M Tron Industries Inc – IPO: ‘S-1/A’ on 1/12/01

On:  Friday, 1/12/01, at 5:24pm ET   ·   Accession #:  912057-1-1366   ·   File #:  333-48766

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Initial Public Offering (IPO):  Pre-Effective Amendment to Registration Statement (General Form)   —   Form S-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Amend #2 to S-1                                       91    436K 
 2: EX-3.1      Articles of Incorporation/Organization or By-Laws      6     25K 
 4: EX-10.10    Material Contract                                      5     17K 
 3: EX-10.3     Material Contract                                      8     24K 
 5: EX-23.2     Consent of Experts or Counsel                          1      5K 

S-1/A   —   Amend #2 to S-1
Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 12, 2001

                                                      REGISTRATION NO. 333-48766
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

AMENDMENT NO. 2 TO

FORM S-1
REGISTRATION STATEMENT
UNDER 
THE SECURITIES ACT OF 1933
--------------------------
M-TRON INDUSTRIES, INC. 
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------------

                                                                [Download Table]
                                                                               
          DELAWARE                        3679                   46-0457994    
(STATE OR OTHER JURISDICTION  (PRIMARY STANDARD INDUSTRIAL    (I.R.S. EMPLOYER 
     OF INCORPORATION)        CLASSIFICATION CODE NUMBER)   IDENTIFICATION NO.)

--------------------------

100 S. DOUGLAS STREET 
P.O. BOX 630
YANKTON, SOUTH DAKOTA 57078 
(800) 762-8800
(Address, Including Zip Code, and Telephone Number, Including Area Code, of 
Registrant's Principal Executive Offices) 
------------------------------

ROBERT R. ZYLSTRA 
PRESIDENT AND CHIEF EXECUTIVE OFFICER 
M-TRON INDUSTRIES, INC. 
100 S. DOUGLAS STREET 
P.O. BOX 630
YANKTON, SOUTH DAKOTA 57078 
(800) 762-8800
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service) 
------------------------------

COPIES TO:
HAROLD B. FINN III, ESQ.
CHARLES J. DOWNEY III, ESQ. 
FINN DIXON & HERLING LLP
ONE LANDMARK SQUARE 
STAMFORD, CT 06901-2689 
(203) 325-5000
(203) 348-5777 FAX

--------------------------

   APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.                

   If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis, pursuant to Rule 415 under the Securities Act of 
1933, check the following box: /X/                                              

If this Form is filed to register additional securities for an offering 
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective        
registration statement for the same offering: / /                               

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the earlier effective registration statement   
for the same offering: / /                                                      

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the earlier effective registration statement   
for the same offering: / /                                                      

  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /                                             
--------------------------

CALCULATION OF REGISTRATION FEE 

                                                        [Enlarge/Download Table]

              TITLE OF EACH CLASS OF                 AMOUNT TO        PROPOSED MAXIMUM          PROPOSED MAXIMUM    
            SECURITIES TO BE REGISTERED            BE REGISTERED   OFFERING PRICE PER UNIT  AGGREGATE OFFERING PRICE
                                                                                                                    
Rights to purchase shares of Class A Common Stock    1,510,185             --(1)                      --            
Class A Common Stock                                1,006,790(3)           $5.00                  $5,033,950        


              TITLE OF EACH CLASS OF                     AMOUNT OF                                                  
            SECURITIES TO BE REGISTERED               REGISTRATION FEE                                              
                                                                                                                    
Rights to purchase shares of Class A Common Stock          $0(2)                                                    
Class A Common Stock                                       $1,329                                                   

(1) M-tron Industries, Inc. is granting, at no cost, transferable subscription  
rights to subscribe for and purchase shares of Class A common stock of  
M-tron Industries, Inc.                                                 
(2) Pursuant to Rule 457(g) under the Securities Act of 1933, as amended, no    
 separate registration fee is required for the rights since they are being
   registered in the same registration statement as the common stock of M-tron
Industries, Inc. underlying the rights.                                 
(3) Represents shares of Class A common stock of M-tron Industries, Inc.        
issuable upon exercise of the rights being registered.                  
------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVENESS UNTIL THE REGISTRANT SHALL 
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION       
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF  
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID        
SECTION 8(A), MAY DETERMINE.                                                    

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THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE       
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL                                 
THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS 
EFFECTIVE. THIS PRELIMINARY PROSPECTUS                                          
IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.                          

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SUBJECT TO COMPLETION, DATED JANUARY   , 2001 

PROSPECTUS                                                                      

   SUBSCRIPTION RIGHTS TO PURCHASE
M-TRON
CLASS A COMMON STOCK

------------------------

We are distributing, at no cost, transferable rights to purchase our    
Class A common stock at a price of $5.00 per share.                             

 - These rights are being distributed, on a pro rata basis, to the persons
    who own shares of common stock of Lynch Corporation, our parent company,
on the record date of [immediately before the effective date of the 
registration statement] 2001.                                       

 - We will issue up to 1,006,790 shares of our Class A common stock in the
offering.                                                           

- You may purchase one share of our Class A common stock for every 1.5  
rights that you own. You will not have the right to purchase any    
fractional shares.                                                  

   - You will be able to exercise your rights only during a limited period. If
    you do not exercise your rights before 5:00 p.m., Eastern Standard Time,
      on [30 days after the effective date of the registration statement], 2001,
    your rights will expire. We may decide to extend the rights offering, in
     our discretion to a date not later than [90 days after the effective date
of the registration statement], 2001.                               

- If you timely exercise all of your subscription rights, you will be   
    entitled to exercise over-subscription privileges to purchase additional
shares of our Class A common stock at the same subscription price.  

    - Our offering is not conditioned on the sale of a minimum number of shares.

   No public market currently exists for our common stock. We have outstanding
two classes of common stock. The holders of our Class A common stock are        
entitled to one vote for each share, and the holders of our Class B common stock
are entitled to five votes for each share. The rights of the holders of our     
common stock are substantially the same in all other respects.                  

------------------------

INVESTING IN OUR CLASS A COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.                                                            

--------------------- 

                                                                [Download Table]

                                                             PER SHARE    TOTAL   
                                                             ---------  ----------
                                                                                  
Subscription Price..........................................   $5.00    $5,033,950
Proceeds, after estimated expenses, to us...................   $4.50    $4,533,950

   The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities or determined if this prospectus
is truthful or complete. It is illegal for any person to tell you otherwise.    

------------------------

The date of this prospectus is             , 2001 

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TABLE OF CONTENTS 

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                                                                PAGE  
                                                              --------
                                                                      
Prospectus Summary..........................................      1   
Risk Factors................................................      4   
Forward-Looking Statements..................................     12   
The Offering................................................     12   
Our Separation from Lynch...................................     21   
Use of Proceeds.............................................     22   
Dividend Policy.............................................     23   
Capitalization..............................................     23   
Dilution....................................................     24   
Selected Combined Financial Information.....................     25   
Management's Discussion and Analysis of Financial Condition           
  and Results of Operations.................................     26   
Our Business................................................     35   
Management..................................................     44   
Principal Stockholders......................................     50   
Certain Transactions........................................     52   
Arrangements Between Us and Lynch...........................     53   
Description of Capital Stock................................     56   
Shares Eligible for Future Sale.............................     58   
Federal Income Tax Consequences.............................     59   
Legal Matters...............................................     61   
Experts.....................................................     61   
Additional Information......................................     61   
Index to Combined Financial Statements and Financial                  
  Statement Schedule........................................    F-1   

------------------------

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that  
contained in this prospectus. We are offering to sell, and seeking offers to    
buy, shares of our Class A common stock only in jurisdictions where offers and  
sales are permitted. The information contained in this prospectus is accurate   
only as of the date of this prospectus, regardless of the time of delivery of   
this prospectus or of any sale of our Class A common stock.                     

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PROSPECTUS SUMMARY

YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED   
INFORMATION, FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS 
PROSPECTUS. EXCEPT AS OTHERWISE INDICATED, THE INFORMATION IN THE PROSPECTUS    
ASSUMES THAT ANY OUTSTANDING OPTIONS TO PURCHASE SHARES OF COMMON STOCK HAVE NOT
BEEN EXERCISED.                                                                 

OUR COMPANY 

We are a leading designer, manufacturer and marketer of custom designed 
electronic components that are used to control the frequency or timing of       
electronic signals in communications equipment and to provide timing references 
for equipment used by the communications industry. Our products, which are      
commonly called frequency control devices, crystals or oscillators, are         
incorporated into, among other things, telecommunications infrastructure        
equipment such as cellular base stations, microwave radios, transceivers and    
telephone network switches, as well as computer network switches and ethernet   
and fiber optic systems.                                                        

We sell our products to communications original equipment manufacturers,
contract manufacturers and distributors. Original equipment manufacturers who   
incorporate our products in their equipment include: Adtran, Inc.; Cirrus Logic 
Incorporated; Lucent Technologies; Newbridge Networks Corporation, a subsidiary 
of Alcatel, and Nortel Networks Corporation. Our contract manufacturer customers
include: Flextronics International Limited; SCI Systems Incorporated and        
Solectron Corporation. Our distributor customers include: All American          
Semiconductor Incorporated; Avnet Incorporated, and Pioneer Standard Electronics
Incorporated.                                                                   

In addition, we sell frequency control devices that are used outside the
communications industry. We expect this portion of our business to decline over 
time, as a percentage of our total business, as we increase our emphasis on the 
growing communications equipment market.                                        

  We are a Delaware corporation. Our principal executive offices are located
at 100 South Douglas Street, Yankton, South Dakota 57078 and our telephone      
number is (800) 762-8800. Our World Wide Web site is www.mtron.com. The         
information in the Web site is not incorporated into, and is not intended to be 
a part of, this prospectus.                                                     

OUR RELATIONSHIP WITH LYNCH 

We are currently an indirect wholly-owned subsidiary of Lynch. After the
completion of this offering, and assuming that all subscription rights are      
exercised, Lynch will own 100% of the outstanding shares of our Class B common  
stock representing 97% of the voting power of our capital stock.                

   Lynch has advised us that it may consider various alternatives with respect
to its ownership of our Class B common stock, including a possible distribution 
of such Class B common stock to its own stockholders. Any shares of Class B     
common stock that are distributed by Lynch to the holders of its common stock   
will convert into an equal number of shares of Class A common stock, which has  
one vote per share, five years after the date of such distribution unless Lynch,
in its sole discretion, accelerates the date of such conversion. Any shares of  
Class B common stock that are transferred by Lynch to an unaffiliated person    
will convert into an equal number of shares of Class A common stock having one  
vote per share immediately upon the transfer of such shares to such person.     

 As described in more detail under "Our Separation From Lynch," we are the
successor to a South Dakota corporation that transferred all of its assets and  
liabilities to us, other than its investment in another corporation that is     
engaged in a different line of business than ours, in connection with a         
reorganization of some of the subsidiaries and affiliates of Lynch. The         
agreements regarding our separation from Lynch are described more fully in the  
sections entitled "Our Separation From Lynch"                                   

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and "Arrangements Between Us and Lynch" included elsewhere in this prospectus.  
See "Risk Factors--Risks Related To Our Relationship With Lynch."               

THE OFFERING

                                                        [Enlarge/Download Table]
                                                                                                  
Description of the rights offering..... We are distributing the rights in this offering to Lynch  
                                        stockholders. Each holder of shares of Lynch common stock 
                                        on the record date of [immediately before the effective   
                                        date of the registration statement], 2001 will receive one
                                        right for every share of Lynch common stock owned on that 
                                        date.                                                     

Description of rights.................. The holders of rights have a basic subscription privilege 
                                        which entitles the holder to purchase one share of our    
                                        Class A common stock for every 1.5 rights held, as well as
                                        an over-subscription privilege to purchase additional     
                                        shares of our Class A common stock that are not purchased 
                                        by other stockholders. You are entitled to exercise your  
                                        over-subscription privilege only if you exercise your     
                                        basic subscription privilege in full. We are offering up  
                                        to 1,006,790 shares. We will not issue fractional shares. 

Subscription price..................... The subscription price for our Class A common stock is    
                                        $5.00 per share.                                          

Exercise period........................ The rights will only be exercisable, in whole or in part, 
                                        from the period beginning on [the effective date of the   
                                        registration statement], 2001 and ending on [30 days after
                                        the effective date of the registration statement], 2001,  
                                        at 5:00 p.m., Eastern Standard Time, unless extended by us
                                        in our sole discretion. In no event will we extend the    
                                        exercise period beyond 5:00 p.m., Eastern Standard Time,  
                                        [90 days after the effective date of the registration     
                                        statement], 2001. Once rights are exercised, you may not  
                                        revoke the exercise or request a refund of monies paid.   

How rights will be evidenced........... Each rights holder will receive a subscription certificate
                                        representing such holder's rights.                        

Transferability of rights.............. The rights are transferable, but we do not know if a      
                                        formal trading market will develop since we do not        
                                        anticipate that the rights will be listed for trading on  
                                        any exchange.                                             

Common stock outstanding after the      1,006,790 shares of Class A common stock, assuming that   
  offering............................. all subscription rights are exercised, and 6,500,000      
                                        shares of Class B common stock.                           

Voting rights of common stock.......... One vote per share of Class A common stock; five votes per
                                        share of Class B common stock. After the offering, and    
                                        assuming that all subscription rights are exercised, the  
                                        outstanding Class B common stock that is owned by Lynch   
                                        will constitute 97% of the voting power of our capital    
                                        stock.                                                    

Use of proceeds........................ For capital expenditures at our Yankton, South Dakota     
                                        facility ($1,000,000), payment of obligations to two of   
                                        our officers ($108,000) and potential acquisitions of     
                                        complementary products, technologies or businesses        
                                        ($3,425,950). See "Use of Proceeds."                      

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  Unless we specifically state otherwise, the information in this prospectus
assumes that all subscription rights are exercised. The information that is set 
forth above excludes options under our 2000 Stock Option Plan to purchase       
1,125,000 shares of Class A common stock which we have granted effective upon   
the closing of the sale of our Class A common stock pursuant to this offering.  

SUMMARY COMBINED FINANCIAL DATA 
(IN THOUSANDS)

    In the table below, we provide you with our summary combined financial data.
We have prepared this information using our financial statements for the five   
years ended December 31, 1999 and the nine-month periods ended September 30,    
1999 and 2000. The combined financial statements for the five years ended       
December 31, 1999 have been audited. The combined financial statements for the  
nine-month periods ended September 30, 1999 and 2000 have not been audited. The 
data should be read in conjunction with the financial statements, related notes 
and other combined financial information included herein.                       

                                                        [Enlarge/Download Table]

                                                                                               NINE MONTHS ENDED 
                                                      YEAR ENDED DECEMBER 31,                    SEPTEMBER 30,   
                                        ----------------------------------------------------  -------------------
                                          1995       1996       1997       1998       1999      1999       2000  
                                        --------   --------   --------   --------   --------  --------   --------
                                                                                                                 
COMBINED STATEMENT OF INCOME DATA:                                                                               
  Net sales...........................  $20,118    $18,433    $22,828    $22,798    $26,467   $19,457    $29,383 
  Gross profit........................    5,452      5,189      5,966      5,982      7,129     5,400      8,848 
  Operating income....................    1,477      1,213      1,610      1,428      1,783     1,435      2,878 
  Net income..........................      847        677      1,006        817      1,058       874      1,883 
  Pro forma basic and diluted earnings                                                                           
    per share(1)......................                                              $   .15              $   .27 

COMBINED BALANCE SHEET DATA:                                                                                     
  Cash................................  $   158    $    36    $    81    $     3    $   125              $   225 
  Working capital.....................    1,013      1,275      1,875      2,469      3,361                3,454 
  Total assets........................    7,375      6,389      8,858      8,898     10,940               15,443 
  Demand note due to parent(2)........        0          0          0          0          0                1,500 
  Due to parent.......................        0          0          0          0        118                  118 
  Long-term notes payable to related                                                                             
    parties, less current portion.....      342         95          0          0        199                   99 
  Net asset(2)........................    2,495      3,172      3,927      4,745      5,387                5,770 

------------------------                                                        

(1) See Note 13 to our Combined Financial Statements, contained in this         
Prospectus.                                                             

(2) Includes our obligation to pay Lynch $1.5 million with respect to a dividend
    which we declared in November, 2000. Such dividend was paid in the form of a
non-interest bearing demand promissory note in the principal amount of  
$1.5 million. In January, 2001 the demand note was paid off using funds 
 borrowed under our short-term line of credit. The effect of this dividend
   has been reflected retroactively in the combined financial statements as of
and for the nine months ended September 30, 2000.                       

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RISK FACTORS

    YOU SHOULD CONSIDER CAREFULLY THE RISKS DESCRIBED BELOW BEFORE YOU DECIDE TO
BUY OUR CLASS A COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCURS, OUR
BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER. IN  
THAT CASE THE TRADING PRICE OF OUR CLASS A COMMON STOCK COULD FALL, AND YOU     
MIGHT LOSE ALL OR PART OF THE MONEY THAT YOU HAVE PAID TO BUY OUR CLASS A COMMON
STOCK.                                                                          

RISKS RELATED TO OUR BUSINESS 

FREQUENCY CONTROL DEVICES ACCOUNT FOR NEARLY ALL OF OUR SALES; CONSEQUENTLY,    
CONTINUED MARKET ACCEPTANCE OF OUR FREQUENCY CONTROL DEVICES IS CRITICAL TO OUR 
SUCCESS.                                                                        

Virtually all of our net sales come from sales of our frequency control 
devices, which consist of packaged quartz crystals and oscillator modules. We   
expect that this product line will continue to account for substantially all of 
our net sales for the foreseeable future. Continued market acceptance of this   
product line is critical to our success. Any decline in demand for this product 
line or failure to achieve continued market acceptance of our frequency control 
devices may harm our business.                                                  

IF WE ARE UNABLE TO DEVELOP OR ACQUIRE SUCCESSFUL NEW PRODUCTS AND TECHNOLOGIES 
IN A TIMELY MANNER, OUR ABILITY TO GROW OUR BUSINESS MAY BE HARMED.             

    Frequency control devices are subject to technological changes, particularly
in devices that control higher frequencies. We believe that our future success  
will depend in part upon our ability to continue to enhance our existing product
line and to develop or acquire successful new products in a timely manner. In   
particular, we need to enhance our ability to produce products that operate at  
higher frequencies and have longer product lives than our current products. We  
cannot assure you that our product development or acquisition efforts will be   
successful or that we will be able to respond effectively to technological      
change. If we are unsuccessful, our business may be negatively impacted.        

IF WE ARE UNABLE TO INCREASE OUR MANUFACTURING CAPACITY, WE MAY BE UNABLE TO    
GROW OUR BUSINESS.                                                              

We are currently producing our products at or near full capacity. Our   
ability to increase our manufacturing capacity is dependent upon our ability to 
obtain equipment, hire additional employees, reduce manufacturing cycle times   
and increase our utilization of our contract manufacturers. If we are unable to 
successfully increase our manufacturing capacity, including that of our contract
manufacturers, we may be unable to grow our business.                           

WE RELY UPON TWO CONTRACT MANUFACTURERS FOR A SIGNIFICANT PORTION OF OUR        
FINISHED PRODUCTS, AND A DISRUPTION IN OUR RELATIONSHIPS WITH EITHER OF THESE   
CONTRACT MANUFACTURERS COULD HAVE A NEGATIVE IMPACT ON OUR SALES.               

 In the first nine months of 2000, approximately 39% of our net sales were
attributable to finished products that were manufactured by two independent     
contract manufacturers located in Korea and China. We expect that sales of      
products manufactured by our contract manufacturers will represent a material   
portion of our sales for the next several years. Although we believe that we    
maintain good relations with these contract manufacturers, we do not have       
written long term supply contracts with them and our relationships with them    
could deteriorate in the future. If either of our contract manufacturers becomes
unable to provide products in the volumes needed, or at acceptable prices, we   
would have to identify and qualify acceptable replacement manufacturers or      
manufacture the products internally. Due to industry-wide capacity shortfalls,  
we could encounter difficulties in locating, qualifying and entering into       
arrangements with replacement manufacturers. As a result, a reduction in the    
production capability or financial viability of either of our independent       
contract manufacturers, or a termination of, or significant interruption in, our
relationships with either of them, may harm our business.                       

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OUR DEPENDENCE ON A FEW SIGNIFICANT CUSTOMERS EXPOSES US TO A RISK OF LOSS OF   
BUSINESS, AND WE MAY NOT BE ABLE TO OBTAIN ORDERS FROM NEW CUSTOMERS.           

 Sales to our ten largest customers accounted for approximately 60% of our
net sales in the first nine months of 2000 and in 1999, 1998, and 1997. As of   
September 30, 2000, our net sales to Newbridge Networks, a subsidiary of        
Alcatel, accounted for approximately 10.0% of our net sales for 2000. In 1999,  
our net sales to Newbridge Networks accounted for approximately 12.4% of our net
sales. No other customer accounted for greater than 10% of our net sales in 1999
or in the first three quarters of 2000. No customer accounted for greater than  
10% of our net sales in 1998 or 1997. If a significant customer reduces or      
delays orders for any reason, our business may be negatively affected. In       
addition, our ability to increase our sales will depend in part upon our ability
to obtain orders from new customers for whom there is intense competition.      

OUR DEPENDENCE ON SUPPLIERS TO DELIVER KEY COMPONENTS MAY AFFECT OUR ABILITY TO 
DELIVER PRODUCTS TO OUR CUSTOMERS IN A TIMELY MANNER, WHICH MAY RESULT IN LOST  
SALES.                                                                          

 We rely on outside suppliers that in some instances are single or limited
sources for key components used in our products, and for some components we have
made the strategic choice to purchase from only one supplier. If we have to     
replace one or more of these sources, we could be delayed in, or even prevented 
from, delivering our products to our customers. If supply delays and shortages  
of key components persist, we may experience an interruption in production until
we locate alternative sources of supply or we may even be forced to adjust our  
product designs and production schedules. Because of a worldwide demand for and 
shortage of some components, we have experienced lengthening lead times and     
delivery times for some of the components, including some types of integrated   
circuits and the packages within which our frequency control devices are        
assembled, that we purchase. If we are not able to obtain sufficient allocations
of these components, our production and shipment of product may be delayed, we  
may lose customers and our business may be adversely affected.                  

OUR DEPENDENCE UPON INTERNATIONAL CUSTOMERS AND SUPPLIERS MAY REDUCE OUR NET    
SALES OR IMPEDE OUR ABILITY TO SUPPLY PRODUCTS.                                 

 Our international sales represented approximately 46% of our net sales in
the first nine months of 2000. This consisted of approximately 20% from         
customers in Canada, 12% from customers in Asia, 5% from customers in Western   
Europe, 4% from customers in Mexico and 5% from other international customers.  
We expect that the percentage of sales to international customers will increase 
in the future. Furthermore, we sell our products to manufacturers of            
communications equipment for incorporation into their own products, many of     
which we believe are sold by those manufacturers to international customers. In 
manufacturing our products, we rely on contract manufacturers and component     
suppliers in various countries. As a result, our sales and our ability to       
manufacture our products are subject to the risks associated with international 
commerce. International sales and our relationships with suppliers may be harmed
by many factors, including:                                                     

- changes in law or policy resulting in burdensome government controls, 
      tariffs, restrictions, embargoes or export or import license requirements;
and                                                                 

- political or economic instability in international markets.           

If our international sales or our relationships with our international  
suppliers are adversely affected by any of these factors, our business may be   
harmed.                                                                         

SEVERAL KEY MANAGEMENT EMPLOYEES, INCLUDING ROBERT R. ZYLSTRA, OUR PRESIDENT AND
CHIEF EXECUTIVE OFFICER, HAVE ONLY RECENTLY JOINED US, AND WE CANNOT BE CERTAIN 
THAT OUR MANAGEMENT TEAM WILL WORK TOGETHER EFFECTIVELY IN THE FUTURE.          

 Several key members of our management team have joined us within the last
one to two years, including Robert R. Zylstra, our President and Chief Executive
Officer, John R. Kerg, Jr., our Vice                                            

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President of Sales and Marketing, and Gregory T. Rogers, our Vice President of  
Engineering. We have little basis on which to judge their individual performance
or whether they will work together effectively in the future. If they do not    
perform well individually or together, our ability to execute our business      
strategy may be impaired and our business may suffer. We do not have employment 
agreements with any officers or employees, other than Mr. Zylstra.              

PART OF OUR GROWTH STRATEGY IS TO MAKE ACQUISITIONS. IF WE ARE UNABLE TO DO SO, 
OUR FUTURE RATE OF GROWTH MAY BE LIMITED.                                       

   An element of our growth strategy is to acquire businesses, technologies or
products that expand and complement our current products. We may not be able to 
execute our acquisition strategy if we:                                         

   - are unable to identify suitable and available businesses, technologies or
products to acquire;                                                

- do not have access to required capital at the necessary time; or      

 - are unwilling or unable to outbid larger companies with more resources.

OUR ACQUISITION STRATEGY INVOLVES FINANCIAL AND MANAGEMENT RISKS WHICH MAY      
ADVERSELY AFFECT OUR INCOME IN THE FUTURE.                                      

  If we acquire additional businesses, technologies or products, we may face
additional risks, including the following:                                      

- future acquisitions could divert management's attention from daily    
  operations or otherwise require additional management, operational and
financial resources;                                                

 - we might not be able to integrate future acquisitions into our business
successfully or operate acquired businesses profitably;             

- we may realize substantial acquisition related expenses, including the
 amortization of goodwill, which would reduce our net income in future
years;                                                              

- we may lose key employees and customers as a result of changes in     
management; and                                                     

- our investigation of potential acquisition candidates may not reveal  
problems and liabilities of or associated with the businesses,      
technologies or products that we acquire.                           

If events such as those described above occur, our net income might be  
adversely affected. If we issue shares of our common stock or other rights to   
purchase our common stock in connection with any future acquisitions, we could  
dilute our existing stockholders' interests and our net income per share may    
decrease. If we issue debt in connection with any future acquisitions, lenders  
may impose covenants upon us which could, among other things, restrict our      
ability to increase capital expenditures or acquire additional businesses.      

OUR SALES AND OPERATING RESULTS COULD FLUCTUATE SIGNIFICANTLY FROM PERIOD TO    
PERIOD, THEREBY POTENTIALLY ADVERSELY AFFECTING THE MARKET PRICE OF OUR COMMON  
STOCK.                                                                          

Our quarterly and annual results could be affected by a wide variety of 
factors that could adversely affect or lead to significant variability in our   
net sales or operating results. In addition, because a significant portion of   
our net sales in any particular quarter has historically come from the sale of  
products to a relatively small number of customers, the loss or delay of sales  
to one or a few of our customers could have a significant negative impact. A    
variety of other factors could also cause, and in the past have caused, this    
variability, including the following:                                           

- decreases in capital spending by providers of communications services;

- competitive pricing pressures;                                        

- component shortages resulting in manufacturing delays;                

- a downturn in general economic conditions; and                        

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- a loss of, or decrease in sales to, one of our significant customers. 

   During periods in which there is a downturn in general economic conditions,
or in which there is a decrease in the rate of capital spending by              
communications service providers, our rate of growth may slow significantly, or 
even decline, resulting in lower net income or net losses. We have experienced  
two such periods during the last five years, most recently during 1998, when our
rate of growth for the year was essentially zero. We believe that, in 1998,     
rates of capital spending by providers of communications services remained flat 
as a result of the Asian currency crisis that existed at that time. Our rate of 
growth also slowed significantly in 1996, when we lost a large customer.        
Competitive pricing pressures are a factor in all periods. We generally respond 
to such pressures by requiring our vendors to supply products and components to 
us at prices that allow us to remain competitive, but there can be no assurance 
that we will be able to do so at any time in the future. While we have          
occasionally experienced component shortages that have had a material impact on 
our ability to manufacture our products, such shortages have occurred           
infrequently and only during times of very rapid growth industry-wide. During   
such shortages, manufacturing lead times for our products, and for those        
produced within our industry generally, are extended.                           

We cannot predict the impact of these and other factors on our sales and
operating results in any future period. Results of operations in any period,    
therefore, should not be considered indicative of the results to be expected for
any future period. Because of this difficulty in predicting future performance, 
our operating results may fall below expectations of securities analysts or     
investors in some future quarter or quarters. Our failure to meet these         
expectations would likely adversely affect the market price of our Class A      
common stock.                                                                   

OUR BUSINESS COULD BE NEGATIVELY IMPACTED IF WE ARE UNABLE TO PUT IN PLACE THE  
APPROPRIATE CONTROLS TO MANAGE OUR GROWTH EFFECTIVELY.                          

We have recently experienced substantial growth in our operations, the  
number of our employees, our product offerings and the geographic area in which 
we do business, and we will seek to continue to grow in the future. Our growth  
places a significant strain on our management, operations and financial systems.
Our future operating results will depend upon our ability to continue to        
implement and improve our operating and financial controls and management       
information systems. Failure to manage our growth effectively may negatively    
impact our business.                                                            

RISKS RELATED TO OUR INDUSTRY 

OUR PRINCIPAL MARKET IS THE COMMUNICATIONS EQUIPMENT INDUSTRY; CONSEQUENTLY, OUR
FUTURE RATE OF GROWTH IS HIGHLY DEPENDENT ON THE DEVELOPMENT AND GROWTH OF THE  
MARKET FOR COMMUNICATIONS EQUIPMENT.                                            

  Our business depends heavily upon capital expenditures by the providers of
communications services. In 1999 and the first nine months of 2000, the majority
of our net sales were to manufacturers of communications infrastructure         
equipment, including indirect sales through distributors and contract           
manufacturers, and we intend to increase our sales to communications            
infrastructure equipment manufacturers in the future. Communications service    
providers have experienced periods of capacity shortage and periods of excess   
capacity. In periods of excess capacity, communications network operators cut   
purchases of capital equipment, including equipment utilizing our products. A   
slowdown in the manufacture and purchase of communications infrastructure       
equipment could substantially reduce our net sales and operating results and    
hurt our financial condition. In this regard, for the nine months ended         
September 30, 2000 and the three months ended December 31, 2000 we received new 
orders, net of permitted cancellations, of approximately $4.0 million per month 
and $3.0 million per month, respectively. If new orders continue at the recent  
reduced rate, we will be unable to sustain our growth.                          

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COMMUNICATIONS EQUIPMENT MANUFACTURERS ARE SOMETIMES LOYAL TO A SPECIFIC        
FREQUENCY CONTROL DEVICE SUPPLIER; WE MAY BE UNABLE TO SELL OUR PRODUCTS TO     
THESE POTENTIAL CUSTOMERS, AND OUR ABILITY TO GROW MAY SUFFER AS A RESULT.      

 We believe that once a communications equipment manufacturer has selected
one supplier's frequency control component for a specific piece of equipment,   
the manufacturer generally continues to rely upon that component and, to the    
extent possible, subsequent generations of the same vendor's component. Once a  
communications equipment manufacturers' production line has been configured for 
use and installation of a particular vendor's component, that manufacturer must 
often make substantial technical modifications to its production line and may   
experience production-line downtime, in order to switch to another vendor's     
component. Accordingly, unless our products offer performance, delivery or cost 
advantages that outweigh a customer's expense of switching to them, it may be   
difficult for us to acquire orders from such a customer.                        

SOME COMMUNICATIONS EQUIPMENT MANUFACTURERS ARE INCREASINGLY RELYING UPON       
CONTRACT MANUFACTURERS, THEREBY DIMINISHING OUR ABILITY TO SELL OUR PRODUCTS    
DIRECTLY TO THOSE EQUIPMENT MANUFACTURERS AT FAVORABLE PRICES.                  

There is a growing trend among communications equipment manufacturers to
outsource the manufacturing of their equipment or components. As a result, our  
ability to persuade these original equipment manufacturers to specify our       
products has been reduced and, in the absence of a manufacturer's specification 
of our products, the prices that we can charge for them may be subject to       
greater competition which in turn may harm our profitability and our business.  

