PRSS 2017 Annual Report

38 accounts receivable collections performance, inventory and supply chain management, and the timing and amount of personnel- related payments. Cash used in operating activities increased $4.6 million primarily due to an increase in payments in 2017 related to the satisfaction of accounts payable and accrued liabilities related to retail holiday activity from the fourth quarter of 2016 as compared to the prior year partially offset by a decrease in prepayments for business insurance renewals that occurred in June of 2017 and timing of the collections of cash related to credit card settlements during 2017 as compared to the prior year. Cash flows from investing activities Cash provided by investing activities increased $25.9 million driven by an increase in the net sale of short-term investments. During 2017, as certificates of deposits matured, we did not reinvest the proceeds due to declines in business levels and due to maintaining cash balances to satisfy fourth quarter peak holiday liabilities during the first quarter of 2018. Cash flows from financing activities Cash used in financing activities decreased $1.2 million as we repurchased less stock under our stock repurchase program compared to the prior year. During the first quarter of 2017, we terminated the stock repurchase program. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including, among other things, market acceptance of our products, our growth, and our operating results, as well as any potential investments or acquisitions. We anticipate that our current cash and cash equivalent balances and potential cash generated from future operations will be sufficient to meet our strategic and working capital requirements for at least the next twelve months. Credit Facility and Indebtedness Our loan and security agreement that provided for a revolving credit facility of $6.5 million to fund acquisitions, share repurchases and other general corporate needs expired on June 30, 2017 and was not renewed. On September 15, 2017, the Letter of Credit provided to the landlord under our production facility and fulfillment center lease was replaced by an escrow agreement. Pursuant to the terms of the escrow agreement, we deposited $1.5 million in a non-interest bearing account, representing the maximum amount owed to the landlord, only to be drawn on by the landlord should we exercise our right to terminate the production facility and fulfillment center lease prior to the expiration of the term. If we require additional capital resources to grow our business or to acquire complementary technologies and businesses at any time in the future, we may seek to sell additional equity or raise funds through debt financing or other sources. The sale of additional equity could result in additional dilution to our stockholders. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operating flexibility and would also require us to incur interest expense. We can provide no assurance that additional financing will be available at all or, if available, that we would be able to obtain financing on terms favorable to us. InApril 2016, our Board of Directors approved the extension of our existing stock repurchase program that authorized the purchase of up to 20% of the outstanding shares of our common stock or an aggregate of 3.5 million shares of our common stock. As of December 31, 2017, we had used $5.3 million of excess cash to repurchase 1,266,028 shares of our common stock. In February 2017, our Board of Directors terminated the repurchase program. Non-GAAP financial measures Regulation G, conditions for use of non-generally accepted accounting principles, or Non-GAAP, financial measures and other SEC regulations define and prescribe the conditions for use of certain Non-GAAP financial information. In addition, to disclosing financial results that are determined in accordance with GAAP, we also disclose certain non-GAAP financial information, including Adjusted EBITDA and Cash Contribution Margin, as further explained below. Analysis of results on a non-GAAP basis should be used as a compliment to, and in conjunction with, data presented in accordance with GAAP. Additionally, because our non- GAAP measures are not calculated in accordance with GAAP, the measures may not necessarily be comparable to similarly titled measures employed by other companies.