SECURITIES & EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended June 30, 2001
                               -------------

                                       or

[    ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OF 15(D) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from            to

Commission File No. 1-106
                    -----


                                LYNCH CORPORATION
                                -----------------
             (Exact name of Registrant as specified in its charter)


            Indiana                                           38-1799862
            -------                                           ---------
(State or other jurisdiction of                           I.R.S. Employer
incorporation or organization)                            Identification No.)


401 Theodore Fremd Avenue, Rye, New York                        10580
----------------------------------------                        -----
(Address of principal executive offices)                      (Zip Code)

                                 (914) 921-7601
                                 --------------
               Registrant's telephone number, including area code


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes  X    No
   -----    ----

Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practical date.

  Class                                            Outstanding at July 31, 2001
  -----                                            ----------------------------
Common Stock, no par value                                   1,510,183




<PAGE>



                                      INDEX

                       LYNCH CORPORATION AND SUBSIDIARIES


PART I.     FINANCIAL INFORMATION


Item 1.  Financial Statements (Unaudited)

                  Condensed Consolidated Balance Sheets:
                    -      June 30, 2001
                    -      December 31, 2000

                  Condensed Consolidated Statements of Operations:
                    -      Three and six months ended June 30, 2001 and 2000

                  Condensed Consolidated Statements of Cash Flows:
                    -      Six months ended June 30, 2001 and 2000

                  Notes to Consolidated Financial Statements:


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations


Item 3.  Quantitative and Qualitative Disclosure About Market Risk


PART II.    OTHER INFORMATION

Item 4.  Submission of Matters to Vote of Security Holders
Item 6.  Exhibits and Reports on Form 8-K

        (a)  Exhibits - None
        (b)  Reports on Form 8-K - None




<PAGE>




SIGNATURES













Part 1 - FINANCIAL INFORMATION -
Item 1 - Financial Statements

<TABLE>
                       LYNCH CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)
<CAPTION>
                                                                 June 30     December 31
                                                                  2001          2000
                                                               (unaudited)       (A)
                                                               ----------   -----------
ASSETS
CURRENT ASSETS
<S>                                                             <C>          <C>
     Cash and Cash Equivalents ..............................   $  12,475    $  10,543
     Restricted Cash ........................................        --          6,500
     Receivables, less allowances of $577 and $1,582 ........      26,112       35,019
     Inventories ............................................      29,423       35,139
     Deferred income taxes ..................................       6,451        7,624
     Other current assets ...................................       1,760        1,807
                                                                ---------    ---------

     TOTAL CURRENT ASSETS ...................................      76,221       96,632

PROPERTY, PLANT AND EQUIPMENT
     Land ...................................................         682          797
     Buildings and improvements .............................      10,314       11,076
     Machinery and equipment ................................      39,910       56,951
                                                                ---------    ---------
                                                                   50,906       68,824
     Accumulated Depreciation ...............................     (29,188)     (27,713)
                                                                ---------    ---------
                                                                   21,718       41,111

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET ..         558       21,589
OTHER ASSETS ................................................       3,164        3,488
                                                                ---------    ---------
    TOTAL ASSETS ............................................   $ 101,661    $ 162,820
                                                                =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Notes payable to banks .................................   $  26,783    $  30,288
     Trade accounts payable .................................      15,016       19,251
     Accrued interest payable ...............................       1,180        1,185
     Accrued liabilities ....................................      11,002       15,234
     Customer advances ......................................       3,355        3,916
     Current maturities of long-term debt ...................       2,058        1,376
                                                                ---------    ---------
     TOTAL CURRENT LIABILITIES ..............................      59,394       71,250

LONG TERM DEBT ..............................................      61,690       61,350
DEFERRED INCOME TAXES .......................................       6,095        6,752
OTHER LONG TERM LIABILITIES .................................       3,806        4,223
MINORITY INTERESTS ..........................................        --          3,813

SHAREHOLDERS' EQUITY
   COMMON STOCK, NO PAR OR STATED VALUE - 10,000,000 SHARES
     1,513,191 SHARES ISSUED AND 1,510,000 SHARES OUTSTANDING       5,139        5,139
   ADDITIONAL PAID-IN CAPITAL ...............................      10,403       10,403
  (ACCUMULATED DEFICIT)  RETAINED EARNINGS ..................     (44,339)         405
   OFFICER'S NOTE RECEIVABLE ................................        (394)        (382)
   ACCUMULATED OTHER COMPREHENSIVE LOSS .....................         (71)         (71)
   TREASURY STOCK OF 3,008  SHARES, AT COST .................         (62)         (62)
                                                                ---------    ---------
   TOTAL SHAREHOLDERS' EQUITY ...............................     (29,324)      15,432
                                                                ---------    ---------

   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ...............   $ 101,661    $ 162,820
                                                                =========    =========
<FN>
(A) The Balance Sheet at December 31, 2000 has been derived from the Audited
Financial Statements at that date, but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
</FN>

                             See accompanying notes
</TABLE>

<PAGE>

<TABLE>


                       LYNCH CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except share amounts)
<CAPTION>

                                                            Three Months              Six Months
                                                           Ended June 30            Ended June 30
                                                        ----------------------   ----------------------
                                                        2001          2000        2001           2000
                                                       ---------------------    -----------------------
<S>                                               <C>            <C>            <C>            <C>
SALES AND REVENUES ............................   $    45,353    $    53,008    $    98,901    $   105,482

