SECURITIES & EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended June 30, 2005

                                       or

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

For the transition period from ____________ to ____________

Commission File No. 1-106

                                LYNCH CORPORATION
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

140 Greenwich Avenue, 4th Floor, Greenwich, CT       06830
--------------------------------------------------------------------------------
(Address of principal executive offices)             (Zip Code)

                                 (203) 622-1150
--------------------------------------------------------------------------------
               Registrant's telephone number, including area code


--------------------------------------------------------------------------------
                   (Former address, 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 [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes [ ]   No |X|

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

        CLASS                               Outstanding At June 30, 2005
-------------------------------             -------------------------------
Common Stock, $0.01 par value                     1,624,926


                                       1




                                      INDEX

                       LYNCH CORPORATION AND SUBSIDIARIES


PART I.   FINANCIAL INFORMATION...............................................3

Item 1.   Financial Statements (Unaudited)....................................3
          Consolidated Balance Sheets:........................................3
            -  June 30, 2005..................................................3
            -  December 31, 2004..............................................3
          Consolidated Statements of Operations:..............................5
            -  Three months ended June, 30, 2005 and 2004.....................5
            -  Six months ended June 30, 2005 and 2004........................5
          Consolidated Statements of Cash Flows:..............................6
            -  Six months ended June 30, 2005 and 2004........................6
          Notes to Condensed Consolidated Financial Statements:...............7

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations...............................................15

Item 3.   Quantitative and Qualitative Disclosure About Market Risk...........23

Item 4.   Controls and Procedures.............................................23

PART II.  OTHER INFORMATION...................................................24

Item 1.   Legal Proceedings...................................................24

Item 2.   Issuer Purchase of Its Equity Securities............................25

Item 4.   Submission of Matters to a Vote of Security Holders.................26

Item 6.   Exhibits and Reports on Form 8-K....................................26



                                       2





PART 1 -- FINANCIAL INFORMATION

ITEM 1 -- FINANCIAL STATEMENTS

                                                 LYNCH CORPORATION AND SUBSIDIARIES
                                                 ----------------------------------
                                              CONSOLIDATED BALANCE SHEETS -- UNAUDITED
                                              ----------------------------------------
                                                (In Thousands, Except Share Amounts)


                                                                                          June 30,         December 31,
                                                                                            2005             2004 (A)
                                                                                       -----------       ----------
ASSETS
Current Assets
  Cash and cash equivalents.....................................................       $     1,067       $    2,580
  Restricted cash (Note E)......................................................             1,000            1,125
  Investments - marketable securities (Note F)..................................             3,842            3,609
  Accounts receivable, less allowance for doubtful accounts of $91 and $92,
   respectively....................                                                          9,392            6,360
  Unbilled accounts receivable..................................................             3,520            2,507
  Inventories (Note G)..........................................................             6,892            7,852
  Deferred income taxes.........................................................               413              111
  Prepaid expense...............................................................               536              626
                                                                                       -----------       ----------
      Total Current Assets......................................................            26,662           24,770
Property, Plant and Equipment
  Land..........................................................................               800              871
  Buildings and improvements....................................................             5,606            5,811
  Machinery and equipment.......................................................            14,224           14,443
                                                                                       -----------       ----------
                                                                                            20,630           21,125
  Less: accumulated depreciation................................................           (13,274)         (12,669)
                                                                                       -----------       ----------
                                                                                             7,356            8,456
  Other assets..................................................................               599              657
                                                                                       -----------       ----------
      Total Assets..............................................................       $    34,617       $   33,883
                                                                                       ===========       ==========


LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Notes payable (Note H)........................................................       $     5,186       $    5,557
  Trade accounts payable........................................................             3,334            2,667
  Accrued warranty expense (Note I).............................................               450              466
  Accrued compensation expense..................................................             1,170            1,101
  Accrued income taxes..........................................................             1,314              966
  Accrued professional fees.....................................................               352              534
  Margin liability on marketable securities.....................................             1,565            1,566
  Other accrued expenses........................................................             1,149            1,139
  Commitments and contingencies (Note M)........................................               761              775
  Customer advances.............................................................             1,172            2,115
  Current maturities of long-term debt (Note H).................................             4,153            3,842
                                                                                       -----------       ----------
      Total Current Liabilities.................................................            20,606           20,728
Long-term debt (Note H).........................................................             2,413            3,162
                                                                                       -----------       ----------
      Total Liabilities.........................................................            23,019           23,890
Shareholders' Equity
  Common stock, $0.01 par value - 10,000,000 shares authorized; 1,649,834
    shares issued; 1,624,926 shares outstanding.................................                16               16
  Additional paid-in capital....................................................            17,404           17,404
  Accumulated deficit...........................................................            (6,385)          (7,786)
  Accumulated other comprehensive income (Note K)...............................             1,116              849
  Treasury stock, at cost, of 24,908 and 17,708 shares, respectively............              (553)            (490)
                                                                                       -----------       ----------
      Total Shareholders' Equity................................................            11,598            9,993
                                                                                       -----------       ----------
      Total Liabilities and Shareholders' Equity................................       $    34,617       $   33,883
                                                                                       ===========       ==========


                                       3


(A) The Balance  Sheet at December  31, 2004 has been  derived  from the audited
financial  statements at that date, but does not include all of the  information
and footnotes required by accounting principles generally accepted in the United
States for complete financial statements.

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                       4





PART I -- FINANCIAL INFORMATION

ITEM 1 -- FINANCIAL STATEMENTS

                                                 LYNCH CORPORATION AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF OPERATIONS -- UNAUDITED
                                                (In Thousands, Except Share Amounts)


                                                                      Three Months Ended                       Six Months Ended
                                                                           June 30,                                June 30,
                                                               ------------------------------        ------------------------------
                                                                    2005               2004               2005                2004
                                                               -----------        -----------        -----------        -----------

SALES AND REVENUES .....................................       $    14,913        $     6,736        $    25,508        $    13,548
Cost and expenses:
  Manufacturing cost of sales ..........................             9,401              4,750             16,719             10,050
  Selling and administrative ...........................             3,511              2,028              6,561              4,303
  Lawsuit settlement provision (Note M) ................              --                  425               --                  425
                                                               -----------        -----------        -----------        -----------
OPERATING PROFIT (LOSS) ................................             2,001               (467)             2,228             (1,230)
Other income (expense):
  Investment income ....................................                 7                  4                 17                  8
  Interest expense .....................................              (208)               (62)              (393)              (113)
  Other income .........................................                77                 (5)                80                 22
                                                               -----------        -----------        -----------        -----------
                                                                      (124)               (63)              (296)               (83)
                                                               -----------        -----------        -----------        -----------
INCOME (LOSS) BEFORE INCOME TAXES ......................             1,877               (530)             1,932             (1,313)
Provision for income taxes .............................              (526)               (30)              (531)               (55)
                                                               -----------        -----------        -----------        -----------
NET INCOME (LOSS) ......................................       $     1,351        $      (560)       $     1,401        $    (1,368)
                                                               ===========        ===========        ===========        ===========
Weighted average shares outstanding ....................         1,630,539          1,495,500          1,631,333          1,496,300
                                                               -----------        -----------        -----------        -----------
BASIC AND DILUTED INCOME (LOSS) PER
  SHARE: ...............................................       $      0.83        $     (0.37)       $      0.86        $     (0.91)
                                                               ===========        ===========        ===========        ===========

     o    Effective  September  30,  2004,  the  Company  acquired,  through its
          subsidiary M-tron Industries,  Inc., 100% of the common stock of Piezo
          Technology,  Inc. (See Note D to the Condensed  Consolidated Financial
          Statements.)  The three  month and six month  results  for the  period
          ending June 30, 2004 do not include Piezo Technology, Inc.

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                       5





PART I -- FINANCIAL INFORMATION

ITEM 1 -- FINANCIAL STATEMENTS

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

                                                                                      Six Months Ended
                                                                                          June 30,
                                                                                  -----------------------
                                                                                       2005         2004
                                                                                  ----------   ----------

OPERATING ACTIVITIES
Net income (loss)...............................................................     $ 1,401   $   (1,368)
Adjustments to reconcile net income (loss) to net cash provided by operating
  activities:
Depreciation....................................................................         640          428
Amortization of definite-lived intangible assets................................          44          123
Gain on sale of fixed assets....................................................         (69)           -
Lawsuit settlement provision (Note M)                                                      -          425
Changes in operating assets and liabilities:
  Receivables...................................................................      (4,045)       2,094
  Inventories...................................................................         960       (1,104)
  Accounts payable and accrued liabilities......................................         882          (98)
  Other assets/liabilities......................................................        (729)           3
                                                                                  ----------   ----------
Net cash provided by operating activities.......................................        (916)         503
                                                                                  ----------   ----------


INVESTING ACTIVITIES
Capital expenditures............................................................        (191)        (184)
Restricted cash.................................................................         125            -
Purchase of marketable securities...............................................           -         (754)
Proceeds from sale if fixed assets..............................................         307            -
Payment on margin liability on marketable securities............................           -         (300)
                                                                                  ----------   ----------
Cash provided by (used in) investing activities.................................         241       (1,238)
                                                                                  ----------   ----------


FINANCING ACTIVITIES
Net repayments of notes payable.................................................        (371)         (97)
Repayment of long-term debt.....................................................        (438)         (62)
Other...........................................................................                                                                    34                -
Purchase of treasury stock......................................................         (63)         (32)
                                                                                  ----------   ----------
Net cash used in financing activities...........................................        (832)        (191)
                                                                                  ----------   ----------
(Decrease) increase in cash and cash equivalents................................      (1,513)        (926)
Cash and cash equivalents at beginning of period................................       2,580        3,981
                                                                                  ----------   ----------
Cash and cash equivalents at end of period......................................  $    1,067   $    3,055
                                                                                  ==========   ==========



           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                 6





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A.   SUBSIDIARIES OF THE REGISTRANT

As of June 30, 2005, the Subsidiaries of the Registrant are as follows:

                                                Owned By Lynch
                                                --------------

Lynch Systems, Inc.............................    100.0%
M-tron Industries, Inc.........................    100.0%
   M-tron Industries, Ltd......................    100.0%
   Piezo Technology, Inc.......................    100.0%
      Piezo Technology India Private Ltd.......     99.9%

B.   BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation  S-X.  Accordingly,  they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating results for the three month and six month period ended
June 30, 2005 are not necessarily indicative of the results that may be expected
for the year ended December 31, 2005.

