Applied Optoelectronics (AAOI) 10-Q 8 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 03, 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	Sep. 30, 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		17,198,121
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current Assets
Cash and cash equivalents	$ 55,907	$ 28,074
Restricted cash	4,285	4,719
Short-term investments	47	7,886
Accounts receivable - trade, net	44,242	38,775
Inventories	54,919	66,238
Prepaid expenses and other current assets	4,761	8,236
Total current assets	164,161	153,928
Cash restricted for construction in progress	847	0
Property, plant and equipment, net	140,516	109,699
Land use rights, net	814	854
Intangible assets, net	4,004	3,900
Deferred income tax assets	11,856	0
Other assets, net	4,593	5,094
TOTAL ASSETS	326,791	273,475
Current liabilities
Current portion of notes payable and long-term debt	25,092	30,908
Accounts payable	32,413	28,668
Bank acceptance payable	3,231	2,998
Accrued liabilities	11,316	11,506
Total current liabilities	72,052	74,080
Notes payable and long-term debt, less current portion	67,201	33,997
TOTAL LIABILITIES	139,253	108,077
Stockholders' equity:
Preferred Stock: 5,000 shares authorized; no shares issued and outstanding at September 30, 2016 and December 31, 2015, $0.001 par value	0	0
Common Stock: 45,000 shares authorized;17,192 and 16,839 shares issued and outstanding at September 30, 2016 and at December 31, 2015, $0.001 par value	17	17
Additional paid-in capital	236,646	233,336
Accumulated other comprehensive gain	2,113	292
Accumulated deficit	(51,238)	(68,247)
TOTAL STOCKHOLDERS' EQUITY	187,538	165,398
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 326,791	$ 273,475

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares shares in Thousands	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Preferred Stock par value	$ .001	$ .001
Preferred Stock shares authorized	5,000	5,000
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	45,000
Common stock shares issued	17,192	16,839
Common stock shares outstanding	17,192	16,839

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Revenue, net	$ 70,137	$ 57,085	$ 175,813	$ 136,951
Cost of goods sold	46,976	39,032	121,097	92,116
Gross profit	23,161	18,053	54,716	44,835
Operating expenses
Research and development	8,362	5,386	24,572	14,892
Sales and marketing	1,594	1,582	4,884	4,748
General and administrative	6,445	4,963	18,084	14,500
Total operating expenses	16,401	11,931	47,540	34,140
Loss from operations	6,760	6,122	7,176	10,695
Other income (expense)
Interest income	40	82	206	236
Interest expense	(462)	(351)	(1,313)	(776)
Other income (expense), net	66	(2,747)	(532)	(1,500)
Total other expense	(356)	(3,016)	(1,639)	(2,040)
Income before income taxes	6,404	3,106	5,537	8,655
Income tax benefit (expense)	11,332	(406)	11,472	(541)
Net income	$ 17,736	$ 2,700	$ 17,009	$ 8,114
Net income (loss) per share
Basic	$ 1.03	$ 0.17	$ 1	$ 0.53
Diluted	$ 0.97	$ 0.16	$ 0.95	$ .50
Weighted average shares used to compute net income (loss) per share
Basic	17,151,031	15,868,989	17,057,687	15,220,301
Diluted	18,360,531	16,693,656	17,954,229	16,184,991

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 17,736	$ 2,700	$ 17,009	$ 8,114
(Loss) gain on foreign currency translation adjustment, net of tax	1,323	(1,009)	1,821	(913)
Comprehensive income	$ 19,059	$ 1,691	$ 18,830	$ 7,201

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - 9 months ended Sep. 30, 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	80
Stock options exercised, value		480			480
Issuance of shares under equity plans, shares	273
Stock based compensation		2,830			2,830
Foreign currency translation adjustment			1,285		1,821
Reclassified realized gains on foreign currency transaction			536		536
Net income				17,009	17,009
Ending balance, shares at Sep. 30, 2016	17,192
Ending balance, value at Sep. 30, 2016	$ 17	$ 236,646	$ 2,113	$ (51,238)	$ 187,538

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating activities:
Net income	$ 17,009	$ 8,114
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for obsolete inventory	2,799	2,177
Depreciation and amortization	9,926	6,733
Deferred income taxes, net	(11,856)	0
Loss on disposal of assets	89	13
Share-based compensation expense	2,830	1,567
Unrealized foreign exchange (gain) loss	(3,509)	2,193
Changes in operating assets and liabilities:
Accounts receivable	(5,412)	(9,767)
Bank acceptance receivable	0	980
Inventories	9,423	(30,578)
Other current assets and other receivables	3,450	(4,073)
Accounts payable	3,886	1,657
Accrued liabilities	(267)	3,246
Net cash provided by (used in) operating activities	28,368	(17,738)
Investing activities:
Purchase of short-term investments	0	(149)
Maturities of short-term investments	7,749	0
Change in restricted cash for construction in progress	(847)	(953)
Purchase of property, plant and equipment	(40,333)	(31,932)
Proceeds from disposal of equipment	1,306	78
Deposits and prepaid charges	659	(2,370)
Purchase of intangible assets	(440)	(331)
Net cash used in investing activities	(31,906)	(35,657)
Financing activities:
Proceeds from issuance notes payable and long-term debt	28,858	8,357
Principal payments of long-term debt and notes payable	(3,995)	(1,727)
Proceeds from line of credit borrowings	115,798	99,923
Repayments of line of credit borrowings	(114,542)	(84,727)
Proceeds from bank acceptance payable	5,850	5,680
Repayments of bank acceptance payable	(5,531)	(3,723)
Repayments of notes payable	(750)	(750)
Increase (decrease) in restricted cash	386	(3,108)
Exercise of stock options	480	430
Proceeds from common stock offering, net	0	38,692
Net cash provided by financing activities	26,554	59,047
Effect of exchange rate changes on cash	4,817	(235)
Net increase in cash	27,833	5,417
Cash and cash equivalents at beginning of period	28,074	32,175
Cash and cash equivalents at end of period	55,907	37,592
Cash paid for:
Interest, net of capitalized amounts	1,277	843
Income taxes	$ (12)	$ 117

