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in april 2020 , the company received distributions of the cares act prf of approximately $ 17 million targeted to offset lost revenue and expenditures incurred in connection with the covid-19 pandemic . the prf payments are subject to certain restrictions and are subject to recoupment if not used for designated purposes . as a condition to receiving distributions , providers must agree to certain terms and conditions , including , among other things , that the funds are being used for lost revenues and unreimbursed covid-19 related expenses as defined by the u.s. department of health and human services ( hhs ) . all recipients of prf payments are required to comply with the reporting requirements described in the terms and conditions and as determined by hhs . the company recognizes grant payments as income when there is reasonable assurance that it has complied with the conditions associated with the grant . grant income recognized by the company is presented in grant income in the accompanying consolidated statements of operations . during the year ended december 31 , 2020 , the company recognized grant income of $ 14.3 million related to the prf payments received . the company has deferred $ 2.7 million of the prf payments , which is included in other current liabilities in the accompanying consolidated balance sheets at december 31 , 2020. as previously noted , hhs guidance related to prf grant funds is still evolving and subject to change . during september and october 2020 , hhs issued updated reporting requirements significantly changing the previous guidance regarding utilization of the funds granted from the prf under the cares act , and in january 2021 hhs issued further guidance updating the reporting requirements relating to prf grant funds . as a result of the updated guidance from hhs , the company could be required to reverse the recognition of the grant income recorded and return a portion of the funds recognized , which could be material to the company . the company is continuing to monitor the reporting requirements as they evolve . hhs has indicated that the cares act prf funds are subject to ongoing reporting and changes to the terms and conditions . to the extent that reporting requirements and terms and conditions are modified in the future , it may affect the company 's ability to comply and may require the return of funds . furthermore , hhs has indicated that it will be closely monitoring and , along with the office of inspector general ( united states ) ( oig ) , auditing providers to ensure that recipients comply with the terms and conditions of relief programs and to prevent fraud and abuse . all providers will be subject to civil and criminal penalties for any deliberate omissions , misrepresentations or falsifications of any information given to hhs . medicare accelerated payment program . in certain circumstances , when a healthcare provider is experiencing financial difficulty due to delays in receiving payment for the medicare services it provided , it may be eligible for an 79 adapthealth corp. and subsidiaries notes to consolidated financial statements december 31 , 2020 and 2019 accelerated or advance payment pursuant to the medicare accelerated payment program . the cares act revised the medicare accelerated payment program in an attempt to disburse payments to healthcare providers more quickly . in april 2020 , the company received recoupable advance payments of approximately $ 46 million made available by cms under the cares act . the recoupment of such amount by cms will begin in april 2021 and will be applied to services provided and revenue recognized during the period in which the recoupment occurs . the total of the recoupable advance payments is included in other current liabilities in the accompanying consolidated balance sheets as of december 31 , 2020. deferral of employment tax payments . as permitted under the cares act , the company has elected to defer certain portions of employer-paid fica taxes otherwise payable from march 27 , 2020 to january 1 , 2021 , which will be paid in two equal installments on december 31 , 2021 and december 31 , 2022. during the year ended december 31 , 2020 , the company deferred a total of $ 8.6 million pursuant to this provision , of which $ 4.3 million is included in other current liabilities and $ 4.3 million is included in other long-term liabilities in the accompanying consolidated balance sheets as of december 31 , 2020. the full extent of the impact of the covid-19 pandemic on the company 's business , results of operations , and financial condition is highly uncertain and will depend on future developments and numerous evolving factors that it may not be able to accurately predict , and could be material to the company 's consolidated financial statements in future reporting periods . ( g ) fair value accounting financial accounting standards board ( fasb ) accounting standards codification ( asc ) topic 820 , fair value measurements and disclosures ( asc 820 ) , creates a single definition of fair value , establishes a framework for measuring fair value in u.s. gaap and expands disclosures about fair value measurements . asc 820 emphasizes that fair value is a market-based measurement , not an entity specific measurement , and states that a fair value measurement is to estimate the price at which an orderly transaction to sell an asset or to transfer the liability would take place between market participants at the measurement date under current market conditions . assets and liabilities adjusted to fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value . story_separator_special_tag other income , net for the year ended december 31 , 2019 consisted of $ 0.2 million of net reductions in the fair value of contingent consideration liabilities related to acquisitions and $ 0.1 million of
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"story_separator_special_tag other income , net for the year ended december 31 , 2019 consisted of $ 0.2 million of net reductions in the fair value of contingent consideration liabilities related to acquisitions and $ 0.1 million of",
"grant income recognized by the company is presented in grant income in the accompanying consolidated statements of operations .",
"assets and liabilities adjusted to fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value .",
"to the extent that reporting requirements and terms and conditions are modified in the future , it may affect the company 's ability to comply and may require the return of funds ."
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equity income related to an equity method investment . income tax ( benefit ) expense . income tax benefit for the year ended december 31 , 2020 was $ 12.0 million compared to income tax expense of $ 0.7 million for the year ended december 31 , 2019. the change in income tax benefit/expense was primarily related to decreased pre-tax income associated with the tax paying entities . ebitda , adjusted ebitda and adjusted ebitda less patient equipment capex adapthealth uses ebitda , adjusted ebitda and adjusted ebitda less patient equipment capex , which are financial measures that are not prepared in accordance with generally accepted accounting principles in the united states , or u.s. gaap , to analyze its financial results and believes that they are useful to investors , as a supplement to u.s. gaap measures . in addition , adapthealth 's ability to incur additional indebtedness and make investments under its existing credit agreement is governed , in part , by its ability to satisfy tests based on a variation of adjusted ebitda less patient equipment capex . adapthealth defines ebitda as net income ( loss ) attributable to adapthealth corp. , plus net income ( loss ) attributable to noncontrolling interests , interest expense ( income ) , income tax expense ( benefit ) , and depreciation and amortization . adapthealth defines adjusted ebitda as ebitda ( as defined above ) , plus loss on extinguishment of debt , equity‑based compensation expense , transaction costs , severance , change in fair value of contingent consideration common shares liability , and non-recurring items of expense ( income ) . adapthealth defines adjusted ebitda less patient equipment capex as adjusted ebitda ( as defined above ) less patient equipment acquired during the period without regard to whether the equipment was purchased or financed through lease transactions . 54 adapthealth believes adjusted ebitda less patient equipment capex is useful to investors in evaluating adapthealth 's financial performance . adapthealth 's business requires significant investment in equipment purchases to maintain its patient equipment inventory . some equipment title transfers to patients ' ownership after a prescribed number of fixed monthly payments . equipment that does not transfer wears out or oftentimes is not recovered after a patient 's use of the equipment terminates . adapthealth uses this metric as the profitability measure in its incentive compensation plans that have a profitability component and to evaluate acquisition opportunities , where it is most often used for purposes of contingent consideration arrangements . in addition , adapthealth 's debt agreements contain covenants that use a variation of adjusted ebitda less patient equipment capex for purposes of determining debt covenant compliance . for purposes of this metric , patient equipment capital expenditure is measured as the value of the patient equipment received during the accounting period without regard to whether the equipment is purchased or financed through lease transactions . ebitda , adjusted ebitda and adjusted ebitda less patient equipment capex should not be considered as measures of financial performance under u.s. gaap , and the items excluded from ebitda , adjusted ebitda and adjusted ebitda less patient equipment capex are significant components in understanding and assessing financial performance . accordingly , these key business metrics have limitations as an analytical tool . they should not be considered as an alternative to net income or any other performance measures derived in accordance with u.s. gaap or as an alternative to cash flows from operating activities as a measure of adapthealth 's liquidity . the following unaudited table presents the reconciliation of net income ( loss ) attributable to adapthealth , to ebitda , adjusted ebitda and adjusted ebitda less patient equipment capex for the years ended december 31 , 2020 and 2019 : replace_table_token_7_th ( a ) represents write offs of deferred financing costs related to refinancing of debt . ( b ) represents equity-based compensation expense for awards granted to employees and non-employee directors . the higher expense in 2020 is due to a full year of expense for awards granted in late 2019 , and overall increased equity-compensation grant activity in 2020. the 2019 period includes expense resulting from accelerated vesting and modification of certain awards in that period . ( c ) represents transaction costs related to acquisitions . the 2019 period also includes costs associated with the 2019 recapitalization and the business combination . 55 ( d ) represents severance costs related to acquisition integration and internal adapthealth restructuring and workforce reduction activities . ( e ) represents a non-cash charge for the change in the estimated fair value of contingent consideration common shares issuable as part of the business combination . refer to note 11 , stockholders ' equity – contingent consideration common shares , included in the accompanying notes to the consolidated financial statements for the year ended december 31 , 2020 for additional discussion of such non-cash charge . ( f ) the 2020 period includes $ 4.2 million of net reductions in the fair value of contingent consideration liabilities related to acquisitions , a $ 0.6 million gain in connection with the sale of a cost method investment , offset by a $ 1.5 million expense associated with the pcs transition services agreement and $ 0.8 million of other non-recurring expenses . ( g ) represents the value of patient equipment obtained during the respective period without regard to whether the equipment is purchased or financed through lease transactions . liquidity and capital resources adapthealth 's principal sources of liquidity are its operating cash flows , borrowings under its credit agreements and other debt arrangements , and proceeds from equity issuances . adapthealth has used these funds to meet its capital requirements , which primarily consist
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" ( f ) the 2020 period includes $ 4.2 million of net reductions in the fair value of contingent consideration liabilities related to acquisitions , a $ 0.6 million gain in connection with the sale of a cost method investment , offset by a $ 1.5 million expense associated with the pcs transition services agreement and $ 0.8 million of other non-recurring expenses .",
"liquidity and capital resources adapthealth 's principal sources of liquidity are its operating cash flows , borrowings under its credit agreements and other debt arrangements , and proceeds from equity issuances .",
"ebitda , adjusted ebitda and adjusted ebitda less patient equipment capex adapthealth uses ebitda , adjusted ebitda and adjusted ebitda less patient equipment capex , which are financial measures that are not prepared in accordance with generally accepted accounting principles in the united states , or u.s. gaap , to analyze its financial results and believes that they are useful to investors , as a supplement to u.s. gaap measures .",
"in addition , adapthealth 's ability to incur additional indebtedness and make investments under its existing credit agreement is governed , in part , by its ability to satisfy tests based on a variation of adjusted ebitda less patient equipment capex .",
"accordingly , these key business metrics have limitations as an analytical tool ."
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( dollars in thousands ) replace_table_token_12_th cash used in investing activities increased from $ 30,767,000 in 2010 to $ 51,367,000 in 2011 , a net increase of $ 20,600,000. this increase was primarily attributable to a net increase in the purchases of marketable securities and an increase in capital expenditures . in 2011 , we purchased a net $ 47,124,000 of marketable securities . such purchases totaled $ 3,139,000 in 2010. such purchases were made to increase the expected returns on our cash holdings . the increase in capital expenditures is largely the result of us undertaking certain capital projects on behalf of certain customers , a large portion of which was reimbursed by such customers and through federal and local government grants . these reimbursements are summarized in the table above . these increases in cash used in investing activities were partially offset by a reduction in our restricted cash balances of $ 21,086,000 in 2011. this reduction resulted from our short sale position in u.s. treasuries being closed in 2011. when this happened , the cash which was previously held in a restricted margin account was returned to us . financing activities cash used in financing activities increased from $ 374,000 in 2011 to $ 63,283,000 in 2012. this increase was primarily due to an increase in dividends paid in 2012 compared to 2011 and a decrease in proceeds from the issuance of stock in 2012 compared to 2011. in 2011 we paid $ 16,254,000 in dividends on our common stock . dividend payments in 2012 included a special dividend payment of $ 1.20 per common share and totaled $ 66,538,000. additionally , in 2011 we generated $ 15,872,000 in net proceeds from the issuance of common shares as part of our at-the-market offering . in 2012 , such net proceeds totaled $ 1,074,000. cash provided by ( used in ) financing activities decreased from $ 38,473,000 in 2010 to $ ( 374,000 ) in 2011. this decrease was primarily attributable to reduced proceeds from the issuance of our common stock in 2011 compared to 2010 , which was partially offset by a reduction in dividend payments in 2011. in 2010 , $ 70,736,000 in net proceeds were received from the issuance of our common stock . such proceeds were primarily the result of the exercise of warrants to purchase our common shares . all such warrants that were not exercised expired in 2010. as a result , no warrants were exercised in 2011. we did , however , generate $ 15,872,000 in 2011 in net proceeds from the issuance of common shares as part of our at-the-market offering under which we issued 1,313,985 shares of our common stock and as a result of the exercise of stock options . cash dividends decreased from $ 31,053,000 in 2010 to $ 16,254,000 in 2011 , partially offsetting the 2011 reduction in proceeds from the issuance of shares of our common stock . capital expenditure commitments we had no material capital projects as of december 31 , 2012 . 34 historically , we finance capital requirements for our business with cash flows from operations and have not had the need to incur bank indebtedness to finance any of our operations during the periods discussed herein . credit facility we entered into a $ 50 million credit agreement with a commercial bank in march 2007. the loan is a revolving facility the proceeds of which may be used for our working capital , capital expenditures , and general corporate purposes . the facility terminates on june 30 , 2013. advances are made pursuant to a borrowing base . advances are secured by a perfected first priority security interest in our accounts receivable and inventory . the interest rate floats at certain margins over libor or base rate based upon the leverage ratio from time to time . there is an unused commitment fee . the ratio of total funded debt to ebitda may not be less than 3:1. we had no borrowings under this credit facility at december 31 , 2012 , 2011 , or 2010. we intend to fund future capital requirements for our businesses from cash flow generated by us as well as from existing cash , cash investments , and , if the need should arise , borrowings under our credit facility . we do not believe there will be a need to issue any securities to fund such capital requirements . department of energy grant we entered into a contract with a customer to design , construct , and operate a commercial-scale plant to produce intermediate anode powder as a component of high-performance graphite anode materials for lithium-ion batteries . in connection with this contract , we applied for a financial assistance award under the electric drive vehicle battery and component manufacturing initiative administered by the department of energy national energy technology laboratory on behalf of the office of energy efficiency and renewable energy . an award was granted to us in the amount of $ 12,600,000 , which we accepted on july 27 , 2010. the funds were to be used to modify existing idle assets and to acquire and construct new assets to be used for the production of specialized materials for lithium-ion batteries for electric cars and other applications . we receive grant monies on a cost share basis as we incur construction-related expenditures . the amounts received under this arrangement are recorded as deferred revenue and are amortized into earnings over the anticipated life of the customer relationship . such amortization began once construction was completed and the plant was placed into service . this occurred in the third quarter of 2011. through december 31 , 2011 , we collected 97 % of this award . the grant was closed in 2012 and no additional amounts were received in 2012. dividends in 2012 , we declared a special cash dividend aggregating $ 1.20 per share on our common stock , with a record
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"the amounts received under this arrangement are recorded as deferred revenue and are amortized into earnings over the anticipated life of the customer relationship .",
"we do not believe there will be a need to issue any securities to fund such capital requirements .",
"department of energy grant we entered into a contract with a customer to design , construct , and operate a commercial-scale plant to produce intermediate anode powder as a component of high-performance graphite anode materials for lithium-ion batteries .",
"these increases in cash used in investing activities were partially offset by a reduction in our restricted cash balances of $ 21,086,000 in 2011. this reduction resulted from our short sale position in u.s. treasuries being closed in 2011. when this happened , the cash which was previously held in a restricted margin account was returned to us .",
"there is an unused commitment fee .",
"the facility terminates on june 30 , 2013. advances are made pursuant to a borrowing base .",
"such amortization began once construction was completed and the plant was placed into service .",
"an award was granted to us in the amount of $ 12,600,000 , which we accepted on july 27 , 2010. the funds were to be used to modify existing idle assets and to acquire and construct new assets to be used for the production of specialized materials for lithium-ion batteries for electric cars and other applications .",
"the interest rate floats at certain margins over libor or base rate based upon the leverage ratio from time to time .",
"such proceeds were primarily the result of the exercise of warrants to purchase our common shares ."
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date and payment date previously discussed . story_separator_special_tag the special cash dividend amounted to $ 49,978,000. we also paid regular cash dividends aggregating $ 0.40 per share on our common stock , with record dates and payment dates as set forth above . the regular cash dividends amounted to $ 16,560,000 , for total dividends paid by us in 2012 of $ 66,538,000. in 2011 , we declared a special cash dividend aggregating $ 0.10 per share on our common stock , with a record date and payment date as previously discussed . the special cash dividend amounted to $ 3,998,000. we also declared regular cash dividends aggregating $ 0.30 per share on our common stock , with record dates and payment dates as set forth above . the regular cash dividends amounted to $ 12,256,000 , for total dividends paid by us in 2011 of $ 16,254,000. in 2010 , we declared special cash dividends aggregating $ 0.80 per share on our common stock , with record dates and payment dates as previously discussed . the special cash dividends amounted to $ 31,053,000. capital management as a result of our initial equity offering , our subsequent positive operating results , the exercise of warrants , and the issuance of shares in our at-the-market offering , we accumulated excess working capital . some of this excess working capital was paid out in 2010 , 2011 , and 2012 as a special cash dividend and in 2011 and 2012 as regular cash dividends . regular cash dividends will also be paid in 2013 as previously discussed . we intend to retain the remaining cash to fund infrastructure and capacity expansion at our batesville plant . third parties have not placed significant restrictions on our working capital management decisions . 35 a significant portion of these funds were held in cash or cash equivalents at multiple financial institutions . in 2012 and 2011 , we also had investments in certain preferred stock , trust preferred securities , and other equity instruments . we classify these investments as current assets in the accompanying consolidated balance sheets and designate them as being “ available-for-sale ” . accordingly , they are recorded at fair value , with the unrealized gains and losses , net of taxes , reported as a component of stockholders ' equity . the fair value of these preferred stock , trust preferred securities , and other equity instruments , including accrued dividends and interest , totaled $ 86,618,000 and $ 56,294,000 at december 31 , 2012 and 2011 , respectively . we also maintained a position in auction rate securities at december 31 , 2012. we have selectively made investments in certain auction rate securities that we believed offered sufficient yield along with sufficient liquidity . to date , all the auction rate securities in which we have invested have maintained a mechanism for liquidity , meaning that the respective auctions have not failed , the issuers have called the instruments , or a secondary market exists for liquidation of the securities . we have classified these instruments as current assets in the accompanying consolidated balance sheet and carried them at their estimated fair market value . the fair value of these instruments approximated their par value and , including accrued interest , totaled $ 1,150,000 at december 31 , 2012. auction rate securities are typically long term bonds issued by an entity for which there is a series of auctions over the life of the bond that serve to reset the interest rate on the bonds to a market rate . these auctions also serve as a mechanism to provide liquidity to the bond holders ; as long as there are sufficient purchasers of the auction rate securities , the then owners of the auction rate securities are able to liquidate their investment through a sale to the new purchasers . in the event of an auction failure , a situation when there are more sellers than buyers of a particular issue , the current owners of an auction rate security issue may not be able to liquidate their investment . as a result of an auction failure , a holder may be forced to hold the particular security either until maturity or until a willing buyer is found . even if a willing buyer is found , however , there is no guarantee that this willing buyer will purchase the security for its carrying value , which would result in a loss being realized on the sale . lastly , we maintain depository accounts such as checking accounts , money market accounts , and other similar accounts at selected financial institutions . story_separator_special_tag in excess of 35 million gallons of biodiesel per year . debottlenecking has increased the annual capacity to in excess of 45 million gallons per year . projects are currently in progress to further debottleneck and optimize the plant to run at higher rates . there currently is uncertainty as to whether we will produce biodiesel in the future . this uncertainty results from : ( i ) changes in feedstock prices relative to biodiesel prices ; and ( ii ) the permanency of government mandates and tax credits . see “ risk factors ” above . while biodiesel is the principal component of the biofuels segment , we also generate revenue from the sale of petrodiesel both in blends with our biodiesel and , from time to time , with no biodiesel added . petrodiesel and biodiesel blends are available to customers at our leased storage facility in north little rock , arkansas and at our batesville plant . in addition , we deliver blended product to a small group of customers within our region . we also sell refined petroleum products from time-to-time on common carrier pipelines in part to maintain our status as a shipper on the pipeline . the majority of our expenses are cost of goods sold .
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"as a result of an auction failure , a holder may be forced to hold the particular security either until maturity or until a willing buyer is found .",
"even if a willing buyer is found , however , there is no guarantee that this willing buyer will purchase the security for its carrying value , which would result in a loss being realized on the sale .",
"petrodiesel and biodiesel blends are available to customers at our leased storage facility in north little rock , arkansas and at our batesville plant .",
"we intend to retain the remaining cash to fund infrastructure and capacity expansion at our batesville plant .",
"the regular cash dividends amounted to $ 12,256,000 , for total dividends paid by us in 2011 of $ 16,254,000. in 2010 , we declared special cash dividends aggregating $ 0.80 per share on our common stock , with record dates and payment dates as previously discussed .",
"these auctions also serve as a mechanism to provide liquidity to the bond holders ; as long as there are sufficient purchasers of the auction rate securities , the then owners of the auction rate securities are able to liquidate their investment through a sale to the new purchasers .",
"the fair value of these instruments approximated their par value and , including accrued interest , totaled $ 1,150,000 at december 31 , 2012. auction rate securities are typically long term bonds issued by an entity for which there is a series of auctions over the life of the bond that serve to reset the interest rate on the bonds to a market rate .",
"we also sell refined petroleum products from time-to-time on common carrier pipelines in part to maintain our status as a shipper on the pipeline ."
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our business genius brands international , inc. is a global content and brand management company dedicated to providing entertaining and enriching “ content and products with a purpose ” for toddlers to tweens . led by industry veterans andrew heyward ( chief executive officer ) and amy moynihan heyward ( president ) , the company produces original content and licenses the rights to that content to a variety of partners . our licensees include ( i ) companies to which the audio-visual rights are licensed for exhibition in various formats such as pay television , free or broadcast television , video-on-demand ( “ vod ” ) , subscription on demand ( “ svod ” ) , dvds/cds and more and ( ii ) companies that develop and distribute products based on our content within different product categories such as toys , electronics , publishing , home goods , stationary , gifts , and more . 14 the company owns a portfolio of original children 's entertainment that is targeted at toddlers to teens including the award-winning baby genius , warren buffett 's secret millionaires club , thomas edison 's secret lab and stan lee 's mighty 7 , the first project from stan lee comics , llc , a joint venture with legendary stan lee 's pow ! entertainment . in addition to the company 's wholly-owned brands , it also acts as licensing agent for certain brands , leveraging its existing licensing infrastructure to expand these brands into new product categories , new retailers , and new territories . these include the best-selling children 's book series , llama llama ; psycho bunny , a luxury apparel line ; from frank , a humor greeting card and product line ; celessence technologies , the world 's leading microencapsulation company . strategic initiatives during 2014 and 2015 , the company began a series of strategic initiatives to restructure certain areas of business in an effort to operate more profitably in the long run . this included product sales , content distribution , production , and product development : 1 ) during the second quarter of 2014 , the company began phasing out the direct production and sale of physical products including dvds and cds and shifted to a licensing model whereby these functions were outsourced to industry experts and category leaders in their respective industries . on july 14 , 2014 , the company employed stone newman in the newly created position of president – global consumer products to manage all consumer products , licensing and merchandising sales for the company 's brands . 2 ) prior to the third quarter of 2014 , the company utilized an agency to license its content to international television broadcasters , home video , and digital distribution outlets . to exert greater control over the distribution of its expanding portfolio of content , during the second quarter of 2014 , the company formed a new global distribution division and appointed andrew berman to the newly created position of senior vice president - international sales to oversee the division and the appointment of regional agents to represent the company locally in key regions . 3 ) during the third and fourth quarter of 2014 , the company partnered with various pre-production , production , and animation companies to provide services to the company for the production of thomas edison 's secret lab in exchange for a certain percentage of the series ' forthcoming adjusted net revenues and the ability to distribute the series in certain languages in certain territories . this model helps to better manage the company 's cash flows while enabling it to exploit territories that would otherwise be challenging to manage and monetize . the company intends to replicate the model for future productions . 4 ) the infrastructure the company has put in place enables it to efficiently exploit a growing portfolio of brands . the company is actively developing a number of new brands , like space pop , to add to its growing portfolio and consistently looks for existing brands to acquire oract aslicensing agent , as with the best-selling line of books , llama llama which the company recently signed . thecompanyremains focused on brands that lend themselves to interactive exploitation in multiple areas and are consistentwith thecompany 's primary point of differentiation : providing multi-media “ content and products with apurpose ” that entertain and enrich kids . 5 ) consistent with the company 's strategy of securing widespread distribution for its content in a variety of formats and building awareness and engagement for its brands that in turn drives its consumer products business , the company has expanded its successful relationship with comcast beyond the already popular baby genius on-demand offering . the company has announced it launched a new kid genius channel in the fourth quarter of2015 , offering 24-hours of video on-demand content that will be consistent with the company 's `` content and products with a purpose `` mission . the new video on-demand channel will include the company 's own content , in addition to other content the company will curate , to offer a robust line-up for kids . the company 's senior vice president-international sales , andrew berman , will oversee the channel . recent events d istribution agreement with sony pictures home entertainment inc. on february 18 , 2016 , we entered into a distribution agreement with sony pictures home entertainment inc. ( “ sony ” ) , pursuant to which the company agreed to grant sony certain rights for the marketing and distribution of the company 's animated feature-length motion pictures and animated television series in the united states and in canada , and potentially additional countries . story_separator_special_tag in consideration for such rights , and subject to certain conditions , sony has paid the company an advance in the amount of $ 2.0 million , against future royalties . private placement on october 29 , 2015
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"the company has announced it launched a new kid genius channel in the fourth quarter of2015 , offering 24-hours of video on-demand content that will be consistent with the company 's `` content and products with a purpose `` mission .",
"our licensees include ( i ) companies to which the audio-visual rights are licensed for exhibition in various formats such as pay television , free or broadcast television , video-on-demand ( “ vod ” ) , subscription on demand ( “ svod ” ) , dvds/cds and more and ( ii ) companies that develop and distribute products based on our content within different product categories such as toys , electronics , publishing , home goods , stationary , gifts , and more .",
"this included product sales , content distribution , production , and product development : 1 ) during the second quarter of 2014 , the company began phasing out the direct production and sale of physical products including dvds and cds and shifted to a licensing model whereby these functions were outsourced to industry experts and category leaders in their respective industries .",
"this model helps to better manage the company 's cash flows while enabling it to exploit territories that would otherwise be challenging to manage and monetize .",
"story_separator_special_tag in consideration for such rights , and subject to certain conditions , sony has paid the company an advance in the amount of $ 2.0 million , against future royalties ."
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, we conducted a private placement with certain accredited investors pursuant to which we sold an aggregate of 4,330,000 shares of its common stock , par value $ 0.001 per and warrants to purchase up to an aggregate of 4,330,000 shares of common stock for a purchase price of $ 1.00 per share and gross proceeds to us of $ 4,330,000 ( the “ 2015 private placement ” ) . the closing of the 2015 private placement was subject to certain customary closing conditions and closed on november 3 , 2015. stock offering costs were $ 502,218 . 15 the warrants are exercisable into shares of common stock for a period of five ( 5 ) years from issuance at an initial exercise price of $ 1.10 per share , subject to adjustment in the event of stock splits , dividends and recapitalizations . the company is prohibited from effecting an exercise of the warrants to the extent that as a result of such exercise , the holder would beneficially own more than 4.99 % ( subject to increase up to 9.99 % upon 61 days ' notice ) in the aggregate of the issued and outstanding shares of common stock , calculated immediately after giving effect to the issuance of shares of common stock upon exercise of the warrant . pursuant to the terms of the purchase agreements , beginning on the closing date of the 2015 private placement and ending sixty ( 60 ) days after the effective date ( as defined in the purchase agreements ) , the company shall not issue any securities , subject to certain exceptions . additionally , until the later of ( i ) such time as the investors in the 2015 private placement , in the aggregate , hold less than 50 % of the common stock originally purchased by them in the private placement and the average daily trading volume of the common stock for a period of ten ( 10 ) consecutive trading days is greater than $ 75,000 and ( ii ) the one year anniversary of the closing of the 2015 private placement , the company has agreed to not sell any securities , subject to certain exceptions , at an effective per share price of common stock less than the purchase price of the common stock sold in the 2015 private placement then in effect . the company has agreed to file a “ resale ” registration statement with the securities and exchange commission ( the “ sec ” ) covering all shares of common stock and shares of common stock underlying the warrants issued or issuable in the 2015 private placement within 45 days of the closing of the 2015 private placement and to maintain the effectiveness of the registration statement until all securities have been sold or are otherwise able to be sold pursuant to rule 144. the company has agreed to use its reasonable best efforts to have the registration statement declared effective within 90 days of the closing of the 2015 private placement ( or 120 days after such closing if the registration statement is subject to review by the sec . the company is obligated to pay to investors a fee of 1 % per month in cash for every thirty day period up to a maximum of six ( 6 % ) percent , ( i ) that the registration statement has not been filed after the required filing date , ( ii ) following the required effectiveness date that the registration statement has not been declared effective ; and ( iii ) as otherwise set forth in the registration rights agreement . chardan capital markets llc acted as sole placement agent in the 2015 private placement in consideration for which chardan received a cash fee of $ 300,000 and a five-year warrant to purchase up to 425,000 shares of common stock ( the “ placement agent warrant ” ) at an initial exercise price of $ 1.20 per share . the terms of the placement agent warrant are identical to the warrants issued in the 2015 private placement except with respect to the exercise price thereof . story_separator_special_tag justify `` > liquidity comparison of cash flows for the twelve months ended december 31 , 2015 and 2014 cash totaled $ 5,187,620 and $ 4,301,099 at december 31 , 2015 and 2014 , respectively . the change in cash is as follows : replace_table_token_5_th during the twelve months ended december 31 , 2015 , our primary source of cash was financing activity , specifically the collection of the second payment related to a long-term , exclusive supply chain services agreement and the receipt of funds related to the issuance of common stock . during the comparable period in 2014 , our primary source of cash was financing activity including the collection of the first payment related to a long-term , exclusive supply chain services contract and the receipt of funds related to the issuance of preferred stock . during both periods , these funds were primarily used to fund operations as well as investments in fixed assets , intangible assets , and capitalized product development . operating activities cash used in operating activities in the twelve months ended december 31 , 2015 was $ 3,396,581 as compared to cash used of $ 2,481,988 during the prior period , representing an increase in cash used in operating activities of $ 914,593 based on the operating results discussed above as well as increases in film and television costs related to the development and production of episodes of thomas edison 's secret lab and the development of space pop ( working title ) .
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"operating activities cash used in operating activities in the twelve months ended december 31 , 2015 was $ 3,396,581 as compared to cash used of $ 2,481,988 during the prior period , representing an increase in cash used in operating activities of $ 914,593 based on the operating results discussed above as well as increases in film and television costs related to the development and production of episodes of thomas edison 's secret lab and the development of space pop ( working title ) .",
"during both periods , these funds were primarily used to fund operations as well as investments in fixed assets , intangible assets , and capitalized product development .",
"the company is obligated to pay to investors a fee of 1 % per month in cash for every thirty day period up to a maximum of six ( 6 % ) percent , ( i ) that the registration statement has not been filed after the required filing date , ( ii ) following the required effectiveness date that the registration statement has not been declared effective ; and ( iii ) as otherwise set forth in the registration rights agreement .",
"the closing of the 2015 private placement was subject to certain customary closing conditions and closed on november 3 , 2015. stock offering costs were $ 502,218 ."
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and infrastructure , including from failure or malicious attacks ; the fact that the prices at which shares of our class a common stock are sold in one or more of our controlled equity offerings or in other offerings or other transactions may vary significantly , and purchasers of shares in such offerings or transactions , as well as existing stockholders , may suffer significant dilution if the price they paid for their shares is higher than the price paid by other purchasers in such offerings or transactions ; our ability to meet expectations with respect to payments of dividends and distributions and repurchases of shares of our class a common stock and purchases of limited partnership interests of bgc holdings , l.p. , which we refer to as bgc holdings , or other equity interests in our subsidiaries , including from cantor , our executive officers , other employees , partners , and others , and the net proceeds to be realized by us from offerings of our shares of class a common stock ; and the effect on the market for and trading price of our class a common stock of various offerings and other transactions , including our controlled equity and other offerings of our class a common stock and convertible or exchangeable debt securities , our repurchases of shares of our class a common stock and purchases of bgc holdings limited partnership interests or other equity interests in our subsidiaries , our payment of dividends on our class a common stock and distributions on bgc holdings limited partnership interests , convertible arbitrage , hedging , and other transactions engaged in by holders of our 4.50 % convertible notes and counterparties to our capped call transactions , and resales of shares of our class a common stock acquired from us or cantor , including pursuant to our employee benefit plans , conversion of our convertible notes , conversion or exchange of our convertible or exchangeable debt securities , and distributions from cantor pursuant to cantor 's 81 distribution rights obligations and other distributions to cantor partners including deferred distribution rights shares . this discussion summarizes the significant factors affecting our results of operations and financial condition during the years ended december 31 , 2012 and 2011. this discussion is provided to increase the understanding of , and should be read in conjunction with , our consolidated financial statements and the notes thereto included elsewhere in this report . overview and business environment we are a leading global brokerage company primarily servicing the wholesale financial and real estate markets through our two segments , financial services and real estate services . our financial services segment specializes in the brokering of a broad range of products , including fixed income securities , interest rate swaps , foreign exchange , equities , equity derivatives , credit derivatives , commodities , futures and structured products . our financial services segment also provides a full range of services , including trade execution , broker-dealer services , clearing , processing , information , and other back-office services to a broad range of financial and non-financial institutions . our integrated platform is designed to provide flexibility to customers with regard to price discovery , execution and processing of transactions , and enables them to use voice , hybrid , or in many markets , fully electronic brokerage services in connection with transactions executed either otc or through an exchange . through our espeed , bgc trader and bgc market data brands , we offer financial technology solutions , market data , and analytics related to select financial instruments and markets . we entered into the commercial real estate business in october 2011 with the acquisition of all of the outstanding shares of newmark & company real estate , inc. , a leading u.s. commercial real estate brokerage and advisory firm primarily serving corporate and institutional clients . newmark was founded in 1929 in new york city . in 2000 , newmark embarked upon a national expansion and in 2006 entered into an agreement with london-based knight frank to operate jointly in the americas as newmark knight frank. in the second quarter of 2012 , we completed the acquisition of substantially all of the assets of grubb & ellis company and its direct and indirect subsidiaries , which we refer to as grubb & ellis. grubb & ellis was formed in 1958 and built a full-service national commercial real estate platform of property management , facilities management and brokerage services . we have largely completed the integration of grubb & ellis with newmark knight frank to form the resulting business , newmark grubb knight frank ( or ngkf ) . ngkf is a full-service commercial real estate platform that comprises our real estate services segment , offering commercial real estate tenants , owners , investors and developers a wide range of services , including leasing ; capital markets services including investment sales , debt placement , appraisal , and valuation services ; as well as consulting , project and development management , leasing and corporate advisory services and property and corporate facilities management services . in connection with our acquisition of substantially all of the assets of grubb & ellis , we began , with the second quarter of 2012 , reporting two reportable segments , financial services and real estate services , as reflected in our quarterly report on form 10-q for such quarter filed on august 8 , 2012. prior to the second quarter of 2012 , we had only one reportable segment . on august 8 , 2012 , we filed a current report on form 8-k to update our financial statements and certain other information contained in our annual report on form 10-k for the year ended december 31 , 2011 and our quarterly report on form 10-q for the quarter ended march 31 , 2012 to reflect such change in our reportable segments . story_separator_special_tag these two segments continue
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"and infrastructure , including from failure or malicious attacks ; the fact that the prices at which shares of our class a common stock are sold in one or more of our controlled equity offerings or in other offerings or other transactions may vary significantly , and purchasers of shares in such offerings or transactions , as well as existing stockholders , may suffer significant dilution if the price they paid for their shares is higher than the price paid by other purchasers in such offerings or transactions ; our ability to meet expectations with respect to payments of dividends and distributions and repurchases of shares of our class a common stock and purchases of limited partnership interests of bgc holdings , l.p. , which we refer to as bgc holdings , or other equity interests in our subsidiaries , including from cantor , our executive officers , other employees , partners , and others , and the net proceeds to be realized by us from offerings of our shares of class a common stock ; and the effect on the market for and trading price of our class a common stock of various offerings and other transactions , including our controlled equity and other offerings of our class a common stock and convertible or exchangeable debt securities , our repurchases of shares of our class a common stock and purchases of bgc holdings limited partnership interests or other equity interests in our subsidiaries , our payment of dividends on our class a common stock and distributions on bgc holdings limited partnership interests , convertible arbitrage , hedging , and other transactions engaged in by holders of our 4.50 % convertible notes and counterparties to our capped call transactions , and resales of shares of our class a common stock acquired from us or cantor , including pursuant to our employee benefit plans , conversion of our convertible notes , conversion or exchange of our convertible or exchangeable debt securities , and distributions from cantor pursuant to cantor 's 81 distribution rights obligations and other distributions to cantor partners including deferred distribution rights shares .",
"in connection with our acquisition of substantially all of the assets of grubb & ellis , we began , with the second quarter of 2012 , reporting two reportable segments , financial services and real estate services , as reflected in our quarterly report on form 10-q for such quarter filed on august 8 , 2012. prior to the second quarter of 2012 , we had only one reportable segment ."
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to be reported in this annual report on form 10-k. our customers include many of the world 's largest banks , broker-dealers , investment banks , trading firms , hedge funds , governments , corporations , property owners , real estate developers and investment firms . we have offices in dozens of major markets , including new york and london , as well as in atlanta , beijing , boston , chicago , copenhagen , dallas , dubai , hong kong , houston , istanbul , johannesburg , los angeles , mexico city , miami , moscow , nyon , paris , rio de janeiro , são paulo , seoul , singapore , sydney , tokyo , toronto , washington , d.c. and zurich . 82 we remain confident in our future growth prospects as we continue to increase the scale and depth of our real estate platform and continue to seek market driven opportunities to expand our business in numerous financial asset classes . financial services : the financial intermediary sector has been a competitive area that has had strong revenue growth over the past decade due to several factors . one factor is the increasing use of derivatives to manage risk or to take advantage of the anticipated direction of a market by allowing users to protect gains and or guard against losses in the price of underlying assets without having to buy or sell the underlying assets . derivatives are often used to mitigate the risks associated with interest rates , equity ownership , changes in the value of foreign currency , credit defaults by corporate and sovereign debtors and changes in the prices of commodity products . over the past decade , demand from financial institutions , financial services intermediaries and large corporations has increased volumes in the wholesale derivatives market , thereby increasing the business opportunity for financial intermediaries . another key factor in the growth of the financial intermediary sector over the past decade has been the increase in the number of new products . as market participants and their customers strive to mitigate risk , new types of equity and fixed income securities , futures , options and other financial instruments have been developed . these new securities and derivatives are not immediately ready for more liquid and standardized electronic markets , and generally increase the need for trading and require broker-assisted execution . the past twelve months have been challenging as lower activity and volatility have contributed to declines in market volumes across the asset classes in our financial services segment . growth drivers as a wholesale intermediary , our business is driven by several key drivers in addition to those listed above . these include : overall industry volumes in the markets in which we broker , the size and productivity of our front-office headcount ( including salespeople , brokers and other front-office professionals ) , regulatory issues and the percentage of our revenues related to fully electronic brokerage . below is a brief analysis of the market and industry volumes for some of our financial services products including our overall hybrid and fully electronic trading activities . overall market volumes and volatility volume is driven by a number of items , including the level of issuance for financial instruments , the price volatility of financial instruments , overall macro-economic conditions , the creation and adoption of new products , the regulatory environment , and the introduction and adoption of new trading technologies . in general , increased price volatility increases the demand for hedging instruments , including many of the cash and derivative products which we broker . for example , hedge funds are increasingly making use of derivatives to protect positions and preserve the capital of their more cautious institutional clients , which now account for almost two-thirds of assets managed by the industry , according to a report from j.p. morgan . during the year ended december 31 , 2012 , industry volumes generally declined year-over-year for many of the otc and listed products we broker in rates , credit , foreign exchange and equities . this was due in large part to volatility being lower than the 10-year average in these asset classes during the year . for example , a broader measure of volatility across rates , credit , foreign exchange ( fx ) , equities , and other markets is bank of america merrill lynch 's global financial stress index ( gfsi ) . it averaged approximately 0.67 over the last five years , and had been as high as 3.01 during the height of the global financial crises in the second half of 2008 , but averaged only 0.23 during the fourth quarter of 2012. market stress measures such as the gfsi are generally good proxies for overall volatility and volumes across our four asset class categories . below is a discussion of the volume and growth drivers of our various financial services brokerage product categories . 83 rates volumes and volatility our rates business is particularly influenced by the level of sovereign debt issuance globally , and over the past year this issuance has generally continued to grow , although quantitative easing has muted the public issuance of many sovereign issues . for example , according to the securities industry and financial markets association ( sifma ) , issuance by the u.s. treasury of interest-bearing debt increased by approximately 42 % for the fourth quarter of 2012 versus the same period last year , and was up by approximately 10 % for all of 2012. rates volumes are also influenced by market volatility , and such volatility has been dampened for the past year due to continued quantitative easing undertaken by the u.s. federal reserve and other major central banks . quantitative easing entails the central banks buying government securities or other securities in the open marketparticularly longer-dated instrumentsin an effort to promote increased lending and liquidity and bring down long-term interest rates
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"this was due in large part to volatility being lower than the 10-year average in these asset classes during the year .",
"during the year ended december 31 , 2012 , industry volumes generally declined year-over-year for many of the otc and listed products we broker in rates , credit , foreign exchange and equities .",
"the past twelve months have been challenging as lower activity and volatility have contributed to declines in market volumes across the asset classes in our financial services segment .",
"for example , according to the securities industry and financial markets association ( sifma ) , issuance by the u.s. treasury of interest-bearing debt increased by approximately 42 % for the fourth quarter of 2012 versus the same period last year , and was up by approximately 10 % for all of 2012. rates volumes are also influenced by market volatility , and such volatility has been dampened for the past year due to continued quantitative easing undertaken by the u.s. federal reserve and other major central banks ."
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although the forward-looking statements in this report reflect the good faith judgment of our management , such statements can only be based on facts and factors currently known by them . consequently , and because forward-looking statements are inherently subject to risks and uncertainties , the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements . you are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business , financial condition , and results of operations and prospects . overview code chain new continent limited ( formerly known as tmsr holding company limited and jm global holding company , the “ company ” or “ ccnc ” ) , through its subsidiaries and controlled entities , focuses its business in two segments : ( 1 ) coal wholesales and sales of coke , steels , construction materials , mechanical equipment and steel scrap ; and ( 2 ) the research , development and application of internet of things ( iot ) and electronic tokens . the company 's coal and coke wholesale business is carried out by jiangsu rong hai electric power fuel co. , ltd. ( “ rong hai ” ) , an entity contractually controlled by the company . the company 's iot business is carried out wuge network games co. , ltd. ( “ wuge ” ) , an entity contractually controlled by the company . on june 30 , 2020 , the company entered into a share purchase agreement with jiazhen li , former ceo of the company ( the “ buyer ” ) , long liao and chunyong zheng , who are former shareholders of wuhan host , to sell all the equity interest the company held in china sunlong . shengrong wfoe and wuhan host are indirect subsidiaries of china sunlong . as a result , as of june 30 , 2020 , operations of shengrong wfoe and wuhan host have been designated as discontinued operations . 44 key factors that affect operating results our operating subsidiaries are incorporated , and our operations and assets are primarily located , in china . accordingly , our results of operations , financial condition and prospects are affected by china 's economic and regulation conditions in the following factors : ( a ) an economic downturn in china or any regional market in china ; ( b ) economic policies and initiatives undertaken by the chinese government ; ( c ) changes in the chinese or regional business or regulatory environment affecting our customers ; and ( e ) changes in the chinese government policy on industrial solid waste . unfavorable changes could affect demand for services that we provide and could materially and adversely affect the results of operations . although the company has generally benefited from china 's economic growth and the policies to encourage the improvement of reducing of solid waste discharge , the company is also affected by the complexity , uncertainties and changes in the chinese economic conditions and regulations governing the mining industry . our fuel materials , mainly coal , operations are largely affected by the following aspects . first , the prc 's macroeconomic growth is not as fast as expected ; the slowdown of economic growth will affect the demand of the market , and the reduction of coal consumption by enterprises will affect the sales of coal and directly affect our earnings . second , the coal market price fluctuation will also affect our sales revenue ; because jiangsu rong hai has long-term and stable customers , the price fluctuations will affect the cost of purchasing coal and thus affect our revenue . third , the risk of price fluctuation in the shipping industry . the fluctuation of shipping price will also directly affect the fluctuation of coal market price , thus affecting our income . fourth , we have long-term and stable customers and continues to rely on a small number of customers from 2009 to 2019. losing our major customers will have a significant impact on our results of operations . in addition , the payment situation of these customers will be affected by abnormal market changes , which will have a negative impact on our business recovery accounts and cash flow . as a result of the novel coronavirus ( covid-19 ) outbreak , we have seen a slowdown in revenue growth in first quarter 2020 as our businesses have been negatively impacted by the covid-19 . these impacts of covid-19 on our business , financial condition , and results of operations include , but are not limited to , the following : ● we temporally closed our offices and production facilities to adhere to the policy beginning in february 2020 , as required by relevant prc regulatory authorities . our offices are slowly reopening pursuant to local guidelines . ● our customers could potentially be negatively impacted by the outbreak , which may reduce the demand of our products . as a result , our revenue and income may be negatively impacted in 2020 . ● the situation may worsen if the covid-19 outbreak continues . we will continue to closely monitor our collections throughout 2020. because of the significant uncertainties surrounding the covid-19 outbreak , the extent of the continued business disruption and the related financial impact can not be reasonably estimated at this time . 45 results of operations year ended december 31 , 2020 as compared to the year ended december 31 , 2019 replace_table_token_2_th revenues the company 's revenue consists of fuel materials revenue and others revenue . story_separator_special_tag agent arrangements , where the entity simply arranges but does not control the goods or services being transferred to the customer , will result in the recognition of the net amount the entity is entitled to retain in the exchange
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"44 key factors that affect operating results our operating subsidiaries are incorporated , and our operations and assets are primarily located , in china .",
"accordingly , our results of operations , financial condition and prospects are affected by china 's economic and regulation conditions in the following factors : ( a ) an economic downturn in china or any regional market in china ; ( b ) economic policies and initiatives undertaken by the chinese government ; ( c ) changes in the chinese or regional business or regulatory environment affecting our customers ; and ( e ) changes in the chinese government policy on industrial solid waste .",
"as a result of the novel coronavirus ( covid-19 ) outbreak , we have seen a slowdown in revenue growth in first quarter 2020 as our businesses have been negatively impacted by the covid-19 .",
"fourth , we have long-term and stable customers and continues to rely on a small number of customers from 2009 to 2019. losing our major customers will have a significant impact on our results of operations .",
"as a result , our revenue and income may be negatively impacted in 2020 ."
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. revenue from equipment and systems , revenue from coating and fuel materials , and revenue from trading and others are recognized at the date of goods delivered and title passed to customers , when a formal arrangement exists , the price is fixed or determinable , the company has no other significant obligations and collectability is reasonably assured . such revenues are recognized at a point in time after all performance obligations are satisfied under the new five-step model . in addition , training service revenues are recognized when the services are rendered and the company has no other obligations , and collectability is reasonably assured . these revenues are recognized at a point in time . prior to january 1 , 2018 , the company allowed its customers to retain 5 % to 10 % of the contract price as retainage during the warranty period of 12 months to guarantee product quality . retainage is considered as a payment term included as a part of the contract price , and was recognized as revenue upon the shipment of products . due to nature of the retainage , the company 's policy is to record revenue the full value of the contract without vat , including any retainage , since the company has experienced insignificant warranty claims historically . due to the infrequent and insignificant amount of warranty claims , the ability to collect retainage was reasonably assured and was recognized at the time of shipment . on january 1 , 2018 , upon the adoption of asu 2014-09 ( asc 606 ) , revenues from product warranty are recognized over the warranty period over 12 months . payments received before all of the relevant criteria for revenue recognition are recorded as customer deposits . gross versus net revenue reporting starting from july 2016 , in the normal course of the company 's trading of industrial waste materials business , the company directly purchases the processed industrial waste materials from the company 's suppliers under the company 's specifications and drop ships the materials directly to the company 's customers . the company would inspect the materials at its customers ' site , during which inspection it temporarily assumes legal title to the materials , and after which inspection legal title is transferred to its customers . in these situations , the company generally collects the sales proceed directly from the company 's customers and pay for the inventory purchases to the company 's suppliers separately . the determination of whether revenues should be reported on a gross or net basis is based on the company 's assessment of whether it is the principal or an agent in the transaction . in determining whether the company is the principal or an agent , the company follows the new accounting guidance for principal-agent considerations . since the company is the primary obligor and is responsible for ( i ) fulfilling the processed industrial waste materials delivery , ( ii ) controlling the inventory by temporarily assume legal title to the materials after inspecting the products from our vendors before passing the materials to our customers , and ( iii ) bearing the back-end risk of inventory loss with respect to any product return from the company 's customers , the company has concluded that it is the principal in these arrangements , and therefore report revenues and cost of revenues on a gross basis . 50 recently issue accounting pronouncements in february 2018 , the fasb issued asu 2018-02 , income statement - reporting comprehensive income ( topic 220 ) : reclassification of certain tax effects from accumulated other comprehensive income . the amendments in this update affect any entity that is required to apply the provisions of topic 220 , income statement – reporting comprehensive income , and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by gaap . the amendments in this update are effective for all entities for fiscal years beginning after december 15 , 2018 , and interim periods within those fiscal years . early adoption of the amendments in this update is permitted , including adoption in any interim period , ( 1 ) for public business entities for reporting periods for which financial statements have not yet been issued and ( 2 ) for all other entities for reporting periods for which financial statements have not yet been made available for issuance . the amendments in this update should be applied either in the period of adoption or retrospectively to each period ( or periods ) in which the effect of the change in the u.s. federal corporate income tax rate in the tax cuts and jobs act is recognized . we do not believe the adoption of this asu would have a material effect on our consolidated financial statements . we do not believe other recently issued but not yet effective accounting standards , if currently adopted , would have a material effect on our consolidated balance sheets , statements of income and comprehensive income and statements of cash flows . story_separator_special_tag needs . liquidity risk is controlled by the application of financial position analysis and monitoring procedures . when necessary , the company will turn to other financial institutions and the owners to obtain short-term funding to meet the liquidity shortage . inflation risk the company is also exposed to inflation risk inflationary factors , such as increases in raw material and overhead costs , could impair our operating results . although we do not believe that inflation has had a material impact on our financial position or results of operations to date , a high rate of inflation in
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"when necessary , the company will turn to other financial institutions and the owners to obtain short-term funding to meet the liquidity shortage .",
"payments received before all of the relevant criteria for revenue recognition are recorded as customer deposits .",
"prior to january 1 , 2018 , the company allowed its customers to retain 5 % to 10 % of the contract price as retainage during the warranty period of 12 months to guarantee product quality .",
"on january 1 , 2018 , upon the adoption of asu 2014-09 ( asc 606 ) , revenues from product warranty are recognized over the warranty period over 12 months .",
"inflation risk the company is also exposed to inflation risk inflationary factors , such as increases in raw material and overhead costs , could impair our operating results .",
"liquidity risk is controlled by the application of financial position analysis and monitoring procedures ."
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505 , equity , whereby the fair value of such options is determined using the black-scholes option pricing model at the earlier of the date at which the non-employee 's performance is complete or a performance commitment is reached . ( o ) earnings per common share eps is calculated pursuant to the two-class method as defined in asc topic no . 260 , earnings per share ( “ asc 260 ” ) , which specifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends or dividend equivalents are considered participating securities and should be included in the computation of eps pursuant to the two-class method . basic eps is calculated by dividing net distributed and undistributed earnings allocated to common shareholders , excluding participating securities , by the weighted-average number of common shares outstanding . the company 's participating securities consist of its unvested share-based payment awards that contain rights to nonforfeitable dividends or dividend equivalents . diluted eps includes the determinants of basic eps and , in addition , reflects the impact of other potentially dilutive shares outstanding during the period . the dilutive effect of participating securities is calculated under the more dilutive of either the treasury method or the two-class method . ( p ) research , development and engineering research , development and engineering costs are expensed as incurred . costs for software development incurred subsequent to establishing technological feasibility , in the form of a working model , are capitalized and amortized over their estimated useful lives . to date , software development costs incurred after technological feasibility has been established have not been material . ( q ) segment reporting fasb asc topic no . 280 , segment reporting ( “ asc 280 ” ) , establishes standards for the way that public business enterprises report information about operating segments in annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports . asc 280 also establishes standards for related disclosures about products and services , geographic areas and major customers . the company operates in one reportable segment : cloud services for business . ( r ) advertising costs advertising costs are expensed as incurred . advertising costs for the year ended december 31 , 2011 , 2010 and 2009 was $ 45.4 million , $ 36.3 million and $ 28.3 million , respectively . ( s ) sales taxes the company may collect sales taxes from certain customers which are remitted to governmental authorities as required and are excluded from revenues . - 40 - ( t ) recent accounting pronouncements in may 2011 , the fasb issued asu no . 2011-04 , fair value measurement ( topic 820 ) : amendments to achieve common fair value measurement and disclosure requirements in u.s. gaap and ifrss . this guidance was issued to achieve common fair value measurement and disclosure requirements between gaap and international financial reporting standards . this new guidance amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization . this asu is effective for interim and annual periods beginning after december 15 , 2011. the adoption of this new guidance is not expected to have a significant impact on the company 's fair value measurements , financial condition , results of operations or cash flows . in june 2011 , the fasb issued asu no . 2011-05 , comprehensive income ( topic 220 ) : presentation of comprehensive income . this guidance is effective for interim and annual periods beginning december 15 , 2011 and will require companies to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements . it eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders ' equity . the standard does not change the items which must be reported in other comprehensive income , how such items are measured or when they must be reclassified to net income . in addition , in december 2011 , the fasb issued an amendment which defers the requirement to present components of reclassifications of other comprehensive income on the face of the income statement . because this guidance impacts presentation only , it will have no effect on the company 's consolidated financial statements . in september 2011 , the fasb issued asu no . 2011-08 , intangibles – goodwill and other ( topic 350 ) , which simplifies how entities test goodwill for impairment and permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test . this asu is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after december 15 , 2011 ( early adoption is permitted ) . the company decided to early adopt this guidance which did not have a significant impact on the company 's consolidated financial position or results of operations . reclassifications certain prior year reported amounts have been reclassified to conform to the 2011 presentation . 3. business acquisitions in july 2011 , the company purchased for cash data haven limited , an ireland-based provider of online data backup services for businesses , and certain assets of the virtual pbx business of buzz networks limited , a uk-based provider of voice services . in october 2011 , the company purchased for cash c infinity , an ireland-based provider of online data backup and hosting services for businesses ( see note 18 – subsequent events for information on the three acquisitions closed thus far in 2012 ) . the financial impact to j2 global for these transactions is immaterial as of the date of the acquisition . story_separator_special_tag
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"this asu is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after december 15 , 2011 ( early adoption is permitted ) .",
"280 , segment reporting ( “ asc 280 ” ) , establishes standards for the way that public business enterprises report information about operating segments in annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports .",
"advertising costs for the year ended december 31 , 2011 , 2010 and 2009 was $ 45.4 million , $ 36.3 million and $ 28.3 million , respectively .",
"3. business acquisitions in july 2011 , the company purchased for cash data haven limited , an ireland-based provider of online data backup services for businesses , and certain assets of the virtual pbx business of buzz networks limited , a uk-based provider of voice services .",
"the company 's participating securities consist of its unvested share-based payment awards that contain rights to nonforfeitable dividends or dividend equivalents .",
"this guidance is effective for interim and annual periods beginning december 15 , 2011 and will require companies to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements .",
"this asu is effective for interim and annual periods beginning after december 15 , 2011. the adoption of this new guidance is not expected to have a significant impact on the company 's fair value measurements , financial condition , results of operations or cash flows .",
"in addition , in december 2011 , the fasb issued an amendment which defers the requirement to present components of reclassifications of other comprehensive income on the face of the income statement ."
