Note 7 - Variable Interest Entities

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Variable Interest Entity Disclosure [Text Block]

7. Variable Interest Entities

The Company holds variable interests in certain entities in the form of equity investments. The Company consolidates an entity under the 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 risks 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, Lynch Capital, a wholly owned subsidiary, 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 invested $1,000 into LGL Systems, representing 34.8% of the membership interests in LGL Systems, which is controlled by LGL Nevada. As a result of these transactions, 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 Consolidated Balance Sheets:

	December 31,
	2023		2022
Assets:
Current assets
Cash and cash equivalents	$	2,932	$	—
Accounts receivable		14		—
Total current assets		2,946		—
Total assets	$	2,946	$	—
Total liabilities	$	—	$	—

As of  December 31, 2023, the non-controlling interests in LGL Systems was $1,920.

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.

The following table presents the total assets of LGL Nevada as well as the Company's maximum exposure to loss:

	December 31,
	2023		2022
Total assets	$	588	$	—
Maximum exposure to loss
On-balance sheet (a)		3		—
Off-balance sheet (b)		—		—
Total	$	3	$	—

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

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

LGL Systems Nevada Management Partners LLC

LGL Nevada was formed in October 2019 for the purpose of performing key management and control 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.