revenue our product revenue is generated from sales to hospitals and other medical facilities that are served through a direct sales force , independent sales representatives and distributors in the united states , germany , the united kingdom , austria , ireland , switzerland , singapore , hong kong , malaysia , monaco , hungary , spain , australia , argentina , benelux , united arab emirates , italy and other markets . in order for surgeons to use our products , the medical facilities where these surgeons treat patients typically require us to enter into pricing agreements . the process of negotiating a pricing agreement can be lengthy and time-consuming , require extensive management time and may not be successful . revenue from sales of our products fluctuates principally based on the selling price of the joint replacement product , as the sales price of our products varies among hospitals and other medical facilities as well as health insurance coverage and reimbursement rates . in addition , our product revenue may fluctuate based on the product sales mix and mix of sales by geography . our product revenue from international sales can be significantly impacted by fluctuations in foreign currency exchange rates , as our sales are typically denominated in the local currency in the countries in which we sell our products . we expect our product revenue to fluctuate from quarter-to-quarter due to a variety of factors , including seasonality , as we have historically experienced lower sales in the summer months , the timing of the introduction of our new products , if any , and the impact of the buying patterns and implant volumes of medical facilities . ongoing royalty revenue is generated from our agreement with microport orthopedics inc. , a wholly owned subsidiary of microport scientific corporation , or collectively , microport . the license agreement with microport and our license agreement with wright medical group , inc. , its wholly owned subsidiary , also generated additional revenue , which was recognized through december 31 , 2017. both agreements were entered into in april 2015. historically , we have accounted for the agreements with wright medical and microport under asc 605-25 , multiple-element arrangements and staff accounting bulletin no . 104 , revenue recognition ( asc 605 ) . in accordance with asc 605 , we were required to identify and account for each of the separate units of accounting . we identified the relative selling price for each and then allocated the total consideration based on their relative values . in connection with these agreements , in april 2015 , we recognized in aggregate ( i ) back-owed royalties of $ 3.4 million as royalty revenue and ( ii ) the value attributable to the settlements of $ 0.2 million as other income . additionally , we recognized an initial $ 5.1 million in aggregate as deferred royalty revenue , to be recognized as royalty revenue ratably through the expiration of the last to expire of our patents and patent applications licensed to wright medical , which currently is expected to occur in 2027. on january 1 , 2018 , we adopted asc 606 , revenue from contracts with customers . our analysis of these contracts under asc 606 indicated that the licenses are functional and thus revenue should have been recognized in full upon the license execution date , which resulted in a $ 4.3 million adjustment to our opening balance of accumulated deficit . in addition , the ongoing royalty from microport , which was previously recognized as royalty revenue upon receipt of payment , is now recognized in the period the sale occurred , resulting in a $ 0.2 million adjustment to our opening balance of accumulated deficit . the license agreement with microport will expire upon the expiration of the last to expire of our patents and patent applications licensed to microport , which currently is expected to occur in 2031. cost of revenue we produce our computer-aided designs , or cad , in-house and in india and use them to direct most of our product manufacturing efforts . we manufacture all of our patient-specific instruments , or ijigs , tibial trays , polyethylene tibia tray inserts used in our total knee implants , and our patient-specific conformis hip system implants in our facility in wilmington , massachusetts . we polish our femoral implants used in our total and partial knee products in our facility in wallingford , connecticut . starting in 2019 , we began to manufacture the lateral partial tibial tray components in our facility in wilmington , massachusetts . we outsource the production of the remainder of the partial knee tibial components , femoral castings , and other knee and hip components to third-party suppliers . our suppliers make our personalized implant components using the cad designs we supply . cost of revenue consists primarily of costs of raw materials , manufacturing personnel , outsourced cad labor , manufacturing supplies , inbound freight , manufacturing overhead , and depreciation expense . 