     The balance  sheet at December  31, 2004 has been  derived from the audited
financial  statements  at that date but does not include all of the  information
and footnotes required by generally accepted accounting  principles for complete
financial statements.

     For further information, refer to the consolidated financial statements and
footnotes  thereto included in the Registrant  Company and  Subsidiaries  Annual
Report on Form 10-K for the year ended December 31, 2004.

C.   ADOPTION OF ACCOUNTING PRONOUNCEMENTS

     On December 14, 2004,  the Financial  Accounting  Standards  Board ("FASB")
issued  Statement of Financial  Accounting  Standards  ("SFAS") No. 123 (revised
2004), "Share Based Payment" ("SFAS 123R"), which is a revision of SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). SFAS 123R supersedes APB
Opinion No. 25, "Accounting for Stock Issued to Employees",  and amends SFAS No.
95 "Statement of Cash Flows". Generally, the approach in SFAS 123R is similar to
the approach described in SFAS 123. However,  SFAS 123R requires all share-based
payments  to  employees,  including  grants to  employee  stock  options,  to be
recognized  in the  income  statement  based on  their  fair  values.  Pro-forma
disclosure is no longer an alternative.

     On April 14, 2005, the Securities and Exchange Commission announced that it
would  provide for a phased-in  implementation  process for SFAS No. 123R.  This
ruling  effectively  delayed the  Company's  adoption of the standard  until the
first quarter of 2006.  The Company will continue to evaluate the  provisions of
SFAS No. 123R to determine its impact on its financial  condition and results of
operations.

     In November  2004,  the FASB issued  SFAS No.  151,  "INVENTORY  COSTS - AN
AMENDMENT OF ARB NO. 43". SFAS No. 151 is effective for inventory costs incurred
during fiscal years  beginning  after June 15, 2005.  This Statement  amends the
guidance  in ARB  No.  43,  Chapter  4,  "INVENTORY  PRICING",  to  clarify  the
accounting  for abnormal  amounts of idle facility  expense,  freight,  handling
costs, and wasted material (spoilage).  This Statement requires that those items
be  recognized  as  current-period  charges  regardless of whether they meet the
criterion of "so abnormal". In addition, this Statement requires that allocation
of fixed production  overheads to the costs of conversion be based on the normal
capacity of the  production  facilities.  The  adoption of this  standard is not
expected to have a material impact on the Company's overall  financial  position
or results of operations.


D.   ACQUISITION

     On October  15,  2004,  the  Company  acquired,  through  its  wholly-owned
subsidiary,  Mtron,  100% of the  common  stock  of  PTI.  The  acquisition  was
effective September 30, 2004. PTI manufactures and markets high-end oscillators,
crystals,  resonators and filters used in electronic and communications systems.
The purchase price was approximately $8,736,000 (before deducting cash acquired,
and before adding  acquisition  costs and transaction  fees). The Company funded
the purchase price by (a) new notes payable and long-term debt of $6,936,000 and
(b)  proceeds  of  $1,800,000  received  from the sale of Lynch Stock to Venator
Merchant Fund ("Venator"),  which is controlled by the Company's Chairman,  Marc
Gabelli.

                                       7


     The  following  is a  revised  allocation  of  the  purchase  price  to the
estimated  fair value of assets  acquired  and  liabilities  assumed for the PTI
acquisition.  The allocation is based on management's  estimates,  including the
valuation  of  the  fixed  and  intangible  assets  by  independent  third-party
appraisers.

                                                          (in thousands)
ASSETS:
-------
Cash.......................................................$  1,389
Accounts receivable........................................   1,565
Inventories................................................   2,485
Prepaid expenses and other current assets..................     853
Property and equipment.....................................   4,454
Intangible assets..........................................     627
Other assets...............................................     356
                                                           --------
Total assets acquired......................................$ 11,729
                                                           ========
LIABILITIES:
Accounts payable...........................................$    556
Accrued expenses...........................................   1,292
Debt assumed by the Company................................   1,145
Total liabilities assumed..................................   2,993
                                                           --------
Net Assets acquired........................................$  8,736
                                                           ========


     Although the Company is in the process of  finalizing  the  purchase  price
accounting  and related  income tax  implications,  during the second quarter of
2005,  certain  adjustments  totaling  approximately  $400,000  were made to the
acquired property and equipment.

     The  fair  market  value  of net  assets  acquired  in the PTI  acquisition
exceeded the purchase  price,  resulting in negative  goodwill of  approximately
$4.4 million. In accordance with Statement of Financial Accounting Standards No.
141 "Accounting for Business Combinations", this negative goodwill was allocated
back to PTI's non-current  assets,  resulting in a write-down in the fair market
value initially  assigned to property and equipment and intangible  assets.  The
adjusted intangible assets of $627,000 consist of customer relationships,  trade
name and funded  technologies,  and were  determined to have definite lives that
range from two to ten years.

E.   RESTRICTED CASH

     At June 30, 2005 and December  31,  2004,  the Company had $1.0 million and
$1.1 million,  respectively,  of Restricted Cash that secures a Letter of Credit
issued by Bank of America to the First  National Bank of Omaha as collateral for
its M-tron subsidiary's loans.

F.   INVESTMENTS

     The following is a summary of marketable  securities  (investments) held by
the Company (in thousands):

                                               Gross       Gross      Estimated
                                             Unrealized  Unrealized     Fair
Equity Securities                  Cost         Gains      Losses       Value
--------------------------------- -------    ----------  ----------   ---------

June 30, 2005.................... $ 2,774     $  1,068       --        $ 3,842
December 31, 2004................ $ 2,774     $    835       --        $ 3,609

                                       8


     The Company has a margin liability against this investment of $1,565,000 at
June 30, 2005 and of  $1,566,000 at December 31, 2004 which must be settled upon
the  disposition of the related  securities  whose fair value is based on quoted
market  prices.  The Company has designated  these  investments as available for
sale  pursuant  to  Statement  of  Financial   Accounting   Standards  No.  115,
"Accounting for Certain Investments in Debt and Equity Securities".

G.   INVENTORIES

     Inventories  are stated at the lower of cost or market  value.  At June 30,
2005, inventories were valued by two methods: last-in, first-out (LIFO) 52%, and
first-in, first-out (FIFO) 48%. At December 31, 2004, inventories were valued by
the same two methods: LIFO - 47%, and FIFO - 53%.

                                     June 30,  December 31,
                                       2005       2004
                                    -----------------------
                                       (in thousands)
Raw materials...................     $ 2,624     $ 2,308
Work in process.................       2,659       3,763
Finished goods..................       1,609       1,781
                                    --------     -------
  Total Inventories.............     $ 6,892     $ 7,852
                                    ========     =======

     Current costs exceed LIFO value of  inventories  by $851,000 and $1,110,000
at June 30, 2005 and December 31, 2004, respectively.

H.   INDEBTEDNESS

     Lynch Systems and MtronPTI  maintain  their own  short-term  line of credit
facilities. In general, the credit facilities are secured by property, plant and
equipment,  inventory,  receivables and common stock of certain subsidiaries and
contain certain covenants  restricting  distributions to the Company.  The Lynch
Systems  credit  facility  includes  an  unsecured  parent  Company   guarantee.
MtronPTI's credit facility includes an unsecured parent Company guarantee and is
supported by a $1.0  million  Letter of Credit that is secured by a $1.0 million
deposit at Bank of America (see Note E - "Restricted Cash").

     On June 30, 2005, MtronPTI renewed its credit agreement with First National
Bank of Omaha  extending  the due date to May 31,  2006.  MtronPTI's  short-term
credit  facility  totals $5.5  million,  of which $2.8 million was available for
future borrowings.  MtronPTI's $3.0 million bridge loan from First National Bank
of Omaha is scheduled to mature on October 14, 2005.  MtronPTI is in discussions
to refinance this bridge loan, however,  there can be no assurances that it will
be able to do so.

     On June 29, 2005,  Lynch Systems  entered into an extension  agreement with
SunTrust  Bank to extend the due date of its credit  agreement  until August 31,
2005.  Lynch Systems $7.0 million  short-term  credit  facility was reduced to a
$4.3 million  credit  facility in accordance  with the extension  agreement,  of
which  $200,000 was available for letters of credit.  Lynch Systems is currently
seeking to obtain new financing,  however,  there can be no assurances that such
financing will be available.

