UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A
Amendment No. 1


(Mark One)
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2009

OR


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number 001-32518

[GRAPHIC MISSING]

CYTOMEDIX, INC.

(Exact Name of Registrant As Specified in Its Charter)


Delaware		23-3011702
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

209 Perry Parkway
Suite 7
Gaithersburg, MD 20877

(Address of Principal Executive Offices)(Zip Code)

(240) 499-2680

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer o		Accelerated Filer o
Non-Accelerated Filer o		Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 37,284,206 shares of Common stock, par value $.0001, outstanding as of October 31, 2009.

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EXPLANATORY NOTE

We are filing this Amended Quarterly Report on Form 10-Q/A (the “Amended Filing” or “Form 10-Q/A”) to our Quarterly Report on Form 10-Q for the three months September 30, 2009 (the “Original Filing”) to amend and restate our unaudited financial statements and related disclosures for the three and nine months ended September 30, 2009 as discussed in Note 2 to the accompanying restated unaudited financial statements.

Background of the Restatement

On January 3, 2011, the Company concluded, based on the recommendation of management, that the previously issued financial statements for the year ended December 31, 2009 included in the Company's most recently filed Form 10-K, and each of the quarterly periods from March 31, 2009 through September 30, 2010 included in the Company's quarterly reports on Forms 10-Q (collectively, the “Affected Periods”) are no longer reliable because they failed to incorporate non-cash charges resulting from required adjustments to certain outstanding warrants (the “Warrants”).

An explanation of the errors and their impact on the Company's financial statements is contained in Note 2 to the financial statements contained in Part I Item 1 of this report. The following is a brief summary of the accounting errors:

(a)

The Company adopted the FASB Emerging Issues Task Force's Issue No 07-5, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity's own Stock” (“EITF 07-5), now codified in ASC 815-40, as of January 1, 2009. EITF 07-5 provides guidance as to assessing equity versus liability treatment and classification for equity-linked financial instruments, including stock purchase warrants. Upon the adoption of EITF 07-5, the Company did not properly assess the impacts of certain non-standard anti-dilution provisions that existed in certain then-outstanding stock purchase warrants, resulting in equity (versus liability) treatment and classification.

(b)

In 2009, the Company did not properly assess the impacts of certain non-standard anti-dilution provisions that existed in stock purchase warrants issued in an August 2009 offering, resulting in equity (versus liability) treatment and classification.

(c)

As a result of the improper accounting treatment of the above-mentioned stock purchase warrants, certain offering expenses were also misclassified and accounted for incorrectly.

Restatement of Other Financial Statements

Along with the filing of this Form 10-Q/A, we are concurrently filing amendments to our Annual Report on Fonn 10-K/A Amendment No. 1 for 2009 and our Quarterly Reports on Form 10-Q for the quarterly period ended March 31 and June 30, 2009 and March 31, June 30 and September 30, 2010. The amendments to our Quarterly Reports on Form 10-Q are being filed to restate our unaudited financial statements and related financial information for the periods contained in those reports. The amendment to our Annual Report on Form 10-K/A Amendment No. 1 is being filed to restate our financial statements for the fiscal year ended December 31, 2009.

Internal Control Considerations

Management determined that there was a control deficiency in its internal control that constitutes a material weakness, as discussed in Part I – Item 4 of the Amended Filing. A material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. For a discussion of management's consideration of the Company's disclosure controls and procedures and the material weakness identified, see Part I – Item 4 included in this Amended Filing.

For the convenience of the reader, this Amended Filing sets forth the Original Filimg as modified and superseded where necessary to reflect the restatement. The following items have been amended principally as a result of, and to reflect, the restatement:

•

Part I – Item 1. Financial Statements;

•

Part I – Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations; and

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•

Part I – Item 4. Controls and Procedures

In accordance with applicable SEC rules, this Amended Filing includes certifications from our Chief Executive Officer and Chief Financial Officer dated as of the date of this filing.

Except for the items noted above, no other information included in the Original Filings is being amended by this Amended Filing. The Amended Filing continues to speak as of the date of the Original Filing and we have not updated the filing to reflect events occurring subsequently to the Original Filing date other than those associated with the restatement of the Company's financial statements. Accordingly, this Amended Filing should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Filing.

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CYTOMEDIX, INC.


	Page
PART I. FINANCIAL INFORMATION		1
Item 1. Financial Statements		1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3. Quantitative and Qualitative Disclosures About Market Risk		21
Item 4T. Controls and Procedures		21
PART II. OTHER INFORMATION		22
Item 1. Legal Proceedings		22
Item 1A. Risk Factors		22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		22
Item 3. Defaults Upon Senior Securities		22
Item 4. Submission of Matters to a Vote of Security Holders		22
Item 5. Other Information		22
Item 6. Exhibits (See Exhibit Index at End of Report)		22
Signatures		23
Exhibit Index		24

iii

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

CYTOMEDIX, INC.

BALANCE SHEETS


	September 30, 2009 (restated)			December 31, 2008
	(Unaudited)
ASSETS
Current assets
Cash	$	2,753,894		$	4,027,026
Short-term investments, restricted		52,500			—
Accounts and royalties receivable, net		500,991			390,739
Patent settlements receivable		—			102,618
Prepaid expenses, inventory, and other current assets		294,605			190,720
Total current assets		3,601,990			4,711,103
Property and equipment, net		93,747			87,389
Total assets	$	3,695,737		$	4,798,492
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	1,026,549		$	1,325,325
Deferred revenues		35,881			197,344
Dividends payable on Series A and Series B preferred stock		18,707			7,243
Derivative liabilities, current portion		176,618			—
Total current liabilities		1,257,755			1,529,912
Derivatives and other liabilities		1,065,440			123,241
Total liabilities		2,323,195			1,653,153
Commitments and contingencies
Stockholders’ equity
Series A Convertible preferred stock; $.0001 par value, authorized 5,000,000 shares; 2009 and 2008 issued and outstanding – 90,217 shares, liquidation preference of $90,217		9			9
Series B Convertible preferred stock; $.0001 par value, authorized 5,000,000 shares; 2009 and 2008 issued and outstanding – 92,300 shares, liquidation preference of $92,300		10			10
Series C Convertible preferred stock; $.0001 par value, authorized 1,000,000 shares; 2009 and 2008 issued and outstanding – 0.0 shares		—			—
Common stock; $.0001 par value, authorized 65,000,000 shares; 2009 issued and outstanding – 37,262,302 shares; 2008 issued and outstanding – 33,962,623 shares		3,726			3,396
Additional paid-in capital		41,739,378			42,219,802
Accumulated deficit		(40,370,581	)		(39,077,878	)
Total stockholders’ equity		1,372,542			3,145,339
Total liabilities and stockholders’ equity	$	3,695,737		$	4,798,492

The accompanying notes are an integral part of these financial statements.

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CYTOMEDIX, INC.

STATEMENTS OF OPERATIONS
(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2009 (restated)			2008			2009 (restated)			2008
Revenues
Sales	$	43,935		$	25,507		$	159,238		$	72,255
Royalties		494,378			473,864			1,487,518			1,482,424
Total revenues		538,313			499,371			1,646,756			1,554,679
Cost of revenues
Cost of sales		9,052			5,244			43,690			11,009
Cost of royalties		94,469			103,679			310,791			422,675
Total cost of revenues		103,521			108,923			354,481			433,684
Gross profit		434,792			390,448			1,292,275			1,120,995
Operating expenses
Salaries and wages		348,610			523,800			1,623,688			1,955,107
Consulting expenses		80,203			94,566			132,987			147,214
Professional fees		146,930			164,626			452,954			682,855
Trials and studies		188			28,034			179,304			28,034
General and administrative expenses		426,295			483,024			1,258,931			1,473,019
Total operating expenses		1,002,226			1,294,050			3,647,864			4,286,229
Loss from operations		(567,434	)		(903,602	)		(2,355,589	)		(3,165,234	)
Other income (expense)
Interest income (expense), net		(309	)		37,737			10,216			136,428
Change in fair value of derivative liabilities		(102,263	)		—			(427,317	)		—
Other		(1,765	)		100			(5,703	)		5,350
Patent litigation settlements, net		—			62,796			—			71,357
Total other income (expense)		(104,337	)		100,633			(422,804	)		213,135
Loss before provision for income taxes		(671,771	)		(802,969	)		(2,778,393	)		(2,952,099	)
Income tax provision		—			—			—			—
Net loss		(671,771	)		(802,969	)		(2,778,393	)		(2,952,099	)
Preferred dividend on:
Series A preferred stock		1,952			1,814			5,745			5,934
Series B preferred stock		1,846			1,710			5,719			5,294
Net loss to common stockholders	$	(675,569	)	$	(806,493	)	$	(2,789,857	)	$	(2,963,327	)
Loss per common share – Basic and diluted	$	(0.02	)	$	(0.03	)	$	(0.08	)	$	(0.09	)
Weighted average shares outstanding – Basic and diluted		35,229,556			32,257,869			34,389,575			32,038,305

The accompanying notes are an integral part of these financial statements.

