this platform enables a user via a single “ identity ” to access and utilize services and features regardless of how the user is connected to the internet , whether it be from a desktop device or a mobile device . in january 2012 , our direct sales representatives began selling our hosted telecommunications products and services . we have experienced significant growth in our network services revenue quarter-over-quarter . revenues recognized during the three months ended march 31 , 2012 , june 30 , 2012 , september 30 , 2012 and december 31 , 2012 were $ 75,000 , $ 168,000 , $ 235,000 , and $ 327,000 , respectively . in june 2012 , we began selling broadband internet connection services and during the year ended december 31 , 2012 , the company generated approximately $ 26,000 in revenue from these services . as of december 31 , 2012 , our backlog is $ 2,374,000 as compared to $ 155,000 at december 31 , 2011. backlog represents contracts signed with no service or payment provided at december 31 , 2012 . 23 restructuring and other charges in july 2011 , we initiated plans to restructure and reduce costs in our operations as a result of the continued lack of profitability and other challenges in our seminar sales channel for our storesonline segment . restructurings began in the third quarter of 2011 in an effort to better position our company for long-term growth , future profitability , greater competitiveness and improved efficiency across our business . actions taken in connection with our restructuring plan include the suspension of our direct mail marketing campaigns and sales of our products and services through our storesonline seminar channel , refinement of our product portfolio focused towards recurring subscription-based products and services , and redeployment of our sales and marketing resources in an effort to increase our direct sales , inside sales , and online sales channels . through these initiatives we incurred aggregate pre-tax restructuring charges and transition expenses of approximately $ 1,259,000 during the year ended december 31 , 2011 , of which approximately $ 1,050,000 was recorded for inventory write-downs , unused direct-response advertising , and intangible asset impairment . the remaining amount relates to the abandonment of an operating lease agreement . there were no restructuring expenses for the year ended december 31 , 2012. critical accounting policies and estimates our consolidated financial statements have been prepared in accordance with us gaap and necessarily included certain estimates and judgments made by management . the following is a list of accounting policies that we believe are the most critical in understanding our consolidated financial position , results of operations or cash flows and that may require management to make subjective or complex judgments about matters that are inherently uncertain . revenue recognition in general , we recognize revenue when all of the following conditions are satisfied : ( 1 ) there is persuasive evidence of an arrangement ; ( 2 ) the product or service has been provided to the customer ; ( 3 ) the amount of fees to be paid by the customer is fixed or determinable ; and ( 4 ) the collection of our fees is probable . we recognize revenue from our web services and network services segments on an accrual basis and revenue from our storesonline segment on a cash basis . specifics to revenue category are as follows : software licenses and dvd training courses sold under eptas are recognized as revenue upon receipt of cash from customers and not at the time of sale . accounting guidance requires revenue to be deferred until customer payments are received as collection of the original principal balance is deemed not probable based on historical collection rates . we enter into agreements where revenue is derived from multiple deliverables including any mix of products and or services . for these arrangements , we determine whether the delivered item ( s ) has value to the customer on a stand-alone basis , and in the event the arrangement includes a general right of return relative to the delivered item ( s ) , whether the delivery or performance of the undelivered item ( s ) is considered probable and substantially in our control . if these criteria are met , the arrangement consideration is allocated to the separate units of accounting based on each unit 's relative selling price . if these criteria are not met , the arrangement is accounted for as a single unit of accounting which would result in revenue being recognized ratably over the contract term or deferred until the earlier of when such criteria are met or when the last undelivered element is delivered . the amount of product and services revenue recognized for arrangements with multiple deliverables is impacted by the allocation of arrangement consideration to the deliverables in the arrangement based on the relative selling prices . in determining our selling prices , we apply the selling price hierarchy using vendor specific objective evidence ( vsoe ) when available , third-party evidence of selling price ( “ tpe ” ) if vsoe does not exist , and best estimated