Applied Optoelectronics (AAOI) 10-Q 10 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 04, 2016
Document And Entity Information
Entity Registrant Name	Applied Optoelectronics, Inc.
Entity Central Index Key	1,158,114
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		17,077,784
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current Assets
Cash and cash equivalents	$ 45,528	$ 28,074
Restricted cash	5,006	4,719
Short-term investments	7,960	7,886
Accounts receivable - trade, net	34,868	38,775
Inventories	60,258	66,238
Prepaid expenses and other current assets	6,859	8,236
Total current assets	160,479	153,928
Property, plant and equipment, net	123,656	109,699
Land use rights, net	852	854
Intangible assets, net	3,959	3,900
Other assets, net	6,915	5,094
TOTAL ASSETS	295,861	273,475
Current liabilities
Current portion of notes payable and long-term debt	40,972	30,908
Accounts payable	25,113	28,668
Bank acceptance payable	2,411	2,998
Accrued liabilities	9,308	11,506
Total current liabilities	77,804	74,080
Notes payable and long-term debt, less current portion	52,178	33,997
TOTAL LIABILITIES	129,982	108,077
Stockholders' equity:
Preferred Stock: 5,000 shares authorized; no shares issued and outstanding at March 31, 2016 and December 31, 2015, $0.001 par value	0	0
Common Stock: 45,000 shares authorized; 17,070 and 16,839 shares issued and outstanding at March 31, 2016 and at December 31, 2015, $0.001 par value	17	17
Additional paid-in capital	234,229	233,336
Accumulated other comprehensive gain	1,210	292
Accumulated deficit	(69,577)	(68,247)
TOTAL STOCKHOLDERS' EQUITY	165,879	165,398
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 295,861	$ 273,475

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Preferred Stock par value	$ .001	$ .001
Preferred Stock shares authorized	5,000,000	5,000,000
Preferred Stock shares issued	0	0
Preferred Stock shares outstanding	0	0
Common stock par value	$ .001	$ 0.001
Common stock shares authorized	45,000,000	45,000,000
Common stock shares issued	17,070,000	16,839,000
Common stock shares outstanding	17,070,000	16,839,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Statement [Abstract]
Revenue, net	$ 50,422	$ 30,234
Cost of goods sold	36,169	20,183
Gross profit	14,253	10,051
Operating expenses
Research and development	8,396	4,805
Sales and marketing	1,680	1,559
General and administrative	5,733	5,003
Total operating expenses	15,809	11,367
Loss from operations	(1,556)	(1,316)
Other income (expense)
Interest income	101	74
Interest expense	(401)	(125)
Other income, net	334	692
Total other income	34	641
Loss before income taxes	(1,522)	(675)
Income tax benefit	192	0
Net loss	$ (1,330)	$ (675)
Net loss per share
Basic	$ (.08)	$ (.05)
Diluted	$ (.08)	$ (.05)
Weighted average shares used to compute net income per share
Basic	16,930,261	14,844,211
Diluted	16,930,261	14,844,211

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (1,330)	$ (675)
(Loss) gain on foreign currency translation adjustment, net of tax	918	(23)
Comprehensive loss	$ (412)	$ (698)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - 3 months ended Mar. 31, 2016 - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Gain	Accumulated Deficit	Total
Beginning balance, shares at Dec. 31, 2015	16,839
Beginning balance, value at Dec. 31, 2015	$ 17	$ 233,336	$ 292	$ (68,247)	$ 165,398
Stock options exercised, shares	15
Stock options exercised, value		85			85
Issuance of shares under equity plans, shares	216
Stock based compensation		808			808
Net loss				(1,330)	(1,330)
Foreign currency translation adjustment			918		918
Ending balance, shares at Mar. 31, 2016	17,070
Ending balance, value at Mar. 31, 2016	$ 17	$ 234,229	$ 1,210	$ (69,577)	$ 165,879

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating activities:
Net loss	$ (1,330)	$ (675)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Provision for obsolete inventory	407	565
Depreciation and amortization	2,957	2,034
Loss on disposal of assets	4	10
Share-based compensation expense	808	516
Unrealized foreign exchange gain (loss)	314	(35)
Changes in operating assets and liabilities:
Accounts receivable	3,945	1,643
Bank acceptance receivable	0	326
Inventory	6,210	(10,141)
Other current assets	1,415	(1,764)
Accounts payable	(3,584)	(5,742)
Accrued liabilities	(2,238)	(570)
Net cash provided by (used in) operating activities	8,908	(13,833)
Investing activities:
Purchase of short-term investments	(35)	(31)
Change in restricted cash for construction in progress	0	(8,993)
Purchase of property, plant and equipment	(16,215)	(6,333)
Proceeds from disposal of equipment	456	0
Deposits and deferred charges	(1,706)	(956)
Purchase of intangible assets	(168)	(94)
Net cash used in investing activities	(17,668)	(16,407)
Financing activities:
Proceeds from issuance notes payable and long-term debt	20,311	0
Principal payments of long-term debt and notes payable	(867)	(94)
Proceeds from line of credit borrowings	31,149	25,091
Repayments of line of credit borrowings	(23,114)	(16,253)
Proceeds from bank acceptance payable	1,411	1,267
Repayments of bank acceptance payable	(2,007)	(1,086)
Repayments of notes payable	(250)	(250)
Increase in restricted cash	(240)	(537)
Exercise of stock options	85	77
Net cash provided by financing activities	26,478	8,215
Effect of exchange rate changes on cash	(264)	(241)
Net increase (decrease) in cash	17,454	(22,266)
Cash and cash equivalents at beginning of period	28,074	32,175
Cash and cash equivalents at end of period	45,528	9,909
Cash paid for:
Interest, net of capitalized amounts	386	103
Income taxes	$ 0	$ 75

1. Description of Business

1. Description of Business	3 Months Ended
	Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Business Overview Applied Optoelectronics, Inc., or AOI, was originally incorporated in Texas in February of 1997 and then converted to a Delaware corporation in March of 2013. AOI together with its wholly-owned subsidiaries are collectively referred to as the Company. The Company is a leading, vertically integrated provider of fiber-optic networking products, primarily for three networking end-markets: internet data centers, cable television, and fiber-to-the-home. The Company designs and manufactures a wide range of optical communications products at varying levels of integration, from components, subassemblies and modules to complete turn-key equipment. The Company has manufacturing and research and development facilities, located in the U.S., Taiwan and China. At its corporate headquarters and manufacturing facilities in Sugar Land, Texas, the Company primarily manufactures lasers and laser components and performs research and development activities for laser component products. The Company operates a division in Taipei, Taiwan that primarily manufactures transceivers for both the data center and fiber-to-the-home (“FTTH”) markets and performs research and development activities for the transceiver products. The Company operates in Ningbo, China through its wholly-owned subsidiary Prime World International Holdings, Ltd. (incorporated in the British Virgin Islands). Prime World International Holdings, Ltd. is the sole parent of Global Technology, Inc. (incorporated in the People’s Republic of China). Through Global Technology Inc., the Company primarily manufactures Cable TV Broadband (“CATV”) systems and equipment and performs research and development activities for the CATV products. Interim Financial Statements The condensed consolidated financial statements of the Company as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and March 31, 2015, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information and with the instructions on Form 10-Q and Rule 10-01 of Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In accordance with those rules and regulations, the Company has omitted certain information and notes required by GAAP for annual consolidated financial statements. In the opinion of management, the condensed consolidated financial statements contain all adjustments, except as otherwise noted, necessary for the fair presentation of the Company’s financial position and results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements. These condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2015. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results expected for the entire fiscal year. All significant intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates in the consolidated financial statements and accompanying notes. Significant estimates and assumptions that impact these financial statements and the accompanying notes relate to, among other things, allowance for doubtful accounts, valuation allowances for deferred tax assets, inventory reserve, share-based compensation expense, estimated useful lives of property and equipment, and taxes.