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CYTOMEDIX, INC.

STATEMENTS OF CASH FLOWS
(Unaudited)


	Nine Months Ended September 30,
	2009 (restated)			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,778,393	)	$	(2,952,099	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		31,101			122,701
Stock-based compensation – consultants and other		11,580			56,365
Stock-based compensation – employees and directors		358,935			412,652
Change in fair value of derivative liabilities		427,317			—
Gain on disposal of assets		(1,116	)		(5,200	)
Change in accounts and other receivables, net		(7,634	)		195,459
Change in other current assets		(46,185	)		(41,898	)
Change in patent settlements receivable, non-current		—			193,978
Change in accounts payable and accrued expenses		(298,776	)		244,721
Change in deferred revenues		(161,463	)		(161,463	)
Change in other liabilities		(123,241	)		160,600
Net cash used in operating activities		(2,587,875	)		(1,774,184	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment		(52,500	)		—
Purchase of equipment		(31,424	)		(70,522	)
Proceeds from sale of equipment		1,900			5,200
Net cash used in investing activities		(82,024	)		(65,322	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, net		1,396,767			1,445,314
Net cash provided by financing activities		1,396,767			1,445,314
Net decrease in cash		(1,273,132	)		(394,192	)
Cash, beginning of period		4,027,026			5,136,446
Cash, end of period	$	2,753,894		$	4,742,254

The accompanying notes are an integral part of these financial statements.

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CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

Note 1 — Description of Business

Cytomedix is a biotechnology company that develops, sells, and licenses regenerative biological therapies, to primarily address the areas of wound care, inflammation, and angiogenesis. The Company currently markets the AutoloGel^TM System, a device for the production of platelet rich plasma (“PRP”) gel derived from the patient’s own blood. The AutoloGel^TM System is cleared by the Food and Drug Administration (“FDA”) for use on a variety of exuding wounds. The Company is currently pursuing a multi-faceted strategy to penetrate the chronic wound market with its AutoloGel^TM System. We are also pursuing opportunities for the application of AutoloGel^TM and PRP technology into other markets such as hair transplantation and orthopedics, as well as actively seeking complementary products for the wound care market. The Company is also moving forward with the development of other product candidates in its pipeline. Most notably is its anti-inflammatory peptide (designated “CT-112”) that has shown promise in pre-clinical testing. Cytomedix sells its products primarily to health care providers in the United States and licenses its patents to surgical medical device suppliers in the United States.

Note 2 — Restatement of 2009 Financial Statements

Historically, the Company has issued stock purchase warrants as part of various financings and as compensation to consultants for various services. Prior to January 1, 2009, the Company assessed whether or not stock purchase warrants should be accounted for and classified as equity or liabilities based on the accounting guidance in effect at the time.

On January 1, 2009, the Company adopted new accounting guidance (ASC 815-40, formerly EITF 07-5 “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock”) that required additional analysis as to whether or not stock purchase warrants are “indexed to” its stock, a condition that is required to attain equity accounting and classification. Upon the adoption of this new guidance, the Company concluded that its previously issued stock purchase warrants were appropriately classified as equity and, therefore, the adoption of the new guidance did not have any impact on its historical financial statements or on its 2009 financial statements.

In connection with the review of certain equity transactions in 2010, the Company determined that, upon the adoption of the new accounting guidance on January 1, 2009, certain stock purchase warrants issued in 2004 should have been appropriately classified as derivative liabilities (and not equity) due to the presence of non-standard anti-dilution provisions in those warrant agreements. These provisions require that the Company modify existing warrants (as to the actual number of warrants and their exercise price) in the event that we issue subsequent equity (or equity-linked instruments) at a price below the exercise price of the existing warrants. Additionally, stock purchase warrants issued in 2009 (after the adoption of the new guidance) should also have been classified as derivative liabilities (and not equity) for similar reasons. Also, as a result of the improper accounting treatment for warrants, certain offering expenses were accounted for incorrectly.

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CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

Note 2 — Restatement of 2009 Financial Statements – (continued)

As a result, the Company has restated its 2009 quarterly financial statements to correct for the misapplication of the new accounting guidance related to the accounting and classification of stock purchase warrants. This correction resulted in adjustments to the following financial statement line items as of and for the periods indicated:


	As Previously Reported			Increase (Decrease)			As Restated
Three months ended September 30, 2009
Change in fair value of derivative liabilties	$	—		$	(102,263	)	$	(102,263	)
Other, net	$	1,116		$	(2,881	)	$	(1,765	)
Total other income (expense)	$	807		$	(105,144	)	$	(104,337	)
Loss before provision for income taxes	$	(566,627	)	$	(105,144	)	$	(671,771	)
Net loss	$	(566,627	)	$	(105,144	)	$	(671,771	)
Net loss to common stockholders	$	(570,425	)		(105,144	)	$	(675,569	)
Loss per common share – Basic and diluted	$	(0.02	)	$	(0.00	)	$	(0.02	)
Nine months ended September 30, 2009
Statement of Operations
Change in fair value of derivative liabilities	$	—		$	(427,317	)	$	(427,317	)
Other, net	$	1,116		$	(6,819	)	$	(5,703	)
Total other income (expense)	$	11,332		$	(434,136	)	$	(422,804	)
Loss before provision for income taxes	$	(2,344,257	)	$	(434,136	)	$	(2,778,393	)
Net loss	$	(2,344,257	)	$	(434,136	)	$	(2,778,393	)
Net loss to common stockholders	$	(2,355,721	)	$	(434,136	)	$	(2,789,857	)
Loss per common share – Basic and diluted	$	(0.07	)	$	(0.01	)	$	(0.08	)
Statement of Cash Flows
Net loss	$	(2,344,257	)	$	(434,136	)	$	(2,778,393	)
Depreciation and amortization	$	24,282		$	6,819		$	31,101
Change in fair value of derivative liabilities	$	—		$	427,317		$	427,317
As of September 30, 2009
Prepaid Expenses and other current assets	$	236,905		$	57,700		$	294,605
Total current assets	$	3,544,290		$	57,700		$	3,601,990
Total assets	$	3,638,037		$	57,700		$	3,695,737
Derivative liabilities, current portion	$	—		$	176,618		$	176,618
Total current liabilities	$	1,081,137		$	176,618		$	1,257,755
Derivative and other liabilities	$	—		$	1,065,440		$	1,065,440
Total liabilities	$	1,081,137		$	1,242,058		$	2,323,195
Additional paid-in capital	$	43,986,754		$	(2,247,376	)	$	41,739,378
Accumulated deficit	$	(41,433,599	)	$	1,063,018		$	(40,370,581	)
Total stockholders' equity	$	2,556,900		$	(1,184,358	)	$	1,372,542
Total liabilities and stockholders' equity	$	3,638,037		$	57,700		$	3,695,737

The cumulative effect of the adoption of the new accounting guidance as of January 1, 2009 was a $1.6 million decrease in additional paid in capital, a $1.5 million decrease in accumulated deficit and a $0.1 million increase in derivative liabilities.

