10-Q

UNITED STATES

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 March 31, 2014
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File No. 1-106

THE LGL GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	38-1799862
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
2525 Shader Rd., Orlando, Florida	32804
(Address of principal executive offices)	(Zip Code)
(407) 298-2000
(Registrant's telephone number, including area code)
(Former name, former address, and former fiscal year if changed since last report)

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at May 13, 2014
Common Stock, $0.01 par value	2,594,732

INDEX

THE LGL GROUP, INC.

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets:	1
	– As of March 31, 2014
	– As of December 31, 2013
	Condensed Consolidated Statements of Operations:	2
	– Three months ended March 31, 2014 and 2013
	Condensed Consolidated Statements of Comprehensive Loss:	3
	– Three months ended March 31, 2014 and 2013
	Condensed Consolidated Statement of Stockholders' Equity:	4
	–Three months ended March 31, 2014
	Condensed Consolidated Statements of Cash Flows:	5
	– Three months ended March 31, 2014 and 2013
	Notes to Condensed Consolidated Financial Statements:	6
Item 2.	Management's Discussion and Analysis of Financial Condition and
	Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information	19
Item 6.	Exhibits	20
SIGNATURES		21

PART I

FINANCIAL INFORMATION

Item 1.Financial Statements.

THE LGL GROUP, INC.CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(Dollars in Thousands)

ASSETS	March 31, 2014			December 31, 2013
Current Assets:
Cash and cash equivalents	$	6,097		$	7,183
Restricted cash (Note E)		1,500			1,500
Accounts receivable, less allowances of $62 and $42, respectively		3,771			3,237
Inventories, net (Note C)		4,379			4,629
Deferred income taxes, net (Note K)		—			—
Prepaid expenses and other current assets		309			405
Total Current Assets		16,056			16,954
Property, Plant and Equipment:
Land		633			633
Buildings and improvements		3,908			3,908
Machinery and equipment		16,111			15,980
Gross property, plant and equipment		20,652			20,521
Less: accumulated depreciation		(16,746	)		(16,535	)
Net property, plant, and equipment		3,906			3,986
Deferred income taxes, net (Note J)		—			—
Other assets, net		838			323
Total Assets	$	20,800		$	21,263
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank (Note E)	$	1,395		$	1,181
Accounts payable		2,254			1,978
Accrued compensation and commissions expense		795			992
Other accrued expenses		324			357
Total Current liabilities		4,768			4,508
Commitments and Contingencies (Note L)
Stockholders' Equity
Common stock, $0.01 par value - 10,000,000 shares authorized; 2,674,448 shares issued and 2,594,784 shares outstanding at March 31, 2014 and December 31, 2013		27			27
Additional paid-in capital		28,683			28,593
Accumulated deficit		(12,147	)		(11,338	)
Treasury stock: 79,664 shares held in treasury at cost at March 31, 2014 and December 31, 2013, respectively		(572	)		(572	)
Accumulated other comprehensive income		41			45
Total Stockholders' Equity		16,032			16,755
Total Liabilities and Stockholders' Equity	$	20,800		$	21,263

See Accompanying Notes to Condensed Consolidated Financial Statements.

1

 THE LGL GROUP, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)

	Three Months Ended March 31,
	2014			2013
REVENUES	$	6,131		$	7,398
Costs and Expenses:
Manufacturing cost of sales		4,535			4,996
Engineering, selling and administrative		2,410			2,680
OPERATING LOSS		(814	)		(278	)
Other Income (Expense):
Interest expense, net		(8	)		(19	)
Other income, net		13			1
Total Other Income (Expense)		5			(18	)
LOSS BEFORE INCOME TAXES		(809	)		(296	)
Income tax benefit		—			213
NET LOSS	$	(809	)	$	(83	)
Weighted average number of shares used in basic and diluted EPS calculation		2,594,784			2,598,144
BASIC AND DILUTED NET LOSS PER COMMON SHARE	$	(0.31	)	$	(0.03	)

See Accompanying Notes to Condensed Consolidated Financial Statements.

2

 THE LGL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - UNAUDITED

(Dollars in Thousands)

	Three Months Ended March 31,
	2014			2013
NET LOSS	$	(809	)	$	(83	)
Other Comprehensive (Loss) Income:
Unrealized (loss) gain on available-for-sale securities, net of income taxes		(4	)		6
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME		(4	)		6
COMPREHENSIVE LOSS	$	(813	)	$	(77	)

See Accompanying Notes to Condensed Consolidated Financial Statements.

3

THE LGL GROUP, INC. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - UNAUDITED

(Dollars in Thousands)

	Shares of Common Stock Outstanding		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Treasury Stock			Accumulated Other Comprehensive Income			Total
Balance at December 31, 2013		2,594,784	$	27	$	28,593	$	(11,338	)	$	(572	)	$	45		$	16,755
Net loss		—		—		—		(809	)		—			—			(809	)
Other comprehensive loss		—		—		—		—			—			(4	)		(4	)
Stock-based compensation		—		—		90		—			—			—			90
Balance at March 31, 2014		2,594,784	$	27	$	28,683	$	(12,147	)	$	(572	)	$	41		$	16,032

See Accompanying Notes to Condensed Consolidated Financial Statements.

4

 THE LGL GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED

(Dollars in Thousands)

	Three Months Ended March 31,
	2014			2013
OPERATING ACTIVITIES
Net loss	$	(809	)	$	(83	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		211			217
Amortization of finite-lived intangible assets		24			23
Write-down of note receivable		—			5
Stock-based compensation		90			110
Deferred income tax benefit		—			(213	)
Changes in operating assets and liabilities:
Increase in accounts receivable, net		(534	)		(129	)
Decrease (increase) in inventories, net		342			(111	)
Decrease in other assets		90			210
Increase (decrease) in trade accounts payable, accrued compensation and commissions expense and other accrued liabilities		46			(765	)
Net cash used in operating activities		(540	)		(736	)
INVESTING ACTIVITIES
Capital expenditures		(12	)		(140	)
Asset acquisition		(748	)		—
Net cash used in investing activities		(760	)		(140	)
FINANCING ACTIVITIES
Net borrowing on note payable to bank		214			133
Principal payments of long-term debt		—			(58	)
Net cash provided by financing activities		214			75
Decrease in cash and cash equivalents		(1,086	)		(801	)
Cash and cash equivalents at beginning of period		7,183			8,625
Cash and cash equivalents at end of period	$	6,097		$	7,824
Supplemental Disclosure:
Cash paid for interest	$	10		$	11
Cash paid for income taxes	$	7		$	—

See Accompanying Notes to Condensed Consolidated Financial Statements.

5

THE LGL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A.Subsidiaries of the Registrant

The LGL Group, Inc. (the "Company"), incorporated in 1928 under the laws of the State of Indiana and reincorporated under the laws of the State of Delaware in 2007, is a holding company with subsidiaries engaged in the manufacturing and marketing of highly-engineered electronic components used to control the frequency or timing of signals in electronic circuits.

 As of March 31, 2014, the subsidiaries of the Company are as follows:

	Owned By The LGL Group, Inc.
M-tron Industries, Inc.	100.0%
M-tron Industries, Ltd.	99.9%
Piezo Technology, Inc.	100.0%
Piezo Technology India Private Ltd.	99.0%
Lynch Systems, Inc.	100.0%

The Company operates through its principal subsidiary, M-tron Industries, Inc., which includes the operations of M-tron Industries, Ltd. ("Mtron") and Piezo Technology, Inc. ("PTI"). The combined operations of Mtron and PTI and their subsidiaries are referred to herein as "MtronPTI."  MtronPTI has operations in Orlando, Florida, Yankton, South Dakota, Yantai, China and Noida, India.  MtronPTI also has sales offices in Sacramento, California, Eindhoven, The Netherlands, Hong Kong and Shanghai, China.

During 2007, the Company sold the operating assets of Lynch Systems, Inc., a subsidiary of the Company, to an unrelated party.

On January 31, 2014, MtronPTI completed the acquisition of certain filter product line assets from Trilithic, Inc. ("Trilithic") for net cash consideration of $700,000, excluding acquisition costs. The acquired assets were comprised of intellectual property for Trilithic's fixed and tunable frequency filter products used in cellular, military and other wireless applications, as well as some equipment.  See Note D – Intangible Assets.  This investment is expected to further strengthen and differentiate MtronPTI's high reliability RF & microwave portfolio, providing increased service to clients in the Internet Communications Technology, or ICT, and Aerospace and Defense, or Aero/Defense, market segments.

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 of America 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 accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2014.

This interim information should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2013.

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C.Inventories

Inventories are stated at the lower of actual cost (determined using the first-in, first-out method), or market (estimated realizable value), with adjustment being recorded in the reserve for obsolescence, which was $2,699,000 and $2,586,000 as of March 31, 2014 and December 31, 2013, respectively.

Inventories are comprised of the following:

	March 31, 2014		December 31, 2013
	(in thousands)
Raw materials	$	1,872	$	1,834
Work in process		1,465		1,490
Finished goods		1,042		1,305
Total Inventories, net	$	4,379	$	4,629

D.Intangible Assets

As part of MtronPTI's acquisition of certain filter product line assets from Trilithic, MtronPTI acquired $538,000 of intellectual property. These intangible assets are included in "other assets" and are recorded at cost less accumulated amortization.  Amortization is computed for financial reporting purposes using the straight-line method over an estimated useful life of 10 years. The net carrying value of these intangible assets is $529,000 as of March 31, 2014.

The estimated aggregate amortization expense for each of the five succeeding years and thereafter is as follows (in thousands):

2014	$	40
2015		54
2016		54
2017		54
2018		54
Thereafter		273
Total	$	529

E.Note Payable to Bank

	March 31, 2014		December 31, 2013
Note Payable:	(in thousands)
MtronPTI revolving loan with JPMorgan Chase Bank, N.A. ("Chase") due September 30, 2014. The loan bears interest at the greater of Chase's prime rate or the one-month LIBOR rate plus 2.50% per annum (3.25% at March 31, 2014), which is due and payable monthly.	$	1,395	$	1,181

On June 30, 2011, MtronPTI entered into a loan agreement with Chase, which was amended on June 28, 2012, September 28, 2012, June 30, 2013 and September 19, 2013 (the "Chase Loan Agreement"). The Chase Loan Agreement provides for a revolving line of credit in the amount of $1,500,000, to be used solely for working capital needs (the "Chase Revolving Loan") and matures on September 30, 2014. The Chase Loan Agreement also provides that it may be extended for up to three 12-month renewal terms starting on June 30, 2014, upon written request by MtronPTI and approval by Chase. On May 5, 2014, Chase approved the extension of the maturity date under the Chase Loan Agreement from June 30, 2014 to September 30, 2014. The total borrowing capacity on the Chase Loan Agreement is subject to certain limitations on the borrowing base as defined in the Chase Loan Agreement.

7

At March 31, 2014, MtronPTI had approximately $1,395,000 outstanding under the Chase Revolving Loan and available borrowing capacity of approximately $105,000.

All outstanding obligations of MtronPTI under the Chase Loan Agreement are collateralized by a first priority security interest in all of the assets of MtronPTI, excluding real property. Additionally, in connection with the Chase Loan Agreement, PTI entered into a separate agreement with Chase providing that PTI would not mortgage or otherwise encumber certain real property it owns in Florida while any credit facility is outstanding under the Chase Loan Agreement.

As additional security for MtronPTI's obligations under the Chase Loan Agreement, MtronPTI's obligations under the Chase Loan Agreement are fully collateralized in cash.  Accordingly, Chase retains a security interest in a separate account holding $1,500,000 of MtronPTI cash deposits pursuant to an Assignment of Deposit agreement.  The amount of the cash collateral deposit with Chase is recorded as restricted cash in the accompanying condensed consolidated balance sheets as of March 31, 2014 and December 31, 2013.  The related Assignment of Deposit agreement restricts MtronPTI's ability to withdraw any portion of the deposit and does not allow MtronPTI to assign the deposit or any part thereof.

The Chase Loan Agreement also contains a variety of affirmative and negative covenants, including, but not limited to, a financial covenant that MtronPTI maintain tangible net worth not less than $6,000,000. As of March 31, 2014, MtronPTI was not in compliance with the tangible net worth covenant under the Chase Loan Agreement. Based on the definition of tangible net worth under the Chase Loan Agreement, MtronPTI had a tangible net worth of $3,992,000 as of March 31, 2014, as compared to the minimum requirement of $6,000,000. Chase has waived non-compliance with this covenant as of March 31, 2014, in accordance with the terms of a letter agreement dated May 5, 2014.

F.Stock-Based Compensation

The Company estimates the fair value of stock options on the grant date using the Black-Scholes-Merton option-pricing model. The Black-Scholes-Merton option-pricing model requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. There is no expected dividend rate. Historical Company information was the basis for the expected volatility assumption. The fair value of grants was calculated using historical volatility as the Company believes that the historical volatility over the life of the option is indicative of expected volatility in the future. The risk-free interest rate is based on the U.S. Treasury zero-coupon rates with a remaining term equal to the expected term of the option. Accounting Standards Codification ("ASC") 718, Stock Compensation, also requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based upon past history of actual performance, forfeiture rates ranging from zero percent to five percent have been assumed for options granted.

On March 13, 2014, the Board of Directors granted a total of 24,576 options to purchase shares of the Company's common stock to members of executive management. These stock options have an exercise price of $5.82, a five-year life expiring on March 13, 2019, and vest as follows: 30% on the first anniversary of the grant date; an additional 30% on the second anniversary of the grant date; and the remaining 40% on the third anniversary of the grant date. These stock options have a grant date fair value of $1.88 per option.  This grant price, combined with the vesting period, reflects the objective to align management incentives with long-term value creation.

Restricted stock awards are granted at a value equal to the market price of our common stock on the date of the grant. There were no restricted stock awards granted during the three months ended March 31, 2014.

Compensation expense related to share-based compensation is recognized over the applicable vesting periods. As of March 31, 2014, there was approximately $223,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements.

G.Earnings (Loss) Per Share

The Company computes earnings (loss) per share in accordance with ASC 260, Earnings Per Share ("ASC 260").  Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period.  Diluted earnings (loss) per share adjusts basic earnings (loss) per share for the effects of stock options, non-participating restricted common stock, and other potentially dilutive financial instruments, only in the periods in which the effects are dilutive.  Shares of restricted stock granted to members of the Board of Directors as a portion of their director fees are deemed to be participating as defined by ASC 260 and therefore are included in the computation of basic earnings (loss) per share.

8

For the three months ended March 31, 2014 and 2013, there were options to purchase 200,559 shares and 192,401 shares of common stock, respectively, that were excluded from the diluted earnings (loss) per share computation because the impact of the assumed exercise of such stock options would have been anti-dilutive, due to the net loss incurred and based on the fact that the exercise price of the options exceeded the market price of the common stock as of March 31, 2014 and 2013, respectively.

H.Warrant Dividend

On August 6, 2013, the Company distributed warrants to purchase shares of the Company's common stock as a dividend to holders of the Company's common stock on July 29, 2013, the record date for the dividend. Stockholders received five warrants for each share of the Company's common stock owned on the record date.  When exercisable, 25 warrants will entitle their holder to purchase one share of the Company's common stock at an exercise price of $7.50 per share (subject to adjustment).

The warrants are "European style warrants" and will only become exercisable on the earlier of (i) their expiration date, August 6, 2018, and (ii) such date that the 30-day volume weighted average price per share, or VWAP, of the Company's common stock is greater than or equal to $15.00 (subject to adjustment). Once the warrants become exercisable, they may be exercised in accordance with the terms of the warrant agreement between the Company and the warrant agent until their expiration at 5:00 p.m., Eastern Time, on the expiration date.

The warrants are traded separately from the Company's common stock on the NYSE MKT under the symbol "LGL WS".

