Axogen, Inc.

Notes to Condensed Consolidated Financial Statements

1. Nature of Business

Axogen, Inc. (together with its wholly-owned subsidiaries, the “Company”) was incorporated in Minnesota. The Company’s business is focused on the science, development and commercialization of the technologies used for peripheral nerve regeneration and repair. The Company’s products include Avance® Nerve Graft, Axoguard Nerve Connector®, Axoguard Nerve Protector®, Axoguard HA+ Nerve Protector™, Axoguard Nerve Cap® and Avive+ Soft Tissue Matrix™. The Company is headquartered in Florida. The Company has processing, warehousing and distribution facilities in Ohio and Texas.

The Company manages its operations as a single operating segment. Substantially all of the Company’s assets are maintained in the United States (“U.S.”). The Company derives substantially all of its revenues from sales to customers in the U.S.

2. Summary of Significant Accounting Policies

Please see Note 2 -Summary of Significant Accounting Policies to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Annual Report on Form 10-K”), filed with the SEC on February 26, 2025, for a description of all significant accounting policies.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company as of September 30, 2025 and December 31, 2024 and for the three and nine months ended September 30, 2025 and 2024. The Company’s condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and therefore do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2024, which are included in the 2024 Annual Report on Form 10-K.

The interim condensed consolidated financial statements are unaudited, and in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of results for the periods presented. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the full year due primarily to the impact of the continued uncertainty of general economic conditions that may impact the Company’s markets for the remainder of fiscal year 2025. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents and Concentration

Cash and cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less from the date of acquisition. Certain of the Company’s cash and cash equivalents balances exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits or are invested in money market accounts with investment banks that are not FDIC-insured. The Company places its cash and cash equivalents in what it believes to be credit-worthy financial institutions. As of September 30, 2025, $23,402 of the cash and cash equivalents balance were not FDIC-insured or were in excess of FDIC limits.

Restricted Cash

Amounts included in restricted cash represent those required to be set aside to meet contractual terms of a lease agreement held by the Company. See Note 8 -Long-Term Debt, Net of Debt Discount and Financing Fees -Other Credit Facilities.

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported on the Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown on the Condensed Consolidated Statements of Cash Flows as of the periods presented:

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 —Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)— Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01 —Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the statement of operations as well as disclosures about specific types of expenses included in the expense captions presented in the statement of operations. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company expects to enhance annual expense disclosures based on the new requirements.

In December 2023, the FASB issued ASU 2023-09 —Income Taxes (Topic 740) — Improvements to Income Tax Disclosures (“ASU 2023-09”). The new guidance provides for disclosure on an annual basis of the following: (i) specific categories in the rate reconciliation and (ii) additional information for reconciling items that meet a quantitative threshold of greater than 5% of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and early adoption is permitted. The Company expects to enhance annual income tax reporting disclosures based on the new requirements.

All other ASUs issued and not yet effective as of September 30, 2025 and through the date of this report, were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s current or future financial position or results of operations.

3. Inventory

Inventory consists of the following as of the periods presented:

As of September 30, 2025 and December 31, 2024, the Company reserved $3,444 and $1,630, respectively, for potential losses relating to inventory.

4. Property and Equipment, Net

Property and equipment, net consist of the following as of the periods presented:

Depreciation expense is as follows for the periods presented:

5. Intangible Assets, Net

Intangible assets, net consist of the following as of the periods presented:

Amortization expense is as follows for the periods presented:

As of September 30, 2025, future amortization of patents is as follows:

6. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of the periods presented:

(1)Money market funds are included in Cash and cash equivalents on the Condensed Consolidated Balance Sheet.

(1)Money market funds are included in Cash and cash equivalents on the Condensed Consolidated Balance Sheet.

The changes in Level 3 liabilities measured at fair value on a recurring basis for the periods indicated were as follows:

There were no changes in the levels or methodology of the measurement of financial assets or liabilities during the three and nine months ended September 30, 2025 and 2024.

The debt derivative liabilities are measured using a “with and without” valuation model to compare the fair value of each tranche of the credit facility the Company has with Oberland Capital and its affiliates (the “Credit Facility”) including the identified embedded derivative features and the fair value of a plain vanilla note with the same terms. The fair value of the Credit Facility including the identified embedded derivative features was determined using a probability-weighted expected return model based onthree potential settlement scenarios for the Credit Facility included in the table below. The estimated settlement value of each scenario, which would include any required make-whole payment, is then discounted to present value using a discount rate that is derived based on the initial terms of the Credit Facility at issuance and corroborated utilizing a synthetic credit rating analysis.

