however , the combined demand for low carb products and cortislim ® began to decline in the fourth quarter of 2004 , which we believe was due to a change in demand for low carb products and the wider availability of cortislim ® in the marketplace . accordingly , we launched new weight management products in fiscal 2005 , and continued to launch them into fiscal 2007 , leading to an increase in sales of weight management products , while consistently experiencing a decrease in sales of low carb products since the beginning of fiscal 2006 , compared to fiscal 2005. moreover , as the rate of obesity increases and as the general public becomes increasingly more health conscious , we expect the demand for weight management products , albeit volatile , to continue to be strong in the near term . accordingly , we will continue to offer the highest quality products available in this segment . 22 in addition to the weight management product lines , we intend to continue our focus in meeting the demands of an increasingly aging population , the effects of increasing costs of traditional healthcare and a rapidly growing fitness conscious public . we believe that the aging of the population provides us with an area of opportunity . the u.s. census bureau reports that the number of individuals in the 65 and over age group is expected to double in the next 25 years . the increase in the population of this age group , coupled with the need for increased supplementation as digestive abilities wane , provides us with an enhanced sales opportunity . for example , anti-degenerative supplements , such as chondroitin sulfate , have demonstrated consistent increases in sales growth . we will continue to offer products such as chondroitin sulfate to meet the demands of this market segment . we believe that as the costs of healthcare continue to rise , lower-cost alternatives to prescription drugs and preventative supplementation will continue to be an option for the american consumer . according to the national coalition on health care and a study by harvard medical school , medical spending as a percentage of gdp increased from 5 % to 16 % between 1950 and 2004 , and is projected to reach 17.7 % of gdp by 2012. as an increasing number of the population seeks to avoid costly medical issues and focuses on prevention through diet , supplementation and exercise , we expect the demand in this market segment to provide us with continued opportunities . for example , lower-cost alternatives to expensive cholesterol lowering medications such as fish oil ( essential fatty acids ) , are experiencing increasing popularity . according to the new journal delaware online , more than 50 million adults are involved in either some sort of regular fitness program or sports activity , with over 25 % of current health-club members being over the age of 55. according to the international health , racquet and sportsclub association , there has been a 3.3 % increase in health club participation from 2005 to 2006 , which is continuing the trend from 2001 through 2005 where there was a 20 % to 25 % increase in wellness program participants . moreover , studies by the british heart foundation found that adults over 40 who exercise are at less than half the risk of experiencing heart disease compared to their sedentary peers , which is information we believe will further fuel this growth . we believe that the increase in our sales of sports supplements , which help with recovery and performance , is an indication of this growth , and that this will continue as fitness programs become an accepted lifestyle rather than a trend . when taken in context of the rising costs of healthcare , we believe the vms industry as a whole stands to benefit . our historical results have also been significantly influenced by our new store openings . since the beginning of 2003 , we have opened 223 stores and operate 348 stores located in 32 states and the district of columbia as of march 15 , 2008. our stores typically require three to four years to mature , generating lower store level sales and store contribution in the initial years than our mature stores . as a result , new stores generally have a negative impact on our overall operating margin and sales per square foot . as our recently opened stores mature , we expect them to contribute meaningfully to our sales and store contribution . critical accounting policies the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenue and expenses during the reporting period . critical accounting policies are those that are the most important portrayal of our financial condition and results of operations , and require our most difficult , subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain . while our significant accounting policies