in 2013 , we exclusively licensed scy-078 from merck sharp & dohme , or merck , in the field of human health , and merck transferred to us the investigational new drug application on file with the u.s. food and drug administration , or the fda , as well as all data merck had developed for the compound , plus active pharmaceutical ingredient and tablets . in 2014 , merck assigned the patents to us related to scy-078 that it had exclusively licensed to us . we are focusing our resources on the development of scy-078 . on may 7 , 2014 , we completed an initial public offering of our common stock , which we refer to as our ipo . we sold an aggregate of 6,200,000 shares of common stock under the registration statement on form s-1 declared effective by the sec on may 2 , 2014 , at a public offering price of $ 10.00 per share . net proceeds to us were $ 54.6 million , after deducting underwriting discounts and commissions and offering expenses . upon the completion of our ipo , all our outstanding shares of convertible preferred stock were automatically converted into 1,691,884 shares of common stock and substantially all outstanding common stock warrants were exercised for an additional 275,687 shares of common stock with net proceeds to us of $ 0.1 million . in connection with the consummation of the ipo , we repaid outstanding debt with a principal balance of $ 15 million , plus all accrued interest , to the holder of such debt , which was outstanding pursuant to a credit agreement referred to herein as the 2013 credit agreement . we are an emerging growth company . under the jumpstart our business startups act of 2012 , or jobs act , emerging growth companies can delay adopting new or revised accounting standards until such time of those standards apply to private companies . we have irrevocably elected not to adopt this exemption from new or revised accounting standards , and therefore , we will be subject to the same new or revised accounting standards as other public companies that are not “ emerging growth companies . ” recent developments scy-078 development we are currently conducting a randomized phase 2 study with the oral formulation of scy-078 . we have opened multiple trial sites , we are actively screening patients for enrollment , and we enrolled the first patient in march 2015. we amended the study protocol 's enrollment criteria in february 2015 in order to enhance and expedite recruitment and we are currently preparing further enhancements to the study 's protocol . we believe that these changes to enrollment criteria will improve the phase 2 study 's overall progress without affecting the interpretability of the study . we expect to report complete data from the phase 2 study in the first half of 2016. we are also currently developing an iv formulation of scy-078 . ind enabling studies for the iv formulation of scy-078 are currently underway . we plan to complete 14 day glp toxicity studies and file an ind to support a first in man study of the iv formulation planned to begin in the second half of 2015. the fda granted fast track designation to the oral formulation of scy-078 in december 2014. this fast track designation , coupled with our prior receipt of qidp designation , allows for a potentially accelerated path to approval and underscores the fda 's understanding of the critical need for new and varied treatments for life-threatening invasive fungal infections . we expect to submit qidp and fast track designation requests for the iv formulation of scy-078 in 2015. the development efforts summarized above are being performed by our own personnel , cros , vendors , consultants and other third parties . we have and will continue to enter into contracts in the normal course of business with various third parties who support our clinical trials , support our preclinical research studies , and provide other services related to our development efforts . our most significant agreement , entered into in june 2014 , is with a third-party cro that is conducting our phase 2 clinical trial for the oral formulation of scy-078 . the total fees and expenses under the agreement are projected to be approximately $ 6.3 million during the term of the agreement . the scope of the services under the agreement can be modified at any time , and the agreement can be terminated by either party 30 days after receipt of written notice . as described in the item 1 . `` business `` section of this annual report , we are developing scy-078 under an exclusive license agreement with merck . in december 2014 , we entered into an amendment to our license agreement with merck that defers the remittance of a milestone payment due to merck , such that no amount will be due upon initiation of the first phase 2 clinical trial of a product containing the scy-078 compound ( the `` deferred milestone `` ) . the amendment also increases , in an amount equal to the deferred milestone , the milestone payment that will be due upon initiation of the first phase 3 clinical trial of a product containing the scy-078 compound . except as described above , all other terms and provisions of the license agreement remain in full force and effect . 