2. Significant Accounting Polic

2. Significant Accounting Policies	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Significant Accounting Policies	There have been no changes in the Company’s significant accounting policies for the three months ended March 31, 2016, as compared to the significant accounting policies described in its 2015 Annual Report. Recent accounting pronouncements In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, On February 25, 2016, the FASB released Accounting Standards Update (ASU) No. 2016-02, Leases to complete its project to overhaul lease accounting. The ASU codifies ASC 842, Leases, which will replace the guidance in ASC 840. The new guidance will require lessees to recognize most leases on the balance sheet for capital and operating leases. The new guidance is effective for public business entities in fiscal years beginning after December 15, 2018. The FASB has issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes , The FASB has issued ASU No. 2015-11, Inventory in July 2015 to require entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The Company early adopted this ASU which had no material impact on the financial statements. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).

3. Fair Value of Financial Inst

3. Fair Value of Financial Instruments	3 Months Ended
	Mar. 31, 2016
Fair Value Disclosures [Abstract]
Fair Value of Financial Instruments	The following table presents a summary of the Company’s financial instruments measured at fair value on a recurring basis for the periods indicated (in thousands): As of March 31, 2016 As of December 31, 2015 (Level 1) (Level 2) (Level 3) Total (Level 1) (Level 2) (Level 3) Total Assets: Cash and cash equivalents $ 45,528 $ – $ – $ 45,528 $ 28,074 $ – $ – $ 28,074 Restricted cash 5,006 – – 5,006 4,719 – – 4,719 Short term investments 7,960 – – 7,960 7,886 – – 7,886 Total assets $ 58,494 $ – $ – $ 58,494 $ 40,679 $ – $ – $ 40,679 Liabilities: Bank acceptance payable – 2,411 – 2,411 – 2,998 – 2,998 Total liabilities $ – $ 2,411 $ – $ 2,411 $ – $ 2,998 $ – $ 2,998 The carrying value amounts of accounts receivable, prepaid expenses and other current assets, borrowings from our credit facility, accounts payable, accrued expenses and other current liabilities approximate fair value because of the short-term maturity of these instruments.

4. Earnings Per Share

4. Earnings Per Share	3 Months Ended
	Mar. 31, 2016
Net loss per share
Earnings Per Share	Basic net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share has been computed using the weighted-average number of shares of common stock and dilutive potential common shares from stock options, restricted stock units/awards and warrants outstanding during the period. The following table sets forth the computation of the basic and diluted net income (loss) per share for the periods indicated (in thousands, except per share amounts): Three months ended March 31, 2016 2015 Numerator: Net loss $ (1,330 ) $ (675 ) Denominator: Weighted average shares used to compute net loss per share Basic 16,930 14,844 Effective of dilutive securities – – Diluted 16,930 14,844 Net loss per share Basic $ (0.08 ) $ (0.05 ) Diluted $ (0.08 ) $ (0.05 ) The following potentially dilutive securities were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive (in thousands): Three months ended March 31, 2016 2015 Employee stock options 782 412 Restricted stock units/awards 57 4 839 416

5. Inventories

5. Inventories	3 Months Ended
	Mar. 31, 2016
Inventory Disclosure [Abstract]
Inventories	Inventories consist of the following for the periods indicated (in thousands): March 31, 2016 December 31, 2015 Raw materials $ 19,332 $ 22,240 Work in process and sub-assemblies 31,780 30,766 Finished goods 9,146 13,232 $ 60,258 $ 66,238 The lower of cost or market adjustment expensed for inventory for the three months ended March 31, 2016 and 2015 was $0.4 million and $0.6 million, respectively.

6. Property, Plant and Equipmen

6. Property, Plant and Equipment	3 Months Ended
	Mar. 31, 2016
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment	Property, plant and equipment consisted of the following for the periods indicated (in thousands): March 31, 2016 December 31, 2015 Land improvements $ 863 $ 863 Building and improvements 27,802 27,255 Machinery and equipment 97,167 88,882 Furniture and fixtures 2,485 2,422 Computer equipment and software 6,088 5,615 Transportation equipment 287 294 134,692 125,331 Less accumulated depreciation and amortization (40,972 ) (37,970 ) 93,720 87,361 Construction in progress 28,835 21,237 Land 1,101 1,101 Property, plant and equipment, net $ 123,656 $ 109,699 For the three months ended March 31, 2016 and 2015, depreciation expense of property, plant and equipment was $2.8 million and $1.9 million, respectively. Among them, $1.9 million and $1.1 million were recorded as cost of sales for the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016 and December 31, 2015, there was $0.2 million and $0.1 million of capitalized interest recorded in construction in progress, respectively.

7. Intangible Assets

7. Intangible Assets	3 Months Ended
	Mar. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	Intangible assets consisted of the following for the periods indicated (in thousands): March 31, 2016 Gross Amount Accumulated amortization Intangible assets, net Patents $ 5,614 $ (1,659 ) $ 3,955 Trademarks 14 (10 ) 4 Total intangible assets $ 5,628 $ (1,669 ) $ 3,959 December 31, 2015 Gross Amount Accumulated amortization Intangible assets, net Patents $ 5,446 $ (1,551 ) $ 3,895 Trademarks 14 (9 ) 5 Total intangible assets $ 5,460 $ (1,560 ) $ 3,900 For the three months ended March 31, 2016 and 2015, amortization expense for intangible assets, included in general and administrative expenses on the income statement, was $110,000 and $100,000, respectively. The remaining weighted average amortization period for intangible assets is approximately 9 years.