The significant inputs that are included in the valuation of the debt derivative liability - first tranche as of the periods presented include:

(1)Represents a significant unobservable input.

(2)See maturity date in table.

The significant inputs that are included in the valuation of the debt derivative liability - second tranche as of the periods presented include:

(1)Represents a significant unobservable input.

(2)See maturity date in table.

The fair values of cash, restricted cash, accounts receivable, accounts payable and accrued expenses approximate the carrying values because of the short-term nature of these instruments. The carrying value and fair value of the Credit Facility were $50,000 and $51,137 at September 30, 2025 and $47,496 and $51,307 at December 31, 2024, respectively. See Note 8 -Long-Term Debt, Net of Debt Discount and Financing Fees.

7. Leases

The Company leases administrative, manufacturing, research, and distribution facilities through operating leases. Several leases include fixed payments, including rent and non-lease components such as common area or other maintenance costs.

The components of total operating lease expense are as follows for the periods indicated:

Supplemental balance sheet information related to the operating and financing leases is as follows as of the periods indicated:

(1)Financing leases are included in Property and equipment, net on the Condensed Consolidated Balance Sheets.

Future minimum lease payments under operating and financing leases as of September 30, 2025 are as follows:

Lease Modifications

The Company accounts for lease revisions as a lease modification in accordance with FASB Accounting Standards Codification (“ASC”) 842, Leases(“ASC 842”), whenthe modification effectively terminates the existing lease and creates a new lease. No lease modifications were recorded during the three andnine months ended September 30, 2025 and 2024.

Sublease Agreements

The Company subleases portions of its headquarters building in Tampa, Florida undertwo sublease agreements with different sublessees. The first sublease term began August 1, 2024 and expires on October 31, 2031. The Company or the sublessee can terminate the sublease agreement after sixty-three months with twelve months written notice. There is no option to extend the sublease agreement. The second sublease term began on February 1, 2025 and expires on January 31, 2030. The sublessee can terminate the sublease agreement after thirty-six months withsix months written notice. The Company accounts for these subleases in accordance with ASC 842.

8. Long-Term Debt, Net of Debt Discount and Financing Fees

Long-term debt, net of debt discount and financing fees consists of the following as of the periods indicated:

Credit Facility

On June 29, 2023, the Company amended its Credit Facility with Oberland Capital and its affiliates, TPC Investments II LP and Argo LLC (collectively, the “Lender”), to transition the base interest rate from the three-month London Interbank Offered Rate to the forward-looking term rate based on the secured overnight financing rate as set by the Federal Reserve Bank of New York plus 0.10% (“Adjusted SOFR”). The Company obtained the first tranche of $35,000 at closing on June 30, 2020. On June 30, 2021, the second tranche of $15,000 was drawn down by the Company.

Each tranche under the Credit Facility requires quarterly interest payments forseven years. Interest is calculated as 7.5% plus the greater of Adjusted SOFR or 2.0% (11.89% at September 30, 2025), provided that the interest rate shall never be less than 9.5%. Each tranche of the Credit Facility has a term ofseven years from the date of issuance (with the first tranche issued on June 30, 2020, maturing on June 30, 2027, and the second tranche issued on June 30, 2021, maturing on June 30, 2028). In connection with the Credit Facility, the Company entered into a revenue participation agreement (the “Revenue Participation Agreement”) with the Lender, which provided that, among other things, a quarterly royalty payment as a percentage of the Company’s net revenues, up to $70,000 in any given year, after April 1, 2021, ending on the date upon which all amounts owed under the Credit Facility have been paid in full. This structure results in approximately 1.5% per year of additional interest payments on the outstanding loan amount. The Company recorded $756 as interest expense for this Revenue Participation Agreement for the nine months ended September 30, 2025 and 2024. The Company pays the quarterly debt interest on the last day of the quarter and for the three months ended September 30, 2025 and 2024 paid $1,519 and $1,652, respectively, and $4,512 and $4,917 for the nine months ended September 30, 2025 and 2024, respectively, to the Lender. As of September 30, 2025, the Company was in compliance with all financial covenants. The borrowings under the Credit Facility are secured by substantially all of the assets of the Company.

Embedded Derivatives

The debt derivative liabilities are recorded at fair value, with the change in fair value reported in Change in fair value of derivatives on the Condensed Consolidated Statements of Operations at each reporting date. The fair values of the debt derivative liabilities were $1,868 and $2,400 at September 30, 2025 and December 31, 2024, respectively. See Note 6 -Fair Value Measurements.