Costs and expenses:
    Manufacturing cost of sales ...............        44,661         45,448         93,214         91,775
    Selling and administrative ................         4,985          6,028         10,589         11,790
    Asset impairment and restructuring charges          1,577         38,061            527
                                                   -----------    -----------    -----------    ----------
OPERATING (LOSS) PROFIT .......................        (5,870)         1,532        (42,963)         1,390

Other income (expense):
    Investment Income .........................           138            273            317            961
    Interest expense ..........................        (2,533)        (2,491)        (5,237)        (5,941)
                                                   -----------    -----------    -----------    ----------
                                                       (2,395)        (2,218)        (4,920)        (4,980)
                                                   -----------    -----------    -----------    ----------
LOSS FROM OPERATIONS BEFORE INCOME
  TAXES, MINORITY INTERESTS AND EXTRAORDINARY
    ITEM ......................................        (8,265)          (686)       (47,883)        (3,590)

(Provision) benefit from income taxes .........          (298)            15           (868)         1,079
Minority interests ............................          (110)           811          4,008          1,893
                                                   -----------    -----------    -----------    ----------
INCOME (LOSS) FROM BEFORE EXTRAORDINARY ITEM ..        (8,673)           140        (44,743)          (618)

EXTRAORDINARY ITEM
     Gain on early extinguishment of debt
    (less income tax provision of
    $1,577 and minority interest of $1,381) ...          --              991           --            2,245
                                                  -----------    -----------    -----------    ----------
NET INCOME (LOSS) .............................   ($    8,673)   $     1,131    ($   44,743)   $     1,627
                                                  ===========    ===========    ===========    ===========
   Weighted average shares outstanding ........     1,510,000      1,510,000      1,510,000      1,472,000
                                                  ===========    ===========    ===========    ===========
Basic and diluted earnings per share:


    Income (loss) before extraordinary item ...         (5.74)          0.09         (29.64)         (0.42)
    Extraordinary item ........................          0.00           0.66           0.00           1.53
                                                   -----------    -----------    -----------    ----------
NET INCOME (LOSS) .............................   ($     5.74)   $      0.75    ($    29.64)   $      1.11
                                                  ===========    ===========    ===========    ===========

See accompanying notes
</TABLE>





<PAGE>

<TABLE>



                       LYNCH CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In Thousands)

<CAPTION>
                                                           Six Months Ended
                                                                June 30
                                                          2001         2000
                                                         -------     ---------
OPERATING ACTIVITIES
<S>                                                     <C>         <C>
Net income (loss) ...................................   ($44,743)   $  1,627
Adjustment to reconcile net income (loss) to net cash
  provided by operating activities:
     Extraordinary item .............................       --        (2,254)
     Depreciation ...................................      2,807       2,867
     Amortization of goodwill and other assets ......        558         396
     Amortization of deferred financing costs........        225         402
     Impairment of assets and restructuring charges .     38,061         --
     Deferred taxes .................................        516         (63)
     Minority interests .............................     (4,008)        579
    Changes in operating assets and liabilities:
        Receivables .................................      8,907      (6,595)
        Inventories .................................      5,716      (1,684)
        Accounts payable and accrued liabilities ....     (9,033)      7,918
         Other ......................................        930         240
                                                        ---------   -----------
Cash provided by (used in) operating activities .....       (640)       3,442
                                                        ---------   -----------

INVESTING ACTIVITIES

Capital expenditures ................................       (776)     (1,395)
Restricted cash .....................................      6,500          --
                                                       ----------  -----------
Cash provided (used in) by investing activities .....      5,724      (1,395)

FINANCING ACTIVITIES

Change in notes payable .............................     (3,505)        796
Repayment & buy back of long-term debt ..............       --       (54,650)
Deferred financing costs ............................       --           (69)
Sale of common stock ................................       --         3,000
Other ...............................................       (223)        514
                                                        ----------  -----------
Cash (used in) financing activities .................     (3,728)    (51,437)
                                                        ----------  -----------
Net increase in cash and cash equivalents ...........      1,932     (49,390)
Cash and cash equivalents at beginning of period ....     10,543      69,132
                                                        ----------  -----------
Cash and cash equivalents at end of period ..........   $ 12,475    $ 19,742
                                                        ==========  ===========
See accompanying notes
</TABLE>


<PAGE>



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A.     Subsidiaries of the Registrant

As of June 30, 2001, the Subsidiaries of the Registrant are as follows:
Subsidiary
<TABLE>
<CAPTION>

                                                                          Owned By Lynch

<S>                                                                        <C>
Lynch Display Technologies, Inc. ........................................  100.0%
Lynch Systems, Inc. .....................................................  100.0%
     Lynch International Holding Corporation ............................  100 .0
     Lynch-AMAV LLC .....................................................   75.0%
M-tron Industries, Inc. .................................................  100.0%
     M-tron Industries, Ltd. ............................................  100.0%
Spinnaker Industries, Inc. ..............................................   47.6%(O)/60.4%(V)
          Entoleter, Inc. ...............................................   47.6%(O)/60.4%(V)
          Spinnaker Coating, Inc. .......................................   47.6%(O)/60.4%(V)
                Spinnaker Coating-Maine, Inc. ...........................   47.6%(O)/60.4%(V)
             Spinnaker Electrical Tape Company ..........................   47.6%(0)/60.4%(V)
<FN>
Notes: (V)=Percentage voting control; (O)=Percentage of equity ownership
</FN>
</TABLE>

B.       Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States for interim  financial  information  and with the  instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the  information  and  footnotes  required by generally  accepted  accounting
principles for complete financial statements. In the opinion of management,  all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair  presentation  have been included.  Operating results for the three and six
month periods ended June 30, 2001 are not necessarily  indicative of the results
that  may be  expected  for the  year  ended  December  31,  2001.  For  further
information,  refer  to the  consolidated  financial  statements  and  footnotes
included  in the  Registrant's  Annual  Report on Form  10-K for the year  ended
December 31, 2000.

