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 September 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.)


50 Kennedy Plaza, Suite 1250, Providence, Rhode Island           02903
------------------------------------------------------           -----
(Address of principal executive offices)                       (Zip Code)

                                 (401) 453-2007
                                 --------------
               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 November 1, 2001
      -----                                     -------------------------------
Common Stock, no par value                                1,497,883




<PAGE>



                                      INDEX

                       LYNCH CORPORATION AND SUBSIDIARIES


PART I.     FINANCIAL INFORMATION
-------     ---------------------


Item 1.  Financial Statements (Unaudited)

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

                  Condensed Consolidated Statements of Operations:
                    -      Three and nine months ended
                           September 30, 2001 and 2000

                  Condensed Consolidated Statements of Cash Flows:
                    -      Nine months ended September 30, 2001 and 2000

                  Notes to Condensed 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 6.  Exhibits and Reports on Form 8-K
(a)      Exhibits - None
(b)      Reports on Form 8-K



SIGNATURES
----------

<PAGE>
<TABLE>

Part 1 - FINANCIAL INFORMATION -
Item 1 - Financial Statements
                       LYNCH CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       (In thousands except share amounts)
<CAPTION>
                                                                       September 30,   December 31,
                                                                           2001            2000
                                                                        (unaudited)        (A)
                                                                       -------------   -----------
ASSETS
CURRENT ASSETS
<S>                                                                      <C>          <C>
     Cash and cash equivalents .......................................   $   7,621    $  10,543
     Restricted cash .................................................        --          6,500
     Receivables, less allowances of $135 and $1,582 .................       5,449       35,019
     Inventories .....................................................       6,823       35,139
     Deferred income taxes ...........................................         617        7,624
     Other current assets ............................................         732        1,807
                                                                         ---------    ---------
     TOTAL CURRENT ASSETS ............................................      21,242       96,632

PROPERTY, PLANT AND EQUIPMENT
     Land ............................................................         291          797
     Buildings and improvements ......................................       4,156       11,076
     Machinery and equipment .........................................      12,293       56,951
                                                                         ---------    ---------
                                                                            16,740       68,824
     Accumulated Depreciation ........................................     (11,008)     (27,713)
                                                                         ---------    ---------
                                                                             5,732       41,111

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET ...........        --         21,589
OTHER ASSETS .........................................................         619        3,488
                                                                         ---------    ---------
    TOTAL ASSETS .....................................................   $  27,593    $ 162,820
                                                                         =========    =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
     Notes payable to banks ..........................................   $   2,190    $  30,288
     Trade accounts payable ..........................................       2,394       19,251
     Accrued interest payable ........................................          14        1,185
     Accrued liabilities .............................................       4,572       15,234
     Customer advances ...............................................       2,379        3,916
     Current maturities of long-term debt ............................         274        1,376
                                                                         ---------    ---------
     TOTAL CURRENT LIABILITIES .......................................      11,823       71,250

LONG TERM DEBT .......................................................         772       61,350
DEFERRED INCOME TAXES ................................................         261        6,752
OTHER LONG TERM LIABILITIES ..........................................       1,561        4,223
MINORITY INTERESTS ...................................................        --          3,813
                                                                         ---------    ---------
     TOTAL LIABILITIES ...............................................      14,417      147,388

LOSS IN EXCESS OF INVESTMENT .........................................      19,420         --

SHAREHOLDERS' EQUITY (DEFICIT)
   COMMON STOCK NO PAR OR STATED  VALUE - 10,000,000
    SHARES AUTHORIZED 1,513,191 SHARES ISSUED ........................       5,139        5,139
   ADDITIONAL PAID-IN CAPITAL ........................................      10,403       10,403
  (ACCUMULATED DEFICIT)  RETAINED EARNINGS ...........................     (21,257)         405
   OFFICER'S NOTE RECEIVABLE .........................................        --           (382)
   ACCUMULATED OTHER COMPREHENSIVE LOSS ..............................         (71)         (71)
   TREASURY STOCK OF 15,308 AND 3,008  SHARES, AT COST ...............        (458)         (62)
                                                                         ---------    ---------
   TOTAL SHAREHOLDERS' EQUITY (DEFICIT) ..............................      (6,244)      15,432
                                                                         ---------    ---------
   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) ..............   $  27,593    $ 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  accounting  principles  generally
     accepted in the United States for complete financial statements.
</FN>

 </TABLE>
                            See accompanying notes

On September 30, 2001, the Company's  ownership and voting interest of Spinnaker
Industries,  Inc.  was  reduced  to 41.8% and  49.5%,  respectively,  due to the
disposition of shares of Spinnaker.  As a result,  effective September 30, 2001,
the Company relinquished  control of Spinnaker and has deconsolidated  Spinnaker
and will  prospectively  account for its ownership of Spinnaker using the equity
method of accounting. See Note B - "Basis of Presentation".


