In January 2019, the Company’s wholly-owned subsidiary, Accuray Asia Limited (“Accuray Asia”), entered into an agreement with CNNC High Energy Equipment (Tianjin) Co., Ltd. (the “CIRC Subsidiary”), a wholly-owned subsidiary of China Isotope & Radiation Corporation, to form a joint venture, CNNC Accuray (Tianjin) Medical Technology Co. Ltd. (the “JV”), to manufacture and sell radiation oncology systems in China. As of September 30, 2024, the Company owned a 49% interest in the JV, which is reported as an investment in joint venture on the Company’s unaudited condensed consolidated balance sheets.

The Company applies the equity method of accounting to its ownership interest in the JV as the Company has the ability to exercise significant influence over the JV but lacks controlling financial interest and is not the primary beneficiary. The Company recognizes the 49% proportionate share of the JV income (loss) on a one-quarter lag due to the timing of the availability of the JV’s financial records. The Company recognizes revenue on sales to the JV in the current period and defers a portion of gross profit to the extent goods sold have not been sold through by the JV to an end customer at the end of such reporting period. With the receipt of the necessary permits and licenses to operate, the JV has begun to manufacture and sell a locally branded “Made in China” radiotherapy device, the Tomo C radiation therapy system, in the Class B license category.

The following table shows the reconciliation between the carrying value of the Company's investment in the JV and its proportional share of the underlying equity in net assets of the JV (in thousands):


	September 30, 2024			June 30, 2024
Carrying value of investment in joint venture	$	6,045		$	9,826
Deferred intra-entity gross profit		13,454			9,835
Equity method goodwill		(4,720	)		(4,720	)
Proportional share of equity investment in joint venture	$	14,779		$	14,941

(1)

As of September 30, 2024, $6.2 million of the deferred intra-entity gross profit balance was related to the Tomo C radiation therapy system as compared to $4.2 million as of June 30, 2024.

As of September 30, 2024, the Company’s carrying value of the investment in the JV was decreased for the Company's proportional share of the JV's currency translation adjustment by $0.7 million. As of June 30, 2024, the Company’s carrying value of the investment in the JV was decreased for the Company's proportional share of the JV's currency translation adjustment by $0.6 million. In June 2024, the JV declared a $2.5 million dividend to the Company which was paid in July 2024.

Summarized financial information of the JV is as follows (in thousands):


	Three Months Ended June 30,
Statement of Operations Data:	2024			2023
Revenue	$	21,834		$	31,855
Gross profit		4,850			5,813
Net income (loss)		(148	)		879
Net income (loss) attributable to the Company		(72	)		431


Summarized Balance Sheet Data:	As of June 30, 2024		As of June 30, 2023
Assets
Current assets	$	131,045	$	76,394
Non-current assets		11,581		14,345
Total assets	$	142,626	$	90,739
Liabilities and Stockholders' Equity
Current liabilities	$	112,379	$	57,898
Non-current liabilities		86		227
Stockholders' equity		30,161		32,614
Total liabilities and stockholders' equity	$	142,626	$	90,739

The following table shows the activity of the Company’s net revenue recognized from intra-entity gross profit from sales (in thousands):


	Three Months Ended September 30,
	2024			2023
Deferred intra-entity gross profit recognized on sales to the JV	$	2,714		$	1,585
Deferred intra-entity gross profit on sales to the JV		(6,333	)		(3,161	)
Net deferred gross profit on sales to the JV (1)	$	(3,619	)	$	(1,576	)

(1)

Profit earned by the Company from the JV is eliminated through cost of goods sold until it is realized; such profits would generally be considered realized when the inventory has been sold through to third parties. For the three months ended September 30, 2024, $2.0 million of the net deferred gross profit on sales to the JV were related to the Tomo C radiation therapy system as compared to $0.6 million for the three months ended September 30, 2023.