the 2017 tax act represents major tax reform legislation that , among other provisions , reduces the u.s. corporate tax rate . see note 8 to the consolidated financial statements for further information on the financial statement impact of the 2017 tax act . results of operations as an aid to understanding our operating results , the following table shows items from our consolidated statements of operations expressed as a percentage of sales : replace_table_token_5_th fiscal year 2017 compared with fiscal year 2016 sales , net for 2017 , net sales totaled approximately $ 39.4 million , compared with approximately $ 50.7 million for 2016. sales of p-25 digital products in 2017 totaled approximately $ 28.7 million ( 72.7 % of total sales ) , compared with approximately $ 33.2 million ( 65.5 % of total sales ) for 2016. sales for the prior year benefited from significant sales to one customer under our contract with the tsa , which were not fully replicated in 2017 , resulting in the year-over-year decrease . absent the impact of sales to the tsa , 2017 sales increased approximately 20.9 % from 2016. during 2017 , demand from other federal , state and international public safety agencies strengthened compared with the prior year . we were awarded several multi-year contracts and blanket purchase orders from federal agencies that we believe will yield sales in future periods , and we are encouraged by our funnel of sales prospects . during the year , we added sales resources to capitalize on opportunities for potential sales growth . however , the timing and size of orders from government agencies at all levels can be unpredictable due to the influence of budgets and other priorities , and we can not assure investors that any sales will occur under the blanket purchase orders , or that our sales prospects will otherwise increase . 20 cost of products and gross profit margin cost of products as a percentage of sales for 2017 was 75.8 % , compared with 66.3 % in 2016. gross profit margin as a percentage of sales for 2017 was 24.2 % , compared with 33.7 % for 2016. our cost of products and gross profit margin are derived primarily from material , labor and overhead costs , product mix , manufacturing volumes and pricing . for 2017 , costs associated with the write-off of specific inventory and higher product service costs also adversely impacted costs of products and gross profit margin . in 2017 , the mix of product sales was more heavily weighted toward lower margin products , and certain products were sold using promotional pricing designed to drive sales growth . following leadership changes , in the third quarter of 2017 , we launched a comprehensive evaluation of our products , markets and strategies through the remainder of the year . as a result of this evaluation , we recognized a charge of $ 3.2 million to write-off inventory with limited customer market opportunities , primarily due to concerns regarding technology and production costs . we also incurred approximately $ 1.8 million in incremental product costs associated with addressing customer requests for modification and upgrades . gross profit margins for the prior year reflected competitive factors associated with the tsa sales , which comprised a significant portion of our sales for 2016. we continue to utilize contract manufacturing relationships for production efficiencies and to manage material and labor costs . we anticipate that our current contract manufacturing relationships or comparable alternatives will be available to us in the future . we believe gross margin improvements can be realized by leveraging increased sales volumes , manufacturing efficiencies and quality . we may encounter product cost and competitive pricing pressures in the future . however , the extent of their impact on gross margins , if any , is uncertain . selling , general and administrative expenses sg & a expenses consist of marketing , sales , commissions , engineering , product development , management information systems , accounting , headquarters expenses and non-cash , share-based employee compensation expense . for 2017 , sg & a expenses totaled approximately $ 14.6 million , or 37.0 % of sales , compared with approximately $ 12.8 million , or 25.3 % of sales , for 2016. engineering and product development expenses for 2017 totaled approximately $ 5.0 million ( 12.7 % of total sales ) , compared with approximately $ 4.1 million ( 8.1 % of total sales ) for the previous year . expenses related to new product development projects were the primary contributor to the increase in engineering expenses . marketing and selling expenses for 2017 totaled approximately $ 5.2 million ( 13.3 % of sales ) , compared with $ 5.4 million ( 10.6 % of sales ) for the prior year . the decrease is attributed primarily to decreases in commissions and incentive compensation directly related to sales performance , which were partially offset by expenses related to new sales staff . general and administrative expenses for 2017 totaled approximately $ 4.3 million ( 11.0 % of total sales ) , compared with approximately $ 3.3 million ( 6.5 % of total sales ) for 2016. the increase was related primarily to headquarters professional fees and expenses incurred in the first quarter associated with changes in senior management . operating ( loss ) income the operating loss for 2017 totaled approximately $ 5.0 million ( 12.8 % of sales ) , compared with operating income of approximately $ 4.3 million ( 8.5 % of sales ) for 2016. the decrease in operating income was attributed to several factors , which included a ) higher costs of products , derived in large part from charges associated with the write-off of inventory , b ) product costs related to addressing customer requested modifications and upgrade , c ) engineering expenses related to new product development , and d ) headquarters professional fees story_separator_special_tag ” allowance for doubtful accounts the allowance for doubtful accounts was approximately $ 50,000 on gross trade receivables of approximately $ 5.6 million as of december 31 , 2017 , as compared with $ 50,000 on gross trade receivables of approximately $ 3.5 million as of december 31 , 2016. this allowance is used to state trade receivables at a net realizable value or the amount that we estimate will be collected on our gross receivables as of december 31 , 2017. because the amount that we will actually collect on the receivables outstanding as of december 31 , 2017 can not be known with certainty , we rely on prior experience . our historical collection losses have typically been infrequent , with write-offs of trade receivables being less than 1 % of sales during past years . accordingly , we have maintained a general allowance of up to approximately 5 % of the gross trade receivables balance in order to allow for future collection losses that arise from customer accounts that do not indicate the inability to pay but turn out to have such an inability . currently , our general allowance on trade receivables is approximately 1 % of gross receivables . as revenues and total receivables increase , the allowance balance may also increase . we also maintain a specific allowance for customer accounts that we know may not be collectible due to various reasons , such as bankruptcy and other customer liquidity issues . we analyze our trade receivables portfolio based on the age of each customer 's invoice . in this way , we can identify those accounts that are more likely than not to have collection problems . we may reserve a portion or all of the customer 's balance . as of december 31 , 2017 and 2016 , we had no specific allowance on trade receivables . excess and obsolete inventory the allowance for obsolete and slow-moving inventory was approximately $ 789,000 and $ 1.6 million at december 31 , 2017 and 2016 , respectively . the allowance for slow-moving , excess , or obsolete inventory is used to state our inventories at the lower of cost or market . because the amount of inventory that we will actually recoup through sales can not be known with certainty at any particular time , we rely on past sales experience , future sales forecasts and our strategic business plans . generally , in analyzing our inventory levels , we classify inventory as having been used or unused during the past year and establish an allowance based upon several factors , including , but not limited to , business forecasts , inventory quantities and historical usage profile . supplemental to the aforementioned analysis , specific inventory items are reviewed individually by management . based on the review , considering business levels , future prospects , new products and technology changes , management , using its business judgment , may adjust the valuation of specific inventory items to reflect an accurate valuation . management also performs a determination of net realizable value for all finished goods with a selling price below cost . for all such items , the inventory is valued at not more than the selling price less cost , if any , to sell . 27 allowance for product warranty we offer two-year warranties to our customers depending on the specific product and terms of the customer purchase agreement . our typical warranties require us to repair and replace defective products during the warranty period at no cost to the customer . at the time the product revenue is recognized , we record a liability for estimated costs under our warranties . the costs are estimated based on historical experience . we periodically assess the adequacy of our recorded liability for product warranties and adjust the amount as necessary . income taxes we account for income taxes using the asset and liability method . deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using the enacted tax rates expected to apply in the period in which the deferred tax asset or liability is expected to be realized . the effect of changes in net deferred tax assets and liabilities is recognized on our consolidated balance sheets and consolidated statements of operations in the period