1. Description of Business

1. Description of Business	9 Months Ended
	Sep. 30, 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 four networking end-markets: internet data centers, cable television, fiber-to-the-home and telecommunications. 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 and optical module products. The Company operates in Taipei, Taiwan and 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 parent of Global Technology, Inc. (incorporated in the People’s Republic of China). Through Global Technology Inc., the Company primarily manufactures certain of our data center transceiver products, including subassemblies, as well as Cable TV Broadband (“CATV”) systems and equipment, and performs research and development activities for the CATV products. The Company also operates a division, AOI-Taiwan, which 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 recently contributed to Prime World International Holdings, Ltd., the Company's business assets, liabilities and contracts relating to AOI—Taiwan. Upon approval by the Department of Commerce, Ministry of Economic Affairs of Taiwan, AOI—Taiwan will operate as a Taiwan branch of Prime World International Holdings, Ltd. The Company also has an additional research and development center in Lawrenceville, Georgia. The Company’s research and development functions are partnered with its manufacturing locations. Interim Financial Statements The unaudited condensed consolidated financial statements of the Company as of September 30, 2016 and December 31, 2015 and for the three and nine months ended September 30, 2016 and September 30, 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 and nine months ended September 30, 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	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Significant Accounting Policies	There have been no changes in the Company’s significant accounting policies for the three and nine months ended September 30, 2016, as compared to the significant accounting policies described in its 2015 Annual Report, except as described below. Income Taxes At the end of each interim period, the Company makes its best estimate of the effective tax rate expected to be applicable for the full fiscal year. This estimate reflects, among other items, the Company’s best estimate of operating results and foreign currency exchange rates. The Company’s quarterly income tax rate may differ from its estimated annual effective tax rate because accounting standards require the Company to exclude the actual results of certain entities expected to generate a pretax loss when applying the estimated annual effective tax rate to the Company’s consolidated pretax results in interim periods. In estimating the annual effective tax rate, the Company does not include the estimated impact of unusual and/or infrequent items, including the reversal of certain valuation allowances, which may cause significant variations in the customary relationship between income tax expense (benefit) and pretax income (loss) in quarterly and year-to-date periods. The income tax expense (benefit) for such unusual and/or infrequent items is recorded in the quarterly period such items are incurred. The Company routinely reviews valuation allowances recorded against deferred tax assets on a more likely than not basis in evaluating whether the Company has the ability to realize the deferred tax assets. In making such a determination, the Company takes into consideration all available and appropriate positive and negative evidence, including projected future taxable income, future reversals of existing taxable temporary differences, available tax planning strategies and taxable income in prior carryback years, if available. Considering these factors, a possibility exists that the Company may record or release a portion of a valuation allowance against some deferred tax assets each quarterly period, which could create volatility in the Company’s future effective tax rate. The Company recorded an income tax benefit of $11.3 million and $11.5 million for the three and nine months ended September 30, 2016, respectively, and an income tax provision of $0.4 million and $0.5 million for the three and nine months ended September 30, 2015, respectively. The income tax benefit for the three and nine months ended September 30, 2016 includes the release of $11.9 million of the Company’s existing valuation allowance against its U.S. deferred tax assets and additional foreign, U.S. federal, and state income tax expenses. The Company considered all available positive and negative evidence in making a determination to release a portion of its existing valuation allowance. Such evidence included, among others, the Company’s history of profitability and losses, jurisdictional income recognition trends, forecasted income by jurisdiction and three years of cumulative taxable income in the U.S. federal tax jurisdiction as of September 30, 2016. Therefore, the Company determined that there is sufficient positive evidence to conclude that it is more likely than not that it will utilize its U.S. deferred tax assets. As a result of the valuation allowance release, a deferred tax asset of $11.9 million is reflected on the accompanying condensed consolidated balance sheet as of September 30, 2016. The related $11.9 million effect on the accompanying condensed consolidated statement of operations for the fiscal period ended September 30, 2016 is a non-cash income tax benefit. The Company’s income tax expense and resulting effective tax rate are based upon the respective estimated annual effective tax rates applicable for the respective periods adjusted for the effects of items required to be treated as discrete to the period, including changes in the aforementioned valuation allowance, stock option expenses due to disqualifying disposition of incentive stock options, changes in tax laws, changes in estimated exposures for uncertain tax positions and other items. 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 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 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 issued ASU No. 2015-11, Inventory 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	9 Months Ended
	Sep. 30, 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 September 30, 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 $ 55,907 $ – $ – $ 55,907 $ 28,074 $ – $ – $ 28,074 Restricted cash 4,285 – – 4,285 4,719 – – 4,719 Short term investments 47 – – 47 7,886 – – 7,886 Total assets $ 60,239 $ – $ – $ 60,239 $ 40,679 $ – $ – $ 40,679 Liabilities: Bank acceptance payable – 3,231 – 3,231 – 2,998 – 2,998 Total liabilities $ – $ 3,231 $ – $ 3,231 $ – $ 2,998 $ – $ 2,998 The carrying value amounts of accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate fair value because of the short-term maturity of these instruments. The carrying value of the term loans approximate fair value due to the variable interest rates.

4. Earnings Per Share

4. Earnings Per Share	9 Months Ended
	Sep. 30, 2016
Net income (loss) per share
Earnings Per Share	Basic net income per share has been computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share has been computed using the weighted-average number of shares of common stock and dilutive potential common shares from stock options and restricted stock units/awards 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 September 30, Nine months ended September 30, 2016 2015 2016 2015 Numerator: Net income $ 17,736 $ 2,700 $ 17,009 $ 8,114 Denominator: Weighted average shares used to compute net income per share Basic 17,151 15,869 17,058 15,220 Effective of dilutive securities 1,210 825 897 965 Diluted 18,361 16,694 17,954 16,185 Net income per share Basic $ 1.03 $ 0.17 $ 1.00 $ 0.53 Diluted $ 0.97 $ 0.16 $ 0.95 $ 0.50 There were no securities that were excluded from the computation of diluted net income per share.

5. Inventories

5. Inventories	9 Months Ended
	Sep. 30, 2016
Inventory Disclosure [Abstract]
Inventories	Inventories, net of inventory writedowns, consist of the following for the periods indicated (in thousands): September 30, 2016 December 31, 2015 Raw materials $ 7,326 $ 22,240 Work in process and sub-assemblies 28,852 30,766 Finished goods 18,741 13,232 $ 54,919 $ 66,238 The lower of cost or market adjustment expensed for inventory for the three months ended September 30, 2016 and 2015 was $0.9 million for each period. The lower of cost or market adjustment expensed for inventory for the nine months ended September 30, 2016 and 2015 was $2.8 million and $2.2 million, respectively.

6. Property, Plant and Equipmen

6. Property, Plant and Equipment	9 Months Ended
	Sep. 30, 2016
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment	Property, plant and equipment consisted of the following for the periods indicated (in thousands): September 30, 2016 December 31, 2015 Land improvements $ 863 $ 863 Building and improvements 67,716 27,255 Machinery and equipment 105,723 88,882 Furniture and fixtures 4,323 2,422 Computer equipment and software 6,526 5,615 Transportation equipment 244 294 185,395 125,331 Less accumulated depreciation and amortization (47,095 ) (37,970 ) 138,300 87,361 Construction in progress 1,115 21,237 Land 1,101 1,101 Property, plant and equipment, net $ 140,516 $ 109,699 For the three months ended September 30, 2016 and 2015, depreciation expense of property, plant and equipment was $3.6 million and $2.3 million, respectively. For the nine months ended September 30, 2016 and 2015, depreciation expense of property, plant and equipment was $9.6 million and $6.4 million, respectively. Included in depreciation expense was $2.1 million and $1.4 million recorded as cost of sales for the three months ended September 30, 2016 and 2015, respectively. Included in depreciation expense was $6.0 million and $3.8 million recorded as cost of sales for the nine months ended September 30, 2016 and 2015, respectively. At September 30, 2016 and December 31, 2015, there was $167,000 and $121,000 of capitalized interest recorded in construction in progress and building, respectively.