] |
Liquidity
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1
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during the fourth quarter of 2009 , we determined based upon our current and future business needs that the rights to certain external administrative software would not provide any future benefit . accordingly , we recorded a disposal in the amount of $ 2.4 million to the consolidated statement of operations representing the capitalized cost as of december 31 , 2009. total disposals of long-lived assets for the year ended december 31 , 2011 , 2010 and 2009 were approximately $ 0.3 million , $ 0.2 million and $ 2.5 million , respectively . share-based compensation the following table represents the share-based compensation expense included in cost of revenues and operating expenses in the accompanying consolidated statements of operations for the years ended december 31 , 2011 , 2010 and 2009 ( in thousands ) : replace_table_token_14_th - 27 - non-operating income and expenses interest and other income . our interest and other income is generated primarily from interest earned on cash , cash equivalents and short- and long-term investments , gain on sale of investments and gains from foreign currency transactions . interest and other income amounted to $ 1.3 million , $ 6.8 million and $ 3.1 million for the years ended december 31 , 2011 , 2010 and 2009 , respectively . the decrease in interest and other income from 2010 to 2011 was primarily due to the gain on the sale of investments in the amount of approximately $ 4.4 million recognized in 2010 and reduced interest income in 2011 due to lower cash and investment balances following an acquisition in the fourth quarter 2010. the increase in interest and other income from 2009 to 2010 was primarily due to gain on the sale of investments in the amount of approximately $ 4.4 million in 2010. interest and other expense . our interest and other expense amounted to $ 0.1 million , $ 0.1 million and $ 0.4 million for the years ended december 31 , 2011 , 2010 and 2009 , respectively . interest and other expense were primarily related to interest expense . other-than-temporary impairment losses . an other-than-temporary impairment occurred in connection with our securities for the year ended december 31 , 2009. during the second quarter of 2009 , we recorded an impairment of $ 9.2 million within the consolidated statement of operations . during the fourth quarter of 2009 , we determined that one auction rate security was other-than-temporarily impaired and recorded an impairment loss of $ 0.2 million to the consolidated statement of operations . no other-than-temporary impairments were recorded for fiscal years 2011 and 2010. income taxes . our effective income tax rate is based on pre-tax income , statutory tax rates , tax regulations ( including those related to transfer pricing ) and different tax rates in the various jurisdictions in which we operate . the tax bases of our assets and liabilities reflect our best estimate of the tax benefits and costs we expect to realize . when necessary , we establish valuation allowances to reduce our deferred tax assets to an amount that will more likely than not be realized . as of december 31 , 2011 , we had utilizable federal and state ( california ) net operating loss carryforwards ( “ nols ” ) of $ 6.7 million and $ 6.7 million , respectively , after considering substantial restrictions on the utilization of these nols due to “ ownership changes ” , as defined in the internal revenue code of 1986 , as amended . we currently estimate that all of the above-mentioned federal and state nols will be available for use before their expiration . these nols expire through the year 2028 for the federal and 2017 for the state . in addition , as of december 31 , 2011 and 2010 , we had available unrecognized state research and development tax credits of $ 0.2 million and $ 0.8 million , which last indefinitely . in 2008 , the governor of california signed into law legislation that suspended the use of nols for tax years beginning on or after january 1 , 2008 and 2009. in 2010 , the suspension was extended an additional two years through the end of 2011. as a result , the company will not be permitted to utilize its california nols generated in prior years to offset taxable income in 2008 through 2011 for purposes of determining the applicable california income tax due . current law reinstates use of nols in tax years beginning on or after january 1 , 2012 absent extension of the suspension . income tax expense amounted to $ 22.4 million , $ 27.6 million and $ 31.0 million for the years ended december 31 , 2011 , 2010 and 2009 , respectively . our effective tax rates for 2011 , 2010 and 2009 were 16 % , 25 % and 32 % , respectively . the decrease in our effective income tax rate from 2010 to 2011 was primarily attributable to the following : 1. a reversal during the first quarter 2011 of approximately $ 14.1 million and the third quarter 2011 of approximately $ 1.1 million of uncertain income tax positions as a result of expiring statutes of limitations , offset by return to provision adjustments in the third quarter of 2011 ; 2. an increase during 2011 in foreign tax credits and our ability to offset such credits against subpart f income ; 3. an increase during 2011 in the portion of our income being taxed in foreign jurisdictions and subject to lower tax rates than in the u.s. ; 4. a decrease during 2011 in state income taxes , net of the federal income tax benefits , partially offset by : 5. a 2010 book but not tax gain on the sale of an impaired auction rate security , resulting in a significant portion of the valuation allowance being reversed ; 6. an increase during 2011 in return to
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[
"the decrease in our effective income tax rate from 2010 to 2011 was primarily attributable to the following : 1. a reversal during the first quarter 2011 of approximately $ 14.1 million and the third quarter 2011 of approximately $ 1.1 million of uncertain income tax positions as a result of expiring statutes of limitations , offset by return to provision adjustments in the third quarter of 2011 ; 2. an increase during 2011 in foreign tax credits and our ability to offset such credits against subpart f income ; 3. an increase during 2011 in the portion of our income being taxed in foreign jurisdictions and subject to lower tax rates than in the u.s. ; 4. a decrease during 2011 in state income taxes , net of the federal income tax benefits , partially offset by : 5. a 2010 book but not tax gain on the sale of an impaired auction rate security , resulting in a significant portion of the valuation allowance being reversed ; 6. an increase during 2011 in return to",
"our effective income tax rate is based on pre-tax income , statutory tax rates , tax regulations ( including those related to transfer pricing ) and different tax rates in the various jurisdictions in which we operate .",
"income tax expense amounted to $ 22.4 million , $ 27.6 million and $ 31.0 million for the years ended december 31 , 2011 , 2010 and 2009 , respectively .",
"our interest and other income is generated primarily from interest earned on cash , cash equivalents and short- and long-term investments , gain on sale of investments and gains from foreign currency transactions .",
"interest and other income amounted to $ 1.3 million , $ 6.8 million and $ 3.1 million for the years ended december 31 , 2011 , 2010 and 2009 , respectively .",
"share-based compensation the following table represents the share-based compensation expense included in cost of revenues and operating expenses in the accompanying consolidated statements of operations for the years ended december 31 , 2011 , 2010 and 2009 ( in thousands ) : replace_table_token_14_th - 27 - non-operating income and expenses interest and other income .",
"no other-than-temporary impairments were recorded for fiscal years 2011 and 2010. income taxes .",
"current law reinstates use of nols in tax years beginning on or after january 1 , 2012 absent extension of the suspension ."
] |
Liquidity
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0
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share-based compensation the company measures all share-based compensation awards at fair value on the date they are granted to employees and directors , and recognizes compensation cost , net of forfeitures , over the requisite service period for awards with only a service condition , and over a graded vesting period for awards with service and performance or market conditions . the fair value of share-based compensation awards with market conditions is measured using a lattice model and in accordance with accounting standards codification ( `` asc `` ) 718 , is not adjusted based on actual achievement of the performance goals . the black-scholes option pricing model is used to measure the fair value of options . the following sections address the assumptions used related to the black-scholes option pricing model . expected life the expected term of stock options represents the period the stock options are expected to remain outstanding and is based on the simplified method , which is the weighted average vesting term plus the original contractual term divided by two . the company uses the simplified method due to a lack of sufficient historical share option exercise experience upon which to estimate an expected term . expected volatility expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period and is estimated based on a weighted average of the company 's historical stock price . dividend yield the company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future . therefore , a zero expected dividend yield was used in the valuation model . risk-free interest rate the risk-free interest rate is based on united states treasury zero-coupon issues with remaining terms similar to the expected term on the options . forfeitures the company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates . the company uses historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest . if the company 's actual forfeiture rate is materially different from its estimate , the stock-based compensation expense could be different from what the company has recorded in the current period . historically , estimated forfeitures have been in line with actual forfeitures . income taxes the company follows the liability method of accounting for income taxes . under this method , deferred income tax assets and liabilities are determined based upon temporary differences between the carrying amounts and tax bases of the company 's assets and liabilities at the balance sheet date , and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse . the effect on deferred tax assets and liabilities of a change in the tax rates is recognized in income in the period in which the change occurs . the company records a valuation reserve in each reporting period when management believes that it is more likely than not that any deferred tax asset created will not be realized . accounting guidance for income taxes requires that the company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit . if a tax position meets the `` more likely than not `` recognition criteria , accounting guidance requires the tax position be measured at the largest amount of benefit greater than 50 % likely of being realized upon ultimate settlement . earnings per share 64 forum energy technologies , inc. and subsidiaries notes to consolidated financial statements ( continued ) basic earnings per share for all periods presented equals net income divided by the weighted average number of the shares of the company 's common stock outstanding during the period . diluted earnings per share is computed by dividing net income by the weighted average number of shares of the company 's common stock outstanding during the period as adjusted for the dilutive effect of the company 's stock options , restricted share plans and warrants . the exercise price of each option is based on the company 's stock price at the date of grant . the diluted earnings per share calculation excludes approximately 0.3 million stock options and warrants , 1.0 million stock options and warrants and 0.4 million stock options and warrants for the years ended december 31 , 2013 , 2012 and 2011 , respectively , because they were anti-dilutive as the option exercise price was greater than the average market price of the common stock . the following is a reconciliation of the number of shares used for the basic and diluted earnings per share computations ( shares in thousands ) : replace_table_token_19_th non-u.s. local currency translation the company operates globally and its primary functional currency is the u.s. dollar ( $ ) . the majority of the company 's non-u.s. operations have designated the local currency as their functional currency . financial statements of these non-u.s. operations are translated into u.s. dollars using the current rate method whereby assets and liabilities are translated at the balance sheet rate and income and expenses are translated into u.s. dollars at the average exchange rates in effect during the period . the resultant translation adjustments are reported as a component of accumulated other comprehensive income within stockholders ' equity . noncontrolling interest noncontrolling interests are classified as equity in the consolidated balance sheets . net earnings include the net earnings for both controlling and noncontrolling interests , with disclosure of both amounts on the consolidated statements of earnings . fair value the carrying amounts for financial instruments classified as current assets and current liabilities approximate fair value , due to the short maturity of such instruments . story_separator_special_tag the flow equipment product line due to the deterioration in this market
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[
"the following is a reconciliation of the number of shares used for the basic and diluted earnings per share computations ( shares in thousands ) : replace_table_token_19_th non-u.s. local currency translation the company operates globally and its primary functional currency is the u.s. dollar ( $ ) .",
"income taxes the company follows the liability method of accounting for income taxes .",
"earnings per share 64 forum energy technologies , inc. and subsidiaries notes to consolidated financial statements ( continued ) basic earnings per share for all periods presented equals net income divided by the weighted average number of the shares of the company 's common stock outstanding during the period .",
"if a tax position meets the `` more likely than not `` recognition criteria , accounting guidance requires the tax position be measured at the largest amount of benefit greater than 50 % likely of being realized upon ultimate settlement .",
"the exercise price of each option is based on the company 's stock price at the date of grant .",
"accounting guidance for income taxes requires that the company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit .",
"historically , estimated forfeitures have been in line with actual forfeitures ."
] |
Liquidity
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1
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which reduced demand for our products significantly starting in the second quarter 2012. the pressure pumping service providers , our customers , experienced excess capacity of new capital equipment and supplies during the year and these companies began to destock inventory they purchased during prior periods . offsetting the lower margins in the flow equipment product line were modest price increases on certain valve products . also positively impacting our operating margins were lower selling , general and administrative costs as a percent of revenue , which was attributable to tighter controls . corporate — selling , general and administrative expenses for corporate increased slightly by $ 0.4 million , or 1.9 % , for the year ended december 31 , 2012 compared to the year ended december 31 , 2011. corporate costs included , among other items , payroll related costs for general management and management of finance and administration , legal , and human resources ; professional fees for legal , accounting and related services ; and marketing costs . 43 other items several items are not included in segment operating income , but are included in total operating income . these items include : contingent consideration , impairment of intangible assets , transaction expenses and gains/losses from the sale of assets . the contingent consideration we incurred was related to two acquisitions in 2011 in the flow equipment product line in which part of the purchase price was payable in cash and or shares of our common stock based on the earnings of the acquired entities . the change in the amount of the accrual is recorded as part of operating income . lower projected earnings of the acquired entities resulted in an increase to operating income of $ 4.6 million for the year ended december 31 , 2012 due to lower contingent consideration , whereas higher projected earnings of the acquired entities resulted in a decrease to operating income of $ 12.1 million for the year ended december 31 , 2011. during the second quarter 2012 , an impairment loss of $ 1.2 million was recorded on certain intangible assets as a result of a lack of orders for a specific service line within the production & infrastructure segment . transaction expenses relate to legal and other advisory costs incurred in acquiring businesses and are not considered to be part of segment operating income . these costs were $ 1.8 million and $ 3.6 million for the years ended december 31 , 2012 and 2011 , respectively . interest expense we incurred $ 16.4 million of interest expense during the year ended december 31 , 2012 , a decrease of $ 3.2 million from the year ended december 31 , 2011. the decrease in interest expense was attributable to a lower debt level as we repaid a portion of our debt from the net proceeds of the ipo and concurrent private placement during the second quarter 2012 , partially offset by an increase in debt levels incurred to finance the four acquisitions in the fourth quarter 2012. taxes tax expense includes current income taxes expected to be due based on taxable income to be reported during the periods in the various jurisdictions in which we conduct business , and deferred income taxes based on changes in the tax effect of temporary differences between the bases of assets and liabilities for financial reporting and tax purposes at the beginning and end of the respective periods . the effective tax rate , calculated by dividing total tax expense by income before income taxes , was 32.0 % and 33.5 % for the years ended december 31 , 2012 and 2011 , respectively . the effective tax rate for the year ended december 31 , 2012 is lower than the comparable period in 2011 primarily due to a reduction in the tax provision from the finalization of certain prior year tax returns . liquidity and capital resources sources and uses of liquidity our internal sources of liquidity are cash on hand and cash flows from operations , while our primary external sources have included our credit facility described below , trade credit , the issuance of our senior notes described below and sales of our common stock . our primary uses of capital have been for acquisitions , ongoing maintenance and growth capital expenditures , inventories and sales on credit to our customers . we continually monitor potential capital sources , including equity and debt financing , to meet our investment and target liquidity requirements . our future success and growth will be highly dependent on our ability to continue to access outside sources of capital . at december 31 , 2013 , we had cash and cash equivalents of $ 39.6 million and total debt of $ 513.1 million . during the year ended december 31 , 2013 , we used the net proceeds from the issuance of $ 400.0 million of 6.25 % senior notes to repay a portion of the outstanding borrowings under our credit facility . see “ —senior notes due 2021 . ” we believe that cash on hand , cash generated from operations and amounts available under the credit facility will be sufficient to fund operations , working capital needs , capital expenditure requirements and financing obligations for the foreseeable future . our total 2014 capital expenditure budget is approximately $ 60.0 million , which consists of , among other items , investments in constructing or expanding certain manufacturing facilities , purchasing machinery and equipment , expanding our rental fleet of subsea equipment , and general maintenance capital expenditures of approximately $ 25.0 million . this budget does not include expenditures for potential business acquisitions . the amount of capital expenditures incurred in 2013 was $ 60.3 million . these expenditures were funded from borrowings under our credit facility , the issuance of our senior notes and internally generated funds .
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[
"during the year ended december 31 , 2013 , we used the net proceeds from the issuance of $ 400.0 million of 6.25 % senior notes to repay a portion of the outstanding borrowings under our credit facility .",
"these expenditures were funded from borrowings under our credit facility , the issuance of our senior notes and internally generated funds .",
"at december 31 , 2013 , we had cash and cash equivalents of $ 39.6 million and total debt of $ 513.1 million ."
] |
Liquidity
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0
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professional services engagements typically result from sales of new licenses ; revenue is recognized over the term of the engagement . our expectation is that professional services revenue will trend flat-to-down over time due to our strategy to expand margins by migrating more services engagements to our partners and delivering products that require less consulting and training services , and in the near-term will trend down due to the effects of the covid-19 pandemic . professional services revenue declined in fy'20 due to challenges with project scoping and implementation activities and performance due to social distancing measures and facility closures implemented to address the covid-19 pandemic . additionally , there was an increase in the estimated costs to complete a large fixed price professional services contract , which led to a corresponding decrease in the estimated percent complete and a related reversal of revenue . revenue by product group replace_table_token_3_th replace_table_token_4_th core product software revenue growth in fy'20 compared to fy'19 was driven by subscription revenue growth of 68 % ( 69 % constant currency ) , offset by expected declines in perpetual license and perpetual support revenue due to the end of sales of perpetual licenses at the end of q1'19 and conversions of support contracts to subscriptions . total revenue growth was lower than software revenue growth due to a decline in professional services revenue . in fy'20 , professional services revenue declined 26 % ( actual and constant currency ) compared to the year-ago period due in part to the impact of the covid-19 pandemic and the impact of the professional services contract described above . arr increased 14 % ( 11 % constant currency ) for fy'20 compared to fy'19 , reflecting solid arr growth for both plm and cad . 20 growth p roduct s oftware revenue growth in fy'20 was driven by subscription revenue growth of 49 % ( 50 % constant currency ) compared to the year-ago period , offset by an expected decline in perpetual license revenue due to the end of sales of perpetual licenses at the end of q1'19 . the revenue growth rate has been impacted by a decrease in the proportion of license revenue recognized upfront as we have released additional cloud functionality ( for which revenue is recognized ratably ) into our iot products . growth product arr increased 34 % ( 32 % constant currency ) for fy'20 compared to fy'19 , including growth from sales of our products through our strategic alliance with rockwell automation and reflecting strong growth in all three product lines . fsg product software revenue declined in fy'20 compared to fy'19 , primarily driven by a 13 % ( actual and constant currency ) decrease in perpetual support revenue due to conversions of support contracts to subscriptions . this decline was partially offset by a 12 % ( 13 % constant currency ) increase in subscription revenue in fy'20 compared to the year-ago period . the total revenue decrease in fy'20 was higher than the decline in software revenue due to a decrease in professional services revenue , which declined 21 % ( 20 % constant currency ) in fy'20 compared to fy'19 due in part to the impact of the covid-19 pandemic on our ability to execute professional services projects . fsg product arr decreased 2 % ( 4 % constant currency ) for fy'20 compared to fy'19 , largely due to the impact of covid-19 on fsg markets , primarily due to the non-renewal of a government contract which did not receive renewed funding . software revenue by geographic region a significant portion of our software revenue is generated outside the u.s. in both fy'19 and fy'20 , approximately 45 % of software revenue was generated in the americas , 35 % in europe , and 20 % in asia pacific . replace_table_token_5_th americas software revenue growth in fy'20 was driven by growth in subscription revenue of 44 % ( actual and constant currency ) as compared to fy'19 , partially offset by a decline of 16 % ( 15 % constant currency ) in perpetual support revenue , resulting in recurring revenue growth of 24 % ( 25 % constant currency ) . europe software revenue growth in fy'20 was driven by growth in subscription revenue of 67 % ( 69 % constant currency ) as compared to fy'19 , partially offset by a decline in perpetual support revenue , resulting in recurring revenue growth of 28 % ( 30 % constant currency ) . asia pacific software revenue growth in fy'20 was driven by growth in subscription revenue of 70 % ( actual and constant currency ) as compared to fy'19 , partially offset by declines of 86 % ( actual and constant currency ) and 20 % ( actual and constant currency ) in perpetual license and support revenue , respectively . recurring revenue growth was 26 % ( actual and constant currency ) . 21 gross margin replace_table_token_6_th ( 1 ) non-gaap financial measures are reconciled to gaap results under non-gaap financial measures below . license gross margin increased in fy'20 compared to fy'19 due to revenue increasing significantly as a result of asc 606 and the discontinuation of the cancellation clause , while cost of license expenses increased only slightly . license revenue growth was driven by an 88 % ( 89 % constant currency ) increase in subscription license revenue year over year , partially offset by a 54 % ( 53 % constant currency ) decrease in perpetual license revenue . support and cloud services gross margin decreased in fy'20 compared to fy'19 due to a decrease in perpetual support revenue and increases in costs associated with our cloud services business due to increased demand for those services , royalty expenses , and outside service costs . this was partially offset by increases in subscription support and cloud services revenue . story_separator_special_tag these rule makers and or regulators may promulgate interpretations ,
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[
"revenue by product group replace_table_token_3_th replace_table_token_4_th core product software revenue growth in fy'20 compared to fy'19 was driven by subscription revenue growth of 68 % ( 69 % constant currency ) , offset by expected declines in perpetual license and perpetual support revenue due to the end of sales of perpetual licenses at the end of q1'19 and conversions of support contracts to subscriptions .",
"this decline was partially offset by a 12 % ( 13 % constant currency ) increase in subscription revenue in fy'20 compared to the year-ago period .",
"license revenue growth was driven by an 88 % ( 89 % constant currency ) increase in subscription license revenue year over year , partially offset by a 54 % ( 53 % constant currency ) decrease in perpetual license revenue .",
"replace_table_token_5_th americas software revenue growth in fy'20 was driven by growth in subscription revenue of 44 % ( actual and constant currency ) as compared to fy'19 , partially offset by a decline of 16 % ( 15 % constant currency ) in perpetual support revenue , resulting in recurring revenue growth of 24 % ( 25 % constant currency ) .",
"professional services engagements typically result from sales of new licenses ; revenue is recognized over the term of the engagement .",
"20 growth p roduct s oftware revenue growth in fy'20 was driven by subscription revenue growth of 49 % ( 50 % constant currency ) compared to the year-ago period , offset by an expected decline in perpetual license revenue due to the end of sales of perpetual licenses at the end of q1'19 ."
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Liquidity
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1
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guidance or regulations that may result in changes to our accounting policies , which could have a material impact on our financial position and results of operations . 28 revenue recognition effective october 1 , 2018 , we record revenues in accordance with the guidance provided by asc 606 , revenue from contracts with customers . for a full description of our revenue accounting policy , please refer to note 2. summary of significant accounting policies , included in the notes to consolidated financial statements in this annual report . our sources of revenue include : ( 1 ) subscription , ( 2 ) perpetual license , ( 3 ) support for perpetual licenses and ( 4 ) professional services . subscriptions include term-based on-premises licenses , software-as-a-service ( saas ) , and hosting services . revenue is derived from the licensing of computer software products and from related support and or professional services contracts . judgments and estimates determination of performance obligations . our subscriptions are frequently sold as a bundle of products and services , typically pairing on-premises term software licenses with support and or cloud services over the same term . on-premises software is typically determined to be a distinct performance obligation , and is thus recognized separately from the support and or cloud components . on-premises software revenue is generally recognized at the point in time that the software is made available to the customer , while the support and cloud revenue components are recognized over the term of the contract . in cases where subscriptions include cloud functionality and on-premises software , an assessment has been performed to determine whether the cloud services are distinct from the on-premises software . in the substantial majority of instances , cloud services provide incremental functionality to customers and have been considered distinct and recognized separately from the on-premises software . this assessment could have a significant impact on the timing of revenue recognition and may change as our product offerings evolve . allocation of transaction price . we estimate the standalone selling price of each identified performance obligation and use that estimate to allocate the transaction price among said performance obligations . the estimated standalone selling price is determined using all information reasonably available to us , including market conditions and other observable inputs . significant judgment is used in determining the standalone selling prices of the on-premises license , support , and cloud components of our subscription products . these estimates are subject to change as our product offerings change and could have a significant impact due to the difference in the timing of revenue recognition for on-premises licenses and support and or cloud . right to exchange . our multi-year , non-cancellable on-premises subscription contracts provide customers with an annual right to exchange software within the original subscription with other software . we account for this right as a refund liability . for most contracts , we use the expected value method to determine the refund liability associated with this right across a portfolio of contracts . where contracts are outside of the standard portfolio of contracts due to contract size , longer contract duration , or other unique contractual terms , we use the most likely amount method to determine the refund liability for each individual contract . in both circumstances , the transaction price is constrained based on our estimates , which impacts the amount of revenue recognized . changes in these estimates could significantly impact revenue for any given period . accounting for income taxes as part of the process of preparing our consolidated financial statements , we are required to calculate our income tax expense based on taxable income by jurisdiction . there are many transactions and calculations about which the ultimate tax outcome is uncertain ; as a result , our calculations involve estimates by management . some of these uncertainties arise as a consequence of revenue-sharing , cost-reimbursement and transfer pricing arrangements among related entities and the differing tax treatment of revenue and cost items across various jurisdictions . if we were compelled to revise or to account differently for our arrangements , that revision could affect our recorded tax liabilities . the income tax accounting process also involves estimating our actual current tax liability , together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes . these differences result in deferred tax assets and liabilities , which are included within our 29 consolidated balance sheets . we must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and , to the extent we believe that it is more likely than not that all or a portion of our deferred tax assets will not be realized , we must establish a valuation allowance as a charge to income tax expense . as of september 30 , 2020 , we have a valuation allowance of $ 171.3 million against net deferred tax assets in the u.s. and a valuation allowance of $ 34.1 million against net deferred tax assets in certain foreign jurisdictions . we have concluded , based on the weight of available evidence , that a full valuation allowance continues to be required against our u.s. net deferred tax assets as they are not more likely than not to be realized in the future . we will continue to reassess our valuation allowance requirements each financial reporting period . the valuation allowance recorded against net deferred tax assets of certain foreign jurisdictions is established primarily for our capital loss carryforwards , the majority of which do not expire . however , there are limitations imposed on the utilization of such capital losses that could further restrict the recognition of any tax benefits . prior to the passage of the u.s. tax act , the company asserted that substantially all of the undistributed earnings of its foreign
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[
"the valuation allowance recorded against net deferred tax assets of certain foreign jurisdictions is established primarily for our capital loss carryforwards , the majority of which do not expire .",
"as of september 30 , 2020 , we have a valuation allowance of $ 171.3 million against net deferred tax assets in the u.s. and a valuation allowance of $ 34.1 million against net deferred tax assets in certain foreign jurisdictions .",
"we have concluded , based on the weight of available evidence , that a full valuation allowance continues to be required against our u.s. net deferred tax assets as they are not more likely than not to be realized in the future ."
] |
Liquidity
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0
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for the years ended december 31 , 2014 , 2013 and 2012 , the holdco administrative services expense totaled $ 1.7 million , $ 1.4 million and $ 1.3 million , respectively . non-compete agreement . on july 19 , 2006 , in connection with our initial public offering , we entered into a non-compete agreement with nustar energy ( the non-compete agreement ) . under the non-compete agreement , we will have a right of first refusal with respect to the potential acquisition of general partner and other equity interests in publicly traded partnerships under common ownership with the general partner interest . nustar energy has a right of first refusal with respect to the potential acquisition of assets that relate to the transportation , storage or terminalling of crude oil , feedstocks or refined petroleum products ( including petrochemicals ) in the united states and internationally . with respect to any other business opportunities , neither we nor nustar energy are prohibited from engaging in any business , even if we and nustar energy would have a conflict of interest with respect to such other business opportunity . the non-compete agreement remains in effect for so long as we or any of our affiliates own 20 % or more of nustar gp , llc or riverwalk logistics , l.p. axeon as a result of the 2014 asphalt sale , we ceased reporting transactions between us and axeon as related party transactions in our consolidated financial statements on february 26 , 2014. axeon services agreement . nustar gp , llc and axeon were a party to a services agreement , which provided that nustar gp , llc furnish certain administrative and other operating services necessary to conduct the business of axeon for an annual fee totaling $ 10.0 million , subject to adjustment ( the axeon services agreement ) . the axeon services agreement terminated on june 30 , 2014 . the aggregate amount charged under the axeon services agreement was $ 3.1 million , $ 7.9 million and $ 2.6 million for the years ended december 31 , 2014 , 2013 and 2012 , respectively . axeon employee services agreement . in addition , nustar gp , llc entered into an employee services agreement with axeon , effective september 28 , 2012 ( the axeon employee services agreement ) . the axeon employee services agreement provided that certain of nustar gp , llc employees would provide employee-services to axeon . in exchange , axeon would reimburse us for the compensation expense of those employees at the same rates that were in effect at the effective date of the axeon employee services agreement . the axeon employee services agreement terminated on december 31 , 2012 , and effective january 1 , 2013 , those employees became employees of axeon . 6. distributions from nustar energy nustar energy 's partnership agreement , as amended , determines the amount and priority of cash distributions that nustar energy 's common unitholders and general partner may receive . we , as nustar energy 's general partner , are entitled to incentive distributions if the amount nustar energy distributes with respect to any quarter exceeds $ 0.60 per unit , with the maximum percentage of 23 % of the amount of any quarterly distribution in excess of $ 0.66 per unit . we also receive a 2 % distribution with respect to our general partner interest . 50 nustar gp holdings , llc notes to consolidated financial statements – ( continued ) the following table reflects the allocation of nustar energy 's cash distributions earned for the periods indicated among its general and limited partners : replace_table_token_24_th the following table summarizes information related to nustar energy 's quarterly cash distributions : replace_table_token_25_th ( a ) the distribution was announced on january 30 , 2015 . 7. accrued compensation expense and long-term liabilities accrued compensation expense and long-term liabilities consisted of the following : replace_table_token_26_th 51 nustar gp holdings , llc notes to consolidated financial statements – ( continued ) 8. fair value measurements we segregate the inputs used in measuring fair value into three levels : level 1 , defined as observable inputs such as quoted prices for identical assets or liabilities in active markets ; level 2 , defined as inputs other than quoted prices in active markets that are either directly or indirectly observable , such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active ; and level 3 , defined as unobservable inputs in which little or no market data exists . the following liabilities are measured at fair value on a recurring basis : replace_table_token_27_th replace_table_token_28_th fair value of financial instruments we recognize cash equivalents , receivables , payables and short-term debt in our consolidated balance sheets at their carrying amount . the fair values of these financial instruments approximate their carrying amounts . the fair value of our short-term debt would fall in level 2 of the fair value hierarchy . 9. statements of cash flows changes in current assets and current liabilities were as follows : replace_table_token_29_th 52 nustar gp holdings , llc notes to consolidated financial statements – ( continued ) cash flows related to interest and income tax were as follows : replace_table_token_30_th non-cash investing and financing activities for the years ended december 31 , 2014 , 2013 and 2012 mainly consisted of : adjustments to our investment in nustar energy and accumulated other comprehensive ( loss ) income through recognition of our proportionate share of nustar energy 's accumulated other comprehensive loss ; and pension funding adjustments recognized in accumulated other comprehensive ( loss ) income . story_separator_special_tag as of december 31 , 2014 , we had the following long-term incentive plans : the fourth amended and restated 2000 long-term incentive plan , under which nustar gp , llc may award up to 3,250,000 nustar energy ( ns )
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[
"for the years ended december 31 , 2014 , 2013 and 2012 , the holdco administrative services expense totaled $ 1.7 million , $ 1.4 million and $ 1.3 million , respectively .",
"nustar gp , llc and axeon were a party to a services agreement , which provided that nustar gp , llc furnish certain administrative and other operating services necessary to conduct the business of axeon for an annual fee totaling $ 10.0 million , subject to adjustment ( the axeon services agreement ) .",
"we , as nustar energy 's general partner , are entitled to incentive distributions if the amount nustar energy distributes with respect to any quarter exceeds $ 0.60 per unit , with the maximum percentage of 23 % of the amount of any quarterly distribution in excess of $ 0.66 per unit .",
"the aggregate amount charged under the axeon services agreement was $ 3.1 million , $ 7.9 million and $ 2.6 million for the years ended december 31 , 2014 , 2013 and 2012 , respectively .",
"50 nustar gp holdings , llc notes to consolidated financial statements – ( continued ) the following table reflects the allocation of nustar energy 's cash distributions earned for the periods indicated among its general and limited partners : replace_table_token_24_th the following table summarizes information related to nustar energy 's quarterly cash distributions : replace_table_token_25_th ( a ) the distribution was announced on january 30 , 2015 ."
] |
Liquidity
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1
|
common units ; the 2006 long-term incentive plan , under which nustar gp holdings may award up to 2,000,000 nustar gp holdings ( nsh ) units . please refer to notes 14 and 15 of the notes to consolidated financial statements in item 8 . “ financial statements and supplementary data ” for a more detailed discussion of employee benefit plans and unit-based compensation . nustar energy reimburses nustar gp , llc for expenses incurred related to employee benefit plans at cost , and for long-term incentive plan compensation expenses resulting from ns and nsh awards to employees and directors of nustar gp , llc . expenses resulting from nustar gp holdings awards to our non-employee directors are included in “ general and administrative expenses ” on our consolidated statements of comprehensive income ( loss ) . our current liabilities related to the long-term incentive plans and employee benefits are included in “ accrued compensation expense ” and our noncurrent liabilities for employee benefits are included in “ long-term liabilities ” on our consolidated balance sheets . services agreements with axeon nustar gp , llc and axeon were a party to a service agreement , which provided that nustar gp , llc furnish certain administrative and other operating services necessary to conduct the business of axeon for an annual fee totaling $ 10.0 million , subject to adjustment ( the axeon services agreement ) . the axeon services agreement terminated on june 30 , 2014. in addition , nustar gp , llc entered into an employee services agreement with axeon , effective september 28 , 2012 ( the axeon employee services agreement ) . the axeon employee services agreement provided that certain of nustar gp , llc employees would provide employee-services to axeon . in exchange , axeon would reimburse us for the compensation expense of those employees at the same rates that were in effect at the effective date of the axeon employee services agreement . the axeon employee services agreement terminated on december 31 , 2012 , and effective january 1 , 2013 , those employees became employees of axeon . 35 the following table summarizes information pertaining to related party transactions : replace_table_token_13_th critical accounting policies the preparation of financial statements in accordance with u.s. generally accepted accounting principles requires management to select accounting policies and to make estimates and assumptions related thereto that affect the amounts reported in the consolidated financial statements and accompanying notes . actual results could differ from those estimates . the accounting policies below are considered critical due to judgments made by management and the sensitivity of these estimates to deviations of actual results from management 's assumptions . the critical accounting policies should be read in conjunction with note 2 of the notes to the consolidated financial statements in item 8 . “ financial statements and supplementary data , ” which summarizes our significant accounting policies . investment in nustar energy we evaluate our investment in nustar energy for impairment if and when there is evidence that we may not be able to recover the carrying amount of our investment or that nustar energy is unable to sustain an earnings capacity that justifies the carrying amount . a loss in the value of our investment that is other than a temporary decline is recognized currently in earnings based on the difference between the estimated current fair value of the investment and our carrying amount . in order to determine fair value , our management must make certain estimates and assumptions regarding nustar energy 's operations , including , among other things , an assessment of market conditions , projected cash flows , interest rates and growth rates that could significantly impact the fair value of our investment . due to the significant subjectivity of the assumptions used to determine fair value , changes in market conditions and or changes in assumptions could result in significant impairment charges in the future , thus affecting our earnings . we believe that the carrying amount of our investment in nustar energy as of december 31 , 2014 is recoverable . unit-based compensation we account for awards of ns unit options , performance awards and restricted units to employees and directors of nustar gp , llc at fair value , whereby a liability for the award is initially recorded and subsequent changes in the fair value are included in the determination of net income . the fair value of ns unit options is determined using the black-scholes model at each reporting date . the fair value of ns restricted units and performance awards equals the market price of ns common units at each reporting date . however , ns performance awards are earned only upon nustar energy 's achievement of an objective performance measure . we record compensation expense each reporting period such that the cumulative compensation expense equals the portion of the award 's current fair value that has vested . we record compensation expense related to ns unit options until such options are exercised , and we record compensation expense for ns restricted units and performance awards until the date of vesting . we account for awards of nsh restricted units and unit options granted to employees of nustar gp , llc and our directors based on the fair value of the awards at the grant date . the fair value of nsh unit options is determined using the black-scholes model at the grant date , and the fair value of the nsh restricted units equals the market price of nsh common units at the grant date . compensation expense for nsh restricted units and unit options is recognized ratably over the vesting period based on the initial fair value determination .
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[
"services agreements with axeon nustar gp , llc and axeon were a party to a service agreement , which provided that nustar gp , llc furnish certain administrative and other operating services necessary to conduct the business of axeon for an annual fee totaling $ 10.0 million , subject to adjustment ( the axeon services agreement ) .",
"we believe that the carrying amount of our investment in nustar energy as of december 31 , 2014 is recoverable .",
"the axeon services agreement terminated on june 30 , 2014. in addition , nustar gp , llc entered into an employee services agreement with axeon , effective september 28 , 2012 ( the axeon employee services agreement ) .",
"common units ; the 2006 long-term incentive plan , under which nustar gp holdings may award up to 2,000,000 nustar gp holdings ( nsh ) units ."
] |
Liquidity
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0
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as of january 27 , 2017 , our bit solution and bit technology is one of 53 of the epa 's “ registered antimicrobial products effective against clostridium difficile spores ” , as published on the epa 's k list . during 2017 , we continued to build brand awareness through marketing and advertising initiatives , as well as the overall performance of our product . we also increased efforts in our research and development of various testing and studies with a concentration in the hospital-healthcare market . we currently have placed significant resources into a study that focuses on quicker hospital room terminal cleans . in february 2017 , we established a scientific advisory board comprised currently of two experts in biosafety and infection prevention . the scientific advisory board will assist management in developing strategies , scientific research and development and monitoring technological and regulatory trends . 17 we have recently been featured in many publications including some that are listed below . one of the articles was a peer review paper that provided the review of tomi 's efficacy data and the first for showing efficacy by combining equipment and solution in the treatment for control of multidrug resistant organisms ( mdro 's ) . – in april 2017 , we were featured in a article published in the international journal of food microbiology by the usda and public health dept . of harvard university which stated cold plasma activated hydrogen peroxide aerosol ( steramist product ) rendered samples of escherichia coli 0157 : h7 , salmonella typhimurium , and listeria innocua inactive , while also maintaining the quality of the produce tested . – in july 2017 , one of our custom built in systems that was designed and installed into a vivarium facility at the dana farber cancer institute was featured in a publication , alnmag ( animal laboratory magazine ) . – in january of 2018 , we were included in the article “ review of necessary practices for epa submission of a hospital disinfectant using good laboratory practice ( glp ) disinfectant study summaries of tomi 's steramist bit disinfection system ” in the journal of the association for biosafety and biosecurity ( absa ) international 2017 , vol . 22 ( 4 ) 172-180 – in february of 2018 , we were featured in an article that discusses how a hospital in delaware is managing to control the spread of the flu virus . delaware online , part of the usa today network , shared news of record high flu cases in the state and how st. francis healthcare , located in wilmington , de , is managing to address the need to control this highly infectious and aggressive flu strain through the use of our steramist bit technology . in march and may 2017 , we raised through a private placement transaction gross proceeds of $ 6,000,000. we issued senior callable convertible promissory notes ( “ the notes ” ) in two tranches of $ 5,300,000 and $ 700,000 , respectively , which originally were scheduled to mature on august 31 , 2018 and november 8 , 2018 , respectively , unless earlier redeemed , repurchased or converted . in february and march 2018 , we and the holders of the notes extended the maturity date of the $ 5,300,000 principal amount of notes to april 1 , 2019 and the $ 700,000 principal amount of notes to june 8 , 2019. the notes are convertible at any time by the holder into common stock at a conversion price of $ 0.54 per share . we may redeem the notes at any time prior to maturity at a price equal to 100 % of the outstanding principal amount of the notes to be redeemed , plus accrued and unpaid interest as of the redemption date . interest on the notes is payable semi-annually in cash on february 28 and august 31 of each year at a rate of 4 percent per annum . in addition , we issued three-year warrants to purchase up to an aggregate of 999,998 shares of common stock at an exercise price of $ 0.69 per share . currently , we are using the proceeds from the private placement for research and development , international product registration , expansion of our internal sales force , marketing , public relations , expansions of our epa label and for working capital and general corporate purposes . in 2016 , we filed a lawsuit against astro pak corporation ( “ astro pak ” ) and its wholly-owned subsidiary , sixlog corporation ( “ sixlog ” ) , in california federal court for infringing our united states patent nos . 6,969,487 and 7,008,592 and violating our intellectual property rights by , among other things , indicating that our technology and patents were proprietary to sixlog and marketing our patented equipment with sixlog labels . in july 2017 , we settled the above-mentioned litigation , pursuant to which astro pak and sixlog acknowledged that we are the sole owner of ionized hydrogen peroxide decontamination and sterilization technology , patents , and products , which we market under the brands binary ionization technology® ( bit ) and steramist . astro pak and sixlog agreed to cease their prior conduct and pay us a cash settlement . astro pak also agreed to assign its ihp mark to us , complementing our existing trademark and trade name protection . finally , astro pak and sixlog agreed to remove from their website ( s ) or take steps to remove any assertions or suggestions that they own or developed ionized hydrogen peroxide technology or patents , or that they provide any ionized hydrogen peroxide products or services . in august 2017 , we announced the hiring of a new sales director to assist in the development of our business in the life science markets and added 26 additional sales representatives to our life sciences division .
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[
"in march and may 2017 , we raised through a private placement transaction gross proceeds of $ 6,000,000. we issued senior callable convertible promissory notes ( “ the notes ” ) in two tranches of $ 5,300,000 and $ 700,000 , respectively , which originally were scheduled to mature on august 31 , 2018 and november 8 , 2018 , respectively , unless earlier redeemed , repurchased or converted .",
"currently , we are using the proceeds from the private placement for research and development , international product registration , expansion of our internal sales force , marketing , public relations , expansions of our epa label and for working capital and general corporate purposes .",
"in august 2017 , we announced the hiring of a new sales director to assist in the development of our business in the life science markets and added 26 additional sales representatives to our life sciences division .",
"astro pak also agreed to assign its ihp mark to us , complementing our existing trademark and trade name protection .",
"we currently have placed significant resources into a study that focuses on quicker hospital room terminal cleans .",
"6,969,487 and 7,008,592 and violating our intellectual property rights by , among other things , indicating that our technology and patents were proprietary to sixlog and marketing our patented equipment with sixlog labels ."
] |
Liquidity
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1
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story_separator_special_tag in january 2017 , the fasb issued asu no . 2017-04 , simplifying the test for goodwill impairment , to simplify the test for goodwill impairment by removing step 2. an entity will , therefore , perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount , recognizing an impairment charge for the amount by which the carrying amount exceeds the fair value , not to exceed the total amount of goodwill allocated to the reporting unit . an entity still has the option to perform a qualitative assessment to determine if the quantitative impairment test is necessary . the asu is effective for interim and annual periods beginning after december 15 , 2019 , with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after january 1 , 2017. adoption of the asu is prospective . we have not yet selected an adoption date , and the asu will have a currently undetermined impact on the consolidated financial statements . in may 2017 , the fasb issued asu no . 2017-09 , scope of modification accounting , to provide guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting . the asu is effective for interim and annual periods beginning after december 15 , 2017 , with early adoption permitted . adoption of the asu is prospective . we will adopt the asu on january 1 , 2018 , which will have no impact on the consolidated financial statements upon adoption . financial operations overview our financial position as of december 31 , 2017 and 2016 , respectively , was as follows : replace_table_token_2_th 22 during the year ended december 31 , 2017 , our debt and liquidity positions were affected by the following : ● gross proceeds from the issuance of the notes of $ 6,000,000 ; and ● net cash used in operations of approximately $ 2,432,000. results of operations for the year ended december 31 , 2017 compared to the year ended december 31 , 2016 replace_table_token_3_th ( 1 ) includes approximately $ 649,000 and $ 615,000 in non-cash equity compensation expense for the years ended december 31 , 2017 and 2016 , respectively . sales during the years ended december 31 , 2017 and 2016 , we had net revenue of approximately $ 4,994,000 and $ 6,343,000 , respectively , representing a decrease in revenue of approximately 1,349,000 or 21 % . the decrease in revenue during the year ended december 31 , 2017 is attributable primarily to the fact that a distributor placed a large order in the first quarter of 2016 , with no such corresponding transaction during the same period in 2017. net revenue product and service revenue replace_table_token_4_th revenue by geographic region replace_table_token_5_th cost of sales during the years ended december 31 , 2017 and 2016 , our cost of sales were approximately $ 1,928,000 and $ 2,611,000 , respectively , representing a decrease of approximately $ 683,000 or 26 % . the primary reason for the decrease in cost of sales is lower sales during the year ended december 31 , 2017 as compared to the prior year . our gross profit margins as a percentage of sales for the year ended december 31 , 2017 increased as compared to the prior period as a result of the customer and product mix in sales . 23 professional fees professional fees for the year ended december 31 , 2017 were approximately $ 877,000 , as compared to $ 517,000 for the prior year , representing an increase of approximately $ 360,000 , or 70 % . the increase is attributable to increased efforts to protect and strengthen our intellectual property and the lawsuit with astro pak , which we settled in july 2017. professional fees are comprised primarily of legal , accounting and financial consulting fees . depreciation and amortization depreciation and amortization was approximately $ 607,000 and $ 586,000 for the years ended december 31 , 2017 and 2016 , respectively , representing an increase of $ 21,000 , or 4 % . the increase in depreciation expense is attributable to additional fixed assets acquired in 2017 and 2016. selling expenses selling expenses for the year ended december 31 , 2017 were approximately $ 1,256,000 , as compared to $ 1,513,000 for the year ended december 31 , 2016 , representing a decrease of approximately $ 257,000 or 17 % . the decrease in selling expenses is attributable to lower sales volume for the year ended december 31 , 2017 and a reduced number of employees as compared to the prior year . selling expenses represent selling salaries and wages , trade show fees , commissions and marketing expenses . research and development research and development expenses for the year ended december 31 , 2017 were approximately $ 454,000 , as compared to $ 184,000 for the year ended december 31 , 2016 , representing an increase of approximately $ 270,000 , or 147 % . the primary reason for the increase was attributable to current and ongoing studies and testing in connection with our product related to quicker hospital terminal cleans . research and development expenses mainly include costs incurred in generating and supporting research on improving , extending and applying our patents in the field of mechanical cleaning and decontamination . consulting fees consulting fees for the year ended december 31 , 2017 were approximately $ 211,000 , as compared to $ 307,000 for the year ended december 31 , 2016 , representing a decrease of approximately $ 96,000 , or 31 % . the decrease in consulting fees is primarily due to significant charge incurred during the year ended december 31 , 2016 with no such charge in 2017. equity compensation expen se equity compensation expense for the year ended december 31 , 2017 was approximately $ 649,000 , as compared to
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[
"financial operations overview our financial position as of december 31 , 2017 and 2016 , respectively , was as follows : replace_table_token_2_th 22 during the year ended december 31 , 2017 , our debt and liquidity positions were affected by the following : ● gross proceeds from the issuance of the notes of $ 6,000,000 ; and ● net cash used in operations of approximately $ 2,432,000. results of operations for the year ended december 31 , 2017 compared to the year ended december 31 , 2016 replace_table_token_3_th ( 1 ) includes approximately $ 649,000 and $ 615,000 in non-cash equity compensation expense for the years ended december 31 , 2017 and 2016 , respectively .",
"the increase is attributable to increased efforts to protect and strengthen our intellectual property and the lawsuit with astro pak , which we settled in july 2017. professional fees are comprised primarily of legal , accounting and financial consulting fees .",
"our gross profit margins as a percentage of sales for the year ended december 31 , 2017 increased as compared to the prior period as a result of the customer and product mix in sales .",
"the asu is effective for interim and annual periods beginning after december 15 , 2019 , with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after january 1 , 2017. adoption of the asu is prospective .",
"we have not yet selected an adoption date , and the asu will have a currently undetermined impact on the consolidated financial statements ."
] |
Liquidity
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2
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$
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[
"$"
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Liquidity
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0
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the increase was partially offset by naturally declining production in the fayetteville shale and to a much lesser extent , declining production from the anadarko basin granite wash and the marginal/uneconomic property sales in northwestern oklahoma and kearny county , kansas . ( 38 ) production by quarter for 2018 and 2017 was as follows ( mcfe ) : replace_table_token_14_th lease bonus and rentals lease bonuses and rentals decreased $ 3,568,300 in 2018 . the decrease was mainly due to the company leasing less valuable acreage in 2018 versus 2017. in 2018 , the company leased 1,754 net mineral acres in oklahoma ( mainly in major , ellis , and roger mills counties ) , 415 net mineral acres in texas ( mainly in dawson county ) and 135 net mineral acres in new mexico ( mainly in lea and eddy counties ) . in 2017 , the company leased 2,067 net mineral acres in oklahoma ( mainly in dewey , canadian , mcclain and grady counties ) , 272 net mineral acres in texas ( mainly in andrews and dawson counties ) and 125 net mineral acres in new mexico ( mainly in lea and eddy counties ) . gains ( losses ) on derivative contracts the fair value of derivative contracts was a net liability of $ 3,414,016 as of september 30 , 2018 , and a net asset of $ 516,159 as of september 30 , 2017. we had a net loss on derivative contracts of $ 4,932,068 in 2018 as compared to a net gain of $ 1,249,840 in 2017. the change is principally due to the oil collars and fixed price swaps being less beneficial in 2018 , as nymex oil futures experienced increases in price in relation to the collars and the fixed prices of the swaps . net cash paid related to derivative contracts settled during 2018 was $ 1,001,893 compared to net cash received of $ 305,410 in 2017. as of september 30 , 2018 , the company 's natural gas and oil costless collar contracts and fixed price swaps have expiration dates of december 2018 through june 2020. the company utilizes derivative contracts for the purpose of protecting its return on investments . lease operating expenses ( loe ) loe increased $ 777,309 or 6 % in 2018. loe costs per mcfe of production decreased from $ 1.14 in 2017 to $ 1.10 in 2018. loe related to field operating costs increased $ 225,954 or 3 % in 2018 , compared to 2017. field operating costs were $ 0.55 per mcfe in 2018 , compared to $ 0.58 per mcfe in 2017. this decrease in rate was principally the result of significant new low-cost production coming on line in late 2017 and the company selling some high operating cost wells in late 2017 and early 2018. the increase in loe related to field operating costs was coupled with an increase in handling fees ( primarily gathering , transportation and marketing costs ) of $ 551,355 in 2018 , primarily due to increased production in 2018. on a per mcfe basis , these handling fees were $ 0.55 in 2018 as compared to $ 0.56 in 2017. natural gas sales bear the large majority of the ( 39 ) handling fees . handling fees are charged either as a percent of sales or based on production volumes . production taxes production taxes increased $ 540,651 or 35 % in 2018 , as compared to 2017. the increase in amount was primarily the result of increased oil , ngl and natural gas sales of $ 8,449,423 during 2018. production taxes as a percentage of oil , ngl and natural gas sales increased from 3.9 % in 2017 to 4.3 % in 2018. the increase in tax rate was mainly due to a change in the oklahoma production tax laws that took effect july 1 , 2018. the discounted tax rate was increased from 2.2 % to 5.2 % for the first three years of production on horizontally drilled wells . there was no change in the ultimate rate of 7.2 % after the discounted period expires . the low overall production tax rate in both years was due to a large proportion of the company 's oil and natural gas revenues coming from horizontally drilled wells , which are eligible for reduced oklahoma and arkansas production tax rates in the first few years of production . depreciation , depletion and amortization ( dd & a ) dd & a decreased $ 2,508 in 2018. dd & a per mcfe was $ 1.50 in 2018 , compared to $ 1.66 in 2017. dd & a decreased $ 1,941,354 as the result of a $ 0.16 decrease in the dd & a rate per mcfe . this was mostly offset by an increase of $ 1,938,846 due to oil , ngl and natural gas production volumes increasing 11 % collectively in 2018 , compared to 2017. the rate decrease was principally due to higher oil and ngl prices utilized in the reserve calculations during 2018 , as compared to 2017 , lengthening the economic life of wells thus resulting in higher projected remaining reserves on a significant number of wells . the company had new high-volume wells with low finding costs begin producing in the later part 2017 and early 2018 , which also contributed to the rate decrease . provision for impairment provision for impairment decreased $ 662,990 in 2018 , as compared to 2017. no impairment was recorded during 2018. during 2017 , impairment of $ 46,279 was recorded on five fields , primarily in oklahoma and texas . story_separator_special_tag in addition , the company is required to maintain certain financial ratios , a current ratio ( as defined by the bank agreement – current assets includes availability under outstanding credit facility ) of no less than 1.0 to 1.0 and a funded debt to ebitda ( trailing 12 months as defined by
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[
"gains ( losses ) on derivative contracts the fair value of derivative contracts was a net liability of $ 3,414,016 as of september 30 , 2018 , and a net asset of $ 516,159 as of september 30 , 2017. we had a net loss on derivative contracts of $ 4,932,068 in 2018 as compared to a net gain of $ 1,249,840 in 2017. the change is principally due to the oil collars and fixed price swaps being less beneficial in 2018 , as nymex oil futures experienced increases in price in relation to the collars and the fixed prices of the swaps ."
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Liquidity
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1
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bank agreement – traditional ebitda with the unrealized gain or loss on derivative contracts also removed from earnings ) of no more than 4.0 to 1.0. at september 30 , 2018 , the company was in compliance with the covenants of the loan agreement and had $ 29,000,000 of availability under its outstanding credit facility . ( 48 ) the table below summarizes the company 's contractual obligations and commitments as of september 30 , 2018 : replace_table_token_18_th the company 's building lease is accounted for as an operating lease and therefore the leased asset and associated liabilities of future rent payments are not included on the company 's balance sheets . at september 30 , 2018 , the company 's derivative contracts were in a net liability position of $ 3,414,016. the ultimate settlement amounts of the derivative contracts are unknown because they are subject to continuing market risk . please read item 7a – “ quantitative and qualitative disclosures about market risk ” and note 1 to the financial statements included in item 8 – “ financial statements and supplementary data ” for additional information regarding the derivative contracts . as of september 30 , 2018 , the company 's estimate for asset retirement obligations was $ 2,809,378. asset retirement obligations represent the company 's share of the future expenditures to plug and abandon the wells in which the company owns a working interest at the end of their economic lives . these amounts were not included in the schedule above due to the uncertainty of timing of the obligations . please read note 1 to the financial statements included in item 8 – “ financial statements and supplementary data ” for additional information regarding the company 's asset retirement obligations . critical accounting policies preparation of financial statements in conformity with accounting principles generally accepted in the united states requires management to make estimates , judgments and assumptions that affect the reported amounts of assets , liabilities , revenues and expenses , and the disclosure of contingent assets and liabilities . however , the accounting principles used by the company generally do not change the company 's reported cash flows or liquidity . existing rules must be interpreted and judgments made on how the specifics of a given rule apply to the company . the more significant reporting areas impacted by management 's judgments and estimates include : crude oil , ngl and natural gas reserve estimation ; derivative contracts ; impairment of assets ; oil , ngl and natural gas sales revenue accruals and provision for income taxes . management 's judgments and estimates in these areas are based on information available from both internal and external sources , including engineers , geologists , consultants and historical experience in similar matters . actual results could differ from the estimates as additional information becomes known . the oil , ngl and natural gas sales revenue accrual is particularly subject to estimate inaccuracies due to the company 's status as a non-operator on all of its properties . as such , production and price information obtained from well operators is ( 49 ) substantially delayed . this causes the estimation of recent production and prices used in the oil , ngl and natural gas r evenue accrual to be subject to future change . oil , ngl and natural gas reserves management considers the estimation of the company 's crude oil , ngl and natural gas reserves to be the most significant of its judgments and estimates . these estimates affect the unaudited standardized measure disclosures included in note 11 to the financial statements in item 8 – “ financial statements and supplementary data , ” as well as dd & a and impairment calculations . changes in crude oil , ngl and natural gas reserve estimates affect the company 's calculation of dd & a , asset retirement obligations and assessment of the need for asset impairments . the company 's independent consulting petroleum engineer , with assistance from company staff , prepares estimates of crude oil , ngl and natural gas reserves on an annual basis , with a semi-annual update . these estimates are based on available geologic and seismic data , reservoir pressure data , core analysis reports , well logs , analogous reservoir performance history , production data and other available sources of engineering , geological and geophysical information . between periods in which reserves would normally be calculated , the company updates the reserve calculations utilizing prices which are updated through the current period . in accordance with the sec rules , the reserve estimates were based on average individual product prices during the 12-month period prior to september 30 determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period , unless prices were defined by contractual arrangements , excluding escalations based upon future conditions . based on the company 's 2018 dd & a , a 10 % change in the dd & a rate per mcfe would result in a corresponding $ 1,839,504 annual change in dd & a expense . crude oil , ngl and natural gas prices are volatile and largely affected by worldwide production and consumption and are outside the control of management . however , projected future crude oil , ngl and natural gas pricing assumptions are used by management to prepare estimates of crude oil , ngl and natural gas reserves and future net cash flows used in asset impairment assessments and in formulating management 's overall operating decisions . successful efforts method of accounting the company has elected to utilize the successful efforts method of
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[
"bank agreement – traditional ebitda with the unrealized gain or loss on derivative contracts also removed from earnings ) of no more than 4.0 to 1.0. at september 30 , 2018 , the company was in compliance with the covenants of the loan agreement and had $ 29,000,000 of availability under its outstanding credit facility ."
] |
Liquidity
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0
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in addition , we have continued to develop and promote cash management services including sweep accounts and remote deposit capture in order to increase the level of commercial deposit accounts . we believe that the development and promotion of these products has made us more competitive in attracting commercial deposits during recent periods . the following table sets forth the balances of our deposit accounts at the dates indicated . replace_table_token_11_th 40 the following table indicates the amount of jumbo certificates of deposit by time remaining until maturity as of september 30 , 2019. jumbo certificates of deposit require minimum deposits of $ 100,000 . ( in thousands ) amount three months or less $ 9,818 over three through six months 6,383 over six through twelve months 16,439 over twelve months 30,113 total $ 62,753 borrowings . we use borrowings from the fhlb consisting of advances and borrowings under a line of credit arrangement to supplement our supply of funds for loans and investments . we also utilize retail repurchase agreements as a source of borrowings . the following table sets forth certain information regarding the bank 's use of fhlb borrowings . replace_table_token_12_th the outstanding balance of borrowings from the fhlb increased $ 132.5 million , from $ 90.0 million at september 30 , 2018 to $ 222.5 million at september 30 , 2019. fhlb borrowings are primarily used to fund loan demand and to purchase available for sale securities . the following table sets forth certain information regarding the bank 's use of borrowings under retail repurchase agreements . replace_table_token_13_th on september 20 , 2018 , the company entered into a subordinated note purchase agreement in the principal amount of $ 20 million . the subordinated note initially bears a fixed interest rate of 6.02 % per year through september 30 , 2023 , and thereafter a floating rate , reset quarterly , equal to the three-month libor rate plus 310 basis points . all interest is payable quarterly and the subordinated note is scheduled to mature on september 30 , 2028. the subordinated note is an unsecured subordinated obligation of the company and may be repaid in whole or in part , without penalty , on or after september 30 , 2023. the subordinated note is intended to qualify as tier 2 capital for the company under regulatory guidelines . the subordinated note had a carrying value of $ 19.7 million , net of unamortized debt issuance costs of 271,000 , at september 30 , 2019 on the balance sheet of the consolidated financial statements . the bank has entered into federal funds purchased line of credit facilities with two other financial institutions that established lines of credit not to exceed the lesser of $ 20 million or 25 % of the bank 's equity capital , excluding reserves , and $ 15 million , respectively . at september 30 , 2019 , the bank had $ 4.0 million outstanding in federal funds purchased under one of the lines of credit . stockholders ' equity . stockholders ' equity increased $ 22.3 million , from $ 98.8 million at september 30 , 2018 to $ 121.1 million at september 30 , 2019. the increase is due to retained net income of $ 14.7 million during the year ended september 30 , 2019 and a $ 6.9 million increase in accumulated other comprehensive income due to an increase in the market value of available-for-sale securities . 41 results of operations for the years ended september 30 , 2019 , 2018 and 2017 story_separator_special_tag text-align : justify ; text-indent : 0.5in `` > 43 average balances and yields . the following tables present information regarding average balances of assets and liabilities , the total dollar amounts of interest income and dividends from average interest-earning assets , the total dollar amounts of interest expense on average interest-bearing liabilities , and the resulting annualized average yields and costs . the yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities , respectively , for the periods presented . nonaccrual loans are included in average balances only . loan fees are included in interest income on loans and are not material . tax exempt income on loans and investment securities for the 2019 , 2018 and 2017 periods has been adjusted to a tax equivalent basis using a federal marginal tax rate of 21.0 % , 24.5 % and 34.0 % , respectively . replace_table_token_14_th 44 rate/volume analysis . the following table sets forth the effects of changing rates and volumes on our net interest income . the rate column shows the effects attributable to changes in rate ( changes in rate multiplied by prior volume ) . the volume column shows the effects attributable to changes in volume ( changes in volume multiplied by prior rate ) . the net column represents the sum of the prior columns . changes attributable to changes in both rate and volume have been allocated proportionally based on the absolute dollar amounts of change in each . replace_table_token_15_th provision for loan losses . the provision for loan losses increased $ 110,000 , or 8.1 % , from $ 1.4 million for the year ended september 30 , 2018 to $ 1.5 million for the year ended september 30 , 2019 due primarily to an increase in total loans of $ 106.7 million . net charge-offs in 2019 were $ 746,000 compared to $ 122,000 for 2018 and nonperforming loans increased $ 907,000 to $ 5.2 million at september 30 , 2019. in 2018 , the provision for loan losses increased $ 52,000 , or 4.0 % , from $ 1.3 million for the year ended september 30 , 2017 to $ 1.4 million for the year ended september 30 , 2018 due primarily to an increase in total loans of $ 84.5 million ( excluding loans acquired in the fnbo merger ) .
