to the extent there are material differences between our estimates and the actual results , our future results of operations will be affected . we believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements : revenue recognition we recognize revenue when all of the following criteria are met : persuasive evidence of an arrangement exists ; delivery has occurred or services have been rendered ; our price to the buyer is fixed or determinable ; and collectability is reasonably assured . a significant portion of our sales are made to distributors under agreements which contain a limited right to return unsold product and price protection provisions . therefore , the recognition of net revenue and related cost of revenue from sales to these distributors are deferred until the distributor resells the product . when product revenue is recognized , we establish an estimated allowance for future product returns based on historical returns experience . actual product returns or pricing adjustments that differ from our estimates could result in increases or decreases to revenue . additionally , we sell extended warranty services , which extend the warranty period for an additional one to three years , depending upon the product . warranty net revenue is deferred and recognized ratably over the warranty service period . warranty reserve the standard warranty periods for our products typically range from one to five years . we establish reserves for estimated product warranty costs at the time revenue is recognized based upon our historical warranty experience , and additionally for any known product warranty issues . although we engage in extensive product quality programs and processes , our warranty obligation is affected by product failure rates , use of materials or service delivery costs that differ from our estimates . as a result , increases or decreases to warranty reserves could be required , which could impact our gross margins . allowance for doubtful accounts we maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments . our allowance for doubtful accounts is based on our assessment of the collectability of specific customer accounts , the aging of accounts receivable , our history of bad debts and the general condition of the industry . if a major customer 's credit worthiness deteriorates , or our customers ' actual defaults exceed our historical experience , our estimates could change and impact our reported financial results . inventory valuation our policy is to value inventories at the lower of cost or market on a part-by-part basis . this policy requires us to make estimates regarding the market value of our inventories , including an assessment of excess and obsolete inventories . we determine excess and obsolete inventories based on an estimate of the future sales demand for our products within a specified time horizon , generally twelve months . the estimates we use for demand are also used for near-term capacity planning and inventory purchasing . in addition , specific reserves are recorded to cover risks in the area of end of life products , inventory located at our contract manufacturers , deferred inventory in our sales channel and warranty replacement stock . if our sales forecast is less than the inventory we have on hand at the end of an accounting period , we may be required to take excess and obsolete inventory charges , which will decrease our gross margin and net operating results for that period . 20 valuation of deferred income taxes we have recorded a valuation allowance to reduce our net deferred tax assets to zero , primarily due to historical net operating losses and uncertainty of generating future taxable income . we consider estimated future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance . if we determine that it is more likely than not that we will realize a deferred tax asset that currently has a valuation allowance , we would be required to reverse the valuation allowance , which would be reflected as an income tax benefit in our consolidated statements of operations at that time . goodwill impairment testing in performing our goodwill impairment testing , we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount . if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount , we conduct a two-step goodwill impairment test . the first step of the impairment test involves comparing the estimated fair value of our single reporting unit with its carrying value , including goodwill . if the carrying amount of the reporting unit exceeds the reporting unit 's fair value , we perform the second step of the analysis , which involves comparing the implied fair value of the reporting unit 's goodwill with the carrying value of that goodwill , the difference of which represents the impairment loss . the determination of the reporting unit 's fair value requires significant judgment and is based on management 's best estimate . we generally use valuation techniques based on our market capitalization and multiples of revenue for similar companies . in addition , management may consider the reporting unit 's expected future earnings , and a control premium , which is the amount that a buyer is willing to pay over the current market price of a company as indicated by the traded price per share ( i.e . , market capitalization ) , in order to acquire a controlling interest . story_separator_special_tag the following table presents gross profit : replace_table_token_5_th 22 the decrease in gross profit as a percentage of net revenue ( referred to as “ gross margin ” ) was impacted by an increase in expedited freight costs . in addition , gross margin was affected by the growth in sales , as a percentage of total net revenues , of certain lower margin new products . since newer products typically have lower margins until they reach production volumes , we may experience downward pressure on gross margins if new product revenues continue to grow as a percentage of total net revenue . selling , general and administrative selling , general and administrative expenses consisted of personnel-related expenses including salaries and commissions , share-based compensation , facility expenses , information technology , trade show expenses , advertising and professional legal and accounting fees . the following table presents selling , general and administrative expenses : replace_table_token_6_th the increase in selling , general and administrative was primarily due to an increase in advertising and marketing fees related to various marketing initiatives attributable to new products releases . the increase in selling , general and administrative expense was partially offset by decreases in ( i ) professional fees and outside services due to a reduction associated with the implementation of various cost-cutting programs , as well as the fact that in the prior year , the balance included fees related to the special investigation that was completed during the quarter ended september 30 , 2011 , and ( ii ) certain facilities-related equipment and insurance expenses . research and development research and development expenses consisted of personnel-related expenses including share-based compensation , as well as expenditures to third-party vendors for research and development activities , and product certification costs . the following table presents research and development expenses : replace_table_token_7_th 23 the decrease in research and development expenses was primarily due to a decrease in variable compensation and lower travel and other miscellaneous expenses . this decrease was partially offset by an increase in the cost of outside services and certifications primarily related to development costs for new products . other expense , net the following table presents other expense , net : replace_table_token_8_th other expense , net , is comprised of foreign currency remeasurement and transaction adjustments related to our foreign subsidiaries whose functional currency is the u.s. dollar . during fiscal year 2013 , as a result of the final dissolution of our foreign subsidiary in france , we reclassified to other income $ 28,000 in accumulated foreign currency translation adjustments related to this subsidiary that were previously suspended in accumulated other comprehensive income . provision for income taxes the following table presents the income tax provision : replace_table_token_9_th the following table presents our effective tax rate based upon our income tax provision : replace_table_token_10_th we utilize the liability method of accounting for income taxes . the difference between our effective tax rate and the federal statutory rate resulted primarily from the effect of our domestic losses recorded without a tax benefit , as well as the effect of foreign earnings taxed at rates differing from the federal statutory rate . we record net deferred tax assets to the extent we believe these assets will more likely than not be realized . as a result of our cumulative losses and uncertainty of generating future taxable income , we provided a full valuation allowance against our net deferred tax assets for the fiscal years ended june 30 , 2013 and 2012. due to the “ change of ownership ” provision of the tax reform act of 1986 , utilization of our net operating loss ( “ nol ” ) carryforwards and tax credit carryforwards may be subject to an annual limitation against taxable income in future periods . as a result of the annual limitation , a portion of these carryforwards may expire before ultimately becoming available to reduce future income tax liabilities . the following table summarizes our nols : june 30 , 2013 ( in thousands ) federal $ 86,397 state $ 33,146 24 our nol carryovers for federal and state income tax purposes begin to expire in fiscal years 2021 and 2014 , respectively . at june 30 , 2013 , our fiscal year ended 2006 through fiscal year ended 2013 tax years remain open to examination by federal , state , and foreign taxing authorities . however , we have nols beginning in fiscal year ended 2001 which would cause the statute of limitations to remain open for the year in which the nol was incurred . liquidity and capital resources story_separator_special_tag text-align : justify `` > june 30 , 2013 ( in thousands ) minimum tnw $ 6,000 actual tnw $ 10,469 the following table presents the balance outstanding on the term loan , the available borrowing capacity on the revolving line of credit and outstanding letters of credit , which were used as security deposits . to date , we have not used any of the borrowing capacity under the revolving line . the available borrowing capacity under the revolving line set forth below reflects a change in the method of calculating our borrowing capacity for foreign trade receivables whereby only trade receivables derived from shipments originating within the u.s. are used to determine our borrowing capacity , which effectively reduces our borrowing capacity to the extent we ship products to foreign customers from an overseas warehouse . replace_table_token_12_th as of june 30 , 2013 , approximately $ 150,000 of our cash was held in foreign subsidiary bank accounts . this cash is unrestricted with regard to foreign liquidity needs ; however , our ability to utilize a portion of this cash to satisfy liquidity needs outside of such foreign locations may be subject to approval by the foreign location board of directors . 