<PAGE>

<TABLE>


                       LYNCH CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except share and per share amounts)

<CAPTION>
                                                          Three Months                Nine Months
                                                       Ended September 30,        Ended September 30,
                                                      ----------------------     ----------------------
                                                       2001         2000           2001          2000
                                                      ---------------------    -----------------------
<S>                                              <C>            <C>            <C>            <C>
SALES AND REVENUES ...........................   $    31,982    $    56,192    $   130,883    $   161,674

Costs and expenses:
    Manufacturing cost of sales ..............        29,321         47,926        122,535        139,701
    Selling and administrative ...............         5,477          7,758         16,066         19,554
    Asset impairment and restructuring charges           211           --           38,272            527
Gain on deconsolidation (Note B) .............        27,406           --           27,406           --
                                                 -----------    -----------    -----------    -----------
OPERATING PROFIT (LOSS) ......................        24,379            508        (18,584)         1,892

Other income (expense):
    Investment Income ........................            83            335            400          1,296
    Interest expense .........................        (2,353)        (2,471)        (7,590)        (8,412)
                                                 -----------    -----------    -----------    -----------
                                                      (2,270)        (2,136)        (7,190)        (7,116)
                                                 -----------    -----------    -----------    -----------
INCOME (LOSS) FROM OPERATIONS BEFORE INCOME
   TAXES,  MINORITY INTERESTS AND
   EXTRAORDINARY ITEM ........................        22,109         (1,628)       (25,774)        (5,224)

Benefit from income taxes ....................           950            796             82          1,875
Minority interests ...........................            23          1,058          4,031          2,951
                                                 -----------    -----------    -----------    -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM ......        23,082            226        (21,661)          (398)

EXTRAORDINARY ITEM
     Gain on early extinguishment of debt
      (less income tax provision of
       $1,577 and minority interest of $1,381)          --             --             --            2,245
                                                 -----------    -----------    -----------    -----------
NET INCOME (LOSS) ............................   $    23,082    $       226    ($   21,661)   $     1,847
                                                 ===========    ===========    ===========    ===========
   Weighted average shares outstanding .......     1,503,000      1,510,000      1,508,000      1,485,000
                                                 ===========    ===========    ===========    ===========
Basic and diluted earnings per share:


    Income (loss) before extraordinary item ..   $     15.36    $      0.15    ($    14.36)   $      0.27
    Extraordinary item .......................          --             --             --             1.51
                                                 -----------    -----------    -----------    -----------
NET INCOME (LOSS) ............................   $     15.36    $      0.15    ($    14.36)   $      1.24
                                                 ===========    ===========    ===========    ===========
</TABLE>


                             See accompanying notes

On September 30, 2001, the Company's  ownership and voting interest of Spinnaker
Industries,  Inc.  was  reduced  to 41.8% and  49.5%,  respectively,  due to the
disposition of shares of Spinnaker.  As a result,  effective September 30, 2001,
the Company relinquished  control of Spinnaker and has deconsolidated  Spinnaker
and will  prospectively  account for its ownership of Spinnaker using the equity
method of accounting. See Note B - "Basis of Presentation".


<PAGE>
<TABLE>

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

<CAPTION>
                                                          Nine Months Ended
                                                             September 30,
                                                       -----------------------
                                                          2001        2000
                                                       ----------  -----------
OPERATING ACTIVITIES

<S>                                                     <C>         <C>
Net income (loss) ...................................   $(21,661)   $  1,847
Adjustment to reconcile net income (loss) to
  net cash provided by operating activities:
      Net loss of Spinnaker .........................     53,929        --
      Gain on deconsolidation .......................    (27,406)       --
        Extraordinary item ..........................       --        (2,245)
        Depreciation and amortization ...............      1,037       4,968
        Amortization of deferred financing costs ....       --         1,168
        Deferred taxes ..............................        516        (615)
        Minority interests ..........................     (4,031)       (480)
        Changes in operating assets and liabilities:
             Receivables ............................     10,262     (12,274)
             Inventories ............................      2,901      (5,600)
             Accounts payable and accrued liabilities     (7,916)    (15,318)
             Other ..................................        140         208
                                                        --------    --------
Cash provided by operating activities ...............      7,771       2,295
                                                        --------    --------
INVESTING ACTIVITIES