Although the Company owns 48% of the equity of Spinnaker  (60% voting  control),
under generally accepted accounting  principles,  the Company is required to all
of the losses of Spinnaker since the  non-Company  interests are not required to
absorb  their share of the losses  (52%) after their  investment  is absorbed by
losses.

In June 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 141, Business  Combinations and Statement of
Financial  Accounting  Standards No. 142, Goodwill and Other Intangible  Assets,
effective  for years  beginning  after  December 15, 2001.  Under the new rules,
goodwill  will no longer be amortized  but will be subject to annual  impairment
tests in accordance with the Statements.  Other intangible  assets will continue
to be amortized over their useful lives.  The pooling of interests  method is no
longer  permitted for business  combinations  initiated after June 30, 2001. The
Company will apply the new rules on accounting for goodwill and other intangible
assets  beginning in the first  quarter of 2002.  During 2002,  the Company will
perform the first of the required  impairment tests of goodwill as of January 1,
2002 and has not yet  determined  what the effect of these  tests will be on the
earnings and financial position of the Company.

C.       Inventories

Inventories  are stated at the lower of cost or market  value.  At June 30, 2001
and  December  31,  2000,  inventories  were valued by three  methods:  last-in,
first-out (LIFO) 31% specific identification 67%, and first-in, first-out (FIFO)
- 2%. At December 31, 2000, the percentages were 28%, 71%, and 1%, respectively.
<TABLE>
<CAPTION>
(In Thousands)       June 30,   Dec. 31,
                       2001      2000
                     -------------------
<S>                   <C>       <C>
Raw materials .....   $ 8,932   $10,172
Work in process ...     3,812     2,796
Finished goods ....    16,679    22,171
                      -------   -------
  Total Inventories   $29,423   $35,139
                      =======   =======
</TABLE>

D.       Indebtedness

Spinnaker   Industries,   Inc.  maintains  revolving  lines  of  credit  at  its
subsidiaries which total $35 million,  of which $23.5 million was outstanding as
of June 30, 2001 and it had $2.7  million of available  borrowings.  In general,
the credit facilities are secured by property,  plant and equipment,  inventory,
receivables  and  common  stock of  certain  subsidiaries  and  contain  certain
covenants restricting distributions to the Registrant.
<TABLE>
<CAPTION>
Long term debt consists of:                   June 30,     Dec.31,
                                                2001       2000
                                              ------------------
Spinnaker Industries, Inc. 10.75%
<S>                                           <C>         <C>
Senior Secured Note due 2006 ..............   $ 51,135    $ 51,135

14% Subordinated Note with PIK interest and
   principal due on January 31, 2003 ......      9,783       9,172

Other .....................................      2,830       2,419
                                              --------    --------
                                                63,748      62,726
Current Maturities ........................     (2,058)     (1,376)
                                              --------    --------
                                              $ 61,690    $ 61,350
                                              ========    ========
</TABLE>



<PAGE>



E.     Earnings per share

Basic  earnings  per common  share  amounts are based on the  average  number of
common shares outstanding during each period,  excluding the dilutive effects of
options, warrants, and convertible securities of which there were none.

F.   Segment Information

The  Company is engaged  in the  manufacture  of  adhesive-backed  label  stock,
frequency  control  devices  and  other  manufacturing.   The  Company  measures
performance of its segments  primarily by revenues,  operating profit and EBITDA
(operating profit before income taxes, depreciation,  amortization and allocated
corporate  expenses).  Identifiable  assets  of each  segment  have not  changed
materially since December 31, 2000,  except for the impairment of certain assets
as discussed in Note G.

EBITDA for  operating  segments is equal to operating  profit  before  interest,
taxes, depreciation and amortization. EBITDA is presented because it is a widely
accepted  financial  indicator  of value and ability to incur and service  debt.
EBITDA is not a substitute  for  operating  income or cash flows from  operating
activities in accordance with generally accepted accounting principles.