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[
"the net column represents the sum of the prior columns .",
"net charge-offs in 2019 were $ 746,000 compared to $ 122,000 for 2018 and nonperforming loans increased $ 907,000 to $ 5.2 million at september 30 , 2019. in 2018 , the provision for loan losses increased $ 52,000 , or 4.0 % , from $ 1.3 million for the year ended september 30 , 2017 to $ 1.4 million for the year ended september 30 , 2018 due primarily to an increase in total loans of $ 84.5 million ( excluding loans acquired in the fnbo merger ) .",
"the provision for loan losses increased $ 110,000 , or 8.1 % , from $ 1.4 million for the year ended september 30 , 2018 to $ 1.5 million for the year ended september 30 , 2019 due primarily to an increase in total loans of $ 106.7 million .",
"the yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities , respectively , for the periods presented .",
"stockholders ' equity increased $ 22.3 million , from $ 98.8 million at september 30 , 2018 to $ 121.1 million at september 30 , 2019. the increase is due to retained net income of $ 14.7 million during the year ended september 30 , 2019 and a $ 6.9 million increase in accumulated other comprehensive income due to an increase in the market value of available-for-sale securities ."
] |
ROO
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1
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story_separator_special_tag in addition , we have continued to develop and promote cash management services including sweep accounts and remote deposit capture in order to increase the level of commercial deposit accounts . we believe that the development and promotion of these products has made us more competitive in attracting commercial deposits during recent periods . the following table sets forth the balances of our deposit accounts at the dates indicated . replace_table_token_11_th 40 the following table indicates the amount of jumbo certificates of deposit by time remaining until maturity as of september 30 , 2019. jumbo certificates of deposit require minimum deposits of $ 100,000 . ( in thousands ) amount three months or less $ 9,818 over three through six months 6,383 over six through twelve months 16,439 over twelve months 30,113 total $ 62,753 borrowings . we use borrowings from the fhlb consisting of advances and borrowings under a line of credit arrangement to supplement our supply of funds for loans and investments . we also utilize retail repurchase agreements as a source of borrowings . the following table sets forth certain information regarding the bank 's use of fhlb borrowings . replace_table_token_12_th the outstanding balance of borrowings from the fhlb increased $ 132.5 million , from $ 90.0 million at september 30 , 2018 to $ 222.5 million at september 30 , 2019. fhlb borrowings are primarily used to fund loan demand and to purchase available for sale securities . the following table sets forth certain information regarding the bank 's use of borrowings under retail repurchase agreements . replace_table_token_13_th on september 20 , 2018 , the company entered into a subordinated note purchase agreement in the principal amount of $ 20 million . the subordinated note initially bears a fixed interest rate of 6.02 % per year through september 30 , 2023 , and thereafter a floating rate , reset quarterly , equal to the three-month libor rate plus 310 basis points . all interest is payable quarterly and the subordinated note is scheduled to mature on september 30 , 2028. the subordinated note is an unsecured subordinated obligation of the company and may be repaid in whole or in part , without penalty , on or after september 30 , 2023. the subordinated note is intended to qualify as tier 2 capital for the company under regulatory guidelines . the subordinated note had a carrying value of $ 19.7 million , net of unamortized debt issuance costs of 271,000 , at september 30 , 2019 on the balance sheet of the consolidated financial statements . the bank has entered into federal funds purchased line of credit facilities with two other financial institutions that established lines of credit not to exceed the lesser of $ 20 million or 25 % of the bank 's equity capital , excluding reserves , and $ 15 million , respectively . at september 30 , 2019 , the bank had $ 4.0 million outstanding in federal funds purchased under one of the lines of credit . stockholders ' equity . stockholders ' equity increased $ 22.3 million , from $ 98.8 million at september 30 , 2018 to $ 121.1 million at september 30 , 2019. the increase is due to retained net income of $ 14.7 million during the year ended september 30 , 2019 and a $ 6.9 million increase in accumulated other comprehensive income due to an increase in the market value of available-for-sale securities . 41 results of operations for the years ended september 30 , 2019 , 2018 and 2017 story_separator_special_tag text-align : justify ; text-indent : 0.5in `` > 43 average balances and yields . the following tables present information regarding average balances of assets and liabilities , the total dollar amounts of interest income and dividends from average interest-earning assets , the total dollar amounts of interest expense on average interest-bearing liabilities , and the resulting annualized average yields and costs . the yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities , respectively , for the periods presented . nonaccrual loans are included in average balances only . loan fees are included in interest income on loans and are not material . tax exempt income on loans and investment securities for the 2019 , 2018 and 2017 periods has been adjusted to a tax equivalent basis using a federal marginal tax rate of 21.0 % , 24.5 % and 34.0 % , respectively . replace_table_token_14_th 44 rate/volume analysis . the following table sets forth the effects of changing rates and volumes on our net interest income . the rate column shows the effects attributable to changes in rate ( changes in rate multiplied by prior volume ) . the volume column shows the effects attributable to changes in volume ( changes in volume multiplied by prior rate ) . the net column represents the sum of the prior columns . changes attributable to changes in both rate and volume have been allocated proportionally based on the absolute dollar amounts of change in each . replace_table_token_15_th provision for loan losses . the provision for loan losses increased $ 110,000 , or 8.1 % , from $ 1.4 million for the year ended september 30 , 2018 to $ 1.5 million for the year ended september 30 , 2019 due primarily to an increase in total loans of $ 106.7 million . net charge-offs in 2019 were $ 746,000 compared to $ 122,000 for 2018 and nonperforming loans increased $ 907,000 to $ 5.2 million at september 30 , 2019. in 2018 , the provision for loan losses increased $ 52,000 , or 4.0 % , from $ 1.3 million for the year ended september 30 , 2017 to $ 1.4 million for the year ended september 30 , 2018 due primarily to an increase in total loans of $ 84.5 million ( excluding loans acquired in the fnbo merger )
|
[
"the net column represents the sum of the prior columns .",
"net charge-offs in 2019 were $ 746,000 compared to $ 122,000 for 2018 and nonperforming loans increased $ 907,000 to $ 5.2 million at september 30 , 2019. in 2018 , the provision for loan losses increased $ 52,000 , or 4.0 % , from $ 1.3 million for the year ended september 30 , 2017 to $ 1.4 million for the year ended september 30 , 2018 due primarily to an increase in total loans of $ 84.5 million ( excluding loans acquired in the fnbo merger )",
"the provision for loan losses increased $ 110,000 , or 8.1 % , from $ 1.4 million for the year ended september 30 , 2018 to $ 1.5 million for the year ended september 30 , 2019 due primarily to an increase in total loans of $ 106.7 million .",
"the yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities , respectively , for the periods presented .",
"stockholders ' equity increased $ 22.3 million , from $ 98.8 million at september 30 , 2018 to $ 121.1 million at september 30 , 2019. the increase is due to retained net income of $ 14.7 million during the year ended september 30 , 2019 and a $ 6.9 million increase in accumulated other comprehensive income due to an increase in the market value of available-for-sale securities ."
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ROO
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2
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.
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[
"."
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ROO
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0
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the income from operations decreased in 2014 from 2013 primarily due to lower sales , the impairment charge and the 2013 income recorded from the settlement of the lawsuit against a third party . in both 2014 and 2013 , the company decreased the interest it had accrued related to its tax reporting of the unauthorized transactions by $ 73,725 and $ 145,488 , respectively . the company reversed accrued interest related to the tax returns as they were filed and based upon the expiration of the statute of limitations for certain returns . these impacts are described further in note 13 of the notes to the consolidated financial statements . the effective income tax rate in 2014 was 44.2 % which is comprised of the u.s. federal statutory rate of 34 % , the effect of state income taxes , the decrease in unrecognized tax benefits and the recognition of some federal income tax credits during the year . it is anticipated that the effective income tax rate will be approximately 37 % in 2015 . liquidity and capital resources cash flows the following table summarizes our cash flows from operating , investing and financing activities for each of the past two fiscal years : replace_table_token_5_th operating activities during 2014 , cash provided by operations stayed approximately the same as the prior year with favorable changes to operating assets and liabilities offsetting the decrease in net income . accounts receivable decreased by $ 9,024,275 as of june 30 , 2014 compared to june 30 , 2013. the proceeds of $ 8,500,000 from the lawsuit settlement , received in july 2013 , were in accounts receivable at june 30 , 2013. in addition , there was a decrease in accounts receivable from customers caused by lower sales late in fiscal year 2014 compared to the same period in fiscal year 2013. the contingent legal fees , related to the lawsuit settlement , were $ 2,120,000 and were recorded in accrued liabilities as of june 30 , 2013 . 12 investing activities cash used in investing activities was lower for 2014 as the company decreased spending on tooling and equipment compared to 2013. in 2015 , the company has budgeted $ 600,000 for tooling and leasehold improvements . the company expects to generate sufficient funds through operations to fund these expenditures . financing activities net cash used in financing activities were similar in 2014 because the company paid the same amount in dividends as it did in 2013 . at the board of directors meeting in may 2014 , the company determined that based on the financial results , the company would not declare a quarterly dividend for the quarter ending june 30 , 2014 . the company will determine whether to declare and the amount of any future dividends based upon its assessment of the company 's financial condition and liquidity , improvement in sales as a whole and in particular in the export markets , an increased generation of cash from operations , and the company 's earnings . dividends declared to stockholders decreased in 2014 but dividends paid stayed the same at $ 1,771,849 or $ 0.18 per share in 2014 . as of june 30 , 2014 , the company had no outstanding borrowings on its bank line of credit facility . on july 31 , 2014 , the company had no outstanding borrowings on its bank line of credit facility and availability of approximately $ 5,000,000 under the credit agreement as amended on july 23 , 2014. there were no purchases of common stock in 2014 or 2013 under the stock repurchase program . no stock options were exercised in 2014 or 2013 . story_separator_special_tag compensation , income taxes and other contingencies . we base our estimates on historical experience and assumptions that we believe to be reasonable under the circumstances . actual results may differ from these estimates . revenue recognition the company recognizes revenue when all of the following criteria are met : persuasive evidence of an arrangement exists ; shipment and delivery has occurred ; the seller 's price to the buyer is fixed and determinable ; and collectibility is reasonably assured . when these criteria are generally satisfied , the company recognizes revenue . the company also offers certain customers the right to return products that do not meet the standards agreed with the customer . the company continuously monitors such product returns and can not guarantee that they will continue to experience the same return rates that they have experienced in the past . any significant increase in product quality failure rates and the resulting credit returns could have a material adverse impact on the company 's operating results for the period or periods in which such returns materialize . the company provides for certain sales incentives . the company records a provision for estimated incentives based upon the incentives offered to customers on product related sales in the same period as the related revenues are recorded . the provision is recorded as a reduction of sales . the company also records a provision for estimated sales returns and allowances on product related sales in the same period as the related revenues are recorded . these estimates are based on historical sales returns , analysis of credit memo data and other known factors . if the historical data the company uses to calculate these estimates does not properly reflect future returns , adjustments may be required in future periods . accounts receivable the company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer 's current credit worthiness , as determined by the review of the customer 's current credit information . story_separator_special_tag disclosure controls and procedures ( as defined in rules 13a-15 ( e ) and 15d-15 ( e ) ) of the securities exchange act of 1934 , as amended ( the “ exchange act ” ) are designed to ensure
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[
"at the board of directors meeting in may 2014 , the company determined that based on the financial results , the company would not declare a quarterly dividend for the quarter ending june 30 , 2014 .",
"the company will determine whether to declare and the amount of any future dividends based upon its assessment of the company 's financial condition and liquidity , improvement in sales as a whole and in particular in the export markets , an increased generation of cash from operations , and the company 's earnings .",
"on july 31 , 2014 , the company had no outstanding borrowings on its bank line of credit facility and availability of approximately $ 5,000,000 under the credit agreement as amended on july 23 , 2014. there were no purchases of common stock in 2014 or 2013 under the stock repurchase program .",
"the company also records a provision for estimated sales returns and allowances on product related sales in the same period as the related revenues are recorded .",
"liquidity and capital resources cash flows the following table summarizes our cash flows from operating , investing and financing activities for each of the past two fiscal years : replace_table_token_5_th operating activities during 2014 , cash provided by operations stayed approximately the same as the prior year with favorable changes to operating assets and liabilities offsetting the decrease in net income .",
"it is anticipated that the effective income tax rate will be approximately 37 % in 2015 .",
"revenue recognition the company recognizes revenue when all of the following criteria are met : persuasive evidence of an arrangement exists ; shipment and delivery has occurred ; the seller 's price to the buyer is fixed and determinable ; and collectibility is reasonably assured .",
"when these criteria are generally satisfied , the company recognizes revenue .",
"accounts receivable the company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer 's current credit worthiness , as determined by the review of the customer 's current credit information .",
"these estimates are based on historical sales returns , analysis of credit memo data and other known factors ."
] |
Liquidity
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1
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that ( 1 ) information required to be disclosed in reports filed or submitted under the exchange act is recorded , processed , summarized and reported within the time periods specified in sec rules and forms ; and ( 2 ) that such information is accumulated and communicated to management , including the principal executive officer and principal financial officer , to allow timely decisions regarding required disclosures . there are inherent limitations to the effectiveness of any system of disclosure controls and procedures , including the possibility of human error and the circumvention or overriding of controls and procedures . accordingly , even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives . the company 's management , including the company 's chief executive officer and chief financial officer , evaluated the effectiveness of the design and operation of the company 's disclosure controls and procedures as of june 30 , 2014 . the company 's management has concluded that the company 's disclosure controls and procedures as of june 30 , 2014 were effective . management 's annual report on internal controls over financial reporting . the company 's management , including its chief executive officer and chief financial officer , is responsible for establishing and maintaining adequate internal control over financial reporting ( as defined in exchange act rules 13a-15 ( f ) and 15d-15 ( f ) ) and designing such internal controls to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the united states of america . there are inherent limitations to the effectiveness of any system of internal control over financial reporting , including the possibility of human error or the circumvention or overriding of controls and procedures . accordingly , even effective internal control over financial reporting can only provide reasonable assurance of achieving its control objectives . management conducted its evaluation of the effectiveness of its internal control over financial reporting based on the framework in the “ 1992 internal control-integrated framework ” and the 2006 `` internal control over financial reporting - guidance for smaller public companies , `` both issued by the committee of sponsoring organizations of the treadway commission ( “ coso ” ) . in connection with this evaluation , there were no changes in the company 's internal control over financial reporting ( as such term is defined in rule 13a-15 ( e ) and 15d-15 ( e ) of the exchange act ) during the quarter ended june 30 , 2014 that have materially affected , or are reasonably likely to materially affect , the company 's internal control over financial reporting . based on this evaluation , management has concluded that the company 's internal control over financial reporting as of june 30 , 2014 was effective . the company plans to adopt `` the 2013 coso framework & sox compliance , `` also issued by coso , on or before the required conversion date in december 2014 . 16 part iii item 10. directors , executive officers and corporate governance . this information is incorporated by reference to the sections entitled `` information as to the nominees , `` `` executive officers , `` `` section 16 ( a ) beneficial reporting compliance , `` `` code of ethics `` and `` board committees - audit committee `` from koss corporation 's proxy statement for its 2014 annual meeting of stockholders filed with the commission under regulation 14a within 120 days of the end of the fiscal year covered by this form 10-k. the company adopted a code of ethics , which is a `` code of ethics `` as defined by applicable rules of the sec , which is applicable to its directors , officers and employees . the code of ethics is publicly available on the company 's website at www.koss.com/en/about/history . if the company makes any substantive amendments to the code of ethics or grants any waiver , including any implicit waiver , from a provision of the code to its principal executive officer , principal financial officer , principal accounting officer or controller or persons performing similar functions , the company will disclose the nature of the amendment or waiver on that website or in a report on form 8-k. item 11. executive compensation . this information is incorporated by reference to the sections entitled `` summary compensation table , `` `` outstanding equity awards at fiscal year end , `` `` director compensation , `` and `` board committees - compensation committee `` from koss corporation 's proxy statement for its 2014 annual meeting of stockholders filed with the commission under regulation 14a within 120 days of the end of the fiscal year covered by this form 10-k. item 12. security ownership of certain beneficial owners and management and related stockholder matters . this information is incorporated by reference to the sections entitled `` beneficial ownership of company securities `` and `` equity compensation plan information `` from koss corporation 's proxy statement for its 2014 annual meeting of stockholders filed with the commission under regulation 14a within 120 days of the end of the fiscal year covered by this form 10-k. item 13. certain relationships and related transactions , and director independence . this information is incorporated by reference to the sections entitled `` independence of the board , `` `` board committees `` and `` related party transactions `` from koss corporation 's proxy statement for its 2014 annual meeting of stockholders filed with the commission under regulation 14a within 120 days of the end of the fiscal year covered by this form
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[
"this information is incorporated by reference to the sections entitled `` beneficial ownership of company securities `` and `` equity compensation plan information `` from koss corporation 's proxy statement for its 2014 annual meeting of stockholders filed with the commission under regulation 14a within 120 days of the end of the fiscal year covered by this form 10-k. item 13. certain relationships and related transactions , and director independence .",
"management conducted its evaluation of the effectiveness of its internal control over financial reporting based on the framework in the “ 1992 internal control-integrated framework ” and the 2006 `` internal control over financial reporting - guidance for smaller public companies , `` both issued by the committee of sponsoring organizations of the treadway commission ( “ coso ” ) .",
"in connection with this evaluation , there were no changes in the company 's internal control over financial reporting ( as such term is defined in rule 13a-15 ( e ) and 15d-15 ( e ) of the exchange act ) during the quarter ended june 30 , 2014 that have materially affected , or are reasonably likely to materially affect , the company 's internal control over financial reporting .",
"the company 's management , including its chief executive officer and chief financial officer , is responsible for establishing and maintaining adequate internal control over financial reporting ( as defined in exchange act rules 13a-15 ( f ) and 15d-15 ( f ) ) and designing such internal controls to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the united states of america .",
"this information is incorporated by reference to the sections entitled `` summary compensation table , `` `` outstanding equity awards at fiscal year end , `` `` director compensation , `` and `` board committees - compensation committee `` from koss corporation 's proxy statement for its 2014 annual meeting of stockholders filed with the commission under regulation 14a within 120 days of the end of the fiscal year covered by this form 10-k. item 12. security ownership of certain beneficial owners and management and related stockholder matters .",
"the company 's management has concluded that the company 's disclosure controls and procedures as of june 30 , 2014 were effective .",
"that ( 1 ) information required to be disclosed in reports filed or submitted under the exchange act is recorded , processed , summarized and reported within the time periods specified in sec rules and forms ; and ( 2 ) that such information is accumulated and communicated to management , including the principal executive officer and principal financial officer , to allow timely decisions regarding required disclosures ."
] |
Liquidity
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0
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as of december 31 , 2020 , we had six properties under active redevelopment and others in various stages of feasibility planning for potential recapture from our net lease portfolio , including four properties for which we have signed new leases and which will be transferred to redevelopment when the appropriate entitlements , permits and approvals have been secured . asset impairment we perform an impairment analysis for the carrying amounts of our properties in accordance with gaap when indicators of impairment exist . we reduced the carrying amounts to fair value , and recorded impairment charges aggregating $ 4.3 million and $ 4.0 million for the years ended december 31 , 2020 and 2019 , respectively , where the carrying amounts of the properties exceed the estimated undiscounted cash flows expected to be received during the assumed holding period which includes the estimated sales value expected to be received at disposition . the impairment charges were attributable to the effect of adding asset retirement costs to certain properties due to changes in estimates associated with our environmental liabilities , which increased the carrying values of these properties in excess of their fair values , reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties , and reductions in estimated sales prices from third-party offers based on signed 31 contracts , letters of intent or indicative bids for certain of our properties . the evaluation and estimates of anticipated cash flows used to conduct our impairment analysis are highly subjective and actual results could vary significantly from our estimates . for a discussion of the risks associated with asset impairments , see “ item 1a . risk factors – our assets may be subject to impairment charges . ” supplemental non-gaap measures we manage our business to enhance the value of our real estate portfolio and , as a reit , place particular emphasis on minimizing risk , to the extent feasible , and generating cash sufficient to make required distributions to stockholders of at least 90 % of our ordinary taxable income each year . in addition to measurements defined by gaap , we also focus on funds from operations ( “ ffo ” ) and adjusted funds from operations ( “ affo ” ) to measure our performance . ffo and affo are generally considered by analysts and investors to be appropriate supplemental non-gaap measures of the performance of reits . ffo and affo are not in accordance with , or a substitute for , measures prepared in accordance with gaap . in addition , ffo and affo are not based on any comprehensive set of accounting rules or principles . neither ffo nor affo represent cash generated from operating activities calculated in accordance with gaap and therefore these measures should not be considered an alternative for gaap net earnings or as a measure of liquidity . these measures should only be used to evaluate our performance in conjunction with corresponding gaap measures . ffo is defined by the national association of real estate investment trusts ( “ nareit ” ) as gaap net earnings before depreciation and amortization of real estate assets , gains or losses on dispositions of real estate , impairment charges and the cumulative effect of accounting changes . our definition of affo is defined as ffo less ( i ) certain revenue recognition adjustments ( defined below ) , ( ii ) changes in environmental estimates , ( iii ) accretion expense , ( iv ) environmental litigation accruals , ( v ) insurance reimbursements , ( vi ) legal settlements and judgments , ( vii ) acquisition costs expensed and ( viii ) other unusual items that are not reflective of our core operating performance . other reits may use definitions of ffo and or affo that are different from ours and , accordingly , may not be comparable . we believe that ffo and affo are helpful to analysts and investors in measuring our performance because both ffo and affo exclude various items included in gaap net earnings that do not relate to , or are not indicative of , our core operating performance . specifically , ffo excludes items such as depreciation and amortization of real estate assets , gains or losses on dispositions of real estate , and impairment charges . however , gaap net earnings and ffo typically include certain other items that the we exclude from affo , including the impact of revenue recognition adjustments comprised of deferred rental revenue ( straight-line rental revenue ) , the net amortization of above-market and below-market leases , adjustments recorded for the recognition of rental income from direct financing leases and the amortization of deferred lease incentives ( collectively , “ revenue recognition adjustments ” ) that do not impact our recurring cash flow and which are not indicative of our core operating performance . deferred rental revenue results primarily from fixed rental increases scheduled under certain leases with our tenants . in accordance with gaap , the aggregate minimum rent due over the current term of these leases is recognized on a straight-line basis rather than when payment is contractually due . the present value of the difference between the fair market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenues from rental properties over the remaining lives of the in-place leases . income from direct financing leases is recognized over the lease terms using the effective interest method , which produces a constant periodic rate of return on the net investments in the leased properties . the amortization of deferred lease incentives represents our funding commitment in certain leases , which deferred expense is recognized on a straight-line basis as a reduction of rental revenue . story_separator_special_tag on december 14 , 2020 , we used a portion of the net proceeds from the series i notes , series j
|
[
"deferred rental revenue results primarily from fixed rental increases scheduled under certain leases with our tenants .",
"” supplemental non-gaap measures we manage our business to enhance the value of our real estate portfolio and , as a reit , place particular emphasis on minimizing risk , to the extent feasible , and generating cash sufficient to make required distributions to stockholders of at least 90 % of our ordinary taxable income each year .",
"story_separator_special_tag on december 14 , 2020 , we used a portion of the net proceeds from the series i notes , series j"
] |
Liquidity
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1
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notes and series k notes ( each as described below ) to repay $ 75.0 million of borrowings outstanding under our restated credit agreement . senior unsecured notes on december 4 , 2020 , we entered into a fifth amended and restated note purchase and guarantee agreement ( the “ fifth amended and restated prudential agreement ” ) with prudential and certain of its affiliates amending and restating our existing fourth amended and restated note purchase agreement . pursuant to the fifth amended and restated prudential agreement , we agreed that our ( a ) 6.0 % series a guaranteed senior notes due february 25 , 2021 , in the original aggregate principal amount of $ 100.0 million ( the “ series a notes ” ) , ( b ) 5.35 % series b guaranteed senior notes due june 2 , 2023 , in the original aggregate principal amount of $ 75.0 million ( the “ series b notes ” ) , ( c ) 4.75 % series c guaranteed senior notes due february 25 , 2025 , in the aggregate principal amount of $ 50.0 million ( the “ series c notes ” ) and ( d ) 5.47 % series d guaranteed senior notes due june 21 , 2028 , in the aggregate principal amount of $ 50.0 million ( the “ series d notes ” ) and ( e ) 3.52 % series f guaranteed senior notes due september 12 , 2029 , in the aggregate principal amount of $ 50.0 million ( the “ series f notes ” ) that were outstanding under the existing fourth restated prudential note purchase agreement would continue to remain outstanding under the fifth amended and restated prudential agreement and we authorized and issued our 3.43 % series i guaranteed senior notes due november 25 , 2030 , in the aggregate principal amount of $ 100.0 million ( the “ series i notes ” and , together with the series a notes , series b notes , series c notes , series d notes and series f notes , the “ notes ” ) to prudential . on december 4 , 2020 , we completed the early redemption of our 6.0 % series a notes due february 25 , 2021 , in the original aggregate principal amount of $ 100.0 million . as a result of the early redemption , we recognized a $ 1.2 million loss on extinguishment of debt on our consolidated statement of operations for the year ended december 31 , 2020. the fifth amended and restated prudential agreement does not provide for scheduled reductions in the principal balance of the series i notes , or any of our previously issued series b notes , series c notes , series d notes , or series f notes prior to their respective maturities . on june 21 , 2018 , we entered into a note purchase and guarantee agreement ( the “ metlife note purchase agreement ” ) with metlife and certain of its affiliates . pursuant to the metlife note purchase agreement , we authorized and issued our 5.47 % series e guaranteed senior notes due june 21 , 2028 , in the aggregate principal amount of $ 50.0 million ( the “ series e notes ” ) . the metlife note purchase agreement does not provide for scheduled reductions in the principal balance of the series e notes prior to their maturity . on december 4 , 2020 , we entered into a first amendment to note purchase and guarantee agreement ( the “ first amended and restated aig agreement ” ) with american general life insurance company amending and restating our existing note purchase and guarantee agreement . pursuant to the first amended and restated aig agreement , we agreed that our 3.52 % series g guaranteed senior notes due september 12 , 2029 , in the aggregate principal amount of $ 50.0 million ( the “ series g notes ” ) that were outstanding under the existing note purchase and guarantee agreement would continue to remain outstanding under the first amended and restated aig agreement and we authorized and issued our $ 50.0 million of 3.43 % series j guaranteed senior notes due november 25 , 2030 ( the “ series j notes ” ) to aig . the first amended and restated aig agreement does not provide for scheduled reductions in the principal balance of the series j notes or any of our previously issued series g notes prior to their respective maturities . on december 4 , 2020 , we entered into a first amended and restated note purchase and guarantee agreement ( the “ first amended and restated massmutual agreement ” ) amending and restating our existing note purchase and guarantee agreement . pursuant to the first amended and restated massmutual agreement , we agreed that our 3.52 % series h guaranteed senior notes due september 12 , 2029 , in the aggregate principal amount of $ 25.0 million ( the “ series h notes ” ) that were outstanding under the existing note purchase and guarantee agreement would continue to remain outstanding under the first amended and restated massmutual agreement and we authorized and issued our $ 25.0 million of 3.43 % series k guaranteed senior notes due november 25 , 2030 ( the “ series k notes ” ) to massmutual . the first amended and restated massmutual agreement does not provide for scheduled reductions in the principal balance of the series k or any of our previously issued series h notes prior to their respective maturities . we used the net proceeds from the issuance of the series i notes , series j notes and series k notes to prepay in full our series a notes due february 25 , 2021 , and repay $ 75.0 million
|
[
"as a result of the early redemption , we recognized a $ 1.2 million loss on extinguishment of debt on our consolidated statement of operations for the year ended december 31 , 2020. the fifth amended and restated prudential agreement does not provide for scheduled reductions in the principal balance of the series i notes , or any of our previously issued series b notes , series c notes , series d notes , or series f notes prior to their respective maturities .",
"we used the net proceeds from the issuance of the series i notes , series j notes and series k notes to prepay in full our series a notes due february 25 , 2021 , and repay $ 75.0 million"
] |
Liquidity
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0
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by integrating a wide range of investment solutions and services , our web-based platform provides financial advisors with the flexibility to address their clients ' needs . envestnet empowers financial advisors to deliver fee-based advice to their clients . we work with both independent advisors ( rias ) , as well as advisors associated with financial institutions ( broker dealers , banks ) . the services we offer and market to financial advisors address advisors ' ability to grow their practice as well as operate more efficiently the envestnet platform spans from the initial meeting an advisor has with a prospective client to the ongoing day-to-day operations of managing an advisory practice . our centrally-hosted technology platform , which we refer to as having open architecture because of its flexibility , provides financial advisors with access to a series of integrated services to help them better serve their clients . these services include risk assessment and selection of investment strategies and solutions , asset allocation models , research and due diligence , portfolio construction , proposal generation and paperwork preparation , model management and account rebalancing , account monitoring , customized fee billing , overlay services covering asset allocation , tax management and socially responsible investing , aggregated multi-custodian performance reporting and communication tools , as well as access to a wide range of leading third-party asset custodians . we offer these solutions principally through the following product and services suites : envestnet 's wealth management software empowers advisors to better manage client outcomes and strengthen their practice . our software unifies the applications and services advisors use to manage their practice and advise their clients , including financial planning ; capital markets assumptions ; asset allocation guidance ; research and due diligence on investment managers and funds ; portfolio management , trading and rebalancing ; multi-custodial , aggregated performance reporting ; and billing calculation and administration . our portfolio management consultants group ( envestnet | pmc ® ) primarily engages in consulting services aimed at providing financial advisors with additional support in addressing their clients ' needs , as well as the creation of proprietary investment solutions and products . envestnet | pmc 's investment solutions and products include managed account and multi-manager portfolios , mutual fund portfolios and etf portfolios . envestnet | pmc also offers prima premium research , comprising institutional-quality research and due diligence on investment managers , mutual funds , etfs and liquid alternatives funds . envestnet | tamarac provides leading portfolio accounting , rebalancing , trading , performance reporting and client relationship management software , principally to high-end rias . envestnet reporting solutions software aggregates and manages investment data , provides performance reporting and benchmarking , giving advisors an in-depth view of clients ' various investments , empowering advisors to give holistic , personalized advice . we believe that our business model results in a high degree of recurring and predictable financial results . revenues overview we earn revenues primarily under two pricing models . first , a majority of our revenues is derived from fees charged as a percentage of the assets that are managed or administered on our technology platform by 36 financial advisors . these revenues are recorded under revenues from assets under management ( aum ) or administration ( aua ) or collectively ( aum/a ) . our asset-based fees vary based on the types of investment solutions and services that financial advisors utilize . asset-based fees accounted for approximately 81 % , 81 % and 77 % of our total revenues for the years ended december 31 , 2012 , 2011 and 2010 , respectively . in future periods , the percentage of our total revenues attributable to asset-based fees is expected to vary based on fluctuations in securities markets , whether we enter into significant license agreements , the mix of aum or aua , and other factors . as of december 31 , 2012 , approximately $ 98 billion of investment assets subject to asset-based fees were managed or administered utilizing our technology platform by approximately 16,100 financial advisors through approximately 450,000 investor accounts . we also generate revenues from recurring , contractual licensing fees for providing access to our technology platform . these revenues are recorded under revenues from licensing and professional services . licensing fees are generally fixed in nature for the contract term and are based on the level of investment solutions and services provided , rather than on the amount of client assets on our technology platform . licensing fees accounted for 15 % , 16 % and 20 % of our total revenues for the years ended december 31 , 2012 , 2011 and 2010 , respectively . fees received in connection with professional services accounted for the remainder of our total revenues . as of december 31 , 2012 , approximately $ 270 billion of investment assets for which we receive licensing fees for utilizing our technology platform were serviced by approximately 6,900 financial advisors through approximately 1,228,000 investor accounts . the following table provides information regarding the amount of assets utilizing our platform , financial advisors and investor accounts in the periods indicated . replace_table_token_5_th revenues from assets under management or administration we generally charge our customers fees based on a higher percentage of the market value of aum than the fees we charge on the market value of aua , because we provide fiduciary oversight and or act as the investment advisor in connection with assets we categorize as aum . the level of fees varies based on the nature of the investment solutions and services we provide , as well as the specific investment manager , fund and or custodian chosen by the financial advisor . a portion of our revenues from assets under management or administration include costs paid by us to third parties for sub-advisory , clearing , custody and brokerage services . these expenses are recorded under cost of revenues . we do not
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[
"asset-based fees accounted for approximately 81 % , 81 % and 77 % of our total revenues for the years ended december 31 , 2012 , 2011 and 2010 , respectively .",
"licensing fees accounted for 15 % , 16 % and 20 % of our total revenues for the years ended december 31 , 2012 , 2011 and 2010 , respectively ."
] |
ROO
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1
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have fiduciary responsibility in connection with aua and , therefore , charge lower fees on these assets . story_separator_special_tag furniture and equipment is depreciated using the straight-line method based on the estimated useful lives of the depreciable assets . leasehold improvements are amortized using the straight-line method over their estimated economic useful lives or the remaining lease term , whichever is shorter . improvements are capitalized , while repairs and maintenance costs are recorded as expenses in the period they are incurred . assets are tested for recoverability whenever events or circumstances indicate that the carrying value of the assets may not be recoverable . internally developed software is amortized on a straight-line basis over its estimated useful life . we evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets . intangible assets are depreciated using an accelerated basis over their estimated economic useful lives and are reviewed for possible impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets . recent developments 2013 developments wealth management solutions on april 11 , 2013 , we entered into a definitive agreement to acquire substantially all of the assets of the wealth management solutions ( wms ) division of prudential investments for $ 10,000 in cash upon closing , subject to certain post-closing adjustments , plus contingent consideration of up to a total of $ 23,000 in cash , based upon meeting certain performance targets , to be paid over three years . wms is a provider of technology solutions that enables financial services firms to develop and enhance their wealth management offerings . we anticipate the acquisition will be completed in the third quarter of 2013 . 2012 developments prima capital holding , inc. agreement on april 5 , 2012 , we completed the acquisition of prima . in accordance with the stock purchase agreement , we acquired all of the outstanding shares of prima for consideration of $ 13,925. prima , now part of envestnet | pmc , provides investment management due diligence , research applications , asset allocation modeling and multi-manager portfolios to the wealth management and retirement industries . prima 's clientele includes banks , independent rias , regional broker-dealers , family offices and trust companies . tamarac , inc. agreement on may 1 , 2012 , we completed the acquisition of tamarac . in accordance with the merger agreement , a newly formed subsidiary of envestnet merged with and into tamarac , and tamarac became a wholly-owned subsidiary of envestnet . under the terms of the merger agreement , net consideration was $ 48,427 for all of the outstanding stock of tamarac . tamarac provides leading portfolio accounting , rebalancing , trading , performance reporting and client relationship management software , principally to high-end rias . 40 in accordance with the terms of the merger agreement between envestnet and tamarac , tamarac senior management were required to apply at least 50 % ( up to 100 % ) of the aggregate proceeds of the tamarac change of control payment totaling $ 2,759 to purchase registered shares of envestnet common stock ( 232,150 shares ) in an amount equal to 95 % multiplied by the envestnet closing market price on the day before the merger closed ( see notes 3 and 12 to the notes to consolidated financial statements ) . in addition , we adopted the envestnet , inc. management incentive plan for envestnet | tamarac management employees ( the 2012 plan ) . the 2012 plan provides for the grant of up to 559,551 shares of unvested common stock . the unvested common stock vests based upon tamarac meeting certain performance conditions and then a subsequent two-year service condition . we also granted to certain tamarac employees 232,150 stock options to acquire envestnet common stock at an exercise price of $ 12.51. these stock options vest on the second anniversary of the grant date ( see notes 3 and 13 to the notes to consolidated financial statements ) . 2011 developments fundquest agreement on december 13 , 2011 , we acquired all of the outstanding shares of fundquest for total consideration of $ 27,796. fundquest , operating as envestnet portfolio solutions , inc. , provides managed account programs , overlay portfolio management , mutual funds , institutional asset management and investment consulting to registered investment advisors , independent advisors , broker-dealers , banks and trust organizations . upon closing of the transaction , the existing platform services agreement between us and fundquest was terminated ( see note 3 to the notes to consolidated financial statements ) and approximately $ 5.8 billion of fundquest 's assets were reclassified to assets under management from assets under administration . in addition , one of fundquest 's clients with $ 1.5 billion in assets transitioned to licensing from assets under administration . fidelity agreement for the years ended december 31 , 2012 , 2011 and 2010 , revenues associated with our relationship with our single largest client , fidelity , accounted for 22 % , 31 % and 31 % , respectively , of our total revenues . as of december 31 , 2011 , we renegotiated a five-year license agreement with fidelity which resulted in a reduction in 2012 license fee revenues . in addition , as a part of the renegotiated agreement , we will continue to receive ongoing platform services fees through the fidelity relationship based upon asset-based fees . critical accounting policies our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the united states , or ( u.s . gaap ) . the accounting policies described below require management to apply significant judgment in connection with the preparation of our consolidated financial statements . in particular , judgment is applied to determine the appropriate assumptions to be used in calculating estimates that affect certain
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[
"fidelity agreement for the years ended december 31 , 2012 , 2011 and 2010 , revenues associated with our relationship with our single largest client , fidelity , accounted for 22 % , 31 % and 31 % , respectively , of our total revenues ."
] |
ROO
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2
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reported amounts in our consolidated financial statements . these estimates and assumptions are based on historical experience and on various other factors that we believe to be reasonable under the circumstances .
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[
"reported amounts in our consolidated financial statements ."
] |
ROO
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0
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59 management 's discussion and analysis cost of revenue and gross margin cpaas cost of revenue consists primarily of fees paid to other network service providers from whom we buy services such as minutes of use , phone numbers , messages , porting of customer numbers and network circuits . cost of revenue also contains costs related to support of our ip voice network , web services , cloud infrastructure , capacity planning and management , rent for network facilities , software licenses , hardware and software maintenance fees and network engineering services . personnel costs ( including non-cash stock-based compensation expenses ) associated with personnel who are responsible for the delivery of services , operation and maintenance of our communications network , and customer support as well as , third-party support agreements and depreciation of network equipment , amortization of internally developed software and gain ( loss ) on disposal of property and equipment are also included in cost of revenue . other cost of revenue consists of costs supporting non-cpaas services including leased circuit costs paid to third party providers , internet connectivity expenses , minutes of use , direct operations , contractors , regulatory fees , surcharges and other pass-through costs and software and hardware maintenance fees . gross margin is calculated by subtracting cost of revenue from revenue , divided by total revenue , expressed as a percentage . our cost of revenue and gross margin have been , and will continue to be , affected by several factors , including the timing and extent of our investments in our network , our ability to manage off-network minutes of use and messaging costs , the product mix of revenue , the timing of amortization of capitalized software development costs and the extent to which we periodically choose to pass on any cost savings to our customers in the form of lower usage prices . operating expenses the most significant components of operating expenses are personnel costs , which consist of salaries , benefits , bonuses , and stock-based compensation expenses . we also incur other non-personnel costs related to our general overhead expenses , including facility expenses , software licenses , web services , depreciation and amortization of assets unrelated to delivery of our services . we expect that our operating expenses will increase in absolute dollars . research and development r & d consist primarily of personnel costs ( including non-cash stock-based compensation expenses ) , outsourced software development and engineering service and cloud infrastructure fees for staging and development of outsourced engineering services . we capitalize the portion of our software development costs in instances where we invest resources to develop software for internal use . we plan to continue to invest in r & d to enhance current product offerings and develop new services . sales and marketing sales and marketing expenses consist primarily of personnel costs , including commissions for our sales employees and non-cash stock-based compensation expenses . sales and marketing expenses also include expenditures related to advertising , marketing , our brand awareness activities , sales support and professional services fees . 60 management 's discussion and analysis we focus our sales and marketing efforts on creating sales leads and establishing and promoting our brand . we plan to continue to invest in sales and marketing in order to expand our cpaas customer base by growing headcount , driving our go-to-market strategies , building brand awareness , advertising and sponsoring additional marketing events . general and administrative general and administrative expenses consist primarily of personnel costs , including stock-based compensation , for our accounting , finance , legal , human resources and administrative support personnel and executives . general and administrative expenses also include costs related to product management and reporting , customer billing and collection functions , information services , professional services fees , credit card processing fees , rent associated with our headquarters in raleigh , north carolina and our other offices , and depreciation and amortization . we expect that we will incur increased costs associated with supporting the growth of our business and to meet the increased compliance requirements associated with our transition to , and operation as , a public company . income taxes for the years ended december 31 , 2015 , 2016 and 2017 , our effective tax rate was 5.5 % , ( 77.4 ) % and 53.7 % , respectively . the increase in our effective tax rate is due to the release of our valuation allowance against deferred tax assets in the fourth quarter of 2016 and the enactment of the tax cuts and jobs act ( the “ act ” ) in the fourth quarter of 2017 . 61 management 's discussion and analysis results of operations consolidated results of operations the following table sets forth the consolidated statements of operations for the periods indicated . replace_table_token_9_th 62 management 's discussion and analysis the following table sets forth our results of operations as a percentage of our total revenue for the periods presented . * replace_table_token_10_th ( * ) columns may not foot due to rounding . 63 management 's discussion and analysis comparison of the years ended december 31 , 2016 and 2017 revenue replace_table_token_11_th in 2017 , total revenue increased by $ 10.8 million , or 7 % , compared to 2016 , and cpaas revenue increased by $ 14.5 million , or 12 % . as a percentage of total revenue , cpaas revenue increased from 77 % to 81 % from 2016 to 2017 . the increase in cpaas revenue was primarily attributable to an increase in the usage of all our service offerings , particularly our voice and messaging usage , which accounted for $ 21.4 million of the increase in cpaas revenue , and our phone number services and 911-enabled phone number services , which accounted for $ 4.1 million of the increase in cpaas revenue . story_separator_special_tag the effective tax rate for
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[
"63 management 's discussion and analysis comparison of the years ended december 31 , 2016 and 2017 revenue replace_table_token_11_th in 2017 , total revenue increased by $ 10.8 million , or 7 % , compared to 2016 , and cpaas revenue increased by $ 14.5 million , or 12 % .",
"general and administrative expenses also include costs related to product management and reporting , customer billing and collection functions , information services , professional services fees , credit card processing fees , rent associated with our headquarters in raleigh , north carolina and our other offices , and depreciation and amortization .",
"personnel costs ( including non-cash stock-based compensation expenses ) associated with personnel who are responsible for the delivery of services , operation and maintenance of our communications network , and customer support as well as , third-party support agreements and depreciation of network equipment , amortization of internally developed software and gain ( loss ) on disposal of property and equipment are also included in cost of revenue .",
"we also incur other non-personnel costs related to our general overhead expenses , including facility expenses , software licenses , web services , depreciation and amortization of assets unrelated to delivery of our services .",
"* replace_table_token_10_th ( * ) columns may not foot due to rounding .",
"story_separator_special_tag the effective tax rate for",
"we expect that our operating expenses will increase in absolute dollars ."
] |
Liquidity
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1
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2016 was ( 77.4 ) % compared to 5.5 % for 2015. loss from discontinued operations , net of income tax in 2016 , loss from discontinued operations decreased by $ 10.6 million compared to 2015 due to the republic wireless spin-off in december 2016. quarterly results of operations the following tables set forth our unaudited quarterly statements of operations data for each of the eight quarters ended december 31 , 2017 . the information for each quarter has been prepared on a basis consistent with our audited consolidated financial statements included in this annual report on form 10-k , and reflect , in the opinion of management , all adjustments of a normal , recurring nature that are necessary for a fair presentation of the financial information contained in those statements . our historical results are not necessarily indicative of the results that may be expected in the future . the following quarterly financial data should be read in conjunction with our audited consolidated financial statements included in this annual report on form 10-k. 68 management 's discussion and analysis replace_table_token_17_th 69 management 's discussion and analysis liquidity and capital resources to date , our principal sources of liquidity have been the proceeds of $ 74.4 million , net of underwriting discounts and commissions , from our initial public offering in november 2017 , in addition to free cash flow driven by payments received from customers using our services , as well as borrowings under our senior secured credit facility . we believe that our cash and cash equivalents balances , our credit facility and the cash flows generated by our operations will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures for at least the next 12 months . statement of cash flows the following table summarizes our cash flows from continuing operations for the periods indicated : replace_table_token_18_th story_separator_special_tag font style= `` font-family : inherit ; font-size:12pt ; `` > december 31 , 2017 . the availability under the credit and security agreement was $ 25.0 million as of december 31 , 2017 . contractual obligations and other commitments the following table summarizes our noncancellable contractual obligations as of december 31 , 2017 : replace_table_token_19_th ( 1 ) operating leases represent total future minimum rent payments under non-cancellable operating lease agreements . ( 2 ) purchase obligations represent total future minimum payments under contracts to various service providers . purchase obligations exclude agreements that are cancellable without penalty . off-balance sheet arrangements we have not entered into any off-balance sheet arrangements and do not have any holdings in variable interest entities . critical accounting policies and significant judgments and estimates our consolidated financial statements are prepared in accordance with gaap . the preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets , liabilities , revenue , costs , and expenses and related disclosures . our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances , the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources . actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material . we believe the accounting policies discussed below are critical to the process of making significant judgments and estimates in the preparation of our financial statements , and to understanding our historical and future performance . revenue recognition and deferred revenue we generate revenue primarily from the sale of communication services to enterprise customers . we recognize revenue when all of the following criteria are met ( i ) persuasive evidence of an arrangement exists ; ( ii ) delivery has occurred ; ( iii ) the fee is fixed or determinable ; and ( iv ) collection is reasonably assured . if collection is not reasonably assured , we defer revenue recognition until collectability becomes reasonably assured . our arrangements do not contain general rights of return . we generally enter into arrangements with customers that are typically 2 to 3 years in length . incremental direct costs incurred related to the acquisition of a customer contract are expensed as incurred . 72 management 's discussion and analysis stock-based compensation stock options awarded to employees , directors and non-employee third parties are measured at fair value on each grant date . options subject to service-based vesting generally vest annually over a four-year period . the determination of the fair value of stock-based compensation arrangements on the grant date requires judgment . we recognize stock-based compensation expense using the black-scholes option-pricing model , net of estimated forfeitures , in order to determine the fair value of stock options , the output of which is affected by a number of variables . these variables include the fair value of our common stock , expected term of the options , expected stock price volatility , risk-free interest rate and expected dividends , which are estimated as follows : fair value of our common stock . the fair value of the shares of our common stock underlying stock options had historically been established by our board of directors with the assistance of an independent third-party valuation firm . because there had been no public market for our common stock , our board of directors had relied on this independent valuation and other factors to establish the fair value of our common stock at the time of grant of the option . the determination of the fair value of our common stock is discussed further below . expected term . the expected term was estimated using the simplified method allowed under sec guidance as we do not have sufficient historical data to use any other method to estimate the expected term . expected volatility . the
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[
"2016 was ( 77.4 ) % compared to 5.5 % for 2015. loss from discontinued operations , net of income tax in 2016 , loss from discontinued operations decreased by $ 10.6 million compared to 2015 due to the republic wireless spin-off in december 2016. quarterly results of operations the following tables set forth our unaudited quarterly statements of operations data for each of the eight quarters ended december 31 , 2017 .",
"statement of cash flows the following table summarizes our cash flows from continuing operations for the periods indicated : replace_table_token_18_th story_separator_special_tag font style= `` font-family : inherit ; font-size:12pt ; `` > december 31 , 2017 .",
"revenue recognition and deferred revenue we generate revenue primarily from the sale of communication services to enterprise customers .",
"the expected term was estimated using the simplified method allowed under sec guidance as we do not have sufficient historical data to use any other method to estimate the expected term .",
"our arrangements do not contain general rights of return .",
"if collection is not reasonably assured , we defer revenue recognition until collectability becomes reasonably assured .",
"incremental direct costs incurred related to the acquisition of a customer contract are expensed as incurred ."
] |
Liquidity
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0
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in an effort to protect the health and safety of our employees , the company enacted numerous proactive , aggressive actions at its facilities globally in the first quarter of 2020 , and implemented a number of safety procedures including hygiene and disinfection protocols , social distancing and wearing ppe . the company expects these actions will continue for the foreseeable future . during 2020 , governments around the world enacted various measures in an effort to contain covid-19 and slow its spread . these measures included orders to close all businesses not deemed “ essential ” , isolate residents to their homes or places of residence , and practice social distancing when engaging in essential activities , which disrupted certain of our operating locations in around the world in the first half of 2020. during the second half of 2020 , all of our manufacturing facilities were operational and were generally running at normal capacity levels . the company continues to work with customers to meet production requirements for their products , many of which are considered essential , including healthcare and medical devices , transportation , communication and energy infrastructure . the company anticipates that the global health crisis caused by covid-19 may continue to negatively impact its business activity for the foreseeable future . it is currently difficult to estimate the magnitude of the covid-19 disruption , if future disruptions will occur due to a resurgence in covid-19 cases and its impact on our employees , customers , suppliers and 21 vendors . the company will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees , customers , partners , suppliers , and other stakeholders , or as required by federal , state , or local authorities . it is not clear what the potential effects any such alterations or modifications may have on our business and operations , including the effects on our customers , employees , and prospects , or on our financial results for the fiscal year 2021. outlook vision and strategy the company closely collaborates with its customers to design and manufacture innovative and reliable solutions for a safer , connected , and more sustainable world in virtually every market that uses electrical energy ; for example , transportation applications like passenger and commercial vehicles , including emobility , industrial applications like renewables and energy storage , hvac and industrial automation and safety , motor drives and power conversion , and electronics applications like data centers and telecommunications , medical devices , home and building automation , appliances , and mobile and consumer electronics . built upon that framework , the secular growth themes of a safer , connected , and more sustainable world , drive increased product content opportunities . the company 's strategic plan is focused on increasing shareholder value by driving profitable sales growth , earnings per share growth , strong cash flow generation , and deploying capital to drive value creation . the company pursues the following major strategic initiatives , which are summarized below , along with more specific areas of focus . strategic objectives priorities double digit sales growth ● grow through increased product content with existing customers and increased market share ● expand portfolio into new and underpenetrated geographies and end markets ● increase innovation capabilities and investments ● expand presence in products and applications that are converging across business segments ● targeted mergers and acquisitions eps growth ● focus on higher profitability growth opportunities ● improve operating margins through operational excellence ● disciplined approach to balancing costs with long-term strategic investments cash flow and liquidity ● disciplined management of working capital ● deployment of capital consistent with capital allocation priorities ● mergers and acquisitions that align with strategy and financial metrics ● grow dividend in line with earnings ● opportunistic share repurchases the company 's strategy is to generate profitable sales growth . in order to accomplish this , the company is focusing on accelerating organic growth by increasing its content and share gains , enhancing technology efforts to drive innovation , capitalizing on cross segment opportunities , and gaining traction in underpenetrated geographies and markets . the company will continue to make targeted strategic acquisitions that align to its strategy and financial metrics to support new business , products , markets , and technologies while leveraging existing customers and targeting new customers . management believes that profitable growth through a combination of organic growth and strategic acquisitions is critical to the company 's competitiveness , while enhancing value the company delivers to all of its stakeholders . in addition , the company continues to implement initiatives across all platforms to enhance productivity while managing its cost structure to align with business conditions , including integration of operations and streamlining administrative and support activities to drive improved operating margins . the company seeks to deploy its capital consistent with capital allocation priorities . priorities for capital deployment , over time , include investments to drive increased organic growth , targeted acquisitions that align to the company 's strategic and financial metrics and returning capital to shareholders through dividends and opportunistic share repurchases . 22 the company has entered the last year of its current five-year growth strategy which is defined below . as such , the company will host a virtual investor and analyst event on february 23 , 2021 to share the specific details of its new five-year strategic plan , which reinforces the company 's continued commitment to profitable growth building on its achievements from its previous five-year plans . the company uses several key indicators to gauge progress toward achieving these objectives . these indicators include organic sales growth , operating margins , cash flow from operations and capital expenditures . story_separator_special_tag through cycles , the company targets double-digit long-term sales growth , split between 5-7 % average annual accelerated organic sales growth and 5-7
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[
"story_separator_special_tag through cycles , the company targets double-digit long-term sales growth , split between 5-7 % average annual accelerated organic sales growth and 5-7"
] |
ROO
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1
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% average annual accelerated growth from strategic acquisitions , while targeting operating margins between 17 % and 19 % and double-digit earnings per share growth . cash flow from operations less capital expenditures is targeted to approximate or exceed net income but in any given year can be significantly impacted by the timing of non-recurring or infrequent expenditures . significant accounting policies and critical estimates critical accounting policies and estimates the preparation of financial statements in conformity with gaap requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities , the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . the company 's most critical accounting policies are those that are most important to the portrayal of its financial condition and results of operations , and which require the company to make its most difficult and subjective judgments , often as a result of the need to make estimates of matters that are inherently uncertain . the company has identified the following as its most critical accounting policies and judgments . although management believes that its estimates and assumptions are reasonable , they are based upon information available when they are made , and therefore , actual results may differ from these estimates under different assumptions or conditions . the company has reviewed these critical accounting policies and related disclosures with the audit committee of its board of directors . significant accounting policies are more fully described in the notes to consolidated financial statements included elsewhere in this annual report . revenue recognition on december 31 , 2017 , the company adopted new guidance on revenue from contracts with customers using the modified retrospective method . the adoption did not have a significant impact on the company 's consolidated financial statements . revenue disaggregation the following table disaggregates the company 's revenue by primary business units for the fiscal years ended december 26 , 2020 and december 28 , 2019 : replace_table_token_5_th 23 replace_table_token_6_th during the fourth quarter of 2020 , the company transferred a business previously reported within the electronics-semiconductor reporting unit to the electronics-passive products and sensors reporting units . this transfer aligns with how this business will be managed and is complimentary with existing electronics passive products and sensors and markets into which they sell . the 2019 disaggregated revenue table has been reclassified to reflect this change . this transfer had no impact to the electronics segment results . see note 16 , segment information , for net sales by segment and countries . revenue recognition the company recognizes revenue on product sales in the period in which the company satisfies its performance obligation and control of the product is transferred to the customer . the company 's sales arrangements with customers are predominately short term in nature and generally provide for transfer of control at the time of shipment as this is the point at which title and risk of loss of the product transfers to the customer . at the end of each period , for those shipments where title to the products and the risk of loss and rewards of ownership do not transfer until the product has been received by the customer , the company adjusts revenues and cost of sales for the delay between the time that the products are shipped and when they are received by the customer . the amount of revenue recorded reflects the consideration to which the company expects to be entitled in exchange for goods and may include adjustments for customer allowance , rebates and price adjustments . the company 's sales channels are primarily through direct sales and independent third-party distributors . the company has elected the practical expedient under accounting standards codification ( `` asc `` ) 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the company would have otherwise recognized is less than one year . revenue and billing the company generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on written sales agreements and purchasing contracts . contract pricing and selling agreement terms are based on market factors , costs , and competition . pricing is often negotiated as an adjustment ( premium or discount ) from the company 's published price lists . the customer is invoiced when the company 's products are shipped to them in accordance with the terms of the sales agreement . as the company 's standard payment terms are less than one year , the company has elected the practical expedient under asc 606-10-32-18 to not assess whether a contract has a significant financing component . the company also elected the practical expedient provided in asc 606-10-25-18b to treat all product shipping and handling activities as fulfillment activities , and therefore recognize the gross revenue associated with the contract , inclusive of any shipping and handling revenue . ship and debit program some of the terms of the company 's sales agreements and normal business conditions provide customers ( distributors ) the ability to receive price adjustments on products previously shipped and invoiced . this practice is common in the industry and is referred to as a “ ship and debit ” program . this program allows the distributor to debit the company for the difference between the distributors ' contracted price and a lower price for specific transactions . under certain circumstances ( usually in a competitive situation or large volume opportunity ) , a distributor will request authorization for pricing allowances to reduce its price . when the company approves such a reduction , the distributor is authorized to “ debit ” its account for the difference between the contracted price and the lower approved price .