     On May  12,  2005,  Venator  Merchant  Fund,  L.P.  made a  loan  to  Lynch
Corporation  in the amount of $700,000  due  September  11, 2005 or within seven
days after  demand by  Venator.  Venator is an  investment  limited  partnership
controlled by Lynch's Chairman of the Board, Marc Gabelli. The loan was approved
by the Audit Committee of the Board of Directors of Lynch. JUNE 30, DECEMBER 31,

                                        9


                                                                                                   June 30,        December 31,
                                                                                                   --------        ------------
                                                                                                     2005              2004
                                                                                                     ----              ----
                                                                                                        (in thousands)
Notes payable:
Mtron bank revolving loan at variable interest rates (greater of prime or 4.5%;
  6.25% at June 30, 2005), due May, 2006                                                           $ 2,730          $ 3,557
Lynch Systems working capital revolving loan at variable interest rates, (LIBOR
  + 2%; 5.11% at June 30, 2005), due August, 2005                                                    1,756            2,000

Venator promissory note at a fixed interest rate of 6%, due September 11, 2005                         700             --
                                                                                                   -------          -------
                                                                                                   $ 5,186          $ 5,557
                                                                                                   =======          =======

Long-term debt consists of:

                                                                                                   June 30,        December 31,
                                                                                                   --------        ------------
                                                                                                     2005              2004
                                                                                                     ----              ----
                                                                                                        (in thousands)
Long-term debt:
Mtron commercial bank term loan at variable interest rates (6.50% at June 30,
  2005), due April, 2007                                                                           $   563          $   686
Yankton Area Progressive Growth loan at 0% interest                                                     --               50
South Dakota Board of Economic Development at a fixed rate of 3%, due
  December, 2007                                                                                       268              273
Yankton Areawide Business Council loan at a fixed interest rate of 5.5%, due
  November, 2007                                                                                        78               83
Lynch Systems term loan at a fixed interest rate of 5.5%, due August, 2005                             403              427
Mtron bridge loan at variable interest rates (greater of prime or 4.5%;  6.25% at
  June 30, 2005), due October, 2005                                                                  3,000            3,000
Mtron term loan at variable interest rates (greater of prime plus 50 basis points
  or 4.5%;  6.75% at June 30, 2005), due October, 2007                                               1,760            1,943
Rice University Promissory Note at a fixed interest rate of 4.5%, due August,
  2009                                                                                                 309              345
Smythe Estate Promissory Note at a fixed interest rate of 4.5% due August, 2009                        185              197
                                                                                                   -------          -------
                                                                                                     6,566            7,004
Current maturities                                                                                  (4,153)          (3,842)
                                                                                                   -------          -------
                                                                                                   $ 2,413          $ 3,162
                                                                                                   =======          =======


I.   LONG-TERM CONTRACTS AND WARRANTY EXPENSE

     Lynch Systems, a 100% wholly-owned subsidiary of the Company, is engaged in
the  manufacture  and  marketing  of  glass-forming   machines  and  specialized
manufacturing  machines.  Certain  sales  contracts  require an advance  payment
(usually  30% of the  contract  price)  which  is  accounted  for as a  customer
advance.  The contractual  sales prices are paid either (i) as the manufacturing
process  reaches  specified  levels of  completion or (ii) based on the shipment
date or (iii)  negotiated  terms of sale.  Guarantees by letter of credit from a
qualifying financial institution are required for most sales contracts.  Because
of the  specialized  nature of these  machines  and the period of time needed to
complete  production and shipping,  Lynch Systems  accounts for these  contracts
using the  percentage-of-completion  accounting  method  as costs  are  incurred
compared to total estimated project costs (cost-to-cost basis). At June 30, 2005
and December 31, 2004,  unbilled accounts  receivable were $3.5 million and $2.5
million, respectively.

     Lynch Systems provides a full warranty to world-wide  customers who acquire
machines.  The warranty covers both parts and labor and normally covers a period
of one year or thirteen months.  Based upon experience,  the warranty accrual is
based  upon three to five  percent  of the  selling  price of the  machine.  The
Company  periodically  assesses  the  adequacy  of the  reserve  and adjusts the
amounts as necessary.

                                       10


                                                                                            (in thousands)

    Balance, December 31, 2004..................................................................$  466
    Warranties issued during the period.........................................................   170
    Settlements made during the period..........................................................  (186)
    Changes in liabilities for pre-existing warranties during the period, including
     expirations................................................................................    --
                                                                                                ------
    Balance, June 30, 2005......................................................................$  450
                                                                                                ======


J.   EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

     On May 26, 2005, the Company's shareholders approved amendments to the 2001
Equity  Incentive  Plan to increase the total number of shares of the  Company's
Common Stock  available for issuance  from 300,000 to 600,000  shares and to add
provisions  that require  terms and  conditions of awards to comply with section
409A of the  Internal  Revenue Code of 1986.  Also on May 26, 2005,  the Company
granted  options to purchase  120,000  shares of Company common stock to certain
employees and  directors of the Company at $13.17 per share.  These options were
anti-dilutive  and have lives of up to ten years.  As of June 30, 2005,  300,000
options are outstanding and fully vested.

     The  Company  accounts  for  the  2001  Equity  Incentive  Plan  under  the
recognition and measurement  principles of Accounting  Principles  Board Opinion
No. 25, "Accounting for Stock Issued to Employees," and related Interpretations.
No stock-based  employee  compensation  cost is reflected in net income,  as all
options  granted  under those plans had an exercise  price equal to or above the
market value of the  underlying  common stock on the date of grant.  The Company
provides pro-forma  disclosures of the compensation expense determined under the
fair value provisions of Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock-Based Compensation" as follows:




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

                                                                        2005          2004         2005          2004
                                                                     ---------    ---------     ----------     ---------
                                                                            (in thousands, except share amounts)


Net income (loss) as reported .................................      $ 1,351       $  (560)      $ 1,401       $(1,368)
Deduct: Total stock based employee compensation
  expense determined under fair value based method for
  all awards, net of related tax effect .......................         (222)          (38)         (222)          (77)
                                                                     -------       -------       -------       -------
Pro-forma net income (loss) ...................................      $ 1,129       $  (598)      $ 1,179       $(1,445)
                                                                     =======       =======       =======       =======
Basic & diluted income (loss) per share:
As reported ...................................................      $  0.83       $ (0.37)      $  0.86       $ (0.91)
Pro forma .....................................................      $  0.69       $ (0.40)      $  0.72       $ (0.97)

          The net income (loss) as reported in each period did not include any stock-based compensation.

                                       11



K.   ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

     Total  comprehensive  income was  $1,175,000 in the three months ended June
30, 2005, compared to a total comprehensive loss of $835,000 in the three months
ended June 30, 2004. Included in total  comprehensive  income (loss) were losses
on available  for sale  securities  of $189,000 and $275,000 in the three months
ended June 30, 2005 and 2004, respectively.

     Total comprehensive  income was $1,668,000 in the six months ended June 30,
2005,  compared to a total  comprehensive  loss of  $1,057,000 in the six months
ended June 30, 2004. Included in total comprehensive income (loss) were gains on
available  for sale  securities of $233,000 and $311,000 in the six months ended
June 30, 2005 and 2004, respectively.


                                                                                 Three Months Ended     Six Months Ended
                                                                                      June 30,              June 30,
                                                                                ------------------     ------------------
                                                                                  2005       2004        2005       2004
                                                                                -------    -------     -------    -------
Net income (loss) as reported ...........................................       $ 1,351    $  (560)    $ 1,401    $(1,368)
Foreign currency translation ............................................            13         --          34         --
Unrealized (loss) gain on available for sale securities .................          (189)      (275)        233        311
                                                                                -------    -------     -------    -------
Total comprehensive income (loss) .......................................       $ 1,175    $  (835)    $ 1,668    $(1,057)
                                                                                =======    =======     =======    =======


The components of accumulated other comprehensive income, net of related tax, at
June 30, 2005 and December 31, 2004, and June 30, 2004 are as follows:


                                                             June 30,       December 31,    June 30,
                                                               2005            2004           2004
                                                           ---------        --------       ---------
Balance beginning of period..............................  $     849        $    291       $     291
Foreign currency translation.............................         34              14              --
Unrealized gain on available for-sale securities.........        233             544             311
                                                           ---------        --------       ---------
Accumulated other comprehensive income...................  $   1,116        $    849       $     602
                                                           =========        ========       =========


L.   SEGMENT INFORMATION

     The Company has two reportable  business segments:  1) glass  manufacturing
equipment  business,  which  represents the operations of Lynch Systems,  and 2)
frequency  control devices (quartz  crystals and  oscillators)  which represents
products manufactured and sold by MtronPTI.  The Company's foreign operations in
Hong Kong and India exist under MtronPTI.

     Operating  profit  (loss) is equal to  revenues  less  operating  expenses,
excluding  investment  income,  interest expense,  and income taxes. The Company
allocates  a  negligible  portion  of  its  general  corporate  expenses  to its
operating segments. Such allocation was $125,000 and $87,500 in the three months
ending June 30, 2005 and 2004, respectively and $250,000 and $175,000 in the six
months ending June 30, 2005 and 2004, respectively.  Identifiable assets of each
industry segment are the assets used by the segment in its operations  excluding
general corporate assets. General corporate assets are principally cash and cash
equivalents,   short-term   investments   and  certain  other   investments  and
receivables.

