net sales of $ 22.7 million in 2014 increased 140.9 percent in comparison to $ 9.4 million in 2013 , primarily due to a $ 13.2 million increase in military maritime sales as a result of high-volume sales to a distributor for the u.s. navy . commercial sales increased $ 2.0 million , or 54.3 percent , in 2014 compared to 2013 , as we built our pipeline and began to penetrate our targeted commercial and industrial markets . the increase in commercial sales was offset by a decrease of $ 2.0 million in r & d services , as we shifted our focus away from research contracts and grants . international sales with the sale of cll , our subsidiary in the united kingdom , we no longer generate significant sales from customers outside the united states . international net sales accounted for less than 1.0 percent of net sales in 2015 and in 2014 , respectively . international net sales accounted for approximately 1.4 percent of net sales in 2013 . the effect of changes in currency exchange rates was not material in 2015 , 2014 , or 2013 , respectively . gross profit gross profit was $ 29.3 million , or 45.5 percent of net sales in 2015 , compared to $ 7.8 million , or 34.3 percent of net sales in 2014 . the increase resulted from our higher sales volume , engaging new suppliers to lower our product costs at increased sales volumes , performing value analysis/engineering processes , and our continued development of operating efficiencies . gross profit in 2014 increased $ 5.7 million over the gross profit of $ 2.1 million in 2013. the increase resulted from higher net sales due to a higher mix of commercial and military maritime products sales , compared to r & d services sales , which carry low to no gross margins . additionally , gross margins on our products improved 12.2 percentage points as a result of continuous development of efficiencies , improvements in our supply chain , and building our economies of scale from sales volume increases . operating expenses product development product development expenses include salaries , contractor and consulting fees , legal fees , supplies and materials , as well as overhead items , such as depreciation and facilities costs . product development costs are expensed as they are incurred . total government reimbursements are the combination of revenues and credits from government contracts . total gross and net product development spending , including credits from government contracts , is shown in the following table ( in thousands ) : replace_table_token_5_th gross product development expenses were $ 3.0 million in 2015 , a 74.0 percent increase compared to $ 1.7 million in 2014 . the increase resulted from higher outside testing and legal fees of approximately $ 541 thousand related to our proprietary commercial intellitube® product line , and higher salaries and related benefits of approximately $ 554 thousand due to hiring additional product engineers as we continue to dedicate resources toward the development of our led lighting technology products in the united states and taiwan . gross product development expenses in 2014 decreased 50.4 percent compared to $ 3.5 million in 2013 . the decrease resulted from focusing our resources exclusively on projects and contracts that support led technologies . 23 selling , general , and administrative selling , general , and administrative expenses were $ 16.8 million , or 26.1 percent of net sales in 2015 , compared to $ 7.8 million , or 34.5 percent of net sales in 2014 . the dollar increase resulted from incurring higher salaries and related benefits of approximately $ 2.0 million and higher recruiting fees of $ 548 thousand as we essentially doubled our sales force in 2015 compared to 2014 , higher consulting services of approximately $ 1.4 million as we seek to grow our business , higher commissions and bonus incentives of approximately $ 1.7 million related to higher sales and earnings , higher severance costs of $ 502 thousand , higher trade show and other marketing costs of approximately $ 478 thousand to support our continued growth , and higher legal and professional fees of approximately $ 463 thousand . selling , general , and administrative expenses in 2014 increased 21.8 percent from $ 6.4 million 2013 . the dollar increase resulted from higher salaries and related benefits , higher stock-based compensation , higher incentive bonuses and commissions , and higher recruiting costs due primarily to building our direct sales force . this was partially offset by lower severance charges , lower amortization expense , and lower project marketing costs . loss on impairment due to the sale of our pool products business in november 2013 and the closing of our facilities in pleasanton , california , we performed an evaluation of property and equipment located in california . in performing this review , we sought a buyer for the assets which we no longer had use , and recorded an impairment loss of $ 608 thousand . the impairment loss represented