7. Intangible Assets

7. Intangible Assets	9 Months Ended
	Sep. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	Intangible assets consisted of the following for the periods indicated (in thousands): September 30, 2016 Gross Amount Accumulated amortization Intangible assets, net Patents $ 5,894 $ (1,893 ) $ 4,001 Trademarks 14 (11 ) 3 Total intangible assets, net $ 5,908 $ (1,904 ) $ 4,004 December 31, 2015 Gross Amount Accumulated amortization Intangible assets, net Patents $ 5,446 $ (1,551 ) $ 3,895 Trademarks 14 (9 ) 5 Total intangible assets, net $ 5,460 $ (1,560 ) $ 3,900 For the three months ended September 30, 2016 and 2015, amortization expense for intangible assets, included in general and administrative expenses on the income statement, was $115,000 and $104,000, respectively. For the nine months ended September 30, 2016 and 2015, amortization expense for intangible assets, included in general and administrative expenses on the income statement, was $337,000 and $305,000, 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	9 Months Ended
	Sep. 30, 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): September 30, 2016 December 31, 2015 Revolving line of credit with a U.S. bank up to $40,000 with interest at LIBOR plus 2%, maturing June 30, 2018 $ 30,000 $ 23,000 Term loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2%, maturing July 31, 2019 3,208 4,150 Term loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2%, maturing June 30, 2020 9,750 2,000 Construction loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2% maturing January 26, 2022 21,826 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 plus 1.5%, or 1.70% maturing on November 30, 2016 6,303 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 2,204 4,475 Revolving line of credit with a Taiwan bank up to $6,000 with interest at Taiwan Time Deposit Interest Rate Index plus 1% or LIBOR plus 1% maturing on November 27, 2016 1,983 3,407 Revolving line of credit with the Taiwan branch of a China bank up to $10,000 with interest at LIBOR plus 1.5% or Taiwan Interbank Offered Rate plus 0.9% , maturing March 15, 2017 6,856 9,418 Note payable to a finance company due in monthly installments with 4.5% interest, maturing May 27, 2018 and June 30, 2018 3,521 4,851 Note payable to a finance company due in monthly installments with 4% interest, maturing March 31, 2019 6,642 – Revolving line of credit with a China bank up to $13,300 with interest of 3.15% for 3-month term – 2,428 Total 92,293 64,905 Less current portion (25,092 ) (30,908 ) Non-current portion $ 67,201 $ 33,997 Bank Acceptance Notes Payable Bank acceptance notes issued to vendors with a zero percent interest rate, a 30% guarantee deposit of $730, and maturity dates ranging from October 2016 to January 2017 3,231 2,998 The current portion of long-term debt is the amount payable within one year of the balance sheet date of September 30, 2016. The one-month London Interbank Offered Rate was 0.4939% on September 30, 2016. Maturities of long-term debt are as follows for the future one-year periods ending September 30 (in thousands): 2017 $ 25,092 2018 8,137 2019 36,181 2020 3,681 2021 700 2022 thereafter 18,502 Total outstanding $ 92,293 On June 24, 2016, the Company entered into a First Amendment to its Credit Agreement with East West Bank and Comerica Bank (“First Amendment”), a second lien deed of trust, multiple security agreements and promissory notes evidencing two credit facilities and a term loan originally entered into on June 30, 2015. The First Amendment increased the Company’s revolving lines of credit from $25 million to $40 million, which mature on June 30, 2018, and retains a $10.0 million term loan maturing on June 30, 2020. The First Amendment also provides for an additional $10.0 million equipment term loan with a one year drawdown period commencing on April 1, 2016 and maturing five years from the closing date of the First Amendment. The interest rate on these loans was lowered by the First Amendment from the LIBOR Borrowing Rate plus 2.75% or 3.0% to LIBOR Borrowing Rate plus 2.0%. As of September 30, 2016, $30.0 million was outstanding under the revolving line of credit. As of September 30, 2016, $9.8 million was outstanding under the term loan. The Company also has with a term loan with East West Bank of $5.0 million with monthly payments of principal and interest that matures on July 31, 2019. As of September 30, 2016, the outstanding balance was $3.2 million. On June 24, 2016, the Company executed a Change in Terms Agreement, Notice of Final Agreement and Modification of the Construction Loan Agreement (“Modification Agreement”) to its Construction Loan Agreement with East West Bank for up to $22.0 million dollars to finance the construction of the Company’s campus expansion plan in Sugar Land, Texas, originally dated January 26, 2015. Upon signing the original Construction Loan Agreement, the Company deposited $11.0 million into a restricted bank account for owner’s contribution of construction costs. The Modification Agreement has a fifteen month draw down period with monthly interest payments commencing on February 26, 2015 and ending on July 31, 2016. Thereafter, the entire outstanding principal balance shall be converted to a sixty-six month term loan with principal and interest payments due monthly amortized over three hundred months. The first principal and interest payment commenced on August 26, 2016, and 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 Construction Loan Agreement, the loan bears interest at an annual rate based on the one-month LIBOR Borrowing Rate plus 2.75%, and the interest rate is reduced to LIBOR Borrowing Rate plus 2.0% under the Modification Agreement. As of September 30, 2016, there was $21.8 million outstanding under this loan agreement and there was $0.8 million in the restricted bank account. On September 27, 2016, the Company executed a Change in Terms Agreement, Notice of Final Agreement and Second Modification to the Construction Loan Agreement (“Second Modifications”) to its Construction Loan Agreement with East West Bank. The Second Modifications amends and restates in part the Company’s Promissory Note and Construction Loan Agreement which was originally executed on January 26, 2015, and the Modification Agreement. The draw down period end date, under the Second Modifications, is amended from July 31, 2016 to September 30, 2016. And thereafter, the entire outstanding principal balance shall be converted to a sixty-four (64) month term loan, amended from a sixty (66) month term loan, with principal and interest payments due monthly amortized over three hundred (300) months. The first principal and interest payment is due on October 26, 2016 and will continue on 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. Except as expressly changed by the Second Modifications, the terms of the original obligation and Modification Agreement remain unchanged. The loan and security agreements with East West Bank and Comerica Bank require the Company to maintain certain financial covenants, including a minimum cash balance, a current ratio, a maximum leverage ratio and a minimum fixed charge coverage ratio. As of September 30, 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 available provided that the Company purchases the same amount of secured certificates 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 0.71%. As of September 30, 2016, no balance was outstanding for the secured loan and $6.3 million was outstanding under this unsecured credit facility. On April 8, 2016, the Company’s Taiwan branch renewed its 90 million New Taiwan dollars, or approximately $2.6 million, and 120 million New Taiwan dollars, or approximately $4.0 million, 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 LIBOR plus 1.7% divided by 0.946. 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%. Any future borrowings under the 120 million New Taiwan dollars credit facility are available provided that the Company purchases certificates of deposit in amounts equal to the borrowing from the bank. As of September 30, 2016, no balance was outstanding under the 120 million New Taiwan dollars credit facility and $2.2 million was outstanding under the 90 million New Taiwan dollars 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 $4.0 million credit facility are available provided that the Company purchases certificates of deposit in amounts equal to the borrowing from 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 September 30, 2016, $2.0 million was outstanding under the unsecured credit facility and no balance was outstanding under the $4.0 million 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 Comprehensive 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 the Company’s China subsidiary. Borrowings under the Comprehensive 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 Comprehensive Credit Line Agreement bear interest at a rate negotiated separately for each drawing depending on the nature of the borrowings. As of September 30, 2016, $6.9 million was outstanding under this credit facility with interest rates at approximately 2.67%. On June 30, 2015, the Company’s Taiwan branch entered into a Purchase and Sale Contract and a Finance Lease Agreement 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's Taiwan branch sold certain equipment to Chailease for a purchase price of 115,240,903 New Taiwan dollars, approximately $3.7 million, 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 dollars, approximately $0.1 million, to 2,364,650 New Taiwan dollars, approximately $0.1 million, during the term of the Finance Lease Agreement, including an initial payment in an amount of 40,240,903 New Taiwan dollars, approximately $1.3 million. The Finance Lease Agreement has a three year term, with monthly payments, maturing on May 27 and June 30, 2018 respectively. The title to the equipment will be transferred to the Company’s Taiwan branch upon the expiration of the Finance Lease Agreement. As of September 30, 2016, $3.5 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 with Chailease in connection with certain equipment, structured as a sale lease-back transaction. Pursuant to the Purchase and Sale Contract, the Company’s Taiwan branch sold certain equipment to Chailease for a purchase price of 312,927,180 New Taiwan dollars, approximately $10.1 million, 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 dollars, approximately $0.2 million, to 7,788,333 New Taiwan dollars, approximately $0.3 million, during the term of the Finance Lease Agreement, including an initial payment in an amount of 62,927,180 New Taiwan dollars, approximately $2.0 million. Based on the 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’s Taiwan branch upon the expiration of the Finance Lease Agreement. As of September 30, 2016, $6.6 million was outstanding under this Finance Lease Agreement. As of September 30, 2016, the Company’s Chinese subsidiary had credit facilities with China Construction Bank totaling $13.3 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 September 30, 2016, the Company’s Chinese subsidiary used $7.0 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 September 30, 2016, the Company had no outstanding balance for the U.S. currency based loan. The outstanding balances of bank acceptance notes issued to vendors were $3.2 million with zero interest rate as of September 30, 2016. As of September 30, 2016, the Company had $24.1 million of unused borrowing capacity. As of September 30, 2016, there was $4.9 million of restricted cash, investments or security deposit associated mainly with the loan facilities.

