8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 1, 2006

ALLIANCE FIBER OPTIC PRODUCTS, INC.
(Exact name of registrant as specified in its charter)

Delaware	0-31857	77-0554122
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

275 Gibraltar Drive, Sunnyvale, California 94089
(Address of principal executive offices)         (Zip Code)

Registrant's telephone number, including area code: (408) 736-6900

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

        The information in this Current Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing.

        On February 1, 2006, Alliance Fiber Optic Products, Inc. issued a press release announcing its financial results for the quarter ended December 31, 2005. A copy of the earnings release is furnished herewith as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits..

Exhibit	Description
99.1	Press Release dated February 1, 2006 announcing fourth quarter 2005 results.

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

      Dated: February 1, 2006

ALLIANCE FIBER OPTIC PRODUCTS, INC.

By   /s/ Anita K. Ho                                                

Name: Anita K. Ho

Title: Acting Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press release dated February 1, 2006 announcing fourth quarter 2005 results.

EX-99

Contact:

Anita Ho
Acting Chief Financial Officer
Alliance Fiber Optic Products, Inc.
Phone: 408-736-6900 x168                                                        ;                                                         February 1, 2006

AFOP REPORTS IMPROVED 4^th QUARTER AND FULL YEAR 2005 RESULTS

2005 Revenues Improve by 44% Versus Prior Year

Sunnyvale, CA — February 1, 2006 — Alliance Fiber Optic Products, Inc. (Nasdaq SmallCap: AFOP), an innovative supplier of fiber optic components, subsystems and integrated modules for the optical network equipment market, today reported its financial results for the fourth quarter ended December 31, 2005.

Revenues for the fourth quarter of 2005 totaled $5,510,000, which represents a 5% increase over revenues of $5,269,000 reported in the previous quarter, and an increase of 18% over revenues of $4,653,000 reported in the fourth quarter of 2004. The Company recorded a net loss for the fourth quarter of 2005 of $526,000, or $0.01 per share based on 39.6 million shares outstanding. This compares to a net loss for the third quarter of 2005 of $558,000, or $0.01 per share based on 39.4 million shares outstanding, and a net loss for the fourth quarter of 2004 of $1,587,000, or $0.04 per share based on 38.7 million shares outstanding.

Revenues for fiscal year 2005 totaled $20,963,000, which represents a 44% increase over revenues of $14,558,000 reported in the previous year. The Company recorded a net loss for fiscal year 2005 of $2,616,000 or $0.07 per share based on 39.3 million shares outstanding. This compares to a net loss for the previous year of $9,343,000 or $0.24 per share based on 38.6 million shares outstanding.

There were no deferred stock compensation charges for either the quarter ended December 31, 2005 or the quarter ended September 30, 2005. Included in the net loss for the quarter ended December 31, 2004 are deferred stock compensation charges of $1,000 and an asset impairment charge of $331,000.

There were no deferred stock compensation charges for the year ended December 31, 2005. Included in the net loss for the year ended December 31, 2004 are deferred stock compensation charges of $286,000 and an asset impairment charge of $331,000.

“The fourth quarter capped a year of consistent improvement for AFOP,” commented Peter Chang, President and Chief Executive Officer. “Revenues grew for the 7^th consecutive quarter, while expenses remained under control, leading to a greatly enhanced bottom line. The net loss for the fourth quarter fell by 6% from last quarter, and by 67% from a year ago. In addition, our gross margin steadily improved throughout the year, ending at 26.1% in the fourth quarter. It is also important to note that while our net loss for the fourth quarter improved by 6% sequentially, our operating net loss was 26% better than last quarter. Finally, our cash and cash equivalents remained essentially unchanged from the prior quarter, at $29 million.”

“In 2005 we made solid progress in broadening our product and technology platform. As business conditions continue to improve, we remain encouraged about the opportunities we see in the year ahead,” concluded Mr. Chang.