Capital expenditures ................................       (626)     (2,317)
Restricted cash .....................................       --        56,026
Other ...............................................        (20)         75
                                                        --------    --------

Cash provided by (used in) investing activities .....       (646)     53,784
                                                        --------    --------
FINANCING ACTIVITIES

Change in notes payable .............................     (1,651)      1,353
Repayment & repurchases of long-term debt ...........       (721)    (53,986)
Deferred financing costs ............................       --           (69)
Sale of common stock ................................       --         3,000
Other ...............................................       (516)       (256)
                                                        --------    --------
Cash used in financing activities ...................     (2,888)    (49,958)
                                                        --------    --------
Net increase in cash and cash equivalents ...........      4,237       6,121
Cash and cash equivalents at beginning of
  period  (excluding Spinnaker in 2001) .............      3,384      13,106
                                                        --------    --------
Cash and cash equivalents at end of period ..........   $  7,621    $ 19,227
                                                        ========    ========
                             See accompanying notes
</TABLE>

On September 30, 2001, the Company's  ownership and voting interest of Spinnaker
Industries,  Inc.  was  reduced  to 41.8% and  49.5%,  respectively,  due to the
disposition of shares of Spinnaker.  As a result,  effective September 30, 2001,
the Company relinquished  control of Spinnaker and has deconsolidated  Spinnaker
and will  prospectively  account for its ownership of Spinnaker using the equity
method of accounting. See Note B - "Basis of Presentation".


<PAGE>



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A.     Subsidiaries of the Registrant

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

Subsidiary                                                                 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. ..............................................   41.8%(O)/49.5%(V)
          Entoleter, Inc. ...............................................   41.8%(O)/49.5%(V)
          Spinnaker Coating, Inc. .......................................   41.8%(O)/49.5%(V)
                Spinnaker Coating-Maine, Inc. ...........................   41.8%(O)/49.5%(V)
             Spinnaker Electrical Tape Company ..........................   41.8%(O)/49.5%(V)
<FN>
Notes: (O)=Percentage of equity ownership; (V)=Percentage voting control
</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  and those  required to
record deconsolidation of Spinnaker Industries, Inc.) considered necessary for a
fair presentation  have been included.  Operating results for the three and nine
month periods ended  September  30, 2001 are not  necessarily  indicative of the
results that may be expected for the year ending  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.

Prior to September  30, 2001,  the Company  owned 48% of the equity of Spinnaker
(60% voting control); as such, under accounting principles generally accepted in
the United  States,  the  Company  was  required  to record all of the losses of
Spinnaker  since the  non-Company  interests  were not  required to absorb their
share of the losses (52%) after their investment was fully absorbed by losses.

Effective  September 30, 2001,  the Company  donated  430,000  shares of Class A
common stock to a university on who's board several of the Company's  executives
serve as Trustees. This resulted in the reduction of the Company's ownership and
voting  interests in Spinnaker  to 41.8% and 49.5%,  respectively.  As a result,
effective September 30, 2001, the Company has deconsolidated  Spinnaker and will
prospectively  account for its ownership of Spinnaker using the equity method of
accounting.

Accordingly,  the Company's results of operations  include the operating results
of Spinnaker  through  9/30/01 (date of  deconsolidation).  The balance sheet at
September 30, 2001 does not contain the assets and  liabilities of Spinnaker due
to the  deconsolidation.  This  deconsolidation  resulted in a non-cash  gain of
$27,406,000  being  recorded  on  September  30,  2001 to reduce  the  Company's
negative investment in Spinnaker to $19,420,000,  which represents the Company's
interest in Spinnaker's accumulated deficit at the date of deconsolidation. This
remaining  interest  represents  losses in excess of investment,  which has been
recorded as a deferred credit on the Company's  balance sheet until such time as
Spinnaker  achieves  profitability  or the  Company  disposes  of its  remaining
interests in  Spinnaker.  Note that the Company  will not record any  additional
losses from Spinnaker as the company has no further obligations to Spinnaker.

<PAGE>

C.       Summarized Financial Information of Unconsolidated Investee

At  September  30,  2001,  the Company has a 41.8%  interest  in  Spinnaker  and
accounts for its investment  using the equity method.  The Spinnaker  results of
operations  are  disclosed  in Note G,  Segment  Information,  and  described as
"Adhesive-Backed  Label Stock." As a result of the  deconsolidation of Spinnaker
(see Note B),  selected  Spinnaker  balance  sheet  information  is presented as
follows:
<TABLE>
<CAPTION>
                       September 30,   December 31,
                           2001           2000
                       ------------    -----------