are described in more detail in the notes to our financial statements , our most critical accounting policies , discussed below , pertain to revenue recognition , inventories , impairment of long-lived assets , goodwill and other intangible assets , deferred sales for our healthy awards program , stock-based compensation , and income taxes . in applying such policies , we must use some amounts that are based upon our informed judgments and best estimates . estimates , by their nature , are based on judgments and available information . the estimates that we make are based upon historical factors , current circumstances and the experience and judgment of management . story_separator_special_tag the supplements category , which is among the largest selling product categories in our mix , experienced significant growth in sales of essential fatty acids , or efas , which were responsible for most of the increase in the supplement category in fiscal 2007. given the current trend in efa consumption , and the growing number of publications and recommendations regarding the heart-health benefits of fish oils ( such as by the american heart association and us national institutes of health ) , we expect continued 27 strength in sales of efas for the next fiscal year . product sales in the sports nutrition category increased at a greater rate than the overall increase in net sales during the fiscal 2007 , and have done so since early fiscal 2006. we believe this is due largely to the growth in the fitness-conscious market as well as the diversity of new product introductions . direct net sales to our direct customers decreased $ 2.6 million , or 3.3 % , to $ 75.9 million for fiscal 2007 compared to $ 78.5 million for fiscal 2006. this decrease was due to a decrease in our catalog sales , which we believe is the result of our continued expansion of our retail store locations and online stores , as well as the general decline in effectiveness of catalogs as a merchandising medium . this overall decrease was largely offset by an increase in our internet based sales of $ 4.7 million during fiscal 2007 , which was primarily due to improvements to our e-commerce platform and customer experience , as well as continued improvements in our online customer prospecting efforts . cost of goods sold cost of goods sold , which includes product , warehouse and distribution and store occupancy costs , increased $ 33.8 million , or 10.4 % , to $ 360.3 million for fiscal 2007 compared to $ 326.5 million for fiscal 2006. the components of cost of goods sold are explained below . cost of goods sold as a percentage of net sales was 67.0 % for fiscal 2007 compared to 67.2 % for fiscal 2006. product costs increased $ 23.7 million , or 9.3 % , to $ 279.8 million during fiscal 2007 compared to $ 256.1 million for fiscal 2006. product costs as a percentage of net sales decreased to 52.0 % in fiscal 2007 compared to 52.7 % for fiscal 2006. the percentage decrease was largely a result of a decrease in price promotions for our products of approximately 1.2 % , offset in part , by an increase in product costs of approximately 0.6 % as a percentage of sales in fiscal 2007 versus fiscal 2006. warehouse and distribution costs increased $ 2.1 million , or 12.4 % , to $ 18.6 million for fiscal 2007 compared to $ 16.6 million for fiscal 2006. warehouse and distribution costs as a percentage of net sales increased to 3.5 % for fiscal 2007 compared to 3.4 % in fiscal 2006. the increase was mainly attributable to increases in shipping costs in fiscal 2007 as compared to fiscal 2006 , as a result of rising fuel costs and shipments to greater distances as we continue to expand our geographic store base . occupancy costs increased $ 8.1 million , or 15.0 % , to $ 61.9 million for fiscal 2007 compared to $ 53.9 million for fiscal 2006. occupancy costs as a percentage of net sales increased to 11.5 % during fiscal 2007 compared to 11.1 % for fiscal 2006. this increase as a percentage of sales is mainly attributable to the increases in utilities and real estate tax expenses as well as a lower ratio of direct net sales , as a component of total net sales , to occupancy expenses . gross profit as a result of the foregoing , gross profit increased $ 18.0 million , or 11.3 % , to $ 177.5 million for fiscal 2007 compared to $ 159.5 million for fiscal 2006. selling , general and administrative expenses selling , general and administrative expenses , including operating payroll and related benefits , advertising and promotion expense , and other selling , general and administrative expenses , increased $ 14.8 million , or 11.5 % , to $ 143.5 million during fiscal 2007 , compared to $ 128.6 million for fiscal 2006. the components of selling , general and administrative expenses