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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2014	Aug. 05, 2014
Document And Entity Information
Entity Registrant Name	Applied Optoelectronics, Inc.
Entity Central Index Key	0001158114
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
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	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		14,805,125
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2014

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2014	Dec. 31, 2013
Current Assets
Cash and cash equivalents	$ 34,079	$ 22,006
Restricted cash	932	775
Short-term investments	7,957	7,970
Accounts receivable - trade, net	24,968	22,089
Inventories	31,200	19,608
Prepaid expenses and other current assets	6,978	5,488
Total current assets	106,114	77,936
Property, plant and equipment, net	41,657	31,134
Land use rights, net	934	959
Intangible assets, net	3,841	851
Other assets, net	978	177
TOTAL ASSETS	153,524	111,057
Current liabilities
Current portion of notes payable and long-term debt	9,562	17,185
Accounts payable	22,631	15,010
Bank acceptance payable	2,377	2,347
Accrued liabilities	5,606	4,515
Total current liabilities	40,176	39,057
Notes payable and long-term debt, less current portion	67	8,923
Other long term liabilities	1,500	0
TOTAL LIABILITIES	41,743	47,980
Stockholders' equity (deficit):
Preferred Stock; 5,000 shares authorized; no shares issued and outstanding at June 30, 2014 and December 31, 2013, $0.001 par value	0	0
Common Stock; 45,000 shares authorized; 14,798 shares issued and outstanding at June 30, 2014, $0.001 par value; 12,644 shares issued and outstanding at December 31, 2013, $0.001 par value	15	13
Additional paid-in capital	190,861	144,023
Accumulated other comprehensive gain	2,224	2,364
Accumulated deficit	(81,319)	(83,323)
TOTAL STOCKHOLDERS' EQUITY	111,781	63,077
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 153,524	$ 111,057

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Convertible Preferred Stock par value	$ .001	$ .001
Convertible Preferred Stock shares authorized	5,000,000	5,000,000
Convertible Preferred Stock shares issued	0	0
Convertible Preferred Stock shares outstanding	0	0
Common stock par value	$ .001	$ 0.00
Common stock shares authorized	45,000,000	45,000,000
Common stock shares issued	14,798,000	12,644,000
Common stock shares outstanding	14,798,000	12,644,000

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Statement [Abstract]
Revenue, net	$ 32,650	$ 19,597	$ 57,509	$ 33,914
Cost of goods sold	21,462	14,150	37,668	23,882
Gross profit	11,188	5,447	19,841	10,032
Operating expenses
Research and development	4,009	1,898	7,555	3,902
Sales and marketing	1,497	1,053	2,830	1,960
General and administrative	3,952	2,447	7,506	4,821
Total operating expenses	9,458	5,398	17,891	10,683
Income (loss) from operations	1,730	49	1,950	(651)
Other income (expense)
Interest income	106	15	185	35
Interest expense	(60)	(296)	(222)	(602)
Other expense, net	228	(50)	201	(58)
Total other expense	274	(331)	164	(625)
Income (loss) before income taxes	2,004	(282)	2,114	(1,276)
Income taxes	(85)		(110)
Net income (loss)	$ 1,919	$ (282)	$ 2,004	$ (1,276)
Net income (loss) per share - basic	$ .13	$ (1.04)	$ 0.15	$ (4.77)
Net income (loss) per share - diluted	$ .12	$ (1.04)	$ .14	$ (4.77)
Weighted average shares used to compute net income (loss) per share - basic	14,785,437	270,912	13,794,384	267,711
Weighted average shares used to compute net income (loss) per share - diluted	15,641,694	270,912	14,620,570	267,711

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 1,919	$ (282)	$ 2,004	$ (1,276)
Foreign currency translation adjustment, net of tax	139	176	(140)	239
Comprehensive loss	$ 2,058	$ (106)	$ 1,864	$ (1,037)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating activities:
Net income (loss)	$ 2,004	$ (1,276)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Provision for obsolete inventory	768	422
Depreciation and amortization	2,670	1,559
Gain (loss) on disposal of assets	(1)	1
Stock-based compensation and warrant expense	1,007	240
Changes in operating assets and liabilities:
Accounts receivable	(2,829)	(415)
Inventory	(12,360)	(4,028)
Other current assets	(1,475)	(544)
Accounts payable	9,087	6,299
Accrued liabilities	1,097	(750)
Net cash provided by (used in) operating activities	(32)	1,508
Investing activities:
Purchase of short-term investments	(53)	0
Purchase of property, plant and equipment	(13,101)	(2,980)
Proceeds from disposal of equipment	12	0
Deposits and deferred charges	(813)	(549)
Purchase of intangible assets	(3,153)	(67)
Net cash used in investing activities	(17,108)	(3,596)
Financing activities:
Proceeds from issuance of notes payable and long-term debt	3,150	0
Principal payments of long-term debt and notes payable	(8,076)	(128)
Proceeds from line of credit borrowings	10,763	13,229
Repayments of line of credit borrowings	(22,304)	(13,018)
Proceeds from bank acceptance payable	3,826	2,733
Repayments of bank acceptance payable	(3,773)	(1,690)
Increase in restricted cash	(164)	(571)
Exercise of stock options	219	50
Exercise of warrants	0	308
Proceeds from public offering, net	45,630	0
Net cash provided by financing activities	29,271	913
Effect of exchange rate changes on cash	(58)	220
Net increase (decrease) in cash	12,073	(955)
Cash and cash equivalents at beginning of the period	22,006	10,723
Cash and cash equivalents at end of the period	34,079	9,768
Cash paid for:
Interest	254	578
Income taxes	$ 71	$ 1

