in all of our locations , nortech employees and contractors have been working diligently to take precautions to ensure a clean and safe environment . we are also working closely with our suppliers and customers to ensure that we are taking every feasible step to minimize disruption and to continue to deliver the products our customers ' need . as of the date of this filing , covid-19 has not had a significant impact on our business . although we currently expect that any future disruptive impact of covid-19 on our business to be temporary , this situation continues to evolve rapidly and therefore we can not predict the extent of which covid-19 's impact on nortech . we expect and are seeing that covid-19 ( and reactions to it ) are having and will have negative global financial consequences and heightened uncertainty , which may directly or indirectly negatively impact the operation of our supply chain , our liquidity and capital resources , and our workforce availability , any of which could have a material adverse effect on our business , financial condition , results of operations or cash flows . 16 critical accounting policies and estimates our significant accounting policies and estimates are summarized in “ notes to consolidated financial statements ” . some of the accounting policies require us to exercise significant judgment in selecting the appropriate assumptions for calculating financial estimates . such judgments are subject to an inherent degree of uncertainty . these judgments are based on historical experience , known trends in the industry , terms of existing contracts and other information from outside sources , as appropriate . actual results may differ from these estimates under different assumptions and conditions . certain of the most critical estimates that require significant judgment are as follows : revenue recognition our revenue is comprised of product , engineering services and repair services . all revenue is recognized when the company satisfies its performance obligation ( s ) under the contract by transferring the promised product or service to our customer either when ( or as ) our customer obtains control of the product or service , with the majority of our revenue being recognized over time including goods produced under contract manufacturing agreements and services revenue . a performance obligation is a promise in a contract to transfer a distinct product or service to a customer . a contract 's transaction price is allocated to each distinct performance obligation . the majority of our contracts have a single performance obligation . revenue is recorded net of returns , allowances and customer discounts . our net sales for services were less than 10 % of our total sales for all periods presented , and accordingly , are included in net sales in the condensed consolidated statements of operations and comprehensive income . sales , value add , and other taxes collected from customers and remitted to governmental authorities are accounted for on a net ( excluded from revenues ) basis . shipping and handling costs charged to our customers are included in net sales , while the corresponding shipping expenses are included in cost of goods sold . goodwill and other intangible assets in accordance with asc 350 , goodwill and other intangible assets , goodwill is not amortized but is required to be reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value . we test impairment annually as of october 1st . in testing goodwill for impairment we perform a quantitative or qualitative impairment test , including computing the fair value of the reporting unit and comparing that value to its carrying value . if the fair value is less than its carrying value , then the goodwill is determined to be impaired . in the event that goodwill is impaired , an impairment charge to earnings would become necessary . to the extent the carrying amount of goodwill exceeds the implied goodwill , the difference is the amount of the goodwill impairment . prior to completing the quantitative analysis described above , we have the option to perform a qualitative assessment of goodwill for impairment to determine whether it is more likely than not ( a likelihood of more than 50 % ) that the fair value of a reporting unit is less than its carrying amount , including goodwill and other intangible assets . if we conclude the fair value is more likely than not less than the carrying value , we perform the quantitative analysis . otherwise , no further testing is needed . in our annual impairment test in 2019 , we performed a qualitative analysis of goodwill for as described above . based on the analysis , we determined that it was more likely than not that the fair value exceeds the carrying amount and therefore , a quantitative analysis was not necessary . in our annual impairment test in 2018 , we performed a