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CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

Note 3 — Liquidity Risks and Management’s Plans

The accompanying financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Since inception, the Company has incurred, and continues to incur, significant losses from operations. The licensing agreements, under which the Company’s royalty revenues are generated, expire in late November 2009. In addition, the Company needs to obtain increased product sales and additional capital to continue its business operations and fund deficits in operating cash flow. The Company is currently executing a new sales strategy, but it is difficult to forecast the success of this new strategy in the current market. The Company also plans to obtain additional capital, to finance the development of its business operations, through strategic collaborations, issuance of its equity securities, grant funding, or any other means it deems appropriate. There is no assurance that such capital will be available on acceptable terms or at all. As a result, there is substantial doubt as to the Company’s ability to continue as a going concern.

In the event the Company is unable to successfully increase product sales and obtain additional capital, it is unlikely that the Company will have sufficient cash flows and liquidity to finance its business operations as currently contemplated. Accordingly, in the event new financing is not obtained, the Company will likely reduce general and administrative expenses, delay new product development efforts, and/or reduce spending on sales and marketing activities until it is able to obtain sufficient financing to do so.

The balance sheets do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

Note 4 — Basis of Presentation

The unaudited condensed financial statements included herein have been prepared by Cytomedix without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly state such information. All such adjustments are of a normal recurring nature. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations.

The year-end condensed balance sheet data were derived from audited financial statements but do not include all disclosures required by accounting principles generally accepted in the United States of America.

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CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

Note 4 — Basis of Presentation – (continued)

These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s 2008 Annual Report on Form 10-K/A filed with the Securities and Exchange Commission. The results of operations for interim periods are not necessarily indicative of the results for any subsequent quarter or the entire fiscal year ending December 31, 2009.

Basic and diluted net losses per common share are presented in accordance with established standards for all periods presented. We compute basic and diluted net losses per common share using the weighted-average number of shares of common stock outstanding during the period. During periods of net losses, shares associated with outstanding stock options, stock warrants, and convertible preferred stock are not included because the inclusion would be anti-dilutive (i.e., reduce the net loss per share). The total numbers of such shares excluded from diluted net loss per common share were 11,743,198 for the three and nine months ended September 30, 2009, and 9,338,214 for the three and nine months ended September 30, 2008.

Note 5 — Fair Value Measurements

The Company determines the fair value of its financial instruments utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The following summarizes the three levels of inputs required, as well as the assets that we value using those levels of inputs.

Level 1 — Quoted prices in active markets for identical assets and liabilities.

Level 2 — Observable inputs, other than quoted prices in active markets for identical assets and liabilities, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable.

Level 3 — Unobservable inputs, supported by little or no market data available, where the reporting entity is required to develop its own assumptions to determine the fair value of the instrument.

An asset's or liability's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

The fair value of the Company's Certificate of Deposit was determined using Level 1 inputs. The fair value as of September 30, 2009 was $52,500.

The following table sets forth a summary of changes in the fair value of our Level 3 liabilities for the nine months ended September 30, 2009:


Description	Balance at December 31, 2008		Cumulative Effect of Adoption of New Accounting Guidance		Additional Issuances and Repricing Due to Anti-Dilution Provisions		Change in Fair Value		Balance at September 30, 2009 (restated)
Derivative Liabilities	$	—	$	128,121	$	686,620	$	427,317	$	1,242,058

The change in fair value of the derivative liabilities is classified in other income (expense) in the Company’s statement of operations. The fair value of the Company's derivative liabilities related to stock purchase warrants was determined using the Black-Scholes option pricing model — a Level 3 input.

The Company does not have any non financial assets or liabilities that it measures at fair value.

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CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

Note 6 — Capital Stock Activity

The Company issued 3,299,679 shares of Common stock during the nine months ended September 30, 2009. The following table lists the sources of and the proceeds from those issuances:


Source	# of Shares		Total Proceeds
Issuance of shares pursuant to registered direct offering completed in Third Quarter 2009		3,299,679	$	1,490,057
Totals		3,299,679	$	1,490,057

In August 2009, the Company entered into securities purchase agreements with certain investors for their purchase of 3,299,679 shares of Cytomedix’s common stock at a purchase price of $0.44 per share, and 5-year warrants to purchase an additional 1,717,800 shares of Cytomedix’s common stock at an exercise price of $0.65 (the “Financing”). Holders of the warrants may exercise warrants at any time on or after 180 days following the issuance date through February 2014. The warrants are accounted for as derivative liabilities. The securities in this Financing were offered and sold pursuant to a prospectus dated March 26, 2008 and a prospectus supplement dated August 10, 2009, pursuant to the Company’s effective shelf registration statement on Form S-3 (SEC File No. 333-147793). As a result of this Financing, Cytomedix received gross proceeds of approximately $1,490,000 (before customary offering expenses of approximately $93,000, and excluding any proceeds that Cytomedix may receive upon exercise of the warrants). Certain officers and directors of the Company participated in this offering. Their purchase price per share was $0.57; all other terms and provisions were the same as those of the public investors.

The following table summarizes the stock options granted by the Company during the three and nine months ended September 30, 2009. These options were granted to employees, board members, and service providers under the Company’s Long-Term Incentive Plan.

Three Months Ended
September 30, 2009

Nine Months Ended
September 30, 2009

Options Granted

Exercise Price

Options Granted

Exercise Price

364,500

$0.53 – $0.62

658,500

$0.30 – $0.62

During the nine months ended September 30, 2009, 55,501 options were forfeited by contract due to the termination of the underlying service arrangement.

On September 17, 2009, pursuant to the Certificate of Designation filed with the Delaware Secretary of State, the Board of Directors authorized a stock dividend on the Company’s Series A and B Convertible Preferred shares. This dividend resulted in the issuance of 7,446 and 7,463 shares of Series A and B Convertible Preferred stock, respectively, in October 2009.

No dividends were declared or paid on the Company’s Common Stock in any of the periods discussed in this report.

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CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

Note 6 — Capital Stock Activity – (continued)

The Company had the following outstanding warrants and options:


	# Outstanding
Equity Instrument	September 30, 2009		December 31, 2008
D Warrants		304,033		304,033
Unit Warrants⁽²⁾		1,812,500		1,812,500
Fitch/Coleman Warrants		975,000		975,000
August 2008 Warrants		1,000,007		1,000,007
August 2009 Warrants⁽¹⁾		1,717,800		—
Other warrants		1,249,632		1,261,632
Options issued under the Long-Term Incentive Plan		4,623,387		4,020,388

(1)

Includes 67,955 warrants issued to a placement agent. The warrants are accounted for as derivative liabilities.

(2)

The warrants are accounted for as derivative liabilities as of January 1, 2009.

Pursuant to a reset pricing provision, the strike price of the Unit Warrants was adjusted to $1.51 as a result of the August 2009 Financing discussed above.

Note 7 — Patent Amortization

In the fourth quarter of 2008, the Company wrote-off the remaining balance of its patents. Amortization expense was approximately $38,000 and $113,000 for the three and nine months ended September 30, 2008, respectively, and zero for the corresponding periods in 2009.

Note 8 — Commitments and Contingencies

The Company is prohibited from granting a security interest in the Company’s patents and/or future royalty streams under the terms of the Series A and B Convertible Preferred stock.

Under the Company’s plan of reorganization upon emergence from bankruptcy in July 2002, the Series A Preferred stock and the dividends accrued thereon that existed prior to emergence from bankruptcy are to be exchanged into one share of new Common stock for every five shares of Series A Preferred stock held as of the date of emergence from bankruptcy. This exchange is contingent on the Company’s attaining aggregate gross revenues for four consecutive quarters of at least $10,000,000 and would result in the issuance of 325,000 shares of Common stock.

The Company is party to a registration rights agreement and a related warrant agreement with one of its former consultants. The registration rights agreement provides for liquidated damages, at the discretion of the warrant holder, in the event that the registration statement relating to the shares underlying the warrants becomes ineffective. The Company’s obligations under this agreement run through the earlier of April 1, 2012 or two years after the exercise of the related warrants. At the discretion of the warrant holder, the liquidated damages may take the form of cash or additional shares of the Company’s Common stock. As of September 30, 2009, the Company has estimated the maximum undiscounted liquidated damages at $75,000. However, the Company has determined that it is unlikely that circumstances allowing for the aforementioned liquidated damages would arise, and therefore no contingent liability has been recorded.

