we have primarily funded our operations to date through the sale of equity securities , including convertible preferred stock , common stock and warrants to purchase common stock . see “ description of capital stock ” elsewhere in this filing for a description of our public equity sales . we have also raised capital through debt financing , consisting primarily of convertible notes ; and , to a lesser extent , payments received in connection with product sales , research grants and licensing fees . through december 31 , 2019 , we had received net proceeds of $ 67.2 million from our sales of common stock , preferred stock and issuance of convertible and other promissory notes and an aggregate of $ 1.7 million from research grants and licensing fees and an aggregate of $ 0.6 million in product sales . at december 31 , 2019 , we had an accumulated deficit of $ 95.9 million and cash and cash equivalents of $ 1.9 million . we have incurred significant operating losses every year since our inception . our net losses were $ 10.0 million and $ 12.2 million for the years ended december 31 , 2019 and 2018 respectively . we expect to continue to incur significant expenses and generate operating losses for at least the next 12 months . we have historically utilized , and intend to continue to utilize , various forms of stock-based awards in order to hire , retain and motivate talented employees , consultants and directors and encourage them to devote their best efforts to our business and financial success . in addition , we believe that our ability to grant stock-based awards is a valuable and necessary compensation tool that aligns the long-term financial interests of our employees , consultants and directors with the financial interests of our stockholders . as a result , a significant portion of our operating expenses includes stock-based compensation expense . stock-based compensation expense has been , and will continue to be for the foreseeable future , a significant recurring expense in our business and an important part of our compensation strategy . specifically , our stock-based compensation expense for the year ended december 31 , 2019 and december 31 , 2018 was $ 0.9 million and $ 3.4 million , respectively , which represented 8.5 % and 30.0 % , respectively , of our total operating expenses for those periods . components of our results of operations net sales net sales are comprised primarily of sales , net of discounts and promotions , of contrapest and related components , to our distributors and customers . 21 operating expenses research and development expenses research and development expenses consist primarily of costs incurred in connection with the research and development of contrapest and our other product candidates , which include : ● employee related expenses , including salaries , related benefits , travel and stock-based compensation expense for employees engaged in research and development functions ; ● expenses incurred in connection with the development of our product candidates ; and ● facilities , depreciation and other expenses , which include direct and allocated expenses for rent and maintenance of facilities , insurance and supplies . we expense research and development costs as incurred . we continue to investigate other applications of our core technology to other product candidates , which includes laboratory tests and academic collaborations . we also continue to develop our supply chain , particularly identifying and improving our sourcing of triptolide , a key active ingredient for our product candidates . at this time , we can not reasonably estimate the costs for further development of contrapest or the cost associated with the development of any of our other product candidates . selling , general and administrative expenses selling , general and administrative expenses consist primarily of salaries and related costs , including stock-based compensation , for personnel in executive , finance , sales , marketing and administrative functions . selling , general and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal , consulting , accounting and audit services . we continue to focus on improving our cost structure , with the goals of shifting resources to commercialization , significantly reducing our year over year burn rate and achieving a 50 % or greater gross margin . steps have included relocating to more cost efficient space , organizational restructuring , and improving our manufacturing and supply processes . we expect to see the benefit of these steps in the coming quarters . ” we plan to continue to hire employees to support our commercialization of contrapest and further development of our product candidates and anticipate that we will continue to utilize various forms of stock-based compensation awards in order to attract and retain qualified employees . as a result , we anticipate that stock-based compensation expense will continue to represent a significant portion of our selling , general and administrative expenses for the foreseeable future . interest income interest income consists primarily of interest income earned on cash and cash equivalents . interest expense interest expense consists primarily of interest accrued on our finance lease and note commitments . other income ( expense ) , net other income ( expense ) , net , consists primarily of recognized change in value of short-term investments and income ( expense ) related to the year-over-year fair market value adjustment of our derivative warrant . income taxes deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities , as well as a consideration of net operating loss and credit carry forwards , using enacted tax rates in effect for the period in which the differences are expected to impact taxable income . story_separator_special_tag 25 story_separator_special_tag serif ; margin : 0pt 0 `` > while our significant accounting policies are described in more detail in note 1 — summary of significant accounting policies to our financial statements included elsewhere in this annual report on form 10-k , we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements . revenue recognition effective january 1 , 2018 , the company adopted asc 606 — revenue from contracts with customers . under asc 606 , the company recognizes revenue from the commercial sales of products , licensing agreements and contracts to perform pilot studies by applying the following steps : ( 1 ) identify the contract with a customer ; ( 2 ) identify the performance obligations in the contract ; ( 3 ) determine the transaction price ; ( 4 ) allocate the