LGL Group (LGL) risk factors, FY2025 10-K

Risks Related to Our Structure

1. 01We have engaged, and in the future may engage, in transactions with our affiliates
2. 02We are subject to the risk of becoming an investment company under the Investment Company Act
3. 03We may structure transactions in a less advantageous manner to avoid becoming subject to the Investment Company Act

Risks Relating to Liquidity and Capital Requirements

1. 04We are a holding company and depend on the businesses of our subsidiaries to satisfy our obligations
2. 05We have made significant investments and negative performance of those investments may result in a significant decline in the value and could impact our cash flows27% rewritten

Risks Relating to Our Merchant Investment Business

1. 06The Company has made and may make material investments in special purpose vehicles that may not be successful
2. 07Our investments may be subject to significant uncertainties
3. 08The historical financial information for our Merchant Investment business is not necessarily indicative of our future performance
4. 09The Merchant Investment business ’ s investment strategy involves numerous and significant risks, including the risk that we may lose some or all of our investments in the Merchant Investment business. This risk may be magnified due to concentration of investments and investments in undervalued securities
5. 10We may not be able to identify suitable investments, and our investments may not result in favorable returns or may result in losses56% rewritten
6. 11The Merchant Investment business may make investments in companies we do not control99% rewritten
7. 12The use of leverage in investments by the Merchant Investment business may pose a significant degree of risk and may enhance the possibility of significant loss in the value of the investments in the Merchant Investment business
8. 13The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Reform Act"), enacted into law in July 2010, resulted in regulations affecting almost every part of the financial services industry
9. 14The ability to hedge investments successfully is subject to numerous risks
10. 15The Merchant Investment business may invest in distressed securities, as well as bank loans, asset backed securities and mortgage- backed securities
11. 16The Merchant Investment business may invest in companies that are based outside of the United States, which may expose the Merchant Investment business to additional risks not typically associated with investing in companies that are based in the United States
12. 17Generally, there are few limitations set forth in the governing documents of the Merchant Investment business on the execution of its investment activities, which are subject to the sole discretion of our management and the Related Party Committee of the Board of Directors

Risks Related to Our Business and Industry

1. 18Macroeconomic fluctuations may harm our business, results of operations and stock price49% rewritten
2. 19Changes in United States trade policies, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition, and results of operations71% rewritten
3. 20Inflation and changing interest rates may adversely affect our financial condition and results of operations65% rewritten
4. 21As a result of the Separation of MtronPTI on October 7, 2022, we are engaged only in the design, manufacture and marketing of our electronic instruments product line that includes highly engineered products for the generation of time and frequency references for synchronization and control
5. 22Our financial results vary significantly from period to period65% rewritten
6. 23Our order backlog may not be indicative of future revenues100% rewritten
7. 24Our future rate of growth and profitability are highly dependent on the development and growth of the communications, networking, aerospace, defense, instrumentation and industrial markets, which are cyclicalNew
8. 25The market share of our customers in the communications, networking, aerospace, defense, instrumentation and industrial markets may change over time, reducing the potential value of our relationships with our existing customer base100% rewritten
9. 26The loss or decrease in sales among one of our top customers, or a material change in the terms on which they are willing to buy from us, could have a substantial negative impact on our sales and operating results21% rewritten
10. 27We may make acquisitions that are not successful, or we may fail to integrate acquired businesses into our operations properly
11. 28Our possible inability to achieve the intended objectives of the transaction
12. 29If we are unable to introduce innovative products, demand for our products may decrease
13. 30Our markets are highly competitive, and we may lose business to larger and better-financed competitors
14. 31Our success depends on our ability to retain key management and technical personnel and attracting, retaining, and training new technical personnel87% rewritten
15. 32We purchase certain key components and raw materials from single or limited sources and could lose sales if these sources fail to fulfill our needs for any reason90% rewritten
16. 33Our products are complex and may contain errors or design flaws, which could be costly to correct100% rewritten
17. 34Communications and network infrastructure equipment manufacturers increasingly rely upon contract manufacturers, thereby diminishing our ability to sell our products directly to those equipment manufacturers
18. 35Future changes in our environmental liability and compliance obligations may increase costs and decrease profitability61% rewritten
19. 36We rely on information technology systems to conduct our business, and disruption, failure or security breaches of these systems could adversely affect our business and results of operations100% rewritten
20. 37Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results

Risks Related to Our Securities

1. 38The price of our common stock has fluctuated considerably and is likely to remain volatile, in part due to the limited market for our common stock
2. 39Our officers, directors and 10% or greater stockholders control approximately 36.7% of the voting power represented by our outstanding shares of common stock as of March 16, 2026
3. 40As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze our results of operations and financial prospects

Risks Related to the Separation

1. 41We may be unable to achieve some or all of the expected benefits of the Separation, and the Separation may adversely affect our business
2. 42The Separation could result in substantial tax liability to us and our stockholders
3. 43The distribution of MtronPTI common stock may not qualify for tax-free treatment
4. 44As a result of the Separation, certain of our directors and officers may have actual or potential conflicts of interest because of their positions or relationships with MtronPTI