Note 4 - China Joint Venture

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Noncontrolling Interest Disclosure [Text Block]

NOTE 4.     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 $153,000 has been made as of December 31, 2024. As of the date of these 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 included in our consolidated balance sheets at December 31, 2024 and 2023, respectively:

	Year Ended
	December 31,
(In thousands)	2024		2023
Cash and cash equivalents	$	13	$	173
Prepaid expenses and other current assets		54		44
Property and equipment, net		247		262
Accounts payable		8		6
Accrued expenses and other current liabilities		33		—

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

	Year Ended
	December 31,
(In thousands)	2024			2023
Beginning interest in China JV	$	229		$	219
Contributions		—			153
Net loss attributable to Apyx		(99	)		(143	)
Ending interest in China JV	$	130		$	229