In conjunction with its FDA clearance, the Company agreed to conduct a post-market surveillance study to further analyze the safety profile of bovine thrombin as used in the AutoloGel^TM System. This study is estimated to cost approximately $500,000 over a period of three years, beginning in the third quarter of 2008. As of September 30, 2009, $73,000 had been incurred.

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CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

Note 8 — Commitments and Contingencies – (continued)

In September 2009, the Company renewed its operating lease for its office space in Rockville, MD which was set to expire in December 2009. Under the terms of the renewed lease, the new expiration date is June 30, 2011 and monthly rent expense is approximately $5,200 from January 2010 through December 2010 and approximately $5,300 thereafter.

In July 2009, in satisfaction of a new Maryland law pertaining to Wholesale Distributor Permits, the Company established a Letter of Credit, in the amount of $50,000, naming the Maryland Board of Pharmacy as the beneficiary. This Letter of Credit serves as security for the performance by the Company of its obligations under applicable Maryland law regarding this permit and is collateralized by the CD described in the Restricted Short-Term Investment Note to these Financial Statements.

In connection with our Licensing and Distribution Agreement with Millennia Holdings in Japan, we are obligated to provide inventory and equipment over the next three years, with an approximate aggregate value of $25,000.

Note 9 — Income Taxes

The Company accounts for income taxes under the liability method, which requires companies to account for deferred income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax rate changes are reflected in income during the period such changes are enacted.

At September 30, 2009, we have accumulated U.S. federal and state net operating tax losses that are available to offset future taxable income and reduce future federal and state income taxes during the carryforward period. The utilization of available losses depends on the generation of future taxable income to absorb the losses. We may not be able to use available losses within the carryforward period. In addition, based on generally accepted accounting principles, we have determined for financial accounting and reporting purposes that it is unlikely that we will be able to apply or use the available losses to reduce future federal or state income taxes during the carryforward period. This assessment is updated annually or more frequently based on changes in circumstances.

A valuation allowance is recorded against deferred tax assets when it is more likely than not that a tax benefit will not be realized. The assessment for a valuation allowance requires judgment on the part of management with respect to the benefits that may be realized. The Company has concluded, based upon available evidence, it is more likely than not that the U.S. federal, state, and local deferred tax assets at September 30, 2009, will not be realizable. For the nine months ended September 30, 2009, we did not record an income tax provision, as a full valuation allowance has been provided against U.S. federal, state, and local deferred tax assets. The valuation allowance will be reversed at such time that realization is believed to be more likely than not. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The only periods subject to examination for the Company’s federal return are the 2003 through 2008 tax years. The Company believes that its income tax filing positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded.

The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income before taxes. There were no such items during the periods covered in this report.

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NOTES TO FINANCIAL STATEMENTS

Note 10 — Termination and Consulting Agreement

On June 5, 2008, the Company and Kshitij Mohan, the Company’s former Chief Executive Officer and Chairman of the Board of Directors, entered into a Termination and Consulting Agreement (the “Agreement”), pursuant to which Dr. Mohan agreed, among other things, to step down as the CEO and Chairman and to become a consultant to the Company effective June 30, 2008.

As part of the Agreement, Dr. Mohan is entitled to the following compensation:

•

$500,000 to be paid in 24 equal monthly installments, beginning in July 2008

•

$5,000 toward legal fees incurred by Dr. Mohan related to this Agreement

•

Continuation of health benefits under the Company’s health insurance plans through December 2009

The Company recorded $510,000 in compensation expense in the second quarter of 2008 which represents the present value of the above outlined special termination benefits to Dr. Mohan. The short and long-term components of the remaining obligation to Dr. Mohan, which are respectively reflected in the Accounts payable and accrued expenses and Other liabilities lines of the Balance Sheets, were $187,000 and $0, respectively, at September 30, 2009 and $257,000 and $180,000, respectively, at September 30, 2008.

Interest expense associated with these obligations was approximately $3,000 and $11,000 for the three and nine months ended September 30, 2009 and $1,000 for the three and nine months ended September 30, 2008, respectively.

Note 11 — Recent Accounting Pronouncements

On January 1, 2009, the Company adopted new accounting guidance (ASC 815-40, formerly EITF 07-5 “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock”) that required additional analysis as to whether or not stock purchase warrants are “indexed to” its stock, a condition that is required to attain equity accounting and classification. Upon the adoption of this new guidance, the Company concluded that our previously issued stock purchase warrants were appropriately classified as equity and, therefore, the adoption of the new guidance did not have any impact on its historical financial statements or on its 2009 financial statements.

In connection with the review of certain equity transactions in 2010, the Company determined that, upon the adoption of the new accounting guidance on January 1, 2009, certain stock purchase warrants issued in 2004 should have been appropriately classified as derivative liabilities (and not equity) due to the presence of non-standard anti-dilution provisions in those warrant agreements. These provisions require that the Company modify existing warrants (as to the actual number of warrants and their exercise price) in the event that the Company issues subsequent equity (or equity-linked instruments) at a price below the exercise price of the existing warrants. Additionally, stock purchase warrants issued in 2009 (after the adoption of the new guidance) should also have been classified as derivative liabilities (and not equity) for similar reasons. Also, as a result of the improper accounting treatment for the above-mentioned stock purchase warrants, certain offering expenses were also misclassified and accounted for incorrectly.

In April 2009, the Financial Accounting Standards Board (“FASB”) issued Staff Position No. FAS 107-1 and APB No. 28-1, Interim Disclosures about Fair Value of Financial Instruments, now included in FASB ASC 825-10, Financial Instruments. This guidance now requires disclosures about fair value of financial instruments in interim reporting periods. These disclosures were previously only required in annual financial statements. The adoption of this guidance did not have a material impact on our financial statements.

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CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

Note 11 — Recent Accounting Pronouncements – (continued)

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset of Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, now included in FASB ASC 820, Fair Value Measurements and Disclosures, which provides additional guidance for estimating fair value when the volume and level of market activity for an asset or liability have significantly decreased. This guidance emphasizes that even if there has been a significant decrease in the volume and level of market activity for the asset or liability and regardless of the valuation techniques used, the objective of a fair value measurement remains the same. In addition, the statement provides guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of this guidance did not have a material impact on the our financial statements.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events, now included in FASB ASC 855, Subsequent Events, which sets forth general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. Our disclosures have been updated to reflect the adoption of this standard.

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162, now included in FASB ASC 105, Generally Accepted Accounting Principles. This guidance establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with generally accepted accounting principles. This guidance explicitly recognizes rules and interpretive releases of the SEC under federal securities laws as authoritative GAAP for SEC registrants and is effective for the Company’s current reporting period. We have updated our financial statement disclosures to reflect the adoption of this standard.

In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements, or ASU 2009-13, which amends existing revenue recognition accounting pronouncements that are currently within the scope of FASB ASC 605, Revenue Recognition. This guidance eliminates the requirement to establish the fair value of undelivered products and services and instead provides for separate revenue recognition based upon management’s estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the impact, if any, that the adoption of this amendment will have on its financial statements.

Note 12 — Subsequent Events

The Company has performed an evaluation of subsequent events through November 12, 2009, which is the date the financial statements were issued.

Issuance of Preferred Stock Dividends

In October 2009, the Company issued 7,446 and 7,463 shares of Series A and B Convertible Preferred stock, respectively, pursuant to the dividend declared by the Board of Directors on September 17, 2009.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains forward-looking statements regarding Cytomedix, Inc. (“Cytomedix,” the “Company,” “we,” “us,” or “our”) and our business, financial condition, results of operations and prospects within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements. You should read the following discussion and analysis in conjunction with our unaudited financial statements contained in this report, as well as the audited financial statements, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Risk Factors” contained in our Annual Report on Form 10-K/A, for the fiscal year ended December 31, 2008. The Company undertakes no obligation to update the forward-looking statements contained in this report to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may occur as part of its ongoing periodic reports filed with the SEC. Given these uncertainties, the reader is cautioned not to place undue reliance on such statements.

