Note 6 - Variable Interest Entities

9 Months Ended

Sep. 30, 2026

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 membership interests 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.

As described in Note 1, Lynch Capital holds a 33.9% equity interest in Skyline SPV, a pooled investment vehicle that holds the Skyline Note. Although this interest is less than a majority, the Company is the primary beneficiary of Skyline SPV and consolidates it because it has (i) the power to direct the activities that most significantly affect Skyline SPV’s economic performance, through Lynch Capital’s role as investment advisor with exclusive authority over decisions to convert, dispose of or otherwise manage the Skyline Note, and (ii) variable interests, consisting of its equity interest, a management fee payable before investor distributions, and carried interest, that give it the obligation to absorb losses of, or the right to receive benefits from, Skyline SPV that could potentially be significant to it.

Consolidated VIEs

The Company's consolidated VIEs are LGL Systems and Skyline SPV.

The following table summarizes the assets and liabilities of the Company's consolidated VIEs included in the Condensed Consolidated Balance Sheets:

	September 30, 2026		December 31, 2025
Assets:
Current assets:
Cash and cash equivalents	$	3,232	$	3,169
Restricted cash and cash equivalents		20		—
Accounts receivable		17		17
Total current assets		3,269		3,186
Convertible promissory note, at fair value		2,464		—
Other assets		56		—
Total assets	$	5,789	$	3,186
Total liabilities	$	—	$	—

The following table summarizes the non-controlling interests in the Company's consolidated VIEs:

	September 30, 2026		December 31, 2025
LGL Systems Acquisition Holding Company, LLC	$	2,118	$	2,077
Skyline Instruments May 2026, a Series of CGF2021 LLC		1,677		—
Total	$	3,795	$	2,077

The following table presents the revenue, net income (loss) attributable to non-controlling interests, and net income (loss) attributable to LGL Group associated with our variable interests in consolidated VIEs, as classified in the Condensed Consolidated Statements of Operations:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Total revenue	$	78	$	33	$	139	$	94
Net income attributable to non-controlling interests		45		22		63		47
Net income attributable to LGL Group		34		11		44		25

Unconsolidated VIEs

The Company's unconsolidated VIEs are LGL Nevada and Skyline.

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.

	September 30, 2026		December 31, 2025
Total assets	$	3,818	$	615
Maximum exposure to loss:
On-balance sheet (a) (b)		2,524		4
Off-balance sheet		—		—
Total	$	2,524	$	4

^(a) As of September 30, 2026 and  December 31, 2025, our investment in LGL Nevada was recorded in Other assets in the Condensed Consolidated Balance Sheets.

^(b) As of September 30, 2026, the Company's exposure to Skyline was reflected through Skyline SPV, a consolidated VIE, and recorded in Convertible promissory note, at fair value and Other assets (Accrued interest receivable) on the Condensed Consolidated Balance Sheets.

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, one of whom is a member of Company management. In the event LGL Nevada resigns as manager of LGL Systems, it has the sole right to appoint a new manager. As of  September 30, 2026, LGL Nevada's total assets were $624 and the Company's maximum exposure to loss is $4. As of  December 31, 2025, LGL Nevada's total assets were $615 and the Company's maximum exposure to loss is $4.

Skyline Instruments Corporation

Through its investment in Skyline SPV, the Company holds a variable interest in Skyline in the form of the Skyline Note and related contractual rights. The Company determined that Skyline is a VIE under FASB ASC Topic 810, Consolidation ("ASC 810") because Skyline lacks sufficient equity at risk to finance its activities without additional subordinated financial support. Skyline SPV’s board designation, participation and approval rights are protective or participating rights that do not convey power over Skyline’s most significant activities, so the Company is not Skyline’s primary beneficiary.

The Company's maximum exposure to loss related to Skyline is the carrying amount of the Skyline Note and related accrued interest reflected on the Condensed Consolidated Balance Sheets. As of  September 30, 2026, Skyline's total assets were $3,194 and the Company's maximum exposure to loss is $2,520, of which $854 is attributable to the Company's equity interest in Skyline SPV and $1,666 is attributable to non-controlling interests in Skyline SPV.