are explained below . selling , general and administrative expenses as a percentage of net sales for fiscal 2007 was 26.7 % compared to 26.5 % for fiscal 2006. operating payroll and related benefits increased $ 5.2 million , or 10.9 % , to $ 53.5 million for fiscal 2007 compared to $ 48.2 million for fiscal 2006. the increase is due mainly to our increase in retail locations throughout fiscal 2007. operating payroll and related benefits expenses as a percentage of net sales remained level at 9.9 % during fiscal 2007 compared to 9.9 % for fiscal 2006. advertising and promotion expenses increased $ 0.6 million , or 4.9 % , to $ 13.7 million for fiscal 2007 compared to $ 13.1 million for fiscal 2006. advertising and promotion expenses as a percentage of net sales decreased to 2.6 % during fiscal 2007 compared to 2.7 % for fiscal 2006 , primarily as a result of web-based advertising initiatives , such as broadening our web platform , which began in early fiscal 2006 and generated expenses throughout that year , but were completed well before fiscal 2007 year-end . 28 other selling , general and administrative expenses , which include depreciation and amortization expense , increased $ 9.0 million , or 13.4 % , to $ 76.3 million in fiscal 2007 compared to $ 67.3 million for fiscal 2006. the increase was due to an increase in depreciation and amortization of approximately $ 1.2 million , reflecting our expanding operation , and a increase in professional fees of $ 1.5 million

key indicators of liquidity and capital resources the following table sets forth key indicators of our liquidity and capital resources ( in thousands ) : replace_table_token_11_th replace_table_token_12_th liquidity and capital resources our primary uses of cash are to fund working capital , operating expenses , debt service and capital expenditures related primarily to the construction of new stores . historically , we have financed these requirements from internally generated cash flow . we believe that the cash generated by operations , together with the borrowing availability under the new credit facility ( described below ) , will be sufficient to meet our working capital needs for the next twelve months , including investments made and expenses incurred in connection with our store growth plans , systems development and store improvements . during fiscal 2007 we spent approximately $ 12 million , out of the $ 14.1 million of total capital expenditures , in connection with our store growth and improvement plans . we opened 36 new stores during fiscal 2007 , and closed one store . our working capital requirements for merchandise inventory will continue to increase as we continue to open additional stores . currently , our practice is to establish an inventory level of $ 165,000 to $ 200,000 in cost for each of our stores , a portion of which is vendor-financed based upon agreed credit terms , with the remainder being purchased in cash . in addition , 60 day payment terms have been extended to us by some of our suppliers allowing us to effectively manage our inventory and working capital .


 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.
     ```key indicators of liquidity and capital resources the following table sets forth key indicators of our liquidity and capital resources ( in thousands ) : replace_table_token_11_th replace_table_token_12_th liquidity and capital resources our primary uses of cash are to fund working capital , operating expenses , debt service and capital expenditures related primarily to the construction of new stores . historically , we have financed these requirements from internally generated cash flow . we believe that the cash generated by operations , together with the borrowing availability under the new credit facility ( described below ) , will be sufficient to meet our working capital needs for the next twelve months , including investments made and expenses incurred in connection with our store growth plans , systems development and store improvements . during fiscal 2007 we spent approximately $ 12 million , out of the $ 14.1 million of total capital expenditures , in connection with our store growth and improvement plans . we opened 36 new stores during fiscal 2007 , and closed one store . our working capital requirements for merchandise inventory will continue to increase as we continue to open additional stores . currently , our practice is to establish an inventory level of $ 165,000 to $ 200,000 in cost for each of our stores , a portion of which is vendor-financed based upon agreed credit terms , with the remainder being purchased in cash . in addition , 60 day payment terms have been extended to us by some of our suppliers allowing us to effectively manage our inventory and working capital .
