we base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about carrying values of assets and liabilities that are not apparent from other sources . since future events and their impact can not be determined with certainty , the actual results will likely differ from our estimates . such differences could be material to the consolidated financial statements . we believe that our application of accounting policies , and the estimates inherently required therein , are reasonable . we periodically reevaluate these accounting policies and estimates , and make adjustments when facts and circumstances dictate a change . historically , we have found our application of accounting policies to be appropriate , and actual results have not differed materially from those determined using necessary estimates . our accounting policies are more fully described in the notes to our consolidated financial statements included in this annual report on form 10-k. the critical accounting policies , judgments and estimates that we believe have the most significant effect on our financial statements are : · valuation of inventories ; · carrying value of long-lived assets ; · software development costs ; · revenue recognition ; · product warranty ; · derivatives and fair value measurements ; · stock-based compensation ; and · income taxes . valuation of inventories inventory is stated at the lower of cost or net realizable value , with cost determined on a weighted average first-in , first-out method . inventory includes purchased parts and components , work in process and finished goods . provisions for excess , obsolete or slow moving inventory are recorded after periodic evaluation of historical sales , current economic trends , forecasted sales , estimated product life cycles and estimated inventory levels . purchasing practices , electronic component obsolescence , accuracy of sales and production forecasts , introduction of new products , product life cycles , product support and foreign regulations governing hazardous materials are the factors that contribute to inventory valuation risks . exposure to inventory valuation risks is managed by maintaining safety stocks , minimum purchase lots , managing product and end-of-life issues brought on by aging components or new product introductions , and by utilizing certain inventory minimization strategies such as vendor-managed inventories . the accounting estimate related to valuation of inventories is considered a “ critical accounting estimate ” because it is susceptible to changes from period-to-period due to the requirement for management to make estimates relative to each of the underlying factors , ranging from purchasing to sales , production , and after-sale support . if actual demand , market conditions or product life cycles differ from estimates , inventory adjustments to lower market values would result in a reduction to the carrying value of inventory , an increase in inventory write-offs and a decrease to gross margins . the company wrote down to net realizable value all of its component and finished goods inventory related to its iwear video headphones resulting from the decision in early 2017 to reduce the suggested retail selling price to a price below the cost . the total write down provision totaled $ 1,124,401 and represents the estimated net realizable of such existing inventory , net of the costs of completion of components and work in progress . this provision has been included in operating expenses on the consolidated statement of operations . 31 carrying value of long-lived assets if facts and circumstances indicate that a long-lived asset , including a products ' mold tooling and equipment , may be impaired , the carrying value is reviewed in accordance with fasb asc topic 360-10 accounting for the impairment or disposal of long-lived assets . if this review indicates that the carrying value of the asset will not be recovered as determined based on projected undiscounted cash flows related to the asset over its remaining life , the carrying value of the asset is reduced to its estimated fair value . impairment losses are dependent on a number of factors such as general economic trends and major technology advances , and thus could be significantly different than historical results . no impairment charges on tooling and equipment were recorded in 2016 or 2015. we perform a valuation of our patents and trademark assets when events or circumstances indicate their carrying amounts may be unrecoverable . we recorded an impairment charge of $ 20,506 representing cost of $ 44,371 , less accumulated amortization of $ 23,865 in 2016 , and an impairment charge of $ 13,222 representing cost of $ 21,954 , less accumulated amortization of $ 8,732 in 2015 regarding our abandoned patents and trademarks . the value of the remaining intellectual property , such as patents and trademarks , were valued ( net of accumulated amortization ) at $ 535,461 as of december 31 , 2016 , because management believes that its value is recoverable . software development costs the company capitalizes the costs of obtaining and developing its software once technological