1. Description of Business

6 Months Ended

Jun. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

1. 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: cable television, fiber-to-the-home and internet data centers. 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 in all three of its locations, 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 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), the sole parent of Global Technology, Inc. (incorporated in the People’s Republic of China). Through Global Technology, 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 June 30, 2014 and December 31, 2013 and for the three and six months ended June 30, 2014 and 2013, have been prepared in accordance with the instructions on Form 10-Q 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 normally provided in the Company’s 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, but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”). 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, 2013. The results of operations for the three and six months ended June 30, 2014 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 Policies

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

2. Significant Accounting Policies

There have been no changes in the Company’s significant accounting policies for the three months ended June 30, 2014, as compared to the significant accounting policies described in its Annual Report.

Recent accounting pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The standard provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is not permitted. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. The Company is in the process of evaluating the impact of adoption on its consolidated financial statements.

3. Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

3. 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 June 30, 2014								As of December 31, 2013
	(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Short term investments	$	7,957	$	–	$	–	$	7,957	$	7,970	$	–	$	–	$	7,970
Total assets	$	7,957	$	–	$	–	$	7,957	$	7,970	$	–	$	–	$	7,970
Liabilities:
Bank acceptance payable		–		2,377		–		2,377		–		2,347		–		2,347
Total liabilities	$	–	$	2,377	$	–	$	2,377	$	–	$	2,347	$	–	$	2,347

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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

4. Earnings Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

4. Earnings Per Share

Basic net income (loss) per share has been computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share has been computed using the weighted-average number of shares of common stock and dilutive potential common shares from options and warrants outstanding during the period. In periods with net losses, normally dilutive shares become anti-dilutive, and therefore for those periods basic and dilutive earnings per share are the same.

The following table sets forth the computation of the basic and diluted net loss per share for the periods indicated (in thousands, except per share amounts):

	Three months ended June 30,					Six months ended June 30,
	2014		2013			2014		2013

Numerator:
Net income (loss)	$	1,919	$	(282	)	$	2,004	$	(1,276	)
Denominator:
Weighted average shares used to compute net income (loss) per share
Basic		14,785		271			13,794		268
Effective of dilutive options and warrants		856		–			826		–
Diluted		15,642		271			14,621		268
Net income (loss) per share
Basic	$	0.13	$	(1.04	)	$	0.15	$	(4.77	)
Diluted	$	0.12	$	(1.04	)	$	0.14	$	(4.77	)

The following potentially dilutive securities were excluded from the computation of diluted net income (loss) per share as their effect would have been anti-dilutive (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013

Employee stock options		–		736		–		736
Preferred stock warrants		–		56		–		56
Restricted stock units		–		–		–		–
		–		792		–		792

5. Inventory

6 Months Ended

Jun. 30, 2014

Inventory Disclosure [Abstract]

5. Inventory

Inventories consist of the following for the periods indicated (in thousands):

	June 30, 2014		December 31, 2013
Raw materials	$	13,212	$	8,832
Work in process		12,947		8,708
Finished goods		5,041		2,068
	$	31,200	$	19,608

The lower of cost or market adjustment expensed for inventory for the three months ended June 30, 2014 and 2013 was $0.5 million and $0.3 million, respectively. The lower of cost or market adjustment expensed for inventory for the six months ended June 30, 2014 and 2013 was $0.8 million and $0.4 million, respectively.

6. Property, Plant and Equipment

6 Months Ended

Jun. 30, 2014

Property, Plant and Equipment [Abstract]

6. Property, Plant and Equipment

Property, plant and equipment consisted of the following for the periods indicated (in thousands):

	June 30, 2014			December 31, 2013
Land improvements	$	103		$	103
Building and improvements		16,112			16,016
Machinery and equipment		48,301			37,490
Furniture and fixtures		1,373			1,047
Computer equipment and software		4,080			3,563
Transportation equipment		187			188
		70,156			58,407
Less accumulated depreciation and amortization		(29,733	)		(28,145	)
		40,423			30,262
Construction in progress		133			139
Land		1,101			733
Property, plant and equipment, net	$	41,657		$	31,134

For the three and six months ended June 30, 2014, depreciation expense of property, plant and equipment was $1.3 million and $2.5 million, respectively.