selling price ( “ besp ” ) if neither vsoe nor tpe is available . we are typically not able to determine vsoe on our products and services . vsoe of fair value for elements of an arrangement is based upon the normal pricing and discounting practices for a deliverable when sold separately . we are typically not able to determine tpe for our products or services . tpe is determined based on competitor prices for similar deliverables when sold separately . generally , our offerings contain a significant level of differentiation such that the comparable pricing of products with similar functionality is difficult to obtain . furthermore , we are unable to reliably determine what similar competitor products ' selling prices are on a stand-alone basis . story_separator_special_tag selling and marketing expenses decreased 99 % or $ 17,716,000 , to $ 244,000 for the year ended december 31 , 2012 as compared to $ 17,960,000 for the year ended december 31 , 2011. selling and marketing expense as a percentage of revenue decreased to 2 % in the current year from 39 % in prior year . the decrease in total selling and marketing expenses as well as selling and marketing expense as a percentage of revenue are primarily due to the suspension of direct mail seminars in july 2011 , which resulted in a more significant reduction in selling and marketing expenses than the reduction in revenue as a result of the continuation of revenue received on the collection of principal on epta contracts . the selling and marketing expenses associated getting attendees to the seminars were a significant part of historical selling and marketing expenses . general and administrative general and administrative expenses consist of payroll and related expenses for executive , accounting and administrative personnel , legal , accounting and other professionals , finance company service fees , and other general corporate expenses . general and administrative expenses decreased 31 % or $ 3,118,000 , to $ 6,890,000 for the year ended december 31 , 2012 as compared to $ 10,008,000 for the year ended december 31 , 2011. the decrease is primarily due to a reduction in payroll and related expenses , accounting fees , legal , and servicing fees on our epta contracts . as of december 31 , 2012 , the company had 20 employees in customer support , and 27 in finance , legal and business development , collections , purchasing and other general administration . however , as of december 31 , 2011 , the company had 42 employees in customer support , and 31 in finance , legal and business development , collections , purchasing and other general administration . research and development research and development expenses primarily consist of payroll and related expenses , related to the development of new products and services for storesonline customers . research and development expenses decreased 62 % or $ 703,000 , to $ 437,000 for the year ended december 31 , 2012 as compared to $ 1,140,000 for the year ended december 31 , 2011. the decrease was primarily attributable to a decrease in our engineering head count dedicated to this segment . as of december 31 , 2012 , the company had 19 employees in engineering and it support . however , as of december 31 , 2011 , the company had 22 employees in engineering and it support . in addition to the overall reduction in headcount , more focus was placed on the development and improvement to our hosted telecommunications products and services during 2012. other income other income primarily relates to epta contracts , which generally carry an 18 % simple interest rate . other income decreased 59 % or $ 2,755,000 , to $ 1,934,000 for the year ended december 31 , 2012 as compared to $ 4,689,000 for the year ended december 31 , 2011. this decrease is primarily due to the decrease in outstanding epta receivables as cash is collected and uncollectable accounts are written off . operating results of crexendo web services segment ( in thousands ) replace_table_token_8_th 30 year ended december 31 , 2012 compared to year ended december 31 , 2011 revenue crexendo web services segment revenue increased 8 % or $ 190,000 , to $ 2,505,000 for the year ended december 31 , 2012 as compared to $ 2,315,000 for the year ended december 31 , 2011. the increase in revenue from the prior year is primarily due to an increase in direct sales representatives , which increased from an average of 8 direct sales representatives for the year ended december 31 , 2011 to an average of 17 sales representatives for the year ended december 31 , 2012. revenue from crexendo web services is generated primarily through search engine optimization services , link building , paid search management services , conversion rate optimization services , and website design and development services . a substantial portion of crexendo web services revenue is generated through six to twelve month service contracts . as such , crexendo web services revenues will initially be seen through fulfillment of our backlog . below is a table which displays the crexendo web services revenue backlog as of december 31 , 2012 and 2011 , which is expected to be recognized as revenue