Conference Call

Management will host a conference call at 1:30 p.m. Pacific Time on February 1, 2006 to discuss AFOP’s fourth quarter and full year 2005 financial results. To participate in AFOP’s conference call, please call (877) 407-9210 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 187465. AFOP will also provide a live webcast of its fourth quarter and full year 2005 conference call at AFOP’s website www.afop.com. A replay will be available until February 8. The dial in for the instant replay is (877) 660-6853. The replay passcodes (account#: 286; conference ID#: 187465) are both required for the replay.

About AFOP

Founded in 1995, Alliance Fiber Optic Products, Inc. designs, manufactures and markets a broad range of high performance fiber optic components and integrated modules. AFOP’s products are used by leading and emerging communications equipment manufacturers to deliver optical networking systems to the long-haul, enterprise, metropolitan and last mile access segments of the communications network. AFOP offers a broad product line of passive optical components including interconnect systems, couplers and splitters, thin film DWDM components and modules, fixed and variable optical attenuators, and depolarizers. AFOP is headquartered in Sunnyvale, California, with manufacturing and product development capabilities in the United States, Taiwan and China. AFOP’s website is located at http://www.afop.com.

Except for the historical information contained herein, the matters set forth in this press release, including statements as to our future prospects, are forward looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, but not limited to general economic conditions and trends, the impact of competitive products and pricing, timely introduction of new technologies, timely design acceptance by our customers, the acceptance of new products and technologies by our customers, customer demand, the timing of customer orders, loss of key customers, ability to ramp new products into volume production, industry-wide shifts in supply and demand for optical components and modules, industry overcapacity, failure of cost control initiatives, financial stability in foreign markets, and other risks detailed from time to time in our SEC reports, including AFOP’s most recent Form 10-QSB for the quarter ended September 30, 2005. These forward-looking statements speak only as of the date hereof. AFOP disclaims any intention or obligation to update or revise any forward-looking statements.

ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)

	Dec. 31, 2005		Dec. 31, 2004
ASSETS
Current assets:
Cash and short-term investments	$	29,407	$	31,456
Accounts receivable, net		3,570		2,322
Inventories		3,670		3,998
Other current assets		634		653
Total current assets		37,281		38,429
Property and equipment, net		4,564		5,603
Other assets		105		121
Total assets	$	41,950	$	44,153
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,342	$	2,205
Accrued expenses and other liabilities		2,428		2,480
Total current liabilities		4,770		4,685
Long-term liabilities		859		826
Total liabilities		5,629		5,511
Stockholders' equity		36,321		38,642
Total liabilities and stockholders' equity	$	41,950	$	44,153

ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended									Twelve Months Ended
	Dec. 31, 2005			Sept. 30, 2005			Dec. 31, 2004			Dec. 31, 2005			Dec. 31, 2004
Revenues	$	5,510		$	5,269		$	4,653		$	20,963		$	14,558
Cost of revenues		4,070			4,141			3,715			16,363			13,174
Gross profit/(loss)		1,440			1,128			938			4,600			1,384
Operating expenses:
Research and development		816			784			1,078			3,434			5,555
Sales and marketing		524			519			564			2,176			2,048
General and administrative		789			756			823			3,009			3,422
Asset impairment charge		--			--			331			--			331
Total operating expenses		2,129			2,059			2,796			8,619			11,356
Loss from operations		(689	)		(931	)		(1,858	)		(4,019	)		(9,972	)
Interest and other income, net		163			373			271			1,403			629
Loss before income taxes		(526	)		(558	)		(1,587	)		(2,616	)		(9,343	)
Income tax provision		--			--			--			--			--
Net loss	$	(526	)	$	(558	)	$	(1,587	)	$	(2,616	)	$	(9,343	)
Net loss per share - basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.07	)	$	(0.24	)
Weighted average shares outstanding
		39,630			39,405			38,670			39,330			38,590