7. Notes Payable and Long-Term Debt

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

7. Notes Payable and Long-Term Debt

Note 7. Notes Payable and Long-Term Debt

Notes payable and long-term debt consisted of the following for the periods indicated (in thousands):

	June 30, 2014		December 31, 2013
Long-Term and Short-Term Debt
Term loan with a U.S. bank with monthly payments of principal and interest at prime plus 0.75% (floor rate: 4%), maturing November 15, 2014		–		3,076
Revolving line of credit with a U.S. bank up to $7,000 with interest at prime plus 0.5% (floor rate: 3.75%), maturing November 15, 2015		–		7,000
Term loan with a U.S. bank with monthly payments of principal and interest at prime plus 0.75% (floor rate: 4.00%), maturing September 10, 2017		–		1,850
Revolving line of credit with a China bank up to $12,000 with interest at 108% of China Prime rate which was 6.48% in 2013 with various maturity dates from April 2014 and August 2014		–		7,053
Revolving line of credit with a China bank up to $3,250 with interest rates ranged from 2.03% to 2.13% with various maturity dates from July 2014 to September 2014		1,246		2,413
Revolving line of credit with a Taiwan bank up to $4,000 with interest an interest rate of 1.75%, maturing December 15, 2014		3,744		3,795
Revolving line of credit with a Taiwan bank up to $4,000 with an interest rate of 1.78%, with various maturity dates from July 2014 to August 2014		3,818		–
Note payable to a finance company due in monthly installments with 4.95% interest, maturing July 30, 2015		821		921
Total		9,629		26,108
Less current portion		9,562		17,185
Long term portion	$	67	$	8,923
Bank Acceptance Payable
Bank acceptance notes issued to vendors with a zero percent interest rate, a 30% guarantee deposit of $769, and maturity dates ranging from July 2014 to December 2014	$	2,377	$	2,347

The current portion of long-term debt is the amount payable within one year of the balance sheet date of June 30, 2014. The prime rate of interest was 3.25% on June 30, 2014 and December 31, 2013, respectively.

The U.S. bank loans and line of credit agreement require the Company to meet certain financial covenants including a minimum current ratio, debt service coverage and maximum debt over tangible net worth ratio requirements. Collateral for the U.S. bank loans and line of credit includes substantially all of the assets of the Company. As of June 30, 2014, the Company was in compliance with all of its financial and operational covenants associated with these loans. As of June 30, 2014, the Company had $7.0 million of unused borrowing capacity on its line of credit and $5.0 million on its equipment term loan.

In December 2013, the Company renewed its U.S. revolving line of credit of $7.0 million with the same U.S. bank with a maturity date of November 15, 2015. The interest rate on this line of credit is the prime rate plus 0.50% or a floor rate of 3.75%, whichever is higher.

The Company issued warrants to the same U.S. bank in connection with the renewals of the loan in 2009, 2010 and 2012. The Company estimated the fair value of these warrants at the date of the grant using the Black-Scholes option-pricing model and records the expense over the life of the warrants. As of June 30, 2014, there were no outstanding warrants related to these loans.

The Company, through its China subsidiary, established RMB and USD currency lines of credit for $12.0 million and $3.3 million, respectively, with a China Bank as of June 30, 2014. The interest rate for the RMB line of credit is 108% of the China prime rate. The interest rate for the USD line of credit ranged from 2.03% to 2.13%. These credit lines are revolving lines that are renewable by its anniversary. Collateral for the loans includes the land use rights, building and equipment located in China. As of June 30, 2014, the Company had $14.0 million unused borrowing capacity.

The Company extended its equipment financing agreement of $1.0 million with a Taiwan bank in 2013. The financing agreement required equipment collateral. The agreement requires monthly installment payments over 24 months and ends in July 2015. The financing agreement bears interest at the rate of 4.95%.

The Company, through its Taiwan branch, established two $4.0 million revolving lines of credit with Taiwan banks in 2013 totaling $8.0 million. The financing agreements require collateral of its time deposits of $8.0 million that is included in short-term investment. The two revolving lines of credit bear interest at a rate (which adjusts quarterly) equal to the Taiwan Time Deposit Interest Rate Index plus 0.41%, currently 1.78%, and at a base rate equal to TAIBOR plus 1%, currently 1.75%. As of June 30, 2014, $7.6 million was outstanding under these credit facilities.