Operating profit (loss) is equal to revenues less operating expenses,  excluding
interest and income taxes.
<TABLE>
<CAPTION>

                                       Three Months Ended          Six Months Ended
                                            June 30                    June 30
                                       -----------------          --------------------
                                          2001          2000         2001        2000
                                       -----------   ---------    ----------   ---------
Revenues:
<S>                                     <C>          <C>          <C>          <C>
  Adhesive-backed label stock .......   $  31,627    $  37,332    $  68,760    $  77,618
  Frequency control devices (a) .....       5,762       10,074       15,804       18,484
  Other Manufacturing ...............       7,964        5,602       14,337        9,380
                                        ---------    ---------    ---------    ---------
  Consolidated Total ................   $  45,353    $  53,008    $  98,901    $ 105,482
                                        ---------    ---------    ---------    ---------

EBITDA
  Adhesive-backed label stock .......   $  (3,520)   $   2,161    $  (3,778)   $   3,698
  Frequency control devices (a) .....        (615)       1,310          383        2,494
  Other manufacturing ...............       1,917          766        2,941          615
  Corporate manufacturing expenses ..        (457)        (587)        (757)      (1,141)
                                        ---------    ---------    ---------    ---------
  Total manufacturing ...............      (2,675)       3,650       (1,211)       5,936

  Corporate expenses less mgt. fees .        (249)        (379)        (635)        (756)
  Asset impairment - restructuring ..        (878)        --         (1,309)        (527)
                                        ---------    ---------    ---------    ---------

  Consolidated Total ................   $  (3,802)   $   3,271    $  (3,155)   $   4,653
                                        ---------    ---------    ---------    ---------

Operating Profit
   Adhesive-backed label stock ......   $  (4,506)   $     705    $  (6,082)   $   1,416
   Frequency control devices ........        (832)       1,139          (40)       2,159
   Other manufacturing ..............       1,753          633        2,616          349
   Corporate manufacturing expenses .        (457)        (491)        (757)      (1,101)
                                        ---------    ---------    ---------    ---------
   Total manufacturing ..............       4,042        1,986       (4,263)       2,823

   Unallocated corporate expenses ...        (251)        (454)        (639)        (906)
                                        ---------    ---------    ---------    ---------
Asset impairment - restructuring
         charge - Spinnaker .........      (1,577)        --        (38,061)        (527)
                                        ---------    ---------    ---------    ---------
   Consolidated Total ...............   $  (5,870)   $   1,532    $ (42,963)   $   1,390
                                        =========    =========    =========    =========
Total Operating Profit for reportable   $  (5,870)   $   1,532    $ (42,963)   $   1,390
Other profit or loss
   Investment income ................         138          273          317          961
   Interest expense .................      (2,533)      (2,491)      (5,237)      (5,941)
                                        ---------    ---------    ---------    ---------
Loss from continuing operations
   before income taxes, minority
   interest and extraordinary items .   $  (8,265)   $    (686)   $ (47,883)   $  (3,590)
                                        =========    =========    =========    =========
<FN>
Note:  a)  Includes one-time write-offs and reversals, as follows:
</FN>
</TABLE>


<TABLE>
<CAPTION>

                           Three Months Ended  Six Months Ended
   (In Thousands)            June 30, 2001      June 30, 2001

Write-off of deferred rights
<S>                            <C>               <C>
   offering expenses .......   $(300)            $(300)

Reversal of bonus accrual ..     367               367

Severance expenses .........     (47)              (47)

Inventory write-down .......    (375)             (375)
                               -----              -----
  Total ....................   $(355)            $(355)
                               =====             =====
</TABLE>

G.       Asset Impairment and Restructuring Charges



<PAGE>
<TABLE>
<CAPTION>



                                           Three Months   Six Months
                                              Ended         Ended
                                          June 30, 2001   June 30, 2001
                                          ------------   -------------

Restructuring charges and asset impairment:
<S>                                           <C>           <C>
    Severance .............................   $   878       $ 1,309
    Asset impairment ......................       699        36,752

Total asset impairment and restructuring ..   $ 1,577       $38,061
                                              -------       -------
Inventory write-down ......................   $ 3,482       $ 3,482
                                              =======       =======
</TABLE>

As  discussed  in the  Spinnaker  Annual  Report on Form 10-K for the year ended
December 31, 2000, Spinnaker recognized certain restructuring charges, primarily
affiliated with its Spinnaker Coating and Spinnaker Coating - Maine business. To
better concentrate on Coating's  strengths and market niche, a decision was made
by its  management to reorganize  and realign the business in the fourth quarter
of 2000 and going forward in 2001. The restructuring reserve was composed of the
following (in thousands):


<PAGE>

<TABLE>
<CAPTION>

                                         Spinnaker's          Spinnaker's
                                     First Quarter 2001    Second Quarter   2001
                                     ------    ------   ------    ------   -------
                                   Balance                                           Balance
                                   12/31/00   Charges  Payments  Charges  Payments  6/30/01
                                   ---------   ------   ------    ------   ------    ------
<S>                                <C>         <C>      <C>       <C>      <C>       <C>
Severance ......................   $   1,125   $  431   $ (217)   $  878   $ (468)   $1,749
</TABLE>


On May 15, 2001,  Spinnaker  announced  that it intended to close its  Spinnaker
Coating - Maine,  Inc.  ("Coating - Maine")  facility in Westbrook,  Maine.  The
Company's  decision to close this  facility was made after  reviewing  the first
quarter of 2001  operating  losses at Maine and  assessing  the  probability  of
returning the Maine  operations to profitability in light of the substantial new
capacity  being added to the industry.  As a result of the  decision,  Spinnaker
will focus its entire efforts on the Spinnaker Coating  operations in Troy, Ohio
where it principally manufacturers specialty-coated products. In connection with
the closing, Spinnaker has recorded as of June 30, 2001, non-cash write-downs of
$36.7  million  to  reflect  the  significantly  reduced  value  of the  related
long-lived assets. Separately,  Spinnaker announced it sold selected assets from
its Maine  facility to Fasson Roll North  America,  a division of Avery Dennison
Corporation.

