since our beginning in 1986 , we have compiled an extensive device control knowledge library that includes nearly 9,000 brands comprising over 800,000 device models across av and smart home platforms , supported by many common smart home protocols , including ir , hdmi-cec , zigbee , and home network or cloud control . this device knowledge graph is backed by our unique device fingerprinting technology which includes over 700,000 unique device fingerprints across both av and smart home devices . our technology also includes other remote controlled home entertainment devices and home automation control modules , as well as wired consumer electronics control ( `` cec `` ) and wireless internet protocol ( `` ip `` ) control protocols commonly found on many of the latest hdmi and internet connected devices . our proprietary software automatically detects , identifies and enables the appropriate control commands for any given home entertainment , automation and air conditioning device in the home . our libraries are continuously updated with device control codes used in newly introduced av and internet of things ( `` iot `` ) devices . these control codes are captured directly from original remote control devices or from the manufacturer 's written specifications to ensure the accuracy and integrity of the library . our proprietary software and know-how permit us to offer a device control code database that is more robust and efficient than similarly priced products of our competitors . we operate as one business segment . we have 2 domestic subsidiaries and 24 international subsidiaries located in argentina , brazil , british virgin islands , cayman islands , france , germany , hong kong ( 3 ) , india , italy , japan , korea , mexico , the netherlands , people 's republic of china ( the `` prc `` ) ( 6 ) , singapore , spain and the united kingdom . to recap our results for 2019 : net sales increased 10.8 % to $ 753.5 million in 2019 from $ 680.2 million in 2018 . our gross profit percentage increased to 22.6 % in 2019 from 20.8 % in 2018 . operating expenses , as a percent of sales , decreased to 20.6 % in 2019 from 21.1 % in 2018 . operating income increased to $ 15.3 million in 2019 from an operating loss of $ 1.7 million in 2018 , and our operating margin percentage increased to 2.0 % in 2019 , compared to an operating deficit of 0.2 % in 2018 . 29 our effective tax rate increased to 65.1 % in 2019 from 54.4 % in 2018 . our strategic business objectives for 2020 include the following : continue to develop and market the advanced remote control products and technologies our customer base is adopting ; continue to broaden our home control and home automation product offerings ; further penetrate international subscription broadcasting markets ; acquire new customers in historically strong regions ; increase our share with existing customers ; and continue to seek acquisitions or strategic partners that complement and strengthen our existing business . we intend for the following discussion of our financial condition and results of operations to provide information that will assist in understanding our consolidated financial statements , the changes in certain key items in those financial statements from period to period , and the primary factors that accounted for those changes , as well as how certain accounting principles , policies and estimates affect our consolidated financial statements . critical accounting policies and estimates the preparation of financial statements in conformity with accounting principles generally accepted in the united states ( `` u.s. gaap `` ) requires us to make estimates and judgments that affect the reported amounts of assets and liabilities , disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . on an ongoing basis , we evaluate our estimates and judgments , including those related to revenue recognition , allowances for doubtful accounts , inventory valuation , impairment of long-lived assets , intangible assets and goodwill , business combinations , income taxes , stock-based compensation expense and performance-based common stock warrants . actual results may differ from these judgments and estimates , and they may be adjusted as more information becomes available . any adjustment may be significant and may have a material impact on our consolidated financial position or results of operations . an accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made , if different estimates reasonably may have been used , or if changes in the estimate that are reasonably likely to occur may materially impact the financial statements . management believes the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements . in addition to the accounting policies mentioned below , see `` item 8. financial statements and supplementary data — notes to consolidated financial statements — note 2 `` for other significant accounting policies . revenue recognition revenue is recognized when