in which the change is recognized . valuation allowances are provided to the extent that it is more likely than not that some portion , or all , of deferred tax assets will not be realized . in determining whether a tax asset is realizable , we consider , among other things , estimates of future earnings based on information currently available , current and anticipated customers , contracts and new product introductions , as well as recent operating results and certain tax planning strategies . if we fail to achieve the future results anticipated in the calculation and valuation of net deferred tax assets , we may be required to adjust the valuation allowance related to our deferred tax assets in the future . forward-looking statements we believe that it is important to communicate our future expectations to our security holders and to the public . this report , therefore , contains statements about future events and expectations which are “ forward-looking statements ” within the meaning of sections 27a of the securities act of 1933 and 21e of the exchange act , including the statements about our plans , objectives , expectations and prospects under the heading “ management 's discussion and analysis of financial condition and results of operations . ” you can expect to identify these statements by forward-looking words such as “ may , ” “ might , ” “ could , ” “ would , ” “ should , ” “ will

liquidity and capital resources for the year ended december 31 , 2017 , net cash used in operating activities totaled approximately $ 2.3 million , compared with cash provided by operations of approximately $ 10.7 million for 2016. cash used in operating activities was primarily related to net loss , accounts receivable and deferred tax assets , inventories and accrued compensation and related taxes , partially offset by accounts payable , depreciation and amortization and accrued expenses . 24 for the year ended december 31 , 2017 , we realized a net loss of approximately $ 3.6 million , compared with net income of approximately $ 2.7 million last year . accounts receivable increased approximately $ 2.1 million during the year ended december 31 , 2017 , reflecting sales that were consummated later in the year that had not yet completed their collection cycle , compared with a $ 657,000 decrease for last year . deferred tax assets for 2017 increased by approximately $ 1.2 million primarily due to our pre-tax loss , and partially offset by the impact of revaluation derived from tax reform . for the prior year , deferred tax assets decreased approximately $ 1.1 million primarily as a result of pre-tax income . net inventories increased during 2017 by approximately $ 508,000 primarily due to material purchases , which were partially offset by the write-off of certain inventory items . last year , inventories decreased approximately $ 2.1 million , primarily due to fulfilling the tsa delivery orders . accrued compensation and related taxes decreased by approximately $ 829,000 during 2017 as performance incentives were paid . for the same period last year , accrued compensation and related taxes increased by approximately $ 1.1 million , related primarily to incentive compensation .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and capital resources for the year ended december 31 , 2017 , net cash used in operating activities totaled approximately $ 2.3 million , compared with cash provided by operations of approximately $ 10.7 million for 2016. cash used in operating activities was primarily related to net loss , accounts receivable and deferred tax assets , inventories and accrued compensation and related taxes , partially offset by accounts payable , depreciation and amortization and accrued expenses . 24 for the year ended december 31 , 2017 , we realized a net loss of approximately $ 3.6 million , compared with net income of approximately $ 2.7 million last year . accounts receivable increased approximately $ 2.1 million during the year ended december 31 , 2017 , reflecting sales that were consummated later in the year that had not yet completed their collection cycle , compared with a $ 657,000 decrease for last year . deferred tax assets for 2017 increased by approximately $ 1.2 million primarily due to our pre-tax loss , and partially offset by the impact of revaluation derived from tax reform . for the prior year , deferred tax assets decreased approximately $ 1.1 million primarily as a result of pre-tax income . net inventories increased during 2017 by approximately $ 508,000 primarily due to material purchases , which were partially offset by the write-off of certain inventory items . last year , inventories decreased approximately $ 2.1 million , primarily due to fulfilling the tsa delivery orders . accrued compensation and related taxes decreased by approximately $ 829,000 during 2017 as performance incentives were paid . for the same period last year , accrued compensation and related taxes increased by approximately $ 1.1 million , related primarily to incentive compensation .
