once $ 4.2 million of this amount has been reimbursed , all gross profits from the sale of the credo-developed products worldwide will be shared equally by credo and us . historically , our primary business was the design , development , marketing , sale and support of differentiated intellectual property , or ip , including embedded memory and high-speed parallel and serdes i/o used in advanced systems-on-chips , or socs . currently , we are focused on developing differentiated ip-rich ic products and are dedicating all our research and development , marketing and sales budget to these ic products . our future success and ability to achieve and maintain profitability will be dependent on the marketing and sales of our ic products into networking , communications and other markets requiring high-bandwidth memory access . we are currently supporting existing design-win customers and actively pursuing additional design wins for the use of our ics in networking and communication equipment . to date , none of our design win customers have commenced full production of systems using our ics . we have established initial pricing of our ic products ordered to date , but longer-term volume prices will be subject to negotiations with our customers and may vary substantially from these initial prices . critical accounting policies and use of estimates our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the united states of america . note 1 to the consolidated financial statements in item 15 of this report describes the significant accounting policies and methods used in the preparation of our consolidated financial statements . we have identified the accounting policies below as some of the more critical to our business and the understanding of our results of operations . these policies may involve estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses . although we believe our judgments and estimates are appropriate , actual future results may differ from our estimates , and if different assumptions or conditions were to prevail , the results could be materially different from our reported results . 30 revenue recognition general we generate revenue from the sales of ic products and licensing of our ip . we recognize revenue when persuasive evidence of an arrangement exists , delivery or performance has occurred , the sales price is fixed or determinable , and collectibility is reasonably assured . evidence of an arrangement generally consists of signed agreements or customer purchase orders . ic products products are sold both directly to customers , as well as through distributors . revenue from sales directly to customers is generally recognized at the time of shipment . we may record an estimated allowance , at the time of shipment , for future returns and other charges against revenue consistent with the terms of sale . ic product revenue and costs relating to sales made through distributors with rights of return or stock rotation are generally deferred until the distributors sell the product to end customers due to our inability to estimate future returns and credits to be issued . distributors are generally able to return up to 10 % of their purchases of slow , non-moving or obsolete inventory for credit every six months . at the time of shipment to distributors , an accounts receivable for the selling price is recorded , as there is a legally enforceable right to receive payment , and inventory is relieved , as legal title to the inventory is transferred upon shipment . revenues are recognized upon receiving notification from the distributors that products have been sold to end customers . distributors provide information regarding products and quantity , end customer shipments and remaining inventory on hand . the associated deferred margin is included in the accrued expenses and other line item in the consolidated balance sheets . royalty royalty revenue represents amounts earned under provisions in our memory licensing agreements that require our licensees to report royalties and make payments at a stated rate based on actual units manufactured or sold by licensees for products that include our memory ip . our license agreements require the licensee to report the manufacture or sale of products that include our technology after the end of the quarter in which the sale or manufacture occurs . we recognize royalties in the quarter in which we receive the licensee 's report . the timing and level of royalties are difficult to predict , and depend on the licensee 's ability to market , produce and sell products incorporating our technology . licensing licensing revenue consists of fees earned from license agreements , development services and support and maintenance . for stand-alone license agreements or license deliverables in multi-deliverable arrangements that do not require significant development , modification or customization , revenue is recognized when all revenue recognition criteria have been met . delivery of the licensed technology