56 contract research and development services as part of our strategic objective to focus our resources on the development of scy-078 , our board of directors has directed our management to explore the divestiture of our contract research and development services business ( the `` service business `` ) . a divestiture of the service business will simplify our business model and allow our new chief executive officer to focus on the execution of our strategic objectives . story_separator_special_tag , 2014 and have no remaining substantive performance obligations . although our revenue increased from 2013 to 2014 , the 61 developments described in the `` recent developments `` section above pertaining to our contract research and development services business are expected to have an adverse effect on our reported revenues in 2015. cost of revenue . for the year ended december 31 , 2014 , cost of revenue decreased to $ 15.4 million compared to $ 16.3 million for the year ended december 31 , 2013 . the decrease of $ 0.9 million , or 5.3 % , was primarily the result of a $ 0.5 million decrease due to operating cost saving measures taken in 2014 , a $ 0.3 million decrease in laboratory materials and third-party scientific contract labor services , and a $ 0.6 million decrease due to scientific personnel devoting more time to scy-078 development in 2014 , which results in the associated salaries and personnel-related costs for this effort being included in research and development expense in 2014 , rather than cost of revenue . these decreases were partially offset by a $ 0.6 million increase in employee compensation expense , which was primarily due to an accrual of estimated annual employee bonus compensation in 2014. research and development . for the year ended december 31 , 2014 , research and development expenses increased to $ 8.3 million from $ 4.4 million for the year ended december 31 , 2013 . the increase of $ 3.9 million , or 89.9 % , was primarily the result of a $ 1.7 million increase in employee compensation expense and a $ 2.2 million increase in third-party development services related to the scy-078 phase 2 clinical trial and the preclinical development of intravenous scy-078 . the increase in employee compensation was due to new research and development personnel hired in 2014 to manage and support the development of scy-078 , stock compensation expense associated with option grants to our research and development personnel , an accrual of estimated annual employee bonus compensation in 2014 , an accrual of employee severance costs associated with workforce reduction activities in june 2014 , and scientific services personnel devoting more time and effort to scy-078 development in 2014 , which results in the associated salaries and personnel-related costs for this effort being included in research and development expense in 2014 , rather than cost of revenue . selling , general & administrative . for the year ended december 31 , 2014 , selling , general and administrative expenses increased to $ 7.6 million from $ 4.4 million for the year ended december 31 , 2013 . the increase of $ 3.2 million , or 72.7 % , was a result of a $ 0.5 million payment to a related party advisor who assisted us in evaluating potential strategic financing alternatives to an ipo , a $ 0.2 million increase in other professional services expenses indirectly associated with our ipo , a $ 0.7 million increase in professional services expenses directly associated with our continuing operations as a regulated , publicly traded company , a $ 1.2 million increase in employee compensation , and a $ 0.6 million increase in other general and administrative expenses . the increase in employee compensation was primarily due to a $ 0.5 million increase in stock compensation expense associated with an option award modification and additional option grants , a $ 0.5 million accrual of estimated annual employee bonus compensation in 2014. the remaining increase to employee compensation expense was associated with an increase in officer and employee salaries that became effective in june 2014 , and an accrual of employee severance costs associated with workforce reduction activities in june 2014. gain on insurance recovery . for the year ended december 31 , 2014 , we recognized a $ 0.2 million gain on insurance recovery as our insurance carrier reimbursed us for the replacement cost of a damaged fixed asset . the insurance proceeds of $ 0.2 million exceeded the carrying value of the damaged asset . gain on sale of assets . for the year ended december 31 , 2014 , gain on sale of asset decreased to zero compared to $ 1.0 million in the year ended december 31 , 2013 . the amount recorded during the 2013 period represents the final two payments received on the 2012 sale of proprietary software . amortization of deferred financing costs and debt discount . for the year ended december 31 , 2014 , amortization of deferred financing costs decreased to $ 0.8 million compared to $ 3.5 million in the year ended december 31 , 2013 . the decrease of $ 2.7 million , or 78.3 % , was primarily associated with the conversion of our convertible promissory notes in december 2013 and the repayment of our 2013 credit agreement in may 2014. during the year ended december 31 , 2013 , we amortized debt discounts associated with our convertible promissory notes issued from december 2011 through june 2013 and deferred financing costs associated with our 2013 credit agreement . all of our convertible promissory notes were converted into preferred stock in december 2013 and , therefore , no amortization of promissory notes debt discount was incurred in 2014. upon completion of our ipo in may 2014 , the entire outstanding balance of the 2013 credit agreement amounting to $ 15.0 million plus accrued interest was paid in full using the proceeds from the ipo . the remaining unamortized balance of the deferred financing costs on the debt settlement date of $ 1.4 million was recognized as a loss on the extinguishment of debt in the year ended december 31 , 2014 . this loss on extinguishment of debt is presented separately in the accompanying statements of operations . story_separator_special_tag roman ; font-size:10pt ; color : # 000000 ; `` > net cash used in operating activities of $ 9.5 million for the year ended december

loss on extinguishment of debt . for the year ended december 31 , 2014 , loss on extinguishment of debt was $ 1.4 million compared to zero for the year ended december 31 , 2013 . as described in the preceding paragraph , upon completion of our ipo in may 2014 , the entire outstanding balance of the 2013 credit agreement amounting to $ 15.0 million plus accrued 62 interest was paid in full using the proceeds from the ipo . the remaining unamortized balance of the deferred financing costs on the debt settlement date of $ 1.4 million was immediately recognized as a loss on the extinguishment of debt in the year ended december 31 , 2014 . interest expense on beneficial conversion feature . for the year ended december 31 , 2014 , interest expense on beneficial conversion feature was zero compared to $ 10.8 million in the year ended december 31 , 2013 . the noncash expense recognized in the year ended december 31 , 2013 is a beneficial conversion feature associated with the conversion of related-party convertible promissory notes into preferred stock in december 2013. as the promissory notes were converted in 2013 , no such interest expense was incurred in the year ended december 31 , 2014 . interest expense — related party . for the year ended december 31 , 2014 , interest expense — related party was zero compared to $ 0.9 million in the year ended december 31 , 2013 . there was no interest expense — related party recognized in the year ended december 31 , 2014 , because the outstanding principal and interest of all convertible promissory notes issued to related parties were converted into preferred stock in december 2013. derivative fair value adjustment . for the year ended december 31 , 2014 , derivative fair value adjustment was a $ 10.1 million gain compared to a $ 7.9 million loss in the year ended december 31 , 2013 .


 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.
     ```loss on extinguishment of debt . for the year ended december 31 , 2014 , loss on extinguishment of debt was $ 1.4 million compared to zero for the year ended december 31 , 2013 . as described in the preceding paragraph , upon completion of our ipo in may 2014 , the entire outstanding balance of the 2013 credit agreement amounting to $ 15.0 million plus accrued 62 interest was paid in full using the proceeds from the ipo . the remaining unamortized balance of the deferred financing costs on the debt settlement date of $ 1.4 million was immediately recognized as a loss on the extinguishment of debt in the year ended december 31 , 2014 . interest expense on beneficial conversion feature . for the year ended december 31 , 2014 , interest expense on beneficial conversion feature was zero compared to $ 10.8 million in the year ended december 31 , 2013 . the noncash expense recognized in the year ended december 31 , 2013 is a beneficial conversion feature associated with the conversion of related-party convertible promissory notes into preferred stock in december 2013. as the promissory notes were converted in 2013 , no such interest expense was incurred in the year ended december 31 , 2014 . interest expense — related party . for the year ended december 31 , 2014 , interest expense — related party was zero compared to $ 0.9 million in the year ended december 31 , 2013 . there was no interest expense — related party recognized in the year ended december 31 , 2014 , because the outstanding principal and interest of all convertible promissory notes issued to related parties were converted into preferred stock in december 2013. derivative fair value adjustment . for the year ended december 31 , 2014 , derivative fair value adjustment was a $ 10.1 million gain compared to a $ 7.9 million loss in the year ended december 31 , 2013 .