Restatements

On January 1, 2009, we adopted new accounting guidance (ASC 815-40, formerly EITF 07-5 “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock”) that required additional analysis as to whether or not stock purchase warrants are“indexed to” our stock, a condition that is required to attain equity accounting and classification. Upon the adoption of this new guidance, we concluded that our previously issued stock purchase warrants were appropriately classified as equity and, therefore, the adoption of the new guidance did not have any impact on our historical financial statements or on our 2009 financial statements.

In connection with the review of certain equity transactions in 2010, we determined that, upon the adoption of the new accounting guidance on January 1, 2009, certain stock purchase warrants issued in 2004 should have been appropriately classified as derivative liabilities (and not equity) due to the presence of non-standard anti-dilution provisions in those warrant agreements. These provisions require that we modify existing warrants (as to the actual number of warrants and their exercise price) in the event that we issue subsequent equity (or equity-linked instruments) at a price below the exercise price of the existing warrants. Additionally, stock purchase warrants issued in 2009 (after the adoption of the new guidance) should also have been classified as derivative liabilities (and not equity) for similar reasons. Also, as a result of the improper accounting treatment for the above-mentioned stock purchase warrants, certain offering expenses were also misclassified and accounted for incorrectly.

As a result, we have restated our 2009 quarterly financial statements to correct for the misapplication of the new accounting guidance related to the accounting and classification of stock purchase warrants. See Note 2 to the financial statements contained in Part I Item 1 of this report for further discussion.

The following discussion and analysis incorporates the impact of the above-mentioned restatements.

Recent Developments

NYSE Amex — Approval of the Plan of Compliance

On July 24, 2009, the Company received a letter from NYSE Amex (the “Exchange”) indicating that the Exchange accepted the Company’s plan of compliance and granted the Company an extension until November 12, 2010 to regain compliance with the Exchange’s continued listing requirements. The Company will be required to provide the Exchange staff with updates on its progress relating to the execution of the plan so as to enable the Exchange staff to review the Company’s adherence to the plan during the extension period. Failure to regain compliance with the continued listing standards by the end of the extension period or to make progress consistent with the plan of compliance during the extension period could result in the Company being delisted from the Exchange.

As previously disclosed, the Company was notified by the Exchange of its non-compliance with Sections 1003(a)(i), 1003(a)(ii) and 1003(a)(iii) of the Exchange Company Guide relating to its shareholders’ equity.

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The Company submitted a plan of compliance outlining its strategy to regain compliance with the continued listing requirements, which plan was approved and accepted by the Exchange, as discussed above.

Description of the Business

Overview

AutoloGel^TM System

In January 2009, we implemented a strategic shift in the commercialization tactics for marketing of the AutoloGel^TM System. We have placed new emphasis on scientific and clinical messaging, and have realigned the commercial organization to reflect a stronger requirement for clinical support during the sales process. We have added two new clinical support staff to facilitate clinical product evaluations and establish protocols for the standardized use of the AutoloGel^TM System. Our top company executives have joined sales managers and clinical staff in the selling process to establish a greater sense of importance and commitment to the AutoloGel^TM System and the positive patient outcomes it produces. Early results of the strategy indicate sales growth and broader customer acceptance. We have experienced a marked increase in the number of product evaluations and interest in the technology. Product sales in the first nine months of 2009 are more than double those in the same period in 2008. Our focus over the upcoming months will be to convert this heightened interest and resulting evaluations into lasting commercial relationships to drive sales increases.

We have developed a new packaging concept, based on customer feedback, which we expect to introduce in the first quarter of 2010. The new design and component enhancements will improve the customer experience, reduce process steps and simplify the preparation of AutoloGel^TM. We are also working with medical device engineers to further refine the AuotloGel^TM System.

We continue to publish in trade journals and exhibit at industry conferences. Two abstracts demonstrating the use of the AutoloGel^TM System were published at the April 2009 Symposium on Advanced Wound Care and Wound Healing Society (SAWC/WHS) Meeting. Separately, two additional abstracts were accepted for the October 2009 Clinical Symposium for Advances in Skin and Wound Care and a single abstract was accepted for the October 2009 National Association for Long Term Hospitals (NALTH) conference. An AutoloGel^TM case series, authored by one of our customers, was published in May 2009 in the journal Wounds. In the first half of 2009, we also collected new data through our clinical evaluations and customer experiences on 65 wounds of all types. The clinical experience and new data continue to support the effectiveness of the AutoloGel^TM System. The average duration of these wounds before the first treatment with AutoloGel^TM was 48 weeks. The AutoloGel^TM System produced a favorable clinical response in 97% of the wounds treated, resulting in a mean reduction in wound volume of 62% in less than three weeks of treatment on average. The Company expects to submit this 65 wound case series in November 2009 for expected publication in the first half of 2010. We believe that these recent publications, other published literature, and the data we continue to collect through product evaluations will support our marketing efforts and help build a compelling case for a reconsideration of Medicare Part B reimbursement by the Centers for Medicare and Medicaid Services (“CMS”).

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The American Recovery and Reinvestment Act of 2009 authorized additional funds for CMS to compare the effectiveness of related therapies, and named a committee to make recommendations regarding the use of the funds. This committee recently identified a comparison of topical growth factor therapies, such as PRP gel, to systemic therapies, such as negative pressure wound therapy, as a priority. We are monitoring and analyzing these initiatives to identify appropriate opportunities to obtain corroborative data, which would support our ultimate goal of convincing CMS to allow coverage for the AutoloGel^TM System.

In 2009 to-date, we have also seen several commercial insurers reimburse for AutoloGel^TM. We intend to continue to build a database of commercial third party payers that reimburse for our technology as a means to significantly and directly expand the available market for AutoloGel^TM and at the same time develop further leverage for our efforts to secure CMS reimbursement.

Additionally, several new customers include key opinion leaders in the area of wound care. These leaders have expressed strong initial support for our technology and continue to be active users/buyers of AutoloGel^TM. As their experience with AutoloGel^TM grows over time, we expect their influence in the clinical community will help drive sales as well as influence additional thought leaders, advocacy groups, and CMS.

Finally, in September 2009, we entered into a license and distribution agreement with Millennia Holdings, Inc. (“Millennia”) for the Company’s AutoloGel^TM System in Japan. The agreement provides territorial exclusivity for 10 years with the option to extend terms upon agreement by both parties. Millennia will be responsible for implementing regulatory and reimbursement processes for the AutoloGel^TM System in Japan. Through its subsidiary wound management company, which is the sole wound management corporation in Japan, Millennia will work with its network of hospitals in Japan to conduct the necessary clinical studies for regulatory approval. Thereafter, Millennia plans to sell and distribute Cytomedix’s AutoloGel^TM System for the treatment of a variety of chronic wounds, including diabetic wounds, which represent a growing and underserved patient population in Japan. The diabetic population in Japan is estimated to be 22.1 million, including patients suspected to have diabetes, according to the National Health and Nutrition Report 2008 by the Ministry of Health Labor and Welfare in Japan. This data indicates that nearly one out of five Japanese either has diabetes or is suspected to be diabetic, thus providing a significant market potential for diabetic wound healing in Japan. Cytomedix must supply Millennia with approximately $25,000 worth of equipment and inventory over the first three years of this agreement. As part of its performance milestones in these first three years, Millenia will complete an investigation of the Japanese regulatory environment as it relates to AutoloGel^TM, introduce AutoloGel^TM to the clinical marketplace, complete case studies in hospitals, and determine a pricing structure for the Japanese market to be agreed upon by Cytomedix. Thereafter, the parties will agree to a plan of distribution including minimum purchase commitments by Millennia.