the difference between the fair value and the carrying value of the asset group . these assets were subsequently sold in 2014 for $ 130 thousand ; the carrying value of the assets after the impairment charge . change in estimate of contingent liabilities in connection with the acquisition of efls in december 2009 , we recorded a performance-related contingent obligation related to a 2.5 percent payout payable over 42 months commencing january 1 , 2010. the payout was based on the fair value of projected annual billings of the acquired business . we accrued for this contingent liability at its estimated fair value at the time of the acquisition . story_separator_special_tag when assets are sold or otherwise disposed of , the cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statement of operations . refer to note 5 , `` property and equipment , `` included in item 8 for additional information . long-lived assets are reviewed for impairment whenever events or circumstances indicate the carrying amount may not be recoverable . events or circumstances that would result in an impairment review primarily include operations reporting losses , a significant change in the use of an asset , or the planned disposal or sale of the asset . the asset would be considered impaired when the future net undiscounted cash flows generated by the asset are less than its carrying value . an impairment loss would be recognized based on the amount by which the carrying value of the asset exceeds its fair value , as determined by quoted market prices ( if available ) or the present value of expected future cash flows . on december 31 , 2013 , we recorded an impairment charge of $ 608 thousand for assets that were held for sale at december 31 , 2013. these assets were subsequently sold in the first quarter of 2014 for $ 130 thousand , which was the carrying value after the impairment charge . valuation of inventories we state inventories at the lower of standard cost ( which approximates actual cost determined using the first-in-first-out method ) or market . we establish provisions for excess and obsolete inventories after evaluation of historical sales , current economic trends , forecasted sales , product lifecycles , and current inventory levels . during 2015 , 2014 , and 2013 , we charged $ 1.5 million , $ 194 thousand , and $ 146 thousand , respectively , to cost of sales from continuing operations for excess and obsolete inventories . adjustments to our estimates , such as forecasted sales and expected product lifecycles , could harm our operating results and financial position . accounting for income taxes 31 as part of the process of preparing the consolidated financial statements , we are required to estimate our income tax liability in each of the jurisdictions in which we do business . this process involves estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items , such as deferred revenues , for tax and accounting purposes . these differences result in deferred tax assets and liabilities , which are included in our consolidated balance sheets . we then assess the likelihood of the deferred tax assets being recovered from future taxable income and , to the extent we believe it is more likely than not that the deferred tax assets will not be recovered , or is unknown , we establish a valuation allowance . significant management judgment is required in determining our provision for income taxes , deferred tax assets and liabilities , and any valuation allowance recorded against our deferred tax assets . at december 31 , 2015 and 2014 , we have recorded a full valuation allowance against our deferred tax assets in the united states due to uncertainties related to our ability to utilize our deferred tax assets , primarily consisting of certain net operating losses carried forward . the valuation allowance is based upon our estimates of taxable income by jurisdiction and the period over which our deferred tax assets will be recoverable . in considering the need for a valuation allowance , we assess all evidence , both positive and negative , available to determine whether all or some portion of the deferred tax assets will not be realized . such evidence includes , but is not limited to , recent earnings history , projections of future income or loss , reversal patterns of existing taxable and deductible temporary differences , and tax planning strategies . we continue to evaluate the need for a valuation allowance on a quarterly basis . as of december 31 , 2015 , we had net operating loss carry-forwards of approximately $ 69.1 million for federal , state , and local income tax purposes . however , due to changes in the company 's capital structure , approximately $ 14.8 million of this amount is available after the application of irc section 382 limitations . as a result of this limitation , in 2016 , we only expect to have approximately $ 6.0 million of the net operating loss carry-forward available for use . if not utilized , these