I.Fair Value Measurements

The Company measures financial and non-financial assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures.  These measurements involve various valuation techniques and assume that the transactions would occur between market participants in the most advantageous market for the Company.  The following is a summary of valuation techniques utilized by the Company for its significant financial and non-financial assets and liabilities as of March 31, 2014 and December 31, 2013:

Assets

To estimate the fair value of its equity and U.S. Treasury securities, the Company obtains current market pricing from quoted market sources or uses pricing for identical securities. Assets measured at fair value on a recurring basis are summarized below.

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total March 31, 2014
Equity securities	$	57	$	—	$	—	$	57
U.S. Treasury securities (cash equivalents)	$	4,739	$	—	$	—	$	4,739

9

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total December 31, 2013
Equity securities	$	61	$	—	$	—	$	61
U.S. Treasury securities (cash equivalents)	$	5,589	$	—	$	—	$	5,589

The Company also has assets that may be subject to measurement at fair value on a non-recurring basis, including goodwill and intangible assets, and other long-lived assets. The Company reviews the carrying value of these assets whenever events and circumstances indicate that the carrying amounts of the assets may not be recoverable. If it is determined that the assets are impaired, the carrying value would be reduced to estimated fair value.

J.Foreign Revenues

For the three months ended March 31, 2014 and 2013, significant foreign revenues from operations (10% or more of foreign sales) were as follows:

	Three Months Ended March 31,
	2014		2013
	(in thousands)
Significant Foreign Revenues:
China	$	851	$	874
Malaysia		798		1,314
Thailand		181		373
Hong Kong		59		531
All other foreign countries		728		521
Total foreign revenues	$	2,617	$	3,613

The Company allocates its foreign revenue based on the customer's ship-to location.

K.Income Taxes

The Company had total federal and state net operating loss carry-forwards ("NOLs") of $7,607,000 and $14,559,000, respectively, as of December 31, 2013.  These NOLs expire through 2033 if not utilized prior to their expiration. The Company had research and development credit carry-forwards of approximately $1,178,000 at December 31, 2013 that can be used to reduce future income tax liabilities and expire principally between 2020 and 2033.  In addition, the Company has foreign tax credit carry-forwards of approximately $359,000 at December 31, 2013 that are available to reduce future U.S. income tax liabilities subject to certain limitations.  These foreign tax credit carry-forwards expire at various times between 2018 and 2020.

The Company maintains a full valuation allowance against its deferred tax assets under the provisions of ASC 740, Income Taxes, based on the Company's assessment of the uncertainty surrounding the realization of the favorable U.S. tax benefits in future tax returns. When assessing the need for valuation allowances, the Company considers future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the ability to realize deferred tax assets in future years, the Company will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.

The Company recorded a net tax benefit of $0 and $213,000, respectively, for the three months ended March 31, 2014 and 2013.

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L.Commitments and Contingencies

In the normal course of business, the Company and its subsidiaries may become defendants in certain product liability, patent infringement, worker claims and other litigation.  The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. The Company is not involved in any legal proceedings other than routine litigation arising in the normal course of business, none of which the Company believes will have a material adverse effect on the Company's business, financial condition or results of operations.

M.Related Party Transactions

At March 31, 2014 and December 31, 2013, approximately $4,739,000 and $5,589,000, respectively, was invested in United States Treasury money market funds managed by a related entity (the "Fund Manager") which is related through two common directors.  One of the Company's directors, who is also a 10% stockholder, currently serves as a director and executive officer of the Fund Manager.  Another of the Company's directors serves as a director and audit committee member of the Fund Manager. The fund transactions in the three months ended March 31, 2014 and the year ended December 31, 2013 were directed solely at the discretion of Company management.

N.Restructuring Charges

On October 17, 2013, the Company's management initiated a restructuring plan to realign its customer support operations across all of the Company's locations and to reduce structural costs in an effort to gain efficiencies in providing customer support.

A reconciliation of the Company's restructuring liability, included as a component of other accrued expenses, is as follows:

	Employee Related		Other			Total
Ending balance, December 31, 2013		19,000		51,000			70,000
Less: Cash payments		—		(48,000	)		(48,000	)
Ending balance, March 31, 2014	$	19,000	$	3,000		$	22,000

O.Subsequent Events

On May 5, 2014, Chase approved the extension of the maturity date under the Chase Loan Agreement from June 30, 2014 to September 30, 2014.

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

Information included or incorporated by reference in this Quarterly Report on Form 10-Q may contain forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different than the future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may," "should," "expect," "anticipate," "estimate," "believe," "intend" or "project" or the negative of these words or other variations on these words or comparable terminology.

Examples of forward-looking statements include, but are not limited to, statements regarding efforts to grow revenue, expectations regarding fulfillment of backlog, future benefits to operating margins and the adequacy of cash resources.  Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2014.  In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Quarterly Report on Form 10-Q will in fact be accurate.  Further, we do not undertake any obligation to publicly update any forward-looking statements. As a result, you should not place undue reliance on these forward-looking statements.

Results of Operations

Three months ended March 31, 2014, compared to three months ended March 31, 2013

Consolidated Revenues and Gross Margin

Consolidated revenues decreased by $1,267,000, or 17.1%, to $6,131,000, for the quarter ended March 31, 2014, from $7,398,000 for the comparable period in 2013.  The decrease was primarily due to price compression and reduced demand from existing customers in the Internet Communications Technology ("ICT") market segment, and to a lesser degree, reduced demand from existing customers within the Aerospace and Defense ("Aero/Defense") market segment. 

On January 31, 2014, MtronPTI completed the acquisition of certain filter product line assets from Trilithic, Inc. ("Trilithic") for net cash consideration of $700,000.  The acquired assets include intellectual property and equipment for Trilithic's fixed and tunable frequency filter products used in cellular, military and other wireless applications.  This investment is expected to further strengthen and differentiate MtronPTI's high reliability RF & microwave portfolio, providing increased service to clients in the ICT and Aero/Defense market segments.

As of March 31, 2014, the Company's order backlog was $9,128,000, which was an increase of 6.1% compared to the backlog as of December 31, 2013, which was $8,601,000, and an increase of 9.2% compared to the backlog as of March 31, 2013, which was $8,357,000.  The increase in backlog is due to an increase in repeat orders for existing products, as well as new orders resulting from our recent acquisition of certain filter product line assets from Trilithic on January 31, 2014.

The backlog of unfilled orders includes amounts based on signed contracts as well as other agreements we have determined are legally binding and likely to proceed. Although the order backlog represents only firm orders that are considered likely to be fulfilled within 12 months, cancellations or scope adjustments may and do occur. The order backlog is adjusted quarterly to reflect project cancellations, deferrals, revised project scope and cost, and sales of subsidiaries, if any.  The Company expects to fill substantially its entire current order backlog within the next twelve months, but cannot provide assurance as to the portion of the order backlog to be fulfilled in a given period.

Consolidated gross margin, which is consolidated revenues less manufacturing cost of sales, as a percentage of revenues decreased to 26.0% from 32.5% for the three-month period ended March 31, 2014, compared to the same prior year period. The decrease was primarily due to a 17.1% decrease in revenues as well as a less favorable product mix compared to the same prior year period. The Company is focusing research and development efforts toward serving additional segments of the timing and frequency control markets, while augmenting sales efforts to gain market share in wireless infrastructure, aerospace, energy exploration, homeland security, military communications and personnel protection.

12

Operating Loss

Operating loss of ($814,000) for the three months ended March 31, 2014, increased by $536,000 compared to an operating loss of ($278,000) for the comparable period in 2013.  The increase in operating loss was due to a 17.1% decrease in revenues and a 6.5% decrease in gross margin, offset partially by a decrease in engineering, selling and administrative expenses of $270,000 as a result of the restructuring plan executed in the fourth quarter of 2013 to realign customer support operations across all of our locations in an effort to gain efficiencies.

Stock-Based Compensation

Stock-based compensation expense was $90,000 and $110,000 for the three months ended March 31, 2014 and 2013, respectively. Compensation expense related to stock-based compensation is recognized over the applicable vesting periods. As of March 31, 2014, there was approximately $223,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements.

On March 13, 2014, the Board of Directors granted a total of 24,576 options to purchase shares of the Company's common stock to members of executive management. These stock options have an exercise price of $5.82, which reflects a 10% premium compared to the closing price on the date of grant, have a five-year life expiring on March 13, 2019, and vest as follows: 30% on the first anniversary of the grant date; an additional 30% on the second anniversary of the grant date; and the remaining 40% on the third anniversary of the grant date. These stock options have a grant date fair value of $1.88 per option. This grant price, combined with the vesting period, reflects the objective to align management incentives with long-term value creation.

Interest Expense, Net

Interest expense, net, was $8,000 for the three months ended March 31, 2014, which was a decrease of $11,000, from $19,000, for the three months ended March 31, 2013. The decrease was due to a reduction in the average outstanding balance on MtronPTI's credit facilities for the three months ended March 31, 2014, compared with the same prior year period.

Income Taxes

The Company recorded a net tax benefit of $0 and $213,000, respectively, for the three months ended March 31, 2014 and 2013.

The Company maintains a full valuation allowance against its deferred tax assets under the provisions of ASC 740, Income Taxes, based on the Company's assessment of the uncertainty surrounding the realization of the favorable U.S. tax benefits in future tax returns.  When assessing the need for valuation allowances, the Company considers future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the ability to realize deferred tax assets in future years, the Company will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.

Net Loss

Net loss for the three months ended March 31, 2014, was ($809,000) compared to a net loss of ($83,000) for the comparable period in 2013. The increased loss is primarily due to the 17.1% decrease in revenues and a 6.5% decrease in gross margin, partially offset by a decrease in engineering, selling and administrative expenses of $270,000 as a result of the restructuring plan executed in the fourth quarter of 2013 to realign customer support operations across all of our locations in an effort to gain efficiencies. Basic and diluted net loss per share for the three month periods ended March 31, 2014 and 2013, was ($0.31) and ($0.03), respectively.

13

Liquidity and Capital Resources

Cash and cash equivalents decreased by $1,086,000, from $7,183,000 at December 31, 2013 to $6,097,000 at March 31, 2014. At March 31, 2014, MtronPTI had approximately $1,395,000 outstanding, and available borrowing capacity of $105,000 under its revolving line of credit with JPMorgan Chase Bank, N.A. ("Chase").

Cash used in operating activities was ($540,000) for the three months ended March 31, 2014, compared to ($736,000) for the same period in 2013. The decrease was due primarily to a net loss of ($809,000), offset by depreciation of $211,000, net working capital adjustments of ($146,000) and stock-based compensation of $90,000, compared to a net loss of ($83,000), which was offset by a deferred tax benefit of ($213,000), net working capital adjustments of ($1,005,000), depreciation of 217,000, stock-based compensation of $110,000 and a decrease in other assets $210,000 for the three months ended March 31, 2013.

Cash used in investing activities for the three months ended March 31, 2014 and 2013 was ($760,000) and ($140,000), respectively. The increase was primarily due to our acquisition of certain of Trilithic's filter product line assets for cash consideration of $700,000 on January 31, 2014.

Cash provided by financing activities was $214,000 for the three months ended March 31, 2014, compared with $75,000 for the comparable prior year period. The change was due primarily to a year over year increase in net borrowings of $81,000 and a year over year decrease in principal payments of long-term debt due to the payoff of the Chase term loan on February 7, 2013.

At March 31, 2014, the Company's consolidated working capital was $11,288,000, compared to $12,446,000 at December 31, 2013.  At March 31, 2014, the Company had current assets of $16,056,000, current liabilities of $4,768,000 and a ratio of current assets to current liabilities of 3.37 to 1.00. Despite the decline in revenues for the first three months of 2014 as compared to the first three months of 2013, accounts receivable increased $534,000, due primarily to an increase revenues from the prior quarter. At December 31, 2013, the Company had current assets of $16,954,000, current liabilities of $4,508,000 and a ratio of current assets to current liabilities of 3.76 to 1.00.  Management continues to focus on efficiently managing working capital requirements to match operating activity levels.

On June 30, 2011, MtronPTI entered into a loan agreement with Chase, which was amended on June 28, 2012, September 28, 2012, June 30, 2013 and September 19, 2013 (the "Chase Loan Agreement"). The Chase Loan Agreement provides for a revolving line of credit in the amount of $1,500,000, to be used solely for working capital needs (the "Chase Revolving Loan") and matures on September 30, 2014. The Chase Loan Agreement also provides that it may be extended for up to three 12-month renewal terms starting on June 30, 2014, upon written request by MtronPTI and approval by Chase. On May 5, 2014, Chase approved the extension of the maturity date under the Chase Loan Agreement from June 30, 2014 to September 30, 2014. The total borrowing capacity on the Chase Loan Agreement is subject to certain limitations on the borrowing base as defined in the Chase Loan Agreement.At March 31, 2014, MtronPTI had approximately $1,395,000 outstanding under the Chase Revolving Loan and available borrowing capacity of approximately $105,000.

All outstanding obligations of MtronPTI under the Chase Loan Agreement are collateralized by a first priority security interest in all of the assets of MtronPTI, excluding real property. Additionally, in connection with the Chase Loan Agreement, PTI entered into a separate agreement with Chase providing that PTI would not mortgage or otherwise encumber certain real property it owns in Florida while any credit facility is outstanding under the Chase Loan Agreement.

As additional security for MtronPTI's obligations under the Chase Loan Agreement, MtronPTI's obligations under the Chase Loan Agreement are fully collateralized in cash.  Accordingly, Chase retains a security interest in a separate account holding $1,500,000 of MtronPTI cash deposits pursuant to an Assignment of Deposit agreement.  The amount of the cash collateral deposit with Chase is recorded as restricted cash in the accompanying condensed consolidated balance sheets as of March 31, 2014 and December 31, 2013.  The related Assignment of Deposit agreement restricts MtronPTI's ability to withdraw any portion of the deposit and does not allow MtronPTI to assign the deposit or any part thereof.

14

The Chase Loan Agreement also contains a variety of affirmative and negative covenants, including, but not limited to, a financial covenant that MtronPTI maintain tangible net worth not less than $6,000,000. As of March 31, 2014, MtronPTI was not in compliance with the tangible net worth covenant under the Chase Loan Agreement. Based on the definition of tangible net worth under the Chase Loan Agreement, MtronPTI had a tangible net worth of $3,992,000 as of March 31, 2014, as compared to the minimum requirement of $6,000,000. Chase has waived non-compliance with this covenant as of March 31, 2014, in accordance with the terms of a letter agreement dated May 5, 2014.

The Company believes that existing cash and cash equivalents, cash generated from operations and available borrowings on its revolving line of credit will be sufficient to meet its ongoing working capital and capital expenditure requirements for the next 12 months.  However, the Company may need to seek additional capital to fund future growth in its business, to provide flexibility to respond to dynamic market conditions, or to fund its strategic growth objectives.  

The Board has adhered to a practice of not paying cash dividends. This policy takes into account our long-term growth objectives, including our anticipated investments for organic growth, potential technology acquisitions or other strategic ventures, and stockholders' desire for capital appreciation of their holdings. In addition, the tangible net worth financial covenant under the Chase Loan Agreement effectively places certain limitations on MtronPTI's ability to make certain payments to its parent, including but not limited to payments of dividends and other distributions, which effectively could limit the Company's ability to pay cash dividends to stockholders. No cash dividends have been paid to the Company's stockholders since January 30, 1989, and none are expected to be paid for the foreseeable future.

Critical Accounting Policies

Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of such statements requires us to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period and the reported amounts of assets and liabilities as of the date of the financial statements. Our estimates are based on historical experience and other assumptions that we consider to be reasonable given the circumstances. Actual results may vary from our estimates.

The Company's most critical accounting policies include revenue recognition, accounts receivable allowance, valuation of inventories, accounting for warranty obligations, accounting for income taxes, and accounting for stock-based compensation.

