” caution concerning forward-looking statements this annual report on form 10-k , including this md & a section , contains “ forward-looking statements ” within the meaning of the private securities litigation reform act of 1995. these forward-looking statements include , among others , statements about our beliefs , plans , objectives , goals , expectations , estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors , many of which are beyond our control . the words “ may , ” “ could , ” “ should , ” “ would , ” “ believe , ” “ anticipate , ” “ estimate , ” “ expect , ” “ intend , ” “ plan , ” “ target , ” “ goal , ” and similar expressions are intended to identify forward-looking statements . all forward-looking statements , by their nature , are subject to risks and uncertainties . our actual future results may differ materially from those set forth in our forward-looking statements . please see the introductory note and item 1a risk factors of this annual report for a discussion of factors that could cause our actual results to differ materially from those in the forward-looking statements . however , other factors besides those listed in item 1a risk factors or discussed in this annual report also could adversely affect our results , and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties . any forward-looking statements made by us or on our behalf speak only as of the date they are made . we do not undertake to update any forward-looking statement , except as required by applicable law . 37 components of our results of operations we manage our business globally within one reportable segment , which is consistent with how our management reviews our business , prioritizes investment and resource allocation decisions and assesses operating performance . revenue our sales primarily relate to sales of our devices . we recognize product revenue upon shipment provided that there is persuasive evidence of an arrangement , there are no uncertainties regarding customer acceptance , the sales price is fixed and determinable , and collection of the resulting receivable is reasonably assured . we do not provide a right of return related to product sales . revenues for service contracts are recognized over the service contract period on a straight-line basis . revenue for rentals of equipment is recognized over the lease term on a straight-line basis . we sell products and services under multiple-element arrangements with separate units of accounting . in these situations , total consideration is allocated to the identified units of accounting based on their relative selling prices and revenue is then recognized for each unit based on its specific characteristics . a deliverable in an arrangement qualifies as a separate unit of accounting if the delivered item has value to the customer on a stand-alone basis . the principal deliverables in our multiple deliverable arrangements that qualify as separate units of accounting consist of ( i ) sales of medical devices and accessories and ( ii ) service contracts . service contracts are considered a performance obligation only if they provide a material right , otherwise they are considered options . other performance obligations , including installation and customer training , are considered inconsequential and are combined with the product as one unit of accounting . selling prices are established using vendor-specific objective evidence ( vsoe ) . if vsoe does not exist , the company uses its best estimate of the selling prices for the deliverables . we operate in a highly-regulated environment and is continually entering into new markets in which regulatory approval is sometimes required prior to the customer being able to use our products . in these cases , where regulatory approval is pending , revenue is deferred until such time as regulatory approval is obtained and customer acceptance becomes certain . deferred revenue consists of payments from customers for long term separately priced service contracts , sales pending regulatory approval and deposits on products . we provide warranties , generally for one year , in conjunction with the sale of our products . these warranties are short term in nature and entitle the customer to repair , replacement , or modification of the defective product subject to the terms of the respective warranty . we record an estimate of future warranty claims at the time we recognize revenue from the sale of the product based upon management 's estimate of the future claims rate . shipping and handling costs are expensed as incurred and are included in cost of sales . cost of sales since 2010 , we have used a third party manufacturer for the production and manufacture of our main products , the srt-100 product line , in accordance with our product specifications . cost of sales consists primarily of direct material , direct labor , overhead , depreciation and amortization . a significant portion of our cost of sales consists of costs paid to our third party manufacturer . gross profit we calculate gross profit as net revenue less cost of sales . our gross profit has been and will continue to be affected by a variety of factors , including average selling price , manufacturing costs , production volumes , product reliability and the implementation over time of cost-reduction strategies . our gross profit may fluctuate from quarter to quarter . 38 selling and marketing we focus on two primary markets - private dermatology practices and radiation oncologists in both private and hospital settings . story_separator_special_tag we currently employ a multi-tier sales strategy in an attempt to optimize geographic coverage and focus on what we perceive to be our key markets . this multi-tier sales model uses a direct salesforce and international dealers and distributors . general and administrative general and administrative expense , or g & a , consists primarily of salaries , employee benefits , bonuses , and related costs for personnel who support our general operations such as executive management , finance , accounting and administrative functions , as well as legal and other professional fees , director and officer insurance and other public company expenses . research and development research and development costs relate to products under development by us and quality and regulatory costs and are expensed as incurred . other income ( expense ) other income ( expense ) primarily consists of interest earned on cash balances and investments less interest payments made pursuant to our secured credit facility with silicon valley bank . our interest expense will fluctuate in future periods to the extent we incur additional , or pay down , indebtedness . income taxes until december 31 , 2015 , we were organized as a limited liability corporation ( llc ) taxed as a pass-through entity and accordingly , we did not recognize a federal or state income tax provision . beginning in 2016 , as a result of our conversion from an llc to a delaware corporation , we began recording a provision for income tax ( benefit ) expense which consists of income taxes in jurisdictions in which we conduct business . we are taxed at the rates applicable within each jurisdiction in which we operate or generate revenue . the composite income tax rate , tax provisions , deferred tax assets and deferred tax liabilities vary according to the jurisdiction in which profits arise . tax laws are complex and subject to different interpretations by management and the respective governmental taxing authorities , and require us to exercise judgment in determining our income tax provision , our deferred tax assets and liabilities and the valuation allowance recorded against our net deferred tax assets . deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized . a valuation allowance is established when it is more likely than not that the future realization of all or some of the deferred tax assets will not be achieved . on december 22 , 2017 , new federal tax reform legislation was enacted in the united states , resulting in significant changes from previous tax law . the new tax law reduced the federal corporate income tax rate to 21 % from 35 % effective january 1 , 2018. our federal income tax expense for periods beginning in 2018 will be based on the new rate . the new tax law also provides for immediate deduction of 100 % of the costs of qualified property that have been incurred and the property placed in service during the period from september 27 , 2017 to december 31 , 2022. this provision will begin to phase down by 20 % per year beginning january 1 , 2023 and will be completely phased out as of january 1 , 2027. inflation inflation has not had a material impact on net sales , revenues or income from continuing operations for our two most recent years as a result of historically low levels of inflation . 39 significant trends and uncertainties impacting our business many third party payors follow coverage decisions and payment amounts determined by the cms , which administers the u.s. medicare program , in setting their coverage and reimbursement policies . effective january 1 , 2016 and 2017 , the total reimbursement for an episode of care remained similar to the reimbursement in prior years . results of operations replace_table_token_2_th year ended december 31 , 2017 compared to the year ended december 31 , 2016 total revenue . total revenue was $ 20,587,827 for the year ended december 31 , 2017 compared to $ 14,811,175 for the year ended december 31 , 2016 , an increase of $ 5,776,652 , or 39.0 % . the growth in revenue was attributable to an increase in the volume of systems sold as well as a higher percentage of sales of the higher priced srt-100 vision product in the current year . total cost of sales . cost of sales was $ 6,787,836 for the year ended december 31 , 2017 compared to $ 4,965,372 for the year ended december 31 , 2016 , an increase of $ 1,822,464 , or 36.7 % . the increase in cost was due to a greater number of systems sold during the year ended december 31 , 2017 compared to the corresponding period in 2016. gross profit . gross profit was $ 13,799,991 for the year ended december 31 , 2017 compared to $ 9,845,803 for the year ended december 31 , 2016 , an increase of $ 3,954,188 or 40.2 % , for the reasons discussed above . our overall gross profit margin was 67.0 % in the year ended december 31 , 2017 compared to 66.5 % in the corresponding period in 2016 , mainly due to increased sales of the higher margin srt-100 vision product . selling and marketing . selling and marketing expense was $ 8,305,315 for the year ended december 31 , 2017 compared to $ 4,915,440 for the year ended december 31 , 2016 , an increase of $ 3,389,875 or 69.0 % . the increase was primarily attributable to an increase in sales personnel as well as increased participation in tradeshows and other marketing expenses . general and administrative . general and administrative expense was $ 3,721,627 for the year ended december 31 , 2017 compared to $ 3,469,332 for the year ended december 31 , 2016 , an increase of $ 252,295

liquidity and capital resources overview in general terms , liquidity is a measurement of our ability to meet our cash needs . for the years ended december 31 , 2017 and 2016 , a significant source of funding has been from cash flows from financing activities , including our ipo in 2016 , as well as from borrowings under out revolving line of credit . we believe that proceeds from our ipo , our borrowing capacity and our access to capital resources are sufficient to meet our future operating capital and funding requirements . our liquidity position and capital requirements may be impacted by a number of factors , including the following : ■ our ability to generate and increase revenue ; ■ fluctuations in gross margins , operating expenses and net results ; and ■ fluctuations in working capital . our primary short-term capital needs , which are subject to change , include expenditures related to : ● expansion of our sales and marketing activities ; and ● expansion of our research and development activities . we regularly evaluate our cash requirements for current operations , commitments , capital requirements and business development transactions , and we may elect to raise additional funds for these purposes in the future . cash flows the following table provides a summary of our cash flows for the periods indicated : replace_table_token_3_th 41 cash flows from operating activities net cash used in operating activities was $ 3,056,606 for the year ended december 31 , 2017 , consisting of a net loss of $ 3,710,514 and an increase in net operating assets of $ 568,857 , partially offset by non-cash charges of $ 1,222,765. the increase in net operating assets was primarily due to the increase in sales resulting in an increase in accounts receivable and an increase in account payable and accrued expenses . non-cash charges consisted primarily of stock compensation expense and depreciation and amortization .


 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 overview in general terms , liquidity is a measurement of our ability to meet our cash needs . for the years ended december 31 , 2017 and 2016 , a significant source of funding has been from cash flows from financing activities , including our ipo in 2016 , as well as from borrowings under out revolving line of credit . we believe that proceeds from our ipo , our borrowing capacity and our access to capital resources are sufficient to meet our future operating capital and funding requirements . our liquidity position and capital requirements may be impacted by a number of factors , including the following : ■ our ability to generate and increase revenue ; ■ fluctuations in gross margins , operating expenses and net results ; and ■ fluctuations in working capital . our primary short-term capital needs , which are subject to change , include expenditures related to : ● expansion of our sales and marketing activities ; and ● expansion of our research and development activities . we regularly evaluate our cash requirements for current operations , commitments , capital requirements and business development transactions , and we may elect to raise additional funds for these purposes in the future . cash flows the following table provides a summary of our cash flows for the periods indicated : replace_table_token_3_th 41 cash flows from operating activities net cash used in operating activities was $ 3,056,606 for the year ended december 31 , 2017 , consisting of a net loss of $ 3,710,514 and an increase in net operating assets of $ 568,857 , partially offset by non-cash charges of $ 1,222,765. the increase in net operating assets was primarily due to the increase in sales resulting in an increase in accounts receivable and an increase in account payable and accrued expenses . non-cash charges consisted primarily of stock compensation expense and depreciation and amortization .
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 Suspicious Activity Report : ” caution concerning forward-looking statements this annual report on form 10-k , including this md & a section , contains “ forward-looking statements ” within the meaning of the private securities litigation reform act of 1995. these forward-looking statements include , among others , statements about our beliefs , plans , objectives , goals , expectations , estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors , many of which are beyond our control . the words “ may , ” “ could , ” “ should , ” “ would , ” “ believe , ” “ anticipate , ” “ estimate , ” “ expect , ” “ intend , ” “ plan , ” “ target , ” “ goal , ” and similar expressions are intended to identify forward-looking statements . all forward-looking statements , by their nature , are subject to risks and uncertainties . our actual future results may differ materially from those set forth in our forward-looking statements . please see the introductory note and item 1a risk factors of this annual report for a discussion of factors that could cause our actual results to differ materially from those in the forward-looking statements . however , other factors besides those listed in item 1a risk factors or discussed in this annual report also could adversely affect our results , and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties . any forward-looking statements made by us or on our behalf speak only as of the date they are made . we do not undertake to update any forward-looking statement , except as required by applicable law . 37 components of our results of operations we manage our business globally within one reportable segment , which is consistent with how our management reviews our business , prioritizes investment and resource allocation decisions and assesses operating performance . revenue our sales primarily relate to sales of our devices . we recognize product revenue upon shipment provided that there is persuasive evidence of an arrangement , there are no uncertainties regarding customer acceptance , the sales price is fixed and determinable , and collection of the resulting receivable is reasonably assured . we do not provide a right of return related to product sales . revenues for service contracts are recognized over the service contract period on a straight-line basis . revenue for rentals of equipment is recognized over the lease term on a straight-line basis . we sell products and services under multiple-element arrangements with separate units of accounting . in these situations , total consideration is allocated to the identified units of accounting based on their relative selling prices and revenue is then recognized for each unit based on its specific characteristics . a deliverable in an arrangement qualifies as a separate unit of accounting if the delivered item has value to the customer on a stand-alone basis . the principal deliverables in our multiple deliverable arrangements that qualify as separate units of accounting consist of ( i ) sales of medical devices and accessories and ( ii ) service contracts . service contracts are considered a performance obligation only if they provide a material right , otherwise they are considered options . other performance obligations , including installation and customer training , are considered inconsequential and are combined with the product as one unit of accounting . selling prices are established using vendor-specific objective evidence ( vsoe ) . if vsoe does not exist , the company uses its best estimate of the selling prices for the deliverables . we operate in a highly-regulated environment and is continually entering into new markets in which regulatory approval is sometimes required prior to the customer being able to use our products . in these cases , where regulatory approval is pending , revenue is deferred until such time as regulatory approval is obtained and customer acceptance becomes certain . deferred revenue consists of payments from customers for long term separately priced service contracts , sales pending regulatory approval and deposits on products . we provide warranties , generally for one year , in conjunction with the sale of our products . these warranties are short term in nature and entitle the customer to repair , replacement , or modification of the defective product subject to the terms of the respective warranty . we record an estimate of future warranty claims at the time we recognize revenue from the sale of the product based upon management 's estimate of the future claims rate . shipping and handling costs are expensed as incurred and are included in cost of sales . cost of sales since 2010 , we have used a third party manufacturer for the production and manufacture of our main products , the srt-100 product line , in accordance with our product specifications . cost of sales consists primarily of direct material , direct labor , overhead , depreciation and amortization . a significant portion of our cost of sales consists of costs paid to our third party manufacturer . gross profit we calculate gross profit as net revenue less cost of sales . our gross profit has been and will continue to be affected by a variety of factors , including average selling price , manufacturing costs , production volumes , product reliability and the implementation over time of cost-reduction strategies . our gross profit may fluctuate from quarter to quarter . 38 selling and marketing we focus on two primary markets - private dermatology practices and radiation oncologists in both private and hospital settings . story_separator_special_tag we currently employ a multi-tier sales strategy in an attempt to optimize geographic coverage and focus on what we perceive to be our key markets . this multi-tier sales model uses a direct salesforce and international dealers and distributors . general and administrative general and administrative expense , or g & a , consists primarily of salaries , employee benefits , bonuses , and related costs for personnel who support our general operations such as executive management , finance , accounting and administrative functions , as well as legal and other professional fees , director and officer insurance and other public company expenses . research and development research and development costs relate to products under development by us and quality and regulatory costs and are expensed as incurred . other income ( expense ) other income ( expense ) primarily consists of interest earned on cash balances and investments less interest payments made pursuant to our secured credit facility with silicon valley bank . our interest expense will fluctuate in future periods to the extent we incur additional , or pay down , indebtedness . income taxes until december 31 , 2015 , we were organized as a limited liability corporation ( llc ) taxed as a pass-through entity and accordingly , we did not recognize a federal or state income tax provision . beginning in 2016 , as a result of our conversion from an llc to a delaware corporation , we began recording a provision for income tax ( benefit ) expense which consists of income taxes in jurisdictions in which we conduct business . we are taxed at the rates applicable within each jurisdiction in which we operate or generate revenue . the composite income tax rate , tax provisions , deferred tax assets and deferred tax liabilities vary according to the jurisdiction in which profits arise . tax laws are complex and subject to different interpretations by management and the respective governmental taxing authorities , and require us to exercise judgment in determining our income tax provision , our deferred tax assets and liabilities and the valuation allowance recorded against our net deferred tax assets . deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized . a valuation allowance is established when it is more likely than not that the future realization of all or some of the deferred tax assets will not be achieved . on december 22 , 2017 , new federal tax reform legislation was enacted in the united states , resulting in significant changes from previous tax law . the new tax law reduced the federal corporate income tax rate to 21 % from 35 % effective january 1 , 2018. our federal income tax expense for periods beginning in 2018 will be based on the new rate . the new tax law also provides for immediate deduction of 100 % of the costs of qualified property that have been incurred and the property placed in service during the period from september 27 , 2017 to december 31 , 2022. this provision will begin to phase down by 20 % per year beginning january 1 , 2023 and will be completely phased out as of january 1 , 2027. inflation inflation has not had a material impact on net sales , revenues or income from continuing operations for our two most recent years as a result of historically low levels of inflation . 39 significant trends and uncertainties impacting our business many third party payors follow coverage decisions and payment amounts determined by the cms , which administers the u.s. medicare program , in setting their coverage and reimbursement policies . effective january 1 , 2016 and 2017 , the total reimbursement for an episode of care remained similar to the reimbursement in prior years . results of operations replace_table_token_2_th year ended december 31 , 2017 compared to the year ended december 31 , 2016 total revenue . total revenue was $ 20,587,827 for the year ended december 31 , 2017 compared to $ 14,811,175 for the year ended december 31 , 2016 , an increase of $ 5,776,652 , or 39.0 % . the growth in revenue was attributable to an increase in the volume of systems sold as well as a higher percentage of sales of the higher priced srt-100 vision product in the current year . total cost of sales . cost of sales was $ 6,787,836 for the year ended december 31 , 2017 compared to $ 4,965,372 for the year ended december 31 , 2016 , an increase of $ 1,822,464 , or 36.7 % . the increase in cost was due to a greater number of systems sold during the year ended december 31 , 2017 compared to the corresponding period in 2016. gross profit . gross profit was $ 13,799,991 for the year ended december 31 , 2017 compared to $ 9,845,803 for the year ended december 31 , 2016 , an increase of $ 3,954,188 or 40.2 % , for the reasons discussed above . our overall gross profit margin was 67.0 % in the year ended december 31 , 2017 compared to 66.5 % in the corresponding period in 2016 , mainly due to increased sales of the higher margin srt-100 vision product . selling and marketing . selling and marketing expense was $ 8,305,315 for the year ended december 31 , 2017 compared to $ 4,915,440 for the year ended december 31 , 2016 , an increase of $ 3,389,875 or 69.0 % . the increase was primarily attributable to an increase in sales personnel as well as increased participation in tradeshows and other marketing expenses . general and administrative . general and administrative expense was $ 3,721,627 for the year ended december 31 , 2017 compared to $ 3,469,332 for the year ended december 31 , 2016 , an increase of $ 252,295