within the next twelve months ( in thousands ) : crexendo web services backlog as of december 31 , 2012 $ 1,135 crexendo web services backlog as of december 31 , 2011 $ 1,142 cost of revenue cost of revenue consists primarily of salaries and outsourcing fees related to fulfillment of our web services . cost of revenue increased 3 % or $ 58,000 , to $ 1,859,000 for the year ended december 31 , 2012 as compared to $ 1,801,000 for the year ended december 31 , 2011. selling and marketing selling and marketing expenses consist primarily of salaries and benefits , as well as advertising expenses . selling and marketing expense decreased 31 % or $ 814,000 , to $ 1,846,000 for the year ended december 31 , 2012 as compared to $ 2,660,000 for the year ended december 31 , 2011. the decrease was primarily attributable to a decrease in sales representatives and other marketing activity solely focused on crexendo web services sales with the increased focus on selling hosted telecommunications products and services starting in january 2012. general and administrative general and administrative expenses consist of payroll and related expenses for administrative personnel . general and administrative expenses increased 99 % or $ 1,822,000 , to $ 3,654,000 for the year ended december 31 , 2012 as compared to $ 1,832,000 for the year ended december 31 , 2011. general and administrative expenses for the year ended december 31

cash and cash equivalents cash and cash equivalents decreased 14 % or $ 1,218,000 , to $ 7,440,000 for the year ended december 31 , 2012 as compared to $ 8,658,000 for the year ended december 31 , 2011. for the year ended december 31 , 2012 , we used cash flows for operating activities of $ 446,000 compared to using cash flows for operating activities of $ 1,648,000 for the year ended december 31 , 2011 . 33 trade receivables trade receivables and long-term trade receivables , net of allowance for doubtful accounts , decreased 78 % or $ 12,079,000 , to $ 3,438,000 for the year ended december 31 , 2012 as compared to $ 15,517,000 for the year ended december 31 , 2011. long-term trade receivables , net of allowance for doubtful accounts , decreased 94 % or $ 5,702,000 , to $ 395,000 for the year ended december 31 , 2012 as compared to $ 6,097,000 for the year ended december 31 , 2011. we offered our customers an installment contract with payment terms between 24 and 36 months , as one of several payment options . the payments that become due more than 12 months after the end of the fiscal period are classified as long-term trade receivables . trade receivables will continue to decline as cash is collected on epta contracts . accounts payable accounts payable decreased 64 % or $ 735,000 , to $ 418,000 for the year ended december 31 , 2012 as compared to $ 1,153,000 for the year ended december 31 , 2011. the aging of accounts payable as of december 31 , 2012 and 2011 was generally within our vendors ' terms of payment . contractual obligations the following table summarizes our significant contractual obligations as of december 31 , 2012 : replace_table_token_10_th — ( 1 ) payments are included in the period in which they are contractually required to be made . actual payments may be made prior to the contractually required date .


 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 and cash equivalents cash and cash equivalents decreased 14 % or $ 1,218,000 , to $ 7,440,000 for the year ended december 31 , 2012 as compared to $ 8,658,000 for the year ended december 31 , 2011. for the year ended december 31 , 2012 , we used cash flows for operating activities of $ 446,000 compared to using cash flows for operating activities of $ 1,648,000 for the year ended december 31 , 2011 . 33 trade receivables trade receivables and long-term trade receivables , net of allowance for doubtful accounts , decreased 78 % or $ 12,079,000 , to $ 3,438,000 for the year ended december 31 , 2012 as compared to $ 15,517,000 for the year ended december 31 , 2011. long-term trade receivables , net of allowance for doubtful accounts , decreased 94 % or $ 5,702,000 , to $ 395,000 for the year ended december 31 , 2012 as compared to $ 6,097,000 for the year ended december 31 , 2011. we offered our customers an installment contract with payment terms between 24 and 36 months , as one of several payment options . the payments that become due more than 12 months after the end of the fiscal period are classified as long-term trade receivables . trade receivables will continue to decline as cash is collected on epta contracts . accounts payable accounts payable decreased 64 % or $ 735,000 , to $ 418,000 for the year ended december 31 , 2012 as compared to $ 1,153,000 for the year ended december 31 , 2011. the aging of accounts payable as of december 31 , 2012 and 2011 was generally within our vendors ' terms of payment . contractual obligations the following table summarizes our significant contractual obligations as of december 31 , 2012 : replace_table_token_10_th — ( 1 ) payments are included in the period in which they are contractually required to be made . actual payments may be made prior to the contractually required date .