Revenue Recognition

The Company recognizes revenue from the sale of its product in accordance with the criteria in ASC 605, Revenue Recognition, which are:

‒ Persuasive evidence that an arrangement exists;

‒ Delivery has occurred;

‒ The seller's price to the buyer is fixed and determinable; and

‒ Collectability is reasonably assured.

The Company meets these conditions upon shipment because title and risk of loss passes to the customer at that time. However, the Company offers a limited right of return and/or authorized price protection provisions in its agreements with certain electronic component distributors who resell the Company's products to original equipment manufacturers or electronic manufacturing services companies. As a result, the Company estimates and records a reserve for future returns and other charges against revenue at the time of shipment consistent with the terms of sale. The reserve is estimated based on historical experience with each respective distributor.  The amount of these reserves at March 31, 2014, is not material to the financial statements.

15

The Company recognizes revenue related to transactions with a right of return and/or authorized price protection provisions when the following conditions are met:

‒ Seller's price to the buyer is fixed or determinable at the date of sale;

‒ Buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product;

‒ Buyer's obligation to the seller would not be changed in the event of theft or physical destruction or damage of the product;

‒ Buyer acquiring the product for resale has economic substance apart from that provided by the seller;

‒ Seller does not have obligations for future performance; and

‒ The amount of future returns can be reasonably estimated.

Accounts Receivable Allowance

Accounts receivable on a consolidated basis consists principally of amounts due from both domestic and foreign customers.  Credit is extended based on an evaluation of the customer's financial condition and collateral is not generally required.  In relation to export sales, the Company generally requires letters of credit supporting a significant portion of the sales price prior to production to limit exposure to credit risk.  Certain credit sales are made to industries that are subject to cyclical economic changes.

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Estimates are based on historical collection experience, current trends, credit policy and relationship between accounts receivable and revenues. In determining these estimates, the Company examines historical write-offs of its receivables and reviews each client's account to identify any specific customer collection issues.  If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payment, additional allowances might be required.  The Company's failure to estimate the losses for doubtful accounts accurately and ensure that payments are received on a timely basis could have a material adverse effect on its business, financial condition and results of operations.

Inventory Valuation

Inventories are stated at the lower of cost or market value using the FIFO (first-in, first-out) method.

The Company maintains a reserve for inventory based on estimated losses that result from inventory that becomes obsolete as of period end. In determining these estimates, the Company performs an analysis on demand and usage for each inventory item over historical time periods. Based on that analysis, the Company reserves a percentage of the inventory amount within each time period based on historical demand and usage patterns of specific items in inventory.

Warranties

The Company offers a standard one-year warranty. The Company tests its products prior to shipment in order to ensure that they meet each customer's requirements based upon specifications received from each customer at the time its order is received and accepted. The Company's customers may request to return products for various reasons, including but not limited to the customers' belief that the products are not performing to specification. The Company's return policy states that it will accept product returns only with prior authorization and if the product does not meet customer specifications, in which case the product would be replaced or repaired. To accommodate the Company's customers, each request for return is reviewed, and if and when it is approved, a return materials authorization ("RMA") is issued to the customer. Each month the Company records a specific warranty reserve for approved RMAs covering products that have not yet been returned. The Company does not maintain a general warranty reserve because, historically, valid warranty returns resulting from a product not meeting specifications or being non-functional have been immaterial.

16

Income Taxes

Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. The future recoverability of the Company's net deferred tax assets is dependent upon the generation of future taxable income prior to the expiration of the loss carry forwards. The Company maintains a full valuation allowance against the Company's net deferred tax assets.  The valuation allowance was calculated in accordance with the provisions of ASC 740, Income Taxes, which requires an assessment of both positive and negative evidence when measuring the need for a valuation allowance. We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal.

Stock-Based Compensation

The Company measures the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the requisite service period, typically the vesting period.

The Company estimates the fair value of stock options on the grant date using the Black-Scholes-Merton option-pricing model. The Black-Scholes-Merton option-pricing model requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. There is no expected dividend rate. Historical Company information was the basis for the expected volatility assumption as the Company believes that the historical volatility over the life of the option is indicative of expected volatility in the future. The risk-free interest rate is based on the U.S. Treasury zero-coupon rates with a remaining term equal to the expected term of the option. The Company also estimates forfeitures at the time of grant and revises, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based upon past history of actual performance, forfeiture rates ranging from zero percent to five percent have been assumed for options granted.

Stock awards are made at a value equal to the market price of the Company's common stock on the date of the grant.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4.Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company's principal executive officer and principal financial officer evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on their evaluation of the Company's disclosure controls and procedures, the Company's principal executive officer and principal financial officer, with the participation of the Company's management, have concluded that the Company's disclosure controls and procedures were effective as of March 31, 2014, to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (b) accumulated and communicated to management, including the Company's principal executive officer and principal financial officer, as appropriate to allow for timely decisions regarding required disclosure.

17

Changes in Internal Control Over Financial Reporting

During the fiscal quarter ended March 31, 2014, there were no changes in the Company's internal controls over financial reporting, or in other factors that could significantly affect these controls, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

18

PART II

OTHER INFORMATION

Item 1.Legal Proceedings.

None.

Item 1A.Risk Factors.

None.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.Defaults Upon Senior Securities.

None.

Item 4.Mine Safety Disclosures.

None.

Item 5.Other Information.

None.

19

Item 6. Exhibits.

The following is a list of exhibits filed as part of this Form 10-Q:

Exhibit No.	Description
2.1	Asset Purchase Agreement, dated as of January 31, 2014, made by and between M-Tron Industries, Inc. and Trilithic. Inc. *+
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

____________

* Filed herewith

**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed as part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Exchange Act and otherwise are not subject to liability under those sections.

+ Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of the omitted schedules and exhibits to the SEC upon request.

20

SIGNATURES

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

	THE LGL GROUP, INC.
Date:May15, 2014	By:	/s/ Gregory P. Anderson
		Gregory P. Anderson
		President and Chief Executive Officer (Principal Executive Officer)
Date:May 15, 2014	By:	/s/ R. LaDuane Clifton
		R. LaDuane Clifton
		Chief Financial Officer (Principal Financial Officer)
Date:May 15, 2014	By:	/s/ James L. Williams
		James L. Williams Corporate Controller (Principal Accounting Officer)

21

EX-2.1

Exhibit 10.1

EXECUTION COPY

ASSET PURCHASE AGREEMENT
BY AND BETWEEN
M-TRON INDUSTRIES, INC.
AND
TRILITHIC, INC.


Dated as of January 31, 2014

Table of Contents

			Page
ARTICLE I		DEFINITIONS	1
1.1.	Certain Definitions		1
ARTICLE II		SALE AND PURCHASE OF ASSETS	6
2.1	Sale and Purchase of Assets		6
2.2	Excluded Assets		7
2.3	Assumed Liabilities		8
2.4	Excluded Liabilities		8
ARTICLE III		CONSIDERATION	8
3.1	Consideration		8
3.2	Purchase Price Allocation		8
ARTICLE IV		CLOSING	9
4.1	Closing		9
4.2	Deliverables		9
ARTICLE V		REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY AND THE BUSINESS	9
5.1	Organization and Good Standing		9
5.2	Authorization of Agreement		9
5.3	Conflicts; Consents of Third Parties		10
5.4	Financial Analysis		10
5.5	Absence of Certain Developments		10
5.6	Taxes		11
5.7	Tangible Personal Property; Title to and Sufficiency of Assets		11
5.8	Intellectual Property		11
5.9	Material Contracts		12
5.10	Litigation		12
5.11	Compliance with Laws; Permits		12

i

Table of Contents

(continued)

			Page
5.12	Financial Advisors		12
5.13	Books and Records		12
5.14	Transactions With Related Parties		13
5.15	Solvency		13
5.16	Full Disclosure		13
ARTICLE VI		REPRESENTATIONS AND WARRANTIES OF PURCHASER	13
6.1	Organization and Good Standing		13
6.2	Authorization of Agreement		13
6.3	Conflicts; Consents of Third Parties		14
6.4	Litigation		14
6.5	Financial Advisors		14
ARTICLE VII		COVENANTS	14
7.1	Further Assurances		14
7.2	Confidentiality		15
7.3	Preservation of Records		15
7.4	Publicity		15
7.5	Tax Matters		15
7.6	Non-Competition		16
7.7	Work in Process		17
7.8	Service of Warranties		18
ARTICLE VIII		INDEMNIFICATION	18
8.1	Survival		18
8.2	Indemnification by the Company		18
8.3	Indemnification by the Purchaser		19
8.4	Indemnification Procedures		19

ii

Table of Contents

(continued)

			Page
8.5	Additional Indemnification Provisions		21
8.6	Tax Treatment of Indemnity Payments		22
8.7	Exclusive Remedy		22
ARTICLE XI		MISCELLANEOUS	22
9.1	Expenses		22
9.2	Submission to Jurisdiction; Consent to Service of Process		22
9.3	Entire Agreement; Amendments and Waivers		22
9.4	Governing Law		23
9.5	Notices		23
9.6	Severability		24
9.7	Binding Effect; No Third-Party Beneficiaries; Assignments		24
9.8	Specific Performance		24
9.9	Counterparts		24

iii

Schedules

Schedule 2.1(a)	Fixed Assets
Schedule 2.1(b)	Specialized Equipment
Schedule 2.1(c)	Inventory
Schedule 2.1(d)	Assumed Contracts
Schedule 2.1(h)	Other Assets
Schedule 2.2(c)	Excluded Assets
Schedule 2.2	Excluded Assets
Schedule 5.9(a)	Material Contracts
Schedule 5.10	Litigation
Schedule 5.14	Transactions with Related Parties

Exhibits

Exhibit A – Books and Records

Exhibit B – Company IP

Exhibit C – Supplemental Inventory

Exhibit D – Form of Bill of Sale

Exhibit E – Form of Assignment and Assumption Agreement

Exhibit F – Form of Intellectual Property Assignment

iv

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of January 31, 2014 (this "Agreement"), is made by and between M-TRON INDUSTRIES, INC., a Delaware corporation ("Purchaser"), and TRILITHIC, INC., an Indiana corporation (the "Company").

W I T N E S S E T H:

WHEREAS, the Company is engaged in a business line of standard and custom radio frequency and microwave (RF&M) passive components within the DC to 18 GHz frequency range that includes rotary step attenuators; programmable attenuators; continuously variable attenuators; fixed attenuators; terminations; feedthru terminations; power dividers; switches; directional couplers; DC blocks; impedance matching pads; and adapters. Typical applications for the Company's RF&M components include; but are not limited to, cellular base stations, distributed antenna systems, simulation testing, instrumentation, electronic warfare, radar and general lab usage; among other lines (the "Component Business").

WHEREAS, the Company is also engaged in manufacturing and selling RF&M filters, specifically, custom filters, tunable filters, filter subsystems, voltage-tuned filters, tubular filters and digitally tunable filters (collectively, the "Business");

WHEREAS, the Company desires to cease operating the Business, but will continue to operate its Component Business; and

WHEREAS, the Company desires to sell to Purchaser the Purchased Assets (as defined below), which relate to the Business and Purchaser desires to acquire the same from the Company, upon the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing premises, the mutual representations, warranties, covenants and agreements hereinafter contained, and other valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows:

ARTICLE I
DEFINITIONS

1.1Certain Definitions.

(a)For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1:

"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

"Books and Records" means the books and records set forth on Exhibit A, which relate exclusively to the Business.

"Business Day" means any day of the year on which national banking institutions in New York are open to the public for conducting business and are not required or authorized to close.

"Code" means the Internal Revenue Code of 1986, as amended.

"Company IP" means the Intellectual Property owned or licensed by the Company and necessary for use exclusively in the conduct of the Business as currently conducted, namely, the custom filters, tunable filters, filter subsystems, voltage-tuned filters, tubular filters and digitally tunable filters all set forth on Exhibit B, and all of the right, title and interest in and to all such product and prototype designs, drawings and specifications for any of the foregoing, and any and all related production process documentation, process notes, or other documents pertinent to these products.

"Contract" means any written or oral agreement, contract, indenture, note, mortgage, guarantee, bond, lease, commitment, easement, right of way, arrangement or understanding.

"Excluded Assets" has the meaning ascribed to it in Section 2.2.

"Expenses" means any and all notices, actions, suits, proceedings, claims, demands, assessments, judgments, awards, settlements, costs, charges, interest, penalties, fees (including reasonable investigation fees) and expenses, including reasonable attorneys' and other professionals' fees and disbursements and witness fees.

"GAAP" means generally accepted accounting principles in the United States of America in effect from time to time.

"Governmental Body" means any government or governmental or regulatory body thereof, or political subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).

"Indemnification Claim" means any claim in respect of which payment may be sought under Article VIII of this Agreement.

"Intellectual Property" means all of the following in any jurisdiction throughout the world: (i) all patents (including, without limitation, utility patents, design patents, industrial designs, plant patents, inventors' certificates and utility models), patent applications (including docketed patent disclosures awaiting filing, reissues, divisions, continuations, continuations-in-part and extensions), and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof (collectively, "Patents"); (ii) all trade secrets and confidential business information (including ideas, research and development, knowhow, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, lists of past and present customers, pricing and cost information); (iii) all Software (including source code, executable code, data, databases, and related documentation) and Technology and (iv) all embodiments of any of the foregoing in any media whatsoever.

2

"IRS" means the Internal Revenue Service.

"Knowledge of the Company" means (i) the actual knowledge of the Company's executive officers and (ii) the knowledge that the Company's executive officers, after reasonable investigation, would have obtained in the conduct of the Company's business.

"Law" means all foreign, federal, state and local laws, statutes, codes, ordinances, rules, regulations, resolutions and Orders.

"Legal Proceeding" means any judicial, administrative or arbitral action, notice, suit, claim, inquiry, investigation or proceeding (public or private) by or before a Governmental Body or arbitrator.

"Liability" means any debt, liability or obligation (whether direct or indirect, absolute or contingent, accrued or unaccrued, know or unknown, liquidated or unliquidated, or due or to become due) and including all costs and expenses relating thereto.

"Lien" means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, right of first refusal, easement, servitude, covenant, transfer restriction, encroachment, reservation, municipal bond, irregularities of title, or any other restriction or limitation of any kind.

"Material Adverse Effect" means a material adverse effect on (i) the prospects, results of operations, condition (financial or otherwise) or performance of the Business or the Purchased Assets or (ii) the ability of the Company to consummate any of the transactions contemplated by this Agreement.

"Order" means any order, injunction, judgment, decree, determination, ruling, writ, assessment or arbitration or other award of a Governmental Body.

"Ordinary Course of Business" means the ordinary and usual course of business of the Company related to the Business and consistent with past practices and applicable Law.

"Permits" means any approvals, authorizations, consents, licenses, permits or certificates of a Governmental Body.

"Permitted Exceptions" means statutory Liens for current Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings, provided an appropriate reserve is established therefor.

"Person" means any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

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"Purchased Assets" has the meaning ascribed to it in Section 2.1.

"Schedules" means the disclosure schedules of the Company and Purchaser, as applicable, accompanying this Agreement.

"Software" means any and all (i) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, and (iv) all documentation including user manuals and other training documentation related to any of the foregoing.

"Supplemental Inventory" shall mean the inventory of the Business set forth on Exhibit C, which:  (i) has a $0 value; (ii) the Company will transfer to Purchaser "as is" upon Closing; and (iii) is excluded from the definition of "Purchased Asset" or "Business" for purposes of the Company's representations and warranties under this Agreement.

"Tax Return" means any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Taxing Authority in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Law relating to any Tax.

"Taxes" means (i) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Taxing Authority in connection with any item described in clause (i) and (iii) any transferee liability in respect of any items described in clauses (i) and/or (ii).