<S>                     <C>          <C>
Current Assets ......   $  36,881    $  59,496
Total Assets ........      54,902      119,031
Current Liabilities .      38,759       49,409
Long-Term Debt ......      61,239       60,310
Shareholder's Deficit     (46,460)      (7,468)
</TABLE>

D.       Inventories

Inventories  are stated at the lower of cost or market  value.  At September 30,
2001, inventories were valued by two methods:  last-in,  first-out (LIFO) - 76%,
and first-in,  first-out  (FIFO) - 24%. At December 31, 2000,  inventories  were
valued by three methods:  LIFO - 28%,  Specific  Identification  - 71%, and FIFO
-1%.
<TABLE>
<CAPTION>
                     September 30,   December 31,
                         2001           2000
                     ------------    ------------

<S>                   <C>             <C>
Raw materials .....   $ 1,550         $10,172
Work in process ...     1,116           2,796
Finished goods ....     4,157          22,171
                      -------         -------
  Total Inventories   $ 6,823         $35,139
                      =======         =======
</TABLE>
<PAGE>

E.       Indebtedness

Lynch  Systems,  Inc.  and M-tron  Industries,  Inc.  maintain  their own credit
facilities that are not guaranteed by the parent company.

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 Company. Long term debt at:

<TABLE>
<CAPTION>
                                                         September 30,   December 31,
                                                             2001            2000
                                                         ------------    ------------

Spinnaker Industries, Inc. 10.75% Senior Secured
<S>                                                          <C>         <C>
   Note due 2006 .........................................   $    --     $ 51,135

Spinnaker Industries, Inc. 14% Subordinated Note
   With PIK interest and principal due on January 31, 2003        --        9,172

Other ....................................................      1,046       2,419
                                                             --------    --------
                                                                1,046      62,726
Current Maturities .......................................       (274)     (1,376)
                                                             --------    --------
                                                             $    772    $ 61,350
                                                             ========    ========
</TABLE>

F.     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.

G.   Segment Information

Prior to  September  30,  2001,  the Company was 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  changed   materially  at  September  30,  2001,  as  a  result  of  the
deconsolidation  of  Spinnaker  Industries  described  in  Section  B,  Basis of
Presentation.

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.


<PAGE>
<TABLE>
<CAPTION>
                                                Three Months Ended        Nine Months Ended
                                                   September 30,            September 30,
                                              ----------------------    -----------------------
                                                 2001        2000            2001        2000
                                              ----------  ----------    -----------  ----------
  Revenues:
<S>                                           <C>          <C>          <C>          <C>
  Adhesive-backed label stock .............   $  21,403    $  35,756    $  90,163    $ 113,374
  Frequency control devices ...............       2,999       10,900       18,803       29,384
  Other Manufacturing .....................       7,580        9,536       21,917       18,916
                                              ---------    ---------    ---------    ---------
  Consolidated Total ......................      31,982       56,192      130,883      161,674
                                              ---------    ---------    ---------    ---------
EBITDA
  Adhesive-backed label stock .............        (977)         609       (4,755)       4,577
  Frequency control devices (a) ...........        (769)       1,391         (386)       3,885
  Deferred incentive compensation -
      Frequency control devices ...........        --           (420)        --           (420)
  Other manufacturing .....................         972        1,296        3,913        1,911
  Corporate manufacturing expenses ........        (308)        (313)      (1,065)      (1,454)
                                              ---------    ---------    ---------    ---------
  Total manufacturing .....................      (1,082)       2,563       (2,293)       8,499

  Corporate expenses ......................        (183)        (356)        (818)      (1,112)
  Restructuring charges - Spinnaker .......        (211)        --         (1,520)        (527)
                                              ---------    ---------    ---------    ---------
  Consolidated Total ......................      (1,476)   $   2,207       (4,631)       6,860
                                              ---------    ---------    ---------    ---------
Operating Profit (Loss)
  Adhesive-backed label stock .............      (1,778)        (734)      (7,860)         682
  Frequency control devices (a) ...........        (988)       1,214       (1,028)       3,373
  Deferred incentive compensation -
    frequency control devices .............        --           (420)        --           (420)
  Other manufacturing .....................         809        1,161        3,425        1,510
  Corporate manufacturing expenses ........        (308)        (282)      (1,065)      (1,389)
                                              ---------    ---------    ---------    ---------
   Total manufacturing ....................      (2,265)         939       (6,528)       3,756

  Unallocated corporate expenses ..........        (551)        (431)      (1,190)      (1,337)
  Asset impairment and Restructuring ......        (211)        --        (38,272)        (527)
      Charge - Spinnaker
  Gain on deconsolidation .................      27,406         --         27,406         --
                                              ---------    ---------    ---------    ---------
   Consolidated Total .....................      24,379          508      (18,584)       1,892
                                              ---------    ---------    ---------    ---------
Total Operating Profit (Loss) of reportable
   segments................................      24,379          508      (18,584)       1,892

