we are seeking one or more strategic partners or other sources of capital to complete the development of neutrolin in the u.s. financial operations overview revenue we have not generated substantial revenue since our inception . as of december 31 , 2014 , we have funded our operations primarily through debt and equity financings and the ipo , our receipt of approximately $ 490,000 from federal grants under the qualifying therapeutic discovery project program , approximately $ 775,000 from the sale of our unused net operating losses through the state of new jersey 's economic development authority technology business tax certificate transfer program and approximately $ 35,000 from the state of new york 's research and development tax credit program . research and development expense research and development , or r & d , expense consists of : ( i ) internal costs associated with our development activities ; ( ii ) payments we make to third party contract research organizations , contract manufacturers , investigative sites , and consultants ; ( iii ) technology and intellectual property license costs ; ( iv ) manufacturing development costs ; ( v ) personnel related expenses , including salaries , stock-based compensation , benefits , travel and related costs for the personnel involved in drug development ; ( vi ) activities relating to regulatory filings and the advancement of our product candidates through preclinical studies and clinical trials ; and ( vii ) facilities and other allocated expenses , which include direct and allocated expenses for rent , facility maintenance , as well as laboratory and other supplies . all r & d is expensed as incurred . conducting a significant amount of development is central to our business model . product candidates in later-stage clinical development generally have higher development costs than those in earlier stages of development , primarily due to the significantly increased size and duration of the clinical trials . we plan to increase our r & d expenses for the foreseeable future in order to complete development of neutrolin in the u.s. 33 the following table summarizes the percentages of our r & d payments related to our two most advanced product candidates and other projects . the percentages summarized in the following table reflect payments directly attributable to each development candidate , which are tracked on a project basis . a portion of our internal costs , including indirect costs relating to our product candidates , are not tracked on a project basis and are allocated based on management 's estimate . replace_table_token_3_th the process of conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming . the probability of success for each product candidate and clinical trial may be affected by a variety of factors , including , among others , the quality of the product candidate 's early clinical data , investment in the program , competition , manufacturing capabilities and commercial viability . as a result of the uncertainties associated with clinical trial enrollments and the risks inherent in the development process , we are unable to determine the duration and completion costs of current or future clinical stages of our product candidates or when , or to what extent , we will generate revenues from the commercialization and sale of any of our product candidates . development timelines , probability of success and development costs vary widely . during the third quarter of 2011 , we received a notice from the u.s. food and drug administration , or fda , that our product candidate , neutrolin , had been assigned to the center for drug evaluation and research , or cder . as a result of this , and given our limited resources , we decided to change our business strategy and focus the majority of our resources on the research and development of neutrolin rather than crmd004 and to seek regulatory and commercialization approval for neutrolin in europe through a ce mark application rather than pursue fda approval at that time . on july 5 , 2013 , we received ce mark approval for neutrolin . as a result , in 2013 , we began the commercial launch of neutrolin in germany for the prevention of catheter-related bloodstream infections , or crbi , and maintenance of catheter patency in hemodialysis patients using a tunneled , cuffed central venous catheter for vascular access . in december 2014 , we received approval from the hessian district president in germany to expand the label to include use in oncology patients receiving chemotherapy , iv hydration and iv medications via central venous catheters . the expansion also adds patients receiving medication and iv fluids via central venous catheters in intensive or critical care units ( cardiac care unit , surgical care unit , neonatal critical care unit , and urgent care centers ) . an indication for use in total parenteral , or iv , nutrition was also approved . in september 2014 , the tuv-sud and the medicinal evaluation board of the netherlands ( meb ) granted a label expansion for neutrolin for these same expanded indications for the eu . to date , neutrolin is registered and may be sold in austria , germany , italy , malta , saudi arabia and the netherlands for such treatment . we are seeking to develop neutrolin in the u.s. based on our discussions with the fda , we expect to conduct at least one phase 3 clinical trial in hemodialysis catheters and one phase 3 clinical trial in oncology/total parenteral nutrition . story_separator_special_tag under asc 718 , share-based compensation cost is measured at grant date , based on the estimated fair value of the award , and is recognized as expense net of expected forfeitures , over the employee 's requisite service period on a straight-line basis . we account for stock options granted to non-employees on a fair value basis using the black-scholes option pricing model in accordance with asc 718 and asc 505. the non-cash charge to operations for non-employee options with vesting is based upon the change in the fair value of the options and amortized to expense over the related vesting period . for the purpose of valuing options and warrants granted to our directors , officers , employees and consultants , we used the black-scholes option pricing model . for the purpose of valuing performance based options granted to non-employees , we use the guidelines in accordance with fasb asc no . 505-50 ( “ asc 505 ” ) , “ equity-based payments to non-employees . ” if the performance condition is outside of the control of the non-employee , the cost to be recognized is the lowest aggregate fair value prior to the achievement of the performance condition , even if we believe it is probable that the performance condition will be achieved . valuations incorporate several variables , including expected term , expected volatility , expected dividend yield and a risk-free interest rate . we estimate the expected term of the options granted based on anticipated exercises in future periods . the expected stock price volatility for our stock options is calculated by examining historical volatilities for publicly traded industry peers , since we have limited trading history for our common stock . we will continue to analyze the expected stock price volatility and expected term assumptions as more historical data for our common stock becomes available . the expected dividend yield reflects our current and expected future policy for dividends on our common stock . to determine the risk-free interest rate , we utilize the u.s. treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards . stock compensation expense is recognized by applying the expected forfeiture rate during the vesting period to the fair value of the award . the estimation of the number of stock awards that will ultimately vest requires judgment , and to the extent actual results or updated estimates differ from our current estimates , compensation expense may need to be revised . we consider many factors when estimating expected forfeitures for stock awards granted to employees , officers and directors , including types of awards , employee class , and an analysis of our historical forfeitures . revenue recognition we recognize revenue in accordance with sec sab no . 101 , “ revenue recognition in financial statements ” ( “ sab 101 ” ) , as amended by sab no . 104 , “ revenue recognition ” ( “ sab 104 ” ) and fasb asc 605 , “ revenue recognition ” ( “ asc 605 ” ) . our product neutrolin received its ce mark in europe in july 2013 and shipment of product to the dialysis centers began in december 2013. in accordance with sab 101 and sab 104 , we recognize revenue from product sales when the following four revenue recognition criteria are met : persuasive evidence of an arrangement exists , delivery has occurred , the selling price is fixed or determinable , and collectability is reasonably assured . we recognize revenue upon shipment of product to the dialysis centers because the four revenue recognition criteria are met at that time . during the year ended december 31 , 2014 , we entered into a distribution agreement with wonik corporation , a south korean company , to market , sell and distribute neutrolin for hemodialysis and oncolytic patients upon receipt of regulatory approval in korea . upon execution of the agreement , wonik paid to us a non-refundable $ 50,000 payment and will pay an additional $ 50,000 upon receipt of the product registration necessary to sell neutrolin in the republic of korea . revenue associated with the non-refundable up-front payment under this arrangement is deferred and recognized as revenue on a straight-line basis over the contractual term of our agreement . 