quantitative analysis using discounted cash flows and market approach which is based on the guideline public company method . discounted cash flow models include assumptions related to our product revenue , gross margins , operating margins and other assumptions . there was no impairment of goodwill recorded in 2018 or 2019. long - lived asset s impairment we evaluate long-lived assets , primarily property and equipment , whenever current events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable . recoverability for assets to be held and used is based on our projection of the undiscounted future operating cash flows of the underlying assets . story_separator_special_tag to the extent such projections indicate that future undiscounted cash flows are not sufficient to recover the carrying amounts of related assets , a charge might be required to reduce the carrying amount to equal estimated fair value . we determined there was a triggering event during the fourth quarter of 2018 and determined the undiscounted cash flows exceeded the carrying amounts of long-lived assets . we did not have a triggering event in 2019 . 17 allowance for doubtful accounts when evaluating the adequacy of the allowance for doubtful accounts , we analyze accounts receivable , historical write-offs of bad debts , customer concentrations , customer credit-worthiness , current economic trends and changes in customer payment terms . we maintain an allowance for doubtful accounts at an amount estimated to be sufficient to provide adequate protection against losses resulting from collecting less than full payment on outstanding accounts receivable . an amount of judgment is required when assessing the ability to realize accounts receivable , including assessing the probability of collection and the current credit-worthiness of each customer . if the financial condition of our customers was to deteriorate , resulting in an impairment of their ability to make payments , an additional provision for uncollectible accounts may be required . we believe the reserve is adequate for any exposure to loss in the december 31 , 2019 accounts receivable . at december 31 , 2019 , our allowance for doubtful accounts was $ 0.3 million . inventory reserves inventory reserves are maintained for the estimated value of the inventory that may have a lower value than stated or quantities in excess of future production needs . we have an evaluation process to assess the value of the inventory that is slow moving , excess or obsolete on a quarterly basis . we evaluate our inventory based on current usage and the latest forecasts of product demand and production requirements from our customers . we believe the total reserve at december 31 , 2019 of $ 1.5 million is adequate . operating results the following table presents our statements of operations data as percentages of total net sales for the years indicated : replace_table_token_4_th net s ales our net sales in 2019 were $ 116.3 million , compared to $ 113.4 million in 2018 , an increase of $ 2.9 million or 2.6 % . net sales results were varied by markets . the medical market increased by $ 12.6 million or 25.2 % with medical devices accounting for 140 % of the increase while medical component products decreased 40 % . the industrial market decreased by $ 9.6 million or 21.3 % in 2019 as compared to 2018. net sales from the aerospace and defense markets decreased by $ 0.1 million or 0.6 % in 2019 as compared to 2018 . 18 net sales by our major ems industry markets for the years ended december 31 , 2019 and 2018 were as follows : replace_table_token_5_th net sales by timing of transfer of goods and services for year ended december 31 , 2019 and 2018 are as follows ( in millions ) : replace_table_token_6_th replace_table_token_7_th backlog our 90-day backlog at december 31 , 2019 was $ 27.3 million , compared to $ 27.4 million at the end of 2018. our aerospace and defense customers 90-day backlog increased 16.7 % compared to the prior year end , along with an increase of 2.0 % for our medical customers over the prior year . these increases were offset by a decrease of 19.4 % in our industrial customers 90-day backlog compared to the prior year end . 