8. Notes Payable and Long-Term

8. Notes Payable and Long-Term Debt	3 Months Ended
	Mar. 31, 2016
Debt Disclosure [Abstract]
Notes Payable and Long-Term Debt	Notes payable and long-term debt consisted of the following for the periods indicated (in thousands): March 31, 2016 December 31, 2015 Revolving line of credit with a U.S. bank up to $25,000 with interest at LIBOR plus 2.75% or 3%, maturing June 30, 2018 $ 25,000 $ 23,000 Term loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2.75%, maturing July 31, 2019 3,774 4,150 Term loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2.75%, maturing June 30, 2020 8,600 2,000 Construction loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2.75%, maturing January 26, 2022 14,679 8,588 Revolving line of credit with a Taiwan bank up to $10,333 with interest based on the bank's corporate interest rate index+ 1.5%, or 2.40% maturing on November 30, 2016 6,118 2,588 Revolving line of credit with a Taiwan bank up to $6,600 with interest at Taiwan deposit index plus 0.41% or LIBOR plus 1.7% maturing on February 6, 2017 4,160 4,475 Revolving line of credit with a Taiwan bank up to $5,000 with interest at Taiwan Time Deposit Interest Rate Index plus 1% or LIBOR plus 1% maturing on November 27, 2016 4,622 3,407 Revolving line of credit with the Taiwan branch of a China bank up to $10,000 with interest at LIBOR plus 1.7% or Taiwan Interbank Offered Rate plus 0.9% , maturing March 15, 2017 9,590 9,418 Note payable to a finance company due in monthly installments with 4.5% interest, maturing May 27, 2018 2,690 2,946 Note payable to a finance company due in monthly installments with 4.5% interest, maturing June 30, 2018 1,746 1,905 Note payable to a finance company due in monthly installments with 4% interest, maturing March 31, 2019 7,759 – Revolving line of credit with a China bank up to $4,734 with interest of 3.15% for 3-month term which mature between April 2016 to June 2016 4,412 2,428 Total 93,150 64,905 Less current portion (40,972 ) (30,908 ) Non-current portion $ 52,178 $ 33,997 Bank Acceptance Notes Payable Bank acceptance notes issued to vendors with a zero percent interest rate, a 30% guarantee deposit of $723, and maturity dates ranging from April 2016 to September 2016 2,411 2,998 The current portion of long-term debt is the amount payable within one year of the balance sheet date of March 31, 2016. The one-month LIBOR rate was 0.4385% on March 31, 2016. Maturities of long-term debt are as follows for the future one-year periods ending March 31 (in thousands): 2017 $ 40,972 2018 8,137 2019 27,530 2020 4,409 2021 thereafter 12,102 Total outstanding $ 93,150 On June 30, 2015, the Company entered into a credit agreement with East West Bank and Comerica Bank, a second lien deed of trust, multiple security agreements and promissory notes evidencing two credit facilities and a term loan. The credit agreement included a $25.0 million revolving line of credit which matures on June 30, 2018 and a $10.0 million term loan maturing on June 30, 2020. The interest rate on these loans is the LIBOR Borrowing Rate plus 2.75% or 3.0%. As of March 31, 2016, $25.0 million was outstanding under the revolving line of credit. As of March 31, 2016, $8.6 million was outstanding under the term loans. The Company also has with East West Bank a term loan of $5.0 million with monthly payments of principal and interest that matures on July 31, 2019. As of March 31, 2016, the outstanding balance was $3.8 million. On January 26, 2015, the Company entered into a construction loan agreement with East West Bank for up to $22.0 million dollars to finance the construction of its campus expansion plan in Sugar Land, Texas. Upon signing the agreement, the Company deposited $11.0 million into a restricted bank account for owner’s contribution of construction costs. The loan will have a fifteen month draw down period with monthly interest payments commencing on February 26, 2015 and ending April 26, 2016. Thereafter, the entire outstanding principal balance shall be converted to a sixty-nine month term loan with principal and interest payments due monthly amortized over three hundred months. The first principal and interest payment is due on May 26, 2016 and will continue the same day of each month thereafter. The final principal and interest payment is due on January 26, 2022 and will include all unpaid principal and all accrued and unpaid interest. The Company may pay without penalty all or a portion of the amount owed earlier than due. Under the loan agreement, the loan bears interest, at an annual rate based on the one-month LIBOR Borrowing Rate plus 2.75%. As of March 31, 2016, there was $14.7 million outstanding under this loan agreement and there was zero balance in the restricted bank account. The loan and security agreements with East West Bank and Comerica Bank require the Company to maintain certain financial covenants, including a minimum current ratio, maximum leverage ratio and minimum annual EBITDA. As of March 31, 2016, the Company was in compliance with all covenants contained in these agreements. On February 19, 2016, the Company’s Taiwan branch renewed and increased its credit facility originally dated January 6, 2015 with CTBC Bank Co. Ltd. in Taipei, Taiwan for 320 million New Taiwan dollars, or approximately $10.3 million, one year revolving credit facility. The obligations under the credit facility are unsecured up to $6.3 million; the remaining $4.0 million is secured by our certificate of deposit with the bank. Borrowings under the credit facility bear interest at a rate based on the bank’s corporate interest rate index plus 1.5% for the unsecured portion of the credit facility and bank’s corporate interest rate index plus 0.93% for the secured portion of the credit facility, adjusted monthly. As of the execution of the credit facility the bank’s corporate interest rate index is 0.91%. As of March 31, 2016, $6.1 million was outstanding under this credit facility. On April 8, 2016, the Company renewed its 90 million New Taiwan dollars and 120 million New Taiwan dollars, one year revolving credit facilities, originally dated March 9, 2015, with E. Sun Commercial Bank Co., Ltd. in Taipei, Taiwan. Borrowings under the 90 million New Taiwan dollars credit facility will bear interest at a rate equal to the London Interbank Offered Rate (LIBOR) plus 1.7% divided by 0.946. The Company’s obligations under the 90 million New Taiwan dollars credit facility are secured by the Company’s certificates of deposit with the bank. Borrowings under the 120 million New Taiwan dollars credit facility will bear interest at a rate equal to the bank’s personal monthly time deposit interest rate plus 0.480%. The bank’s personal monthly time deposit interest rate is currently 1.22%. As of March 31, 2016, $4.2 million was outstanding under this credit facility. On December 22, 2015, the Company’s Taiwan branch renewed its $4.0 million credit facility, originally dated December 20, 2013, and entered into a $2.0 million, one year revolving credit facility agreement with Mega International Commercial Bank (“Mega Bank”). Obligations under the credit facilities are secured by certificate of deposit with Mega Bank. Borrowings under the $4.0 million credit facility bear interest at a rate not less than the LIBOR borrowing rate plus 1.0%, divided by 0.946 for U.S. and other currency borrowings; New Taiwan dollars borrowings bear interest at a rate equal to the bank’s base lending rate plus 0.76%. Borrowings under the $2.0 million credit facility bear interest at a rate not less than the LIBOR borrowing rate plus 1.2%, divided by 0.946 for U.S. dollar borrowings; New Taiwan dollars borrowings bear interest at a rate equal to the bank’s base lending rate plus 0.76% but shall not be less than 1.90%; and other currency borrowings shall bear interest at a rate at the bank’s based lending rate plus 1.0%, divided by 0.946. As of March 31, 2016, $4.6 million was outstanding under this credit facility. On April 22, 2016, the Company’s Taiwan branch entered into a comprehensive credit line agreement originally dated April 1, 2015, with the Taipei branch of China Construction Bank, providing a revolving credit line of $10 million, maturing on March 15, 2017. Borrowings under the credit line agreement are secured by a standby letter of credit issued by the China branch of the bank under existing agreements between the bank and our China subsidiary. Borrowings under the credit line agreement reduce the amounts available under the existing credit line between the bank and the Company’s China subsidiary and cannot exceed 97% of the amount of the standby letter of credit issued by the China branch of the bank. Borrowings under the credit line agreement bear interest at a rate negotiated separately for each drawing depending on the nature of the borrowings. As of March 31, 2016, $9.6 million was outstanding under this credit facility. On June 30, 2015, the Company’s Taiwan branch entered into a purchase and sale contract and a finance lease agreement together with the sale contract with Chailease Finance Co, Ltd. (“Chailease”) in connection with certain equipment, structured as a sale lease-back transaction. Pursuant to the sale contract, the Company sold certain equipment to Chailease for a purchase price of 115,240,903 New Taiwan dollars and simultaneously leased the equipment back from Chailease pursuant to the finance lease agreement. The monthly lease payments range from 2,088,804 New Taiwan dollar to 2,364,650 New Taiwan dollars during the term of the finance lease agreement, including an initial payment in an amount of 40,240,903 New Taiwan dollars. The finance lease agreement has a three year term, with monthly lease payments, maturing on May 27 and June 30, 2018 respectively. The title to the equipment will be transferred to the Company upon the expiration of the finance lease agreement. As of March 31, 2016, $4.4 million was outstanding under this finance lease agreement. On March 31, 2016, the Company’s Taiwan branch entered into a purchase and sale contract and a finance lease agreement together with the sale contract with Chailease in connection with certain equipment, structured as a sale lease-back transaction. Pursuant to the sale contract, the Company sold certain equipment to Chailease for a purchase price of 312,927,180 New Taiwan dollars and simultaneously leased the equipment back from Chailease pursuant to the finance lease agreement. The finance lease agreement has a three year term with monthly lease payments range from 6,772,500 New Taiwan dollar to 7,788,333 New Taiwan dollars during the term of the finance lease agreement, including an initial payment in an amount of 62,927,180 New Taiwan dollars. Based on the lease payments made under the finance lease agreement, the annual interest rate is calculated to be 4.0%. The title to the equipment will be transferred to the Company upon the expiration of the finance lease agreement. As of March 31, 2016, $7.8 million was outstanding under this finance lease agreement. As of March 31, 2016, the Company’s China subsidiary had credit facilities with China Construction Bank totaling $4.7 million, which can be drawn in U.S. currency, RMB currency, issuing bank acceptance notes to vendors with different interest rates or issuing standby letters of credit. As of March 31, 2016, the Company’s China subsidiary used $10.0 million of its credit facility and issued standby letters of credit as collateral for the Company’s Taiwan branch line of credit with China Construction Bank. As of March 31, 2016, the Company had a U.S. currency based loan of $4.4 million outstanding under various notes with three-month terms, maturing from April to June 2016 with effective interest rate of 3.15%. The outstanding balances of bank acceptance notes issued to vendors were $2.4 million with zero interest rate as of March 31, 2016. As of March 31, 2016, the Company had $15.7 million of unused borrowing capacity. As of March 31, 2016, there was $11.4 million of restricted cash, investments or security deposit associated mainly with the loan facilities.