The asset  impairments  resulted from the  write-down  to estimated  fair market
value of fixed  assets to be taken out of service and held for sale or disposal.
The majority of this charge  related to the  impairment  of goodwill  associated
with the  acquisition  of  Coating  - Maine in 1998.  As of June 30,  2001,  the
impairment amount caused a reduction to the carrying value of goodwill and fixed
assets by  approximately  $20.8  million  and $15.9  million,  respectively.  In
conjunction  with the closing and included in restructuring  charges,  Spinnaker
has incurred  severance and related  costs  totaling $.9 million for the quarter
ended June 30, 2001 for the termination of 143 employees.  Spinnaker  expects to
incur  additional  severance  related costs and recognize a curtailment gain for
the Non-Union defined benefit pension plan during subsequent quarters.

H.       Subsequent Events

Effective  July 31, 2001,  Louis A.  Guzzetti,  Jr.  resigned  from the Board of
Directors of the Company.  In connection  with Mr.  Guzzetti's  resignation,  on
August 9, 2001, the Company purchased 12,300 shares of its Common Stock from Mr.
Guzzetti for a purchase price of  $396,204.56.  Such purchase price was equal to
the  outstanding  principal  amount and unpaid interest on the loans made by the
Company to Mr.  Guzzetti on June 5, 2000 and  September  20, 2000 to finance his
original  purchase  of such Common  Stock (the  "Guzzetti  Loans").  The Company
surrendered the promissory note evidencing the Guzzetti Loans to Mr. Guzzetti in
full payment of the  purchase  price.  Also on August 9, 2001,  the Company paid
$372,931.25 to Mr. Gabelli in full payment of the outstanding  principal  amount
and unpaid  interest on the loans made by Mr.  Gabelli to the Company on June 5,
2000 and September 20, 2000 to fund the Guzzetti Loans.


<PAGE>




Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.

Sales and Revenues/Gross Margin

Revenues for the second quarter of 2001  decreased by $7.7 million or 14.4%,  to
$45.4  million,  from the second  quarter of 2000.  Revenues  for the six months
ended June 30, 2001 decreased by $6.6 million or 6.2% from the  comparable  2000
period reflecting decreased order flow.

Spinnaker's  net sales for the quarter  ended June 30, 2001 were $32.8  million,
compared to $38.5 million in the corresponding  2000 period. The decrease in net
sales for 2001 is attributed to lower sales volumes and lower selling  prices in
most  pressure-sensitive  products.  As  a  part  of  Spinnaker's  restructuring
program, the elimination of non-pressure  sensitive product lines in 2000 caused
volumes to be lower.  Another  contributing factor is the ongoing process of the
shutdown of its Maine facility.

Spinnaker's gross margin as a percentage of net sales for the quarter ended June
30, 2001 was down 15.9% from the corresponding  2000 period.  The primary reason
for the lower margin in 2001 was  continued  price  erosion  within the pressure
sensitive  market  due to  competitive  pressures  and  excess  capacity  in the
industry  and  overall  sluggish   economic   conditions.   These  factors  also
contributed  to lower  volumes of products  sold for the three months ended June
30, 2001.  Additionally,  Spinnaker incurred higher material costs (primarily at
its Maine facility),  offset by a reduction in workforce and depreciation.  Also
contributing  to the decrease in gross margin for the second quarter of 2001 was
a one-time  write-down  to inventory,  associated  with the closing of its Maine
facility for approximately $3.5 million.

Spinnaker's  net sales  for the six  month's  ended  June 30,  2001  were  $70.8
million,  compared  to $80.3  million  in the  corresponding  2000  period.  The
decrease in net sales for 2001 is  attributed to lower sales volumes in pressure
sensitive water based, hot melt and sheet products,  in which aggregate  volumes
decreased  approximately 11% over the comparable 2000 period.  Net sales in 2001
are also being negatively impacted by the elimination of non  pressure-sensitive
products,   with  sales  for  non-pressure   sensitive   products  for  2001  of
approximately $.9 million,  compared to $3.5 million for the corresponding  2000
period.  Offsetting a portion of these losses in the non-pressure sensitive area
are increased sales volumes of pressure  sensitive  government postage products.
Sales of postage products have risen  approximately  31% over the  corresponding
2000 period.

On a comparable  basis,  gross  margin as a  percentage  of revenues for the six
months  ended  June 30,  2001 was down  10.7% from the first six months of 2000.
Contributing  to the  decline  in  gross  margin,  were  higher  material  costs
(primarily at the Coating - Maine facility),  along with continued price erosion
and volume  declines.  Consistent  with the recent trends in the industry,  over
capacity and sluggish economic  conditions have impaired  Spinnaker's  operating
performance. Through its ongoing restructuring measures, Spinnaker has partially
offset  these   unfavorable   impacts   through   reduction  in  workforce   and
depreciation.  Also  contributing to the decrease in gross margin for the second
quarter of 2001 was a one-time  write-down  to  inventory,  associated  with the
closing of Coating - Maine, of approximately $3.5 million.