carry-forwards will begin to expire in 2021 for federal and have begun to expire for state and local purposes . please refer to note 12 , `` income taxes , `` included in item 8 for additional information . share-based payments the cost of employee and director stock options and restricted stock units , as well as other share-based compensation arrangements , is reflected in the consolidated financial statements based on the estimated grant date fair value method under the authoritative guidance . management applies the black-scholes option pricing model to options issued to employees and directors to determine the fair value of stock options and apply judgment in estimating key assumptions that are important elements of the model in expense recognition . these elements include the expected life of the option , the expected stock-price volatility , and expected forfeiture rates . the assumptions used in calculating the fair value of share-based awards under black-scholes represent our best estimates , but these estimates involve inherent uncertainties and the application of management judgment . although we believe the assumptions and estimates we have made are reasonable and appropriate , changes in assumptions could materially impact our reported financial results . restricted stock units and stock options issued to non-employees are valued based upon the intrinsic value of the award . see note 11 , `` stockholders ' equity , `` included in item 8 for

liquidity and capital resources while we generated net income of $ 8.8 million in 2015 , we have incurred substantial losses in the past , and as of december 31 , 2015 , we had an accumulated deficit of $ 80.1 million . in the third quarter of 2015 , we raised approximately $ 23.6 million , net of fees , from a follow-on public offering of 1,500,000 shares of our common stock . we also raised approximately $ 18 million between 2012 and 2014 through the issuance of common stock and debt , including $ 5.15 million in cash , net of related expenses , from a public offering and sale of our common stock in august 2014. additionally , we received $ 4.8 million in cash , net of related expenses , through the sale of our pool products business in 2013. while we were profitable in 2015 , in order for us to continue to grow our business profitably , we will need to continue executing our marketing and sales plans for our energy-efficient led lighting products to expand our customer base , and develop new technologies into sustainable product lines . there is a risk that our business may not be as successful as we envision as we work to expand our customer base and grow net sales from commercial clients in our targeted vertical markets . additionally , there is no guarantee that the u.s. navy will continue on its current pace with the adoption of our led lighting products for its fighting fleet . we terminated our revolving credit facility effective december 31 , 2015 , and are not actively pursuing securing a new line of credit at this time . there can be no assurance that we will generate sufficient cash flows to sustain and grow our operations or , if necessary , obtain funding on acceptable terms or in a timely fashion or at all .


 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 while we generated net income of $ 8.8 million in 2015 , we have incurred substantial losses in the past , and as of december 31 , 2015 , we had an accumulated deficit of $ 80.1 million . in the third quarter of 2015 , we raised approximately $ 23.6 million , net of fees , from a follow-on public offering of 1,500,000 shares of our common stock . we also raised approximately $ 18 million between 2012 and 2014 through the issuance of common stock and debt , including $ 5.15 million in cash , net of related expenses , from a public offering and sale of our common stock in august 2014. additionally , we received $ 4.8 million in cash , net of related expenses , through the sale of our pool products business in 2013. while we were profitable in 2015 , in order for us to continue to grow our business profitably , we will need to continue executing our marketing and sales plans for our energy-efficient led lighting products to expand our customer base , and develop new technologies into sustainable product lines . there is a risk that our business may not be as successful as we envision as we work to expand our customer base and grow net sales from commercial clients in our targeted vertical markets . additionally , there is no guarantee that the u.s. navy will continue on its current pace with the adoption of our led lighting products for its fighting fleet . we terminated our revolving credit facility effective december 31 , 2015 , and are not actively pursuing securing a new line of credit at this time . there can be no assurance that we will generate sufficient cash flows to sustain and grow our operations or , if necessary , obtain funding on acceptable terms or in a timely fashion or at all .