39 inventory valuation we engage third parties to manufacture and package inventory held for sale , takes title to certain inventory once manufactured , and warehouses such goods until packaged for final distribution and sale . inventories are stated at the lower of cost or market price with cost determined on a first-in , first-out basis . inventories are reviewed periodically to identify slow-moving or obsolete inventory based on sales activity , both projected and historical , as well as product shelf-life . in evaluating the recoverability of our inventories , we consider the probability that revenue will be obtained from the future sale of the related inventory and , if required , will write down inventory quantities in excess of expected requirements . expired inventory is disposed of and the related costs are recognized as cost of product sales in the consolidated statements of operations . we analyze our inventory levels to identify inventory that may expire prior to sale , inventory that has a cost basis in excess of its estimated realizable value , or inventory in excess of expected sales requirements . although the manufacturing of our products is subject to strict quality controls , certain batches or units of product may no longer meet quality specifications or may expire , which would require adjustments to our inventory values . in the future , reduced demand , quality issues or excess supply beyond those anticipated by management may result in an adjustment to inventory levels , which would be recorded as an increase to cost of product sales . the determination of whether or not inventory costs will be

sources of liquidity as a result of our cost of sales , r & d and sg & a expenditures and the lack of substantial product sales revenue , we have not been profitable and have generated operating losses since we were incorporated in july 2006. we received ce mark approval for our neutrolin product in july 2013 and launched our product in the eu in december 2013. in february 2013 , we sold 761,429 shares of our series a non-voting convertible preferred stock and a warrant to purchase up to 400,000 shares of our common stock for gross proceeds of $ 533,000. in may 2013 , we sold $ 1,500,000 of convertible notes and warrants to purchase up to 750,000 shares of our common stock . in july 2013 , we sold 454,546 shares of series b non-voting convertible preferred stock and a warrant to purchase up to 227,273 shares of our common stock for gross proceeds of $ 500,000. in october 2013 we sold 150,000 shares of our series c-1 and 150,000 shares of our series c-2 non-voting convertible preferred stock and warrants to purchase up to 1,500,000 shares of our common stock for gross proceeds of $ 3,000,000. additionally , we exchanged $ 400,000 in principal amount of convertible notes issued in september 2012 for 57,400 shares of our series d non-voting convertible preferred stock and also exchanged $ 750,000 in principal amount of convertible notes issued in may 2013 for 53,537 shares of our series e non-voting convertible preferred stock . all of the series a and series c-1 non-voting convertible preferred stock have converted to common stock .


 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.
     ```sources of liquidity as a result of our cost of sales , r & d and sg & a expenditures and the lack of substantial product sales revenue , we have not been profitable and have generated operating losses since we were incorporated in july 2006. we received ce mark approval for our neutrolin product in july 2013 and launched our product in the eu in december 2013. in february 2013 , we sold 761,429 shares of our series a non-voting convertible preferred stock and a warrant to purchase up to 400,000 shares of our common stock for gross proceeds of $ 533,000. in may 2013 , we sold $ 1,500,000 of convertible notes and warrants to purchase up to 750,000 shares of our common stock . in july 2013 , we sold 454,546 shares of series b non-voting convertible preferred stock and a warrant to purchase up to 227,273 shares of our common stock for gross proceeds of $ 500,000. in october 2013 we sold 150,000 shares of our series c-1 and 150,000 shares of our series c-2 non-voting convertible preferred stock and warrants to purchase up to 1,500,000 shares of our common stock for gross proceeds of $ 3,000,000. additionally , we exchanged $ 400,000 in principal amount of convertible notes issued in september 2012 for 57,400 shares of our series d non-voting convertible preferred stock and also exchanged $ 750,000 in principal amount of convertible notes issued in may 2013 for 53,537 shares of our series e non-voting convertible preferred stock . all of the series a and series c-1 non-voting convertible preferred stock have converted to common stock .