control of a good or service is transferred to a customer . control is considered to be transferred when the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of that good or service . revenues are generated from manufacturing and delivering universal control , sensing and automation products and av accessories , which are sold through multiple channels , and licensing intellectual property that is embedded in these products or licensed to others for use in their products . story_separator_special_tag we recognize the fair value of performance-based common stock warrants as a reduction to net sales ratably as the warrants vest based on the projected number of warrants that will vest , the proportion of the performance criteria achieved by the customer within the period relative to the total performance required ( aggregate purchase levels ) for the warrants to vest and the then-current fair value of the related unvested warrants . if we do not have a reliable forecast of future purchases to be made by the customer by which to estimate the number of warrants that will vest , then the maximum number of potential warrants is assumed until such time that a reliable forecast of future purchases is available . to the extent that our projections change in the future as to the number of warrants that will vest , a cumulative catch-up adjustment will be recorded in the period in which our estimates change . the fair value of performance-based common stock warrants is determined utilizing the black-scholes option pricing model . the assumptions utilized in the black-scholes model include the price of our common stock , the risk-free interest rate , expected volatility , expected life in years and dividend yield . the price of our common stock is equal to the average of the high and low trade prices of our common stock on the measurement date . the risk-free interest rate over the expected life is equal to the prevailing u.s. treasury note rate over the same period . expected volatility is determined utilizing historical volatility over a period of time equal to the expected life of the warrant . expected life is equal to the remaining contractual term of the warrant . the dividend yield is assumed to be zero since we have not historically declared dividends and do not have any plans to declare dividends in the future . results of operations the following table sets forth our results of operations expressed as a percentage of net sales for the periods indicated . replace_table_token_4_th year ended december 31 , 2019 ( `` 2019 `` ) compared to year ended december 31 , 2018 ( `` 2018 `` ) net sales . net sales for 2019 were $ 753.5 million , an increase of 10.8 % compared to $ 680.2 million in 2018 . the increase in net sales was primarily due to the recent launches of higher end platforms by existing customers in the subscription broadcasting channel , a newly acquired customer and continued strength in home automation . gross profit . gross profit in 2019 was $ 170.2 million compared to $ 141.8 million in 2018 . gross profit as a percent of sales increased to 22.6 % in 2019 from 20.8 % in 2018 . the gross profit percentage was favorably impacted by product mix as small- to medium-sized subscription broadcasters launched advanced platforms ; an increase in royalty revenue as certain consumer electronic companies are embedding our technology in their devices ; lower raw material costs during 2019 ; and foreign currency as the u.s. dollar strengthened by approximately 400 basis points versus the chinese yuan renminbi . the gross profit percentage was unfavorably impacted by higher u.s. tariffs on many of our products that are manufactured in the prc and imported into the u.s. in an effort to mitigate the effect of the increased tariffs , we transitioned the production of many of our goods destined for the u.s. market from our prc factories to our factory in mexico . in connection with this transition , which began in the fourth quarter of 2018 , we incurred costs related to the movement of materials , duplicative labor efforts and indirect costs including unabsorbed duplicative overhead . 34 research and development ( `` r & d `` ) expenses . r & d expenses increased 23.5 % to $ 29.4 million in 2019 from $ 23.8 million in 2018 primarily due to our continued investment in the development of new products that enhance the user experience in home entertainment and home automation . selling , general and administrative ( `` sg & a `` ) expenses . sg & a expenses increased 4.9 % to $ 125.5 million in 2019 from $ 119.7 million in 2018 , primarily due to increases in incentive compensation expense and an increase in contingent consideration recorded in connection with our acquisition of the net assets of ecolink intelligent technology , inc. ( `` ecolink `` ) . partially offsetting these increases was payroll expense , which decreased as a result of our ongoing corporate restructuring initiatives . interest income ( expense ) , net . net interest expense was $ 3.9 million in 2019 compared to $ 4.7 million in 2018 . this decrease was a result of a lower average quarterly loan balance . gain on sale of guangzhou factory . in june 2018 , we completed the sale of our guangzhou manufacturing facility in exchange for cash proceeds of $ 51.3 million , resulting in a pre-tax gain of $ 37.0 million . other income ( expense ) , net . net other expense was $ 1.0 million in 2019 compared to $ 4.5 million in 2018 . this change was driven primarily by both a decline in foreign currency losses associated with fluctuations in the chinese yuan renminbi versus the u.s. dollar and foreign currency gains associated with fluctuations in the brazilian real versus the u.s. dollar in 2019. income tax expense . income tax expense was $ 6.8 million in 2019 compared to $ 14.2 million in 2018 . our effective tax rate was 65.1 % in 2019 compared to 54.4 % in 2018 . our effective tax rate was higher than normal in 2018 as a result of the recording of an $ 8.1 million valuation allowance against u.s. federal and state deferred tax assets . in 2019 , the u.s. incurred a loss and , because

liquidity and capital resources sources and uses of cash replace_table_token_5_th replace_table_token_6_th net cash provided by operating activities increased $ 72.4 million in 2019 compared to 2018 , primarily due to the net impact of the gain on sale of the guangzhou factory and changes in working capital associated with accounts receivable and accounts payable . accounts receivable and contract assets produced cash inflows of $ 17.2 million in 2019 compared to $ 5.5 million in 2018 largely due to a decrease in days sales outstanding from 71 days at december 31 , 2018 to 64 days at december 31 , 2019. accounts payable and accrued liabilities produced net cash inflows of $ 14.2 million during 2019 compared to cash outflows of $ 7.4 million in 2018 , largely as a result of timing of payments . our inventory turns remained relatively consistent with 3.3 turns at december 31 , 2018 compared to 3.2 turns at december 31 , 2019. net cash used for investing activities during 2019 was $ 24.0 million compared to net cash provided by investing activities of $ 23.6 million during 2018 . in 2019 , acquisitions of property , plant and equipment were $ 21.3 million which reflects a normalized level of spending . in 2018 , we received net cash proceeds of $ 46.2 million for the sale of our guangzhou factory , which was completed in june 2018 , which was partially offset by acquisitions of property , plant and equipment of $ 20.1 million . net cash used for financing activities was $ 39.2 million during 2019 compared to net cash used for financing activities of $ 53.3 million during 2018 . the primary drivers of our cash flows from financing activities in 2019 and 2018 were borrowings and 35 repayments on our line of credit and repurchases of shares of our common stock on the open market . net payments on our line of credit were $ 33.5 million and $ 36.5 million in 2019 and 2018 , respectively .


 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 sources and uses of cash replace_table_token_5_th replace_table_token_6_th net cash provided by operating activities increased $ 72.4 million in 2019 compared to 2018 , primarily due to the net impact of the gain on sale of the guangzhou factory and changes in working capital associated with accounts receivable and accounts payable . accounts receivable and contract assets produced cash inflows of $ 17.2 million in 2019 compared to $ 5.5 million in 2018 largely due to a decrease in days sales outstanding from 71 days at december 31 , 2018 to 64 days at december 31 , 2019. accounts payable and accrued liabilities produced net cash inflows of $ 14.2 million during 2019 compared to cash outflows of $ 7.4 million in 2018 , largely as a result of timing of payments . our inventory turns remained relatively consistent with 3.3 turns at december 31 , 2018 compared to 3.2 turns at december 31 , 2019. net cash used for investing activities during 2019 was $ 24.0 million compared to net cash provided by investing activities of $ 23.6 million during 2018 . in 2019 , acquisitions of property , plant and equipment were $ 21.3 million which reflects a normalized level of spending . in 2018 , we received net cash proceeds of $ 46.2 million for the sale of our guangzhou factory , which was completed in june 2018 , which was partially offset by acquisitions of property , plant and equipment of $ 20.1 million . net cash used for financing activities was $ 39.2 million during 2019 compared to net cash used for financing activities of $ 53.3 million during 2018 . the primary drivers of our cash flows from financing activities in 2019 and 2018 were borrowings and 35 repayments on our line of credit and repurchases of shares of our common stock on the open market . net payments on our line of credit were $ 33.5 million and $ 36.5 million in 2019 and 2018 , respectively .