feasibility has been determined by management . such costs are accumulated and capitalized . these projects could take several years to complete . the capitalized costs are then amortized over 3 to 5 years on a straight-line basis . unsuccessful or discontinued software projects are written off and expensed in the fiscal period where the application is abandoned or discontinued . the value of the unamortized software development costs remaining were valued ( net of accumulated amortization ) at $ 214,838 as of december 31 , 2016 , because management believes that its value is recoverable . revenue recognition we recognize revenue from product sales in accordance with fasb asc topic 605 revenue recognition . product sales represent the majority of our revenue and there have been no material changes in or inflation in our product pricing over the past two fiscal years . story_separator_special_tag there was an overall decrease in product sales for the year ended december 31 , 2016 over the same period in 2015 of $ 556,275 or 22 % . the following table reflects the major components of our sales : 36 replace_table_token_4_th the decrease in smart glasses was primarily the result of a 25 % decrease in sales of the m100 smart glasses . after the announcement of the new m300 at ces in january 2016 , many customers have delayed further purchases of our smart glasses until we commence shipping the m300 smart glasses . pre-orders for the new m300 , including migration packages , are included primarily as deferred revenues and will not be recognized as revenues until those orders are finally shipped to the customer . our iwear video headphones sales were 18 % of product revenues for the year ended december 31 , 2016 versus nil in the same period in 2015 when it was not yet available . revenues from this product line were constrained throughout most of 2016 due to production difficulties , but production capacities are consistently improving . for the 2015 comparative period , approximately 8 % of revenues came from the wrap ar series of video eyewear products which was discontinued in the summer of 2015 , whereas no such product revenues were reported in the 2016 period . sales of waveguide related component sales were 5 % of total sales versus 14 % in the prior period , partially due to customers awaiting shipments of the next generation of waveguides . cost of sales and gross profit ( loss ) . cost of product revenues and engineering services is comprised of materials , components , labor , warranty costs , freight costs , manufacturing overhead , software royalties , and the non-cash amortization of software development costs related to the production of our products and rendering engineering services . the following table reflects the components of our cost of goods sold for products : replace_table_token_5_th the decreased net gross profit ( loss ) percentage earned in the year ended december 31 , 2016 , as compared to the same period in 2015 was primarily the result of lower sales levels to absorb many of our relatively fixed manufacturing overheads and amortization costs and the fact that we earn significantly lower gross margins on iwear as compared to our smart glasses and prior wrap ar products . production issues and product shortages contributed to a negative margin on iwear for 2016. manufacturing overhead costs rose primarily due to increased salaries and production labor costs of $ 198,862 , with over half related to iwear rework costing ; increased rent and utility cost allocations of $ 162,293 due to our larger plant , resulted in an increase of $ 361,155 from 2015. freight costs of $ 482,010 were substantially higher for the 2016 period as compared to $ 250,981 in 2015. as our new iwear product is bulkier and heavier and ships in a larger retail package than our prior products , the costs of air shipments became prohibitive material given that production volumes from china increased from 2015. research and development . our research and development expenses consist primarily of compensation costs for personnel , related stock compensation expenses , third party services , purchase of research supplies and materials , and consulting fees related to research and development costs . software development expenses to determine technical feasibility before final development and ongoing maintenance that are not capitalized are included in research and development costs . replace_table_token_6_th 37 comparing research and development costs for the year ended december 31 , 2016 versus the same period in 2015 , there was an increase in 2016 salary , benefits and stock compensation expenses of $ 1,040,841 , primarily the result of additional r & d staff versus the same period in 2015 ; a $ 131,654 reduction in new staff recruitment fees ; an increase in project development and research costs of $ 1,937,091 primarily related to the new product development for the m300 smart glasses and to a smaller extent the m3000 , with the majority of these amounts being spent on outside contractors which assisted in the development work ; an increase in $ 208,665 in rent and utility costs related to