Note E - Related Party Transactions

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

E. Related Party Transactions

Certain balances held and invested in various mutual funds are managed by an entity (the "Fund Manager"), which is related to the company through certain of our shareholders.  All investments including those in related party mutual funds are overseen by the Independent Investment Committee of the Board. The Investment Committee meets regularly to review the alternatives and has determined that the current investments most reflect the company’s objective of lower cost, market return and adherence to having a larger proportion of underlying investments directly in US treasuries.

As of September 30, 2023, the balance with the Fund Manager totaled $32,121,000, all of which is classified within cash and cash equivalents on the accompanying condensed consolidated balance sheets. The fund has an expense ratio of approximately .08% on an annual basis, including a management fee of .08%, which is paid to the Fund Manager.

As of December 31, 2022, the balance with the Fund Manager totaled $26,811,000, including $10,295,000 which is classified within cash and cash equivalents on the accompanying condensed consolidated balance sheets and $16,516,000 which is classified as marketable securities on the accompanying condensed consolidated balance sheets.

Certain members of our board of directors (the “Board”), including Marc Gabelli, Timothy Foufas, Manjit Kalha and Michael Ferrantino, and three members of our management, Marc Gabelli, Patrick Huvane and Timothy Foufas, are members of LGL Systems.

Transactions with M-tron Industries, Inc.

LGL Group and MtronPTI entered into an Amended and Restated Transitional Administrative and Management Services Agreement, which sets out the terms for services to be provided between the two companies post-separation. The current terms result in a net monthly payment of $4,000 per month to MtronPTI from LGL Group.

MtronPTI and LGL Group have agreed to share any excess Separation costs. Included in discontinued operations is an amount of $28,000 which represents 50% of the excess Separation costs incurred for the quarter ended March 31, 2023.

At September 30, 2023 and December 31, 2022, there was a balance due to LGL Group from MtronPTI of $0 and $6,000, respectively, which is included within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets.

Transactions with LGL Systems Acquisition Holding Company, LLC.

LGL Group invested $1 million into LGL Systems during June 2023 through Lynch Capital. LGL Group's $1 million in membership interests represents approximately 35% of the membership interests, with approximately $929,000 of affiliated membership interests and a further $961,000 of unaffiliated membership interests. The affiliated members of LGL Systems include Venator Merchant Fund L.P., which is wholly owned by Marc Gabelli. Other affiliated members include Patrick Huvane, LGL's EVP, Tim Foufas, LGL's Co-CEO and LGL Director, Michael Ferrantino, an LGL Director and its former Co-CEO, and Manjit Kalha, an LGL Director and its current audit committee chairman. For the third quarter of 2023, the Company recorded $22,000 in net income attributable to non-controlling interests.