we believe we can achieve profitability because our proprietary technology platform will allow us to maximize efficiencies in the development , production and sales of our products . by leveraging our core technology , we believe we can develop and bring to market products rapidly and greatly reduce our design and development costs . we expect to continue to increase production volume , and to reduce the per unit production cost for the t : slim pump and its disposable cartridge over time . further , due to shared product design features , our production system is adaptable to new products and we intend to leverage our shared manufacturing infrastructure to reduce our product costs and drive operational efficiencies . by expanding our product offerings to address people in all segments of the large and growing insulin-dependent diabetes market , we believe we can increase the productivity of our sales force , thereby improving our operating margin . from inception through december 31 , 2013 , we have primarily financed our operations through sales of equity securities , and , to a lesser extent , debt financings . we expect to continue to incur net losses for the next several years and may require additional capital through equity financings and debt financings in order to fund our operations to a level of revenues adequate to support our cost structure . we have experienced consecutive quarterly revenue growth since the commercial launch of t : slim in the third quarter of 2012 , while incurring quarterly operating losses since our inception . our operating results may fluctuate on a quarterly or annual basis in the future and our growth or operating results may not be consistent with predictions made by securities analysts . we may not be able to achieve profitability in the future . for additional information about the risks and uncertainties associated with our business , see the section entitled risk factors in part i , item 1a of this annual report . subsequent event voluntary recall on january 10 , 2014 , we announced a voluntary recall of select lots of cartridges used with the t : slim that may be at risk of leaking . the cause of the recall was identified during our internal product testing . the recall was expanded on january 20 , 2014 to include additional lots of affected cartridges used with the t : slim . we incurred approximately $ 1.6 million in direct costs associated with the recall . we recorded a cost of sales charge of approximately $ 1.3 million in the fourth quarter of 2013 and expect to record a cost of sales charge for the remainder in the first quarter of 2014. we do not currently expect any further direct financial impact of the recall beyond these costs . the total cost of the recall consisted of approximately $ 0.6 million associated with the return and replacement of affected cartridges in the field and approximately $ 1.0 million for the write-off of affected cartridges within our internal inventory . components of results of operations sales we commenced commercial sales of t : slim in the united states in the third quarter of 2012. the t : slim insulin delivery system is comprised of the t : slim pump and pump-related supplies that include disposable cartridges and infusion sets . we also offer accessories including protective cases , belt clips , and power adapters . sales of accessories since commercial launch have not been material . we primarily sell our products through national and regional distributors on a non-exclusive basis . these distributors are generally providers of medical equipment and supplies to individuals with diabetes . our primary end customers are people with insulin-dependent diabetes . similar to other durable medical equipment , the primary payor is generally a third-party insurance carrier and the customer is usually responsible for any medical insurance plan copay or co-insurance requirements . 63 we anticipate our sales will increase as we expand our sales and marketing infrastructure , increase awareness of our products and broaden third party reimbursement for our products . we also expect that our sales will fluctuate on a quarterly basis in the future due to a variety of factors , including seasonality and the impact of the buying patterns of our distributors and other customers . we believe that our sales are subject to seasonal fluctuation due to the impact of annual deductible and coinsurance requirements associated with most medical insurance plans utilized by our individual customers and the individual customers of our distributors . our sales may also be influenced by the summer vacation period . accordingly , we expect sequential growth of sales from the third quarter to the fourth quarter to be relatively higher than for other quarter-to-quarter growth , and we also expect sequential growth of sales from the fourth quarter to the first quarter to be relatively lower than for other quarter-to-quarter growth . it is also possible that we may see a decline in sales from the fourth quarter to the first quarter due to these seasonal fluctuations . cost of sales we manufacture the t : slim pump and its disposable cartridge at our manufacturing facility in san diego , california . infusion sets and t : slim accessories are manufactured by third-party suppliers . cost of sales includes raw materials , labor costs , manufacturing overhead expenses , product training cost and reserves for expected warranty costs , scrap and inventory obsolescence . due to our relatively low production volumes , compared to our potential capacity for our products , the majority of our per unit costs are currently manufacturing overhead expenses . these expenses include quality assurance , manufacturing engineering , material procurement , inventory control , facilities , equipment and information technology and operations supervision and management . story_separator_special_tag we consider the overall creditworthiness and payment history of the distributor , customer and the contracted insurance payor in concluding whether collectability is reasonably assured . prior to the first quarter of 2013 , t : slim pump sales were recorded as deferred revenue until the company 's 30-day right of return expired because we did not have sufficient history to be able to reasonably estimate returns . at december 31 , 2012 , we had $ 1.9 million recorded as deferred revenue . beginning in the first quarter of 2013 , we began recognizing t : slim pump revenue when all