transaction price to each performance obligation in the contract ; and ( 5 ) recognize revenue when each performance obligation is satisfied . for the comparative periods , revenue has not been adjusted and continues to be reported under asc 605 — revenue recognition . under asc 605 , revenue is recognized when the following criteria are met : ( 1 ) persuasive evidence of an arrangement exists ; ( 2 ) the performance of service has been rendered to a customer or delivery has occurred ; ( 3 ) the amount of the fee to be paid by a customer is fixed and determinable ; and ( 4 ) the collectability of the fee is reasonably assured . the performance obligations identified by the company under accounting standards codification ( “ asc ” ) topic 606 , revenue from contracts with customers , are straightforward and similar to the unit of account and performance obligation determination under asc topic 605 , revenue recognition . there was no impact on the company 's financial statements as a result of adopting asc 606 for the years ended december 31 , 2019 and 2019 , respectively . stock-based compensation we recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant , net of estimated forfeitures , in accordance with asc topic 718 — stock compensation ( “ asc 718 ” ) . we estimate the grant date fair value of the awards , and the resulting stock-based compensation expense , using the black-scholes option pricing model . the grant date fair value of stock-based awards is expensed on a straight-line basis over the vesting period of the respective award . we account for stock-based compensation arrangements with non-employees using a fair value approach . the fair value of these stock options is measured using the black-scholes option-pricing model reflecting the same assumptions as applied to employee options in each of the reported periods , other than the expected life , which is assumed to be the remaining contractual life of the option . the fair value of the stock options granted to non-employees is re-measured as the stock options vest and is recognized in the statements of operations and comprehensive loss during the period the related services are rendered . we recorded stock-based compensation expense of approximately $ 0.9 million and $ 3.4 million for the years ended december 31 , 2019 and 2018 respectively . we expect to continue to grant stock options and other equity-based awards in the future , and to the extent that we do , our stock-based compensation expense recognized in future periods will likely remain significant . 27 the black-scholes option pricing model requires the use of highly subjective and complex assumptions , which determine the fair value of stock-based awards . if we had made different assumptions , our stock-based compensation expense , net loss and loss per share of common stock could have been significantly different . our assumptions are as follows : ● expected term . the expected term represents the period that the stock-based awards are expected to be outstanding . our historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data . therefore , we estimate the expected term by using the simplified method , which calculates the expected term as the average of the time-to-vesting and the contractual life of the options . ● expected volatility . expected volatility is derived from the average historical volatilities of publicly traded companies within our industry that we consider to be comparable to our business over a period approximately equal to the expected term . we intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock price becomes available , or unless circumstances change such that the identified companies are no longer similar to us , in which case , more suitable companies whose share prices are publicly available would be utilized in the calculation . ● risk-free interest rate . the risk-free interest rate is based on the u.s. treasury yield in effect at the time of grant for zero coupon u.s. treasury notes with maturities approximately equal to the expected term . ● expected dividend . the expected dividend is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock . ● expected forfeitures . we use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest . to the extent actual forfeitures differ from the estimates , the difference will be recorded as a cumulative adjustment in the period that the estimates are revised . significant factors , assumptions and methodologies used in determining fair value of our common stock as noted above , we are

cash flows the following table summarizes our sources and uses of cash for each of the years presented : replace_table_token_3_th operating activities . during the year ended december 31 , 2019 , operating activities used $ 8.1 million of cash , primarily resulting from our net loss of $ 10.0 million , changes in our operating assets and liabilities of $ 0.5 million and non-cash charges of $ 1.4 million . our net loss was primarily attributed to research and development activities and our selling , general and administrative expenses , as we generated limited product sales and no research grant and licensing revenue during the year . net cash used by changes in our operating assets and liabilities for the year ended december 31 , 2019 consisted primarily of a $ 547,000 increase in accrued expenses and accounts payable , a decrease in prepaid expenses and deposits of $ 85,000 and a decrease in inventories of $ 81,000 offset by a decrease in deferred rent of $ 16,000 and a net increase in accounts receivable and deposits of $ 139,000. during the year ended december 31 , 2018 , operating activities used $ 9.1 million of cash , primarily resulting from our net loss of $ 11.9 million and changes in our operating assets and liabilities of $ 1.0 million , partially offset by non-cash charges of $ 3.8 million . our net loss was primarily attributed to research and development activities and our selling , general and administrative expenses , as we generated limited product sales and no research grant and licensing revenue during the period . net cash used by changes in our operating assets and liabilities for the year ended december 31 , 2018 consisted primarily of a $ 29,000 decrease in accrued expenses and accounts payable , an increase in inventories of $ 721,000 , a net increase in accounts receivable and deposits of $ 113,000 and an increase in prepaid expenses of $ 172,000 investing activities during the year ended december 31 , 2019 , we used $ 71,000 of cash in investing activities , which consisted entirely of the purchases of property and equipment .


