PRSS 2017 Annual Report

37 Quarterly trends Our business is subject to seasonal fluctuations. In particular, we generate a significant portion of our revenues during the fourth quarter primarily due to increased retail activity during the holiday seasons. During the fourth quarter, we typically see our largest increases in orders and customers. As a result of this seasonality, our revenue in the first three quarters of each year are generally substantially lower than our revenue in the fourth quarter of each year, and we expect this to continue for the foreseeable future. Consolidated Balance Sheet The following table is a summary of our overall financial position: December 31, '17 vs. '16 Change 2017 2016 $ (in thousands) Total assets $ 51,172 $ 62,920 $ (11,748) Total liabilities 15,241 18,452 (3,211) Total stockholders' equity 35,931 44,468 (8,537) • Total assets decreased $11.7 million in 2017 driven by a reduction in current assets due to the utilization of cash and short-term investments for the 2017 payment of production, advertising, royalty and commission liabilities related to retail holiday activity during the fourth quarter of 2016. In addition, cash balances were adversely impacted during 2017 from the declines in business levels. • Total liabilities decreased $3.2 million in 2017 primarily from the decrease in sales volume during the fourth quarter of 2017 as compared to the fourth quarter of 2016 which resulted in lower production, royalty and commission liabilities. • Total stockholders' equity decreased $8.5 million in 2017 primarily driven by our net loss of $10.3 million partially offset by $1.8 million of stock-based compensation expense. Liquidity and Capital Resources As of December 31, 2017, cash, cash equivalents, short-term investments and restricted cash totaled $32.4 million. The following table summarizes our cash flows for the periods indicated: Year Ended December 31, '17 vs. '16 Change 2017 2016 $ (in thousands) Cash Flows from: Operating activities $ (6,426) $ (1,846) $ (4,580) Investing activities 13,275 (12,673) 25,948 Financing activities (392) (1,581) 1,189 Cash flows from operating activities Our primary source of cash from operating activities is cash collections from our customers and partners. The substantial majority of our net revenue is generated from credit card transactions and credit card accounts receivable and are typically settled between one and five business days. Our primary uses of cash for operating activities are for settlement of accounts payable to vendors and personnel-related expenditures. Our quarterly cash flows from operations are impacted by the seasonality of our business. We generate a significant portion of our cash flow from operations in the fourth quarter, and cash flows in the first three to nine months have generally been negative due to the timing of settlements of accounts payable and accrued liabilities related to our fourth quarter holiday business, and to a lesser extent, operating losses. We expect that cash provided by (used in) operating activities may fluctuate in future periods due to a number of factors, including volatility in our operating results, seasonality,