the eos technology informs the entire surgical process by capturing a calibrated , full-body image in a standing ( weight-bearing ) position , enabling precise measurement of anatomical angles and dimensions . the resulting imaging drives a more accurate understanding of patient alignment during diagnosis , elevates the likelihood of surgical goal fulfillment by integrating a fully informed plan into surgery , and enables a post-operative assessment against the original surgical plan we believe the addition of eos imaging will advance our alphainformatix platform , providing capabilities in surgical planning , patient-specific implants , intraoperative alignment reconciliation , and other intraoperative functionalities resulting in a platform distinctively equipped to address the requirements of spine surgery . we expect the transaction to close in the third quarter of 2020. revenue and expense components the following is a description of the primary components of our revenues and expenses : revenues . we derive our revenues primarily from the sale of spinal surgery implants used in the treatment of spine disorders . spinal implant products include pedicle screws and complementary implants , interbody devices , plates , and tissue-based materials . our revenues are generated by our direct sales force and independent distributors . our products are requested directly by surgeons and shipped and billed to hospitals and surgical centers . currently , most of our business is conducted with customers within markets in which we have experience and with payment terms that are customary to our business . we may defer revenues until the time of collection if circumstances related to payment terms , regional market risk or customer history indicate that collectability is not certain . cost of revenues . cost of revenues consists of direct product costs , royalties , milestones and the amortization of purchased intangibles . our product costs consist primarily of direct labor , overhead , and raw materials and components . the product costs of 44 certain of our biologics products include the cost of procuring and processing human tissue . we incur royalties related to the technologies that we license from others and the pr oducts that are developed in part by surgeons with whom we collaborate in the product development process . amortization of purchased intangibles consists of amortization of developed product technology . research and development expenses . research and development expense consists of costs associated with the design , development , testing , and enhancement of our products . research and development expense also includes salaries and related employee benefits , research-related overhead expenses , fees paid to external service providers in both cash and equity , and costs associated with our scientific advisory board and executive surgeon panels . sales , general and administrative expenses . sales , general and administrative expense consists primarily of salaries and related employee benefits , sales commissions and support costs , depreciation of our surgical instruments , regulatory affairs , quality assurance costs , professional service fees , travel , medical education , trade show and marketing costs , insurance and legal expenses . litigation-related expenses . litigation-related expenses are costs incurred for our ongoing litigation , primarily with nuvasive , inc. transaction-related expenses . reflects the recognition of transaction expense incurred as part of the safeop acquisition . gain on settlement . gain on settlement consists of a gain of approximately $ 6.2 million for the year ended december 31 , 2018 as a result of the settlement agreement with elite medical holdings and pac 3 surgical , pursuant to which we made a cash payment of $ 0.4 million as the final and total compensation under the collaboration and related amendment . the gain reflects the reversal of accrued obligations previously recorded under the collaboration . restructuring expenses . restructuring expense consists of severance , social plan benefits and related taxes in connection with our ongoing cost rationalization efforts , including the termination of our manufacturing operations in california in 2017. other expense , net . other expense , net includes interest income , interest expense , gains and losses from foreign currency exchanges and other non-operating gains and losses . income tax benefit . income tax benefit from continuing operations primarily consists of release of the valuation allowance from the safeop acquisition , partially offset by state taxes . sale of international business on september 1 , 2016 , we completed the sale of our international distribution operations and agreements , including our wholly-owned subsidiaries in japan , brazil , australia , china and singapore and substantially all of the assets of our other sales operations in the united kingdom and italy , to an affiliate of globus ( “ globus transaction ” ) . following the closing of the globus transaction , we now operate in the u.s. market only and are restricted from marketing and selling our products in foreign markets pursuant to the terms and conditions , and for the time periods , set forth in the definitive documents related to the globus transaction . 