the company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements . revenue recognition the company recognizes revenue upon the shipment of products or the performance of services when : ( 1 ) persuasive evidence of the arrangement exists ; ( 2 ) services have been rendered ; ( 3 ) the price is fixed or determinable ; and ( 4 ) collectibility is reasonably assured . when a sales agreement involves multiple deliverables , such as extended support provisions , training to be supplied after delivery of the systems , and test programs specific to customers ' routine applications , the multiple deliverables are evaluated to determine the unit of accounting . judgment is required to properly identify the accounting units of multiple element transactions and the manner in which revenue is allocated among the accounting units . j udgments made , or changes to judgments made , may significantly affect the timing or amount of revenue recognition . revenue related to the multiple elements are allocated to each unit of accounting using the relative selling price hierarchy . consistent with accounting guidance , the selling price is based upon vendor specific objective evidence ( vsoe ) . if vsoe is not available , third party evidence ( tpe ) is used to establish the selling price . in the absence of vsoe or tpe , estimated selling price is used . the company has adopted this guidance effective with the first quarter of fiscal 2012. prior to fiscal 2012 , revenue for arrangements containing multiple deliverables was allocated based upon estimated fair values . the adoption of the new revenue recognition accounting standards did not have a material impact on our consolidated financial statements . during the first quarter of fiscal 2013 , the company entered into an agreement with a customer to develop a next generation fox system . the project identifies multiple milestones with values assigned to each . the consideration earned upon achieving the milestone is required to meet the following conditions prior to recognition : ( i ) the value is commensurate with the vendor 's performance to meet the milestone , ( ii ) it relates solely to past performance , ( iii ) and it is reasonable relative to all of the deliverables and payment terms within the arrangement . revenue is recognized for the milestone upon acceptance by the customer . 18 sales tax collected from customers is not included in net sales but rather recorded as a liability due to the respective taxing authorities . provisions for the estimated future cost of warranty and installation are recorded at the time the products are shipped . royalty-based revenue related to licensing income from performance test boards and burn-in boards is recognized upon the earlier of the receipt by the company of the licensee 's report related to its usage of the licensed intellectual property or upon payment by the licensee . the company 's terms of sales with distributors are generally free on board , or fob , shipping point with payment due within 60 days . all products go through in-house testing and verification of specifications before shipment . apart from warranty reserves , credits issued have not been material as a percentage of net sales . the company 's distributors do not generally carry inventories of the company 's products . instead , the distributors place orders with the company at or about the time they receive orders from their customers . the company 's shipment terms to our distributors do not provide for credits or rights of return . because the company 's distributors do not generally carry inventories of our products , they do not have rights to price protection or to return products . at the time the company ships products to the distributors , the price is fixed . subsequent to the issuance of the invoice , there are no discounts or special terms . the company does not give the buyer the right to return the product or to receive future price concessions . the company 's arrangements do not include vendor consideration . product development costs and capitalized software the company capitalizes its systems software development costs incurred after a system achieves technological feasibility and before first commercial shipment . such costs typically represent a small portion of total research and development costs . no system software development costs were capitalized or amortized in fiscal 2015 , 2014 , or 2013. allowance for doubtful accounts the company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables . the company also reviews its trade receivables by aging category to identify specific customers with known disputes or collection issues . the company exercises judgment when determining the adequacy of these reserves as the company evaluates historical bad debt trends , general economic conditions in the united states and internationally and changes in customer financial conditions . uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received . warranty obligations the company provides and records the estimated cost of product warranties at the time revenues are recognized on products shipped . while the company engages in extensive product quality programs and processes , including actively monitoring and evaluating the quality of its component suppliers , the company 's warranty obligation is affected by product failure rates , material usage and service delivery costs incurred in correcting a product failure . the company 's estimate of warranty reserve is based on management 's assessment of future warranty obligations and on historical warranty obligations . story_separator_special_tag research and development , or r & d , expenses consist primarily of salaries and related costs of employees engaged in ongoing research , design and development activities , costs of engineering materials and supplies and professional consulting expenses . r & d expenses increased to $ 3.4 million for the fiscal year ended may 31 , 2014 from $ 3.2 million for the fiscal year ended may 31 , 2013 , an increase of 5.9 % . the increase in r & d expenses was primarily due to increases of $ 0.3 million of project expenses and $ 0.2 million of outside services . these were partially offset by an increase of $ 0.4 million of r & d expenditures , related to non-recurring engineering milestones , transferred into cost of goods sold and prepaid expenses . interest expense . interest expense decreased to $ 26,000 for the fiscal year ended may 31 , 2014 from $ 49,000 for the fiscal year ended may 31 , 2013 as a result of lower average borrowings on the line of credit . other income ( expense ) , net . other expense , net increased to $ 64,000 for the fiscal year ended may 31 , 2014 from $ 33,000 for the fiscal year ended may 31 , 2013. the change in other expense was due to foreign exchange losses resulting from the fluctuation in the value of the dollar compared to foreign currencies . income tax ( expense ) benefit . income tax benefit was $ 15,000 for the fiscal year ended may 31 , 2014 , compared with income tax expense of $ 30,000 for the fiscal year ended may 31 , 2013. the income tax benefit for the fiscal year ended may 31 , 2014 was primarily due to the reversal of tax liabilities previously established under fin-48 , which were no longer required . 