69 we calculate gross margin as revenue less cost of revenue divided by revenue . our gross margin has been and will continue to be affected by a variety of factors , including primarily volume of units produced , mix of product components manufactured by us versus sourced from third parties , our average selling price , the geographic mix of sales , product sales mix , the number of cancelled sales orders resulting in wasted implants , and royalty revenue . we expect our gross margin from the sale of our products , which excludes royalty revenue , to expand over time to the extent we are successful in reducing our manufacturing costs per unit and increasing our manufacturing efficiency as sales volume increases . story_separator_special_tag on june 25 , 2019 , we entered into a loan and security agreement ( the `` 2019 secured loan agreement `` ) with innovatus life sciences lending fund i , lp ( `` innovatus `` ) , as collateral agent and lender , east west bank and the other lenders party thereto from time to time ( collectively , the `` lenders `` ) , pursuant to which the lenders agreed to make term loans and revolving credit facility to the company to repay existing indebtedness , for working capital and general business purposes , in a principal amount of up to $ 30 million , comprised of a $ 20 million term loan and up to $ 10 million revolving credit facility . the company used $ 15 million of the proceeds from the debt financings to pay off its 2017 secured loan agreement with oxford and the remaining proceeds will be utilized to fund the operations of the business . in addition , innovatus purchased approximately $ 3 million of the company 's common stock at the previous day 's closing price . for further information regarding the 2017 secured loan agreement and the 2019 secured loan agreement , see “ note k —debt and notes payable ” in the financial statements and related notes appearing elsewhere in this annual report on form 10-k. 74 on september 30 , 2019 , we entered into an asset purchase agreement with howmedica osteonics corp. , a subsidiary of stryker corporation also known as stryker orthopaedics ( `` stryker `` ) . in connection with entering into the asset purchase agreement , we also entered into a development agreement , a license agreement , and other ancillary agreements contemplated by the asset purchase agreement with stryker . under the terms of the agreements , we agreed to sell and license to stryker certain assets relating to the company 's patient-specific instrumentation technology , and to develop , manufacture , and supply patient-specific instrumentation for use in connection with stryker 's `` off-the-shelf `` non-personalized knee implant offerings . we received $ 14 million upfront and will receive up to an additional $ 16 million in milestone payments pursuant to the license agreement and the development agreement . as of december 2019 , we successfully completed one out of the three total milestones . we may be required to pay back a portion of the initial payment as it is contingent on successful completion of milestones set forth in the development and license agreements . under the long-term distribution agreement , we will supply patient-specific instrumentation to stryker . we expect to incur substantial expenditures in the foreseeable future in connection with the following : expansion of our sales and marketing efforts ; expansion of our manufacturing capacity ; funding research , development and clinical activities related to our existing products and product platform , including ifit design software and product support ; funding research , development and clinical activities related to new products that we may develop , including other joint replacement products ; pursuing and maintaining appropriate regulatory clearances and approvals for our existing products and any new products that we may develop ; and preparing , filing and prosecuting patent applications , and maintaining and enforcing our intellectual property rights and position . we anticipate that our principal sources of funds in the future will be revenue generated from the sale of our products , completion of the milestones set forth in the development agreement and license agreement with stryker , potential future capital raises through the issuance of equity or other securities , debt financings , and revenue that we may generate in connection with licensing our intellectual property . we will need to generate significant additional revenue to achieve and maintain profitability , and even if we achieve profitability , we can not be sure that we will remain profitable for any substantial period of time . it is also possible that we may allocate significant amounts of capital toward products or technologies for which market demand is lower than anticipated and , as a result , abandon such efforts . if we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it , or if we expend capital on projects that are not successful , our ability to continue to support our business growth and to respond to business challenges could be significantly limited , and we may even have to scale back our operations . our failure to become and remain profitable could impair our ability to raise capital , expand our business , maintain our research and development efforts or continue to fund our operations . we anticipate needing to engage in additional equity or debt financings to secure additional funds . we may not be able to obtain additional financing on terms favorable to us , or at all . to the extent that we raise additional capital through the future sale of equity or debt , the ownership interest of our stockholders will be diluted . the terms of these future equity or debt securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders or involve negative covenants that restrict our ability to take specific actions , such as incurring additional debt or making capital expenditures . at december 31 , 2019 , we had cash and cash equivalents and investments of $ 26.4 million and $ 0.5 million in restricted cash allocated to lease deposits . based on our current operating plan , we expect that our existing cash and cash equivalents as of december 31 , 2019 , anticipated revenue from operations , our ability to issue equity to lpc , and our ability to draw down on the line of credit will enable us to fund our operating expenses and capital expenditure requirements and pay our debt service as it becomes due for at

