Company: MDXG
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001376339-25-000009
Chunk: 144

Company: MIMEDX GROUP, INC.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 7
Chunk 144
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 us to defray future tax liability, including net operating loss carryforwards, research and development tax credits, and other future deductions and credits. We record a valuation allowance to offset our gross deferred tax asset to the extent that realization is not likely.

Judgments and Uncertainties

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Transactions which result in lower taxable income in the future give rise to deferred tax assets. GAAP requires that the net balance of deferred tax assets reflect the extent of utilization which is ‘more likely than not’. This is accomplished through a valuation allowance recorded against gross deferred tax assets.

We evaluate our ability to recover deferred tax assets based on projected future taxable income, scheduled reversals of deferred tax liabilities, tax planning strategies, and our recent operating results. Judgment is required to determine whether the totality of this evidence suggests that we can recover our deferred tax assets in the future.

Sensitivity of Estimate to Change

As of December 31, 2024, we had $0.5 million in valuation allowances recorded against our deferred tax assets balance of $28.8 million. The amount and extent of the valuation allowance necessary to reflect the extent of realization of these deferred tax assets being more likely than not may change due to changes in tax law, a revision to our expectation regarding taxable income in the future, taxable income generated in a period in which we had not previously anticipated taxable income, a change in scheduled reversals of deferred tax liabilities, and other changes.

Recently Adopted Accounting Pronouncements

See Item 8, Note 2, Significant Accounting Policies, in the Consolidated Financial Statements for recently adopted accounting pronouncements.

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