Average pet acquisition cost. Average pet acquisition cost (PAC) is calculated as net acquisition cost divided by the total number of new subscription pets enrolled in that period. Net acquisition cost, a non-GAAP financial measure, is calculated in a reporting period as sales and marketing expense, excluding stock-based compensation expense and other business segment sales and marketing expense, offset by sign-up fee revenue. We exclude stock-based compensation expense because the amount varies from period to period based on number of awards issued and market-based valuation inputs. We offset sign-up fee revenue because it is a one-time charge to new members collected at the time of enrollment used to partially offset initial setup costs, which are included in sales and marketing expenses. We exclude other business segment sales and marketing expense because that does not relate to subscription enrollments. We monitor average pet acquisition cost to evaluate the efficiency of our sales and marketing programs in acquiring new members and measure effectiveness based on our desired return on investment.
We operate in two segments: subscription business and other business. Our subscription business segment includes revenue and expenses related to monthly subscriptions for our pet medical insurance, which we market directly to consumers. When we do not directly market to consumers, we classify the related revenue and expenses in our other business segment.
Technology and development expenses primarily consist of personnel costs and related expenses for our technology staff, which includes information technology development and infrastructure support, third-party services, as well as depreciation of hardware and capitalized software.
Year ended December 31, 2019 compared to year ended December 31, 2018. General and administrative expenses increased by $2.8 million, or 15%, to $21.0 million for the year ended December 31, 2019. The change was primarily due to a $3.1 million increase in compensation expenses, a $0.8 million increase in professional service fees, and a $1.5 million increase in depreciation expense mainly due to owning our home office building since August 2018, partially offset by a total of $2.6 million in savings from additional lease income and less rental expense. General and administrative expenses decreased from 6% to 5% as a percentage of revenue for the year ended December 31, 2019, as we experienced scale in our support functions.
We derive operating cash flows from the sale of our subscription plans, which is used to pay veterinary invoices and other cost of revenue. Additionally, cash is used to support the growth of our business by reinvesting to acquire new pet enrollments and to fund projects that improve our members' experience. Cash provided by operating activities was $16.2 million for the year ended December 31, 2019, compared to cash provided by operating activities of $12.7 million for the year ended December 31, 2018. The $3.5 million increase was primarily driven by increased pet count and scale in our operating departments, as well as timing differences between collections from members and payments of veterinary invoices and payments to vendors. Changes in accounts receivable were primarily related to annual policies with monthly payment terms within our other business segment.
The Company incurs certain costs, including premium taxes, fees and enrollment-based bonuses, and referral fees that directly relate to the successful acquisition of new or renewal customer contracts. These costs are deferred and are included in prepaid expenses and other assets on the consolidated balance sheet and amortized over the related policy term to the applicable financial statement line item, either sales and marketing expense or other cost of revenue. Deferred acquisition costs as of December 31, 2019 and December 31, 2018 were $1.8 million and $1.3 million, respectively. Amortized deferred acquisition costs classified within sales and marketing amounted to $2.5 million, $2.1 million, and $1.7 million and amortized deferred acquisition costs classified within other cost of revenue amounted to $19.2 million, $15.9 million, and $13.2 million, for the years ended December 31, 2019, 2018, and 2017, respectively.
As of December 31, 2019, expected amortization expense relating to purchased intangible assets for each of the next five years and thereafter is as follows (in thousands):
Additionally, the Company has extended a $2.5 million revolving line of credit to the variable interest entity to fund its inventory purchases. The Company's investment and amounts loaned under the line of credit are recorded in other long-term assets on the consolidated balance sheet. Outstanding loan balance under the line of credit was $2.5 million and $0.6 million as of December 31, 2019 and 2018, respectively. The Company has also entered into a series of agreements to provide ancillary services to the variable interest entity at cost. The Company provided $1.4 million and $0.6 million of these services for the years ended December 31, 2019 and 2018, respectively, which were recorded against its operating expenses.
Stock-based compensation expense includes stock options, restricted stock awards, and restricted stock units granted to employees and non-employees and has been reported in the Company’s consolidated statements of operations depending on the function performed by the employee or non-employee. Stock-based compensation expense recognized in each category of the consolidated statement of operations for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands):
Substantially all of the Company’s long-lived assets were located in the United States as of December 31, 2019 and 2018.
New York law restricts the ability of the Company's insurance subsidiary in New York to pay dividends to its holding company parent. These restrictions are based in part on the prior year’s statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior approval, and dividends in larger amounts, or extraordinary dividends, are subject to approval by the New York State Department of Financial Services, the subsidiary's primary regulator. An extraordinary dividend or distribution is defined as a dividend or distribution that, in the aggregate in any 12-month period, exceeds the lesser of (i) 10% of surplus as of the preceding December 31 or (ii) the insurer’s adjusted net investment income for such 12-month period, not including realized capital gains. Under regulatory requirements at December 31, 2019, the amount of dividends that may be paid by the Company’s insurance subsidiary in New York to the Company without prior approval by regulatory authorities was $1.5 million. This insurance subsidiary did not pay dividends to the Company during the years ended December 31, 2019, 2018, and 2017.
As of December 31, 2019, the Company had $6.7 million on deposit with various states in which it writes policies.