8. Accrued Liabilites

6 Months Ended

Jun. 30, 2014

Payables and Accruals [Abstract]

8. Accrued Liabilites

Accrued liabilities consisted of the following for the periods indicated (in thousands):

	June 30, 2014		December 31, 2013
Accrued payroll	$	2,631	$	2,279
Accrued employee benefits		424		489
Accrued taxes		166		270
Accrued interest		2		34
Advanced payments		88		128
Accrued commissions		88		148
Accrued other		2,207		1,167
	$	5,606	$	4,515

9. Other Income and Expense

6 Months Ended

Jun. 30, 2014

Other income (expense)

9. Other Income and Expense

Other income and expense consisted of the following for the periods indicated (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Unrealized foreign exchange gain (loss)	$	183		$	(31	)	$	(2	)	$	(192	)
Realized foreign exchange gain (loss)		4			(80	)		70			(64	)
Government subsidy income		28			61			108			195
Other non-operating gain (loss)		16			(9	)		27			(5	)
Gain (loss) on disposal of assets		(3	)		9			(2	)		8
	$	228		$	(50	)	$	201		$	(58	)

10. Share-Based Compensation

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

10. Share-Based Compensation

The Accounting Standards Codification (“ASC”) 718 requires companies to record compensation expense for stock options measured at fair value, on the date of grant, using an option –pricing model.

The Company’s board of directors and stockholders previously approved the 1998 Share Incentive Plan, the 2000 Share Incentive Plan, the 2004 Share Incentive Plan and the 2006 Share Incentive Plan, (collectively the “Prior Plans”). Following the Company’s initial public offering, no further awards will be granted under the Prior Plans. However, all outstanding awards under the Prior Plans will continue to exist and will continue to be governed by their existing terms.

On April 12, 2013, the Company’s board of directors adopted and approved the Company’s 2013 Equity Incentive Plan, (the “2013 Plan”), and it was subsequently approved by the Company’s stockholders on May 21, 2013.

The Company issues stock options to employees, consultants and non-employee directors. Stock option awards for the Prior Plans and the 2013 Plan 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 and restrictive stock units (“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.

As of June 30, 2014, the Company had outstanding equity awards to purchase 1,471,848 shares of common stock under its share incentive plans with a weighted average exercise price of $8.93.

The following table summarizes employee share-based compensation expense resulting from stock options and RSUs for the periods indicated, (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013
Cost of sales	$	28	$	14	$	53	$	26
Research and development		31		13		56		24
Sales and marketing		25		11		48		21
General and administrative		434		91		850		169
	$	518	$	129	$	1,007	$	240

The following is a summary of stock option activity during the six month period ending June 30, 2014 (in thousands, except price data):

	Shares			Weighted Average Exercise Price		Weighted Average Fair Value		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding, December 31, 2013		1,468		$	8.38	$	4.11			$	9,731
Granted		108			13.84		7.12				–
Exercised		(91	)		5.99		2.03				1,447
Forfeited		(14	)		8.43		5.11				209
Expired		–			6.75		4.88				1
Outstanding, June 30, 2014		1,471		$	8.93	$	4.45		8.564	$	20,992
Exercisable, June 30, 2014		301		$	6.35	$	1.95		6.802	$	5,069
Vested and expected to vest		1,347		$	8.84	$	4.38		8.514	$	19,342

As of June 30, 2014, total compensation cost related to unvested stock options not yet recognized was $4.3 million, which is expected to be expensed over a weighted-average period of 3.1 years. The aggregated intrinsic value of options outstanding and options exercisable as of June 30, 2014 was $21.0 million and $5.1 million, respectively.

Under the 2013 Plan, participants may be granted RSUs, representing an unfunded, unsecured right to receive common stock on the date specified in the recipient’s award. The Company recognizes compensation expense on a straight-line basis over the applicable vesting term of the award.

During the three months ended June 30, 2014, the Company granted 2,839 RSUs with a total grant-date fair market value of $0.1 million. As of June 30, 2014, there was approximately $23,000 of unrecognized compensation cost related to RSUs.

11. Stockholders' Equity

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

11. Stockholders' Equity

1. 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.

2. 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.

3. Warrants

As of June 30, 2014, the Company had no outstanding warrants to purchase common or preferred stock.

4. Public Offerings of Common Stock

On September 25, 2013, the Company sold 3.6 million shares of its common stock in its initial public offering at a price of $10.00 per share, providing proceeds of $31.5 million, net of expenses and underwriting discounts and commissions. The Company’s initial public offering closed on October 1, 2013.