9. Accrued Liabilites

9. Accrued Liabilites	9 Months Ended
	Sep. 30, 2016
Payables and Accruals [Abstract]
Accrued Liabilites	Accrued liabilities consisted of the following for the periods indicated (in thousands): September 30, 2016 December 31, 2015 Accrued payroll $ 6,139 $ 6,757 Accrued rent 939 792 Accrued employee benefits 1,526 1,379 Accrued state and local taxes 451 372 Accrued income taxes 177 – Advance payments 386 1,258 Accrued product warranty 486 412 Accrued commission expenses 162 126 Accrued professional fees 221 81 Accrued other 829 329 $ 11,316 $ 11,506

10. Other Income and Expense

10. Other Income and Expense	9 Months Ended
	Sep. 30, 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 September 30, Nine months ended September 30, 2016 2015 2016 2015 Unrealized foreign exchange gain (loss) $ 3,318 $ (3,160 ) $ 3,686 $ (2,270 ) Realized foreign exchange gain (loss) (3,387 ) 393 (4,300 ) 552 Government subsidy income 125 3 145 202 Other non-operating gain 14 20 26 29 Loss on disposal of assets (4 ) (3 ) (89 ) (13 ) $ 66 $ (2,747 ) $ (532 ) $ (1,500 ) During the three and nine months ended September 30, 2016, $3.0 million of realized exchange loss was recognized when the company transferred assets and liabilities of its Taiwan branch office to Prime World International Holding Company, its wholly-owned subsidiary.

11. Share-Based Compensation

11. Share-Based Compensation	9 Months Ended
	Sep. 30, 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 in September 2013, 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 at January 1, 2016 1,310 $ 9.07 $ 4.59 – $ 10,598 Exercised (81 ) 6.79 $ 14.96 2.18 – 659 Forfeited (9 ) 8.26 3.70 – 81 Outstanding at September 30, 2016 1,220 $ 9.23 $ 4.76 6.559 $ 15,839 Exercisable at September 30, 2016 965 $ 8.99 $ 4.60 6.460 $ 12,762 Vested and expected to vest 1,207 $ 9.22 $ 4.75 6.555 $ 15,686 As of September 30, 2016, there was approximately $1.2 million of unrecognized stock option expense, net of estimated forfeitures, which is expected to be recognized over 1 year. 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 496 15.72 7,798 Released (119 ) $ 13.34 13.95 1,587 Cancelled/Forfeited (6 ) 15.30 101 Outstanding at September 30, 2016 523 $ 14.81 $ 11,620 Exercisable at September 30, 2016 14 $ 11.41 $ 311 Vested and expected to vest 504 $ 14.80 $ 11,199 As of September 30, 2016, there was $6.9 million of unrecognized compensation expense related to these RSUs and RSAs. This expense is expected to be recognized over 3.12 years. Share-Based Compensation Employee share-based compensation expenses recognized for the periods indicated (in thousands): Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Share-Based compensation - by expense type Cost of sales $ 53 $ 17 $ 140 $ 52 Research and development 165 55 437 165 Sales and marketing 97 58 264 162 General and administrative 732 387 1,989 1,188 $ 1,047 $ 517 $ 2,830 $ 1,567 Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Share-Based compensation - by award type Employee stock options $ 374 $ 388 $ 1,111 $ 1,152 Restricted stock units/awards 673 129 1,719 415 $ 1,047 $ 517 $ 2,830 $ 1,567

12. Stockholders' Equity

12. Stockholders' Equity	9 Months Ended
	Sep. 30, 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. The Company completed its ATM Offering in August 2015 and sold 1.9 million shares 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	9 Months Ended
	Sep. 30, 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 September 30, Nine months ended September 30, 2016 2015 2016 2015 Revenues: United States $ 7,277 $ 5,218 $ 15,314 $ 13,295 Taiwan 44,723 43,220 126,991 97,802 China 18,137 8,647 33,508 25,854 $ 70,137 $ 57,085 $ 175,813 $ 136,951 As of the period ended September 30, December 31, 2016 2015 Long-lived assets: United States $ 61,891 $ 44,280 Taiwan 51,629 45,420 China 31,814 24,753 $ 145,334 $ 114,453

14. Subsequent Events

14. Subsequent Events	9 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
Subsequent Events	On October 17, 2016, the Company filed a Registration Statement on Form S-3 with the Securities and Exchange Commission, effective November 1, 2016, 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 $250 million.