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 Suspicious Activity Report : net sales of $ 22.7 million in 2014 increased 140.9 percent in comparison to $ 9.4 million in 2013 , primarily due to a $ 13.2 million increase in military maritime sales as a result of high-volume sales to a distributor for the u.s. navy . commercial sales increased $ 2.0 million , or 54.3 percent , in 2014 compared to 2013 , as we built our pipeline and began to penetrate our targeted commercial and industrial markets . the increase in commercial sales was offset by a decrease of $ 2.0 million in r & d services , as we shifted our focus away from research contracts and grants . international sales with the sale of cll , our subsidiary in the united kingdom , we no longer generate significant sales from customers outside the united states . international net sales accounted for less than 1.0 percent of net sales in 2015 and in 2014 , respectively . international net sales accounted for approximately 1.4 percent of net sales in 2013 . the effect of changes in currency exchange rates was not material in 2015 , 2014 , or 2013 , respectively . gross profit gross profit was $ 29.3 million , or 45.5 percent of net sales in 2015 , compared to $ 7.8 million , or 34.3 percent of net sales in 2014 . the increase resulted from our higher sales volume , engaging new suppliers to lower our product costs at increased sales volumes , performing value analysis/engineering processes , and our continued development of operating efficiencies . gross profit in 2014 increased $ 5.7 million over the gross profit of $ 2.1 million in 2013. the increase resulted from higher net sales due to a higher mix of commercial and military maritime products sales , compared to r & d services sales , which carry low to no gross margins . additionally , gross margins on our products improved 12.2 percentage points as a result of continuous development of efficiencies , improvements in our supply chain , and building our economies of scale from sales volume increases . operating expenses product development product development expenses include salaries , contractor and consulting fees , legal fees , supplies and materials , as well as overhead items , such as depreciation and facilities costs . product development costs are expensed as they are incurred . total government reimbursements are the combination of revenues and credits from government contracts . total gross and net product development spending , including credits from government contracts , is shown in the following table ( in thousands ) : replace_table_token_5_th gross product development expenses were $ 3.0 million in 2015 , a 74.0 percent increase compared to $ 1.7 million in 2014 . the increase resulted from higher outside testing and legal fees of approximately $ 541 thousand related to our proprietary commercial intellitube® product line , and higher salaries and related benefits of approximately $ 554 thousand due to hiring additional product engineers as we continue to dedicate resources toward the development of our led lighting technology products in the united states and taiwan . gross product development expenses in 2014 decreased 50.4 percent compared to $ 3.5 million in 2013 . the decrease resulted from focusing our resources exclusively on projects and contracts that support led technologies . 23 selling , general , and administrative selling , general , and administrative expenses were $ 16.8 million , or 26.1 percent of net sales in 2015 , compared to $ 7.8 million , or 34.5 percent of net sales in 2014 . the dollar increase resulted from incurring higher salaries and related benefits of approximately $ 2.0 million and higher recruiting fees of $ 548 thousand as we essentially doubled our sales force in 2015 compared to 2014 , higher consulting services of approximately $ 1.4 million as we seek to grow our business , higher commissions and bonus incentives of approximately $ 1.7 million related to higher sales and earnings , higher severance costs of $ 502 thousand , higher trade show and other marketing costs of approximately $ 478 thousand to support our continued growth , and higher legal and professional fees of approximately $ 463 thousand . selling , general , and administrative expenses in 2014 increased 21.8 percent from $ 6.4 million 2013 . the dollar increase resulted from higher salaries and related benefits , higher stock-based compensation , higher incentive bonuses and commissions , and higher recruiting costs due primarily to building our direct sales force . this was partially offset by lower severance charges , lower amortization expense , and lower project marketing costs . loss on impairment due to the sale of our pool products business in november 2013 and the closing of our facilities in pleasanton , california , we performed an evaluation of property and equipment located in california . in performing this review , we sought a buyer for the assets which we no longer had use , and recorded an impairment loss of $ 608 thousand . the impairment loss represented the difference between the fair value and the carrying value of the asset group . these assets were subsequently sold in 2014 for $ 130 thousand ; the carrying value of the assets after the impairment charge . change in estimate of contingent liabilities in connection with the acquisition of efls in december 2009 , we recorded a performance-related contingent obligation related to a 2.5 percent payout payable over 42 months commencing january 1 , 2010. the payout was based on the fair value of projected annual billings of the acquired business . we accrued for this contingent liability at its estimated fair value at the time of the acquisition . story_separator_special_tag when assets are