26 cash flows the following table presents the major components of the consolidated statements of cash flows : replace_table_token_13_th operating activities

liquidity the following table presents details of our working capital and cash and cash equivalents : replace_table_token_11_th our principal sources of cash and liquidity include our existing cash and cash equivalents , amounts available under our credit facilities , and cash generated from operations . we believe that these sources will be sufficient to fund our current requirements for working capital , capital expenditures and other financial commitments for at least the next 12 months . we anticipate that the primary factors affecting our cash and liquidity are net revenue , working capital requirements and capital expenditures . management defines cash and cash equivalents as highly liquid deposits with original maturities of 90 days or less when purchased . we maintain cash and cash equivalents balances at certain financial institutions in excess of amounts insured by federal agencies . management does not believe this concentration subjects us to any unusual financial risk beyond the normal risk associated with commercial banking relationships . we frequently monitor the third-party depository institutions that hold our cash and cash equivalents . our emphasis is primarily on safety of principal and secondarily on maximizing yield on those funds . our future working capital requirements will depend on many factors , including the timing and amount of our net revenue , research and development expenses , and expenses associated with any strategic partnerships or acquisitions and infrastructure investments . we incurred a net loss of $ 2.8 million and $ 3.0 million for the fiscal years ended june 30 , 2013 and 2012 , respectively . we expect our existing cash and cash equivalents , amounts available under our credit facilities and cash generated from operations will be sufficient to fund our capital expenditures , our working capital and other cash requirements . from time to time , we may seek additional capital from public or private offerings of our capital stock , borrowings under our existing or future credit lines or other sources in order to ( i ) develop or enhance our products , ( ii ) take advantage of future opportunities , ( iii ) respond to competition or ( iv ) continue to operate our business .


 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 the following table presents details of our working capital and cash and cash equivalents : replace_table_token_11_th our principal sources of cash and liquidity include our existing cash and cash equivalents , amounts available under our credit facilities , and cash generated from operations . we believe that these sources will be sufficient to fund our current requirements for working capital , capital expenditures and other financial commitments for at least the next 12 months . we anticipate that the primary factors affecting our cash and liquidity are net revenue , working capital requirements and capital expenditures . management defines cash and cash equivalents as highly liquid deposits with original maturities of 90 days or less when purchased . we maintain cash and cash equivalents balances at certain financial institutions in excess of amounts insured by federal agencies . management does not believe this concentration subjects us to any unusual financial risk beyond the normal risk associated with commercial banking relationships . we frequently monitor the third-party depository institutions that hold our cash and cash equivalents . our emphasis is primarily on safety of principal and secondarily on maximizing yield on those funds . our future working capital requirements will depend on many factors , including the timing and amount of our net revenue , research and development expenses , and expenses associated with any strategic partnerships or acquisitions and infrastructure investments . we incurred a net loss of $ 2.8 million and $ 3.0 million for the fiscal years ended june 30 , 2013 and 2012 , respectively . we expect our existing cash and cash equivalents , amounts available under our credit facilities and cash generated from operations will be sufficient to fund our capital expenditures , our working capital and other cash requirements . from time to time , we may seek additional capital from public or private offerings of our capital stock , borrowings under our existing or future credit lines or other sources in order to ( i ) develop or enhance our products , ( ii ) take advantage of future opportunities , ( iii ) respond to competition or ( iv ) continue to operate our business .