OUR MARKET IS HIGHLY COMPETITIVE AND WE MAY LOSE BUSINESS TO LARGER AND         
BETTER-FINANCED COMPETITORS.                                                    

    The frequency control device market is highly competitive. Many domestic and
foreign companies participate in the market for our products. Some of our       
present competitors, as well as other potential competitors, have substantially 
greater financial resources and more extensive engineering, manufacturing,      
marketing, and customer support capabilities than we have. Unless we are able to
invest significant financial resources in acquiring or developing products and  
enhancing customer support worldwide, and are able to gain customer acceptance  
of our products, our ability to compete with other manufacturers and            
distributors of frequency control devices may be limited.                       

PUBLIC CONCERN OVER HEALTH RISKS POSED BY WIRELESS DEVICES MAY DECREASE DEMAND  
FOR SUCH PRODUCTS.                                                              

Claims have been made that handheld cellular telephones and related     
infrastructure equipment may pose health risks. If wireless communications      
equipment or other devices that incorporate our products were determined or     
perceived to create a significant health risk, the market for communications    
infrastructure products could be significantly impacted and our business could  
be harmed.                                                                      

RISKS RELATED TO OUR RELATIONSHIP WITH LYNCH

WE ARE EFFECTIVELY CONTROLLED BY LYNCH, OUR PRINCIPAL STOCKHOLDER, WHICH MAY    
LIMIT YOUR ABILITY TO INFLUENCE STOCKHOLDER MATTERS OR TO RECEIVE A PREMIUM FOR 
YOUR SHARES THROUGH A CHANGE IN CONTROL.                                        

    Upon completion of this offering, our principal stockholder, Lynch, will own
6,500,000 shares of our Class B common stock. Because each share of Class B     
common stock is entitled to cast five votes per share on all matters requiring  
stockholder approval, our principal stockholder will have the right to cast 97% 
of the total votes that can be cast on any matter requiring stockholder         
approval. As long as Lynch owns a majority of the voting power of our           
outstanding common stock, Lynch will continue to be                             

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able to elect our entire board of directors and to remove any director, with or 
without cause, without calling a special meeting, and investors in this offering
will not be able to affect the outcome of any stockholder vote. As a result,    
Lynch will control all matters affecting us, including:                         

- the composition of our board of directors and, through it, any        
determination with respect to our business direction and policies,  
including the appointment and removal of officers;                  

    - any determinations with respect to acquisitions, mergers or other business
combinations;                                                       

- our financing; and                                                    

- administration of, or changes to, the agreements providing for our    
separation from Lynch.                                              

  Conflicts of interest may arise between Lynch and us in a number of areas,
including those listed above. Lynch is not obligated to distribute its shares of
Class B common stock to its own stockholders and is not prohibited from selling 
a controlling interest in us to a third party. Moreover, if Lynch were to       
distribute its shares of Class B common stock to its own stockholders, such     
shares would be converted into shares of Class A common stock five years after  
the date of distribution, or sooner if Lynch, in its discretion, accelerated the
conversion date, and a single stockholder of Lynch, Mario J. Gabelli (including 
a charitable foundation and a partnership controlled by Mr. Gabelli), might be  
deemed to be the beneficial owner of approximately 28.5% of our Class A common  
stock, assuming full exercise of all subscription rights, including by          
Mr. Gabelli. The interests of Mr. Gabelli might conflict with those of other    
stockholders. Moreover, Mr. Gabelli's ownership of a substantial portion of our 
common stock could delay, defer or prevent a change in our control, and some    
transactions might be more difficult or impossible to accomplish without his    
support. Mr. Gabelli has not advised us whether he intends to exercise any of   
his subscription rights.                                                        

WE MAY HAVE LIABILITIES ARISING FROM OUR STATUS AS A MEMBER OF LYNCH'S          
CONSOLIDATED TAX GROUP.                                                         

Even if the rights offering is fully subscribed, we will continue as a  
member of Lynch's consolidated tax group under federal income tax law until the 
M-tron securities held by Lynch do not constitute either 80% of the voting power
or the market value of our outstanding stock. Each member of a consolidated     
group for federal income tax purposes is severally liable for the federal income
tax liability of each other member of the consolidated group. Similar rules may 
apply under state income tax laws. If Lynch or members of its consolidated tax  
group fail to pay tax liabilities arising prior to the time that we are no      
longer a member of Lynch's consolidated tax group, we could be required to make 
payments in respect of these tax liabilities. Such payments, if required, could 
materially adversely affect our financial condition.                            

OUR STOCK PRICE AND BUSINESS MAY SUFFER SO LONG AS LYNCH OR ANOTHER ENTITY      
CONTINUES TO OWN A SUBSTANTIAL PORTION OF OUR COMMON STOCK.                     

  The liquidity of our common stock in the market will be constrained unless
and until Lynch elects to sell or distribute some significant portion of its    
shares of our Class B common stock to unaffiliated persons. The potential sale  
of our shares by Lynch could adversely affect market prices. In addition,       
because of the relatively limited liquidity of the market for our Class A common
stock, relatively small trades of our common stock may have a disproportionate  
effect on our Class A common stock price. Also, so long as Lynch or another     
entity owns a controlling interest in us, we may face significant difficulty    
hiring and retaining key personnel, many of whom might be attracted by the      
potential of operating our business as a fully independent entity.              

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A DISTRIBUTION OR DISPOSITION OF THE SHARES OF OUR CLASS B COMMON STOCK BY LYNCH
COULD DEPRESS OUR STOCK PRICE.                                                  

 If Lynch were to distribute its shares of its Class B common stock to its
stockholders, such Class B shares would convert into an equal number of shares  
of Class A common stock five years after the date of such distribution unless   
Lynch, in its sole discretion, accelerated the date of such conversion. Any     
shares of Class B common stock that were transferred by Lynch to an unaffiliated
person or entity would convert into an equal number of shares of Class A common 
stock immediately upon the transfer of such shares. We are unable to predict    
whether significant amounts of our common stock will be sold in the open market 
in anticipation of, or following, a distribution or disposition of our stock by 
Lynch, but sales of substantial amounts of our stock in the public market, or   
the perception that these sales may occur, could adversely affect the market    
price of our stock.                                                             

WE DERIVE INTANGIBLE BENEFITS FROM LYNCH'S OWNERSHIP OF US. IF WE CEASED TO BE A
SUBSIDIARY OF LYNCH, WE WOULD NO LONGER BE PROVIDED THESE BENEFITS.             

Although we have operated in all material respects as a free-standing   
subsidiary, we have historically derived intangible benefits from being a       
subsidiary of Lynch, including management advisory and oversight services that  
have been provided to us by Lynch. These benefits would be lost to us if Lynch  
ceased to own a majority of the voting power of our common stock. The loss of   
these benefits might adversely affect our business.                             

RISKS RELATED TO THE PURCHASE OF OUR SHARES IN THE OFFERING 

THERE HAS BEEN NO PRIOR PUBLIC MARKET FOR OUR COMMON STOCK, AND THERE MAY BE NO 
MEANINGFUL PUBLIC MARKET FOR OUR COMMON STOCK AFTER THIS OFFERING; OUR STOCK    
PRICE MAY DECLINE BELOW THE SUBSCRIPTION PRICE AND COULD BE HIGHLY VOLATILE.    

 There has been no public market for our common stock and an active public
market may not develop. If an active public market for our common stock does not
develop, you may be unable to sell any shares that you may purchase in this     
offering, and the price of our common stock may decrease below the subscription 
price. There can be no assurance that any shares of our Class A common stock    
will be sold in this offering.                                                  

The stock market in general, and the stock prices of technology and     
communications companies in particular, have experienced extreme price and      
volume fluctuations. This volatility is often unrelated or disproportionate to  
the operating performance of these companies. Because we serve the              
communications industry, we expect our stock to be similarly volatile. Broad    
market and industry factors may reduce our stock price, regardless of our       
operating performance. Many of the additional factors that might cause          
volatility in our stock price are beyond our control. Some of these factors     
include:                                                                        

- changes in financial estimates by securities analysts;                

    - changes in the economic performance or market valuations of communications
companies;                                                          

- actions by institutional stockholders or by Lynch;                    

- announcements by us or our competitors of significant acquisitions,   
strategic partnerships, joint ventures or capital commitments or the
market's response to any such announcements; and                    

- potential litigation.                                                 

In the past, following periods of volatility in the market price of a   
company's securities, securities class action litigation has often been         
instituted against that company. The institution of securities class action     
litigation against us could result in substantial costs to us and a diversion of
our management's attention and resources.                                       

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IT MAY BE DIFFICULT FOR INVESTORS TO SELL OUR COMMON STOCK IF OUR COMMON STOCK  
IS NOT LISTED ON A SECURITIES EXCHANGE.                                         

We intend to file an application to the American Stock Exchange for     
quotation of our Class A common stock immediately after consummation of this    
offering. If we meet the listing criteria and our application is approved, our  
Class A common stock will be traded on the American Stock Exchange. The listing 
and continued trading of our Class A common stock on the American Stock Exchange
will be conditioned upon our meeting certain criteria.                          

    The American Stock Exchange requires that, in order for our securities to be
listed for quotation, we must have a public float with a market value of at     
least $3,000,000 at a price of at least $3.00 per share. In addition, we will   
have to meet the following distribution criteria:                               

- a public float of at least 500,000 shares and at least 800 public     
stockholders; or                                                    

- a public float of at least 1,000,000 shares and at least 400 public   
stockholders; or                                                    

- a public float of at least 500,000 shares, at least 400 public        
stockholders and an average daily volume of at least 2,000.         

  Lynch has advised us that it believes it currently has approximately 1,800
public stockholders. In order to meet the American Stock Exchange listing       
requirements, we will be required to sell at least 600,000 shares of our        
Class A common stock (assuming a market value of $5.00 per share) to at least   
800 public stockholders, excluding officers, directors and controlling          
shareholders and excluding other affiliated persons holding 10% or more of our  
outstanding stock. There can be no assurance that we will meet these criteria,  
particularly since approximately 29% of the rights in this offering will be     
distributed to persons who, if they exercised such rights, would not be deemed  
to be "public shareholders" for purposes of satisfying the American Stock       
Exchange's listing requirements. If we fail to meet any of these criteria, we   
may not be able to list our Class A common stock on the American Stock Exchange.
If we are unable to list our Class A common stock on the American Stock         
Exchange, we will try to qualify for listing on another securities exchange,    
however there can be no assurance that we will be able to do so. If we cannot do
so, it may be difficult for investors to sell their Class A common stock.       

WE MAY BE OBLIGATED TO PAY TWO OF OUR OFFICERS SUBSTANTIAL ADDITIONAL           
COMPENSATION ON A ONE TIME BASIS IF LYNCH SELLS A MAJORITY OF ITS HOLDINGS OF   
OUR STOCK.                                                                      

 In the event that, at any time before 2009, Lynch sells a majority of its
stock interest in us in one or a series of transactions, we will be obligated to
pay two of our officers, if they are still employed by us as of the last of such
sales, a total of 4% of the excess of the value of Lynch's interest in us       
determined on the basis of the weighted-average per share price paid to Lynch   
over our book value immediately prior to the consummation of this offering.     
Thus, by way of illustration, if Lynch were to sell a majority of its stock     
interest in us in 2001 at a per share price of $7.50 per share, we would be     
obligated to pay such officers if they were then employed by us a total of      
approximately $1,719,000 of additional compensation in 2001, thereby resulting  
in a one-time after-tax reduction in net income for that year of $1,134,000     
(using our book value as of September 30, 2000 and assuming an effective tax    
rate of 34%).                                                                   

DELAWARE LAW AND PROVISIONS OF OUR CHARTER MAY DELAY OR PREVENT US FROM BEING   
ACQUIRED, WHICH COULD AFFECT THE VALUE OF OUR STOCK.                            

As a Delaware corporation, we are subject to the Delaware General       
Corporation Law, including Section 203. Generally, Section 203 may prevent a    
person or entity owning 15% or more of our outstanding voting stock from        
engaging in a merger or business combination with us. Our board of directors has
resolved that Section 203 shall not apply to a person or entity acquiring 15% or
more of our voting stock directly from Lynch. Otherwise, however, as a result of
the application of Section 203,                                                 

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potential acquirers might be discouraged from attempting to acquire us, even if 
we were no longer affiliated with Lynch.                                        

   We are authorized to issue up to 1,000,000 shares of preferred stock and to
determine the price, privileges, voting rights and other terms of the shares.   
The issuance of any preferred stock with superior rights to our common stock    
could reduce the value of our common stock. Moreover, specific rights we may    
grant to future holders of our preferred stock could be used to restrict our    
ability to merge with or sell our assets to a third party, preserving control of
us by our then existing stockholders and management and preventing you from     
realizing a premium on your shares.                                             

FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus contains forward-looking     
statements concerning our business, operations, financial performance and       
financial condition. These statements can be identified by the use of           
forward-looking terms such as "may," "will," "expect," "anticipate," "estimate,"
"continue," or other similar words. Forward-looking statements are included, for
example, in the discussions under "Our Separation from Lynch," "Management's    
Discussion and Analysis of Financial Condition and Results of Operations" and   
"Our Business." The forward-looking statements involve risks and uncertainties  
and actual results may differ materially from those expressed or implied in     
those statements. Factors that could cause differences, include, but are not    
limited to, those discussed under "Risk Factors" and "Management's Discussion   
and Analysis of Financial Condition and Results of Operations."                 

THE OFFERING

   We are distributing the rights at no cost to those persons that are holders
of outstanding shares of Lynch common stock on the record date, [immediately    
before the effective date of the registration statement], 2001. Each person that
is a holder of shares of Lynch common stock on the record date will receive one 
right for every share of Lynch common stock owned by that holder on the record  
date. Each right will carry a basic subscription privilege which entitles the   
holder to purchase 2/3 of a share of M-tron Class A common stock as well as an  
over-subscription privilege to purchase additional shares that are not purchased
by other rights holders. No fractional shares will be issued. We are offering up
to 1,006,790 shares of our Class A common stock in the aggregate. You are not   
required to exercise any or all of your rights unless you wish to purchase      
shares under your over-subscription privilege, in which case you must exercise  
all of your rights.                                                             

PURPOSE OF THE OFFERING                                                         

This rights offering is, essentially, our initial public offering. The  
rights offering is different from a traditional initial public offering in that 
it is initially directed only to Lynch's stockholders. The primary purposes of  
the offering are to give Lynch's stockholders an opportunity to purchase shares 
of our Class A common stock, to create an initial public market for our common  
stock, to facilitate future access to public markets, to give us the option of  
using shares of our Class A common stock to finance future acquisitions, if any,
and to obtain additional capital. We believe that the rights offering has an    
advantage over a traditional initial public offering because we believe that    
persons who already have an initial interest in us, by virtue of their ownership
interest in our parent, Lynch, are more likely to purchase our stock than would 
be persons who were not already familiar with us.                               

EXPIRATION DATE                                                                 

The rights will expire at 5:00 p.m., Eastern Standard Time, on [30 days 
after the effective date of the registration statement], 2001 unless extended by
us. In no case will we extend the time to exercise the rights past [90 days     
after the effective date of the registration statement], 2001. After expiration 
of                                                                              

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the offering period, unexercised rights will be null and void and no longer     
exercisable by the holder. We will not be obligated to honor any purported      
exercise of rights received by the subscription agent after the expiration time,
regardless of when the documents relating to such exercise were sent, except    
when you have timely transmitted the documents under the guaranteed delivery    
procedures described below. Notice of any extension of the expiration time will 
be made through a press release issued by us.                                   

SUBSCRIPTION PRIVILEGES                                                         

The holders of rights have a basic subscription privilege which entitles
them to purchase two-thirds of a share of our Class A common stock for each     
right held, as well as an over-subscription privilege to purchase additional    
shares that are not purchased by other rights holders. No fractional shares will
be issued. You are not required to exercise any or all of your rights unless you
wish to purchase shares under your over-subscription privilege, in which case   
you must exercise all of your rights. We will send you certificates representing
shares that you purchase with your subscription privilege as soon as practicable
after the rights offering closes.                                               

DETERMINATION OF SUBSCRIPTION PRICE                                             

    Prior to the rights offering, there has been no public market for our common
stock. We determined the subscription price based upon our assessment of our    
business potential and prospects and current market conditions. Any valuation of
our business and our common stock, given the fact that there has been no public 
market for our common stock and the potential for volatility in the market      
place, is highly speculative. Accordingly, the actual value or resale value of  
our common stock may be significantly higher or lower than the subscription     
price.                                                                          

PLAN OF DISTRIBUTION                                                            

   We are distributing the rights at no cost to those persons that are holders
of outstanding shares of Lynch common stock on the record date, [immediately    
before the effective date of the registration statement], 2001. Where shares are
held indirectly through a broker, bank or other institution, we will reimburse  
the institutions' reasonable out-of-pocket costs in distributing this prospectus
and other materials to beneficial owners of the stock.                          

Under the securities laws of the states, the securities underlying the  
rights may not be sold unless the rights and securities have been registered or 
qualified for sale in the states or an exemption from that requirement is       
available and is complied with by us.                                           

 We have appointed American Stock Transfer & Trust Company, to assist with
the rights offering in the role of subscription agent. You should deliver your  
subscription certificate, payment of the subscription price and notice of       
guaranteed delivery, if applicable, to the subscription agent. The address to   
which these documents and payment should be delivered is:                       

59 Maiden Lane                                                          
New York, NY 10038                                                      
Telephone: (718) 921-8200                                               
Facsimile: (718) 234-5001                                               

    The subscription agent will hold all subscriptions and subscription proceeds
in escrow until the termination or close of the rights offering. The            
subscription agent will be responsible for delivering stock certificates to     
rights holders and will be responsible for delivering refunds to rights holders 
if the rights offering is terminated, if a subscription certificate is rejected 
or if an over-payment is made in connection with a rights holder's exercise of  
the over-subscription privilege. Subscription proceeds will be held in an escrow
account. Subscribers may not withdraw funds from the escrow account. Escrowed   

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proceeds will be released to us after the consummation of the offering. We will 
pay the fees and expenses of the subscription agent in connection with the      
rights offering.                                                                

EXERCISE OF RIGHTS                                                              

You may exercise your rights, in whole or in part, by delivering to the 
subscription agent, at or prior to 5:00 p.m., Eastern Standard Time, on [30 days
after the effective date of the registration statement], 2001, or such later    
date to which we may extend the rights offering:                                

- your properly completed and duly executed subscription certificate;   

- any required signature guarantees or other supplemental documentation;

- your payment in full of $5.00 per share of M-tron Class A common stock
     subscribed for under your basic subscription privilege and for any shares
of M-tron Class A common stock as to which you wish to exercise your
over-subscription privilege.                                        

We may reject any subscription documents the subscription agent receives
after 5:00 p.m., Eastern Standard Time, on [30 days after the effective date of 
the registration statement], 2001, regardless of when the documents were        
originally mailed.                                                              

METHOD OF PAYMENT                                                               

   Payments for the shares must be made in U.S. dollars for the full number of
shares for which you have subscribed, and over-subscribed, either by:           

- check or bank draft drawn upon a U.S. bank payable to American Stock  
Transfer & Trust Company, as subscription agent, or                 

 - wire transfer of immediately available funds to the subscription agent.

 For detailed wiring instructions, contact American Stock Transfer & Trust
Company at (718) 921-8200. Any wire transfer of funds should clearly indicate   
the identity of the rights holder who is paying the subscription price by the   
wire transfer. Evidence of such wire transfer should be delivered to the        
subscription agent via facsimile at (718) 234-5001. The subscription price will 
be deemed to have been received by the subscription agent only upon:            

- clearance of any uncertified check;                                   

- receipt by the subscription agent of any certified check or bank draft
drawn upon a U.S. bank; or                                          

 - receipt of good funds in the subscription agent's account designated in
the wiring instructions provided by the subscription agent.         

    If paying by uncertified personal check, please note that funds paid in this
manner may take up to five business days to clear. Accordingly, holders of      
rights who wish to pay the subscription price by means of uncertified personal  
check are urged to make payment sufficiently in advance of the date on which the
rights expire to ensure that such payment is received and cleared by such date  
and are urged to consider payment by means of certified or cashier's check,     
money order or wire transfer of funds.                                          

GUARANTEED DELIVERY PROCEDURES                                                  

  If you want to exercise your rights, whether in whole or in part, but time
will not permit your subscription certificate to reach the subscription agent on
or prior to 5:00 p.m., Eastern Standard Time, on [30 days after the effective   
date of the registration statement], 2001, you may exercise your rights if you  
satisfy the following guaranteed delivery procedures:                           

 - you send, and the subscription agent receives, payment in full for each
    share of common stock being purchased through the subscription privilege
   and the over-subscription privilege in the method described above under
"The Offering--Method of payment," on or prior to 5:00 p.m., Eastern
   Standard Time, on [30 days after the effective date of the registration
statement], 2001;                                                   

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  - you send, and the subscription agent receives, on or prior to 5:00 p.m.,
Eastern Standard Time, on [30 days after the effective date of the  
registration statement], 2001, a notice of guaranteed delivery,     
     substantially in the form provided with the attached instructions, from a
   member firm of a registered national securities exchange or a member of
     the National Association of Securities Dealers, Inc. or a commercial bank
    or trust company having an office or correspondent in the United States;
and                                                                 

    - you send, and the subscription agent receives, your properly completed and
 duly executed subscription certificate and the related nominee holder
   certification, if applicable, including any required guarantees, within
three business days following the date of your notice of guaranteed 
delivery.                                                           

  A notice of guaranteed delivery must state your name, the number of rights
that you hold, and the number of shares of common stock that you wish to        
purchase under the subscription privilege and over-subscription privilege. A    
notice of guaranteed delivery must also guarantee the delivery of your          
subscription certificate to the subscription agent within three business days   
following the date of the notice of guaranteed delivery. A notice of guaranteed 
delivery may be delivered to the subscription agent in the same manner as your  
subscription certificate at the address set forth above under "The              
Offering--Plan of distribution" or may be transmitted to the subscription agent 
by facsimile transmission, to facsimile number (718) 234-5001. You can obtain   
additional copies of the form of notice of guaranteed delivery by requesting it 
from the subscription agent at the same address.                                

SIGNATURE GUARANTEES                                                            

Your signature on each subscription certificate must be guaranteed by an
Eligible Guarantor Institution, as defined in Rule 17Ad-15 of the Securities    
Exchange Act of 1934, and required under the standards and procedures adopted by
the subscription agent. Eligible Guarantor Institutions include banks, brokers, 
dealers, credit unions, national securities exchanges and savings associations, 
each as defined.                                                                

  Signatures on the subscription certificate do not need to be guaranteed if
the subscription certificate provides that the shares of Class A common stock to
be purchased are to be delivered directly to the record owner of such rights or 
if the subscription certificate is submitted for the account of a member firm of
a registered national securities exchange or a member of the National           
Association of Securities Dealers, Inc., or a commercial bank or trust company  
having an office or correspondent in the United States.                         

SHARES HELD FOR OTHERS                                                          

   If you hold shares of Lynch common stock for others on the record date, you
should provide a copy of this prospectus to the respective beneficial owners of 
those shares as soon as possible, ascertain such beneficial owners' intentions  
and obtain instructions with respect to the rights, as set forth in the         
instructions we have provided to you for your distribution to the beneficial    
owners. If the beneficial owner so instructs, you should complete subscription  
certificates and, in the case of the over-subscription privilege, the related   
nominee holder certification and submit them to the subscription agent with the 
proper payment. If you hold shares of Lynch common stock for the account(s) of  
more than one beneficial owner, you may exercise the number of rights to which  
all such beneficial owners in the aggregate otherwise would have been entitled  
had they been direct record holders of Lynch common stock on the record date for
the rights offering, provided that, you, as a nominee record holder, make a     
proper showing to the subscription agent by submitting the form entitled        
"Nominee Holder Certification" which we will provide to you with your rights    
offering materials.                                                             

    If you are a beneficial owner of Lynch common stock or you will receive your
rights through a broker, custodian bank or other nominee, we will ask your      
broker, custodian bank or other nominee to                                      

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notify you of this rights offering. If you wish to exercise your rights, you    
will need to contact your broker, custodian bank or nominee and request it to   
effect the transaction in accordance with your instructions. To indicate your   
decision with respect to your rights, you should complete and return to your    
broker, custodian bank or other nominee the form entitled "Beneficial Owners    
Election Form." You should receive this form from your broker, custodian bank or
other nominee with the other rights offering materials. If you wish to obtain a 
separate rights certificate, you should contact the nominee as soon as possible 
and request that a separate rights certificate be issued to you. You should be  
aware that nominee record holders may establish deadlines for receiving         
instructions from beneficial holders significantly in advance of the expiration 
date for the rights.                                                            

AMBIGUITIES IN EXERCISE OF THE RIGHTS                                           

If you do not specify the number of rights being exercised on your      
subscription certificate, or if your payment is not sufficient to pay the total 
subscription price for all of the shares that you indicate you wish to purchase,
you will be deemed to have exercised the maximum number of rights that could be 
exercised for the amount of the payment that the subscription agent receives    
from you.                                                                       

  If your payment exceeds the total subscription price for all of the rights
shown on your subscription certificate, your payment will be applied in the     
following order:                                                                

    - to subscribe for the number of shares of our Class A common stock, if any,
    that you indicated on the subscription certificate(s) that you wished to
purchase through your subscription privilege; then                  

- to subscribe for shares of our Class A common stock until your        
subscription privilege has been fully exercised; then               

    - to subscribe for additional shares of our Class A common stock pursuant to
   the over-subscription privilege (subject to any applicable limitation).

    Any excess payment remaining after the foregoing allocation will be returned
to you as soon as practicable following the closing of the rights offering by   
mail, without interest or deduction.                                            

OUR DECISIONS ARE BINDING                                                       

  All questions concerning the timeliness, validity, form and eligibility of
any exercise of rights will be determined by us and our determinations will be  
final and binding. We reserve the right, in our sole discretion, to waive any   
defect or irregularity, or permit a defect or irregularity to be corrected      
within such time as we may determine, or reject the purported exercise of any   
right. Subscriptions will not be deemed to have been received or accepted until 
all irregularities have been waived or cured within such time as we determine in
our sole discretion. We reserve the right, in our sole discretion, to reject any
subscriptions not properly submitted or the acceptance of which would, in the   
opinion of our counsel, be unlawful. None of Lynch, M-tron or the subscription  
agent will be under any duty to give notification of any defect or irregularity 
in connection with the submission of subscription certificates or incur any     
liability for failure to give such notification.                                

RIGHT TO TERMINATE OR MODIFY RIGHTS OFFERING                                    

We may withdraw the rights and terminate the rights offering at any time
prior to the expiration of the rights, for any reason. If we withdraw the rights
and terminate the rights offering, any funds received from rights holders will  
be promptly refunded by the subscription agent without interest or penalty. Our 
board of directors, in its sole discretion, may amend the terms and conditions  
of the rights and the offering at any time prior to the expiration of the       
rights. If we amend the terms of the rights (other than by extending the        
expiration time), an amended prospectus will be distributed to all holders of   
record of rights, including all holders of rights who have previously exercised 
rights, and thereafter subscriptions will only be accepted from holders of      
rights who acknowledge receipt of the amended prospectus. All holders of rights 
who exercised their rights prior to receiving the amended prospectus            

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will be required to confirm the exercise of their rights by executing and       
delivering a consent form on or prior to the Expiration Date, as it may be      
extended.                                                                       

RISK OF LOSS ON DELIVERY OF SUBSCRIPTION CERTIFICATE FORMS AND PAYMENTS         

 The instructions accompanying the subscription certificate should be read
carefully and followed in detail. Do not send subscription certificates to Lynch
or to M-tron. The method of delivery of subscription certificates and payment of
the subscription price to the subscription agent will be at the election and    
risk of the rights holders but, if sent by mail it is recommended that such     
certificates and payments be sent by registered mail, properly insured, with    
return receipt requested, and that a sufficient number of days be allowed to    
ensure delivery to the subscription agent and clearance of payment at or prior  
to 5:00 p.m., Eastern Standard Time, on [30 days after the effective date of the
registration statement], 2001.                                                  

OVER-SUBSCRIPTION PRIVILEGE                                                     

Subject to the limitations described below, each subscription right also
entitles you to exercise an over-subscription privilege to purchase a portion of
the shares of our Class A common stock that are not purchased pursuant to the   
exercise of the rights holders' basic subscription rights. You are entitled to  
exercise your over-subscription privilege only if you exercise all of the basic 
subscription rights that are evidenced by your subscription certificate. If you 
wish to exercise your over-subscription privilege, you must indicate the number 
of additional shares that you would like to purchase in the space provided on   
your subscription certificate and, when you send in your subscription           
certificate, you must also send the full purchase price for the number of       
additional shares that you have requested to purchase pursuant to the exercise  
of your over-subscription privilege (in addition to the full purchase price for 
the number of shares that you will purchase pursuant to the full exercise of    
your basic subscription privilege). If over-subscription privileges are         
exercised with respect to more than the number of shares of our Class A common  
stock that are available for purchase pursuant to the exercise of the           
over-subscription privileges, we will allocate the available shares pro rata    
among those rights holders who exercised their over-subscription privilege based
upon the number of rights evidenced by their respective subscription            
certificates. If all available shares are not so allocated, as could occur if   
some holders of rights did not exercise their over-subscription privileges to   
the full extent of their respective pro rata shares of the available shares, we 
will continue to allocate the remaining available shares among those rights     
holders whose exercise of the over-subscription privilege has not been fully    
satisfied, again based on the number of rights evidenced by their respective    
subscription certificates. If you have requested to purchase more shares than   
are allocated to you, we will return the unused portion of the amount tendered  
by you, without interest, promptly after the consummation of this offering.     
Notwithstanding the foregoing, in certain circumstances, in order to comply with
applicable state securities laws, we may not be able to honor all               
over-subscription privileges even if we have shares available.                  

   To determine if you have fully exercised your basic subscription privilege,
we will consider only the basic subscription privileges held by you in the same 
capacity. For example, if you were granted rights to purchase shares of our     
common stock by reason of your individual ownership of Lynch common stock and by
reason of your joint ownership, with your spouse, of other shares of Lynch      
common stock, you would only need to fully exercise your basic subscription     
privilege with respect to your individually owned rights in order to exercise   
your over-subscription privilege with respect to your individually owned rights.
You would not have to subscribe for any shares under the basic subscription     
privilege owned jointly with your spouse to exercise your individual            
over-subscription privilege.                                                    

 When you complete the portion of the subscription certificate to exercise
the over-subscription privilege, you will be representing and certifying that   
you have fully exercised your basic subscription privilege received in respect  
of shares of Lynch common stock you hold in that capacity. You must             

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exercise your over-subscription privilege at the same time as you exercise your 
basic subscription privilege in full.                                           

   If you own your shares of Lynch common stock through your broker, dealer or
other nominee holder who will exercise your over-subscription privilege on your 
behalf, the nominee holder will be required to certify to us and the            
subscription agent:                                                             

    - the number of shares of Lynch common stock held on [immediately before the
    effective date of the registration statement], 2001, the record date, on
your behalf;                                                        

- the number of rights you exercised under your basic subscription      
privilege;                                                          

 - that your entire basic subscription privilege held in the same capacity
has been exercised in full; and                                     

- the number of shares of our Class A common stock you subscribed for   
pursuant to the over-subscription privilege.                        

    Your nominee holder must also disclose to us some other information received
from you.                                                                       

If you exercised your over-subscription privilege and are allocated less
than all of the shares of our Class A common stock for which you wished to      
subscribe, the excess funds you paid for shares of our Class A common stock that
are not allocated to you will be returned in full by mail, without interest or  
deduction, promptly after the expiration date of the rights.                    