Anti-Inflammatory Peptide

CT-112, an anti-inflammatory octapeptide, continues to represent an avenue through which we can further monetize our intellectual property. In pre-clinical in-vitro and in-vivo studies, CT-112 was shown to be potentially useful as a therapeutic for a number of autoimmune diseases, such as rheumatoid arthritis, graft-versus-host disease, chronic obstructive pulmonary disease, reperfusion injury and atherosclerosis. Market assessments found that these fields are crowded with new therapies under investigation, and that the requisite clinical trials are lengthy and involve large numbers of patients. The Company engaged the Frankel Group to conduct a review of potential therapeutic indications for CT-112, which revealed a number of underserved conditions that provide optimal market opportunity along with a well-defined regulatory pathway. Initial targets may include Pyoderma Gangrenosum (PG), atopic dermatitis, and an anti-inflammatory coating for medical devices. To facilitate partnering and further development of the CT-112 candidate, we are in the process of completing studies in human cell systems that are intended to provide potency estimates. Results from these studies will be available by the end of 2009. We also are actively seeking grant funding for the development of a dermal formulation. Based on the outcome of these activities, Cytomedix intends to proceed with development in dermal indications while seeking partners in the device coating area.

Other Initiatives

We have also been focusing on selected opportunities to accelerate revenue growth, broaden our product offering, and address other sub-markets appropriate for our existing therapies. We are actively evaluating a number of opportunities that meet one or more of these goals.

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We are studying other wound care therapies that could be combined with AutoloGel^TM to either provide further improved wound healing outcomes across a broad range of wound etiologies, or provide greater flexibility for the implementation of regenerative therapy.

We are working to address the hair transplantation market, as data indicate that AutoloGel^TM reduces redness, swelling, and crusting at the sites of follicle harvest and transplant. This is a self-pay market that would avoid the complexities of third party reimbursement.

We have been developing a PRP system appropriate for surgical orthopedic applications, with comparable indications to those for devices developed by our licensees, and have filed a 510(k) submission with the FDA in the third quarter of this year. In the normal course of this process, the FDA has responded to our submission with a list of questions. We are currently preparing our responses to their initial round of questions.

Comparison of Operating Results for the Three and Nine Month Periods Ended September 30, 2009 and 2008

Certain Numbers in this Section have Been Rounded for Ease of Analysis.

Currently, the Company’s revenues are primarily earned through its licensing agreements. These revenues, net of related royalty and contingent legal fees, represent the primary source of cash from operations for the Company. Cash generated from the Company’s licensing agreements is wholly dependent on covered sales generated by its licensees, which are entirely outside of the Company’s control. These revenues, which constituted approximately 95% of the Company’s revenues in 2008, will cease by the end of November 2009 as the underlying license agreements expire at that time.

Sales of the Company’s products are currently modest. The Company implemented a significantly revamped selling approach beginning in January 2009. This new approach focuses on the scientific mechanisms underpinning AutoloGel^TM, and leverages the Company’s clinical expertise in chronic wound care. Part of this new sales approach includes increased clinical involvement by our staff to assist prospective customers in conducting intensive on-site evaluations of AutoloGel^TM and offering on-going support to existing customers in order to optimize healing outcomes. Although it is still relatively early in the process, this new approach is eliciting positive customer responses to the new messaging and tactics. In the first nine months of 2009, product sales of $159,000 were more than double those for the same period in 2008, evidencing the success of the new sales strategy. We expect continued growth in the coming quarters with a short-term goal of replacing the expiring royalty revenues by second quarter of 2010. However, there is no assurance that we will achieve this goal. The Company continues to target selected submarkets, including the Veterans Administration and other government agency health facilities, as well as capitated payment scheme environments such as long-term acute care facilities.

The Company’s revenues are insufficient to cover its operating expenses. Operating expenses primarily consist of employee compensation, professional fees, consulting expenses, and other general business expenses such as insurance, travel related expenses, and sales and marketing related items. Cash outflows have recently risen as we have increased our investment in the commercialization efforts around AutoloGel^TM, the evaluation of additional products/technologies, and an enhanced investor relations effort.

Revenues

Revenues rose $39,000 (8%) to $538,000 and $92,000 (6%) to $1,647,000 comparing the three and nine months ended September 30, 2009, respectively, to the same periods last year. Revenues are normally generated from two sources: the sale of the Company’s products and royalties received from licensing activities.

For the three month period, the increase was due to higher royalty revenues ($21,000) and product sales ($18,000).

For the nine month period, the increase was due to higher product sales ($87,000) and higher royalty revenues ($5,000).

The increase in product sales is a result of the revised selling approach implemented in the first quarter of 2009. The Company plans to devote further resources to its efforts in the sales and marketing areas in the

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coming quarters. Royalties are directly dependent on sales of covered products by licensees, over which the Company exercises no control. The license agreements currently resulting in royalty revenue expire in late November 2009.

Gross Profit

Gross profit rose $44,000 (11%) to $435,000 and $171,000 (15%) to $1,292,000 comparing the three and nine months ended September 30, 2009, respectively, to the same periods last year. For the three month periods, gross margins improved to 81% from 78% in the prior year, while for the nine month period gross margins improved to 78% from 72% in the prior year. The increased profits resulted from higher revenues on comparable or improved margins. For the nine month period, the improved margins were driven by a shift in revenue to higher margin royalty revenue, partly offset by shift in product revenue to lower margin reagent kits and a $14,000 write-off of obsolete inventory in the second quarter of 2009.

Operating Expenses

Operating expenses fell $292,000 (23%) to $1,002,000 and $638,000 (15%) to $3,648,000 comparing the three and nine months ended September 30, 2009, to the same periods last year. A discussion of the various components of Operating expenses follows below.

Salaries and Wages

Salaries and wages fell $175,000 (33%) to $349,000 and $331,000 (17%) to $1,624,000 comparing the three and nine months ended September 30, 2009, to the same periods last year.

For the three month period, the decrease was primarily due to lower bonus expense ($335,000) resulting from the reversal of accrued bonuses, as the Company elected not to pay a bonus to the CEO for fiscal year 2008 and does not currently anticipate a bonus payout to employees for fiscal year 2009. This was partly offset by higher salaries ($96,000) and higher equity-based compensation ($60,000).

For the nine month period, the decrease was primarily due to lower bonus expense ($422,000), as the Company elected not to pay bonuses to employees for fiscal year 2008 and does not currently anticipate a bonus payout to employees for fiscal year 2009, and the accrual in 2008 of a severance package to the former CEO ($510,000). These amounts were partly offset by higher salaries ($300,000) and equity-based compensation ($80,000), and the reversal in 2008 of the bonus accrual for the former CEO ($192,000).

Consulting Expenses

The change in consulting expenses was nominal, comparing the three and nine months ended September 30, 2009, to the same periods last year.

Professional Fees

Professional fees fell $18,000 (11%) to $147,000 and $230,000 (34%) to $453,000 comparing the three and nine months ended September 30, 2009, to the same periods last year.

For the three month period, the decrease was not significant.

For the nine month period, the decrease was primarily due to lower legal fees associated with Medicare reimbursement efforts ($112,000), lower patent maintenance fees ($43,000) and lower audit fees ($29,000).

Trials and Studies

Trials and studies expenses fell $28,000 (100%) to nearly zero and rose $151,000 (540%) to $179,000, comparing the three and nine months ended September 30, 2009, to the same periods last year.

For the three month period, the decrease was due to delays in enrollment in the Company’s TAPS program (post-market surveillance study) for the AutoloGel^TM System, and a pause in expenditures around CT-112 as the Company evaluates the findings of the market assessment completed by the Frankel Group regarding the optimal paths forward for partnering this technology.

For the nine month period, the increase was due to costs incurred earlier in 2009 for the TAPS program and the CT-112 project, both initiated in the third quarter of 2008.

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General and Administrative Expenses

General and administrative expenses fell $57,000 (12%) to $426,000 and $214,000 (15%) to $1,259,000 comparing the three and nine months ended September 30, 2009, to the same periods last year.

For the three month period, the decrease was primarily due to lower equity-based compensation ($40,000) and patent amortization ($38,000) as the Company wrote-off the remaining value of its patents in the fourth quarter of 2008, partly offset by increased marketing expenses ($23,000).

For the nine month period, the decrease was primarily due to lower equity-based compensation ($188,000), patent amortization ($113,000) as the Company wrote-off the remaining value of its patents in the fourth quarter of 2008, recruiting fees ($61,000), and investor services ($45,000), partly offset by increased travel expenses ($112,000), sales demonstration supplies ($44,000), and various other expenses.