```    
 Suspicious Activity Report : we are seeking one or more strategic partners or other sources of capital to complete the development of neutrolin in the u.s. financial operations overview revenue we have not generated substantial revenue since our inception . as of december 31 , 2014 , we have funded our operations primarily through debt and equity financings and the ipo , our receipt of approximately $ 490,000 from federal grants under the qualifying therapeutic discovery project program , approximately $ 775,000 from the sale of our unused net operating losses through the state of new jersey 's economic development authority technology business tax certificate transfer program and approximately $ 35,000 from the state of new york 's research and development tax credit program . research and development expense research and development , or r & d , expense consists of : ( i ) internal costs associated with our development activities ; ( ii ) payments we make to third party contract research organizations , contract manufacturers , investigative sites , and consultants ; ( iii ) technology and intellectual property license costs ; ( iv ) manufacturing development costs ; ( v ) personnel related expenses , including salaries , stock-based compensation , benefits , travel and related costs for the personnel involved in drug development ; ( vi ) activities relating to regulatory filings and the advancement of our product candidates through preclinical studies and clinical trials ; and ( vii ) facilities and other allocated expenses , which include direct and allocated expenses for rent , facility maintenance , as well as laboratory and other supplies . all r & d is expensed as incurred . conducting a significant amount of development is central to our business model . product candidates in later-stage clinical development generally have higher development costs than those in earlier stages of development , primarily due to the significantly increased size and duration of the clinical trials . we plan to increase our r & d expenses for the foreseeable future in order to complete development of neutrolin in the u.s. 33 the following table summarizes the percentages of our r & d payments related to our two most advanced product candidates and other projects . the percentages summarized in the following table reflect payments directly attributable to each development candidate , which are tracked on a project basis . a portion of our internal costs , including indirect costs relating to our product candidates , are not tracked on a project basis and are allocated based on management 's estimate . replace_table_token_3_th the process of conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming . the probability of success for each product candidate and clinical trial may be affected by a variety of factors , including , among others , the quality of the product candidate 's early clinical data , investment in the program , competition , manufacturing capabilities and commercial viability . as a result of the uncertainties associated with clinical trial enrollments and the risks inherent in the development process , we are unable to determine the duration and completion costs of current or future clinical stages of our product candidates or when , or to what extent , we will generate revenues from the commercialization and sale of any of our product candidates . development timelines , probability of success and development costs vary widely . during the third quarter of 2011 , we received a notice from the u.s. food and drug administration , or fda , that our product candidate , neutrolin , had been assigned to the center for drug evaluation and research , or cder . as a result of this , and given our limited resources , we decided to change our business strategy and focus the majority of our resources on the research and development of neutrolin rather than crmd004 and to seek regulatory and commercialization approval for neutrolin in europe through a ce mark application rather than pursue fda approval at that time . on july 5 , 2013 , we received ce mark approval for neutrolin . as a result , in 2013 , we began the commercial launch of neutrolin in germany for the prevention of catheter-related bloodstream infections , or crbi , and maintenance of catheter patency in hemodialysis patients using a tunneled , cuffed central venous catheter for vascular access . in december 2014 , we received approval from the hessian district president in germany to expand the label to include use in oncology patients receiving chemotherapy , iv hydration and iv medications via central venous catheters . the expansion also adds patients receiving medication and iv fluids via central venous catheters in intensive or critical care units ( cardiac care unit , surgical care unit , neonatal critical care unit , and urgent care centers ) . an indication for use in total parenteral , or iv , nutrition was also approved . in september 2014 , the tuv-sud and the medicinal evaluation board of the netherlands ( meb ) granted a label expansion for neutrolin for these same expanded indications for the eu . to date , neutrolin is registered and may be sold in austria , germany , italy , malta , saudi arabia and the netherlands for such treatment . we are seeking to develop neutrolin in the u.s. based on our discussions with the fda , we expect to conduct at least one phase 3 clinical trial in hemodialysis catheters and one phase 3 clinical trial in oncology/total parenteral nutrition . story_separator_special_tag under asc 718 , share-based compensation cost is measured at grant date , based on the estimated fair value of the award , and is recognized as expense net of expected forfeitures , over the employee 's requisite service period on a straight-line basis . we account for stock options granted to non-employees on a fair value basis using the black-scholes option pricing model in accordance with asc 718 and asc 505. the non-cash charge to operations for non-employee options with vesting is based upon the change in the fair value of the options and amortized to expense over the related vesting period . for the purpose of valuing options and warrants granted to our directors , officers , employees and consultants , we used the black-scholes option pricing model . for the purpose of valuing performance based options granted to non-employees , we use the guidelines in accordance with fasb asc no . 