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[
"the company has elected the practical expedient under accounting standards codification ( `` asc `` ) 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the company would have otherwise recognized is less than one year .",
"% average annual accelerated growth from strategic acquisitions , while targeting operating margins between 17 % and 19 % and double-digit earnings per share growth ."
] |
ROO
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0
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unallocated internal research and development costs consist primarily of : o personnel costs , which include salaries , benefits and stock-based compensation expense ; o allocated facilities and other expenses , which include expenses for rent and maintenance of facilities and depreciation expense ; and o regulatory expenses and technology license fees related to development activities . the largest component of our operating expenses has historically been the investment in clinical trials , including contract manufacturing arrangements , clinical trial material related costs and other research and development activities . however , we do not allocate internal research and development costs , such as salaries , benefits , stock-based compensation expense and indirect costs to product candidates on a program-specific basis . the following table shows our research and development expenses for the years ended december 31 , 2020 , 2019 and 2018 ( in thousands ) : replace_table_token_1_th 76 we expect research and development expenses will continue to be significant and may increase in the future as we advance our product candidates into and through later stage clinical trials and pursue regulatory approvals , which will require a significant investment in regulatory support and contract manufacturing and clinical trial material related costs . in addition , we continue to evaluate opportunities to acquire or in-license other product candidates and technologies , which may result in higher research and development expenses due to license fees and or milestone payments . the process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming . we may never succeed in timely developing and achieving regulatory approval for our product candidates . the probability of success of our product candidates may be affected by numerous factors , including clinical data , competition , intellectual property rights , manufacturing capability and commercial viability . as a result , we are unable to determine the duration and completion costs of our development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates . the covid-19 pandemic presents additional risks and uncertainties associated with developing drugs , including : delays in trial activities and patient enrollment or diversion of healthcare resources as a result of the evolving effects of the covid-19 pandemic or otherwise ; production shortages or other supply interruptions in clinical trial materials resulting from the evolving effects of the covid-19 pandemic or otherwise ; our ability to hire and retain key research and development personnel ; the scope , rate of progress , results and expense of our ongoing , as well as any additional , clinical trials and other research and development activities ; and the timing and receipt of any regulatory approvals . general and administrative expenses general and administrative expenses consist of personnel costs , allocated expenses and expenses for outside professional services , including legal , audit , accounting services , insurance costs and costs associated with being a public company . personnel costs consist of salaries , benefits and stock-based compensation . allocated expenses consist of facilities and other expenses , which include direct and allocated expenses for rent and maintenance of facilities , depreciation expense and other supplies . our expenses include costs related to compliance with the rules and regulations of the sec and nasdaq , insurance , investor relations , banking fees and other administrative expenses and professional services . we expect our general and administrative expenses to increase in the future due to sales and marketing activities from the commercialization of zokinvy . interest expense interest expense consists of interest and amortization of the debt discount related to the oxford loan . interest income interest income consists of interest earned on our investments in debt securities and cash equivalents . critical accounting policies and estimates our management 's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements , which have been prepared in accordance with generally accepted accounting principles in the united states . the preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets , liabilities and expenses . on an ongoing basis , we evaluate these estimates and judgments . we base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances . these estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not 77 readily apparent from other sources . actual results may differ materially from these estimates . we believe that the accounting policies discussed below are critical to understanding our historical and future performance , as these policies relate to the more significant areas involving management 's judgments and estimates . accrued research and development costs we record accrued expenses for estimated costs of research and development activities conducted by external service providers , which include the conduct of clinical research and contract formulation and manufacturing activities . we record the estimated costs of development activities based upon the estimated amount of services provided but not yet invoiced and include these costs in accrued liabilities in the consolidated balance sheets and within research and development expenses in the consolidated statements of operations . we record accrued expenses for these costs based on the estimated amount of work completed and in accordance with agreements established with these external service providers . we estimate the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services . we make judgments and estimates in determining the accrued balance in each reporting period . as actual costs become known , we adjust our accrued estimates . story_separator_special_tag million in net proceeds , after deducting commissions . on december 18 , 2020 , we
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[
"interest income interest income consists of interest earned on our investments in debt securities and cash equivalents .",
"story_separator_special_tag million in net proceeds , after deducting commissions .",
"the following table shows our research and development expenses for the years ended december 31 , 2020 , 2019 and 2018 ( in thousands ) : replace_table_token_1_th 76 we expect research and development expenses will continue to be significant and may increase in the future as we advance our product candidates into and through later stage clinical trials and pursue regulatory approvals , which will require a significant investment in regulatory support and contract manufacturing and clinical trial material related costs .",
"we record accrued expenses for these costs based on the estimated amount of work completed and in accordance with agreements established with these external service providers ."
] |
Liquidity
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1
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filed a new shelf registration statement on form s-3 ( file no . 333-251497 ) with the securities and exchange commission , which permits the offering , issuance and sale by us up to a maximum aggregate offering price of $ 200.0 million of our common stock , preferred stock , debt securities and warrants . up to a maximum of $ 50.0 million of the maximum aggregate offering price of $ 200.0 million may be issued and sold pursuant to a new atm financing facility under a sales agreement with jefferies . we have not issued any shares under this facility . we believe that the currently available resources will be sufficient to fund our planned operations for at least the next 12 months following the issuance date of these consolidated financial statements . however , if our anticipated operating results are not achieved in future periods , we believe that planned expenditures may need to be reduced or we would be required to raise funding in order to fund our operations . additionally , our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to , and volatility in , the credit and financial markets in the united states and worldwide resulting from the ongoing covid-19 pandemic . our primary uses of cash are to fund operating expenses , including research and development expenditures and general and administrative expenditures . cash used to fund operating expenses is impacted by the timing of when we pay these expenses , as reflected in the change in outstanding accounts payable and accrued expenses . future funding requirements we have not generated any revenue from product sales . we expect to generate revenues from product sales of zokinvy beginning in 2021. at the same time , we expect our expenses to increase in connection with our ongoing development and manufacturing activities , particularly as we continue the research , development , manufacture and clinical trials of , and seek regulatory approval for our product candidates . our primary uses of capital are , and we expect will continue to be , funding research efforts and the development of our product candidates , sales and marketing costs for commercialization of zokinvy and other product candidates , compensation and related expenses , hiring additional staff , including clinical , scientific , operational , financial , and management personnel , and costs associated with operating as a public company . we expect to incur substantial expenditures in the foreseeable future for the development and potential commercialization of our product candidates . we plan to continue to fund losses from operations and capital funding needs through future equity and or debt financings , as well as potential additional collaborations or strategic partnerships with other companies . as a result of economic conditions , general global economic uncertainty , political change and other factors , including the ongoing covid-19 pandemic , we do not know whether additional capital will be available when needed , or that , if available , we will be able to obtain additional capital on reasonable terms . if we are unable to raise additional capital due to the volatile global financial markets , general economic uncertainty or other factors , we may need to curtail planned development or commercialization activities . the sale of additional equity or convertible debt could result in additional dilution to our stockholders . the incurrence of indebtedness would result in debt service obligations and could result in operating and financing covenants that would restrict our operations . we can provide no assurance that financing will be available in the amounts we need or on terms acceptable to us , if at all . if we are not able to secure adequate additional funding we may be forced to delay , make reductions in spending , extend payment terms with suppliers , liquidate assets where possible , and or suspend or curtail planned programs . any of these actions could materially harm our business . 80 cash flows the following table summarizes our cash flows for the periods indicated ( in thousands ) : replace_table_token_3_th story_separator_special_tag style= `` margin-top:6pt ; margin-bottom:0pt ; text-indent:0 % ; font-family : times new roman ; font-size:10pt ; font-weight : normal ; font-style : normal ; text-transform : none ; font-variant : normal ; `` > the amended oxford loan bears interest at a floating rate per annum equal to the greater of either the 30-day u.s. dollar libor reported in the wall street journal plus 6.64 % or 9.15 % . the amended oxford loan has an interest only period until april 1 , 2021 , followed by 36 equal monthly payments of principal and interest . upon the receipt of amended tranche b , the interest only period for borrowed funds will be extended by one year until april 1 , 2022 , followed by 24 equal monthly payments of principal plus accrued interest . at the time of final payment , we are required to pay an exit fee of 7.5 % of the original principal balance of borrowed funds , or $ 2.3 million . in addition , we are required to pay an additional exit fee of $ 1.0 million . on february 23 , 2021 , we entered into the fifth amendment to the oxford loan . the amendment extended the interest only period by 17 months until september 1 , 2022 , followed by 19 equal monthly payments of principal and interest . upon the receipt of amended tranche b , the interest only period for borrowed funds will be extended by six months until march 1 , 2023 , followed by 13 equal monthly payments of principal plus accrued interest . in addition , we paid the amendment fees of $ 0.2 million to the lenders on the effective
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[
"333-251497 ) with the securities and exchange commission , which permits the offering , issuance and sale by us up to a maximum aggregate offering price of $ 200.0 million of our common stock , preferred stock , debt securities and warrants .",
"upon the receipt of amended tranche b , the interest only period for borrowed funds will be extended by six months until march 1 , 2023 , followed by 13 equal monthly payments of principal plus accrued interest .",
"in addition , we paid the amendment fees of $ 0.2 million to the lenders on the effective",
"we plan to continue to fund losses from operations and capital funding needs through future equity and or debt financings , as well as potential additional collaborations or strategic partnerships with other companies ."
] |
Liquidity
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the preparation of these financial statements requires us to make estimates , judgments and assumptions that affect the reported amounts of assets and liabilities , disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of expenses during the reporting periods . in accordance with u.s gaap , we evaluate our estimates and judgments on an ongoing basis . significant estimates include assumptions used in the determination of share-based compensation and some of our research and development expenses . we base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances , the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates under different assumptions or conditions . we define our critical accounting policies , in accordance with u.s. gaap , as those that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations , as well as the specific manner in which we apply those principles . while our significant accounting policies are more fully 60 described in note 2 to our financial statements appearing elsewhere in this annual report , we believe the following are the critical accounting policies used in the preparation of our financial statements that require significant estimates and judgments . revenue recognition on january 1 , 2018 , we adopted accounting standards update , or asu , 2014-09 , revenue from contracts with customers ( topic 606 ) , or asc 606 , as amended by asu 2016-08 , 2016-10 , 2016-12 and 2016-20 using the modified retrospective method . under asc 606 , we recognize revenue in an amount that reflects the consideration to which we expect to be entitled in exchange for the transfer of promised goods or services to customers . to determine revenue recognition for contracts with customers that are within the scope of asc 606 , we perform the following steps : ( 1 ) identify the contract with the customer , ( 2 ) identify the performance obligations in the contract , ( 3 ) determine the transaction price , ( 4 ) allocate the transaction price to the performance obligations in the contract , and ( 5 ) recognize revenue when ( or as ) the entity satisfies a performance obligation . we only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services transferred to the customer . as part of the accounting for our revenue arrangements , we develop assumptions that require judgment such as the estimate of the stand-alone selling price for each performance obligation identified in the contract . licenses of intellectual property : if the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement , we recognize revenue allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license . for licenses that are bundled with other promised goods or services , we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and , if over time , the appropriate method of measuring progress for purposes of recognizing revenue . we evaluate the measure of progress each reporting period and , if necessary , adjust the measure of performance and related revenue recognition . milestone payments : at the inception of each arrangement that includes development , commercialization , and regulatory milestone payments , we evaluate whether the achievement of the milestones is considered probable and estimate the amount to be included in the transaction price using the most likely amount method . performance milestone payments represent a form of variable consideration . if it is probable that a significant revenue reversal would not occur , the associated milestone value is included in the transaction price . achievement of milestones that are not within our or our licensee 's control , such as regulatory approvals , are not considered probable until the approvals are achieved . the transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis and we recognize revenue as or when the performance obligations under the contract are satisfied . at the end of each subsequent reporting period , we re-evaluate the probability of achieving such milestones and any related constraint , and if necessary , adjust our estimate of the overall transaction price . any such adjustments are recorded on a cumulative catch-up basis , which would affect revenues and earnings in the period of adjustment . manufacturing supply services : arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the customer 's discretion are generally considered options . we assess if these options provide a material right to the licensee and if so , they are accounted for as separate performance obligations at the outset of the arrangement . royalties : for arrangements that include sales-based royalties , including milestone payments based on the level of sales , and the license is deemed to be the predominant item to which the royalties relate , we recognize revenue at the later of ( i ) when the related sales occur or ( ii ) when the performance obligation to which some or all of the royalty has been allocated has been satisfied ( or partially satisfied ) . to date , we have not received any royalty revenue resulting from any of our licensing arrangements . accrued expenses as part of
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[
"significant estimates include assumptions used in the determination of share-based compensation and some of our research and development expenses .",
"to determine revenue recognition for contracts with customers that are within the scope of asc 606 , we perform the following steps : ( 1 ) identify the contract with the customer , ( 2 ) identify the performance obligations in the contract , ( 3 ) determine the transaction price , ( 4 ) allocate the transaction price to the performance obligations in the contract , and ( 5 ) recognize revenue when ( or as ) the entity satisfies a performance obligation .",
"achievement of milestones that are not within our or our licensee 's control , such as regulatory approvals , are not considered probable until the approvals are achieved .",
"revenue recognition on january 1 , 2018 , we adopted accounting standards update , or asu , 2014-09 , revenue from contracts with customers ( topic 606 ) , or asc 606 , as amended by asu 2016-08 , 2016-10 , 2016-12 and 2016-20 using the modified retrospective method .",
"as part of the accounting for our revenue arrangements , we develop assumptions that require judgment such as the estimate of the stand-alone selling price for each performance obligation identified in the contract .",
"manufacturing supply services : arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the customer 's discretion are generally considered options .",
"while our significant accounting policies are more fully 60 described in note 2 to our financial statements appearing elsewhere in this annual report , we believe the following are the critical accounting policies used in the preparation of our financial statements that require significant estimates and judgments ."
] |
ROO
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1
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the process of preparing our financial statements , we are required to estimate accrued expenses . story_separator_special_tag this process involves reviewing open contracts and purchase orders , communicating with applicable vendor personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost . we make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us . we periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary . examples of estimated accrued expenses include fees paid to cros and investigative sites in connection with clinical trials . we accrue our expenses related to clinical trials based on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and cros that conduct research activities or manage clinical trials on our behalf . the 61 financial terms of these agreements are subject to negotiation , vary from contract to contract and may result in uneven payment flows . payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones . in accruing service fees , we estimate the time period over which services will be performed and the level of effort to be expended in each period . if the level of effort varies from our estimate , we will adjust the accrual accordingly . if we underestimate or overestimate the level of services performed or the costs of these services , our actual expenses could differ from our estimates . although we do not currently anticipate the future settlement of existing accruals to differ materially from our estimates , our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in us reporting amounts that are too high or too low for any period . share-based compensation compensation cost related to share-based awards granted to employees is measured based on the estimated fair value of the award at the grant date . we estimate the fair value of stock options using a black-scholes option pricing model . compensation expense for options granted to non-employees is determined as the fair value of consideration received or the fair value of the equity instruments issued , whichever is more reliably measured . share-based compensation costs are expensed on a straight-line basis over the relevant vesting period . the fair value of restricted stock units , or rsus , granted is measured based on the market value of our common stock on the date of grant and is recognized ratably over the requisite service period , which is generally the vesting period of the awards . all share-based compensation costs are recorded in general and administrative or research and development costs in the statements of operations based upon the underlying employees ' roles . significant factors , assumptions and methodologies used in determining fair value determining the appropriate fair value measurement of share-based awards requires the use of subjective assumptions . the determination of the fair value measurement of options using the black-scholes option pricing model is affected by our estimated common stock fair values as well as assumptions regarding a number of other subjective variables . these other variables include the expected term of the options , our expected stock price volatility over the expected term of the options , stock option exercise and cancellation behaviors , risk-free interest rates and expected dividends . we estimate the fair value of stock options at the grant date using black-scholes option pricing model with the following assumptions : fair value of our common stock . we estimate the fair value of our common stock by reference to the closing price of our common stock on the nasdaq global market on the date of grant . volatility . we calculate expected volatility based on the historical volatility of our common stock . expected term . we use the simplified method as prescribed by the sec staff accounting bulletin no . 107 , share-based payment , as we do not have sufficient historical exercise and post-vesting termination data to provide a reasonable basis upon which to estimate the expected term of stock options granted to employees . risk-free rate . the risk-free interest rate is based on the yields of u.s. treasury securities with maturities similar to the expected time to liquidity . forfeitures . forfeitures are accounted for as they occur . dividend yield . we have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future . we have an employee stock purchase plan that is considered a compensatory plan . the fair value of the discount and the look-back period of the employee stock purchase plan are estimated using the black-scholes option pricing model and expense is recognized over the six-month withholding period prior to the purchase date . share-based compensation expense related to stock options , the employee stock purchase plan and rsus aggregated $ 3.6 million , $ 4.6 million and $ 4.8 million for the years ended december 31 , 2020 , 2019 and 2018 , respectively . tax valuation allowance we recorded aggregate deferred tax assets of $ 63.4 million , primarily related to our net operating losses , as of december 31 , 2020 , which have been fully offset by a valuation allowance due to uncertainties surrounding our ability to realize these tax benefits . we record a valuation allowance if it is more likely than not that a deferred tax asset will not be realized . we provided a full valuation 62 allowance on our deferred tax assets that primarily consist of cumulative net operating losses , or nols
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[
"examples of estimated accrued expenses include fees paid to cros and investigative sites in connection with clinical trials .",
"we accrue our expenses related to clinical trials based on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and cros that conduct research activities or manage clinical trials on our behalf .",
"compensation expense for options granted to non-employees is determined as the fair value of consideration received or the fair value of the equity instruments issued , whichever is more reliably measured .",
"if the level of effort varies from our estimate , we will adjust the accrual accordingly .",
"payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones .",
"although we do not currently anticipate the future settlement of existing accruals to differ materially from our estimates , our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in us reporting amounts that are too high or too low for any period ."
] |
ROO
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2
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for the period from our inception through december 31 , 20 20 . we incurred a net loss for tax purposes of $ 12.3 million for the year ended december 31 , 20 20 .
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[
"for the period from our inception through december 31 , 20 20 .",
"we incurred a net loss for tax purposes of $ 12.3 million for the year ended december 31 , 20 20 ."
] |
ROO
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0
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this is attributable to the difference between hep 's contributed capital and its allocated equity at formation of the slc pipeline . this difference is being amortized as an adjustment to hep 's pro-rata share of earnings . additionally , we have a 50 % ownership interest in sabine biofuels , a biofuels production facility . this equity method investment had a carrying balance of $ 8.5 million at december 31 , 2014 . revenue recognition : refined product sales and related cost of sales are recognized when products are shipped and title has passed to customers . hep recognizes pipeline transportation revenues as products are shipped through its pipelines . all revenues are reported inclusive of shipping and handling costs billed and exclusive of any taxes billed to customers . shipping and handling costs incurred are reported in cost of products sold . depreciation : depreciation is provided by the straight-line method over the estimated useful lives of the assets , primarily 20 to 25 years for refining , pipeline and terminal facilities , 10 to 40 years for buildings and improvements , 5 to 30 years for other fixed assets and 5 years for vehicles . 61 hollyfrontier corporation notes to consolidated financial statements continued cost classifications : costs of products sold include the cost of crude oil , other feedstocks , blendstocks and purchased finished products , inclusive of transportation costs . we purchase crude oil that at times exceeds the supply needs of our refineries . quantities in excess of our needs are sold at market prices to purchasers of crude oil that are recorded on a gross basis with the sales price recorded as revenues and the corresponding acquisition cost as cost of products sold . additionally , we enter into buy/sell exchanges of crude oil with certain parties to facilitate the delivery of quantities to certain locations that are netted at cost . operating expenses include direct costs of labor , maintenance materials and services , utilities , marketing expense and other direct operating costs . general and administrative expenses include compensation , professional services and other support costs . deferred maintenance costs : our refinery units require regular major maintenance and repairs which are commonly referred to as “ turnarounds . ” catalysts used in certain refinery processes also require regular “ change-outs . ” the required frequency of the maintenance varies by unit and by catalyst , but generally is every two to five years . turnaround costs are deferred and amortized over the period until the next scheduled turnaround . other repairs and maintenance costs are expensed when incurred . deferred turnaround and catalyst amortization expense was $ 96.9 million , $ 84.8 million and $ 54.4 million for the years ended december 31 , 2014 , 2013 and 2012 , respectively . environmental costs : environmental costs are charged to operating expenses if they relate to an existing condition caused by past operations and do not contribute to current or future revenue generation . liabilities are recorded when site restoration and environmental remediation , cleanup and other obligations are either known or considered probable and can be reasonably estimated . such estimates are undiscounted and require judgment with respect to costs , time frame and extent of required remedial and clean-up activities and are subject to periodic adjustments based on currently available information . recoveries of environmental costs through insurance , indemnification arrangements or other sources are included in other assets to the extent such recoveries are considered probable . contingencies : we are subject to proceedings , lawsuits and other claims related to environmental , labor , product and other matters . we are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses . a determination of the amount of reserves required , if any , for these contingencies is made after careful analysis of each individual issue . the required reserves may change in the future due to new developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters . income taxes : provisions for income taxes include deferred taxes resulting from temporary differences in income for financial and tax purposes , using the liability method of accounting for income taxes . the liability method requires the effect of tax rate changes on current and accumulated deferred income taxes to be reflected in the period in which the rate change was enacted . the liability method also requires that deferred tax assets be reduced by a valuation allowance unless it is more likely than not that the assets will be realized . potential interest and penalties related to income tax matters are recognized in income tax expense . we believe we have appropriate support for the income tax positions taken and to be taken on our income tax returns and that our accruals for tax liabilities are adequate for all open years based on an assessment of many factors , including past experience and interpretations of tax law applied to the facts of each matter . new accounting pronouncements revenue recognition in may 2014 , an accounting standard update ( asu 2014-09 , “ revenue from contracts with customers ” ) was issued requiring revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the expected consideration for these goods or services . this standard is effective january 1 , 2017 , and we are evaluating the impact of this standard . story_separator_special_tag additionally , when faced with new emissions or fuels standards , we seek to execute projects that facilitate compliance and also improve the operating costs and / or yields of associated refining processes . el dorado refinery capital projects at the el dorado refinery include naphtha fractionation and an additional hydrogen plant . they also include the installation of an fcc gasoline hydrotreater in
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"deferred turnaround and catalyst amortization expense was $ 96.9 million , $ 84.8 million and $ 54.4 million for the years ended december 31 , 2014 , 2013 and 2012 , respectively .",
"this equity method investment had a carrying balance of $ 8.5 million at december 31 , 2014 .",
"depreciation : depreciation is provided by the straight-line method over the estimated useful lives of the assets , primarily 20 to 25 years for refining , pipeline and terminal facilities , 10 to 40 years for buildings and improvements , 5 to 30 years for other fixed assets and 5 years for vehicles .",
"the required reserves may change in the future due to new developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters .",
"” the required frequency of the maintenance varies by unit and by catalyst , but generally is every two to five years .",
"we are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses ."
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order to meet tier 3 gasoline requirements . continuing project work is planned to include upgrades to the crude unit desalter and a new tail gas treatment unit to reduce air emissions in compliance with the el dorado refinery 's existing epa consent decree . tulsa refineries capital spending for the tulsa refineries in 2015 includes previously approved capital appropriations for numerous infrastructure upgrades , including a project to improve fcc yields . spending on maintenance capital items and general improvements continues at an elevated level at the tulsa refineries due to lower maintenance capital expenditures made prior to hollyfrontier 's purchase of the facilities . navajo refinery the navajo refinery capital spending in 2015 will be principally directed towards previously approved capital appropriations as well as maintenance capital spending . included among previously approved capital projects is a $ 25.0 million upgrade to the navajo refinery 's waste water treatment system . cheyenne refinery we are continuing with our previously approved plan to install a new hydrogen plant at the cheyenne refinery . the hydrogen plant , along with a now-completed naphtha fractionation project , is anticipated to allow us to reduce benzene content in cheyenne gasoline production , while at the same time improving the refinery 's overall liquid yields and light oils production . previously appropriated projects still underway at cheyenne include wastewater treatment plant improvements , a flue gas scrubber for the fcc unit to reduce air emissions and a redundant tail gas unit associated with the sulfur recovery process . woods cross refinery engineering and construction continue on our previously announced expansion project to increase planned processing capacity to 45,000 bpsd , at a cost currently expected to range between $ 350.0 million and $ 400.0 million . on november 18 , 2013 , the utah division of air quality issued a revised air quality permit ( the “ approval order ” ) authorizing the expansion . on december 18 , 2013 , two local environmental groups filed an administrative appeal challenging the issuance of the approval order and seeking a stay of the approval order . on march 25 , 2014 , the administrative law judge ( “ alj ” ) issued a recommendation to the executive director of the utah department of environmental quality ( the “ deq ” ) recommending that the motion to stay the approval order be denied . on may 8 , 2014 , the executive director of the deq issued an order approving the alj 's recommendation and denying the motion to stay the approval order . the environmental groups did not file an appeal of this denial . the merits briefing and oral argument were completed in september 2014. on october 1 , 2014 , holly refining & marketing company - woods cross llc , our wholly-owned subsidiary , and the state of utah jointly submitted proposed findings of fact and conclusions of law to the alj . the expansion is expected to be completed in the fourth quarter of 2015. this project work includes a new rail loading rack for intermediates and finished products associated with refining waxy crude oil . the expansion , and expected completion timeline and cost , are subject to the woods cross refinery successfully obtaining the approval order . regulatory compliance items or other presently existing or future environmental regulations / consent decrees could cause us to make additional capital investments beyond those described above and incur additional operating costs to meet applicable requirements , including those related to recently promulgated federal tier 3 gasoline standards . hep each year the holly logistic services , l.l.c . board of directors approves hep 's annual capital budget , which specifies capital projects that hep management is authorized to undertake . additionally , at times when conditions warrant or as new opportunities arise , special projects may be approved . the funds allocated for a particular capital project may be expended over a period of several years , depending on the time required to complete the project . therefore , hep 's planned capital expenditures for a given year consist of expenditures approved for capital projects included in its current year capital budget as well as , in certain cases , expenditures approved for capital projects in capital budgets for prior years . the 2015 hep capital budget is comprised of $ 10.0 million for maintenance capital expenditures and $ 73.0 million for expansion capital expenditures . 41 table of content cash flows – financing activities year ended december 31 , 2014 compared to year ended december 31 , 2013 net cash flows used for financing activities were $ 838.4 million for the year ended december 31 , 2014 compared to $ 1,160.0 million for the year ended december 31 , 2013 , a decrease of $ 321.6 million . during the year ended december 31 , 2014 , we purchased $ 158.8 million in common stock , paid $ 647.2 million in dividends and recognized $ 2.0 million excess tax benefits on our equity-based compensation . also during this period , hep received $ 642.3 million and repaid $ 434.3 million under the hep credit agreement , paid $ 156.2 million upon the redemption of hep 's 8.25 % senior notes and paid distributions of $ 78.2 million to noncontrolling interests . during the year ended december 31 , 2013 , we received $ 73.4 million from the sale of hep common units , purchased $ 225.0 million in common stock , paid $ 645.9 million in dividends , paid $ 301.0 million upon the redemption of our
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"during the year ended december 31 , 2013 , we received $ 73.4 million from the sale of hep common units , purchased $ 225.0 million in common stock , paid $ 645.9 million in dividends , paid $ 301.0 million upon the redemption of our",
"41 table of content cash flows – financing activities year ended december 31 , 2014 compared to year ended december 31 , 2013 net cash flows used for financing activities were $ 838.4 million for the year ended december 31 , 2014 compared to $ 1,160.0 million for the year ended december 31 , 2013 , a decrease of $ 321.6 million .",
"board of directors approves hep 's annual capital budget , which specifies capital projects that hep management is authorized to undertake .",
"additionally , at times when conditions warrant or as new opportunities arise , special projects may be approved .",
"the funds allocated for a particular capital project may be expended over a period of several years , depending on the time required to complete the project .",
"therefore , hep 's planned capital expenditures for a given year consist of expenditures approved for capital projects included in its current year capital budget as well as , in certain cases , expenditures approved for capital projects in capital budgets for prior years .",
"the 2015 hep capital budget is comprised of $ 10.0 million for maintenance capital expenditures and $ 73.0 million for expansion capital expenditures ."
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the recall was expanded on january 20 , 2014 to include additional lots of affected cartridges used with the t : slim . we incurred approximately $ 1.6 million in direct costs associated with the recall . we recorded a cost of sales charge of approximately $ 1.3 million in the fourth quarter of 2013 and expect to record a cost of sales charge for the remainder in the first quarter of 2014. we do not currently expect any further direct financial impact of the recall beyond these costs . the total cost of the recall consisted of approximately $ 0.6 million associated with the return and replacement of affected cartridges in the field and approximately $ 1.0 million for the write-off of affected cartridges within our internal inventory . components of results of operations sales we commenced commercial sales of t : slim in the united states in the third quarter of 2012. the t : slim insulin delivery system is comprised of the t : slim pump and pump-related supplies that include disposable cartridges and infusion sets . we also offer accessories including protective cases , belt clips , and power adapters . sales of accessories since commercial launch have not been material . we primarily sell our products through national and regional distributors on a non-exclusive basis . these distributors are generally providers of medical equipment and supplies to individuals with diabetes . our primary end customers are people with insulin-dependent diabetes . similar to other durable medical equipment , the primary payor is generally a third-party insurance carrier and the customer is usually responsible for any medical insurance plan copay or co-insurance requirements . 63 we anticipate our sales will increase as we expand our sales and marketing infrastructure , increase awareness of our products and broaden third party reimbursement for our products . we also expect that our sales will fluctuate on a quarterly basis in the future due to a variety of factors , including seasonality and the impact of the buying patterns of our distributors and other customers . we believe that our sales are subject to seasonal fluctuation due to the impact of annual deductible and coinsurance requirements associated with most medical insurance plans utilized by our individual customers and the individual customers of our distributors . our sales may also be influenced by the summer vacation period . accordingly , we expect sequential growth of sales from the third quarter to the fourth quarter to be relatively higher than for other quarter-to-quarter growth , and we also expect sequential growth of sales from the fourth quarter to the first quarter to be relatively lower than for other quarter-to-quarter growth . it is also possible that we may see a decline in sales from the fourth quarter to the first quarter due to these seasonal fluctuations . cost of sales we manufacture the t : slim pump and its disposable cartridge at our manufacturing facility in san diego , california . infusion sets and t : slim accessories are manufactured by third-party suppliers . cost of sales includes raw materials , labor costs , manufacturing overhead expenses , product training cost and reserves for expected warranty costs , scrap and inventory obsolescence . due to our relatively low production volumes , compared to our potential capacity for our products , the majority of our per unit costs are currently manufacturing overhead expenses . these expenses include quality assurance , manufacturing engineering , material procurement , inventory control , facilities , equipment and information technology and operations supervision and management . we expect our overall gross margin , which is calculated as sales less cost of sales for a given period divided by sales , to fluctuate in future periods as a result of the changing percentage of products sold to distributors versus directly to individual customers , varying levels of reimbursement among third-party payors , changing mix of products sold with different gross margins , changes in our manufacturing processes or costs and increased manufacturing output . manufacturing inefficiencies will also impact our gross margins , which we may experience as we attempt to manufacture our products on a larger scale , change our manufacturing capacity or output , and adjust to expanding our manufacturing facilities . any new products that we sell in the future may change our future gross margins . selling , general and administrative we expect our selling , general and administrative , or sg & a , expenses to increase as our business expands . our sg & a expenses primarily consist of salary , fringe benefits and stock-based compensation for our executive , financial , marketing , sales , business development , regulatory affairs and administrative functions . other significant expenses include product demonstration samples , trade show expenses , outside legal counsel , independent auditors and other outside consultants , insurance , facilities and information technology expenses . research and development we expect our research and development , or r & d , expenses to increase as we initiate and advance our development projects . our r & d activities primarily consist of engineering and research programs associated with our products under development , as well as r & d activities associated with our core technologies and processes . r & d expenses are primarily related to employee compensation , including salary , fringe benefits , stock-based compensation and temporary employee expenses . we also incur significant expenses for supplies , development prototypes , outside design and testing services and milestone payments under our development and commercialization agreements with dexcom and other collaborators . 64 other income and expense our other income and expense primarily consist of the change in the fair value of outstanding common and preferred stock warrants , as well as interest expense and amortization of debt discount associated with term loan agreements and convertible notes payable . at december 31 , 2013 , there was $ 30 million outstanding principal under
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"due to our relatively low production volumes , compared to our potential capacity for our products , the majority of our per unit costs are currently manufacturing overhead expenses .",
"we expect our overall gross margin , which is calculated as sales less cost of sales for a given period divided by sales , to fluctuate in future periods as a result of the changing percentage of products sold to distributors versus directly to individual customers , varying levels of reimbursement among third-party payors , changing mix of products sold with different gross margins , changes in our manufacturing processes or costs and increased manufacturing output .",
"accordingly , we expect sequential growth of sales from the third quarter to the fourth quarter to be relatively higher than for other quarter-to-quarter growth , and we also expect sequential growth of sales from the fourth quarter to the first quarter to be relatively lower than for other quarter-to-quarter growth .",
"manufacturing inefficiencies will also impact our gross margins , which we may experience as we attempt to manufacture our products on a larger scale , change our manufacturing capacity or output , and adjust to expanding our manufacturing facilities .",
"any new products that we sell in the future may change our future gross margins .",
"cost of sales includes raw materials , labor costs , manufacturing overhead expenses , product training cost and reserves for expected warranty costs , scrap and inventory obsolescence .",
"selling , general and administrative we expect our selling , general and administrative , or sg & a , expenses to increase as our business expands ."
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ROO
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our term loan with capital royalty partners , which accrues interest at a rate of 14 % per annum . story_separator_special_tag story_separator_special_tag technology expense related to the sg & a functions increased $ 1.3 million . additionally , we expensed $ 1.8 million relating to the acquisition of patent rights for non-commercialized products . research and development expenses . r & d expenses increased 9 % to $ 9.0 million for 2012 from $ 8.3 million for 2011. the increase in r & d expenses for 2012 was primarily due to a $ 1.0 million milestone payment under a collaboration agreement . other income ( expense ) . other income ( expense ) increased to $ 33,000 for 2012 from ( $ 1.3 ) million for 2011. interest and other expense for 2012 was primarily related to interest associated with convertible notes payable to certain stockholders at a rate of 8 % per annum that were converted to series d preferred stock in august 2012 , and interest paid on a $ 5 million loan from silicon valley bank entered into in march 2012 at a rate ranging from 7.5 % to 10 % per annum . interest and other expense for 2011 was primarily related to interest associated with the convertible notes issued in august 2011 , which were subsequently converted to series d preferred stock in august 2012. the decrease in fair value of the stock warrants was $ 2.6 million for 2012 compared to an increase of $ 0.8 million for 2011. the change was due to the revaluation of the fair value of the common and preferred stock warrants . liquidity and capital resources at december 31 , 2013 , we had $ 129.5 million in cash and cash equivalents and short-term investments . we believe that our cash on hand , cash available under our term loan agreement and proceeds from the exercise of options and warrants will be sufficient to satisfy our liquidity requirements for at least the next 18 months . we expect that our sales performance and the resulting operating income or loss , as well as the status of each of our new product development programs , will significantly impact our cash management decisions . we have utilized , and may continue to utilize , debt arrangements with debt providers and financial institutions to finance our operations . factors such as interest rates and available cash will impact our decision to continue to utilize debt arrangements as a source of cash . historically , our sources of cash have included private placements and a public offering of equity securities , debt arrangements , and cash generated from operations . our historical cash outflows have primarily been associated with cash used for operating activities such as the purchase of inventory , expansion of our sales and marketing infrastructure , increase in our r & d activities , the acquisition of intellectual property , expenditures related to equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency , overall facility expansion and other working capital needs . 67 the following table shows a summary of our cash flows for the years ended december 31 , 2013 , 2012 , and 2011 : replace_table_token_5_th operating activities . net cash used in operating activities was $ 47.8 million for the year ended december 31 , 2013 , compared to $ 33.5 million and $ 21.5 million for the same periods in 2012 and 2011 , respectively . the increase in net cash used in operating activities for the 2012 and 2013 periods presented was primarily associated with increased costs related to the initiation of commercial operations in august 2012 and continued expansion during 2013. our employee headcount , employee-related expenses and working capital needs , including accounts receivable and inventory , increased significantly as a result of our initiation of commercial operations . investing activities . net cash used in investing activities was $ 11.1 million for the year ended december 31 , 2013 , compared to net cash used of $ 5.5 million in 2012 and net cash generated of $ 5.9 million in 2011. the increase in net cash used in investing activities for the 2012 and 2013 periods was primarily related to the purchase of short-term investments , the acquisition of patents , and the purchase of capital equipment . the net cash provided in 2011 was primarily related to the sale of securities to fund our operating activities . financing activities . net cash provided by financing activities was approximately $ 166.1 million for the year ended december 31 , 2013 , compared to $ 47.5 million and $ 13.2 million for the same periods in 2012 and 2011 , respectively . the net cash provided in 2013 is a result of net proceeds from our initial public offering of approximately $ 125.0 million in november 2013 , net proceeds from issuance of preferred stock of $ 28.9 million , net proceeds from issuance of notes payable of $ 16.0 million and proceeds from warrant and stock option exercises of $ 2.6 million , offset by principal payments on notes payable of $ 4.4 million and $ 2.0 million used in restricted cash . the net cash provided by 2012 financing activities not reoccurring in 2013 included proceeds from issuance of preferred stock of $ 30.9 million and proceeds from issuance of notes payable and convertible notes payable of $ 17.2 million while 2011 net cash proceeds from financing activities was driven by the issuance of convertible notes payable . our liquidity position and capital requirements are subject to fluctuation based on a number of factors . for example , our cash inflow and outflow may be impacted by the following : fluctuations in gross margins and operating margins ; our ability to generate sales ; and fluctuations in working capital .
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"for example , our cash inflow and outflow may be impacted by the following : fluctuations in gross margins and operating margins ; our ability to generate sales ; and fluctuations in working capital .",
"our historical cash outflows have primarily been associated with cash used for operating activities such as the purchase of inventory , expansion of our sales and marketing infrastructure , increase in our r & d activities , the acquisition of intellectual property , expenditures related to equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency , overall facility expansion and other working capital needs .",
"r & d expenses increased 9 % to $ 9.0 million for 2012 from $ 8.3 million for 2011. the increase in r & d expenses for 2012 was primarily due to a $ 1.0 million milestone payment under a collaboration agreement .",
"we expect that our sales performance and the resulting operating income or loss , as well as the status of each of our new product development programs , will significantly impact our cash management decisions .",
"financing activities .",
"the increase in net cash used in operating activities for the 2012 and 2013 periods presented was primarily associated with increased costs related to the initiation of commercial operations in august 2012 and continued expansion during 2013. our employee headcount , employee-related expenses and working capital needs , including accounts receivable and inventory , increased significantly as a result of our initiation of commercial operations ."
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we currently have $ 4.1 billion of debt obligations outstanding , none of which are maturing in the next twelve months . for a summary of principal debt balances and their maturity dates and principal terms refer to note 9 - debt , in the notes to our consolidated financial statements . we anticipate closing the acquisition of greektown in mid-2019 , and we expect to fund the purchase with approximately $ 350.0 million of cash on hand ( which represents a portion of the proceeds that we raised in our november 2018 equity offering ) and $ 350.0 million of debt , either through additional long-term debt financing or under our revolving credit facility . we anticipate funding future transactions with a mix of debt , equity and available cash . we believe that we have sufficient liquidity to meet our liquidity and capital resource requirements primarily through currently available cash and cash equivalents , restricted cash , short term investments , cash received under our lease agreements , borrowings from banks , including undrawn capacity under our revolving credit facility , and proceeds from the issuance of debt and equity securities . all of the lease agreements call for an initial term of fifteen years with four , five-year renewal options ( except for harrah 's philadelphia ) and are designed to provide us with a reliable and predictable revenue stream . however , our cash flows from operations and our ability to access capital resources could be adversely affected due to uncertain economic factors and volatility in the financial and credit markets . in particular , we can provide no assurances that our tenants will not default on their leases or fail to make full rental payments if their businesses become challenged due to , among other things , adverse economic conditions . our ability to raise funds through the issuance of debt and equity securities and access to other third-party sources of capital in the future will be dependent on , among other things , general economic conditions , general market conditions for reits , market perceptions and the trading price of our stock . we will continue to analyze which sources of capital are most advantageous to us at any particular point in time , but the capital markets may not be consistently available on terms we deem attractive , or at all . cash flow analysis the table below summarizes our cash flows for the year ended december 31 , 2018 and the period from october 6 , 2017 to december 31 , 2017 : replace_table_token_8_th cash flows from operating activities net cash provided by operating activities increased $ 374.6 million for the year ended december 31 , 2018 compared with the period from october 6 , 2017 to december 31 , 2017. the increase is primarily driven by a full year of operations in 2018 , compared to only three months of operations in 2017 . 52 cash flows from investing activities net cash used in investing activities increased $ 4.6 million for the year ended december 31 , 2018 compared with the period from october 6 , 2017 to december 31 , 2017. during 2018 , the primary use of cash from investing activities was our investment in direct financing leases of $ 771.5 million related to the purchase of octavius tower and harrah 's philadelphia and net investments in short-term investments of $ 520.9 million . during the period from october 6 , 2017 to december 31 , 2017 , our investment in deferred financing leases of $ 1,136.2 million related to the acquisition of harrah 's las vegas was the primary use of cash from investing activities . cash flows from financing activities net cash provided by financing activities decreased $ 110.6 million for the year ended december 31 , 2018 compared with the period from october 6 , 2017 to december 31 , 2017. during the year ended december 31 , 2018 the primary sources and uses of cash from financing activities include : net proceeds from our initial public offering of $ 1,307.1 million of our common stock ; net proceeds from our primary follow-on equity offering of $ 694.4 million of our common stock ; repayment of $ 300.0 million on our revolving credit facility ; repayment of $ 100.0 million on our term loan b facility ; redemption of $ 290.1 million in aggregate principal amount of our second lien notes ; dividend payments of $ 262.7 million during the period from october 6 , 2017 to december 31 , 2017 the primary sources and uses of cash from financing activities include : proceeds from the issuance of $ 2,200.0 million of our term loan b facility ; proceeds from the $ 300.0 million draw from our revolving credit facility ; proceeds from the private placement issuance of $ 1,000.0 million of our common stock ; the sale of approximately 18.4 acres of undeveloped land located behind the linq hotel & casino and harrah 's las vegas to caesars for $ 73.6 million ; repayment of our $ 1,638.4 million senior secured first lien prior term loan ; repayment of our $ 311.7 million first-priority senior secured prior first lien notes ; the purchase by vici propco of the entirety of the outstanding cplv mezzanine debt in the aggregate principal amount of $ 400.0 million ; costs of $ 36.2 million related to our common stock private placement and premium and fees related to the purchase of the mezzanine debt of $ 38.4 million ; and debt issuance costs of $ 31.5 million related to our term loan b facility and revolving credit facility . story_separator_special_tag 53 debt the following table summarizes our debt related transactions from the formation date to december 31 , 2018 : replace_table_token_9_th impact of initial public offering on february 5 , 2018 , we completed an initial public offering of 69,575,000 shares of common stock ( which included 9,075,000 shares of
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"story_separator_special_tag 53 debt the following table summarizes our debt related transactions from the formation date to december 31 , 2018 : replace_table_token_9_th impact of initial public offering on february 5 , 2018 , we completed an initial public offering of 69,575,000 shares of common stock ( which included 9,075,000 shares of",
"we believe that we have sufficient liquidity to meet our liquidity and capital resource requirements primarily through currently available cash and cash equivalents , restricted cash , short term investments , cash received under our lease agreements , borrowings from banks , including undrawn capacity under our revolving credit facility , and proceeds from the issuance of debt and equity securities ."
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common stock related to the overallotment option exercised by the underwriters in full ) at an offering price of $ 20.00 per share for gross proceeds of $ 1.4 billion , resulting in net proceeds of $ 1.3 billion after commissions and expenses . we utilized a portion of the net proceeds from the stock offering to : ( a ) pay down $ 300.0 million of indebtedness outstanding under the revolving credit facility ; ( b ) redeem $ 268.4 million in aggregate principal amount of the second lien notes at a redemption price of 108 % plus accrued and unpaid interest to the date of the redemption ; and ( c ) repay $ 100.0 million of the term loan b facility . covenants on december 22 , 2017 , vici propco entered into a credit agreement ( the “ credit agreement ” ) governing the term loan b facility and the revolving credit facility . the credit agreement contains customary covenants that , among other things , limit the ability of vici propco and its restricted subsidiaries to : ( i ) incur additional indebtedness ; ( ii ) merge with a third party or engage in other fundamental changes ; ( iii ) make restricted payments ; ( iv ) enter into , create , incur or assume any liens ; ( v ) make certain sales and other dispositions of assets ; ( vi ) enter into certain transactions with affiliates ; ( vii ) make certain payments on certain other indebtedness ; ( viii ) make certain investments ; and ( ix ) incur restrictions on the ability of restricted subsidiaries to make certain distributions , loans or transfers of assets to vici propco or any restricted subsidiary . these covenants are subject to a number of exceptions and qualifications , including the ability to make unlimited restricted payments to maintain our reit status and to avoid the payment of federal or state income or excise tax , the ability to make restricted payments in an amount not to exceed 95 % of our funds from operations ( as defined in the credit agreement ) subject to no event of default under the credit agreement and pro forma compliance with the financial covenant pursuant to the credit agreement , and the ability to make additional restricted payments in an aggregate amount not to exceed the greater of 0.6 % of adjusted total assets ( as defined in the credit agreement ) or $ 30,000,000. commencing with the first full fiscal quarter ended after december 22 , 2017 , if the outstanding amount of the revolving credit facility plus any drawings under letters of credit issued pursuant to the credit agreement that have not been reimbursed as of the end of any fiscal quarter exceeds 30 % of the aggregate amount of the revolving credit facility , vici propco and its restricted subsidiaries on a consolidated basis would be required to maintain a maximum total net debt to adjusted total assets ratio , as defined in the credit agreement , as of the last day of any applicable fiscal quarter . 54 the cplv cmbs debt was incurred in october 2017 pursuant to a loan agreement containing certain covenants limiting cplv property owner llc 's ability to among other things : ( i ) incur additional debt ; ( ii ) enter into certain transactions with its affiliates ; ( iii ) consolidate , merge , sell or otherwise dispose of its assets ; and ( iv ) allow transfers of its direct or indirect equity interests . the second lien notes were issued on october 6 , 2017 , pursuant to an indenture ( the “ indenture ” ) by and among vici propco and its wholly owned subsidiary , vici fc inc. ( together , the “ issuers ” ) , the subsidiary guarantors party thereto , and umb bank national association , as trustee . the indenture contains covenants that limit the issuers ' and their restricted subsidiaries ' ability to , among other things : ( i ) incur additional debt ; ( ii ) pay dividends on or make other distributions in respect of their capital stock or make other restricted payments ; ( iii ) make certain investments ; ( iv ) sell certain assets ; ( v ) create or permit to exist dividend and or payment restrictions affecting their restricted subsidiaries ; ( vi ) create liens on certain assets to secure debt ; ( vii ) consolidate , merge , sell or otherwise dispose of all or substantially all of their assets ; ( viii ) enter into certain transactions with their affiliates ; and ( ix ) designate their subsidiaries as unrestricted subsidiaries . these covenants are subject to a number of exceptions and qualifications , including the ability to declare or pay any cash dividend or make any cash distribution to vici to the extent necessary for vici to distribute cash dividends of 100 % of our “ real estate investment trust taxable income ” within the meaning of section 857 ( b ) ( 2 ) of the internal revenue code of 1986 , as amended , certain restricted payments not to exceed the amount of our cumulative earnings ( calculated pursuant to the indenture as $ 30,000,000 plus 95 % of our cumulative adjusted funds from operations ( as defined in the indenture ) less cumulative distributions , with certain other adjustments ) , and the ability to make restricted payments in an amount equal to the greater of 0.6 % of adjusted total assets ( as defined in the indenture )
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"54 the cplv cmbs debt was incurred in october 2017 pursuant to a loan agreement containing certain covenants limiting cplv property owner llc 's ability to among other things : ( i ) incur additional debt ; ( ii ) enter into certain transactions with its affiliates ; ( iii ) consolidate , merge , sell or otherwise dispose of its assets ; and ( iv ) allow transfers of its direct or indirect equity interests .",
"these covenants are subject to a number of exceptions and qualifications , including the ability to declare or pay any cash dividend or make any cash distribution to vici to the extent necessary for vici to distribute cash dividends of 100 % of our “ real estate investment trust taxable income ” within the meaning of section 857 ( b ) ( 2 ) of the internal revenue code of 1986 , as amended , certain restricted payments not to exceed the amount of our cumulative earnings ( calculated pursuant to the indenture as $ 30,000,000 plus 95 % of our cumulative adjusted funds from operations ( as defined in the indenture ) less cumulative distributions , with certain other adjustments ) , and the ability to make restricted payments in an amount equal to the greater of 0.6 % of adjusted total assets ( as defined in the indenture )"
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as of may 31 , 2020 , we have funded 781 ppp loans for a total of $ 116.2 million , with an average loan amount of $ 150,000. another $ 12,000 in ppp loans have been approved and are in the application pipeline process as of may 31 , 2020. in addition to the 1 % interest earned on these loans , the sba pays us fees for processing ppp loans in the following amounts : ( i ) five percent for loans of not more than $ 350,000 ; ( ii ) three percent for loans of more than $ 350,000 and less than $ 2,000,000 ; and one percent for loans of at least $ 2,000,000. we may not collect any fees from the loan applicants . we may utilize the frb 's paycheck protection program liquidity facility ( “ ppplf ” ) , pursuant to which the company will pledge its ppp loans at face value as collateral to obtain frb non-recourse borrowings . the company will also assist our customers with accessing other borrowing options as they become available such as other government sponsored lending programs , as appropriate . allowance for loan losses and loan modifications – the company recorded a provision for loan losses of $ 1.3 million for the fiscal year 2020 , compared to $ 50,000 in fiscal 2019 due primarily to deterioration in economic conditions related to covid-19 . as of may 31 , 2020 , the bank 's loan portfolio exposures to industries most affected by the covid-19 pandemic were as follows ( dollars in thousands ) : replace_table_token_23_th 50 we have received , and continue to receive , inquiries and requests from borrowers for some type of payment relief due to the covid-19 pandemic although the number of new requests have recently slowed . these modifications were not classified as tdrs in accordance with the guidance of the cares act and subsequent bank regulatory guidance . the company has made available the following short-term relief option to all borrowers affected by covid-19 : interest only payments for up to 90 days ; full payment deferrals for up to 90 days upon request with an extension for another 90 days upon submission of specified documentation and recovery plans ; loan re-amortization , especially in cases where significant prepayments of principal have occurred and to provide for continuing payment reduction at the end of the 180-day deferment period ; covenant waivers and resets ; and extension of up to six months on loans maturing prior to december 31 , 2020. all loans modified due to covid-19 will be separately monitored and any request for continuation of relief beyond the initial modification will be reassessed at that time to determine if a further modification should be granted and if a downgrade in risk rating is appropriate . as of march 31 , 2020 , the company had approved payment deferrals for ten commercial loans that were impacted by the covid-19 pandemic totaling $ 36.2 million which consisted of deferral of regularly scheduled principal and interest payments . as of march 31 , 2020 , the bank had not received any requests for payment deferrals for consumer loans . as of may 31 , 2020 , the bank had approved payment deferrals for 91 commercial loans that were impacted by the covid-19 pandemic totaling $ 145.8 million . in general , the payment deferral period for these loans was 90 days . depending on economic conditions , extensions to the initial payment deferral periods may be necessary . the bank has received an additional 13 commercial loan modification requests totaling $ 25.3 million that are in the process of being completed . in addition , as of may 31 , 2020 , 42 consumer and mortgage loans totaling $ 10.1 million were approved for payment deferrals . furthermore , 20 mortgage loans serviced for fhlmc totaling $ 3.4 million were approved for payment deferrals . the primary method of relief granted by the company has been to allow the borrower to defer their loan payments for up to 90 days . after the deferral period , normal loan payments will continue , however , payments will be applied first to interest until the deferred interest is repaid and thereafter applied to both principal and interest with any deficiency in amortized principal payments added to the balloon payment due at maturity . we believe the steps we are taking are necessary to effectively manage our portfolio and assist our customers through the ongoing uncertainty surrounding the duration , impact and government response to the covid-19 pandemic . branch operations and additional customer support – we have taken various steps to ensure the safety of our customers and our personnel . many of our employees are working remotely or have flexible work schedules , and we have established measures within our offices to help ensure the safety of those employees who must work on-site . the family first coronavirus response act also provides additional flexibility to our employees to help navigate their individual challenges . the covid-19 pandemic has caused significant disruptions to our branch operations resulting in the implementation of various social distancing measures at the company to address client and community needs , including branch lobby closures . to ensure the safety of our customers and employees , services are offered through drive up facilities , atms , online banking , our call center operations and or by appointment . critical accounting policies the company has established various accounting policies that govern the application of gaap in the preparation of the company 's consolidated financial statements . the company has identified policies that due to judgments , estimates and assumptions inherent in those policies are critical to an understanding of the company 's consolidated financial statements . story_separator_special_tag the allocation of corporate value approach applies the aggregate market value of the company and divides it among the reporting units . a key
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[
"the company has identified policies that due to judgments , estimates and assumptions inherent in those policies are critical to an understanding of the company 's consolidated financial statements .",
"we may utilize the frb 's paycheck protection program liquidity facility ( “ ppplf ” ) , pursuant to which the company will pledge its ppp loans at face value as collateral to obtain frb non-recourse borrowings .",
"critical accounting policies the company has established various accounting policies that govern the application of gaap in the preparation of the company 's consolidated financial statements .",
"the company will also assist our customers with accessing other borrowing options as they become available such as other government sponsored lending programs , as appropriate .",
"depending on economic conditions , extensions to the initial payment deferral periods may be necessary ."
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assumption in this approach is the control premium applied to the aggregate market value . a control premium is utilized as the value of a company from the perspective of a controlling interest is generally higher than the widely quoted market price per share . the company used an expected control premium of 30 % , which was based on comparable transactional history . the income approach uses a reporting unit 's projection of estimated operating results and cash flows that are discounted using a rate that reflects current market conditions . the projection uses management 's best estimates of economic and market conditions over the projected period including growth rates in loans and deposits , estimates of future expected changes in net interest margins and cash expenditures . assumptions used by the company in its discounted cash flow model ( income approach ) included an annual revenue growth rate that approximated 5.3 % , a net interest margin that approximated 4.0 % and a return on assets that ranged from 1.24 % to 1.34 % ( average of 1.29 % ) . in addition to utilizing the above projections of estimated operating results , key assumptions used to determine the fair value estimate under the income approach were the discount rate of 15.54 % utilized for our cash flow estimates and a terminal value estimated at 1.43 times the ending book value of the reporting unit . the company used a build-up approach in developing the discount rate that included : an assessment of the risk free interest rate , the rate of return expected from publicly traded stocks , the industry the company operates in and the size of the company . the market approach estimates fair value by applying tangible book value multiples to the reporting unit 's operating performance . the multiples are derived from comparable publicly traded companies with similar operating and investment characteristics of the reporting unit . in applying the market approach method , the company selected four publicly traded comparable institutions . after selecting comparable institutions , the company derived the fair value of the reporting unit by completing a comparative analysis of the relationship between their financial metrics listed above and their market values utilizing a market multiple of 1.1 times tangible book value . the company calculated a fair value of its reporting unit of $ 217.0 million using the corporate value approach , $ 170.0 million using the income approach and $ 253.0 million using the market approach , with a final concluded value of $ 216.0 million , with equal weight given to the corporate value approach and market approach and slightly less weight given to the income approach . the results of the company 's step one test indicated that the reporting unit 's fair value was greater than its carrying value and therefore no impairment of goodwill exists . 55 even though the company determined that there was no goodwill impairment , a sustained decline in the value of its stock price as well as values of other financial institutions , declines in revenue for the company beyond our current forecasts , significant adverse changes in the operating environment for the financial industry or an increase in the value of our assets without an increase in the value of the reporting unit may result in a future impairment charge . it is possible that changes in circumstances existing at the measurement date or at other times in the future , or in the numerous estimates associated with management 's judgments , assumptions and estimates made in assessing the fair value of our goodwill , could result in an impairment charge of a portion or all of our goodwill . if the company recorded an impairment charge , its financial position and results of operations would be adversely affected ; however , such an impairment charge would have no impact on our liquidity , operations or regulatory capital . as a result of the effects of the covid-19 pandemic and its impacts on the financial markets and economy , the company completed a qualitative assessment of goodwill and concluded that it is more likely than not that the fair value of the bank ( the reporting unit ) , exceeds its carrying value at march 31 , 2020. if adverse economic conditions or the recent decrease in the company 's common stock price and market capitalization as a result of the covid-19 pandemic were sustained in the future rather than temporary , it may significantly affect the fair value of the reporting unit and may trigger future goodwill impairment charges . any impairment charge could have a material adverse effect on our results of operations and financial condition . however , such an impairment would not impact the company 's liquidity , operations or regulatory capital . estimated fair value of level 3 assets the company determines the estimated fair value of certain assets that are classified as level 3 under the fair value hierarchy established under gaap . these level 3 assets are valued using significant unobservable inputs that are supported by little or no market activity and that are significant to the estimated fair value of the assets . these level 3 assets are certain loans measured for impairment for which there is neither an active market for identical assets from which to determine fair value , nor is there sufficient , current market information about similar assets to use as observable , corroborated data for all significant inputs in a valuation model . under these circumstances , the estimated fair values of these assets are determined using pricing models , discounted cash flow methodologies , appraisals , and other valuation methods in accordance with accounting standards , for which the determination of fair value requires significant management judgment or estimation
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[
"under these circumstances , the estimated fair values of these assets are determined using pricing models , discounted cash flow methodologies , appraisals , and other valuation methods in accordance with accounting standards , for which the determination of fair value requires significant management judgment or estimation",
"the projection uses management 's best estimates of economic and market conditions over the projected period including growth rates in loans and deposits , estimates of future expected changes in net interest margins and cash expenditures .",
"the company used a build-up approach in developing the discount rate that included : an assessment of the risk free interest rate , the rate of return expected from publicly traded stocks , the industry the company operates in and the size of the company .",
"any impairment charge could have a material adverse effect on our results of operations and financial condition .",
"the income approach uses a reporting unit 's projection of estimated operating results and cash flows that are discounted using a rate that reflects current market conditions .",
"it is possible that changes in circumstances existing at the measurement date or at other times in the future , or in the numerous estimates associated with management 's judgments , assumptions and estimates made in assessing the fair value of our goodwill , could result in an impairment charge of a portion or all of our goodwill ."
