SecProbe.io

CORRESP
1
filename1.htm

      Unassociated Document

    September
      10, 2007

    U.S.
      Securities and Exchange Commission

    Mail
      Stop
      6010

    Washington,
      DC 20549

            Re:

              Cytomedix,
                Inc. (the “Company”)

    Form
      10-K
      for the fiscal year ended December 31, 2006

    Filed
      February 26, 2007

    File
      No.
      001-32518

    Ladies
      and Gentlemen:

    Filed
      today is our response to the Security and Exchange Commission’s (“SEC” or
“Commission”) letter to the Company dated August 28, 2007 regarding the Form
      10-K for the fiscal year ended December 31, 2006. Set forth below is the text
      of
      the comment contained in that letter of August 28 and the Company’s responses
      thereto. The headings and numbered paragraphs below correspond to the headings
      and paragraph numbers in the SEC letter.

    Form
      10-K for the year ended December 31, 2006

    Financial
      Statements

    Statements
      of Operations, page 26

              1.

              We
                reference prior comment three in our letter dated August 8, 2007.
                We
                continue to believe that since patent infringement appears to relate
                to
                your operations, you should record the settlement within operating
                income
                (loss). For classification guidance refer, by analogy, to the presentation
                guidance from Interpretive Question 2 to the presentation and disclosure
                guidance from SAB Topic 5-P. Please note that, in general, charges
                and
                credits related to operating activities, such as patent infringement
                matters, should themselves be reported in operating income or
                loss.

    Response

    The
      Company has read Interpretive Question 2 of SAB Topic 5-P,however, it notes
      that
      this question is specifically addressing restructuring charges tied to some
      underlying activity. In the Company’s case, the activity is the litigation
      settlement itself and therefore it believes that the guidance, by analogy,
      is
      not relevant to this set of circumstances.

    In
      its process to determine the most appropriate presentation, the Company analyzed
      the litigation settlements in two contexts as follows:

              §

              Were
                they part of the Company’s on-going business
                model

              §

              What
                would provide investors with the most accurate depiction of the Company’s
                historical performance, and thereby provide a baseline or reference
                point
                for analysis of projected and future
                results

    Through
      this analysis, the Company concluded that litigation settlements were most
      appropriately presented as Other Income due to the following
      reasons:

    First,
      litigation settlements, per se, are not part of the Company’s on-going strategy.
      Currently, the Company has no plans to pursue patent litigation settlements
      and
      therefore believes it to be unlikely that it will realize patent litigation
      settlement income in the foreseeable future. In contrast, the Company is
      currently pursuing additional licensees for its technology, for use on a
      prospective basis, which have been and will continue to be recorded under
      operating income.

    Second,
      the Company feels that it would be misleading to investors to include litigation
      settlements as part of operations. The Company believes that investors currently
      use the following key metrics to evaluate the Company:

              §

              On-going
                royalty revenue

              §

              Margins
                on product and royalty
                revenues

              §

              Cash
                position

              §

              Cash
                used in operations

    The
      inclusion of patent litigation settlements in operations would make the
      comparison of the period over period operational performance more difficult.
      In
      determining where to reflect this income at the time of the first litigation
      settlement, the Company and its audit committee were very concerned that if
      this income was included under operating income that investors would improperly
      draw the conclusion that this income would be on-going and potentially mislead
      investors to expect similar incomes and cash inflows in the
      future.

    The
      Company therefore feels that classification of settlements as Other Income
      most
      accurately reflects the current business model, best informs and protects
      investors, and is consistent with both GAAP and the mission of the
      SEC.

    We
      appreciate the opportunity to provide further clarification to you regarding
      our
      financial statement presentation of patent infringement settlements and look
      forward to reaching agreement with you on the optimal presentation. If you
      have
      any further questions, or if we may be of any assistance, please contact the
      undersigned at 240-499-2680.

    Very
      truly yours,

    Andrew
      Maslan