19 90-day backlog by our major ems industry markets are as follows : replace_table_token_8_th our 90-day backlog varies due to order size , manufacturing delays , inventory programs , contract terms and conditions and changes in timing of customer delivery schedules and releases . these variables cause inconsistencies in comparing the backlog from one period to the next . our total shipment backlog was $ 50.1 million at december 31 , 2019 compared to $ 47.1 million at the end of december 31 , 2018. gross profit our gross profit as a percentage of net sales was 10.8 % and 11.7 % for the years ended december 31 , 2019 and 2018 , respectively . the decline in gross profit in the year to date comparison was driven by product mix and operational inefficiencies due to component shortages . selling selling expenses were $ 2.7 million , or 2.3 % of net sales , for the year ended december 31 , 2019 and $ 3.6 million , or 3.2 % of net sales , for the year ended december 31 , 2018. the decrease is due to lower sales incentives and timing of events . general and administrative general and administrative expenses were $ 9.6 million , or 8.3 % of net sales , for the year ended december 31 , 2019 and $ 8.4 million , or 7.4 % of net sales , for the year ended 2018. the increase was due to additional spend related to our recently implemented erp system and one-time expenditures to improve operations . income from operations our income from operations for the 2019 fiscal year was $ 0.2 million , a decrease of $ 1.0 million from the 2018 fiscal year of $ 1.2 million , resulting from our decrease in gross profit as a percent of sales . interest expense interest expense for the year ended december 31 , 2019 was $ 1.0 million , compared with $ 0.8 million for the year ended december 31 , 2018 due largely to additional borrowing on line of credit and higher interest rates . income taxes income tax expense for the year ended december 31 , 2019 was $ 0.4 million . income tax expense for the year ended december 31 , 2018 was $ 0.3 million . the effective tax rate for fiscal 2019 and 2018 was

liquidity and capital resources we believe that our existing financing arrangements and anticipated cash flows from operations will be sufficient to satisfy our working capital needs , capital expenditures and debt repayments for at least the next 12 months . credit facility we have a credit agreement with bank of america which was entered into on june 15 , 2017 ( as amended , the “ bank of america credit agreement ” ) , and provides for a line of credit arrangement of $ 16 million that expires on june 15 , 2022. the credit arrangement also has a $ 5 million real estate term note outstanding with a maturity date of june 15 , 2022. under the bank of america credit agreement , both the line of credit and real estate term notes are subject to variations in the libor rate . our bank of america credit agreement bears interest at the combined weighted-average interest rate of 5.5 % as of december 31 , 2019 , compared with 4.80 % as of december 31 , 2018. we had borrowings on our bank of america credit agreement of $ 10.1 million outstanding , compared with $ 9.3 million outstanding as of december 31 , 2018. there are no acceleration clauses under the bank of america credit agreement that would accelerate the maturity of our outstanding line of credit borrowings . the line of credit and real estate term notes with bank of america contain certain covenants which , among other things , require us to adhere to regular reporting requirements , abide by annual shareholder dividend limitations , maintain certain financial performance , and limit the amount of annual capital expenditures . the availability under our line is subject to borrowing base requirements , and advances are at the discretion of the lender .


 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 believe that our existing financing arrangements and anticipated cash flows from operations will be sufficient to satisfy our working capital needs , capital expenditures and debt repayments for at least the next 12 months . credit facility we have a credit agreement with bank of america which was entered into on june 15 , 2017 ( as amended , the “ bank of america credit agreement ” ) , and provides for a line of credit arrangement of $ 16 million that expires on june 15 , 2022. the credit arrangement also has a $ 5 million real estate term note outstanding with a maturity date of june 15 , 2022. under the bank of america credit agreement , both the line of credit and real estate term notes are subject to variations in the libor rate . our bank of america credit agreement bears interest at the combined weighted-average interest rate of 5.5 % as of december 31 , 2019 , compared with 4.80 % as of december 31 , 2018. we had borrowings on our bank of america credit agreement of $ 10.1 million outstanding , compared with $ 9.3 million outstanding as of december 31 , 2018. there are no acceleration clauses under the bank of america credit agreement that would accelerate the maturity of our outstanding line of credit borrowings . the line of credit and real estate term notes with bank of america contain certain covenants which , among other things , require us to adhere to regular reporting requirements , abide by annual shareholder dividend limitations , maintain certain financial performance , and limit the amount of annual capital expenditures . the availability under our line is subject to borrowing base requirements , and advances are at the discretion of the lender .