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our strategy includes acquiring ownership stakes in well-managed businesses with strong reputations in the industry . we engaged in a number of acquisition and disposal transactions during the 2009 to 2011 period , which affected revenues , expenses , operating income and net income . additional information regarding material acquisitions is provided in note 4 acquisitions and information on dispositions is provided in note 10 discontinued operations in the notes to the consolidated financial statements . foreign exchange fluctuations . our financial results and competitive position are affected by fluctuations in the exchange rate between the us dollar and non-us dollars , primarily the canadian dollar . see also quantitative and qualitative disclosures about market risk foreign exchange. seasonality . historically , with some exceptions , we generate the highest quarterly revenues during the fourth quarter in each year . the fourth quarter has historically been the period in the year in which the highest volumes of media placements and retail related consumer marketing occur . story_separator_special_tag text-align : left ; font-family : serif ; font-size : 10pt ; line-height : 12pt ; font-style : italic ; font-variant : normal ; font-weight : bold ; text-transform : none ; padding-top : 5pt ; padding-right : 0pt ; padding-left : 4px ; padding-bottom : 3pt ; margin-top : 0pt ; margin-right : 0pt ; margin-left : 0pt ; margin-bottom : 0pt `` > new financing on october 23 , 2009 , the company completed a $ 300 million refinancing of its existing debt arrangements . the company issued $ 225 million of 11 % notes and obtained a new $ 75 million revolving wf credit agreement . the proceeds were used to pay off the existing fortress facility , consisting of the $ 130 million term loan , and the c $ 45 million convertible debentures . the proceeds were also used for the early payment of $ 46.0 million of deferred acquisition consideration relating to kirshenbaum bond senecal & partners llc ( kbsp ) and crispin porter & bogusky llc ( cpb ) . in connection with the repayment of its prior indebtedness , the company incurred termination fees and expenses of $ 2.0 million and wrote off deferred financing costs of $ 2.5 million . 20 effective october 5 , 2009 , mdc acquired the remaining 6 % equity interest in cpb from the minority holder . in accordance with the terms of the underlying limited liability company agreement , the estimated contingent purchase price of $ 8.5 million will be paid in future periods beginning in april 2011. following the closing of this transaction , mdc 's ownership in cpb is 100 % . results of operations for the years ended december 31 , 2011 , 2010 and 2009 : replace_table_token_5_th 21 replace_table_token_6_th 22 replace_table_token_7_th year ended december 31 , 2011 compared to year ended december 31 , 2010 revenue was $ 943.3 million for the year ended 2011 , representing an increase of $ 254.2 million , or 36.9 % , compared to revenue of $ 689.1 million for the year ended 2010. this increase relates primarily to acquisition growth of $ 132.1 million and an increase in organic revenue of $ 117.3 million . in addition , a weakening of the us dollar , primarily versus the canadian dollar during the year ended december 31 , 2011 , resulted in an increase of $ 4.8 million . operating profit for the year ended 2011 was $ 9.3 million , compared to $ 30.3 million in 2010. operating profit decreased by $ 19.6 million in the strategic marketing services , and was offset by an increase of $ 12.2 million within the performance marketing services segment . corporate operating expenses increased by $ 13.6 million in 2011. loss from continuing operations was a loss of $ 75.6 million in 2011 , compared to a loss of $ 1.4 million in 2010. this increase in loss of $ 74.2 million was primarily attributable to the decrease in operating profit of $ 21.0 million , an increase in tax expense of $ 41.9 million and an increase in net interest expense equal to $ 8.6 million . this increase in net interest expense was primarily due to the company 's outstanding 11 % notes . these amounts were impacted by an increase in foreign exchange losses from a gain of $ 0.1 million in 2010 to a loss of $ 1.7 million in 2011 , and a decrease in other income , net of $ 0.3 million and a decrease in equity in earnings of non-consolidated affiliates of $ 0.7 million . 23 marketing communications group revenues attributable to the marketing communications group , which consists of two reportable segments strategic marketing services and performance marketing services , were $ 943.3 million in the aggregate in 2011 , compared to $ 689.1 million in 2010 , representing a year-over-year increase of 36.9 % . the components of the revenue for 2011 are shown in the following table : replace_table_token_8_th the geographic mix in revenues was relatively consistent between 2011 and 2010 and is demonstrated in the following table : replace_table_token_9_th the operating profit of the marketing communications group decreased by approximately 14.0 % to $ 45.6 million in 2011 , from $ 53.0 million in 2010. the decrease in operating profit of $ 7.4 million was primarily due to an increase in acquisition related costs and estimated deferred acquisition consideration adjustments of $ 12.4 million , and increased depreciation and amortization of $ 5.6 million , due to acquisitions . these amounts were offset by $ 10.2 million of increased operating profits related to the increase in revenue and a $ 0.4 million decrease in non-cash stock based compensation , despite the company 's strategic investments in talent , new office locations , and other growth investments . story_separator_special_tag operating margins decreased to 4.8 % for 2011 compared to 7.7 % for 2010. this decrease in operating
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"results of operations for the years ended december 31 , 2011 , 2010 and 2009 : replace_table_token_5_th 21 replace_table_token_6_th 22 replace_table_token_7_th year ended december 31 , 2011 compared to year ended december 31 , 2010 revenue was $ 943.3 million for the year ended 2011 , representing an increase of $ 254.2 million , or 36.9 % , compared to revenue of $ 689.1 million for the year ended 2010. this increase relates primarily to acquisition growth of $ 132.1 million and an increase in organic revenue of $ 117.3 million .",
"in accordance with the terms of the underlying limited liability company agreement , the estimated contingent purchase price of $ 8.5 million will be paid in future periods beginning in april 2011. following the closing of this transaction , mdc 's ownership in cpb is 100 % .",
"additional information regarding material acquisitions is provided in note 4 acquisitions and information on dispositions is provided in note 10 discontinued operations in the notes to the consolidated financial statements .",
"the company issued $ 225 million of 11 % notes and obtained a new $ 75 million revolving wf credit agreement .",
"the proceeds were also used for the early payment of $ 46.0 million of deferred acquisition consideration relating to kirshenbaum bond senecal & partners llc ( kbsp ) and crispin porter & bogusky llc ( cpb ) .",
"20 effective october 5 , 2009 , mdc acquired the remaining 6 % equity interest in cpb from the minority holder .",
"our strategy includes acquiring ownership stakes in well-managed businesses with strong reputations in the industry ."
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margin was primarily related to an increase in reimbursed client related direct costs ( excluding staff costs ) as a percentage of revenues from 20.3 % of revenue in 2010 to 24.3 % of revenue in 2011. this increase in reimbursed client related direct costs is due to the requirement that certain costs be included in both revenue and direct costs due to the company acting as principle versus agent for certain client contracts . in addition , margins were negatively impacted by an increase in office and general expenses as a percentage of revenue from 18.7 % in 2010 to 19.5 % in 2011 primarily due to acquisition related costs and estimated deferred acquisition consideration adjustments as a percentage of revenue of 1.5 % in 2011 compared to 0.3 % in 2010. offsetting these increases was a reduction in total staff costs as a percentage of revenues from 55.5 % in 2010 , to 53.9 % in 2011. in addition , depreciation and amortization expenses decreased as a percentage of revenue from 4.9 % in 2010 , to 4.2 % in 2011 , due to the increase in revenue in 2011. marketing communications businesses strategic marketing services revenues attributable to strategic marketing services in 2011 were $ 608.1 million , compared to $ 438.9 million in 2010. the year-over-year increase of $ 169.2 million , or 38.5 % , was attributable primarily to organic growth of $ 81.5 million or 18.6 % ; acquisition growth of $ 84.7 million or 19.3 % ; and a foreign exchange translation of $ 2.9 million due to the weakening of the us dollar compared to the canadian dollar . this organic revenue growth was driven by net new business wins . the operating profit of strategic marketing services decreased by $ 19.7 million to $ 21.3 million in 2011 from $ 41.0 million in 2010. operating margins decreased to 3.5 % in 2011 from 9.3 % in 2010. the decrease in operating profit was primarily due to an increase in acquisition related costs and estimated deferred acquisition consideration adjustments of $ 21.7 million , increased depreciation and amortization of $ 4.5 million , due to acquisitions , offset by $ 4.4 million of increased operating profits related to increased 24 revenue , and a decrease in non-cash stock based compensation of $ 2.1 million . the decrease in operating margin was primarily related to an increase in direct costs ( excluding staff costs ) as a percentage of revenues from 16.8 % of revenue in 2010 , to 22.1 % of revenue in 2011. in addition , margins were negatively impacted by an increase in office and general expenses as a percentage of revenue from 20.6 % in 2010 to 22.7 % in 2011 due to the increased acquisition related costs and estimated deferred acquisition consideration adjustments of 4.0 % in 2011 compared to 0.6 % in 2010 offset in part from the increase in revenue . offsetting these increases , total staff costs as a percentage of revenue decreased from 55.8 % in 2010 to 54.2 % in 2011 , despite the company 's investment in talent . depreciation and amortization decreased as a percentage of revenue from 4.1 % during 2010 to 3.7 % during 2011 , due to the increase in revenues . performance marketing services performance marketing services generated revenues of $ 335.2 million for 2011 , an increase of $ 85.0 million , or 34 % , compared to revenues of $ 250.2 million in 2010. the year-over-year increase was attributable primarily to acquisition growth of $ 47.4 million , organic revenue growth of $ 35.8 million , and a foreign translation increase of $ 1.8 million . this organic revenue growth was driven by net new business wins . the operating profit of performance marketing services increased by $ 12.2 million to $ 24.2 million in 2011 , from an operating profit of $ 12.0 million in 2010. operating margins improved from 4.8 % in 2010 compared to 7.2 % in 2011. the increase in operating profit was primarily due to a decrease in acquisition related costs and estimated deferred acquisition consideration adjustments of $ 9.3 million and $ 5.8 million relating to increased revenue . these increases were offset in part from increased depreciation and amortization of $ 1.2 million , due to acquisitions and increased non-cash stock based compensation of $ 1.7 million . the increase in operating margin in 2011 was due primarily to a decrease in total staff costs as a percentage of revenue from 55.0 % in 2010 to 53.2 % in 2011. office and general expenses as a percentage of revenue decreased from 15.3 % in 2010 to 13.6 % in 2011 due to a decrease in acquisition related costs and estimated deferred acquisition consideration adjustments as a percentage of revenue of a positive net adjustment of 0.3 % in 2010 to a larger positive net adjustment of 3.0 % in 2011. this decrease was offset by an increase in non-cash stock based compensation expense of $ 1.7 million . in addition , depreciation and amortization expense decreased as a percentage of revenue from 6.3 % in 2010 to 5.1 % in 2011 , due to the increased revenue . offsetting these decreases was an increase in direct costs ( excluding staff costs ) as a percentage of revenue from 26.4 % in 2010 to 28.2 % in 2011. corporate operating costs related to the company 's corporate operations increased by $ 13.6 million to $ 36.3 million in 2011 , compared to $ 22.7 million in 2010. this increase was primarily related to increased compensation and related costs of $ 9.0 million ( $ 7.6 million of which consisted of non-cash stock based compensation ) .
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[
"performance marketing services performance marketing services generated revenues of $ 335.2 million for 2011 , an increase of $ 85.0 million , or 34 % , compared to revenues of $ 250.2 million in 2010. the year-over-year increase was attributable primarily to acquisition growth of $ 47.4 million , organic revenue growth of $ 35.8 million , and a foreign translation increase of $ 1.8 million .",
"offsetting these decreases was an increase in direct costs ( excluding staff costs ) as a percentage of revenue from 26.4 % in 2010 to 28.2 % in 2011. corporate operating costs related to the company 's corporate operations increased by $ 13.6 million to $ 36.3 million in 2011 , compared to $ 22.7 million in 2010. this increase was primarily related to increased compensation and related costs of $ 9.0 million ( $ 7.6 million of which consisted of non-cash stock based compensation ) .",
"margin was primarily related to an increase in reimbursed client related direct costs ( excluding staff costs ) as a percentage of revenues from 20.3 % of revenue in 2010 to 24.3 % of revenue in 2011. this increase in reimbursed client related direct costs is due to the requirement that certain costs be included in both revenue and direct costs due to the company acting as principle versus agent for certain client contracts ."
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compared to 2013 , in 2014 we are forecasting an increase in all of our oilfield operating business segments , including : rovs on greater service demand to support drilling and vessel-based projects ; subsea products on higher demand for all our major product lines ; subsea projects on a growth in deepwater service activity ; and asset integrity on increased demand for our services . we use our rovs to provide drilling support , vessel-based inspection , maintenance and repair , subsea hardware installation , construction , and pipeline inspection services to customers in the oil and gas industry . the largest percentage of our rovs has historically been used to provide drill support services . therefore , the number of floating drilling rigs on hire is a leading market indicator for this business . the following table shows average floating rigs under contract and our rov utilization . replace_table_token_11_th demand for floating rigs is our primary driver of future growth prospects . according to industry data published by ihs petrodata , at the end of 2013 , there were 314 floating drilling rigs in the world , with 282 of the rigs under contract . of the 282 rigs under contract , 213 are contracted through 2014 . one hundred two additional floating rigs were on order , and 60 of these 102 have been contracted long-term . we estimate approximately 29 floating rigs will be placed in service during 2014 , and we have rov contracts on 16 of those . competitors have the rov contracts on three rigs , leaving 10 contract opportunities . in addition to floating rig demand , subsea tree completions are another leading indicator of the strength of the deepwater market and the primary demand driver for our subsea products lines . according to industry data published by quest offshore resources , inc. , the global market for subsea tree orders is expected to increase approximately 65 % in the 2013-2017 time period compared to the previous five years . additionally , quest projects that subsea tree installations during the same time period will increase approximately 50 % compared to the previous five-year period , and the installed subsea completion base will have a net increase of approximately 1,400 trees , or 35 % . critical accounting policies and estimates we have based the following discussion and analysis of our financial condition and results of operations on our consolidated financial statements , which we have prepared in conformity with accounting principles generally accepted in the united states . these principles require us to make various estimates , judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the periods we present . we base our estimates on historical experience , available information and other assumptions we believe to be reasonable under the circumstances . on an ongoing basis , we evaluate our estimates ; however , our actual results may differ from these estimates under different assumptions or conditions . the following discussion summarizes the accounting policies we believe ( 1 ) require our management 's most difficult , subjective or complex judgments and ( 2 ) are the most critical to our reporting of results of operations and financial position . 23 revenue recognition . we recognize our revenue according to the type of contract involved . on a daily basis , we recognize revenue under contracts that provide for specific time , material and equipment charges , which we bill periodically , ranging from weekly to monthly . we account for significant fixed-price contracts , which we enter into mainly in our subsea products segment , and occasionally in our subsea projects and advanced technologies segments , using the percentage-of-completion method . in 2013 , we accounted for 12 % of our revenue using the percentage-of-completion method . in determining whether a contract should be accounted for using the percentage-of-completion method , we consider whether : the customer provides specifications for the construction of facilities or production of goods or for the provision of related services ; we can reasonably estimate our progress towards completion and our costs ; the contract includes provisions as to the enforceable rights regarding the goods or services to be provided , consideration to be received and the manner and terms of payment ; the customer can be expected to satisfy its obligations under the contract ; and we can be expected to perform our contractual obligations . under the percentage-of-completion method , we recognize estimated contract revenue based on costs incurred to date as a percentage of total estimated costs . changes in the expected cost of materials and labor , productivity , scheduling and other factors affect the total estimated costs . additionally , external factors , including weather or other factors outside of our control , may also affect the progress and estimated cost of a project 's completion and , therefore , the timing of income and revenue recognition . we routinely review estimates related to our contracts and reflect revisions to profitability in earnings immediately . if a current estimate of total contract cost indicates an ultimate loss on a contract , we recognize the projected loss in full when we determine it . in prior years , we have recorded adjustments to earnings as a result of revisions to contract estimates . although we are continually striving to accurately estimate our contract costs and profitability , adjustments to overall contract costs could be significant in future periods . story_separator_special_tag we expect our 2014 subsea projects operating margin to improve slightly over 2013. our asset integrity segment revenue and operating income were higher in 2013 over 2012 due to high demand in most of our geographic areas , particularly africa and australia . our asset integrity segment revenue and operating income were higher in 2012 as compared to 2011 on higher service
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[
"compared to 2013 , in 2014 we are forecasting an increase in all of our oilfield operating business segments , including : rovs on greater service demand to support drilling and vessel-based projects ; subsea products on higher demand for all our major product lines ; subsea projects on a growth in deepwater service activity ; and asset integrity on increased demand for our services .",
"although we are continually striving to accurately estimate our contract costs and profitability , adjustments to overall contract costs could be significant in future periods .",
"we estimate approximately 29 floating rigs will be placed in service during 2014 , and we have rov contracts on 16 of those .",
"according to industry data published by quest offshore resources , inc. , the global market for subsea tree orders is expected to increase approximately 65 % in the 2013-2017 time period compared to the previous five years .",
"in prior years , we have recorded adjustments to earnings as a result of revisions to contract estimates .",
"we account for significant fixed-price contracts , which we enter into mainly in our subsea products segment , and occasionally in our subsea projects and advanced technologies segments , using the percentage-of-completion method .",
"according to industry data published by ihs petrodata , at the end of 2013 , there were 314 floating drilling rigs in the world , with 282 of the rigs under contract .",
"we use our rovs to provide drilling support , vessel-based inspection , maintenance and repair , subsea hardware installation , construction , and pipeline inspection services to customers in the oil and gas industry ."
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sales in most of the geographic areas we serve , and particularly in norway due to our acquisition in december 2011. we anticipate our 2014 operating income for asset integrity to be higher than in 2013 on increased service sales and a slight improvement in operating margin . advanced technologies . the table that follows sets out revenue and profitability for this segment . replace_table_token_13_th 29 our advanced technologies operating income in 2013 was higher than that of 2012 due to increases in work and operational efficiency on theme park projects and an increase in vessel maintenance and repair work for the u.s. navy . our advanced technologies operating income in 2012 was higher than that of 2011 on higher engineering and vessel maintenance work for the u.s. navy and higher levels of theme park projects . we anticipate our advanced technologies 2014 operating income to approximate that of 2013 . unallocated expenses . our unallocated expenses , i.e . , those not associated with a specific business segment , within gross margin consist of expenses related to our incentive and deferred compensation plans , including restricted stock and bonuses , as well as other general expenses . our unallocated expenses within operating income consist of those within gross margin plus general and administrative expenses related to corporate functions . the table that follows sets out our unallocated expenses . replace_table_token_14_th our unallocated gross margin and operating expenses increased in each of 2013 and 2012 , primarily due to higher compensation related to incentive plans . other . the table that follows sets forth our significant financial statement items below the operating income line . replace_table_token_15_th interest expense decreased in 2013 compared to 2012 on decreasing debt levels as we paid down our debt to zero during 2013. interest expense increased in 2012 compared to 2011 from higher debt levels after we increased our borrowings to fund an acquisition in december 2011. we did not capitalize any interest in 2013 , 2012 or 2011 . we record results from our 50 % investment in medusa spar llc using the equity method . medusa spar llc owns 75 % of a production spar in the u.s. gulf of mexico and earns its revenue from fees charged on production processed through the facility . throughput declined in each of 2013 and 2012 from the immediately preceding year due to normal well production decline . we expect medusa spar llc revenue and our equity share of its earnings will decline in 2014 due to normal well production decline . medusa spar llc 's revenue could be increased if the operator of the producing wells receives regulatory approval to start producing from other zones in the existing wells , which are anticipated to have higher flow rates than the currently-producing zones , or is able to connect more wells to the spar . included in other income ( expenses ) , net are foreign currency transaction gains/ ( losses ) of $ 0.1 million , $ ( 5.4 ) million and $ ( 0.4 ) million for 2013 , 2012 and 2011 , respectively . our effective tax rate , including foreign , state and local taxes , was 31.5 % , 31.5 % , and 30.3 % for 2013 , 2012 and 2011 , respectively , which included a combination of expiring statutes of limitations and the resolution of uncertain tax positions of $ 0.7 million , $ 3.0 million and $ 0.9 million , respectively , related to certain liabilities for uncertain tax positions we recorded in prior years . the primary difference between our 2012 and 2011 effective tax rates and the u.s. federal statutory rate of 35 % reflects our intent to indefinitely reinvest in certain of our international operations . therefore , we are no longer providing for u.s. taxes on a portion of our foreign earnings . the effective tax rate of 30.3 % in our financial statements for 2011 is a result of our effective rate of 31.5 % adjusted by $ 4.9 million of additional tax benefits , primarily attributable to amending prior years ' u.s. federal income tax returns to reflect a broader interpretation of our pre-tax income eligible for certain deductions 30 allowable for oil and gas construction activities , and tax effecting the $ 19.6 million gain on the sale of the ocean legend at the u.s. federal statutory rate of 35 % . we anticipate our effective tax rate in 2014 will be approximately 31.3 % . off-balance sheet arrangements we do not have any off-balance sheet arrangements , as defined by sec rules . contractual obligations at december 31 , 2013 , we had payments due under contractual obligations as follows : replace_table_token_16_th at december 31 , 2013 , we had outstanding purchase order commitments totaling $ 479 million , including approximately $ 100 million for the construction of a new subsea support vessel scheduled for delivery in 2016 , $ 49 million for rov launch and recovery system equipment and $ 29 million for specialized steel tubes to be used in our manufacturing of steel tube umbilicals . we have ordered the specialized steel tubes in advance to meet expected sales commitments . the winches have been ordered for new rovs and for anticipated replacements due to normal wear and tear . should we decide not to accept delivery of the steel tubes , we would incur cancellation charges of at least 10 % of the amount canceled . in 2001 , we entered into an agreement with our chairman of the board of directors ( the ``
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[
"contractual obligations at december 31 , 2013 , we had payments due under contractual obligations as follows : replace_table_token_16_th at december 31 , 2013 , we had outstanding purchase order commitments totaling $ 479 million , including approximately $ 100 million for the construction of a new subsea support vessel scheduled for delivery in 2016 , $ 49 million for rov launch and recovery system equipment and $ 29 million for specialized steel tubes to be used in our manufacturing of steel tube umbilicals .",
"we have ordered the specialized steel tubes in advance to meet expected sales commitments .",
"the winches have been ordered for new rovs and for anticipated replacements due to normal wear and tear ."
] |
Liquidity
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0
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overview we are a leader and an innovator in providing technology-enabled services platforms that empower consumers to make healthcare saving and spending decisions . consumers and employers use our platforms to manage tax-advantaged hsas and other cdbs offered by employers , including fsas and hras , cobra administration , commuter and other benefits , compare treatment options and pricing , evaluate and pay healthcare bills , receive personalized benefit information , access remote and telemedicine benefits , earn wellness incentives , and receive investment advice to grow their tax-advantaged healthcare savings . the core of our offerings is the hsa , a financial account through which consumers spend and save long-term for healthcare expenses on a tax-advantaged basis . as of january 31 , 2021 , we administered 5.8 million hsas , with balances totaling $ 14.3 billion , which we call hsa assets . during the fiscal years ended january 31 , 2021 and 2020 , we added approximately 0.7 million and 1.5 million new hsas , respectively , which reflects in 2019 the wageworks acquisition . also , as of january 31 , 2021 , we administered 7.0 million complementary cdbs . we refer to the aggregate number of hsas and other cdbs on our platforms as total accounts , of which we had 12.8 million as of january 31 , 2021. we reach consumers primarily through relationships with their employers , which we call clients . we reach clients primarily through a sales force that calls on clients directly , relationships with benefits brokers and advisors , and integrated partnerships with a network of health plans , benefits administrators , benefits brokers and consultants , and retirement plan recordkeepers , which we call network partners . as of january 31 , 2021 , our platforms were integrated with 174 network partners , and we serve approximately 100,000 clients . we have increased our share of the growing hsa market from 4 % in calendar year 2010 to 16 % in 2020 , measured by hsa assets . according to devenir , today we are the largest hsa provider by accounts and second largest by assets . in addition , we believe we are the largest provider of other cdbs . we seek to differentiate ourselves through our proprietary technology , product breadth , ecosystem connectivity , and service-driven culture . our proprietary technology is designed to help consumers optimize the value of their hsas and other cdbs and gain confidence and skills in managing their healthcare costs as part of their financial security . our ability to engage consumers is enhanced by our platforms ' capacity to securely share data in both directions with others in the health , benefits , and retirement ecosystems . our commuter benefits offering also leverages connectivity to an ecosystem of mass transit , ride hailing , and parking providers . these strengths reflect our “ deep purple ” culture of remarkable service to customers and teammates , achieved by driving excellence , ethics , and process into everything we do . we earn revenue primarily from three sources : service , custodial , and interchange . we earn service revenue mainly from fees paid by clients on a recurring per-account per-month basis . we earn custodial revenue mainly from hsa assets held at our members ' direction in federally insured cash deposits , insurance contracts or mutual funds , and from investment of client-held funds . we earn interchange revenue mainly from fees paid by merchants on payments that our members make using our physical payment cards and virtual platforms . see “ key components of our results of operations ” for additional information on our sources of revenue , including the adverse impacts caused by the ongoing covid-19 pandemic . -33- wageworks acquisition on august 30 , 2019 , we completed the wageworks acquisition and paid approximately $ 2.0 billion in cash to wageworks stockholders , financed through net borrowings of approximately $ 1.22 billion under a new term loan facility and approximately $ 816.9 million of cash on hand . as a result of the wageworks acquisition , wageworks inc. became a wholly owned subsidiary of healthequity , inc. the key strategy of the wageworks acquisition was to enable us to increase the number of our employer sales opportunities , the conversion of these opportunities to clients , and the value of clients in generating members , hsa assets and complementary cdbs . wageworks ' historic strength of selling to employers directly and through health benefits brokers and advisors complemented our distribution through network partners . with wageworks ' cdb capabilities , we provide employers with a single partner for both hsas and other cdbs , which is preferred by the vast majority of employers according to research conducted for us by aite group . for clients that partner with us in this way , we believe we can produce more value by encouraging both cdb participants to contribute to hsas and hsa-only members to take advantage of tax savings available through other cdbs . accordingly , we believe that there are significant opportunities to expand the scope of services that we provide to our clients . the wageworks acquisition has significantly increased the number of our total accounts , hsa assets , client-held funds , adjusted ebitda , total revenue , total cost of revenue , operating expenses , and other financial results . these increases impact the comparability of the period-over-period results described in this report . key factors affecting our performance we believe that our future performance will be driven by a number of factors , including those identified below . each of these factors presents both significant opportunities and significant risks to our future performance . see also `` results of operations - revenue `` for information relating to the ongoing covid-19 pandemic and also the section entitled “ risk factors ” included in part 1 , item 1a of this annual report on form
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[
"during the fiscal years ended january 31 , 2021 and 2020 , we added approximately 0.7 million and 1.5 million new hsas , respectively , which reflects in 2019 the wageworks acquisition .",
"as a result of the wageworks acquisition , wageworks inc. became a wholly owned subsidiary of healthequity , inc. the key strategy of the wageworks acquisition was to enable us to increase the number of our employer sales opportunities , the conversion of these opportunities to clients , and the value of clients in generating members , hsa assets and complementary cdbs .",
"key factors affecting our performance we believe that our future performance will be driven by a number of factors , including those identified below .",
"we have increased our share of the growing hsa market from 4 % in calendar year 2010 to 16 % in 2020 , measured by hsa assets ."
] |
ROO
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10-k and our other reports filed with the sec . wageworks integration on august 30 , 2019 , we completed the wageworks acquisition . story_separator_special_tag we earn a material portion of our total revenue from interest paid to us by these partners . the lengths of our agreements with depository partners typically range from three to five years and may have fixed or variable interest rate terms . the terms of new and renewing agreements may be impacted by the then-prevailing interest rate environment , which in turn is driven by macroeconomic factors and government policies over which we have no control . such factors , and the response of our competitors to them , also determine the amount of interest retained by our members . we believe that diversification of depository partners , varied contract terms and other factors reduce our exposure to short-term fluctuations in prevailing interest rates and mitigate the short-term impact of sustained increases or declines in prevailing interest rates on our custodial revenue . over longer periods , sustained shifts in prevailing interest rates affect the amount of custodial revenue we can realize on custodial assets and the interest retained by our members . we expect our custodial revenue to continue to be adversely affected by the interest rate cuts by the federal reserve associated with the ongoing covid-19 pandemic and other market conditions that have caused interest rates to decline significantly . -35- interest on our long-term debt changes frequently due to variable interest rate terms , and as a result , our interest expense is expected to fluctuate based on changes in prevailing interest rates . our competition and industry our direct competitors are hsa custodians and other cdb providers . many of these are state or federally chartered banks and other financial institutions for which we believe technology-based healthcare services are not a core business . some of our direct competitors ( including healthcare service companies such as united health group 's optum , webster bank , and well-known retail investment companies , such as fidelity investments ) are in a position to devote more resources to the development , sale , and support of their products and services than we have at our disposal . in addition , numerous indirect competitors , including benefits administration technology and service providers , partner with banks and other hsa custodians to compete with us . our network partners may also choose to offer competitive services directly , as some health plans have done . our success depends on our ability to predict and react quickly to these and other industry and competitive dynamics . as a result of the covid-19 pandemic , we have seen an adverse impact on sales opportunities , with some opportunities delayed and most now being held virtually . as an increasing number of companies go out of business , the number of our clients and potential clients is adversely affected . increased unemployment may mean that fewer of our members contribute to hsas , fsas or other cdbs and reduce overall demand for our products . we have seen a significant decline in the use of commuter benefits due to many of our members working from home during the outbreak or other impacts from the outbreak , which has negatively impacted both our interchange revenue and service revenue , and this `` work from home `` trend may continue after the pandemic . we have also seen a decline in interchange revenue across all other products . the extent to which the covid-19 pandemic will negatively impact our business is highly uncertain and can not be accurately predicted . regulatory environment federal law and regulations , including the affordable care act , the internal revenue code , the employee retirement income security act and department of labor regulations , and public health regulations that govern the provision of health insurance and provide the tax advantages associated with our products , play a pivotal role in determining our market opportunity . privacy and data security-related laws such as the health insurance portability and accountability act , or hipaa , and the gramm-leach-bliley act , laws governing the provision of investment advice to consumers , such as the investment advisers act of 1940 , or the advisers act , the usa patriot act , anti-money laundering laws , and the federal deposit insurance act , all play a similar role in determining our competitive landscape . in addition , state-level regulations also have significant implications for our business in some cases . for example , our subsidiary healthequity trust company is regulated by the wyoming division of banking , and several states are considering , or have already passed , new privacy regulations that can affect our business . various states also have laws and regulations that impose additional restrictions on our collection , storage , and use of personally identifiable information . privacy regulation in particular has become a priority issue in many states , including california , which in 2018 enacted the california consumer privacy act broadly regulating california residents ' personal information and providing california residents with various rights to access and control their data , and the new california privacy rights act . we have also seen an increase in regulatory changes related to our products due to government responses to the covid-19 pandemic and may continue to see additional regulatory changes . our ability to predict and react quickly to relevant legal and regulatory trends and to correctly interpret their market and competitive implications is important to our success . our acquisition strategy we have a successful history of acquiring hsa portfolios and businesses that strengthen our platform . we seek to continue this growth strategy and are regularly engaged in evaluating different opportunities . we have developed an internal capability to source , evaluate , and integrate acquired hsa portfolios . we intend to continue to thoughtfully pursue acquisitions of complementary assets and businesses that
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[
"the lengths of our agreements with depository partners typically range from three to five years and may have fixed or variable interest rate terms .",
"wageworks integration on august 30 , 2019 , we completed the wageworks acquisition .",
"as a result of the covid-19 pandemic , we have seen an adverse impact on sales opportunities , with some opportunities delayed and most now being held virtually .",
"we have developed an internal capability to source , evaluate , and integrate acquired hsa portfolios .",
"-35- interest on our long-term debt changes frequently due to variable interest rate terms , and as a result , our interest expense is expected to fluctuate based on changes in prevailing interest rates ."
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2
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we believe will strengthen our platform .
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"we believe will strengthen our platform ."
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ROO
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0
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changes to internal control over financial reporting there were no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected , or are reasonably likely to materially affect , our internal controls over financial reporting . item 9b . other information . none . 38 part iii item 10. directors , executive officers and corporate governance . the information required by item 10 is incorporated by reference to the sections entitled “ questions and answers about the 2018 annual meeting and voting , ” “ election of directors , ” “ section 16 ( a ) beneficial ownership reporting compliance , ” “ corporate governance , ” and “ executive officers ” in our definitive proxy statement relating to our 2018 annual meeting of stockholders . item 11. executive compensation . the information required by item 11 is incorporated by reference to the section s entitled “ executive compensation ” and “ director compensation ” in our definitive proxy statement relating to our 2018 annual meeting of stockholders . item 12. security ownership of certain beneficial owners and management and related stockholder matters . the information required by item 12 is incorporated by reference to the section s entitled “ security ownership of principal stockholders , ” “ security ownership of directors and management ” and “ equity compensation plan information ” in our definitive proxy statement relating to our 2018 annual meeting of stockholders . item 13. certain relationships and related transactions , and director independence . the information required by item 13 is incorporated by reference to the sections entitled “ corporate governance ” and “ certain transactions and business relationships ” in our definitive proxy statement relating to our 2018 annual meeting of stockholders . item 14. principal accounting fees and services the information required by item 14 is incorporated by reference to the section entitled “ independent registered public account ant firm ” in our definitive proxy statement relating to our 2018 annual meeting of stockholders . 39 part iv item 15. exhibits , financial statement schedules . ( a ) documents filed as part of this report . ( 1 ) financial statements . the following financial statements are included in part ii , item 8 of this annual report on form 10-k : report of eide bailly , llp on con solidated financial statements as of november 30 , 2017 and 2016 consolidated balance sheets as of november 30 , 2017 and 2016 consolidated statements of operations for each of the two years in the period ended november 30 , 2017 and 2016 consol idated statements of comprehensive income for each of the two years in the period ended november 30 , 2017 and 2016 consolidated statements of stockholders ' equity for each of the two years in the period ended november 30 , 2017 and 2016 consolidated statements of cash flows for each of the two years in the period ended november 30 , 2017 and 2016 notes to consolidated financial statements ( 2 ) financial statement schedules . not applicable . ( 3 ) exhibits . exhibit no . description 3.1 certificate of incorporation of art 's-way manufacturing co. , inc.– incorporated by reference to exhibit 3.1 to the company 's quarterly report on form 10-q for the quarter year ended may 31 , 2012 . 3.2 certificate of amendment to the certificate of incorporation of art 's-way manufacturing co. , inc. – incorporated by reference to exhibit 3.2 to the company 's quarterly report on form 10-k for the quarter ended may 31 , 2012 . 3.3 bylaws of art 's-way manufacturing co. , inc.– incorporated by reference to exhibit 3.2 to the company 's annual report on form 10-k for the fiscal year ended november 30 , 2008 . 3.4 amendments to bylaws of art 's-way manufacturing co. , inc. – incorporated by reference to exhibit 3.1 to the company 's quarterly report on form 10-qsb for the quarter ended may 31 , 2004 . 10.1 * art 's-way manufacturing co. , inc. 2007 non-employee directors stock option plan – incorporated by reference to exhibit 10.1 of the company 's quarterly report on form 10-qsb for the quarter ended february 28 , 2007 . 10.2 * art 's-way manufacturing co. , inc. 2007 employee stock option plan – incorporated by reference to exhibit 10.3 of the company 's annual report on form 10-k for the fiscal year ended november 30 , 2009 . 10.3 * form of non-qualified option agreement under 2007 non-employee directors ' stock option plan and 2007 employee stock option plan – incorporated by reference to exhibit 10.8 of the company 's quarterly report on form 10-q for the quarter ended may 31 , 2009 . 40 10.4 * director compensation policy – incorporated by reference to exhibit 10.1 to the company 's quarterly report on form 10-q for the quarter ended february 29 , 2016 . 10.5 * art 's-way manufacturing co. , inc. 2011 equity incentive plan – incorporated by reference to exhibit 10.1 to the company 's current report on form 8-k filed may 3 , 2011 . 10.6 * form of incentive stock option agreement under the art 's-way manufacturing co. , inc. 2011 equity incentive plan – incorporated by reference to exhibit 10.2 to the company 's current report on form 8-k filed may 3 , 2011 . 10.7 story_separator_special_tag . this report contains forward-looking statements that involve significant risks and uncertainties . the following discussion , which focuses on our results of operations , contains forward-looking information and statements . story_separator_special_tag at the transfer of title , all risks of ownership have passed to the buyer , and the buyer agrees to maintain insurance on the manufactured items that have not yet been shipped . we have operated using bill and hold agreements with certain customers for many years , with consistent satisfactory results for both buyer and seller .
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"10.3 * form of non-qualified option agreement under 2007 non-employee directors ' stock option plan and 2007 employee stock option plan – incorporated by reference to exhibit 10.8 of the company 's quarterly report on form 10-q for the quarter ended may 31 , 2009 .",
"changes to internal control over financial reporting there were no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected , or are reasonably likely to materially affect , our internal controls over financial reporting .",
"the following financial statements are included in part ii , item 8 of this annual report on form 10-k : report of eide bailly , llp on con solidated financial statements as of november 30 , 2017 and 2016 consolidated balance sheets as of november 30 , 2017 and 2016 consolidated statements of operations for each of the two years in the period ended november 30 , 2017 and 2016 consol idated statements of comprehensive income for each of the two years in the period ended november 30 , 2017 and 2016 consolidated statements of stockholders ' equity for each of the two years in the period ended november 30 , 2017 and 2016 consolidated statements of cash flows for each of the two years in the period ended november 30 , 2017 and 2016 notes to consolidated financial statements ( 2 ) financial statement schedules ."
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ROO
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the credit terms on this agreement are consistent with the credit terms on all other sales . all risks of loss are shouldered by the buyer , and there are no exceptions to the buyer 's commitment to accept and pay for these manufactured goods . revenues recognized at the completion of production in the 2017 and 2016 fiscal years were approximately $ 184,000 and $ 424,000 , respectively . 13 our modular buildings segment is in the construction industry and , as such , accounts for long-term contracts on the percentage-of-completion method . revenue and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at completion . contract losses are recognized when current estimates of total contract revenue and contract cost indicate a loss . estimated contract costs include any and all costs appropriately allocable to the contract . the provision for these contract losses will be the excess of estimated contract costs over estimated contract revenues . costs and profit in excess of amounts billed are classified as current assets and billings in excess of cost and profit are cl assified as current liabilities . story_separator_special_tag style= `` margin : 0pt ; text-align : justify ; font-family : times new roman , times , serif ; font-size : 10pt ; `` > during the third quarter of the 2016 fiscal year , we made the decision to exit the pressure vessels industry and are currently working to liquidate the assets . our pressurized vessels segment 's net sales for the 2017 fiscal year were $ 0 compared to $ 1,598,000 for the 2016 fiscal year . we continued to incur expenses during 2017 due to holding the facility in dubuque , iowa . in january 2018 , we accepted an offer on the remaining assets for $ 1,500,000. we anticipate closing on the disposition of these assets in the second quarter of fiscal 2018. based on this offer , we have recorded an impairment to our assets of $ 289,000 in the 2017 fiscal year . our pretax loss in 2017 was $ ( 401,000 ) compared to $ ( 617,000 ) in 2016 , a decrease of $ 216,000 , or 35.0 % . trends and uncertainties we are subject to a number of trends and uncertainties that may affect our short-term or long-term liquidity , sales revenues , and operations . similar to other farm equipment manufacturers , we are affected by items unique to the farm industry , including fluctuations in farm income resulting from the change in commodity prices , crop damage caused by weather and insects , government farm programs , interest rate fluctuations , and other unpredictable variables . other uncertainties include our oem customers and the decisions they make regarding their current supply chain structure , inventory levels , and overall business conditions . management believes that our business is dependent on the farming industry for the bulk of our sales revenues . as such , our business tends to reap the benefits of increases in farm net income , as farmers tend to purchase equipment in lucrative times and forgo purchases in less profitable years . direct government payments are declining and costs of agricultural production are increasing ; therefore , we anticipate that further increases in the value of production will benefit our business , while any future decreases in the value of production will decrease farm net income and may harm our financial results . as with other farm equipment manufacturers , we depend on our network of dealers to influence customers ' decisions , and dealer influence is often more persuasive than a manufacturer 's reputation or the price of the product . seasonality sales of our agricultural products are seasonal ; however , we have tried to decrease the impact of this seasonality through the development of beet harvesting machinery coupled with private labeled products , as the peak periods for these different products occur at different times . we believe that our tool sales are not seasonal . our modular building sales are somewhat seasonal , and we believe that this is due to the budgeting and funding cycles of the universities that commonly purchase our modular buildings . we believe that this cycle can be offset by building backlogs of inventory and by increasing sales to other public and private sectors . liquidity and capital resources our main source of funds during the 2017 fiscal year was cash generated by operating activities , which was primarily due to inventory reductions , and amounts available under our revolving line of credit . we used $ 514,000 of cash to update facilities and equipment . 15 on september 28 , 2017 , w e entered into a new credit facility with bank midwest , which superseded and replaced in its entirety our previous credit facility with u.s. bank national association ( “ u.s . bank ” ) . the bank midwest credit facility consists of a $ 5,000,000 revolving line of credit , pursuant to which we had borrowed $ 2,462,530 as of november 30 , 2017 , with $ 2,537,470 remaining available , and two term loans , which had outstanding principal balances of $ 2,595,000 , and $ 600,000 as of november 30 , 2017. proceeds of the new line of credit and two term loans were used to refinance all of the indebtedness outstanding under the u.s. bank credit facility in the amount of approximately $ 6,562,030 , which consisted of $ 6,528,223 in unpaid principal and approximately $ 33,807 in accrued and
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"our pretax loss in 2017 was $ ( 401,000 ) compared to $ ( 617,000 ) in 2016 , a decrease of $ 216,000 , or 35.0 % .",
"direct government payments are declining and costs of agricultural production are increasing ; therefore , we anticipate that further increases in the value of production will benefit our business , while any future decreases in the value of production will decrease farm net income and may harm our financial results .",
"management believes that our business is dependent on the farming industry for the bulk of our sales revenues .",
"our pressurized vessels segment 's net sales for the 2017 fiscal year were $ 0 compared to $ 1,598,000 for the 2016 fiscal year ."
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ROO
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mortgage servicing rights are recorded at fair value upon sale of the loan , and are amortized in proportion to and over the period of estimated net servicing income . loans loans are recorded at their current unpaid principal balance , net of unearned income and unamortized loan fees and expenses , which are amortized under the effective interest method over the estimated lives of the loans . interest income on loans is accrued based on the principal amount outstanding . for all loan classes within the company 's loan portfolio , loans are placed on nonaccrual status when timely collection of principal and or interest in accordance with contractual terms is in doubt . loans are transferred to nonaccrual status generally when principal or interest payments become ninety days delinquent , unless the loan is well secured and in the process of collection or sooner when management concludes circumstances indicate that borrowers may be unable to meet contractual principal or interest payments . when a loan is transferred to a nonaccrual status , all interest previously accrued in the current period but not collected is reversed against interest income in that period . interest accrued in a prior period and not collected is charged-off against the allowance for credit losses . if ultimate repayment of a nonaccrual loan is expected , any payments received are applied in accordance with contractual terms . if ultimate repayment of principal is not expected , any payment received on a nonaccrual loan is applied to principal until ultimate repayment becomes expected . for all loan classes within the company 's loan portfolio , nonaccrual loans are returned to accrual status when they become current as to principal and interest and demonstrate a period of performance under the contractual terms and , in the opinion of management , are fully collectible as to principal and interest . for loans in all portfolios , the principal amount is charged off in full or in part as soon as management determines , based on available facts , that the collection of principal in full or in part is improbable . for commercial loans , management considers specific facts and circumstances relative to individual credits in making such a determination . for consumer and residential real estate loan classes , management uses specific guidance and thresholds from the federal financial institutions examination council 's uniform retail credit classification and account management policy . a loan is considered to be a troubled debt restructuring ( “ tdr ” ) when the company grants a concession to the borrower because of the borrower 's financial condition that the company would not otherwise consider . such concessions generally include one or a combination of the following : an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk ; a temporary reduction in the interest rate ; or a change in scheduled payment amount . tdr loans are nonaccrual loans ; however , they can be returned to accrual status after a period of performance , generally evidenced by six months of compliance with their modified terms . section 4013 of the coronavirus aid , relief and economic security act ( “ cares act ” ) , which was enacted on march 27 , 2020 , provides that a qualified loan modification is exempt by law from classification as a troubled debt restructuring as defined by gaap . to be eligible , each loan modification must be ( 1 ) related to the coronavirus ( “ covid-19 ” ) pandemic ; ( 2 ) executed on a loan that was not more than 30 days past due as of december 31 , 2019 ; and ( 3 ) executed between march 1 , 2020 , and the earlier of ( a ) 60 days after the date of termination of the national emergency or ( b ) december 31 , 2020. on august 3 , 2020 , the federal financial institutions examination council ( “ ffiec ” ) issued a joint statement on additional loan accommodations related to covid-19 . the joint statement clarifies that for loan modifications in which section 4013 is being applied , subsequent modifications could also be eligible under section 4013. accordingly , the company is offering modifications made in response to covid-19 to borrowers who were current and otherwise not past due in accordance with the criteria stated in section 4013. these include short-term , 180 days or less , modifications in the form of payment deferrals , fee waivers , extensions of repayment terms , or other delays in payment . accordingly , the company did not account for such loan modifications as tdrs . as of december 31 , 2020 , there were $ 110.8 million in loans in modification programs related to covid-19 . on december 27 , 2020 , the consolidated appropriations act amended section 2014 of the cares act extending the exemption of qualified loan modifications from classification as a troubled debt restructuring as defined by gaap to the earlier of january 1 , 2022 , or 60 days after the national emergency concerning covid-19 ends . allowance for credit losses - loans the cecl approach requires an estimate of the credit losses expected over the life of a loan ( or pool of loans ) . it replaces the incurred loss approach 's threshold that required the recognition of a credit loss when it was probable a loss event was incurred . the allowance for credit losses is a valuation account that is deducted from , or added to , the loans ' amortized cost basis to present the net , lifetime amount expected to be collected on the loans . loan losses are charged off against the allowance when management believes a loan balance is confirmed to be uncollectible . story_separator_special_tag interest income for tax-exempt securities and loans has been adjusted to a taxable-equivalent basis
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"allowance for credit losses - loans the cecl approach requires an estimate of the credit losses expected over the life of a loan ( or pool of loans ) .",
"if ultimate repayment of a nonaccrual loan is expected , any payments received are applied in accordance with contractual terms .",
"loans are transferred to nonaccrual status generally when principal or interest payments become ninety days delinquent , unless the loan is well secured and in the process of collection or sooner when management concludes circumstances indicate that borrowers may be unable to meet contractual principal or interest payments .",
"such concessions generally include one or a combination of the following : an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk ; a temporary reduction in the interest rate ; or a change in scheduled payment amount .",
"a loan is considered to be a troubled debt restructuring ( “ tdr ” ) when the company grants a concession to the borrower because of the borrower 's financial condition that the company would not otherwise consider .",
"story_separator_special_tag interest income for tax-exempt securities and loans has been adjusted to a taxable-equivalent basis",
"to be eligible , each loan modification must be ( 1 ) related to the coronavirus ( “ covid-19 ” ) pandemic ; ( 2 ) executed on a loan that was not more than 30 days past due as of december 31 , 2019 ; and ( 3 ) executed between march 1 , 2020 , and the earlier of ( a ) 60 days after the date of termination of the national emergency or ( b ) december 31 , 2020. on august 3 , 2020 , the federal financial institutions examination council ( “ ffiec ” ) issued a joint statement on additional loan accommodations related to covid-19 .",
"the allowance for credit losses is a valuation account that is deducted from , or added to , the loans ' amortized cost basis to present the net , lifetime amount expected to be collected on the loans .",
"as of december 31 , 2020 , there were $ 110.8 million in loans in modification programs related to covid-19 .",
"loans loans are recorded at their current unpaid principal balance , net of unearned income and unamortized loan fees and expenses , which are amortized under the effective interest method over the estimated lives of the loans .",
"for commercial loans , management considers specific facts and circumstances relative to individual credits in making such a determination .",
"on december 27 , 2020 , the consolidated appropriations act amended section 2014 of the cares act extending the exemption of qualified loan modifications from classification as a troubled debt restructuring as defined by gaap to the earlier of january 1 , 2022 , or 60 days after the national emergency concerning covid-19 ends ."
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using the statutory federal income tax rate of 21 % for 2020 , 2019 and 2018 . 35 average balances and net interest income replace_table_token_9_th ( 1 ) securities are shown at average amortized cost . ( 2 ) for purposes of these computations , nonaccrual loans and loans held for sale are included in the average loan balances outstanding . ( 3 ) interest income for tax-exempt securities and loans have been adjusted to a fte basis using the statutory federal income tax rate of 21 % . 36 2020 operating results as compared to 2019 operating results net interest income net interest income for the year ended 2020 was $ 315.7 million , up $ 4.1 million , or 1.3 % , from 2019. fte net interest margin of 3.31 % for the year ended december 31 , 2020 , was down from 3.58 % for the year ended december 31 , 2019. interest income decreased $ 19.3 million , or 5.2 % , as the yield on average interest-earning assets decreased 57 basis points ( “ bps ” ) from 2019 to 3.65 % , while average interest-earning assets increased $ 823.5 million primarily due to excess liquidity and an increase in average loans due to ppp loan originations . interest expense was down $ 23.4 million , or 41.8 % , for the year ended december 31 , 2020 as compared to the year ended december 31 , 2019 as the cost of interest-bearing liabilities decreased 41 bps . the federal reserve lowered its target fed funds rate by 150 basis points in the first quarter of 2020. analysis of changes in fte net interest income replace_table_token_10_th loans and corresponding interest and fees on loans the average balance of loans increased by approximately $ 489.4 million , or 7.0 % , from 2019 to 2020. the yield on average loans decreased from 4.62 % in 2019 to 4.13 % in 2020 , as loans re-priced downward due to the interest rate environment in 2020. fte interest income from loans decreased 4.3 % , from $ 321.8 million in 2019 to $ 308.1 million in 2020. this decrease was due to the decreases in yields . net interest income in 2020 included $ 14.2 million of interest and fees on ppp loans . total loans increased $ 362.8 million , or 5.1 % , from december 31 , 2019 to december 31 , 2020. total ppp loans as of december 31 , 2020 were $ 431 million ( net of unamortized fees ) , with $ 548 million originated at an average loan size of $ 184 thousand and an average annual fee of 3.2 % . excluding ppp loans , period end loans decreased $ 68.0 million from december 31 , 2019. commercial and industrial loans decreased $ 34.5 million to $ 1.3 billion ; commercial real estate loans increased $ 238.3 million to $ 2.4 billion ; and total consumer loans decreased $ 271.8 million to $ 3.4 billion . total loans represent approximately 68.6 % of assets as of december 31 , 2020 , as compared to 73.4 % as of december 31 , 2019. the following table reflects the loan portfolio by major categories ( 1 ) for the years indicated : composition of loan portfolio replace_table_token_11_th ( 1 ) loans are summarized by business line which do not align to how the company assesses credit risk in the estimate for credit losses under cecl . 37 residential real estate loans consist primarily of loans secured by a first or second mortgage on primary residences . we originate adjustable-rate and fixed-rate , one-to-four-family residential real estate loans for the construction , purchase or refinancing of a mortgage . these loans are generally collateralized by properties located in the company 's market area . subprime mortgage lending , which has been the riskiest sector of the residential housing market , is not a market that the company has ever actively pursued . the market does not apply a uniform definition of what constitutes “ subprime ” lending . our reference to subprime lending relies upon the “ statement on subprime mortgage lending ” issued by the ots and the other federal bank regulatory agencies ( the “ agencies ” ) , on june 29 , 2007 , which further referenced the “ expanded guidance for subprime lending programs , ” or the expanded guidance , issued by the agencies by press release dated january 31 , 2001. loans in the commercial and commercial real estate , consist primarily of loans made to small and medium-sized entities . the company offers a variety of loan options to meet the specific needs of our commercial customers including term loans , time notes and lines of credit . such loans are made available to businesses for working capital needs such as inventory and receivables , business expansion , equipment purchases , livestock purchases and seasonal crop expenses . these loans typically are usually collateralized by business assets such as equipment , accounts receivable and perishable agricultural products , which are exposed to industry price volatility . the company offers commercial real estate ( “ cre ” ) loans to finance real estate purchases , refinancings , expansions and improvements to commercial and agricultural properties . cre loans are loans secured by liens on real estate , which may include both owner occupied and non-owner-occupied properties , such as apartments , commercial structures , health care facilities and other facilities . the company offers a variety of consumer loan products including indirect auto , specialty lending , home equity and other consumer loans . indirect auto loans include indirect installment loans to individuals , which are primarily secured by automobiles . although automobile loans have generally been originated through dealers , all applications submitted through dealers are subject to the company 's normal underwriting
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"these loans are generally collateralized by properties located in the company 's market area .",
"( 2 ) for purposes of these computations , nonaccrual loans and loans held for sale are included in the average loan balances outstanding .",
"the federal reserve lowered its target fed funds rate by 150 basis points in the first quarter of 2020. analysis of changes in fte net interest income replace_table_token_10_th loans and corresponding interest and fees on loans the average balance of loans increased by approximately $ 489.4 million , or 7.0 % , from 2019 to 2020. the yield on average loans decreased from 4.62 % in 2019 to 4.13 % in 2020 , as loans re-priced downward due to the interest rate environment in 2020. fte interest income from loans decreased 4.3 % , from $ 321.8 million in 2019 to $ 308.1 million in 2020. this decrease was due to the decreases in yields .",
"these loans typically are usually collateralized by business assets such as equipment , accounts receivable and perishable agricultural products , which are exposed to industry price volatility .",
"36 2020 operating results as compared to 2019 operating results net interest income net interest income for the year ended 2020 was $ 315.7 million , up $ 4.1 million , or 1.3 % , from 2019. fte net interest margin of 3.31 % for the year ended december 31 , 2020 , was down from 3.58 % for the year ended december 31 , 2019. interest income decreased $ 19.3 million , or 5.2 % , as the yield on average interest-earning assets decreased 57 basis points ( “ bps ” ) from 2019 to 3.65 % , while average interest-earning assets increased $ 823.5 million primarily due to excess liquidity and an increase in average loans due to ppp loan originations .",
"the company offers a variety of loan options to meet the specific needs of our commercial customers including term loans , time notes and lines of credit .",
"using the statutory federal income tax rate of 21 % for 2020 , 2019 and 2018 .",
"net interest income in 2020 included $ 14.2 million of interest and fees on ppp loans .",
"total loans represent approximately 68.6 % of assets as of december 31 , 2020 , as compared to 73.4 % as of december 31 , 2019. the following table reflects the loan portfolio by major categories ( 1 ) for the years indicated : composition of loan portfolio replace_table_token_11_th ( 1 ) loans are summarized by business line which do not align to how the company assesses credit risk in the estimate for credit losses under cecl ."