                                       12

                                                                                 Three Months                    Six Months
                                                                                Ended June 30,                  Ended June 30,
                                                                           ---------------------             ---------------------
                                                                           2005             2004             2005             2004
                                                                           ----             ----             ----             ----
REVENUES
Glass manufacturing equipment - USA                                     $    616         $    181         $  1,066         $    333
Glass manufacturing equipment - Foreign                                    5,448              970            7,209            3,117
                                                                        --------         --------         --------         --------
Total Glass manufacturing equipment                                        6,064            1,151            8,275            3,450

Frequency control devices - USA                                            4,837            2,052            9,691            4,189
Frequency control devices - Foreign                                        4,012            3,533            7,542            5,909
                                                                        --------         --------         --------         --------
Total Frequency control devices                                            8,849            5,858           17,233           10,098
                                                                        --------         --------         --------         --------
Consolidated total revenues                                             $ 14,913         $  6,736         $ 25,508         $ 13,548
                                                                        ========         ========         ========         ========
OPERATING PROFIT (LOSS)
Glass manufacturing equipment                                           $  1,774         $   (130)        $  1,848         $   (522)
Frequency control devices                                                    638              407            1,217              469
                                                                        --------         --------         --------         --------
Total manufacturing                                                        2,412              277            3,065              (53)

Unallocated Corporate expense                                               (411)            (744)            (837)          (1,177)
                                                                        --------         --------         --------         --------
Consolidated total operating profit (loss)                              $  2,001         $   (467)        $  2,228         $ (1,230)
                                                                        ========         ========         ========         ========
OTHER PROFIT (LOSS)
Investment income                                                       $      7         $      4         $     17         $      8
Interest expense                                                            (208)             (62)            (393)            (113)
Other income (expense)                                                        77               (5)              80               22
                                                                        --------         --------         --------         --------
Consolidated total profit (loss) before taxes                           $  1,877         $   (530)        $  1,832         $ (1,313)
                                                                        ========         ========         ========         ========

CAPITAL EXPENDITURES
Glass manufacturing equipment                                           $      8         $     10         $     20         $     13
Frequency control devices                                                    152              105              170              171
General Corporate                                                           --               --                  1             --
                                                                        --------         --------         --------         --------
Consolidated total capital expenditures                                 $    160         $    115         $    191         $    184
                                                                        ========         ========         ========         ========
TOTAL ASSETS
Glass manufacturing equipment                                                                             $ 12,109         $   9,902
Frequency control devices                                                                                   17,100             9,018
General Corporate                                                                                            5,308             2,878
                                                                                                          --------         ---------
Consolidated total assets                                                                                 $ 34,517         $  21,798
                                                                                                          ========         =========



M.   COMMITMENTS AND CONTINGENCIES

     In  the  normal  course  of  business,  subsidiaries  of  the  Company  are
defendants in certain product  liability,  worker claims and other litigation in
which the  amounts  being  sought  may exceed  insurance  coverage  levels.  The
resolution of these matters is not expected to have a material adverse effect on
the Company's financial condition or operations. In addition, the Company and/or
one or more of its  subsidiaries  are parties to the following  additional legal
proceedings:

                                       13


IN RE: SPINNAKER COATING,  INC.,  DEBTOR/PACE LOCAL 1-1069 V. SPINNAKER COATING,
INC., AND LYNCH CORPORATION,  U.S. BANKRUPTCY COURT,  DISTRICT OF MAINE, CHAPTER
11, ADV.  PRO. NO.  02-2007,  PACE LOCAL 1-1069 V. LYNCH  CORPORATION  AND LYNCH
SYSTEMS, INC. CUMBERLAND COUNTY SUPERIOR COURT, CV-2001-00352; AND MAINE SUPREME
JUDICIAL COURT, LAW DOCKET NO. CUM-04-682

     On or about June 26, 2001, in  anticipation of the July 15, 2001 closure of
Spinnaker's  Westbrook,  Maine  facility,  Plaintiff PACE Local 1-1069  ("PACE")
filed a three count complaint in Cumberland County Superior Court, CV-2001-00352
naming the following Defendants:  Spinnaker Industries, Inc., Spinnaker Coating,
Inc., and Spinnaker Coating-Maine, Inc. (collectively, the "Spinnaker Entities")
and the Company. The complaint alleged that under Maine's Severance Pay Act both
the  Spinnaker  Entities  and the Company  would be liable to pay  approximately
$1,166,000  severance pay under Maine's Severance Pay Act in connection with the
plant  closure.  Subsequently,  the  Spinnaker  Entities  filed for relief under
Chapter 11 of the Bankruptcy Code and the action  proceeded  against the Company
on the issue of whether the Company has  liability to PACE's  members  under the
Maine Severance Pay Act.

     In 2002,  both PACE and the  Company  moved  for  summary  judgment  in the
action.  On July 28,  2003,  the Court  issued an order  denying  the  Company's
motion,  finding that there remained a disputed issue of material fact regarding
one of the  Company's  primary  defenses.  The  Court  granted  partial  summary
judgment  in favor of PACE to the extent  that the Court  found that the Company
was the Spinnaker Entities "parent corporation" and, therefore,  the Company was
an "employer" subject to potential liability under Maine's Severance Pay Act.

     On November 3, 2004, the Court held that the Spinnaker Entities' bankruptcy
did not prevent the award of severance pay under the statute.  The Court granted
summary  judgment  to PACE on the  second  count of its  complaint  based on its
earlier  ruling  that the Company was the parent  corporation  of the  Spinnaker
Entities. The Court also issued a separate order that related to the calculation
of  damages,  largely  agreeing  with the Company on the  appropriate  method of
calculating  damages  and  awarded  PACE  $653,018   (subsequently  modified  to
$656,020) in severance pay, which is  approximately  one-half the amount claimed
by PACE. The Court rejected PACE's claim for pre-judgment  interest, but granted
its request for attorney fees.

     Both PACE and the  Company  have  appealed  to the Maine  Supreme  Judicial
Court. The Company filed its brief on April 4, 2005. PACE filed its brief on May
18, 2005.  Lynch filed its Reply Brief on June 9, 2005.  The Maine Supreme Court
has not yet  scheduled  oral  argument.  Management  does not  believe  that the
resolution  of this case will have a material  adverse  effect on the  Company's
consolidated financial condition and operations.

QUI TAM LAWSUIT

     The Company,  Lynch  Interactive and numerous other parties have been named
as defendants in a lawsuit  brought under the so-called "qui tam"  provisions of
the  federal  False  Claims  Act in the  United  States  District  Court for the
District  of  Columbia.  The  complaint  was filed  under seal with the court in
February,  2001,  and the seal was lifted in  January,  2002.  The  Company  was
formally  served with the complaint in July,  2002.  The main  allegation in the
case is that the  defendants  participated  in the  creation  of "sham"  bidding
entities  that  allegedly  defrauded  the United  States  Treasury by improperly
participating in Federal  Communications  Commission  ("FCC") spectrum  auctions
restricted to small  businesses,  as well as obtaining  bidding credits in other
spectrum auctions  allocated to "small" and "very small"  businesses.  While the
lawsuit  seeks to recover  an  unspecified  amount of  damages,  which  would be
subject to  mandatory  trebling  under the  statute,  a report  prepared for the
relator  (a  private  individual  who filed the  action on behalf of the  United
States) in 2005  alleges  damages  of  approximately  $91  million in respect of
bidding  credits,  approximately  $70 million in respect of government loans and
approximately $206 million in respect of subsequent resales of licenses, in each
case prior to trebling.

     In  September,  2003,  the  Court  granted  Lynch  Interactive's  motion to
transfer the action to the Southern District of New York and in September, 2004,
the Court issued a ruling denying  defendants' motion to refer the issues in the
action to the FCC.  In  December,  2004,  the  defendants  filed a motion in the
United States  District  Court for the District of Columbia to compel the FCC to
provide information  subpoenaed by them in order to conduct their defense.  This
motion was denied in May, 2005 and the  defendants are  considering  appropriate


                                       14


responses.  In the  mean-time,  discovery  is  substantially  complete  and  the
preparation and filing of dispositive motions has begun.

     The U. S.  Department of Justice has notified the Court that it declined to
intervene  in the case.  The  Defendants  strongly  believe  that the  action is
completely  without merit and that the relator's  damage  computation is without
basis, and are vigorously  defending it. Under the separation  agreement between
the  Company and Lynch  Interactive  pursuant  to which  Lynch  Interactive  was
spun-off to the Company's  shareholders on September 1, 1999, Lynch  Interactive
would be obligated to indemnify  the Company for any losses or damaged  incurred
by the  Company  as a result of this  action.  Lynch  Interactive  has agreed in
writing to defend the case on the Company's  behalf and to indemnify the Company
for any losses it may incur.  Lynch  Interactive  has retained  legal counsel to
defend the claim on behalf of the Company and Lynch Interactive,  at the expense
of Lynch  Interactive and certain other  defendants.  Nevertheless,  the Company
cannot  predict  the  ultimate  outcome of the  litigation,  nor can the Company
predict the effect that the  lawsuit or its outcome  will have on the  Company's
business or plan of operation.

N.   INCOME TAXES

     The Company files consolidated  federal income tax returns. The Company has
approximately $2,400,000 net operating loss ("NOL") carry-forward as of June 30,
2005. This NOL expires in 2026 if not utilized prior to that date.

O.   GUARANTEES

     The Company presently guarantees (unsecured) the SunTrust Bank loans of its
subsidiary,  Lynch Systems.  The Company  presently  guarantees  (unsecured) the
First  National  Bank  of  Omaha  loans  of its  subsidiary,  MtronPTI,  and has
guaranteed  a Letter of Credit  issued  to the First  National  Bank of Omaha on
behalf of its  subsidiary,  MtronPTI (see Note H - "Indebtedness  Debt").  As of
June 30, 2005, the $1,000,000  Letter of Credit issued by Bank of America to The
First  National  Bank of Omaha was  secured by a  $1,000,000  deposit at Bank of
America. (See Note E - "Restricted Cash", also see "subsequent events".)