 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 flows the following table summarizes our sources and uses of cash for each of the years presented : replace_table_token_3_th operating activities . during the year ended december 31 , 2019 , operating activities used $ 8.1 million of cash , primarily resulting from our net loss of $ 10.0 million , changes in our operating assets and liabilities of $ 0.5 million and non-cash charges of $ 1.4 million . our net loss was primarily attributed to research and development activities and our selling , general and administrative expenses , as we generated limited product sales and no research grant and licensing revenue during the year . net cash used by changes in our operating assets and liabilities for the year ended december 31 , 2019 consisted primarily of a $ 547,000 increase in accrued expenses and accounts payable , a decrease in prepaid expenses and deposits of $ 85,000 and a decrease in inventories of $ 81,000 offset by a decrease in deferred rent of $ 16,000 and a net increase in accounts receivable and deposits of $ 139,000. during the year ended december 31 , 2018 , operating activities used $ 9.1 million of cash , primarily resulting from our net loss of $ 11.9 million and changes in our operating assets and liabilities of $ 1.0 million , partially offset by non-cash charges of $ 3.8 million . our net loss was primarily attributed to research and development activities and our selling , general and administrative expenses , as we generated limited product sales and no research grant and licensing revenue during the period . net cash used by changes in our operating assets and liabilities for the year ended december 31 , 2018 consisted primarily of a $ 29,000 decrease in accrued expenses and accounts payable , an increase in inventories of $ 721,000 , a net increase in accounts receivable and deposits of $ 113,000 and an increase in prepaid expenses of $ 172,000 investing activities during the year ended december 31 , 2019 , we used $ 71,000 of cash in investing activities , which consisted entirely of the purchases of property and equipment .
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 Suspicious Activity Report : we have primarily funded our operations to date through the sale of equity securities , including convertible preferred stock , common stock and warrants to purchase common stock . see “ description of capital stock ” elsewhere in this filing for a description of our public equity sales . we have also raised capital through debt financing , consisting primarily of convertible notes ; and , to a lesser extent , payments received in connection with product sales , research grants and licensing fees . through december 31 , 2019 , we had received net proceeds of $ 67.2 million from our sales of common stock , preferred stock and issuance of convertible and other promissory notes and an aggregate of $ 1.7 million from research grants and licensing fees and an aggregate of $ 0.6 million in product sales . at december 31 , 2019 , we had an accumulated deficit of $ 95.9 million and cash and cash equivalents of $ 1.9 million . we have incurred significant operating losses every year since our inception . our net losses were $ 10.0 million and $ 12.2 million for the years ended december 31 , 2019 and 2018 respectively . we expect to continue to incur significant expenses and generate operating losses for at least the next 12 months . we have historically utilized , and intend to continue to utilize , various forms of stock-based awards in order to hire , retain and motivate talented employees , consultants and directors and encourage them to devote their best efforts to our business and financial success . in addition , we believe that our ability to grant stock-based awards is a valuable and necessary compensation tool that aligns the long-term financial interests of our employees , consultants and directors with the financial interests of our stockholders . as a result , a significant portion of our operating expenses includes stock-based compensation expense . stock-based compensation expense has been , and will continue to be for the foreseeable future , a significant recurring expense in our business and an important part of our compensation strategy . specifically , our stock-based compensation expense for the year ended december 31 , 2019 and december 31 , 2018 was $ 0.9 million and $ 3.4 million , respectively , which represented 8.5 % and 30.0 % , respectively , of our total operating expenses for those periods . components of our results of operations net sales net sales are comprised primarily of sales , net of discounts and promotions , of contrapest and related components , to our distributors and customers . 21 operating expenses research and development expenses research and development expenses consist primarily of costs incurred in connection with the research and development of contrapest and our other product candidates , which include : ● employee related expenses , including salaries , related benefits , travel and stock-based compensation expense for employees engaged in research and development functions ; ● expenses incurred in connection with the development of our product candidates ; and ● facilities , depreciation and other expenses , which include direct and allocated expenses for rent and maintenance of facilities , insurance and supplies . we expense research and development costs as incurred . we continue to investigate other applications of our core technology to other product candidates , which includes laboratory tests and academic collaborations . we also continue to develop our supply chain , particularly identifying and improving our sourcing of triptolide , a key active ingredient for our product candidates . at this time , we can not reasonably estimate the costs for further development of contrapest or the cost associated with the development of any of our other product candidates . selling , general and administrative expenses selling , general and administrative expenses consist primarily of salaries and related costs , including stock-based compensation , for personnel in executive , finance , sales , marketing and administrative functions . selling , general and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal , consulting , accounting and audit services . we continue to focus on improving our cost structure , with the goals of shifting resources to commercialization , significantly reducing our year over year burn rate and achieving a 50 % or greater gross margin . steps have included relocating to more cost efficient space , organizational restructuring , and improving our