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Note 6 - China Joint Venture

3 Months Ended

Mar. 31, 2025

Notes to Financial Statements

Noncontrolling Interest Disclosure [Text Block]

NOTE 6.     CHINA JOINT VENTURE

In 2019, the Company executed a joint venture agreement with its Chinese supplier (the “China JV”) whereby the Company has a 51% ownership interest. The agreement required the Company to make capital contributions of approximately $357,000 into the newly formed entity, which were made in prior years. In June 2023, the Company executed an amendment to the joint venture agreement to increase the amount of its registered capital. The amendment requires the Company to make additional capital contributions to the China JV of $408,000, of which $184,000 has been made as of March 31, 2025. As of the date of these Condensed Consolidated Financial Statements, the joint venture has not commenced principal operations.

During 2024, the Company determined that the contributions made to the China JV to date are not sufficient for the China JV to fund expected losses without additional subordinated financial support. Accordingly, the Company has determined that the China JV is a VIE. The Company has determined that because it has the sole right to direct the activities of the China JV that most significantly impact its economic performance, and as the majority owner, has the obligation to absorb losses of the VIE and the right to receive benefits from the VIE that are significant to the China JV, that the Company is the primary beneficiary of the VIE. Accordingly, the China JV has been consolidated in these consolidated financial statements.

The China JV is organized as a limited liability company under the laws of the Peoples Republic of China, accordingly the Company's exposure to losses in the China JV is limited to the Company's registered capital in the Company, which is equal to the sum of the required capital contributions above. As the China JV has not commenced principal operations, the assets of the China JV are not available to settle obligations of the Company.

The following table summarizes the assets and liabilities of the China JV, a consolidated variable interest entity, included in the Company’s consolidated balance sheets at March 31, 2025 and December 31, 2024, respectively:

		March 31,				December 31,
		2025				2024
(In thousands)
Cash and cash equivalents			8				13
Prepaid expenses and other current assets			55				54
Property and equipment, net			243				247
Accounts payable			5				8
Accrued expenses and other current liabilities			11				33

Changes in the Company’s ownership investment in the China JV were as follows:

		Three Months Ended
		March 31,
(In thousands)		2025				2024
Beginning interest in China JV		$	130			$	229
Contributions			31				—
Net loss attributable to Apyx			(23	)			(14	)
Ending interest in China JV		$	138			$	215

  

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- Definition

The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 810
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/810/tableOfContent

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