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 Suspicious Activity Report : to the extent there are material differences between our estimates and the actual results , our future results of operations will be affected . we believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements : revenue recognition we recognize revenue when all of the following criteria are met : persuasive evidence of an arrangement exists ; delivery has occurred or services have been rendered ; our price to the buyer is fixed or determinable ; and collectability is reasonably assured . a significant portion of our sales are made to distributors under agreements which contain a limited right to return unsold product and price protection provisions . therefore , the recognition of net revenue and related cost of revenue from sales to these distributors are deferred until the distributor resells the product . when product revenue is recognized , we establish an estimated allowance for future product returns based on historical returns experience . actual product returns or pricing adjustments that differ from our estimates could result in increases or decreases to revenue . additionally , we sell extended warranty services , which extend the warranty period for an additional one to three years , depending upon the product . warranty net revenue is deferred and recognized ratably over the warranty service period . warranty reserve the standard warranty periods for our products typically range from one to five years . we establish reserves for estimated product warranty costs at the time revenue is recognized based upon our historical warranty experience , and additionally for any known product warranty issues . although we engage in extensive product quality programs and processes , our warranty obligation is affected by product failure rates , use of materials or service delivery costs that differ from our estimates . as a result , increases or decreases to warranty reserves could be required , which could impact our gross margins . allowance for doubtful accounts we maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments . our allowance for doubtful accounts is based on our assessment of the collectability of specific customer accounts , the aging of accounts receivable , our history of bad debts and the general condition of the industry . if a major customer 's credit worthiness deteriorates , or our customers ' actual defaults exceed our historical experience , our estimates could change and impact our reported financial results . inventory valuation our policy is to value inventories at the lower of cost or market on a part-by-part basis . this policy requires us to make estimates regarding the market value of our inventories , including an assessment of excess and obsolete inventories . we determine excess and obsolete inventories based on an estimate of the future sales demand for our products within a specified time horizon , generally twelve months . the estimates we use for demand are also used for near-term capacity planning and inventory purchasing . in addition , specific reserves are recorded to cover risks in the area of end of life products , inventory located at our contract manufacturers , deferred inventory in our sales channel and warranty replacement stock . if our sales forecast is less than the inventory we have on hand at the end of an accounting period , we may be required to take excess and obsolete inventory charges , which will decrease our gross margin and net operating results for that period . 20 valuation of deferred income taxes we have recorded a valuation allowance to reduce our net deferred tax assets to zero , primarily due to historical net operating losses and uncertainty of generating future taxable income . we consider estimated future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance . if we determine that it is more likely than not that we will realize a deferred tax asset that currently has a valuation allowance , we would be required to reverse the valuation allowance , which would be reflected as an income tax benefit in our consolidated statements of operations at that time . goodwill impairment testing in performing our goodwill impairment testing , we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount . if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount , we conduct a two-step goodwill impairment test . the first step of the impairment test involves comparing the estimated fair value of our single reporting unit with its carrying value , including goodwill . if the carrying amount of the reporting unit exceeds the reporting unit 's fair value , we perform the second step of the analysis , which involves comparing the implied fair value of the reporting unit 's goodwill with the carrying value of that goodwill , the difference of which represents the impairment loss . the determination of the reporting unit 's fair value requires significant judgment and is based on management 's best estimate . we generally use valuation techniques based on our market capitalization and multiples of revenue for similar companies . in addition , management may consider the reporting unit 's expected future earnings , and a control premium , which is the amount that a buyer is willing to pay over the current market price of a company as indicated by the traded price per share ( i.e . , market capitalization ) , in order to acquire a controlling interest . story_separator_special_tag the following table presents gross profit : replace_table_token_5_th 22 the decrease in gross profit as a percentage of net revenue ( referred to as “ gross margin ” ) was impacted by an increase in expedited freight costs . in addition , gross margin was affected by the growth in sales , as a percentage of total net revenues , of certain lower margin