is typically the final revenue recognition criterion met , at which time revenue is recognized . if any of the criteria are not met , revenue recognition is deferred until such time as all criteria have been met . support and maintenance revenue is recognized ratably over the period during which the obligation exists , typically 12 months . fair value measurements of financial instruments we measure the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels , as follows : level 1inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date . story_separator_special_tag in 2014 , we realized $ 0.3 million of revenue recognition from the reversal of sales return reserves recorded in prior periods following the completion of system-level tests in the field by customers , which reduced our expected risk of returns . we expect product revenue to increase in 2015 as our existing customers commence full production of their systems that utilize our ics for which we have design wins . furthermore , we expect to expand our customer base . replace_table_token_6_th royalty and other revenue is primarily comprised of revenue generated from licensing agreements . the sequential decreases were primarily due to a decrease in shipment volumes by licensees whose products incorporate our licensed ip and a decrease in revenue recognized from residual licensing agreements entered into in 2011 and prior years . we expect royalty and other revenue to decline in 2015 , as we expect a decline in shipments of units incorporating our technology by licensees , as their products approach their end of life . 33 cost of net revenue and gross profit . replace_table_token_7_th replace_table_token_8_th in 2014 and 2013 , cost of net revenue was primarily comprised of direct and indirect costs related to the sale of ic products . in 2012 , cost of net revenues primarily consisted of personnel and related overhead allocation costs for engineers assigned to revenue-generating licensing arrangements . cost of net revenue increased in 2014 and 2013 , primarily due to the increase in product material and testing costs related to our ic shipments . we expect that the cost of net revenue will increase in the future in absolute dollars , because we anticipate an increase in sales of our ic products . gross profit decreased in 2014 and 2013 , primarily due to the decrease in our royalty revenue , which has no associated costs , coupled with the increase in ic shipments . the deferred margin recognized from the reversal of sales return reserves in 2014 was not material . gross margin percentage decreased in 2014 and 2013 , primarily due an increase in product revenue , which has associated costs , as compared to royalty revenue , which has no associated costs . research and development . replace_table_token_9_th our research and development expenses include costs related to the development of our ic products and amortization of intangible assets . we expense research and development costs as they are incurred . the $ 5.9 million increase in 2014 over the prior year was primarily due to increases in personnel-related costs , resulting from higher headcount , mask tooling costs , computer-aided software license fees and stock-based compensation charges . the $ 5.2 million decrease in 2013 over the prior year was primarily due to decreases in our mask tooling costs , personnel-related costs resulting from lower headcount , computer-aided software license fees and lower amortization costs related to acquired intangible assets . research and development expenses included stock-based compensation expense of $ 3.4 million , $ 2.6 million and $ 2.7 million for the years ended december 31 , 2014 , 2013 and 2012 , respectively . we expect that research and development expenses will increase in absolute dollars as our mask tooling costs and other fabrication costs are expected to be higher in 2015 compared with 2014 , as we continue to develop next generation products . 34 selling , general and administrative . replace_table_token_10_th selling , general and administrative expenses consist primarily of personnel and related overhead costs for sales , marketing , finance , human resources and general management . selling , general and administrative expenses increased $ 0.4 million for 2014 , compared with the prior year , as a result of increases in personnel-related and consulting costs . the $ 2.1 million decrease for 2013 was primarily due to a decrease in personnel-related and legal costs . selling , general and administrative expenses included stock- based compensation expense of $ 1.2 million , $ 1.1 million and $ 1.1 million for the years ended december 31 , 2014 , 2013 and 2012 , respectively . we expect total selling , general and administrative expenses to remain consistent in absolute dollars in 2015. gain on sale of assets . replace_table_token_11_th in march 2012 , we entered into an asset purchase agreement for an exclusive license of a portion of our intellectual property pertaining to our high- speed serial i/o technology for approximately $ 4.3 million . as part of the agreement , we provided certain technology transfer support services , and 15 employees of our india subsidiary accepted employment with the purchaser . in 2012 , we received approximately $ 3.4 million in cash , less transaction costs , from this agreement , and received the final payment of $ 0.6 million in 2013. other income , net . replace_table_token_12_th other income , net primarily consisted of interest income on our investments , which was $ 0.2 million for each of the years ended december 31 , 2014 , 2013 and 2012 , partially offset by other non-operating items . 