505-50 ( “ asc 505 ” ) , “ equity-based payments to non-employees . ” if the performance condition is outside of the control of the non-employee , the cost to be recognized is the lowest aggregate fair value prior to the achievement of the performance condition , even if we believe it is probable that the performance condition will be achieved . valuations incorporate several variables , including expected term , expected volatility , expected dividend yield and a risk-free interest rate . we estimate the expected term of the options granted based on anticipated exercises in future periods . the expected stock price volatility for our stock options is calculated by examining historical volatilities for publicly traded industry peers , since we have limited trading history for our common stock . we will continue to analyze the expected stock price volatility and expected term assumptions as more historical data for our common stock becomes available . the expected dividend yield reflects our current and expected future policy for dividends on our common stock . to determine the risk-free interest rate , we utilize the u.s. treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards . stock compensation expense is recognized by applying the expected forfeiture rate during the vesting period to the fair value of the award . the estimation of the number of stock awards that will ultimately vest requires judgment , and to the extent actual results or updated estimates differ from our current estimates , compensation expense may need to be revised . we consider many factors when estimating expected forfeitures for stock awards granted to employees , officers and directors , including types of awards , employee class , and an analysis of our historical forfeitures . revenue recognition we recognize revenue in accordance with sec sab no . 101 , “ revenue recognition in financial statements ” ( “ sab 101 ” ) , as amended by sab no . 104 , “ revenue recognition ” ( “ sab 104 ” ) and fasb asc 605 , “ revenue recognition ” ( “ asc 605 ” ) . our product neutrolin received its ce mark in europe in july 2013 and shipment of product to the dialysis centers began in december 2013. in accordance with sab 101 and sab 104 , we recognize revenue from product sales when the following four revenue recognition criteria are met : persuasive evidence of an arrangement exists , delivery has occurred , the selling price is fixed or determinable , and collectability is reasonably assured . we recognize revenue upon shipment of product to the dialysis centers because the four revenue recognition criteria are met at that time . during the year ended december 31 , 2014 , we entered into a distribution agreement with wonik corporation , a south korean company , to market , sell and distribute neutrolin for hemodialysis and oncolytic patients upon receipt of regulatory approval in korea . upon execution of the agreement , wonik paid to us a non-refundable $ 50,000 payment and will pay an additional $ 50,000 upon receipt of the product registration necessary to sell neutrolin in the republic of korea . revenue associated with the non-refundable up-front payment under this arrangement is deferred and recognized as revenue on a straight-line basis over the contractual term of our agreement . 39 inventory valuation we engage third parties to manufacture and package inventory held for sale , takes title to certain inventory once manufactured , and warehouses such goods until packaged for final distribution and sale . inventories are stated at the lower of cost or market price with cost determined on a first-in , first-out basis . inventories are reviewed periodically to identify slow-moving or obsolete inventory based on sales activity , both projected and historical , as well as product shelf-life . in evaluating the recoverability of our inventories , we consider the probability that revenue will be obtained from the future sale of the related inventory and , if required , will write down inventory quantities in excess of expected requirements . expired inventory is disposed of and the related costs are recognized as cost of product sales in the consolidated statements of operations . we analyze our inventory levels to identify inventory that may expire prior to sale , inventory that has a cost basis in excess of its estimated realizable value , or inventory in excess of expected sales requirements . although the manufacturing of our products is subject to strict quality controls , certain batches or units of product may no longer meet quality specifications or may expire , which would require adjustments to our inventory values . in the future , reduced demand , quality issues or excess supply beyond those anticipated by management may result in an adjustment to inventory levels , which would be recorded as an increase to cost of product sales . the determination of whether or not inventory costs will be