the expanded r & d portion of our new corporate facilities ; an increase of $ 231,773 in external research related consulting fees for optics and waveguide research ; and an $ 11,612 increase in travel costs related to our outside production contractor and development contractors . selling and marketing . selling and marketing costs consist of trade show costs , advertising , travel costs , sales staff compensation costs including stock compensation expense , consulting fees , pr agency fees , website costs and sales commissions paid to full-time staff and outside consultants . replace_table_token_7_th these costs increased overall due to the following factors : higher salary , commissions , benefits and stock compensation expenses related to new staff additions totaling $ 418,180 in both north american and europe ; increased trade show costs of $ 402,380 due to larger exhibit booth sizes and show rentals and attendance at several additional major trade shows during 2016 versus 2015 ; increased public relations and video production costs of $ 340,761 due to the hiring of an additional pr and marketing service firm as compared to the 2015 period and the production of 4 new product videos in 2016 ; a $ 144,319 increase in website costs including additions to our main new corporate and european websites ; a $ 92,093 increase in travel costs ; and a $ 42,736 increase in rent and utility costs . general and administrative . general and administrative costs include professional fees , investor relations ( ir ) costs including shares and warrants issued for ir services , salaries and related stock compensation , travel costs , office and rental costs . replace_table_token_8_th general

liquidity and capital resources as of december 31 , 2016 , we had cash and cash equivalents of $ 14,533,944 , an increase of $ 2,656,886 from $ 11,877,058 as of december 31 , 2015. at december 31 , 2016 , we had current assets of $ 18,230,053 compared to current liabilities of $ 4,421,959 which resulted in a working capital position of $ 13,808,094. as at december 31 , 2015 , we had a working capital position of $ 14,728,089. our current liabilities are comprised principally of accounts payable , current portion of convertible long-term debt , and accrued expenses . 38 operating activities . we used $ 14,396,964 of cash for operating activities in 2016 compared to $ 11,668,079 in 2015. in addition to the net loss adjusted for non-cash items , working capital operating uses for 2016 resulted from a $ 426,521 increase in inventory and a $ 78,389 increase in prepaid expenses . the major working capital operating items for 2015 resulted from a $ 2,437,149 increase in inventory and a $ 1,276,132 reduction in accounts payable . investing activities . investing activities used $ 2,186,303 of cash for 2016 as compared to a use of $ 2,084,739 for the same period in 2015. in 2016 , we used $ 2,039,299 of cash primarily for the completion of our new clean room , new product tooling , and new projection optics tooling and additional manufacturing and r & d equipment , as compared to $ 1,892,831 of cash used in 2015 primarily for the purchase of lease improvements and equipment for our new office and manufacturing facility as well as additions to product tooling . the costs of registering our intellectual property rights were $ 147,004 in 2016 and $ 191,908 in the same period in 2015. financing activities .


 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 as of december 31 , 2016 , we had cash and cash equivalents of $ 14,533,944 , an increase of $ 2,656,886 from $ 11,877,058 as of december 31 , 2015. at december 31 , 2016 , we had current assets of $ 18,230,053 compared to current liabilities of $ 4,421,959 which resulted in a working capital position of $ 13,808,094. as at december 31 , 2015 , we had a working capital position of $ 14,728,089. our current liabilities are comprised principally of accounts payable , current portion of convertible long-term debt , and accrued expenses . 38 operating activities . we used $ 14,396,964 of cash for operating activities in 2016 compared to $ 11,668,079 in 2015. in addition to the net loss adjusted for non-cash items , working capital operating uses for 2016 resulted from a $ 426,521 increase in inventory and a $ 78,389 increase in prepaid expenses . the major working capital operating items for 2015 resulted from a $ 2,437,149 increase in inventory and a $ 1,276,132 reduction in accounts payable . investing activities . investing activities used $ 2,186,303 of cash for 2016 as compared to a use of $ 2,084,739 for the same period in 2015. in 2016 , we used $ 2,039,299 of cash primarily for the completion of our new clean room , new product tooling , and new projection optics tooling and additional manufacturing and r & d equipment , as compared to $ 1,892,831 of cash used in 2015 primarily for the purchase of lease improvements and equipment for our new office and manufacturing facility as well as additions to product tooling . the costs of registering our intellectual property rights were $ 147,004 in 2016 and $ 191,908 in the same period in 2015. financing activities .