On March 19, 2014, the Company sold 2.0 million shares of its common stock in a secondary offering at a price of $24.25 per share, providing proceeds of $45.6 million net of expenses and underwriting discounts and commissions. The Company’s sale of 1.6 million shares in the secondary offering closed on March 25, 2014 and the Company’s sale of an additional 0.4 million shares as a result of the underwriters’ exercise of their option to purchase additional shares closed on March 28, 2014.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(d),(e))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Subparagraph (SAB TOPIC 4.E)
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
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-Paragraph 1
-Subparagraph (SX 210.5-02.29-31)
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Subparagraph (SAB TOPIC 4.C)
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Paragraph 1
-Subparagraph (SX 210.3-04)
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 505
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-Name Accounting Standards Codification
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-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph d
-Article 4

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 18: http://www.xbrl.org/2003/role/presentationRef
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-Number Topic 4
-Section C

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

+ Details

12. Segment and Geographic Information

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

12. Segment and 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 the Company’s product manufacturing plants. Long-lived assets in the tables below comprise only property, plant, equipment and intangible assets (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013
Revenues:
United States	$	6,987	$	2,221	$	12,124	$	4,622
Taiwan		20,549		9,104		34,889		15,039
China		5,114		8,272		10,496		14,253
	$	32,650	$	19,597	$	57,509	$	33,914

	As of the period ended
	June 30,		December 31,
	2014		2013
Long-lived assets:
United States	$	13,640	$	9,415
Taiwan		16,632		7,192
China		16,159		16,337
	$	46,431	$	32,944

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-SubTopic 10
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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+ Details

13. Subsequent Events

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

13. Subsequent Events

Repayment of Debt

On April 1, 2014, the Company paid $8.1 million to East West Bank from the net proceeds received in its secondary offering to extinguish its entire debt balances. Also in April 2014, the Company repaid $1.3 million of its credit line with a China bank.

On April 1, 2014, the Company’s Taiwan facility entered into a new lease agreement for office and manufacturing space in New Taipei City, Taiwan. The lease has a term of 15 years commencing on June 1, 2014.

2. Significant Accounting Policies (Policies)	6 Months Ended
2. Significant Accounting Policies (Policies)	Jun. 30, 2014
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: cable television, fiber-to-the-home and internet data centers. 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 in all three of its locations, 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 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), the sole parent of Global Technology, Inc. (incorporated in the People’s Republic of China). Through Global Technology, 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 June 30, 2014 and December 31, 2013 and for the three and six months ended June 30, 2014 and 2013, have been prepared in accordance with the instructions on Form 10-Q 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 normally provided in the Company’s 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, but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”). 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, 2013. The results of operations for the three and six months ended June 30, 2014 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.
Recent Accounting Pronouncements	Recent accounting pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The standard provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is not permitted. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. The Company is in the process of evaluating the impact of adoption on its consolidated financial statements.

3. Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Schedule of assets and liabilities at fair value

	As of June 30, 2014								As of December 31, 2013
	(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Short term investments	$	7,957	$	–	$	–	$	7,957	$	7,970	$	–	$	–	$	7,970
Total assets	$	7,957	$	–	$	–	$	7,957	$	7,970	$	–	$	–	$	7,970
Liabilities:
Bank acceptance payable		–		2,377		–		2,377		–		2,347		–		2,347
Total liabilities	$	–	$	2,377	$	–	$	2,377	$	–	$	2,347	$	–	$	2,347

4. Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Computation of basic and diluted net loss per share

	Three months ended June 30,					Six months ended June 30,
	2014		2013			2014		2013

Numerator:
Net income (loss)	$	1,919	$	(282	)	$	2,004	$	(1,276	)
Denominator:
Weighted average shares used to compute net income (loss) per share
Basic		14,785		271			13,794		268
Effective of dilutive options and warrants		856		–			826		–
Diluted		15,642		271			14,621		268
Net income (loss) per share
Basic	$	0.13	$	(1.04	)	$	0.15	$	(4.77	)
Diluted	$	0.12	$	(1.04	)	$	0.14	$	(4.77	)

Schedule of potentially dilutive securites

	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013

Employee stock options		–		736		–		736
Preferred stock warrants		–		56		–		56
Restricted stock units		–		–		–		–
		–		792		–		792

5. Inventory (Tables)

6 Months Ended

Jun. 30, 2014

Inventory Disclosure [Abstract]

Schedule of inventories

	June 30, 2014		December 31, 2013
Raw materials	$	13,212	$	8,832
Work in process		12,947		8,708
Finished goods		5,041		2,068
	$	31,200	$	19,608

6. Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2014

Property, Plant and Equipment [Abstract]

Schedule of property, plant and equipment

	June 30, 2014			December 31, 2013
Land improvements	$	103		$	103
Building and improvements		16,112			16,016
Machinery and equipment		48,301			37,490
Furniture and fixtures		1,373			1,047
Computer equipment and software		4,080			3,563
Transportation equipment		187			188
		70,156			58,407
Less accumulated depreciation and amortization		(29,733	)		(28,145	)
		40,423			30,262
Construction in progress		133			139
Land		1,101			733
Property, plant and equipment, net	$	41,657		$	31,134