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 Suspicious Activity Report : in all of our locations , nortech employees and contractors have been working diligently to take precautions to ensure a clean and safe environment . we are also working closely with our suppliers and customers to ensure that we are taking every feasible step to minimize disruption and to continue to deliver the products our customers ' need . as of the date of this filing , covid-19 has not had a significant impact on our business . although we currently expect that any future disruptive impact of covid-19 on our business to be temporary , this situation continues to evolve rapidly and therefore we can not predict the extent of which covid-19 's impact on nortech . we expect and are seeing that covid-19 ( and reactions to it ) are having and will have negative global financial consequences and heightened uncertainty , which may directly or indirectly negatively impact the operation of our supply chain , our liquidity and capital resources , and our workforce availability , any of which could have a material adverse effect on our business , financial condition , results of operations or cash flows . 16 critical accounting policies and estimates our significant accounting policies and estimates are summarized in “ notes to consolidated financial statements ” . some of the accounting policies require us to exercise significant judgment in selecting the appropriate assumptions for calculating financial estimates . such judgments are subject to an inherent degree of uncertainty . these judgments are based on historical experience , known trends in the industry , terms of existing contracts and other information from outside sources , as appropriate . actual results may differ from these estimates under different assumptions and conditions . certain of the most critical estimates that require significant judgment are as follows : revenue recognition our revenue is comprised of product , engineering services and repair services . all revenue is recognized when the company satisfies its performance obligation ( s ) under the contract by transferring the promised product or service to our customer either when ( or as ) our customer obtains control of the product or service , with the majority of our revenue being recognized over time including goods produced under contract manufacturing agreements and services revenue . a performance obligation is a promise in a contract to transfer a distinct product or service to a customer . a contract 's transaction price is allocated to each distinct performance obligation . the majority of our contracts have a single performance obligation . revenue is recorded net of returns , allowances and customer discounts . our net sales for services were less than 10 % of our total sales for all periods presented , and accordingly , are included in net sales in the condensed consolidated statements of operations and comprehensive income . sales , value add , and other taxes collected from customers and remitted to governmental authorities are accounted for on a net ( excluded from revenues ) basis . shipping and handling costs charged to our customers are included in net sales , while the corresponding shipping expenses are included in cost of goods sold . goodwill and other intangible assets in accordance with asc 350 , goodwill and other intangible assets , goodwill is not amortized but is required to be reviewed for impairment at least annually or when events or circumstances indicate that carrying value may exceed fair value . we test impairment annually as of october 1st . in testing goodwill for impairment we perform a quantitative or qualitative impairment test , including computing the fair value of the reporting unit and comparing that value to its carrying value . if the fair value is less than its carrying value , then the goodwill is determined to be impaired . in the event that goodwill is impaired , an impairment charge to earnings would become necessary . to the extent the carrying amount of goodwill exceeds the implied goodwill , the difference is the amount of the goodwill impairment . prior to completing the quantitative analysis described above , we have the option to perform a qualitative assessment of goodwill for impairment to determine whether it is more likely than not ( a likelihood of more than 50 % ) that the fair value of a reporting unit is less than its carrying amount , including goodwill and other intangible assets . if we conclude the fair value is more likely than not less than the carrying value , we perform the quantitative analysis . otherwise , no further testing is needed . in our annual impairment test in 2019 , we performed a qualitative analysis of goodwill for as described above . based on the analysis , we determined that it was more likely than not that the fair value exceeds the carrying amount and therefore , a quantitative analysis was not necessary . in our annual impairment test in 2018 , we performed a quantitative analysis using discounted cash flows and market approach which is based on the guideline public company method . discounted cash flow models include assumptions related to our product revenue , gross margins , operating margins and other assumptions . there was no impairment of goodwill recorded in 2018 or 2019. long - lived asset s impairment we evaluate long-lived assets , primarily property and equipment , whenever current events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable . recoverability for assets to be held and used is based on our projection of the undiscounted future operating cash flows of the underlying assets . story_separator_special_tag to the extent such projections indicate that future undiscounted cash flows are not sufficient to recover the carrying amounts of related assets , a charge might be required to reduce the carrying amount to equal estimated fair value . we determined there was a triggering event during the fourth quarter of 2018 and determined the undiscounted cash flows exceeded the carrying amounts of long-lived assets . we did not have a triggering event in 2019 . 