Other profit or loss
   Investment income ......................          83          335          400        1,296
   Interest expense .......................      (2,353)      (2,471)      (7,590)      (8,412)
                                              ---------    ---------    ---------    ---------
Loss from continuing operations
   Before income taxes, minority
   Interest and extraordinary items .......   $  22,109    $  (1,628)   $ (25,774)   $  (5,224)
                                              =========    =========    =========    =========
</TABLE>


<TABLE>
<CAPTION>
Total Assets                                  September 30, 2001           December 31, 2000
                                            ----------------------       ------------------------
<S>                                                 <C>                        <C>
Adhesive-backed label stock                         $   --                     $116,746
Frequency control devices .............              9,461                       18,210
Other manufacturing ...................             16,140                       20,193
General Corporate .....................              1,992                        7,671
                                                  --------                     --------
Consolidated Total ....................           $ 27,593                     $162,820
                                                  ========                     ========
</TABLE>


<PAGE>



Note:  a)  Includes one-time write-offs and reversals, as follows:
<TABLE>
<CAPTION>
                                              Three Months Ended           Nine Months ended
                                              September 30, 2001           September 30, 2001
                                              ------------------           ------------------
Write-off of Deferred Rights
<S>                                                   <C>                        <C>
   Offering Expense .....................              --                        $ 300
Reversal of Bonus Accrual ...............              --                         (367)
Severance Expenses ......................              --                           47
Inventory Write-Down ....................              --                          375
                                                     -----                       -----
   Total Cost ...............................          --                        $ 355
                                                     =====                       =====
</TABLE>


H.       Asset Impairment and Restructuring Charges

<TABLE>
<CAPTION>
                                              Three Months Ended          Nine Months Ended
                                              September 30, 2001          September 30, 2001
                                              ------------------          ------------------

Restructuring charges and asset impairment:
<S>                                              <C>                          <C>
    Severance ..........................         $   211                      $ 1,520
    Asset impairment ...................              --                       36,752
                                                 -------                      -------

Total asset impairment and restructuring         $   211                      $38,272
                                                 =======                      =======

Inventory write-down ...................             --                       $ 3,482
                                                 -------                      -------
   Total Cost ..........................         $   211                      $41,754
                                                 =======                      =======
</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.

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 manufactures  specialty-coated products. In connection with
the  closing,  Spinnaker  has  recorded  as  of  September  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 is related to the impairment of goodwill  associated
with the acquisition of Coating - Maine in 1998. In conjunction with the closing
and included in  restructuring  charges,  Spinnaker  has incurred  severance and
related  costs  totaling  $1.5 million for the nine months ended  September  30,
2001.
<PAGE>

I.       Equity Transactions

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.  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  outstanding  principal  amount and unpaid  interest on the
loans.

On August 17, 2001,  Ralph R. Papitto  replaced Mario J. Gabelli as Chairman and
Chief Executive Officer of Lynch Corporation (the "Company") and Mr. Gabelli was
appointed Vice Chairman. In connection with Mr. Papitto's appointment, the Board
of Directors'  approved,  subject to shareholder  ratification,  the grant of an
option to Mr. Papitto to purchase up to 374,471  shares of the Company's  Common
Stock at an exercise price of $30 per share (subject to customary  anti-dilution
adjustments) (the "Option").

As of November 13, 2001, no options have been granted under this plan.

J.       Subsequent Events

On  November  13,  2001,   Spinnaker   announced  that  it  commenced  voluntary
proceedings  under  Chapter 11 of the U. S.  Bankruptcy  Code for the purpose of
facilitating  and  accelerating  the financial  restructuring  it previously was
pursuing. Spinnaker filed its petition in the United States Bankruptcy Court for
the  Southern  District of Ohio,  Western  Division,  in Dayton.  The Chapter 11
filing includes Spinnaker Coating, Inc. and certain other affiliates.

Spinnaker also announced that it reached  agreement,  subject to Court approval,
with its existing  lenders to provide up to $30 million in debtor-in  possession
(DIP)  financing.  This funding will allow  Spinnaker to continue  operating its
Spinnaker  Coating and other  business  units in their  ordinary  and  customary
manner.

As a result of Lynch's previously discussed deconsolidation of Spinnaker,  these
events are not expected to affect the Company's financial statements.