1. Description of Business (Pol

1. Description of Business (Policies)	9 Months Ended
	Sep. 30, 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 four networking end-markets: internet data centers, cable television, fiber-to-the-home and telecommunications. 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 and optical module products. The Company operates in Taipei, Taiwan and 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 parent of Global Technology, Inc. (incorporated in the People’s Republic of China). Through Global Technology Inc., the Company primarily manufactures certain of our data center transceiver products, including subassemblies, as well as Cable TV Broadband (“CATV”) systems and equipment, and performs research and development activities for the CATV products. The Company also operates a division, AOI-Taiwan, which 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 recently contributed to Prime World International Holdings, Ltd., the Company's business assets, liabilities and contracts relating to AOI—Taiwan. Upon approval by the Department of Commerce, Ministry of Economic Affairs of Taiwan, AOI—Taiwan will operate as a Taiwan branch of Prime World International Holdings, Ltd. The Company also has an additional research and development center in Lawrenceville, Georgia. The Company’s research and development functions are partnered with its manufacturing locations.
Interim Financial Statements	Interim Financial Statements The unaudited condensed consolidated financial statements of the Company as of September 30, 2016 and December 31, 2015 and for the three and nine months ended September 30, 2016 and September 30, 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 and nine months ended September 30, 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)	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Income Taxes	Income Taxes At the end of each interim period, the Company makes its best estimate of the effective tax rate expected to be applicable for the full fiscal year. This estimate reflects, among other items, the Company’s best estimate of operating results and foreign currency exchange rates. The Company’s quarterly income tax rate may differ from its estimated annual effective tax rate because accounting standards require the Company to exclude the actual results of certain entities expected to generate a pretax loss when applying the estimated annual effective tax rate to the Company’s consolidated pretax results in interim periods. In estimating the annual effective tax rate, the Company does not include the estimated impact of unusual and/or infrequent items, including the reversal of certain valuation allowances, which may cause significant variations in the customary relationship between income tax expense (benefit) and pretax income (loss) in quarterly and year-to-date periods. The income tax expense (benefit) for such unusual and/or infrequent items is recorded in the quarterly period such items are incurred. The Company routinely reviews valuation allowances recorded against deferred tax assets on a more likely than not basis in evaluating whether the Company has the ability to realize the deferred tax assets. In making such a determination, the Company takes into consideration all available and appropriate positive and negative evidence, including projected future taxable income, future reversals of existing taxable temporary differences, available tax planning strategies and taxable income in prior carryback years, if available. Considering these factors, a possibility exists that the Company may record or release a portion of a valuation allowance against some deferred tax assets each quarterly period, which could create volatility in the Company’s future effective tax rate. The Company recorded an income tax benefit of $11.3 million and $11.5 million for the three and nine months ended September 30, 2016, respectively, and an income tax provision of $0.4 million and $0.5 million for the three and nine months ended September 30, 2015, respectively. The income tax benefit for the three and nine months ended September 30, 2016 includes the release of $11.9 million of the Company’s existing valuation allowance against its U.S. deferred tax assets and additional foreign, U.S. federal, and state income tax expenses. The Company considered all available positive and negative evidence in making a determination to release a portion of its existing valuation allowance. Such evidence included, among others, the Company’s history of profitability and losses, jurisdictional income recognition trends, forecasted income by jurisdiction and three years of cumulative taxable income in the U.S. federal tax jurisdiction as of September 30, 2016. Therefore, the Company determined that there is sufficient positive evidence to conclude that it is more likely than not that it will utilize its U.S. deferred tax assets. As a result of the valuation allowance release, a deferred tax asset of $11.9 million is reflected on the accompanying condensed consolidated balance sheet as of September 30, 2016. The related $11.9 million effect on the accompanying condensed consolidated statement of operations for the fiscal period ended September 30, 2016 is a non-cash income tax benefit. The Company’s income tax expense and resulting effective tax rate are based upon the respective estimated annual effective tax rates applicable for the respective periods adjusted for the effects of items required to be treated as discrete to the period, including changes in the aforementioned valuation allowance, stock option expenses due to disqualifying disposition of incentive stock options, changes in tax laws, changes in estimated exposures for uncertain tax positions and other items.
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 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 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 issued ASU No. 2015-11, Inventory 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)	9 Months Ended
	Sep. 30, 2016
Fair Value Disclosures [Abstract]
Schedule of assets and liabilities at fair value	As of September 30, 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 $ 55,907 $ – $ – $ 55,907 $ 28,074 $ – $ – $ 28,074 Restricted cash 4,285 – – 4,285 4,719 – – 4,719 Short term investments 47 – – 47 7,886 – – 7,886 Total assets $ 60,239 $ – $ – $ 60,239 $ 40,679 $ – $ – $ 40,679 Liabilities: Bank acceptance payable – 3,231 – 3,231 – 2,998 – 2,998 Total liabilities $ – $ 3,231 $ – $ 3,231 $ – $ 2,998 $ – $ 2,998

4. Earnings Per Share (Tables)

4. Earnings Per Share (Tables)	9 Months Ended
	Sep. 30, 2016
Net income (loss) per share
Computation of basic and diluted net loss per share	Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Numerator: Net income $ 17,736 $ 2,700 $ 17,009 $ 8,114 Denominator: Weighted average shares used to compute net income per share Basic 17,151 15,869 17,058 15,220 Effective of dilutive securities 1,210 825 897 965 Diluted 18,361 16,694 17,954 16,185 Net income per share Basic $ 1.03 $ 0.17 $ 1.00 $ 0.53 Diluted $ 0.97 $ 0.16 $ 0.95 $ 0.50

5. Inventories (Tables)

5. Inventories (Tables)	9 Months Ended
	Sep. 30, 2016
Inventory Disclosure [Abstract]
Schedule of inventories	September 30, 2016 December 31, 2015 Raw materials $ 7,326 $ 22,240 Work in process and sub-assemblies 28,852 30,766 Finished goods 18,741 13,232 $ 54,919 $ 66,238

6. Property, Plant and Equipm27

6. Property, Plant and Equipment (Tables)	9 Months Ended
	Sep. 30, 2016
Property, Plant and Equipment [Abstract]
Schedule of property, plant and equipment	September 30, 2016 December 31, 2015 Land improvements $ 863 $ 863 Building and improvements 67,716 27,255 Machinery and equipment 105,723 88,882 Furniture and fixtures 4,323 2,422 Computer equipment and software 6,526 5,615 Transportation equipment 244 294 185,395 125,331 Less accumulated depreciation and amortization (47,095 ) (37,970 ) 138,300 87,361 Construction in progress 1,115 21,237 Land 1,101 1,101 Property, plant and equipment, net $ 140,516 $ 109,699

7. Intangible Assets (Tables)

7. Intangible Assets (Tables)	9 Months Ended
	Sep. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	September 30, 2016 Gross Amount Accumulated amortization Intangible assets, net Patents $ 5,894 $ (1,893 ) $ 4,001 Trademarks 14 (11 ) 3 Total intangible assets, net $ 5,908 $ (1,904 ) $ 4,004 December 31, 2015 Gross Amount Accumulated amortization Intangible assets, net Patents $ 5,446 $ (1,551 ) $ 3,895 Trademarks 14 (9 ) 5 Total intangible assets, net $ 5,460 $ (1,560 ) $ 3,900