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 Suspicious Activity Report : since our beginning in 1986 , we have compiled an extensive device control knowledge library that includes nearly 9,000 brands comprising over 800,000 device models across av and smart home platforms , supported by many common smart home protocols , including ir , hdmi-cec , zigbee , and home network or cloud control . this device knowledge graph is backed by our unique device fingerprinting technology which includes over 700,000 unique device fingerprints across both av and smart home devices . our technology also includes other remote controlled home entertainment devices and home automation control modules , as well as wired consumer electronics control ( `` cec `` ) and wireless internet protocol ( `` ip `` ) control protocols commonly found on many of the latest hdmi and internet connected devices . our proprietary software automatically detects , identifies and enables the appropriate control commands for any given home entertainment , automation and air conditioning device in the home . our libraries are continuously updated with device control codes used in newly introduced av and internet of things ( `` iot `` ) devices . these control codes are captured directly from original remote control devices or from the manufacturer 's written specifications to ensure the accuracy and integrity of the library . our proprietary software and know-how permit us to offer a device control code database that is more robust and efficient than similarly priced products of our competitors . we operate as one business segment . we have 2 domestic subsidiaries and 24 international subsidiaries located in argentina , brazil , british virgin islands , cayman islands , france , germany , hong kong ( 3 ) , india , italy , japan , korea , mexico , the netherlands , people 's republic of china ( the `` prc `` ) ( 6 ) , singapore , spain and the united kingdom . to recap our results for 2019 : net sales increased 10.8 % to $ 753.5 million in 2019 from $ 680.2 million in 2018 . our gross profit percentage increased to 22.6 % in 2019 from 20.8 % in 2018 . operating expenses , as a percent of sales , decreased to 20.6 % in 2019 from 21.1 % in 2018 . operating income increased to $ 15.3 million in 2019 from an operating loss of $ 1.7 million in 2018 , and our operating margin percentage increased to 2.0 % in 2019 , compared to an operating deficit of 0.2 % in 2018 . 29 our effective tax rate increased to 65.1 % in 2019 from 54.4 % in 2018 . our strategic business objectives for 2020 include the following : continue to develop and market the advanced remote control products and technologies our customer base is adopting ; continue to broaden our home control and home automation product offerings ; further penetrate international subscription broadcasting markets ; acquire new customers in historically strong regions ; increase our share with existing customers ; and continue to seek acquisitions or strategic partners that complement and strengthen our existing business . we intend for the following discussion of our financial condition and results of operations to provide information that will assist in understanding our consolidated financial statements , the changes in certain key items in those financial statements from period to period , and the primary factors that accounted for those changes , as well as how certain accounting principles , policies and estimates affect our consolidated financial statements . critical accounting policies and estimates the preparation of financial statements in conformity with accounting principles generally accepted in the united states ( `` u.s. gaap `` ) requires us to make estimates and judgments that affect the reported amounts of assets and liabilities , disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . on an ongoing basis , we evaluate our estimates and judgments , including those related to revenue recognition , allowances for doubtful accounts , inventory valuation , impairment of long-lived assets , intangible assets and goodwill , business combinations , income taxes , stock-based compensation expense and performance-based common stock warrants . actual results may differ from these judgments and estimates , and they may be adjusted as more information becomes available . any adjustment may be significant and may have a material impact on our consolidated financial position or results of operations . an accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made , if different estimates reasonably may have been used , or if changes in the estimate that are reasonably likely to occur may materially impact the financial statements . management believes the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements . in addition to the accounting policies mentioned below , see `` item 8. financial statements and supplementary data — notes to consolidated financial statements — note 2 `` for other significant accounting policies . revenue recognition revenue is recognized when control of a good or service is transferred to a customer . control is considered to be transferred when the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of that good or service . revenues are generated from manufacturing and delivering universal control , sensing and automation products and av accessories , which are sold through multiple channels , and licensing intellectual property that is embedded in these products or licensed to others for use in their products . story_separator_special_tag we recognize the fair value