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 Suspicious Activity Report : this platform enables a user via a single “ identity ” to access and utilize services and features regardless of how the user is connected to the internet , whether it be from a desktop device or a mobile device . in january 2012 , our direct sales representatives began selling our hosted telecommunications products and services . we have experienced significant growth in our network services revenue quarter-over-quarter . revenues recognized during the three months ended march 31 , 2012 , june 30 , 2012 , september 30 , 2012 and december 31 , 2012 were $ 75,000 , $ 168,000 , $ 235,000 , and $ 327,000 , respectively . in june 2012 , we began selling broadband internet connection services and during the year ended december 31 , 2012 , the company generated approximately $ 26,000 in revenue from these services . as of december 31 , 2012 , our backlog is $ 2,374,000 as compared to $ 155,000 at december 31 , 2011. backlog represents contracts signed with no service or payment provided at december 31 , 2012 . 23 restructuring and other charges in july 2011 , we initiated plans to restructure and reduce costs in our operations as a result of the continued lack of profitability and other challenges in our seminar sales channel for our storesonline segment . restructurings began in the third quarter of 2011 in an effort to better position our company for long-term growth , future profitability , greater competitiveness and improved efficiency across our business . actions taken in connection with our restructuring plan include the suspension of our direct mail marketing campaigns and sales of our products and services through our storesonline seminar channel , refinement of our product portfolio focused towards recurring subscription-based products and services , and redeployment of our sales and marketing resources in an effort to increase our direct sales , inside sales , and online sales channels . through these initiatives we incurred aggregate pre-tax restructuring charges and transition expenses of approximately $ 1,259,000 during the year ended december 31 , 2011 , of which approximately $ 1,050,000 was recorded for inventory write-downs , unused direct-response advertising , and intangible asset impairment . the remaining amount relates to the abandonment of an operating lease agreement . there were no restructuring expenses for the year ended december 31 , 2012. critical accounting policies and estimates our consolidated financial statements have been prepared in accordance with us gaap and necessarily included certain estimates and judgments made by management . the following is a list of accounting policies that we believe are the most critical in understanding our consolidated financial position , results of operations or cash flows and that may require management to make subjective or complex judgments about matters that are inherently uncertain . revenue recognition in general , we recognize revenue when all of the following conditions are satisfied : ( 1 ) there is persuasive evidence of an arrangement ; ( 2 ) the product or service has been provided to the customer ; ( 3 ) the amount of fees to be paid by the customer is fixed or determinable ; and ( 4 ) the collection of our fees is probable . we recognize revenue from our web services and network services segments on an accrual basis and revenue from our storesonline segment on a cash basis . specifics to revenue category are as follows : software licenses and dvd training courses sold under eptas are recognized as revenue upon receipt of cash from customers and not at the time of sale . accounting guidance requires revenue to be deferred until customer payments are received as collection of the original principal balance is deemed not probable based on historical collection rates . we enter into agreements where revenue is derived from multiple deliverables including any mix of products and or services . for these arrangements , we determine whether the delivered item ( s ) has value to the customer on a stand-alone basis , and in the event the arrangement includes a general right of return relative to the delivered item ( s ) , whether the delivery or performance of the undelivered item ( s ) is considered probable and substantially in our control . if these criteria are met , the arrangement consideration is allocated to the separate units of accounting based on each unit 's relative selling price . if these criteria are not met , the arrangement is accounted for as a single unit of accounting which would result in revenue being recognized ratably over the contract term or deferred until the earlier of when such criteria are met or when the last undelivered element is delivered . the amount of product and services revenue recognized for arrangements with multiple deliverables is impacted by the allocation of arrangement consideration to the deliverables in the arrangement based on the relative selling prices . in determining our selling prices , we apply the selling price hierarchy using vendor specific objective evidence ( vsoe ) when available , third-party evidence of selling price ( “ tpe ” ) if vsoe does not exist , and best estimated selling price ( “ besp ” ) if neither vsoe nor tpe is available . we are typically not able to determine vsoe on our products and services . vsoe of fair value for elements of an arrangement is based upon the normal pricing and discounting practices for a deliverable when sold separately . we are typically not able to determine tpe for our products or services . tpe is determined based on competitor prices for similar deliverables when sold separately . generally , our offerings contain a significant level of differentiation such that the comparable pricing of products with similar functionality is difficult to obtain . furthermore , we are unable to reliably determine