9. Accrued Liabilites

9. Accrued Liabilites	3 Months Ended
	Mar. 31, 2016
Payables and Accruals [Abstract]
Accrued Liabilites	Accrued liabilities consisted of the following for the periods indicated (in thousands): March 31, 2016 December 31, 2015 Accrued payroll $ 4,245 $ 6,757 Accrued rent 842 792 Accrued employee benefits 772 1,379 Accrued state and local taxes 219 372 Advance payments 1,735 1,258 Accrued product warranty 484 412 Accrued other 1,011 536 $ 9,308 $ 11,506

10. Other Income and Expense

10. Other Income and Expense	3 Months Ended
	Mar. 31, 2016
Other income (expense)
Other Income and Expense	Other income and (expense) consisted of the following for the periods indicated (in thousands): Three months ended March 31, 2016 2015 Unrealized foreign exchange gain $ 410 $ 43 Realized foreign exchange gain (loss) (78 ) 319 Government subsidy income – 199 Other non-operating gain 6 141 Loss on disposal of assets (4 ) (10 ) $ 334 $ 692

11. Share-Based Compensation

11. Share-Based Compensation	3 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-Based Compensation	Equity Plans The Company’s board of directors and stockholders approved the following equity plans: · the 1998 Share Incentive Plan · the 2000 Share Incentive Plan · the 2004 Share Incentive Plan · the 2006 Share Incentive Plan · the 2013 Equity Incentive Plan (“2013 Plan”) The Company issued stock options, restricted stock awards (“RSAs”) and restricted units (“RSUs”) to employees, consultants and non-employee directors. Stock option awards generally vest over a four year period and have a maximum term of ten years. Stock options under these plans have been granted with an exercise price equal to the fair market value on the date of the grant. Nonqualified and Incentive Stock Options, RSAs and RSUs may be granted from these plans. Prior to the Company’s initial public offering, the fair market value of the Company’s stock had been historically determined by the board of directors and from time to time with the assistance of third party valuation specialists. Stock Options Options have been granted to the Company’s employees under the five incentive plans and generally become exercisable as to 25% of the shares on the first anniversary date following the date of grant and 12.5% on a semi-annual basis thereafter. All options expire ten years after the date of grant. The following is a summary of option activity (in thousands, except per share data): Number of shares Weighted Average Exercise Price Weighted Average Share Price on Date of Exercise Weighted Average Fair Value Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding, January 1, 2016 1,310 9.07 4.59 – 10,598 Exercised (15 ) 6.37 $ 17.84 1.90 – 165 Forfeited (1 ) 8.54 5.07 – 19 Outstanding, March 31, 2016 1,294 $ 9.10 $ 4.62 6.958 $ 7,515 Exercisable, March 31, 2016 891 $ 8.75 $ 4.32 6.768 $ 5,490 Vested and expected to vest 1,267 $ 9.08 $ 4.60 6.947 $ 7,389 As of March 31, 2016, there was approximately $1.8 million of unrecognized stock option expense, net of estimated forfeitures, which is expected to be recognized over 1.43 years. Restricted Stock Units/Awards The following is a summary of RSU/RSA activity (in thousands, except per share data): Number of shares Weighted Average Share Price on Date of Release Weighted Average Fair Value Aggregate Intrinsic Value Outstanding at January 1, 2016 152 11.20 2,611 Granted 451 16.15 7,287 Released (29 ) $ 16.37 8.97 486 Cancelled/Forfeited (4 ) 15.39 71 Outstanding at March 31, 2016 570 $ 15.21 $ 8,492 Exercisable, March 31, 2016 14 $ 19.45 $ 211 Vested and expected to vest 545 $ 15.20 $ 8,127 As of March 31, 2016, there was $7.6 million of unrecognized compensation expense related to these RSUs and RSAs. This expense is expected to be recognized over 3.72 years. Share-Based Compensation Employee share-based compensation expenses recognized for the periods indicated (in thousands): Three months ended March 31, 2016 2015 Share-Based compensation - by expense type Cost of sales $ 37 $ 16 Research and development 118 53 Sales and marketing 73 50 General and administrative 580 397 $ 808 $ 516 Three months ended March 31, 2016 2015 Share-Based compensation - by award type Employee stock options $ 378 $ 385 Restricted stock units/awards 430 131 $ 808 $ 516

12. Stockholders' Equity

12. Stockholders' Equity	3 Months Ended
	Mar. 31, 2016
Equity [Abstract]
Stockholders' Equity	Common Stock The Company has authorized the issuance of up to 45,000,000 shares of common stock, all of which have been designated voting common stock, under its Amended and Restated Certificate of Incorporation. Convertible Preferred Stock The Company has authorized the issuance of up to 5,000,000 shares of preferred stock under the Company’s Amended and Restated Certificate of Incorporation. Public Offerings of Common Stock On June 3, 2015, the Company filed a Securities Registration Statement on Form S-3 (the “Form S-3”) with the Securities and Exchange Commission effective June 23, 2015, providing for the public offer and sale of certain securities of the Company from time to time, at its discretion, up to an aggregate amount of $140 million. In connection with the Company’s Form S-3, the Company entered into an Equity Distribution Agreement with Raymond James & Associates, Inc. (the “sales agent”) pursuant to which the Company may issue and sell shares of the Company’s stock having an aggregate offering price of up to $40 million (the “ATM Offering”) from time to time through the sales agent. On July 16, 2015, the Company commenced sales of common stock through the ATM Offering, and as of March 31, 2016, the Company has sold 1.9 million shares under the ATM Offering at a weighted average price of $21.54 per share, providing proceeds of $38.6 million, net of expenses and underwriting discounts and commissions.

