Note 6 - Variable Interest Entities

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Variable Interest Entity Disclosure [Text Block]

6. Variable Interest Entities

The Company holds variable interests in certain entities in the form of equity investments. The Company consolidates an entity under the variable interest entity ("VIE") guidance when it is determined the Company is the primary beneficiary.

The Company has no right to the benefits from, nor does it bear the risk associated with, VIEs beyond the Company's direct equity investments in these entities. If the Company were to liquidate, the assets held by VIEs would not be available to the general creditors of the Company as a result of the liquidation.

During June 2023, the Company was appointed as sole managing member of LGL Systems Nevada Management Partners, LLC ("LGL Nevada") and invested approximately $4 into LGL Nevada, representing the Company's 1.0% general partnership interest. Concurrently, Lynch Capital, a wholly owned subsidiary of the Company, invested $1,000 into LGL Systems Acquisition Holding Company, LLC ("LGL Systems"), representing 34.8% of the memberships in LGL Systems, which is controlled by LGL Nevada. As a result, the Company determined it was the primary beneficiary of LGL Systems and was therefore required to consolidate LGL Systems.

Consolidated VIEs

The Company's only consolidated VIE is LGL Systems.

The following table summarizes the assets and liabilities of LGL Systems included in the Condensed Consolidated Balance Sheets:

	March 31, 2024		December 31, 2023
Assets:
Current assets:
Cash and cash equivalents	$	2,980	$	2,932
Accounts receivable		14		14
Total current assets		2,994		2,946
Total assets	$	2,994	$	2,946
Total liabilities	$	—	$	—

As of  March 31, 2024 and December 31, 2023, the non-controlling interests in LGL Systems was $1,942 and $1,920, respectively. 

Unconsolidated VIEs

The Company's only unconsolidated VIE is LGL Nevada.

We calculate our maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE and (ii) other commitments and guarantees to the VIE.

	March 31, 2024		December 31, 2023
Total assets	$	591	$	588
Maximum exposure to loss:
On-balance sheet (a)		3		3
Off-balance sheet (b)		—		—
Total	$	3	$	3

^(a) As of March 31, 2024 and December 31, 2023, our investment in LGL Nevada was recorded in Other assets in the Condensed Consolidated Balance Sheets.

^(b) This amount represents our remaining unfunded commitment to LGL Nevada.

LGL Systems Nevada Management Partners LLC

LGL Nevada was formed in October 2019 for the purpose of performing key management and controls decisions of LGL Systems. The remaining 99.0% of ownership interests are held by four individuals, two of which are members of Company management. In the event LGL Nevada resigns as manager of LGL Systems, it has the sole right to appoint a new manager.