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 Suspicious Activity Report : however , the combined demand for low carb products and cortislim ® began to decline in the fourth quarter of 2004 , which we believe was due to a change in demand for low carb products and the wider availability of cortislim ® in the marketplace . accordingly , we launched new weight management products in fiscal 2005 , and continued to launch them into fiscal 2007 , leading to an increase in sales of weight management products , while consistently experiencing a decrease in sales of low carb products since the beginning of fiscal 2006 , compared to fiscal 2005. moreover , as the rate of obesity increases and as the general public becomes increasingly more health conscious , we expect the demand for weight management products , albeit volatile , to continue to be strong in the near term . accordingly , we will continue to offer the highest quality products available in this segment . 22 in addition to the weight management product lines , we intend to continue our focus in meeting the demands of an increasingly aging population , the effects of increasing costs of traditional healthcare and a rapidly growing fitness conscious public . we believe that the aging of the population provides us with an area of opportunity . the u.s. census bureau reports that the number of individuals in the 65 and over age group is expected to double in the next 25 years . the increase in the population of this age group , coupled with the need for increased supplementation as digestive abilities wane , provides us with an enhanced sales opportunity . for example , anti-degenerative supplements , such as chondroitin sulfate , have demonstrated consistent increases in sales growth . we will continue to offer products such as chondroitin sulfate to meet the demands of this market segment . we believe that as the costs of healthcare continue to rise , lower-cost alternatives to prescription drugs and preventative supplementation will continue to be an option for the american consumer . according to the national coalition on health care and a study by harvard medical school , medical spending as a percentage of gdp increased from 5 % to 16 % between 1950 and 2004 , and is projected to reach 17.7 % of gdp by 2012. as an increasing number of the population seeks to avoid costly medical issues and focuses on prevention through diet , supplementation and exercise , we expect the demand in this market segment to provide us with continued opportunities . for example , lower-cost alternatives to expensive cholesterol lowering medications such as fish oil ( essential fatty acids ) , are experiencing increasing popularity . according to the new journal delaware online , more than 50 million adults are involved in either some sort of regular fitness program or sports activity , with over 25 % of current health-club members being over the age of 55. according to the international health , racquet and sportsclub association , there has been a 3.3 % increase in health club participation from 2005 to 2006 , which is continuing the trend from 2001 through 2005 where there was a 20 % to 25 % increase in wellness program participants . moreover , studies by the british heart foundation found that adults over 40 who exercise are at less than half the risk of experiencing heart disease compared to their sedentary peers , which is information we believe will further fuel this growth . we believe that the increase in our sales of sports supplements , which help with recovery and performance , is an indication of this growth , and that this will continue as fitness programs become an accepted lifestyle rather than a trend . when taken in context of the rising costs of healthcare , we believe the vms industry as a whole stands to benefit . our historical results have also been significantly influenced by our new store openings . since the beginning of 2003 , we have opened 223 stores and operate 348 stores located in 32 states and the district of columbia as of march 15 , 2008. our stores typically require three to four years to mature , generating lower store level sales and store contribution in the initial years than our mature stores . as a result , new stores generally have a negative impact on our overall operating margin and sales per square foot . as our recently opened stores mature , we expect them to contribute meaningfully to our sales and store contribution . critical accounting policies the preparation of financial statements in conformity with accounting principles generally accepted in the united states of america requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenue and expenses during the reporting period . critical accounting policies are those that are the most important portrayal of our financial condition and results of operations , and require our most difficult , subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain . while our significant accounting policies are described in more detail in the notes to our financial statements , our most critical accounting policies , discussed below , pertain to revenue recognition , inventories , impairment of long-lived assets , goodwill and other intangible assets , deferred sales for our healthy awards program , stock-based compensation , and income taxes . in applying such policies , we must use some amounts that are based upon our informed judgments and best estimates . estimates , by their nature , are based on judgments and available information . the estimates that we make are based upon historical factors , current circumstances and the