13. Geographic Information

13. Geographic Information	3 Months Ended
	Mar. 31, 2016
Segment Reporting [Abstract]
Geographic Information	The Company operates in one reportable segment. The Company’s Chief Executive Officer, who is considered to be the chief operating decision maker, manages the Company’s operations as a whole and reviews financial information presented on a consolidated basis, accompanied by information about product revenue, for purposes of evaluating financial performance and allocating resources. The following tables set forth the Company’s revenue and asset information by geographic region. Revenue is classified based on the location of where the product is manufactured. Long-lived assets in the tables below comprise only property, plant, equipment and intangible assets (in thousands): Three months ended March 31, 2016 2015 Revenues: United States $ 23,239 $ 7,294 Taiwan 23,818 18,341 China 3,365 4,599 $ 50,422 $ 30,234 As of the period ended March 31, December 31, 2016 2015 Long-lived assets: United States $ 52,297 $ 44,280 Taiwan 48,447 45,420 China 27,723 24,753 $ 128,467 $ 114,453

14. Subsequent Events

14. Subsequent Events	3 Months Ended
	Mar. 31, 2016
Subsequent Events [Abstract]
Subsequent Events	On April 8, 2016, the Company renewed its 90 million New Taiwan dollars and 120 million New Taiwan dollars, one year revolving credit facilities, originally dated March 9, 2015, with E. Sun Commercial Bank Co., Ltd. in Taipei, Taiwan. Borrowings under the 90 million New Taiwan dollars credit facility will bear interest at a rate equal to the London Interbank Offered Rate (LIBOR) plus 1.7% divided by 0.946. The Company’s obligations under the 90 million New Taiwan dollars credit facility are secured by the Company’s certificates of deposit with the bank. Borrowings under the 120 million New Taiwan dollars credit facility will bear interest at a rate equal to the bank’s personal monthly time deposit interest rate plus 0.480%. The bank’s personal monthly time deposit interest rate is currently 1.22%. On April 22, 2016, the Company’s Taiwan branch entered into a comprehensive credit line agreement originally dated April 1, 2015, with the Taipei branch of China Construction Bank, providing a revolving credit line of $10 million, maturing on March 15, 2017. Borrowings under the credit line agreement are secured by a standby letter of credit issued by the China branch of the bank under existing agreements between the bank and its China subsidiary. Borrowings under the credit line agreement reduce the amounts available under the existing credit line between the bank and the Company’s China subsidiary and cannot exceed 97% of the amount of the standby letter of credit issued by the China branch of the bank. Borrowings under the credit line agreement bear interest at a rate negotiated separately for each drawing depending on the nature of the borrowings.

1. Description of Business (Pol

1. Description of Business (Policies)	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Business Overview	Business Overview Applied Optoelectronics, Inc., or AOI, was originally incorporated in Texas in February of 1997 and then converted to a Delaware corporation in March of 2013. AOI together with its wholly-owned subsidiaries are collectively referred to as the Company. The Company is a leading, vertically integrated provider of fiber-optic networking products, primarily for three networking end-markets: internet data centers, cable television, and fiber-to-the-home. The Company designs and manufactures a wide range of optical communications products at varying levels of integration, from components, subassemblies and modules to complete turn-key equipment. The Company has manufacturing and research and development facilities, located in the U.S., Taiwan and China. At its corporate headquarters and manufacturing facilities in Sugar Land, Texas, the Company primarily manufactures lasers and laser components and performs research and development activities for laser component products. The Company operates a division in Taipei, Taiwan that primarily manufactures transceivers for both the data center and fiber-to-the-home (“FTTH”) markets and performs research and development activities for the transceiver products. The Company operates in Ningbo, China through its wholly-owned subsidiary Prime World International Holdings, Ltd. (incorporated in the British Virgin Islands). Prime World International Holdings, Ltd. is the sole parent of Global Technology, Inc. (incorporated in the People’s Republic of China). Through Global Technology Inc., the Company primarily manufactures Cable TV Broadband (“CATV”) systems and equipment and performs research and development activities for the CATV products.
Interim Financial Statements	Interim Financial Statements The condensed consolidated financial statements of the Company as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and March 31, 2015, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information and with the instructions on Form 10-Q and Rule 10-01 of Regulation S-X pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In accordance with those rules and regulations, the Company has omitted certain information and notes required by GAAP for annual consolidated financial statements. In the opinion of management, the condensed consolidated financial statements contain all adjustments, except as otherwise noted, necessary for the fair presentation of the Company’s financial position and results of operations for the periods presented. The year-end condensed balance sheet data was derived from audited financial statements. These condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2015. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results expected for the entire fiscal year. All significant intercompany accounts and transactions have been eliminated.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates in the consolidated financial statements and accompanying notes. Significant estimates and assumptions that impact these financial statements and the accompanying notes relate to, among other things, allowance for doubtful accounts, valuation allowances for deferred tax assets, inventory reserve, share-based compensation expense, estimated useful lives of property and equipment, and taxes.

2. Significant Accounting Pol23

2. Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Recent accounting pronouncements	Recent accounting pronouncements In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, On February 25, 2016, the FASB released Accounting Standards Update (ASU) No. 2016-02, Leases to complete its project to overhaul lease accounting. The ASU codifies ASC 842, Leases, which will replace the guidance in ASC 840. The new guidance will require lessees to recognize most leases on the balance sheet for capital and operating leases. The new guidance is effective for public business entities in fiscal years beginning after December 15, 2018. The FASB has issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes , The FASB has issued ASU No. 2015-11, Inventory in July 2015 to require entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The Company early adopted this ASU which had no material impact on the financial statements. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).

3. Fair Value of Financial In24

3. Fair Value of Financial Instruments (Tables)	3 Months Ended
	Mar. 31, 2016
Fair Value Disclosures [Abstract]
Schedule of assets and liabilities at fair value	As of March 31, 2016 As of December 31, 2015 (Level 1) (Level 2) (Level 3) Total (Level 1) (Level 2) (Level 3) Total Assets: Cash and cash equivalents $ 45,528 $ – $ – $ 45,528 $ 28,074 $ – $ – $ 28,074 Restricted cash 5,006 – – 5,006 4,719 – – 4,719 Short term investments 7,960 – – 7,960 7,886 – – 7,886 Total assets $ 58,494 $ – $ – $ 58,494 $ 40,679 $ – $ – $ 40,679 Liabilities: Bank acceptance payable – 2,411 – 2,411 – 2,998 – 2,998 Total liabilities $ – $ 2,411 $ – $ 2,411 $ – $ 2,998 $ – $ 2,998

4. Earnings Per Share (Tables)

4. Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2016
Net loss per share
Computation of basic and diluted net loss per share	The following table sets forth the computation of the basic and diluted net income (loss) per share for the periods indicated (in thousands, except per share amounts): Three months ended March 31, 2016 2015 Numerator: Net loss $ (1,330 ) $ (675 ) Denominator: Weighted average shares used to compute net loss per share Basic 16,930 14,844 Effective of dilutive securities – – Diluted 16,930 14,844 Net loss per share Basic $ (0.08 ) $ (0.05 ) Diluted $ (0.08 ) $ (0.05 ) The following potentially dilutive securities were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive (in thousands): Three months ended March 31, 2016 2015 Employee stock options 782 412 Restricted stock units/awards 57 4 839 416

5. Inventories (Tables)

5. Inventories (Tables)	3 Months Ended
	Mar. 31, 2016
Inventory Disclosure [Abstract]
Schedule of inventories	March 31, 2016 December 31, 2015 Raw materials $ 19,332 $ 22,240 Work in process and sub-assemblies 31,780 30,766 Finished goods 9,146 13,232 $ 60,258 $ 66,238

6. Property, Plant and Equipm27

6. Property, Plant and Equipment (Tables)	3 Months Ended
	Mar. 31, 2016
Property, Plant and Equipment [Abstract]
Schedule of property, plant and equipment	March 31, 2016 December 31, 2015 Land improvements $ 863 $ 863 Building and improvements 27,802 27,255 Machinery and equipment 97,167 88,882 Furniture and fixtures 2,485 2,422 Computer equipment and software 6,088 5,615 Transportation equipment 287 294 134,692 125,331 Less accumulated depreciation and amortization (40,972 ) (37,970 ) 93,720 87,361 Construction in progress 28,835 21,237 Land 1,101 1,101 Property, plant and equipment, net $ 123,656 $ 109,699