35 income tax provision . replace_table_token_13_th our income tax provisions were primarily attributable to taxes on earnings of our foreign subsidiaries and branches . as of december 31 , 2014 , we had net operating loss carryforwards of approximately $ 133 million for u.s. federal income tax purposes and approximately $ 98 million for state income tax purposes that are available to reduce future income tax liabilities to the extent permitted under federal and state income tax laws . these net operating loss carryforwards expire from 2015 to 2034. in 2015 , we anticipate that our effective income tax rate will continue to be less than the federal statutory tax rate because of expected losses . as of december 31 , 2014 and 2013 , we had net deferred tax assets of approximately $ 67 million and $ 55 million , respectively . because of uncertainties regarding the realization of these deferred

liquidity and capital resources as of december 31 , 2014 , we had cash , cash equivalents and investments totaling $ 25.8 million compared with a combined balance of $ 50.5 million at december 31 , 2013. on march 4 , 2015 , we sold 14,375,000 shares of common stock in an equity offering made under our shelf registration statement and raised approximately $ 21.3 million , net of transaction expenses . after the transaction , our shelf registration statement remains available and allows us to sell up to approximately $ 27 million of our securities through september 2017. our primary capital requirements are to fund working capital , including development of our ic products , and any acquisitions that we make that require cash consideration or expenditures . in 2014 , we used $ 26.3 million in operating activities , which primarily resulted from the net loss of $ 32.7 million , adjusted for non-cash charges and gains , which included stock-based compensation expenses of $ 4.6 million and depreciation and amortization expenses of $ 1.4 million and changes to operating assets and liabilities of $ 0.3 million . the changes in assets and liabilities primarily related to the payments to vendors , including purchases of inventory . in 2013 , we used $ 22.6 million in operating activities , which primarily resulted from the net loss of $ 24.8 million , and $ 2.6 million used for operating assets and liabilities , adjusted for non-cash charges and gains , which included stock-based compensation expenses of $ 3.7 million and depreciation and amortization expenses of $ 1.7 million . the changes in assets and liabilities primarily related to the recognition of revenue related to deferred revenues and payments to vendors .


 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 , 2014 , we had cash , cash equivalents and investments totaling $ 25.8 million compared with a combined balance of $ 50.5 million at december 31 , 2013. on march 4 , 2015 , we sold 14,375,000 shares of common stock in an equity offering made under our shelf registration statement and raised approximately $ 21.3 million , net of transaction expenses . after the transaction , our shelf registration statement remains available and allows us to sell up to approximately $ 27 million of our securities through september 2017. our primary capital requirements are to fund working capital , including development of our ic products , and any acquisitions that we make that require cash consideration or expenditures . in 2014 , we used $ 26.3 million in operating activities , which primarily resulted from the net loss of $ 32.7 million , adjusted for non-cash charges and gains , which included stock-based compensation expenses of $ 4.6 million and depreciation and amortization expenses of $ 1.4 million and changes to operating assets and liabilities of $ 0.3 million . the changes in assets and liabilities primarily related to the payments to vendors , including purchases of inventory . in 2013 , we used $ 22.6 million in operating activities , which primarily resulted from the net loss of $ 24.8 million , and $ 2.6 million used for operating assets and liabilities , adjusted for non-cash charges and gains , which included stock-based compensation expenses of $ 3.7 million and depreciation and amortization expenses of $ 1.7 million . the changes in assets and liabilities primarily related to the recognition of revenue related to deferred revenues and payments to vendors .