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 Suspicious Activity Report : we base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about carrying values of assets and liabilities that are not apparent from other sources . since future events and their impact can not be determined with certainty , the actual results will likely differ from our estimates . such differences could be material to the consolidated financial statements . we believe that our application of accounting policies , and the estimates inherently required therein , are reasonable . we periodically reevaluate these accounting policies and estimates , and make adjustments when facts and circumstances dictate a change . historically , we have found our application of accounting policies to be appropriate , and actual results have not differed materially from those determined using necessary estimates . our accounting policies are more fully described in the notes to our consolidated financial statements included in this annual report on form 10-k. the critical accounting policies , judgments and estimates that we believe have the most significant effect on our financial statements are : · valuation of inventories ; · carrying value of long-lived assets ; · software development costs ; · revenue recognition ; · product warranty ; · derivatives and fair value measurements ; · stock-based compensation ; and · income taxes . valuation of inventories inventory is stated at the lower of cost or net realizable value , with cost determined on a weighted average first-in , first-out method . inventory includes purchased parts and components , work in process and finished goods . provisions for excess , obsolete or slow moving inventory are recorded after periodic evaluation of historical sales , current economic trends , forecasted sales , estimated product life cycles and estimated inventory levels . purchasing practices , electronic component obsolescence , accuracy of sales and production forecasts , introduction of new products , product life cycles , product support and foreign regulations governing hazardous materials are the factors that contribute to inventory valuation risks . exposure to inventory valuation risks is managed by maintaining safety stocks , minimum purchase lots , managing product and end-of-life issues brought on by aging components or new product introductions , and by utilizing certain inventory minimization strategies such as vendor-managed inventories . the accounting estimate related to valuation of inventories is considered a “ critical accounting estimate ” because it is susceptible to changes from period-to-period due to the requirement for management to make estimates relative to each of the underlying factors , ranging from purchasing to sales , production , and after-sale support . if actual demand , market conditions or product life cycles differ from estimates , inventory adjustments to lower market values would result in a reduction to the carrying value of inventory , an increase in inventory write-offs and a decrease to gross margins . the company wrote down to net realizable value all of its component and finished goods inventory related to its iwear video headphones resulting from the decision in early 2017 to reduce the suggested retail selling price to a price below the cost . the total write down provision totaled $ 1,124,401 and represents the estimated net realizable of such existing inventory , net of the costs of completion of components and work in progress . this provision has been included in operating expenses on the consolidated statement of operations . 31 carrying value of long-lived assets if facts and circumstances indicate that a long-lived asset , including a products ' mold tooling and equipment , may be impaired , the carrying value is reviewed in accordance with fasb asc topic 360-10 accounting for the impairment or disposal of long-lived assets . if this review indicates that the carrying value of the asset will not be recovered as determined based on projected undiscounted cash flows related to the asset over its remaining life , the carrying value of the asset is reduced to its estimated fair value . impairment losses are dependent on a number of factors such as general economic trends and major technology advances , and thus could be significantly different than historical results . no impairment charges on tooling and equipment were recorded in 2016 or 2015. we perform a valuation of our patents and trademark assets when events or circumstances indicate their carrying amounts may be unrecoverable . we recorded an impairment charge of $ 20,506 representing cost of $ 44,371 , less accumulated amortization of $ 23,865 in 2016 , and an impairment charge of $ 13,222 representing cost of $ 21,954 , less accumulated amortization of $ 8,732 in 2015 regarding our abandoned patents and trademarks . the value of the remaining intellectual property , such as patents and trademarks , were valued ( net of accumulated amortization ) at $ 535,461 as of december 31 , 2016 , because management believes that its value is recoverable . software development costs the company capitalizes the costs of obtaining and developing its software once technological feasibility has been determined by management . such costs are accumulated and capitalized . these projects could take several years to complete . the capitalized costs are then amortized over 3 to 5 years on a straight-line basis . unsuccessful or discontinued software projects are written off and expensed in the fiscal period where the application is abandoned or discontinued . the value of the unamortized software development costs remaining were valued ( net of accumulated amortization ) at $ 214,838 as of december 31 , 2016 , because management believes that its value is recoverable . revenue recognition we recognize revenue from product sales in accordance with fasb asc topic 605 revenue recognition . product sales represent the majority of our revenue and there have been no material changes