Unamortized Debt Discount and Financing Fees

The unamortized debt discount consists of the remaining initial fair values of the embedded derivatives related to the Credit Facility.

Financing fees for the Credit Facility were $642 and were recorded as a contra liability to Long-term debt on the Condensed Consolidated Balance Sheets.

Amortization of debt discount and deferred financing fees for the three months ended September 30, 2025 and 2024 was $225 and for the nine months ended September 30, 2025 and 2024, was $666 and $669, respectively.

Other Credit Facilities

The Company had restricted cash of $4,000 and $6,000 at September 30, 2025 and December 31, 2024, respectively, which represents collateral for an irrevocable standby letter of credit.

9. Stock-Based Compensation

The Company’s stock-based compensation plans are described in Note 11 -Stock-Based Compensation to its consolidated financial statements included in the 2024 Annual Report on Form 10-K.

During the nine months ended September 30, 2025, the following stock-based awards were granted to officers and employees. All awards were granted under the 2019 Amended and Restated Long-Term Incentive Plan, with the exception of the inducement shares awarded as material inducement of employment to new employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4).

(1)Restricted Stock Units (“RSUs”) awarded to certain officers and employees during the first, second, and third quarters of 2025 vest 50% after 24 months and an additional 25% on the third and fourth anniversaries of the grant date. Included in the second quarter RSUs are 103,767 units awarded to the Board of Directors for their annual fee, vestingone year from the date of the award. Upon vesting, the outstanding number of RSUs vested are converted into common stock.

(2)Performance Stock Units (“PSUs”) were awarded to certain executive officers and other employees during the firstand second quarters of 2025 with a target of 545,300 shares and performance metrics tied to the Company’s revenue compounded annual growth rate (“CAGR”) from 2025 through 2027 and total shareholder return (“TSR”) relative to its peers (“CAGR TSR PSUs”) with a payout ranging from 0% to 200% upon achievement of specific revenue CAGR and relative TSR goals. The CAGR TSR PSUs vest at the end of thethree-year period upon determination of the results at the end of the performance period. PSUs were awarded to certain employees during the second quarter of 2025 with a target of 69,500 shares and performance metrics tied to the achievement of sales quota goals.

(3)7,000 BLA PSUs were awarded to an employee related to work on the Biologics License Application (“BLA”) for Avance® Nerve Graft during the first quarter of 2025. The number of shares was allocated to certain milestones related to the BLA approval by the FDA. The performance measure is based upon achieving each of the specific milestones and will vest upon achieving each of the milestones but not sooner than one year after the grant date.

(4)Inducement shares were issued to certain employees as a material inducement to entering into employment with the Company during the first and second quarters of 2025 in accordance with Nasdaq Listing Rule 5635(c)(4). The RSUs vest 50% after 24 months and an additional 25% on the third and fourth anniversaries of the grant date. The PSUs granted are TSR PSUs that are tied to the Company’s share price targets with a payout range from 0% to 200% upon achievement of specific average share prices over a 30-day trading period immediately preceding the end of the performance period of February 22, 2024 through February 22, 2027. The performance measure is based upon achieving each of the specific milestones and the awards will vest upon achieving each of the milestones but not sooner than one year after the grant date.

Total stock-based compensation expense is as follows for the periods indicated:

10. Net Income (Loss) Per Common Share

The following reflects the net income (loss) attributable to common shareholders and share data used in the basic and diluted net income (loss) per common share computations using the two-class method for the periods indicated:

(1)Common equivalent shares for the three months ended September 30, 2024 and nine months ended September 30, 2025 and 2024 are not included in the diluted per share calculations as they would be anti-dilutive if the Company were in a net income position.

11. Income Taxes

The Company hasno recorded income tax expense or income tax benefit for the three and nine months ended September 30, 2025 and 2024 due to the generation of fiscal year net operating losses, the benefits of which have been fully reserved.

Deferred income taxes are accounted for using the balance sheet approach, which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities as measured by enacted state and federal tax rates. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more-likely-than-not that a portion or none of the deferred tax assets will be realized. As of September 30, 2025 and December 31, 2024, management assessed the realizability of deferred tax assets. After consideration of all the evidence, including reversal of deferred tax liabilities, future taxable income and other factors, management determined that a full valuation allowance was necessary as of September 30, 2025 and December 31, 2024. A portion of the net operating loss carryforwards may expire due to limitations imposed by Section 382 of the Internal Revenue Code (“IRC”). In addition, future utilization of the available net operating loss carryforwards may be limited under IRC Section 382 as a result of changes in ownership.