8. Notes Payable and Long-Ter29

8. Notes Payable and Long-Term Debt (Tables)	9 Months Ended
	Sep. 30, 2016
Debt Disclosure [Abstract]
Schedule of notes payable and long-term debt	September 30, 2016 December 31, 2015 Revolving line of credit with a U.S. bank up to $40,000 with interest at LIBOR plus 2%, maturing June 30, 2018 $ 30,000 $ 23,000 Term loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2%, maturing July 31, 2019 3,208 4,150 Term loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2%, maturing June 30, 2020 9,750 2,000 Construction loan with a U.S. bank with monthly payments of principal and interest at LIBOR plus 2% maturing January 26, 2022 21,826 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 plus 1.5%, or 1.70% maturing on November 30, 2016 6,303 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 2,204 4,475 Revolving line of credit with a Taiwan bank up to $6,000 with interest at Taiwan Time Deposit Interest Rate Index plus 1% or LIBOR plus 1% maturing on November 27, 2016 1,983 3,407 Revolving line of credit with the Taiwan branch of a China bank up to $10,000 with interest at LIBOR plus 1.5% or Taiwan Interbank Offered Rate plus 0.9% , maturing March 15, 2017 6,856 9,418 Note payable to a finance company due in monthly installments with 4.5% interest, maturing May 27, 2018 and June 30, 2018 3,521 4,851 Note payable to a finance company due in monthly installments with 4% interest, maturing March 31, 2019 6,642 – Revolving line of credit with a China bank up to $13,300 with interest of 3.15% for 3-month term – 2,428 Total 92,293 64,905 Less current portion (25,092 ) (30,908 ) Non-current portion $ 67,201 $ 33,997 Bank Acceptance Notes Payable Bank acceptance notes issued to vendors with a zero percent interest rate, a 30% guarantee deposit of $730, and maturity dates ranging from October 2016 to January 2017 3,231 2,998
Maturities of notes payable and long-term debt	2017 $ 25,092 2018 8,137 2019 36,181 2020 3,681 2021 700 2022 thereafter 18,502 Total outstanding $ 92,293

9. Accrued Liabilites (Tables)

9. Accrued Liabilites (Tables)	9 Months Ended
	Sep. 30, 2016
Payables and Accruals [Abstract]
Schedule of accrued liabilities	September 30, 2016 December 31, 2015 Accrued payroll $ 6,139 $ 6,757 Accrued rent 939 792 Accrued employee benefits 1,526 1,379 Accrued state and local taxes 451 372 Accrued income taxes 177 – Advance payments 386 1,258 Accrued product warranty 486 412 Accrued commission expenses 162 126 Accrued professional fees 221 81 Accrued other 829 329 $ 11,316 $ 11,506

10. Other Income and Expense (T

10. Other Income and Expense (Tables)	9 Months Ended
	Sep. 30, 2016
Other income (expense)
Schedule of other income and expense	Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Unrealized foreign exchange gain (loss) $ 3,318 $ (3,160 ) $ 3,686 $ (2,270 ) Realized foreign exchange gain (loss) (3,387 ) 393 (4,300 ) 552 Government subsidy income 125 3 145 202 Other non-operating gain 14 20 26 29 Loss on disposal of assets (4 ) (3 ) (89 ) (13 ) $ 66 $ (2,747 ) $ (532 ) $ (1,500 )

11. Share-Based Compensation (T

11. Share-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 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 at January 1, 2016 1,310 $ 9.07 $ 4.59 – $ 10,598 Exercised (81 ) 6.79 $ 14.96 2.18 – 659 Forfeited (9 ) 8.26 3.70 – 81 Outstanding at September 30, 2016 1,220 $ 9.23 $ 4.76 6.559 $ 15,839 Exercisable at September 30, 2016 965 $ 8.99 $ 4.60 6.460 $ 12,762 Vested and expected to vest 1,207 $ 9.22 $ 4.75 6.555 $ 15,686
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 496 15.72 7,798 Released (119 ) $ 13.34 13.95 1,587 Cancelled/Forfeited (6 ) 15.30 101 Outstanding at September 30, 2016 523 $ 14.81 $ 11,620 Exercisable at September 30, 2016 14 $ 11.41 $ 311 Vested and expected to vest 504 $ 14.80 $ 11,199
Schedule of employee stock-based compensation expenses	Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Share-Based compensation - by expense type Cost of sales $ 53 $ 17 $ 140 $ 52 Research and development 165 55 437 165 Sales and marketing 97 58 264 162 General and administrative 732 387 1,989 1,188 $ 1,047 $ 517 $ 2,830 $ 1,567 Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Share-Based compensation - by award type Employee stock options $ 374 $ 388 $ 1,111 $ 1,152 Restricted stock units/awards 673 129 1,719 415 $ 1,047 $ 517 $ 2,830 $ 1,567

13. Geographic Information (Tab

13. Geographic Information (Tables)	9 Months Ended
	Sep. 30, 2016
Segment Reporting [Abstract]
Revenue and asset information by geographic region	Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Revenues: United States $ 7,277 $ 5,218 $ 15,314 $ 13,295 Taiwan 44,723 43,220 126,991 97,802 China 18,137 8,647 33,508 25,854 $ 70,137 $ 57,085 $ 175,813 $ 136,951 As of the period ended September 30, December 31, 2016 2015 Long-lived assets: United States $ 61,891 $ 44,280 Taiwan 51,629 45,420 China 31,814 24,753 $ 145,334 $ 114,453

2. Significant Accounting Pol34

2. Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Accounting Policies [Abstract]
Income tax benefit	$ (11,332)	$ 406	$ (11,472)	$ 541
Deferred tax asset	$ 11,856		11,856		$ 0
Increase in deferred tax asset			$ 11,856	$ 0

3. Fair Value of Financial In35

3. Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets:
Cash and cash equivalents	$ 55,907	$ 28,074
Restricted cash	4,285	4,719
Short term investments	47	7,886
Total assets	60,239	40,679
Liabilities:
Bank acceptance payable	3,231	2,998
Total liabilities	3,231	2,998
Level 1 [Member]
Assets:
Cash and cash equivalents	55,907	28,074
Restricted cash	4,285	4,719
Short term investments	47	7,886
Total assets	60,239	40,679
Liabilities:
Bank acceptance payable	0	0
Total liabilities	0	0
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	3,231	2,998
Total liabilities	3,231	2,998
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		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Numerator:
Net income	$ 17,736	$ 2,700	$ 17,009	$ 8,114
Weighted average shares used to compute net income per share
Basic	17,151,031	15,868,989	17,057,687	15,220,301
Effective of dilutive options and warrants	1,210,000	825,000	897,000	965,000
Diluted	18,360,531	16,693,656	17,954,229	16,184,991
Net income per share
Basic	$ 1.03	$ 0.17	$ 1	$ 0.53
Diluted	$ 0.97	$ 0.16	$ 0.95	$ .50

4. Earnings Per Share (Details

4. Earnings Per Share (Details Narrative) - shares shares in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Net income (loss) per share
Potentially dilutive securities excluded from EPS	0	0

5. Inventories (Details)

5. Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 7,326	$ 22,240
Work in process and sub-assemblies	28,852	30,766
Finished goods	18,741	13,232
Inventories	$ 54,919	$ 66,238

5. Inventory (Details Narrative

5. Inventory (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Inventory Disclosure [Abstract]
Lower of cost or market adjustment for inventory	$ 900	$ 900	$ 2,800	$ 2,200

6. Property, Plant and Equipm40

6. Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Property, plant and equipment, gross	$ 185,395	$ 125,331
Less accumulated depreciation and amortization	(47,095)	(37,970)
Property, plant and equipment	138,300	87,361
Construction in progress	1,115	21,237
Land	1,101	1,101
Property, plant and equipment, net	140,516	109,699
Land improvements [Member]
Property, plant and equipment, gross	863	863
Building and improvements [Member]
Property, plant and equipment, gross	67,716	27,255
Machinery and equipment [Member]
Property, plant and equipment, gross	105,723	88,882
Furniture and fixtures [Member]
Property, plant and equipment, gross	4,323	2,422
Computer rquipment and software [Member]
Property, plant and equipment, gross	6,526	5,615
Transportation equipment [Member]
Property, plant and equipment, gross	$ 244	$ 294