7. Notes Payable and Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Schedule of notes payable and long-term debt

	June 30, 2014		December 31, 2013
Long-Term and Short-Term Debt
Term loan with a U.S. bank with monthly payments of principal and interest at prime plus 0.75% (floor rate: 4%), maturing November 15, 2014		–		3,076
Revolving line of credit with a U.S. bank up to $7,000 with interest at prime plus 0.5% (floor rate: 3.75%), maturing November 15, 2015		–		7,000
Term loan with a U.S. bank with monthly payments of principal and interest at prime plus 0.75% (floor rate: 4.00%), maturing September 10, 2017		–		1,850
Revolving line of credit with a China bank up to $12,000 with interest at 108% of China Prime rate which was 6.48% in 2013 with various maturity dates from April 2014 and August 2014		–		7,053
Revolving line of credit with a China bank up to $3,250 with interest rates ranged from 2.03% to 2.13% with various maturity dates from July 2014 to September 2014		1,246		2,413
Revolving line of credit with a Taiwan bank up to $4,000 with interest an interest rate of 1.75%, maturing December 15, 2014		3,744		3,795
Revolving line of credit with a Taiwan bank up to $4,000 with an interest rate of 1.78%, with various maturity dates from July 2014 to August 2014		3,818		–
Note payable to a finance company due in monthly installments with 4.95% interest, maturing July 30, 2015		821		921
Total		9,629		26,108
Less current portion		9,562		17,185
Long term portion	$	67	$	8,923
Bank Acceptance Payable
Bank acceptance notes issued to vendors with a zero percent interest rate, a 30% guarantee deposit of $769, and maturity dates ranging from July 2014 to December 2014	$	2,377	$	2,347

8. Accrued Liabilites (Tables)

6 Months Ended

Jun. 30, 2014

Payables and Accruals [Abstract]

Schedule of accrued liabilities

	June 30, 2014		December 31, 2013
Accrued payroll	$	2,631	$	2,279
Accrued employee benefits		424		489
Accrued taxes		166		270
Accrued interest		2		34
Advanced payments		88		128
Accrued commissions		88		148
Accrued other		2,207		1,167
	$	5,606	$	4,515

9. Other Income and Expense (Tables)

6 Months Ended

Jun. 30, 2014

Other income (expense)

Schedule of other income and expense

	Three months ended June 30,						Six months ended June 30,
	2014			2013			2014			2013
Unrealized foreign exchange gain (loss)	$	183		$	(31	)	$	(2	)	$	(192	)
Realized foreign exchange gain (loss)		4			(80	)		70			(64	)
Government subsidy income		28			61			108			195
Other non-operating gain (loss)		16			(9	)		27			(5	)
Gain (loss) on disposal of assets		(3	)		9			(2	)		8
	$	228		$	(50	)	$	201		$	(58	)

10. Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of employee stock-based compensation expenses

	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013
Cost of sales	$	28	$	14	$	53	$	26
Research and development		31		13		56		24
Sales and marketing		25		11		48		21
General and administrative		434		91		850		169
	$	518	$	129	$	1,007	$	240

Summary of option activity

	Shares			Weighted Average Exercise Price		Weighted Average Fair Value		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding, December 31, 2013		1,468		$	8.38	$	4.11			$	9,731
Granted		108			13.84		7.12				–
Exercised		(91	)		5.99		2.03				1,447
Forfeited		(14	)		8.43		5.11				209
Expired		–			6.75		4.88				1
Outstanding, June 30, 2014		1,471		$	8.93	$	4.45		8.564	$	20,992
Exercisable, June 30, 2014		301		$	6.35	$	1.95		6.802	$	5,069
Vested and expected to vest		1,347		$	8.84	$	4.38		8.514	$	19,342

12. Segment and Geographic Information (Tables)

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Revenue and asset information by geographic region

	Three months ended June 30,				Six months ended June 30,
	2014		2013		2014		2013
Revenues:
United States	$	6,987	$	2,221	$	12,124	$	4,622
Taiwan		20,549		9,104		34,889		15,039
China		5,114		8,272		10,496		14,253
	$	32,650	$	19,597	$	57,509	$	33,914

	As of the period ended
	June 30,		December 31,
	2014		2013
Long-lived assets:
United States	$	13,640	$	9,415
Taiwan		16,632		7,192
China		16,159		16,337
	$	46,431	$	32,944

3. Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2014	Dec. 31, 2013
Liabilities:
Bank acceptance payable	$ 2,377	$ 2,347
Fair Value, Measurements, Recurring [Member]
Assets:
Short term investments	7,957	7,970
Total assets	7,957	7,970
Liabilities:
Bank acceptance payable	2,377	2,347
Total liabilities	2,377	2,347
Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 1 [Member]
Assets:
Short term investments	7,957	7,970
Total assets	7,957	7,970
Liabilities:
Bank acceptance payable	0	0
Total liabilities	0	0
Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 2 [Member]
Assets:
Short term investments	0	0
Total assets	0	0
Liabilities:
Bank acceptance payable	2,377	2,347
Total liabilities	2,377	2,347
Fair Value, Measurements, Recurring [Member] \| Fair Value, Inputs, Level 3 [Member]
Assets:
Short term investments	0	0
Total assets	0	0
Liabilities:
Bank acceptance payable	0	0
Total liabilities	$ 0	$ 0