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 Suspicious Activity Report : the 2017 tax act represents major tax reform legislation that , among other provisions , reduces the u.s. corporate tax rate . see note 8 to the consolidated financial statements for further information on the financial statement impact of the 2017 tax act . results of operations as an aid to understanding our operating results , the following table shows items from our consolidated statements of operations expressed as a percentage of sales : replace_table_token_5_th fiscal year 2017 compared with fiscal year 2016 sales , net for 2017 , net sales totaled approximately $ 39.4 million , compared with approximately $ 50.7 million for 2016. sales of p-25 digital products in 2017 totaled approximately $ 28.7 million ( 72.7 % of total sales ) , compared with approximately $ 33.2 million ( 65.5 % of total sales ) for 2016. sales for the prior year benefited from significant sales to one customer under our contract with the tsa , which were not fully replicated in 2017 , resulting in the year-over-year decrease . absent the impact of sales to the tsa , 2017 sales increased approximately 20.9 % from 2016. during 2017 , demand from other federal , state and international public safety agencies strengthened compared with the prior year . we were awarded several multi-year contracts and blanket purchase orders from federal agencies that we believe will yield sales in future periods , and we are encouraged by our funnel of sales prospects . during the year , we added sales resources to capitalize on opportunities for potential sales growth . however , the timing and size of orders from government agencies at all levels can be unpredictable due to the influence of budgets and other priorities , and we can not assure investors that any sales will occur under the blanket purchase orders , or that our sales prospects will otherwise increase . 20 cost of products and gross profit margin cost of products as a percentage of sales for 2017 was 75.8 % , compared with 66.3 % in 2016. gross profit margin as a percentage of sales for 2017 was 24.2 % , compared with 33.7 % for 2016. our cost of products and gross profit margin are derived primarily from material , labor and overhead costs , product mix , manufacturing volumes and pricing . for 2017 , costs associated with the write-off of specific inventory and higher product service costs also adversely impacted costs of products and gross profit margin . in 2017 , the mix of product sales was more heavily weighted toward lower margin products , and certain products were sold using promotional pricing designed to drive sales growth . following leadership changes , in the third quarter of 2017 , we launched a comprehensive evaluation of our products , markets and strategies through the remainder of the year . as a result of this evaluation , we recognized a charge of $ 3.2 million to write-off inventory with limited customer market opportunities , primarily due to concerns regarding technology and production costs . we also incurred approximately $ 1.8 million in incremental product costs associated with addressing customer requests for modification and upgrades . gross profit margins for the prior year reflected competitive factors associated with the tsa sales , which comprised a significant portion of our sales for 2016. we continue to utilize contract manufacturing relationships for production efficiencies and to manage material and labor costs . we anticipate that our current contract manufacturing relationships or comparable alternatives will be available to us in the future . we believe gross margin improvements can be realized by leveraging increased sales volumes , manufacturing efficiencies and quality . we may encounter product cost and competitive pricing pressures in the future . however , the extent of their impact on gross margins , if any , is uncertain . selling , general and administrative expenses sg & a expenses consist of marketing , sales , commissions , engineering , product development , management information systems , accounting , headquarters expenses and non-cash , share-based employee compensation expense . for 2017 , sg & a expenses totaled approximately $ 14.6 million , or 37.0 % of sales , compared with approximately $ 12.8 million , or 25.3 % of sales , for 2016. engineering and product development expenses for 2017 totaled approximately $ 5.0 million ( 12.7 % of total sales ) , compared with approximately $ 4.1 million ( 8.1 % of total sales ) for the previous year . expenses related to new product development projects were the primary contributor to the increase in engineering expenses . marketing and selling expenses for 2017 totaled approximately $ 5.2 million ( 13.3 % of sales ) , compared with $ 5.4 million ( 10.6 % of sales ) for the prior year . the decrease is attributed primarily to decreases in commissions and incentive compensation directly related to sales performance , which were partially offset by expenses related to new sales staff . general and administrative expenses for 2017 totaled approximately $ 4.3 million ( 11.0 % of total sales ) , compared with approximately $ 3.3 million ( 6.5 % of total sales ) for 2016. the increase was related primarily to headquarters professional fees and expenses incurred in the first quarter associated with changes in senior management . operating ( loss ) income the operating loss for 2017 totaled approximately $ 5.0 million ( 12.8 % of sales ) , compared with operating income of approximately $ 4.3 million ( 8.5 % of sales ) for 2016. the decrease in operating income was attributed to several factors , which included a ) higher costs of products , derived in large part from charges associated with the write-off of inventory , b ) product costs related to addressing customer requested modifications and upgrade , c ) engineering expenses related to new product development , and d ) headquarters professional fees story_separator_special_tag ” allowance for doubtful accounts the allowance for doubtful accounts was approximately $ 50,000 on gross trade receivables of approximately $ 5.6 million as of december 31 , 2017 , as compared with $ 50,000 on gross trade receivables of approximately $ 3.5 million as of december 31 , 2016. this allowance is used to state trade receivables at a net realizable value or the amount that we estimate will be collected on our gross receivables as of december 31 , 2017. because the amount that we will actually collect on the receivables outstanding as of december 31 , 2017 can not be known with certainty , we rely on prior experience . our historical collection losses have typically been infrequent , with write-offs of trade receivables being less than 1 % of sales during past years . accordingly , we have maintained a general allowance of up to approximately 5 % of the gross trade receivables balance in order to allow for future collection losses that arise from customer accounts that do not indicate the inability to pay but turn out to have such an inability . currently , our general allowance on trade receivables is approximately 1 % of gross receivables . as revenues and total receivables increase , the allowance balance may also increase . we also maintain a specific allowance for customer accounts that we know may not be collectible due to various reasons , such as bankruptcy and other customer liquidity issues . we analyze our trade receivables portfolio based on the age of each customer 's invoice . in this way , we can identify those accounts that are more likely than not to have collection problems . we may reserve a portion or all of the customer 's balance . as of december 31 , 2017 and 2016 , we had no specific allowance on trade receivables . excess and obsolete inventory the allowance for obsolete and slow-moving inventory was approximately $ 789,000 and $ 1.6 million at december 31 , 2017 and 2016 , respectively . the allowance for slow-moving , excess , or obsolete inventory is used to state our inventories at the lower of cost or market . because the amount of inventory that we will actually recoup through sales can not be known with certainty at any particular time , we rely on past sales experience , future sales forecasts and our strategic business plans . generally , in analyzing our inventory levels , we classify inventory as having been used or unused during the past year and establish an allowance based upon several factors , including , but not limited to , business forecasts , inventory quantities and historical usage profile . supplemental to the aforementioned analysis , specific inventory items are reviewed individually by management . based on the review , considering business levels , future prospects , new products and technology changes , management , using its business judgment , may adjust the valuation of specific inventory items to reflect an accurate valuation . management also performs a determination of net realizable value for all finished goods with a selling price below cost . for all such items , the inventory is valued at not more than the selling price less cost , if any , to sell . 27 allowance for product warranty we offer two-year warranties to our customers depending on the specific product and terms of the customer purchase agreement . our typical warranties require us to repair and replace defective products during the warranty period at no cost to the customer . at the time the product revenue is recognized , we record a liability for estimated costs under our warranties . the costs are estimated based on historical experience . we periodically assess the adequacy of our recorded liability for product warranties and adjust the amount as necessary . income taxes we account for income taxes using the asset and liability method . deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using the enacted tax rates expected to apply in the period in which the deferred tax asset or liability is expected to be realized . the effect of changes in net deferred tax assets and liabilities is recognized on our consolidated balance sheets and consolidated statements of operations in the period in which the change is recognized . valuation allowances are provided to the extent that it is more likely than not that some portion , or all , of deferred tax assets will not be realized . in determining whether a tax asset is realizable , we consider , among other things , estimates of future earnings based on information currently available , current and anticipated customers , contracts and new product introductions , as well as recent operating results and certain tax planning strategies . if we fail to achieve the future results anticipated in the calculation and valuation of net deferred tax assets , we may be required to adjust the valuation allowance related to our deferred tax assets in the future . forward-looking statements we believe that it is important to communicate our future expectations to our security holders and to the public . this report , therefore , contains statements about future events and expectations which are “ forward-looking statements ” within the meaning of sections 27a of the securities act of 1933 and 21e of the exchange act , including the statements about our plans , objectives , expectations and prospects under the heading “ management 's discussion and analysis of financial condition and results of operations . ” you can expect to identify these statements by forward-looking words such as “ may , ” “ might , ” “ could , ” “ would , ” “ should , ” “ will