in or inflation in our product pricing over the past two fiscal years . story_separator_special_tag there was an overall decrease in product sales for the year ended december 31 , 2016 over the same period in 2015 of $ 556,275 or 22 % . the following table reflects the major components of our sales : 36 replace_table_token_4_th the decrease in smart glasses was primarily the result of a 25 % decrease in sales of the m100 smart glasses . after the announcement of the new m300 at ces in january 2016 , many customers have delayed further purchases of our smart glasses until we commence shipping the m300 smart glasses . pre-orders for the new m300 , including migration packages , are included primarily as deferred revenues and will not be recognized as revenues until those orders are finally shipped to the customer . our iwear video headphones sales were 18 % of product revenues for the year ended december 31 , 2016 versus nil in the same period in 2015 when it was not yet available . revenues from this product line were constrained throughout most of 2016 due to production difficulties , but production capacities are consistently improving . for the 2015 comparative period , approximately 8 % of revenues came from the wrap ar series of video eyewear products which was discontinued in the summer of 2015 , whereas no such product revenues were reported in the 2016 period . sales of waveguide related component sales were 5 % of total sales versus 14 % in the prior period , partially due to customers awaiting shipments of the next generation of waveguides . cost of sales and gross profit ( loss ) . cost of product revenues and engineering services is comprised of materials , components , labor , warranty costs , freight costs , manufacturing overhead , software royalties , and the non-cash amortization of software development costs related to the production of our products and rendering engineering services . the following table reflects the components of our cost of goods sold for products : replace_table_token_5_th the decreased net gross profit ( loss ) percentage earned in the year ended december 31 , 2016 , as compared to the same period in 2015 was primarily the result of lower sales levels to absorb many of our relatively fixed manufacturing overheads and amortization costs and the fact that we earn significantly lower gross margins on iwear as compared to our smart glasses and prior wrap ar products . production issues and product shortages contributed to a negative margin on iwear for 2016. manufacturing overhead costs rose primarily due to increased salaries and production labor costs of $ 198,862 , with over half related to iwear rework costing ; increased rent and utility cost allocations of $ 162,293 due to our larger plant , resulted in an increase of $ 361,155 from 2015. freight costs of $ 482,010 were substantially higher for the 2016 period as compared to $ 250,981 in 2015. as our new iwear product is bulkier and heavier and ships in a larger retail package than our prior products , the costs of air shipments became prohibitive material given that production volumes from china increased from 2015. research and development . our research and development expenses consist primarily of compensation costs for personnel , related stock compensation expenses , third party services , purchase of research supplies and materials , and consulting fees related to research and development costs . software development expenses to determine technical feasibility before final development and ongoing maintenance that are not capitalized are included in research and development costs . replace_table_token_6_th 37 comparing research and development costs for the year ended december 31 , 2016 versus the same period in 2015 , there was an increase in 2016 salary , benefits and stock compensation expenses of $ 1,040,841 , primarily the result of additional r & d staff versus the same period in 2015 ; a $ 131,654 reduction in new staff recruitment fees ; an increase in project development and research costs of $ 1,937,091 primarily related to the new product development for the m300 smart glasses and to a smaller extent the m3000 , with the majority of these amounts being spent on outside contractors which assisted in the development work ; an increase in $ 208,665 in rent and utility costs related to the expanded r & d portion of our new corporate facilities ; an increase of $ 231,773 in external research related consulting fees for optics and waveguide research ; and an $ 11,612 increase in travel costs related to our outside production contractor and development contractors . selling and marketing . selling and marketing costs consist of trade show costs , advertising , travel costs , sales staff compensation costs including stock compensation expense , consulting fees , pr agency fees , website costs and sales commissions paid to full-time staff and outside consultants . replace_table_token_7_th these costs increased overall due to the following factors : higher salary , commissions , benefits and stock compensation expenses related to new staff additions totaling $ 418,180 in both north american and europe ; increased trade show costs of $ 402,380 due to larger exhibit booth sizes and show rentals and attendance at several additional major trade shows during 2016 versus 2015 ; increased public relations and video production costs of $ 340,761 due to the hiring of an additional pr and marketing service firm as compared to the 2015 period and the production of 4 new product videos in 2016 ; a $ 144,319 increase in website costs including additions to our main new corporate and european websites ; a $ 92,093 increase in travel costs ; and a $ 42,736 increase in rent and utility costs . general and administrative . general and administrative costs include professional fees , investor relations ( ir ) costs including shares and warrants issued for ir services , salaries and related stock compensation , travel costs , office and rental costs . replace_table_token_8_th general

