Company: AAOI
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001437749-25-033627
Chunk: 129

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 8
Chunk 129
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 Share-based compensation - by expense types             
 Cost of goods sold  $87  $116  $264  $355 
 Research and development   293   356   900   1,114 
 Sales and marketing   275   334   1,097   1,160 
 General and administrative   2,460   2,137   6,580   9,212 
 Total share-based compensation expense  $3,116  $2,943  $8,842  $11,841 

   Note 16.  Income Taxes 
   ​​
   For the three months ended  September 30, 2025 and 2024, the effective tax rate varied from the federal statutory rate of 21% primarily due to the change of the valuation allowance on federal, state, Taiwan, and China deferred tax assets ("DTA"). 
    
   The Company continually monitors and performs an assessment of the realizability of its DTAs, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets using a “more likely than not” standard. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Based on the Company’s review of this evidence, management determined that a full valuation allowance against all of the Company’s net deferred tax assets at  September 30, 2025 was appropriate. 
    
   On  July 4, 2025, new U.S tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or "OBBBA") which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act.  In addition, the OBBBA makes changes to certain U.S. corporate and international tax provisions which are generally not effective until 2026.  For example, as a U.S. domiciled company, the income from the Company's foreign subsidiaries is subject to the U.S. tax provisions under Internal Revenue Code Section 951A, which, as amended by the OBBBA, generally will require that net Controlled Foreign Corporation (“CFC