45 results of operations the first table below sets forth our statements of operations data for the periods presented . our historical results are not necessarily indicative of the operating results that may be expected in the future . replace_table_token_1_th replace_table_token_2_th 46 year ended december 31 , 2019 compared to the year ended december 31 , 2018 total revenues . total revenues increased by $ 21.7 million , or 23.7 % , primarily due to sales growth from strategic distribution channels and new product launches . revenue from u.s. products increased by $ 24.6 million , or 29.4 % . story_separator_special_tag the present value of lease payments is determined by using the incremental borrowing rate for operating leases determined by using the incremental borrowing rate of interest that we would pay to borrow on a c ollateralized basis an amount equal to the lease payments in a similar economic environment . we applied the new guidance to our existing facility lease at the time of adoption and recognized a right-of-use asset of $ 2.4 million and operating lease liabilit y of $ 2.9 million , during the first period of adoption , and recorded a reversal of the previous deferred rent balance under the previous lease guidance of approximately $ 0.6 million . we entered into another facility lease for smaller office space during th e third quarter of 2019 and also applied this guidance to create an additional rou asset and operating lease liability . the two leases are presented together on the company 's consolidated balance sheet . rent expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in research and development and general and administrative expenses in the statements of operations and comprehensive loss . valuation of intangible assets we assess the impairment of our intangible assets annually in december or whenever business conditions change and an earlier impairment indicator arises . this assessment requires us to make assumptions and judgments regarding the carrying value of these assets . these assets are considered to be impaired if we determine that their carrying value may not be recoverable based upon our assessment of certain events or changes in circumstances , including the following : a determination that the carrying value of such assets can not be recovered through undiscounted cash flows ; loss of legal ownership or title to the assets ; significant changes in our strategic business objectives and utilization of the assets ; or the impact of significant negative industry or economic trends . if the assets are considered to be impaired , the impairment we recognize is the amount by which the carrying value of the assets exceeds the fair value of the assets . significant management judgment is required in estimating the fair value of our intangible assets . warrants to purchase common stock warrants are accounted for in accordance with the applicable accounting guidance provided in asc 815 - derivatives and hedging as either derivative liabilities or as equity instruments depending on the specific terms of the agreements . liability-classified instruments are recorded at fair value at each reporting period with any change in fair value recognized as a component of change in fair value of derivative liabilities in the consolidated statements of operations . we estimate liability classified instruments using the black scholes model , which requires management to develop assumptions and inputs that have significant impact on such valuations . during each reporting period , we evaluate changes in facts and circumstances that could impact the classification of warrants from liability to equity , or vice versa . stock-based compensation we account for stock-based compensation under provisions which require that share-based payment transactions with employees be recognized in the financial statements based on their fair value and recognized as compensation expense over the vesting period . the amount of expense recognized during the period is affected by subjective assumptions , including estimates of our future volatility , the expected term for our stock options , the number of options expected to ultimately vest , and the timing of vesting for our share-based awards . 53 we use a black-sc holes option-pricing model to estimate the fair value of our stock option awards . the calculation of the fair value of the awards using the black-scholes option-pricing model is affected by our stock price on the date of grant as well as assumptions regard ing the following : estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award . our estimated volatility through december 31 , 2019 was based on our actual historical volatility . an increase in the estimated volatility would result in an increase to our stock-based compensation expense . the expected term represents the period of time that awards granted are expected to be outstanding . our estimated expected term through december 31 , 2019 was calculated using a weighted-average term based on historical exercise patterns and the term from option grant date to exercise for the options granted within the specified date range . an increase in the