On October 15, 2001, the Lynch Corporation Board of Directors elected Richard E.
McGrail and Raymond H. Keller to the  Registrant's  Board.  Mr.  McGrail and Mr.
Keller were also named  respectively to the positions of Chief Operating Officer
and Chief Financial Officer.

<PAGE>

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


Sales and Revenues/Gross Margin

Revenues for the third quarter of 2001  decreased by $24.2 million or 43.1%,  to
$32.0  million,  from the third  quarter  of 2000.  Reflecting  decreased  order
in-flow,  revenues  for the nine  months  ended  September  30, 2001 were $130.9
million, $30.8 million or 19.0% below the comparable prior year period.

Spinnaker's  net sales for the  quarter  ended  September  30,  2001 were  $22.6
million,  compared  to $37.3  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 shutdown
of Spinnaker's facility in Maine.

Spinnaker's  gross  margin as a  percentage  of net sales for the quarter  ended
September 30, 2001 was down 4.2% 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,  excess capacity in the
industry, and overall sluggish economic conditions.

Spinnaker's  net sales for the nine months ended  September  30, 2001 were $93.4
million,  compared  to $117.6  million in the  corresponding  2000  period.  The
decrease in net sales for 2001 is mainly  attributable  to lower selling  prices
due to excess  capacity and  depressed  demand  caused by the  weakened  general
economy.

On a comparable basis,  Spinnaker's gross margin as a percentage of revenues for
the nine  months  ended  September  30,  2001 was down 5.6% from the first  nine
months  of 2000.  Contributing  to the  decline  in gross  margin,  were  higher
material costs along with continued  selling price erosion and volume  declines.
Consistent  with recent  trends in the  industry,  over  capacity  and  sluggish
economic  conditions  have  impaired  Spinnaker's  operating  performance.  Also
contributing  to the nine  months 2001  decrease in gross  margin was a one-time
write-down  to inventory of  approximately  $3.5 million  recorded in the second
quarter.

Revenues at M-tron  decreased  by $7.9  million or 72.5% to $3.0 million for the
third  quarter  of  2001  due  to the  continuation  of  weak  demand  from  the
infrastructure segment of the telecommunications industry which is still working
through the overcapacity  caused by the Internet bubble.  M-tron's  revenues for
the first nine months of 2001 decreased  $10.6 million or 36.0% to $18.8 million
due to the same factors.

Lynch  Systems'  revenues for the third quarter of 2001 declined by $1.6 million
from the  corresponding  2000  period to $6.4  million  due  mainly to  customer
delivery  schedules for glass press  machines.  However,  order backlog of $17.8
million at September 30, 2001 remains  strong and was  comparable to the backlog
last  September.  Lynch  Systems  revenues  for the  first  nine  months of 2001
increased  $4.0  million or 27.4% from the  corresponding  2000  period to $18.6
million reflecting increased orders and sales of glass press machines.
<PAGE>

M-tron's  gross margin as a percentage of net sales for the three and nine month
periods of 2001 were down 25.2% and 13.0%  respectively from the same periods of
2000. The previously  described  sales decline of 72.5% in the quarter and 36.0%
year-to-date caused the significant reduction in gross margin.

Lynch  Systems  gross margin as a percentage of net sales for the three and nine
month periods of 2001 were up 2.2% and 5.2%  respectively  from the same periods
of 2000.  The  year-to-date  sales  increase of 27.1% and better  absorption  of
manufacturing overhead were the primary reasons for the margin improvements.

Operating Profit (Loss)

Operating  profit for the third quarter 2001 was $24.4  million  compared to the
third quarter 2000 operating profit of $0.5 million or a positive swing of $23.9
million.  For the first nine  months of 2001  operating  loss was $18.6  million
compared to the  corresponding  2000 period's  operating profit of $1.9 million.
The quarter and  year-to-date  operating  profit  includes a $27.4  million gain
recorded  in the  deconsolidation  of  Spinnaker  (see  Note B to the  condensed
consolidated financial statements).

On September 30, 2001,  the Company's  ownership  interest and voting control of
Spinnaker  Industries,   Inc.  (Spinnaker)  was  reduced  to  41.8%  and  49.5%,
respectively,  due to the  disposition  of  shares  of  Spinnaker.  As a result,
effective September 30, 2001, the Company has deconsolidated  Spinnaker and will
prospectively  account for its ownership of Spinnaker using the equity method of
Accounting.