22 story_separator_special_tag font-size : 10pt `` > the company anticipates that the existing cash balance together with cash flows from operations , as well as funds available through the working capital credit facility will be adequate to meet its working capital and capital equipment requirements through fiscal 2016. refer to note 9 of notes to consolidated financial statements , “ line of credit ” , for further discussion of the new credit facility agreement with qvt fund lp and quintessence fund l.p. after fiscal 2016 , depending on its rate of growth and profitability , the company may require additional equity or debt financing to meet its working capital requirements or capital equipment needs . there can be no assurance that additional financing will be available when required , or if available , that such financing can be obtained on terms satisfactory to the company . off-balance sheet financing the company has not entered into any off-balance sheet financing arrangements and has not established any special purpose entities . overview of contractual obligations the following table provides a summary of such arrangements , or contractual obligations . replace_table_token_5_th ( 1 ) long-term debt on the balance sheet is net of unamortized debt issuance costs of $ 319,000 . ( 2 ) based on 9 % interest rate . see note 11 “ long-term debt . ” ( 3 ) shown above are the company 's binding purchase obligations . the large majority of the company 's purchase orders are cancelable by either party , which if canceled may result in a negotiation with the vendor to determine if there shall be any restocking or cancellation fees payable to the vendor . in the normal course of business to facilitate sales of its products , the company indemnifies other parties , including customers , with respect to certain matters . the company has agreed to hold the other party harmless against losses arising from a breach of representations or covenants , or from intellectual property infringement or other claims . these agreements may limit the time period within which an indemnification claim can be made and the amount of the claim . in addition , the company has entered into indemnification agreements with its officers and directors , and the company 's bylaws contain similar indemnification obligations to the company 's agents . it is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement . to date , payments made by the company under these agreements have not had a material impact on the company 's operating results , financial position or cash flows . recent accounting pronouncements : in may 2014 , the financial accounting standards board ( `` fasb `` ) issued accounting standards update ( `` asu `` ) no . 2014-09 , revenue from contracts with customers , a new standard on revenue recognition . the new standard will supersede existing revenue recognition guidance and apply to all entities that enter into contracts to provide goods or services to customers . the guidance also addresses the measurement and recognition of gains and losses on the sale of certain non-financial assets , such as real estate , and property and equipment . the new standard will become effective for us beginning with the first quarter of fiscal 2019 and can be adopted either retrospectively to each reporting period presented or as a cumulative effect adjustment as of the date of adoption . the company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements . in august 2014 , the fasb issued asu no . 2014-15 , presentation of going concern . this standard requires management to evaluate the conditions or events that raise substantial doubt about the entity 's ability to continue as a 24 going concern and whether or not it is probable that the entity will be unable to meet its obligations as they become due within one year after

liquidity and capital resources we consider cash and cash equivalents as liquid and available for use . as of may 31 , 2015 , the company had $ 5.5 million in cash and cash equivalents , compared to $ 1.8 million as of may 31 , 2014. net cash used in operating activities was $ 2.3 million and $ 0.6 million for the fiscal years ended may 31 , 2015 and 2014 , respectively . for the fiscal year ended may 31 , 2015 , net cash used in operating activities was primarily the result of the net loss of $ 6.6 million , as adjusted to exclude the effect of non-cash charges including stock-based compensation expense of $ 1.0 million , and an increase in inventories of $ 1.0 million , partially offset by an increase in customer deposits and deferred revenue of $ 3.7 million and a decrease in accounts receivable of $ 1.8 million . the increase in inventories was primarily due to inventory purchases to support future shipments . the increase in customer deposits and deferred revenue was primarily due to the receipt of additional down payments from certain customers . the decrease in accounts receivable was primarily due to a decrease in sales . for the fiscal year ended may 31 , 2014 , net cash used in operating activities was primarily the result of net income of $ 0.4 million , as adjusted to exclude the effect of non-cash charges including stock-based compensation expense of $ 0.8 million , a decrease in customer deposits and deferred revenue of $ 1.0 million and an increase in inventories of $ 0.7 million . the decrease in customer deposits and deferred revenue was primarily due to the shipments against customer orders with down payments . the increase in inventories was primarily due to inventory purchases to support future shipments .