experience and judgment of management . story_separator_special_tag the supplements category , which is among the largest selling product categories in our mix , experienced significant growth in sales of essential fatty acids , or efas , which were responsible for most of the increase in the supplement category in fiscal 2007. given the current trend in efa consumption , and the growing number of publications and recommendations regarding the heart-health benefits of fish oils ( such as by the american heart association and us national institutes of health ) , we expect continued 27 strength in sales of efas for the next fiscal year . product sales in the sports nutrition category increased at a greater rate than the overall increase in net sales during the fiscal 2007 , and have done so since early fiscal 2006. we believe this is due largely to the growth in the fitness-conscious market as well as the diversity of new product introductions . direct net sales to our direct customers decreased $ 2.6 million , or 3.3 % , to $ 75.9 million for fiscal 2007 compared to $ 78.5 million for fiscal 2006. this decrease was due to a decrease in our catalog sales , which we believe is the result of our continued expansion of our retail store locations and online stores , as well as the general decline in effectiveness of catalogs as a merchandising medium . this overall decrease was largely offset by an increase in our internet based sales of $ 4.7 million during fiscal 2007 , which was primarily due to improvements to our e-commerce platform and customer experience , as well as continued improvements in our online customer prospecting efforts . cost of goods sold cost of goods sold , which includes product , warehouse and distribution and store occupancy costs , increased $ 33.8 million , or 10.4 % , to $ 360.3 million for fiscal 2007 compared to $ 326.5 million for fiscal 2006. the components of cost of goods sold are explained below . cost of goods sold as a percentage of net sales was 67.0 % for fiscal 2007 compared to 67.2 % for fiscal 2006. product costs increased $ 23.7 million , or 9.3 % , to $ 279.8 million during fiscal 2007 compared to $ 256.1 million for fiscal 2006. product costs as a percentage of net sales decreased to 52.0 % in fiscal 2007 compared to 52.7 % for fiscal 2006. the percentage decrease was largely a result of a decrease in price promotions for our products of approximately 1.2 % , offset in part , by an increase in product costs of approximately 0.6 % as a percentage of sales in fiscal 2007 versus fiscal 2006. warehouse and distribution costs increased $ 2.1 million , or 12.4 % , to $ 18.6 million for fiscal 2007 compared to $ 16.6 million for fiscal 2006. warehouse and distribution costs as a percentage of net sales increased to 3.5 % for fiscal 2007 compared to 3.4 % in fiscal 2006. the increase was mainly attributable to increases in shipping costs in fiscal 2007 as compared to fiscal 2006 , as a result of rising fuel costs and shipments to greater distances as we continue to expand our geographic store base . occupancy costs increased $ 8.1 million , or 15.0 % , to $ 61.9 million for fiscal 2007 compared to $ 53.9 million for fiscal 2006. occupancy costs as a percentage of net sales increased to 11.5 % during fiscal 2007 compared to 11.1 % for fiscal 2006. this increase as a percentage of sales is mainly attributable to the increases in utilities and real estate tax expenses as well as a lower ratio of direct net sales , as a component of total net sales , to occupancy expenses . gross profit as a result of the foregoing , gross profit increased $ 18.0 million , or 11.3 % , to $ 177.5 million for fiscal 2007 compared to $ 159.5 million for fiscal 2006. selling , general and administrative expenses selling , general and administrative expenses , including operating payroll and related benefits , advertising and promotion expense , and other selling , general and administrative expenses , increased $ 14.8 million , or 11.5 % , to $ 143.5 million during fiscal 2007 , compared to $ 128.6 million for fiscal 2006. the components of selling , general and administrative expenses are explained below . selling , general and administrative expenses as a percentage of net sales for fiscal 2007 was 26.7 % compared to 26.5 % for fiscal 2006. operating payroll and related benefits increased $ 5.2 million , or 10.9 % , to $ 53.5 million for fiscal 2007 compared to $ 48.2 million for fiscal 2006. the increase is due mainly to our increase in retail locations throughout fiscal 2007. operating payroll and related benefits expenses as a percentage of net sales remained level at 9.9 % during fiscal 2007 compared to 9.9 % for fiscal 2006. advertising and promotion expenses increased $ 0.6 million , or 4.9 % , to $ 13.7 million for fiscal 2007 compared to $ 13.1 million for fiscal 2006. advertising and promotion expenses as a percentage of net sales decreased to 2.6 % during fiscal 2007 compared to 2.7 % for fiscal 2006 , primarily as a result of web-based advertising initiatives , such as broadening our web platform , which began in early fiscal 2006 and generated expenses throughout that year , but were completed well before fiscal 2007 year-end . 28 other selling , general and administrative expenses , which include depreciation and amortization expense , increased $ 9.0 million , or 13.4 % , to $ 76.3 million in fiscal 2007 compared to $ 67.3 million for fiscal 2006. the increase was due to an increase in depreciation and amortization of approximately $ 1.2 million , reflecting our expanding operation , and a increase in professional fees of $ 1.5 million