EXERCISE OF LESS THAN ALL RIGHTS                                                

If you subscribe for fewer than all of the shares represented by your   
subscription certificate, you may (1) attempt to sell your remaining rights, or 
(2) receive from American Stock Transfer & Trust Company a new subscription     
certificate representing the unused rights. See "The Offering--Transferability  
of rights" below if you do not wish to exercise any or all of your rights, but  
instead, want to find out about how you may be able to sell them.               

TRANSFERABILITY OF RIGHTS                                                       

It is not anticipated that a formal market will be made in the rights or
that they will be traded on any exchange. Although an informal market may       
develop, there is no assurance that any market will develop for the rights.     

You may transfer all of the rights, including over-subscription rights, 
evidenced by a single subscription certificate by signing the subscription      
certificate for transfer in accordance with the appropriate form printed on the 
subscription certificate.                                                       

You may transfer a portion of the rights, including over-subscription   
rights, evidenced by a single subscription certificate by delivering to American
Stock Transfer & Trust Company, as subscription agent, the subscription         
certificate properly signed for transfer, with separate written instructions to 
register a portion of the rights in the name of your transferee and to issue a  
new subscription certificate to the transferee covering the transferred rights. 
In that event you will receive a new subscription certificate covering the      
rights you did not transfer provided that the subscription agent receives a     
properly endorsed subscription certificate from you no later than 5:00 p.m.,    
Eastern Standard Time, on the fifth business day prior to the expiration date.  

   If you wish to transfer all or a portion of your rights, you should allow a
sufficient amount of time prior to the expiration time for:                     

    - the transfer instructions to be received and processed by the subscription
agent;                                                              

- new subscription certificates to be issued and transmitted; and       

   - the rights evidenced by the new subscription certificates to be exercised
or sold by the intended recipients.                                 

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    It may require from two to ten business days, or more, to complete transfers
of rights, depending upon how you deliver the subscription certificate and      
payment and the number of transactions you request. None of Lynch, M-tron or the
subscription agent will be liable to you or any transferee of rights if         
subscription certificates or any other required documents are not received in   
time for exercise or sale prior to the expiration time.                         

  If you exercise or sell rights in part, a new subscription certificate for
the remaining rights will be issued to you only if the subscription agent       
receives a properly endorsed subscription certificate from you no later than    
5:00 p.m., Eastern Standard Time, on the fifth business day prior to the        
expiration date. It will not issue new subscription certificates for partially  
exercised or sold subscription certificates submitted after that time and date. 
If you do submit a subscription certificate after that time and date, you will  
not be able to exercise the unexercised or unsold rights.                       

Unless you make other arrangements with the subscription agent, a new   
subscription certificate issued after 5:00 p.m., Eastern Standard Time, on the  
fifth business day before the expiration date will be held for pick-up by you at
the offices of the subscription agent at 59 Maiden Lane, New York, New York.    

  If you request a reissuance of a subscription certificate, the delivery of
that document will be at your risk.                                             

 You, and not Lynch, M-tron or the subscription agent, will be responsible
for paying any brokerage commissions or other expenses that you may incur in    
connection with the purchase or sale of rights.                                 

If you do not exercise your rights prior to the expiration time, those  
rights will expire and will no longer be exercisable by you.                    

PROCEDURES FOR DEPOSITORY TRUST COMPANY PARTICIPANTS                            

We expect that you will be able to exercise your subscription privilege 
through the facilities of the Depository Trust Company. If your rights are held 
of record through the Depository Trust Company, you may exercise your basic     
subscription privilege and your over-subscription by instructing the Depository 
Trust Company to transfer your rights from your account to the account of the   
subscription agent, together with certification as to the aggregate number of   
rights you are exercising and the number of shares of our Class A common stock  
you are subscribing for, including any over-subscription, under your            
subscription privilege and your subscription price payment for each share you   
subscribed for under your subscription and over-subscription privilege.         

MINIMUM SUBSCRIPTION AMOUNT                                                     

We are conducting the rights offering on a best efforts basis. Thus, we 
cannot guarantee that any of our shares will be sold. The rights offering is not
conditioned upon our receipt of subscriptions for any minimum number of shares  
of our Class A common stock. However, we may cancel the rights offering at any  
time prior to its completion, in which case all subscription payments will be   
returned without interest or penalty.                                           

NO REVOCATION                                                                   

Once you exercise your subscription privilege, you may not revoke that  
exercise. Rights not exercised prior to their expiration will be null and void  
as of and after such time.                                                      

NO BOARD RECOMMENDATION                                                         

    Neither our Board of Directors nor the Board of Directors of Lynch makes any
recommendation to you about whether you should exercise any rights. In addition,
the members of those Boards, including Mario J. Gabelli, Chairman of Lynch, have
not advised us whether they intend to exercise any subscription rights they may 
receive as shareholders of Lynch or whether, if they do exercise their          
subscription rights, they intend to exercise their over-subscription privilege. 
If you exercise rights, you                                                     

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risk investment loss on money invested. We cannot assure you that anyone        
purchasing shares of our Class A common stock will be able to sell those shares 
in the future at a higher price. An investment in our Class A common stock must 
be made in accordance with your evaluation of your best interest.               

NO FRACTIONAL SHARES                                                            

No fractional shares will be issued. If your rights would allow you to  
purchase a fractional share, you may exercise your rights only by rounding down 
to, and paying for, the nearest whole share, or any lesser number of whole      
shares. We will accept any inadvertent subscription indicating a purchase of    
fractional shares by rounding downward to the nearest number of whole shares and
refunding without interest any payment received for a fractional share as soon  
as practicable.                                                                 

STATE AND FOREIGN SECURITIES LAW                                                

   The rights may not be exercised by any person, and neither this prospectus,
nor the subscription certificate shall constitute an offer to sell or a         
solicitation of an offer to purchase any shares of our common stock, in any     
jurisdiction in which such transactions would be unlawful. We will not sell     
shares of our Class A common stock to residents of the states of Minnesota or   
Vermont. [Residents of those states who are shareholders of Lynch as of the     
record date will receive rights, which they may transfer, but they may not      
exercise those rights.]                                                         

 No action has been taken in any jurisdiction outside the United States to
permit offers and sales of the rights or the offer, sale or distribution of the 
shares of our common stock. Consequently, we may reject subscriptions that      
relate to the exercise of rights by any holder of rights outside the United     
States, and we may also reject subscriptions from holders in jurisdictions      
within the United States and we may refuse to distribute rights to any eligible 
subscriber if we should determine that we may not lawfully issue securities to  
such subscribers. We may do so even if we could qualify the securities for sale 
or distribution by taking other actions or modifying the terms of the offering  
or the distribution in such jurisdictions, which we may decline to do in our    
sole discretion. In such event, rights holders who are residents of these       
jurisdictions will not be eligible to participate in the rights offering.       

  Subscription certificates will not be mailed to eligible subscribers whose
addresses are outside the United States or who have an APO or FPO military      
address, but will be held by the subscription agent for their account. To       
exercise such rights, these subscribers must notify the subscription agent by   
the expiration date and must establish to our satisfaction that such exercise is
permitted under applicable law.                                                 

ISSUANCE OF STOCK CERTIFICATES                                                  

Stock certificates for shares purchased in the rights offering will be  
issued to you as soon as practicable after the expiration date. American Stock  
Transfer & Trust Company will deliver subscription payments to us only after    
consummation of the rights offering and the issuance of stock certificates to   
those exercising rights.                                                        

If you exercise rights, you will have no rights as a stockholder until  
certificates representing shares you purchased are issued. Unless otherwise     
instructed in your subscription certificate form, shares purchased by the       
exercise of rights will be registered in the name of the person exercising the  
rights.                                                                         

QUESTIONS OR REQUESTS FOR ASSISTANCE                                            

If you have questions or need assistance concerning the procedure for   
exercising the rights, or if you would like additional copies of this           
prospectus, the Instructions for Subscription Certificates or the Notice of     
Guaranteed Delivery, you should contact the subscription agent at               
(718) 921-8200.                                                                 

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OUR SEPARATION FROM LYNCH 

OVERVIEW                                                                        

  We were incorporated under Delaware law in the Fall of 2000, at which time
our predecessor, a South Dakota Corporation, became the owner of all of our     
capital stock by making a nominal investment in us. However, prior to December, 
2000, we conducted our business as the South Dakota corporation, which is also a
subsidiary of Lynch. In December, 2000, Lynch Systems, Inc., another subsidiary 
of Lynch was merged into the South Dakota corporation, and immediately          
thereafter the South Dakota corporation transferred to us all of its assets and 
liabilities, other than those that it had acquired from Lynch Systems and other 
than the South Dakota corporation's interest in 48% of the outstanding shares of
common stock of Spinnaker Industries, Inc., a publicly held corporation whose   
operations have always been conducted separately from our operations.           
Consequently, we now own all of the assets and liabilities of the South Dakota  
corporation which were used in the conduct of our present business prior to     
December, 2000. Lynch has agreed to indemnify us against any liabilities that   
might arise out of the merger of the South Dakota corporation with Lynch Systems
or out of the transfer of the South Dakota corporation's assets and liabilities 
to us. Currently, we are an indirect wholly-owned subsidiary of Lynch. After the
consummation of this offering, Lynch will continue to own all of our Class B    
common stock, which will be entitled to cast at least 97% of the votes that may 
be cast by the holders of our common stock, but we will be a separate           
publicly-held company. The termination of our status as a wholly-owned          
subsidiary of Lynch is sometimes referred to in this prospectus as the          
"Separation."                                                                   

BENEFITS OF THE SEPARATION; DETRIMENTS OF A LOSS OF AFFILIATION                 

   We believe that we will realize benefits from the Separation, including the
following:                                                                      

GREATER STRATEGIC FOCUS.  In addition to our business, Lynch generates  
significant revenue from other lines of business. Our focus will be on          
developing businesses and strategic opportunities for our products.             

   BETTER INCENTIVES FOR EMPLOYEES AND GREATER ACCOUNTABILITY.  We expect that
the motivation of our employees and the focus of our management will be         
strengthened by incentive compensation programs tied to the market performance  
of our common stock. The separation will enable us to offer our employees       
compensation directly linked to the performance of our business, which we expect
to enhance our ability to attract and retain qualified personnel.               

 MORE DIRECT ACCESS TO CAPITAL MARKETS.  As a separate, public company, we
will have more direct access to the capital markets to issue debt or equity     
securities and to grow through acquisitions.                                    

  On the other hand, it should be recognized that we have derived intangible
benefits from being a subsidiary of Lynch, including management and oversight   
services that have been provided to us by Lynch. These benefits would be lost to
us if Lynch ceased to own a majority of the voting power of our common stock,   
and the loss of such benefits could adversely affect our business.              

SEPARATION AND ON-GOING INTER-COMPANY ARRANGEMENTS                              

   We have entered into a separation agreement providing for the separation of
our business from Lynch. Lynch will continue to provide to us some management   
advisory and oversight services, including strategic, merger and acquisition,   
and financial services, essentially on the same basis as it has provided such   
services in the past. These services will be provided for a fee equal to        
$100,000 per annum, plus out-of-pocket expenses. The dollar amount of this fee  
will increase annually by an amount equal to the percentage increase in the     
consumer price index for the preceding year. The management                     

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services arrangement would terminate if Lynch were to cease to own a majority of
the voting power of our common stock.                                           

LYNCH'S CONTROL OF US FOLLOWING THE SEPARATION                                  

After the completion of this offering, Lynch will own 100% of the       
outstanding shares of our Class B common stock representing at least 97% of the 
voting power of our capital stock. Lynch has advised us that it may consider    
various alternatives with respect to its ownership of our Class B common stock, 
including (subject to compliance with applicable Federal and state securities   
laws) a possible distribution of such Class B common stock to its own           
stockholders. In this connection, in order to preserve Lynch's ability to make  
such a distribution on a tax-free basis, which requires, among other things,    
that Lynch own stock having 80% of the voting power of all of our capital stock,
the Class B common stock has five votes per share. Nonetheless, Lynch is not    
obligated to distribute any of its shares of our common stock to the holders of 
Lynch's common stock and it is not prohibited from selling such shares to a     
third party.                                                                    

Any shares of Class B common stock that are distributed by Lynch to the 
holders of its common stock will convert into an equal number of shares of      
Class A common stock which has one vote per share five years after the date of  
such distribution unless Lynch, in its sole discretion, accelerates the date of 
such conversion. Any shares of Class B common stock that are transferred by     
Lynch to an unaffiliated person or entity will convert into an equal number of  
shares of Class A common stock having one vote per share immediately upon the   
transfer of such shares to such entity or person which is not controlled by or  
is not under common control with Lynch.                                         

USE OF PROCEEDS 

  At a subscription price of $5.00 per share, the net proceeds from the sale
of the 1,006,790 shares of Class A common stock that we are offering would be   
approximately $4,533,950 million after deducting estimated offering expenses    
payable by us. We do not know the number of shares of Class A common stock that 
will be sold.                                                                   

We expect to use the net proceeds from this offering as follows in the  
following order of priority:                                                    

                                                                [Download Table]
                                                                               

Capital expenditures at our Yankton, South Dakota                              
  facility.................................................. $  1,000,000 (22%)

Payment of obligations to our officers (See "Certain                           
  Transactions")............................................ $     108,000 (2%)

Potential acquisitions of complementary products,                              
  technologies or businesses................................ $  3,425,950 (76%)

  We are also indebted to two of our present officers and one former officer
in the aggregate amount of $99,448, see "Certain Transactions," but we do not   
intend to use the proceeds of the offering to pay such indebtedness.            
Nonetheless, it should be recognized that the receipt of the proceeds of the    
offering might enhance our ability to pay such indebtedness in the future.      

We are not engaged in any material negotiations with respect to the     
acquisition of any products, technologies or businesses that might be acquired  
using any portion of the proceeds of the offering. However, we currently intend 
that any such acquisition would be of products, technologies, or businesses that
are related to our present business. None of the proceeds of the offering will  
be used to acquire products, technologies or businesses from any affiliate,     
including Lynch.                                                                

In the short term, prior to commencing any capital expenditures or any  
acquisition, we will use a portion of the proceeds to satisfy indebtedness under
our revolving line of credit which at January    , 2001 stands at approximately 
$5.1 million, and currently bears interest at the rate of 9.0%. Capital         
expenditures at our Yankton, South Dakota facility will be used to increase the 
capacity and efficiency                                                         

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of our manufacturing facilities and to develop new technologies and new         
products. If the net proceeds of this offering are less than $4.5 million, we   
will scale back or forego acquisitions that require cash investments on our part
that cannot be financed through other means and finance our planned capital     
expenditures out of our line of credit or our cash flow from operations. We     
would endeavor to obtain sufficient financing to go forward with acquisitions if
such financing becomes necessary. Pending the uses described above, we intend to
invest the net proceeds of this offering in investment grade, interest-bearing  
instruments.                                                                    

DIVIDEND POLICY 

  We currently intend to retain earnings, if any, to support the development
of our business and do not anticipate paying cash dividends for the foreseeable 
future. Payment of future dividends, if any, will be at the discretion of our   
Board of Directors after taking into account various factors, including our     
financial condition, operating results and current and anticipated cash needs.  
In addition, our current credit facility imposes restrictions upon our payment  
of cash dividends in excess of 50% of net income for the prior fiscal year      
without our lender's consent.                                                   

CAPITALIZATION

    The following table presents our capitalization as of September 30, 2000. We
have not presented our capitalization as adjusted to give effect to the receipt 
by us of the net proceeds, from the sale of shares of Class A common stock in   
this offering since there can be no assurance that any shares of our Class A    
common stock will be sold pursuant to this offering.                            

                                                                [Download Table]

                                                              (IN THOUSANDS)
                                                              --------------
                                                                            
Demand note due to parent(1)................................      $1,500    
Short-term notes payable to bank and related parties........       1,008    
Due to parent...............................................         118    
Long-term notes payable to related parties, less current                    
  portion...................................................          99    
Stockholders' equity:                                                       
  Preferred Stock, $.01 par value, 1,000,000 shares                         
    authorized, none issued or outstanding..................                
  Class A common stock, $0.01 par value, 12,000,000 shares                  
    authorized, 0 shares issued and outstanding (2).........           0    
  Class B common stock, $0.01 par value, 13,000,000 shares                  
    authorized, 0 shares issued and outstanding.............           0    
  Additional paid-in capital................................           0    
  Retained earnings.........................................                
  Less: treasury stock......................................           0    
Net assets(3)...............................................       5,770    
                                                                  ------    
Total capitalization........................................      $8,495    
                                                                  ======    

------------------------                                                        

(1) The amount shown in the above table as "Demand note due to parent" reflects 
    our obligation to pay Lynch $1.5 million with respect to a dividend which we
declared in November, 2000. Such dividend was paid in the form of a     
non-interest bearing demand promissory note in the principal amount of  
$1.5 million. In January, 2001, the demand note was paid off using funds
 borrowed under our short-term line of credit. The effect of this dividend
   has been reflected retroactively in the combined financial statements as of
and for the nine months ended September 30, 2000.                       

(2) The information in the above table excludes 1,125,000 shares of Class A     
common stock that are reserved for issuance under our 2000 stock Option 
Plan.                                                                   

(3) The amount shown in the above table as net assets represents the net        
   investment of Lynch in us, after giving effect to the dividend discussed in
Note (1) above.                                                         

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DILUTION

Our net tangible book value as of September 30, 2000, was $5,770,000, or
$0.89 per common share. Net tangible book value represents our total tangible   
assets less total liabilities, divided by the total number of shares of our     
common stock outstanding. After giving effect to the sale of 1,006,790 shares of
Class A common stock at a subscription price of $5.00 per share and deducting   
the estimated offering expenses payable by us, our pro forma net tangible book  
value as of September 30, 2000 would have been $10,303,950 or $1.37 per share.  
This represents an immediate increase in pro forma net book value of $0.48 per  
share to existing stockholders and an immediate dilution of $3.63 per share to  
new investors purchasing shares of our Class A common stock in this offering.   
The following table illustrates the per share dilution to the new investors.    

                                                                [Download Table]
                                                                   
Subscription price per share................................  $5.00
  Pro forma net tangible book value per share as of                
    September 30, 2000......................................  $0.89
  Increase in pro forma net tangible book value per share          
    attributable to new investors...........................  $0.48
Pro forma net tangible book value per share after this             
  offering..................................................  $1.37
Dilution per share to new investors.........................  $3.63

  The amounts of the "Pro forma net tangible book value per share after this
offering" would be less, and the "Dilution per share to new investors" would be 
more, if less than 1,006,790 shares of our Class A common stock were sold       
pursuant to this offering. For example, if only 500,000 shares of our Class A   
common stock were sold pursuant to this offering, the "Pro forma net tangible   
book value per share after this offering" would be $1.11 and the "Dilution per  
share to new investors" would be $3.89.                                         

The following table summarizes, on a pro forma basis as of September 30,
2000, the differences between the existing stockholders and the new investors   
with respect to the number of shares of common stock purchased, the total       
consideration paid and the average price paid per share at a subscription price 
of $5.00 per share, in each case assuming a sale of 1,006,790 shares of our     
Class A common stock pursuant to this offering:                                 

                                                        [Enlarge/Download Table]

                                            SHARES PURCHASED     TOTAL CONSIDERATION                
                                          --------------------  ---------------------  AVERAGE PRICE
                                           NUMBER     PERCENT     AMOUNT     PERCENT     PER SHARE  
                                          ---------   --------  ----------   --------  -------------
                                                                                                    
Existing stockholders.................... 6,500,000      87%    $5,770,000      50%        $0.89    
New investors............................ 1,006,790      13%     5,033,950      50%         5.00    
                                          ---------     ---     ----------     ---         -----    
Total....................................               100%                   100%        $1.44    
                                                        ===                    ===         =====    

 The information in the tables above excludes options under our 2000 Stock
Option Plan to purchase 1,125,000 shares of Class A common stock which we have  
granted effective upon consummation of this offering at an exercise price per   
share equal to the subscription price.                                          

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SELECTED COMBINED FINANCIAL INFORMATION 

The following selected combined financial data for the five years ended 
December 31, 1999 are derived from our audited financial statements and are     
presented on the basis described in Note 1 of the Notes to Combined Financial   
Statements. The financial data for the nine month periods ended September 30,   
1999 and 2000 are derived from unaudited financial statements. The unaudited    
financial statements include all adjustments, consisting of normal recurring    
accruals, which we consider necessary for a fair presentation of the financial  
position and the results of operations for these periods.                       

Operating results for the nine months ended September 30, 2000 are not  
necessarily indicative of the results that may be expected for the entire year  
ending December 31, 2000. The following data should be read in conjunction with 
the combined financial statements, related notes, and other financial           
information included elsewhere in this prospectus.                              

                                                        [Enlarge/Download Table]

                                                                                                 NINE MONTHS    
                                                                                                    ENDED       
                                                     YEAR ENDED DECEMBER 31,                    SEPTEMBER 30,   
                                       ----------------------------------------------------  -------------------
                                         1995       1996       1997       1998       1999      1999       2000  
                                       --------   --------   --------   --------   --------  --------   --------
                                                                     (IN THOUSANDS)                             
                                                                                                                
COMBINED STATEMENT OF INCOME DATA:                                                                              
Net sales............................. $20,118    $18,433    $22,828    $22,798    $26,467   $19,457    $29,383 
Cost of products sold.................  14,666     13,244     16,862     16,816     19,338    14,057     20,535 
                                       -------    -------    -------    -------    -------   -------    ------- 
Gross profit..........................   5,452      5,189      5,966      5,982      7,129     5,400      8,848 
Research and development expenses.....     801        834        779        674        856       630        675 
Selling, general and administrative                                                                             
  expenses............................   3,174      3,142      3,577      3,880      4,490     3,335      5,296 
Equity-based compensation expense.....       0          0          0          0         --        --         -- 
                                       -------    -------    -------    -------    -------   -------    ------- 
Operating income......................   1,477      1,213      1,610      1,428      1,783     1,435      2,877 
Interest expense......................     222        163        195        186        232       162         98 
Other (income)........................       0          0          0          0        (17)      (17)         0 
                                       -------    -------    -------    -------    -------   -------    ------- 
Income before income taxes............   1,255      1,050      1,415      1,242      1,568     1,290      2,779 
Income tax expense....................     408        373        409        425        510       416        896 
                                       -------    -------    -------    -------    -------   -------    ------- 
Net income............................ $   847    $   677    $ 1,006    $   817    $ 1,058   $   874    $ 1,883 
                                       =======    =======    =======    =======    =======   =======    ======= 
Pro forma basic and diluted earnings                                                                            
  per share(1)........................                                             $   .15              $   .27 

                                                                                                        9/30/00 
                                                                                                        --------
COMBINED BALANCE SHEET DATA:                                                                                    
                                                                                                                
Cash.................................. $   158    $    36    $    81    $     3    $   125              $   225 
Working capital.......................   1,013      1,275      1,875      2,469      3,361                3,454 
Total assets..........................   7,375      6,389      8,858      8,898     10,940               15,443 
Demand note due to parent(2)..........       0          0          0          0          0                1,500 
Due to parent.........................       0          0          0          0        118                  118 
Long-term notes payable to related                                                                              
  parties, less current portion.......     342         95          0          0        199                   99 
Net assets(2).........................   2,495      3,172      3,927      4,745      5,387                5,770 

------------------------                                                        

(1) See Note 13 to our Combined Financial Statements, contained in this         
Prospectus.                                                             

(2) Includes our obligation to pay Lynch $1.5 million with respect to a dividend
   which we declared in November 2000. Such dividend was paid in the form of a
   demand promissory note in the principal amount of $1.5 million. In January,
2001, the demand note was paid using funds borrowed under our short-term
    line of credit. The effect of this dividend has been reflected retroactively
in the combined financial statements as of and for the nine months ended
September 30, 2000.                                                     

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

 You should read the following discussion of our results of operations and
financial condition in conjunction with the financial statements and other      
financial information included elsewhere in this prospectus. This discussion    
contains forward-looking statements that involve risks and uncertainties. Our   
actual results may be materially different from those anticipated in these      
forward-looking statements resulting from a variety of factors, including, but  
not limited to, those under "Risk Factors" and elsewhere in this prospectus.    

OVERVIEW                                                                        

We are a leading designer, manufacturer and marketer of custom designed 
frequency control devices that provide essential frequency control and timing   
references for infrastructure equipment used by the communications industry. Our
devices support fixed and mobile wireless, copper wire, coaxial cable and fiber 
optic long haul and last mile systems. Our products are incorporated into, among
other things, cellular base stations, microwave radios, transceivers, network   
switches and routers and ethernet and fiber optic systems. In recent years we   
have focused our business on the rapidly growing communications industry.       

Over the past two years, we have introduced new management executives in
three areas critical to our success. In early 2000, we added Robert R. Zylstra, 
our President and Chief Executive Officer. In early 1999, we added Gregory T.   
Rogers, our Vice President of Engineering, and John R. Kerg, Jr., our Vice      
President of Sales and Marketing. Under the leadership of our new CEO, the      
management team has focused on developing and implementing our strategic        
initiatives to grow the business in the communications industry.                

 Virtually all of our net sales are derived from the delivery of frequency
control devices, including packaged quartz crystals and oscillator modules. The 
demand for our frequency control products depends upon many factors, including  
continued investment in the expansion and improvement of communications         
infrastructure and the need for more advanced frequency control devices. In 1999
and the first nine months of 2000, the majority of our net sales was related to 
the communications infrastructure industry.                                     

    We recognize net sales at the time of shipment to the customer. Sales of our
custom designed products are final and are made with no right of return after   
shipment.                                                                       

A significant portion of our net sales has been derived from customers  
outside the United States and we expect that to continue. Our international     
sales represented approximately 46% of our net sales in the first nine months of
2000. This consisted of approximately 20% from customers in Canada, 12% from    
customers in Asia, 5% from customers in Western Europe, 4% from customers in    
Mexico and 5% from other international customers. All of our sales are          
denominated in United States dollars and therefore our currency risk on         
international sales is limited. Some manufacturers that produce items for us    
invoice us in Japanese Yen. Purchases denominated in Yen account for            
approximately 14.0% of our total purchases. We make no material purchases in any
other foreign currency.                                                         

   We manufacture products at our Yankton, South Dakota facility. In addition,
we utilize the services of two contract manufacturers in South Korea and China  
to produce product for us. In the first nine months of 2000, sales of products  
manufactured for us in South Korea and China represented approximately 39% of   
our net sales. All of our purchases from our contract manufacturers are         
denominated in United States dollars.                                           

We derive a significant portion of our net sales from our ten largest   
customers. Our top ten customers accounted for approximately 60% of net sales in
the first nine months of 2000. In the first nine months of 2000, Newbridge      
Networks, a subsidiary of Alcatel, accounted for approximately 10.0%            

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of our net sales. No other customers accounted for more than 10% of our net     
sales in the first nine months of 2000.                                         

Our customers include original equipment manufacturers, contract        
manufacturers and distributors. Over recent years, sales to contract            
manufacturers and distributors have increased at a higher rate than sales to    
original equipment manufacturers. As a general matter, sales to both contract   
manufacturers and distributors generate lower margins than sales to original    
equipment manufacturers. Sales to contract manufacturers and distributors       
comprised approximately 53% of our net sales in the first nine months of 2000.  
Other factors that can affect our gross margins include product mix in any given
period, competitive pressures and manufacturing costs. We expect that over time 
our increased emphasis on working closely with designers at original equipment  
manufacturers to have our products specified for use in the products of the     
original equipment manufacturers will contribute positively to our overall gross
margins.                                                                        

Cost of products sold consists of the cost of manufacturing services on 
products produced by our two contract manufacturers and the cost of purchased   
components and direct materials cost for internally manufactured components,    
compensation and employee benefits for manufacturing personnel and purchasing   
and manufacturing overhead cost. We expect our cost of products sold to decrease
as a percentage of sales as the scale of our operations increases and provides  
greater coverage of fixed costs.                                                

Research and development expenses consist primarily of compensation and 
related costs for personnel as well as costs related to materials, supplies and 
depreciation of equipment utilized in our research and development efforts. All 
research and development cost is expensed as incurred. We intend to increase our
spending on research and development significantly by increasing the size of our
research and development staff.                                                 

   Selling, general and administrative expenses consist primarily of wages and
benefits, as well as expenses related to marketing, administrative and support  
activities and a management fee paid to Lynch, our parent, for advisory and     
oversight services, such as finance, cash management, legal, and human resources
provided to us. Lynch charges us $100,000 per year for these services which,    
Lynch has advised, is approximately equivalent to Lynch's estimate of the actual
costs incurred by it in providing these services to us. In the our opinion,     
these charges are reasonable in light of the services provided, however, the    
costs of these services as allocated to us by Lynch are not necessarily         
indicative of the costs that we would have incurred on a stand-alone basis. For 
a discussion of this, please see Note 1, Basis of Presentation, to our combined 
financial statements appearing elsewhere in this Prospectus.                    

  Equity-based compensation expense consists of compensation that accrued to
the benefit of certain executives based upon our financial performance over a   
defined period of time.                                                         

BASIS OF PRESENTATION                                                           

  We are the successor to a South Dakota corporation that transferred all of
its assets and liabilities to us, other than its investment in another          
corporation that is engaged in a different line of business than ours, in       
connection with a reorganization of some of the subsidiaries and affiliates of  
our parent, Lynch. Our combined financial statements have been prepared using   
the historical basis of assets and liabilities and historical results of        
operations of our predecessor, including the accounts of its wholly-owned       
foreign subsidiary but excluding any assets or liabilities relating to our      
predecessor's investment in another corporation. Significant intercompany       
accounts and transactions have been eliminated.                                 

  The historical financial information presented in this prospectus reflects
periods during which we did not operate as an independent public company. Such  
information, therefore, may not necessarily reflect our results of operations,  
financial condition or cash flows in the future or what they would have         

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been had we been an independent public company during the reporting periods. It 
is likely that our administrative expenses will increase as a result of         
additional financial reporting requirements, stock listing and transfer fees,   
directors' fees, insurance compensation, and other costs associated with being a
public company.                                                                 

RESULTS OF OPERATIONS                                                           

The following table sets forth, for the periods indicated, our combined 
financial data expressed as a percentage of net sales:                          

                                                        [Enlarge/Download Table]

                                                                                NINE MONTHS      
                                                  YEAR ENDED                       ENDED         
                                                 DECEMBER 31                    SEPTEMBER 30     
                                     ------------------------------------  ----------------------
                                       1997          1998          1999      1999          2000  
                                     --------      --------      --------  --------      --------
                                                                                                 
Net Sales..........................   100.0%        100.0%        100.0%    100.0%        100.0% 
Cost of products sold..............    73.9          73.8          73.1      72.2          69.9  
                                      -----         -----         -----     -----         -----  
Gross profit.......................    26.1          26.2          26.9      27.8          30.1  
Research and development                                                                         
  expenses.........................     3.4           3.0           3.2       3.2           2.3  
Selling, general and administrative                                                              
  expenses.........................    15.6          17.0          17.0      17.2          18.0  
Equity-based compensation                                                                        
  expense..........................      --            --            --        --            --  
                                      -----         -----         -----     -----         -----  
Operating income...................     7.1           6.2           6.7       7.4           9.8  
Interest expense...................     0.9           0.8           0.9       0.9           0.3  
Other (income).....................      --            --          (0.1)     (0.1)           --  
                                      -----         -----         -----     -----         -----  
Income before income taxes.........     6.2           5.4           5.9       6.6           9.5  
Income tax expense.................     1.8           1.8           1.9       2.1           3.1  
                                      -----         -----         -----     -----         -----  
Net income.........................     4.4%          3.6%          4.0%      4.5%          6.4% 
                                      =====         =====         =====     =====         =====  

NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE NINE MONTHS ENDED          
SEPTEMBER 30, 1999                                                          

  NET SALES.  Net sales increased $9.9 million, or 51%, to $29.4 million for
the nine months ended September 30, 2000 from $19.5 million for the nine months 
ended September 30, 1999. The increase in net sales was primarily due to        
increased demand for most of our products by existing customers. Approximately  
10% of the increase in net sales was due to an increase in sales of our         
temperature controlled oscillators (TCXOs), which were first introduced in      
mid-1999. Continuing a recent trend, sales to contract manufacturers and        
distributors increased 100% compared to 10% for our sales to original equipment 
manufacturers, or OEM's. Sales to contract manufacturers and distributors       
accounted for 52.4% of our net sales, in the nine months ended September 30,    
2000, compared to 37.5% of our net sales, in the nine months ended              
September 30, 1999.                                                             

GROSS PROFIT.  Gross profit increased to $8.8 million, or 30.1% of net  
sales, for the nine months ended September 30, 2000 from $5.4 million, or 27.8% 
of net sales, for the same period in 1999. The primary improvement in the gross 
margin was due to the increased volume of products manufactured and shipped     
which accounted for 2.4% of the improvement with other items representing less  
than .5%. Improvements in the gross margin percentage were partially offset by  
increased sales of products to contract manufacturers and distributors at lower 
margins representing approximately .7% deterioration in margins.                