```    
 Suspicious Activity Report : once $ 4.2 million of this amount has been reimbursed , all gross profits from the sale of the credo-developed products worldwide will be shared equally by credo and us . historically , our primary business was the design , development , marketing , sale and support of differentiated intellectual property , or ip , including embedded memory and high-speed parallel and serdes i/o used in advanced systems-on-chips , or socs . currently , we are focused on developing differentiated ip-rich ic products and are dedicating all our research and development , marketing and sales budget to these ic products . our future success and ability to achieve and maintain profitability will be dependent on the marketing and sales of our ic products into networking , communications and other markets requiring high-bandwidth memory access . we are currently supporting existing design-win customers and actively pursuing additional design wins for the use of our ics in networking and communication equipment . to date , none of our design win customers have commenced full production of systems using our ics . we have established initial pricing of our ic products ordered to date , but longer-term volume prices will be subject to negotiations with our customers and may vary substantially from these initial prices . critical accounting policies and use of estimates our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the united states of america . note 1 to the consolidated financial statements in item 15 of this report describes the significant accounting policies and methods used in the preparation of our consolidated financial statements . we have identified the accounting policies below as some of the more critical to our business and the understanding of our results of operations . these policies may involve estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses . although we believe our judgments and estimates are appropriate , actual future results may differ from our estimates , and if different assumptions or conditions were to prevail , the results could be materially different from our reported results . 30 revenue recognition general we generate revenue from the sales of ic products and licensing of our ip . we recognize revenue when persuasive evidence of an arrangement exists , delivery or performance has occurred , the sales price is fixed or determinable , and collectibility is reasonably assured . evidence of an arrangement generally consists of signed agreements or customer purchase orders . ic products products are sold both directly to customers , as well as through distributors . revenue from sales directly to customers is generally recognized at the time of shipment . we may record an estimated allowance , at the time of shipment , for future returns and other charges against revenue consistent with the terms of sale . ic product revenue and costs relating to sales made through distributors with rights of return or stock rotation are generally deferred until the distributors sell the product to end customers due to our inability to estimate future returns and credits to be issued . distributors are generally able to return up to 10 % of their purchases of slow , non-moving or obsolete inventory for credit every six months . at the time of shipment to distributors , an accounts receivable for the selling price is recorded , as there is a legally enforceable right to receive payment , and inventory is relieved , as legal title to the inventory is transferred upon shipment . revenues are recognized upon receiving notification from the distributors that products have been sold to end customers . distributors provide information regarding products and quantity , end customer shipments and remaining inventory on hand . the associated deferred margin is included in the accrued expenses and other line item in the consolidated balance sheets . royalty royalty revenue represents amounts earned under provisions in our memory licensing agreements that require our licensees to report royalties and make payments at a stated rate based on actual units manufactured or sold by licensees for products that include our memory ip . our license agreements require the licensee to report the manufacture or sale of products that include our technology after the end of the quarter in which the sale or manufacture occurs . we recognize royalties in the quarter in which we receive the licensee 's report . the timing and level of royalties are difficult to predict , and depend on the licensee 's ability to market , produce and sell products incorporating our technology . licensing licensing revenue consists of fees earned from license agreements , development services and support and maintenance . for stand-alone license agreements or license deliverables in multi-deliverable arrangements that do not require significant development , modification or customization , revenue is recognized when all revenue recognition criteria have been met . delivery of the licensed technology is typically the final revenue recognition criterion met , at which time revenue is recognized . if any of the criteria are not met , revenue recognition is deferred until such time as all criteria have been met . support and maintenance revenue is recognized ratably over the period during which the obligation exists , typically 12 months . fair value measurements of financial instruments we measure the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels , as follows : level 1inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date . story_separator_special_tag in 2014 , we realized $ 0.3 million of revenue recognition from the reversal of sales return reserves recorded in prior periods following the completion of system-level tests in the field by customers , which reduced our expected risk of returns . we expect product revenue to increase in 2015 as our existing customers commence full production of their systems that utilize our ics for which we have design wins . furthermore , we expect to expand our customer base . replace_table_token_6_th royalty and other revenue is primarily comprised of revenue generated from licensing agreements . the sequential decreases were primarily due to a decrease in shipment volumes by licensees whose products incorporate our licensed ip and a decrease in revenue recognized from residual licensing agreements entered into in 2011 and prior years . we expect royalty and other revenue to decline in 2015 , as we expect a decline in shipments of units incorporating our technology by licensees , as their products approach their end of life . 