4. Earnings Per Share (Details-EPS calculation) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share [Abstract]
Net income (loss)	$ 1,919	$ (282)	$ 2,004	$ (1,276)
Weighted average shares used to compute net income (loss) per share
Basic	14,785,437	270,912	13,794,384	267,711
Effective of dilutive options and warrants	856,000	0	826,000	0
Diluted	15,641,694	270,912	14,620,570	267,711
Net income (loss) per share
Basic	$ .13	$ (1.04)	$ 0.15	$ (4.77)
Diluted	$ .12	$ (1.04)	$ .14	$ (4.77)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References + Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

4. Earnings Per Share (Details-Antidilutive shares) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Potentially dilutive securires excluded from computation of diluted net income (loss) per share	0	792,000	0	792,000
Employee Stock Option [Member]
Potentially dilutive securires excluded from computation of diluted net income (loss) per share	0	736,000	0	736,000
Warrant [Member]
Potentially dilutive securires excluded from computation of diluted net income (loss) per share	0	56,000	0	56,000
Restricted Stock [Member]
Potentially dilutive securires excluded from computation of diluted net income (loss) per share	0	0	0	0

5. Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2014	Dec. 31, 2013
Inventory Details
Raw materials	$ 13,212	$ 8,832
Work in process	12,947	8,708
Finished goods	5,041	2,068
Inventories	$ 31,200	$ 19,608

5. Inventory (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
5. Inventory (Details Narrative) - USD ($) $ in Thousands	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Inventory Details Narrative
Lower of cost or market adjustment for inventory	$ 500	$ 300	$ 800	$ 400

6. Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2014	Dec. 31, 2013
Property, plant and equipment, gross	$ 70,156	$ 58,407
Less accumulated depreciation and amortization	(29,733)	(28,145)
Property, plant and equipment	40,423	30,262
Construction in progress	133	139
Land	1,101	733
Property, plant and equipment, net	41,657	31,134
Land Improvements [Member]
Property, plant and equipment, gross	103	103
Building and Building Improvements [Member]
Property, plant and equipment, gross	16,112	16,016
Machinery and Equipment [Member]
Property, plant and equipment, gross	48,301	37,490
Furniture and Fixtures [Member]
Property, plant and equipment, gross	1,373	1,047
Computer Equipment and software [Member]
Property, plant and equipment, gross	4,080	3,563
Transportation Equipment [Member]
Property, plant and equipment, gross	$ 187	$ 188

6. Property, Plant and Equipment (Details Narrative) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014
Property Plant And Equipment Details Narrative
Depreciation expense	$ 1,300	$ 2,500

7. Notes Payable and Long-Term Debt (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Notes payable and long-term debt total	$ 9,629	$ 26,108
Current portion of notes payable and long-term debt	9,562	17,185
Long term portion of notes payable and long-term debt	67	8,923
Bank acceptance notes	2,377	2,347
Term loan 1
Notes payable and long-term debt total	$ 0	3,076
Debt maturity date	Nov. 15, 2014
Interest rate	prime plus 0.75%
Line of Credit
Notes payable and long-term debt total	$ 0	7,000
Debt maturity date	Nov. 15, 2015
Interest rate	prime plus 0.5%
Term loan 2
Notes payable and long-term debt total	$ 0	1,850
Debt maturity date	Sep. 10, 2017
Interest rate	prime plus 0.75%
Line of Credit 2
Notes payable and long-term debt total	$ 0	7,053
Debt maturity date	Aug. 30, 2014
Interest rate	108% of China Prime rate
Line of Credit 3
Notes payable and long-term debt total	$ 1,246	2,413
Debt maturity date	Jun. 30, 2014
Interest rate	2.55% to 3.63% with China bank
Line of Credit 4
Notes payable and long-term debt total	$ 3,744	3,795
Debt maturity date	Jun. 30, 2014
Interest rate	Taiwan Time Deposit Interest plus 0.41%
Line of Credit 5
Notes payable and long-term debt total	$ 3,818	0
Debt maturity date	Aug. 31, 2014
Interest rate	Taiwan Time Deposit Interest plus 0.41%
Note payable 1
Notes payable and long-term debt total	$ 821	$ 921
Debt maturity date	Jul. 30, 2015
Interest rate	4.95%