RESEARCH AND DEVELOPMENT EXPENSES.  Research and development expenses   
increased $45,000, or 7.0%, to $675,000, or 2.3% of net sales, for the nine     
months ended September 30, 2000, compared to $630,000, or 3.2% of net sales, for
same period in 1999. The increase in expense resulted from                      

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investments for new product development. We expect total research and           
development expense to be approximately $1.0 million for the year ending        
December 31, 2000 and $2.0 million for the year ending December 31, 2001. The   
additional research and development funds will be used to invest in product     
development, hire additional engineers and continue to use outside services to  
support our new product initiatives.                                            

 SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and administrative
expenses increased $1,961,000, or 58.8%, to $5.3 million, or 18.0% of net sales,
for the nine months ended September 30, 2000 from $3.3 million, or 17.2% of net 
sales, for the same period in 1999. The increased expense was due to increased  
commissions associated with our increase in net sales and increased incentive   
compensation as a result of increased profitability. Equity-based compensation  
expense was $516,000 for the nine months ended September 30, 2000 compared to   
$25,076 for the same period in 1999. The increased compensation expense was due 
to our improved financial performance and the addition of our new President and 
Chief Executive Officer in January 2000.                                        

   OTHER INCOME.  The amount of $17,256 for 1999 was derived from the sales of
test equipment to one of our contract manufacturers.                            

   INTEREST EXPENSE.  Interest expense decreased $63,000 from $162,000 for the
nine months ended September 30, 1999 to $98,000 for the nine-month period ended 
September 30, 2000. The lower expense is attributed to lower borrowing levels.  

INCOME TAXES.  Our tax provision increased $.5 million, or 115% to      
$.9 million for the nine months ended September 30, 2000 from $.4 million for   
the same period in 1999. The effective tax rate was approximately 32% for each  
of the nine-month periods. The State of South Dakota does not levy an income tax
on business conducted in the state.                                             

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998           

   NET SALES.  Net sales increased $3.7 million, or 16.1%, to $26.5 million in
1999 from $22.8 million in 1998. The increase in net sales was primarily due to 
increased sales volume of frequency control devices delivered to communications 
infrastructure equipment suppliers, including increased sales of voltage        
controlled crystal oscillators in 1999 arising from an increase in sales to a   
non-U.S. customer. Net sales for 1999 were also increased by the introduction in
1999 of our temperature controlled oscillators.                                 

GROSS PROFIT.  Gross profit increased $1.1 million, or 19.2%, to        
$7.1 million, or 26.9% of net sales, in 1999 from $6.0 million, or 26.2% of net 
sales, in 1998. The primary reason for the improvement in gross profit was the  
increase in volume of products manufactured and shipped. The gross margin       
percentage benefitted from increased volume which resulted in a better          
utilization of fixed overhead, but that was offset by manufacturing             
inefficiencies and quality control problems which were experienced as we rapidly
increased the rate of throughput at our South Dakota facility to meet increased 
customer demand.                                                                

RESEARCH AND DEVELOPMENT EXPENSES.  Research and development expenses   
increased $182,000, or 27.0%, to $856,000, or 3.2% of net sales, in 1999 from   
$674,000, or 3.0% of net sales, in 1998. The increase in research and           
development expense was due to increased staffing and the finalization of a     
number of new products and enhancements of existing lines, including the        
development of the temperature controlled oscillator.                           

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and     
administrative expenses increased $548,000, or 14.1%, to $4.4 million, or 16.8% 
of net sales in 1999, from $3.9 million, or 17.0% of net sales, in 1998. The    
increased expense was primarily due to increased commissions associated with our
increase in net sales and, to a lesser extent, the addition of our Vice         
President of Sales and Marketing                                                

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to fill a position which had been vacant since mid-1997. Equity-based           
compensation expense for the year ended December 31, 1999 was $62,000. The plan 
under which the expense accrued was adopted in 1999 and no such expense was     
accrued during the year ended December 31, 1998.                                

   OTHER INCOME.  The amount of $17,256 for 1999 was derived from the sales of
test equipment to one of our contract manufacturers.                            

INTEREST EXPENSE.  Interest expense increased to $232,000 in 1999 from  
$186,000 in 1998 as a result of increased borrowings and higher interest rates. 

  INCOME TAX EXPENSE.  Income tax expense increased to $510,000 in 1999 from
$425,000 in 1998 due primarily to improved earnings. The effective tax rates    
were 32.5% in 1999 and 34.2% in 1998.                                           

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997           

NET SALES.  Net sales for 1998 were $22.8 million, unchanged from 1997. 
Sales volume and types of products sold remained relatively constant for 1997   
and 1998 reflecting the lack of growth of the industry during this time period. 

   GROSS PROFIT.  Gross profit for 1998 was $6.0 million, unchanged from 1997.
Types of products sold and costs associated with sales remained relatively      
constant for 1997 and 1998.                                                     

RESEARCH AND DEVELOPMENT EXPENSES.  Research and development expenses   
decreased $105,000, or   13.5%, to $674,000, or 3.0% of net sales, in 1998 from 
$779,000, or 3.4% of net sales, in 1997. This decrease was caused, primarily, by
lower employment costs.                                                         

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and     
administrative expenses increased $303,000, or 8.5%, to $3.9 million, or 17.0%  
of net sales, in 1998 from $3.6 million, or 15.6% of net sales, in 1997. The    
increased expense, both in dollar terms and as a percentage of sales, was due to
increased commissions as a percent of sales and increased marketing expenses.   

INTEREST EXPENSE.  Interest expense was $186,000 in 1998 and $195,000 in
1997.                                                                           

    INCOME TAX EXPENSE.  Income tax expense was $425,000 in 1998 and $409,000 in
1997. The effective tax rates were 34.2% in 1998 and 28.9% in 1997.             

QUARTERLY RESULTS OF OPERATIONS                                                 

    The following tables set forth our unaudited quarterly results of operations
data for the eight quarters ended September 30, 2000, and the data expressed as 
percentages of our net sales for the same periods. This information has been    
prepared on the same basis as the audited combined financial statements         
appearing elsewhere in this prospectus and, in our opinion, contains all        
adjustments, consisting of normal recurring accruals, necessary for a fair      
presentation of the unaudited quarterly                                         

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results of operations set forth below. Results of operations for any previous   
quarter are not necessarily indicative of the results you can expect for the    
entire year or any future period.                                               

                                                        [Enlarge/Download Table]

                                      DEC 31    MAR 31    JUN 30    SEP 30    DEC 31    MAR 31    JUN 30    SEP 30 
                                       1998      1999      1999      1999      1999      2000      2000      2000  
                                     --------  --------  --------  --------  --------  --------  --------  --------
                                                                                                                   
Net sales...........................  $5,807    $5,425    $6,946    $7,088    $7,008    $8,410   $10,074   $10,899 
Cost of products sold...............   4,153     3,902     5,071     5,085     5,280     5,811     7,081     7,643 
                                      ------    ------    ------    ------    ------    ------   -------   ------- 
Gross profit........................   1,654     1,523     1,875     2,003     1,728     2,599     2,993     3,256 
Research and development expenses...     185       202       224       204       226       200       197       278 
Selling, general and administrative                                                                                
  expenses..........................     989       988     1,192     1,156     1,154     1,548     1,839     1,909 
                                      ------    ------    ------    ------    ------    ------   -------   ------- 
Operating income....................     480       333       459       643       348       851       957     1,069 
Interest expense....................      40        35        50        77        70        48        28        22 
Other (income)......................      --        --        --       (17)       --        --        --        -- 
                                      ------    ------    ------    ------    ------    ------   -------   ------- 
Income before income taxes..........     440       298       409       583       278       803       929     1,047 
Income tax expense..................     153        98       129       189        94       260       301       335 
                                      ------    ------    ------    ------    ------    ------   -------   ------- 
Net income..........................  $  287    $  200    $  280    $  394    $  184    $  543   $   628   $   712 
                                      ======    ======    ======    ======    ======    ======   =======   ======= 

PERCENTAGE OF NET SALES 

                                                        [Enlarge/Download Table]

                                    DEC 31    MAR 31    JUN 30    SEP 30    DEC 31    MAR 31    JUN 30    SEP 30 
                                     1998      1999      1999      1999      1999      2000      2000      2000  
                                   --------  --------  --------  --------  --------  --------  --------  --------
                                                                                                                 
Net sales.........................  100.0%    100.0%    100.0%    100.0%    100.0%    100.0%    100.0%      100% 
Cost of products sold.............   71.5      71.9      73.0      71.7      75.3      69.1      70.3      70.1  
                                    -----     -----     -----     -----     -----     -----     -----     -----  
Gross profit......................   28.5      28.1      27.0      28.3      24.7      30.9      29.7      29.9  
Research and development                                                                                         
  expense.........................    3.2       3.7       3.2       2.9       3.2       2.4       1.9       2.6  
Selling, general and                                                                                             
  administrative expense..........   17.0      18.3      17.2      16.0      16.0      16.3      16.4      17.5  
                                    -----     -----     -----     -----     -----     -----     -----     -----  
Operating income..................    8.3       6.1       6.6       9.1       5.0      10.2       9.5       9.8  
Interest expense..................    0.7       0.6       0.7       1.1       1.0       0.6       0.3       0.2  
Other (income)....................     --        --        --      (0.2)       --        --        --        --  
                                    -----     -----     -----     -----     -----     -----     -----     -----  
Income before income taxes........    7.6       5.5       5.9       8.2       4.0       9.6       9.2       9.6  
Income tax expense................    2.6       1.8       1.9       2.7       1.3       3.1       3.0       3.1  
                                    -----     -----     -----     -----     -----     -----     -----     -----  
Net income........................    5.0%      3.7%      4.0%      5.5%      2.7%      6.5%      6.2%      6.5% 
                                    =====     =====     =====     =====     =====     =====     =====     =====  

    Our operating results have historically been subject to quarterly and annual
fluctuations. We anticipate that factors affecting our future operating results 
will include the timing of significant orders, patterns of capital spending by  
the communications industry, market acceptance of new or enhanced versions of   
our products and changes in the pricing of our products. In addition, the timing
and level of our research and development expenditures could cause quarterly    
results to fluctuate. A substantial portion of our annual revenues comes from   
sales to a relatively small number of customers. Our revenues and operating     
results for a period may be affected by the timing of orders received or orders 
shipped during a period. See "Risk Factors--Risks Related to Our Business--Our  
sales and operating results can fluctuate significantly from period to period,  
thereby potentially adversely affecting the market price of our stock." Gross   
profits were relatively stable for the periods shown until the fourth quarter of
1999 when margins declined by approximately 2.4%. This decline in margins       
occurred when one of our major customers changed its specifications for         
frequency control devices we produced for that customer. We experienced a       
one-time decline in manufacturing yields as we adjusted our manufacturing       
processes to meet that customer's revised specifications. Equity based          
compensation                                                                    

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increased as previously explained due to improved financial performance and the 
addition of our new President and Chief Executive Officer in January, 2000 which
impacted selling, general and administrative costs in the quarters ended        
June 30, 2000 and September 30, 2000.                                           

LIQUIDITY AND CAPITAL RESOURCES                                                 

    As a free-standing subsidiary of Lynch, we have historically managed our own
cash, debt, receivables and payables. We do not expect our separation from Lynch
to have a material impact on the management of our capital resources.           

As of September 30, 2000, we had working capital of $3.5 million, as    
compared to $3.4 million as of December 31, 1999. The increase in our working   
capital position was due primarily to increased receivables and inventories to  
support higher levels of business activity and lower accounts payable largely   
offset by a declaration of a dividend in the amount of $1.5 million in the form 
of a demand promissory note payable to Lynch, higher levels of accrued expenses,
higher accruals for incentive compensation and higher notes payable. As of      
September 30, 2000, we had $.8 million outstanding on our line of credit,       
compared to $2.7 million outstanding at December 31, 1999. At September 30, 2000
we had $2.4 million available on our line of credit. (In January, 2001, we      
increased our line of credit to $6 million and borrowed $1,500,000 under our    
line of credit to pay the demand promissory note. As a result, as of            
January    , 2001, we had $5.1 million outstanding on our line of credit leaving
$0.9 million available on our line of credit.)                                  

Cash provided by (used in) operating activities was $2.6 million for the
nine months ended September 30, 2000, $(177,000) for the nine months ended      
September 30, 1999, $58,000 in 1999, $1.1 million in 1998, and $102,000 in 1997.
Net cash provided by operating activities for the nine months ended             
September 30, 2000 was due to increased sales and profitability. In addition,   
accounts payable increased also reflecting the increased activity, offset by    
increases in accounts receivable and inventory that also reflected the increased
activity. Net cash used in operating activities for the nine months ended       
September 30, 1999 was due to lower levels of sales activity in this period     
compared to 2000 combined with increased accounts receivable and inventory      
partially offset by increased levels of accounts payable. Net cash used in      
operating activities in 1999 was due to increased accounts receivable and       
inventory levels related to the growth in our business in the second half of    
1999, partially offset by increased accounts payable and accrued liabilities.   
Net cash provided by operating activities in 1998 was due to profitable         
operations supplemented by increases in accounts payable and accrued expense and
by decreases in accounts receivable partially offset by increased levels of     
inventory. Net cash provided by operating activities in 1997 was due to         
profitable operations supplemented by increases in accounts payable and accrued 
expenses almost completely offset by increased accounts receivable and inventory
levels.                                                                         

    Net cash used in investing activities was $601,000 for the nine months ended
September 30, 2000, $697,000 for the nine months ended September 30, 1999,      
$804,000 in 1999, $878,000 in 1998 and $679,000 in 1997. Net cash used in       
investing activities for each of these periods was for capital expenditures. We 
expect 2000 capital expenditures to be approximately $1.6 million. The increase 
is principally related to expenditures of approximately $600,000 for capacity   
expansion at our Yankton, South Dakota facility and approximately $500,000 for  
equipment which is expected to reduce our costs. For 2001, we expect capital    
expenditures to be approximately $3 million, principally for additional capacity
increases.                                                                      

  Net cash provided by (used in) financing activities was $(1.9) million for
the nine months ended September 30, 2000, $888,000 for the nine months ended    
September 30, 1999, $868,000 in 1999, $(311,000) in 1998 and $623,000 in 1997.  
Net cash used in financing activities for the nine months ended September 30,   
2000 was for repayment of our line of credit of $1.8 million and repayment of   
$100,000 of long-term debt. Net cash provided by financing activities in 1999   
was from increased net                                                          

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borrowings under our line of credit of 868,000. Net cash used in financing      
activities in 1998 resulted from decreased net borrowings under our line of     
credit of $217,000 and repayments of $94,000 of long-term debt. Net cash        
provided by financing activities in 1997 was from increased net borrowings of   
$1.1 million under our line of credit partially offset by $250,000 payment of   
long-term debt and $250,000 of dividends to Lynch.                              

  At September 30, 2000 we had a $3.7 million revolving credit facility that
is secured by substantially all of our personal property. As of September 30,   
2000, $800,000 was borrowed against the facility, $.5 million was in support of 
a standby letter of credit and $2.4 million of credit remained available,       
subject to borrowing base provisions. Interest on the amounts outstanding under 
the facility accrue at the bank's prime rate minus 0.5%. Our effective interest 
rate was 9.0% at September 30, 2000. The revolving credit agreement presently   
requires us, among other things, to maintain a specified minimum tangible net   
worth ratio and limits capital expenditures and the payments of dividends on    
capital stock. As of September 30, 2000, we were in compliance with all         
covenants under the revolving credit agreement. The revolving credit facility   
expires in May 2001. Subsequent to this offering, we do not anticipate paying   
any dividends on our common stock for the foreseeable future.                   

Our primary capital requirements are for working capital to fund the    
necessary levels of inventory and accounts receivable, to sustain the Company's 
sales growth, for capital expenditures and for acquisitions. We believe that    
anticipated cash flow from operations and the amounts available under our line  
of credit, together with the proceeds from this offering, after payment of      
indebtedness, will satisfy our projected working capital and capital expenditure
requirements through the next twelve months. In the event that the proceeds of  
this offering are less than we expect, we believe that anticipated cash flow    
from operations and the amounts available under our line of credit will satisfy 
projected working capital and capital expenditure requirements for the next     
twelve months provided that we may scale back, or forego, acquisitions that     
require cash investments on our part that cannot be financed through other      
means. Thereafter, working capital and capital expenditures are expected to be  
financed through internal cash flow and, as required, through increased bank    
lines supported by an increasing equity base. To the extent that we grow more   
rapidly than expected, we may need additional cash to finance our operating and 
investing activities. In addition as part of our growth strategy, we intend to  
make acquisitions from time to time. Such acquisitions may require us to engage 
in public or private debt or equity issuances. We cannot be certain that        
financing will be available to us when we need it on favorable terms or at all. 
Also, any debt financing could increase our debt to equity ratio and may limit  
our ability to fund capital expenditures and dividends. Future issuances of     
shares to finance or to effect acquisitions could result in dilution.           

QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISKS                      

We may be exposed to market risk from changes in interest rates on      
borrowings under our revolving line of credit.                                  

As of December 31, 1999, we were subject to interest rate risk on       
approximately $2.7 million of variable rate debt. Each 1.0% of increase in the  
interest rate would impact annual pre-tax earnings by approximately $27,000 if  
applied to that total.                                                          

  We are not exposed to significant market risk from fluctuations in foreign
currency exchange rates because our products are sold in U.S. dollars.          

  We enter into forward exchange contracts to purchase Japanese Yen to hedge
certain firm purchase commitments denominated in Yen. The purpose of our foreign
currency-hedging activities is to protect us from the risk that the eventual    
dollar cash flows resulting from the purchase of inventories from international 
suppliers will be adversely affected by changes in exchange rates. At           
September 30, 2000 we had forward exchange contracts, all having maturities of 3
months or less, of $400,000. Each of these contracts are designated as a hedge  
of an identifiable purchase order                                               

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denominated in a foreign currency. The contracts are entered into to hedge risk 
of currency fluctuations related to specific purchases. Any gains or losses on  
these contracts are deferred and accounted for as part of the underlying        
transaction as they meet the definition of a hedge of a foreign currency        
commitment and the foreign currency commitment (i.e. purchase order) is firm. We
measure the effectiveness of each hedge when the goods are received and paid for
by comparing the hedge against the foreign currency being hedged. The amount of 
deferred gains or losses were not material at September 30, 2000.               

BACKLOG                                                                         

  We had backlog orders of approximately $13.2 million at September 30, 2000
compared with $6.1 million at September 30, 1999. We had backlog orders of      
approximately $6.9 million at December 31, 1999, compared with $3.6 million at  
December 31, 1998. We include as backlog those orders which are subject to      
specific production release orders under written contracts, verbal and written  
orders from distributors with which we have had long-standing relationships, as 
well as written purchase orders from sales representatives. Our customers may   
cancel or defer orders without significant penalty. We believe that             
substantially all of our backlog at September 30, 2000, will be shipped during  
the subsequent six months. See "Risk Factors--Risks Related to Our Business--Our
backlog may not result in future sales" for a discussion of risks associated    
with our backlog.                                                               

IMPACT OF ACCOUNTING STANDARDS                                                  

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities (as amended by SFAS
No. 137 and SFAS No. 138) which will be effective for us in January 2001. SFAS  
No. 133 requires us to recognize all derivatives as assets or liabilities on the
balance sheet and to measure them at fair value on a marked-to-market basis.    
This applies whether the derivatives are stand-alone instruments, such as       
forward currency exchange contracts and interest rate swaps or collars, or      
embedded derivatives, such as call options contained in convertible debt        
investments. Along with the derivatives, the underlying hedged items are also to
be marked-to-market on an ongoing basis. These market value adjustments are to  
be included either in net earnings in the Statement of Operations or in other   
comprehensive income (and accumulated in stockholders' equity), depending on the
nature of the transaction. We do not expect SFAS No. 133 to have a significant  
effect on our results of operations or financial position.                      

   In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101 Revenue Recognition in Financial Statements.  
SAB No. 101 requires us to recognize revenue when it is realized and earned,    
which includes persuasive evidence of a sales agreement, delivery has occurred, 
the selling price is fixed and collectibility is reasonably assured. Given our  
current method of recognizing revenue, we believe that our financial statements 
comply with SAB No. 101.                                                        

In March 2000, the FASB issued FASB Interpretation No. 44 (FIN          
44) Accounting for Certain Transactions involving Stock Compensation. This      
interpretation clarifies the application of Accounting Principles Board Opinion 
No. 25 for certain issues. The adoption of FIN 44 did not have a significant    
effect on our earnings or financial position.                                   

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OUR BUSINESS

OVERVIEW                                                                        

We are a leading designer, manufacturer and marketer of custom designed 
electronic components that are used to control the frequency or timing of       
electronic signals in communications equipment. Our devices, which are commonly 
called frequency control devices, crystals or oscillators, support fixed and    
mobile wireless, copper wire, coaxial cable and fiber optic systems. Our        
products are incorporated into, among other things, telecommunications          
infrastructure equipment such as cellular base stations, microwave radios,      
transceivers and telephone network switches, as well as computer network        
switches and ethernet and fiber optic systems. We sell our products to          
communications original equipment manufacturers, contract manufacturers and to  
distributors. Original equipment manufacturers who incorporate our products in  
their equipment include: ADC Telecommunications; Adtran, Inc.; Cirrus Logic;    
Cisco Systems; Telefonaktiebolaget LM Ericsson; Lucent Technologies; Newbridge  
Networks, a subsidiary of Alcatel; Nortel Networks and Paradyne. Our contract   
manufacturer customers include: Celestica; Flextronics International; Jabil     
Circuit; Primetech Electronics; SCI Systems and Solectron. Our distributor      
customers include: All American Semiconductor; Arrow Electronics; Avnet; Dove   
Electronic Components and Pioneer Standard Electronics.                         

  Our products are quartz crystal based frequency control devices consisting
of packaged quartz crystals and oscillators incorporating those crystals. Our   
frequency control devices produce an electrical signal that is used as a carrier
signal for the transmission of information, as a timing signal for digital      
circuits, or as a reference frequency for devices that transmit and receive     
information. Our products enable communications equipment manufacturers and     
communications service providers to meet the increasing demands of their        
customers because they produce an electrical signal that is:                    

    - accurate--the frequency of the signal does not change significantly over a
period of time;                                                     

  - stable--the frequency of the signal does not vary significantly when our
product is subjected to a range of operating temperatures; and      

    - has low electronic noise--the signal does not add interfering signals that
can degrade the performance of the communications system.           

Increased accuracy allows for better frequency management in a          
communications system, thereby permitting more signals/data to be transmitted in
a given range of frequencies. An accurate signal is also essential as a         
reference for the transmission of digital information, which must be transmitted
in precisely timed pulses.                                                      

    Low electronic noise is essential to the accurate transmission and reception
of information over any given signal, since electronic noise can distort or     
degrade the desired signal. In addition, our frequency control devices are used 
as reference oscillators for devices, known as phase locked loop synthesizers,  
that multiply the frequency of an electronic signal. Low electronic noise is    
essential in such applications since inaccuracies in data transmission that are 
created by electronic noise will be multiplied to the same extent that the      
frequency of a signal is multiplied by the synthesizer.                         

   Our products exhibit low aging characteristics, that is, the performance of
our products will not deteriorate significantly over time. Low aging is         
essential to our customers since our products are often expected to be used     
without replacement, over long periods of time in applications such as remotely 
located cellular transmission stations.                                         

We believe that quartz crystal based technology is the best means of    
producing low aging frequency control devices that are accurate and stable with 
low electronic noise. Our frequency control devices generate signals that are   
significantly more accurate than those produced by high volume manufacturers,   
and more reliable than those produced by many other producers of frequency      
control devices. There are frequency control devices that are based upon        
materials other than quartz, but these                                          

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devices are either not as accurate as are required by our customers or are too  
expensive for most applications. In addition, some frequency control devices use
relatively new technologies that we do not use to produce signals at higher     
frequencies than the signals produced by our products. To date, however, these  
devices have not proven to be competitive, in terms of cost or performance, with
our frequency control devices, except in applications requiring the generation  
of very high frequencies.                                                       

In addition we sell crystals and oscillators which are used outside the 
communications industry. These frequency control devices are used in            
microprocessor and computer applications. We expect this portion of our business
to decline over time as we increase our emphasis on the growing communications  
market.                                                                         

  We have over 35 years of experience designing, manufacturing and marketing
crystal based frequency control products. Our customers rely on the skills of   
our engineering and design team to help them solve frequency control problems   
during all phases of their products' life cycles, including product design,     
prototyping, manufacturing and subsequent product improvements. Our resources   
allow us to design and prototype custom frequency control solutions quickly and 
our involvement with our customers during the early phases of their products'   
life cycles permits us to provide excellent service and support throughout all  
phases of the products' life cycles.                                            

INDUSTRY BACKGROUND                                                             

The communications industry is in the midst of an expansion that is     
attributable to, among other things:                                            

  - increased use of mobile wireless communications for voice, video, paging
and data transmission;                                              

- growth in demand for high speed Internet access and other information 
transmission and retrieval services;                                

  - deregulation and privatization of the communications industry worldwide;
and                                                                 

   - development and expansion of new fixed wireless high speed, high capacity
 information transmission systems to support the convergence of voice,
video and data transmission.                                        

INCREASED GLOBAL DEMAND FOR MOBILE WIRELESS VOICE AND INFORMATION       
TRANSMISSION SERVICES REQUIRES AN EXPANSION OF WIRELESS INFRASTRUCTURE. The     
increase in the use of mobile wireless systems by consumers and businesses for  
transmitting voice, video, paging and data signals over analog, cellular,       
digital cellular and digital personal communications services (PCS) systems is  
driving the expansion of wireless infrastructure. Strategies Unlimited, a market
research firm specializing in wireless communications, estimated in their most  
recent market survey published in December, 1999 that the number of global      
cellular/PCS subscribers would grow from 313 million in 1998 to approximately   
1.3 billion by 2004. (We have not sought, nor have we received consent from     
Strategies Unlimited to refer to it or their survey in this prospectus.) We have
no reason to believe that such estimate will prove to be inaccurate and we      
believe that wireless service providers will expand their current infrastructure
and implement new services that permit wireless transmission of integrated      
voice, video and data traffic. We believe these factors will require a          
substantial increase in capital investment for wireless communications          
infrastructure equipment employing frequency control devices. It should be      
recognized, however, that there have been reports in the media, as well as in   
some medical journals, that the use of hand-held wireless communications        
equipment may expose the user's brain to the risks of radiation. If such risks  
are proven to be, or are perceived by the public to be, substantial, the market 
for our direct and indirect customers' hand-held wireless communications        
equipment might be adversely affected, in which event the market for our        
products would be adversely affected.                                           

    GLOBAL DEMAND FOR HIGH SPEED, HIGH CAPACITY INFORMATION TRANSMISSION SYSTEMS
IS DRIVEN BY THE RAPID GROWTH IN USE OF HIGH SPEED INTERNET ACCESS AND OTHER    
INFORMATION TRANSMISSION AND RETRIEVAL SERVICES.                                

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Demand for information transmission and retrieval services over the Internet and
other communications networks has grown dramatically as businesses and consumers
increase their use of the Internet as a global communications medium. Consumers 
are using the Internet for e-mail, audio, video, multimedia services,           
information gathering and shopping. Businesses are using the Internet to reach  
individual and business consumers and to enhance communications within their own
organizations. This increased usage requires expanded capacity which is being   
met by additions to and upgrades in the communications infrastructure using     
equipment that employs precision frequency control devices.                     

DEREGULATION AND PRIVATIZATION OF THE COMMUNICATIONS SERVICES INDUSTRY  
WORLDWIDE FOSTERS COMPETITION AMONG SERVICE PROVIDERS, WHICH LEADS TO INCREASED 
DEMAND FOR HIGH SPEED, HIGH CAPACITY INFORMATION TRANSMISSION EQUIPMENT. In the 
United States, local telephone exchange carriers, such as the regional Bell     
operating companies, were, until recently, the exclusive owners and operators of
the copper wire connections between network backbones and their subscribers,    
commonly known as the last mile. The Federal Communications Act of 1996         
intensified the competitive environment in the United States by requiring these 
telephone companies to provide access to portions of their networks, including  
the last mile, to competing providers. Outside the United States, many countries
are privatizing their state-run telephone companies, liberalizing their laws and
opening their markets to foreign investment and competition. To compete in this 
environment, many service providers seek to differentiate themselves and        
increase market share by offering integrated voice, video and data services.    
These integrated services are provided using high speed, high capacity          
information transmission equipment that employs precision frequency control     
devices.                                                                        

 LIMITATIONS OF EXISTING ACCESS TECHNOLOGIES ARE DRIVING THE DEPLOYMENT OF
FIXED WIRELESS HIGH SPEED, HIGH CAPACITY INFORMATION TRANSMISSIONS SYSTEMS. New 
fixed wireless technology offers quality of service comparable to land-line     
alternatives at data transmission speeds significantly faster than copper wire  
networks or coaxial cable and can be deployed in a much shorter time and at a   
much lower cost. These new fixed wireless systems employ frequency control      
devices in virtually all of their components.                                   

OUR COMPETITIVE ADVANTAGES                                                      

  We believe that we are well positioned for continued and increased success
in the evolving communications industry because:                                

- we are focused on serving the communications industry;                

  - our design and engineering expertise enables us to provide collaboration
and design support services to original equipment manufacturers;    

- our integrated manufacturing capability allows us to implement rapidly
production of new products;                                         

- we provide high quality, reliable products; and                       

- we provide extensive customer service and technical support.          

WE ARE FOCUSED ON SERVING THE COMMUNICATIONS INDUSTRY.  We focus on     
providing frequency control devices to the communications industry. We believe  
that the technical requirements of this market are unique and that our industry 
focus allows us to better understand and serve the needs and requirements of our
customers.                                                                      

    OUR DESIGN AND ENGINEERING EXPERTISE ENABLES US TO PROVIDE COLLABORATION AND
DESIGN SUPPORT SERVICES TO ORIGINAL EQUIPMENT MANUFACTURERS. We have a design   
engineering group with many years of experience in the manufacture and design of
frequency control devices. This experience provides us with the ability to      
design frequency control devices that meet the increasingly demanding needs of  
communication systems. To address these needs, designers of communications      
equipment have a broad range of options                                         

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available to them. We believe that by collaborating with the original equipment 
manufacturers' designers early in the product development process, we increase  
our opportunity to have a designer specify our frequency control devices for use
in the product being designed.                                                  

OUR INTEGRATED MANUFACTURING CAPABILITY ALLOWS US TO IMPLEMENT RAPIDLY  
PRODUCTION OF NEW PRODUCTS. Competitive pressures are creating the need for     
original equipment manufacturers to reduce the design to production cycle time  
for new products. Our Yankton, South Dakota factory can perform each of the     
major processes required to convert basic quartz bars into finished frequency   
control devices. With this level of integration, we can offer faster turn-around
on both prototype devices and custom made, high performance devices.            