"Taxing Authority" means any (i) nation, state, county, city, town, village, district, or other jurisdiction of any nature, (ii) federal, state, local, municipal, foreign, or other government, (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), (iv) multi-national organization or body, or (v) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

"Technology" means, collectively, all trade secrets, designs, formulae, algorithms, procedures, methods, techniques,  programs, subroutines, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, improvements and other similar materials, and all recordings, graphs, drawings, reports, analyses, and other tangible embodiments of the foregoing, in any form, whether or not specifically listed herein, and all related technology used by the Company in connection with, or that relate exclusively to, the Business.

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"Transaction Documents" means (i) this Agreement, (ii) the bill of sale with respect to the Purchased Assets, in the form attached hereto as Exhibit D, (iii) the assignment and assumption agreement with respect to the Assumed Liabilities, in the form attached hereto as Exhibit E, (iv) the intellectual property assignment, in the form attached hereto as Exhibit F, (v)  any other document or instrument to be executed and delivered on or prior to the Closing in connection with the transactions contemplated by this Agreement, as reasonably requested by Purchaser, and (vi) any Schedule, Annex or Exhibit to any of the foregoing.

(b)Other Definitional and Interpretive Matters.  Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

(i)Calculation of Time Period.  When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.  If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

(ii)Dollars.  Any reference in this Agreement to $ shall mean U.S. dollars.

(iii)Exhibits/Schedules.  The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement.  All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.  The specific disclosures set forth in the Schedules shall be organized to correspond to a specific section reference in this Agreement to which the qualifying and correspondingly numbered disclosure relates, together with appropriate cross references when disclosure is applicable to other sections of this Agreement, and any disclosure set forth in one section of the Schedules shall not apply to, and shall not be deemed to be disclosed for purposes of, any other section of the Schedules without a specific cross-reference to such other section to which such disclosure is also applicable.

(iv)Gender and Number.  Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

(v)Headings.  The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.  All references in this Agreement to any "Section" are to the corresponding Section of this Agreement unless otherwise specified.

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(vi)Herein.  The words "herein," "hereinafter," "hereof," and "hereunder" used herein refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

(vii)Including.  The word "including" or any variation thereof means "including, without limitation" and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

(viii)Made Available.  An item shall be considered "made available" to Purchaser, to the extent such phrase appears in this Agreement, only if such item has been provided in writing to Purchaser.

(ix)Reflected On or Set Forth In.  An item arising with respect to a specific representation or warranty shall be deemed to be "reflected on" or "set forth in" a balance sheet or financial statements to the extent any such phrase appears in such representation or warranty, if (a) there is a reserve, accrual or other similar item underlying a number on such balance sheet or financial statements that relate to the subject matter of such representation, (b) such item is otherwise specifically set forth on the balance sheet or financial statements or (c) such item is reflected on the balance sheet or financial statements and is specifically set forth in the notes thereto.

(c)The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

ARTICLE II
SALE AND PURCHASE OF ASSETS

2.1Sale and Purchase of the Assets.  Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, the Company shall sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase and acquire from the Company, free and clear of all Liens, all right, title and interest of the Company in and to all of its properties, assets, including Contracts, and rights of every kind and description, all as related exclusively to, used exclusively in or intended exclusively for use in the Business as currently conducted as set forth below, other than the Excluded Assets (collectively, the "Purchased Assets"):

(a)those fixed assets set forth on Schedule 2.1(a);

(b)the specialized production fixturing and test fixturing related to the Company IP, tools, jigs, dies, patterns, molds, parts, certain engineering equipment, accessories, computers and peripheral devices wherever located and any replacement and spare parts for any such assets, all as set forth on Schedule 2.1(b);

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(c)all (i) inventory, stock in trade, merchandise, goods, supplies and other products, (ii) raw materials, work in progress, finished products, wherever located, all as set forth on Schedule 2.1(c);

(d)all Contracts set forth on Schedule 2.1(d) ("Assumed Contracts");

(e)all of the goodwill and going concern value relating to the Business or any of the Purchased Assets;

(f)all of the Company IP set forth on Exhibit B;

(g)the Books and Records; and

(h)all other intangible and tangible assets set forth on Schedule 2.1(h).

2.2Excluded Assets.  Except as otherwise set forth in Section 2.1, from and after the Closing, the Company shall retain all of its existing right, title and interest in and to the following properties, assets and Contracts (collectively, the "Excluded Assets"):

(a)all properties, assets and rights related to the Company's Components Business;

(b)all properties, assets and rights general in nature that do not relate exclusively to the Business, including general testing equipment, assets in the shop (other than specialized tooling for custom filters, tunable filters, the VTF Program or filter subsystems), tools, benches, shelves, production equipment that does not have a specific filter or filter subsystem application;

(c)all other properties, assets and rights set forth on Schedule 2.2(c);

(d)all cash, cash equivalents and receivables arising from the operation of the Business prior to the Closing;

(e)all Contracts other than those set forth on Schedule 2.1(d);

(f)all assets related to Paratek PTIC;

(g)any trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, slogans, Internet domain names and individual, corporate, business and product names related to the Business, together with all translations, adaptations, derivations, and combinations thereof, together with the goodwill associated with any of the foregoing, and all applications, registrations and renewals thereof and any copyrightable works, copyrights and applications related to the Business, registrations and renewals therefor, works of authorship and mask work rights;

(h)any marketing, promotional or branding material or rights related to the Purchased Assets;

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(i)all minute books, corporate seals, equity record books and equity transfer records of the Company.

2.3Assumed Liabilities.  Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser shall assume and pay, honor, perform and discharge when due, all executory obligations under the Assumed Contracts included in the Purchased Assets (i) arising after the Closing, (ii) not related to, or arising out of, any breach of Assumed Contract occurring or existing prior to the Closing, and (iii) not related to, or arising out of, any fact, event, act, omission, circumstance or condition occurring or existing prior to the Closing (collectively, the "Assumed Liabilities") and no others.

2.4Excluded Liabilities.  Notwithstanding anything to the contrary in this Agreement, Purchaser shall not assume or in any way be responsible for, and the Company shall remain obligated to pay, honor, perform and discharge, all of the Liabilities of the Company (other than the Assumed Liabilities), including, without limitation, any Liabilities directly or indirectly arising out of or related to (i) any indebtedness of the Company, or (ii) any fact, event, act, omission, circumstance or condition occurring or existing prior to the Closing (collectively, the "Excluded Liabilities").

                         ARTICLE III
CONSIDERATION

3.1Consideration.  The aggregate consideration for the Purchased Assets shall consist of (i) the payment by Purchaser to the Company of $700,000 in cash and (ii) Purchaser's assumption of the Assumed Liabilities at the Closing.  Upon the terms and subject to the conditions contained herein, at the Closing, Purchaser shall (i) pay to the Company the Purchase Priceby certified check or by wire transfer of immediately available United States funds into such account or accounts of the Company as shall have been designated in writing to Purchaser (the "Closing Payment").

3.2Purchase Price Allocation.  Purchaser shall prepare an allocation of the consideration paid to the Company among the Purchased Assets in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder.  Purchaser shall deliver such allocation to the Company within ninety (90) days after the Closing Date and such allocation shall be reasonably acceptable to the Company.  Purchaser and the Company shall report, act and file Tax Returns (including, but not limited to, IRS Form 8594) in all respects and for all purposes consistent with such allocation prepared by Purchaser.  The Company shall timely and properly prepare, execute, file and deliver, or cause to be prepared, executed, filed and delivered, all such documents, forms, and other information as Purchaser shall reasonably request to prepare such allocation.  None of Purchaser or the Company shall take any position (whether in audits, tax returns, or otherwise) that is inconsistent with such allocation unless required to do so by applicable Law.

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ARTICLE IV
CLOSING

4.1Closing.  On the terms and subject to the conditions set forth in this Agreement, the closing of the sale and purchase of the Purchased Assets provided for in Section 2.1 hereof and the assumption of the Assumed Liabilities provided for in Section 2.3 hereof (the "Closing") shall take place on January 31, 2014, via electronic delivery of documents and Purchased Assets, to the extent practicable, or as otherwise determined by the parties and shall be deemed to have taken place simultaneously with the execution and delivery of this Agreement and the satisfaction of the obligations of the parties under Section 4.2.

4.2Deliverables.  At the Closing:

(a)the Company shall have executed and delivered to Purchaser, and Purchaser shall have executed and delivered to the Company, each of the Transaction Documents to which it is a party;

(b)subject to Section 7.7, the Company shall have delivered to Purchaser the Purchased Assets;

(c)the Company shall have delivered to Purchaser, the Supplemental Inventory; and

(d)Purchaser shall have delivered to the Company the Closing Payment in accordance with Section 3.1.

ARTICLE V
REPRESENTATIONS AND WARRANTIESRELATING TO THE COMPANY AND THE BUSINESS

The Company represents and warrants to Purchaser as follows:

5.1Organization and Good Standing.  The Company is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it was incorporated and has all requisite corporate power and authority to own, lease and operate the Purchased Assets and carry on the Business.  The Company is duly qualified or authorized to do business and is in good standing under the Laws of each jurisdiction in which it owns, leases or operates its properties and assets and each other jurisdiction in which the conduct of the Business or the ownership of the Purchased Assets requires such qualification or authorization.  The Company has made available to Purchaser a true and complete copy of the articles of incorporation of the Company and a true and complete copy of the bylaws of the Company, each as currently in effect.

5.2Authorization of Agreement.  The Company has all requisite power and authority to execute and deliver this Agreement and each other Transaction Document to be executed by the Company in connection with the consummation of the transactions contemplated by this Agreement (collectively, the "Company Documents"), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Company Documents, the performance of the Company's obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of the Company.  This Agreement and each of the Company Documents has been duly and validly executed and delivered by the Company, and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

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5.3Conflicts; Consents of Third Parties.

(a)None of the execution or delivery by the Company of this Agreement or any of the Company Documents, the consummation of any of the transactions contemplated hereby or thereby, or compliance by the Company with any of the provisions hereof or thereof does or will conflict with, or result in any violation of, or constitute a breach of or a default (with or without notice or lapse of time, or both) under, or result in the loss of any benefit under, or permit the acceleration of any obligation under, or give rise to a right of termination, modification or cancellation under, or result in the creation of any Lien upon any of the Purchased Assets under, any provision of (i) the articles of incorporation, bylaws or any other governing documents of the Company, each as currently in effect; (ii) any Contract or Permit to which the Company is a party and by which it is bound in connection with the Business or the Purchased Assets; (iii) any Order of any Governmental Body applicable to the Business or by which any of the Purchased Assets is bound; or (iv) any applicable Law.

(b)Except for the consent of PNC Bank, National Association, which has been obtained, no consent, waiver, approval, Order, Permit or authorization of, or declaration, registration or filing with, or notification to, any Person or Governmental Body is required on the part of the Company in connection with the execution, delivery or performance of this Agreement or any of the Company Documents, the compliance by the Company with any of the provisions hereof or thereof, or the consummation of any of the transactions contemplated hereby or thereby.

5.4Financial Analysis.  The Company has provided an informal, internally prepared a financial analysis to Purchaser as well as the Company's audited financial statements (the "Financial Analysis").  The Financial Analysis was true, complete and correct as of the date prepared.

5.5Absence of Certain Developments.  Since January 1, 2014, (i) the Company has conducted the Business only in the Ordinary Course of Business, (ii) there has not been any event, change, occurrence or circumstance that, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect, and (iii) there has not been any uninsured damage, destruction, loss or casualty to the Purchased Assets or the Business.

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5.6Taxes.

(a)The Company has paid (or there have been paid on its behalf) all Taxes owed by it that have become due (without regard to whether or not such Taxes are or were disputed).  There are no Liens for Taxes upon any of the Purchased Assets or the Business.

(b)The Company has filed (or there have been filed on its behalf) on a timely basis (taking into account all extensions of time to file that have been granted) all Tax Returns that are required to have been filed by or with respect to it.  All such Tax Returns were accurate and complete and were prepared in compliance with applicable Laws.  The Company has not received any notice of any failure (or alleged failure) to pay any Tax.

(c)There is no dispute or claim concerning any liability for Taxes of or with respect to the Purchased Assets or the Business claimed or raised by any Taxing Authority.  The Company has not received any notice from a Taxing Authority indicating an intent to open an audit or other review or request for information related to Tax matters affecting the Purchased Assets or the Business.

5.7Tangible Personal Property; Title to and Sufficiency of Assets.  The Company has good, valid and marketable title to all of the Purchased Assets, free and clear of all Liens.  All tangible personal property included in the Purchased Assets is in good operating condition and repair, ordinary wear and tear excepted, and is suitable and adequate for the uses for which it is intended or is being used.

5.8Intellectual Property.

(a)Exhibit B identifies all Company IP, including all: (i) Patents and applications therefor, the registration number, issue date, title, expiration date and next Tax date for each country in which any such Patent has been issued, or the application number, date of filing, title, inventor information and status for each country in which any such Patent application is pending and any renewal, application and other fees, and all other actions, required for the maintenance, registration or prosecution of any of the Company IP prior to the Closing have been paid or taken off.

(b)The Company owns (beneficially and of record) all right, title and interest in and to all Company IP owned by it, free and clear of all Liens, and the Company has all proprietary rights in and to all Company IP licensed or used by it, free and clear of all Liens.  All of the Company IP, the registrations and applications for registration of which are set forth on Exhibit B, is valid and in full force and effect.  To the Knowledge of the Company, all of the other rights within the Company IP are valid and subsisting.  There is no Legal Proceeding that is pending or, to the Knowledge of the Company, threatened that challenges the rights of the Company in respect of any Company IP or the validity, enforceability or effectiveness thereof.  The Company has not received any written communication alleging that the Business has infringed any Intellectual Property right of any third party, and there are no Legal Proceedings that are pending or, to the Knowledge of the Company, threatened against the Company with respect thereto.  To the Knowledge of the Company, the conduct of the Business does not infringe or otherwise violate any Intellectual Property right of any third party.  To the Knowledge of the Company, there is no unauthorized use, infringement or misappropriation of the Company IP by any third party.

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5.9Material Contracts.

(a)Schedule 5.9(a) sets forth a true, correct and complete list of all Contracts to which the Company is a party and by which it is bound in connection with the Business or the Purchased Assets that (i) are material to the Business or (ii) involve payments or receipts in excess of $10,000 (collectively, the "Material Contracts").

(b)(i) Each Material Contract is a valid, binding and enforceable obligation of the Company and of the other party or parties thereto, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors' rights generally and general principles of equity (regardless of whether considered in a proceeding at law or in equity), and (ii) each Material Contract is in full force and effect.

(c)(i) Neither the Company nor, to the Knowledge of the Company, any other party thereto is in breach of or default under any term of any Material Contract and (ii) no event has occurred that with notice or lapse of time, or both, would constitute a breach of or a default by the Company or, to the Knowledge of the Company, any other party under any Material Contract.

(d)The Company has not received written notice of termination, cancellation or non-renewal that is currently in effect with respect to any Material Contract and, to the Knowledge of the Company, no other party to a Material Contract plans to terminate, cancel or not renew any such Material Contract.

5.10Litigation.  Except as set forth on Schedule 5.10, there are no Legal Proceedings pending or, to the Knowledge of the Company, threatened against the Business, the Company or any of the Purchased Assets, nor are any of the foregoing subject to any Order.  There are no Legal Proceedings pending or, to the Knowledge of the Company, threatened that are reasonably likely to prohibit or limit the ability of the Company to enter into this Agreement or any of the Company Documents, to consummate any of the transactions contemplated hereby or thereby or to perform any of its obligations hereunder or thereunder.

5.11Compliance with Laws; Permits.  The Company is and has been in compliance with all Laws applicable to any of the Purchased Assets, the Business or its operations, except where the failure to comply would not have a Material Adverse Effect.  The Company has not received written notice of the violation of any such Laws.

5.12Financial Advisors.  No Person has acted, directly or indirectly, as a broker, finder or financial advisor for the Company or any of its Affiliates in connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment from Purchaser in respect thereof.