7. Intangible Assets (Tables)

7. Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	Intangible assets consisted of the following for the periods indicated (in thousands): March 31, 2016 Gross Amount Accumulated amortization Intangible assets, net Patents $ 5,614 $ (1,659 ) $ 3,955 Trademarks 14 (10 ) 4 Total intangible assets $ 5,628 $ (1,669 ) $ 3,959 December 31, 2015 Gross Amount Accumulated amortization Intangible assets, net Patents $ 5,446 $ (1,551 ) $ 3,895 Trademarks 14 (9 ) 5 Total intangible assets $ 5,460 $ (1,560 ) $ 3,900

8. Notes Payable and Long-Ter29

8. Notes Payable and Long-Term Debt (Tables)	3 Months Ended
	Mar. 31, 2016
Debt Disclosure [Abstract]
Schedule of notes payable and long-term debt	March 31, 2016 December 31, 2015 Revolving line of credit with a U.S. bank up to $25,000 with interest at LIBOR plus 2.75% or 3%, maturing June 30, 2018 $ 25,000 $ 23,000 Term loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2.75%, maturing July 31, 2019 3,774 4,150 Term loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2.75%, maturing June 30, 2020 8,600 2,000 Construction loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2.75%, maturing January 26, 2022 14,679 8,588 Revolving line of credit with a Taiwan bank up to $10,333 with interest based on the bank's corporate interest rate index+ 1.5%, or 2.40% maturing on November 30, 2016 6,118 2,588 Revolving line of credit with a Taiwan bank up to $6,600 with interest at Taiwan deposit index plus 0.41% or LIBOR plus 1.7% maturing on February 6, 2017 4,160 4,475 Revolving line of credit with a Taiwan bank up to $5,000 with interest at Taiwan Time Deposit Interest Rate Index plus 1% or LIBOR plus 1% maturing on November 27, 2016 4,622 3,407 Revolving line of credit with the Taiwan branch of a China bank up to $10,000 with interest at LIBOR plus 1.7% or Taiwan Interbank Offered Rate plus 0.9% , maturing March 15, 2017 9,590 9,418 Note payable to a finance company due in monthly installments with 4.5% interest, maturing May 27, 2018 2,690 2,946 Note payable to a finance company due in monthly installments with 4.5% interest, maturing June 30, 2018 1,746 1,905 Note payable to a finance company due in monthly installments with 4% interest, maturing March 31, 2019 7,759 – Revolving line of credit with a China bank up to $4,734 with interest of 3.15% for 3-month term which mature between April 2016 to June 2016 4,412 2,428 Total 93,150 64,905 Less current portion (40,972 ) (30,908 ) Non-current portion $ 52,178 $ 33,997 Bank Acceptance Notes Payable Bank acceptance notes issued to vendors with a zero percent interest rate, a 30% guarantee deposit of $723, and maturity dates ranging from April 2016 to September 2016 2,411 2,998
Maturities of notes payable and long-term debt	2017 $ 40,972 2018 8,137 2019 27,530 2020 4,409 2021 thereafter 12,102 Total outstanding $ 93,150

9. Accrued Liabilites (Tables)

9. Accrued Liabilites (Tables)	3 Months Ended
	Mar. 31, 2016
Payables and Accruals [Abstract]
Schedule of accrued liabilities	March 31, 2016 December 31, 2015 Accrued payroll $ 4,245 $ 6,757 Accrued rent 842 792 Accrued employee benefits 772 1,379 Accrued state and local taxes 219 372 Advance payments 1,735 1,258 Accrued product warranty 484 412 Accrued other 1,011 536 $ 9,308 $ 11,506

10. Other Income and Expense (T

10. Other Income and Expense (Tables)	3 Months Ended
	Mar. 31, 2016
Other income (expense)
Schedule of other income and expense	Three months ended March 31, 2016 2015 Unrealized foreign exchange gain $ 410 $ 43 Realized foreign exchange gain (loss) (78 ) 319 Government subsidy income – 199 Other non-operating gain 6 141 Loss on disposal of assets (4 ) (10 ) $ 334 $ 692

11. Share-Based Compensation (T

11. Share-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of option activity	Number of shares Weighted Average Exercise Price Weighted Average Share Price on Date of Exercise Weighted Average Fair Value Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding, January 1, 2016 1,310 9.07 4.59 – 10,598 Exercised (15 ) 6.37 $ 17.84 1.90 – 165 Forfeited (1 ) 8.54 5.07 – 19 Outstanding, March 31, 2016 1,294 $ 9.10 $ 4.62 6.958 $ 7,515 Exercisable, March 31, 2016 891 $ 8.75 $ 4.32 6.768 $ 5,490 Vested and expected to vest 1,267 $ 9.08 $ 4.60 6.947 $ 7,389
Summary of RSU activity	Number of shares Weighted Average Share Price on Date of Release Weighted Average Fair Value Aggregate Intrinsic Value Outstanding at January 1, 2016 152 11.20 2,611 Granted 451 16.15 7,287 Released (29 ) $ 16.37 8.97 486 Cancelled/Forfeited (4 ) 15.39 71 Outstanding at March 31, 2016 570 $ 15.21 $ 8,492 Exercisable, March 31, 2016 14 $ 19.45 $ 211 Vested and expected to vest 545 $ 15.20 $ 8,127
Schedule of employee stock-based compensation expenses	Three months ended March 31, 2016 2015 Share-Based compensation - by expense type Cost of sales $ 37 $ 16 Research and development 118 53 Sales and marketing 73 50 General and administrative 580 397 $ 808 $ 516 Three months ended March 31, 2016 2015 Share-Based compensation - by award type Employee stock options $ 378 $ 385 Restricted stock units/awards 430 131 $ 808 $ 516

13. Geographic Information (Tab

13. Geographic Information (Tables)	3 Months Ended
	Mar. 31, 2016
Segment Reporting [Abstract]
Revenue and asset information by geographic region	Three months ended March 31, 2016 2015 Revenues: United States $ 23,239 $ 7,294 Taiwan 23,818 18,341 China 3,365 4,599 $ 50,422 $ 30,234 As of the period ended March 31, December 31, 2016 2015 Long-lived assets: United States $ 52,297 $ 44,280 Taiwan 48,447 45,420 China 27,723 24,753 $ 128,467 $ 114,453

3. Fair Value of Financial In34

3. Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Assets:
Restricted cash	$ 5,006	$ 4,719
Liabilities:
Bank acceptance payable	2,411	2,998
Fair Value, Measurements, Recurring [Member]
Assets:
Cash and cash equivalents	45,528	28,074
Restricted cash	5,006	4,719
Short term investments	7,960	7,886
Total assets	58,494	40,679
Liabilities:
Bank acceptance payable	2,411	2,998
Total liabilities	2,411	2,998
Fair Value, Measurements, Recurring [Member] | Level 1 [Member]
Assets:
Cash and cash equivalents	45,528	28,074
Restricted cash	5,006	4,719
Short term investments	7,960	7,886
Total assets	58,494	40,679
Liabilities:
Bank acceptance payable	0	0
Total liabilities	0	0
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Assets:
Cash and cash equivalents	0	0
Restricted cash	0	0
Short term investments	0	0
Total assets	0	0
Liabilities:
Bank acceptance payable	2,411	2,998
Total liabilities	2,411	2,998
Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Assets:
Cash and cash equivalents	0	0
Restricted cash	0	0
Short term investments	0	0
Total assets	0	0
Liabilities:
Bank acceptance payable	0	0
Total liabilities	$ 0	$ 0