expected term would result in an increase to our stock-based compensation expense . the risk-free interest rate is based on the yield curve of a zero-coupon u.s. treasury bond on the date the stock option award is granted with a maturity equal to the expected term of the stock option award . an increase in the risk-free interest rate would result in an increase to our stock-based compensation expense . the assumed dividend yield is based on our expectation of not paying dividends in the foreseeable future . we use historical data to estimate the number of future stock option forfeitures . share-based compensation recorded in our consolidated statements of operations is based on awards expected to ultimately vest and has been reduced for estimated forfeitures . our estimated forfeiture rates may differ from our actual forfeitures which would affect the amount of expense recognized during the period . we account for stock option grants to non-employees under provisions which require that the fair value of these instruments be recognized as an expense over the period in which the related services are rendered . stock-based compensation expense of awards with performance conditions is recognized over the period from the date the performance condition is determined to be probable of occurring through the time the applicable condition is met . determining the likelihood and timing of achieving performance conditions is

liquidity and capital resources at each reporting period , we evaluate whether there are conditions or events that raise substantial doubt about the company 's ability to continue as a going concern within one year after the date that the financial statements are issued . our evaluation entails analyzing prospective operating budgets and forecasts for expectations of cash needs and comparing those needs to the current cash and cash equivalent balances , and availability under existing credit facilities . we are required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by our plans or when those plans alleviate substantial doubt about the company 's ability to continue as a going concern . 48 we hav e experienced negative operating cash flows for all historical periods presented and we expect these losses to continue into the foreseeable future as we continue to incur costs related to the execution of our operating plan and introduction of new product s. our annual operating plan projects that existing working capital at december 31 , 2019 of $ 71.9 million ( including cash of $ 47.1 million ) , along with available draws on our working capital credit line with midcap and an additional $ 20 million in availabl e borrowings under our credit facility with squadron medical finance solutions llc ( “ squadron ” ) , allows us to fund our operations through at least one year subsequent to the date the financial statements are issued . as more fully described in note 5 , our existing credit agreements with midcap and squadron ( collectively , the “ current lenders ” ) include a financial covenant that requires the company to maintain a minimum cash balance of $ 5.0 million . the minimum cash covenant converts to a minimum fixed charge coverage ratio beginning april 30 , 2020. we expect that we will be unable to meet the fixed charge covenant at that time .


 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 each reporting period , we evaluate whether there are conditions or events that raise substantial doubt about the company 's ability to continue as a going concern within one year after the date that the financial statements are issued . our evaluation entails analyzing prospective operating budgets and forecasts for expectations of cash needs and comparing those needs to the current cash and cash equivalent balances , and availability under existing credit facilities . we are required to make certain additional disclosures if it concludes substantial doubt exists and it is not alleviated by our plans or when those plans alleviate substantial doubt about the company 's ability to continue as a going concern . 48 we hav e experienced negative operating cash flows for all historical periods presented and we expect these losses to continue into the foreseeable future as we continue to incur costs related to the execution of our operating plan and introduction of new product s. our annual operating plan projects that existing working capital at december 31 , 2019 of $ 71.9 million ( including cash of $ 47.1 million ) , along with available draws on our working capital credit line with midcap and an additional $ 20 million in availabl e borrowings under our credit facility with squadron medical finance solutions llc ( “ squadron ” ) , allows us to fund our operations through at least one year subsequent to the date the financial statements are issued . as more fully described in note 5 , our existing credit agreements with midcap and squadron ( collectively , the “ current lenders ” ) include a financial covenant that requires the company to maintain a minimum cash balance of $ 5.0 million . the minimum cash covenant converts to a minimum fixed charge coverage ratio beginning april 30 , 2020. we expect that we will be unable to meet the fixed charge covenant at that time .
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 Suspicious Activity Report : the eos technology informs the entire surgical process by capturing a calibrated , full-body image in a standing ( weight-bearing ) position , enabling precise measurement of anatomical angles and dimensions . the resulting imaging drives a more accurate understanding of patient alignment during diagnosis , elevates the likelihood of surgical goal fulfillment by integrating a fully informed plan into surgery , and enables a post-operative assessment against the original surgical plan we believe the addition of eos imaging will advance our alphainformatix platform , providing capabilities in surgical planning , patient-specific implants , intraoperative alignment reconciliation , and other intraoperative functionalities resulting in a platform distinctively equipped to address the requirements of spine surgery . we expect the transaction to close in the third quarter of 2020. revenue and expense components the following is a description of the primary components of our revenues and expenses : revenues . we derive our revenues primarily from the sale of spinal surgery implants used in the treatment of spine disorders . spinal implant products include pedicle screws and complementary implants , interbody devices , plates , and tissue-based materials . our revenues are generated by our direct sales force and independent distributors . our products are requested directly by surgeons and shipped and billed to hospitals and surgical centers . currently , most of our business is conducted with customers within markets in which we have experience and with payment terms that are customary to our business . we may defer revenues until the time of collection if circumstances related to payment terms , regional market risk or customer history indicate that collectability is not certain . cost of revenues . cost of revenues consists of direct product costs , royalties , milestones and the amortization of purchased intangibles . our product costs consist primarily of direct labor , overhead , and raw materials and components . the product costs of 44 certain of our biologics products include the cost of procuring and processing human tissue . we incur royalties related to the technologies that we license from others and the pr oducts that are developed in part by surgeons with whom we collaborate in the product development process . amortization of purchased intangibles consists of amortization of developed product technology . research and development expenses . research and development expense consists of costs associated with the design , development , testing , and enhancement of our products . research and development expense also includes salaries and related employee benefits , research-related overhead expenses , fees paid to external service providers in both cash and equity , and costs associated with our scientific advisory board and executive surgeon panels . sales , general and administrative expenses . sales , general and administrative expense consists primarily of salaries and related employee benefits , sales commissions and support costs , depreciation of our surgical instruments , regulatory affairs , quality assurance costs , professional service fees , travel , medical education , trade show and marketing costs , insurance and legal expenses . litigation-related expenses . litigation-related expenses are costs incurred for our ongoing litigation , primarily with nuvasive , inc. transaction-related expenses . reflects the recognition of transaction expense incurred as part of the safeop acquisition . gain on settlement . gain on settlement consists of a gain of approximately $ 6.2 million for the year ended december 31 , 2018 as a result of the settlement agreement with elite medical holdings and pac 3 surgical , pursuant to which we made a cash payment of $ 0.4 million as the final and total compensation under the collaboration and related amendment . the gain reflects the reversal of accrued obligations previously recorded under the collaboration . restructuring expenses . restructuring expense consists of severance , social plan benefits and related taxes in connection with our ongoing cost rationalization efforts , including the termination of our manufacturing operations in california in 2017. other expense , net . other expense , net includes interest income , interest expense , gains and losses from foreign currency exchanges and other non-operating gains and losses . income tax benefit . income tax benefit from continuing operations primarily consists of release of the valuation allowance from the safeop acquisition , partially offset by state taxes . sale of international business on september 1 , 2016 , we completed the sale of our international distribution operations and agreements , including our wholly-owned subsidiaries in japan , brazil , australia , china and singapore and substantially all of the assets of our other sales operations in the united kingdom and italy , to an affiliate of globus ( “ globus transaction ” ) . following the closing of the globus transaction , we now operate in the u.s. market only and are restricted from marketing and selling our products in foreign markets pursuant to the terms and conditions , and for the time periods , set forth in the definitive documents related to the globus transaction . 45 results of operations the first table below sets forth our statements of operations data for the periods presented . our historical results are not necessarily indicative of the operating results that may be expected in the future . replace_table_token_1_th replace_table_token_2_th 46 year ended december 31 , 2019 compared to the year ended december 31 , 2018 total revenues . total revenues increased by $ 21.7 million , or 23.7 % , primarily due to sales growth from strategic distribution channels and new product launches . revenue from u.s. products increased by $ 24.6 million , or 29.4 % . story_separator_special_tag the present value of lease payments is determined by using the incremental borrowing rate for operating leases determined by using the incremental borrowing rate of interest that we would pay to borrow on a c ollateralized basis an amount equal to the lease payments in a similar economic environment . we applied the new guidance to our existing facility lease at the time of adoption and recognized a right-of-use asset of $ 2.4 million and operating lease liabilit y of $ 2.9 million , during the first period of adoption , and recorded a reversal of the previous deferred rent balance under the previous lease guidance of approximately $ 0.6 million . we entered into another facility lease for smaller office space during th e third quarter of 2019 and also applied this guidance to create an additional rou asset and operating lease liability . the two leases are presented together on the company 's consolidated balance sheet . rent expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in research and development and general and administrative expenses in the statements of operations and comprehensive loss . valuation of intangible assets we assess the impairment of our intangible assets annually in december or whenever business conditions change and an earlier impairment indicator arises . this assessment requires us to make assumptions and judgments regarding the carrying value of these assets . these assets are considered to be impaired if we determine that their carrying value may not be recoverable based upon our assessment of certain events or changes in circumstances , including the following : a determination that the carrying value of such assets can not be recovered through undiscounted cash flows ; loss of legal ownership or title to the assets ; significant changes in our strategic business objectives and utilization of the assets ; or the impact of significant negative industry or economic trends . if the assets are considered to be impaired , the impairment we recognize is the amount by which the carrying value of the assets exceeds the fair value of the assets . significant management judgment is required in estimating the fair value of our intangible assets . warrants to purchase common stock warrants are accounted for in accordance with the applicable accounting guidance provided in asc 815 - derivatives and hedging as either derivative liabilities or as equity instruments depending on the specific terms of the agreements . liability-classified instruments are recorded at fair value at each reporting period with any change in fair value recognized as a component of change in fair value of derivative liabilities in the consolidated statements of operations . we estimate liability classified instruments using the black scholes model , which requires management to develop assumptions and inputs that have significant impact on such valuations . during each reporting period , we evaluate changes in facts and circumstances that could impact the classification of warrants from liability to equity , or vice versa . stock-based compensation we account for stock-based compensation under provisions which require that share-based payment transactions with employees be recognized in the financial statements based on their fair value and recognized as compensation expense over the vesting period . the amount of expense recognized during the period is affected by subjective assumptions , including estimates of our future volatility , the expected term for our stock options , the number of options expected to ultimately vest , and the timing of vesting for our share-based awards . 53 we use a black-sc holes option-pricing model to estimate the fair value of our stock option awards . the calculation of the fair value of the awards using the black-scholes option-pricing model is affected by our stock price on the date of grant as well as assumptions regard ing the following : estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the award . our estimated volatility through december 31 , 2019 was based on our actual historical volatility . an increase in the estimated volatility would result in an increase to our stock-based compensation expense . the expected term represents the period of time that awards granted are expected to be outstanding . our estimated expected term through december 31 , 2019 was calculated using a weighted-average term based on historical exercise patterns and the term from option grant date to exercise for the options granted within the specified date range . an increase in the expected term would result in an increase to our stock-based compensation expense . the risk-free interest rate is based on the yield curve of a zero-coupon u.s. treasury bond on the date the stock option award is granted with a maturity equal to the expected term of the stock option award . an increase in the risk-free interest rate would result in an increase to our stock-based compensation expense . the assumed dividend yield is based on our expectation of not paying dividends in the foreseeable future . we use historical data to estimate the number of future stock option forfeitures . share-based compensation recorded in our consolidated statements of operations is based on awards expected to ultimately vest and has been reduced for estimated forfeitures . our estimated forfeiture rates may differ from our actual forfeitures which would affect the amount of expense recognized during the period . we account for stock option grants to non-employees under provisions which require that the fair value of these instruments be recognized as an expense over the period in which the related services are rendered . stock-based compensation expense of awards with performance conditions is recognized over the period from the date the performance condition is determined to be probable of occurring through the time the applicable condition is met . determining the likelihood and timing of achieving performance conditions is