 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 we consider cash and cash equivalents as liquid and available for use . as of may 31 , 2015 , the company had $ 5.5 million in cash and cash equivalents , compared to $ 1.8 million as of may 31 , 2014. net cash used in operating activities was $ 2.3 million and $ 0.6 million for the fiscal years ended may 31 , 2015 and 2014 , respectively . for the fiscal year ended may 31 , 2015 , net cash used in operating activities was primarily the result of the net loss of $ 6.6 million , as adjusted to exclude the effect of non-cash charges including stock-based compensation expense of $ 1.0 million , and an increase in inventories of $ 1.0 million , partially offset by an increase in customer deposits and deferred revenue of $ 3.7 million and a decrease in accounts receivable of $ 1.8 million . the increase in inventories was primarily due to inventory purchases to support future shipments . the increase in customer deposits and deferred revenue was primarily due to the receipt of additional down payments from certain customers . the decrease in accounts receivable was primarily due to a decrease in sales . for the fiscal year ended may 31 , 2014 , net cash used in operating activities was primarily the result of net income of $ 0.4 million , as adjusted to exclude the effect of non-cash charges including stock-based compensation expense of $ 0.8 million , a decrease in customer deposits and deferred revenue of $ 1.0 million and an increase in inventories of $ 0.7 million . the decrease in customer deposits and deferred revenue was primarily due to the shipments against customer orders with down payments . the increase in inventories was primarily due to inventory purchases to support future shipments .
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 Suspicious Activity Report : the company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements . revenue recognition the company recognizes revenue upon the shipment of products or the performance of services when : ( 1 ) persuasive evidence of the arrangement exists ; ( 2 ) services have been rendered ; ( 3 ) the price is fixed or determinable ; and ( 4 ) collectibility is reasonably assured . when a sales agreement involves multiple deliverables , such as extended support provisions , training to be supplied after delivery of the systems , and test programs specific to customers ' routine applications , the multiple deliverables are evaluated to determine the unit of accounting . judgment is required to properly identify the accounting units of multiple element transactions and the manner in which revenue is allocated among the accounting units . j udgments made , or changes to judgments made , may significantly affect the timing or amount of revenue recognition . revenue related to the multiple elements are allocated to each unit of accounting using the relative selling price hierarchy . consistent with accounting guidance , the selling price is based upon vendor specific objective evidence ( vsoe ) . if vsoe is not available , third party evidence ( tpe ) is used to establish the selling price . in the absence of vsoe or tpe , estimated selling price is used . the company has adopted this guidance effective with the first quarter of fiscal 2012. prior to fiscal 2012 , revenue for arrangements containing multiple deliverables was allocated based upon estimated fair values . the adoption of the new revenue recognition accounting standards did not have a material impact on our consolidated financial statements . during the first quarter of fiscal 2013 , the company entered into an agreement with a customer to develop a next generation fox system . the project identifies multiple milestones with values assigned to each . the consideration earned upon achieving the milestone is required to meet the following conditions prior to recognition : ( i ) the value is commensurate with the vendor 's performance to meet the milestone , ( ii ) it relates solely to past performance , ( iii ) and it is reasonable relative to all of the deliverables and payment terms within the arrangement . revenue is recognized for the milestone upon acceptance by the customer . 18 sales tax collected from customers is not included in net sales but rather recorded as a liability due to the respective taxing authorities . provisions for the estimated future cost of warranty and installation are recorded at the time the products are shipped . royalty-based revenue related to licensing income from performance test boards and burn-in boards is recognized upon the earlier of the receipt by the company of the licensee 's report related to its usage of the licensed intellectual property or upon payment by the licensee . the company 's terms of sales with distributors are generally free on board , or fob , shipping point with payment due within 60 days . all products go through in-house testing and verification of specifications before shipment . apart from warranty reserves , credits issued have not been material as a percentage of net sales . the company 's distributors do not generally carry inventories of the company 's products . instead , the distributors place orders with the company at or about the time they receive orders from their customers . the company 's shipment terms to our distributors do not provide for credits or rights of return . because the company 's distributors do not generally carry inventories of our products , they do not have rights to price protection or to return products . at the time the company ships products to the distributors , the price is fixed . subsequent to the issuance of the invoice , there are no discounts or special terms . the company does not give the buyer the right to return the product or to receive future price concessions . the company 's arrangements do not include vendor consideration . product development costs and capitalized software the company capitalizes its systems software development costs incurred after a system achieves technological feasibility and before first commercial shipment . such costs typically represent a small portion of total research and development costs . no system software development costs were capitalized or amortized in fiscal 2015 , 2014 , or 2013. allowance for doubtful accounts the company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables . the company also reviews its trade receivables by aging category to identify specific customers with known disputes or collection issues . the company exercises judgment when determining the adequacy of these reserves as the company evaluates historical bad debt trends , general economic conditions in the united states and internationally and changes in customer financial conditions . uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received . warranty obligations the company provides and records the estimated cost of product warranties at the time revenues are recognized on products shipped . while the company engages in extensive product quality programs and processes , including actively monitoring and evaluating the quality of its component suppliers , the company 's warranty obligation is affected by product failure rates , material usage and service delivery costs incurred in correcting a product failure . the company 's estimate of warranty reserve is based on management 's assessment of future warranty obligations and on historical warranty obligations . story_separator_special_tag research and development , or r & d , expenses consist primarily of salaries and related costs of employees engaged in ongoing research , design and development activities , costs of engineering materials and supplies and professional consulting expenses . r & d expenses increased to $ 3.4 million for the fiscal year ended may 31 , 2014 from $ 3.2 million for the fiscal year ended may 31 , 2013 , an increase of 5.9 % . the increase in r & d expenses was primarily due to increases of $ 0.3 million of project expenses and $ 0.2 million of outside services . these were partially offset by an increase of $ 0.4 million of r & d expenditures , related to non-recurring engineering milestones , transferred into cost of goods sold and prepaid expenses . interest expense . interest expense decreased to $ 26,000 for the fiscal year ended may 31 , 2014 from $ 49,000 for the fiscal year ended may 31 , 2013 as a result of lower average borrowings on the line of credit . other income ( expense ) , net . other expense , net increased to $ 64,000 for the fiscal year ended may 31 , 2014 from $ 33,000 for the fiscal year ended may 31 , 2013. the change in other expense was due to foreign exchange losses resulting from the fluctuation in the value of the dollar compared to foreign currencies . income tax ( expense ) benefit . income tax benefit was $ 15,000 for the fiscal year ended may 31 , 2014 , compared with income tax expense of $ 30,000 for the fiscal year ended may 31 , 2013. the income tax benefit for the fiscal year ended may 31 , 2014 was primarily due to the reversal of tax liabilities previously established under fin-48 , which were no longer required . 22 story_separator_special_tag font-size : 10pt `` > the company anticipates that the existing cash balance together with cash flows from operations , as well as funds available through the working capital credit facility will be adequate to meet its working capital and capital equipment requirements through fiscal 2016. refer to note 9 of notes to consolidated financial statements , “ line of credit ” , for further discussion of the new credit facility agreement with qvt fund lp and quintessence fund l.p. after fiscal 2016 , depending on its rate of growth and profitability , the company may require additional equity or debt financing to meet its working capital requirements or capital equipment needs . there can be no assurance that additional financing will be available when required , or if available , that such financing can be obtained on terms satisfactory to the company . off-balance sheet financing the company has not entered into any off-balance sheet financing arrangements and has not established any special purpose entities . overview of contractual obligations the following table provides a summary of such arrangements , or contractual obligations . replace_table_token_5_th ( 1 ) long-term debt on the balance sheet is net of unamortized debt issuance costs of $ 319,000 . ( 2 ) based on 9 % interest rate . see note 11 “ long-term debt . ” ( 3 ) shown above are the company 's binding purchase obligations . the large majority of the company 's purchase orders are cancelable by either party , which if canceled may result in a negotiation with the vendor to determine if there shall be any restocking or cancellation fees payable to the vendor . in the normal course of business to facilitate sales of its products , the company indemnifies other parties , including customers , with respect to certain matters . the company has agreed to hold the other party harmless against losses arising from a breach of representations or covenants , or from intellectual property infringement or other claims . these agreements may limit the time period within which an indemnification claim can be made and the amount of the claim . in addition , the company has entered into indemnification agreements with its officers and directors , and the company 's bylaws contain similar indemnification obligations to the company 's agents . it is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement . to date , payments made by the company under these agreements have not had a material impact on the company 's operating results , financial position or cash flows . recent accounting pronouncements : in may 2014 , the financial accounting standards board ( `` fasb `` ) issued accounting standards update ( `` asu `` ) no . 2014-09 , revenue from contracts with customers , a new standard on revenue recognition . the new standard will supersede existing revenue recognition guidance and apply to all entities that enter into contracts to provide goods or services to customers . the guidance also addresses the measurement and recognition of gains and losses on the sale of certain non-financial assets , such as real estate , and property and equipment . the new standard will become effective for us beginning with the first quarter of fiscal 2019 and can be adopted either retrospectively to each reporting period presented or as a cumulative effect adjustment as of the date of adoption . the company is currently evaluating the impact of adopting this new guidance on our consolidated financial statements . in august 2014 , the fasb issued asu no . 2014-15 , presentation of going concern . this standard requires management to evaluate the conditions or events that raise substantial doubt about the entity 's ability to continue as a 24 going concern and whether or not it is probable that the entity will be unable to meet its obligations as they become due within one year after