5.13Books and Records.  The Books and Records of the Company, all of which have been made available to Purchaser prior to the Closing Date, are complete and accurate and have been maintained in accordance with sound business practice and applicable requirements of Law.

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5.14Transactions With Related Parties.  Except as disclosed on Schedule 5.14, no present or former officer, director, employee, agent or stockholder of the Company, or any Affiliate thereof, is currently a party to any transaction related to the Business, including, without limitation, any Contract providing for the employment of, furnishing of services by, rental of assets from or to, or otherwise requiring payments to, any such Person.

5.15Solvency.  The Company is Solvent (as defined below) and will not fail to be Solvent as a result of the execution and delivery of this Agreement or any of the other Transaction Documents to which it is a party or as a result of the consummation of the transactions contemplated thereby.  "Solvent" means, when used with respect to any Person, that at the time of determination: (i) such Person is then able and expects to be able to pay its debts as they mature; and (ii) such Person has capital sufficient to carry on its business as conducted and as proposed to be conducted.

5.16Full Disclosure.  All facts of importance to the business, operations, prospects, condition (financial or otherwise), assets or Liabilities of the Business or the Company have been accurately and completely disclosed to Purchaser in this Agreement.  No representation or warranty by the Company in this Agreement, and no document furnished or to be furnished to Purchaser pursuant to this Agreement, or in connection herewith or with the transactions contemplated hereby, contains or will contain any untrue or misleading statement of material fact or omits or will omit any material fact necessary to make the statements contained herein or therein, in light of the circumstances under which made, not misleading.

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to the Company as follows:

6.1Organization and Good Standing.  Purchaser is a corporation duly incorporated, validly existing and in good standing under the Laws of the jurisdiction in which it was incorporated and has all requisite corporate power and authority to own, lease and operate its properties and assets and carry on its business.

6.2Authorization of Agreement.  Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and each other Transaction Document to be executed by Purchaser in connection with the consummation of the transactions contemplated by this Agreement (the "Purchaser Documents"), to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery by Purchaser of this Agreement and the Purchaser Documents, the performance of Purchaser's obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Purchaser.  This Agreement and each of the Purchaser Documents has been duly and validly executed and delivered by Purchaser, and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) constitutes the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

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6.3Conflicts; Consents of Third Parties.

(a)None of the execution or delivery by Purchaser of this Agreement or any of the Purchaser Documents, the consummation of any of the transactions contemplated hereby or thereby, or compliance by Purchaser with any of the provisions hereof or thereof does or will conflict with, or result in any violation of, or constitute a breach of or a default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, modification or cancellation under, or result in the creation of any Lien upon any of the properties or assets of Purchaser under, any provision of (i) the certificate of incorporation, by-laws or any other governing documents of Purchaser, each as currently in effect; (ii) any Contract or Permit to which Purchaser is a party or by which Purchaser or any of its properties or assets is bound; (iii) any Order of any Governmental Body applicable to Purchaser or by which Purchaser or any of its properties or assets is bound; or (iv) any applicable Law.

(b)Except for the consent of JPMorgan Chase Bank, N.A., which has been obtained, no consent, waiver, approval, Order, Permit or authorization of, or declaration, registration or filing with, or notification to, any Person or Governmental Body is required on the part of Purchaser in connection with the execution, delivery or performance of this Agreement or any of the Purchaser Documents, the compliance by Purchaser with any of the provisions hereof or thereof, or the consummation of any of the transactions contemplated hereby or thereby.

6.4Litigation.  There are no Legal Proceedings pending or, to the knowledge of Purchaser, threatened that are reasonably likely to prohibit or limit the ability of Purchaser to enter into this Agreement or any of the Purchaser Documents, to consummate any of the transactions contemplated hereby or thereby or to perform any of its obligations hereunder or thereunder.

6.5Financial Advisors.  No Person has acted, directly or indirectly, as a broker, finder or financial advisor for Purchaser or any of its Affiliates in connection with the transactions contemplated by this Agreement.  No Person is entitled to any fee or commission or like payment from the Company in respect thereof.

ARTICLE VII
COVENANTS

7.1Further Assurances.  At any time or from time to time after the Closing, at the request of Purchaser and without further consideration, the Company agrees to execute and deliver to Purchaser any further documents or instruments and perform any further acts that may reasonably be deemed necessary, appropriate or advisable by Purchaser to vest, record, perfect, support and/or confirm the rights herein conveyed, or intended so to be, with respect to any of the Purchased Assets.  Nothing herein shall be deemed a waiver by Purchaser of its right to receive at the Closing an effective assignment of such rights by the Company as otherwise set forth in this Agreement.  In addition, the Company will cooperate with the Purchaser in order to redirect to Purchaser, any viewers of the Company website who are seeking to purchase items included in the Business.

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7.2Confidentiality.  The Company acknowledges that it and its Affiliates possess and may continue to possess after the Closing knowledge of confidential and valuable business information relating to the Business not generally known by or available to the public and agrees, and shall cause its Affiliates, at all times (a) to keep confidential all such information, (b) not to use such confidential information on its own behalf (except in connection with the transactions contemplated hereby) or on behalf of any other Person, other than Purchaser or Purchaser's Affiliates, and (c) not to disclose such confidential information to any third party (other than to the Company's counsel, accountants and other representatives in connection with the transactions contemplated hereby) without Purchaser's prior written approval; provided, however, that the Company shall not have any such obligations with respect to confidential information that has become a matter of public knowledge or has been or is hereafter publicly disclosed, in any case other than by or through the Company or any of its Affiliates in violation of this Agreement.

7.3Preservation of Records.  The Company agrees that it shall, and shall cause its Affiliates to, preserve and keep any records held by it relating to the Business for a period of seven (7) years from the Closing Date and shall make such records and personnel available to Purchaser as may be reasonably necessary in connection with, among other things, any insurance claim, Legal Proceeding, Tax audit or investigation by any Governmental Body.

7.4Publicity.  None of the Company or any of its Affiliates shall issue any press release or public announcement concerning this Agreement or any of the transactions contemplated hereby or make any other public disclosure containing the terms of this Agreement.  Neither Purchaser nor any of its Affiliates shall issue any press release or public announcement concerning this Agreement or any of the transactions contemplated hereby or make any other public disclosure containing the terms of this Agreement without obtaining the prior approval of the Company as to the form of such press release or announcement, which approval will not be unreasonably withheld or delayed, unless, in the judgment of Purchaser, disclosure is otherwise required by applicable Law or by the applicable rules of any stock exchange on which Purchaser or any of its Affiliates lists securities, provided that, to the extent required by applicable Law, the party intending to make such release shall use its commercially reasonable efforts consistent with applicable Law to consult with the other party with respect to the text thereof.

7.5Tax Matters.

(a)The Company shall pay, when due, all transfer, documentary, sales, use, stamp, registration and other similar Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of any of the transactions contemplated by this Agreement and the other Transaction Documents and shall, at its own expense, file all necessary Tax Returns and other documentation with respect to such Taxes, fees and charges.

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(b)Following the Closing, the Company and Purchaser shall, as reasonably requested by the other: (i) assist the other party in preparing any Tax Returns relating to the Business which such other party is responsible for preparing and filing; (ii) cooperate fully in preparing for any Tax audit of, or dispute with, any Taxing Authority regarding, and any Legal Proceeding relating to, liability for Taxes, in the preparation or conduct of any Legal Proceeding or investigation of claims, and in connection with the preparation of financial statements or other documents to be filed with any Taxing Authority, in each case with respect to the Business; and (iii) make available to the other party, as reasonably requested, and to any Taxing Authority all information, records, and documents relating to Taxes relating to the Business.

7.6Non-Competition.  As a material inducement to Purchaser's consummation of the transactions contemplated by this Agreement and the other Transaction Documents, the Company agrees as follows:

(a)The Company and its Affiliates shall not, for a period of three (3) years following the Closing Date (computed by excluding from such computation any time during which the Company or its Affiliates is found by a court of competent jurisdiction to have been in violation of any provision of this Section 7.6(a)), directly or indirectly, for themselves or on behalf of or in conjunction with any other Person, engage in, invest in or otherwise participate in (whether as an owner, employee, officer, director, manager, independent contractor, agent, partner, advisor, or otherwise) any business that competes with the Business anywhere in the world, or at any time following the Closing Date make any use of any Company IP.  Notwithstanding the foregoing, this covenant shall not be deemed to prohibit the acquisition as an investment of not more than five percent (5%) of the capital stock of a competing business whose stock is traded on a national securities exchange or market, or over-the-counter.

(b)The Company and its Affiliates shall not, for a period of three (3) years following the Closing Date (computed by excluding from such computation any time during which any of the Company or its Affiliates is found by a court of competent jurisdiction to have been in violation of any provision of this Section 7.6(b)), directly or indirectly, solicit or accept business from any customer or prospective customer of the Company with whom it had any contact in the twenty-four (24) month period prior to the Closing Date with respect to any products or services sold by the Business as of the Closing Date.

(c)The Company and its Affiliates shall not, for a period of three (3) years following the Closing Date (computed by excluding from such computation any time during which any of the Company or its Affiliates is found by a court of competent jurisdiction to have been in violation of any provision of this Section 7.6(c)), directly or indirectly, solicit, hire (or assist or encourage any other Person to solicit or hire) or otherwise interfere with the employment or independent contractor relationship of any Person who is employed by or serves as an independent contractor to Purchaser or any of its Affiliates during the operation of this provision.  For the avoidance of doubt, an employee or independent contractor shall not be deemed to have been solicited or hired solely as a result of a general public advertisement or other such general solicitation.

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(d)The Company acknowledges that it has carefully read and considered the provisions of this Section 7.6 and agrees that the foregoing covenants are reasonable with respect to their duration, geographic area and scope.  If a judicial or arbitral determination is made that any provision of this Section 7.6 constitutes an unreasonable or otherwise unenforceable restriction against any of the Company or its Affiliates, then the provisions of this Section 7.6 shall be rendered void only to the extent such judicial or arbitral determination finds such provisions to be unenforceable.  In that regard, any judicial or arbitral authority construing this Section 7.6 shall be empowered to sever any prohibited business activity, time period or geographical area from the coverage of any such agreements and to apply the remaining provisions of this Section 7.6 to the remaining business activities, time periods and/or geographical areas not so severed.  Moreover, in the event that any provision, or the application thereof, of this Section 7.6 is determined not to be specifically enforceable, Purchaser shall nevertheless be entitled to recover monetary damages as a result of the breach of such agreement.

(e)The Company also acknowledges that the transactions contemplated by this Agreement constitute full and adequate consideration for the execution and enforceability of the restrictions set forth in this Section 7.6.  The Company also acknowledges and understands that these restrictions are reasonably necessary to protect interests of Purchaser and its Affiliates, including, without limitation, protection of the goodwill acquired, and the Company acknowledges that such restrictions will not prevent it from conducting businesses that are not included in the restricted business set forth in this Section 7.6 during the periods covered by the restrictive covenants set forth in this Section 7.6.

(f)The parties agree that the Company will continue to operate its Component Business after the Closing and nothing in this Agreement shall prohibit or restrict in any way, the operation of the Company's Components Business

7.7Work in Process.  To the extent the Company holds physical assets related to the Business in its facilities as of the Closing Date ("WIP") that are deemed work in process, such WIP will be treated as follows:

(a)Ownership of all WIP will be transferred to the Purchaser on the Closing Date.

(b)Purchaser may retain the Company to complete all or any portion of the WIP at the Company's facility from the Closing through the close of business on Friday, February 14, 2014, or such other date as agreed upon by the parties (the "Transition Period").  For the avoidance of doubt, (i) the Purchaser is not acquiring any of the contracts relating to the WIP and (ii) all intellectual property and inventory necessary to the fulfillment of orders relating to the WIP are being transferred to Purchaser as part of this transaction.

(c)Purchaser will either retain the Company to complete orders relating to the WIP or complete the orders itself.

(d)WIP completed by the Company at the Purchaser's request during the Transition Period will be labeled with Purchaser's labeling and will be invoiced as MTron accounts receivable.

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(e)On or prior to the close of business on the last day of the Transition Period, Purchaser will physically pack and move the physical Purchased Assets out of the Company's facility.

(f)Subject to the provisions set forth in this Section 7.7, the Company will cease operating the Business in its name on the Closing Date and will cease operating in practical operations as of the end of the Transition Period.

(g)Upon payment to the Purchaser of orders fulfilled by the Company at the Purchaser's request pursuant to Section 7.7(a), Purchaser shall, promptly,  upon receipt of payment from the customer, pay over (i) to the Company 80% of such amount received and (ii) to the applicable sales representative, any commission earned upon such sale.

7.8Service of Warranties.  For one (1) year after the Closing Date, at the Company's request, Purchaser shall use its commercially reasonable best efforts to service the warranties of products sold by the Business prior to the Closing, in exchange for payment of 115% of Purchaser's costs (including but not limited to parts, materials, external processing, professional costs and labor).

ARTICLE VIII
INDEMNIFICATION

8.1Survival.  The representations and warranties of the parties contained in this Agreement and the indemnification obligations pursuant to Section 8.3(d) shall survive until the second (2^nd) anniversary of the Closing Date, except that the representations and warranties (i) set forth in Sections 5.6 (Taxes) and 5.8 (Intellectual Property) shall survive until thirty (30) days after the expiration of the applicable statute of limitations, including any extensions thereof, and (ii) set forth in Sections 5.1 (Organization and Good Standing), 5.2 (Authorization of Agreement), 5.3 (Conflicts; Consents of Third Parties), 5.12 (Financial Advisors), 6.1 (Organization and Good Standing), 6.2 (Authorization of Agreement), 6.3 (Conflicts; Consents of Third Parties), 6.5 (Financial Advisors) and the third sentence of Section 5.7 (Tangible Personal Property; Title to and Sufficiency of Assets) shall survive indefinitely.  Unless otherwise expressly provided in this Agreement, all of the covenants and obligations of the parties contained in this Agreement shall survive the Closing indefinitely.  Notwithstanding the foregoing, if a written claim or written notice is given under this Article VIII with respect to any representation or warranty prior to the expiration of the applicable survival period, the claim with respect to such representation or warranty shall continue indefinitely until such claim is finally resolved.

8.2Indemnification by the Company.  Subject to Section 8.5 hereof, the Company hereby agrees to reimburse, defend, indemnify and hold harmless Purchaser and its Affiliates and its and their respective directors, officers, employees, stockholders, members, managers, partners, agents, attorneys, representatives, successors and permitted assigns (collectively, the "Purchaser Indemnified Parties") from and against any and all losses, Liabilities, fines, diminution in value, damages, Taxes and Expenses (individually, a "Loss" and, collectively, "Losses") relating to, based upon, resulting from or arising out of:

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(a)any inaccuracy or breach of any of the representations or warranties made by the Company in this Agreement or any of the other Transaction Documents;

(b)any breach of or failure to perform any covenant or agreement made by the Company in this Agreement or any of the other Transaction Documents;

(c)the ownership, use or operation of any of the assets or properties of the Company (including any of the Purchased Assets) or the Business prior to the Closing;

(d)any of the Excluded Assets or Excluded Liabilities;

(e)any matter disclosed or required to be disclosed in Schedule 5.10 (Litigation);

(f)the non-compliance by the Company with any Bulk Transfer Laws; or

(g)any and all Taxes (i) relating to any period prior to the Closing with respect to the Company, the Business or any of the Purchased Assets or (ii) in connection with the execution and delivery of this Agreement or the consummation of any of the transactions contemplated hereby (including, without limitation, all transfer, documentary, sales, use, stamp, registration and other similar Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest)).