Other Income (Expense)

Other income (expense) for the three and nine months ended September 30, 2009 reflects lower interest earned on cash invested in money market accounts and notes receivable balances as compared to the same period last year, lower patent settlement income in the third quarter of 2009 as the Company had received a final balloon payment in the third quarter of 2008 under a license agreement it was accounting for on the cash basis, as well as changes in the fair value of derivative liabilities of $102,000 and $427,000, respectively, for the three and nine months ended September 30, 2009.

Liquidity and Capital Resources

There exists substantial doubt that the Company will continue as a going concern. We completed a $1.5 million capital raise in the third quarter of 2009 and believe that we have adequate cash to fund operations through the second quarter of 2010. However, this belief is based on the successful execution of our new sales strategy in the current market and resulting increase in revenue from product sales. Furthermore, there is no assurance that the Company will have adequate funding to enable it to operate beyond that point or to reach a point of self-sustainability without additional financing. The licensing agreements, under which the Company’s royalty revenues are generated, expire in late November 2009. This revenue, which constituted approximately 95% of the Company’s revenues in 2008, will cease at that time and there is no assurance that the Company will be able to replace this revenue through increased sales of its current or future products, new license agreements, or other mechanisms.

Additional cash will likely be required for the Company to pursue all elements of its strategic plan. Specific programs that may require additional funding may include development of CT-112, accelerated investment in the sales and marketing areas beyond what is currently forecasted, significant new product development or modifications, conduct of the trials the Company may deem necessary in order to obtain CMS coverage, and pursuit of certain other attractive opportunities for the Company. We are exploring potential strategic partnerships for some of these endeavors, which could likely provide a capital infusion to the Company. However, it may be necessary to partner one or more of our technologies at an earlier stage of development, which could cause the Company to share a greater portion of the potential future economic value of those programs with its partners. We may also consider raising capital through the issuance of our equity securities, though this may result in significant dilution to our investors. The Company continuously assesses the state of the capital markets and its access to capital. It weighs the cost of capital and dilutive effects of equity issuance against the expected benefits of accelerating the pursuit of certain strategic objectives. The Company’s ability to raise additional capital is dependent on, among other things, the state of the financial markets at the time of any proposed offering. Given the current state of the financial markets, the likelihood of a capital raise may be significantly diminished. The Company is also exploring the possibility of obtaining grant funding for some of its on-going projects, but it is too early to determine whether these efforts are likely to be successful. Because the Company was in bankruptcy in 2002, the Company may not be able to obtain debt financing. There is no assurance that additional funding, through any of the aforementioned means, will be available on acceptable terms, or at all. If adequate capital cannot be obtained on a timely basis and on satisfactory terms, the Company’s operations would be materially negatively impacted.

The Company has certain warrants that are callable, subject to certain requirements including a minimum per share price ranging from $4 to $6, at an aggregate exercise price of approximately $6.0 million. The Company

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has no material commitments for capital expenditures. The Company has begun implementation of a post-market surveillance study per its understanding reached with the FDA. The Company estimates that this new study will cost approximately $500,000 over the next three years, and of that amount, approximately $73,000 has been incurred to date, and approximately $200,000 will be expended in the next 12 months.

Contractual Obligations

Prospects for the Future

Cytomedix’s success is directly dependent on its ability to generate sales of the AutoloGel^TM System, and to further develop the other product candidates in its pipeline. The Company believes that AutoloGel^TM has a reasonable chance for success in the marketplace. First and foremost, the Company believes that, based on the results of the Company’s clinical trial and other historical data, recent data accumulated from clinical evaluations at prospective customer sites, as well as the results of a pharmaco-economic study, the AutoloGel^TM System has higher healing rates for diabetic foot ulcers and other chronic wounds and is more cost effective than most other wound treatments. Although still relatively early, the Company’s revised sales strategy, centered around heavy clinician to clinician interaction, is meeting with very positive response from potential and existing customers. However, given limited resources, sales increases are expected to be moderate. The Company owns the patents on the process for utilizing platelet gel for treating damaged tissue and wound healing, which is the basis of its license agreements, through November 2009 and for the specific formulation of AutoloGel^TM, which it believes provides several competitive advantages, and which patents expire in 2019.

The Company also believes that the AutoloGel^TM System is the only PRP gel system with a wound indication cleared by the FDA, thus affording another competitive advantage. While the existing CMS decision of non-coverage of autologous blood-derived products when used on chronic wounds will continue to restrict the Company’s ability to target the entire wound care market, it will not have an impact on the Company’s current sales and marketing strategy, which targets selected sub-markets with established payment pathways for its products, as well as certain commercial insurance reimbursement opportunities.

We are also exploring the opportunity to exploit other relevant markets for AutoloGel^TM, such as in the hair transplantation market, and the international wound care market.

The Company believes that pre-clinical data on CT-112 is promising. The Company believes that the magnitude of the potential markets for CT-112, along with the potential competitive advantage over existing therapies, could make CT-112 an attractive partnering opportunity for well-established drug and biological therapy companies. Such partnerships could provide Cytomedix with initial and milestone-based capital infusions and on-going licensing revenues. However, the ability to secure such a partnership and the attractiveness of the terms to Cytomedix is in part a function of how far through development Cytomedix can take CT-112 on its own.

While Cytomedix’s opportunities and recent progress are encouraging, the Company has limited resources, and is currently not self-sustaining. Given the economic conditions in the overall financial markets, the availability of capital on terms acceptable to the Company may be significantly diminished. The Company may therefore seek additional infusions of capital through strategic collaborations and/or place certain projects on indefinite hold in order to conserve cash.

Recent Accounting Pronouncements

On January 1, 2009, we adopted new accounting guidance (ASC 815-40, formerly EITF 07-5 “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock”) that required additional analysis as to whether or not stock purchase warrants are “indexed to” our stock, a condition that is required to attain equity accounting and classification. Upon the adoption of this new guidance, we concluded that our previously issued stock purchase warrants were appropriately classified as equity and, therefore, the adoption of the new guidance did not have any impact on our historical financial statements or on our 2009 financial statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company does not enter into financial instruments for speculation or trading purposes. In accordance with the Company’s investment policy, cash is to be invested in bank and institutional money market funds, or in T-Bills or short-term T-Notes. At September 30, 2009, the Company’s cash balance of approximately $2.8 million was maintained primarily in an institutional money market account, sensitive to changes in the general level of interest rates. Based on the Company’s cash balances at September 30, 2009, a 100 basis point increase or decrease in interest rates would have an approximately $28,000 impact on the Company’s annual interest income and net loss. Actual changes in rates may differ from the hypothetical assumption used in computing this exposure.

Item 4T. Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2009. The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934. Management recognizes that any disclosure controls and procedures no matter how well designed and operated, can only provide reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As a result of a material weakness in our internal control over financial reporting relating to the accounting for stock purchase warrants, our management has reassessed the effectiveness of our disclosure controls and procedures and have determined that our disclosure controls and procedures were not effective as of September 30, 2009.

Restatement of Consolidated Financial Statements

On January 3, 2011, the Audit Committee of the Board of Directors concluded, based on the recommendation of management, that the previously issued financial statements for the year ended December 31, 2009 included in the Company's most recently filed Form 10-K and the quarterly periods from March 31, 2009 through September 30, 2010 included in the Company’s quarterly reports on Forms 10-Q (collectively, the “Affected Periods”) are no longer reliable because they failed to incorporate non-cash charges resulting from required adjustments to certain outstanding warrants (the “Warrants”). The Company’s management and the Audit Committee of the Board of Directors have determined that financial statements in the Affected Periods should be restated to reflect these noncash charges. The Company’s management and the Audit Committee of the Board of Directors have discussed these matters with the Company’s independent registered public accounting firm.

Remediation Plan

Management has been actively engaged in developing a remediation plan to address the material weakness. Implementation of the remediation plan is in process and consists of redesigning quarterly procedures to enhance management's identification, capture, review, approval and recording of contractual terms included in equity arrangements. Management believes the foregoing efforts will effectively remediate the material weakness. As the Company continues to evaluate and work to improve its internal control over financial reporting, management may execute additional measures to address potential control deficiencies or modify the remediation plan described above. Management will continue to review and make necessary changes to the overall design of the Company's internal control environment, as well as to policies and procedures to improve the overall effectiveness of internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended on the Evaluation Date that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

At present, the Company is not engaged in or the subject of any material pending legal proceedings.