In the normal course of business, the Company is subject to examination by taxing authorities throughout the U.S. The Company’s remaining open tax years subject to examination by federal tax authorities include the years ended December 31, 2021 through 2024. The Internal Revenue Service is currently examining the Company’s 2021 federal income tax return. The Company’s remaining open tax years subject to examination by state and foreign tax authorities include the years ended December 31, 2020 through 2024. However, for tax years 2004 through 2017, federal and state taxing authorities may examine and adjust loss carryforwards in the years in which those loss carryforwards are ultimately utilized.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of 2017, including 100% bonus depreciation, domestic research and development cost expensing, and the business interest expense limitation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The new legislation did not have a material impact on the Company’s effective tax rate in 2025.

12. Segments

The Company determines its operating segments in accordance with FASB ASC 280, Segment Reporting (“ASC 280”). ASC 280 defines operating segments as components where discrete financial information is regularly reviewed by the chief operating decision maker (“CODM”), which for the Company is the Chief Executive Officer, to determine resource allocation and assess performance. As such, based on the way the CODM monitors and makes decisions affecting operations, the Company has concluded that it hasone operating and reportable segment. The CODM is regularly provided with only the consolidated expenses as noted on the face of the Condensed Consolidated Statements of Operations. As the Company has onlyone operating segment and is managed on a consolidated basis, the measure of profit or loss is consolidated net income or loss. The metrics are used to review operating trends, to perform analytical comparisons between periods and to monitor budget to actual variances.

13. Commitments and Contingencies

Service Agreements

The Company pays a third party a facility fee for the use of cleanrooms, manufacturing, storage, and office space and for services in support of its tissue processing including for routine sterilization of daily supplies, providing disposable supplies and microbial services, and office support pursuant to a License and Services Agreement, as amended (the “License and Services Agreement”). Pursuant to the License and Services Agreement, the Company recorded expenses of $233 for the three months ended September 30, 2025 and 2024, and $686 and $706 for the nine months ended September 30, 2025 and 2024, respectively, within Cost of goods sold in the Company’s Condensed Consolidated Statements of Operations. The License and Services Agreement was amended on December 31, 2023 extending the term through December 31, 2026. The License and Services Agreement maybe terminated by either party by providing aneighteen-month written notice. The Company utilizes the same third-party vendor for processing and packaging of Avive+ Soft Tissue Matrix™.

Distribution and Supply Agreements

In August 2008, the Company entered into an exclusive distribution agreement with a third party (the “Distributor”) to distribute the Axoguard Nerve Connector® and Axoguard Nerve Protector™ products worldwide and the parties subsequently amended the agreement on August 4, 2023. The distribution agreement expires on December 31, 2030. The distribution agreement establishes a formula for the transfer cost of the Axoguard Nerve Connector® and Axoguard Nerve Protector™ products and requires certain minimum purchases by the Company, although, through mutual agreement, the parties have not established such minimums; and, to date, have not enforced such provision. Under the distribution agreement, the Company provides purchase orders to the Distributor, and the Distributor fulfills the purchase orders. The distribution agreement allows for termination provisions for both parties.

In June 2017, the Company entered into the Nerve End Cap Supply Agreement (the “Supply Agreement”) with the Distributor whereby the Distributor is the exclusive contract manufacturer of the Axoguard Nerve Cap®, and the parties subsequently amended the agreement on August 4, 2023. The Supply Agreement expires on December 31, 2030. The Supply Agreement establishes the terms and conditions in which the Distributor will manufacture the product for the Company. Under the Supply Agreement, the Company provides purchase orders to the Distributor and the Distributor fulfills the purchase orders. The Supply Agreement allows for termination provisions for both parties.

In May 2023, the Company entered into the Supply and Manufacturing Agreement (the “HA+ Supply Agreement”) with the Distributor whereby the Distributor is the exclusive contract manufacturer of the Axoguard HA+ Nerve Protector™. The HA+ Supply Agreement expires on July 1, 2030. The HA+ Supply Agreement establishes the terms and conditions in which the Distributor will manufacture, package, label and deliver the product to the Company. Under the HA+ Supply Agreement, the Company provides purchase orders to the Distributor, and the Distributor fulfills the purchase orders. The HA+ Supply Agreement allows for termination provisions for both parties.

The loss of the Company’s ability to sell the Axoguard Nerve Connector®, Axoguard Nerve Protector™, Axoguard Nerve Cap® and Axoguard HA+ Nerve Protector™ products could have a material adverse effect on the Company’s business until other replacement products would become available.