     There  were  no  other  financial,   performance,  indirect  guarantees  or
indemnification agreements.

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

CRITICAL ACCOUNTING POLICIES

     The Company has  identified the  accounting  policies  listed below that we
believe are most critical to our financial  condition and results of operations,
and that require  management's most difficult,  subjective and complex judgments
in estimating the effect of inherent uncertainties.  This section should be read
in conjunction with Note 1 to the Consolidated Financial Statements, included in
the Company's  Annual Report on Form 10-K for the year ended  December 31, 2004,
which includes other significant accounting policies.

ACCOUNTS RECEIVABLE

     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  except at Lynch  Systems.  In  relation to export  sales,  the Company
requires letters of credit  supporting a significant  portion of the sales price
prior to production to limit exposure to credit risk.  Certain  subsidiaries and
business  segments have credit sales to industries  that are subject to cyclical
economic changes.  The Company maintains an allowance for doubtful accounts at a
level that management believes is sufficient to cover potential credit losses.

                                       15


     We maintain allowances for doubtful accounts for estimated losses resulting
from  the  inability  of our  clients  to make  required  payments.  We base our
estimates on our historical collection experience, current trends, credit policy
and relationship of our accounts  receivable and revenues.  In determining these
estimates,  we examine historical  write-offs of our receivables and review each
client's account to identify any specific  customer  collection  issues.  If the
financial  condition  of our  customers  was  to  deteriorate,  resulting  in an
impairment  of their  ability  to make  payment,  additional  allowances  may be
required.  Our failure to estimate  accurately the losses for doubtful  accounts
and ensure that  payments  are  received on a timely basis could have a material
adverse effect on our business, financial condition, and results of operations.

INVENTORY VALUATION

     Inventories  are stated at the lower of cost or market  value.  Inventories
valued using the last-in,  first-out (LIFO) method comprised  approximately  52%
and 47% of  consolidated  inventories  at June 30, 2005 and  December  31, 2004,
respectively. The balance of inventories are valued using the first-in-first-out
(FIFO) method. If actual market conditions are more or less favorable than those
projected  by  management,  including  the demand for our  products,  changes in
technology, internal labor costs and the costs of materials,  adjustments may be
required.

REVENUE RECOGNITION AND ACCOUNTING FOR LONG-TERM CONTRACTS

     Revenues,  with the  exception  of certain  long-term  contracts  discussed
below,  are  recognized  upon  shipment when title  passes.  Shipping  costs are
included in manufacturing cost of sales.

     Lynch Systems,  a 100% owned  subsidiary of the Company,  is engaged in the
manufacture   and   marketing  of   glass-forming   machines   and   specialized
manufacturing  machines.  Certain  sales  contracts  require an advance  payment
(usually  30% of the  contract  price)  which  is  accounted  for as a  customer
advance.  The contractual  sales prices are paid either (i) as the manufacturing
process reaches  specified  levels of completion;  or (ii) based on the shipment
date; or (iii) negotiated  terms of sale.  Guarantees by Letter of Credit from a
qualifying financial institution are required for most sales contracts.  Because
of the  specialized  nature of these  machines  and the period of time needed to
complete  production and shipping,  Lynch Systems  accounts for these  contracts
using the  percentage-of-completion  accounting  method  as costs  are  incurred
compared to total  estimated  project costs  (cost-to-cost  basis).  At June 30,
2005, and December 31, 2004,  unbilled  accounts  receivable  were $3.5 and $2.5
million respectively.

     The  percentage of completion  method is used since  reasonably  dependable
estimates of the revenues and costs  applicable to various  stages of a contract
can be made, based on historical  experience and milestones set in the contract.
These  estimates  include  current  customer  contract  specifications,  related
engineering  requirements and the achievement of project  milestones.  Financial
management  maintains contact with project managers to discuss the status of the
projects and, for fixed-price  engagements,  financial  management is updated on
the budgeted costs and required resources to complete the project. These budgets
are then used to calculate  revenue  recognition and to estimate the anticipated
income or loss on the project.  In the past, we have  occasionally been required
to commit unanticipated  additional  resources to complete projects,  which have
resulted in lower than  anticipated  profitability or losses on those contracts.
Favorable  changes in estimates result in additional profit  recognition,  while
unfavorable changes in estimates result in the reversal of previously recognized
earnings to the extent of the error of the estimate.  We may experience  similar
situations in the future.  Provisions for estimated losses on contracts are made
during the period in which such losses  become  probable  and can be  reasonably
estimated. To date, such losses have not been significant.

WARRANTY EXPENSE

     Lynch Systems provides a full warranty to world-wide  customers who acquire
machines.  The warranty covers both parts and labor and normally covers a period
of one year or thirteen months.  Based upon experience,  the warranty accrual is
based  upon three to five  percent  of the  selling  price of the  machine.  The
Company  periodically  assesses  the  adequacy  of the  reserve  and adjusts the
amounts as necessary.

                                       16




                                                                                              (in thousands)

  Balance, December 31, 2004..............................................................      $      466
  Warranties issued during the period.....................................................             170
  Settlements made during the period......................................................            (186)
  Changes in liabilities for pre-existing warranties during the period, including
    expirations...........................................................................                -
                                                                                                -----------
  Balance, June 30, 2005..................................................................      $      450
                                                                                                 ==========

RESULTS OF OPERATIONS
SECOND QUARTER
THREE MONTHS ENDED JUNE 30, 2005 COMPARED TO JUNE 30, 2004

CONSOLIDATED REVENUES AND GROSS MARGIN

     Consolidated  revenues for the second  quarter 2005 increased $8.2 million,
or 121%, to $14.9 million from $6.7 million for the  comparable  period in 2004.
The increase  came from both  MtronPTI,  including the  contribution  of the PTI
acquisition, and Lynch Systems.

     Revenues at MtronPTI increased by $3.2 million, or 57%, to $8.8 million for
the second quarter 2005 from $5.6 million for the comparable period in 2004. The
increase was primarily due to the contribution of the PTI acquisition, which was
acquired effective September 30, 2004.

     Revenues at Lynch  Systems  increased  by $4.9  million,  or 408%,  to $6.1
million for the second quarter 2005 from $1.2 million for the comparable  period
in 2004.  Approximately $4.2 million of the increase was related to the sales of
large CRT machines.

     The  consolidated  gross margin as a percentage  of revenues for the second
quarter increased to 37.0%, compared to 29.5% for the comparable period in 2004.
Both MtronPTI and Lynch Systems experienced higher margins as compared to 2004.

     MtronPTI's gross margin as a percentage of revenues for the second quarter,
increased  to  29.1%  from  26.4%  for  the  comparable   period  in  2004.  The
contribution  from PTI,  combined with selective price increases and operational
efficiencies resulted in the improved gross margin rates.

     Lynch  Systems'  gross  margin as a  percentage  of revenues for the second
quarter,  increased to 48.5% from 44.4% for the  comparable  period in 2004. The
margin  improvement  was primarily due to higher margin sales of CRT machines in
the second quarter of 2005.

OPERATING PROFIT (LOSS)

     Operating  profit  increased  $2.5 million,  to $2.0 million for the second
quarter 2005 from an operating  loss of $467,000  for the  comparable  period in
2004.

     Operating profit at MtronPTI  increased  $231,000,  or 57%, to $638,000 for
the second  quarter 2005 from $407,000 for the  comparable  period in 2004.  The
operating profit improvement was primarily due to the significant sales increase
and improvements in gross margin, which was partially offset by higher operating
expenses  resulting  from the  addition  of PTI,  which was  acquired  effective
September 30, 2004.

     Operating  profit at Lynch Systems  increased  $1.8 million to $1.7 million
for the second  quarter 2005 from a $130,000 loss for the  comparable  period in
2004. The operating  profit  improvement  resulted from higher gross margins and
lower operating expenses.

                                       17


     Corporate  expenses  decreased  $333,000 to $411,000 for the second quarter
2005 from $744,000 for the  comparable  period in 2004. In the second quarter of
2004, the Company recorded a $425,000 lawsuit settlement provision.

OTHER INCOME (EXPENSE), NET

     Investment  income  increased  $3,000 to $7,000 for the second quarter 2005
from $4,000 for the comparable period in 2004.

     Interest expense increased $146,000 to $208,000 for the second quarter 2005
from $62,000 for the  comparable  period in 2004,  primarily  due to increase in
debt resulting from the acquisition of PTI and borrowings at Lynch Systems.

     Other income increased  $82,000 to $77,000 for the second quarter 2005 from
a loss of $5,000 for the comparable  period in 2004,  primarily due to a gain on
sale of a warehouse in Orlando.

INCOME TAXES

     The Company files consolidated  federal income tax returns,  which includes
all subsidiaries.

     The income tax  provision  for the three month  period  ended June 30, 2005
included  federal,  as well  as  state,  local,  and  foreign  taxes  offset  by
provisions  made for certain net operating  loss  carryforwards  that may not be
fully realized.

NET INCOME (LOSS)

     Net income for the second  quarter 2005 was $1.4 million  compared to a net
loss of $560,000 in the  comparable  period in 2004. As a result,  fully diluted
income per share for the second  quarter  2005 was $0.83  compared  to a loss of
$0.37 per share for the comparable period in 2004.


SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO JUNE 30, 2004

CONSOLIDATED REVENUES AND GROSS MARGIN

     Consolidated  revenues  for the six  month  period  ending  June  30,  2005
increased  $12.0  million,  or 88%, to $25.5  million from $13.5 million for the
comparable  period in 2004.  The  significant  increase came from both MtronPTI,
including the contribution of the PTI acquisition, and Lynch Systems.

     Revenues at MtronPTI  increased by $7.1  million,  or 70%, to $17.2 million
for the six month  period  ending  June 30,  2005  from  $10.1  million  for the
comparable period in 2004. The increase was primarily due to the contribution of
the PTI acquisition, which was acquired effective September 30, 2004.

     Revenues at Lynch  Systems  increased  by $4.8  million,  or 137%,  to $8.3
million for the six month period  ending June 30, 2005 from $3.5 million for the
comparable  period in 2004. The increase was primarily due to sales of large CRT
machines in 2005.

     The consolidated gross margin as a percentage of revenues for the six month
period  ending  June 30,  2005  increased  to 34.5%,  compared  to 25.8% for the
comparable  period in 2004. Both MtronPTI and Lynch Systems  experienced  higher
margins as compared to 2004.

     MtronPTI's  gross  margin as a  percentage  of  revenues  for the six month
period  ending June 30, 2005  increased  to 29.4% from 25.0% for the  comparable
period  in 2004.  The  contribution  from PTI,  combined  with  selective  price
increases and  operational  efficiencies  resulted in the improved  gross margin
rates.

                                       18


     Lynch  Systems'  gross margin as a percentage of revenues for the six month
period  ending June 30, 2005  increased  to 44.9% from 28.1% for the  comparable
period in 2004.  The increase was  primarily due to sales of large CRT machines,
which carry higher gross margins, in the second quarter of 2005.

OPERATING PROFIT (LOSS)

     Operating profit increased $3.4 million,  to $2.2 million for the six month
period  ended  June 30,  2005 from an  operating  loss of $1.2  million  for the
comparable period in 2004.

     Operating profit at MtronPTI increased $748,000 to $1.2 million for the six
month period  ended June 30, 2005 from  $469,000  for the  comparable  period in
2004.  The operating  profit  improvement  was primarily due to the  significant
sales increase and  improvements in gross margin,  which was partially offset by
higher operating expenses resulting from the addition of PTI, which was acquired
effective September 30, 2004.

     Operating  profit at Lynch Systems  increased  $2.3 million to $1.8 million
for the six month period ended June 30, 2005 from a $522,000  operating loss for
the comparable  period in 2004. The operating profit  improvement  resulted from
higher gross margins and lower operating expenses.

     Corporate expenses decreased $340,000, to $837,000 for the six month period
ending June 30, 2005 from $1.2  million for the  comparable  period in 2004.  In
2004, the Company recorded a $425,000 lawsuit settlement provision.

OTHER INCOME (EXPENSE), NET

     Investment  income  increased  $9,000 to $17,000  for the six month  period
ended June 30, 2005 from $8,000 for the comparable period in 2004.

     Interest  expense  increased  $280,000 to $393,000 for the six month period
ended June 30, 2005 from $113,000 for the  comparable  period in 2004  primarily
due to increase in debt resulting from acquisition of PTI and borrowing at Lynch
Systems.

     Other  income  increased  $58,000 to $80,000 for the six month period ended
June 30, 2005 from $22,000 for the comparable  period in 2004 primarily due to a
gain on the sale of warehouse in Orlando.

INCOME TAXES

     The Company files consolidated  federal income tax returns,  which includes
all subsidiaries.

     The income  tax  provision  for the six month  period  ended June 30,  2005
included  federal,  as well  as  state,  local,  and  foreign  taxes  offset  by
provisions  made for certain net operating  loss  carryforwards  that may not be
fully realized.

NET INCOME (LOSS)

     Net income for the six months ended June 30, 2005 was $1.4 million compared
to a net loss of $1.4  million in the  comparable  period in 2004.  As a result,
fully diluted  income per share for the six month period ended June 30, 2005 was
$0.86 compared to a loss of $0.91 per share for the comparable period in 2004.

BACKLOG/NEW ORDERS

     Total backlog of manufactured  products at June 30, 2005 was $12.9 million,
a $4.7 million  decline over the backlog at December 31, 2004,  and $0.7 million
more than the backlog at June 30, 2004.

     MtronPTI  had  backlog  orders of $7.6  million  at June 30,  2005 which is
consistent with the backlog at December 31, 2004 and represents an increase over
the $3.3 million of backlog at June 30, 2004.  Backlog  increased  from June 30,
2004  primarily due to the addition of backlog  attributable  to PTI,  which was
acquired effective September 30, 2004.

                                       19


     Lynch Systems had backlog  orders of $5.3 million at June 30, 2005 compared
to $9.9 million at December 31, 2004 and $8.8 million at June 30, 2004.  Backlog
decreased  from  December  2004 due to sales of large CRT machines in the second
quarter of 2005. At June 30, 2005, the backlog of CRT machines is  approximately
$0.8 million and the related  revenue is expected to be  recognized in the third
quarter of 2005.

FINANCIAL CONDITION

     At June 30,  2005,  the  Company had  current  assets of $26.7  million and
current liabilities of $20.6 million. At June 30, 2005, working capital was $6.1
million,  compared to $4.0 million at December 31, 2004 and $7.4 million at June
30, 2004. The ratio of current assets to current liabilities was 1.30 to 1.00 at
June 30, 2005; 1.19 to 1.00 at December 31, 2004; and 1.71 to 1.00 ratio at June
30, 2004.

     Cash used in operating activities was approximately $0.9 million in the six
months ended June 30, 2005, compared to cash provided by operating activities of
approximately  $0.5 million in the six months  ended June 30, 2004.  The year to
year unfavorable change in operating cash flow of $1.4 million was primarily due
to an increase in accounts receivable. Capital expenditures were $191,000 in the
six months  ended June 30,  2005,  compared to $184,000 in the six months  ended
June 30, 2004.

     At  June  30,  2005,  the  Company's  total  cash,  cash   equivalents  and
investments in marketable  securities (before margin liability) was $5.9 million
(including $1.0 million of restricted cash).

     Total debt of $11.8 million at June 30, 2005 was $0.8 million less than the
amount  outstanding  at December 31, 2004 and $8.2 million more than the debt at
June 30, 2004. Debt  outstanding at June 30, 2005 included $1.9 million of fixed
rate debt at an average interest rate of 5.1%, and $9.8 million of variable rate
debt at an average interest rate of 6.2%.

     On June 29, 2005,  Lynch Systems  entered into an extension  agreement with
SunTrust  Bank to extend the due date of it credit  agreement  until  August 31,
2005. Lynch Systems $7.0 million  short-term credit facility was reduced to $4.3
million in  accordance  with the  extension  agreement,  of which  $200,000  was
available  for letters of credit.  The  extension  agreement  also calls for the
acceleration of the existing Lynch Systems term loan from August, 2013 to August
31,  2005.  At June 30,  2005,  there  were  outstanding  Letters  of  Credit of
$2,323,000  and  borrowings  of  $1,756,000  under the working  capital line and
$403,000  under the term loan.  These loans include an unsecured  parent company
guarantee.  Under the terms of extension agreement Lynch Systems cannot make any
cash distributions to the parent company.  In order to meet the on-going working
capital and capital expenditure requirements,  Lynch Systems will need to obtain
new  financing.  Lynch  Systems is  currently  seeking to obtain new  financing,
however, there can be no assurance that such financing will be available.

     In connection with the completion of the acquisition of PTI, on October 14,
2004,  M-tron and PTI,  each  wholly-owned  subsidiaries  of Lynch  Corporation,
entered  into a Loan  Agreement  with  First  National  Bank of Omaha.  The Loan
Agreement  provides for loans in the amounts of $2,000,000 (the "Term Loan") and
$3,000,000  (the "Bridge  Loan"),  together with a $5,500,000  Revolving Line of
Credit (the "Revolving Loan"). On June 30, 2005,  MtronPTI renewed its Revolving
Loan with First  National Bank of Omaha  extending the due date to May 31, 2006.
At June 30, 2005, the Company had $2.8 million  available for future  borrowings
under the Revolving  Loan.  The Revolving  Loan bears interest at the greater of
prime rate or 4.5%.  The Term Loan bears  interest  at the greater of prime rate
plus 50 basis points,  or 4.5%, and is to be repaid in monthly  installments  of
$37,514,  with the then remaining  principal balance plus accrued interest to be
paid on the third  anniversary  of the Loan  Agreement.  The  Bridge  Loan bears
interest at the same rate as the Term Loan.  Accrued interest thereon is payable
monthly and the principal  amount thereof,  together with accrued  interest,  is
payable on the first anniversary of the Loan Agreement.

     All outstanding  obligations under the Loan Agreement are collateralized by
security  interests in the assets of M-tron and PTI, as well as by a mortgage on


                                       20


PTI's  premises.  The Loan  Agreement  contains  a variety  of  affirmative  and
negative  covenants of types customary in an asset-based  lending facility.  The
Loan  Agreement  also contains  financial  covenants  relating to maintenance of
levels of minimal tangible net worth and working capital, and current,  leverage
and fixed charge ratios, restricting the amount of capital expenditures.

     Pursuant to an  Unconditional  Guaranty  for Payment and  Performance,  the
Company  has  guaranteed  to  First  National  Bank of  Omaha  the  payment  and
performance  of its  subsidiaries'  obligations  under  the Loan  Agreement  and
ancillary  agreements  and  instruments.  The Company has guaranteed a Letter of
Credit issued to the First  National Bank of Omaha on behalf of its  subsidiary,
MtronPTI. As of June 30, 2005, the $1,000,000 Letter of Credit issued by Bank of
America to The First National Bank of Omaha was secured by a $1,000,000  deposit
at Bank of America.

     On May  12,  2005,  Venator  Merchant  Fund,  L.P.  made a  loan  to  Lynch
Corporation  in the amount of $700,000  due  September  11, 2005 or within seven
days after  demand by  Venator.  Venator is an  investment  limited  partnership
controlled by Lynch's Chairman of the Board, Marc Gabelli. The loan was approved
by the Audit Committee of the Board of Directors of Lynch.  The Company does not
have any revolving credit facilities at the parent company level.

ADOPTION OF ACCOUNTING PRONOUNCEMENTS

     On December 14, 2004,  the Financial  Accounting  Standards  Board ("FASB")
issued  Statement of Financial  Accounting  Standards  ("SFAS") No. 123 (revised
2004), "State Based Payment" ("SFAS 123R"), which is a revision of SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). SFAS 123R supersedes APB
Opinion No. 25, "Accounting for Stock Issued to Employees",  and amends SFAS No.
95 "Statement of Cash Flows". Generally, the approach in SFAS 123R is similar to
the approach described in SFAS 123. However,  SFAS 123R requires all share-based
payments  to  employees,  including  grants to  employee  stock  options,  to be
recognized  in the  income  statement  based on  their  fair  values.  Pro-forma
disclosure is no longer an alternative.

     On April 14, 2005, the Securities and Exchange Commission announced that it
would  provide for a phased-in  implementation  process for SFAS No. 123R.  This
ruling  effectively  delayed the  Company's  adoption of the standard  until the
first quarter of 2006.  The Company will continue to evaluate the  provisions of
SFAS No. 123R to determine its impact on its financial  condition and results of
operations.

OFF-BALANCE SHEET ARRANGEMENTS

     Aside  from the  Company's  stand-by  Letter  of  Credit  in the  amount of
$1,000,000, the Company does not have any off-balance sheet arrangements.

AGGREGATE CONTRACTUAL OBLIGATIONS

     Details of the  Company's  contractual  obligations  for  short-term  debt,
long-term debt, leases, purchases and other long term obligations as of June 30,
2005 are as follows:


                                                                        Payments Due by Period - Including Interest (In Thousands)
                                                                    ----------------------------------------------------------------
                                                                                    Less Than      1 - 3         3 - 5     More Than
Contractual Obligations                                                Total          1 Year       Years         Years      5 Years
--------------------------------------------------------------      ----------    -----------  -----------   ----------  -----------

Short-term Debt (Revolving Credit) ...........................        $ 5,390        $ 5,390           --           --        --
Long-term Debt Obligations ...................................          6,887          4,348        2,509           30        --
Capital Lease Obligations ....................................             --             --           --           --        --
Operating Lease Obligations ..................................            268            176           82           10        --
Purchase Obligations .........................................             --             --           --           --        --
Other Long-term Liabilities Reflected on
  the Registrant's Balance Sheet under
  GAAP .......................................................             --             --           --           --        --
  TOTAL ......................................................        $12,545        $ 9,914      $ 2,591      $    40        --
                                                                      =======        =======      =======      =======    =======


                                       21



MARKET RISK

     The  Company is exposed to market  risk  relating to changes in the general
level of U.S.  interest  rates.  Changes in interest rates affect the amounts of
interest  earned on the Company's cash  equivalents  and short-term  investments
(approximately  $2.1 million at June 30, 2005). The Company  generally  finances
the debt  portion of the  acquisition  of  long-term  assets  with  fixed  rate,
long-term  debt. The Company does not use derivative  financial  instruments for
trading or speculative  purposes.  Management  does not foresee any  significant
changes in the strategies  used to manage interest rate risk in the near future,
although the strategies may be reevaluated as market conditions  dictate.  There
has been no significant change in market risk since December 31, 2004.

     Since the Company's  international  sales are in U.S. Dollars,  there is no
monetary risk.

     At June 30, 2005,  approximately  $9.8 million of the Company's  debt bears
interest at variable rates.  Accordingly,  the Company's earnings and cash flows
are  affected  by changes in  interest  rates.  Assuming  the  current  level of
borrowings for variable rate debt, and assuming a two percentage  point increase
in the 2005 average interest rate under these  borrowings,  it is estimated that
the Company's  interest expense would change by approximately  $0.2 million.  In
the event of an adverse change in interest rates,  management would take actions
to further mitigate its exposure.

SUBSEQUENT EVENTS

     On July 1, 2005, Lynch Corporation filed a Registration Statement with the
Securities and Exchange Commission in connection with a proposed rights offering
to its existing shareholders.

     The proposed rights offering  consists of transferable  rights to subscribe
to Lynch common stock.  Lynch would issue one subscription  right for each share
of common  stock held on the record  date.  Every three such rights will entitle
the shareholder to subscribe for one common share.

     Each  right  will  also  carry  with it an  oversubscription  privilege  to
subscribe for  additional  common shares that are not purchased by other holders
of rights.  The rights will not be exercisable until the registration  statement
is declared  effective.  The record date and  exercise  price will be set at the
time of effectiveness  at a discount to market  determined by the Lynch Board of
Directors.  Subscription  rights in the proposed offering will be issued only to
shareholders on the record date.

     After the SEC declares effective the Registration Statement, a subscription
certificate,  together  with a  prospectus  containing  details  of  the  rights
offering,  will be  mailed  to  shareholders.  It is  expected  that the  rights
offering  will remain open for 30 days,  subject to extension for up to 15 days.
No  fractional  shares  will be issued,  and Lynch will round up to the  nearest
whole number the number of shares its shareholders may purchase.

     The purpose of this offering is to provide for our ongoing operating needs.
The proceeds will be used for working capital,  general  corporate  purposes and
acquisitions,  although the Company has not identified any specific acquisitions
at this time.

     The  foregoing is not an  offering,  which can be made only by means of the
prospectus. A registration statement relating to these securities has been filed
with  the  U.S.  Securities  and  Exchange  Commission  but has  not yet  become
effective.  These  securities  may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective.  This disclosure
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall  there be any sale of these  securities  in any state in which such offer,
solicitation or sale would be unlawful prior to  registration  or  qualification
under the securities laws of any such state.


RISK FACTORS

     Certain   subsidiaries  and  business  segments  of  the  Company  sell  to
industries that are subject to cyclical economic  changes.  Any downturns in the
economic  environment  would  have a  financial  impact on the  Company  and its
consolidated  subsidiaries  and may cause  the  reported  financial  information
herein not to be indicative of future operating results,  financial condition or
cash flows.

     Future  activities  and  operating  results  may be  adversely  affected by
fluctuating  demand for capital goods such as large glass presses,  delay in the
recovery  of demand for  components  used by  telecommunications  infrastructure
manufacturers,  disruption  of foreign  economies  and the inability to renew or
obtain new financing for expiring loans.

                                       22


     Financial  instruments that potentially  subject the Company to significant
concentrations of credit risk consist  principally of cash investments and trade
accounts receivable.

     The Company maintains cash and cash equivalents and short-term  investments
with various financial  institutions.  These financial  institutions are located
throughout the country and the Company's policy is designed to limit exposure to
any one institution.  The Company performs periodic  evaluations of the relative
credit  standing of those  financial  institutions  that are  considered  in the
Company's  investment  strategy.  Other than certain  accounts  receivable,  the
Company does not require collateral on these financial instruments.  In relation
to export sales, the Company requires Letters of Credit supporting a significant
portion of the sales price prior to production to limit exposure to credit risk.
The  Company  maintains  an  allowance  for  doubtful  accounts  at a level that
management believes is sufficient to cover potential credit losses.

     For a complete  list of risk factors,  see the  Company's  Annual Report on
Form 10-K for the year ended December 31, 2004.

FORWARD LOOKING INFORMATION

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

     The Registrant makes available,  free of charge,  its Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, and current reports, if any, on Form 8-K.

     The Registrant also makes this information available on its website,  whose
internet address is WWW.LYNCHCORP.COM.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     See "Market Risk" under Item 2 above.

ITEM 4.   CONTROLS AND PROCEDURES

     The  principal  executive  officer and  principal  financial  officer  have
concluded that the Company's  disclosure  controls and procedures were effective
as of the end of the period  covered by this report based on the  evaluation  of
these controls and procedures required by Exchange Act Rule 13a-15.

     There  has  been no  changes  in the  Registrant's  internal  control  over
financial  reporting that occurred during the  Registrant's  last fiscal quarter
that has materially affected,  or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.


                                       23



PART II.    OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

IN RE: SPINNAKER COATING,  INC.,  DEBTOR/PACE LOCAL 1-1069 V. SPINNAKER COATING,
INC., AND LYNCH CORPORATION,  U.S. BANKRUPTCY COURT,  DISTRICT OF MAINE, CHAPTER
11, ADV.  PRO. NO.  02-2007,  PACE LOCAL 1-1069 V. LYNCH  CORPORATION  AND LYNCH
SYSTEMS, INC. CUMBERLAND COUNTY SUPERIOR COURT, CV-2001-00352; AND MAINE SUPREME
JUDICIAL COURT, LAW DOCKET NO. CUM-04-682

     On or about June 26, 2001, in  anticipation of the July 15, 2001 closure of
Spinnaker's  Westbrook,  Maine  facility,  Plaintiff PACE Local 1-1069  ("PACE")
filed a three count complaint in Cumberland County Superior Court, CV-2001-00352
naming the following Defendants:  Spinnaker Industries, Inc., Spinnaker Coating,
Inc., and Spinnaker Coating-Maine, Inc. (collectively, the "Spinnaker Entities")
and the Company. The complaint alleged that under Maine's Severance Pay Act both
the  Spinnaker  Entities  and the Company  would be liable to pay  approximately
$1,166,000  severance pay under Maine's Severance Pay Act in connection with the
plant  closure.  Subsequently,  the  Spinnaker  Entities  filed for relief under
Chapter 11 of the Bankruptcy Code and the action  proceeded  against the Company
on the issue of whether the Company has  liability to PACE's  members  under the
Maine Severance Pay Act.