17 allowance for doubtful accounts when evaluating the adequacy of the allowance for doubtful accounts , we analyze accounts receivable , historical write-offs of bad debts , customer concentrations , customer credit-worthiness , current economic trends and changes in customer payment terms . we maintain an allowance for doubtful accounts at an amount estimated to be sufficient to provide adequate protection against losses resulting from collecting less than full payment on outstanding accounts receivable . an amount of judgment is required when assessing the ability to realize accounts receivable , including assessing the probability of collection and the current credit-worthiness of each customer . if the financial condition of our customers was to deteriorate , resulting in an impairment of their ability to make payments , an additional provision for uncollectible accounts may be required . we believe the reserve is adequate for any exposure to loss in the december 31 , 2019 accounts receivable . at december 31 , 2019 , our allowance for doubtful accounts was $ 0.3 million . inventory reserves inventory reserves are maintained for the estimated value of the inventory that may have a lower value than stated or quantities in excess of future production needs . we have an evaluation process to assess the value of the inventory that is slow moving , excess or obsolete on a quarterly basis . we evaluate our inventory based on current usage and the latest forecasts of product demand and production requirements from our customers . we believe the total reserve at december 31 , 2019 of $ 1.5 million is adequate . operating results the following table presents our statements of operations data as percentages of total net sales for the years indicated : replace_table_token_4_th net s ales our net sales in 2019 were $ 116.3 million , compared to $ 113.4 million in 2018 , an increase of $ 2.9 million or 2.6 % . net sales results were varied by markets . the medical market increased by $ 12.6 million or 25.2 % with medical devices accounting for 140 % of the increase while medical component products decreased 40 % . the industrial market decreased by $ 9.6 million or 21.3 % in 2019 as compared to 2018. net sales from the aerospace and defense markets decreased by $ 0.1 million or 0.6 % in 2019 as compared to 2018 . 18 net sales by our major ems industry markets for the years ended december 31 , 2019 and 2018 were as follows : replace_table_token_5_th net sales by timing of transfer of goods and services for year ended december 31 , 2019 and 2018 are as follows ( in millions ) : replace_table_token_6_th replace_table_token_7_th backlog our 90-day backlog at december 31 , 2019 was $ 27.3 million , compared to $ 27.4 million at the end of 2018. our aerospace and defense customers 90-day backlog increased 16.7 % compared to the prior year end , along with an increase of 2.0 % for our medical customers over the prior year . these increases were offset by a decrease of 19.4 % in our industrial customers 90-day backlog compared to the prior year end . 19 90-day backlog by our major ems industry markets are as follows : replace_table_token_8_th our 90-day backlog varies due to order size , manufacturing delays , inventory programs , contract terms and conditions and changes in timing of customer delivery schedules and releases . these variables cause inconsistencies in comparing the backlog from one period to the next . our total shipment backlog was $ 50.1 million at december 31 , 2019 compared to $ 47.1 million at the end of december 31 , 2018. gross profit our gross profit as a percentage of net sales was 10.8 % and 11.7 % for the years ended december 31 , 2019 and 2018 , respectively . the decline in gross profit in the year to date comparison was driven by product mix and operational inefficiencies due to component shortages . selling selling expenses were $ 2.7 million , or 2.3 % of net sales , for the year ended december 31 , 2019 and $ 3.6 million , or 3.2 % of net sales , for the year ended december 31 , 2018. the decrease is due to lower sales incentives and timing of events . general and administrative general and administrative expenses were $ 9.6 million , or 8.3 % of net sales , for the year ended december 31 , 2019 and $ 8.4 million , or 7.4 % of net sales , for the year ended 2018. the increase was due to additional spend related to our recently implemented erp system and one-time expenditures to improve operations . income from operations our income from operations for the 2019 fiscal year was $ 0.2 million , a decrease of $ 1.0 million from the 2018 fiscal year of $ 1.2 million , resulting from our decrease in gross profit as a percent of sales . interest expense interest expense for the year ended december 31 , 2019 was $ 1.0 million , compared with $ 0.8 million for the year ended december 31 , 2018 due largely to additional borrowing on line of credit and higher interest rates . income taxes income tax expense for the year ended december 31 , 2019 was $ 0.4 million . income tax expense for the year ended december 31 , 2018 was $ 0.3 million . the effective tax rate for fiscal 2019 and 2018 was