of performance-based common stock warrants as a reduction to net sales ratably as the warrants vest based on the projected number of warrants that will vest , the proportion of the performance criteria achieved by the customer within the period relative to the total performance required ( aggregate purchase levels ) for the warrants to vest and the then-current fair value of the related unvested warrants . if we do not have a reliable forecast of future purchases to be made by the customer by which to estimate the number of warrants that will vest , then the maximum number of potential warrants is assumed until such time that a reliable forecast of future purchases is available . to the extent that our projections change in the future as to the number of warrants that will vest , a cumulative catch-up adjustment will be recorded in the period in which our estimates change . the fair value of performance-based common stock warrants is determined utilizing the black-scholes option pricing model . the assumptions utilized in the black-scholes model include the price of our common stock , the risk-free interest rate , expected volatility , expected life in years and dividend yield . the price of our common stock is equal to the average of the high and low trade prices of our common stock on the measurement date . the risk-free interest rate over the expected life is equal to the prevailing u.s. treasury note rate over the same period . expected volatility is determined utilizing historical volatility over a period of time equal to the expected life of the warrant . expected life is equal to the remaining contractual term of the warrant . the dividend yield is assumed to be zero since we have not historically declared dividends and do not have any plans to declare dividends in the future . results of operations the following table sets forth our results of operations expressed as a percentage of net sales for the periods indicated . replace_table_token_4_th year ended december 31 , 2019 ( `` 2019 `` ) compared to year ended december 31 , 2018 ( `` 2018 `` ) net sales . net sales for 2019 were $ 753.5 million , an increase of 10.8 % compared to $ 680.2 million in 2018 . the increase in net sales was primarily due to the recent launches of higher end platforms by existing customers in the subscription broadcasting channel , a newly acquired customer and continued strength in home automation . gross profit . gross profit in 2019 was $ 170.2 million compared to $ 141.8 million in 2018 . gross profit as a percent of sales increased to 22.6 % in 2019 from 20.8 % in 2018 . the gross profit percentage was favorably impacted by product mix as small- to medium-sized subscription broadcasters launched advanced platforms ; an increase in royalty revenue as certain consumer electronic companies are embedding our technology in their devices ; lower raw material costs during 2019 ; and foreign currency as the u.s. dollar strengthened by approximately 400 basis points versus the chinese yuan renminbi . the gross profit percentage was unfavorably impacted by higher u.s. tariffs on many of our products that are manufactured in the prc and imported into the u.s. in an effort to mitigate the effect of the increased tariffs , we transitioned the production of many of our goods destined for the u.s. market from our prc factories to our factory in mexico . in connection with this transition , which began in the fourth quarter of 2018 , we incurred costs related to the movement of materials , duplicative labor efforts and indirect costs including unabsorbed duplicative overhead . 34 research and development ( `` r & d `` ) expenses . r & d expenses increased 23.5 % to $ 29.4 million in 2019 from $ 23.8 million in 2018 primarily due to our continued investment in the development of new products that enhance the user experience in home entertainment and home automation . selling , general and administrative ( `` sg & a `` ) expenses . sg & a expenses increased 4.9 % to $ 125.5 million in 2019 from $ 119.7 million in 2018 , primarily due to increases in incentive compensation expense and an increase in contingent consideration recorded in connection with our acquisition of the net assets of ecolink intelligent technology , inc. ( `` ecolink `` ) . partially offsetting these increases was payroll expense , which decreased as a result of our ongoing corporate restructuring initiatives . interest income ( expense ) , net . net interest expense was $ 3.9 million in 2019 compared to $ 4.7 million in 2018 . this decrease was a result of a lower average quarterly loan balance . gain on sale of guangzhou factory . in june 2018 , we completed the sale of our guangzhou manufacturing facility in exchange for cash proceeds of $ 51.3 million , resulting in a pre-tax gain of $ 37.0 million . other income ( expense ) , net . net other expense was $ 1.0 million in 2019 compared to $ 4.5 million in 2018 . this change was driven primarily by both a decline in foreign currency losses associated with fluctuations in the chinese yuan renminbi versus the u.s. dollar and foreign currency gains associated with fluctuations in the brazilian real versus the u.s. dollar in 2019. income tax expense . income tax expense was $ 6.8 million in 2019 compared to $ 14.2 million in 2018 . our effective tax rate was 65.1 % in 2019 compared to 54.4 % in 2018 . our effective tax rate was higher than normal in 2018 as a result of the recording of an $ 8.1 million valuation allowance against u.s. federal and state deferred tax assets . in 2019 , the u.s. incurred a loss and , because