Item 1A. Risk Factors

There were no material changes from the risk factors as previously disclosed on our 10-K/A filed with the Securities and Exchange Commission for the year ended December 31, 2008.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company issued no unregistered shares of Common stock during the three months ended September 30, 2009. Nor did the Company repurchase any of its equity securities during the same fiscal period.

Item 3. Defaults Upon Senior Securities

N/A

Item 4. Submission of Matters to a Vote of Security Holders

The Company held its annual meeting of shareholders on September 18, 2009, at the Company’s offices in Rockville, Maryland. At the meeting, the shareholders elected James S. Benson, Mark T. McLoughlin, David E. Jorden, Stephen N. Keith, C. Eric Winzer and Martin P. Rosendale as Directors to hold office until the next annual meeting of shareholders and until their successors are duly elected. A summary of votes cast follows below:


Nominee	Votes for		Votes Withheld		Abstentions*
James S. Benson		24,089,913		347,681		—
Mark T. McLoughlin		23,902,241		535,353		—
David E. Jorden		24,118,110		319,484		—
Stephen N. Keith		24,118,110		319,484		—
C. Eric Winzer		24,169,691		267,903		—
Martin P. Rosendale		24,118,110		319,484		—

Pursuant to the terms of the Proxy Statement, proxies received were voted, unless authority was withheld, in favor of the election of the six nominees.

Shareholders also voted to ratify the appointment of PricewaterhouseCoopers, LLP as the Company’s independent registered accountant for the fiscal year ending December 31, 2009 with 24,376,834 votes for, and 30,685 votes against.

Finally, the shareholders also voted to amend the Long-Term Incentive Plan to increase the number of shares of common stock authorized to be issued under the Plan from 5,000,000 to 6,500,000, with 10,365,753 votes for, and 1,649,640 votes against.

Further information regarding the meeting and the proposals submitted to a vote of the shareholders may be found in the Company’s definitive proxy statement filed with the Securities and Exchange Commission on August 11, 2009.

Item 5. Other Information

None.

Item 6. Exhibits

The exhibits listed in the accompanying Exhibit Index are furnished as part of this report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CYTOMEDIX, INC.

By:

/s/ Martin P. Rosendale

Martin P. Rosendale,
Chief Executive Officer

Date: January 7, 2011

By:

/s/ Andrew S. Maslan
Andrew S. Maslan,
Chief Financial Officer

Date: January 7, 2011

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EXHIBIT INDEX


Number		Exhibit Table
2.1		First Amended Plan of Reorganization with All Technical Amendments (Previously filed on June 28, 2002, as exhibit to Current Report on Form 8-K, File No. 000-28443, and incorporated by reference herein).
2.2		Amended and Restated Official Exhibits to the First Amended Plan of Reorganization of Cytomedix, Inc. with All Technical Amendments (Previously filed on May 10, 2004, as exhibit to Form 10-QSB for the quarter ended March 31, 2004, File No. 000-28443, and incorporated by reference herein).
3(i)		Restated Certificate of Incorporation of Cytomedix, Inc. (Previously filed on November 7, 2002, as exhibit to Form 10-QSB for quarter ended June 30, 2001, File No. 000-28443, and incorporated by reference herein).
3(i)(1)		Amendment to Restated Certificate of Incorporation of Cytomedix, Inc. (Previously filed on November 15, 2004, as exhibit to Form 10-QSB for quarter ended September 30, 2004, File No. 000-28443, and incorporated by reference herein).
3(ii)		Restated Bylaws of Cytomedix, Inc. (Previously filed on November 7, 2002, as exhibit to Form 10-QSB for quarter ended June 30, 2001, File No. 000-28443, and incorporated by reference herein).
4.1		Form Common Stock Purchase Warrant (Previously filed on August 12, 2009, as exhibit to the Current Report on Form 8-K, dated August 10, 2009, and incorporated by reference herein).
10.1		Form Securities Purchase Agreement (Previously filed on August 12, 2009, as exhibit to the Current Report on Form 8-K, dated August 10, 2009, and incorporated by reference herein).
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certificate of Chief Executive Officer pursuant to 18 U.S.C.ss.1350.
32.2		Certificate of Chief Financial Officer pursuant to 18 U.S.C.ss.1350.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q/AAmendment No. 1

For the Quarterly Period Ended September 30, 2009

OR

For the Transition Period from to

Commission File Number 001-32518

CYTOMEDIX, INC.

209 Perry ParkwaySuite 7Gaithersburg, MD 20877

(240) 499-2680

APPLICABLE ONLY TO CORPORATE ISSUERS

EXPLANATORY NOTE

Background of the Restatement

Restatement of Other Financial Statements

Internal Control Considerations

CYTOMEDIX, INC.

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements

CYTOMEDIX, INC. BALANCE SHEETS

CYTOMEDIX, INC. STATEMENTS OF OPERATIONS (Unaudited)

CYTOMEDIX, INC. STATEMENTS OF CASH FLOWS (Unaudited)

CYTOMEDIX, INC. NOTES TO FINANCIAL STATEMENTS

Note 1 — Description of Business

Note 2 — Restatement of 2009 Financial Statements

CYTOMEDIX, INC. NOTES TO FINANCIAL STATEMENTS

Note 2 — Restatement of 2009 Financial Statements – (continued)

CYTOMEDIX, INC. NOTES TO FINANCIAL STATEMENTS

Note 3 — Liquidity Risks and Management’s Plans

Note 4 — Basis of Presentation

CYTOMEDIX, INC. NOTES TO FINANCIAL STATEMENTS

Note 4 — Basis of Presentation – (continued)

Note 5 — Fair Value Measurements

CYTOMEDIX, INC. NOTES TO FINANCIAL STATEMENTS

Note 6 — Capital Stock Activity

CYTOMEDIX, INC. NOTES TO FINANCIAL STATEMENTS

Note 6 — Capital Stock Activity – (continued)

Note 7 — Patent Amortization

Note 8 — Commitments and Contingencies

CYTOMEDIX, INC. NOTES TO FINANCIAL STATEMENTS

Note 8 — Commitments and Contingencies – (continued)

Note 9 — Income Taxes

CYTOMEDIX, INC. NOTES TO FINANCIAL STATEMENTS

Note 10 — Termination and Consulting Agreement

Note 11 — Recent Accounting Pronouncements

CYTOMEDIX, INC. NOTES TO FINANCIAL STATEMENTS

Note 11 — Recent Accounting Pronouncements – (continued)

Note 12 — Subsequent Events

Issuance of Preferred Stock Dividends

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Restatements

Recent Developments

NYSE Amex — Approval of the Plan of Compliance

Description of the Business

Overview

AutoloGelTM System

Anti-Inflammatory Peptide

Other Initiatives

Comparison of Operating Results for the Three and Nine Month Periods Ended September 30, 2009 and 2008

Revenues

Gross Profit

Operating Expenses

Salaries and Wages

Consulting Expenses

Professional Fees

Trials and Studies

General and Administrative Expenses

Other Income (Expense)

Liquidity and Capital Resources

Contractual Obligations

Prospects for the Future

Recent Accounting Pronouncements

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4T. Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Restatement of Consolidated Financial Statements

Remediation Plan

Changes in Internal Control Over Financial Reporting

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A
Amendment No. 1

209 Perry Parkway
Suite 7
Gaithersburg, MD 20877

PART I

FINANCIAL INFORMATION

CYTOMEDIX, INC.

BALANCE SHEETS

CYTOMEDIX, INC.

STATEMENTS OF OPERATIONS
(Unaudited)

CYTOMEDIX, INC.

STATEMENTS OF CASH FLOWS
(Unaudited)

CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

CYTOMEDIX, INC.

NOTES TO FINANCIAL STATEMENTS

AutoloGel^TM System

PART II

OTHER INFORMATION