6. Property, Plant and Equipm41

6. Property, Plant and Equipment (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 3,600	$ 2,300	$ 9,600	$ 6,400
Cost of Sales, depreciation	2,100	$ 1,400	6,000	$ 3,800
Capitalized interest on construction in progress	$ 167		$ 167		$ 121

7. Intangible Assets (Details)

7. Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Gross Amount	$ 5,908	$ 5,460
Accumulated amortization	(1,904)	(1,560)
Intangible assets, net	4,004	3,900
Patents [Member]
Gross Amount	5,894	5,446
Accumulated amortization	(1,893)	(1,551)
Intangible assets, net	4,001	3,895
Trademarks [Member]
Gross Amount	14	14
Accumulated amortization	(11)	(9)
Intangible assets, net	$ 3	$ 5

7. Intangible Assets (Details N

7. Intangible Assets (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense for intangible assets	$ 115	$ 104	$ 337	$ 305
Weighted average amortization period			9 years

8. Notes Payable and Long-Ter44

8. Notes Payable and Long-Term Debt (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Notes payable and long-term debt total	$ 92,293	$ 64,905
Current portion of notes payable and long-term debt	(25,092)	(30,908)
Long term portion of notes payable and long-term debt	67,201	33,997
Term loan 1
Notes payable and long-term debt total	$ 3,208	4,150
Debt maturity date	Jul. 31, 2019
Interest rate	LIBOR plus 2%
Term loan 2
Notes payable and long-term debt total	$ 9,750	2,000
Debt maturity date	Jun. 30, 2020
Interest rate	LIBOR plus 2%
Note Payable 1
Notes payable and long-term debt total	$ 3,521	4,851
Debt maturity date	Jun. 30, 2018
Interest rate	4.5%
Note payable 2
Notes payable and long-term debt total	$ 6,642	0
Debt maturity date	Mar. 31, 2019
Interest rate	4%
Construction Loan
Notes payable and long-term debt total	$ 21,826	8,588
Debt maturity date	Jan. 26, 2022
Interest rate	LIBOR plus 2%
Revolving Line of Credit | Revolving Line of Credit 1
Notes payable and long-term debt total	$ 30,000	23,000
Debt maturity date	Jun. 30, 2018
Interest rate	LIBOR plus 2%
Revolving Line of Credit | Revolving Line of Credit 2
Notes payable and long-term debt total	$ 6,303	2,588
Debt maturity date	Nov. 30, 2016
Interest rate	Bank's corporate interest rate index+1.5% or 1.70%
Revolving Line of Credit | Revolving Line of Credit 3
Notes payable and long-term debt total	$ 2,204	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	$ 1,983	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	$ 6,856	9,418
Debt maturity date	Mar. 15, 2017
Interest rate	LIBOR +1.5% or Taiwan Interbank Offered Rate plus 0.9%
Revolving Line of Credit | Revolving Line of Credit 6
Notes payable and long-term debt total	$ 0	$ 2,428
Debt maturity date	Sep. 30, 2016
Interest rate	3.15%

8. Notes Payable and Long-Ter45

8. Notes Payable and Long-Term Debt (Details - Debt maturities) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Maturities of notes payable and long-term debt
2,017	$ 25,092
2,018	8,137
2,019	36,181
2,020	3,681
2,021	700
2022 thereafter	18,502
Total outstanding	$ 92,293	$ 64,905

8. Notes Payable and Long-Ter46

8. Notes Payable and Long-Term Debt (Details Narrative) TWD in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2016TWD	Dec. 31, 2015USD ($)
Cash restricted for construction in progress	$ 11,400
Unused borrowing capacity	24,100
Bank acceptance notes	3,231		$ 2,998
Restricted cash, investments or security deposit associated with loan facilities	$ 4,900
London Interbank Offered Rate (LIBOR) [Member]
Interest rate description	0.4939%
Chailease [Member] | Finance Lease 1 [Member]
Debt issuance/renewal/modification date	Jun. 30, 2015
Revolving line of credit, maturity date	Jun. 30, 2018
Note payable	$ 3,500
Chailease [Member] | Finance Lease 2 [Member]
Debt issuance/renewal/modification date	Mar. 31, 2016
Revolving line of credit, maturity date	Mar. 31, 2019
Note payable	$ 6,600
Comprehensive Credit Line Agreement [Member]
Debt issuance/renewal/modification date	Apr. 22, 2016
Revolving line of credit maximum borrowing capacity	$ 10,000
Revolving line of credit amount outstanding	$ 6,900
Revolving line of credit, maturity date	Mar. 15, 2017
Interest rate on line of credit	Rate at approximately 2.67%
East West Bank and Comerica [Member]
Interest rate on line of credit	LIBOR Borrowing Rate plus 2.0%.
East West Bank and Comerica [Member] | Revolving Lines of Credit [Member]
Debt issuance/renewal/modification date	Jun. 24, 2016
Revolving line of credit maximum borrowing capacity	$ 40,000
Revolving line of credit amount outstanding	$ 30,000
Revolving line of credit, maturity date	Jun. 30, 2018
East West Bank and Comerica [Member] | Term Loan [Member]
Revolving line of credit maximum borrowing capacity	$ 10,000
Revolving line of credit amount outstanding	$ 9,800
Revolving line of credit, maturity date	Jun. 30, 2020
East West Bank and Comerica [Member] | Equipment Loan [Member]
Revolving line of credit maximum borrowing capacity	$ 10,000
Revolving line of credit, maturity date	Jun. 24, 2021
East West Bank [Member] | Term Loan [Member]
Revolving line of credit maximum borrowing capacity	$ 5,000
Revolving line of credit amount outstanding	$ 3,200
Revolving line of credit, maturity date	Jul. 31, 2019
East West Bank [Member] | Construction Loan [Member]
Debt issuance/renewal/modification date	Sep. 27, 2016
Revolving line of credit maximum borrowing capacity	$ 22,000
Revolving line of credit amount outstanding	21,800
Cash restricted for construction in progress	$ 800
Revolving line of credit, maturity date	Sep. 30, 2016
Interest rate on line of credit	LIBOR Borrowing Rate plus 2.0%
CTBC Bank Taipei
Debt issuance/renewal/modification date	Feb. 19, 2016
Revolving line of credit maximum borrowing capacity	$ 10,300
Revolving line of credit amount outstanding	$ 6,300
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 0.71%
CTBC Bank Taipei | Taiwan, New Dollars
Revolving line of credit maximum borrowing capacity | TWD		TWD 320,000
E. Sun Commercial Bank | Credit Facility 1 [Member]
Debt issuance/renewal/modification date	Apr. 8, 2016
Revolving line of credit maximum borrowing capacity	$ 2,600
Revolving line of credit amount outstanding	$ 2,200
Interest rate on line of credit	London Interbank Offered Rate (LIBOR) plus 1.7% divided by 0.946
E. Sun Commercial Bank | Credit Facility 1 [Member] | Taiwan, New Dollars
Revolving line of credit maximum borrowing capacity | TWD		90,000
E. Sun Commercial Bank | Credit Facility 2 [Member]
Debt issuance/renewal/modification date	Apr. 18, 2016
Revolving line of credit maximum borrowing capacity	$ 4,000
Revolving line of credit amount outstanding	$ 0
Interest rate on line of credit	Bank's personal monthly time deposit interest rate plus 0.480%
E. Sun Commercial Bank | Credit Facility 2 [Member] | Taiwan, New Dollars
Revolving line of credit maximum borrowing capacity | TWD		TWD 120,000
Mega International Commercial Bank | Credit Facility 1 [Member]
Revolving line of credit maximum borrowing capacity	$ 4,000
Revolving line of credit amount outstanding	$ 0
Mega International Commercial Bank | Credit Facility 1 [Member]
Debt issuance/renewal/modification date	Dec. 22, 2015
Interest rate on line of credit	Not less than the LIBOR borrowing rate plus 1.0%, divided by 0.946 for U.S. and other currency borrowings
Mega International Commercial Bank | Credit Facility 2 [Member]
Debt issuance/renewal/modification date	Dec. 22, 2015
Revolving line of credit maximum borrowing capacity	$ 2,000
Revolving line of credit amount outstanding	$ 2,000
Interest rate on line of credit	Not less than the LIBOR borrowing rate plus 1.2%, divided by 0.946 for U.S. dollar borrowings
China Construction Bank
Debt issuance/renewal/modification date	Sep. 30, 2016
Revolving line of credit maximum borrowing capacity	$ 13,300
Revolving line of credit, maturity date	Jun. 30, 2016
Bank acceptance notes	$ 3,200
Restricted cash, investments or security deposit associated with loan facilities	$ 730
Bank acceptance interest rate	0.00%	0.00%
Debt maturity date	October 2016 to January 2017