33 cost of net revenue and gross profit . replace_table_token_7_th replace_table_token_8_th in 2014 and 2013 , cost of net revenue was primarily comprised of direct and indirect costs related to the sale of ic products . in 2012 , cost of net revenues primarily consisted of personnel and related overhead allocation costs for engineers assigned to revenue-generating licensing arrangements . cost of net revenue increased in 2014 and 2013 , primarily due to the increase in product material and testing costs related to our ic shipments . we expect that the cost of net revenue will increase in the future in absolute dollars , because we anticipate an increase in sales of our ic products . gross profit decreased in 2014 and 2013 , primarily due to the decrease in our royalty revenue , which has no associated costs , coupled with the increase in ic shipments . the deferred margin recognized from the reversal of sales return reserves in 2014 was not material . gross margin percentage decreased in 2014 and 2013 , primarily due an increase in product revenue , which has associated costs , as compared to royalty revenue , which has no associated costs . research and development . replace_table_token_9_th our research and development expenses include costs related to the development of our ic products and amortization of intangible assets . we expense research and development costs as they are incurred . the $ 5.9 million increase in 2014 over the prior year was primarily due to increases in personnel-related costs , resulting from higher headcount , mask tooling costs , computer-aided software license fees and stock-based compensation charges . the $ 5.2 million decrease in 2013 over the prior year was primarily due to decreases in our mask tooling costs , personnel-related costs resulting from lower headcount , computer-aided software license fees and lower amortization costs related to acquired intangible assets . research and development expenses included stock-based compensation expense of $ 3.4 million , $ 2.6 million and $ 2.7 million for the years ended december 31 , 2014 , 2013 and 2012 , respectively . we expect that research and development expenses will increase in absolute dollars as our mask tooling costs and other fabrication costs are expected to be higher in 2015 compared with 2014 , as we continue to develop next generation products . 34 selling , general and administrative . replace_table_token_10_th selling , general and administrative expenses consist primarily of personnel and related overhead costs for sales , marketing , finance , human resources and general management . selling , general and administrative expenses increased $ 0.4 million for 2014 , compared with the prior year , as a result of increases in personnel-related and consulting costs . the $ 2.1 million decrease for 2013 was primarily due to a decrease in personnel-related and legal costs . selling , general and administrative expenses included stock- based compensation expense of $ 1.2 million , $ 1.1 million and $ 1.1 million for the years ended december 31 , 2014 , 2013 and 2012 , respectively . we expect total selling , general and administrative expenses to remain consistent in absolute dollars in 2015. gain on sale of assets . replace_table_token_11_th in march 2012 , we entered into an asset purchase agreement for an exclusive license of a portion of our intellectual property pertaining to our high- speed serial i/o technology for approximately $ 4.3 million . as part of the agreement , we provided certain technology transfer support services , and 15 employees of our india subsidiary accepted employment with the purchaser . in 2012 , we received approximately $ 3.4 million in cash , less transaction costs , from this agreement , and received the final payment of $ 0.6 million in 2013. other income , net . replace_table_token_12_th other income , net primarily consisted of interest income on our investments , which was $ 0.2 million for each of the years ended december 31 , 2014 , 2013 and 2012 , partially offset by other non-operating items . 35 income tax provision . replace_table_token_13_th our income tax provisions were primarily attributable to taxes on earnings of our foreign subsidiaries and branches . as of december 31 , 2014 , we had net operating loss carryforwards of approximately $ 133 million for u.s. federal income tax purposes and approximately $ 98 million for state income tax purposes that are available to reduce future income tax liabilities to the extent permitted under federal and state income tax laws . these net operating loss carryforwards expire from 2015 to 2034. in 2015 , we anticipate that our effective income tax rate will continue to be less than the federal statutory tax rate because of expected losses . as of december 31 , 2014 and 2013 , we had net deferred tax assets of approximately $ 67 million and $ 55 million , respectively . because of uncertainties regarding the realization of these deferred