new products . since newer products typically have lower margins until they reach production volumes , we may experience downward pressure on gross margins if new product revenues continue to grow as a percentage of total net revenue . selling , general and administrative selling , general and administrative expenses consisted of personnel-related expenses including salaries and commissions , share-based compensation , facility expenses , information technology , trade show expenses , advertising and professional legal and accounting fees . the following table presents selling , general and administrative expenses : replace_table_token_6_th the increase in selling , general and administrative was primarily due to an increase in advertising and marketing fees related to various marketing initiatives attributable to new products releases . the increase in selling , general and administrative expense was partially offset by decreases in ( i ) professional fees and outside services due to a reduction associated with the implementation of various cost-cutting programs , as well as the fact that in the prior year , the balance included fees related to the special investigation that was completed during the quarter ended september 30 , 2011 , and ( ii ) certain facilities-related equipment and insurance expenses . research and development research and development expenses consisted of personnel-related expenses including share-based compensation , as well as expenditures to third-party vendors for research and development activities , and product certification costs . the following table presents research and development expenses : replace_table_token_7_th 23 the decrease in research and development expenses was primarily due to a decrease in variable compensation and lower travel and other miscellaneous expenses . this decrease was partially offset by an increase in the cost of outside services and certifications primarily related to development costs for new products . other expense , net the following table presents other expense , net : replace_table_token_8_th other expense , net , is comprised of foreign currency remeasurement and transaction adjustments related to our foreign subsidiaries whose functional currency is the u.s. dollar . during fiscal year 2013 , as a result of the final dissolution of our foreign subsidiary in france , we reclassified to other income $ 28,000 in accumulated foreign currency translation adjustments related to this subsidiary that were previously suspended in accumulated other comprehensive income . provision for income taxes the following table presents the income tax provision : replace_table_token_9_th the following table presents our effective tax rate based upon our income tax provision : replace_table_token_10_th we utilize the liability method of accounting for income taxes . the difference between our effective tax rate and the federal statutory rate resulted primarily from the effect of our domestic losses recorded without a tax benefit , as well as the effect of foreign earnings taxed at rates differing from the federal statutory rate . we record net deferred tax assets to the extent we believe these assets will more likely than not be realized . as a result of our cumulative losses and uncertainty of generating future taxable income , we provided a full valuation allowance against our net deferred tax assets for the fiscal years ended june 30 , 2013 and 2012. due to the “ change of ownership ” provision of the tax reform act of 1986 , utilization of our net operating loss ( “ nol ” ) carryforwards and tax credit carryforwards may be subject to an annual limitation against taxable income in future periods . as a result of the annual limitation , a portion of these carryforwards may expire before ultimately becoming available to reduce future income tax liabilities . the following table summarizes our nols : june 30 , 2013 ( in thousands ) federal $ 86,397 state $ 33,146 24 our nol carryovers for federal and state income tax purposes begin to expire in fiscal years 2021 and 2014 , respectively . at june 30 , 2013 , our fiscal year ended 2006 through fiscal year ended 2013 tax years remain open to examination by federal , state , and foreign taxing authorities . however , we have nols beginning in fiscal year ended 2001 which would cause the statute of limitations to remain open for the year in which the nol was incurred . liquidity and capital resources story_separator_special_tag text-align : justify `` > june 30 , 2013 ( in thousands ) minimum tnw $ 6,000 actual tnw $ 10,469 the following table presents the balance outstanding on the term loan , the available borrowing capacity on the revolving line of credit and outstanding letters of credit , which were used as security deposits . to date , we have not used any of the borrowing capacity under the revolving line . the available borrowing capacity under the revolving line set forth below reflects a change in the method of calculating our borrowing capacity for foreign trade receivables whereby only trade receivables derived from shipments originating within the u.s. are used to determine our borrowing capacity , which effectively reduces our borrowing capacity to the extent we ship products to foreign customers from an overseas warehouse . replace_table_token_12_th as of june 30 , 2013 , approximately $ 150,000 of our cash was held in foreign subsidiary bank accounts . this cash is unrestricted with regard to foreign liquidity needs ; however , our ability to utilize a portion of this cash to satisfy liquidity needs outside of such foreign locations may be subject to approval by the foreign location board of directors . 26 cash flows the following table presents the major components of the consolidated statements of cash flows : replace_table_token_13_th operating activities