9. Accrued Liabilities (Details

9. Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accrued Liabilities Details
Accrued payroll	$ 6,139	$ 6,757
Accrued rent	939	792
Accrued employee benefits	1,526	1,379
Accrued state and local taxes	451	372
Accrued income taxes	177	0
Advance payments	386	1,258
Accrued product warranty	486	412
Accrued commission expenses	162	126
Accrued professional fees	221	81
Accrued other	829	329
Total accrued liabilities	$ 11,316	$ 11,506

10. Other Income and Expense (D

10. Other Income and Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Other income (expense)
Unrealized foreign exchange gain (loss)	$ 3,318	$ (3,160)	$ 3,686	$ (2,270)
Realized foreign exchange gain (loss)	(3,387)	393	(4,300)	552
Government subsidy income	125	3	145	202
Other non-operating gain	14	20	26	29
Loss on disposal of assets	(4)	(3)	(89)	(13)
Total other income and expense	$ 66	$ (2,747)	$ (532)	$ (1,500)

10. Other Income and Expense 49

10. Other Income and Expense (Details Narrative) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016
Other income (expense)
Recognized realized exchange loss	$ 3,000	$ 3,000

11. Share-Based Compensation (D

11. Share-Based Compensation (Details-Option activity) - Employee Stock Option [Member] $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)$ / sharesshares
Number of Shares
Outstanding, beginning balance | shares	1,310
Exercised | shares	(81)
Forfeited | shares	(9)
Outstanding, ending balance | shares	1,220
Exericsable, ending balance | shares	965
Vested and expected to vest | shares	1,207
Weighted Average Exercise Price
Outstanding, beginning balance	$ 9.07
Exercised	6.79
Forfeited	8,026
Outstanding, ending balance	9.23
Exericsable, ending balance	8.99
Vested and expected to vest	9.22
Weighted Average Share Price on Date of Exercise	14.96
Weighted Average Fair Value
Outstanding, beginning balance	4.59
Exercised	2.18
Forfeited	3.70
Outstanding, ending balance	4.76
Exericsable, ending balance	4.60
Vested and expected to vest	$ 4.75
Weighted Average Remaining Contractual Life
Outstanding, ending balance	6 years 6 months 22 days
Exericsable, ending balance	6 years 5 months 16 days
Vested and expected to vest	6 years 6 months 20 days
Aggregate Intrinsic Value
Aggregate intrinsic value, beginning balance | $	$ 10,598
Exercised | $	659
Forfeited | $	81
Aggregate intrinsic value, ending balance | $	15,839
Exericsable, ending balance | $	12,762
Vested and expected to vest | $	$ 15,686

11. Share-Based Compensation 51

11. Share-Based Compensation (Details-Restricted Stock Units) - Restricted Stock Units/Awards $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)$ / sharesshares
Number of shares
Outstanding, beginning balance | shares	152
Granted | shares	496
Released | shares	(119)
Cancelled/Forfeited | shares	(6)
Outstanding, ending balance | shares	523
Exericsable, ending balance | shares	14
Vested and expected to vest | shares	504
Weighted Average Share Price on Date of Release	$ 13.34
Weighted Average Fair Value
Outstanding, beginning balance	11.20
Granted	15.72
Released	13.95
Cancelled/Forfeited	15.30
Outstanding, ending balance	14.81
Exericsable, ending balance	11.41
Vested and expected to vest	$ 14.80
Aggregate Intrinsic Value
Aggregate intrinsic value, outstanding | $	$ 2,611
Granted | $	7,798
Released | $	1,587
Cancelled/Forfeited | $	101
Aggregate intrinsic value, outstanding | $	11,620
Exericsable, ending balance | $	311
Vested and expected to vest | $	$ 11,199

11. Share-Based Compensation 52

11. Share-Based Compensation (Details-Share based compensation expense) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Employee stock-based compensation expense	$ 1,047	$ 517	$ 2,830	$ 1,567
Employee Stock Option [Member]
Employee stock-based compensation expense	374	388	111	1,152
Restricted Stock Units/Awards
Employee stock-based compensation expense	673	129	1,719	415
Cost of sales [Member]
Employee stock-based compensation expense	53	17	140	52
Research and development [Member]
Employee stock-based compensation expense	165	55	437	165
Sales and marketing [Member]
Employee stock-based compensation expense	97	58	264	162
General and administrative [Member]
Employee stock-based compensation expense	$ 732	$ 387	$ 1,989	$ 1,188

11. Share-Based Compensation 53

11. Share-Based Compensation (Details Narrative) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Employee Stock Option [Member]
Unrecognized compensation expense	$ 1,200
Unrecognized compensation expense recognized period	1 year
Restricted Stock Units/Awards
Unrecognized compensation expense	$ 6,900
Unrecognized compensation expense recognized period		3 years 1 month 13 days

12. Stockholders Equity (Detail

12. Stockholders Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 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		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues	$ 70,137	$ 57,085	$ 175,813	$ 136,951
UNITED STATES
Revenues	7,277	5,218	15,314	13,295
TAIWAN, PROVINCE OF CHINA
Revenues	44,723	43,220	126,991	97,802
CHINA
Revenues	$ 18,137	$ 8,647	$ 33,508	$ 25,854

13. Geographic Information (D56

13. Geographic Information (Details - Long lived assets) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Long-lived assets	$ 145,334	$ 114,453
UNITED STATES
Long-lived assets	61,891	44,280
TAIWAN, PROVINCE OF CHINA
Long-lived assets	51,629	45,420
CHINA
Long-lived assets	$ 31,814	$ 24,753