LGL GROUP INC

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 hasno 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 wouldnot 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.

During* June 2026,Lynch Capital invested $850 in Skyline SPV, representing a 42.5% equity interest in Skyline SPV as of June 30, 2026.*Skyline SPV in turn invested in the Skyline Note. The Company serves as investment advisor to Skyline SPV pursuant to an investment advisory agreement. The Company determined it was the primary beneficiary of Skyline SPV because it (i) holds exclusive authority to direct the activities that most significantly affect its economic performance, including decisions to convert, dispose of, or otherwise manage the Skyline Note, and (ii) holds variable interests that provide the right to receive benefits from Skyline SPV that could potentially be significant to it, comprising its pro-rata equity interest, a management fee payable from Skyline SPV assets prior to any investor distributions, and a carried interest on certain investor returns, that could potentially be significant to Skyline SPV. As such, LGL Group was required to consolidate Skyline SPV.

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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:

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

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:

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.

LGL Systems Nevada Management Partners LLC

LGL Nevada was formed in* October 2019for the purpose of performing key management and controls decisions of LGL Systems. The remaining 99.0% of ownership interests are held byfour* individuals,one of which 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. The Company's maximum exposure to loss is limited to its carrying value of its investment in LGL Nevada. As of* June 30, 2026*, LGL Nevada's total assets were $621 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 Financial Accounting Standards Board Accounting Standards Codification ("ASC") Topic810, Consolidation ("ASC810") because Skyline doesnot have sufficient equity at risk to finance its activities without additional subordinated financial support.

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The Company evaluated whether it is the primary beneficiary of Skyline. Although Skyline SPV holds a board designation right, participation rights in future financings, and approval rights over certain extraordinary corporate events, the Company concluded that these are participating and protective rights that donot provide it with the power to direct the activities that most significantly impact Skyline's economic performance. Accordingly, the Company isnot the primary beneficiary of Skyline and doesnot consolidate Skyline.

The Company's maximum exposure to loss related to Skyline is limited to the net assets of Skyline SPV as reflected on the Condensed Consolidated Balance Sheets. As of* June 30, 2026*, Skyline's total assets were $2,091 and the Company's maximum exposure to loss is $848.