4. Earnings Per Share (Details-

4. Earnings Per Share (Details-EPS calculation) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Numerator:
Net income	$ (1,330)	$ (675)
Weighted average shares used to compute net income per share
Basic	16,930,261	14,844,211
Effective of dilutive options and warrants	0	0
Diluted	16,930,261	14,844,211
Net income per share
Basic	$ (.08)	$ (.05)
Diluted	$ (.08)	$ (.05)

4. Earnings Per Share (Details

4. Earnings Per Share (Details - Potentially Dilutive Shares) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Potentially dilutive securities excluded from EPS	839	416
Employee Stock Option [Member]
Potentially dilutive securities excluded from EPS	782	412
Restricted Stock Units/Awards
Potentially dilutive securities excluded from EPS	57	4

5. Inventories (Details)

5. Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 19,332	$ 22,240
Work in process and sub-assemblies	31,780	30,766
Finished goods	9,146	13,232
Inventories	$ 60,258	$ 66,238

5. Inventory (Details Narrative

5. Inventory (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Inventory Disclosure [Abstract]
Lower of cost or market adjustment for inventory	$ 400	$ 600

6. Property, Plant and Equipm39

6. Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Property, plant and equipment, gross	$ 134,692	$ 125,331
Less accumulated depreciation and amortization	(40,972)	(37,970)
Property, plant and equipment	93,720	87,361
Construction in progress	28,835	21,237
Land	1,101	1,101
Property, plant and equipment, net	123,656	109,699
Land improvements [Member]
Property, plant and equipment, gross	863	863
Building and improvements [Member]
Property, plant and equipment, gross	27,802	27,255
Machinery and equipment [Member]
Property, plant and equipment, gross	97,167	88,882
Furniture and fixtures [Member]
Property, plant and equipment, gross	2,485	2,422
Computer rquipment and software [Member]
Property, plant and equipment, gross	6,088	5,615
Transportation equipment [Member]
Property, plant and equipment, gross	$ 287	$ 294

6. Property, Plant and Equipm40

6. Property, Plant and Equipment (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 2,800	$ 1,900
Cost of Sales	1,900	$ 1,100
Capitalized interest on construction in progress	$ 2,000		$ 1,000

7. Intangible Assets (Details)

7. Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Gross Amount	$ 5,628	$ 5,460
Accumulated amortization	(1,669)	(1,560)
Intangible assets, net	3,959	3,900
Patents [Member]
Gross Amount	5,614	5,446
Accumulated amortization	(1,659)	(1,551)
Intangible assets, net	3,955	3,895
Trademarks [Member]
Gross Amount	14	14
Accumulated amortization	(10)	(9)
Intangible assets, net	$ 4	$ 5

7. Intangible Assets (Details N

7. Intangible Assets (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense for intangible assets	$ 110	$ 100
Weighted average amortization period	9 years

8. Notes Payable and Long-Ter43

8. Notes Payable and Long-Term Debt (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Notes payable and long-term debt total	$ 93,150	$ 64,905
Current portion of notes payable and long-term debt	(40,972)	(30,908)
Long term portion of notes payable and long-term debt	52,178	33,997
Bank acceptance notes	2,411	2,998
Term loan 1
Notes payable and long-term debt total	$ 3,774	4,150
Debt maturity date	Jul. 31, 2019
Interest rate	LIBOR plus 2.75%
Term loan 2
Notes payable and long-term debt total	$ 8,600	2,000
Debt maturity date	Jun. 30, 2020
Interest rate	LIBOR plus 2.75%
Note Payable 1
Notes payable and long-term debt total	$ 2,690	2,946
Debt maturity date	May 27, 2018
Interest rate	4.5%
Note payable 2
Notes payable and long-term debt total	$ 1,746	1,905
Debt maturity date	Jun. 30, 2018
Interest rate	4.5%
Note payable 3
Notes payable and long-term debt total	$ 7,759	0
Debt maturity date	Mar. 31, 2019
Interest rate	4%
Construction Loan
Notes payable and long-term debt total	$ 14,679	8,588
Debt maturity date	Jan. 26, 2022
Interest rate	LIBOR plus 2.75%
Revolving Line of Credit | Revolving Line of Credit 1
Notes payable and long-term debt total	$ 25,000	23,000
Debt maturity date	Jun. 30, 2018
Interest rate	LIBOR plus 2.75% or 3%
Revolving Line of Credit | Revolving Line of Credit 2
Notes payable and long-term debt total	$ 6,118	2,588
Debt maturity date	Nov. 30, 2015
Interest rate	Bank's corporate interest rate index+1.5% or 2.40%
Revolving Line of Credit | Revolving Line of Credit 3
Notes payable and long-term debt total	$ 4,160	4,475
Debt maturity date	Feb. 6, 2017
Interest rate	Taiwan deposit index + 0.41% or LIBOR +1.7%
Revolving Line of Credit | Revolving Line of Credit 4
Notes payable and long-term debt total	$ 4,622	3,407
Debt maturity date	Nov. 27, 2016
Interest rate	Taiwan Time Deposit Interest Rate plus 1% or LIBOR plus 1%
Revolving Line of Credit | Revolving Line of Credit 5
Notes payable and long-term debt total	$ 9,590	9,418
Debt maturity date	Mar. 15, 2017
Interest rate	LIBOR +1.7% or Taiwan Interbank Offered Rate plus 0.9%
Revolving Line of Credit | Revolving Line of Credit 6
Notes payable and long-term debt total	$ 4,412	2,428
Debt maturity date	Jun. 30, 2016
Interest rate	3.15%
Bank Acceptance Notes Payable
Bank acceptance notes	$ 2,411	$ 2,998
Debt maturity date	Sep. 30, 2016
Interest rate	0% interest rate, 30% guarantee deposit of $723

8. Notes Payable and Long-Ter44

8. Notes Payable and Long-Term Debt (Details - Debt maturities) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Maturities of notes payable and long-term debt
2,017	$ 40,972
2,018	8,137
2,019	27,530
2,020	4,409
2021 thereafter	12,102
Total outstanding	$ 93,150	$ 64,905