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rsus subject to pro rata vesting ) ( incorporated by reference from the registrant 's form 10-k filed february 28 , 2017 ) 10.41 form of global restricted stock unit agreement under the 2016 bunge limited equity incentive plan ( for rsus subject to cliff vesting ) ( incorporated by reference from the registrant 's form 10-k filed february 28 , 2017 ) 10.42 form of global performance unit agreement under the 2016 bunge limited equity incentive plan ( incorporated by reference from the registrant 's form 10-k filed february 28 , 2017 ) 10.43 bunge limited 2017 non-employee directors equity incentive plan ( incorporated by reference from the registrant 's definitive proxy statement filed april 13 , 2017 ) 10.44 form of restricted stock unit award agreement under the bunge limited 2017 non-employee directors equity incentive plan ( incorporated by reference from the registrant 's form 10-k filed february 23 , 2018 10.45 bunge excess benefit plan ( amended and restated as of january 1 , 2009 ) ( incorporated by reference from the registrant 's story_separator_special_tag the following should be read in conjunction with `` cautionary statement regarding forward looking statements `` and our combined consolidated financial statements and notes thereto included in item 15 of this annual report on form 10-k. non-u.s. gaap financial measures total segment earnings before interest and taxes ( `` ebit `` ) is an operating performance measure used by bunge 's management to evaluate segment operating activities . bunge 's management believes total segment ebit is a useful measure of operating profitability , since the measure allows for an evaluation of the performance of its segments without regard to its financing methods or capital structure . in addition , ebit is a financial measure that is widely used by analysts and investors in bunge 's industries . total segment ebit is a non-u.s. gaap financial measure and is not intended to replace net income attributable to bunge , the most directly comparable u.s. gaap financial measure . operating results factors affecting operating results bunge limited , a bermuda company , together with its subsidiaries , is a leading global agribusiness and food company with integrated operations that stretch from the farm to consumer foods . the commodity nature of the company 's principal products , as well as regional and global supply and demand variations that occur as an inherent part of the business , make volumes an important operating measure . accordingly , information is included in `` segment results `` that summarizes certain items in our consolidated statements of income and volumes by reportable segment . the common unit of measure for all reported volumes is metric tons . a description of reported volumes for each reportable segment has also been included in the discussion of key factors affecting results of operations in each of our business segments as discussed below . agribusiness in the agribusiness segment , we purchase , store , transport , process and sell agricultural commodities and commodity products . profitability in this segment is affected by the availability and market prices of agricultural commodities and processed commodity products and the availability and costs of energy , transportation and logistics services . profitability in our oilseed processing operations is also impacted by volumes procured , processed and sold and by capacity utilization rates . availability of agricultural commodities is affected by many factors , including weather , farmer planting and selling decisions , plant diseases , governmental policies , and agricultural sector economic conditions . reported volumes in this segment primarily reflect ( i ) grains and oilseeds originated from farmers , cooperatives or other aggregators and from which `` origination margins `` are earned ; ( ii ) oilseeds processed in our oilseed processing facilities and from which `` crushing margins `` are earned , representing the margin from the industrial separation of the oilseed into its protein meal and vegetable oil components , both of which are separate commodity products ; and ( iii ) third party sales of grains , oilseeds and related commodity products merchandised through our distribution businesses and from which `` distribution margins `` are earned . the foregoing subsegment volumes may overlap as they produce separate margin capture opportunities . for example , oilseeds procured in our south american grain origination activities may be processed in our oilseed processing facilities in asia-pacific and will be reflected at both points within the segment . as such , these reported volumes do not represent solely volumes of net sales to third-parties , but rather where margin is earned , appropriately reflecting their contribution to our global network 's capacity utilization and profitability . demand for our purchased and processed agribusiness products is affected by many factors , including global and regional economic conditions , changes in per capita income , the financial condition of customers and customer access to credit , worldwide consumption of food products , particularly pork and poultry , population growth rates , relative prices of substitute agricultural products , outbreaks of disease associated with livestock and poultry , and demand for renewable fuels produced from agricultural commodities and commodity products . we expect that the factors described above will continue to affect global supply and demand for our agribusiness products for the foreseeable future . we also expect that , from time to time , imbalances will likely exist between oilseed processing capacity and demand for oilseed products in certain regions , which impacts our decisions regarding whether , when and where to purchase , store , transport , process or sell these commodities , including whether to change the location of or adjust our own oilseed processing capacity . additionally , price fluctuations and availability of commodities may cause fluctuations in our working capital , such as inventories , accounts receivable and borrowings over the course of a given year . for example , increased availability of commodities at harvest times often causes fluctuations in our
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"the foregoing subsegment volumes may overlap as they produce separate margin capture opportunities .",
"additionally , price fluctuations and availability of commodities may cause fluctuations in our working capital , such as inventories , accounts receivable and borrowings over the course of a given year .",
"as such , these reported volumes do not represent solely volumes of net sales to third-parties , but rather where margin is earned , appropriately reflecting their contribution to our global network 's capacity utilization and profitability .",
"rsus subject to pro rata vesting ) ( incorporated by reference from the registrant 's form 10-k filed february 28 , 2017 ) 10.41 form of global restricted stock unit agreement under the 2016 bunge limited equity incentive plan ( for rsus subject to cliff vesting ) ( incorporated by reference from the registrant 's form 10-k filed february 28 , 2017 ) 10.42 form of global performance unit agreement under the 2016 bunge limited equity incentive plan ( incorporated by reference from the registrant 's form 10-k filed february 28 , 2017 ) 10.43 bunge limited 2017 non-employee directors equity incentive plan ( incorporated by reference from the registrant 's definitive proxy statement filed april 13 , 2017 ) 10.44 form of restricted stock unit award agreement under the bunge limited 2017 non-employee directors equity incentive plan ( incorporated by reference from the registrant 's form 10-k filed february 23 , 2018 10.45 bunge excess benefit plan ( amended and restated as of january 1 , 2009 ) ( incorporated by reference from the registrant 's story_separator_special_tag the following should be read in conjunction with `` cautionary statement regarding forward looking statements `` and our combined consolidated financial statements and notes thereto included in item 15 of this annual report on form 10-k. non-u.s. gaap financial measures total segment earnings before interest and taxes ( `` ebit `` ) is an operating performance measure used by bunge 's management to evaluate segment operating activities .",
"profitability in our oilseed processing operations is also impacted by volumes procured , processed and sold and by capacity utilization rates .",
"demand for our purchased and processed agribusiness products is affected by many factors , including global and regional economic conditions , changes in per capita income , the financial condition of customers and customer access to credit , worldwide consumption of food products , particularly pork and poultry , population growth rates , relative prices of substitute agricultural products , outbreaks of disease associated with livestock and poultry , and demand for renewable fuels produced from agricultural commodities and commodity products .",
"for example , increased availability of commodities at harvest times often causes fluctuations in our"
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inventories and borrowings . story_separator_special_tag these amounts are remeasured into their respective functional currencies at exchange rates as of the balance sheet date , with the resulting gains or losses included in the entity 's statement of income and , therefore , in our consolidated statements of income as foreign exchange gains ( losses ) . we primarily use a combination of equity and intercompany loans to finance our subsidiaries . intercompany loans that are of a long-term investment nature with no intention of repayment in the foreseeable future are considered permanently invested and as such are treated as analogous to equity for accounting purposes . as a result , any foreign currency translation gains or losses on such permanently invested intercompany loans are reported in accumulated other comprehensive income ( loss ) in our consolidated balance sheets . in contrast , foreign currency translation gains or losses on intercompany loans that are not of a permanent nature are recorded in our consolidated statements of income as foreign exchange gains ( losses ) . income taxes as a bermuda exempted company , we are not subject to income taxes on income in our jurisdiction of incorporation . however , our subsidiaries , which operate in multiple tax jurisdictions , are subject to income taxes at various statutory rates ranging from 0 % to 35 % . the jurisdictions that significantly impact our effective tax rate are brazil , the united states , argentina and bermuda . determination of taxable income requires the interpretation of related and often complex tax laws and regulations in each jurisdiction where we operate and the use of estimates and assumptions regarding future events . results of operations 2018 overview for the year ended december 31 , 2018 , net income attributable to bunge increased by $ 107 million to $ 267 million from $ 160 million in 2017 . this increase resulted primarily from higher total segment ebit of $ 301 million , particularly in agribusiness , as described below , and was partially offset by higher interest and income tax expenses . income tax expense was $ 179 million in 2018 , compared to income tax expense of $ 56 million in 2017. the effective tax rate for 2018 was 39 % compared to 24 % in 2017. the higher effective tax rate for 2018 was primarily due to unfavorable earnings mix , coupled with an income tax charge of $ 48 million for valuation allowances established in brazil and china . total segment ebit of $ 737 million in 2018 increased from $ 436 million in 2017 . ebit for 2018 included $ 51 million of severance , employee benefit and other program costs related to our global competitiveness program ( “ gcp ” ) , $ 9 million of severance and other employee benefit costs related to other industrial initiatives , $ 10 million of restructuring charges in our industrial sugar operations in brazil , and $ 10 million of indirect tax credits in brazil . in addition , ebit included $ 10 million of asset impairment charges in europe relating to port assets . ebit also included $ 29 million of losses on the disposition of equity interests in brazil and asia , $ 19 million of acquisition fees , and a $ 24 million loss on the extinguishment of debt . ebit for 2017 included $ 55 million of severance , employee benefit and other program costs related to our gcp , $ 35 million of severance and other employee benefit costs related to other industrial initiatives , $ 22 million of restructuring charges in our industrial sugar operations in brazil , and $ 16 million of indirect tax credits in our industrial sugar operations in brazil . in addition , ebit included $ 20 million of asset impairment charges in asia and europe relating to feedmill and port assets , $ 17 million of impairment charges related to our palm oil affiliate in indonesia and our renewable oils affiliate in brazil , and impairment charges of $ 7 million of intangible assets . ebit also included $ 9 million of gains on the disposition of equity interests in brazil and $ 9 million of acquisition fees . agribusiness segment ebit increased in 2018 by $ 389 million to $ 645 million , primarily due to higher soy crush margins in all regions driven by favorable market dynamics and reduced soybean production in argentina due to a drought . additionally , better results in our ocean freight activities contributed to the improved results . edible oil products segment ebit decreased $ 4 million to $ 122 million in 2018 from $ 126 million in 2017 . increases to gross profit from the acquisition of loders and higher gross profit in europe from higher volumes and improved margins for margarine were more than offset by weaker margins in brazil from our packaged oil business as continued high availability of oils from the strong crushing environment pressured retail sales as well as higher sg & a resulting from recent acquisitions . milling products segment ebit increased by $ 27 million to $ 90 million in 2018 driven primarily by higher volumes and margins in mexico , the acquisition of minsa usa , and lower costs in brazil . 29 sugar and bioenergy segment ebit decreased by $ 123 million . the lower results were primarily in our sugarcane milling operations , driven by lower international sugar prices from higher global supply and weaker demand , as well as lower volumes and higher costs due to the impact of severe weather in brazil . results in our trading and merchandising business were also lower as we exited this business during the year . fertilizer segment ebit increased $ 36 million , primarily due to stronger margins in argentina resulting from the recovery of international fertilizer prices .
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"inventories and borrowings .",
"the jurisdictions that significantly impact our effective tax rate are brazil , the united states , argentina and bermuda .",
"total segment ebit of $ 737 million in 2018 increased from $ 436 million in 2017 .",
"additionally , better results in our ocean freight activities contributed to the improved results .",
"results of operations 2018 overview for the year ended december 31 , 2018 , net income attributable to bunge increased by $ 107 million to $ 267 million from $ 160 million in 2017 .",
"increases to gross profit from the acquisition of loders and higher gross profit in europe from higher volumes and improved margins for margarine were more than offset by weaker margins in brazil from our packaged oil business as continued high availability of oils from the strong crushing environment pressured retail sales as well as higher sg & a resulting from recent acquisitions .",
"agribusiness segment ebit increased in 2018 by $ 389 million to $ 645 million , primarily due to higher soy crush margins in all regions driven by favorable market dynamics and reduced soybean production in argentina due to a drought ."
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if a loan is impaired , a portion of the allowance is allocated so that the loan is reported net at the present value of estimated future cash flows using the loan 's existing rate or at the fair value of collateral if repayment is expected solely from the sale of the collateral . troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan 's effective rate at inception . if a troubled debt restructuring is considered to be a collateral dependent loan , the loan is reported , net , at the fair value of the collateral . for troubled debt restructurings that subsequently default , we determine the amount of reserve in accordance with the accounting policy for the allowance for loan losses . the general component of the allowance for loan losses covers non-impaired loans and is based on historical loss experience adjusted for current factors . the historical loss experience is determined by portfolio and class and is based on the actual loss history experienced by us . this actual loss experience is then adjusted by comparing current conditions to the conditions that existed during the loss history . we consider the changes related to ( i ) lending policies , ( ii ) economic conditions , ( iii ) nature and volume of the loan portfolio and class , ( iv ) lending staff , ( v ) volume and severity of past due , non-accrual , and risk graded loans , ( vi ) loan review system , ( vii ) value of underlying collateral for collateral dependent loans , ( viii ) concentration levels and ( ix ) effects of other external factors . goodwill : goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets . core deposit intangibles : core deposit intangibles are acquired customer relationships arising from whole bank and branch acquisitions . core deposit intangibles are initially measured at fair value and then are amortized over their estimated useful lives using an accelerated method . the useful lives of the core deposits are estimated to generally be between seven and ten years . goodwill and core deposit intangibles are assessed at least annually for impairment and any such impairment is recognized and expensed in the period identified . we have selected december 31 as the date to perform our annual goodwill impairment test . goodwill is the only intangible asset with an indefinite useful life . emerging growth company : pursuant to the jobs act , an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by the financial accounting standards board ( “ fasb ” ) or the sec either ( i ) within the same periods as those otherwise applicable to non-emerging growth companies or ( ii ) within the same time periods as private companies . we have irrevocably elected to adopt new accounting standards within the public company adoption period . 56 we may take advantage of some of the reduced regulatory and reporting requirements that are available to us so long as the company qualifies as an emerging growth company , including , but not limited to , not being required to comply with the auditor attestation requirements of section 404 ( b ) of the sarbanes-oxley act , reduced disclosure obligations regarding executive compensation , and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments . results of operations we generate most of our revenue from interest income and fees on loans , interest and dividends on investment securities and non-interest income , such as service charges and fees , debit card income and mortgage banking income . we incur interest expense on deposits and other borrowed funds and non-interest expense , such as salaries and employee benefits and occupancy expenses . changes in interest rates earned on interest-earning assets or incurred on interest-bearing liabilities , as well as the volume and types of interest-earning assets , interest-bearing and non-interest-bearing liabilities and stockholders ' equity , are usually the largest drivers of periodic change in net interest income . fluctuations in interest rates are driven by many factors , including governmental monetary policies , inflation , deflation , macroeconomic developments , changes in unemployment , the money supply , political and international circumstances and domestic and foreign financial markets . periodic changes in the volume and types of loans in our loan portfolio are affected by , among other factors , economic and competitive conditions in arkansas , kansas , missouri and oklahoma , as well as developments affecting the consumer , commercial and real estate sectors within these markets . net income year ended december 31 , 2017 compared with year ended december 31 , 2016 net income for the year ended december 31 , 2017 was $ 20.6 million compared to $ 9.4 million for year ended december 31 , 2016. net income allocable to common stockholders was $ 20.6 million for the year ended december 31 , 2017 , compared to $ 9.4 million for the year ended december 31 , 2016 , an increase of $ 11.3 million , or 120.3 % . during the year ended december 31 , 2017 , increases in net interest income of $ 33.4 million and non-interest income of $ 5.0 million were partially offset by $ 20.4 million in higher non-interest expenses and an increase of $ 834 thousand in the provision for loan loss when compared to the year ended december 31 , 2016. the changes in the components of net income are discussed in more detail in the following sections of “ results of operations . story_separator_special_tag ” year ended december 31 , 2016 compared with year ended december 31 , 2015 net
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"during the year ended december 31 , 2017 , increases in net interest income of $ 33.4 million and non-interest income of $ 5.0 million were partially offset by $ 20.4 million in higher non-interest expenses and an increase of $ 834 thousand in the provision for loan loss when compared to the year ended december 31 , 2016. the changes in the components of net income are discussed in more detail in the following sections of “ results of operations .",
"net income year ended december 31 , 2017 compared with year ended december 31 , 2016 net income for the year ended december 31 , 2017 was $ 20.6 million compared to $ 9.4 million for year ended december 31 , 2016. net income allocable to common stockholders was $ 20.6 million for the year ended december 31 , 2017 , compared to $ 9.4 million for the year ended december 31 , 2016 , an increase of $ 11.3 million , or 120.3 % .",
"we have selected december 31 as the date to perform our annual goodwill impairment test .",
"emerging growth company : pursuant to the jobs act , an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by the financial accounting standards board ( “ fasb ” ) or the sec either ( i ) within the same periods as those otherwise applicable to non-emerging growth companies or ( ii ) within the same time periods as private companies .",
"core deposit intangibles are initially measured at fair value and then are amortized over their estimated useful lives using an accelerated method .",
"changes in interest rates earned on interest-earning assets or incurred on interest-bearing liabilities , as well as the volume and types of interest-earning assets , interest-bearing and non-interest-bearing liabilities and stockholders ' equity , are usually the largest drivers of periodic change in net interest income .",
"periodic changes in the volume and types of loans in our loan portfolio are affected by , among other factors , economic and competitive conditions in arkansas , kansas , missouri and oklahoma , as well as developments affecting the consumer , commercial and real estate sectors within these markets .",
"goodwill : goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets .",
"we have irrevocably elected to adopt new accounting standards within the public company adoption period ."
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income for the year ended december 31 , 2016 was $ 9.4 million compared to $ 10.3 million for year ended december 31 , 2015. net income allocable to common stockholders was $ 9.4 million for the year ended december 31 , 2016 , compared to $ 10.1 million for the year ended december 31 , 2015 , a decrease of $ 750 thousand , or 7.4 % . during the year ended december 31 , 2016 , increases in net interest income of $ 6.3 million , non-interest income of $ 664 thousand and a reduction of $ 928 thousand in the provision for loan loss were offset by $ 8.5 million in higher non-interest expenses when compared to the year ended december 31 , 2015. the changes in the components of net income are discussed in more detail in the following sections of “ results of operations . ” net interest income and net interest margin analysis net interest income is the difference between interest income on interest-earning assets , including loans and securities , and interest expense incurred on interest-bearing liabilities , including deposits and other borrowed funds . to evaluate net interest income , management measures and monitors ( 1 ) yields on loans and other interest-earning assets , ( 2 ) the costs of deposits and other funding sources , ( 3 ) the net interest spread and ( 4 ) net interest margin . net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities . net interest margin is calculated as net interest income divided by average interest-earning assets . because non-interest-bearing sources of funds , such as non-interest-bearing deposits and stockholders ' equity also fund interest-earning assets , net interest margin includes the benefit of these non-interest-bearing sources of funds . net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities , referred to as a “ volume change , ” and it is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds , referred to as a “ yield/rate change . ” 57 the following table shows the average balance of each principal category of assets , liabilities , and stockholders ' equity and the average yields on interest-earning assets and average rates on interest-bearing liabilities for the years ended december 31 , 2017 , 2016 and 2015. the yields and rates are calculated by dividing income or expense by the average daily balances of the associated assets or liabilities . average balance sheets and net interest analysis replace_table_token_6_th ( 1 ) average loan balances include nonaccrual loans , hedge fair value adjustments and merger fair value adjustments . ( 2 ) net interest margin is calculated by dividing net interest income by average interest-earning assets for the period . ( 3 ) tax exempt income is not included in the above table on a tax equivalent basis . ( 4 ) actual unrounded values are used to calculate the reported yield or rate disclosed . accordingly , recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts . 58 increases and decreases in interest income and interest expense result from changes in average balances ( volume ) of interest-earning assets and interest-bearing liabilities , as well as changes in average interest yields/rates . the following table analyzes the change in volume variances and yield/rate variances for the year ended december 31 , 2017 as compared to the year ended december 31 , 2016 , and the year ended december 31 , 2016 as compared to the year ended december 31 , 2015. analysis of changes in net interest income replace_table_token_7_th ( 1 ) the effect of changes in volume is determined by multiplying the change in volume by the previous year 's average rate . similarly , the effect of rate changes is calculated by multiplying the change in average rate by the prior year 's volume . the changes attributable to both volume and rate , which can not be segregated , have been allocated to the volume variance and the rate variance in proportion to the relationship of the absolute dollar amount of the change in each . year ended december 31 , 2017 compared with year ended december 31 , 2016 net interest income before the provision for loan losses for the year ended december 31 , 2017 was $ 86.0 million compared with $ 52.6 million for the year ended december 31 , 2016 , an increase of $ 33.4 million , or 63.5 % . the increase in net interest income is primarily due to the increase in the volume of interest-earnings assets and to a lesser extent an increase in yields on interest-earning assets . the increase in average volume of interest-earning assets was primarily due to increases in loans and investment securities partially offset by a decrease in federal funds sold and other . interest expense for the year ended december 31 , 2017 was $ 16.7 million , an increase of $ 7.5 million , or 81.4 % , from the interest expense of $ 9.2 million for the year ended december 31 , 2016. the increase in interest expense was primarily due to an increase in the average volume and rates of interest bearing liabilities incurred to fund the increased volume of interest-earning assets . interest income was $ 102.7 million for the year ended december 31 , 2017 and $ 61.8 million for the year ended december 31 , 2016 , an increase of $ 40.9 million , or 66.2 % .
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"year ended december 31 , 2017 compared with year ended december 31 , 2016 net interest income before the provision for loan losses for the year ended december 31 , 2017 was $ 86.0 million compared with $ 52.6 million for the year ended december 31 , 2016 , an increase of $ 33.4 million , or 63.5 % .",
"interest income was $ 102.7 million for the year ended december 31 , 2017 and $ 61.8 million for the year ended december 31 , 2016 , an increase of $ 40.9 million , or 66.2 % .",
"the increase in net interest income is primarily due to the increase in the volume of interest-earnings assets and to a lesser extent an increase in yields on interest-earning assets .",
"the increase in average volume of interest-earning assets was primarily due to increases in loans and investment securities partially offset by a decrease in federal funds sold and other .",
"average balance sheets and net interest analysis replace_table_token_6_th ( 1 ) average loan balances include nonaccrual loans , hedge fair value adjustments and merger fair value adjustments ."
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these levels from highest to lowest priority are as follows : level 1 : quoted prices ( unadjusted ) in active markets that are accessible at the measurement date for identical assets or liabilities ; level 2 : quoted prices in active markets for similar assets or liabilities or observable prices that are based on inputs not quoted on active markets , but corroborated by market data ; and level 3 : unobservable inputs or valuation techniques that are used when little or no market data is available . the determination of fair value and the assessment of a measurement 's placement within the hierarchy requires judgment . level 3 valuations often involve a higher degree of judgment and complexity . level 3 valuations may require the use of various cost , market , or income valuation methodologies applied to unobservable management estimates and assumptions . management 's assumptions could vary depending on the asset or liability valued and the valuation method used . such assumptions could include : estimates of prices , earnings , costs , actions of market participants , market factors , or the weighting of various valuation methods . the company may also engage external advisors to assist in determining fair value , as appropriate . although the company believes that the recorded fair value of its financial instruments is appropriate , these fair values may not be indicative of net realizable value or reflective of future fair values . deferred preservation costs deferred preservation costs includes costs of cardiac and vascular tissues available for shipment , tissues currently in active processing , and tissues held in quarantine pending release to implantable status . by federal law , human tissues can not be bought or sold , therefore , the tissues the company preserves are not held as inventory . the costs the company incurs to procure and process cardiac and vascular tissues are instead accumulated and deferred . deferred preservation costs are stated at the lower of cost or market value on a first-in , first-out basis and are deferred until revenue is recognized . upon shipment of tissue to an implanting facility , revenue is recognized and the related deferred preservation costs are expensed as cost of preservation services . cost of preservation services also includes , as applicable , lower of cost or market write-downs and impairments for tissues not deemed to be recoverable , and includes , as incurred , idle facility expense , excessive spoilage , extra freight , and rehandling costs . the calculation of deferred preservation costs involves judgment and complexity and uses the same principles as inventory costing . donated human tissue is procured from deceased human donors by organ and tissue procurement organizations ( otpos ) , which consign the tissue to the company for processing , preservation , and distribution . deferred preservation costs consist primarily of the procurement fees charged by the otpos , direct labor and materials ( including salary and fringe benefits , laboratory supplies and expenses , and freight-in charges ) , and indirect costs ( including allocations of costs from support departments and facility allocations ) . fixed production overhead costs are allocated based on actual tissue processing levels , to the extent that they are within the range of the facility 's normal capacity . these costs are then allocated among the tissues processed during the period based on cost drivers , such as the number of donors or number of tissues processed . the company applies a yield estimate to all tissues in process and in quarantine to estimate the portion of tissues that will ultimately become implantable . management estimates quarantine yields based on its experience and reevaluates these estimates periodically . actual yields could differ significantly from the company 's estimates , which could result in a change in tissues available for shipment , and could increase or decrease the balance of deferred preservation costs . these changes could result in additional cost of preservation services expense or could increase per tissue preservation costs , which would impact gross margins on tissue preservation services in future periods . the company regularly evaluates its deferred preservation costs to determine if the costs are appropriately recorded at the lower of cost or market value . the company also evaluates its deferred preservation costs for costs not deemed to be recoverable , including tissues not expected to ship prior to the expiration date of their packaging . lower of cost or market value write-downs are recorded if the tissue processing costs incurred exceed the estimated market value of the tissue services , based on recent average service fees at the time of the evaluation . impairment write-downs are recorded based on the book value of tissues deemed to be impaired . actual results may differ from these estimates . write-downs of deferred 40 preservation costs are expensed as cost of preservation services , and these write-downs are permanent impairments that create a new cost basis , which can not be restored to its previous levels if the company 's estimates change . the company recorded write-downs to its deferred preservation costs totaling $ 540,000 , $ 448,000 , and $ 195,000 for the years ended december 31 , 2014 , 2013 , and 2012 , respectively . deferred income taxes deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and tax return purposes . the company periodically assesses the recoverability of its deferred tax assets , as necessary , when the company experiences changes that could materially affect its determination of the recoverability of its deferred tax assets . management provides a valuation allowance against its deferred tax assets when , as a result of this analysis , management believes it is more likely than not that some portion or all of its deferred tax assets will not be realized . story_separator_special_tag 44 revenues during these
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[
"the company recorded write-downs to its deferred preservation costs totaling $ 540,000 , $ 448,000 , and $ 195,000 for the years ended december 31 , 2014 , 2013 , and 2012 , respectively .",
"the company periodically assesses the recoverability of its deferred tax assets , as necessary , when the company experiences changes that could materially affect its determination of the recoverability of its deferred tax assets .",
"write-downs of deferred 40 preservation costs are expensed as cost of preservation services , and these write-downs are permanent impairments that create a new cost basis , which can not be restored to its previous levels if the company 's estimates change .",
"management estimates quarantine yields based on its experience and reevaluates these estimates periodically ."
] |
Liquidity
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1
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three and twelve month periods were largely for sales in certain international markets , as perclot topical was only recently approved for domestic distribution , as discussed below . the increase in revenues for the three and twelve months ended december 31 , 2014 was primarily due to increased sales in the company 's markets in europe , asia pacific , and latin america , partially due to growth in both new geographies and new surgical indications . the company expects that overall perclot revenues will increase in 2015 as compared to 2014 ; however , revenues may show some variability from quarter to quarter . in april 2014 cryolife received 510 ( k ) clearance for perclot topical from the fda , which allowed cryolife to begin commercialization of perclot topical in the u.s. the company began shipping perclot topical in august 2014 and is currently in the early stages of this product launch . in december 2014 cryolife received approval of the supplement to its investigational device exemption ( ide ) for perclot from the fda that addressed several study design considerations previously raised by the fda . this approval allows the company to begin its pivotal clinical trial to gain approval to commercialize perclot for surgical indications in the u.s. the company plans to begin enrollment in the trial in the first half of 2015 and currently expects to receive pma from the fda during 2017. cardiogenesis cardiac laser therapy revenues from the company 's cardiogenesis cardiac laser therapy product line consist primarily of sales of handpieces and , in certain periods , revenues from the sale of laser consoles . revenues from cardiac laser therapy increased 1 % for the three months ended december 31 , 2014 as compared to the three months ended december 31 , 2013. revenues from the sale of laser consoles were $ 240,000 and $ 470,000 for the three months ended december 31 , 2014 and 2013 , respectively . revenues from the sale of handpieces increased 17 % for the three months ended december 31 , 2014 as compared to the three months ended december 31 , 2013 , primarily due to a 19 % increase in unit shipments of handpieces . revenues from cardiac laser therapy decreased 8 % for the twelve months ended december 31 , 2014 as compared to the twelve months ended december 31 , 2013. revenues from the sale of laser consoles were $ 384,000 and $ 932,000 for the twelve months ended december 31 , 2014 and 2013 , respectively . revenues from the sale of handpieces decreased 3 % for the twelve months ended december 31 , 2014 as compared to the twelve months ended december 31 , 2013. this decrease was primarily due to a 4 % decrease in unit shipments of handpieces , which decreased revenues by 5 % , partially offset by an increase in average sales prices , which increased revenues by 2 % . revenues from laser console sales decreased for both the three and twelve months ended december 31 , 2014 due to both fewer laser console sales and a reduction in the average price paid per laser console as hospitals are increasingly reluctant to make large capital equipment purchases . in june 2013 the fda approved the company 's new handpiece design , and the company made the decision to exclusively distribute the new handpiece beginning late in the second quarter of 2013. the company 's handpiece revenues were negatively impacted in the second half of 2013 and the first half of 2014 , due to the slower than anticipated adoption of the new handpiece design . the decrease in handpiece revenues for the twelve months ended december 31 , 2014 is a result of a decrease in revenues in the first half of 2014 as compared to the first half of 2013. the company expects that overall cardiac laser therapy revenues will increase slightly in 2015 as compared to 2014 ; however , revenues from laser console sales can vary significantly from quarter to quarter due to the long lead time required to generate sales of capital equipment . hero graft revenues from hero grafts include revenues related to the sale of vascular grafts , venous outflow components , and accessories , which are generally sold together as a kit . hero grafts are primarily distributed in domestic markets as a solution for esrd in certain hemodialysis patients . hero graft revenues increased 10 % for the three months ended december 31 , 2014 as compared to the three months ended december 31 , 2013. hero grafts revenues increased 24 % for the twelve months ended december 31 , 2014 as compared to the twelve months ended december 31 , 2013. the increase in sales of hero grafts for the three months ended december 31 , 2014 was primarily due to an increase in shipments in direct markets in europe . the increase in sales of hero grafts for the twelve months ended december 31 , 2014 was primarily due to an increase in shipments in domestic markets , as a result of increased procedure volume and an 45 increase in the number of implanting physicians , and to a lesser extent , due to shipments to direct markets in europe . sales of the hero graft have increased significantly in europe since the company launched the product in september 2013. the company expects that hero graft revenues will increase in 2015 as compared to 2014. although hero graft revenues are subject to variability quarter to quarter due to the timing of surgical cases , the company believes that this variability will continue to decrease as the company broadens its base of implanting physicians . preservation services revenues from preservation services decreased 4 % and 3 % for the three and twelve months ended december 31 , 2014 , respectively , as compared to the three and twelve months ended december
|
[
"revenues from cardiac laser therapy increased 1 % for the three months ended december 31 , 2014 as compared to the three months ended december 31 , 2013. revenues from the sale of laser consoles were $ 240,000 and $ 470,000 for the three months ended december 31 , 2014 and 2013 , respectively .",
"the company expects that overall perclot revenues will increase in 2015 as compared to 2014 ; however , revenues may show some variability from quarter to quarter .",
"hero graft revenues from hero grafts include revenues related to the sale of vascular grafts , venous outflow components , and accessories , which are generally sold together as a kit .",
"in april 2014 cryolife received 510 ( k ) clearance for perclot topical from the fda , which allowed cryolife to begin commercialization of perclot topical in the u.s. the company began shipping perclot topical in august 2014 and is currently in the early stages of this product launch .",
"in december 2014 cryolife received approval of the supplement to its investigational device exemption ( ide ) for perclot from the fda that addressed several study design considerations previously raised by the fda ."
] |
Liquidity
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0
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in september 2015 , the financial accounting standards board ( `` fasb `` ) issued asu no . 2015-16 , business combinations ( topic 805 ) . the amendments in this asu require that an acquiring company recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined . additionally , this asu requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date . to simplify the accounting for adjustments made to provisional amounts recognized in a business combination , the amendments in this asu eliminates the requirement to retrospectively account for those adjustments . this asu is effective prospectively for fiscal years beginning after december 15 , 2015 , including interim periods within those fiscal years . the company does not expect the guidance in this asu to have a material impact on our consolidated financial statements and related disclosures . in july 2015 , the fasb issued asu no . 2015-11 , inventory ( topic 330 ) , which requires entities to measure most inventory at the lower of cost and net realizable value . this measure simplifies the current guidance , which requires entities to measure inventory at the lower of cost or market , where market is defined as one of three different measures , including net realizable value . the asu does not apply to inventories measured by using either the last-in , first-out method or the retail inventory method . the asu is effective prospectively for interim and annual periods beginning after december 15 , 2016 , and early adoption is permitted . we are in the process of evaluating the impact of the standard . in april 2015 , the fasb issued asu no . 2015-03 , simplifying the presentation of debt issuance costs , which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability , consistent with debt discounts . the amendments in this update are effective for fiscal years beginning after december 15 , 2015 and interim periods within those fiscal years . we do not expect the guidance to have a material impact on the company . 48 energy focus , inc. notes to consolidated financial statements in april 2015 , the fasb issued asu no . 2015-05 , customer 's accounting for fees paid in a cloud computing arrangement , which provides guidance to customers about whether a cloud computing arrangement includes a software license . if a cloud computing arrangement includes a software license , the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses . if a cloud computing arrangement does not include a software license , the customer should account for the arrangement as a service contract . the guidance will not change u.s. gaap for a customer 's accounting for service contracts . the amendments in the update are effective for interim and annual periods beginning after december 15 , 2015. we do not expect the guidance to have a material impact on the company . in january 2015 , the fasb issued asu no . 2015-01 , income statement-extraordinary and unusual items ( subtopic 225-20 ) : simplifying income statement presentation by eliminating the concept of extraordinary items , which provides guidance on simplifying income statement presentation by eliminating the concept of extraordinary items from u.s. gaap . the amendments in this update are effective for fiscal years , and interim periods within those fiscal years , beginning after december 15 , 2015. a reporting entity may apply the amendments prospectively and retrospectively to all periods presented in the financial statements . early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption . we have evaluated the accounting guidance and determined that there is no impact of this update to our consolidated financial statements . in may 2014 , the fasb issued asu no . 2014-9 , revenue recognition - revenue from contracts with customers , which is a comprehensive revenue recognition standard that will supersede nearly all of the existing revenue recognition guidance under u.s. gaap . the standard is effective for interim and annual periods beginning after december 15 , 2016 , and either full retrospective adoption or modified retrospective adoption is permitted . in august 2015 , the fasb issued asu 2015-14 , revenue from contracts with customer ( topic 606 ) : deferral of the effective date . this asu defers the effective date of asu 2014-09 , revenue from contracts with customer ( topic 606 ) for all entities by one year . as a result , all entities will be required to apply the provisions of asu 2014-09 to annual reporting periods beginning after december 15 , 2017 , including interim reporting periods within that reporting period . early adoption is permitted only as of annual reporting periods beginning after december 15 , 2016 , including interim reporting periods within that reporting period . the company is currently assessing the adoption date and impact the guidance in this asu will have , if any , on our consolidated results of operations , cash flows , or financial position . in april 2014 , the fasb issued asu no . 2014-08 , reporting discontinued operations and disclosures of disposals of components of an entity , which changes the criteria for reporting discontinued operations while enhancing disclosures in this area . under the new guidance , only disposals representing a strategic shift in operations should be presented as discontinued operations . story_separator_special_tag when assets
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[
"in august 2015 , the fasb issued asu 2015-14 , revenue from contracts with customer ( topic 606 ) : deferral of the effective date .",
"story_separator_special_tag when assets",
"this asu defers the effective date of asu 2014-09 , revenue from contracts with customer ( topic 606 ) for all entities by one year .",
"the company is currently assessing the adoption date and impact the guidance in this asu will have , if any , on our consolidated results of operations , cash flows , or financial position .",
"48 energy focus , inc. notes to consolidated financial statements in april 2015 , the fasb issued asu no .",
"the amendments in this update are effective for fiscal years , and interim periods within those fiscal years , beginning after december 15 , 2015. a reporting entity may apply the amendments prospectively and retrospectively to all periods presented in the financial statements .",
"2015-11 , inventory ( topic 330 ) , which requires entities to measure most inventory at the lower of cost and net realizable value ."
] |
Liquidity
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1
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are sold or otherwise disposed of , the cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statement of operations . refer to note 5 , `` property and equipment , `` included in item 8 for additional information . long-lived assets are reviewed for impairment whenever events or circumstances indicate the carrying amount may not be recoverable . events or circumstances that would result in an impairment review primarily include operations reporting losses , a significant change in the use of an asset , or the planned disposal or sale of the asset . the asset would be considered impaired when the future net undiscounted cash flows generated by the asset are less than its carrying value . an impairment loss would be recognized based on the amount by which the carrying value of the asset exceeds its fair value , as determined by quoted market prices ( if available ) or the present value of expected future cash flows . on december 31 , 2013 , we recorded an impairment charge of $ 608 thousand for assets that were held for sale at december 31 , 2013. these assets were subsequently sold in the first quarter of 2014 for $ 130 thousand , which was the carrying value after the impairment charge . valuation of inventories we state inventories at the lower of standard cost ( which approximates actual cost determined using the first-in-first-out method ) or market . we establish provisions for excess and obsolete inventories after evaluation of historical sales , current economic trends , forecasted sales , product lifecycles , and current inventory levels . during 2015 , 2014 , and 2013 , we charged $ 1.5 million , $ 194 thousand , and $ 146 thousand , respectively , to cost of sales from continuing operations for excess and obsolete inventories . adjustments to our estimates , such as forecasted sales and expected product lifecycles , could harm our operating results and financial position . accounting for income taxes 31 as part of the process of preparing the consolidated financial statements , we are required to estimate our income tax liability in each of the jurisdictions in which we do business . this process involves estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items , such as deferred revenues , for tax and accounting purposes . these differences result in deferred tax assets and liabilities , which are included in our consolidated balance sheets . we then assess the likelihood of the deferred tax assets being recovered from future taxable income and , to the extent we believe it is more likely than not that the deferred tax assets will not be recovered , or is unknown , we establish a valuation allowance . significant management judgment is required in determining our provision for income taxes , deferred tax assets and liabilities , and any valuation allowance recorded against our deferred tax assets . at december 31 , 2015 and 2014 , we have recorded a full valuation allowance against our deferred tax assets in the united states due to uncertainties related to our ability to utilize our deferred tax assets , primarily consisting of certain net operating losses carried forward . the valuation allowance is based upon our estimates of taxable income by jurisdiction and the period over which our deferred tax assets will be recoverable . in considering the need for a valuation allowance , we assess all evidence , both positive and negative , available to determine whether all or some portion of the deferred tax assets will not be realized . such evidence includes , but is not limited to , recent earnings history , projections of future income or loss , reversal patterns of existing taxable and deductible temporary differences , and tax planning strategies . we continue to evaluate the need for a valuation allowance on a quarterly basis . as of december 31 , 2015 , we had net operating loss carry-forwards of approximately $ 69.1 million for federal , state , and local income tax purposes . however , due to changes in the company 's capital structure , approximately $ 14.8 million of this amount is available after the application of irc section 382 limitations . as a result of this limitation , in 2016 , we only expect to have approximately $ 6.0 million of the net operating loss carry-forward available for use . if not utilized , these carry-forwards will begin to expire in 2021 for federal and have begun to expire for state and local purposes . please refer to note 12 , `` income taxes , `` included in item 8 for additional information . share-based payments the cost of employee and director stock options and restricted stock units , as well as other share-based compensation arrangements , is reflected in the consolidated financial statements based on the estimated grant date fair value method under the authoritative guidance . management applies the black-scholes option pricing model to options issued to employees and directors to determine the fair value of stock options and apply judgment in estimating key assumptions that are important elements of the model in expense recognition . these elements include the expected life of the option , the expected stock-price volatility , and expected forfeiture rates . the assumptions used in calculating the fair value of share-based awards under black-scholes represent our best estimates , but these estimates involve inherent uncertainties and the application of management judgment . although we believe the assumptions and estimates we have made are reasonable and appropriate , changes in assumptions could materially impact our reported financial results . restricted stock units and stock options issued to non-employees are valued based upon the intrinsic value of the award . see note 11 , `` stockholders ' equity , `` included in item 8 for
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[
"at december 31 , 2015 and 2014 , we have recorded a full valuation allowance against our deferred tax assets in the united states due to uncertainties related to our ability to utilize our deferred tax assets , primarily consisting of certain net operating losses carried forward .",
"refer to note 5 , `` property and equipment , `` included in item 8 for additional information .",
"on december 31 , 2013 , we recorded an impairment charge of $ 608 thousand for assets that were held for sale at december 31 , 2013. these assets were subsequently sold in the first quarter of 2014 for $ 130 thousand , which was the carrying value after the impairment charge .",
"as of december 31 , 2015 , we had net operating loss carry-forwards of approximately $ 69.1 million for federal , state , and local income tax purposes .",
"share-based payments the cost of employee and director stock options and restricted stock units , as well as other share-based compensation arrangements , is reflected in the consolidated financial statements based on the estimated grant date fair value method under the authoritative guidance .",
"during 2015 , 2014 , and 2013 , we charged $ 1.5 million , $ 194 thousand , and $ 146 thousand , respectively , to cost of sales from continuing operations for excess and obsolete inventories .",
"however , due to changes in the company 's capital structure , approximately $ 14.8 million of this amount is available after the application of irc section 382 limitations .",
"as a result of this limitation , in 2016 , we only expect to have approximately $ 6.0 million of the net operating loss carry-forward available for use ."
] |
Liquidity
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0
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we assess classification of our common stock purchase warrants and other free standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required . our derivative instruments consisting of warrants to purchase our common stock were valued using the black-scholes option pricing model , using the following assumptions at december 31 , 2013 : estimated dividends : none expected volatility : 184 % risk-free interest rate : 0.83 % expected term : 3.25 – 10 years liquidity with the sale of its interests in biozone laboratories , inc. , we presently do not have any regularly recurring revenue . cocrystal believes that its cash and cash equivalents of $ 2.9 million as of march 20 , 2014 , and the assets acquired in a merger in early 2014 , including common stock of a publicly traded company , will be sufficient to allow cocrystal to fund its current operating plan for at least the next 12 months . a portion of the musclepharm common stock ( 600,000 shares ) is being held in escrow to satisfy any breaches of representations under the asset purchase agreement . as cocrystal continues to incur losses , achieving profitability is dependent upon the successful development , approval and commercialization of its product candidates , and achieving a level of revenues adequate to support cocrystal 's cost structure . cocrystal may never achieve profitability , and unless and until it does , cocrystal will continue to need to raise additional capital . over the next 12 months ending march 31 , 2015 , we estimate negative cash flow of approximately $ 7 million . management intends to fund future operations through additional private or public debt or equity offerings , and may seek additional capital through arrangements with strategic partners or from other sources . in addition we may , if appropriate or necessary sell investment stock currently held . there can be no assurances , however , that additional funding will be available on terms acceptable to cocrystal , or at all . related party transactions not applicable . -14- off-balance sheet arrangements we do not have any off-balance sheet arrangements . cautionary note regarding forward looking statements this report includes forward-looking statements including statements regarding our future business development , regulatory compliance , generation of revenues , our liquidity , expectations from proposed capital raises , and the issues relating to the potential claims relating to our former pittsburg , california lease and the related bank loan guarantee . the words “ believe , ” “ may , ” “ estimate , ” “ continue , ” “ anticipate , ” “ intend , ” “ should , ” “ plan , ” “ could , ” “ target , ” “ potential , ” “ is likely , ” “ will , ” “ expect ” and similar expressions , as they relate to us , are intended to identify forward-looking statements . we have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition , results of operations , business strategy and financial needs . the results anticipated by any or all of these forward-looking statements might not occur . important factors , uncertainties and risks that may cause actual results to differ materially from these forward-looking statements are contained in the risk factors that follow . we undertake no obligation to publicly update or revise any forward-looking statements , whether as the result of new information , future events or otherwise . for more information regarding some of the ongoing risks and uncertainties of our business , see the risk factors and our other filings with the sec risk factors you should consider carefully the following risk factors , together with all of the other information included or incorporated in this annual report . each of these risk factors , either alone or taken together , could adversely affect our business , operating results and financial condition , and adversely affect the value of an investment in our common stock . there may be additional risks that we do not know of or that we believe are immaterial that could also impair our business and financial position . risks related to the discovery and development of product candidates because the approach we are taking to discover and develop drugs is novel , it may never lead to marketable products . we are concentrating our antiviral therapeutic product research and development efforts using cocrystal 's proprietary technology , and our future success depends on the continued successful development of this technology and the products derived from it . we have no products or product candidates . the scientific discoveries that form the basis for our efforts to discover and develop product candidates are relatively new . the scientific evidence to support the feasibility of developing product candidates based on our approach is limited . if we do not successfully develop and commercialize product candidates based upon our technological approach , we may not become profitable and the value of our stock may decline . further , our focus on cocrystal 's technology for developing drugs , as opposed to relying entirely on more standard technologies for drug development , increases the risks associated with the ownership of our stock . if we are unsuccessful in developing any product candidates using cocrystal 's technology , we may be required to change the scope and direction of our product development activities . we may not identify and implement successfully an alternative product development strategy . -15- we may not succeed in our efforts to identify or discover potential product candidates . the success of our business depends primarily upon our ability to identify , develop and commercialize antiviral drug products . story_separator_special_tag our research programs may initially show promise in identifying potential product candidates , yet fail to yield product
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[
"we assess classification of our common stock purchase warrants and other free standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required .",
"we undertake no obligation to publicly update or revise any forward-looking statements , whether as the result of new information , future events or otherwise .",
"we are concentrating our antiviral therapeutic product research and development efforts using cocrystal 's proprietary technology , and our future success depends on the continued successful development of this technology and the products derived from it .",
"the scientific evidence to support the feasibility of developing product candidates based on our approach is limited .",
"the results anticipated by any or all of these forward-looking statements might not occur .",
"the success of our business depends primarily upon our ability to identify , develop and commercialize antiviral drug products ."
] |
ROO
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1
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candidates for clinical development for several reasons , including : · our research methodology or that of our partners may be unsuccessful in identifying potential product candidates ; · potential product candidates may have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval ; and · we or our partners may change their development profiles for potential product candidates or abandon a therapeutic area . such events may force us to abandon our development efforts for a program or programs , which would have a material adverse effect on our business and could cause us to cease operations . research programs to identify new product candidates require substantial technical , financial and human resources . we may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful . we may be unable to successfully complete preclinical testing and clinical trials of our product candidates or experience significant delays in doing so . we intend to invest a significant portion of our efforts and financial resources in the identification and preclinical development of product candidates that target viral replication enzymes . our ability to generate product revenues , which we do not expect will occur for many years , if ever , will depend heavily on the successful development and eventual commercialization of our product candidates . the commercial success of our product candidates will depend on several factors , including : · successful completion of preclinical studies and clinical trials ; · receipt of marketing approvals from regulatory authorities ; · obtaining and maintaining patent and trade secret protection for product candidates ; · establishing and maintaining manufacturing relationships with third parties or establishing our own manufacturing capability ; and · commercializing our products , if and when approved , whether alone or in collaboration with others . if we do not achieve one or more of these factors in a timely manner or at all , we could experience significant delays or an inability to successfully complete development of , or to successfully commercialize , our product candidates , which would materially harm our business . -16- we may be unable to to demonstrate safety and efficacy of our product candidates to the satisfaction of regulatory authorities or we may incur additional costs or experience delays in completing , or ultimately be unable to complete , the development and commercialization of our product candidates . before obtaining marketing approval from regulatory authorities for the sale of product candidates , we or our partners must conduct extensive preclinical studies and clinical trials to demonstrate the safety and efficacy of the product candidates in humans . clinical testing is expensive , difficult to design and implement , can take many years to complete and is uncertain as to outcome . a failure of one or more clinical trials can occur at any stage of testing . the outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials , and interim results of a clinical trial do not predict final results . moreover , preclinical and clinical data are often susceptible to varying interpretations and analyses , and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for their products . events that may cause a delay or unsuccessful completion of clinical development include : · delays in agreeing with the fda or other regulatory authorities on final clinical trial design ; · imposition of a clinical hold following an inspection of our clinical trial operations or trial sites by the fda or other regulatory authorities ; · delays in agreeing on acceptable terms with prospective contract research organizations , or cros , and clinical trial sites ; · delays in obtaining required institutional review board approval at each clinical trial site ; · delays in recruiting suitable patients to participate in a trial ; · delays in the testing , validation , manufacturing and delivery of the product candidates to the clinical sites ; · delays in having patients complete participation in a trial or return for post-treatment follow-up ; · delays caused by patients dropping out of a trial due to product side effects or disease progression ; · clinical sites dropping out of a trial to the detriment of enrollment ; · time required to add new clinical sites ; or · delays by our contract manufacturers in producing and delivering sufficient supply of clinical trial materials . -17- if we or our partners must conduct additional clinical trials or other testing of any product candidates beyond those that are contemplated , or are unable to successfully complete clinical trials or other testing of any the product candidates , or if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns , we or our partners may : · be delayed in obtaining marketing approval for our product candidates ; · not obtain marketing approval at all ; · obtain approval for indications or patient populations not as broad as intended or desired ; · obtain approval with labeling that includes significant use or distribution restrictions or safety warnings ; · be subject to additional post-marketing testing requirements ; or · remove the product from the market after obtaining marketing approval . our product development costs will also increase if we experience delays in testing or in obtaining marketing approvals . we do not know whether any clinical trials will begin as planned , will need to be restructured or will be completed on schedule if at all .
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[
"the commercial success of our product candidates will depend on several factors , including : · successful completion of preclinical studies and clinical trials ; · receipt of marketing approvals from regulatory authorities ; · obtaining and maintaining patent and trade secret protection for product candidates ; · establishing and maintaining manufacturing relationships with third parties or establishing our own manufacturing capability ; and · commercializing our products , if and when approved , whether alone or in collaboration with others .",
"we do not know whether any clinical trials will begin as planned , will need to be restructured or will be completed on schedule if at all .",
"moreover , preclinical and clinical data are often susceptible to varying interpretations and analyses , and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for their products .",
"-17- if we or our partners must conduct additional clinical trials or other testing of any product candidates beyond those that are contemplated , or are unable to successfully complete clinical trials or other testing of any the product candidates , or if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns , we or our partners may : · be delayed in obtaining marketing approval for our product candidates ; · not obtain marketing approval at all ; · obtain approval for indications or patient populations not as broad as intended or desired ; · obtain approval with labeling that includes significant use or distribution restrictions or safety warnings ; · be subject to additional post-marketing testing requirements ; or · remove the product from the market after obtaining marketing approval .",
"before obtaining marketing approval from regulatory authorities for the sale of product candidates , we or our partners must conduct extensive preclinical studies and clinical trials to demonstrate the safety and efficacy of the product candidates in humans .",
"we intend to invest a significant portion of our efforts and financial resources in the identification and preclinical development of product candidates that target viral replication enzymes ."
] |
ROO
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principles of consolidation the accompanying consolidated financial statements have been prepared in accordance with u.s. generally accepted accounting principles ( gaap ) . the consolidated financial statements include accounts of pdi and its wholly owned subsidiaries ( tvg , inc. , protocall , inc. , inserve support solutions , and pdi investment company , inc. ) all significant intercompany balances and transactions have been eliminated in consolidation . in the second quarter of 2006 , the company discontinued its medical device and diagnostic ( md & d ) business . the md & d business was part of the company 's sales services reporting segment . the md & d business is accounted for as a discontinued operation under gaap and , therefore , the md & d business results of operations have been removed from the company 's results of continuing operations for 2006. see note 19 , discontinued operations . accounting estimates the preparation of consolidated financial statements in conformity with gaap requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period . management 's estimates are based on historical experience , facts and circumstances available at the time , and various other assumptions that are believed to be reasonable under the circumstances . significant estimates include incentives earned or penalties incurred on contracts , loss contract provisions , valuation allowances related to deferred income taxes , self-insurance loss accruals , allowances for doubtful accounts and notes , income tax accruals and facilities realignment accruals . the company periodically reviews these matters and reflects changes in estimates as appropriate . actual results could materially differ from those estimates . cash and cash equivalents cash and cash equivalents include unrestricted cash accounts , money market investments and highly liquid investment instruments with original maturity of three months or less at the date of purchase . investments in marketable securities available-for-sale securities are carried at fair value with the unrealized gains or losses , net of tax , included as a component of accumulated other comprehensive income ( loss ) in stockholders ' equity . realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in other income ( expense ) , net . the fair values for marketable equity securities are based on quoted market prices . held-to-maturity investments are stated at amortized cost . interest income is accrued as earned . realized gains and losses are computed based upon specific identification and included in interest income , net in the consolidated statement of operations . the company does not have any investments classified as “ trading . ” receivables and allowance for doubtful accounts trade accounts receivable are recorded at the invoiced amount and do not bear interest . management reviews a customer 's credit history before extending credit . the company has recorded a provision for estimated losses resulting from the inability of its customers to make required payments based on historical experience and periodically adjusts these provisions to reflect actual experience . additionally , the company will establish a specific allowance for doubtful accounts when the company becomes aware of a specific customer 's inability or unwillingness to meet its financial obligations ( e.g . , bankruptcy filing ) . allowance for doubtful accounts was $ 0 as of december 31 , 2008 and 2007 , respectively . the company operates almost exclusively in the pharmaceutical industry and to a great extent its revenue is dependent on a limited number of large pharmaceutical companies . the company also partners with customers in the emerging pharmaceutical sector , some of whom may have limited financial resources . a general downturn in the pharmaceutical industry or adverse material event to one or more of the company 's emerging pharmaceutical customers could result in higher than expected customer defaults and additional allowances may be required . f-7 pdi , inc. notes to the consolidated financial statements ( continued ) ( tabular information in thousands , except share and per share data ) unbilled costs and accrued profits and unearned contract revenue in general , contractual provisions , including predetermined payment schedules or submission of appropriate billing detail , establish the prerequisites for billings . unbilled costs and accrued profits arise when services have been rendered and payment is assured but customers have not been billed . these amounts are classified as a current asset . normally , in the case of detailing contracts , the customers agree to pay the company a portion of the fee due under a contract in advance of performance of services because of large recruiting and employee development costs associated with the beginning of a contract . the excess of amounts billed over revenue recognized represents unearned contract revenue , which is classified as a current liability . loans and investments in privately held entities from time to time , the company makes investments in and or loans to privately-held companies . the company determines whether the fair values of any investments in privately held entities have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable . if the company considers any such decline to be other than temporary ( based on various factors , including historical financial results , and the overall health of the investee 's industry ) , a write-down is recorded to estimated fair value . on a quarterly basis , the company reviews outstanding loans receivable to determine if a provision for doubtful notes is necessary . story_separator_special_tag cost of services within the marketing services segment decreased approximately $ 2.8 million , or 16.7 % primarily due to the decrease in new projects and the curtailment or postponement of certain existing projects at pharmakon . replace_table_token_5_th 27 pdi ,
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[
"allowance for doubtful accounts was $ 0 as of december 31 , 2008 and 2007 , respectively .",
"f-7 pdi , inc. notes to the consolidated financial statements ( continued ) ( tabular information in thousands , except share and per share data ) unbilled costs and accrued profits and unearned contract revenue in general , contractual provisions , including predetermined payment schedules or submission of appropriate billing detail , establish the prerequisites for billings .",
"on a quarterly basis , the company reviews outstanding loans receivable to determine if a provision for doubtful notes is necessary .",
"the consolidated financial statements include accounts of pdi and its wholly owned subsidiaries ( tvg , inc. , protocall , inc. , inserve support solutions , and pdi investment company , inc. ) all significant intercompany balances and transactions have been eliminated in consolidation .",
"these amounts are classified as a current asset ."
] |
Liquidity
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1
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inc. annual report on form 10-k ( continued ) gross profit in the sales services segment increased slightly on higher revenue for the year ended 2008 as compared to year ended 2007. in 2007 , we recognized $ 0.6 million in revenue associated with a contract with a former emerging pharmaceutical client for services performed in 2006. because of the uncertainty surrounding collections , we recognized revenue from this client on a cash basis and all costs associated with this contract were recognized in 2006. the decrease in gross profit attributable to the marketing services segment was commensurate with the decrease in revenue discussed above as total gross profit decreased at all three business units . the gross profit percentage decreased to 40.8 % from 44.1 % in the comparable prior year period primarily due to a decrease in margin percentage at tvg attributed to a change in product mix . the product commercialization segment 's negative gross profit was attributable to our sales force , promotional costs and contract loss accrual associated with this program plus the $ 1 million non-refundable upfront payment we made to novartis as per the terms of our promotion agreement . ( note : compensation and other selling , general and administrative ( other sg & a ) expense amounts for each segment contain allocated corporate overhead . ) replace_table_token_6_th the decrease in compensation expense was primarily a result of a reduction in incentive compensation accrued for 2008 due to our financial performance relative to the financial targets established for 2008 under our incentive compensation plan . the decrease for both sales services and marketing services segments in 2008 can be attributed to the reason discussed above . the product commercialization segment had compensation costs of $ 1.3 million . this was primarily attributable to employee and sales services support costs . there was no compensation expense attributable to this segment in 2007. replace_table_token_7_th total other sg & a expenses decreased primarily due to the following : 1 ) a decrease in depreciation expense of approximately $ 0.7 million primarily due to the conversion to a new financial reporting system that was at a much lower capitalized cost than our previous system ; 2 ) a decrease in net franchise taxes of approximately $ 1.0 million primarily due to the settlement of one state 's assessment for less than the $ 0.6 million that had been accrued in 2007 ; 3 ) a reduction in executive consulting of approximately $ 1.0 million ; and 4 ) a reduction in business insurance expense of approximately $ 0.4 million . as a percentage of total revenue , other sg & a expenses decreased to 14.7 % in 2008 from 17.1 % in 2007. executive severance in 2008 , we incurred approximately $ 1.2 million in executive severance costs that related to the departure of our chief executive officer and one other executive . in 2007 , we did not have any executive severance costs . legal and related costs in 2008 and 2007 , we had legal expenses of approximately $ 0.3 million , respectively , which primarily pertained to legal expenses incurred by us in the ordinary course of business . 28 pdi , inc. annual report on form 10-k ( continued ) facilities realignment in 2008 , we had charges of approximately $ 75,000 related to the excess office space at our dresher , pennsylvania location . in 2007 , we had net charges of approximately $ 1.0 million primarily related to the impairment of fixed assets and other expenses related to our exiting the computer data center space at our saddle river , new jersey location in december 2007. total charges in 2007 for the sales services segment were approximately $ 1.0 million and approximately $ 26,000 was credited to the marketing services segment . replace_table_token_8_th the increased operating loss in 2008 is primarily attributable to the $ 26.2 million in negative revenue and expenses associated with our promotional program within the product commercialization segment . this was partially offset by a reduction in our total operating expenses of approximately $ 5.0 million , or 10.8 % . interest income , net interest income , net , for 2008 and 2007 was approximately $ 2.8 million and $ 6.1 million , respectively . the decrease is primarily attributable to a decrease in interest rates for 2008 as well as smaller available cash balances . provision for income taxes we recorded a provision for income taxes of $ 0.9 million for 2008 and $ 1.8 million for 2007. our overall effective tax rate was a provision of 2.6 % and a provision of 21.5 % for 2008 and 2007 , respectively . the tax provision for 2007 is primarily attributable to the full valuation allowance on the net deferred tax assets except for the basis difference in goodwill . federal tax attribute carryforwards at december 31 , 2008 , consist primarily of approximately $ 29.2 million of net operating losses and $ 339,000 of capital losses . in addition , we have approximately $ 63.5 million of state net operating losses carryforwards . the utilization of the federal carryforwards as an available offset to future taxable income is subject to limitations under federal income tax laws . if the federal net operating losses are not utilized , they will begin to expire in 2027 and if the current state net operating losses are not utilized they begin to expire in 2009. the capital losses can only be utilized against capital gains and $ 339,000 will expire in 2009. net loss there was a net loss of $ 34.5 million in 2008 , compared to a net loss of $ 10.0 million in 2007
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"provision for income taxes we recorded a provision for income taxes of $ 0.9 million for 2008 and $ 1.8 million for 2007. our overall effective tax rate was a provision of 2.6 % and a provision of 21.5 % for 2008 and 2007 , respectively .",
"in 2007 , we had net charges of approximately $ 1.0 million primarily related to the impairment of fixed assets and other expenses related to our exiting the computer data center space at our saddle river , new jersey location in december 2007. total charges in 2007 for the sales services segment were approximately $ 1.0 million and approximately $ 26,000 was credited to the marketing services segment .",
"28 pdi , inc. annual report on form 10-k ( continued ) facilities realignment in 2008 , we had charges of approximately $ 75,000 related to the excess office space at our dresher , pennsylvania location .",
"( note : compensation and other selling , general and administrative ( other sg & a ) expense amounts for each segment contain allocated corporate overhead . )",
"this was primarily attributable to employee and sales services support costs ."