what similar competitor products ' selling prices are on a stand-alone basis . story_separator_special_tag selling and marketing expenses decreased 99 % or $ 17,716,000 , to $ 244,000 for the year ended december 31 , 2012 as compared to $ 17,960,000 for the year ended december 31 , 2011. selling and marketing expense as a percentage of revenue decreased to 2 % in the current year from 39 % in prior year . the decrease in total selling and marketing expenses as well as selling and marketing expense as a percentage of revenue are primarily due to the suspension of direct mail seminars in july 2011 , which resulted in a more significant reduction in selling and marketing expenses than the reduction in revenue as a result of the continuation of revenue received on the collection of principal on epta contracts . the selling and marketing expenses associated getting attendees to the seminars were a significant part of historical selling and marketing expenses . general and administrative general and administrative expenses consist of payroll and related expenses for executive , accounting and administrative personnel , legal , accounting and other professionals , finance company service fees , and other general corporate expenses . general and administrative expenses decreased 31 % or $ 3,118,000 , to $ 6,890,000 for the year ended december 31 , 2012 as compared to $ 10,008,000 for the year ended december 31 , 2011. the decrease is primarily due to a reduction in payroll and related expenses , accounting fees , legal , and servicing fees on our epta contracts . as of december 31 , 2012 , the company had 20 employees in customer support , and 27 in finance , legal and business development , collections , purchasing and other general administration . however , as of december 31 , 2011 , the company had 42 employees in customer support , and 31 in finance , legal and business development , collections , purchasing and other general administration . research and development research and development expenses primarily consist of payroll and related expenses , related to the development of new products and services for storesonline customers . research and development expenses decreased 62 % or $ 703,000 , to $ 437,000 for the year ended december 31 , 2012 as compared to $ 1,140,000 for the year ended december 31 , 2011. the decrease was primarily attributable to a decrease in our engineering head count dedicated to this segment . as of december 31 , 2012 , the company had 19 employees in engineering and it support . however , as of december 31 , 2011 , the company had 22 employees in engineering and it support . in addition to the overall reduction in headcount , more focus was placed on the development and improvement to our hosted telecommunications products and services during 2012. other income other income primarily relates to epta contracts , which generally carry an 18 % simple interest rate . other income decreased 59 % or $ 2,755,000 , to $ 1,934,000 for the year ended december 31 , 2012 as compared to $ 4,689,000 for the year ended december 31 , 2011. this decrease is primarily due to the decrease in outstanding epta receivables as cash is collected and uncollectable accounts are written off . operating results of crexendo web services segment ( in thousands ) replace_table_token_8_th 30 year ended december 31 , 2012 compared to year ended december 31 , 2011 revenue crexendo web services segment revenue increased 8 % or $ 190,000 , to $ 2,505,000 for the year ended december 31 , 2012 as compared to $ 2,315,000 for the year ended december 31 , 2011. the increase in revenue from the prior year is primarily due to an increase in direct sales representatives , which increased from an average of 8 direct sales representatives for the year ended december 31 , 2011 to an average of 17 sales representatives for the year ended december 31 , 2012. revenue from crexendo web services is generated primarily through search engine optimization services , link building , paid search management services , conversion rate optimization services , and website design and development services . a substantial portion of crexendo web services revenue is generated through six to twelve month service contracts . as such , crexendo web services revenues will initially be seen through fulfillment of our backlog . below is a table which displays the crexendo web services revenue backlog as of december 31 , 2012 and 2011 , which is expected to be recognized as revenue within the next twelve months ( in thousands ) : crexendo web services backlog as of december 31 , 2012 $ 1,135 crexendo web services backlog as of december 31 , 2011 $ 1,142 cost of revenue cost of revenue consists primarily of salaries and outsourcing fees related to fulfillment of our web services . cost of revenue increased 3 % or $ 58,000 , to $ 1,859,000 for the year ended december 31 , 2012 as compared to $ 1,801,000 for the year ended december 31 , 2011. selling and marketing selling and marketing expenses consist primarily of salaries and benefits , as well as advertising expenses . selling and marketing expense decreased 31 % or $ 814,000 , to $ 1,846,000 for the year ended december 31 , 2012 as compared to $ 2,660,000 for the year ended december 31 , 2011. the decrease was primarily attributable to a decrease in sales representatives and other marketing activity solely focused on crexendo web services sales with the increased focus on selling hosted telecommunications products and services starting in january 2012. general and administrative general and administrative expenses consist of payroll and related expenses for administrative personnel . general and administrative expenses increased 99 % or $ 1,822,000 , to $ 3,654,000 for the year ended december 31 , 2012 as compared to $ 1,832,000 for the year ended december 31 , 2011. general and administrative expenses for the year ended december 31