Insurance Financing Agreements

The Company finances some of its commercial insurance policies. Outstanding payments owed under the insurance financing agreements are included in Prepaid expenses and other assets on the Condensed Consolidated Balance Sheets. The amounts owed under the insurance financing agreements were $410 and $1,255 as of September 30, 2025 and December 31, 2024, respectively.

Processing Facilities

The Company is highly dependent on the continued availability of its processing facilities at its Axogen Processing Center (the “APC Facility”) in Vandalia, Ohio and the facility it leases in Dayton, Ohio and could be harmed if the physical infrastructure of these facilities is unavailable for any prolonged period of time.

Certain Economic Development Grants

The Company obtained certain economic development grants from state and local authorities totaling up to $2,685, including $1,250 of cash grants, to offset costs to acquire and develop the APC Facility. Certain of these economic development grants were subject to fixed asset investments and job creation milestones by December 31, 2024 and have clawback clauses if the Company does not meet the job creation milestones. The Company has not met certain job creation milestones and has requested a reduction or waiver of clawbacks or extensions from the grant authorities to extend the job creation milestones evaluation date from December 31, 2024 and the expiration date to December 31, 2026. During the nine months ended September 30, 2025, the Company received notice from certain grant authorities waiving any action in connection with the December 31, 2024 job creation milestones evaluation date and extending the evaluation period through the Company’s next annual report. The Company is continuing discussions with grant authorities regarding the evaluation, expiration and clawbacks of the job creation milestones. The Company could be obligated to pay back up to approximately $950 as of September 30, 2025 related to these grants. As of September 30, 2025, the Company has received $1,250 in cash grants related to these economic development grants.

Fair Value of the Debt Derivative Liabilities

The fair value of the debt derivative liabilities is $1,868 as of September 30, 2025. The fair value of the debt derivative liabilities was determined using a probability-weighted expected return model based upon three potential settlement scenarios for the Credit Facility. The estimated settlement value of each scenario includes any required make-whole payment, and then discounted to present value using a discount rate that is derived based upon the initial terms of the Credit Facility at issuance and corroborated utilizing a synthetic rating analysis. The calculated fair values under thethree scenarios are then compared to the fair value of a plain vanilla note, with the difference reflecting the fair value of the debt derivative liabilities. The Company estimated the make-whole payments required under each scenario according to the terms of the Credit Facility to generate an internal rate of return equal to 11.5% through the scheduled maturity dates, less the total of all quarterly interest and royalty payments previously paid to the Lender. The calculation utilized the XIRR function in Microsoft Excel as required by the Credit Facility. If the debt is not prepaid but instead is held to its scheduled maturities, the Company’s estimate of the make-whole payment for the first tranche and second tranche of the Credit Facility due on June 30, 2027 and June 30, 2028, respectively, are approximately zero. The Company has consistently applied this approach since the inception of the debt agreement on June 30, 2020.

The Company has become aware that the Lender may have an alternative interpretation of the calculation of the make-whole payments that the Company believes does not properly utilize the same methodology utilized by the XIRR function in Microsoft Excel as described in the Credit Facility. Under the Credit Facility, the Company has the option to hold payment obligations until maturity or at anytime prepay, in whole or in part, its obligations, including the Revenue Participation Agreement, by making a payment in the amount using the alternative interpretation of the calculation, generating an internal rate of return of 11.5% of the outstanding principal amount, reduced by the sum of the interest and principal previously paid and all amounts paid under the Revenue Participation Agreement. The Company estimates the top end of the range of the make-whole payments if the debt is held to its scheduled maturities under an alternative interpretation to be approximately $9,000 for the first tranche of the Credit Facility due on June 30, 2027 and approximately $3,000 for the second tranche of the Credit Facility due on June 30, 2028. Further, if the debt is prepaid prior to its scheduled maturity dates and subject to the alternative interpretation, the make-whole payments would be larger than the amounts herein. Under the alternative interpretation of the calculation, if the Credit Facility was to be prepaid in whole as of September 30, 2025, the make-whole payment, in excess of the outstanding principal of the Credit Facility, is estimated to be approximately $25,200.

Other Commitments

Certain executive officers of the Company are parties to employment contracts. Such contracts have severance payments for certain conditions including change of control.

Legal Proceedings

The Company is and may be subject to various claims, lawsuits and proceedings in the ordinary course of the Company’s business. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. While there can be no assurances as to the ultimate outcome of any legal proceeding or other loss contingency involving the Company, in the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected individually or in the aggregate, to result in a material, adverse effect on the Company’s financial condition, results of operations or cash flows. However, it is possible that the Company’s results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies.