revenue from ip licensing and royalties represented the majority of our revenues for 2012 , and we expect revenue from ip licensing and royalties to represent a significant portion of our revenues in 2013. due to the shift in our engineering and research and development focus and the decline in major consumer electronics applications utilizing customized versions of our 1t-sram technology , our competitiveness and the demand for our ip have declined since the beginning of 2011. as a result of our reduced licensing activities , we expect our licensing and royalty revenue to decrease in future periods . our expectation is that our revenue will transition from primarily licensing and royalty to predominately ic product sales . to date , we have substantially completed our performance obligations under our existing agreements , and we expect licensing revenues to decline in 2013. we have also been focused on monetizing our ip portfolio to fund the change in our business . towards this end , we have completed asset sales for proceeds of approximately $ 39.3 million , including our december 2011 patent sale and march 2012 serdes technology sale . 30 the 1t-sram is our high-density , high-performance patented memory solution that represents an alternative to traditional volatile embedded memory . our i/o ip includes physical layer ( phy ) circuitry that allows ics to communicate with one another in the networking , storage , computer and consumer market segments . our phy ip supports serial interface technologies , such as 10 gbps base kr , xaui , pci express and sata , as well as parallel interfaces like ddr3 . our ip customers typically include fabless semiconductor companies , integrated device manufacturers ( idms ) and foundries . critical accounting policies and use of estimates our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the united states of america . note 1 to the consolidated financial statements in item 15 of this report describes the significant accounting policies and methods used in the preparation of our consolidated financial statements . we have identified the accounting policies below as some of the more critical to our business and the understanding of our results of operations . these policies may involve estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses . although we believe our judgments and estimates are appropriate , actual future results may differ from our estimates , and if different assumptions or conditions were to prevail , the results could be materially different from our reported results . revenue recognition licensing licensing revenue consists of fees earned from license agreements , development services and support and maintenance . license fees generally range from $ 100,000 to several million dollars per contract , depending on the scope and complexity of the development project , and the extent of the licensee 's rights . the vast majority of our contracts allow for milestone billing based on work performed . fees billed prior to revenue recognition are recorded as deferred revenue . we recognize revenue when persuasive evidence of an arrangement exists , delivery or performance has occurred , the sales price is fixed or determinable , and collectibility is reasonably assured . evidence of an arrangement generally consists of signed agreements . when sales arrangements contain multiple elements ( e.g . , license and services ) , we review each element to determine the separate units of accounting that exist within the agreement . if more than one unit of accounting exists , the consideration payable to us under the agreement is allocated to each unit of accounting using the relative fair value method . revenue is recognized for each unit of accounting when the revenue recognition criteria have been met for that unit of accounting . for stand-alone license agreements or license deliverables in multi-deliverable arrangements that do not require significant development , modification or customization , revenue is recognized when all revenue recognition criteria have been met . delivery of the licensed technology is typically the final revenue recognition criterion met , at which time revenue is recognized . if any of the criteria are not met , revenue recognition is deferred until such time as all criteria have been met . for license agreements that include deliverables requiring significant production , modification or customization , and where we have significant experience in meeting the design specifications involved in the contract and the direct labor hours related to services under the contract can be reasonably estimated , we recognize revenue over the period in which the contract services are performed . for these arrangements , we recognize revenue using the percentage of completion method . revenue recognized in any period is dependent on our progress toward completion of projects in progress . significant management judgment and discretion are used to estimate total direct labor hours . these judgmental elements include determining that we have the experience to meet the design specifications and estimating the total direct labor hours . we follow this method because we can obtain reasonably 31 dependable estimates of the direct labor hours to perform the contract services . the direct labor hours for the development of the licensee 's design are estimated at the beginning of the contract . as these direct labor hours are incurred , they are used as a measure of progress towards completion . we have the ability to reasonably estimate the direct labor hours on a contract-by-contract basis based on our experience in developing prior licensees ' designs . during the contract performance period , we review estimates of direct labor hours to complete the contracts as the contract progresses to completion and will revise our estimates of revenue and gross profit under the contract if we revise the estimations of the direct labor hours to complete . story_separator_special_tag royalty revenue decreased $ 1.0 million in 2011 primarily due to a decrease in shipments by an idm licensee whose product is used in the nintendo wii® game console , although we did experience an increase in royalties received from tsmc and from another licensee due to higher manufacturing volumes for their products . cost of net revenue and gross profit . replace_table_token_7_th replace_table_token_8_th cost of net revenue consists of personnel and related overhead allocation costs for engineers assigned to revenue-generating licensing arrangements and direct and indirect costs related to the sale of ic products . cost of net revenue decreased in 2012 , primarily due to the lack of new licensing agreements and reduced requirements for engineering services on existing contracts . cost of net revenue in 2012 included stock-based compensation expense of $ 0.1 million , a decrease of $ 0.3 million compared with 2011. total gross profit decreased to $ 5.7 million in 2012 primarily due to the decrease in license and royalty revenues . we expect that the cost of licensing revenue will decrease in absolute dollars in the future because we anticipate entering into few , if any , license agreements . this decrease will be offset by increased ic cost of net revenue from sales of our bandwidth engine ics . we expect cost as a percentage of total net revenue to increase as we generate additional revenue from the sale of ics rather than the licensing of ip . cost of net revenue increased in 2011 primarily due to two 1t-sram projects that were substantially completed in the fourth quarter of 2011 in which we expensed $ 1.2 million of previously capitalized deferred costs . cost of net revenue in 2011 included stock-based compensation expense of $ 0.4 million , an increase of $ 0.1 million compared with 2010. total gross profit decreased to 35 $ 10.8 million in 2011 primarily due to the lower margin contribution from the two 1t-sram projects and the decrease in royalty revenues . research and development . replace_table_token_9_th our research and development expenses include costs related to the development of our ic products and amortization of technology-based intangible assets . we expense research and development costs as they are incurred . the $ 2.3 million increase in 2012 was primarily due to increases in our mask tooling and other fabrication costs and stock-based compensation charges , partially offset by decreases in personnel-related costs resulting from lower headcount and lower amortization costs related to acquired intangible assets . the $ 0.7 million increase in 2011 was primarily due to increases in license costs for our cad software tools , costs related to the development of our bandwidth engine ic and stock-based compensation charges , offset by a decrease in acquisition-related contingent compensation charges . research and development expenses included stock-based compensation expense of $ 2.7 million , $ 2.0 million and $ 1.5 million for the years ended december 31 , 2012 , 2011 and 2010 , respectively . we expect that research and development expenses will remain flat or decrease slightly in absolute dollars and as a percentage of total revenue as our average headcount and related personnel costs are expected to be lower in 2013 as compared to 2012. the primary driver of research and development expense will be our continued investment in our current and next generation ic products . selling , general and administrative . replace_table_token_10_th selling , general and administrative expenses consist primarily of personnel and related overhead costs for sales , marketing , finance , human resources and general management . the $ 0.7 million decrease for 2012 was primarily due to a decrease in personnel-related , legal and stock-based compensation costs . the $ 1.5 million decrease for 2011 was primarily due to a decrease in personnel-related , acquisition-related and consulting costs . selling , general and administrative expenses included stock-based compensation expense of $ 1.1 million , $ 1.4 million and $ 1.5 million for the years ended december 31 , 2012 , 2011 and 2010 , respectively . we expect total selling , general and administrative expenses to remain flat or slightly decrease in absolute dollars . 36 gain on sale of assets . replace_table_token_11_th in march 2012 , we entered into an asset purchase agreement for an exclusive license of a portion of our intellectual property pertaining to our high-speed serial i/o technology for approximately $ 4.3 million . as part of the agreement , we provided certain technology transfer support services , and 15 employees of our india subsidiary accepted employment with the purchaser . in 2012 , we received approximately $ 3.4 million in cash , net of transaction costs , from this agreement , and we expect to receive an additional $ 0.6 million in march 2013. in december 2011 , we entered into a patent purchase agreement for the sale of 43 united states and 30 related foreign memory technology patents for $ 35.0 million in cash . we recognized a $ 35.6 million gain on this transaction . the gain was comprised of the $ 35.0 million of proceeds , plus $ 0.8 million , which we determined to be the value of our retained license to these patents , net of transaction costs . other income and expense , net . replace_table_token_12_th other income and expense , net primarily consisted of interest income on our investments , which was $ 0.2 million , $ 0.1 million and $ 0.3 million for the years ended december 31 , 2012 , 2011 and 2010 , respectively . interest income increased by $ 28,000 in 2012 due to a higher average investment balance and declined by $ 129,000 in 2011 primarily due to lower average investment balances and lower interest rates earned . the increase in interest income was offset by increases in other expenses . income tax provision . replace_table_token_13_th our 2012 and 2010 income tax provisions were primarily attributable to foreign jurisdictions .

liquidity and capital resources as of december 31 , 2012 , we had cash , cash equivalents and investments totaling $ 40.7 million compared with a combined balance of $ 58.0 million at december 31 , 2011. our principal source of cash in 2011 was the sale of patents for $ 35 million in december 2011. in december 2010 , we sold approximately 5 million shares of common stock in a registered direct equity offering , raising approximately $ 20 million , net of transaction expenses of approximately $ 0.1 million . the offering was made under our $ 50 million shelf registration statement that became effective in november 2010. our primary capital requirements are to fund working capital , including development of our ic products , and any acquisitions that we make that require cash consideration or expenditures . in 2012 , we used $ 22.0 million in operating activities , which primarily resulted from the net loss of $ 27.6 million and the $ 3.3 million gain on the sale of assets , adjusted for non-cash charges consisting of stock-based compensation of $ 3.8 million , depreciation and amortization of $ 2.7 million and $ 2.4 million generated from changes in operating assets and liabilities . the changes in assets and liabilities primarily related to the timing of billing our customers , collection of receivables , recognition of revenue related to deferred revenues and payments to vendors . in 2011 , we used $ 15.7 million in operating activities , which primarily resulted from the net income of $ 11.3 million and $ 1.3 million generated from changes in operating assets and liabilities , reduced by the $ 35.6 million gain on the sale of patents and adjusted for non-cash charges consisting of stock-based compensation of $ 3.8 million and depreciation and amortization of $ 3.7 million . the changes in assets and liabilities primarily related to the timing of billing our customers , collection of receivables and payments to vendors .


 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 as of december 31 , 2012 , we had cash , cash equivalents and investments totaling $ 40.7 million compared with a combined balance of $ 58.0 million at december 31 , 2011. our principal source of cash in 2011 was the sale of patents for $ 35 million in december 2011. in december 2010 , we sold approximately 5 million shares of common stock in a registered direct equity offering , raising approximately $ 20 million , net of transaction expenses of approximately $ 0.1 million . the offering was made under our $ 50 million shelf registration statement that became effective in november 2010. our primary capital requirements are to fund working capital , including development of our ic products , and any acquisitions that we make that require cash consideration or expenditures . in 2012 , we used $ 22.0 million in operating activities , which primarily resulted from the net loss of $ 27.6 million and the $ 3.3 million gain on the sale of assets , adjusted for non-cash charges consisting of stock-based compensation of $ 3.8 million , depreciation and amortization of $ 2.7 million and $ 2.4 million generated from changes in operating assets and liabilities . the changes in assets and liabilities primarily related to the timing of billing our customers , collection of receivables , recognition of revenue related to deferred revenues and payments to vendors . in 2011 , we used $ 15.7 million in operating activities , which primarily resulted from the net income of $ 11.3 million and $ 1.3 million generated from changes in operating assets and liabilities , reduced by the $ 35.6 million gain on the sale of patents and adjusted for non-cash charges consisting of stock-based compensation of $ 3.8 million and depreciation and amortization of $ 3.7 million . the changes in assets and liabilities primarily related to the timing of billing our customers , collection of receivables and payments to vendors .
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 Suspicious Activity Report : revenue from ip licensing and royalties represented the majority of our revenues for 2012 , and we expect revenue from ip licensing and royalties to represent a significant portion of our revenues in 2013. due to the shift in our engineering and research and development focus and the decline in major consumer electronics applications utilizing customized versions of our 1t-sram technology , our competitiveness and the demand for our ip have declined since the beginning of 2011. as a result of our reduced licensing activities , we expect our licensing and royalty revenue to decrease in future periods . our expectation is that our revenue will transition from primarily licensing and royalty to predominately ic product sales . to date , we have substantially completed our performance obligations under our existing agreements , and we expect licensing revenues to decline in 2013. we have also been focused on monetizing our ip portfolio to fund the change in our business . towards this end , we have completed asset sales for proceeds of approximately $ 39.3 million , including our december 2011 patent sale and march 2012 serdes technology sale . 30 the 1t-sram is our high-density , high-performance patented memory solution that represents an alternative to traditional volatile embedded memory . our i/o ip includes physical layer ( phy ) circuitry that allows ics to communicate with one another in the networking , storage , computer and consumer market segments . our phy ip supports serial interface technologies , such as 10 gbps base kr , xaui , pci express and sata , as well as parallel interfaces like ddr3 . our ip customers typically include fabless semiconductor companies , integrated device manufacturers ( idms ) and foundries . critical accounting policies and use of estimates our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the united states of america . note 1 to the consolidated financial statements in item 15 of this report describes the significant accounting policies and methods used in the preparation of our consolidated financial statements . we have identified the accounting policies below as some of the more critical to our business and the understanding of our results of operations . these policies may involve estimates and judgments that affect the reported amounts of assets , liabilities , revenues and expenses . although we believe our judgments and estimates are appropriate , actual future results may differ from our estimates , and if different assumptions or conditions were to prevail , the results could be materially different from our reported results . revenue recognition licensing licensing revenue consists of fees earned from license agreements , development services and support and maintenance . license fees generally range from $ 100,000 to several million dollars per contract , depending on the scope and complexity of the development project , and the extent of the licensee 's rights . the vast majority of our contracts allow for milestone billing based on work performed . fees billed prior to revenue recognition are recorded as deferred revenue . we recognize revenue when persuasive evidence of an arrangement exists , delivery or performance has occurred , the sales price is fixed or determinable , and collectibility is reasonably assured . evidence of an arrangement generally consists of signed agreements . when sales arrangements contain multiple elements ( e.g . , license and services ) , we review each element to determine the separate units of accounting that exist within the agreement . if more than one unit of accounting exists , the consideration payable to us under the agreement is allocated to each unit of accounting using the relative fair value method . revenue is recognized for each unit of accounting when the revenue recognition criteria have been met for that unit of accounting . for stand-alone license agreements or license deliverables in multi-deliverable arrangements that do not require significant development , modification or customization , revenue is recognized when all revenue recognition criteria have been met . delivery of the licensed technology is typically the final revenue recognition criterion met , at which time revenue is recognized . if any of the criteria are not met , revenue recognition is deferred until such time as all criteria have been met . for license agreements that include deliverables requiring significant production , modification or customization , and where we have significant experience in meeting the design specifications involved in the contract and the direct labor hours related to services under the contract can be reasonably estimated , we recognize revenue over the period in which the contract services are performed . for these arrangements , we recognize revenue using the percentage of completion method . revenue recognized in any period is dependent on our progress toward completion of projects in progress . significant management judgment and discretion are used to estimate total direct labor hours . these judgmental elements include determining that we have the experience to meet the design specifications and estimating the total direct labor hours . we follow this method because we can obtain reasonably 31 dependable estimates of the direct labor hours to perform the contract services . the direct labor hours for the development of the licensee 's design are estimated at the beginning of the contract . as these direct labor hours are incurred , they are used as a measure of progress towards completion . we have the ability to reasonably estimate the direct labor hours on a contract-by-contract basis based on our experience in developing prior licensees ' designs . during the contract performance period , we review estimates of direct labor hours to complete the contracts as the contract progresses to completion and will revise our estimates of revenue and gross profit under the contract if we revise the estimations of the direct labor hours to complete . story_separator_special_tag royalty revenue decreased $ 1.0 million in 2011 primarily due to a decrease in shipments by an idm licensee whose product is used in the nintendo wii® game console , although we did experience an increase in royalties received from tsmc and from another licensee due to higher manufacturing volumes for their products . cost of net revenue and gross profit . replace_table_token_7_th replace_table_token_8_th cost of net revenue consists of personnel and related overhead allocation costs for engineers assigned to revenue-generating licensing arrangements and direct and indirect costs related to the sale of ic products . cost of net revenue decreased in 2012 , primarily due to the lack of new licensing agreements and reduced requirements for engineering services on existing contracts . cost of net revenue in 2012 included stock-based compensation expense of $ 0.1 million , a decrease of $ 0.3 million compared with 2011. total gross profit decreased to $ 5.7 million in 2012 primarily due to the decrease in license and royalty revenues . we expect that the cost of licensing revenue will decrease in absolute dollars in the future because we anticipate entering into few , if any , license agreements . this decrease will be offset by increased ic cost of net revenue from sales of our bandwidth engine ics . we expect cost as a percentage of total net revenue to increase as we generate additional revenue from the sale of ics rather than the licensing of ip . cost of net revenue increased in 2011 primarily due to two 1t-sram projects that were substantially completed in the fourth quarter of 2011 in which we expensed $ 1.2 million of previously capitalized deferred costs . cost of net revenue in 2011 included stock-based compensation expense of $ 0.4 million , an increase of $ 0.1 million compared with 2010. total gross profit decreased to 35 $ 10.8 million in 2011 primarily due to the lower margin contribution from the two 1t-sram projects and the decrease in royalty revenues . research and development . replace_table_token_9_th our research and development expenses include costs related to the development of our ic products and amortization of technology-based intangible assets . we expense research and development costs as they are incurred . the $ 2.3 million increase in 2012 was primarily due to increases in our mask tooling and other fabrication costs and stock-based compensation charges , partially offset by decreases in personnel-related costs resulting from lower headcount and lower amortization costs related to acquired intangible assets . the $ 0.7 million increase in 2011 was primarily due to increases in license costs for our cad software tools , costs related to the development of our bandwidth engine ic and stock-based compensation charges , offset by a decrease in acquisition-related contingent compensation charges . research and development expenses included stock-based compensation expense of $ 2.7 million , $ 2.0 million and $ 1.5 million for the years ended december 31 , 2012 , 2011 and 2010 , respectively . we expect that research and development expenses will remain flat or decrease slightly in absolute dollars and as a percentage of total revenue as our average headcount and related personnel costs are expected to be lower in 2013 as compared to 2012. the primary driver of research and development expense will be our continued investment in our current and next generation ic products . selling , general and administrative . replace_table_token_10_th selling , general and administrative expenses consist primarily of personnel and related overhead costs for sales , marketing , finance , human resources and general management . the $ 0.7 million decrease for 2012 was primarily due to a decrease in personnel-related , legal and stock-based compensation costs . the $ 1.5 million decrease for 2011 was primarily due to a decrease in personnel-related , acquisition-related and consulting costs . selling , general and administrative expenses included stock-based compensation expense of $ 1.1 million , $ 1.4 million and $ 1.5 million for the years ended december 31 , 2012 , 2011 and 2010 , respectively . we expect total selling , general and administrative expenses to remain flat or slightly decrease in absolute dollars . 36 gain on sale of assets . replace_table_token_11_th in march 2012 , we entered into an asset purchase agreement for an exclusive license of a portion of our intellectual property pertaining to our high-speed serial i/o technology for approximately $ 4.3 million . as part of the agreement , we provided certain technology transfer support services , and 15 employees of our india subsidiary accepted employment with the purchaser . in 2012 , we received approximately $ 3.4 million in cash , net of transaction costs , from this agreement , and we expect to receive an additional $ 0.6 million in march 2013. in december 2011 , we entered into a patent purchase agreement for the sale of 43 united states and 30 related foreign memory technology patents for $ 35.0 million in cash . we recognized a $ 35.6 million gain on this transaction . the gain was comprised of the $ 35.0 million of proceeds , plus $ 0.8 million , which we determined to be the value of our retained license to these patents , net of transaction costs . other income and expense , net . replace_table_token_12_th other income and expense , net primarily consisted of interest income on our investments , which was $ 0.2 million , $ 0.1 million and $ 0.3 million for the years ended december 31 , 2012 , 2011 and 2010 , respectively . interest income increased by $ 28,000 in 2012 due to a higher average investment balance and declined by $ 129,000 in 2011 primarily due to lower average investment balances and lower interest rates earned . the increase in interest income was offset by increases in other expenses . income tax provision . replace_table_token_13_th our 2012 and 2010 income tax provisions were primarily attributable to foreign jurisdictions .