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 Suspicious Activity Report : in 2013 , we exclusively licensed scy-078 from merck sharp & dohme , or merck , in the field of human health , and merck transferred to us the investigational new drug application on file with the u.s. food and drug administration , or the fda , as well as all data merck had developed for the compound , plus active pharmaceutical ingredient and tablets . in 2014 , merck assigned the patents to us related to scy-078 that it had exclusively licensed to us . we are focusing our resources on the development of scy-078 . on may 7 , 2014 , we completed an initial public offering of our common stock , which we refer to as our ipo . we sold an aggregate of 6,200,000 shares of common stock under the registration statement on form s-1 declared effective by the sec on may 2 , 2014 , at a public offering price of $ 10.00 per share . net proceeds to us were $ 54.6 million , after deducting underwriting discounts and commissions and offering expenses . upon the completion of our ipo , all our outstanding shares of convertible preferred stock were automatically converted into 1,691,884 shares of common stock and substantially all outstanding common stock warrants were exercised for an additional 275,687 shares of common stock with net proceeds to us of $ 0.1 million . in connection with the consummation of the ipo , we repaid outstanding debt with a principal balance of $ 15 million , plus all accrued interest , to the holder of such debt , which was outstanding pursuant to a credit agreement referred to herein as the 2013 credit agreement . we are an emerging growth company . under the jumpstart our business startups act of 2012 , or jobs act , emerging growth companies can delay adopting new or revised accounting standards until such time of those standards apply to private companies . we have irrevocably elected not to adopt this exemption from new or revised accounting standards , and therefore , we will be subject to the same new or revised accounting standards as other public companies that are not “ emerging growth companies . ” recent developments scy-078 development we are currently conducting a randomized phase 2 study with the oral formulation of scy-078 . we have opened multiple trial sites , we are actively screening patients for enrollment , and we enrolled the first patient in march 2015. we amended the study protocol 's enrollment criteria in february 2015 in order to enhance and expedite recruitment and we are currently preparing further enhancements to the study 's protocol . we believe that these changes to enrollment criteria will improve the phase 2 study 's overall progress without affecting the interpretability of the study . we expect to report complete data from the phase 2 study in the first half of 2016. we are also currently developing an iv formulation of scy-078 . ind enabling studies for the iv formulation of scy-078 are currently underway . we plan to complete 14 day glp toxicity studies and file an ind to support a first in man study of the iv formulation planned to begin in the second half of 2015. the fda granted fast track designation to the oral formulation of scy-078 in december 2014. this fast track designation , coupled with our prior receipt of qidp designation , allows for a potentially accelerated path to approval and underscores the fda 's understanding of the critical need for new and varied treatments for life-threatening invasive fungal infections . we expect to submit qidp and fast track designation requests for the iv formulation of scy-078 in 2015. the development efforts summarized above are being performed by our own personnel , cros , vendors , consultants and other third parties . we have and will continue to enter into contracts in the normal course of business with various third parties who support our clinical trials , support our preclinical research studies , and provide other services related to our development efforts . our most significant agreement , entered into in june 2014 , is with a third-party cro that is conducting our phase 2 clinical trial for the oral formulation of scy-078 . the total fees and expenses under the agreement are projected to be approximately $ 6.3 million during the term of the agreement . the scope of the services under the agreement can be modified at any time , and the agreement can be terminated by either party 30 days after receipt of written notice . as described in the item 1 . `` business `` section of this annual report , we are developing scy-078 under an exclusive license agreement with merck . in december 2014 , we entered into an amendment to our license agreement with merck that defers the remittance of a milestone payment due to merck , such that no amount will be due upon initiation of the first phase 2 clinical trial of a product containing the scy-078 compound ( the `` deferred milestone `` ) . the amendment also increases , in an amount equal to the deferred milestone , the milestone payment that will be due upon initiation of the first phase 3 clinical trial of a product containing the scy-078 compound . except as described above , all other terms and provisions of the license agreement remain in full force and effect . 