7. Notes Payable and Long-Term Debt (Details Narrative) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
UNITED STATES
Revolving line of credit maximum borrowing capacity		$ 7,000
Revolving line of credit, maturity date		Nov. 15, 2015
Interest rate on line of credit		Prime rate plus 0.50% or the floor rate 3.75%, whichever is higher.
UNITED STATES \| Line of Credit [Member]
Unused borrowing capacity	$ 7,000
UNITED STATES \| Equipment Term Loan
Unused borrowing capacity	5,000
CHINA \| China, Yuan Renminbi
Revolving line of credit maximum borrowing capacity	$ 12,000
Interest rate on line of credit	108% of the China prime rate
CHINA \| United States of America, Dollars
Unused borrowing capacity	$ 14,000
Revolving line of credit maximum borrowing capacity	$ 3,300
Interest rate on line of credit	2.03% to 2.13%
TAIWAN
Revolving line of credit maximum borrowing capacity	$ 8,000
Revolving line of credit, maturity date	Jul. 31, 2015
Interest rate on line of credit	Taiwan Time Deposit Interest Rate Index plus 0.41%

8. Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2014	Dec. 31, 2013
Accrued Liabilities Details
Accrued payroll	$ 2,631	$ 2,279
Accrued employee benefits	424	489
Accrued taxes	166	270
Accrued interest	2	34
Accrued payments	88	128
Accrued commission	88	148
Accrued other	2,207	1,167
Total accrued liabilities	$ 5,606	$ 4,515

9. Other Income and Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Other Income And Expense Details
Unrealized foreign exchange gain (loss)	$ 183	$ (31)	$ (2)	$ (192)
Realized foreign exchange gain (loss)	4	(80)	70	(64)
Government subsidy income	28	61	108	195
Other non-operating gain (loss)	16	(9)	27	(5)
Gain (loss) on disposal of assets	(3)	9	(2)	8
Total other income and expense	$ (228)	$ 50	$ (201)	$ 58

10. Share-Based Compensation (Details-Share based compensation expense) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Employee stock-based compensation expense	$ 518	$ 129	$ 1,007	$ 240
Cost of Sales [Member]
Employee stock-based compensation expense	28	14	53	26
Research and Development Expense [Member]
Employee stock-based compensation expense	31	13	56	24
Sales and Marketing Expense [Member]
Employee stock-based compensation expense	25	11	48	21
General and Administrative Expense [Member]
Employee stock-based compensation expense	$ 434	$ 91	$ 850	$ 169

10. Share-Based Compensation (Details-Option activity) - Options $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2014 USD ($) $ / shares shares
Number of Shares
Outstanding, beginning balance \| shares	1,468,000
Granted \| shares	108,000
Exercised \| shares	(91,000)
Forfeited \| shares	(14,000)
Expired \| shares
Outstanding, ending balance \| shares	1,471,848
Exericsable, ending balance \| shares	301,000
Vested and expected to vest \| shares	1,347,000
Weighted Average Exercise Price
Outstanding, beginning balance \| $ / shares	$ 8.38
Granted \| $ / shares	13.84
Exercised \| $ / shares	5.99
Forfeited \| $ / shares	8.43
Expired \| $ / shares	6.75
Outstanding, ending balance \| $ / shares	8.93
Exericsable, ending balance \| $ / shares	6.35
Vested and expected to vest \| $ / shares	$ 8.84
Weighted Average Remaining Contractual Life
Outstanding, ending balance	8 years 6 months 23 days
Exercisable	6 years 9 months 19 days
Vested and expected to vest	8 years 6 months 5 days
Aggregate Intrinsic Value
Outstanding, beginning balance \| $	$ 9,731
Exercised \| $	1,447
Forfeited \| $	209
Expired \| $	1
Outstanding, ending balance \| $	20,992
Exercisable \| $	5,069
Vested and expected to vest \| $	$ 19,342

10. Share-Based Compensation (Details Narrative) $ in Thousands	6 Months Ended
	Jun. 30, 2014 USD ($) shares
Compensation cost on unvested options not yet recognized	$ 4,300
Compensation cost unrecognized weighted average period	3 years 1 month 6 days
Restricted Stock Units (RSUs)
RSU's granted \| shares	2,839,000
RSU grant-date fair market value	$ 100
Compensation cost on unvested RSU's not yet recognized	$ 23

11. Stockholders Equity (Details Narrative) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Common stock authorized	45,000,000		45,000,000
Preferred stock authorized	5,000,000		5,000,000
Warrants outstanding	0
Stock sold in public offering, shares	2,000,000		3,600,000
Stock sold in public offering, proceeds	$ 45,630	$ 0
Proceeds from public offering			$ 31,500

12. Segment and Geographic Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Revenues	$ 32,650	$ 19,597	$ 57,509	$ 33,914
Long-lived assets	46,431		46,431		$ 32,944
UNITED STATES
Revenues	6,987	2,221	12,124	4,622
Long-lived assets	13,640		13,640		9,415
TAIWAN
Revenues	20,549	9,104	34,889	15,039
Long-lived assets	16,632		16,632		7,192
CHINA
Revenues	5,114	$ 8,272	10,496	$ 14,253
Long-lived assets	$ 16,159		$ 16,159		$ 16,337