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Liquidity
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the noncontrolling owner 's proportionate share in the income or losses of the company 's majority owned subsidiaries is subtracted from , or added to , net income to calculate the net income attributable to neogen corporation . all intercompany accounts and transactions have been eliminated in consolidation . share and per share amounts reflect the october 30 , 2013 3-for-2 stock split as if it took place at the beginning of the period presented . use of estimates the preparation of financial statements in conformity with u.s. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes . actual results could differ from these estimates . comprehensive income comprehensive income represents net income and any revenues , expenses , gains and losses that , under u.s. generally accepted accounting principles , are excluded from net income and recognized directly as a component of equity . accumulated other comprehensive income ( loss ) consists solely of foreign currency translation adjustments . accounts receivable and concentrations of credit risk financial instruments which potentially subject the company to concentrations of credit risk consist principally of accounts receivable . management attempts to minimize credit risk by reviewing customers ' credit history before extending credit and by monitoring credit exposure on a regular basis . an allowance for doubtful accounts on accounts receivable is established based upon factors surrounding the credit risk of specific customers , historical trends and other information . collateral or other security is generally not required for accounts receivable . once a receivable balance has been determined to be uncollectible , that amount is written off to the allowance for doubtful accounts . no customer accounted for more than 10 % of accounts receivable at may 31 , 2015. the activity in the allowance for doubtful accounts was as follows : replace_table_token_19_th fair value of financial instruments the carrying amounts of the company 's financial instruments other than cash equivalents and marketable securities , which include accounts receivable and accounts payable , approximate fair value based on either their short maturity or current terms for similar instruments . f-7 fair value measurements fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs . the company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows : level 1 : observable inputs such as quoted prices in active markets ; level 2 : inputs , other than quoted prices in active markets , that are observable either directly or indirectly ; and level 3 : unobservable inputs in which there is little or no market data , which require the reporting entity to develop its own assumptions . cash and cash equivalents cash and cash equivalents consist of bank demand accounts , savings deposits , certificates of deposit and commercial paper with original maturities of 90 days or less . cash and cash equivalents were $ 66,061,000 and $ 40,675,000 at may 31 , 2015 and 2014 , respectively . the carrying value of these assets approximates fair value due to the short maturity of these instruments and meet the level 1 criteria . cash held at foreign subsidiaries was $ 13,277,000 and $ 10,234,000 at may 31 , 2015 and 2014 , respectively . marketable securities the company has marketable securities held by banks or broker-dealers consisting of short-term domestic certificates of deposit of $ 26,109,000 and commercial paper rated at least a-2/p-2 with maturities between 91 days and one year of $ 21,994,000 . outstanding marketable securities at may 31 , 2015 were $ 48,103,000 ; there were $ 35,821,000 marketable securities outstanding at may 31 , 2014. these securities are classified as available for sale . the primary objective of the company 's short-term investment activity is to preserve capital for the purpose of funding operations , capital expenditures and business acquisitions ; short-term investments are not entered into for trading or speculative purposes . these securities are recorded at fair value ( that approximates cost ) based on recent trades or pricing models and therefore meet the level 2 criteria . interest income on these investments is recorded within other income on the income statement . inventories inventories are stated at the lower of cost , determined on the first-in , first-out method , or market . the components of inventories were as follows : replace_table_token_20_th the company 's inventories are analyzed for slow moving , expired and obsolete items no less frequently than quarterly and the valuation allowance is adjusted as required . the valuation allowance for inventory was $ 1,550,000 and $ 1,425,000 at may 31 , 2015 and 2014 , respectively . property and equipment property and equipment is stated at cost . expenditures for major improvements are capitalized while repairs and maintenance are charged to expense . depreciation is provided on the straight-line method over the estimated useful lives of the respective assets , which are generally seven to 39 years for buildings and improvements and three to ten years for furniture , fixtures , machinery and equipment . depreciation expense was $ 6,318,000 , $ 5,383,000 and $ 4,417,000 in fiscal years 2015 , 2014 and 2013 , respectively . goodwill and other intangible assets goodwill represents the excess of purchase price over fair value of tangible net assets of acquired businesses after amounts are allocated to other identifiable intangible assets . other intangible assets include customer relationships , trademarks , licenses , trade names , covenants not-to-compete and patents . amortizable intangible assets are amortized on either an accelerated or a straight-line basis over 5 to 25 years . story_separator_special_tag dna testing revenues , excluding sales through neogen europe and neogen do brasil , increased 14 % in fiscal 2014 compared to fiscal 2013
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"story_separator_special_tag dna testing revenues , excluding sales through neogen europe and neogen do brasil , increased 14 % in fiscal 2014 compared to fiscal 2013",
"the components of inventories were as follows : replace_table_token_20_th the company 's inventories are analyzed for slow moving , expired and obsolete items no less frequently than quarterly and the valuation allowance is adjusted as required .",
"these securities are recorded at fair value ( that approximates cost ) based on recent trades or pricing models and therefore meet the level 2 criteria .",
"the company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows : level 1 : observable inputs such as quoted prices in active markets ; level 2 : inputs , other than quoted prices in active markets , that are observable either directly or indirectly ; and level 3 : unobservable inputs in which there is little or no market data , which require the reporting entity to develop its own assumptions .",
"interest income on these investments is recorded within other income on the income statement .",
"the primary objective of the company 's short-term investment activity is to preserve capital for the purpose of funding operations , capital expenditures and business acquisitions ; short-term investments are not entered into for trading or speculative purposes .",
"use of estimates the preparation of financial statements in conformity with u.s. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes .",
"property and equipment property and equipment is stated at cost ."
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Liquidity
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, due primarily to continued strength in products introduced in the latter half of fiscal 2013 , and new products for the detection of developmental defects in cattle , introduced in fiscal 2014. the customizable nature of the new proprietary offerings allowed the company to expand market share with beef breed associations . additionally , revenues for canine genotyping increased $ 660,000 in fiscal 2014 , primarily due to the company 's relationship with a number of canine associations . cost of revenues replace_table_token_6_th cost of revenues increased 15 % in fiscal 2015 and 27 % in fiscal 2014 in comparison with the prior years . this compares with revenue increases of 14 % and 19 % , respectively . expressed as a percentage of revenues , cost of revenues was 51 % , 50 % and 47 % in fiscal years 2015 , 2014 and 2013 , respectively . for fiscal 2015 , the strength of the u.s. dollar , which adversely impacted top line revenue with no corresponding decline in product cost , had the largest impact on the slight decline in gross margins . for fiscal year 2014 , the increase in cost of revenues , expressed as a percentage of sales , and the corresponding decline in gross margin percentage was due to the overall shift in revenues towards animal safety products and product mix shifts within each segment . food safety gross margins were 60 % , 63 % and 64 % in fiscal years 2015 , 2014 and 2013 , respectively . in fiscal 2015 , the lower gross margins were primarily due to the strength in the u.s. dollar , which resulted in lower revenues and gross margins when international sales in europe , mexico and brazil were converted from local currencies to the dollar . all currencies the company operates in weakened against the dollar in fiscal 2015 , and pressured margins . additionally , a mix shift , the result of transferring revenues of lower gross margin animal safety products for customers in mexico and central america to neogen latinoamerica , negatively impacted gross margins in food safety . in fiscal 2014 , gross margins declined due to a product mix shift , primarily the result of lower sales of mycotoxin test kits due to crops that were largely free of the natural toxins aflatoxin and deoxynivalenol , which had contributed to strong sales of the company 's mycotoxin test kits in fiscal 2013. the lower mycotoxin revenues in fiscal 2014 were replaced with higher revenues in other product lines , such as dehydrated culture media , which had lower gross margins . animal safety gross margins were 40 % , 38 % and 41 % in fiscal years 2015 , 2014 and 2013 , respectively . the improved margins in fiscal 2015 compared to fiscal 2014 reflect a mix shift towards higher margin products and efficiency gains made in a number of the segment 's operating units . rodenticides , which have higher than average gross margins within the segment , had a sales increase of 21 % due to rodent infestation in the northwest u.s. , and the company 's small animal supplements product line experienced an increase of 23 % , due to higher sales of the company 's higher margin thyroid replacement product . the decline in gross margins in 2014 compared to 2013 was largely the result of product mix shifts within the segment during the year , and the impact from three acquisitions the company made in 2014 , which had gross margins which were lower than the segment average . 26 operating expenses replace_table_token_7_th sales and marketing expenses increased by 11 % in fiscal 2015 and 14 % in fiscal 2014 , each compared with the prior year . as a percentage of sales , sales and marketing expense was 18 % , 19 % and 20 % in fiscal years 2015 , 2014 and 2013 , respectively . the company continued to invest in sales and marketing personnel in fiscal 2015 ; however , efficiencies of scale were achieved with the integration of recent acquisitions , resulting in a lower rate of increase in expense than the increase in revenues . salaries and commission expense were the largest increase in this category at 15 % in fiscal 2015 and 11 % in fiscal 2014 , reflecting the increase in personnel and revenue . other significant increases were shipping expense , which was 15 % higher and was commensurate with the increase in revenues , and other personnel-related expenses , such as fringe benefits and travel . general and administrative expenses increased 3 % in fiscal 2015 compared to fiscal 2014 and by 21 % in fiscal 2014 compared to fiscal 2013. the increases in fiscal years 2015 and 2014 , respectively , are primarily due to higher stock option expense and increased amortization of intangible assets resulting from the company 's recent acquisitions . also contributing to the fiscal 2014 increase were increased salary and other personnel-related expenses , primarily due to the integration of acquisitions from fiscal years 2013 and 2014. a $ 1.2 million , or 73 % , decrease in legal expenses , primarily related to a lawsuit that was settled in october 2014 , partially offset the increase in this category for fiscal 2015. research and development expenses increased 15 % in fiscal 2015 compared to fiscal 2014 and 7 % in fiscal 2014 compared to fiscal 2013. in fiscal 2015 , the increase in expense was primarily due to higher salaries , resulting from increased headcount needed to support the company 's efforts , and outside services and lab supplies , due to higher levels of commercialization activities . as a percentage of revenue , these expenses were 3 % in fiscal years 2015
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"also contributing to the fiscal 2014 increase were increased salary and other personnel-related expenses , primarily due to the integration of acquisitions from fiscal years 2013 and 2014. a $ 1.2 million , or 73 % , decrease in legal expenses , primarily related to a lawsuit that was settled in october 2014 , partially offset the increase in this category for fiscal 2015. research and development expenses increased 15 % in fiscal 2015 compared to fiscal 2014 and 7 % in fiscal 2014 compared to fiscal 2013. in fiscal 2015 , the increase in expense was primarily due to higher salaries , resulting from increased headcount needed to support the company 's efforts , and outside services and lab supplies , due to higher levels of commercialization activities .",
"as a percentage of revenue , these expenses were 3 % in fiscal years 2015",
"additionally , revenues for canine genotyping increased $ 660,000 in fiscal 2014 , primarily due to the company 's relationship with a number of canine associations .",
"the company continued to invest in sales and marketing personnel in fiscal 2015 ; however , efficiencies of scale were achieved with the integration of recent acquisitions , resulting in a lower rate of increase in expense than the increase in revenues .",
"additionally , a mix shift , the result of transferring revenues of lower gross margin animal safety products for customers in mexico and central america to neogen latinoamerica , negatively impacted gross margins in food safety .",
"for fiscal year 2014 , the increase in cost of revenues , expressed as a percentage of sales , and the corresponding decline in gross margin percentage was due to the overall shift in revenues towards animal safety products and product mix shifts within each segment .",
"this compares with revenue increases of 14 % and 19 % , respectively ."
] |
Liquidity
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since inception , we have financed our operations primarily through the sale of equity and debt securities and our term loans with silicon valley bank , or svb , and westriver innovation lending fund viii , l.p. , or westriver . in april 2019 , we received $ 46.3 million in net proceeds from an underwritten public offering of our common stock . in may 2019 , we received an additional $ 2.5 million under our term loan with svb and westriver , or our 2019 loan , and in october 2019 , we received an additional $ 5.0 million under our 2019 loan . in january 2020 , we entered into the sfj agreement pursuant to which sfj has agreed to provide us up to $ 120.0 million of funding to support the clinical development of bentracimab . as of december 31 , 2020 , sfj has provided funding and paid for amounts on our behalf in the aggregate amount of $ 47.1 million under the sfj agreement . in addition , we expect that sfj will fund or reimburse an additional $ 42.9 million of clinical trial costs and other expenses . sfj will also provide up to an additional $ 30.0 million of funding upon the achievement of specified clinical development milestones with respect to our ongoing reverse-it trial of bentracimab . since our inception , we have incurred significant operating losses . our net loss was $ 98.6 million for the year ended december 31 , 2020. as of december 31 , 2020 , we had an accumulated deficit of $ 260.7 million . we expect to continue to incur significant expenses and operating losses for the foreseeable future . we anticipate that our expenses will increase substantially in connection with our ongoing activities , as we : continue our ongoing clinical trials of bentracimab and pemziviptadil , as well as initiate and complete additional clinical trials , as needed ; 79 seek to expand our geographical reach through the sfj agreement and the corresponding clinical development support fees that we will incur ; pursue regulatory approvals for bentracimab as a reversal agent for the antiplatelet drug ticagrelor and pemziviptadil for the treatment of pah ; develop pb6440 for treatment-resistant hypertension ; seek to discover and develop additional clinical and preclinical product candidates ; scale up our clinical and regulatory capabilities ; establish a commercialization infrastructure and scale up external manufacturing and distribution capabilities to commercialize any product candidates for which we may obtain regulatory approval , including bentracimab and pemziviptadil ; adapt our regulatory compliance efforts to incorporate requirements applicable to marketed products ; maintain , expand and protect our intellectual property portfolio ; hire additional clinical , manufacturing and scientific personnel ; add operational , financial and management information systems and personnel , including personnel to support our product development and possible future commercialization efforts ; and incur additional legal , accounting and other expenses in operating as a public company . recent development in march 2021 , we entered into a supply agreement with biovectra inc. for the manufacture and supply of bulk drug substance for bentracimab for commercial distribution following regulatory approval . under the terms of the supply agreement , biovectra has committed to maintaining capacity to manufacture an agreed number of batches of product per year , although we are free to contract with third parties for the manufacture of bentracimab . refer to `` item 1. business `` under the subheading business - license , co-development and other agreements - biovectra supply agreement in this annual report . financial overview components of operating results revenue grant revenue grant revenue is derived from government grants that support our efforts on specific research projects . we recognize grant revenue when there is reasonable assurance of compliance with the conditions of the grant and reasonable assurance that the grant revenue will be received . revenue under collaborative agreement revenue under collaborative agreement is derived from an agreement with our collaboration partner , immunoforge co. , ltd. , or immunoforge . we have granted immunoforge a license to develop certain compound indications in exchange for an upfront license payment and event-based payments subject to immunoforge 's achievement of specified development , regulatory and sales-based milestones . in addition , we are entitled to royalties if products under the collaboration are commercialized . we recognize revenue for upfront amounts when the license is transferred to immunoforge . development milestones and other fees are recognized as revenue when it is probable that the amount will not result in a significant reversal of revenue in the future . sales-based milestones and royalties can not be recognized until the underlying sales occur . research and development expense research and development expense consists of expenses incurred in connection with the discovery and development of our product candidates . we expense research and development costs as incurred . these expenses include : expenses incurred under agreements with contract research organizations , or cros , as well as investigative sites and consultants that conduct our clinical trials and preclinical studies ; 80 manufacturing and supply scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial supply and potential commercial supply , including manufacturing validation batches ; clinical development support fees that we incur related to the sfj agreement ; outsourced professional scientific development services ; employee-related expenses , which include salaries , benefits and stock-based compensation ; expenses relating to regulatory activities ; and laboratory materials and supplies used to support our research activities . research and development activities are central to our business model . product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development , primarily due to the increased size and duration of later-stage clinical trials . story_separator_special_tag we expect our research and development expense to increase significantly over the next several years as we increase personnel costs , including stock-based compensation ,
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[
"in january 2020 , we entered into the sfj agreement pursuant to which sfj has agreed to provide us up to $ 120.0 million of funding to support the clinical development of bentracimab .",
"as of december 31 , 2020 , sfj has provided funding and paid for amounts on our behalf in the aggregate amount of $ 47.1 million under the sfj agreement .",
"in may 2019 , we received an additional $ 2.5 million under our term loan with svb and westriver , or our 2019 loan , and in october 2019 , we received an additional $ 5.0 million under our 2019 loan .",
"our net loss was $ 98.6 million for the year ended december 31 , 2020. as of december 31 , 2020 , we had an accumulated deficit of $ 260.7 million .",
"since our inception , we have incurred significant operating losses .",
"since inception , we have financed our operations primarily through the sale of equity and debt securities and our term loans with silicon valley bank , or svb , and westriver innovation lending fund viii , l.p. , or westriver .",
"in addition , we expect that sfj will fund or reimburse an additional $ 42.9 million of clinical trial costs and other expenses ."
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ROO
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conduct our later-stage clinical trials for bentracimab and pemziviptadil , develop pb6440 , conduct other preclinical studies and clinical trials and prepare regulatory filings and , if we receive regulatory approval for one or more product candidates , prepare for commercialization efforts . the successful development of our product candidates is highly uncertain . at this time , we can not reasonably estimate or know the nature , timing and costs of the efforts that will be necessary to complete the remainder of the development of our product candidates , or when , if ever , material net cash inflows may commence from those candidates . this uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials , which vary significantly over the life of a project as a result of many factors , including : delays in regulators or institutional review boards authorizing us or our investigators to commence our clinical trials or in our ability to negotiate agreements with clinical trial sites or contract research organizations ; our ability to secure adequate supply of product candidates for our trials ; the number of clinical sites included in the trials ; the length of time required to enroll suitable patients ; the number of patients that ultimately participate in the trials ; the number of doses patients receive ; any side effects associated with our product candidates ; the impacts of the covid-19 pandemic on our ability to initiate trial sites , enroll and assess patients , supply study drug and report trial results ; the duration of patient follow-up ; and the results of our clinical trials . our expenditures are subject to additional uncertainties , including the terms and timing of regulatory approvals , and the expense of filing , prosecuting , defending and enforcing any patent claims or other intellectual property rights . we may never succeed in achieving regulatory approval for our product candidates . we may obtain unexpected results from our clinical trials . we may elect to discontinue , delay or modify clinical trials of our product candidates . a change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate . for example , if the fda or other regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate , or if we experience significant delays in enrollment in any of our clinical trials , we could be required to expend significant additional financial resources and time on the completion of clinical development . product commercialization will take several years and millions of dollars in development costs . general and administrative expense general and administrative expense consists principally of salaries and related costs for personnel in executive and administrative functions , including stock-based compensation , travel expenses and recruiting expenses . other general and administrative expense includes professional fees for legal , accounting and tax-related services and insurance costs . 81 we anticipate that our general and administrative expense will increase as we continue to operate as a public reporting company and continue to develop bentracimab , pemziviptadil , pb6440 and our future product candidates . we believe that these increases likely will include increased costs for director and officer liability insurance , costs related to the hiring of additional personnel and increased fees for outside consultants , lawyers and accountants . we also expect to incur increased costs to comply with corporate governance , internal controls , investor relations , disclosure and similar requirements applicable to public reporting companies . loss from remeasurement of development derivative liability loss from remeasurement of development derivative liability reflects the revaluation at each reporting date of our development derivative liability based on the present value of the estimated consideration to be received and the estimated consideration to be paid pursuant to the contractual terms under the sfj agreement , which is determined to be fair value . the liability is remeasured at the end of each quarter as a level 3 derivative , with the change in fair value recorded in the condensed statements of operations . interest expense interest expense consists of interest expense on our term loan with svb and westriver . license , co-development and other agreements medimmune limited license agreement in november 2017 , we entered into an exclusive license agreement , or the medimmune license , with medimmune limited , or medimmune , a wholly owned subsidiary of astrazeneca plc . pursuant to the medimmune license , medimmune granted us an exclusive , worldwide license under certain patent rights owned or controlled by medimmune to develop and commercialize any products covered by the medimmune license , or the medimmune licensed products , for the treatment , palliation , diagnosis or prevention of any human disorder or condition . under the medimmune license , we paid medimmune an upfront fee of $ 0.1 million . we are also required to pay medimmune : quarterly fees relating to technical services provided by medimmune ; up to $ 18.0 million in clinical and regulatory milestone fees , $ 3.0 million of which had been incurred as of december 31 , 2020 ; up to $ 50.0 million in commercial milestone fees ; and mid-single digit to low-teen royalty percentages on net sales of medimmune licensed products , subject to reduction in specified circumstances . in addition , the medimmune license offers an option for third-party product storage costs . from the inception of the medimmune license through december 31 , 2020 , we have incurred costs of $ 3.6 million under the medimmune license .
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[
"we are also required to pay medimmune : quarterly fees relating to technical services provided by medimmune ; up to $ 18.0 million in clinical and regulatory milestone fees , $ 3.0 million of which had been incurred as of december 31 , 2020 ; up to $ 50.0 million in commercial milestone fees ; and mid-single digit to low-teen royalty percentages on net sales of medimmune licensed products , subject to reduction in specified circumstances .",
"the liability is remeasured at the end of each quarter as a level 3 derivative , with the change in fair value recorded in the condensed statements of operations .",
"at this time , we can not reasonably estimate or know the nature , timing and costs of the efforts that will be necessary to complete the remainder of the development of our product candidates , or when , if ever , material net cash inflows may commence from those candidates .",
"interest expense interest expense consists of interest expense on our term loan with svb and westriver .",
"from the inception of the medimmune license through december 31 , 2020 , we have incurred costs of $ 3.6 million under the medimmune license ."
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employees that work in two leased office buildings in the phoenix area will be consolidated into this new building when it 's expected to be completed in late 2016. although the university is funding the construction of the building and parking garage , the university is marketing these , along with a recently refurbished office building in the same development , as part of a sale-leaseback transaction . these investments are intended to support our growing on-campus student population as well as enhance the brand of the university . community involvement and the public good . in 2014 , the university announced a five-point plan to restore west phoenix through a ) a unique partnership with habitat for humanity to repair hundreds of homes in the university 's neighborhood ; b ) an ongoing initiative with the phoenix police department to improve public safety ; c ) the creation of jobs and commerce on the main campus and along the camelback road corridor in west phoenix ; d ) the development of a trained workforce in the areas of science , technology , engineering and mathematics ; and e ) the continued support of k-12 students at neighborhood schools via our outreach program . our students are serving as tutors and mentors to these high school students and the results thus far have been extremely positive . the university continues to be involved in more than 120 community events and projects throughout the year , helping organizations such as the phoenix dream center , feed my starving children , hopefest , arizona foster care , phoenix rescue mission , boy/girl scouts , goodwill arizona , muscular dystrophy association , young life and elevate phoenix . the university also puts on popular gift drives at christmas and easter to help brighten those seasons for many underprivileged families . our faculty , staff and students also go out into our surrounding neighborhoods to participate in university sponsored programs such as serve the city , canyon kids , 12 months of service and the run to fight children 's cancer . 48 revenue and enrollment net revenue consists principally of tuition , room and board charges attributable to students residing on our ground campus , application and graduation fees , and fees from educational resources such as access to online materials or commissions we earn from bookstore and publication sales , less scholarships . factors affecting our net revenue include : ( i ) the number of students who are enrolled and who remain enrolled in our courses ; ( ii ) the number of credit hours per student ; ( iii ) our degree and program mix ; ( iv ) changes in our tuition rates ; ( v ) the timing of our ground traditional campus semesters ; ( vi ) the amount of the scholarships that we offer ; and ( vii ) the number of students housed in , and the rent charged for , our on-campus student apartments and dormitories . we define enrollment as individual students who attended a course during the last two months of the calendar quarter . we offer three 15-week semesters in a calendar year with one start available per semester for our traditional ground students . online and professional studies students have more frequent class starts in five , seven , eight and sixteen-week courses through the calendar year . enrollments are a function of the number of continuing students at the beginning of each period and new enrollments during the period , which are offset by graduations , withdrawals , and inactive students during the period . inactive students for a particular period include students who are not registered in a class and , therefore , are not generating net revenue for that period , but who have not withdrawn from grand canyon university . we believe that the principal factors that affect our enrollments and net revenue are the number and breadth of the programs we offer ; the attractiveness of our program offerings and learning experience , particularly for career-oriented adults who are seeking pay increases or job opportunities that are directly tied to higher educational attainment ; the effectiveness of our marketing , recruiting and retention efforts , which is affected by our brand strength and price point ; the quality of our academic programs and student services ; the convenience and flexibility of our online delivery platform ; the availability and cost of federal and other funding for student financial aid ; the seasonality of our net revenue , which is enrollment driven and is typically lowest in our second fiscal quarter and highest in our fourth fiscal quarter ; and general economic conditions , particularly as they might affect job prospects in our core disciplines . the following is a summary of our student enrollment at december 31 , 2015 , 2014 , and 2013 by degree type and by instructional delivery method : replace_table_token_9_th replace_table_token_10_th ( 1 ) enrollment represents individual students who attended a course during the last two months of the calendar quarter . included in enrollment at december 31 , 2015 , 2014 and 2013 are students pursuing non-degree certificates of 679 , 585 , and 487 , respectively . ( 2 ) includes 6,302 , 5,570 and 4,285 students pursuing doctoral degrees at december 31 , 2015 , 2014 and 2013 , respectively . ( 3 ) as of december 31 , 2015 , 2014 and 2013 , 47.8 % , 46.0 % and 43.5 % , respectively , of our working adult students ( online and professional studies students ) were pursuing graduate or doctoral degrees . ( 4 ) includes our traditional on-campus students , as well as our professional studies students . story_separator_special_tag 51 results of operations the following table sets forth statements of operations data as a percentage of net revenue for each of the periods indicated : replace_table_token_11_th year ended december 31 , 2015 compared to
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[
"online and professional studies students have more frequent class starts in five , seven , eight and sixteen-week courses through the calendar year .",
"in 2014 , the university announced a five-point plan to restore west phoenix through a ) a unique partnership with habitat for humanity to repair hundreds of homes in the university 's neighborhood ; b ) an ongoing initiative with the phoenix police department to improve public safety ; c ) the creation of jobs and commerce on the main campus and along the camelback road corridor in west phoenix ; d ) the development of a trained workforce in the areas of science , technology , engineering and mathematics ; and e ) the continued support of k-12 students at neighborhood schools via our outreach program .",
"( 3 ) as of december 31 , 2015 , 2014 and 2013 , 47.8 % , 46.0 % and 43.5 % , respectively , of our working adult students ( online and professional studies students ) were pursuing graduate or doctoral degrees .",
"employees that work in two leased office buildings in the phoenix area will be consolidated into this new building when it 's expected to be completed in late 2016. although the university is funding the construction of the building and parking garage , the university is marketing these , along with a recently refurbished office building in the same development , as part of a sale-leaseback transaction ."
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year ended december 31 , 2014 net revenue . our net revenue for the year ended december 31 , 2015 was $ 778.2 million , an increase of $ 87.1 million , or 12.6 % , as compared to net revenue of $ 691.1 million for the year ended december 31 , 2014. this increase was primarily due to an increase in ground and online enrollment and , to a lesser extent , an increase in room and board and other student fees , partially offset by an increase in institutional scholarships . we did not raise tuition in any of our programs for our 2014-15 academic year . a tuition increase of approximately 1 % was implemented for the majority of our online programs in september 2015. we have not raised our tuition for our traditional ground program in seven years . end-of-period enrollment increased 9.9 % between december 31 , 2015 and 2014 , as ground enrollment increased 19.2 % and online enrollment increased 7.7 % over the prior year . the majority of the ground enrollment growth between years was residential students at our ground traditional campus in phoenix , arizona . we attribute the significant growth in our ground enrollment between years to our increasing brand recognition and the value proposition that our ground traditional campus affords to traditional-aged students and their parents . after scholarships , our ground traditional students pay for tuition , room , board , and fees , often half to a third of what it costs to attend a private , traditional university in another state and an amount comparable to what it costs to attend a public university . although our online enrollment continues to grow , as the proportion of traditional colleges and universities providing alternative learning modalities increases , we will face increasing competition for working adult students from such institutions , including those with well-established reputations for excellence . the growth in revenue per student between years is primarily due to our residential traditional campus enrollment growing at a rate higher than our working adult enrollment . when factoring in room , board and fees , the revenue per student is higher for these students than for our working adult students . instructional costs and services expenses . our instructional costs and services expenses for the year ended december 31 , 2015 were $ 329.7 million , an increase of $ 40.9 million , or 14.1 % , as compared to instructional costs and services expenses of $ 288.8 million for the year ended december 31 , 2014. this increase was primarily due to increases in instructional compensation and related expenses including share-based compensation , faculty compensation , occupancy and depreciation and amortization , dues , fees , subscriptions and other instructional supplies , bad debt expense and other miscellaneous instructional costs and services of $ 15.3 million , $ 7.3 million , $ 8.0 million , $ 7.6 million , $ 1.6 million and $ 1.1 million , respectively . the increase in employee compensation and related expenses and faculty compensation are primarily due to the increase in the number of staff to support the increasing number of students attending the university and increased benefit costs between years . in addition , we continue to increase our full-time faculty between years . the increase in occupancy , depreciation and amortization is the result of us placing into service additional buildings to support the growing number of ground traditional students . the increase in dues , fees , subscriptions and other instructional supplies is primarily due to increased licensing fees related to educational resources and increased food costs associated with a higher number of residential students . our instructional costs and services expenses as a percentage of net revenue increased by 0.6 % to 42.4 % for the year ended december 31 , 2015 , as compared to 41.8 % for the year ended december 31 , 2014 due to an increase in dues , fees , subscriptions and other instructional supplies as a percentage of revenue due to the low profit margin derived on food sales , and occupancy , depreciation and amortization increasing as a percentage of revenue , partially offset by a decrease in bad debt expense from 2.2 % of net revenue for the year ended december 31 , 2014 to 2.1 % of net revenues for the year ended december 31 , 2015. we anticipate that instructional costs and services will continue to increase as a percentage of revenue due to these factors . 52 admissions advisory and related expenses . our admissions advisory and related expenses for the year ended december 31 , 2015 were $ 112.6 million , an increase of $ 4.0 million , or 3.7 % , as compared to admissions advisory and related expenses of $ 108.6 million for the year ended december 31 , 2014. this increase was primarily due to increases in employee compensation and related expenses , partially offset by decreases in other admissions advisory expenses of $ 5.1 million and $ 1.2 million , respectively . employee compensation and related expenses increased as a result of increasing the number of enrollment counselors and increasing benefit costs between years . our admissions advisory and related expenses as a percentage of net revenue decreased by 1.2 % to 14.5 % for the year ended december 31 , 2015 , from 15.7 % for the year ended december 31 , 2014 primarily due to our ability to leverage our admissions advisory personnel across an increasing revenue base . although we are hopeful that we will continue to see leverage of our admissions advisory personnel , we do not anticipate the leverage in future years will be as significant as in 2015 .
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"our instructional costs and services expenses for the year ended december 31 , 2015 were $ 329.7 million , an increase of $ 40.9 million , or 14.1 % , as compared to instructional costs and services expenses of $ 288.8 million for the year ended december 31 , 2014. this increase was primarily due to increases in instructional compensation and related expenses including share-based compensation , faculty compensation , occupancy and depreciation and amortization , dues , fees , subscriptions and other instructional supplies , bad debt expense and other miscellaneous instructional costs and services of $ 15.3 million , $ 7.3 million , $ 8.0 million , $ 7.6 million , $ 1.6 million and $ 1.1 million , respectively .",
"our admissions advisory and related expenses for the year ended december 31 , 2015 were $ 112.6 million , an increase of $ 4.0 million , or 3.7 % , as compared to admissions advisory and related expenses of $ 108.6 million for the year ended december 31 , 2014. this increase was primarily due to increases in employee compensation and related expenses , partially offset by decreases in other admissions advisory expenses of $ 5.1 million and $ 1.2 million , respectively .",
"after scholarships , our ground traditional students pay for tuition , room , board , and fees , often half to a third of what it costs to attend a private , traditional university in another state and an amount comparable to what it costs to attend a public university .",
"the majority of the ground enrollment growth between years was residential students at our ground traditional campus in phoenix , arizona .",
"the increase in occupancy , depreciation and amortization is the result of us placing into service additional buildings to support the growing number of ground traditional students ."
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Liquidity
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the transaction price is allocated to separate performance obligations , generally story_separator_special_tag the following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes in this annual report on form 10-k. this may contain forward-looking statements based upon current expectations that involve risks and uncertainties . our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors , including those set forth under 36 item 1a “ risk factors ” and elsewhere in this annual report on form 10-k. unless otherwise stated , references in this report to particular years or quarters refer to our fiscal year and the associated quarters of those fiscal years . we have elected to omit discussion of the earliest of the three years covered by the consolidated financial statements presented . such omitted discussion can be found under item 7 , management 's discussion and analysis of financial condition and results of operations , located in our annual report on form 10-k for the fiscal year ended december 31 , 2019 , filed with the sec on february 26 , 2020 , for reference to discussion of the fiscal year ended december 31 , 2018 , the earliest of the three fiscal years presented . overview our business we are a leader in transforming the pharmacy care delivery model . our medication management automation solutions and adherence tools empower healthcare systems and pharmacies to focus on clinical care , rather than administrative tasks . our solutions support the vision of a fully autonomous pharmacy , a roadmap designed to improve operational efficiencies through a fully automated , medication management infrastructure . our vision is to transform the pharmacy care delivery model through automation designed to replace manual , error-prone processes , combined with a single , cloud-based platform and advanced services offerings . we believe our connected devices , products , and solutions will help our customers harness the power of data and analytics , and deliver improved patient outcomes . over 7,000 facilities worldwide use our automation and analytics solutions which are designed to improve pharmacy workflows , increase operational efficiency , reduce medication errors , deliver actionable intelligence , and improve patient safety . more than 50,000 institutional and retail pharmacies across north america and the united kingdom leverage our innovative medication adherence and population health solutions to improve patient engagement , and adherence to prescriptions and vaccine scheduling , helping to reduce costly hospital readmissions . we sell our product and consumable solutions together with related service offerings . revenues generated in the united states represented 89 % of our total revenues for the year ended december 31 , 2020. over the past several years , our business has expanded from a single-point solution to a platform of products and services that will help to further advance the vision of the autonomous pharmacy . this has resulted in larger deal sizes across multiple products , services , and implementations for customers and , we believe , more comprehensive , valuable , and enduring relationships . we utilize product bookings as an indicator of the success of our business . product bookings generally consist of all firm orders other than for technical services and other less significant items , as evidenced generally by a non-cancelable contract and purchase order for equipment and software products , and by a purchase order for consumables . the majority of connected devices and software license product bookings are installable within twelve months of booking , and are recorded as revenue upon customer acceptance of the installation or receipt of goods . revenues from software-as-a-service ( “ saas ” ) , subscription software , and technology-enabled services product bookings are recorded over the contractual term . product bookings increased by 23 % , from $ 813 million in 2019 to $ 1.002 billion in 2020 , driven by the success of our growth strategies in our comprehensive platform and differentiated products , as well as expanding our customer portfolio . in addition to product solution sales , we provide services to our customers . we provide installation planning and consulting as part of most product sales which is generally included in the initial price of the solution . to help assure the maximum availability of our systems , our customers typically purchase maintenance and support contracts in increments of one to five years . as a result of the growth of our installed base of customers and expanded service offerings , our service revenues have also grown . 37 the following table summarizes each revenue category : revenue category revenue type ( 1 ) income statement classification included in product bookings connected devices , software licenses , and other high visibility/ nonrecurring product yes ( 2 ) technical services high visibility/ recurring service no consumables high visibility/ recurring product yes saas , subscription software , and technology-enabled services high visibility/ recurring service yes _ ( 1 ) all revenue types are highly visible from long-term , sole-source agreements , backlog , or the recurring nature of the revenue stream . ( 2 ) freight revenue and certain other insignificant revenue streams are not included in product bookings . our full-time headcount of approximately 2,860 on december 31 , 2020 , an increase of approximately 160 from december 31 , 2019 , reflects our efforts to grow our operations , while driving profitability and optimizing resource allocation . operating segments we manage our operations as a single segment for the purposes of assessing performance and making operating decisions . our chief operating decision maker ( `` codm `` ) is our chief executive officer . the codm allocates resources and evaluates the performance of omnicell at the consolidated level using information about our revenues , gross profit , income from operations , and other key financial data . all significant operating decisions are based upon an analysis of
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"revenues generated in the united states represented 89 % of our total revenues for the year ended december 31 , 2020. over the past several years , our business has expanded from a single-point solution to a platform of products and services that will help to further advance the vision of the autonomous pharmacy .",
"such omitted discussion can be found under item 7 , management 's discussion and analysis of financial condition and results of operations , located in our annual report on form 10-k for the fiscal year ended december 31 , 2019 , filed with the sec on february 26 , 2020 , for reference to discussion of the fiscal year ended december 31 , 2018 , the earliest of the three fiscal years presented .",
"in addition to product solution sales , we provide services to our customers .",
"product bookings increased by 23 % , from $ 813 million in 2019 to $ 1.002 billion in 2020 , driven by the success of our growth strategies in our comprehensive platform and differentiated products , as well as expanding our customer portfolio .",
"the transaction price is allocated to separate performance obligations , generally story_separator_special_tag the following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes in this annual report on form 10-k. this may contain forward-looking statements based upon current expectations that involve risks and uncertainties .",
"( 2 ) freight revenue and certain other insignificant revenue streams are not included in product bookings .",
"we utilize product bookings as an indicator of the success of our business .",
"the codm allocates resources and evaluates the performance of omnicell at the consolidated level using information about our revenues , gross profit , income from operations , and other key financial data ."
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omnicell as one operating segment , which is the same as our reporting segment . story_separator_special_tag acquisitions on october 1 , 2020 , we completed the acquisition of the 340b link business ( the “ 340b link business ” ) of pharmaceutical strategies group , llc pursuant to the terms and conditions of the equity purchase agreement , dated august 11 , 2020 , as amended , by and among the company , psgh , llc , bw apothecary holdings , llc , the sellers identified therein and the seller 's representative for total cash consideration of $ 225.0 million . the acquisition adds a comprehensive and differentiated suite of software-enabled services and solutions used by certain eligible hospitals , health systems , clinics , and entities to manage compliance and capture 340b drug cost savings on outpatient prescriptions filled through the eligible entity 's pharmacy or a contracted pharmacy partner . the results of the operations of the 340b link business have been included in our consolidated results of operations beginning october 1 , 2020. critical accounting policies and estimates our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements , which have been prepared in accordance with u.s. generally accepted accounting principles ( “ gaap ” ) . the preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities , disclosure of any contingent assets and liabilities at the date of the financial statements , and the reported amounts of revenues and expenses during the reporting periods . we regularly review our estimates and assumptions , which are based on historical experience and various other factors that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of certain assets and liabilities that are not readily apparent from other sources . actual results may differ from these estimates and assumptions . we believe the following critical accounting policies are affected by significant judgments and estimates used in the preparation of our consolidated financial statements : 39 revenue recognition we earn revenues from sales of our products and related services , which are sold in the healthcare industry , our principal market . prior to recognizing revenue , we identify the contract , performance obligations , and transaction price , and allocate the transaction price to the performance obligations . all identified contracts meet the following required criteria : parties to the contract have approved the contract ( in writing , orally , or in accordance with other customary business practices ) and are committed to perform their respective obligations . a majority of our contracts are evidenced by a non-cancelable written agreement . contracts for consumable products are generally evidenced by an order placed via phone or a purchase order . entity can identify each party 's rights regarding the goods or services to be transferred . contract terms are documented within the written agreements . where a written contract does not exist , such as for consumable products , the rights of each party are understood as following our standard business process and terms . the entity can identify the payment terms for the goods or services to be transferred . payment terms are documented within the agreement and are generally net 30 to 60 days from shipment of tangible product or services performed for customers in the united states . where a written contract does not exist , our standard payment terms are net 30 day terms . the contract has commercial substance ( that is the risk , timing , or amount of the entity 's future cash flows is expected to change as a result of the contract ) . our agreements are an exchange of cash for a combination of products and services which result in changes in the amount of our future cash flows . it is probable the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer . we perform a credit check for all significant customers or transactions and where collectability is not probable , payment in full or a substantial down payment is typically required to help assure the full agreed upon contract price will be collected . distinct goods or services are identified as performance obligations . a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer are considered a single performance obligation . where a good or service is determined not to be distinct , we combine the good or service with other promised goods or services until a bundle of goods or services that is distinct is identified . to identify our performance obligations , we consider all of the products or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices . when performance obligations are included in separate contracts , we consider an entire customer arrangement to determine if separate contracts should be considered combined for the purposes of revenue recognition . most of our sales , other than renewals of support and maintenance , contain multiple performance obligations , with a combination of hardware systems , consumables and software products , support and maintenance , and professional services . the transaction price of a contract is determined based on the fixed consideration , net of an estimate for variable consideration such as various discounts or rebates provided to customers . as a result of our commercial selling practices , contract prices are generally fixed with minimal , if any , variable consideration . the transaction price is allocated to separate performance obligations proportionally based on the standalone selling price of each performance obligation . standalone selling price is best evidenced by
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"payment terms are documented within the agreement and are generally net 30 to 60 days from shipment of tangible product or services performed for customers in the united states .",
"where a written contract does not exist , our standard payment terms are net 30 day terms .",
"most of our sales , other than renewals of support and maintenance , contain multiple performance obligations , with a combination of hardware systems , consumables and software products , support and maintenance , and professional services .",
"we believe the following critical accounting policies are affected by significant judgments and estimates used in the preparation of our consolidated financial statements : 39 revenue recognition we earn revenues from sales of our products and related services , which are sold in the healthcare industry , our principal market .",
"the contract has commercial substance ( that is the risk , timing , or amount of the entity 's future cash flows is expected to change as a result of the contract ) .",
"we regularly review our estimates and assumptions , which are based on historical experience and various other factors that are believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the carrying values of certain assets and liabilities that are not readily apparent from other sources ."
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the price we charge for the good or service when selling it separately in similar circumstances to similar customers .
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"the price we charge for the good or service when selling it separately in similar circumstances to similar customers ."
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these non-tuition revenues are recognized upon delivery of goods or as services are performed and represent less than 10 % of our revenues . our revenues are directly dependent on the average number of students enrolled in our schools and the courses in which they are enrolled . our average enrollment is impacted by the number of new students starting , re-entering , graduating and withdrawing from our schools . in addition , our diploma/certificate programs range from 19 to 136 weeks , our associate 's degree programs range from 64 to 98 weeks , and students attend classes for different amounts of time per week depending on the school and program in which they are enrolled . because we start new students every month , our total student population changes monthly . the number of students enrolling or re-entering our programs each month is driven by the demand for our programs , the effectiveness of our marketing and advertising , the availability of financial aid and other sources of funding , the number of recent high school graduates , the job market and seasonality . our retention and graduation rates are influenced by the quality and commitment of our teachers and student services personnel , the effectiveness of our programs , the placement rate and success of our graduates and the availability of financial aid . although similar courses have comparable tuition rates , the tuition rates vary among our numerous programs . the majority of students enrolled at our schools rely on funds received under various government-sponsored student financial aid programs to pay a substantial portion of their tuition and other education-related expenses . the largest of these programs are title iv programs which represented approximately 78 % of our revenue on a cash basis while the remainder is primarily derived from state grants and cash payments made by students during both 2018 and 2017. the higher education act of 1965 , as amended ( the “ hea ” ) requires institutions to use the cash basis of accounting when determining its compliance with the 90/10 rule . we extend credit for tuition and fees to many of our students that attend our campuses . our credit risk is mitigated through the students ' participation in federally funded financial aid programs unless students withdraw prior to the receipt by us of title iv program funds for those students . under title iv programs , the government funds a certain portion of a student 's tuition , with the remainder , referred to as “ the gap , ” financed by the students themselves under private party loans , including credit extended by us . the gap amount has continued to increase over the last several years as we have raised tuition on average for the last several years by 2-3 % per year and restructured certain programs to reduce the amount of financial aid available to students , while funds received from title iv programs increased at lower rates . the additional financing that we are providing to students may expose us to greater credit risk and can impact our liquidity . however , we believe that these risks are somewhat mitigated due to the following : · our internal financing is provided to students only after all other funding resources have been exhausted ; thus , by the time this funding is available , students have completed approximately two-thirds of their curriculum and are more likely to graduate ; · funding for students who interrupt their education is typically covered by title iv funds as long as they have been properly packaged for financial aid ; and · creditworthy criteria to demonstrate a student 's ability to pay . the operating expenses associated with an existing school do not increase or decrease proportionally as the number of students enrolled at the school increases or decreases . we categorize our operating expenses as : · educational services and facilities . major components of educational services and facilities expenses include faculty compensation and benefits , expenses of books and tools , facility rent , maintenance , utilities , depreciation and amortization of property and equipment used in the provision of education services and other costs directly associated with teaching our programs excluding student services which is included in selling , general and administrative expenses . · selling , general and administrative . selling , general and administrative expenses include compensation and benefits of employees who are not directly associated with the provision of educational services ( such as executive management and school management , finance and central accounting , legal , human resources and business development ) , marketing and student enrollment expenses ( including compensation and benefits of personnel employed in sales and marketing and student admissions ) , costs to develop curriculum , costs of professional services , bad debt expense , rent for our corporate headquarters , depreciation and amortization of property and equipment that is not used in the provision of educational services and other costs that are incidental to our operations . selling , general and administrative expenses also includes the cost of all student services including financial aid and career services . all marketing and student enrollment expenses are recognized in the period incurred . 33 index critical accounting policies and estimates our discussions of our financial condition and results of operations are based upon our consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states of america , or gaap . the preparation of financial statements in conformity with gaap requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period . on an ongoing basis , we evaluate our estimates and assumptions , including those related to revenue recognition , bad
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[
"the number of students enrolling or re-entering our programs each month is driven by the demand for our programs , the effectiveness of our marketing and advertising , the availability of financial aid and other sources of funding , the number of recent high school graduates , the job market and seasonality .",
"the gap amount has continued to increase over the last several years as we have raised tuition on average for the last several years by 2-3 % per year and restructured certain programs to reduce the amount of financial aid available to students , while funds received from title iv programs increased at lower rates .",
"· selling , general and administrative .",
"the largest of these programs are title iv programs which represented approximately 78 % of our revenue on a cash basis while the remainder is primarily derived from state grants and cash payments made by students during both 2018 and 2017. the higher education act of 1965 , as amended ( the “ hea ” ) requires institutions to use the cash basis of accounting when determining its compliance with the 90/10 rule .",
"however , we believe that these risks are somewhat mitigated due to the following : · our internal financing is provided to students only after all other funding resources have been exhausted ; thus , by the time this funding is available , students have completed approximately two-thirds of their curriculum and are more likely to graduate ; · funding for students who interrupt their education is typically covered by title iv funds as long as they have been properly packaged for financial aid ; and · creditworthy criteria to demonstrate a student 's ability to pay .",
"the operating expenses associated with an existing school do not increase or decrease proportionally as the number of students enrolled at the school increases or decreases .",
"our retention and graduation rates are influenced by the quality and commitment of our teachers and student services personnel , the effectiveness of our programs , the placement rate and success of our graduates and the availability of financial aid ."
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debts , fixed assets , goodwill and other intangible assets , income taxes and certain accruals . story_separator_special_tag actual results could differ from those estimates . the critical accounting policies discussed herein are not intended to be a comprehensive list of all of our accounting policies . in many cases , the accounting treatment of a particular transaction is specifically dictated by gaap and does not result in significant management judgment in the application of such principles . we believe that the following accounting policies are most critical to us in that they represent the primary areas where financial information is subject to the application of management 's estimates , assumptions and judgment in the preparation of our consolidated financial statements . revenue recognition . prior to adoption of asu 2014-09 revenues are derived primarily from programs taught at our schools . tuition revenues , textbook sales and one-time fees , such as nonrefundable application fees and course material fees , are recognized on a straight-line basis over the length of the applicable program as the student proceeds through the program , which is the period of time from a student 's start date through his or her graduation date ( including internships or externships , if any , occurring prior to graduation ) , and we complete the performance of teaching the student entitling us to the revenue . other revenues , such as tool sales and contract training revenues , are recognized as goods are delivered or training completed . on an individual student basis , tuition earned in excess of cash received is recorded as accounts receivable , and cash received in excess of tuition earned is recorded as unearned tuition . we evaluate whether collectability of revenue is reasonably assured prior to the student commencing a program by attending class and reassess collectability of tuition and fees when a student withdraws from a course . we calculate the amount to be returned under title iv and its stated refund policy to determine eligible charges and , if there is a balance due from the student after this calculation , we expect payment from the student . we have a process to pursue uncollected accounts whereby , based upon the student 's financial means and ability to pay , a payment plan is established with the student to ensure that collectability is reasonable . we continuously monitor our historical collections to identify potential trends that may impact our determination that collectability of receivables for withdrawn students is realizable . if a student withdraws from a program prior to a specified date , any paid but unearned tuition is refunded . refunds are calculated and paid in accordance with federal , state and accrediting agency standards . generally , the amount to be refunded to a student is calculated based upon the period of time the student has attended classes and the amount of tuition and fees paid by the student as of his or her withdrawal date . these refunds typically reduce deferred tuition revenue and cash on our consolidated balance sheets as we generally do not recognize tuition revenue in our consolidated statements of income ( loss ) until the related refund provisions have lapsed . based on the application of our refund policies , we may be entitled to incremental revenue on the day the student withdraws from one of our schools . we record revenue for students who withdraw from one of our schools when payment is received because collectability on an individual student basis is not reasonably assured . after adoption of asu 2014-09 on january 1 , 2018 , we adopted the new standard on revenue recognition , asu 2014-09 , using the modified retrospective approach of asu 2016-10. the adoption of the guidance in asu 2014-09 as amended by asu 2016-10 did not have a material impact on the measurement or recognition of revenue in any prior or current reporting periods and there was no adjustment to retained earnings . the core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to students in an amount that reflects the consideration to which the company expects to be entitled in exchange for such goods or services . substantially all of our revenues are considered to be revenues from contracts with students . the related accounts receivable balances are recorded in our balance sheets as student accounts receivable . we do not have significant revenue recognized from performance obligations that were satisfied in prior periods , and we do not have any transaction price allocated to unsatisfied performance obligations other than in our unearned tuition . we record revenue for students who withdraw from one of our schools only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur . unearned tuition represents contract liabilities primarily related to our tuition revenue . we have elected not to provide disclosure about transaction prices allocated to unsatisfied performance obligations if contract durations are less than one-year , or if we have the right to consideration from a student in an amount that corresponds directly with the value provided to the student for performance obligations completed to date . we have assessed the costs incurred to obtain a contract with a student and determined them to be immaterial . allowance for uncollectible accounts . based upon experience and judgment , we establish an allowance for uncollectible accounts with respect to tuition receivables . we use an internal group of collectors in our collection efforts . in establishing our allowance for uncollectible accounts , we consider , among other things , current and expected economic conditions , a student 's status ( in-school or out-of-school ) , whether or not a student is currently making payments , and overall collection history . changes in trends in any of these areas may impact the allowance
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[
"tuition revenues , textbook sales and one-time fees , such as nonrefundable application fees and course material fees , are recognized on a straight-line basis over the length of the applicable program as the student proceeds through the program , which is the period of time from a student 's start date through his or her graduation date ( including internships or externships , if any , occurring prior to graduation ) , and we complete the performance of teaching the student entitling us to the revenue .",
"these refunds typically reduce deferred tuition revenue and cash on our consolidated balance sheets as we generally do not recognize tuition revenue in our consolidated statements of income ( loss ) until the related refund provisions have lapsed .",
"revenue recognition .",
"based on the application of our refund policies , we may be entitled to incremental revenue on the day the student withdraws from one of our schools .",
"we record revenue for students who withdraw from one of our schools when payment is received because collectability on an individual student basis is not reasonably assured .",
"changes in trends in any of these areas may impact the allowance",
"on an individual student basis , tuition earned in excess of cash received is recorded as accounts receivable , and cash received in excess of tuition earned is recorded as unearned tuition .",
"we do not have significant revenue recognized from performance obligations that were satisfied in prior periods , and we do not have any transaction price allocated to unsatisfied performance obligations other than in our unearned tuition .",
"the core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to students in an amount that reflects the consideration to which the company expects to be entitled in exchange for such goods or services ."
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for uncollectible accounts . the receivables balances of withdrawn students with delinquent obligations are reserved for based on our collection history .
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"the receivables balances of withdrawn students with delinquent obligations are reserved for based on our collection history .",
"for uncollectible accounts ."
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( 2 ) firm purchase commitments relate to contracts for production and testing of our vaccine products , conduct of clinical trials , and other research-related activities . ( 3 ) pursuant to the emory license , we have committed to make potential future milestone and royalty payments which are contingent upon the occurrence of future events . such events include development milestones , regulatory approvals and product sales . because the achievement of these milestones is currently neither probable nor reasonably estimable , the contingent payments have not been included in the table above or recorded on our consolidated balance sheets . the aggregate total of all potential milestone payments included in the emory license ( excluding royalties on net sales ) is approximately $ 3.5 million . as of december 31 , 2012 , except as disclosed in the table above , we had no other material firm purchase obligations or commitments for capital expenditures and no committed lines of credit or other committed funding or long-term debt . we have employment agreements with our executive officers and a consulting agreement with a member of our board of directors , each of which may be terminated with no more than 90 days advance written notice . the table also excludes budgeted expenses under our a research agreements with emory university which are fully reimbursable to us pursuant to the ipcavd grant from the nih and cover a period of less than one year . net operating loss carryforwards at december 31 , 2012 , we had consolidated net operating loss carryforwards for income tax purposes of $ 69.8 million , which will expire in 2013 through 2032 if not utilized . approximately $ 51.9 million of our net operating loss carryforwards relate to the operations of our predecessor , dauphin technology , inc. prior to the 2006 merger between dauphin technology , inc. and geovax , inc. we also have research and development tax credits of approximately $ 764,000 available to reduce income taxes , if any , which will expire in 2022 through 2031 if not utilized . the amount of net operating loss carryforwards and research tax credits available to reduce income taxes in any particular year may be limited in certain circumstances . based on an assessment of all available evidence including , but not limited to , our limited operating history in our core business and lack of profitability , uncertainties of the commercial viability of our technology , the impact of government regulation and healthcare reform initiatives , and other risks normally associated with biotechnology companies , we have concluded that it is more likely than not that these net operating loss carryforwards and credits will not be realized and , as a result , a 100 % deferred tax valuation allowance has been recorded against these assets . 27 results of operations net loss we recorded net losses of $ 2,135,140 , $ 2,346,826 , and $ 2,747,328 for the years ended december 31 , 2012 , 2011 and 2010 , respectively . our operating results typically fluctuate due to the timing of activities and related costs associated with our vaccine research and development activities and our general and administrative costs , as described in more detail below . grant revenue we recorded grant revenues of $ 2,657,327 , $ 4,899,885 , and $ 5,185,257 for the years ended december 31 , 2012 , 2011 and 2010 , respectively . grant revenues for all three years relate to grants from the nih for our vaccine development activities , except that 2010 includes $ 244,479 related to our receipt of a qualified therapeutic discover program ( qtdp ) grant . in september 2007 , the nih awarded us an ipcavd grant to support our hiv/aids vaccine development , optimization and production . the original project period for the grant covered a five year period ending in august 2012 , but was extended for an additional one year period . the aggregate award totaled $ 20.4 million and there is approximately $ 1.6 million remaining and available for use as of december 31 , 2012. in september 2012 , the nih awarded us an additional grant of $ 1.9 million to support development of versions of our hiv/aids vaccines for the clade c subtype of the hiv virus prevalent in the developing world . the project period of this grant covers a one year period ending in august 2013. there is approximately $ 1.4 million from this grant remaining and available for use as of december 31 , 2012. research and development our research and development expenses were $ 3,043,522 , $ 4,276,375 , and $ 4,793,956 for the years ended december 31 , 2012 , 2011 and 2010 , respectively . research and development expense for these periods includes stock-based compensation expense of $ 78,140 , $ 179,400 , and $ 206,501 for 2012 , 2011 and 2010 , respectively ( see discussion under “ stock-based compensation expense ” below ) . our research and development costs do not include costs incurred by the hvtn in conducting clinical trials of our vaccines ; those costs are funded directly by the nih . our research and development expenses can fluctuate considerably on a period-to-period basis , depending on our need for vaccine manufacturing by third parties , the timing of expenditures related to our grants from the nih , and the timing of costs associated with clinical trials being funding directly by us . the recently completed phase 2a clinical trial for our preventive vaccine was conducted and funded by the hvtn as is the ongoing phase 1 clinical trial of our second generation preventive vaccine , but we are responsible for the manufacture of vaccine product to be used in the trials . story_separator_special_tag we are not currently receiving any government support for the ongoing phase 1 clinical trial of our therapeutic vaccine ( treatment interruption protocol ) . we can not predict
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"( 2 ) firm purchase commitments relate to contracts for production and testing of our vaccine products , conduct of clinical trials , and other research-related activities .",
"the original project period for the grant covered a five year period ending in august 2012 , but was extended for an additional one year period .",
"the aggregate award totaled $ 20.4 million and there is approximately $ 1.6 million remaining and available for use as of december 31 , 2012. in september 2012 , the nih awarded us an additional grant of $ 1.9 million to support development of versions of our hiv/aids vaccines for the clade c subtype of the hiv virus prevalent in the developing world .",
"the project period of this grant covers a one year period ending in august 2013. there is approximately $ 1.4 million from this grant remaining and available for use as of december 31 , 2012. research and development our research and development expenses were $ 3,043,522 , $ 4,276,375 , and $ 4,793,956 for the years ended december 31 , 2012 , 2011 and 2010 , respectively .",
"our operating results typically fluctuate due to the timing of activities and related costs associated with our vaccine research and development activities and our general and administrative costs , as described in more detail below .",
"research and development expense for these periods includes stock-based compensation expense of $ 78,140 , $ 179,400 , and $ 206,501 for 2012 , 2011 and 2010 , respectively ( see discussion under “ stock-based compensation expense ” below ) .",
"grant revenue we recorded grant revenues of $ 2,657,327 , $ 4,899,885 , and $ 5,185,257 for the years ended december 31 , 2012 , 2011 and 2010 , respectively ."