8.3Indemnification by Purchaser.  Subject to Section 8.5 hereof, Purchaser hereby agrees to reimburse, defend, indemnify and hold harmless the Company and its directors, officers, employees, stockholders, members, managers, partners, agents, attorneys, representatives, successors and permitted assigns (collectively, the "Company Indemnified Parties") from and against any and all Losses relating to, based upon, resulting from or arising out of:

(a)any inaccuracy or breach of any of the representations or warranties made by Purchaser in this Agreement or any of the other Transaction Documents;

(b)any breach of or failure to perform any covenant or agreement made by Purchaser in this Agreement or any of the other Transaction Documents;

(c)the ownership, use or operation of any of the Purchased Assets (but not the Excluded Assets) or the Business after the Closing, other than the Excluded Liabilities;

(d)the Company's transfer of any assets to Purchaser  other than the Purchased Assets; or

(e)any of the Assumed Liabilities.

8.4Indemnification Procedures.

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(a)In the event that any Legal Proceedings shall be instituted, or that any claim shall be asserted, by any Person not party to this Agreement in respect of an Indemnification Claim, the party seeking indemnification (the "Indemnified Party") shall promptly cause written notice of the assertion of any Indemnification Claim of which it has knowledge that is covered by this indemnity to be delivered to the party from whom indemnification is sought (the "Indemnifying Party"); provided that no delay on the part of the Indemnified Party in giving any such notice shall relieve the Indemnifying Party of any indemnification obligation hereunder unless (and then solely to the extent that) the Indemnifying Party is materially prejudiced by such delay.  The Indemnifying Party shall have the right, at its sole option and expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the Indemnified Party, and to defend against any Indemnification Claim and if the Indemnifying Party elects to defend against any Indemnification Claim, it shall within thirty (30) days (or sooner, if the nature of the Indemnification Claim so requires) (the "Dispute Period") notify the Indemnified Party of its intent to do so.  If the Indemnifying Party does not elect within the Dispute Period to defend against any Indemnification Claim, the Indemnified Party may defend against such Indemnification Claim.  If the Indemnifying Party elects to defend against any Indemnification Claim, (i) the Indemnifying Party shall use its commercially reasonable efforts to defend and protect the interests of the Indemnified Party with respect to such Indemnification Claim, (ii) the Indemnified Party, prior to or during the period in which the Indemnifying Party assumes the defense of such matter, may take such reasonable actions as the Indemnified Party deems necessary to preserve any and all rights with respect to such matter, without such actions being construed as a waiver of the Indemnified Party's rights to defense and indemnification pursuant to this Agreement, (iii) the Indemnifying Party shall be deemed to have agreed that it shall indemnify the Indemnified Party for such Indemnification Claim pursuant to the provisions of this Article VIII and (iv) the Indemnified Party may participate, at his or its own expense, in the defense of such Indemnification Claim; provided, however, that such Indemnified Party shall be entitled to participate in any such defense with separate counsel at the expense of the Indemnifying Party if (A) so requested by the Indemnifying Party to participate or (B) based upon the advice of counsel to the Indemnified Party, a conflict or potential conflict exists between the Indemnified Party and the Indemnifying Party, or there are defenses available to the Indemnified Party that are different from or in addition to those available to the Indemnifying Party, that would make such separate representation advisable; and provided, further, that the Indemnifying Party shall not be required to pay for more than one firm of counsel (in addition to local counsel) for all Indemnified Parties in connection with an Indemnification Claim.  The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Indemnification Claim.  Notwithstanding anything in this Section 8.4 to the contrary, the Indemnifying Party shall not, without the prior written consent of the Indemnified Party, settle or compromise, or permit a default or consent to entry of any judgment with respect to, any Indemnification Claim (each, a "Settlement") unless (i) the claimant and such Indemnifying Party provide to such Indemnified Party an unqualified release from all Liability in respect of the Indemnification Claim, (ii) such Settlement does not impose any Liabilities on the Indemnified Party, and (iii) with respect to any non-monetary provision of such Settlement, such provisions would not, in the Indemnified Party's reasonable judgment, have or be reasonably expected to have any adverse effect on the business, assets, properties, condition (financial or otherwise), results of operations or prospects of the Indemnified Party.

(b)If the Indemnifying Party does not undertake within the Dispute Period to defend against an Indemnification Claim, then the Indemnifying Party shall have the right to participate in any such defense at its sole cost and expense, but, in such case, the Indemnified Party shall control the investigation and defense and may settle or take any other actions the Indemnified Party deems reasonably advisable without in any way waiving or otherwise affecting the Indemnified Party's rights to indemnification pursuant to this Agreement.

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(c)In the event that an Indemnified Party should have an Indemnification Claim against the Indemnifying Party hereunder which it determines to assert, but which does not involve a Legal Proceeding or claim by a third party, the Indemnified Party shall send written notice to the Indemnifying Party describing in reasonable detail the nature of such Indemnification Claim and the Indemnified Party's estimate of the amount of Losses attributable to such Indemnification Claim.  The Indemnifying Party shall have thirty (30) days from the date such claim notice is delivered during which to notify the Indemnified Party in writing of any good faith objections it has to the Indemnified Party's notice or Indemnification Claim, setting forth in reasonable detail each of the Indemnifying Party's objections thereto.  If the Indemnifying Party does not deliver such written notice of objection within such thirty (30) day period, the Indemnifying Party shall be deemed to have accepted responsibility for the prompt payment of the Indemnified Party's Indemnification Claim, and shall have no further right to contest the validity of such Indemnification Claim.  If the Indemnifying Party does deliver such written notice of objection within such thirty (30) day period, the Indemnifying Party and the Indemnified Party shall attempt in good faith to resolve any such dispute within thirty (30) days of the delivery by the Indemnifying Party of such written notice of objection, and if not resolved in such thirty (30) day period, may be resolved through Legal Proceedings brought by either party or by such other means as such parties mutually agree.

(d)If an Indemnifying Party does not deliver a written notice of objection to an Indemnified Party with respect to an Indemnification Claim in accordance with Section 8.4(c), or an Indemnification Claim of an Indemnified Party has been finally resolved by a Law of a Governmental Body with respect to which all appeals have been determined or rights to appeal have expired, by a Settlement or by agreement of such Indemnified Party and Indemnifying Party (in any such case, a "Resolution"), the amount of Losses incurred by such Indemnified Party with respect to such Indemnification Claim shall be the obligations of the Indemnifying Party and shall be paid to such Indemnified Party promptly following such Resolution.

8.5Additional Indemnification Provisions.

(a)Any Indemnification Claim to be made by Purchaser or the Company, as the case may be, shall be made on or prior to the expiration of the applicable survival period set forth in Section 8.1, except as otherwise provided therein.

(b)In no event shall the total indemnification to be paid under Section 8.2 and Section 8.3 for Losses arising with respect to all matters exceed thirty percent (30%) of the Purchase Price, with the exception of indemnification for (w) any inaccuracy or breach of any of the representations and warranties as a result of fraud, (x) any inaccuracy or breach of any of the representations and warranties under Section 5.6 (Taxes); (y) any Losses arising out of Section 8.3(d); and (z) any matter disclosed in Schedule 5.10 (Litigation), to which no such limit shall apply and to which there shall be no limit on the ability to pursue all legal remedies.

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(c)The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or agreement, shall not affect the right to indemnification or other remedy based on any such representation, warranty, covenant or agreement.

8.6Tax Treatment of Indemnity Payments.  The Company and Purchaser agree to treat any indemnity payment made pursuant to this Article VIII as an adjustment to the consideration for the Purchased Assets for federal, state, local and foreign income tax purposes.

8.7Exclusive Remedy.  The sole and exclusive remedy for any breach of or inaccuracy, or alleged breach of or inaccuracy, of any representation or warranty in this Agreement shall be indemnification in accordance with this Article VIII, except with respect to any claim based upon fraud or misrepresentation or misconduct by Purchaser or the Company.

ARTICLE IX
MISCELLANEOUS

9.1Expenses.  Except as otherwise provided in this Agreement, each party shall bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other Transaction Document and the consummation of the transactions contemplated hereby and thereby.

9.2Submission to Jurisdiction; Consent to Service of Process.

(a)The parties hereto hereby irrevocably submit to the exclusive jurisdiction of any federal or state court located within the County of New York over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action proceeding related thereto shall be heard and determined in such courts.  The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute.  Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

(b)Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by delivery of a copy thereof in accordance with the provisions of Section 9.5.

9.3Entire Agreement; Amendments and Waivers.  This Agreement and the Transaction Documents (including the schedules and exhibits hereto) represent the entire understanding and agreement among the parties hereto with respect to the subject matter hereof.  This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought.  No action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.  No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

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9.4Governing Law.  This Agreement shall be governed by and construed in accordance with the Laws of the State of New York§ applicable to contracts made and performed in such State, without reference to conflict of law rules that would require the application of the Laws of another jurisdiction.

9.5Notices.  All notices and other communications under this Agreement shall be in writing and shall be deemed given (a) when delivered personally by hand (with written confirmation of receipt), (b) when sent by facsimile (with written confirmation of transmission) or (c) one Business Day following the day sent by reputable overnight courier (with written confirmation of receipt), in each case at the following addresses and facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party(ies) pursuant to this provision):

If to the Company to:

Trilithic, Inc.9710 Park Davis DriveIndianapolis, Indiana 46235Attention:  Jeffrey L. HalePhone:  (317) 423-6808 Facsimile:  (317) 423-7688

With a copy (which shall not constitute notice) to:

Faegre Baker Daniels LLP600 E. 96th Street, Suite 600Indianapolis, Indiana 46204Attention:  Regina M. Sharrow, Esq.Phone:  (317) 569-9600 Facsimile:  (317) 569-4800

If to Purchaser, to:

c/o The LGL Group, Inc.

2525 Shader RoadOrlando, Florida 32804Attention:  Gregory P. AndersonPhone:  (407) 298-2000 Facsimile:  (407) 587-0155

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With a copy (which shall not constitute notice) to:

Olshan Frome Wolosky LLPPark Avenue Tower65 East 55^th StreetNew York New York 10022Attention:  Robert H. Friedman, Esq.Phone:  (212) 451-2300 Facsimile:  (212) 451-2222

9.6Severability.  If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.  Except as otherwise expressly provided for in this Agreement, nothing contained in any representation or warranty, or the fact that any representation or warranty may or may not be more specific than any other representation or warranty, shall in any way limit or restrict the scope, applicability or meaning of any other representation or warranty contained in this Agreement.

9.7Binding Effect; No Third-Party Beneficiaries; Assignment.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.  Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any Person not a party to this Agreement, except as otherwise contemplated by Sections 8.2 and 8.3.  No assignment of this Agreement or of any rights or obligations hereunder may be made by any party hereto, directly or indirectly (by operation of law or otherwise), without the prior written consent of the other parties hereto, and any attempted assignment without the required consents shall be void; provided, however, that Purchaser may assign its rights, interests and obligations hereunder to any Affiliate; provided, further, that no assignment of any obligations hereunder shall relieve the parties hereto of any such obligations.  Upon any such permitted assignment, the references in this Agreement to Purchaser shall also apply to any such assignee unless the context otherwise requires.

9.8Specific Performance.  The parties acknowledge and agree that any breach of this Agreement would give rise to irreparable harm for which monetary damages would not be an adequate remedy.  The parties accordingly agree that the non-breaching party shall be entitled, in addition to any other remedies available under applicable Law or this Agreement, to enforce the terms of this Agreement by decree of specific performance without the necessity of proving the inadequacy of monetary damages as a remedy and to obtain injunctive relief against any breach or threatened breach of this Agreement, without the requirement to post bond or other security.

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9.9Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original copy of this Agreement and all of which, when taken together, shall be deemed to constitute one and the same agreement, and photostatic, .pdf or facsimile copies of fully-executed counterparts of this Agreement shall be given the same effect as originals.

** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK **

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed on its behalf as of the date first written above.

M-TRON INDUSTRIES, INC.
By:	/s/ Gregory P. Anderson
	Name:	Gregory P. Anderson
	Title:	President and Chief Executive Officer
TRILITHIC, INC.
By:	/s/ Jeffrey L. Hale
	Name:	Jeffrey L. Hale
	Title:	President and Secretary

S-1

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory P. Anderson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The LGL Group, Inc. for the quarterly period ended March 31, 2014;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 15, 2014	/s/ Gregory P. Anderson
	Name:	Gregory P. Anderson
	Title:	President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, R. LaDuane Clifton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The LGL Group, Inc. for the quarterly period ended March 31, 2014;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 15, 2014	/s/ R. LaDuane Clifton
	Name:	R. LaDuane Clifton
	Title:	Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of The LGL Group, Inc., (the "Company") on Form 10-Q for the quarterly period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gregory P. Anderson, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 15, 2014	/s/ Gregory P. Anderson
	Name:	Gregory P. Anderson
	Title:	President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of The LGL Group, Inc., (the "Company") on Form 10-Q for the quarterly period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, R. LaDuane Clifton, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 15, 2014	/s/ R. LaDuane Clifton
	Name:	R. LaDuane Clifton
	Title:	Chief Financial Officer (Principal Financial Officer)

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Equity securities [Member]
Assets measured at fair value on recurring basis [Abstract]
Fair value assets	$ 57	$ 61
U.S. Treasury securities [Member]
Assets measured at fair value on recurring basis [Abstract]
Fair value assets	4,739	5,989
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Equity securities [Member]
Assets measured at fair value on recurring basis [Abstract]
Fair value assets	57	61
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury securities [Member]
Assets measured at fair value on recurring basis [Abstract]
Fair value assets	4,739	5,989
Significant Other Observable Inputs (Level 2) [Member] | Equity securities [Member]
Assets measured at fair value on recurring basis [Abstract]
Fair value assets	0	0
Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury securities [Member]
Assets measured at fair value on recurring basis [Abstract]
Fair value assets	0	0
Significant Unobservable Inputs (Level 3) [Member] | Equity securities [Member]
Assets measured at fair value on recurring basis [Abstract]
Fair value assets	0	0
Significant Unobservable Inputs (Level 3) [Member] | U.S. Treasury securities [Member]
Assets measured at fair value on recurring basis [Abstract]
Fair value assets	$ 0	$ 0

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Inventories (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Classification of inventories [Abstract]
Raw materials, net	$ 1,872,000	$ 1,834,000
Work in process, net	1,465,000	1,490,000
Finished goods, net	1,042,000	1,305,000
Total Inventories, net	4,379,000	4,629,000
Inventory Reserve for Obsolescence	$ 2,699,000	$ 2,586,000

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Subsidiaries of the Registrant (Tables)

3 Months Ended

Mar. 31, 2014

Subsidiaries of the Registrant [Abstract]

Schedule of subsidiaries of the entity, by ownership percentage

As of March 31, 2014, the subsidiaries of the Company are as follows:

	Owned By The LGL Group, Inc.
M-tron Industries, Inc.	100.0%
M-tron Industries, Ltd.	99.9%
Piezo Technology, Inc.	100.0%
Piezo Technology India Private Ltd.	99.0%
Lynch Systems, Inc.	100.0%

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Related Party Transactions (Details) (Director [Member], USD $)	Mar. 31, 2014	Mar. 31, 2013
Director [Member]
Related Party Transaction [Line Items]
Amount invested in United States Treasury money market funds	$ 4,739,000	$ 5,589,000
Percentage of stockholders controlled by entity (in hundredths)	10.00%	10.00%

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Earnings Per Share (Details)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Earnings (Loss) Per Share [Abstract]
Shares of common stock excluded from computation of diluted earnings per share (in shares)	200,559	192,401

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Basis of Presentation

3 Months Ended

Mar. 31, 2014

Basis of Presentation [Abstract]

Basis of Presentation

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 of America 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 accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2014.

This interim information should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2013.