WE SUPPLY HIGH QUALITY, HIGHLY RELIABLE FREQUENCY CONTROL DEVICES.  We  
carefully control the manufacturing processes in our South Dakota facility and  
at our contract manufacturers. We believe that this control, and the attention  
to quality that drives it, allows us to offer high quality, highly reliable     
products.                                                                       

 WE PROVIDE EXTENSIVE SERVICE AND TECHNICAL SUPPORT TO OUR CUSTOMERS.  Our
sales and customer service personnel have direct responsibility for specific    
customers and have the authority to respond to nearly all customer concerns.    
This allows us to quickly and effectively resolve customer issues as they arise.
We believe that the quality of our customer service and technical support has   
been instrumental in winning repeat business in the past and our reputation for 
customer service and technical support will help us to win new business in the  
future.                                                                         

STRATEGY                                                                        

   Our objective is to build on the strength of our core expertise in packaged
quartz crystal and oscillator technologies to become the supplier of choice to  
original equipment manufacturers who supply infrastructure equipment to the     
communications industry.                                                        

LEVERAGE OUR REPUTATION AS A SERVICE ORIENTED AND DEPENDABLE SUPPLIER OF
HIGH QUALITY, HIGHLY RELIABLE FREQUENCY CONTROL DEVICES. We intend to take      
advantage of our reputation as a service oriented, high quality supplier of     
reliable frequency control devices to achieve significant growth in market      
share. We believe that our focus on quality and reliability allows us to meet   
the increasingly demanding needs of our customers and that our customers will   
continue to turn to us to meet those needs. As the communications infrastructure
evolves, we believe that our growth will be driven both by expanding our        
business with existing customers and by adding new customers.                   

 CAPITALIZE ON CHANGES TO OUR SALES PROCESS TO INCREASE OUR PENETRATION AT
EXISTING CUSTOMERS AND TO ACQUIRE NEW CUSTOMERS. We have reorganized to make our
sales representatives more accountable for the quality of service provided to   
our customers. Our new system assigns key account representatives who are       
responsible for ensuring the quality of service to their customers. The improved
level of service that we provide to our existing customers allows us to build   
closer relationships with key customer personnel thereby resulting in greater   
sales opportunities. In addition, our new system will focus the efforts of our  
key account representatives on penetrating new customer accounts.               

INCREASE OUR DESIGN AND ENGINEERING CAPABILITIES AND CREATE HIGHER VALUE
SOLUTIONS FOR OUR CUSTOMERS' DESIGN ENGINEERS. We intend to increase our        
investment in technical resources, including design and engineering personnel,  
to enable us to provide a higher level of design and engineering support to our 
customers. We believe that increasing our technical participation with our      
original equipment manufacturer customers in the early stages of their design   
process will lead to our frequency control devices being designed into their    
products more regularly.                                                        

INCREASE OUR MANUFACTURING CAPACITY TO TAKE ADVANTAGE OF COMMUNICATIONS 
INDUSTRY GROWTH. To capitalize on strong demand we have committed to expand our 
manufacturing capacity at our main facility in South Dakota. We intend to       
increase the use of our offshore contract manufacturers who                     

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have recently committed to adding capacity on our behalf. In addition, our long 
term objective is to reduce the time it takes to manufacture our products which 
will result in further increases in our manufacturing capacity. To that end, we 
have dedicated additional resources to evaluating our manufacturing processes   
and to identifying and implementing process improvements.                       

   PURSUE SELECTED STRATEGIC ACQUISITIONS AND MERGERS.  We believe that we can
significantly enhance our business opportunities by acquiring technology,       
product portfolios and/or customer base. Some of these may offer immediate sales
opportunities while others may meet longer term objectives. We plan to pursue   
these opportunities by making strategic acquisitions or by acquiring or         
licensing technology.                                                           

EXPAND OUR PRODUCT LINE TO INCLUDE A BROADER RANGE OF FREQUENCY CONTROL 
DEVICES. We intend to design, manufacture and sell devices that control higher  
frequencies or provide greater precision than our current products. These       
devices will serve applications within the communications industry for which we 
do not currently provide products. We intend to achieve this through a          
combination of increased research and development and strategic acquisitions, if
they are appropriate. We are currently planning to more than triple our         
expenditures on research and development over the next two years.               

PRODUCTS                                                                        

Our products are high quality, reliable, technically advanced frequency 
control devices, including packaged quartz crystals and oscillators             
incorporating those crystals.                                                   

An oscillator is a device that produces an electronic output signal of a
specific frequency. In a quartz crystal based oscillator, an output signal is   
generated by applying an electric voltage to a quartz crystal. The application  
of an electric voltage to a quartz crystal causes the crystal to vibrate at a   
specific resonant frequency. The frequency at which a quartz crystal will       
vibrate is directly related to the thickness of the crystal. Quartz crystal     
based oscillators are well suited for use in frequency control devices because  
they produce stable and predictable frequencies when subjected to specific      
electrical voltages and are relatively insensitive to environmental conditions. 
These products enable higher precision in frequency management and timing or    
pulse control.                                                                  

    We design and produce a range of packaged quartz crystals and quartz crystal
based oscillators. There is a variety of features in our product family. The    
Packaged Crystal is single crystal in a hermetically sealed package and is used 
by electronic equipment manufacturers, along with their own electronic          
circuitry, to build oscillators for frequency control in their electronic       
devices. The Clock Oscillator is the simplest of our oscillators, It is a       
self-contained package with a crystal and electronic circuitry that is used as a
subsystem by electronic equipment manufacturers to provide frequency control for
their devices. The Voltage Controlled Crystal Oscillator (VCXO) is a variable   
frequency oscillator whose frequency can be changed by varying the control      
voltage to the oscillator. The Temperature Compensated Crystal Oscillator (TCXO)
is an oscillator designed for use over a range of temperatures. It has built-in 
compensation electronics to keep the frequency stable over a range of           
temperatures. The Digitally Compensated Crystal Oscillator (DCXO) is a          
temperature compensated oscillator in which the compensation electronics are    
digital and offer greater frequency stability than the TCXO over a range of     
temperatures. This variety of features in our product family offers the         
designers at electronic equipment manufacturers a range of options as they      
create the needed performance in their products.                                

 Currently, our oscillator products operate at frequencies ranging from 32
kilohertz to 160 megahertz which constitute most of the frequencies that are now
used in communications equipment. However, many of our products, through        
amplification or other means, are ultimately incorporated into those products   
that operate at frequencies in excess of 160 megahertz. The prices for our      
products range from $0.09 for basic packaged crystals to $98.18 for highly      
accurate temperature compensated crystal oscillators.                           

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    Our products are employed in numerous applications within the communications
industry, including:                                                            

- Computer and Telephone network switches                               

- Modems                                                                

- Wireless transmitters/receivers                                       

- Digital signal processors                                             

- Multiplexers                                                          

- Data recovery/regeneration devices                                    

- Repeaters                                                             

- Data transceivers                                                     

- Line interface devices                                                

- Base station controllers                                              

  Our products are incorporated into end products that serve all elements of
the communications industry, including:                                         

  - Fiber Optic Long Haul--A fiber optic connection between widely separated
 data transmitting and receiving locations, such as from city to city,
commonly known as a network backbone.                               

- Fiber Optic Last Mile--The fiber optic connections between a network  
    backbone and individual network users, such as between a local telephone
office and an office building.                                      

- Fixed Wireless--The wireless connections between fixed information    
transmitting and receiving locations.                               

- Mobile Wireless--The wireless connections between fixed and mobile    
information transmitting and receiving locations.                   

- Copper Long Haul--A copper wire, including coaxial cable, network     
backbone.                                                           

  - Copper Last Mile--The copper wire connections between a network backbone
and individual network users.                                       

The crystals and oscillators we sell for use in non-communications      
applications are used in industrial applications such as security systems,      
metering systems and industrial control systems as well as in various computer  
peripheral equipment such as printers, modems, monitors, video cards and sound  
cards. These non-communications applications do not require the quality and     
reliability demanded by manufacturers of communications equipment.              

RESEARCH AND DEVELOPMENT                                                        

At September 30, 2000, we employed 11 engineers and technicians in South
Dakota who devoted most of their time to research and development. By           
December 31, 2001, we intend to more than double the number of engineers and    
technicians who perform research and development. Our research and development  
expense was approximately $856,000 in 1999, $673,000 in 1998 and $778,000 in    
1997. As part of our strategy, we intend to raise significantly our research and
development spending through 2001. We will spend approximately $2 million on    
research and development during 2001.                                           

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CUSTOMERS                                                                       

We market and sell our frequency control devices primarily to:          

- original equipment manufacturers of communications equipment;         

- contract manufacturers for original equipment manufacturers; and      

- distributors who sell to original equipment manufacturers and contract
manufacturers.                                                      

Original equipment manufacturers who incorporate our products in their  
equipment include: ADC Telecommunications; Adtran, Inc.; Cirrus Logic; Cisco    
Systems; Ericsson; Lucent Technologies; Marconi Networks; Newbridge Networks;   
Nortel Networks and Paradyne. Our contract manufacturer customers include:      
Celestica; Flextronics International; Jabil Circuit; SCI Systems and Solectron. 
Our distributor customers include: All American Semiconductor; Arrow            
Electronics; Avnet Sterling and Pioneer Standard Electronics.                   

   In 1999, Newbridge Networks accounted for approximately 12.4% of net sales.
No other customer accounted for more than 10% of our 1999 revenues. In 1998, no 
customer accounted for more than 10% of our net sales. Sales to our ten largest 
customers accounted for approximately 60% of net sales for 1999, 1998 and 1997. 

SALES AND MARKETING                                                             

In order to focus our sales effort, earlier this year we reorganized our
sales personnel. We now use key account representatives to foster the strongest 
possible sales relationship between us and our original equipment manufacturer  
customers. Our key account representatives have full access to our applications 
engineering group, enabling us to bring our best design and engineering support 
to the customer effectively and efficiently. This combination of relationship   
management and technical support is critical to achieving our goal of being     
designed into our customers' products. Working below our key account            
representatives is our network of manufacturers' representatives and inside     
sales representatives who service all of our customers. Our key account         
representatives serve as the contact person for the customers to whom they are  
assigned and ensure that we meet the global needs of those customers. Our key   
account representatives are also responsible for acquiring new customers. In    
addition to our key account representatives, we use our senior management team  
on a proactive basis to help build high level relationships with our high       
priority customers and to help penetrate new accounts. We believe that this     
reorganization of our sales effort will benefit us over the long term; however, 
we are unable to quantify the increase in sales that may result from this       
reorganization. We do not believe that the cost of the reorganization will have 
a material adverse inpact on our results of operations.                         

  We work actively to sell our products through distributors and to contract
manufacturers. These customers represent a growing part of our shipments as many
of our target original equipment manufacturers continue to rely more heavily on 
the services and capabilities of these companies. We believe that these customer
relationships also give us opportunities to grow our business outside of our    
focal markets. A portion of our sales management team focuses on these customers
with the objective of rapidly growing our business in all applications and      
markets.                                                                        

 Our international sales represented approximately 43%, 36% and 43% of our
net sales for 1999, 1998 and 1997, respectively. In 1999, this consisted of     
approximately 19% from customers in Canada, 9% from customers in Asia, 6% from  
customers in Western Europe, 4% from customers in Mexico and 5% from other      
international customers. We are increasing our international sales efforts by   
adding distributors and manufacturers' representatives in Western Europe and    
Asia.                                                                           

    Our website includes an online search engine that allows design engineers to
choose from our products based on a menu of performance characteristics. We plan
to expand the number of online                                                  

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resources available through out website for use by product design engineers and 
purchasing personnel. We also expect to upgrade our website generally, to help  
penetrate the design and engineering groups at our original equipment           
manufacturer customers and increase the site's customer service features.       

BACKLOG                                                                         

  We had backlog orders of approximately $13.2 million at September 30, 2000
compared with $6.1 million at September 30, 1999. We had backlog orders of      
approximately $6.9 million at December 31, 1999, compared with $3.6 million at  
December 31, 1998. We include as backlog those orders which are subject to      
specific production release orders under written contracts, verbal and written  
orders from distributors with which we have had long-standing relationships, as 
well as written purchase orders from sales representatives. Our customers may   
cancel or defer orders without significant penalty. We believe that             
substantially all of our backlog at September 30, 2000, will be shipped during  
the next six months. See "Risk Factors--Risks Related to Our Business--Our      
backlog may not result in future sales" for a discussion of risks associated    
with our backlog.                                                               

For the nine months ended September 30, 2000 and the three months ended 
December 31, 2000 we received new orders, net of permitted cancellations, of    
approximately $4.0 million per month and $3.0 million per month, respectively.  
If new orders continue at the recent rate, we will be unable to sustain our     
growth.                                                                         

COMPETITION                                                                     

  Frequency control devices are sold in a highly competitive industry. There
are numerous domestic and international manufacturers who are capable of        
providing custom designed quartz crystals and oscillator modules comparable in  
quality and performance to our products. Our competitors include Vectron        
International (a division of Dover Corporation), CTS Corporation and Saronix.   
Some of our competitors currently offer products that use technologies that we  
do not use and that operate at frequencies ranging up to 622 megahertz. These   
frequencies are increasingly being used in communications equipment. We believe 
that none of our competitors produce products that have materially longer lives 
than our products. We do not operate in the same markets as high volume         
manufacturers of standard products; rather we focus on manufacturing lower      
volumes of custom designed frequency control devices. Many of our competitors   
and potential competitors have substantially greater financial, engineering,    
manufacturing and marketing resources than we do. We seek to manufacture custom 
designed, high performance crystals and oscillators, which we believe we can    
sell competitively based upon performance, quality, order response time and a   
high level of engineering support.                                              

MANUFACTURING                                                                   

We have one manufacturing facility in Yankton, South Dakota, and have   
long-term relationships with two contract manufacturers in Asia. We maintain a  
rigorous quality control system and are an ISO 9001 qualified manufacturer.     

   Our South Dakota facility has the capability to start with a plain piece of
quartz and produce from that a packaged quartz crystal or a finished high       
performance oscillator. We have processes in place for sawing and lapping quartz
and for high-vacuum metal deposition. In addition, we produce many of our own   
thick film coatings for ceramic substrate, and we have automated assembly and   
test systems for production of finished oscillators.                            

   In 1990, we established a working relationship with a contract manufacturer
located in South Korea, and in 1994, we established a working relationship with 
a contract manufacturer located in the People's Republic of China. While we do  
not have written long term agreements with them, we believe that we are the     
largest customer for each of these contract suppliers and, as such, believe that
from                                                                            

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time to time we receive preferential treatment on production scheduling matters.
We established, and we monitor and audit, the process control and quality       
control systems at our contract manufacturers to ensure quality and reliability.
In order to serve our markets and maintain profitability, we review our         
manufacturing costs on a product-by-product basis to determine at which facility
the product should be produced.                                                 

   We attempt to utilize standard parts and components that are available from
multiple vendors located in the United States or internationally. Some          
components used in our products are available from only a limited number of     
sources. Despite the risks associated with purchasing components from single    
sources or from a limited number of sources, we have made the strategic decision
to select single source or limited source suppliers in order to obtain higher   
quality goods and lower pricing, and to receive more timely delivery and        
maintain quality control.                                                       

INTELLECTUAL PROPERTY                                                           

  We hold one patent, but do not consider it to be critical to our business.
We believe that our technological position depends primarily on the technical   
competence and creative ability of our engineering and technical staff in areas 
of product design and manufacturing processes as well as proprietary know how   
and information. We require our key personnel to execute confidentiality        
agreements.                                                                     

To the best of our knowledge, we are not infringing on the intellectual 
property rights of others. However, intellectual property rights are uncertain  
and involve complex legal and factual questions. It is possible that we may     
unknowingly be infringing on the intellectual property rights of others and may 
be liable for that infringement. See "Risk Factors--Risks Related to Our        
Business--Third parties may claim that we are infringing upon their intellectual
property, and we could suffer significant litigation costs or licensing expenses
or be prevented from selling our products."                                     

FACILITIES                                                                      

Our operations are conducted through the following facilities:          

                                                        [Enlarge/Download Table]

                       APPROXIMATE                                                             
LOCATION               SQUARE FEET                      USES                       OWNED/LEASED
--------               -----------  ---------------------------------------------  ------------
                                                                                               
Yankton, South Dakota     16,000    Principal executive and corporate office,        Leased    
                                    sales office                                               
Yankton, South Dakota     35,000    Research and development, manufacturing and       Owned    
                                    assembly and training                                      
Hong Kong, China           1,000    Sales office                                     Leased    

    The lease on our South Dakota office facility expires on September 30, 2003,
with options to renew until 2006. We made capital expenditures of approximately 
$825,000 for the second half of 2000 to expand our production capacity at our   
owned facility.                                                                 

LITIGATION                                                                      

From time to time, we have been involved in litigation. However, no such
matters have been material to our business. We are not currently involved in any
material litigation.                                                            

EMPLOYEES                                                                       

As of September 30, 2000, we employed 264 people, including 21 in       
engineering, 200 in manufacturing and quality assurance, 22 in customer service,
technical support and customer training, 7 in sales and marketing, and 14 in    
administration. We also employ independent contractors and temporary employees. 
None of our employees is represented by a labor union, and we consider our      
employee relations to be good.                                                  

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MANAGEMENT

EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS                                 

 Our executive officers, directors and key employees, and their ages as of
August 31, 2000, were as follows:                                               

                                                        [Enlarge/Download Table]

NAME                                         AGE                      POSITION                 
----                                       --------  ------------------------------------------
                                                                                               
Robert R. Zylstra.........................    52     President and Chief Executive Officer,    
                                                     Director                                  

David L. Rein, Sr.........................    56     Senior Vice President and Chief Financial 
                                                     Officer                                   

Robert J. Jenks...........................    48     Senior Vice President of Operations       

John R. Kerg, Jr..........................    42     Vice President of Sales and Marketing     

Gregory T. Rogers.........................    40     Vice President of Engineering             

Jeffrey A. Kocak..........................    38     Director of Quality Systems               

Kwok Sun Leung............................    51     Managing Director, M-tron Industries,     
                                                     Limited, Hong Kong                        

Anthony J. Santoro(1)(2)..................    58     Chairman of the Board of Directors        

E. Val Cerutti(1)(2)......................    60     Director                                  

------------------------                                                        

(1) Member of our Audit Committee.                                              

(2) Member of our Compensation Committee.                                       

  Executive officers are elected to serve in such capacities by the Board of
Directors until the next annual meeting of the Board of Directors, or until     
their respective successors have been duly elected and qualified, or until their
earlier death, resignation, disqualification or removal from office. There are  
no family relationships between any of our executive officers.                  

   ROBERT R. ZYLSTRA, our President and Chief Executive Officer and one of our
directors, joined us in January of 2000. From July, 1997 to January, 2000,      
Mr. Zylstra served as General Manager of Product Technologies and New Business  
Ventures with the Data Storage and Information Management Business of Imation   
Corp. In this role, he was charged with managing a mature business and growing a
portfolio of assorted technologies into a major business. From 1994 to 1997, he 
served as Manufacturing Director for Imation's and 3M Corporation's Data Storage
and Information Management Business. Prior to Imation's spin-off from 3M in     
1996, Mr. Zylstra held a variety of domestic and international positions with   
3M. He has an MS in mechanical engineering from the University of Iowa and a BS 
in mathematics and physics from Iowa State University.                          

    DAVID L. REIN, SR., our Chief Financial Officer, joined us in 1979. Prior to
joining us, he served in various financial positions with NCR Corporation. He   
has an MBA from the University of Michigan and a BS from Lehigh University.     

ROBERT J. JENKS, our Senior Vice President of Operations, with          
responsibility for manufacturing and supply, joined us as a Technical Director  
in 1993. He became our Director of Operations in 1995 and has held his current  
position since 1997. Prior to joining us, Mr. Jenks served in various design and
manufacturing positions with E.F. Johnson Company. He has a BS from North Dakota
State University.                                                               

  JOHN R. KERG, JR., our Vice President of Sales and Marketing, joined us in
April of 1999. Before joining us, Mr. Kerg served as Corporate Marketing Manager
of Pioneer Standard Electronics, Inc.                                           

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from 1989 to 1999, and as Headend Microwave Technician for Cox                  
Communications, Inc. from 1982 to 1989. He has a BS in electrical engineering   
technology from ETI Technical College and an MBA from Cleveland State College.  

   GREGORY T. ROGERS, our Vice President of Engineering, joined us in February
of 1999 as Director of Engineering. He was promoted to Vice President of        
Engineering in June 2000. Prior to joining us, Mr. Rogers served as a contract  
engineer with General Electric Company from 1998 to 1999, and a production      
manager with Bliley Electric Company from 1995 to 1998. From 1986 to 1995, he   
held various positions with Murata Electronics, North America, Inc., most       
recently as Engineering Manager. He has a BS from Gannon University in          
electronical engineering technology and mechanical engineering technology.      

JEFFREY A. KOCAK, our Director of Quality Systems, joined us in 1988.   
Mr. Kocak has held his current position since 1995, and from 1988 to 1995 held  
various quality assurance positions with us. Prior to joining us, Mr. Kocak     
served as an electronic technician and a senior electronic technician with      
Litton Microwave Systems. He has an Electronics Technology degree from Jackson  
Area Technical Institute.                                                       

   KWOK SUN LEUNG, Managing Director of our wholly owned Hong Kong subsidiary,
M-tron Industries, Limited, joined us in October of 1993. Mr. Leung supervises  
our Hong Kong operations. Prior to joining us, Mr. Leung served as Regional     
Account Manager for Texas Instruments, Inc. from 1991 to 1993, as Factory       
Manager at PopBridge Manufacturing Co., Ltd., in China, from 1990 to 1991 and as
a Regional Distribution Manager for Intel Semiconductor Ltd. from 1989 to 1990. 
Mr. Leung has a Diploma of Electronic Engineering from Hong Kong Polytechnic.   

ANTHONY J. SANTORO, our Chairman of the Board of Directors, joined us in
December of 2000. He currently serves as Chancellor of Roger Williams           
University. From 1993 through 2000, he served as President of Roger Williams    
University. From 1992 through 1993, he served as Dean and Vice President of     
Roger Williams University School of Law.                                        

  E. VAL CERUTTI, our Director, joined us in December of 2000. He has served
as business consultant since 1992. From 1975 through 1992, he served as         
President and Chief Operating Officer of Stella D'oro Biscuit Co., Inc., a      
producer of bakery products. He also currently serves as a Director of Spinnaker
Industries, Inc., The Gabelli Convertible Securities Fund and The Gabelli Gold  
Fund. Mr. Cerutti has also served as a director of the South Dakota corporation 
that was our predecessor since September, 1999.                                 

COMPENSATION OF DIRECTORS                                                       

  Non-employee directors receive a cash retainer of $2,500.00 per quarter, a
fee of $1,000.00 for each Board of Directors or committee meeting they attend in
person and a fee of $1,000 for each Board of Directors or committee meeting     
attended by telephone, which lasts for at least 15 minutes. A director who is an
employee of M-tron is not compensated for services as a member of the Board of  
Directors or any committee thereof. As described under "Benefit Plans-Stock     
Option Plan," non-employee directors also are eligible to receive stock options 
under our 2000 Stock Option Plan and currently receive options to purchase 5,000
shares of Class A common stock upon their initial election as a director. In    
addition, our initial non-employee directors, Messrs. Santoro and Cerutti, each 
received options to purchase an additional 5,000 shares, or an aggregate of     
10,000 options, upon their initial election as directors.                       

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BOARD COMMITTEES                                                                

AUDIT COMMITTEE                                                                 

  The Audit Committee of the Board of Directors reviews, acts on and reports
to the Board of Directors with respect to various auditing and accounting       
matters, including the recommendation of our independent auditors, the scope of 
the annual audits, fees to be paid to the independent auditors, the performance 
of our independent auditors and our accounting practices. The members of the    
Audit Committee are Messrs. Santoro and Cerutti.                                

COMPENSATION COMMITTEE                                                          

The Compensation Committee of the Board of Directors determines the     
salaries, benefits and stock option grants for our employees, consultants,      
directors and other individuals compensated by us and also administers our stock
option plan. The members of the Compensation Committee are Messrs. Santoro and  
Cerutti who were appointed to that committee in December, 2000. From the time of
our incorporation, in October of 2000, until December, 2000, our Board of       
Directors served as our compensation committee. Mr. Zylstra, our President and  
Chief Executive Officer, served as a member of our Board of Directors commencing
shortly after our incorporation and participated in deliberations of our Board  
of Directors concerning executive compensation.                                 

EXECUTIVE COMPENSATION                                                          

  The following table sets forth information with respect to compensation we
paid in 1997, 1998 and 1999 for services to us by our former chief executive    
officer and the two other highest-paid executive officers (sometimes called the 
"named executive officers") whose total salary and bonus for the year exceeded  
$100,000. Our former chief executive officer retired in January 2000 and Robert 
R. Zylstra became our President and Chief Executive Officer. Mr. Zylstra was not
previously an officer or employee, and does not appear in the following table.  

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                        SECURITIES                 
                                                                        UNDERLYING     ALL OTHER   
NAME & PRINCIPAL POSITION                   YEAR     SALARY    BONUS     SARS(1)    COMPENSATION(2)
-------------------------                 --------  --------  --------  ----------  ---------------
                                                                                                   
Martin J. Kiousis........................   2000    $ 31,027       (3)          0             0    
President and Chief Executive Officer       1999    $114,479  $62,792     325,000        $3,572    
(retired in January 2000)                   1998     115,031   40,500           0         3,894    

Robert R. Zylstra........................   2000    $165,515       (3)          0           200    
President and Chief Executive Officer                                                              
(commencing in January 2000)                                                                       

Robert J. Jenks..........................   2000    $128,760       (3)          0           200    
Vice President-Operations                   1999     126,089   16,745     130,000           200    
                                            1998     119,194   10,800           0           200    

David L. Rein, Sr........................   2000    $ 94,748       (3)          0           200    
Vice President and Chief Financial          1999      89,586   16,745                       200    
  Officer                                                                 130,000                  
                                            1998      84,752   10,800           0           200    

------------------------                                                        

(1) As discussed under the heading "Certain Transactions", as of January 1, 1999
Messrs. Kiousis, Jenks and Rein were awarded interests in us that are   
similar to stock appreciation rights. Such awards were not awards of a  
specific number of shares but, rather, were awards of 5%, 2% and        

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2%, respectively, the appreciation of our book value (exclusive of any  
change in the value of the investment of our predecessor in Spinnaker   
    Industries). The amount shown under the heading "Securities Underlying SARs"
in the above table is the amount of securities such percentage interests
would have represented as of September 30, 2000.                        

(2) Reflects 401(k) plan contributions in the amount of $200 per year. Also     
   reflects, in the case of Mr. Kiousis, the personal use of a company vehicle
    and the taxable portion of life insurance. Does not reflect profits realized
 by Messrs. Kiousis, Jenks and Rein on the buy-back of our stock, interest
  paid on the notes which we issued to them in connection with such buy back
    or additional consideration that we agreed to pay to them in connection with
such buy-back. See "Certain Transactions-Stock Redemption and Note      
Issuance".                                                              

(3) The bonus that will be paid to each of the named officers, other than Mr.   
   Kiousis, will not be determined until the audit of our financial statements
as at, and for the period ended, December 31, 2000, has been completed. 

BENEFIT PLANS                                                                   

 STOCK OPTION PLAN.  We adopted and approved our 2000 Stock Option Plan to
provide for grants of stock options to our employees, consultants, employees and
consultants of our subsidiaries and our non-employee directors. Our stock option
plan permits grants of incentive stock options meeting the requirements of      
Section 422 of the Internal Revenue Code, and also nonqualified stock options   
that do not meet the requirements of Section 422. We have reserved 1,125,000    
shares of our Class A common stock for issuance upon exercise of options granted
under our stock option plan. The maximum number of shares that may be subject to
options granted to any participant under our stock option plan in any fiscal    
year is 500,000. Options may not be granted under our stock option plan after   
January   , 2011. We currently grant non-employee directors options to purchase 
5,000 shares of Class A common stock upon their election as directors. In       
addition, as discussed above under the heading "Management--Compensation of     
Directors," Messrs. Santoro and Cerutti were granted options to purchase an     
additional 5,000 shares upon their initial election. Effective as of the        
consummation of this offering, we intend to grant options to purchase an        
aggregate of 574,000 shares of Class A common stock, with an exercise price     
equal to the subscription price. Of the total grants, our executive officers and
key employees are expected to receive the following grants:                     

                                                                [Download Table]

                                                              NUMBER OF SHARES 
NAME                                                         UNDERLYING OPTIONS
----                                                         ------------------
                                                                               
Robert R. Zylstra..........................................         225,000    
David L. Rein, Sr..........................................          50,000    
Robert J. Jenks............................................          50,000    
John R. Kerg, Jr...........................................          30,000    
Gregory T. Rogers..........................................          30,000    
Jeffrey A. Kocak...........................................          10,000    

  The options to be issued to our executive officers and key employees as of
the consummation of this offering will vest as follows: 75% of such options will
vest on the third anniversary of the date of grant and the final 25% will vest  
on the fourth anniversary of the date of grant.                                 

  Our stock option plan will generally be administered by a committee of our
Board of Directors consisting of two or more non-employee directors; however,   
our Board of Directors will be responsible for actions pertaining to grants of  
options to non-employee directors. If no committee is selected, our stock option
plan will be administered by our Board of Directors.                            

 We may not grant incentive stock options at exercise prices less than the
fair-market value of our Class A common stock on the date of grant, or, for an  
option granted to a person holding more than                                    

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10% of our voting stock, at less than 110% of such fair-market value. The       
exercise price of non-qualified options granted to employees and consultants    
will be determined by the committee of our Board of Directors that administers  
our stock option plan or our Board of Directors if no such committee has been   
established. The exercise price of non-qualified stock options granted to       
non-employee directors will be determined by our Board of Directors, but may not
be less than 85% of the fair market value of our Class A common stock. An       
optionee exercising an option may pay the exercise price in cash. If approved by
the committee, or our Board of Directors with respect to options granted to a   
non-employee director, an optionee may pay the exercise price with previously   
acquired shares of our common stock that the optionee has held for six months or
longer or through a cashless exercise of such option.                           

 An optionee who leaves us because of death, disability or retirement will
have all of his or her options outstanding vest immediately, and will have three
months to exercise his or her options in the case of retirement and one year to 
exercise his or her options in the case of death or disability, unless otherwise
determined by the committee. If an optionee's employment or service with us is  
terminated for any reason other than death, disability or retirement, all of his
or her options will immediately terminate, unless otherwise determined by the   
committee. Options may not be transferred other than by will or the laws of     
descent and distribution and may be exercised during the lifetime of an optionee
only by the optionee. The term of each option, which is fixed at the date of    
grant, may not exceed ten years from the date the option is granted, except that
an incentive option granted to a person holding more than 10% of our voting     
stock may be exercisable only for five years. Options may be made exercisable in
whole or in installments at dates specified at the time of grant. In the event  
of a change in control, all options will automatically become fully exercisable 
unless the committee determines prior to a change in control that the option    
will be honored or assumed or new rights substituted immediately following the  
change in control.                                                              

    Our Board of Directors may at any time amend, suspend or terminate our stock
option plan and may amend the terms of any outstanding option, except that no   
amendment, suspension or termination may impair the rights of the optionees as  
they relate to outstanding options unless such amendment, suspension or         
termination is made to comply with applicable law, stock exchange rules or      
intended accounting treatment. However, no amendment will be made to our stock  
option plan without the approval of our stockholders to the extent such approval
is required by law or stock exchange rules.                                     