the revenue recognition criteria above are met , as we established sufficient history in order to reasonably estimate product returns . as a result of this change , we recorded a one-time adjustment during 2013 , to recognize previously deferred revenue and cost of sales of $ 1.9 million and $ 1.1 million , respectively . revenue recognition for arrangements with multiple deliverables we consider the deliverables in our product offering as separate units of accounting and recognize deliverables as revenue upon delivery only if ( i ) the deliverable has standalone value and ( ii ) if the arrangement includes a general right of return relative to the delivered item ( s ) , delivery or performance of the undelivered item ( s ) is probable and substantially controlled by us . we allocate consideration to the separate units of accounting , unless the undelivered elements were deemed perfunctory and inconsequential . we use the relative 70 selling price method , in which allocation of consideration is based on vendor-specific objective evidence ( vsoe ) if available , third-party evidence ( tpe ) , or if vsoe and tpe are not available , management 's best estimate of a standalone selling price ( esp ) for the undelivered elements . in february 2013 , the fda cleared t : connect , our cloud-based data management application , which is made available upon purchase by t : slim pump customers . this service is deemed an undelivered element at the time of the t : slim sale . because the company has neither vsoe nor tpe for this deliverable , the allocation of revenue is based on the company 's esp . the company establishes its esp based on estimated cost to provide such services , including consideration for a reasonable profit margin and corroborated by comparable market data . the company allocates fair value based on management 's esp to this element at the time of sale and is recognizing the revenue over the four year hosting period . at december 31 , 2013 , $ 0.2 million was recorded as deferred revenue for the t : connect hosting service . all other undelivered elements at the time of sale are deemed inconsequential or perfunctory . product returns we offer a 30-day right of return for our t : slim pump customers from the date of shipment , provided a physician 's confirmation of the medical reason for the return is received . estimated return allowances for sales returns are based on historical returned quantities as compared to t : slim pump shipments in the same period . the return rate is then applied to the sales of the period to establish a reserve at the end of the period . the return rates used in the reserve are adjusted for known or expected changes in the marketplace when appropriate . our allowance for product returns at december 31 , 2013 was $ 0.2 million . actual product returns have not differed materially from estimated amounts reserved . as of december 31 , 2012 , we lacked sufficient historical data to establish an estimated return allowance and as such we deferred our t : slim pump sales of $ 1.9 million that were subject to return as of that date . warranty reserve we provide a four-year warranty on our t : slim pump to end user customers and may replace any pumps that do not function in accordance with the product specifications . any pump returned to us may be refurbished and redeployed . additionally , we offer a six month warranty on t : slim cartridges and infusion sets . estimated warranty costs are recorded at the time of shipment . warranty costs are estimated based on the current product cost , actual experience and expected failure rates from test studies performed in conjunction with the clearance of our product with the fda to support the longevity and reliability of our t : slim pump . we evaluate the reserve quarterly and make adjustments when appropriate . previously , we have estimated the product cost with the current new pump cost . beginning in the fourth quarter of 2013 , we estimated the product cost with a mix of new and refurbished pump costs . this change reduced our liability at december 31 , 2013 by $ 0.5 million , decreased loss from operations and net loss by $ 0.5 million and decreased the loss per share by $ 0.17 per share . at december 31 , 2013 and 2012 , the warranty reserve was $ 1.1 million and $ 0.3 million , respectively . of the $ 1.1 million warranty reserve at december 31 , 2013 , $ 0.5 million was recorded as a component of other current liabilities and $ 0.6 million was recorded in other long-term liabilities . in addition , of the total $ 1.1 million warranty reserve at december 31 , 2013 , $ 0.3 million was related to potential replacement associated with the voluntary product recall of selected lots of cartridges . actual warranty costs have not differed materially from estimated amounts reserved . inventory reserve we periodically review inventories for potential impairment based on quantities on hand , expectations of future use , judgments based on quality control testing data and assessments of the likelihood of scrapping or

liquidity and capital resources at december 31 , 2013 , we had $ 129.5 million in cash and cash equivalents and short-term investments . we believe that our cash on hand , cash available under our term loan agreement and proceeds from the exercise of options and warrants will be sufficient to satisfy our liquidity requirements for at least the next 18 months . we expect that our sales performance and the resulting operating income or loss , as well as the status of each of our new product development programs , will significantly impact our cash management decisions . we have utilized , and may continue to utilize , debt arrangements with debt providers and financial institutions to finance our operations . factors such as interest rates and available cash will impact our decision to continue to utilize debt arrangements as a source of cash . historically , our sources of cash have included private placements and a public offering of equity securities , debt arrangements , and cash generated from operations . our historical cash outflows have primarily been associated with cash used for operating activities such as the purchase of inventory , expansion of our sales and marketing infrastructure , increase in our r & d activities , the acquisition of intellectual property , expenditures related to equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency , overall facility expansion and other working capital needs .