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Restructuring Charges (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Restructuring Reserve [Roll Forward]
Restructuring Reserve, Beginning Balance	$ 70,000
Restructuring Reserve, Settled with Cash	(48,000)
Restructuring Reserve, Ending Balance	22,000
Employee Related [Member]
Restructuring Reserve [Roll Forward]
Restructuring Reserve, Beginning Balance	19,000
Restructuring Reserve, Settled with Cash	0
Restructuring Reserve, Ending Balance	19,000
Other [Member]
Restructuring Reserve [Roll Forward]
Restructuring Reserve, Beginning Balance	51,000
Restructuring Reserve, Settled with Cash	(48,000)
Restructuring Reserve, Ending Balance	$ 3,000

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Measurements [Abstract]

Assets measured at fair value on recurring basis

Assets

To estimate the fair value of its equity and U.S. Treasury securities, the Company obtains current market pricing from quoted market sources or uses pricing for identical securities. Assets measured at fair value on a recurring basis are summarized below.

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total March 31, 2014
Equity securities	$	57	$	—	$	—	$	57
U.S. Treasury securities (cash equivalents)	$	4,739	$	—	$	—	$	4,739

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total December 31, 2013
Equity securities	$	61	$	—	$	—	$	61
U.S. Treasury securities (cash equivalents)	$	5,589	$	—	$	—	$	5,589

The Company also has assets that may be subject to measurement at fair value on a non-recurring basis, including goodwill and intangible assets, and other long-lived assets. The Company reviews the carrying value of these assets whenever events and circumstances indicate that the carrying amounts of the assets may not be recoverable. If it is determined that the assets are impaired, the carrying value would be reduced to estimated fair value.

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Notes Payable to Bank and Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2014

Notes Payable to Bank and Long-Term Debt [Abstract]

Schedule of debt including short and long term

	March 31, 2014		December 31, 2013
Note Payable:	(in thousands)
MtronPTI revolving loan with JPMorgan Chase Bank, N.A. ("Chase") due September 30, 2014. The loan bears interest at the greater of Chase's prime rate or the one-month LIBOR rate plus 2.50% per annum (3.25% at March 31, 2014), which is due and payable monthly.	$	1,395	$	1,181

On June 30, 2011, MtronPTI entered into a loan agreement with Chase, which was amended on June 28, 2012, September 28, 2012, June 30, 2013 and September 19, 2013 (the "Chase Loan Agreement"). The Chase Loan Agreement provides for a revolving line of credit in the amount of $1,500,000, to be used solely for working capital needs (the "Chase Revolving Loan") and matures on September 30, 2014. The Chase Loan Agreement also provides that it may be extended for up to three 12-month renewal terms starting on June 30, 2014, upon written request by MtronPTI and approval by Chase. On May 5, 2014, Chase approved the extension of the maturity date under the Chase Loan Agreement from June 30, 2014 to September 30, 2014. The total borrowing capacity on the Chase Loan Agreement is subject to certain limitations on the borrowing base as defined in the Chase Loan Agreement.

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Foreign Revenues (Tables)

3 Months Ended

Mar. 31, 2014

Significant Foreign Revenues [Abstract]

Schedule of foreign revenues

For the three months ended March 31, 2014 and 2013, significant foreign revenues from operations (10% or more of foreign sales) were as follows:

	Three Months Ended March 31,
	2014		2013
	(in thousands)
Significant Foreign Revenues:
China	$	851	$	874
Malaysia		798		1,314
Thailand		181		373
Hong Kong		59		531
All other foreign countries		728		521
Total foreign revenues	$	2,617	$	3,613

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Restructuring Charges (Tables)

3 Months Ended

Mar. 31, 2014

Restructuring Charges [Abstract]

Schedule of Restructuring Reserve by Type of Cost [Table Text Block]

A reconciliation of the Company's restructuring liability, included as a component of other accrued expenses, is as follows:

	Employee Related		Other			Total
Ending balance, December 31, 2013		19,000		51,000			70,000
Less: Cash payments		—		(48,000	)		(48,000	)
Ending balance, March 31, 2014	$	19,000	$	3,000		$	22,000

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Subsidiaries of the Registrant

3 Months Ended

Mar. 31, 2014

Subsidiaries of the Registrant [Abstract]

Subsidiaries of the Registrant

A.Subsidiaries of the Registrant

The LGL Group, Inc. (the "Company"), incorporated in 1928 under the laws of the State of Indiana and reincorporated under the laws of the State of Delaware in 2007, is a holding company with subsidiaries engaged in the manufacturing and marketing of highly-engineered electronic components used to control the frequency or timing of signals in electronic circuits.

As of March 31, 2014, the subsidiaries of the Company are as follows:

	Owned By The LGL Group, Inc.
M-tron Industries, Inc.	100.0%
M-tron Industries, Ltd.	99.9%
Piezo Technology, Inc.	100.0%
Piezo Technology India Private Ltd.	99.0%
Lynch Systems, Inc.	100.0%

The Company operates through its principal subsidiary, M-tron Industries, Inc., which includes the operations of M-tron Industries, Ltd. ("Mtron") and Piezo Technology, Inc. ("PTI"). The combined operations of Mtron and PTI and their subsidiaries are referred to herein as "MtronPTI."  MtronPTI has operations in Orlando, Florida, Yankton, South Dakota, Yantai, China and Noida, India.  MtronPTI also has sales offices in Sacramento, California, Eindhoven, The Netherlands, Hong Kong and Shanghai, China.

During 2007, the Company sold the operating assets of Lynch Systems, Inc., a subsidiary of the Company, to an unrelated party.

On January 31, 2014, MtronPTI completed the acquisition of certain filter product line assets from Trilithic, Inc. ("Trilithic") for net cash consideration of $700,000, excluding acquisition costs. The acquired assets were comprised of intellectual property for Trilithic's fixed and tunable frequency filter products used in cellular, military and other wireless applications, as well as some equipment.  See Note D – Intangible Assets.  This investment is expected to further strengthen and differentiate MtronPTI's high reliability RF & microwave portfolio, providing increased service to clients in the Internet Communications Technology, or ICT, and Aerospace and Defense, or Aero/Defense, market segments.

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Subsidiaries of the Registrant (Details) (USD $)		3 Months Ended
	Jan. 31, 2014	Mar. 31, 2014 M-tron Industries, Ltd. [Member]	Mar. 31, 2014 Piezo Technology, Inc. [Member]	Mar. 31, 2014 Piezo Technology India Private Ltd. [Member]	Mar. 31, 2014 Lynch Systems, Inc. [Member]	Mar. 31, 2014 M-tron Industries, Inc. [Member]
Subsidiaries of the entity, by ownership percentage [Abstract]
Owned By LGL (in hundredths)		99.90%	100.00%	99.00%	100.00%	100.00%
Cash consideration	$ 700,000

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Foreign Revenues (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Segment Reporting Information [Line Items]
Total foreign revenues	$ 2,617	$ 3,613
Hong Kong [Member]
Segment Reporting Information [Line Items]
Total foreign revenues	59	531
China [Member]
Segment Reporting Information [Line Items]
Total foreign revenues	851	874
Malaysia [Member]
Segment Reporting Information [Line Items]
Total foreign revenues	798	1,314
Thailand [Member]
Segment Reporting Information [Line Items]
Total foreign revenues	181	373
All other foreign countries [Member]
Segment Reporting Information [Line Items]
Total foreign revenues	$ 728	$ 521

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Condensed Consolidated Balance Sheets-Unaudited (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current Assets:
Cash and cash equivalents	$ 6,097	$ 7,183
Restricted cash (Note E)	1,500	1,500
Accounts receivable, less allowances of $62 and $42, respectively	3,771	3,237
Inventories, net (Note C)	4,379	4,629
Deferred income taxes (Note K)	0	0
Prepaid expenses and other current assets	309	405
Total Current Assets	16,056	16,954
Property, Plant and Equipment
Land	633	633
Buildings and improvements	3,908	3,908
Machinery and equipment	16,111	15,980
Gross property, plant and equipment	20,652	20,521
Less: accumulated depreciation	(16,746)	(16,535)
Net property, plant, and equipment	3,906	3,986
Deferred income taxes, net (Note J)	0	0
Other assets, net	838	323
Total Assets	20,800	21,263
LIABILITIES AND STOCKHOLDERS' EQUITY
Note payable to bank (Note E)	1,395	1,181
Accounts payable	2,254	1,978
Accrued compensation and commissions expense	795	992
Other accrued expenses	324	357
Total Current Liabilities	4,768	4,508
Total Liabilities	4,768	4,508
Stockholders' Equity:
Common stock, $0.01 par value - 10,000,000 shares authorized; 2,674,448 shares issued and 2,594,784 shares outstanding at March 31, 2014 and December 31, 2013	27	27
Additional paid-in capital	28,683	28,593
Accumulated deficit	(12,147)	(11,338)
Treasury stock: 79,664 shares held in treasury at cost at March 31, 2014 and December 31, 2013, respectively	(572)	(572)
Accumulated other comprehensive income	41	45
Total Stockholders' Equity	16,032	16,755
Total Liabilities and Stockholders' Equity	$ 20,800	$ 21,263

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Consolidated Statement of Stockholder's Equity (USD $)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Treasury stock	Accumulated Other Comprehensive Loss [Member]
Balance at Dec. 31, 2013	$ 16,755,000	$ 27,000	$ 28,593,000	$ (11,338,000)	$ (572,000)	$ 45,000
Balance (in shares) at Dec. 31, 2013	2,594,784	2,594,784
Net loss	(809,000)	0	0	(809,000)	0	0
Other comprehensive loss	(4,000)	0	0	0	0	(4,000)
Stock-based compensation	90,000	0	90,000	0	0	0
Balance at Mar. 31, 2014	$ 16,032,000	$ 27,000	$ 28,683,000	$ (12,147,000)	$ (572,000)	$ 41,000
Balance (in shares) at Mar. 31, 2014	2,594,784	2,594,784

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Notes Payable to Bank and Long-Term Debt (Details) (USD $)	3 Months Ended
	Mar. 31, 2014 Term	Dec. 31, 2013
Notes Payable:
MtronPTI revolving loan with J.P. Morgan Chase Bank, N.A. ("Chase") due June 30, 2014. The loan bears interest at the greater of Chase's prime rate or the one-month LIBOR rate plus 2.50% per annum (3.25% at September 30, 2013), which is due and payable monthly.	$ 1,395,000	$ 1,181,000
Debt instrument, reference rate (in hundredths)	2.50%
Revolving loan, interest rate (in hundredths)	3.25%
Debt instrument, maturity due date	Sep. 30, 2014
Credit facilities provides under chase loan agreement [Abstract]
Line of credit facility amount soley for working capital	1,500,000
Avaialable borrowing capacity	319,000
Number of 12 month renewal terms	3
Collateral deposit	1,500,000
Renewal extension	Sep. 30, 2014
Outstanding under the revolving loan agreement	0
MtronPTI tangible net worth	3,992,000
Financial covenants under chase loan agreement [Abstract]
Tangible net worth as financial covenant, minimum	$ 6,000,000
Debt instrument, reference rate	one-month LIBOR rate

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Subsequent Events

3 Months Ended

Mar. 31, 2014

Subsequent Events[Abstract]

Subsequent Events

O.Subsequent Events

On May 5, 2014, Chase approved the extension of the maturity date under the Chase Loan Agreement from June 30, 2014 to September 30, 2014.

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Stock Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Stock-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 223,000
Minimum [Member]
Stock-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation arrangement, expected dividend rate (in hundredths)	0.00%
Maximum [Member]
Stock-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation arrangement, expected dividend rate (in hundredths)	5.00%
Stock Options [Member]
Stock-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation, shares granted options to purchase (in shares)	24,576
Exercise price of stock options granted (in dollars per share)	$ 5.82
Percentage of shares vested on first anniversary of the grant date (in hundredths)	30.00%
Percentage of shares vested on second anniversary of the grant date (in hundredths)	30.00%
Percentage of shares vested on third anniversary of the grant date (in hundredths)	40.00%
Stock option, expiration date	Mar. 13, 2019
Grant date fair value	$ 1.88

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Fair Value Measurements (Policies)

3 Months Ended

Mar. 31, 2014

Fair Value Measurements [Abstract]

Fair Value Measurements

The Company measures financial and non-financial assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures.  These measurements involve various valuation techniques and assume that the transactions would occur between market participants in the most advantageous market for the Company.  The following is a summary of valuation techniques utilized by the Company for its significant financial and non-financial assets and liabilities as of March 31, 2014 and December 31, 2013:

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
OPERATING ACTIVITIES
Net loss	$ (809)	$ (83)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	211	217
Amortization of finite-lived intangible assets	24	23
Write-down of note receivable	0	5
Stock-based compensation	90	110
Deferred income tax benefit	0	(213)
Changes in operating assets and liabilities:
Increase in accounts receivable, net	(534)	(129)
Decrease (increase) in inventories, net	342	(111)
Decrease in other assets	90	210
Increase (decrease) in trade accounts payable, accrued compensation and commissions expense and other accrued liabilities	46	(765)
Net cash used in operating activities	(540)	(736)
INVESTING ACTIVITIES
Capital expenditures	(12)	(140)
Asset acquisition	(748)	0
Net cash used in investing activities	(760)	(140)
FINANCING ACTIVITIES
Net borrowings on note payable to bank	214	133
Principal payments of long-term debt	0	(58)
Net cash used in financing activities	214	75
Decrease in cash and cash equivalents	(1,086)	(801)
Cash and cash equivalents at beginning of period	7,183	8,625
Cash and cash equivalents at end of period	6,097	7,824
Supplemental Disclosure:
Cash paid for income taxes	7	0
Cash paid for interest	$ 10	$ 11

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Condensed Consolidated Balance Sheets-Unaudited (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
ASSETS
Accounts receivable, allowances	$ 62	$ 42
Stockholders' Equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	2,674,448	2,674,448
Common stock, shares outstanding (in shares)	2,594,784	2,594,784
Treasury Stock, Shares	79,664	79,664

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Foreign Revenues

3 Months Ended

Mar. 31, 2014

Significant Foreign Revenues [Abstract]

Foreign Revenues

J.Foreign Revenues

For the three months ended March 31, 2014 and 2013, significant foreign revenues from operations (10% or more of foreign sales) were as follows:

	Three Months Ended March 31,
	2014		2013
	(in thousands)
Significant Foreign Revenues:
China	$	851	$	874
Malaysia		798		1,314
Thailand		181		373
Hong Kong		59		531
All other foreign countries		728		521
Total foreign revenues	$	2,617	$	3,613

The Company allocates its foreign revenue based on the customer's ship-to location.

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Document and Entity Information (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	LGL GROUP INC
Entity Central Index Key	0000061004
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float		$ 14,103,435
Entity Common Stock, Shares Outstanding		2,594,784
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Taxes [Abstract]

Income Taxes [Text Block]

K.Income Taxes

The Company had total federal and state net operating loss carry-forwards ("NOLs") of $7,607,000 and $14,559,000, respectively, as of December 31, 2013.  These NOLs expire through 2033 if not utilized prior to their expiration. The Company had research and development credit carry-forwards of approximately $1,178,000 at December 31, 2013 that can be used to reduce future income tax liabilities and expire principally between 2020 and 2033.  In addition, the Company has foreign tax credit carry-forwards of approximately $359,000 at December 31, 2013 that are available to reduce future U.S. income tax liabilities subject to certain limitations.  These foreign tax credit carry-forwards expire at various times between 2018 and 2020.

The Company maintains a full valuation allowance against its deferred tax assets under the provisions of ASC 740, Income Taxes, based on the Company's assessment of the uncertainty surrounding the realization of the favorable U.S. tax benefits in future tax returns. When assessing the need for valuation allowances, the Company considers future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the ability to realize deferred tax assets in future years, the Company will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.

The Company recorded a net tax benefit of $0 and $213,000, respectively, for the three months ended March 31, 2014 and 2013.