Revenues at M-tron  decreased  by $4.3  million or 42.8% to $5.8 million for the
second quarter of 2001 due to decreased demand from the  infrastructure  segment
of the telecommunications  industry.  M-tron's revenues for the first six months
of 2001  decreased  $2.7  million  or  14.5% to  $15.8  million  due to the same
factors.  Lynch  Systems'  revenues for the second  quarter of 2001 increased by
$2.3  million  from the  corresponding  2000 period to $6.7  million  reflecting
increased  orders and sales of glass press machines.  Lynch Systems revenues for
the first six months of 2001 increased $5.6 million from the corresponding  2000
period to $12.3 million for the same reasons.

Operating Loss

Operating  loss for the second  quarter  2001 was $5.9  million  compared to the
second quarter 2000 operating profit of $1.5 million on a negative swing of $7.4
million.  For the first  six  months of 2001  operating  loss was $43.0  million
compared to the corresponding 2000 period's operating profit of $1.4 million.

Spinnaker's  loss from  operations  for the three months ended June 30, 2001 was
$1.4 million excluding an impairment charge of approximately $.7 million related
to certain  long-lived assets associated with the closing of the Coating - Maine
facility  (see  discussion  at Note G to the  condensed  consolidated  financial
statements)  and charges of $4.4 million related to  restructuring  and one-time
inventory  write-downs  compared to income from operations in the  corresponding
2000  period  of  approximately  $.2  million.  Additionally,  Spinnaker's  2001
operating  results  reflect lower  operating  margins,  offset by a reduction in
selling and  administrative  costs that are  primarily the result of the ongoing
restructuring  efforts  which  began in the last  quarter  of 2000.  Spinnaker's
restructuring and asset impairment charges were: ( in thousands)
<TABLE>
<CAPTION>
                                       Three Months Ended
                                         June 30, 2001

Restructuring charges:
 <S>                                       <C>
  Severance ............................   $  878
  Asset impairment .....................      699

Total restructuring and asset impairment   $1,577
                                           ======
Inventory write-down ...................   $3,482
                                           ======
</TABLE>

As discussed in Spinnaker's Annual Report on Form 10-K for the year ended
December 31, 2000, Spinnaker recognized certain restructuring charges, primarily
affiliated with its Spinnaker Coating - Maine business. To better concentrate on
Coating's strengths and market niche, a decision was made by Spinnaker's
management to reorganize and realign the business in the fourth quarter of 2000
and going forward in 2001. The restructuring reserve was composed of the
following (in thousands):


<PAGE>


<TABLE>
<CAPTION>

                                                    Spinnaker's                            Spinnaker's
                                                 First Quarter 2001                    Second Quarter 2001
                                          ------------------- ------------------- ---------------- -------------------
                        Balance                                                                                         Balance
                        12/31/00            Charges            Payments            Charges           Payments          6/30/01
                      ------------------- ------------------- ------------------- ---------------- ------------------- -----------
<S>                     <C>                   <C>               <C>                <C>               <C>              <C>
Severance               $ 1,125               $ 431             $ (217)            $ 878             $ (468)          $ 1,749
</TABLE>

Spinnaker  expects to incur additional  severance  related costs and recognize a
curtailment gain during  subsequent  quarters for the non-union  defined benefit
pension plan.

Spinnaker's  loss from  continuing  operations for the six months ended June 30,
2001  was  approximately   $45.0  million,   compared  to  $.2  million  in  the
corresponding 2000 period.

Spinnaker  also  recognized  charges of $41.5 million in the first half of 2001.
The charge  relates to the  continued  restructuring  efforts  that began in the
fourth  quarter of 2000 and a  write-down  of assets  affiliated  with Coating -
Maine.  Spinnaker's   restructuring  and  asset  impairment  charges  were:  (in
thousands)
<TABLE>
<CAPTION>
                                                          Six Months Ended
                                                            June 30, 2001
Restructuring charges:
<S>                                                           <C>
  Severance ...............................................   $ 1,309
  Asset impairment ........................................    36,752
Total restructuring and asset impairment                      -------
                                                              $38,061

Inventory write-down ......................................   $ 3,482
                                                              =======
</TABLE>


For the 2001 second quarter M-tron had an operating loss of $.8 million compared
to an  operating  profit of $1.1  million in the  second  quarter of 2000 due to
decreased  sales  volumes  mentioned  above.  For the first six  months of 2001,
M-tron's  operating  loss was $40,000  compared to an  operating  profit for the
corresponding  2000  period of $2.2  million  due to the  reduction  in  revenue
factors mentioned above. Included in M-tron's results for both the three and six
month periods of 2001 are the following one-time charges and reversals:
<TABLE>
<CAPTION>

                                              Three Months Ended   Six Months Ended
   (In Thousands)                              June 30, 2001        June 30, 2001
                                              -------------------- ---------------
<S>                                                <C>                  <C>
Write-off of deferred rights offering expenses     $(300)               $(300)
                                                    -----               -----
Reversal of bonus accrual ....................       367                  367
                                                    -----               -----
Severance expenses ...........................       (47)                 (47)
                                                    -----               -----
Inventory write-down .........................      (375)                (375)
                                                    -----               -----
  Total ......................................      $(355)              $(355)
                                                    =====               =====
</TABLE>


For the 2001  second  quarter,  Lynch  Systems had an  operating  profit of $1.7
million  compared to an operating profit of $.7 million in the second quarter of
2000. For the first six month period of 2001 Lynch Systems also had an operating
profit of $2.7  million  compared to an  operating  profit of $.3 million in the
comparable  period in 2000. This turnaround for both periods at Lynch Systems is
due to the increased sales mentioned above and better absorption of overhead.