sold or otherwise disposed of , the cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statement of operations . refer to note 5 , `` property and equipment , `` included in item 8 for additional information . long-lived assets are reviewed for impairment whenever events or circumstances indicate the carrying amount may not be recoverable . events or circumstances that would result in an impairment review primarily include operations reporting losses , a significant change in the use of an asset , or the planned disposal or sale of the asset . the asset would be considered impaired when the future net undiscounted cash flows generated by the asset are less than its carrying value . an impairment loss would be recognized based on the amount by which the carrying value of the asset exceeds its fair value , as determined by quoted market prices ( if available ) or the present value of expected future cash flows . on december 31 , 2013 , we recorded an impairment charge of $ 608 thousand for assets that were held for sale at december 31 , 2013. these assets were subsequently sold in the first quarter of 2014 for $ 130 thousand , which was the carrying value after the impairment charge . valuation of inventories we state inventories at the lower of standard cost ( which approximates actual cost determined using the first-in-first-out method ) or market . we establish provisions for excess and obsolete inventories after evaluation of historical sales , current economic trends , forecasted sales , product lifecycles , and current inventory levels . during 2015 , 2014 , and 2013 , we charged $ 1.5 million , $ 194 thousand , and $ 146 thousand , respectively , to cost of sales from continuing operations for excess and obsolete inventories . adjustments to our estimates , such as forecasted sales and expected product lifecycles , could harm our operating results and financial position . accounting for income taxes 31 as part of the process of preparing the consolidated financial statements , we are required to estimate our income tax liability in each of the jurisdictions in which we do business . this process involves estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items , such as deferred revenues , for tax and accounting purposes . these differences result in deferred tax assets and liabilities , which are included in our consolidated balance sheets . we then assess the likelihood of the deferred tax assets being recovered from future taxable income and , to the extent we believe it is more likely than not that the deferred tax assets will not be recovered , or is unknown , we establish a valuation allowance . significant management judgment is required in determining our provision for income taxes , deferred tax assets and liabilities , and any valuation allowance recorded against our deferred tax assets . at december 31 , 2015 and 2014 , we have recorded a full valuation allowance against our deferred tax assets in the united states due to uncertainties related to our ability to utilize our deferred tax assets , primarily consisting of certain net operating losses carried forward . the valuation allowance is based upon our estimates of taxable income by jurisdiction and the period over which our deferred tax assets will be recoverable . in considering the need for a valuation allowance , we assess all evidence , both positive and negative , available to determine whether all or some portion of the deferred tax assets will not be realized . such evidence includes , but is not limited to , recent earnings history , projections of future income or loss , reversal patterns of existing taxable and deductible temporary differences , and tax planning strategies . we continue to evaluate the need for a valuation allowance on a quarterly basis . as of december 31 , 2015 , we had net operating loss carry-forwards of approximately $ 69.1 million for federal , state , and local income tax purposes . however , due to changes in the company 's capital structure , approximately $ 14.8 million of this amount is available after the application of irc section 382 limitations . as a result of this limitation , in 2016 , we only expect to have approximately $ 6.0 million of the net operating loss carry-forward available for use . if not utilized , these carry-forwards will begin to expire in 2021 for federal and have begun to expire for state and local purposes . please refer to note 12 , `` income taxes , `` included in item 8 for additional information . share-based payments the cost of employee and director stock options and restricted stock units , as well as other share-based compensation arrangements , is reflected in the consolidated financial statements based on the estimated grant date fair value method under the authoritative guidance . management applies the black-scholes option pricing model to options issued to employees and directors to determine the fair value of stock options and apply judgment in estimating key assumptions that are important elements of the model in expense recognition . these elements include the expected life of the option , the expected stock-price volatility , and expected forfeiture rates . the assumptions used in calculating the fair value of share-based awards under black-scholes represent our best estimates , but these estimates involve inherent uncertainties and the application of management judgment . although we believe the assumptions and estimates we have made are reasonable and appropriate , changes in assumptions could materially impact our reported financial results . restricted stock units and stock options issued to non-employees are valued based upon the intrinsic value of the award . see note 11 , `` stockholders ' equity , `` included in item 8 for