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Condensed Consolidated Statements of Operations-Unaudited (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Condensed Consolidated Statements of Operations [Abstract]
REVENUES	$ 6,131,000	$ 7,398,000
Cost and Expenses:
Manufacturing cost of sales	4,535,000	4,996,000
Engineering, selling and administrative	2,410,000	2,680,000
OPERATING LOSS	(814,000)	(278,000)
Other Income (Expense):
Interest expense, net	(8,000)	(19,000)
Other income, net	13,000	1,000
Total Other Income (Expense)	5,000	(18,000)
LOSS BEFORE INCOME TAXES	(809,000)	(296,000)
Income tax benefit	0	213,000
NET LOSS	$ (809,000)	$ (83,000)
Weighted average number of shares used in basic and diluted net income (loss) per common share calculation (in shares)	2,594,784	2,598,144
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE (in dollars per share)	$ (0.31)	$ (0.03)

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Notes Payable to Bank and Long-Term Debt

3 Months Ended

Mar. 31, 2014

Notes Payable to Bank and Long-Term Debt [Abstract]

Notes Payable to Bank and Long-Term Debt

E.Note Payable to Bank

	March 31, 2014		December 31, 2013
Note Payable:	(in thousands)
MtronPTI revolving loan with JPMorgan Chase Bank, N.A. ("Chase") due September 30, 2014. The loan bears interest at the greater of Chase's prime rate or the one-month LIBOR rate plus 2.50% per annum (3.25% at March 31, 2014), which is due and payable monthly.	$	1,395	$	1,181

On June 30, 2011, MtronPTI entered into a loan agreement with Chase, which was amended on June 28, 2012, September 28, 2012, June 30, 2013 and September 19, 2013 (the "Chase Loan Agreement"). The Chase Loan Agreement provides for a revolving line of credit in the amount of $1,500,000, to be used solely for working capital needs (the "Chase Revolving Loan") and matures on September 30, 2014. The Chase Loan Agreement also provides that it may be extended for up to three 12-month renewal terms starting on June 30, 2014, upon written request by MtronPTI and approval by Chase. On May 5, 2014, Chase approved the extension of the maturity date under the Chase Loan Agreement from June 30, 2014 to September 30, 2014. The total borrowing capacity on the Chase Loan Agreement is subject to certain limitations on the borrowing base as defined in the Chase Loan Agreement.

At March 31, 2014, MtronPTI had approximately $1,395,000 outstanding under the Chase Revolving Loan and available borrowing capacity of approximately $105,000.

All outstanding obligations of MtronPTI under the Chase Loan Agreement are collateralized by a first priority security interest in all of the assets of MtronPTI, excluding real property. Additionally, in connection with the Chase Loan Agreement, PTI entered into a separate agreement with Chase providing that PTI would not mortgage or otherwise encumber certain real property it owns in Florida while any credit facility is outstanding under the Chase Loan Agreement.

As additional security for MtronPTI's obligations under the Chase Loan Agreement, MtronPTI's obligations under the Chase Loan Agreement are fully collateralized in cash.  Accordingly, Chase retains a security interest in a separate account holding $1,500,000 of MtronPTI cash deposits pursuant to an Assignment of Deposit agreement.  The amount of the cash collateral deposit with Chase is recorded as restricted cash in the accompanying condensed consolidated balance sheets as of March 31, 2014 and December 31, 2013.  The related Assignment of Deposit agreement restricts MtronPTI's ability to withdraw any portion of the deposit and does not allow MtronPTI to assign the deposit or any part thereof.

The Chase Loan Agreement also contains a variety of affirmative and negative covenants, including, but not limited to, a financial covenant that MtronPTI maintain tangible net worth not less than $6,000,000. As of March 31, 2014, MtronPTI was not in compliance with the tangible net worth covenant under the Chase Loan Agreement. Based on the definition of tangible net worth under the Chase Loan Agreement, MtronPTI had a tangible net worth of $3,992,000 as of March 31, 2014, as compared to the minimum requirement of $6,000,000. Chase has waived non-compliance with this covenant as of March 31, 2014, in accordance with the terms of a letter agreement dated May 5, 2014.

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Intangible Assets

3 Months Ended

Mar. 31, 2014

Intangible Assets [Abstract]

Intangible Assets [Text Block]

D.Intangible Assets

As part of MtronPTI's acquisition of certain filter product line assets from Trilithic, MtronPTI acquired $538,000 of intellectual property. These intangible assets are included in "other assets" and are recorded at cost less accumulated amortization.  Amortization is computed for financial reporting purposes using the straight-line method over an estimated useful life of 10 years. The net carrying value of these intangible assets is $529,000 as of March 31, 2014.

 The estimated aggregate amortization expense for each of the five succeeding years and thereafter is as follows (in thousands):

2014	$	40
2015		54
2016		54
2017		54
2018		54
Thereafter		273
Total	$	529

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Stock Based Compensation (Policies)

3 Months Ended

Mar. 31, 2014

Stock-Based Compensation [Abstract]

Stock-based compensation policy

F.Stock-Based Compensation

The Company estimates the fair value of stock options on the grant date using the Black-Scholes-Merton option-pricing model. The Black-Scholes-Merton option-pricing model requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. There is no expected dividend rate. Historical Company information was the basis for the expected volatility assumption. The fair value of grants was calculated using historical volatility as the Company believes that the historical volatility over the life of the option is indicative of expected volatility in the future. The risk-free interest rate is based on the U.S. Treasury zero-coupon rates with a remaining term equal to the expected term of the option. Accounting Standards Codification ("ASC") 718, Stock Compensation, also requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based upon past history of actual performance, forfeiture rates ranging from zero percent to five percent have been assumed for options granted.

On March 13, 2014, the Board of Directors granted a total of 24,576 options to purchase shares of the Company's common stock to members of executive management. These stock options have an exercise price of $5.82, a five-year life expiring on March 13, 2019, and vest as follows: 30% on the first anniversary of the grant date; an additional 30% on the second anniversary of the grant date; and the remaining 40% on the third anniversary of the grant date. These stock options have a grant date fair value of $1.88 per option.  This grant price, combined with the vesting period, reflects the objective to align management incentives with long-term value creation.

Restricted stock awards are granted at a value equal to the market price of our common stock on the date of the grant. There were no restricted stock awards granted during the three months ended March 31, 2014.

Compensation expense related to share-based compensation is recognized over the applicable vesting periods. As of March 31, 2014, there was approximately $223,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies [Abstract]

Commitments and Contingencies

L.Commitments and Contingencies

In the normal course of business, the Company and its subsidiaries may become defendants in certain product liability, patent infringement, worker claims and other litigation.  The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. The Company is not involved in any legal proceedings other than routine litigation arising in the normal course of business, none of which the Company believes will have a material adverse effect on the Company's business, financial condition or results of operations.

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Warrant Dividend

3 Months Ended

Mar. 31, 2014

Warrant Dividend [Abstract]

Warrant Dividend [Text Block]

H.Warrant Dividend

On August 6, 2013, the Company distributed warrants to purchase shares of the Company's common stock as a dividend to holders of the Company's common stock on July 29, 2013, the record date for the dividend. Stockholders received five warrants for each share of the Company's common stock owned on the record date.  When exercisable, 25 warrants will entitle their holder to purchase one share of the Company's common stock at an exercise price of $7.50 per share (subject to adjustment).

The warrants are "European style warrants" and will only become exercisable on the earlier of (i) their expiration date, August 6, 2018, and (ii) such date that the 30-day volume weighted average price per share, or VWAP, of the Company's common stock is greater than or equal to $15.00 (subject to adjustment). Once the warrants become exercisable, they may be exercised in accordance with the terms of the warrant agreement between the Company and the warrant agent until their expiration at 5:00 p.m., Eastern Time, on the expiration date.

The warrants are traded separately from the Company's common stock on the NYSE MKT under the symbol "LGL WS".

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Stock Based Compensation

3 Months Ended

Mar. 31, 2014

Stock-Based Compensation [Abstract]

Stock-Based Compensation

F.Stock-Based Compensation

The Company estimates the fair value of stock options on the grant date using the Black-Scholes-Merton option-pricing model. The Black-Scholes-Merton option-pricing model requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. There is no expected dividend rate. Historical Company information was the basis for the expected volatility assumption. The fair value of grants was calculated using historical volatility as the Company believes that the historical volatility over the life of the option is indicative of expected volatility in the future. The risk-free interest rate is based on the U.S. Treasury zero-coupon rates with a remaining term equal to the expected term of the option. Accounting Standards Codification ("ASC") 718, Stock Compensation, also requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based upon past history of actual performance, forfeiture rates ranging from zero percent to five percent have been assumed for options granted.

On March 13, 2014, the Board of Directors granted a total of 24,576 options to purchase shares of the Company's common stock to members of executive management. These stock options have an exercise price of $5.82, a five-year life expiring on March 13, 2019, and vest as follows: 30% on the first anniversary of the grant date; an additional 30% on the second anniversary of the grant date; and the remaining 40% on the third anniversary of the grant date. These stock options have a grant date fair value of $1.88 per option.  This grant price, combined with the vesting period, reflects the objective to align management incentives with long-term value creation.

Restricted stock awards are granted at a value equal to the market price of our common stock on the date of the grant. There were no restricted stock awards granted during the three months ended March 31, 2014.

Compensation expense related to share-based compensation is recognized over the applicable vesting periods. As of March 31, 2014, there was approximately $223,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements.

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Earnings Per Share

3 Months Ended

Mar. 31, 2014

Earnings (Loss) Per Share [Abstract]

Earnings (Loss) Per Share

G.Earnings (Loss) Per Share

The Company computes earnings (loss) per share in accordance with ASC 260, Earnings Per Share ("ASC 260").  Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period.  Diluted earnings (loss) per share adjusts basic earnings (loss) per share for the effects of stock options, non-participating restricted common stock, and other potentially dilutive financial instruments, only in the periods in which the effects are dilutive.  Shares of restricted stock granted to members of the Board of Directors as a portion of their director fees are deemed to be participating as defined by ASC 260 and therefore are included in the computation of basic earnings (loss) per share.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2014

Fair Value Measurements [Abstract]

Fair Value Measurements

I.Fair Value Measurements

The Company measures financial and non-financial assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures.  These measurements involve various valuation techniques and assume that the transactions would occur between market participants in the most advantageous market for the Company.  The following is a summary of valuation techniques utilized by the Company for its significant financial and non-financial assets and liabilities as of March 31, 2014 and December 31, 2013:

Assets

To estimate the fair value of its equity and U.S. Treasury securities, the Company obtains current market pricing from quoted market sources or uses pricing for identical securities. Assets measured at fair value on a recurring basis are summarized below.

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total March 31, 2014
Equity securities	$	57	$	—	$	—	$	57
U.S. Treasury securities (cash equivalents)	$	4,739	$	—	$	—	$	4,739

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total December 31, 2013
Equity securities	$	61	$	—	$	—	$	61
U.S. Treasury securities (cash equivalents)	$	5,589	$	—	$	—	$	5,589

The Company also has assets that may be subject to measurement at fair value on a non-recurring basis, including goodwill and intangible assets, and other long-lived assets. The Company reviews the carrying value of these assets whenever events and circumstances indicate that the carrying amounts of the assets may not be recoverable. If it is determined that the assets are impaired, the carrying value would be reduced to estimated fair value.

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Intangible Assets (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	10 years
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2014	$ 40,000
2015	54,000
2016	54,000
2017	54,000
2018	54,000
Thereafter	273,000
Total	529,000
Intellectual property [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Asset, Amount	$ 538,000

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Restructuring Charges

3 Months Ended

Mar. 31, 2014

Restructuring Charges [Abstract]

Restructuring Charges [Text Block]

N.Restructuring Charges

On October 17, 2013, the Company's management initiated a restructuring plan to realign its customer support operations across all of the Company's locations and to reduce structural costs in an effort to gain efficiencies in providing customer support.

A reconciliation of the Company's restructuring liability, included as a component of other accrued expenses, is as follows:

	Employee Related		Other			Total
Ending balance, December 31, 2013		19,000		51,000			70,000
Less: Cash payments		—		(48,000	)		(48,000	)
Ending balance, March 31, 2014	$	19,000	$	3,000		$	22,000

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Inventories (Tables)

3 Months Ended

Mar. 31, 2014

Inventories [Abstract]

Schedule of inventories

	March 31, 2014		December 31, 2013
	(in thousands)
Raw materials	$	1,872	$	1,834
Work in process		1,465		1,490
Finished goods		1,042		1,305
Total Inventories, net	$	4,379	$	4,629

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Income Taxes (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Deferred tax assets [Abstract]
Federal tax loss carry-forwards			$ 7,607,000
State tax loss carry-forward			14,559,000
(Provision) benefit for income taxes [Abstract]
(Provision) benefit for income taxes	0	213,000
Federal and State Authorities [Member]
Tax Credit Carryforward [Line Items]
Expiration date	2033
Research and development credit carryforwards [Member]
Tax Credit Carryforward [Line Items]
Tax credit carryforward amount			1,178,000
Research and development credit carryforwards [Member] | Minimum [Member]
Tax Credit Carryforward [Line Items]
Expiration date	2020
Research and development credit carryforwards [Member] | Maximum [Member]
Tax Credit Carryforward [Line Items]
Expiration date	2033
Foreign tax credit carryforwards [Member]
Tax Credit Carryforward [Line Items]
Tax credit carryforward amount			$ 359,000
Foreign tax credit carryforwards [Member] | Minimum [Member]
Tax Credit Carryforward [Line Items]
Expiration date	2018
Foreign tax credit carryforwards [Member] | Maximum [Member]
Tax Credit Carryforward [Line Items]
Expiration date	2020

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Condensed Consolidated Statement of Comprehensive Loss-Unaudited (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Condensed Consolidated Statements of Comprehensive Income (Loss) Unaudited [Abstract]
NET LOSS	$ (809)	$ (83)
Other Comprehensive (Loss) Income:
Unrealized (loss) gain on available-for-sale securities, net of taxes	(4)	6
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME	(4)	6
COMPREHENSIVE LOSS	$ (813)	$ (77)

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Inventories

3 Months Ended

Mar. 31, 2014

Inventories [Abstract]

Inventories

C.Inventories

Inventories are stated at the lower of actual cost (determined using the first-in, first-out method), or market (estimated realizable value), with adjustment being recorded in the reserve for obsolescence, which was $2,699,000 and $2,586,000 as of March 31, 2014 and December 31, 2013, respectively.

Inventories are comprised of the following:

	March 31, 2014		December 31, 2013
	(in thousands)
Raw materials	$	1,872	$	1,834
Work in process		1,465		1,490
Finished goods		1,042		1,305
Total Inventories, net	$	4,379	$	4,629

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Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2014

Intangible Assets [Abstract]

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

 The estimated aggregate amortization expense for each of the five succeeding years and thereafter is as follows (in thousands):

2014	$	40
2015		54
2016		54
2017		54
2018		54
Thereafter		273
Total	$	529

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Warrant Dividend (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Warrant Dividend [Abstract]
Dividend declaration date	Aug. 06, 2013
Dividend date of record	Jul. 29, 2013
Number of warrants received for each share of common stock (in shares)	5
Number of warrants that entitle holder to purchase one share of common stock (in shares)	25
Warrant exercise price (in dollars per share)	$ 7.50
Minimum volume weighted average price per share (in dollars per share)	$ 15.00

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Related Party Transactions

3 Months Ended

Mar. 31, 2014

Related Party Transactions [Abstract]

Related Party Transactions

M.Related Party Transactions

At March 31, 2014 and December 31, 2013, approximately $4,739,000 and $5,589,000, respectively, was invested in United States Treasury money market funds managed by a related entity (the "Fund Manager") which is related through two common directors.  One of the Company's directors, who is also a 10% stockholder, currently serves as a director and executive officer of the Fund Manager.  Another of the Company's directors serves as a director and audit committee member of the Fund Manager. The fund transactions in the three months ended March 31, 2014 and the year ended December 31, 2013 were directed solely at the discretion of Company management.