Other Income (Expense), Net

Investment income decreased for the three and the six months ended June 30, 2001
due to the  buy  back  of  debt  with  the  net  proceeds  of the  2000  sale of
Spinnaker's industrial tape units, which were invested in short term instruments
during the earlier 2000 periods.

Interest  expense  was $2.5  million  for the  second  quarter  2001  which  was
comparable to the  corresponding  period in 2000.  During the  six-month  period
ended  June  30,  2001,  interest  expense  decreased  by $.7  million  from the
corresponding  period in 2000.  This  reduction was primarily due to Spinnaker's
repurchase of its Senior Notes in the later part of 2000.

Tax Provision

The income tax (provision)  benefit includes federal, as well as state and local
taxes.  Because of Spinnaker's  losses,  a valuation  allowance of approximately
$3.0 and $17.0 million was  established to offset the income tax benefit for the
three and six months ended June 30, 2001. For financial reporting purposes,  the
valuation  allowance  has been  recognized  to offset  the  deferred  tax assets
generated  during the period.  Spinnaker  has  approximately  $60 million of net
operating loss  carryforwards  available to offset future taxable income,  which
expire in the years 2008 through 2020.

Minority Interest

Minority  interests  contribution  to the net  income  (loss)  decreased  by $.9
million for the second quarter 2001 from the corresponding period in 2000 due to
a profit at a 75% owned  foreign  subsidiary  of Lynch  Systems and the previous
total  absorption  of the  Spinnaker  minority  interests  equity from  previous
Spinnaker losses.  For the six months ended June 30, 2001, the minority interest
benefit  increased  due to increased  Spinnaker  losses.  The minority  interest
equity was fully absorbed during the first quarter of 2001. Although the Company
owns 48% of the  equity of  Spinnaker  (60%  voting  control),  under  generally
accepted accounting principles,  the Company is required to all of the losses of
Spinnaker since the non-Company interests are not required to absorb their share
of the losses (52%) after their investment is absorbed by losses.

Net Income/Loss

Net loss for the second  quarter 2001 was $8.7 million  compared to a net income
of $1.1 million in the year earlier quarter.  The $9.8 million negative swing is
primarily  due to increased  Spinnaker  losses  primarily  generated by minority
write-downs,  asset impairment charges and restructuring  charges.  Net loss for
the six months ended June 30, 2001 was $44.8  million,  or $29.64 per share,  as
compared  to a net income of $1.6  million,  or $1.11 per share in the  previous
year's six month period.

Backlog/New Orders

Total backlog of manufactured  products from  continuing  operations at June 30,
2001 was $18.1  million,  which  represents  a decrease of $7.8 million from the
backlog of $25.9 million at December 31, 2000. Decreased order receipt at M-tron
accounted for the  significant  decrease to the backlog at June 30, 2001.  Lynch
Systems'  backlog  increased by $2.1 million from  December 31, 2000 to June 30,
2001.

FINANCIAL CONDITION

Liquidity/Capital Resources

As of June 30, 2001, the Company had current assets of $76.2 million and current
liabilities of $59.4  million.  Working  capital was therefore  $16.8 million as
compared to $25.4 million at December 31, 2000. The decrease is primarily due to
the deteriorated operating results at Spinnaker and M-tron.

First six months capital  expenditures were $.8 million in 2001 and $1.4 million
in 2000.  The  Company  plans to spend  approximately  $2.0  million  on capital
expenditures for the year and anticipates that it will have sufficient cash flow
from operations and borrowing  availability  under various credit  facilities at
its subsidiaries to fund such capital expenditure plans.

At June 30, 2001, total debt was $91.5 million, of which Spinnaker accounted for
$85.1 million, which was $20.5 million less than the $93.0 million at the end of
2000. The reduction is primarily due to principal repayments.  Long term debt at
June 30, 2001 included  $63.1 million of fixed interest rate debt, at an average
cash interest rate of 11.3% and $27.9 million of variable  interest rate debt at
an average interest rate of 9.2%. Additionally,  the Company had unused lines of
credit facilities of which the Spinnaker Credit Facility is a major portion. The
Spinnaker Credit Facility is available to fund acquisitions and support periodic
fluctuations in working capital.  Credit availability under the Spinnaker Credit
Facility is subject to certain  variables,  such as  inventory  and  receivables
eligible  to be  included  in the  borrowing  base.  The  Company  is charged an
available credit fee of 0.375% per annum.  Outstanding  borrowings bear interest
at variable rates related to the prime interest rate or LIBOR. At June 30, 2001,
the combined  effective  interest rate was 6.99%. The Refinanced Credit Facility
will expire July 31, 2002. As of June 30, 2001 aggregate  availability under the
Refinanced   Credit  Facility  was   approximately   $26.2  million,   of  which
approximately $23.5 million was outstanding.

The Company does not at present  have credit  facilities  at the parent  company
level. Management believes it has adequate working capital at this level to fund
current operations into the near future.

The Company  may from time to time make  acquisitions  which  would  probably be
financed with a significant  component of debt. This acquisition debt as well as
current debt  outstanding  would contain  restrictions  on the amount of readily
available funds that can be transferred to the Company from its subsidiaries.

