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increase in the non-cash adjustment for the accretion of the debt discount and the debt issuance cost provided by convertible notes payable.
cash provided by investing activities was $7.4 million for the year ended December 31, 2012 compared to net cash provided of $2.7 million for the year ended
December 31, 2013. The decrease of $4.7 million in cash provided by investing activities was driven by a decrease in net proceeds from maturities of available for sale short term
investments of $9.5 million offset by a decrease in purchases of available for sale short term investments of $4.8 million compared to the prior year.
cash provided by financing activities during the year ended December 31, 2012 was immaterial. Net cash provided by financing activities during the year ended
December 31, 2013 of approximately $4.3 million was attributable to our September 2013 convertible promissory note financing.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under the
applicable regulations of the Securities and Exchange Commission, or SEC.
Net Operating Loss Carryforwards
As of December 31, 2013, we had federal and state net operating loss carryforwards of approximately $69.9 million and
$45.4 million, respectively, to offset future federal and state taxable income, which will expire at various times between 2014 and 2033. We also had federal and state research and development
tax credit carryforwards of approximately $2.0 million and $1.1 million, respectively, to offset future income taxes, which will expire at various times between 2022 and 2033. Lastly, as
of December 31, 2013, we had federal Orphan Drug tax credit carryforwards of approximately $7.2 million, to offset future income taxes, which will expire at various times between 2029
and 2033. Net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities and may become subject to an annual
limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of
the United States Internal Revenue Code of 1986, as amended, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable
income or tax liabilities. The amount of the annual limitation is determined based on the value of our company immediately prior to the ownership change. Subsequent ownership changes may further
affect the limitation in future years. On December 31, 2013, we recorded a 100% valuation allowance against our net operating loss and tax credit carryforwards, as we believe it is more likely
than not that the tax benefits will not be fully realized. In the future, if we determine that a portion or all of the tax benefits associated with our tax carryforwards will be realized, net income
would increase in the period of such determination.