Accordingly,  the Company's results of operations  include the operating results
of  Spinnaker  through  September  30,  2001  (date  of  deconsolidation).  This
deconsolidation  resulted in a non-cash gain of  $27,406,000  being  recorded on
September 30, 2001 to reduce the Company's  negative  investment in Spinnaker to
$19,420,000,  which represents the Company's interest in Spinnaker's accumulated
deficit  at the date of  deconsolidation.  This  remaining  interest  represents
losses in excess of investment,  which has been recorded as a deferred credit on
the Company's balance sheet until such time as Spinnaker achieves  profitability
or the Company disposes of its remaining  interests in Spinnaker.  Note that the
Company will not record any additional  losses from Spinnaker as the Company has
no further obligations to Spinnaker.

Spinnaker's  loss from  operations for the three months ended September 30, 2001
was $2.0 million  excluding an impairment  charge of approximately  $0.2 million
associated with the closing of the Coating - Maine facility as compared to a $.9
million loss from operations in the third quarter of 2000.

Spinnaker's   loss  from   continuing   operations   excluding   impairment  and
restructuring  charges  for  the  nine  months  ended  September  30,  2001  was
approximately $5.5 million,  compared to a $.5 million loss in the corresponding
2000 period.  Spinnaker's operating results reflect lower operating margins that
were partially offset by reductions in selling and administrative costs that are
primarily the result of the restructuring initiated late last year.

Spinnaker also  recognized  charges of $41.7 million in the first nine months 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)
<PAGE>

<TABLE>
<CAPTION>
                                       Nine Months ended
                                       September 30, 2001
                                       ------------------
Restructuring charges:
<S>                                        <C>
  Severance ............................   $ 1,520
  Asset impairment .....................    36,752

Total restructuring and
    asset impairment....................    38,272
Inventory write-down ...................     3,482
                                           -------
TOTAL COST  ........................       $41,754
                                           =======
</TABLE>

For the 2001 third quarter M-tron had an operating loss of $1.0 million compared
to an  operating  profit of $1.2  million  in the third  quarter  of 2000 due to
dramatically  decreased sales volumes mentioned above. For the first nine months
of 2001,  M-tron's  operating  loss was $1.0  million  compared to an  operating
profit for the  corresponding  2000 period of $3.4 million due mainly to the 36%
reduction in revenue factors  mentioned above.  Included in M-tron's results for
the nine month period of 2001 are the following one-time costs:
<TABLE>
<CAPTION>

                                                    Nine Months Ended
                                                    September 30, 2001
                                                    ------------------

<S>                                                      <C>
Write-off of deferred rights offering expenses....       $ 300
Reversal of bonus accrual ........................        (367)
Severance expenses ...............................          47
Inventory write-down .............................         375
                                                         -----
     Total                                               $ 355
                                                         =====
</TABLE>

For the 2001  third  quarter,  Lynch  Systems  had an  operating  profit of $0.8
million  compared to an operating profit of $1.0 million in the third quarter of
2000.  For the first nine month  period of 2001 Lynch  Systems had an  operating
profit of $3.4 million  compared to an  operating  profit of $1.3 million in the
comparable  period in 2000. The significant $2.1 million nine month  improvement
at Lynch  Systems is due to primarily the increased  sales  mentioned  above and
better absorption of overhead.

Other Income (Expense), Net

Investment  income  decreased for the three and nine months ended  September 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 investments
during the earlier 2000 periods, and lower market rates on invested funds.

Interest  expense  was  $2.4  million  for the  third  quarter  2001  which  was
comparable to the corresponding period in 2000. Nine-month 2001 interest expense
of $7.6 million  represented  a $0.8 million  reduction  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 and lower cost of funds.

Tax Benefit (Provision)

The income tax benefit  (provision)  includes federal,  as well as state, local,
and foreign taxes. The quarter and nine month 2001 net tax benefit is the result
of operating losses.


<PAGE>

Minority Interest

Minority  interests of $4.0 million  contribution to nine months 2001 net income
is the result of the absorption of Spinnaker losses in the first quarter of 2001
by  minority  interests  to the extent of their  investment.  This  benefit  was
reduced to a small extent by profits at a 75% owned foreign  subsidiary of Lynch
Systems.

Net Income (Loss)

Net income for the third quarter 2001 was $23.1 million compared to a net income
of $0.2  million  in the year  earlier.  The  $22.9  million  positive  swing is
primarily due to a $27.4 gain on  deconsolidation  that was reduced by operating
losses at M-tron and Spinnaker.  Fully diluted third quarter  earnings per share
were $15.36  compared to $0.15 per share in third quarter 2000. Net loss for the
nine months ended  September 30, 2001 was $21.7 million,  or $(14.36) per share,
as opposed to net income of $1.8 million, or $1.24 per share last year-to-date.