8. Notes Payable and Long-Ter45

8. Notes Payable and Long-Term Debt (Details Narrative) TWD in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)	Mar. 31, 2015	Mar. 31, 2016TWD
Cash restricted for construction in progress	$ 11,400
Unused borrowing capacity	15,700
Chailease Finance Co.
Revolving line of credit amount outstanding	$ 4,400
Revolving line of credit, maturity date	Jun. 30, 2018
Chailease 2 Finance Co.
Revolving line of credit amount outstanding	$ 7,800
Revolving line of credit, maturity date	Mar. 31, 2019
China Construction Taiwan [Member]
Revolving line of credit maximum borrowing capacity	$ 10,000
Revolving line of credit amount outstanding	$ 9,600
Revolving line of credit, maturity date	Apr. 1, 2016
Interest rate on line of credit	LIBOR + 1.5% for US dollar borrowings and not less than Taiwan Interbank Offered Rate plus 0.9% for New Taiwan dollar borrowings.
East West Bank
Revolving line of credit maximum borrowing capacity	$ 25,000
Revolving line of credit amount outstanding	$ 25,000
Revolving line of credit, maturity date	Jun. 30, 2018
Interest rate on line of credit	LIBOR Borrowing Rate plus 2.75% or 3.0%
East West Bank Term Loan
Revolving line of credit maximum borrowing capacity	$ 10,000
Revolving line of credit amount outstanding	$ 8,600
Revolving line of credit, maturity date	Jun. 30, 2020
Interest rate on line of credit	LIBOR Borrowing Rate plus 2.75% or 3.0%
East West Bank Term Loan 2
Revolving line of credit maximum borrowing capacity	$ 5,000
Revolving line of credit amount outstanding	3,800
Revolving line of credit, maturity date		Jul. 31, 2019
East West Bank Construction Loan
Revolving line of credit maximum borrowing capacity	22,000
Revolving line of credit amount outstanding	14,700
Cash restricted for construction in progress	$ 11,000
Revolving line of credit, maturity date	Apr. 26, 2016
Interest rate on line of credit	LIBOR Borrowing Rate plus 2.75%
CTBC Bank Taipei
Revolving line of credit maximum borrowing capacity	$ 10,300
Revolving line of credit amount outstanding	$ 6,100
Interest rate on line of credit	Bank's corporate interest rate plus 1.5% for unsecured facility and plus 0.93% for secured facility, adjusted monthly, as of execution bank corporate interest rate is 0.91%
CTBC Bank Taipei | Taiwan, New Dollars
Revolving line of credit maximum borrowing capacity | TWD			TWD 320,000
E. Sun Commercial Bank
Revolving line of credit maximum borrowing capacity	$ 7,000
Revolving line of credit amount outstanding	$ 4,200
Revolving line of credit, maturity date	May 27, 2016
Interest rate on line of credit	The $4.0 million revolving line of credit with CD security bears interest at a rate equal to Taiwan Deposit Index Rate plus 0.41% for New Taiwan dollar borrowings and a 0.1% service fee for U.S. dollar borrowings. The additional $3.0 million credit facility bears interest at a rate equal to LIBOR plus 1.7% divided by 0.946 and a 0.3% service fee for U.S. dollar borrowings.
Mega International Commercial Bank
Revolving line of credit maximum borrowing capacity	$ 6,000
Revolving line of credit amount outstanding	$ 4,600
Interest rate on line of credit	Interest at a rate not less than LIBOR plus 1.0 divided by 0.946 for US dollar borrowings and for New Taiwan dollar borrowings interest will bear at a rate of equal to the Bank's base lending rate plus 0.76%. The current effective rate is 1.77%.
China Construction Bank
Revolving line of credit maximum borrowing capacity	$ 4,700
Revolving line of credit amount outstanding	$ 2,400
Revolving line of credit, maturity date	Jun. 30, 2016
Interest rate on line of credit	3.15%
London Interbank Offered Rate (LIBOR) [Member]
LIBOR rate	One-month LIBOR rate was 0.4385% on March 31, 2016

9. Accrued Liabilities (Details

9. Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Accrued Liabilities Details
Accrued payroll	$ 4,245	$ 6,757
Accrued rent	842	792
Accrued employee benefits	772	1,379
Accrued state and local taxes	219	372
Advance payments	1,735	1,258
Accrued product warranty	484	412
Accrued other	1,011	536
Total accrued liabilities	$ 9,308	$ 11,506

10. Other Income and Expense (D

10. Other Income and Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Other Income And Expense Details
Unrealized foreign exchange gain	$ 410	$ 43
Realized foreign exchange gain (loss)	(78)	319
Government subsidy income	0	199
Other non-operating gain	6	141
Loss on disposal of assets	(4)	(10)
Total other income and expense	$ 334	$ 692

11. Share-Based Compensation (D

11. Share-Based Compensation (Details-Option activity) - Employee Stock Option [Member] $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)$ / sharesshares
Number of Shares
Outstanding, beginning balance | shares	1,310
Exercised | shares	(15)
Forfeited | shares	(1)
Outstanding, ending balance | shares	1,294
Exericsable, ending balance | shares	891
Vested and expected to vest | shares	1,267
Weighted Average Exercise Price
Outstanding, beginning balance	$ 9.07
Exercised	6.37
Forfeited	8.54
Outstanding, ending balance	9.10
Exericsable, ending balance	8.75
Vested and expected to vest	9.08
Weighted Average Share Price on Date of Exercise	17.84
Weighted Average Fair Value
Outstanding, beginning balance	4.59
Exercised	1.90
Forfeited	5.07
Outstanding, ending balance	4.62
Exericsable, ending balance	4.32
Vested and expected to vest	$ 4.60
Weighted Average Remaining Contractual Life
Outstanding, ending balance	6 years 11 months 15 days
Exericsable, ending balance	6 years 9 months 7 days
Vested and expected to vest	6 years 11 months 11 days
Aggregate Intrinsic Value
Aggregate intrinsic value, beginning balance | $	$ 10,598
Exercised | $	165
Forfeited | $	19
Aggregate intrinsic value, ending balance | $	7,515
Exericsable, ending balance | $	5,490
Vested and expected to vest | $	$ 7,389

11. Share-Based Compensation 49

11. Share-Based Compensation (Details-Restricted Stock Units) - Restricted Stock Units/Awards $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)$ / sharesshares
Number of shares
Outstanding, beginning balance | shares	152
Granted | shares	451
Released | shares	(29)
Cancelled/Forfeited | shares	(4)
Outstanding, ending balance | shares	570
Exericsable, ending balance | shares	14
Vested and expected to vest | shares	545
Weighted Average Share Price on Date of Release	$ 16.37
Weighted Average Fair Value
Outstanding, beginning balance	11.20
Granted	16.15
Released	8.97
Cancelled/Forfeited	15.39
Outstanding, ending balance	15.21
Exericsable, ending balance	19.45
Vested and expected to vest	$ 15.20
Aggregate Intrinsic Value
Aggregate intrinsic value, outstanding | $	$ 2,611
Granted | $	7,287
Released | $	486
Cancelled/Forfeited | $	71
Aggregate intrinsic value, outstanding | $	8,492
Exericsable, ending balance | $	211
Vested and expected to vest | $	$ 8,127

11. Share-Based Compensation 50

11. Share-Based Compensation (Details-Share based compensation expense) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Employee stock-based compensation expense	$ 808	$ 516
Employee Stock Option [Member]
Employee stock-based compensation expense	378	385
Restricted Stock Units/Awards
Employee stock-based compensation expense	430	131
Cost of sales [Member]
Employee stock-based compensation expense	37	16
Research and development [Member]
Employee stock-based compensation expense	118	53
Sales and marketing [Member]
Employee stock-based compensation expense	73	50
General and administrative [Member]
Employee stock-based compensation expense	$ 580	$ 397

11. Share-Based Compensation 51

11. Share-Based Compensation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2016	Sep. 30, 2015
Employee Stock Option [Member]
Unrecognized compensation expense	$ 1,800
Unrecognized compensation expense recognized period	1 year 5 months 5 days
Restricted Stock Units/Awards
Unrecognized compensation expense	$ 7,600
Unrecognized compensation expense recognized period		3 years 8 months 19 days

12. Stockholders Equity (Detail

12. Stockholders Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Common stock shares authorized	45,000,000	45,000,000
Preferred Stock shares authorized	5,000,000	5,000,000
ATM Offering
Issuance of common stock, net shares	1,900,000
Issuance of common stock, net value	$ 38,600
Weighted average price per share	$ 21.54

13. Geographic Information (Det

13. Geographic Information (Details - Revenues) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenues	$ 50,422	$ 30,234
UNITED STATES
Revenues	23,239	7,294
TAIWAN, PROVINCE OF CHINA
Revenues	23,818	18,341
CHINA
Revenues	$ 3,365	$ 4,599

13. Geographic Information (D54

13. Geographic Information (Details - Long lived assets) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Long-lived assets	$ 128,467	$ 114,453
UNITED STATES
Long-lived assets	52,297	44,280
TAIWAN, PROVINCE OF CHINA
Long-lived assets	48,447	45,420
CHINA
Long-lived assets	$ 27,723	$ 24,753