  The grant of an option will create no tax consequences for the optionee or
us. Upon exercising an option, other than an incentive stock option, the        
optionee will generally recognize ordinary income equal to the difference       
between the exercise price and the fair market value of the shares acquired on  
the date of exercise and we generally will be entitled to a tax deduction in the
same amount. An optionee generally will not recognize taxable income upon       
exercising an incentive stock option and we will not be entitled to any tax     
deduction with respect to an incentive stock option if the optionee holds the   
shares for the applicable periods specified in the Internal Revenue Code.       

   401(K) PLAN.  All of our employees are eligible to participate in the Lynch
Corporation 401(k) Savings Plan after having completed one year of service, as  
defined in the plan, and having reached the age of 18.                          

The Lynch Corporation 401(k) Savings Plan permits our employees to make 
contributions by deferring a portion of their compensation. Participating       
employees also share in contributions made by their respective employers. The   
annual mandatory employer contribution to each participant's account is equal to
25% of the first $800 of the participant's contribution. In addition, the       
employer may make a discretionary contribution of up to 75% of the first $800 of
the participant's contribution. We intend to seek the adoption of changes to    
Lynch's 401(k) plan that will, among other changes, enhance our employer        
contributions with respect to our employees, early in 2001. We do not expect    
that any of such changes or enhancements to Lynch's 401(k) plan will have a     
material impact on our results of                                               

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operations. A participant's interest in both employee and employer contributions
and earnings thereupon are fully vested at all times.                           

 Employee and employer contributions are invested in guaranteed investment
contracts, mutual funds or common stock of Lynch, as determined by the          
participants. With respect to the individuals listed in the Summary Compensation
Table, each of Messrs. Jenks and Rein deferred $10,000 under the Lynch          
Corporation 401(k) Savings Plan during 1999 and 2000, which amounts have been   
included for each such individual in the Summary Compensation Table.            

   BONUS PLAN.  We have in place a discretionary bonus plan that is based upon
an objective measure of corporate performance and on subjective evaluation of   
individual performance for its executive officers and other key personnel. The  
plan provides for an annual bonus pool equal to between 25% and 35% of the      
amount by which our consolidated earnings before taxes for the calendar year    
exceed 20% of our average controllable capital employed in the business during  
the year. Before any amount is allocated to the bonus pool, however, our 2000   
earnings before income taxes must exceed the level attained in 1999. For 2000   
approximately 50 employees are participants in the plan. The Board of Directors 
may take into consideration other factors and circumstances in determining the  
amount of the bonus pool and awarding bonuses such as progress toward           
achievement of strategic goals and qualitative aspects of management            
performance. We had similar plans in effect in 1999 and 1998. The total bonuses 
paid to named executive officers for 1999 and 1998 were $96,282 and $62,100,    
respectively. Our Board of Directors will review and implement a bonus program  
for 2001. However, there can be no assurances that it will mirror the current   
program.                                                                        

 EMPLOYMENT AGREEMENTS.  We have entered into an employment agreement with
Robert R. Zylstra, our President and Chief Executive Officer, which terminates  
in January 2002. The agreement provides for an initial salary of $175,000 per   
year, plus participation in our bonus program. Mr. Zylstra's bonus for 2000 will
be not less than $100,000 if we meet our 2000 plan target for earnings before   
interest, tax, depreciation and amortization. In addition, Mr. Zylstra's        
employment agreement provides that (1) upon the consummation of this offering,  
he will be entitled to receive an option to purchase 225,000 shares of our      
Class A common stock at the subscription price and (2) on each of the first     
three anniversaries of the consummation of this offering he will be entitled to 
receive an option to purchase 75,000 shares of our Class A common stock at the  
then current fair market value provided that in the immediately preceding year  
our return on equity was at least 18%. Any options issued to Mr. Zylstra        
pursuant to the terms and conditions of his employment agreement will vest as   
follows: 75% of such options will vest on the third anniversary of the date of  
grant and the final 25% will vest on the fourth anniversary of the date of      
grant. Mr. Zylstra has agreed that he will not compete with us for a period of  
two years after termination of his employment with us and that he will maintain 
the confidentiality of information concerning our business and affairs.         

As of January 1, 1998, Robert Jenks entered into a three year employment
agreement to act as our Senior Vice President of Operations with primary        
responsibility for manufacturing, operations and engineering. Mr. Jenks'        
employment agreement provided for a base salary of not less than $120,000 per   
year plus participation in our bonus plan. Mr. Jenks also agreed that he will   
not compete with us for a period of two years after termination of his          
employment with us and will maintain confidential information as to our business
and affairs.                                                                    

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PRINCIPAL STOCKHOLDERS

The following table sets forth information known to us regarding the    
beneficial ownership of our common stock as of September, 2000, and as adjusted 
to reflect the sale of shares offered by the prospectus for:                    

- each executive officer;                                               

- each of our directors;                                                

- all directors and executive officers as a group; and                  

   - each person known to us to be the beneficial owner of more than 5% of our
outstanding shares of common stock.                                 

                                                        [Enlarge/Download Table]

                                              SHARES BENEFICIALLY OWNED             SHARES BENEFICIALLY OWNED      
                                                 BEFORE THE OFFERING                    AFTER THE OFFERING         
                                         ------------------------------------  ------------------------------------
                                                                PERCENTAGE OF                         PERCENTAGE OF
                                                                TOTAL VOTING                          TOTAL VOTING 
NAME AND ADDRESS                         CLASS A     CLASS B        POWER      CLASS A     CLASS B        POWER    
----------------                         --------   ---------   -------------  --------   ---------   -------------
                                                                                                                   
DIRECTORS AND EXECUTIVE OFFICERS                                                                                   
Robert R. Zylstra......................      0              0           0         200             0          *     
Robert J. Jenks........................      0              0           0          37             0          *     
David L. Rein, Sr......................      0              0           0         933             0          *     
Anthony J. Santoro.....................      0              0           0           0             0          *     
E. Val Cerutti.........................      0              0           0         768             0          *     
All Executive Officers and Directors as                                                                            
  a group (5 persons)..................      0              0           0       1,938             0          *     

PRINCIPAL STOCKHOLDER                                                                                              
Lynch Corporation(2) ..................      0      6,500,000       100.0%          0     6,500,000         97%    
401 Theodore Fremd Avenue Rye,                                                                                     
  New York 10580                                                                                                   
Mario J. Gabelli(2) ...................      0      6,500,000       100.0%          0     6,500,000         97%    
401 Theodore Fremd Avenue Rye,                                                                                     
  New York 10580                                                                                                   

------------------------                                                        

*   Less than 1%.                                                               

(1) The number shown under "Class A" for the Executive Officers and Directors,  
individually and as a group, represents the maximum number of shares of 
  Class A common stock that each such person would be able to purchase if he
chose to exercise all of the rights that will be distributed to him. The
  number of shares that will actually be beneficially owned by the executive
    officers and directors, individually and as a group, after the offering will
 depend upon whether any of our executive officers and directors purchases
  shares pursuant to this offering. Effective as of the consummation of this
   offering, we will award each of the executive officers and directors in the
    group in this table options to purchase shares of Class A common stock at an
exercise price equal to the subscription price. The number of shares    
 underlying each executive officer's options is not included in this table
since the options are not exercisable within 60 days of the date of this
prospectus.                                                             

(2) Reflects shares held indirectly by Lynch through a wholly-owned subsidiary. 
  Mario J. Gabelli, the Chairman of Lynch, may be deemed to beneficially own
   approximately 28.5% of the common stock of Lynch (including shares of Lynch
held by a charitable foundation of which Mr. Gabelli is a trustee and a 
  limited partnership in which Mr. Gabelli is the general partner and has an
   approximate 6% interest). Mr. Gabelli disclaims beneficial ownership of the
   shares of our common stock held by Lynch through its subsidiary, as well as
shares of Lynch held by the charitable foundation and, except for his   
ownership interest in the limited partnership, the shares held by the   

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  partnership. Mr. Gabelli has not advised us whether he intends to exercise
    any subscription rights he may receive as a shareholder of Lynch or whether,
if he does exercise his subscription rights, he intends to exercise his 
over-subscription privilege.                                            

  Beneficial ownership is determined in accordance with the rules of the SEC
and generally means sole or shared power to vote or direct the voting or to     
dispose or direct the disposition of any common stock. Except as indicated by   
footnote, and subject to community property laws where applicable, the persons  
named in the table above have sole voting and investment power with respect to  
all shares of common stock shown as beneficially owned by them. The percentage  
of beneficial ownership is based upon 6,500,000 shares of Class B common stock  
outstanding as of the date of the Separation, and 1,006,790 shares of Class A   
common stock and 6,500,000 shares of Class B common stock outstanding after     
completion of this offering, assuming full exercise of all subscription rights. 

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CERTAIN TRANSACTIONS

STOCK REDEMPTION AND NOTE ISSUANCE                                              

As of January 1, 1999, we purchased from Messrs. Kiousis, Jenks and Rein
shares of our stock, which had been purchased while we were a South Dakota      
corporation, equal to 5%, 2% and 2% of our then outstanding stock, respectively,
all of which had been sold to them prior to January 1997, except for a 2%       
interest that was sold to Mr. Jenks and a 1% interest that was sold to          
Mr. Rein, each in January 1998. The aggregate purchase price that was paid to   
these executives for their stock was $416,269, which was equal to the book value
of the repurchased stock at that time. Since there was no market for our stock  
at the time of such purchase, it is not possible to determine whether similar   
amounts of stock might have been purchased from others at prices that would have
been more or less favorable to us, particularly since no other persons, other   
than Lynch, owned any of our stock. If our capitalization at the time the stock 
was purchased had been the same as our capitalization as of September 30, 2000, 
we would have purchased from Messrs. Kiousis, Jenks and Rein 325,000, 130,000   
and 130,000 shares, respectively, at a per-share purchase price of $.71. Of the 
purchase price for the stock repurchased from Messrs. Kiousis, Jenks and Rein,  
$117,925 was paid to us by the executives to satisfy loans that had been made by
us to these executives to finance their purchase of their stock. The loan made  
to Mr. Jenks bore interest at the rate of 6% per annum and was the only loan the
amount of which exceeded $60,000 during 1999. The maximum amount outstanding in 
1999 under the loan to Mr. Jenks was $78,616. The amount outstanding when       
Mr. Jenks' loan was repaid was $78,616. We believe that the terms of the        
promissory notes that were issued to us by the three officers were no less      
favorable to us than could have been obtained from unaffiliated third parties,  
except for the interest rate that was payable under such promissory notes, which
may have been less favorable to us than could have been obtained from an        
unaffiliated third party. We issued promissory notes to the executives for the  
remaining balance of $298,344, in the following principal amounts: Mr. Kiousis, 
$237,229; Mr. Jenks, $10,904; and Mr. Rein, $50,211. Interest on the notes is   
payable quarterly at 10% per annum with principal installments payable annually 
beginning January 2000 through maturity in January 2002. To date, we have made  
payments of $193,737.03, $8,913.93 and $41,105.66 to Messrs. Kiousis, Jenks and 
Rein, respectively, pursuant to the notes. We believe that the terms of the     
promissory notes that were issued to the three officers were no less favorable  
to us than could have been obtained from unaffiliated third parties.            

  In connection with the purchase of shares described above, we granted each
of Messrs. Kiousis, Jenks and Rein the right to receive additional consideration
in an amount equal to the product of (a) the increase in our book value         
(disregarding any change in the value of our investment in Spinnaker Industries)
between the date of grant and the date of exercise of their right, multiplied by
(b) a percentage, which was equal to the percentage of our stock that had been  
owned by such executives prior to the buy-back that is described above. As noted
above, that percentage was 5% in the case of Mr. Kiousis, and 2% in the case of 
each of Messrs. Rein and Jenks. Each executive's right to receive such          
consideration was to vest at varying rates from January 1, 1999 through         
January 1, 2001.                                                                

Mr. Kiousis was paid $53,324 at the time of his resignation in          
January 2000, in full settlement of his right to receive such additional        
consideration, which amount was equivalent to the increase in our book value    
(disregarding any change in the value of our investment in Spinnaker Industries)
between January 1, 1999 and the date of his resignation. Effective as of the    
consummation of this offering, we will pay Messrs. Jenks and Rein cash          
settlement payments in full settlement of their rights to receive such          
additional consideration. As of September 30, 2000, such cash settlement        
payments would have been $54,000 each. In addition, if Lynch were to sell a     
majority of its stock interest in us prior to January 1, 2009, in one or a      
series of transactions, each of Messrs. Jenks and Rein, assuming that they were 
then employed by us, would be entitled to receive from us a contingent payment  
equal to 2% of the excess of the value of Lynch's stock interest in us,         
determined on the basis of the weighted average per share price paid to Lynch,  
over the book value of that interest immediately prior to the                   

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consummation of this offering. We may pay this amount, at our option, in cash or
our stock. Thus, by way of illustration, if Lynch were to sell a majority of its
stock interest in M-tron in 2001 at a per share price of $7.50, we would be     
obligated to pay each of Messrs. Jenks and Rein approximately $875,000 of       
additional compensation in 2001, thereby resulting in a one-time after-tax      
reduction in net income for that year of $1,155,000 (using our book value as of 
June 30, 2000 and assuming an effective tax rate of 34%). A distribution by     
Lynch to its shareholders of its shares of Class B common stock would not give  
rise to any right to receive the above-described contingent payment.            

MANAGEMENT FEE; DIVIDEND                                                        

We paid Lynch a fee of $100,000 in the aggregate for management services
provided to us by Lynch in 1999 and we expect to pay Lynch the same amount on an
annualized basis for management services provided to us by Lynch in 2000. Lynch 
has advised us that such amount is approximately equivalent to the actual costs 
that were incurred by it in providing such services to us. In our opinion, these
charges are reasonable in light of the services provided. For a discussion of   
the management fee, see Note 1, Basis of Presentation, to our combined financial
statements appearing elsewhere in this Prospectus. See also, "Arrangements      
Between Us and Lynch." We also paid $1.5 million to Lynch in January 2001 in    
satisfaction of a non-interest bearing demand promissory note in the principal  
amount of $1.5 million which we distributed as a dividend to Lynch in November, 
2000. The purpose of the dividend was to enable Lynch, as our sole shareholder, 
to share in a portion of our prior accumulated earnings, thereby enabling Lynch 
to recoup a portion of its investment in us.                                    

CASH ADVANCE FROM LYNCH                                                         

In January of 1999, Lynch made a cash advance to us in the amount of    
$117,925. This amount is shown on our balance sheet as "due to parent" and is   
payable on demand, without interest.                                            

FUTURE TRANSACTIONS WITH AFFILIATES                                             

  Our board of directors has adopted a by-law which requires that, effective
as of the consummation of this offering (a) all future material affiliated      
transactions and loans will be made or entered into on terms that are no less   
favorable to us than those that could be obtained from unaffiliated third       
parties, (b) all future material affiliated transactions and loans, and any     
forgiveness of loans, must be approved by a majority of our directors and a     
majority of our independent directors (that is, directors who are not officers  
or employees of us or any of our affiliates) who do not have an interest in the 
transactions and who had access, at our expense, to our counsel or to           
independent legal counsel, and (c) we will have at all times, at least two      
independent directors.                                                          

ARRANGEMENTS BETWEEN US AND LYNCH 

    We have provided below a summary description of the separation agreement and
the assignment and assumption agreement executed by Lynch and us. This          
description, which summarizes the material terms of the agreements, is not      
complete. You should read the full text of these agreements, which have been    
filed with the Securities and Exchange Commission as exhibits to the            
registration statement of which this prospectus is a part.                      

SEPARATION AGREEMENT                                                            

The separation agreement contains the key provisions relating to our    
becoming a public company.                                                      

THE SEPARATION.  We will become a public company at the closing of this 
offering. As previously noted, in December, 2000, we became the successor to a  
South Dakota corporation that transferred all of its assets and liabilities to  
us, other than its investment in another corporation that is engaged in a       
different line of business than ours, in connection with a reorganization of    
certain subsidiaries and                                                        

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affiliates of Lynch. The separation agreement sets forth various interim and    
ongoing relationships between Lynch and us, including matters relating to:      

- taxes;                                                                

- management services;                                                  

- directors and officers insurance; and                                 

- securities matters relating to a spin-off or other offering.          

COVENANTS BETWEEN US AND LYNCH.  In addition to the documents that      
transferred to us our predecessor's assets and liabilities, other than its      
investment in another corporation, we have agreed with Lynch for Lynch to       
provide management advisory and oversight services to us, and we have agreed to 
exchange information, engage in auditing practices and resolve disputes in      
particular ways. We have not entered into any non-competition agreements with   
Lynch.                                                                          

MANAGEMENT SERVICES.  Lynch will provide to us management advisory and  
oversight services, including strategic, merger and acquisition, and financial  
services, essentially on the same basis as it has provided such services to us  
in the past. These services will be provided for a fee equal to $100,000 per    
annum, plus out-of-pocket expenses. During 2000, Lynch provided advice and      
assistance to us in connection with the hiring of Robert R. Zylstra, our        
President and Chief Executive Officer. In addition, Lynch provided advice and   
assistance in connection with strategic planning, evaluation and prioritization 
of capital expenditures, evaluation of potential acquisitions and this offering.
The dollar amount of this fee will increase over time by at least the percentage
increase in the consumer price index. In addition, the fee may be increased by  
more than the percentage increase in the consumer price index if the amount of  
services to be provided to us by Lynch increases substantially, provided that we
and Lynch must agree on the amount of any increase. The management services     
agreement would terminate if Lynch were to cease to own a majority of the voting
power of our common stock.                                                      

 TAX MATTERS.  The separation agreement allocates responsibilities for tax
matters between us and Lynch. In general, the agreement provides that while we  
are a member of Lynch's consolidated group, we must pay to Lynch the same amount
that we would have paid in taxes to the Internal Revenue Service if we had not  
been a member of Lynch's consolidated group. The agreement also provides for    
compensation or reimbursement as appropriate, in the event that we were to cease
being a member of Lynch's consolidated group, to reflect redeterminations after 
we ceased being a member of Lynch's consolidated group of our tax liability for 
periods during which we were a member of Lynch's consolidated group.            

  The separation agreement also requires us to indemnify Lynch for any taxes
that might become payable by it or its subsidiaries in certain circumstances,   
including if Lynch were to distribute its Class B common stock to its           
stockholders and some other entity thereafter acquired a controlling interest in
us which had the effect of causing the distribution not to qualify for tax-free 
treatment to Lynch. Lynch must indemnify us for any taxes that were attributable
to itself or its other subsidiaries for all periods during which we are a member
of Lynch's consolidated group, as well as for any taxes that might result if the
reorganization of certain of Lynch's subsidiaries and affiliates that           
immediately preceded the Separation was not tax-free or if any distribution by  
Lynch of its Class B common stock to its stockholders were not tax-free, other  
than by reason of the subsequent acquisition of a controlling interest in us by 
another entity.                                                                 

    The indemnity obligations of Lynch and us include any interest and penalties
on taxes.                                                                       

Each member of a consolidated group for United States federal income tax
purposes is jointly and severally liable for the group's federal income tax     
liability. Accordingly, we could be required to pay a                           

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deficiency in the group's federal income tax liability for a period during which
we are a member of the group even if the separation agreement allocates that    
liability to Lynch or another member.                                           

 The separation agreement also assigns responsibilities for administrative
matters, in the event that we cease being a member of Lynch's consolidated      
group, such as the filing of returns, payment of taxes due, retention of records
and conduct of audits, examinations or similar proceedings.                     

EMPLOYEE MATTERS.  All of our eligible employees will continue to       
participate in the Lynch Corporation 401(k) Savings Plan, as described under    
"Management-Benefit Plans-401(k) Plan" after the public offering.               

    INFORMATION EXCHANGE; AUDITING PRACTICES.  We and Lynch have agreed to share
information with each other, for a variety of purposes, unless the sharing would
be commercially detrimental. Also, so long as Lynch is required to consolidate  
our results of operations and financial position, we have agreed to various     
procedures to ensure that auditing of our respective financial statements is    
facilitated, including our agreement not to select a different independent      
accounting firm from that used by Lynch without Lynch's consent and our mutual  
agreement to notify each other of any change in accounting principles.          

    DISPUTE RESOLUTION.  If problems arise between us and Lynch, which cannot be
resolved, the parties will resort to binding arbitration.                       

GENERAL RELEASE OF PRE-SEPARATION CLAIMS.  In the separation agreement, 
subject to specified exceptions, we released Lynch and its affiliates, agents,  
successors and assigns, and Lynch released us, and our affiliates, agents,      
successors and assigns, from any liabilities arising from events occurring on or
before the separation date, including events occurring in connection with the   
activities to implement the transfer of assets and liabilities to us, this      
offering and the distribution. This provision does not impair either party's    
enforcement of the separation agreement or any ancillary agreement or           
arrangement.                                                                    

INDEMNIFICATION.  In general, we have agreed to indemnify Lynch and its 
affiliates, agents, successors and assigns from all liabilities, including      
environmental liabilities, arising from our business or any of our contracts.   
Lynch has agreed to indemnify us and our affiliates, agents, successors and     
assigns from all liabilities that are attributable to any of Lynch's            
subsidiaries and affiliates, other than those of our predecessor.               

These indemnification provisions do not apply to amounts collected under
insurance policies.                                                             

   LIABILITY ARISING FROM THIS PROSPECTUS.  We will bear any liability arising
from any untrue statement of a material fact or any omission of a material fact 
in this prospectus.                                                             

INSURANCE MATTERS.  The separation agreement also contains provisions   
governing our directors and officers insurance from the separation date until   
Lynch ceases to own a majority of the voting power of our common stock. In      
general, we agree to reimburse Lynch for our allocable portion, to be determined
by negotiation, of premium expenses related to this insurance coverage during   
this period.                                                                    

EXPENSES.  All of the out-of-pocket costs and expenses related to this  
offering, as well as the costs and expenses related to the transfer of assets   
and liabilities to us, will be borne by us.                                     

ASSIGNMENT AND ASSUMPTION AGREEMENT                                             

    As previously noted, we are the successor to a South Dakota corporation that
transferred all of its assets and liabilities to us, other than its investment  
in Spinnaker Industries in lieu of another corporation, in connection with a    
reorganization of some of the subsidiaries and affiliates of Lynch. The         
assignment and assumption agreement transferred to us the assets and liabilities
that we received                                                                

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and assumed from our predecessor. We have been, and our predecessor was,        
operated in all material respects as a free-standing subsidiary of Lynch, and we
own, lease or license the assets used in our business.                          

DESCRIPTION OF CAPITAL STOCK

GENERAL                                                                         

   Our authorized capital stock consists of 26,000,000 shares of common stock,
of which 12,000,000 shares are Class A common stock and 13,000,000 shares are   
Class B common stock, and 1,000,000 shares of preferred stock. All shares have a
par value of $.01 solely for the purpose of a statute or regulation imposing a  
tax or fee based upon our capitalization. As of the date of this prospectus, we 
had 6,500,000 shares of Class B common stock issued and outstanding. No shares  
of Class A common stock or preferred stock were outstanding.                    

COMMON STOCK                                                                    

The holders of our common stock:                                        

    - have equal ratable rights to dividends from funds legally available, when,
as and if declared by our Board of Directors; and                   

    - are entitled to share ratably in all our assets available for distribution
      to holders of our common stock upon liquidation, dissolution or winding up
of our affairs.                                                     

  The holders of our Class A common stock are entitled to one vote per share
on all matters that stockholders may vote on at all meetings of stockholders.   
The holder of our Class B common stock, Lynch, is entitled to five votes per    
share on all matters that stockholders may vote on at all meetings of           
stockholders. Any shares of Class B common stock that are distributed by Lynch  
to the holders of its common stock will convert into an equal number of shares  
of Class A common stock which has one vote per share five years after the date  
of such distribution unless Lynch, in its sole discretion, accelerates the date 
of such conversion. Prior to such conversion, any shares of Class B common stock
that are distributed by Lynch to its shareholders will continue to have five    
votes per share. Any shares of Class B common stock that are transferred by     
Lynch to an unaffiliated person or entity will convert into an equal number of  
shares of Class A common stock having one vote per share immediately upon the   
transfer of such shares to such entity or person which is not controlled by or  
is not under common control with Lynch. The Class B common stock has been given 
so-called super voting power so as to preserve Lynch's ability to distribute    
such common stock to its stockholders on a tax-free basis, which requires, among
other things, that Lynch own stock having 80% of the voting power of all of our 
capital stock.                                                                  

    All of the shares of our Class B common stock now outstanding are fully paid
and nonassessable, and the shares of our Class A common stock to be issued upon 
completion of this offering will be fully paid and nonassessable. We have no    
redemption, sinking fund, conversion or preemptive rights with respect to the   
shares of our common stock. The holders of our common stock do not have         
cumulative voting rights. Subject to the rights of any future series or classes 
of capital stock, the holders of more than 51.5% of our outstanding shares of   
Class B common stock voting for the election of directors can elect all of our  
directors to be elected, if they so choose. In that event, the holders of the   
remaining shares, including the holders of shares of the Class A common stock,  
will not be able to elect any of our directors.                                 

PREFERRED STOCK                                                                 

  Our Board of Directors is authorized to issue shares of preferred stock in
one or more classes or series and to fix the voting powers, designations,       
preferences and other special rights, and the                                   

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qualifications, limitations and restrictions of each class or series, without   
any further vote or action of the stockholders. The issuance of any preferred   
stock could dilute the voting power or otherwise affect the rights of the       
holders of our common stock. The issuance of preferred stock could have the     
effect of acting as an anti-takeover device to delay or prevent a change in     
control of our company. There are no shares of preferred stock currently        
outstanding and we have no present plans to issue preferred stock.              

POTENTIAL ANTI-TAKEOVER EFFECT OF DELAWARE LAW AND PROVISIONS OF OUR CHARTER    
DOCUMENTS                                                                   

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW.  Section 203 of the
Delaware General Corporation Law prevents an "interested stockholder" (defined  
in Section 203, generally, as a person owning 15% or more of a corporation's    
outstanding voting stock) from engaging in a "business combination" (as defined 
in Section 203) with a publicly-held Delaware corporation for three years       
following the date such person became an interested stockholder unless          
(1) before such person became an interested stockholder, the board of directors 
of the corporation approved the transaction in which the interested stockholder 
became an interested stockholder or approved the business combination; (2) upon 
consummation of the transaction that resulted in the interested stockholder's   
becoming an interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the transaction  
commenced (excluding stock held by directors who are also officers of the       
corporation and by employee stock plans that do not provide employees with the  
rights to determine confidentially whether shares held subject to the plan will 
be tendered in a tender or exchange offer); or (3) following the transaction in 
which such person became an interested stockholder, the business combination is 
approved by the board of directors of the corporation and authorized at a       
meeting of stockholders by the affirmative vote of the holders of two-thirds of 
the outstanding voting stock of the corporation not owned by the interested     
stockholder. Our board of directors has resolved that Section 203 shall not     
apply to a person or entity acquiring 15% or more of our voting stock directly  
from Lynch.                                                                     

LIMITATION ON DIRECTORS' LIABILITY; INDEMNIFICATION OF DIRECTORS AND    
OFFICERS.  Our Certificate of Incorporation contains provisions that eliminate  
the personal liability of our directors for monetary damages resulting from     
breaches of their fiduciary duty other than liability for breaches of the duty  
of loyalty, acts or omissions not in good faith or which involve intentional    
misconduct or a knowing violation of law, violations under Section 174 of the   
Delaware General Corporation Law or any transaction from which the director     
derived an improper personal benefit. Our By-laws contain provisions requiring  
the indemnification of our directors and officers to the fullest extent         
permitted by Section 145 of the Delaware General Corporation Law, including     
circumstances in which indemnification is otherwise discretionary. We believe   
that these provisions are necessary to attract and retain qualified persons as  
directors and officers, but they may embolden our directors or officers to      
resist takeover attempts.                                                       

TRANSFER AGENT AND REGISTRAR                                                    

 Our transfer agent and registrar with respect to our Class A common stock
will be American Stock Transfer & Trust Company.                                

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SHARES ELIGIBLE FOR FUTURE SALE 

Upon consummation of this offering, assuming all subscription rights are
exercised, we will have 1,006,790 shares of Class A common stock outstanding and
6,500,000 shares of Class B common stock outstanding. Of these shares, the      
1,006,790 shares of Class A common stock sold in this offering will be freely   
tradeable without restriction under the Securities Act except for any shares    
which may be acquired by an affiliate of us, as the term "affiliate" is defined 
in Rule 144 under the Securities Act of 1933, as amended. Persons who may be    
deemed to be affiliates generally include individuals or entities that control, 
are controlled by, or are under common control with, us and may include our     
directors and officers as well as any of our significant stockholders.          

    Other than the shares of Class A common stock issued in this offering, as of
the closing of this offering no other shares of Class A common stock will be    
outstanding. Effective as of the consummation of this offering, we will issue   
options to purchase an aggregate of 574,000 shares of Class A common stock to   
our executive officers and employees and non-employee directors, but none of    
such options initially vest prior to the first anniversary of the closing of    
this offering. The shares of Class A common stock will be eligible for sale in  
the public market following this offering, subject to either registration under 
the Securities Act of 1933, as amended or compliance with the volume and manner 
of sale limitations and other requirements of Rule 144 under the Securities Act 
of 1933, as amended or pursuant to another exemption from the registration      
requirements of the Securities Act of 1933, as amended. If Lynch were to        
distribute its shares of its Class B common stock to its stockholders, such     
Class B shares would convert into an equal number of shares of Class A common   
stock five years after the date of such distribution unless Lynch, in its sole  
discretion, accelerated the date of such conversion. Any shares of Class B      
common stock that were transferred by Lynch to an unaffiliated person or entity 
would convert into an equal number of shares of Class A common stock having one 
vote per share immediately upon the transfer of such shares to such entity or   
person which was not controlled by or was not under common control with Lynch.  
We expect that shares of our common stock distributed to Lynch stockholders     
would be freely transferable, except for shares of common stock received by     
persons who may be deemed to be affiliates. Persons who are affiliates would be 
permitted to sell the shares of our common stock received by them in a          
distribution by Lynch only through registration under the Securities Act of     
1933, as amended, or under an exemption from registration, such as the one      
provided by Rule 144. Shares of our common stock that were transferred by Lynch 
to an unaffiliated person would be deemed to be "restricted securities" as      
defined in Rule 144, as are the shares of Class B common stock that are now held
by Lynch, and could not be sold other than through registration under the       
Securities Act of 1933, as amended or under an exemption from registration, such
as the one provided by Rule 144.                                                

As of the date of this prospectus, we have 1,125,000 shares of Class A  
common stock reserved for issuance upon exercise of options granted or to be    
granted under our 2000 Stock Option Plan. We intend to file a registration      
statement on Form S-8 under the Securities Act of 1933, as amended covering all 
shares issuable upon the exercise of options under our 2000 Stock Option Plan.  
Upon the effectiveness of the registration statement on Form S-8, the shares    
will be immediately available for sale in the public market, subject to the     
terms of the related options (including vesting provisions). Sales of           
substantial amounts of our shares, or the prospect of such sales, could         
materially adversely affect the market price of our shares and our ability to   
raise capital through an offering of securities.                                

 Under Rule 144, as in effect on the date of this prospectus, once we have
been a public company for at least 90 days, a person who has beneficially owned 
restricted securities, as that term is defined under Rule 144, for at least one 
year, will be entitled to sell in any three-month period a number of shares of  
Class A common stock that does not exceed the greater of                        

- 1% of the then outstanding number of shares, or                       

  - the average weekly reported trading volume of our shares on all national
securities exchanges and/or reported through the automated quotation
system of a registered securities association, if                   

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     applicable, during the four calendar weeks immediately preceding the date
on which notice of the sale is filed with the SEC.                  