Subsequent Events

Effective  July 31, 2001,  Louis A.  Guzzetti,  Jr.  resigned  from the Board of
Directors of the Company.  In connection  with Mr.  Guzzetti's  resignation,  on
August 9, 2001, the Company purchased 12,300 shares of its Common Stock from Mr.
Guzzetti for a purchase price of  $396,204.56.  Such purchase price was equal to
the  outstanding  principal  amount and unpaid interest on the loans made by the
Company to Mr.  Guzzetti on June 5, 2000 and  September  20, 2000 to finance his
original  purchase  of such Common  Stock (the  "Guzzetti  Loans").  The Company
surrendered the promissory note evidencing the Guzzetti Loans to Mr. Guzzetti in
full payment of the  purchase  price.  Also on August 9, 2001,  the Company paid
$372,931.25 to Mr. Gabelli in full payment of the outstanding  principal  amount
and unpaid  interest on the loans made by Mr.  Gabelli to the Company on June 5,
2000 and September 20, 2000 to fund the Guzzetti Loans.

Accounting and Reporting Policies

Impact of Recently Issued Accounting Standards

In June 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 141, Business  Combinations and Statement of
Financial  Accounting  Standards No. 142, Goodwill and Other Intangible  Assets,
effective  for years  beginning  after  December 15, 2001.  Under the new rules,
goodwill  will no longer be amortized  but will be subject to annual  impairment
tests in accordance with the Statements.  Other intangible  assets will continue
to be amortized over their useful lives.  The pooling of interests  method is no
longer  permitted for business  combinations  initiated after June 30, 2001. The
Company will apply the new rules on accounting for goodwill and other intangible
assets  beginning in the first  quarter of 2002.  During 2002,  the Company will
perform the first of the required  impairment tests of goodwill as of January 1,
2002 and has not yet  determined  what the effect of these  tests will be on the
earnings and financial position of the Company.

MARKET RISK

There has been no significant change in market risk since December 31, 2000. The
Company is exposed to market risk  relating  to changes in the general  level of
U.S.  interest  rates.  Changes in interest rates affect the amounts of interest
earned  on  the  Company's   cash   equivalents   and   short-term   investments
(approximately  $12.5 million at June 30, 2001). The Company generally  finances
the debt  portion of the  acquisition  of  long-term  assets  with  fixed  rate,
long-term  debt.  The Company  generally  maintains  the majority of its debt as
fixed rate in nature by borrowing on a fixed long-term  basis.  The Company does
not use derivative  financial  instruments for trading or speculative  purposes.
Management  does not foresee any  significant  changes in the strategies used to
manage  interest rate risk in the near future,  although the  strategies  may be
reevaluated as market conditions dictate.

At June 30, 2001, approximately $27.5 million, or 30% of the Company's long-term
debt and notes  payable  bears  interest at  variable  rates.  Accordingly,  the
Company's  earnings  and cash flows are  affected by changes in interest  rates.
Assuming the current level of  borrowings  for variable rate debt and assuming a
one  percentage  point  change in the 2001  average  interest  rate under  these
borrowings,  it is estimated that the Company's six months 2001 interest expense
would have changed by less than $.2 million.  In the event of an adverse  change
in interest rates,  management would likely take actions to further mitigate its
exposure. However, due to the uncertainty of the actions that would be taken and
their  possible  effects,  the analysis  assumes no such actions.  Further,  the
analysis  does not  consider  the  effects of the change in the level of overall
economic activity that could exist in such an environment.

Forward Looking Information

Included in this Management  Discussion and Analysis of Financial  Condition and
Results  of  Operations  are  certain  forward   looking   financial  and  other
information,  including  without  limitation  matters  relating to Spinnaker and
Market Risk.  It should be recognized  that such  information  are  projections,
estimates  or  forecasts  based  on  various   assumptions,   including  without
limitation, meeting its assumptions regarding expected operating performance and
other matters specifically set forth, as well as the expected performance of the
economy  as it impacts  the  Company's  businesses,  government  and  regulatory
actions and approvals, and tax consequences, and the risk factors and cautionary
statements  set forth in reports  filed by the  Company and  Spinnaker  with the
Securities and Exchange Commission.  As a result, such information is subject to
uncertainties, risks and inaccuracies, which could be material.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

                  See "Market Risk" under Item 2 above.

PART II OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

At the Annual Meeting of Stockholders of the Registrant held on May 11, 2001 the
following persons were elected as Directors with the following votes:


<PAGE>




         Name            Votes For  Votes Withheld
         ----            ---------  --------------
E. Val Cerutti .......   1,397,809   4886
Robert E. Dolan ......   1,397,704   4991
Mario J. Gabelli .....   1,397,764   4931
Avrum Gray ...........   1,397,709   4986
Louis A. Guzzetti, Jr    1,397,649   5046
Ralph R. Papitto .....   1,397,809   4886


Item 6.  Exhibits  and  Reports  on  Form  8-K

(a)  Exhibits Credit Agreement Amendments

(b)  Reports on Form 8-K
        No reports  on Form 8-K were filed  during the  quarter
        ended June 30, 2001

                                   SIGNATURES


Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                    LYNCH CORPORATION
                                                      (Registrant)

                                               By: s/Roger J. Dexter
                                                   ---------------------------
                                                    Roger J. Dexter
                                                    Chief Financial Officer
August 14, 2001