56 contract research and development services as part of our strategic objective to focus our resources on the development of scy-078 , our board of directors has directed our management to explore the divestiture of our contract research and development services business ( the `` service business `` ) . a divestiture of the service business will simplify our business model and allow our new chief executive officer to focus on the execution of our strategic objectives . story_separator_special_tag , 2014 and have no remaining substantive performance obligations . although our revenue increased from 2013 to 2014 , the 61 developments described in the `` recent developments `` section above pertaining to our contract research and development services business are expected to have an adverse effect on our reported revenues in 2015. cost of revenue . for the year ended december 31 , 2014 , cost of revenue decreased to $ 15.4 million compared to $ 16.3 million for the year ended december 31 , 2013 . the decrease of $ 0.9 million , or 5.3 % , was primarily the result of a $ 0.5 million decrease due to operating cost saving measures taken in 2014 , a $ 0.3 million decrease in laboratory materials and third-party scientific contract labor services , and a $ 0.6 million decrease due to scientific personnel devoting more time to scy-078 development in 2014 , which results in the associated salaries and personnel-related costs for this effort being included in research and development expense in 2014 , rather than cost of revenue . these decreases were partially offset by a $ 0.6 million increase in employee compensation expense , which was primarily due to an accrual of estimated annual employee bonus compensation in 2014. research and development . for the year ended december 31 , 2014 , research and development expenses increased to $ 8.3 million from $ 4.4 million for the year ended december 31 , 2013 . the increase of $ 3.9 million , or 89.9 % , was primarily the result of a $ 1.7 million increase in employee compensation expense and a $ 2.2 million increase in third-party development services related to the scy-078 phase 2 clinical trial and the preclinical development of intravenous scy-078 . the increase in employee compensation was due to new research and development personnel hired in 2014 to manage and support the development of scy-078 , stock compensation expense associated with option grants to our research and development personnel , an accrual of estimated annual employee bonus compensation in 2014 , an accrual of employee severance costs associated with workforce reduction activities in june 2014 , and scientific services personnel devoting more time and effort to scy-078 development in 2014 , which results in the associated salaries and personnel-related costs for this effort being included in research and development expense in 2014 , rather than cost of revenue . selling , general & administrative . for the year ended december 31 , 2014 , selling , general and administrative expenses increased to $ 7.6 million from $ 4.4 million for the year ended december 31 , 2013 . the increase of $ 3.2 million , or 72.7 % , was a result of a $ 0.5 million payment to a related party advisor who assisted us in evaluating potential strategic financing alternatives to an ipo , a $ 0.2 million increase in other professional services expenses indirectly associated with our ipo , a $ 0.7 million increase in professional services expenses directly associated with our continuing operations as a regulated , publicly traded company , a $ 1.2 million increase in employee compensation , and a $ 0.6 million increase in other general and administrative expenses . the increase in employee compensation was primarily due to a $ 0.5 million increase in stock compensation expense associated with an option award modification and additional option grants , a $ 0.5 million accrual of estimated annual employee bonus compensation in 2014. the remaining increase to employee compensation expense was associated with an increase in officer and employee salaries that became effective in june 2014 , and an accrual of employee severance costs associated with workforce reduction activities in june 2014. gain on insurance recovery . for the year ended december 31 , 2014 , we recognized a $ 0.2 million gain on insurance recovery as our insurance carrier reimbursed us for the replacement cost of a damaged fixed asset . the insurance proceeds of $ 0.2 million exceeded the carrying value of the damaged asset . gain on sale of assets . for the year ended december 31 , 2014 , gain on sale of asset decreased to zero compared to $ 1.0 million in the year ended december 31 , 2013 . the amount recorded during the 2013 period represents the final two payments received on the 2012 sale of proprietary software . amortization of deferred financing costs and debt discount . for the year ended december 31 , 2014 , amortization of deferred financing costs decreased to $ 0.8 million compared to $ 3.5 million in the year ended december 31 , 2013 . the decrease of $ 2.7 million , or 78.3 % , was primarily associated with the conversion of our convertible promissory notes in december 2013 and the repayment of our 2013 credit agreement in may 2014. during the year ended december 31 , 2013 , we amortized debt discounts associated with our convertible promissory notes issued from december 2011 through june 2013 and deferred financing costs associated with our 2013 credit agreement . all of our convertible promissory notes were converted into preferred stock in december 2013 and , therefore , no amortization of promissory notes debt discount was incurred in 2014. upon completion of our ipo in may 2014 , the entire outstanding balance of the 2013 credit agreement amounting to $ 15.0 million plus accrued interest was paid in full using the proceeds from the ipo . the remaining unamortized balance of the deferred financing costs on the debt settlement date of $ 1.4 million was recognized as a loss on the extinguishment of debt in the year ended december 31 , 2014 . this loss on extinguishment of debt is presented separately in the accompanying statements of operations . story_separator_special_tag roman ; font-size:10pt ; color : # 000000 ; `` > net cash used in operating activities of $ 9.5 million for the year ended december