     In 2002,  both PACE and the  Company  moved  for  summary  judgment  in the
action.  On July 28,  2003,  the Court  issued an order  denying  the  Company's
motion,  finding that there remained a disputed issue of material fact regarding
one of the  Company's  primary  defenses.  The  Court  granted  partial  summary
judgment  in favor of PACE to the extent  that the Court  found that the Company
was the Spinnaker Entities "parent corporation" and, therefore,  the Company was
an "employer" subject to potential liability under Maine's Severance Pay Act.

     On November 3, 2004, the Court held that the Spinnaker Entities' bankruptcy
did not prevent the award of severance pay under the statute.  The Court granted
summary  judgment  to PACE on the  second  count of its  complaint  based on its
earlier  ruling  that the Company was the parent  corporation  of the  Spinnaker
Entities. The Court also issued a separate order that related to the calculation
of  damages,  largely  agreeing  with the Company on the  appropriate  method of
calculating  damages  and  awarded  PACE  $653,018   (subsequently  modified  to
$656,020) in severance pay, which is  approximately  one-half the amount claimed
by PACE. The Court rejected PACE's claim for pre-judgment  interest, but granted
its request for attorney fees.

     Both PACE and the  Company  have  appealed  to the Maine  Supreme  Judicial
Court. The Company filed its brief on April 4, 2005. PACE filed its brief on May
18, 2005.  Lynch filed its Reply Brief on June 9, 2005.  The Maine Supreme Court
has not yet  scheduled  oral  argument.  Management  does not  believe  that the
resolution  of this case will have a material  adverse  effect on the  Company's
consolidated financial condition and operations.

QUI TAM LAWSUIT

     The Company,  Lynch  Interactive and numerous other parties have been named
as defendants in a lawsuit  brought under the so-called "qui tam"  provisions of
the  federal  False  Claims  Act in the  United  States  District  Court for the
District  of  Columbia.  The  complaint  was filed  under seal with the court in
February,  2001,  and the seal was lifted in  January,  2002.  The  Company  was
formally  served with the complaint in July,  2002.  The main  allegation in the
case is that the  defendants  participated  in the  creation  of "sham"  bidding
entities  that  allegedly  defrauded  the United  States  Treasury by improperly
participating in Federal  Communications  Commission  ("FCC") spectrum  auctions
restricted to small  businesses,  as well as obtaining  bidding credits in other
spectrum auctions  allocated to "small" and "very small"  businesses.  While the
lawsuit  seeks to recover  an  unspecified  amount of  damages,  which  would be
subject to  mandatory  trebling  under the  statute,  a report  prepared for the
relator  (a  private  individual  who filed the  action on behalf of the  United
States) in 2005  alleges  damages  of  approximately  $91  million in respect of
bidding  credits,  approximately  $70 million in respect of government loans and
approximately $206 million in respect of subsequent resales of licenses, in each
case prior to trebling.

                                       24


     In  September,  2003,  the  Court  granted  Lynch  Interactive's  motion to
transfer the action to the Southern District of New York and in September, 2004,
the Court issued a ruling denying  defendants' motion to refer the issues in the
action to the FCC.  In  December,  2004,  the  defendants  filed a motion in the
United States  District  Court for the District of Columbia to compel the FCC to
provide information  subpoenaed by them in order to conduct their defense.  This
motion was denied in May, 2005 and the  defendants are  considering  appropriate
responses.  In the  mean-time,  discovery  is  substantially  complete  and  the
preparation and filing of dispositive motions has begun.

     The U. S.  Department of Justice has notified the Court that it declined to
intervene  in the case.  The  Defendants  strongly  believe  that the  action is
completely  without merit and that the relator's  damage  computation is without
basis, and are vigorously  defending it. Under the separation  agreement between
the  Company and Lynch  Interactive  pursuant  to which  Lynch  Interactive  was
spun-off to the Company's  shareholders on September 1, 1999, Lynch  Interactive
would be obligated to indemnify  the Company for any losses or damaged  incurred
by the  Company  as a result of this  action.  Lynch  Interactive  has agreed in
writing to defend the case on the Company's  behalf and to indemnify the Company
for any losses it may incur.  Lynch  Interactive  has retained  legal counsel to
defend the claim on behalf of the Company and Lynch Interactive,  at the expense
of Lynch  Interactive and certain other  defendants.  Nevertheless,  the Company
cannot  predict  the  ultimate  outcome of the  litigation,  nor can the Company
predict the effect that the  lawsuit or its outcome  will have on the  Company's
business or plan of operation.

ITEM 2.   ISSUER PURCHASE OF ITS EQUITY SECURITIES

                                                                                                                Maximum Number (Or
                                                                                        Total Number of         Approximate Dollar
                                                                                      Shares Purchased as        Value) of Shares
                                                                                       Part of Publicly           That May Yet be
                                       Total Number of       Average Price Paid       Announced Plans or        Purchased Under the
               Period                 Shares Purchased            Per Share                Programs              Plans or Programs
-----------------------------------  ------------------  -----------------------  ------------------------  ------------------------
April 1, 2005 -
April 30, 2005 ....................         --                       --                      --                    47,600 Shares
May 1, 2005 -
May 31, 2005 ......................        1,200              $     8.6225                 1,200                   46,400 Shares
June 1, 2005 -
June 30, 2005 .....................        6,000              $     8.7738                 6,000                   40,400 Shares
                                    ------------------  -----------------------  ------------------------  ------------------------
                 Total ............        7,200              $     8.7486                 7,200                   40,400 Shares
                                    ==================  =======================  ========================  =========================

     On February 4, 2004, Lynch announced that on January 23, 2004, the Board of
Directors  authorized  the  repurchase  of up to 50,000  shares of the Company's
outstanding  common  stock.  The timing of the  buy-back and the exact number of
shares purchased will depend on market conditions; this program does not have an
expiration  date.  The  Company  will buy back  shares  through  both public and
private  channels at prices  believed to be appropriate and in the best interest
of shareholders.

     As of June 30, 2005, the Company has repurchased 9,600 shares in the amount
of $94,995,  at an average  price of $9.8953 per share and 40,400  shares remain
available for purchase under this program.


                                       25




ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At the Annual Meeting of  Stockholders  of the  Registrant  held on May 26,
2005:

     The following persons were elected as Directors with the following votes:

      NAME                            VOTES FOR          VOTES WITHHELD
      --------------------            ----------         --------------
      E. Val Cerutti                  1,453,178               71,046
      Marc Gabelli                    1,456,578               67,646
      John C. Ferrara                 1,456,198               68,026
      Avrum Gray                      1,453,073               71,151
      Anthony R. Pustorino            1,449,692               74,532

     The  Amendments  to 2001  Equity  Incentive  Plan  were  approved  with the
following votes:

                                      VOTES FOR          VOTES AGAINST
                                      ---------          --------------
                                      620,822                 170,805


ITEM 6.   EXHIBITS


     Exhibits filed herewith:

     31.1      Certification  of Principal  Executive  Officer  pursuant to Rule
               13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as
               amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley
               Act of 2002.

     31.2      Certificate  of  Principal  Financial  Officer  pursuant  to Rule
               13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as
               amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley
               Act of 2002.

     32        Certification  of  Principal   Executive  Officer  and  Principal
               Financial  Officer pursuant to Rule 13a-14(b) or 15d-14(b) of the
               Securities  Act of 1934,  as  amended,  as  adopted  pursuant  to
               Section 906 of the Sarbanes-Oxley Act of 2002.




                                       26





                                   SIGNATURES

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

                                               LYNCH CORPORATION
                                               (Registrant)


August  11, 2005                               By:  /s/ Eugene Hynes
                                                    ----------------------------
                                                    Eugene Hynes
                                                    Principal Financial Officer


                                  EXHIBIT INDEX

Exhibit
No.                                      Description
---                                      -----------

31.1      Certification  of  Principal   Executive   Officer  pursuant  to  Rule
          13a-14(a)  or  15d-14(a) of the  Securities  Exchange Act of 1934,  as
          amended,  as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
          of 2002.

31.2      Certificate of Principal  Financial Officer pursuant to Rule 13a-14(a)
          or 15d-14(a) of the  Securities  Exchange Act of 1934, as amended,  as
          adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32        Section 1350  Certifications of Registrant's  principal  executive and
          principal financial officers required by Exchange Act Rule 13a-14(b).



     The Exhibits  listed above have been filed  separately  with the Securities
and Exchange  Commission in conjunction  with this Quarterly Report on Form 10-Q
or have been  incorporated by reference into this Quarterly Report on Form 10-Q.
Upon request,  Lynch Corporation will furnish to each of its shareholders a copy
of  any  such  Exhibit.  Requests  should  be  addressed  to the  Office  of the
Secretary,  Lynch  Corporation,  140 Greenwich Avenue,  4th Floor,  Greenwich CT
06830.

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