manufacturing and supply processes . we expect to see the benefit of these steps in the coming quarters . ” we plan to continue to hire employees to support our commercialization of contrapest and further development of our product candidates and anticipate that we will continue to utilize various forms of stock-based compensation awards in order to attract and retain qualified employees . as a result , we anticipate that stock-based compensation expense will continue to represent a significant portion of our selling , general and administrative expenses for the foreseeable future . interest income interest income consists primarily of interest income earned on cash and cash equivalents . interest expense interest expense consists primarily of interest accrued on our finance lease and note commitments . other income ( expense ) , net other income ( expense ) , net , consists primarily of recognized change in value of short-term investments and income ( expense ) related to the year-over-year fair market value adjustment of our derivative warrant . income taxes deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities , as well as a consideration of net operating loss and credit carry forwards , using enacted tax rates in effect for the period in which the differences are expected to impact taxable income . story_separator_special_tag 25 story_separator_special_tag serif ; margin : 0pt 0 `` > while our significant accounting policies are described in more detail in note 1 — summary of significant accounting policies to our financial statements included elsewhere in this annual report on form 10-k , we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements . revenue recognition effective january 1 , 2018 , the company adopted asc 606 — revenue from contracts with customers . under asc 606 , the company recognizes revenue from the commercial sales of products , licensing agreements and contracts to perform pilot studies by applying the following steps : ( 1 ) identify the contract with a customer ; ( 2 ) identify the performance obligations in the contract ; ( 3 ) determine the transaction price ; ( 4 ) allocate the transaction price to each performance obligation in the contract ; and ( 5 ) recognize revenue when each performance obligation is satisfied . for the comparative periods , revenue has not been adjusted and continues to be reported under asc 605 — revenue recognition . under asc 605 , revenue is recognized when the following criteria are met : ( 1 ) persuasive evidence of an arrangement exists ; ( 2 ) the performance of service has been rendered to a customer or delivery has occurred ; ( 3 ) the amount of the fee to be paid by a customer is fixed and determinable ; and ( 4 ) the collectability of the fee is reasonably assured . the performance obligations identified by the company under accounting standards codification ( “ asc ” ) topic 606 , revenue from contracts with customers , are straightforward and similar to the unit of account and performance obligation determination under asc topic 605 , revenue recognition . there was no impact on the company 's financial statements as a result of adopting asc 606 for the years ended december 31 , 2019 and 2019 , respectively . stock-based compensation we recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant , net of estimated forfeitures , in accordance with asc topic 718 — stock compensation ( “ asc 718 ” ) . we estimate the grant date fair value of the awards , and the resulting stock-based compensation expense , using the black-scholes option pricing model . the grant date fair value of stock-based awards is expensed on a straight-line basis over the vesting period of the respective award . we account for stock-based compensation arrangements with non-employees using a fair value approach . the fair value of these stock options is measured using the black-scholes option-pricing model reflecting the same assumptions as applied to employee options in each of the reported periods , other than the expected life , which is assumed to be the remaining contractual life of the option . the fair value of the stock options granted to non-employees is re-measured as the stock options vest and is recognized in the statements of operations and comprehensive loss during the period the related services are rendered . we recorded stock-based compensation expense of approximately $ 0.9 million and $ 3.4 million for the years ended december 31 , 2019 and 2018 respectively . we expect to continue to grant stock options and other equity-based awards in the future , and to the extent that we do , our stock-based compensation expense recognized in future periods will likely remain significant . 27 the black-scholes option pricing model requires the use of highly subjective and complex assumptions , which determine the fair value of stock-based awards . if we had made different assumptions , our stock-based compensation expense , net loss and loss per share of common stock could have been significantly different . our assumptions are as follows : ● expected term . the expected term represents the period that the stock-based awards are expected to be outstanding . our historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data . therefore , we estimate the expected term by using the simplified method , which calculates the expected term as the average of the time-to-vesting and the contractual life of the options . ● expected volatility . expected volatility is derived from the average historical volatilities of publicly traded companies within our industry that we consider to be comparable to our business over a period approximately equal to the expected term . we intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock price becomes available , or unless circumstances change such that the identified companies are no longer similar to us , in which case , more suitable companies whose share prices are publicly available would be utilized in the calculation . ● risk-free interest rate . the risk-free interest rate is based on the u.s. treasury yield in effect at the time of grant for zero coupon u.s. treasury notes with maturities approximately equal to the expected term . ● expected dividend . the expected dividend is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock . ● expected forfeitures . we use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest . to the extent actual forfeitures differ from the estimates , the difference will be recorded as a cumulative adjustment in the period that the estimates are revised . significant factors , assumptions and methodologies used in determining fair value of our common stock as noted above , we are