 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 at december 31 , 2013 , we had $ 129.5 million in cash and cash equivalents and short-term investments . we believe that our cash on hand , cash available under our term loan agreement and proceeds from the exercise of options and warrants will be sufficient to satisfy our liquidity requirements for at least the next 18 months . we expect that our sales performance and the resulting operating income or loss , as well as the status of each of our new product development programs , will significantly impact our cash management decisions . we have utilized , and may continue to utilize , debt arrangements with debt providers and financial institutions to finance our operations . factors such as interest rates and available cash will impact our decision to continue to utilize debt arrangements as a source of cash . historically , our sources of cash have included private placements and a public offering of equity securities , debt arrangements , and cash generated from operations . our historical cash outflows have primarily been associated with cash used for operating activities such as the purchase of inventory , expansion of our sales and marketing infrastructure , increase in our r & d activities , the acquisition of intellectual property , expenditures related to equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency , overall facility expansion and other working capital needs .
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 Suspicious Activity Report : we believe we can achieve profitability because our proprietary technology platform will allow us to maximize efficiencies in the development , production and sales of our products . by leveraging our core technology , we believe we can develop and bring to market products rapidly and greatly reduce our design and development costs . we expect to continue to increase production volume , and to reduce the per unit production cost for the t : slim pump and its disposable cartridge over time . further , due to shared product design features , our production system is adaptable to new products and we intend to leverage our shared manufacturing infrastructure to reduce our product costs and drive operational efficiencies . by expanding our product offerings to address people in all segments of the large and growing insulin-dependent diabetes market , we believe we can increase the productivity of our sales force , thereby improving our operating margin . from inception through december 31 , 2013 , we have primarily financed our operations through sales of equity securities , and , to a lesser extent , debt financings . we expect to continue to incur net losses for the next several years and may require additional capital through equity financings and debt financings in order to fund our operations to a level of revenues adequate to support our cost structure . we have experienced consecutive quarterly revenue growth since the commercial launch of t : slim in the third quarter of 2012 , while incurring quarterly operating losses since our inception . our operating results may fluctuate on a quarterly or annual basis in the future and our growth or operating results may not be consistent with predictions made by securities analysts . we may not be able to achieve profitability in the future . for additional information about the risks and uncertainties associated with our business , see the section entitled risk factors in part i , item 1a of this annual report . subsequent event voluntary recall on january 10 , 2014 , we announced a voluntary recall of select lots of cartridges used with the t : slim that may be at risk of leaking . the cause of the recall was identified during our internal product testing . the recall was expanded on january 20 , 2014 to include additional lots of affected cartridges used with the t : slim . we incurred approximately $ 1.6 million in direct costs associated with the recall . we recorded a cost of sales charge of approximately $ 1.3 million in the fourth quarter of 2013 and expect to record a cost of sales charge for the remainder in the first quarter of 2014. we do not currently expect any further direct financial impact of the recall beyond these costs . the total cost of the recall consisted of approximately $ 0.6 million associated with the return and replacement of affected cartridges in the field and approximately $ 1.0 million for the write-off of affected cartridges within our internal inventory . components of results of operations sales we commenced commercial sales of t : slim in the united states in the third quarter of 2012. the t : slim insulin delivery system is comprised of the t : slim pump and pump-related supplies that include disposable cartridges and infusion sets . we also offer accessories including protective cases , belt clips , and power adapters . sales of accessories since commercial launch have not been material . we primarily sell our products through national and regional distributors on a non-exclusive basis . these distributors are generally providers of medical equipment and supplies to individuals with diabetes . our primary end customers are people with insulin-dependent diabetes . similar to other durable medical equipment , the primary payor is generally a third-party insurance carrier and the customer is usually responsible for any medical insurance plan copay or co-insurance requirements . 63 we anticipate our sales will increase as we expand our sales and marketing infrastructure , increase awareness of our products and broaden third party reimbursement for our products . we also expect that our sales will fluctuate on a quarterly basis in the future due to a variety of factors , including seasonality and the impact of the buying patterns of our distributors and other customers . we believe that our sales are subject to seasonal fluctuation due to the impact of annual deductible and coinsurance requirements associated with most medical insurance plans utilized by our individual customers and the individual customers of our distributors . our sales may also be influenced by the summer vacation period . accordingly , we expect sequential growth of sales from the third quarter to the fourth quarter to be relatively higher than for other quarter-to-quarter growth , and we also expect sequential growth of sales from the fourth quarter to the first quarter to be relatively lower than for other quarter-to-quarter growth . it is also possible that we may see a decline in sales