Sales pursuant to Rule 144 are also subject to requirements relating to 
manner of sale, notice and availability of current public information about us. 
Under Rule 144(k), if at least two years have elapsed since restricted          
securities comprised of Class A common stock were acquired from us or an        
affiliate of ours, the holder of those shares is permitted to sell the shares   
without restriction, so long as the holder is not an affiliate of ours and has  
not been an affiliate for at least 90 days prior to the date of sale.           

Any of our employees, directors or consultants who purchased, or were   
awarded shares of Class A common stock or options to purchase shares of Class A 
common stock pursuant to a written compensatory plan or contract is entitled to 
rely on the resale provisions of Rule 701 under the Securities Act of 1933, as  
amended, which permits stockholders to sell their Rule 701 shares without having
to comply with Rule 144's holding period restrictions, in each case commencing  
90 days after the date of this prospectus. In addition, holders who are not     
affiliates may sell Rule 701 shares without complying with the public           
information, volume and notice provisions of Rule 144. Effective as of the date 
of the closing of this offering, we will have outstanding options to purchase   
574,000 shares of our Class A common stock to our employees and directors.      
Pursuant to Rule 701, shares of Class A common stock issued upon exercise of    
these options will be available for sale in the public market beginning 90 days 
after the date of this prospectus, subject to any applicable lock-up agreements.
However, such options will not initially vest prior to the first anniversary of 
the closing of this offering.                                                   

FEDERAL INCOME TAX CONSEQUENCES 

The following discussion summarizes the material Federal income tax     
consequences of the acquisition, ownership and exercise or lapse of a right and 
of the acquisition, ownership and disposition of the common stock that may be   
acquired on its exercise. This discussion is based on the current provisions of 
the Internal Revenue Code of 1986, as amended, existing Treasury regulations    
thereunder and current administrative rulings and court decisions, all of which 
are subject to change. Any change, which may or may not be retroactive, could   
alter the tax consequences described herein. This discussion is addressed to a  
person that will hold a right and the shares of our Class A common stock        
acquired on exercise of a right as a capital asset and that, for Federal income 
tax persons, is a U.S. citizen or resident or a domestic corporation,           
partnership, trust or estate. This summary does not purport to deal with all    
aspects of taxation that may be relevant to a particular person in light of his 
particular circumstances or to taxpayers subject to special treatment under the 
Federal income tax law, including financial institutions, broker-dealers,       
foreign persons or persons holding rights or shares of our Class A common stock 
as part of a straddle, "synthetic security" or other integrated investment,     
including a "conversion transaction".                                           

  Neither we nor Lynch has obtained, or will obtain, a private letter ruling
from the Internal Revenue Service with respect to any Federal income tax        
consequences of the rights distribution. However, based upon the opinion of our 
counsel, Finn Dixon & Herling LLP, Stamford, Connecticut, we believe that the   
relevant material Federal income tax consequences will be as described below.   
Nonetheless, no assurance can be provided that positions contrary to those      
described below will not be taken by the Internal Revenue Service or by a court.

RIGHTS TRANSFERRED TO HOLDERS OF SHARES OF LYNCH COMMON STOCK                   

Rights transferred to a holder of shares of Lynch common stock will be  
subject to the Federal income tax rules applicable to investment options.       
Because we are part of Lynch's affiliated group, a transfer of the rights by us 
to a Lynch stockholder will be treated as a distribution of property by Lynch to
such stockholder in an amount equal to the fair market value, if any, on the    
date of the distribution of the rights distributed. That distribution, if it has
any value, will be taxable, first, as a dividend to the                         

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extent of the current and/or accumulated earnings and profits, if any, of Lynch 
as of the end of the taxable year in which the distribution takes place which   
are attributable to the shares of Lynch common stock owned by that stockholder; 
second, as a non-taxable reduction of the stockholder's basis in his shares of  
Lynch common stock, on a share-by-share basis, to the extent thereof; and third,
as gain recognized as though there had been a sale or exchange of Lynch common  
stock. A rights holder's basis in a right subject to these rules will be equal  
to its fair market value on the date of distribution, and his holding period in 
that right will begin on the day after the date of distribution. Lynch has      
advised us that it will obtain advice from an evaluation firm as to the fair    
market value of the rights and that the aggregate value of the rights that were 
distributed to Lynch's shareholders, as determined by Lynch, will be reported to
them on Form 1099 DIV in accordance with the requirements of the Internal       
Revenue Code.                                                                   

  The portion of a distribution constituting a dividend will be eligible for
the dividends received deduction otherwise generally available to a corporate   
holder of Lynch common stock. In the case of any corporate stockholder that has 
not held a share of Lynch common stock for more than two years on the           
distribution announcement date, the portion, if any, of the distribution taxable
as a dividend will be subject to the provisions of Section 1059 of the Internal 
Revenue Code applicable to "extraordinary dividends" if the amount taxable as a 
dividend is at least 10% of the holder's basis in the share of Lynch common     
stock. Section 1059 sometimes aggregates dividends paid within specified time   
periods. If Section 1059applies to a corporate holder, the untaxed portion of   
the dividend (generally, the portion qualifying for the dividends received      
deduction), if any, will reduce the corporate holder's tax basis in its Lynch   
common stock, on a share-by-share basis, but not below zero, and any excess     
generally will be taxable as capital gain.                                      

 A holder of rights will not recognize any gain or loss on exercise of the
right. The rights holder's tax basis in our common stock acquired on exercise   
will be equal to the sum of the price paid for our common stock on exercise of  
the right and the rights holder's tax basis in the right exercised. The rights  
holder's holding period for the shares of our common stock acquired on exercise 
of a right will begin on the date of exercise.                                  

 Upon a sale, exchange or other taxable disposition of a right, the rights
holder will recognize capital gain or loss equal to the difference between the  
amount realized for the right and the rights holder's tax basis in the right.   
That gain or loss will be short-term capital gain or loss.                      

If a holder of a right fails to exercise the right and it lapses        
unexercised, the rights holder will recognize a short-term capital loss, on the 
date the right expires, in an amount equal to the rights holder's tax basis in  
the right.                                                                      

OUR COMMON STOCK                                                                

    The Federal income tax rules generally applicable to common stock will apply
to the shares of our Class A common stock issued on exercise of a right. You    
will recognize gain or loss upon the sale of shares of our Class A common stock 
acquired by exercise of the rights in an amount equal to the difference between 
the amount realized from the sale and your tax basis in the shares. The gain or 
loss recognized will be long-term or short-term capital gain or loss, depending 
on whether you have held the shares for more than one year or for one year or   
less.                                                                           

INFORMATION REPORTING AND BACKUP WITHHOLDING                                    

    Information reporting by Lynch to the Internal Revenue Service will apply in
respect of rights distributed in respect of our common stock.                   

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LEGAL MATTERS 

The validity of the rights that we are distributing and of the shares of
Class A common stock offered by this prospectus will be passed upon for us by   
Finn Dixon & Herling LLP, Stamford, Connecticut.                                

EXPERTS 

The financial statements and schedule of M-tron Industries, Inc. at     
December 31, 1999 and 1998, and for each of the three years in the period ended 
December 31, 1999, appearing in this prospectus and registration statement have 
been audited by Ernst & Young LLP, independent auditors, as set forth in their  
report thereon appearing elsewhere herein, and are included in reliance upon    
such report given on the authority of such firm as experts in accounting and    
auditing.                                                                       

ADDITIONAL INFORMATION

We have filed a registration statement on Form S-1 with the SEC for the 
rights which we are distributing and for the stock we are offering by this      
prospectus. This prospectus does not include all of the information contained in
the registration statement. You should refer to the registration statement and  
its exhibits for additional information. Whenever we make reference in this     
prospectus to any of our contracts, agreements or other documents, the          
references are not necessarily complete and you should refer to the exhibits    
attached to the registration statement for copies of the actual contract,       
agreement or other document. When we complete this offering, we will also be    
required to file annual, quarterly and special reports, proxy statements and    
other information with the SEC.                                                 

    You can read our SEC filings, including the registration statement, over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference facilities at 450     
Fifth Street, NW, Washington, DC 20549, 7 World Trade Center, Suite 1300, New   
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,  
Chicago, Illinois 60661-2511. You may also obtain copies of the documents at    
prescribed rates by writing to the Public Reference Section of the SEC at 450   
Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330   
for further information on the operation of the public reference facilities.    

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INDEX TO COMBINED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE

                                                                [Download Table]

                                                                PAGE  
                                                              --------
                                                                      
Report of Independent Auditors..............................    F-2   

Combined Financial Statements of M-tron Industries, Inc.              

Combined Balance Sheets as of December 31, 1998 and 1999 and          
  September 30, 2000 (unaudited)............................    F-3   

Combined Statements of Income for the years ended December            
  31, 1997, 1998 and 1999 and the nine months ended                   
  September 30, 1999 (unaudited) and September 30, 2000               
  (unaudited)...............................................    F-4   

Combined Statements of Net Assets for the years ended                 
  December 31, 1997, 1998 and 1999 and the nine months ended          
  September 30, 1999 (unaudited) and September 30, 2000               
  (unaudited)...............................................    F-5   

Combined Statements of Cash Flows for the years ended                 
  December 31, 1997, 1998, and 1999 and the nine months               
  ended September 30, 1999 (unaudited) and September 30,              
  2000 (unaudited)..........................................    F-6   

Notes to Combined Financial Statements......................    F-7   

Schedule II--Valuation and Qualifying Accounts..............    S-1   

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REPORT OF INDEPENDENT AUDITORS

The Board of Directors                                                          
M-tron Industries, Inc.                                                         

  We have audited the accompanying combined balance sheets of the net assets
and operations to be contributed to M-tron Industries, Inc. (see Note 1) as of  
December 31, 1999 and 1998, and the related combined statements of income, net  
assets and cash flows for each of the three years in the period ended           
December 31, 1999. Our audits also included the financial statement schedule    
listed in Item 16(b). These financial statements and schedule are the           
responsibility of the management of M-tron Industries, Inc. Our responsibility  
is to express an opinion on these financial statements and schedule based on our
audits.                                                                         

We conducted our audits in accordance with auditing standards generally 
accepted in the United States. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An 
audit also includes assessing the accounting principles used and significant    
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

In our opinion, the accompanying financial statements referred to above 
present fairly, in all material respects, the combined financial position of the
net assets and operations to be contributed to M-tron Industries, Inc. (see     
Note 1) at December 31, 1999 and 1998, and the combined results of its          
operations and its cash flows for each of the three years in the period ended   
December 31, 1999, in conformity with accounting principles generally accepted  
in the United States. Also, in our opinion, the related financial statement     
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth     
therein.                                                                        

                         /s/ ERNST & YOUNG LLP

Des Moines, Iowa                                                                
October 25, 2000                                                                

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M-TRON INDUSTRIES, INC. 

COMBINED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                              DECEMBER 31,                       
                                                        -------------------------   SEPTEMBER 30,
                                                           1998          1999           2000     
                                                        -----------   -----------   -------------
                                                                                      UNAUDITED  
                                                                                                 
ASSETS                                                                                           
Current assets:                                                                                  
  Cash................................................. $     2,787   $   124,847    $   224,924 
  Accounts receivable, less allowance for doubtful                                               
    accounts of $39,000 in 1998, $47,000 in 1999 and                                             
    $57,000 in 2000....................................   2,921,764     3,598,716      5,902,035 
  Inventories..........................................   3,213,150     4,375,202      6,127,240 
  Prepaid expenses and other...........................     134,825       123,868        352,528 
  Deferred income taxes................................     192,387       220,100        302,960 
                                                        -----------   -----------    ----------- 
Total current assets...................................   6,464,913     8,442,733     12,909,687 
Deferred income taxes..................................          --            --         21,504 
Property, plant, and equipment, at cost:                                                         
  Land.................................................      19,836        19,836         39,296 
  Buildings and improvements...........................     997,232     1,174,244      1,174,244 
  Machinery and equipment..............................   7,139,144     7,714,165      7,723,574 
                                                        -----------   -----------    ----------- 
                                                          8,156,212     8,908,245      8,937,114 
  Less accumulated depreciation........................  (5,723,178)   (6,410,674)    (6,424,940)
                                                        -----------   -----------    ----------- 
                                                          2,433,034     2,497,571      2,512,174 
                                                        -----------   -----------    ----------- 
Total assets........................................... $ 8,897,947   $10,940,304    $15,443,365 
                                                        ===========   ===========    =========== 
LIABILITIES AND NET ASSETS                                                                       
Current liabilities:                                                                             
  Accounts payable..................................... $ 1,361,110   $ 1,420,814    $ 3,793,495 
  Accrued bonuses......................................     108,058       134,538      1,181,064 
  Other accrued expenses...............................     449,445       608,321      1,259,275 
  Income tax payable...................................     271,847       144,637        714,262 
  Demand note due to Parent............................          --            --      1,500,000 
  Current portion of notes payable to related                                                    
    parties............................................          --        99,448         99,448 
  Notes payable to bank................................   1,805,301     2,673,539        908,445 
                                                        -----------   -----------    ----------- 
Total current liabilities..............................   3,995,761     5,081,297      9,455,989 
Due to parent..........................................          --       117,925        117,925 
Long-term notes payable to related parties, less                                                 
  current portion......................................          --       198,896         99,448 
Deferred income taxes..................................     157,605       155,636             -- 
Commitments                                                                                      
Net assets.............................................   4,744,581     5,386,550      5,770,003 
                                                        -----------   -----------    ----------- 
Total liabilities and net assets....................... $ 8,897,947   $10,940,304    $15,443,365 
                                                        ===========   ===========    =========== 

SEE ACCOMPANYING NOTES. 

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M-TRON INDUSTRIES, INC. 

COMBINED STATEMENTS OF INCOME 

                                                        [Enlarge/Download Table]

                                                                                        NINE MONTHS       
                                                                                    ENDED SEPTEMBER 30,   
                                               YEAR ENDED DECEMBER 31,                  (UNAUDITED)       
                                       ---------------------------------------   -------------------------
                                          1997          1998          1999          1999          2000    
                                       -----------   -----------   -----------   -----------   -----------
                                                                                                          
Net sales............................. $22,828,387   $22,797,643   $26,467,152   $19,457,441   $29,382,971
Cost of products sold.................  16,862,108    16,815,682    19,337,833    14,057,588    20,534,763
                                       -----------   -----------   -----------   -----------   -----------
Gross profit..........................   5,966,279     5,981,961     7,129,319     5,399,853     8,848,208
Research and development expenses.....     778,460       673,427       855,592       630,477       674,921
Selling, general, and administrative                                                                      
  expenses (including equity based                                                                        
  compensation of $62,294 in 1999 and                                                                     
  $25,076 and $516,000 for the nine                                                                       
  months ended September 30, 1999 and                                                                     
  September 30, 2000, respectively)...   3,577,335     3,880,096     4,490,677     3,334,510     5,295,665
                                       -----------   -----------   -----------   -----------   -----------
Operating income......................   1,610,484     1,428,438     1,783,050     1,434,865     2,877,622
Other expense (income):                                                                                   
  Interest expense....................     195,443       186,495       232,403       161,816        98,328
  Other...............................          --            --       (17,256)      (17,260)           --
                                       -----------   -----------   -----------   -----------   -----------
Income before income taxes............   1,415,041     1,241,943     1,567,903     1,290,310     2,779,294
Income tax expense....................     409,365       424,825       509,665       416,004       895,841
                                       -----------   -----------   -----------   -----------   -----------
Net income............................ $ 1,005,676   $   817,118   $ 1,058,238   $   874,306   $ 1,883,453
                                       ===========   ===========   ===========   ===========   ===========
Pro forma basic and diluted earnings                                                                      
  per share...........................                             $       .15                 $       .27
                                                                   ===========                 ===========
Weighted average shares used in                                                                           
  computation.........................                               6,900,000                   6,900,000
                                                                   ===========                 ===========

SEE ACCOMPANYING NOTES. 

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M-TRON INDUSTRIES, INC. 

COMBINED STATEMENTS OF NET ASSETS 

                                                        [Enlarge/Download Table]

                                                                              NINE MONTHS ENDED    
                                                                                SEPTEMBER 30,      
                                          YEAR ENDED DECEMBER 31,                (UNAUDITED)       
                                    ------------------------------------   ----------------------- 
                                       1997         1998         1999         1999         2000    
                                    ----------   ----------   ----------   ----------   ---------- 
                                                                                                   
Balance at beginning of period..... $3,171,787   $3,927,463   $4,744,581   $4,744,581   $5,386,550 
  Net income.......................  1,005,676      817,118    1,058,238      874,306    1,883,453 
  Dividends........................   (250,000)          --           --           --   (1,500,000)
  Redemption of equity interests...         --           --     (416,269)    (416,269)          -- 
                                    ----------   ----------   ----------   ----------   ---------- 
Balance at end of period........... $3,927,463   $4,744,581   $5,386,550   $5,618,887   $5,770,003 
                                    ==========   ==========   ==========   ==========   ========== 

SEE ACCOMPANYING NOTES. 

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M-TRON INDUSTRIES, INC. 

COMBINED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                                     NINE MONTHS ENDED    
                                                  YEAR ENDED DECEMBER 31,              SEPTEMBER 30,      
                                            -----------------------------------   ----------------------- 
                                               1997        1998         1999         1999         2000    
                                            ----------   ---------   ----------   ----------   ---------- 
                                                                                        (UNAUDITED)       
                                                                                                          
OPERATING ACTIVITIES                                                                                      
Net income................................  $1,005,676   $ 817,118   $1,058,238   $  874,306   $1,883,453 
Adjustments to reconcile net income to net                                                                
  cash provided by (used in) operating                                                                    
  activities:                                                                                             
  Depreciation............................     589,221     645,431      739,601      528,905      586,778 
  Deferred income taxes...................     (60,490)      5,466      (29,682)     (22,262)    (260,000)
  Changes in operating assets and                                                                         
    liabilities:                                                                                          
    Accounts receivable...................    (371,023)   (231,838)    (676,952)    (607,327)  (2,303,319)
    Inventories...........................  (1,882,534)    337,164   (1,162,052)  (2,003,739)  (1,752,038)
    Prepaid expenses and other............       9,799      12,923       10,957      (65,632)    (228,660)
    Accounts payable......................     329,067    (253,969)      59,704      778,914    2,372,681 
    Accrued bonuses and expenses..........     141,404    (153,372)     185,356      312,015    1,611,260 
    Income taxes payable..................     340,488     (68,641)    (127,210)      27,564      601,849 
                                            ----------   ---------   ----------   ----------   ---------- 
Net cash provided by (used in) operating                                                                  
  activities..............................     101,608   1,110,282       57,960     (177,256)   2,566,004 
INVESTING ACTIVITIES                                                                                      
Purchases of property, plant, and                                                                         
  equipment...............................    (688,245)   (878,042)    (804,138)    (696,997)    (616,981)
Proceeds from sales of equipment..........       8,774          --           --           --       15,600 
                                            ----------   ---------   ----------   ----------   ---------- 
Net cash used in investing activities.....    (679,471)   (878,042)    (804,138)    (696,997)    (601,381)
FINANCING ACTIVITIES                                                                                      
Payment of related party debt.............          --          --           --           --      (99,448)
Payments of long-term debt................    (247,693)    (94,355)          --           --           -- 
Net increase (decrease) in notes payable                                                                  
  to bank.................................   1,121,151    (216,575)     868,238      887,875   (1,765,098)
Dividends paid............................    (250,000)         --           --           --           -- 
                                            ----------   ---------   ----------   ----------   ---------- 
Net cash provided by (used in) financing                                                                  
  activities..............................     623,458    (310,930)     868,238      887,875   (1,864,546)
                                            ----------   ---------   ----------   ----------   ---------- 
Net (decrease) increase in cash...........      45,595     (78,690)     122,060       13,622      100,077 
Cash at beginning of year.................      35,882      81,477        2,787        2,787      124,847 
                                            ----------   ---------   ----------   ----------   ---------- 
Cash at end of period.....................  $   81,477   $   2,787   $  124,847   $   16,409   $  224,924 
                                            ==========   =========   ==========   ==========   ========== 
SUPPLEMENTAL DISCLOSURES                                                                                  
Interest paid in cash.....................  $  185,888   $ 191,246   $  217,053   $  148,356   $  121,228 
Income taxes paid to parent...............  $   90,000   $ 488,000   $  644,792   $  389,792   $  500,000 
Noncash financing activities:                                                                             
  Notes issued to related parties for                                                                     
    redemption of common stock............  $       --   $      --   $  298,344   $  298,344   $       -- 
  Unpaid dividend.........................  $       --   $      --   $       --   $       --   $1,500,000 
  Payable to parent for redemption of                                                                     
    common stock..........................  $       --   $      --   $  117,925   $       --   $       -- 

SEE ACCOMPANYING NOTES. 

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M-TRON INDUSTRIES, INC. NOTES TO COMBINED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND

NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

1.  DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION                           

BACKGROUND                                                                      

M-tron Industries, Inc. (the "Company"), a Delaware corporation, is an  
indirect wholly-owned subsidiary of Lynch Corporation ("Lynch"). The Company was
established in August 2000 for the purpose of succeeding to the business of     
M-tron Industries, Inc., ("M-tron South Dakota"), a South Dakota corporation, a 
wholly-owned subsidiary of Lynch. It is anticipated that in December 2000, all  
assets and liabilities related to the business that had previously been         
conducted by M-tron South Dakota will be received by the Company except for     
M-tron South Dakota's investment in 48% of the outstanding common stock of      
Spinnaker Industries, Inc. ("Spinnaker"). The Company was capitalized in        
August 2000 with a $1,000 cash contribution from Lynch and has not engaged in   
any activity since its formation.                                               

DESCRIPTION OF BUSINESS                                                         

    The Company manufactures and sells packaged quartz crystal frequency control
devices to customers throughout the United States and internationally. The      
Company operates in one business segment for financial reporting purposes.      

BASIS OF PRESENTATION                                                           

   The accompanying combined financial statements have been prepared using the
historical basis of assets and liabilities and historical results of operations 
of M-tron South Dakota, including the accounts of M-tron Industries Limited     
("M-tron Limited"), its wholly-owned foreign subsidiary, but excludes M-tron    
South Dakota's investment in Spinnaker. Significant intercompany accounts and   
transactions have been eliminated.                                              

The historical financial information presented herein reflects periods  
during which the Company did not operate as an independent public company. Such 
information, therefore, may not necessarily reflect the results of operations,  
financial condition or cash flows of the Company in the future or what they     
would have been had the Company been an independent public company during the   
reporting periods.                                                              

    Lynch has historically provided certain advisory and oversight services such
as finance, cash management, legal, and human resources to its various business 
units. Lynch charges the Company $100,000 per year for these services which,    
Lynch has advised, is approximately equivalent to the estimated actual costs    
that were incurred by Lynch in providing such services to the Company (see      
Note 5). In the opinion of management, these charges are reasonable in light of 
the services provided; however, the costs of these services allocated to the    
Company are not necessarily indicative of the costs that would have been        
incurred by the Company on a stand-alone basis. As a result, the financial      
position, results of operations, and cash flows of the Company presented may not
be fully indicative of what the financial position, results of operations, and  
cash flows would have been if the Company had operated on a stand-alone basis.  
It is likely that the Company's administrative expenses will increase as a      
result of additional financial reporting requirements, stock listing and        
transfer fees, directors' fees, insurance, compensation, and other costs        
associated with being a public company.                                         

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M-TRON INDUSTRIES, INC. NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND

NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

1.  DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)               
INTERIM FINANCIAL STATEMENTS (UNAUDITED)                                        

   The interim financial information as of September 30, 2000 and for the nine
months ended September 30, 1999 and 2000 is unaudited. In the opinion of        
management, the information furnished in the unaudited interim combined         
financial statements reflects all adjustments necessary for a fair presentation 
of the financial position and results of operations as of September 30, 2000 and
for the nine months ended September 30, 1999 and 2000.                          

USE OF ESTIMATES                                                                

The preparation of financial statements in conformity with accounting   
principles generally accepted in the United States requires management to make  
estimates and assumptions that affect the amounts reported in the financial     
statements and accompanying notes. Actual results could differ from those       
estimates.                                                                      

2.  SIGNIFICANT ACCOUNTING POLICIES                                             

ACCOUNTS RECEIVABLE AND CONCENTRATIONS OF CREDIT RISK                           

   The Company has certain concentrations of credit risk with respect to trade
receivables (see Note 10). The Company performs initial and periodic credit     
evaluations of its customers, generally does not require collateral, and        
maintains allowances for potential credit losses.                               

INVENTORIES                                                                     

    Inventories are stated at the lower of cost or market. Cost is determined by
the last-in, first-out (LIFO) method for manufactured products and by the       
first-in, first-out (FIFO) method for purchased products.                       

PROPERTY, PLANT AND EQUIPMENT                                                   

Depreciation of property, plant and equipment is provided using the     
straight-line method over the estimated useful lives of the assets as follows:  

                                                                [Download Table]
                                                                         
Buildings...................................................  30-40 years
Leasehold improvements......................................  6-20 years 
Machinery and equipment.....................................  5-7 years  

REVENUE RECOGNITION                                                             

    The Company recognizes revenues at the time of shipment. The Company's sales
of custom designed frequency control devices are final with no right of return  
after shipment. Certain of the Company's non-custom product sales to            
distributors are subject to returns in the normal course of the Company's       
business; however, the Company accrues for amounts related to product returns   
when probable and reasonably estimable.                                         

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M-TRON INDUSTRIES, INC. NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND

NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                                 
INCOME TAXES                                                                    

 The Company files a consolidated income tax return with Lynch. All income
taxes reflected by the Company have been computed on a separate return basis.   
The Company follows the liability method of accounting for income taxes, under  
which deferred income tax assets and liabilities are determined based on the    
difference between financial reporting and income tax bases of assets and       
liabilities using the enacted marginal tax rates. Deferred income tax expense is
based on the changes in the asset or liability from period to period. The       
current portion of deferred income taxes is determined based on the             
classification of the related asset or liability for financial reporting        
purposes. Temporary differences result primarily from depreciation, inventory   
valuation, certain reserves and accruals.                                       

RESEARCH AND DEVELOPMENT                                                        

Research and development costs are incurred to develop new and improved 
products. Research and development costs are charged to expense when incurred.  

ADVERTISING                                                                     

   The Company expenses advertising costs as incurred. Advertising expense was
approximately $159,000 in 1997, $315,000 in 1998 and $235,000 in 1999 and       
$174,000 and $165,000 for the nine months ended September 30, 1999 and          
September 30, 2000, respectively.                                               

FAIR VALUE OF FINANCIAL INSTRUMENTS                                             

Financial instruments primarily include accounts receivable, accounts   
payable and notes payable to related parties and bank. Management believes the  
fair value of accounts receivable and accounts payable approximate their        
carrying value in the balance sheet as of each balance sheet date due to the    
short term nature of these financial instruments. The fair value of the notes   
payable to related parties and the bank is estimated to approximate their       
carrying amount as of each balance sheet date. The fair value of the notes      
payable to related parties is estimated based on interest rates set using       
arms-length negotiations between the Company and the note holders. The fair     
value of notes payable to bank is estimated based on anticipated interest rates 
which management believes would currently be available to the Company for       
similar borrowings, taking into account the current credit risk of the Company  
and other market factors.                                                       

FOREIGN OPERATIONS                                                              

    The Company has operations in Hong Kong through its wholly-owned subsidiary,
M-Tron Limited. The financial statements of M-Tron Limited are prepared using   
the U.S. dollar as its functional currency. The transactions of this operation  
that are denominated in foreign currencies have been remeasured in U.S. dollars,
and any resulting gains or losses, are included in income.                      

NET ASSETS                                                                      

    Net assets represents the net investment by Lynch and, for 1997 and 1998, by
certain minority shareholders. The Company intends to pay a dividend of         
$1.5 million to Lynch (see Note 4). Payment of the dividend is to be in the form
of a non-interest bearing demand promissory note. The effect of                 

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M-TRON INDUSTRIES, INC. NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND

NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                                 
the dividend has been retroactively reflected in the financial statements as of 
and for the nine months ended September 30, 2000.                               

EMERGING ACCOUNTING ISSUES                                                      

 In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities (as       
amended by SFAS No. 137 and SFAS No. 138) which will be effective in            
January 2001. SFAS No. 133 requires the Company to recognize all derivatives and
the underlying hedged items as assets or liabilities on the balance sheet date  
and to measure them at fair value on the marked-to-market basis with the market 
value adjustments included in earnings. The Company does not expect SFAS        
No. 133 to have a significant effect on the Company's earnings or financial     
position.                                                                       

   In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101 Revenue Recognition in Financial Statements.  
SAB No. 101 requires the Company to recognize revenue when it is realized and   
earned which includes persuasive evidence of a sales agreement, delivery has    
occurred, the selling price is fixed and collectibility is reasonably assured.  
Given the Company's current method of recognizing revenue, Company management   
believes that the Company's financial statements comply with SAB No. 101.       

In March 2000, the FASB issued FASB Interpretation No. 44 (FIN          
44) Accounting for Certain Transactions involving Stock Compensation. This      
interpretation clarifies the application of Accounting Principles Board Opinion 
No. 25 for certain issues. The adoption of FIN 44 did not have a significant    
effect on the Company's earnings or financial position.                         

  The Company is not aware of any other accounting standards which have been
issued that would require the Company to change current accounting policies or  
adopt new policies, in which the effect would be material to the combined       
financial statements.                                                           

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M-TRON INDUSTRIES, INC. 

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

3.  INVENTORIES                                                                 

Inventories are summarized as follows:                                  

                                                        [Enlarge/Download Table]

                                                       DECEMBER 31,         SEPTEMBER 30,
                                                  -----------------------   -------------
                                                     1998         1999          2000     
                                                  ----------   ----------   -------------
                                                                                         
Raw materials.................................... $  608,519   $1,296,033    $1,297,449  
Work in process..................................    812,435      890,867     2,276,645  
Finished goods...................................  2,022,374    2,444,923     2,809,767  
                                                  ----------   ----------    ----------  
                                                   3,443,328    4,631,823     6,383,861  
Less LIFO reserve................................   (230,178)    (256,621)     (256,621) 
                                                  ----------   ----------    ----------  
                                                  $3,213,150   $4,375,202    $6,127,240  
                                                  ==========   ==========    ==========  

 Of the inventory values represented above, approximately 52.7%, 44.3% and
33.1% represents inventory accounted for under the FIFO method at December 31,  
1998 and 1999 and September 30, 2000 respectively, and 47.3%, 55.7% and 66.9%   
under the LIFO method at December 31, 1998 and 1999 and September 30, 2000.     

The Company had reserves against excess and obsolete inventories of     
approximately $243,000, $183,000 and $213,000 at December 31, 1998 and 1999 and 
September 30, 2000, respectively. These reserves are netted against the         
respective inventories summarized above.                                        

   The Company enters into forward exchange contracts to purchase Japanese Yen
to hedge certain firm purchase commitments denominated in Yen. The purpose of   
the Company's foreign currency-hedging activities is to protect the Company from
the risk that the eventual dollar cash flows resulting from the purchase of     
inventories from international suppliers will be adversely affected by changes  
in exchange rates. At September 30, 2000 the Company had forward exchange       
contracts, all having maturities of 3 months or less, of $400,000. Gains or     
losses on these contracts are deferred and accounted for as part of the         
underlying transaction. The amount of deferred gains or losses were not material
at September 30, 2000.                                                          

4.  NOTES PAYABLE TO BANK                                                       

                                                        [Enlarge/Download Table]

                                                       DECEMBER 31,        SEPTEMBER 30,
                                                  -----------------------  -------------
                                                     1998         1999         2000     
                                                  ----------   ----------  -------------
                                                                                        
Notes payable to bank under:                                                            
  Revolving credit agreement..................... $1,652,047   $2,575,936   $  833,383  
  Overdraft agreement for subsidiary.............    153,254       97,603       75,062  
                                                  ----------   ----------   ----------  
                                                  $1,805,301   $2,673,539   $  908,445  
                                                  ==========   ==========   ==========  

    The revolving credit agreement matured in March 2000 and was renewed through
May, 2001. Interest is payable monthly at a defined base rate (7.75%, 8.5% and  
9.0% at December 31, 1998 and 1999 and September 30, 2000, respectively).       

