Company: AAOI
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001437749-25-025450
Chunk: 124

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 8
Chunk 124
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 to time, the Company  may be subject to legal proceedings and litigation arising in the ordinary course of business, including, but not limited to, inquiries, investigations, audits and other regulatory proceedings, such as described below. The Company records a loss provision when it believes it is both probable that a liability has been incurred and the amount can be reasonably estimated.
    
   The Company believes that there are no claims or actions pending or threatened against it, the ultimate disposition of which would have a material adverse effect on it.
            
   Other Contingencies
    
   On  August 9, 2021, the Company received a Taxes Notification of Audit Result ("Notice") from the Texas Comptroller’s Office (the "Comptroller"), for fiscal years between 2016 and 2019, informing the Company that the Comptroller believes the Company did not qualify for certain sales and use tax exemptions on various Research and Development purchases and accordingly the Company is liable for Sale and Use Tax in the amount of approximately $1.0 million including interest charges. The Company paid $0.4 million for the tax notice in  May 2021, but challenged the remaining tax assessments and vigorously defended its position. The Comptroller’s office exhausted its redetermination period and therefore moved the Company’s case to the hearing process. No hearing date has yet been scheduled, and as a result the Company is not able to determine the outcome of this sales tax dispute or the likelihood or amount of the Company’s loss, if any, arising from this matter.

   Note 19.  Subsequent Events
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   On  July 4, 2025, the President signed into law the One Big Beautiful Bill Act, which includes several significant corporate tax changes. See Note 16, "Income Taxes" for additional information. 

    On  July 18, 2025, Global entered into a one-year credit facility with Shanghai Pudong Development Bank Co., Ltd., in Ningbo City, China, totaling 82,000,000 RMB (the "¥82M SPD Credit Facility"), or approximately $11.4 million at that time. Borrowing under the ¥82M SPD Credit Facility will be used to repay the amounts outstanding under the ¥200M Credit Facility and for general corporate and capital investment purposes.
     
    On  July 23, 2025, Global used the ¥82M SPD Credit Facility, together with