from the fourth quarter to the first quarter due to these seasonal fluctuations . cost of sales we manufacture the t : slim pump and its disposable cartridge at our manufacturing facility in san diego , california . infusion sets and t : slim accessories are manufactured by third-party suppliers . cost of sales includes raw materials , labor costs , manufacturing overhead expenses , product training cost and reserves for expected warranty costs , scrap and inventory obsolescence . due to our relatively low production volumes , compared to our potential capacity for our products , the majority of our per unit costs are currently manufacturing overhead expenses . these expenses include quality assurance , manufacturing engineering , material procurement , inventory control , facilities , equipment and information technology and operations supervision and management . story_separator_special_tag we consider the overall creditworthiness and payment history of the distributor , customer and the contracted insurance payor in concluding whether collectability is reasonably assured . prior to the first quarter of 2013 , t : slim pump sales were recorded as deferred revenue until the company 's 30-day right of return expired because we did not have sufficient history to be able to reasonably estimate returns . at december 31 , 2012 , we had $ 1.9 million recorded as deferred revenue . beginning in the first quarter of 2013 , we began recognizing t : slim pump revenue when all the revenue recognition criteria above are met , as we established sufficient history in order to reasonably estimate product returns . as a result of this change , we recorded a one-time adjustment during 2013 , to recognize previously deferred revenue and cost of sales of $ 1.9 million and $ 1.1 million , respectively . revenue recognition for arrangements with multiple deliverables we consider the deliverables in our product offering as separate units of accounting and recognize deliverables as revenue upon delivery only if ( i ) the deliverable has standalone value and ( ii ) if the arrangement includes a general right of return relative to the delivered item ( s ) , delivery or performance of the undelivered item ( s ) is probable and substantially controlled by us . we allocate consideration to the separate units of accounting , unless the undelivered elements were deemed perfunctory and inconsequential . we use the relative 70 selling price method , in which allocation of consideration is based on vendor-specific objective evidence ( vsoe ) if available , third-party evidence ( tpe ) , or if vsoe and tpe are not available , management 's best estimate of a standalone selling price ( esp ) for the undelivered elements . in february 2013 , the fda cleared t : connect , our cloud-based data management application , which is made available upon purchase by t : slim pump customers . this service is deemed an undelivered element at the time of the t : slim sale . because the company has neither vsoe nor tpe for this deliverable , the allocation of revenue is based on the company 's esp . the company establishes its esp based on estimated cost to provide such services , including consideration for a reasonable profit margin and corroborated by comparable market data . the company allocates fair value based on management 's esp to this element at the time of sale and is recognizing the revenue over the four year hosting period . at december 31 , 2013 , $ 0.2 million was recorded as deferred revenue for the t : connect hosting service . all other undelivered elements at the time of sale are deemed inconsequential or perfunctory . product returns we offer a 30-day right of return for our t : slim pump customers from the date of shipment , provided a physician 's confirmation of the medical reason for the return is received . estimated return allowances for sales returns are based on historical returned quantities as compared to t : slim pump shipments in the same period . the return rate is then applied to the sales of the period to establish a reserve at the end of the period . the return rates used in the reserve are adjusted for known or expected changes in the marketplace when appropriate . our allowance for product returns at december 31 , 2013 was $ 0.2 million . actual product returns have not differed materially from estimated amounts reserved . as of december 31 , 2012 , we lacked sufficient historical data to establish an estimated return allowance and as such we deferred our t : slim pump sales of $ 1.9 million that were subject to return as of that date . warranty reserve we provide a four-year warranty on our t : slim pump to end user customers and may replace any pumps that do not function in accordance with the product specifications . any pump returned to us may be refurbished and redeployed . additionally , we offer a six month warranty on t : slim cartridges and infusion sets . estimated warranty costs are recorded at the time of shipment . warranty costs are estimated based on the current product cost , actual experience and expected failure rates from test studies performed in conjunction with the clearance of our product with the fda to support the longevity and reliability of our t : slim pump . we evaluate the reserve quarterly and make adjustments when appropriate . previously , we have estimated the product cost with the current new pump cost . beginning in the fourth quarter of 2013 , we estimated the product cost with a mix of new and refurbished pump costs . this change reduced our liability at december 31 , 2013 by $ 0.5 million , decreased loss from operations and net loss by $ 0.5 million and decreased the loss per share by $ 0.17 per share . at december 31 , 2013 and 2012 , the warranty reserve was $ 1.1 million and $ 0.3 million , respectively . of the $ 1.1 million warranty reserve at december 31 , 2013 , $ 0.5 million was recorded as a component of other current liabilities and $ 0.6 million was recorded in other long-term liabilities . in addition , of the total $ 1.1 million warranty reserve at december 31 , 2013 , $ 0.3 million was related to potential replacement associated with the voluntary product recall of selected lots of cartridges . actual warranty costs have not differed materially from estimated amounts reserved . inventory reserve we periodically review inventories for potential impairment based on quantities on hand , expectations of future use , judgments based on quality control testing data and assessments of the likelihood of scrapping or