Backlog/New Orders

Total backlog of manufactured products of consolidated subsidiaries at September
30, 2001 was $19.9  million,  a reduction  of $6.0  million  from the backlog at
December  31, 2000,  but an  improvement  of $1.8  million  since June 30, 2001.
Decreased  purchases  by  infrastructure  suppliers  to  the  telecommunications
industry  caused a  significant  reduction of M-tron's  backlog at September 30,
2001. Lynch Systems' backlog increased by $4.3 million from December 31, 2000 to
September 30, 2001.

Financial  Condition - Excluding Spinnaker

On September 30, 2001, the Company's  ownership and voting interest of Spinnaker
Industries,  Inc.  was  reduced  to 41.8% and  49.5%,  respectively,  due to the
disposition of shares of Spinnaker.  As a result,  effective September 30, 2001,
the Company relinquished  control of Spinnaker and has deconsolidated  Spinnaker
and will  prospectively  account for its ownership of Spinnaker using the equity
method of accounting. (See Note B - "Basis of Presentation".)


<PAGE>

Liquidity/Capital Resources

As of September 30, 2001, the consolidated companies had current assets of $21.2
million and current liabilities of $11.8 million.  Working capital was therefore
$9.4 million and the ratio of current assets to current  liabilities was 1.80 to
1.00, in comparison to 1.34 to 1.00 at December 31, 2000.

First  nine  months  capital  expenditures  were $0.6  million  in 2001 and $1.6
million in full year 2000. The Company plans to spend approximately $0.8 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 September 30, 2001, total debt was $3.2 million, which was $2.4 million less
than the $5.6 million at the end of 2000. The reduction is primarily due to
principal repayments.

The Company does not at present  have credit  facilities  at the parent  company
level and there is presently no parent  guaranteed  debt.  The Company  believes
that existing cash and cash  equivalents,  cash  generated  from  operations and
available  borrowings under its subsidiaries  lines of credit will be sufficient
to meet its on-going  working capital and capital  expenditure  requirements for
the foreseeable 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

On  November  13,  2001,   Spinnaker   announced  that  it  commenced  voluntary
proceedings  under  Chapter 11 of the U. S.  Bankruptcy  Code for the purpose of
facilitating  and  accelerating  the financial  restructuring  it previously was
pursuing. Spinnaker filed its petition in the United States Bankruptcy Court for
the  Southern  District of Ohio,  Western  Division,  in Dayton.  The Chapter 11
filing includes Spinnaker Coating, Inc. and certain other affiliates.

Spinnaker also announced that it reached  agreement,  subject to Court approval,
with its existing  lenders to provide up to $30 million in debtor-in  possession
(DIP)  financing.  This funding will allow  Spinnaker to continue  operating its
Spinnaker  Coating and other  business  units in their  ordinary  and  customary
manner.

As a result of Lynch's previously discussed deconsolidation of Spinnaker,  these
events are not expected to affect the Company's financial statements.

On October 15, 2001, the Lynch Corporation Board of Directors elected Richard E.
McGrail and Raymond H. Keller to the  Registrant's  Board.  Mr.  McGrail and Mr.
Keller were also named  respectively to the positions of Chief Operating Officer
and Chief Financial Officer.

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  $6.2  million at  September  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.


<PAGE>

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 6.           Exhibits and Reports on Form 8-K


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

                    A report  on Form 8-K was filed  during  the  quarter  ended
                    September  30, 2001.  The report that was filed on August 24
                    described the following events. No financial statements were
                    filed.

                    On August  17,  2001,  Ralph R.  Papitto  replaced  Mario J.
                    Gabelli as  Chairman  and Chief  Executive  Officer of Lynch
                    Corporation  (the  "Company")  and Mr. Gabelli was appointed
                    Vice Chairman. In connection with Mr. Papitto's appointment,
                    the Board of  Directors'  approved,  subject to  shareholder
                    ratification,  the  grant of an  option  to Mr.  Papitto  to
                    purchase up to 374,471 shares of the Company's  Common Stock
                    at an exercise  price of $30 per share (subject to customary
                    anti-dilution adjustments) (the "Option").

                    Also on August 17, 2001, Anthony T. Castor,  III, and Robert
                    E.  Dolan  resigned  as  directors.   There  are  now  three
                    vacancies on the Board (Louis A. Guzzetti,  Jr., resigned on
                    July 31) and it is contemplated that three new directors who
                    are acceptable to Mr.  Papitto and the remaining  Board will
                    fill such vacancies. (See Note J - Item 1 - of the condensed
                    consolidated financial statements.)



                                   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/Raymont H. Keller
                                                    -----------------
                                                       Raymond H. Keller
                                                       Chief Financial Officer
 November 14, 2001