cash flows the following table sets forth a summary of our cash flows for the periods indicated , as well as the year-over-year change ( in thousands ) : replace_table_token_3_th net cash used in operating activities . net cash used in operating activities was $ 2.8 million for the year ended december 31 , 2019 and $ 25.2 million for the year ended december 31 , 2018 , a decrease of $ 22.3 million . these amounts primarily reflect net losses of $ 28.5 million for the year ended december 31 , 2019 and $ 43.4 million for the year ended december 31 , 2018 . non-cash reconciling items between net loss and cash used in operations for the year ended december 31 , 2019 improved relative to december 31 , 2018 due to the goodwill impairment of $ 6.7 million and $ 2.4 million in other asset impairment that were recorded in 2018 , and stock-based compensation expense of $ 1.0 million , partially offset by a $ 1.5 million decrease from other non-cash items . the remaining change is related to decreases in our operating assets and liabilities , including contract liabilities of $ 12.0 million , and advances for research and development of $ 3.8 million related to the development agreement with stryker , accounts receivable of $ 2.0 million and $ 2.7 million from accounts payable and accrued liabilities . the decreases are partially offset by increases from prepaid and other assets of $ 2.2 million and inventory of $ 2.2 million . net cash provided by investing activities . net cash provided by investing activities was $ 4.3 million for the year ended december 31 , 2019 compared to $ 15.6 million cash provided by investing activities for the year ended december 31 , 2018 , a decrease of $ 11.3 million . these amounts primarily reflect a decrease of $ 12.4 million from the net purchase and maturity of investment securities classified as available-for-sale , along with a $ 1.1 million reduction in purchases of property and equipment . net cash provided by financing activities . net cash provided by financing activities was $ 8.5


 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.
     ```cash flows the following table sets forth a summary of our cash flows for the periods indicated , as well as the year-over-year change ( in thousands ) : replace_table_token_3_th net cash used in operating activities . net cash used in operating activities was $ 2.8 million for the year ended december 31 , 2019 and $ 25.2 million for the year ended december 31 , 2018 , a decrease of $ 22.3 million . these amounts primarily reflect net losses of $ 28.5 million for the year ended december 31 , 2019 and $ 43.4 million for the year ended december 31 , 2018 . non-cash reconciling items between net loss and cash used in operations for the year ended december 31 , 2019 improved relative to december 31 , 2018 due to the goodwill impairment of $ 6.7 million and $ 2.4 million in other asset impairment that were recorded in 2018 , and stock-based compensation expense of $ 1.0 million , partially offset by a $ 1.5 million decrease from other non-cash items . the remaining change is related to decreases in our operating assets and liabilities , including contract liabilities of $ 12.0 million , and advances for research and development of $ 3.8 million related to the development agreement with stryker , accounts receivable of $ 2.0 million and $ 2.7 million from accounts payable and accrued liabilities . the decreases are partially offset by increases from prepaid and other assets of $ 2.2 million and inventory of $ 2.2 million . net cash provided by investing activities . net cash provided by investing activities was $ 4.3 million for the year ended december 31 , 2019 compared to $ 15.6 million cash provided by investing activities for the year ended december 31 , 2018 , a decrease of $ 11.3 million . these amounts primarily reflect a decrease of $ 12.4 million from the net purchase and maturity of investment securities classified as available-for-sale , along with a $ 1.1 million reduction in purchases of property and equipment . net cash provided by financing activities . net cash provided by financing activities was $ 8.5
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 Suspicious Activity Report : revenue our product revenue is generated from sales to hospitals and other medical facilities that are served through a direct sales force , independent sales representatives and distributors in the united states , germany , the united kingdom , austria , ireland , switzerland , singapore , hong kong , malaysia , monaco , hungary , spain , australia , argentina , benelux , united arab emirates , italy and other markets . in order for surgeons to use our products , the medical facilities where these surgeons treat patients typically require us to enter into pricing agreements . the process of negotiating a pricing agreement can be lengthy and time-consuming , require extensive management time and may not be successful . revenue from sales of our products fluctuates principally based on the selling price of the joint replacement product , as the sales price of our products varies among hospitals and other medical facilities as well as health insurance coverage and reimbursement rates . in addition , our product revenue may fluctuate based on the product sales mix and mix of sales by geography . our product revenue from international sales can be significantly impacted by fluctuations in foreign currency exchange rates , as our sales are typically denominated in the local currency in the countries in which we sell our products . we expect our product revenue to fluctuate from quarter-to-quarter due to a variety of factors , including seasonality , as we have historically experienced lower sales in the summer months , the timing of the introduction of our new products , if any , and the impact of the buying patterns and implant volumes of medical facilities . ongoing royalty revenue is generated from our agreement with microport orthopedics inc. , a wholly owned subsidiary of microport scientific corporation , or collectively , microport . the license agreement with microport and our license agreement with wright medical group , inc. , its wholly owned subsidiary , also generated additional revenue , which was recognized through december 31 , 2017. both agreements were entered into in april 2015. historically , we have accounted for the agreements with wright medical and microport under asc 605-25 , multiple-element arrangements and staff accounting bulletin no . 104 , revenue recognition ( asc 605 ) . in accordance with asc 605 , we were required to identify and account for each of the separate units of accounting . we identified the relative selling price for each and then allocated the total consideration based on their relative values . in connection with these agreements , in april 2015 , we recognized in aggregate ( i ) back-owed royalties of $ 3.4 million as royalty revenue and ( ii ) the value attributable to the settlements of $ 0.2 million as other income . additionally , we recognized an initial $ 5.1 million in aggregate as deferred royalty revenue , to be recognized as royalty revenue ratably through the expiration of the last to expire of our patents and patent applications licensed to wright medical , which currently is expected to occur in 2027. on january 1 , 2018 , we adopted asc 606 , revenue from contracts with customers . our analysis of these contracts under asc 606 indicated that the licenses are functional and thus revenue should have been recognized in full upon the license execution date , which resulted in a $ 4.3 million adjustment to our opening balance of accumulated deficit . in addition , the ongoing royalty from microport , which was previously recognized as royalty revenue upon receipt of payment , is now recognized in the period the sale occurred , resulting in a $ 0.2 million adjustment to our opening balance of accumulated deficit . the license agreement with microport will expire upon the expiration of the last to expire of our patents and patent applications licensed to microport , which currently is expected to occur in 2031. cost of revenue we produce our computer-aided designs , or cad , in-house and in india and use them to direct most of our product manufacturing efforts . we manufacture all of our patient-specific instruments , or ijigs , tibial trays , polyethylene tibia tray inserts used in our total knee implants , and our patient-specific conformis hip system implants in our facility in wilmington , massachusetts . we polish our femoral implants used in our total and partial knee products in our facility in wallingford , connecticut . starting in 2019 , we began to manufacture the lateral partial tibial tray components in our facility in wilmington , massachusetts . we outsource the production of the remainder of the partial knee tibial components , femoral castings , and other knee and hip components to third-party suppliers . our suppliers make our personalized implant components using the cad designs we supply . cost of revenue consists primarily of costs of raw materials , manufacturing personnel , outsourced cad labor , manufacturing supplies , inbound freight , manufacturing overhead , and depreciation expense . 69 we calculate gross margin as revenue less cost of revenue divided by revenue . our gross margin has been and will continue to be affected by a variety of factors , including primarily volume of units produced , mix of product components manufactured by us versus sourced from third parties , our average selling price , the geographic mix of sales , product sales mix , the number of cancelled sales orders resulting in wasted implants , and royalty revenue . we expect our gross margin from the sale of our products , which excludes royalty revenue , to expand over time to the extent we are successful in reducing our manufacturing costs per unit and increasing our manufacturing efficiency as sales volume increases . story_separator_special_tag on june 25 , 2019 , we entered into a loan and security agreement ( the `` 2019 secured loan agreement `` ) with innovatus life sciences lending fund i , lp ( `` innovatus `` ) , as collateral agent and lender , east west bank and the other lenders party thereto from time to time ( collectively , the `` lenders `` ) , pursuant to which the lenders agreed to make term loans and revolving credit facility to the company to repay existing indebtedness , for working capital and general business purposes , in a principal amount of up to $ 30 million , comprised of a $ 20 million term loan and up to $ 10 million revolving credit facility . the company used $ 15 million of the proceeds from the debt financings to pay off its 2017 secured loan agreement with oxford and the remaining proceeds will be utilized to fund the operations of the business . in addition , innovatus purchased approximately $ 3 million of the company 's common stock at the previous day 's closing price . for further information regarding the 2017 secured loan agreement and the 2019 secured loan agreement , see “ note k —debt and notes payable ” in the financial statements and related notes appearing elsewhere in this annual report on form 10-k. 74 on september 30 , 2019 , we entered into an asset purchase agreement with howmedica osteonics corp. , a subsidiary of stryker corporation also known as stryker orthopaedics ( `` stryker `` ) . in connection with entering into the asset purchase agreement , we also entered into a development agreement , a license agreement , and other ancillary agreements contemplated by the asset purchase agreement with stryker . under the terms of the agreements , we agreed to sell and license to stryker certain assets relating to the company 's patient-specific instrumentation technology , and to develop , manufacture , and supply patient-specific instrumentation for use in connection with stryker 's `` off-the-shelf `` non-personalized knee implant offerings . we received $ 14 million upfront and will receive up to an additional $ 16 million in milestone payments pursuant to the license agreement and the development agreement . as of december 2019 , we successfully completed one out of the three total milestones . we may be required to pay back a portion of the initial payment as it is contingent on successful completion of milestones set forth in the development and license agreements . under the long-term distribution agreement , we will supply patient-specific instrumentation to stryker . we expect to incur substantial expenditures in the foreseeable future in connection with the following : expansion of our sales and marketing efforts ; expansion of our manufacturing capacity ; funding research , development and clinical activities related to our existing products and product platform , including ifit design software and product support ; funding research , development and clinical activities related to new products that we may develop , including other joint replacement products ; pursuing and maintaining appropriate regulatory clearances and approvals for our existing products and any new products that we may develop ; and preparing , filing and prosecuting patent applications , and maintaining and enforcing our intellectual property rights and position . we anticipate that our principal sources of funds in the future will be revenue generated from the sale of our products , completion of the milestones set forth in the development agreement and license agreement with stryker , potential future capital raises through the issuance of equity or other securities , debt financings , and revenue that we may generate in connection with licensing our intellectual property . we will need to generate significant additional revenue to achieve and maintain profitability , and even if we achieve profitability , we can not be sure that we will remain profitable for any substantial period of time . it is also possible that we may allocate significant amounts of capital toward products or technologies for which market demand is lower than anticipated and , as a result , abandon such efforts . if we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it , or if we expend capital on projects that are not successful , our ability to continue to support our business growth and to respond to business challenges could be significantly limited , and we may even have to scale back our operations . our failure to become and remain profitable could impair our ability to raise capital , expand our business , maintain our research and development efforts or continue to fund our operations . we anticipate needing to engage in additional equity or debt financings to secure additional funds . we may not be able to obtain additional financing on terms favorable to us , or at all . to the extent that we raise additional capital through the future sale of equity or debt , the ownership interest of our stockholders will be diluted . the terms of these future equity or debt securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders or involve negative covenants that restrict our ability to take specific actions , such as incurring additional debt or making capital expenditures . at december 31 , 2019 , we had cash and cash equivalents and investments of $ 26.4 million and $ 0.5 million in restricted cash allocated to lease deposits . based on our current operating plan , we expect that our existing cash and cash equivalents as of december 31 , 2019 , anticipated revenue from operations , our ability to issue equity to lpc , and our ability to draw down on the line of credit will enable us to fund our operating expenses and capital expenditure requirements and pay our debt service as it becomes due for at