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M-TRON INDUSTRIES, INC. 

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

4.  NOTES PAYABLE TO BANK (CONTINUED)                                           

    Borrowings under the revolving credit agreement are limited to the lesser of
$3,700,000 or a defined borrowing base determined by eligible accounts          
receivable and inventories. Aggregate available borrowings at September 30, 2000
were approximately $2,400,000. The note is secured by substantially all assets  
of the Company. The revolving credit agreement requires the Company, among other
things, to maintain a specified minimum tangible net worth ratio and prohibits  
the payments of cash dividends on capital stock in excess of 50% of earnings    
without prior approval from the lender. The $1.5 million dividend that the      
Company intends to pay to Lynch (see Notes 2 and 12) has been approved by the   
Lender.                                                                         

  The bank overdraft agreement with a foreign bank covers outstanding checks
written by the foreign subsidiary. The overdraft is secured by a standby        
documentary letter of credit which expires April 2001 and is renewable annually 
thereafter. Interest is payable monthly on the bank overdraft agreement at a    
defined base rate plus 2% (12.25%, 10.75% and 11.5% at December 31, 1998 and    
1999 and September 30, 2000, respectively).                                     

5.  COMMITMENTS AND CONTINGENCIES                                               

  The Company leases office buildings under operating leases with terms of 2
to 3 years. The Company expects that generally leases will be renewed under     
renewal options. Rental expense under these operating leases was approximately  
$78,000 in 1997, $74,000 in 1998 and $66,000 in 1999 and $51,000 and $46,000 in 
the nine months ended September 30, 1999 and 2000, respectively.                

Minimum future rental commitments applicable to noncancellable operating
leases at December 31, 1999 are as follows:                                     

                                                                [Download Table]
                                                                      
2000........................................................  $ 43,000
2001........................................................    27,000
2002........................................................    27,000
2003........................................................    20,000
                                                              --------
                                                              $117,000
                                                              ========

    During 1997, 1998 and 1999, the Company paid management fees to Lynch in the
amount of $100,000. The Company paid management fees to Lynch of $75,000 in each
of the nine months ended September 30, 1999 and 2000.                           

  The Company has committed to make capital expenditures of $275,000 for the
remainder of 2000 to expand production capacity.                                

   The Company is involved in various legal proceedings of a nature considered
normal to its business. The Company accrues for amounts related to these legal  
matters if it is probable that a liability has been incurred and an amount is   
reasonably estimable. In management's opinion, the Company is not currently     
involved in any material litigation.                                            

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M-TRON INDUSTRIES, INC. 

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

6.  INCOME TAXES                                                                

The Company had U. S. and foreign income before income taxes as follows:

                                                        [Enlarge/Download Table]

                                                                             NINE MONTHS ENDED   
                                          YEAR ENDED DECEMBER 31,              SEPTEMBER 30,     
                                    ------------------------------------  -----------------------
                                       1997         1998         1999        1999         2000   
                                    ----------   ----------   ----------  ----------   ----------
                                                                                                 
U. S............................... $1,156,894   $1,223,867   $1,403,585  $1,156,518   $2,426,406
Foreign............................    258,147       18,076      164,318     133,792      352,888
                                    ----------   ----------   ----------  ----------   ----------
Total income before income taxes... $1,415,041   $1,241,943   $1,567,903  $1,290,310   $2,779,294
                                    ==========   ==========   ==========  ==========   ==========

Components of income tax expense are as follows:                        

                                                        [Enlarge/Download Table]

                                                                             NINE MONTHS ENDED   
                                             YEAR ENDED DECEMBER 31,           SEPTEMBER 30,     
                                          ------------------------------   --------------------- 
                                            1997       1998       1999       1999        2000    
                                          --------   --------   --------   --------   ---------- 
                                                                                                 
Current expense:                                                                                 
  Federal................................ $452,873   $416,286   $510,000   $422,531   $1,083,894 
  Foreign................................   16,982      3,073     29,347     15,735       71,947 
                                          --------   --------   --------   --------   ---------- 
Total current expense....................  469,855    419,359    539,347    438,266    1,155,841 
Deferred expense (benefit):                                                                      
  Federal................................  (60,490)     5,466    (29,682)   (22,262)    (260,000)
  Foreign................................       --         --         --         --           -- 
                                          --------   --------   --------   --------   ---------- 
                                           (60,490)     5,466    (29,682)   (22,262)    (260,000)
                                          --------   --------   --------   --------   ---------- 
                                          $409,365   $424,825   $509,665   $416,004   $  895,841 
                                          ========   ========   ========   ========   ========== 

   A reconciliation of income tax expense with the amount computed by applying
the statutory federal income tax rate to pretax income is as follows:           

                                                        [Enlarge/Download Table]

                                                                             NINE MONTHS ENDED  
                                              YEAR ENDED DECEMBER 31,          SEPTEMBER 30,    
                                           ------------------------------   ------------------- 
                                             1997       1998       1999       1999       2000   
                                           --------   --------   --------   --------   -------- 
                                                                                                
Amount based on federal statutory rate.... $481,000   $422,000   $533,000   $439,000   $945,000 
Effect of foreign taxes...................  (71,635)     2,825    (23,335)   (22,996)   (49,159)
                                           --------   --------   --------   --------   -------- 
Income tax expense........................ $409,365   $424,825   $509,665   $416,004   $895,841 
                                           ========   ========   ========   ========   ======== 

The Company does not provide for U.S. income taxes on income of M-tron  
Limited as earnings of M-tron Limited are considered to be permanently          
reinvested and not subject to U.S. income taxes. Deferred income taxes on the   
cumulative permanently reinvested earnings of M-tron Limited are not            
determinable due to the various tax planning strategies of the Company and other
factors.                                                                        

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M-TRON INDUSTRIES, INC. 

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

6.  INCOME TAXES (CONTINUED)                                                    
Components of deferred income taxes are as follows:                     

                                                        [Enlarge/Download Table]

                                                               DECEMBER 31,        SEPTEMBER 30,
                                                           ---------------------   -------------
                                                             1998        1999          2000     
                                                           ---------   ---------   -------------
                                                                                                
Deferred income tax assets:                                                                     
  Accruals and reserves--current.......................... $ 192,387   $ 220,100     $302,960   
                                                           ---------   ---------     --------   
  Deferred compensation--noncurrent....................... $      --   $      --     $175,440   
Deferred income tax liabilities--depreciation,                                                  
  noncurrent..............................................  (157,605)   (155,636)    (153,936)  
                                                           ---------   ---------     --------   
Net deferred tax asset (liability)--noncurrent............ $(157,605)  $(155,636)    $ 21,504   
                                                           =========   =========     ========   

The approximate tax effect of each of the components of deferred income 
taxes is equivalent to the Company's effective federal tax rate.                

7.  EMPLOYEE BENEFIT PLAN                                                       

    The Company participates in the Lynch 401(k) plan which covers substantially
all the Company's employees meeting certain minimum service requirements. Under 
the terms of the plan, participants may contribute up to 15% of their salary to 
the plan and the Company will make a matching, nonelective contribution equal to
25% of the employee's first $800 contribution. The Company contributed $13,000  
in 1997, $14,300 in 1998, $14,400 in 1999 and $10,800 in each of the nine months
ended September 30, 1999 and 2000. In addition, the Company may elect to        
contribute an additional amount to the plan at the discretion of the Board of   
Directors (none in 1997, 1998, 1999 or for the nine months ended September 30,  
1999 and 2000).                                                                 

8.  DEFERRED COMPENSATION                                                       

 In January 1999, concurrent with the redemption of the minority interests
(see Note 9), the Company established a deferred compensation plan through which
the former minority shareholders were awarded stock appreciation rights (SARs). 
The SARs vest at varying rates from January 1, 1999 through January 1, 2001. All
SARs awarded under the program expire at the earlier of certain defined events  
or December 31, 2008. The SARs provide the employees a certain percentage,      
ranging from 2% to 5%, of the increase in the defined book value of the Company 
from December 31, 1998 through the exercise date of the award. Defined book     
value is equal to the net assets of the Company adjusted for imputed interest   
earned by the employees on their outstanding notes (see Note 9) and certain     
other charges. Vested amounts are payable at the holder's option in cash or in  
an equivalent amount of Lynch stock. In January 2000, the Company paid in cash  
the vested amount of a SAR owed to a former minority shareholder that retired.  
The Company accounts for stock-based compensation in accordance with Accounting 
Principles Board Opinion No. 25 and related interpretations (APB 25). Expense   
related to the SAR's was approximately $62,000 in 1999 and $25,000 and $95,000  
for the nine months ended September 30, 1999 and 2000, respectively. The Company
intends to settle such SAR's in cash upon the consummation of a rights offering.

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M-TRON INDUSTRIES, INC. 

NOTES TO COMBINED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

8.  DEFERRED COMPENSATION (CONTINUED)                                           

   In addition to the benefits payable under the SARs, if Lynch were to sell a
majority of its stock interest in the Company prior to January 1, 2009, in one  
or a series of transactions, the holders of the SARs, assuming that they are    
then employed by the Company, would be entitled to receive from the Company a   
contingent payment equal to an aggregate of 4% of the excess of the value of    
Lynch's stock interest in the Company, determined on the basis of the weighted  
average per share price paid to Lynch, over the book value of that interest     
immediately prior to the consummation of a rights offering. The Company may pay 
this amount, at its option, in cash or Company stock.                           

 Expense under the alternative fair value method of FASB Statement No. 123
would be equivalent to expense as determined by APB 25 and, accordingly, pro    
forma net income would not differ from amounts as reported.                     

  In January 2000, the Company entered into an employment agreement with its
President through which the President may purchase shares of common stock of the
Company equal to 3% of the outstanding shares of common stock immediately       
following an initial public offering ("IPO") of the Company's stock. The        
purchase price of such shares would be equal to 33 1/3% of the public offering  
price. The Company must complete an IPO prior to January 24, 2003 for the option
to acquire shares to be in effect. In the event of an IPO, the Company would    
recognize compensation expense for the difference between the public offering   
price and the reduced purchase price under the employment agreement. In the     
event that the Company does not do an IPO by January 24, 2003, the President    
shall be entitled to additional compensation equal to 3% of the increase in the 
defined market value of the Company from January 1, 2000 through the end of the 
last fiscal quarter next preceding his termination. The Company recognized      
expense of $421,000 during the nine months ended September 30, 2000 for the     
additional compensation expected related to the increase in the defined market  
value of the Company.                                                           

9.  STOCK REDEMPTIONS AND NOTES PAYABLE TO RELATED PARTIES                      

    On January 1, 1999, the Company redeemed all of the equity interests held by
the minority shareholders for an aggregate purchase price of $416,269 which was 
equal to the book value of the interests at that time. The Company recorded the 
redemption cost as a charge to the net assets. Of the redemption price, $117,925
was payable to Lynch for payment on shareholder loans outstanding. Notes payable
were issued for the remaining balance of $298,344. Interest on the notes is     
payable quarterly at 10% with principal installments of $99,448 payable annually
beginning January 2000 through the notes maturity in January 2002. The Company  
recorded approximately $22,000 and $15,000 of interest expense related to these 
notes in 1999 and for the nine months ended September 30, 2000, respectively.   

10.  CONCENTRATIONS                                                             

    Sales to the Company's ten largest customers accounted for approximately 60%
of net sales in all periods presented. In 1999, the Company had sales to one    
customer that totaled approximately $3,300,000 or 12.4% of net sales. The amount
receivable from this customer was approximately $547,000 and $657,000 at        
December 31, 1999 and September 30, 2000, respectively. There were no sales to a
single customer that exceeded 10% of net sales in 1997 and 1998. The Company had
sales to two                                                                    

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M-TRON INDUSTRIES, INC. 

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

10.  CONCENTRATIONS (CONTINUED)                                                 
customers that total approximately $4,439,000 or 22.8% of net sales in the nine 
months ended September 30, 1999 and sales to one customer that totaled          
approximately $2,920,000 or 10% of net sales in the nine months ended           
September 30, 2000. There were no material amounts due from a single customer at
December 31, 1998.                                                              

 The majority of the Company's net sales in 1998 and 1999 and for the nine
months ended September 30, 1999 and 2000 were to manufacturers of communications
infrastructure equipment. Net sales to manufacturers of communications          
infrastructure equipment for 1997 could not be derived from the Company's       
accounting system.                                                              

    The Company purchases from outside suppliers and contract manufacturers that
in certain cases are single or limited sources for key components that are      
needed to produce products. The inability of certain of these suppliers or      
manufacturers to supply components could ultimately affect the Company's ability
to deliver products to its customers in a timely manner.                        

11.  SEGMENT INFORMATION                                                        

The Company is principally engaged in one business segment for reporting
purposes which is the manufacturing and selling of quartz crystal frequency     
control devices. The Company has its corporate headquarters and manufacturing   
facilities in the United States and maintains a sales office in Hong Kong. The  
Company attributes sales to and revenues from customers in different geographic 
areas on the basis of the location of the customer. All of the Company's sales  
are denominated in U.S. dollars. Net sales by customer location for the years   
ended December 31, 1998 and 1999 and the nine months ended September 30, 1999   
and 2000 were as follows (in thousands):                                        

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED        NINE MONTHS ENDED 
                                                            DECEMBER 31,         SEPTEMBER 30,   
                                                         -------------------  -------------------
                                                           1998       1999      1999       2000  
                                                         --------   --------  --------   --------
                                                                                                 
Net sales:                                                                                       
  United States......................................... $14,500    $15,200   $11,596    $15,777 
  Canada................................................   3,400      5,100     3,901      5,775 
  Asia..................................................   2,000      2,400     1,591      3,554 
  Western Europe........................................   1,100      1,600     1,067      1,373 
  All other.............................................   1,798      2,167     1,302      2,904 
                                                         -------    -------   -------    ------- 
                                                         $22,798    $26,467   $19,457    $29,383 
                                                         =======    =======   =======    ======= 

 Net sales by customer location for the year ended December 31, 1997 could
not be derived from the Company's accounting system.                            

  The Company did not have significant long-lived assets located outside the
United States at December 31, 1998 and 1999 and September 30, 2000.             

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M-TRON INDUSTRIES, INC. 

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 AND
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND 2000 (UNAUDITED) 

12.  SUBSEQUENT EVENT                                                           

   The Company is currently in the process of registering shares of its common
stock for a rights offering. Effective upon the consummation of the rights      
offering, the Company intends to adopt a stock option plan and to reserve       
1,125,000 shares of its common stock to provide for grants of stock options to  
certain employee and non-employee directors. No options have been granted. In   
addition, the Company and its President intend to enter into a modified         
employment agreement such that the President's rights to purchase shares of     
common stock of the Company equal to 3% of the outstanding shares of common     
stock immediately following an IPO of the Company's common stock will be        
terminated. The new employment agreement is expected to provide that (1) upon   
the consummation of a rights offering, the President will be entitled to receive
an option to purchase 225,000 shares of the Company's common stock at the       
subscription price of the rights offering and (2) on each of the first three    
anniversaries of the consummation of the rights offering the President will be  
entitled to receive an option to purchase 75,000 shares of the Company's common 
stock at the current fair market value on the date of grant, provided that in   
the immediately preceding year the Company's return on equity was at least 18%. 
Any options issued to the President pursuant to the terms and conditions of his 
employment agreement will vest as follows: 75% of such options will vest on the 
third anniversary of the date of grant and the final 25% will vest on the fourth
anniversary of the date of grant.                                               

  The Company intends to pay, in January, 2001, the $1.5 million demand note
(see Note 4) with available borrowings under an increased line of credit with   
maximum borrowings of $6 million.                                               

13.  PRO FORMA EARNINGS PER SHARE                                               

Pro Forma earnings per share (basic and diluted) has been calculated    
assuming the issuance of 6,500,000 shares of Class B Common Stock to Lynch and  
the sale of 400,000 shares of Class A Common Stock (representing the number of  
shares required to be sold in the rights offering such that the net proceeds    
therefrom would be sufficient to pay the $1.5 million dividend to Lynch (see    
Note 2)) assuming all shares are outstanding as of the beginning of the periods 
presented.                                                                      

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M-TRON INDUSTRIES, INC. 
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS 

                                                        [Enlarge/Download Table]

                                          BALANCE AT   CHARGED TO                         BALANCE AT
                                         BEGINNING OF  COSTS AND     OTHER                   END    
DESCRIPTION                                 PERIOD      EXPENSES   ADDITIONS  DEDUCTIONS  OF PERIOD 
-----------                              ------------  ----------  ---------  ----------  ----------
                                                                                                    
Period ended September 30, 2000                                                                     
  Allowance for doubtful accounts.......    $47,206      $10,000   $     --    $     --     $57,206 
  Reserves for excess and obsolete                                                                  
    inventories.........................    183,381       40,000         --     (10,000)    213,381 
Period ended December 31, 1999                                                                      
  Allowance for doubtful accounts.......     39,059        9,837         --      (1,690)     47,206 
  Reserves for excess and obsolete                                                                  
    inventories.........................    241,337      153,229         --    (211,185)    183,381 
Period ended December 31, 1998                                                                      
  Allowance for doubtful accounts.......     38,743       11,310         --     (10,994)     39,059 
  Reserves for excess and obsolete                                                                  
    inventories.........................    190,853       86,187         --     (35,703)    241,337 
Period ended December 31, 1997                                                                      
  Allowance for doubtful accounts.......     29,516       11,618         --      (2,391)     38,743 
  Reserves for excess and obsolete                                                                  
    inventories.........................     83,077      151,875         --     (44,099)    190,853 

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M-TRON

   UNTIL       , 2001, ALL DEALERS THAT BUY, SELL OR TRADE OUR COMMON STOCK OR
RIGHTS TO ACQUIRE OUR COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS        
OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.                              

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PART II 
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.                           

The following table sets forth the costs and expenses payable by us in  
connection with the sale and distribution of the securities being registered.   
All of the amounts shown are estimated except the Securities and Exchange       
Commission registration fee.                                                    

                                                                [Download Table]
                                                                     
SEC registration fee........................................   $1,329
Listing fee.................................................        *
Blue sky fees and expenses..................................        *
Printing and engraving expenses.............................        *
Legal fees and expenses.....................................        *
Accounting fees and expenses................................        *
Subscription Agent, transfer agent and registrar fees and            
  expenses..................................................        *
Miscellaneous fees & expenses...............................        *
                                                               ------
Total.......................................................   $    *
                                                               ======

------------------------                                                        

*   To be provided by amendment.                                                

The Registrant will bear all of the foregoing and expenses.             

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.                             

   Pursuant to Section 102(b)(7) of the Delaware Corporation Law (the "DGCL"),
the Registrant's Restated Certificate of Incorporation (the "Certificate of     
Incorporation") (filed as Exhibit 3.1 to this Registration Statement) eliminates
the liability of the Registrant's directors to the Registrant or its            
stockholders, except for liabilities related to breach of duty of loyalty,      
actions not in good faith and certain other liabilities.                        

 Section 145 of the DGCL provides for indemnification by the Registrant of
its directors and officers. In addition, the Registrant's Amended and Restated  
Certificate of Incorporation (filed as Exhibit 3.1 to this Registration         
Statement) requires the Registrant to indemnify any current or former director  
or officer to the fullest extent permitted by the DGCL.                         

   All of the Registrant's directors and officers will be covered by insurance
policies maintained by Lynch Corporation against specified liabilities for      
actions taken in their capacities as such, including liabilities under the      
Securities Act of 1933, as amended. After the distribution described in the     
prospectus, the Registrant intends to obtain similar insurance policies for the 
benefit of its officers and directors.                                          

ITEM 16. RECENT SALES OF UNREGISTERED SECURITIES.                               

(a) Within the past three years, the Registrant has issued and sold the 
following securities:                                                           

       (1) On October 24, 2000, the Registrant issued 100 shares of its common
   stock to M-tron Industries, Inc., a South Dakota corporation ("M-tron South
Dakota"), for an aggregate consideration of $1,000.                     

    (2) On January 15, 2001, upon filing of the Registrant's amended and
 restated certificate of incorporation, the shares of common stock held by
 M-tron South Dakota were exchanged for 6,500,000 shares of Class B common
stock of the Registrant.                                                

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 (3) On [immediately before the effective date of the registration
   statement], 2001, the Registrant issued options to purchase an aggregate of
         shares of Class A common stock to [approximately 45] of its executive
officers and employees and non-employee directors, effective upon       
consummation of the offering contemplated hereby and with a per share   
  exercise price equal to the initial public offering price in the offering.

    (b) All transactions described in Item 15(a) above were effected in reliance
upon the exemption from the registration requirements of the Securities Act     
contained in Section 4(2) of the Securities Act on the basis that such          
transactions did not involve any public offering. The transactions described in 
Item 15(a)(3) above were also effected in reliance upon the exemption from the  
registration requirements contained in Rule 701 promulgated under the Securities
Act.                                                                            

ITEM 17. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.                            

(a) Exhibits                                                                    

                                                                [Download Table]

EXHIBIT NO.                        DESCRIPTION OF EXHIBIT                   
-----------     ------------------------------------------------------------
                                                                            
         *2.1   Form of Separation Agreement between Lynch and the          
                registrant                                                  

         *2.2   Assignment and Assumption Agreement between Lynch and the   
                Registrant                                                  

        **3.1   Amended and Restated Certificate of Incorporation of the    
                Registrant                                                  

         *3.2   Restated By-laws of the Registrant                          

         *4.1   Specimen of certificate of Class A common stock             

         *4.2   Form of Subscription Certificate                            

         *4.3   Form of Subscription Agent Agreement between M-tron and     
                American Stock Transfer & Trust Company                     

         *4.4   Form of Excluded Holder Transfer Form                       

         *4.5   Form of International Holder Transfer Form                  

         *4.6   Form of Nominee Holder Over-subscription Exercise Form      

       ***5.1   Opinion of Finn Dixon & Herling LLP (including the consent  
                of such firm) regarding legality of securities being offered

       ***5.2   Opinion of Finn Dixon & Herling LLP (including the consent  
                of such firm) regarding certain tax matters                 

        *10.1   2000 Stock Plan                                             

        *10.2   Form of 2000 Stock Plan Agreement for employees and         
                consultants                                                 

       **10.3   Form of 2000 Stock Plan Agreement for non-employee directors

        *10.4   Employment Agreement with Robert R. Zylstra                 

        *10.5   Employment Agreement with Robert Jenks                      

        *10.6   Form of Agreement with David Rein relating to cash          
                settlement of right to receive stock appreciation based     
                consideration                                               

        *10.7   Form of Agreement with Robert Jenks relating to cash        
                settlement of right to receive stock appreciation based     
                consideration                                               

        *10.8   Amended and Restated Credit Agreement by and between the    
                registrant and The First National Bank of Omaha             

        *10.9   Lease between J.R. Properties and the Registrant            

       **10.10  Bonus Plan                                                  

        *21.1   List of Subsidiaries                                        

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                                                                [Download Table]

EXHIBIT NO.                       DESCRIPTION OF EXHIBIT                   
-----------    ------------------------------------------------------------
                                                                           
      ***23.1  Consent of Finn Dixon & Herling LLP (included as part of its
               opinion filed as Exhibit 5 hereto)                          

       **23.2  Consent of Ernst & Young LLP                                

        *24    Powers of Attorney                                          

        *27.1  Financial Data Schedule                                     

        *99.1  Form of Letter to Lynch Shareholders                        

        *99.2  Form of Instructions to Lynch Shareholders as to Use of     
               Subscription Certificates                                   

        *99.3  Form of Notice of Guaranteed Delivery for Subscription      
               Certificates and Transfer Forms                             

        *99.4  Form of Letter to Securities Dealers, Commercial Banks,     
               Brokers, Trust Companies and Other Nominees                 

        *99.5  Form of Broker Letter to Clients                            

        *99.6  Form of Special Notice to Eligible Lynch Shareholders Whose 
               Addresses are Outside the United States                     

        *99.7  Form of Special Notice to Eligible Lynch Shareholders Whose 
               Addresses are in Excluded States                            

        *99.8  Form of Nominee Holder Certification Form                   

------------------------                                                        

*   Previously filed.                                                           

**  Filed herewith.                                                             

*** To be filed by amendment.                                                   

(b) Financial Statement Schedule                                        

                                                                [Download Table]
                                                                   
Valuation and Qualifying Accounts...........................    S-1

ITEM 18. UNDERTAKINGS.                                                          

   Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling    
person of the Registrant pursuant to the DGCL, the Certificate of Incorporation 
and By-laws, or otherwise, the Registrant has been advised that in the opinion  
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in such Securities Act, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than 
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,   
suit or proceeding) is asserted by such director, officer or controlling person 
in connection with the securities being registered, the Registrant will, unless 
in the opinion of its counsel the matter has been settled by controlling        
precedent, submit to a court of appropriate jurisdiction the question whether   
such indemnification by it is against public policy as expressed in such        
Securities Act and will be governed by the final adjudication of such issue.    

The Registrant hereby undertakes:                                       

      1.  To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this 
registration statement:                                                 

       (i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;                                           

         (ii) to reflect in the prospectus any facts or events arising after
  the effective date of the registration statement (or the most recent
post-effective amendment thereof) which,                          

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     individually or in the aggregate, represent a fundamental change in the
      information set forth in the registration statement; notwithstanding the
     foregoing, any increase or decrease in volume of securities offered (if
      the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the 
estimated maximum offering range may be reflected in the form of  
      prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price 
 represent no more than a 20 percent change in the maximum aggregate
     offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and                      

           (iii) to include any material information with respect to the plan of
    distribution not previously disclosed in the registration statement or
    any material change to such information in the registration statement.

2.  That, for the purpose of determining any liability under the
  Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered   
    therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.                              

      3.  To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the       
termination of the offering.                                            

      4   For purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of prospectus
   filed as part of this registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the Registrant pursuant to 
   Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared   
effective.                                                              

     5   For the purpose of determining any liability under the Securities
   Act of 1933, as amended, each post-effective amendment that contains a form
    of prospectus shall be deemed to be a new registration statement relating to
   the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.      

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SIGNATURES

  Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to its Registration Statement to be signed 
on its behalf by the undersigned, thereunto duly authorized, in the City of     
Yankton, State of South Dakota, on the 12th day of January, 2001.               

                                                                [Download Table]
                                               
M-TRON INDUSTRIES, INC.                        

By:             /s/ ROBERT R. ZYLSTRA          
     ------------------------------------------
                  Robert R. Zylstra            
        PRESIDENT AND CHIEF EXECUTIVE OFFICER  

  Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to Registration Statement has been signed by the following persons in the 
capacities and on the dates indicated:                                          

                                                        [Enlarge/Download Table]

              SIGNATURE                               TITLE                       DATE      
              ---------                               -----                       ----      
                                                                                            

        /s/ ROBERT R. ZYLSTRA           President and Chief Executive                       
--------------------------------------    Officer and Director (Principal   January 12, 2001
          Robert R. Zylstra               Executive Officer)                                

                                        Senior Vice President and Chief                     
                  *                       Financial Officer (Principal                      
--------------------------------------    Financing and Accounting          January 12, 2001
          David L. Rein, Sr.              Officer)                                          

                  *                                                                         
--------------------------------------  Chairman of the Board of Directors  January 12, 2001
          Anthony J. Santoro                                                                

                  *                                                                         
--------------------------------------  Director                            January 12, 2001
            E. Val Cerutti                                                                  

                                                                [Download Table]
                                              
*By:           /s/ ROBERT R. ZYLSTRA          
      --------------------------------------  
                 Robert R. Zylstra            
                 Attorney-in-fact             

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EXHIBIT INDEX 

                                                                [Download Table]

EXHIBIT NO.                        DESCRIPTION OF EXHIBIT                   
-----------     ------------------------------------------------------------
                                                                            
         *2.1   Form of Separation Agreement between Lynch and the          
                registrant                                                  

         *2.2   Assignment and Assumption Agreement between Lynch and the   
                Registrant                                                  

        **3.1   Amended and Restated Certificate of Incorporation of the    
                Registrant                                                  

         *3.2   Restated By-laws of the Registrant                          

         *4.1   Specimen of certificate of Class A common stock             

         *4.2   Form of Subscription Certificate                            

         *4.3   Form of Subscription Agent Agreement between M-tron and     
                American Stock Transfer & Trust Company                     

         *4.4   Form of Excluded Holder Transfer Form                       

         *4.5   Form of International Holder Transfer Form                  

         *4.6   Form of Nominee Holder Over-subscription Exercise Form      

       ***5.1   Opinion of Finn Dixon & Herling LLP (including the consent  
                of such firm) regarding legality of securities being offered

       ***5.2   Opinion of Finn Dixon & Herling LLP (including the consent  
                of such firm) regarding certain tax matters                 

        *10.1   2000 Stock Plan                                             

        *10.2   Form of 2000 Stock Plan Agreement for employees and         
                consultants                                                 

       **10.3   Form of 2000 Stock Plan Agreement for non-employee directors

        *10.4   Employment Agreement with Robert R. Zylstra                 

        *10.5   Employment Agreement with Robert Jenks                      

        *10.6   Form of Agreement with David Rein relating to cash          
                settlement of right to receive stock appreciation based     
                consideration                                               

        *10.7   Form of Agreement with Robert Jenks relating to cash        
                settlement of right to receive stock appreciation based     
                consideration                                               

        *10.8   Amended and Restated Credit Agreement by and between the    
                registrant and The First National Bank of Omaha             

        *10.9   Lease between J.R. Properties and the Registrant            

       **10.10  Bonus Plan                                                  

        *21.1   List of Subsidiaries                                        

      ***23.1   Consent of Finn Dixon & Herling LLP (included as part of its
                opinion filed as Exhibit 5 hereto)                          

       **23.2   Consent of Ernst & Young LLP                                

        *24     Powers of Attorney                                          

        *27.1   Financial Data Schedule                                     

        *99.1   Form of Letter to Lynch Shareholders                        

        *99.2   Form of Instructions to Lynch Shareholders as to Use of     
                Subscription Certificates                                   

        *99.3   Form of Notice of Guaranteed Delivery for Subscription      
                Certificates and Transfer Forms                             

        *99.4   Form of Letter to Securities Dealers, Commercial Banks,     
                Brokers, Trust Companies and Other Nominees                 

        *99.5   Form of Broker Letter to Clients                            

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EXHIBIT NO.                       DESCRIPTION OF EXHIBIT                   
-----------    ------------------------------------------------------------
                                                                           
        *99.6  Form of Special Notice to Eligible Lynch Shareholders Whose 
               Addresses are Outside the United States                     
        *99.7  Form of Special Notice to Eligible Lynch Shareholders Whose 
               Addresses are in Excluded States                            
        *99.8  Form of Nominee Holder Certification Form                   

------------------------                                                        

*   Previously filed.                                                           

**  Filed herewith.                                                             

*** To be filed by amendment.                                                   

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-1/A’ Filing		Date		First		Last			Other Filings
		1/1/09		56		80			None on these Dates
		12/31/08		79
		9/30/03		47
		1/24/03		80
		12/31/01		33		44
		1/15/01		85
Filed on:		1/12/01		1		89
		1/1/01		56		79
		12/31/00		11		51
		10/25/00		67
		10/24/00		85
		9/30/00		7		83
		8/31/00		48
		6/30/00		36		57
		1/1/00		80
		12/31/99		7		83
		9/30/99		7		82
		1/1/99		50		80
		12/31/98		33		83
		1/1/98		53
		12/31/97		34		83
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