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the level of support we may receive from hvtn or other federal agencies ( or divisions thereof ) for our future clinical trials . we expect that our research and development costs will increase in the future as we progress into the later stage human clinical trials leading up to possible product approval by the fda . since our inception , all of our research and development efforts have been focused on development of our hiv/aids vaccines , which we have managed and evaluated to date as a single project . upon receipt of the ipcavd grant from the nih in late 2007 , we began incurring additional costs associated with the grant , and reallocated personnel and other internal resources toward activities supported by the grant . the table below summarizes our research and development expenses for each of the years in the three year period ended december 31 , 2012. the amounts shown related to nih grants represent all direct costs associated with grant activities , including salaries and personnel-related expenses , supplies , consulting , contract services and travel . the remainder of our research and development expense is allocated to our general hiv/aids vaccine program . replace_table_token_4_th 28 our vaccine candidates still require significant , time-consuming and costly research and development , testing and regulatory clearances . completion of clinical development will take several years or more , but the length of time generally varies substantially according to the type , complexity , novelty and intended use of a product candidate . the nih has funded the costs of conducting all of our completed and ongoing human clinical trials to date , except for our ongoing pilot phase 1/2 therapeutic trial , with geovax incurring costs associated with manufacturing the clinical vaccine supplies and other study support . we expect the nih will fund the costs of another phase 1 therapeutic trial which we anticipate will start in mid-2013 . we are also having discussions with the hvtn and nih with regard to the conduct of a planned phase 2 efficacy trial of our preventive vaccine , and we expect the nih will provide support for this trial as well . we intend to seek government and or third party support for future clinical human trials , but there can be no assurance that we will be successful . the duration and the cost of future clinical trials may vary significantly over the life of the project as a result of differences arising during development of the human clinical trial protocols , including , among others : · the number of patients that ultimately participate in the clinical trial ; · the duration of patient follow-up that seems appropriate in view of the results ; · the number of clinical sites included in the clinical trials ; and · the length of time required to enroll suitable patient subjects . due to the uncertainty regarding the timing and regulatory approval of clinical trials and pre-clinical studies , our future expenditures are likely to be highly volatile in future periods depending on the outcomes of the trials and studies . from time to time , we will make determinations as to how much funding to direct to these programs in response to their scientific , clinical and regulatory success , anticipated market opportunity and the availability of capital to fund our programs . in developing our product candidates , we are subject to a number of risks that are inherent in the development of products based on innovative technologies . for example , it is possible that our vaccines may be ineffective or toxic , or will otherwise fail to receive the necessary regulatory clearances , causing us to delay , extend or terminate our product development efforts . any failure by us to obtain , or any delay in obtaining , regulatory approvals could cause our research and development expenditures to increase which , in turn , could have a material adverse effect on our results of operations and cash flows . because of the uncertainties of clinical trials , estimating the completion dates or cost to complete our research and development programs is highly speculative and subjective . as a result of these factors , we are unable to accurately estimate the nature , timing and future costs necessary to complete the development of our product candidates . in addition , we are unable to reasonably estimate the period when material net cash inflows could commence from the sale , licensing or commercialization of such product candidates , if ever . general and administrative expense our general and administrative expenses were $ 1,752,765 , $ 2,972,555 , and $ 3,162,134 for the years ended december 31 , 2012 , 2011 and 2010 , respectively . general and administrative costs include officers ' salaries , legal and accounting costs , patent costs , amortization expense associated with intangible assets , and other general corporate expenses . general and administrative expense includes stock-based compensation expense of $ 231,936 , $ 593,597 , and $ 544,031 for 2012 , 2011 and 2010 , respectively ( see discussion under “ stock-based compensation expense ” below ) . the decline in general and administrative expense from 2011 to 2012 is primarily due to lower legal costs , patent costs and stock-based compensation expense related to investment advisory fees and investor warrant extensions . however , we expect that our general and administrative costs may increase in the future in support of expanded research and development activities and other general corporate activities . stock-based compensation expense we recorded total stock-based compensation expense of $ 310,076 , $ 772,997 , and $ 750,532 during the years ended december 31 , 2012 , 2011 and 2010 , respectively , which was allocated to research
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"we are also having discussions with the hvtn and nih with regard to the conduct of a planned phase 2 efficacy trial of our preventive vaccine , and we expect the nih will provide support for this trial as well .",
"completion of clinical development will take several years or more , but the length of time generally varies substantially according to the type , complexity , novelty and intended use of a product candidate .",
"the remainder of our research and development expense is allocated to our general hiv/aids vaccine program .",
"general and administrative expense our general and administrative expenses were $ 1,752,765 , $ 2,972,555 , and $ 3,162,134 for the years ended december 31 , 2012 , 2011 and 2010 , respectively .",
"for example , it is possible that our vaccines may be ineffective or toxic , or will otherwise fail to receive the necessary regulatory clearances , causing us to delay , extend or terminate our product development efforts .",
"from time to time , we will make determinations as to how much funding to direct to these programs in response to their scientific , clinical and regulatory success , anticipated market opportunity and the availability of capital to fund our programs .",
"general and administrative costs include officers ' salaries , legal and accounting costs , patent costs , amortization expense associated with intangible assets , and other general corporate expenses ."
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Liquidity
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total loans , excluding covered loans , as of december 31 , 2011 were stable compared to december 31 , 2010. the office , retail , and industrial and other commercial real estate portfolios exhibited 6.2 % growth during this period , substantially in the form of owner-occupied business relationships . offsetting this progress , we continued to reduce our exposure to more troubled construction and multi-family real estate categories during 2011. non-performing assets , excluding covered loans and covered oreo , were $ 248.4 million at december 31 , 2011 , decreasing $ 21.1 million , or 7.8 % , from december 31 , 2010. the reduction was substantially due to management 's remediation activities , dispositions , charge-offs , and the return of accruing tdrs to performing status , partially offset by loans downgraded to non-accrual status . for a detailed discussion of non-performing assets , refer to the section titled `` loan portfolio and credit quality `` of this item 7. total average funding sources for 2011 increased $ 152.4 million , or 2.2 % , from 2010 resulting from a $ 433.0 million , or 10.0 % , increase in average transactional deposits and a $ 12.5 million , or 9.1 % , increase in senior and subordinated debt . these increases were partially offset by declines in higher-costing time deposits of $ 199.6 million , or 10.0 % , and borrowed funds of $ 93.5 million , or 26.0 % . the rise in demand deposits and drop in time deposits resulted in a more favorable product mix . for a discussion of our funding sources , see the section titled `` funding and liquidity management `` of this item 7. in fourth quarter 2011 , we redeemed all of the $ 193.0 million of preferred shares issued to the treasury , resulting in the recognition of $ 1.5 million in accelerated accretion . we funded the redemption through a combination of existing liquid assets and proceeds from a $ 115.0 million senior debt offering . the notes , which have an interest rate of 5.875 % , payable semi-annually , will mature in november 2016. in a related transaction , we redeemed the treasury 's associated warrant . we paid $ 900,000 to the treasury to redeem the warrant , which concluded our 45 participation in the cpp . for a discussion of our capital position , see the section titled `` management of capital `` of this item 7. performance overview for 2010 compared with 2009 net loss in 2010 was $ 9.7 million , before adjustment for preferred dividends and non-vested restricted shares , with a $ 19.7 million loss , or $ 0.27 per share , applicable to common shareholders after such adjustments . this compares to a net loss of $ 25.8 million , before adjustment for preferred dividends and non-vested restricted shares and net loss applicable to common shareholders of $ 35.6 million , or $ 0.71 per share , for 2009. the year-over-year improvement was largely due to higher net interest income and fee-based revenues and lower provision for loan losses , which more than offset higher noninterest expense , including losses recognized on the sale and write-down of oreo . pre-tax , pre-provision operating earnings for 2010 were $ 136.4 million , an increase of 3.8 % from 2009. the increase over 2009 was primarily driven by higher average interest-earning assets , improved net interest margins , and greater fee-based revenues , which offset higher costs related to fdic-assisted transactions and loan remediation activities . our 2010 tax-equivalent net interest income increased $ 24.5 million compared to 2009. interest expense declined $ 40.7 million , reflecting both a decline in total interest-bearing liabilities and the rates paid for those liabilities . tax-equivalent interest income declined $ 16.2 million compared to 2009 due to a 14 basis point decline in tax-equivalent yield . the net result of these changes was an increase in tax-equivalent net interest income . fee-based revenues of $ 86.8 million for 2010 grew by 1.9 % compared to 2009. service charge fees declined primarily from lower overdraft and non-sufficient fund fees . however , this decline was more than offset by increases in other service charges , commissions , and fees ( primarily merchant fee income ) , card-based fees , and wealth management fees . noninterest expense rose by 18.7 % for 2010 compared to 2009. the increase was attributed to higher losses and write-downs on oreo and increases in loan remediation costs ( including costs to service certain assets acquired in fdic-assisted transactions ) , other professional services fees from the valuation and integration of fdic-acquired assets , and compensation expense . we recorded integration expenses associated with our fdic-assisted transactions of $ 3.3 million in 2010. in 2010 , we sold $ 390.2 million in collateralized mortgage obligations ( `` cmos `` ) , other mortgage-backed securities , municipal securities , and corporate bonds for a gain of $ 17.1 million . net securities gains were $ 12.2 million for 2010 and were net of other-than-temporary impairment charges of $ 4.9 million . impairment charges were primarily related to our collateralized debt obligations ( `` cdos `` ) . outstanding loans , excluding covered loans , of $ 5.1 billion as of december 31 , 2010 declined $ 102.7 million , or 2.0 % , from december 31 , 2009 as we charged-off $ 147.1 million in loans in 2010. growth of 1.9 % in commercial and industrial loans , 4.8 % in multi-family loans , and 7.2 % in other commercial real estate lending more than offset a 37.8 % decline in the commercial and residential construction loan portfolios . story_separator_special_tag ( 6 ) for a discussion of the gains on fdic-assisted transactions , refer to note 5 of `` notes to consolidated financial statements `` in item 8 of this form 10-k. 2011 compared to 2010 total noninterest income
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"we recorded integration expenses associated with our fdic-assisted transactions of $ 3.3 million in 2010. in 2010 , we sold $ 390.2 million in collateralized mortgage obligations ( `` cmos `` ) , other mortgage-backed securities , municipal securities , and corporate bonds for a gain of $ 17.1 million .",
"impairment charges were primarily related to our collateralized debt obligations ( `` cdos `` ) .",
"for a detailed discussion of non-performing assets , refer to the section titled `` loan portfolio and credit quality `` of this item 7. total average funding sources for 2011 increased $ 152.4 million , or 2.2 % , from 2010 resulting from a $ 433.0 million , or 10.0 % , increase in average transactional deposits and a $ 12.5 million , or 9.1 % , increase in senior and subordinated debt .",
"we funded the redemption through a combination of existing liquid assets and proceeds from a $ 115.0 million senior debt offering ."
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Liquidity
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declined 6.1 % for 2011 compared to 2010. the decrease reflects lower net securities gains , a trading loss in 2011 following a trading gain in 2010 , and a gain on an fdic-assisted transaction in 2010 , all of which more than offset increases in operating revenues . 51 fee-based revenues , which comprise the majority of noninterest income , of $ 94.2 million for 2011 rose 8.6 % compared to 2010 as a result of increases in all categories . the growth in service charges on deposit accounts was due primarily to a combination of higher volumes of non-sufficient-funds fees ( including transactions generated by customers obtained in a 2010 fdic-assisted transaction ) and more fees earned on business and personal checking accounts resulting from market-driven pricing increases . average assets under management for 2011 totaled $ 4.4 billion , a $ 346.5 million increase from 2010 , with such growth derived equally from improved equity market performance and new sales initiatives . the increase in average assets under management fueled the year-over-year growth in wealth management fees . a rise in merchant fees , miscellaneous loan fees , and investment revenue led to the increase in other service charges , commissions , and fees . the year-over-year increase in merchant fees was due primarily to a volume increase resulting from customers acquired in an fdic-assisted transaction . we experienced continued growth in card-based fees resulting from both greater volumes and higher average rates per transaction . the increase in rates earned on card-based fees resulted from the migration in late 2010 from multi-merchant networks to an exclusive mastercard network in most areas , which drove higher transaction yields and incentives . the $ 1.1 million gain on acquisition of deposits related to our purchase of certain chicago-market deposits from old national . the transaction closed in december 2011 and included $ 106.7 million in deposits ( comprised of $ 70.6 million in core transactional deposits and $ 36.1 in time deposits ) and one banking facility . 2010 compared to 2009 total noninterest income decreased 11.7 % for 2010 compared to 2009. the decline from 2009 resulted from changes in gains realized from net securities sales , early extinguishment of debt , and fdic-assisted transactions and the fair value adjustment related to our non-qualified deferred compensation plan , which is reflected in trading ( losses ) gains , net . fee-based revenues of $ 86.8 million for 2010 grew by 1.9 % compared to 2009. service charges on deposit accounts declined primarily due to lower overdraft and non-sufficient funds fees . however , this decline was more than offset by increases in other service charges , commissions , and fees ( primarily merchant fee income ) , card-based fees , and wealth management fees . the majority of the decline in service charges on deposit accounts resulted from a $ 2.5 million decline in fees charged to customers with insufficient funds . the decrease was driven by ( i ) regulatory changes that require customers to affirmatively consent to our overdraft services for automated teller machine and one-time debit card transactions before overdraft fees may be assessed and ( ii ) a change from a tiered rate to a flat rate . wealth management fees improved from 2009 to 2010 primarily due to a $ 666.3 million , or 17.5 % , increase in assets under management during this period . approximately $ 102.7 million of the $ 666.3 million increase was attributable to managed assets acquired in an fdic-assisted transaction . higher retail investment advisory fees and merchant processing fees drove the increase in other service charges , commissions , and fees from 2009 to 2010. merchant processing fees improved 18.5 % , and retail investment advisory fees increased 9.9 % for 2010 compared to 2009 . 52 noninterest expense the following table presents the components of noninterest expense for the years ended december 31 , 2011 , 2010 , and 2009. table 5 noninterest expense analysis ( dollar amounts in thousands ) replace_table_token_14_th n/m not meaningful . ( 1 ) oreo operating expense , net , consists of real estate taxes , commissions on sales , insurance , and maintenance , net of any rental income . ( 2 ) the efficiency ratio expresses noninterest expense , excluding oreo expense , as a percentage of tax-equivalent net interest income plus total fees and other income . 2011 compared to 2010 total noninterest expense for 2011 decreased 6.1 % from 2010. excluding losses on sales and write-downs of oreo , integration costs , and severance-related costs , noninterest expense increased $ 15.2 million , or 6.5 % , as a result of higher loan remediation costs , increased salaries related to the expansion of commercial , retail , and wealth 53 management sales staff and a $ 1.3 million correction of a 2010 actuarial pension expense calculation related to the valuation of future early retirement benefits recorded in fourth quarter 2011. in 2011 , we recorded a $ 2.0 million charge for severance-related costs stemming from an organizational realignment implemented in december 2011. this charge includes $ 1.6 million in salaries and wages , $ 96,000 in retirement and other employee benefits , and $ 274,000 in other professional services . the organizational realignment eliminated approximately 50 open positions and another 50 filled positions . the annual savings in future years is estimated to be $ 5.0 million . the increase in salaries and wages for 2011 compared to 2010 reflected the full year impact of additional staff employed as a result of a third quarter 2010 fdic-assisted transaction , the expansion of commercial sales staff , annual merit increases , higher incentive compensation , and
|
[
"2011 compared to 2010 total noninterest expense for 2011 decreased 6.1 % from 2010. excluding losses on sales and write-downs of oreo , integration costs , and severance-related costs , noninterest expense increased $ 15.2 million , or 6.5 % , as a result of higher loan remediation costs , increased salaries related to the expansion of commercial , retail , and wealth 53 management sales staff and a $ 1.3 million correction of a 2010 actuarial pension expense calculation related to the valuation of future early retirement benefits recorded in fourth quarter 2011. in 2011 , we recorded a $ 2.0 million charge for severance-related costs stemming from an organizational realignment implemented in december 2011. this charge includes $ 1.6 million in salaries and wages , $ 96,000 in retirement and other employee benefits , and $ 274,000 in other professional services .",
"( 1 ) oreo operating expense , net , consists of real estate taxes , commissions on sales , insurance , and maintenance , net of any rental income .",
"a rise in merchant fees , miscellaneous loan fees , and investment revenue led to the increase in other service charges , commissions , and fees .",
"the decrease was driven by ( i ) regulatory changes that require customers to affirmatively consent to our overdraft services for automated teller machine and one-time debit card transactions before overdraft fees may be assessed and ( ii ) a change from a tiered rate to a flat rate .",
"the growth in service charges on deposit accounts was due primarily to a combination of higher volumes of non-sufficient-funds fees ( including transactions generated by customers obtained in a 2010 fdic-assisted transaction ) and more fees earned on business and personal checking accounts resulting from market-driven pricing increases ."
] |
Liquidity
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the following discussion and analysis should be read in conjunction with our financial statements , included herewith . this discussion should not be construed to imply that the results discussed herein will necessarily continue into the future , or that any conclusion reached herein will necessarily be indicative of actual operating results in the future . such discussion represents only the best present assessment of our management . general overview we operate two distinct business operations . these are : ● marine technology business ( “ also referred to as “ products segment ” ) ; and ● marine engineering business ( “ also referred to as “ services segment ” ) . our marine technology business is a technology solution provider to the subsea market . it has a long-established pedigree in this market , and it designs , develops and manufactures proprietary solutions for this market ( both for commercial and defense applications ) including our range of flagship volumetric real time sonar solutions . these solutions/products are used primarily in the underwater construction market , offshore oil and gas , offshore wind energy industry , and in the complex dredging , port security , mining and marine sciences sectors . our customers include service providers to major oil and gas ( “ o & g ” ) companies , law enforcement agencies , ports , mining companies , defense bodies , research institutes and universities . our marine engineering business is a supplier of engineering services and embedded solutions ( such as mission computers ) to prime defense contractors such as raytheon and northrop grumman . generally , the items supplied into the defense market are sub-systems in broader mission critical integrated systems and thus requires a high level of reliability , consistency in standards and robustness . we have long-standing relationships with prime defense contractors , and we use these credentials to secure more business . we support some significant defense programs by supplying and maintaining proprietary parts ( or parts for which we are preferred suppliers ) through obsolescence management programs . these services provide recurring stream of revenues for our services segment . 21 both business operations have established synergies in terms of customers and specialized engineering skill sets encompassing capturing , computing and displaying data in harsh environments . our business is affected by a number of factors including those set out below : a. united kingdom 's withdrawal from the european union ( “ brexit ” ) including the possibility that such withdrawal will take place without a deal on their future relationship ( “ no deal brexit issue ” ) following a national referendum and the recent elections in the united kingdom which saw a majority government , a bill has now been passed for the united kingdom to leave the european union on january 31 , 2020. a transitional period of 12 months is expected . during the transitional period , the united kingdom government and the european union will negotiate its future trade relationship . if no agreement is reached , the uk government which now has a majority for its actions , has stated that it will leave the european union without a deal on its future relationship , a no deal brexit could affect our uk operations which represents a significant part of our earnings ( coda octopus products limited ( edinburgh-based ) and coda octopus martech limited ( portland , england-based ) . the ongoing uncertainty also impacts the british pound ( which is the trading currency of our uk operations ) . although the appointment of a majority government on december 13 , 2019 saw a surge in the uk pound against all major currencies , it is expected that the ongoing uncertainty around the future relationship with the european union will cause the uk pound to continue to be volatile against major currencies , including the us dollar . since our reporting currency is the us dollar , depreciation of the uk pound has an adverse impact on revenues reported and devaluation of our consolidated balance sheet assets . because there is no precedent for a european union member state leaving the union , the full implications for the company are not clear . the outcome is dependent on the type of future relationship that is struck between the united kingdom and the european union . in a worst-case scenario , where no deal on the future of the uk relationship with the european union is struck , it is widely believed that the world trade organization ( wto ) rules will apply . operating on this basis would have far-reaching implications for our company particularly in the area of costs associated with import/export arrangements for our products including custom duties on purchases and sales and delays and increased compliance costs in the supply chain ( both purchasing and selling ) . we currently benefit from mutual recognition rules in a number of areas including export control requirements and quality standards which allow us to distribute our products freely in the european union . if these are removed it is likely to involve new qualifications requirements that we would need to meet with the attendant costs and delays involved . furthermore , if free movement is restricted this will also limit our ability to utilize our trained engineers and experts on customer projects in the european union . the company continues to make plans to mitigate the departure from the european union . the company established a company , coda octopus products a/s , in denmark to maintain a presence in the european union and to address some of the foreseeable issues . however , we can give no assurance that this in itself would be sufficient to address the impact of both a no deal brexit and a no deal brexit . 22 b. currency risks : the company 's operations are split between the united states , united kingdom , australia ,
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[
"although the appointment of a majority government on december 13 , 2019 saw a surge in the uk pound against all major currencies , it is expected that the ongoing uncertainty around the future relationship with the european union will cause the uk pound to continue to be volatile against major currencies , including the us dollar .",
"if no agreement is reached , the uk government which now has a majority for its actions , has stated that it will leave the european union without a deal on its future relationship , a no deal brexit could affect our uk operations which represents a significant part of our earnings ( coda octopus products limited ( edinburgh-based ) and coda octopus martech limited ( portland , england-based ) .",
"we have long-standing relationships with prime defense contractors , and we use these credentials to secure more business .",
"our marine technology business is a technology solution provider to the subsea market .",
"our business is affected by a number of factors including those set out below : a. united kingdom 's withdrawal from the european union ( “ brexit ” ) including the possibility that such withdrawal will take place without a deal on their future relationship ( “ no deal brexit issue ” ) following a national referendum and the recent elections in the united kingdom which saw a majority government , a bill has now been passed for the united kingdom to leave the european union on january 31 , 2020. a transitional period of 12 months is expected ."
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ROO
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1
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and denmark . story_separator_special_tag the preparation of financial statements in conformity with us gaap requires our management to make estimates and assumptions that affect the reported values of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported levels of revenue and expenses during the reporting period . actual results could materially differ from those estimates . below is a discussion of accounting policies that we consider critical to an understanding of our financial condition and operating results and that may require complex judgment in their application or require estimates about matters which are inherently uncertain . a discussion of our significant accounting policies , including further discussion of the accounting policies described below , can be found in note 2 , “ summary of accounting policies ” of our consolidated financial statements . revenue recognition all of our revenues are earned under formal contracts with our customers and are derived from both sales and rental of underwater technologies and equipment for imaging , mapping , defense and survey applications and from the engineering services that we provide . our contracts do not include the possibility for additional contingent consideration so that our determination of the contract price does not involve having to consider potential variable additional consideration . our product sales do not include a right of return by the customer . with regard to our products segment , all of our products are sold on a stand-alone basis and those market prices are evidence of the value of the products . to the extent that we also provide services ( e.g . , installation , training , etc . ) , those services are either included as part of the product or are subject to written contracts based on the stand-alone value of those services . revenue from the sale of services is recognized when those services have been provided to the customer and evidence of the provision of those services exist . for further discussion of our revenue recognition accounting policies , refer to note 2 – “ revenue recognition ” in these financial statements 24 stock based compensation we recognize the expense related to the fair value of stock based compensation awards within the consolidated statements of income and comprehensive income . the stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed ( measurement date ) and is recognized over the periods in which the related services are rendered . income taxes the company accounts for income taxes in accordance with accounting standards codification topic 740 , income taxes ( asc 740 ) . under asc 740 , deferred income tax assets and liabilities are recorded for the income tax effects of differences between the bases of assets and liabilities for financial reporting purposes and their bases for income tax reporting . the company 's differences arise principally from the use of various accelerated and modified accelerated cost recovery system lives for income tax purposes versus straight line depreciation used for book purposes and from the utilization of net operating loss carry-forwards . deferred tax assets and liabilities are the amounts by which the company 's future income taxes are expected to be impacted by these differences as they reverse . deferred tax assets are based on differences that are expected to decrease future income taxes as they reverse . correspondingly , deferred tax liabilities are based on differences that are expected to increase future income taxes as they reverse . note 7 to the consolidated financial statements discusses the amounts of deferred tax assets and liabilities , and also presents the impact of significant differences between financial reporting income and taxable income . 25 for income tax purposes , the company uses the percentage of completion method of recognizing revenues on long-term contracts which is consistent with the company 's financial reporting under u.s. gaap . intangible assets intangible assets consist principally of the excess of cost over the fair value of net assets acquired ( i.e . goodwill ) , customer relationships , non-compete agreements and licenses . goodwill was allocated to our reporting units based on the original purchase price allocation . goodwill is not amortized and is evaluated for impairment annually or more often if circumstances indicate impairment may exist . customer relationships , non-compete agreements , patents and licenses are being amortized on a straight-line basis over periods of 2 to 15 years . the company amortizes its limited lived intangible assets using the straight-line method over their estimated period of benefit . we periodically evaluate the recoverability of intangible assets and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists . the first step of the goodwill impairment test used to identify potential impairment compares the fair value of the reporting unit with its ' carrying amount , including goodwill . if the fair value , which is based on future cash flows , exceeds the carrying amount , goodwill is not considered impaired . if the carrying amount exceeds the fair value , the second step must be performed to measure the amount of the impairment loss , if any . the company will early adopt accounting standards codification 2017 – 04 , simplifying the test for goodwill impairment , which permits the company to impair the difference between carrying amount in excess of the fair value of the reporting unit as the reduction in goodwill . asc 2017-04 eliminates the requirement in previous gaap to perform step 2 of the goodwill impairment test . at the end of each year , we evaluate goodwill on a separate reporting unit basis to assess recoverability , and impairments , if any , are recognized in earnings . an impairment loss would be recognized in an amount equal to the excess of the
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[
"25 for income tax purposes , the company uses the percentage of completion method of recognizing revenues on long-term contracts which is consistent with the company 's financial reporting under u.s. gaap .",
"correspondingly , deferred tax liabilities are based on differences that are expected to increase future income taxes as they reverse .",
"goodwill is not amortized and is evaluated for impairment annually or more often if circumstances indicate impairment may exist .",
"revenue recognition all of our revenues are earned under formal contracts with our customers and are derived from both sales and rental of underwater technologies and equipment for imaging , mapping , defense and survey applications and from the engineering services that we provide .",
"customer relationships , non-compete agreements , patents and licenses are being amortized on a straight-line basis over periods of 2 to 15 years ."
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ROO
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carrying amount of the goodwill over the fair value of the reporting unit .
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[
"carrying amount of the goodwill over the fair value of the reporting unit ."
] |
ROO
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0
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purchased credit impaired loans loans acquired at a discount for which it is probable that all contractual payments will not be received are generally accounted for under asc topic 310-30 , loans and debt securities acquired with deteriorated credit quality ( “ asc 310-30 ” ) . in addition , certain purchased loans with evidence of deteriorated credit quality may be accounted for under this topic even if it is not yet probable that all contractual payments will not be received . these loans are recorded at fair value at the time of acquisition . estimated credit losses are included in the determination of fair value , and therefore , an allowance for loan losses is not recorded on the acquisition date . the excess of expected cash flows at acquisition over the initial investment in acquired loans ( “ accretable yield ” ) is recorded as interest income over the life of the loans if the timing and amount of the future cash flows is reasonably estimable . subsequent to acquisition , the company aggregates individual loans with common risk characteristics into pools of loans . increases in estimated cash flows over those expected at the acquisition date are recognized as interest income , prospectively . decreases in expected cash flows after the acquisition date are recognized by recording an allowance for loan losses . 31 loans accounted for under asc 310-30 are generally considered accruing and performing loans as the loans accrete interest income over the estimated life of the loan when cash flows are reasonably estimable . accordingly , purchased credit impaired loans that are contractually past due are still considered to be accruing and performing loans . if the timing and amount of future cash flows is not reasonably estimable , the loans may be classified as nonaccrual loans and the purchase price discount on those loans is not recorded as interest income until the timing and amount of future cash flows can be reasonably estimated . fdic loss-sharing asset in conjunction with certain of the fdic-assisted acquisitions , the bank entered into loss-sharing agreements with the fdic . at the date of the acquisitions , the company elected to account for amounts receivable under the loss-sharing agreements as an indemnification asset in accordance with the business combinations topic of the fasb asc . subsequent to initial recognition , the fdic loss-sharing asset is reviewed quarterly and adjusted for any changes in expected cash flows . these adjustments are measured on the same basis as the related covered assets . any decrease in expected cash flows due to an increase in expected credit losses will increase the fdic loss-sharing asset and any increase in expected future cash flows due to a decrease in expected credit losses will decrease the fdic loss-sharing asset . increases and decreases to the fdic loss-sharing asset are recorded as adjustments to noninterest income . valuation and recoverability of goodwill goodwill represented $ 382.8 million of our $ 8.95 billion in total assets as of december 31 , 2015 . the company has a , single reporting unit . we review goodwill for impairment annually , during the third quarter , and also test for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of our reporting unit below its carrying amount . such events and circumstances may include among others : a significant adverse change in legal factors or in the general business climate ; significant decline in our stock price and market capitalization ; unanticipated competition ; the testing for recoverability of a significant asset group within the reporting unit ; and an adverse action or assessment by a regulator . any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on our consolidated financial statements . under the intangibles – goodwill and other topic of the fasb asc , the testing for impairment may begin with an assessment of qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount . when required , the goodwill impairment test involves a two-step process . in step one , we would test goodwill for impairment by comparing the fair value of the reporting unit with its carrying amount . if the fair value of the reporting unit exceeds the carrying amount of the reporting unit , goodwill is not deemed to be impaired , and no further testing is necessary . if the carrying amount of the reporting unit were to exceed the fair value of the reporting unit , we would perform a second test to measure the amount of impairment loss , if any . to measure the amount of any impairment loss , we would determine the implied fair value of goodwill in the same manner as if the reporting unit were being acquired in a business combination . specifically , we would allocate the fair value of the reporting unit to all of the assets and liabilities of the reporting unit in a hypothetical calculation that would determine the implied fair value of goodwill . if the implied fair value of goodwill is less than the recorded goodwill , we would record an impairment charge for the difference . the accounting estimates related to our goodwill require us to make considerable assumptions about fair values . our assumptions regarding fair values require significant judgment about economic and industry factors and the growth and earnings prospects of the bank . changes in these judgments , either individually or collectively , may have a significant effect on the estimated fair values . based on the results of the annual goodwill impairment test , we determined that no goodwill impairment charges were required as our single reporting unit 's fair value exceeded its carrying amount . story_separator_special_tag the current period adjustment reflected
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[
"subsequent to acquisition , the company aggregates individual loans with common risk characteristics into pools of loans .",
"these loans are recorded at fair value at the time of acquisition .",
"subsequent to initial recognition , the fdic loss-sharing asset is reviewed quarterly and adjusted for any changes in expected cash flows .",
"fdic loss-sharing asset in conjunction with certain of the fdic-assisted acquisitions , the bank entered into loss-sharing agreements with the fdic .",
"story_separator_special_tag the current period adjustment reflected",
"at the date of the acquisitions , the company elected to account for amounts receivable under the loss-sharing agreements as an indemnification asset in accordance with the business combinations topic of the fasb asc ."
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Liquidity
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our updated estimate of probable losses . this adjustment is included in “ miscellaneous ” in the table above . also contributing to the increase in other noninterest income was a $ 1.0 million increase in mortgage banking due to an increase in volume of loans held for sale . comparison of 2014 with 2013 the increase in other noninterest income was due to increases in several components of noninterest income , including small business administration premiums , interest rate swap income and credit card fees . the increase in small business administration premiums was due to an increase in volume of small business administration loans coupled with favorable secondary market pricing experienced during 2014. noninterest expense noninterest expense was $ 266.1 million in 2015 , an increase of $ 26.9 million , or 11 % , over 2014 . noninterest expense increased $ 8.4 million , or 4 % , in 2014 over 2013 . 39 the following table presents the significant components of noninterest expense and the related dollar and percentage change from period to period : replace_table_token_13_th the following table shows the impact of the acquisition-related expenses for the periods indicated to the various components of noninterest expense : replace_table_token_14_th comparison of 2015 with 2014 compensation and employee benefits expense increased 14 % to $ 149.4 million in 2015 from $ 130.9 million in 2014 primarily due to the added personnel costs associated with the intermountain acquisition . the remaining noninterest expense categories increased $ 8.3 million , or 8 % , between 2014 and 2015 . the increase was primarily due to higher occupancy and data processing expenses , which were due to higher acquisition-related expenses for these items in 2015. acquisition-related expenses were $ 10.9 million in 2015 compared to $ 9.4 million in 2014 . comparison of 2014 with 2013 compensation and employee benefits expense increased to $ 130.9 million , or 4 % , in 2014 from $ 125.4 million in 2013 primarily due to the added personnel costs associated with the intermountain and west coast acquisitions . the remaining noninterest expense categories increased $ 3.0 million , or 3 % , between 2013 and 2014 . the increase was primarily due to lower benefit on oreo , which was a benefit of $ 7.4 million in 2013 , but only $ 1.0 million in 2014. acquisition-related expenses were $ 9.4 million in 2014 compared to $ 25.5 million in 2013 . 40 other noninterest expense : the following table presents selected items of “ other noninterest expense ” and the related dollar and percentage change from period to period : replace_table_token_15_th ( 1 ) reclassified to conform to current period 's presentation . the reclassification was limited to adding a separate line item for fraud losses , which was previously included in “ miscellaneous . ” comparison of 2015 with 2014 other noninterest expense increased $ 3.5 million due to additional ongoing expenses related to the acquisition of intermountain , increased software support and maintenance related to software upgrades made to our atms , higher fraud losses and increased fdic clawback expense in 2015. comparison of 2014 with 2013 other noninterest expense decreased $ 2.9 million due to acquisition-related costs of $ 2.2 million recorded to other noninterest expense during 2014 compared to $ 6 million in 2013 and the reclassification of investments in affordable housing projects expense to provision for income taxes related to the company 's adoption of asu 2014-01 accounting for investments in qualified affordable housing projects during 2014. income tax for the years ended december 31 , 2015 , 2014 and 2013 we recorded income tax provisions of $ 42.8 million , $ 36.2 million and $ 27.0 million , respectively . the effective tax rate was 30 % in 2015 , 31 % in 2014 and 31 % in 2013 . our effective tax rate continues to be less than our federal statutory rate of 35 % primarily due to the amount of tax-exempt municipal securities held in the investment portfolio , tax-exempt earnings on bank owned life insurance , and loans with favorable tax attributes . for additional information , see note 23 to the consolidated financial statements in “ item 8. financial statements and supplementary data ” of this report . 41 financial condition our total assets increased 4 % to $ 8.95 billion at december 31 , 2015 from $ 8.58 billion at december 31 , 2014 . our available for sale securities portfolio increased $ 59.4 million , or 3 % , due primarily to purchases of securities resulting from deposits growing in excess of loans . the loan portfolio increased $ 371.0 million , or 7 % , to $ 5.75 billion due to substantial new loan production partially offset by contractual payments and prepayments . the fdic loss-sharing asset decreased $ 8.6 million , or 57 % , to $ 6.6 million at december 31 , 2015 . the decrease in the fdic loss-sharing asset was primarily due to $ 6.2 million in amortization and $ 2.8 million in cash received from the fdic . premises and equipment , net decreased $ 7.9 million or 5 % , primarily due to depreciation . deposit balances increased $ 514.1 million , or 7 % , to $ 7.44 billion , due to organic growth . federal home loan bank advances decreased $ 148.0 million to $ 68.5 million as the short-term advance balance outstanding decreased . securities sold under agreements to repurchase increased $ 5.4 million to $ 99.7 million . total shareholders ' equity increased $ 14.0 million to $ 1.24 billion . investment portfolio we invest in securities to generate revenues for the company , to manage liquidity while minimizing interest rate risk and to provide collateral for certain public deposits and short-term borrowings . the amortized cost amounts represent the company 's original cost for the investments , adjusted for accumulated amortization or accretion
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[
"investment portfolio we invest in securities to generate revenues for the company , to manage liquidity while minimizing interest rate risk and to provide collateral for certain public deposits and short-term borrowings .",
"39 the following table presents the significant components of noninterest expense and the related dollar and percentage change from period to period : replace_table_token_13_th the following table shows the impact of the acquisition-related expenses for the periods indicated to the various components of noninterest expense : replace_table_token_14_th comparison of 2015 with 2014 compensation and employee benefits expense increased 14 % to $ 149.4 million in 2015 from $ 130.9 million in 2014 primarily due to the added personnel costs associated with the intermountain acquisition .",
"for additional information , see note 23 to the consolidated financial statements in “ item 8. financial statements and supplementary data ” of this report ."
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Liquidity
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if abbott 's spending for the quarterly period exceeds our spending , we record a net payable in our financial statements equal to the difference between our spending and 50 % of the total spending , and record additional research and development expenses in this amount . as a result , our revenues and research and development expenses for periods that end prior to or include the termination date of the collaboration agreement may fluctuate depending on which party in the collaboration incurred the majority of the development costs in any particular quarterly period . contracts and grants revenues are subject to the estimation processes to the extent that the reimbursable costs underlying these revenues are incurred but not billed and agreed to on a timely basis , and are subject to change in future periods when actual costs are known . to date we have not made material adjustments to these estimates . we recognize revenues from the achievement of research and development milestones , if deemed substantive , when the milestones are achieved . if not deemed substantive , we recognize revenue on a straight line basis over the remaining expected term of continued involvement in the research and development process . inventories inventories are stated at the lower of cost or market , with cost being determined using a standard cost method , which approximates average cost . average cost consists primarily of material , labor and manufacturing overhead expenses and includes the services and products of third party suppliers . we analyze our inventory levels quarterly and write down inventory that has become obsolete , inventory that has a cost basis in excess of its expected net realizable value and inventory in excess of expected customer demand . we also write off costs related to expired inventory . we capitalize the costs associated with the manufacture of biothrax as inventory from the initiation of the manufacturing process through the completion of manufacturing , labeling and packaging . income taxes under the asset and liability method of income tax accounting , deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax basis of assets and liabilities and are measured using the tax rates and laws that are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled . a net deferred tax asset or liability is reported on the balance sheet . our deferred tax assets include the unamortized portion of in-process research and development expenses , the anticipated future benefit of the net operating losses and other timing differences between the financial reporting and tax basis of assets and liabilities . we have historically incurred net operating losses for income tax purposes in some states , primarily maryland , and in some foreign jurisdictions , primarily the united kingdom . in connection with our october 2010 acquisition of trubion pharmaceuticals , inc. , or trubion , we acquired significant federal net operating losses and research and development tax credits along with other tax attributes . the amount of the deferred tax assets on our balance sheet reflects our expectations regarding our ability to use our net operating losses and research and development tax credit carryforwards , including those acquired in our acquisition of trubion , to offset future taxable income . the applicable tax rules in particular jurisdictions limit our ability to use net operating losses and research and development tax credit carryforwards as a result of ownership changes . in particular , we believe that these rules will significantly limit our ability to use net operating losses generated by microscience limited , or microscience , and antex biologics , inc. , or antex , prior to our acquisition of microscience in june 2005 and our acquisition of substantially all of the assets of antex in may 2003. we do not expect that these limitation rules will significantly limit the net operating losses and research and development tax credit carryforwards acquired in the trubion acquisition . we review our deferred tax assets on a quarterly basis to assess our ability to realize the benefit from these deferred tax assets . if we determine that it is more likely than not that the amount of our expected future taxable income will not be sufficient to allow us to fully utilize our deferred tax assets , we increase our valuation allowance against deferred tax assets by recording a provision for income taxes on our income statement , which reduces net income or increases net loss for that period and reduces our deferred tax assets on our balance sheet . if we determine that the amount of our expected future taxable income will allow us to utilize net operating losses in excess of our net deferred tax assets , we reduce our valuation allowance by recording a benefit from income taxes on our income statement , which increases net income or reduces net loss for that period and increases our deferred tax assets on our balance sheet . uncertainty in income taxes is accounted for using a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return . we recognize in our financial statements the impact of a tax position if that position is more likely than not of being sustained on audit , based on the technical merits of the position . contingent value rights in accordance with the terms of our acquisition of trubion in october 2010 , we have committed to make potential future contingent value right , or cvr , payments to former shareholders and stock option holders of trubion . the obligation to make cvr payments expires on october 28 , 2013. cvr payments generally become due and payable only upon achievement of certain developmental , regulatory or commercial milestones . story_separator_special_tag we believe that significant investment in product
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[
"in connection with our october 2010 acquisition of trubion pharmaceuticals , inc. , or trubion , we acquired significant federal net operating losses and research and development tax credits along with other tax attributes ."
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Liquidity
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1
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development is a competitive necessity and plan to continue these investments in order to be in a position to realize the potential of our product candidates . we expect that spending for our product pipeline will increase as our product development activities continue based on ongoing advancement of our product candidates , and as we prepare for regulatory submissions and other regulatory activities . we expect that the magnitude of any increase in our research and development spending will be dependent upon such factors as the results from our ongoing preclinical studies and clinical trials , participation of third-party collaborators , number of product candidates under development , the size , structure and duration of any follow-on clinical programs that we may initiate , costs associated with manufacturing our product candidates on a large-scale basis for later-stage clinical trials , and our ability to use or rely on data generated by government agencies , such as studies involving biothrax conducted by the cdc . selling , general and administrative expenses selling , general and administrative expenses consist primarily of salaries and other related costs for personnel serving the executive , sales and marketing , business development , finance , accounting , information technology , legal and human resource functions . other costs include facility costs not otherwise included in cost of product sales or research and development expense and professional fees for legal and accounting services . we currently market and sell biothrax directly to the u.s. government with a small , targeted marketing and sales group . as we seek to broaden the market for biothrax and if we receive marketing approval for additional products , we expect that we will increase our spending for marketing and sales activities . total other income ( expense ) total other income ( expense ) consists primarily of interest income and interest expense , and in 2010 , a charge to reduce previously accrued interest income related to a settlement agreement with protein sciences corporation , or psc . we earn interest income on our cash , cash equivalents and in 2010 , on a note receivable , and we incur interest expense on our indebtedness . we capitalize interest expense based on the cost of major ongoing projects which have not yet been placed in service , such as new manufacturing facilities . some of our existing debt arrangements provide for increasing amortization of principal payments in future periods . see “ liquidity and capital resources — debt financing ” for additional information . results of operations year ended december 31 , 2011 compared to year ended december 31 , 2010 revenues product sales revenues decreased by $ 49.0 million , or 19 % , to $ 202.4 million for 2011 from $ 251.4 million for 2010. this decrease in product sales revenues was primarily due to a 21 % decrease in the number of doses of biothrax delivered . this decrease was due to the redeployment of our potency testing capacity from biothrax release testing to qualification of replacement reference standards and other development testing during the first quarter of 2011 , coupled with lower production yields in the period in which the doses were produced . product sales revenues in 2011 consisted of biothrax sales to hhs and the cdc of $ 200.9 million and aggregate international and other sales of $ 1.5 million . product sales revenue in 2010 consisted of biothrax sales to hhs of $ 248.5 million and aggregate international and other sales of $ 2.9 million . contracts and grants revenues increased by $ 36.2 million , or 104 % , to $ 71.0 million in 2011 from $ 34.8 million in 2010. the increase in contracts and grants revenues was primarily due to revenues from our contract with barda for large-scale manufacturing for biothrax and our collaborations with abbott and pfizer , along with increased activity and associated revenue from our development contracts with niaid and barda for nuthrax and previthrax . contracts and grants revenues in 2011 consisted of $ 48.6 million in development contract and grant revenue from niaid and barda , $ 22.1 million from abbott and pfizer and $ 250,000 from the wellcome trust . contracts and grants revenue for 2010 primarily consisted of $ 30.6 million from niaid and barda , $ 2.2 million from abbott and pfizer , $ 1.2 million related to the u.s. government 's therapeutic-discovery project program and $ 750,000 from a milestone payment related to the 2008 sale of technology rights and related materials to our pertussis technology . cost of product sales cost of product sales decreased by $ 4.9 million , or 10 % , to $ 42.2 million for 2011 from $ 47.1 million for 2010. this decrease was attributable to the 21 % decrease in the number of biothrax doses sold , partially offset by an increase in the cost per dose sold associated with decreased production yields in the period in which the doses were produced . research and development expenses research and development expenses increased by $ 35.5 million , or 40 % , to $ 124.8 million for 2011 from $ 89.3 million for 2010. this increase primarily reflects higher contract service and personnel-related costs , and includes increased expenses of $ 30.0 million for product candidates and technology platform development activities that are categorized in the biosciences segment , increased expenses of $ 4.0 million for product candidates that are categorized in the biodefense segment , and increased expenses of $ 1.6 million in other research and development , which are in support of central research and development activities . during 2011 and 2010 , we incurred research and development expenses net of development contract and grant reimbursements along with the net loss attributable to noncontrolling interests of $ 47.0 million and $ 50.0 million , respectively . the increase in spending on biodefense product candidates , detailed in
|
[
"contracts and grants revenue for 2010 primarily consisted of $ 30.6 million from niaid and barda , $ 2.2 million from abbott and pfizer , $ 1.2 million related to the u.s. government 's therapeutic-discovery project program and $ 750,000 from a milestone payment related to the 2008 sale of technology rights and related materials to our pertussis technology ."
] |
Liquidity
|
0
|
52 part iv item 15. exhibits , financial statement schedules ( a ) the following documents are filed as part of this report : ( 1 ) financial statements ( 2 ) financial statements schedule all financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required , or the required information is presented in the financial statements and notes thereto in is item 15 of part iv below . ( 3 ) exhibits we hereby file as part of this report the exhibits listed in the attached exhibit index . exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the sec , 100 f street , n.e . , room 1580 , washington , d.c. 20549. copies of such material can also be obtained from the public reference section of the sec , 100 f street , n.e . , washington , d.c. 20549 , at prescribed rates or on the sec website at www.sec.gov . item 16. form 10-k summary not applicable . 53 exhibit index replace_table_token_4_th * filed herewith . * * furnished herewith ( 1 ) incorporated by reference to exhibits to the company 's current report on form 8-k filed on august 22 , 2017 ( 2 ) incorporated by reference to exhibits to the company 's registration statement on form s-1filed on july 12 , 2017 ( 3 ) incorporated by reference to exhibits to amendment no . 2 to the company 's registration statement on form s-1filed on august 14 , 2017 ( 4 ) incorporated by reference to exhibits to amendment no . 1 to the company 's registration statement on form s-1filed on july 31 , 2017 ( 5 ) incorporated by reference to exhibits to the company 's current report on form 8-k filed on may 9 , 2018 ( 6 ) incorporated by reference to exhibits to the company 's current report on form 8-k filed on june 28 , 2018 54 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . july 24 , 2018 i-am capital acquisition company by : f. jacob cherian name : f. jacob cherian title : chief executive officer ( principal executive officer ) pursuant to the requirements of the securities exchange act of 1934 , this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated . name position date f. jacob cherian chief executive officer and director july 24 , 2018 f. jacob cherian ( principal executive officer ) suhel kanuga chief financial officer and director july 24 , 2018 suhel kanuga ( principal financial and accounting officer ) donald r. caldwell chairman july 24 , 2018 donald r. caldwell roman franklin director july 24 , 2018 roman franklin max hooper director july 24 , 2018 max hooper frank leavy director july 24 , 2018 frank leavy edward lenoard jaroski director july 24 , 2018 edward lenoard jaroski william h. herrmann director july 24 , 2018 william h. herrmann 55 i-am capital acquisition company index to story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report . certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties . overview we are a blank check company incorporated on april 17 , 2017 in delaware and formed for the purpose of effecting a merger , share exchange , asset acquisition , share purchase , reorganization or similar business combination with one or more businesses . we intend to effectuate our business combination using cash from the proceeds of our ipo and the private placement , our securities , debt or a combination of cash , securities and debt . the issuance of additional shares of common stock or preferred stock : ● may significantly dilute the equity interest of our investors ; ● may subordinate the rights of holders of common stock if we issue preferred shares with rights senior to those afforded to our common stock ; ● could cause a change in control if a substantial number of our shares of common stock are issued , which may affect , among other things , our ability to use our net operating loss carry forwards , if any , and could result in the resignation or removal of our present officers and directors ; ● may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us ; and ● may adversely affect prevailing market prices for our securities . similarly , if we issue debt securities , it could result in : ● default and foreclosure on our assets if our operating revenues after our business combination are insufficient to pay our debt obligations ; ● acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant ; ● our immediate payment of all principal and accrued interest , if any , if the debt security is payable on demand ; ● our inability to obtain additional financing if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding ; ● our inability to pay dividends on our common stock ; ● using a substantial portion of our cash flow to pay principal and interest on our debt , which will
|
[
"1 to the company 's registration statement on form s-1filed on july 31 , 2017 ( 5 ) incorporated by reference to exhibits to the company 's current report on form 8-k filed on may 9 , 2018 ( 6 ) incorporated by reference to exhibits to the company 's current report on form 8-k filed on june 28 , 2018 54 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized .",
"we intend to effectuate our business combination using cash from the proceeds of our ipo and the private placement , our securities , debt or a combination of cash , securities and debt .",
"overview we are a blank check company incorporated on april 17 , 2017 in delaware and formed for the purpose of effecting a merger , share exchange , asset acquisition , share purchase , reorganization or similar business combination with one or more businesses .",
"similarly , if we issue debt securities , it could result in : ● default and foreclosure on our assets if our operating revenues after our business combination are insufficient to pay our debt obligations ; ● acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant ; ● our immediate payment of all principal and accrued interest , if any , if the debt security is payable on demand ; ● our inability to obtain additional financing if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding ; ● our inability to pay dividends on our common stock ; ● using a substantial portion of our cash flow to pay principal and interest on our debt , which will",
"the issuance of additional shares of common stock or preferred stock : ● may significantly dilute the equity interest of our investors ; ● may subordinate the rights of holders of common stock if we issue preferred shares with rights senior to those afforded to our common stock ; ● could cause a change in control if a substantial number of our shares of common stock are issued , which may affect , among other things , our ability to use our net operating loss carry forwards , if any , and could result in the resignation or removal of our present officers and directors ; ● may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us ; and ● may adversely affect prevailing market prices for our securities .",
"certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties ."
] |
ROO
|
1
|
story_separator_special_tag 52 part iv item 15. exhibits , financial statement schedules ( a ) the following documents are filed as part of this report : ( 1 ) financial statements ( 2 ) financial statements schedule all financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required , or the required information is presented in the financial statements and notes thereto in is item 15 of part iv below . ( 3 ) exhibits we hereby file as part of this report the exhibits listed in the attached exhibit index . exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the sec , 100 f street , n.e . , room 1580 , washington , d.c. 20549. copies of such material can also be obtained from the public reference section of the sec , 100 f street , n.e . , washington , d.c. 20549 , at prescribed rates or on the sec website at www.sec.gov . item 16. form 10-k summary not applicable . 53 exhibit index replace_table_token_4_th * filed herewith . * * furnished herewith ( 1 ) incorporated by reference to exhibits to the company 's current report on form 8-k filed on august 22 , 2017 ( 2 ) incorporated by reference to exhibits to the company 's registration statement on form s-1filed on july 12 , 2017 ( 3 ) incorporated by reference to exhibits to amendment no . 2 to the company 's registration statement on form s-1filed on august 14 , 2017 ( 4 ) incorporated by reference to exhibits to amendment no . 1 to the company 's registration statement on form s-1filed on july 31 , 2017 ( 5 ) incorporated by reference to exhibits to the company 's current report on form 8-k filed on may 9 , 2018 ( 6 ) incorporated by reference to exhibits to the company 's current report on form 8-k filed on june 28 , 2018 54 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized . july 24 , 2018 i-am capital acquisition company by : f. jacob cherian name : f. jacob cherian title : chief executive officer ( principal executive officer ) pursuant to the requirements of the securities exchange act of 1934 , this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated . name position date f. jacob cherian chief executive officer and director july 24 , 2018 f. jacob cherian ( principal executive officer ) suhel kanuga chief financial officer and director july 24 , 2018 suhel kanuga ( principal financial and accounting officer ) donald r. caldwell chairman july 24 , 2018 donald r. caldwell roman franklin director july 24 , 2018 roman franklin max hooper director july 24 , 2018 max hooper frank leavy director july 24 , 2018 frank leavy edward lenoard jaroski director july 24 , 2018 edward lenoard jaroski william h. herrmann director july 24 , 2018 william h. herrmann 55 i-am capital acquisition company index to story_separator_special_tag the following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report . certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties . overview we are a blank check company incorporated on april 17 , 2017 in delaware and formed for the purpose of effecting a merger , share exchange , asset acquisition , share purchase , reorganization or similar business combination with one or more businesses . we intend to effectuate our business combination using cash from the proceeds of our ipo and the private placement , our securities , debt or a combination of cash , securities and debt . the issuance of additional shares of common stock or preferred stock : ● may significantly dilute the equity interest of our investors ; ● may subordinate the rights of holders of common stock if we issue preferred shares with rights senior to those afforded to our common stock ; ● could cause a change in control if a substantial number of our shares of common stock are issued , which may affect , among other things , our ability to use our net operating loss carry forwards , if any , and could result in the resignation or removal of our present officers and directors ; ● may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us ; and ● may adversely affect prevailing market prices for our securities . similarly , if we issue debt securities , it could result in : ● default and foreclosure on our assets if our operating revenues after our business combination are insufficient to pay our debt obligations ; ● acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant ; ● our immediate payment of all principal and accrued interest , if any , if the debt security is payable on demand ; ● our inability to obtain additional financing if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding ; ● our inability to pay dividends on our common stock ; ● using a substantial portion of our cash flow to pay principal and interest on our debt , which
|
[
"1 to the company 's registration statement on form s-1filed on july 31 , 2017 ( 5 ) incorporated by reference to exhibits to the company 's current report on form 8-k filed on may 9 , 2018 ( 6 ) incorporated by reference to exhibits to the company 's current report on form 8-k filed on june 28 , 2018 54 signatures pursuant to the requirements of section 13 or 15 ( d ) of the securities act of 1934 , the registrant has duly caused this report to be signed on its behalf by the undersigned , thereunto duly authorized .",
"we intend to effectuate our business combination using cash from the proceeds of our ipo and the private placement , our securities , debt or a combination of cash , securities and debt .",
"overview we are a blank check company incorporated on april 17 , 2017 in delaware and formed for the purpose of effecting a merger , share exchange , asset acquisition , share purchase , reorganization or similar business combination with one or more businesses .",
"similarly , if we issue debt securities , it could result in : ● default and foreclosure on our assets if our operating revenues after our business combination are insufficient to pay our debt obligations ; ● acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant ; ● our immediate payment of all principal and accrued interest , if any , if the debt security is payable on demand ; ● our inability to obtain additional financing if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding ; ● our inability to pay dividends on our common stock ; ● using a substantial portion of our cash flow to pay principal and interest on our debt , which",
"the issuance of additional shares of common stock or preferred stock : ● may significantly dilute the equity interest of our investors ; ● may subordinate the rights of holders of common stock if we issue preferred shares with rights senior to those afforded to our common stock ; ● could cause a change in control if a substantial number of our shares of common stock are issued , which may affect , among other things , our ability to use our net operating loss carry forwards , if any , and could result in the resignation or removal of our present officers and directors ; ● may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us ; and ● may adversely affect prevailing market prices for our securities .",
"certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties ."
] |
ROO
|
2
|
will
|
[
"will"
] |
ROO
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