Company: AAOI
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001437749-25-033627
Chunk: 113

Company: APPLIED OPTOELECTRONICS, INC.
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 8
Chunk 113
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 foot on an annual basis (approximately $183,367 per month) during the final six months of the term.
    
   Although the lease agreement was executed prior to  September 30, 2025, the lease had not yet commenced as of that date, as Coleman is currently completing required improvements to the leased premises. The Company expects the lease to commence in the first quarter of 2026, at which time the Company will recognize a right-of-use (“ROU”) asset and a corresponding lease liability on its consolidated balance sheet. The total undiscounted lease payments over the initial lease term are approximately $21.9 million, which will be recognized upon lease commencement. No ROU asset or lease liability related to this agreement has been recorded as of  September 30, 2025.
    
   As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Based on the applicable lease terms and current economic environment, the Company applies a location approach for determining the incremental borrowing rate.
    
   Lease expense is included under general and administrative expenses and were $1.1 million and $0.4 million for the three months ended  September 30, 2025 and 2024, respectively. For the nine months ended  September 30, 2025 and 2024, lease expenses were $2.4 million and $1.1 million, respectively. The components of lease expense were as follows for the periods indicated (in thousands):

       Three months ended September 30,    Nine months ended September 30,  
   2025    2024    2025    2024  
 Operating lease expense  $840  $318  $1,771  $1,028 
 Short Term lease expense   257   41   614   62 
 Total lease expense  $1,097  $359  $2,385  $1,090 

   Maturities of lease liabilities are as follows for the future one-year periods ending  September 30, 2025 (in thousands):
   ​
   
     Fiscal years:   Operating  
 2025 (remaining 3 months)  $632 
 2026   3,246 
 202