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

                                   FORM 10-QSB

              (Mark One)

                 |X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2003

                |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         Commission file number 0-28443

                                 Cytomedix, Inc.
                                 ---------------
        (Exact name of small business issuer as specified in its charter)

          Delaware                                      23-3011702
- -------------------------------          ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

1523 South Bowman Rd., Suite A, Little Rock, AR               72211
- -----------------------------------------------               -----
   (Address of principal executive offices)                 (Zip Code)

Issuer's telephone number       (501) 219-2111

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 |_|

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes |X|  No |_|

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of November 13, 2003: 13,211,839 shares of Common Stock, $.0001 par
value

Transitional Small Business Disclosure Format (Check one): Yes |_|  No |X|



                                 CYTOMEDIX, INC.
                                TABLE OF CONTENTS

PART I--FINANCIAL INFORMATION

Item 1. Financial Statements.                                                 1

Item 2. Management's Discussion and Analysis.                                14

         Overview of Business                                                14
         Results of Operations                                               15
         Liquidity and Capital Resources as of September 30, 2003            17
         Risk Factors                                                        18
         Prospects for the Future                                            23

Item 3. Controls and Procedures.                                             23

PART II--OTHER INFORMATION

Item 1. Legal Proceedings.                                                   24

Item 2. Changes in Securities.                                               25

         Outstanding Common Stock and Dividends                              25
         Sales of Non-Registered Securities in the Third Quarter
         of 2003                                                             25
         Sales of Non-Registered Securities Subsequent to the
         Third Quarter of 2003                                               26

Item 3. Defaults Upon Senior Securities.                                     26

Item 4. Submission of Matters to a Vote of Security Holders.                 26

Item 5. Other Information.                                                   26

Item 6. Exhibits and Reports on Forms 8-K.                                   27

SIGNATURES                                                                   28



                                     PART I
                              FINANCIAL INFORMATION

Item 1.   Financial Statements.

                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                            Condensed Balance Sheets



                         ASSETS

                                                                                  Successor Company
                                                                           --------------------------------
                                                                           September 30,       December 31,
                                                                               2003                2002
                                                                           ------------         -----------
                                                                            (Unaudited)         (Audited)
                                                                                          
Current assets
   Cash                                                                    $  1,618,247         $   945,298
   Receivables                                                                  230,519             238,273
   Prepaid expenses, other current assets and inventory                         319,784             255,967
                                                                           ------------         -----------
         Total current assets                                                 2,168,550           1,439,538

Cash - restricted                                                                20,460              20,000
Property and equipment, net                                                     258,137             312,706
Intangibles                                                                   4,263,728           4,358,465
Other assets                                                                     34,500              23,000
                                                                           ------------         -----------
         Total assets                                                      $  6,745,375         $ 6,153,709
                                                                           ============         ===========

        LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
   Accounts payable and accrued expenses                                   $    660,356         $   745,124
   Deferred revenue                                                              81,448              81,448
   Note payable                                                                  22,666              37,054
                                                                           ------------         -----------
         Total current liabilities                                              764,470             863,626
                                                                           ------------         -----------
Long-term liabilities
   Dividends payable on Series A and Series B preferred stock                    65,674             110,759
   Deferred revenue                                                             458,145             519,230
                                                                           ------------         -----------
         Total long-term liabilities                                            523,819             629,989
                                                                           ------------         -----------
         Total liabilities                                                    1,288,289           1,493,615
                                                                           ------------         -----------
Commitments and contingencies

Stockholders' equity
  Series A Convertible preferred stock; $.0001 par value, $1.00
   liquidation value, authorized 5,000,000 shares; at 2003 issued -
   1,359,067 shares, issuable -  261,010 shares; at 2002 issued -
   759,760 shares, issuable - 606,163 shares                                        163                 137
  Series B Convertible preferred stock; $.0001 par value, $1.00
   liquidation value, authorized 5,000,000 shares; at 2003 issued -
   1,402,650 shares, issuable - 260,989 shares; at 2002 issued -
   1,224,034 shares, issuable - 178,616 shares                                      166                 140
  Common stock; $.0001 par value, authorized 40,000,000 shares; at
   2003 issued - 12,541,639 shares, issuable - 659,614 shares; at
   2002 issued - 10,070,173 shares, issuable - 649,104 shares                     1,323               1,073
   Additional paid-in capital                                                11,123,582           6,942,297
   Deferred compensation                                                       (599,651)           (155,833)
   Deficit accumulated in the development stage                              (5,068,497)         (2,127,720)
                                                                           ------------         -----------
         Total stockholders' equity                                           5,457,086           4,660,094
                                                                           ------------         -----------
                                                                           $  6,745,375         $ 6,153,709
                                                                           ============         ===========


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


                                       1


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                 Condensed Statements of Operations - Unaudited



                                                                                                                      Predecessor
                                                                 Successor Company                                      Company
                                            -------------------------------------------------------------------       ------------
                                            Three Months      Three Months       Nine Months       July 1, 2002        Six Months
                                                Ended            Ended              Ended            Through             Ended
                                            September 30,     September 30,     September 30,      September 30,        June 30,
                                                2003              2002               2003              2003               2002
                                            ------------       -----------       ------------       -----------       ------------
                                                                                                       
Revenue
   Sales                                    $    104,892       $   135,140       $    229,407       $   563,237       $    117,500
   Royalties                                     166,431            35,289            547,596           879,949            309,770
                                            ------------       -----------       ------------       -----------       ------------
Total revenue                                    271,323           170,429            777,003         1,443,186            427,270
                                            ------------       -----------       ------------       -----------       ------------

Cost of revenue
   Cost of sales                                  43,025            29,652            115,624           177,671             16,073
   Cost of royalties                             134,834                --            448,233           713,967            234,376
                                            ------------       -----------       ------------       -----------       ------------
Total cost of revenue                            177,859            29,652            563,857           891,638            250,449
                                            ------------       -----------       ------------       -----------       ------------
Gross profit                                      93,464           140,777            213,146           551,548            176,821
                                            ------------       -----------       ------------       -----------       ------------

Operating expenses
   Salaries and wages                            239,098           173,847            696,556         1,093,538            285,906
   Consulting expense                            370,663           147,326            805,816         1,038,259             74,178
   Consulting expense - related party             65,971                --            202,635           521,187                 --
   Professional fees                             157,595           386,879            569,539         1,328,225            189,201
   Royalty expense - related party                18,750            18,750             57,926            95,426             37,500
   General and administrative expenses           234,440           270,867            657,052         1,269,756            492,264
                                            ------------       -----------       ------------       -----------       ------------
Total operating expenses                       1,086,517           997,669          2,989,524         5,346,391          1,079,049
                                            ------------       -----------       ------------       -----------       ------------
Loss from operations                            (993,053)         (856,892)        (2,776,378)       (4,794,843)          (902,228)
                                            ------------       -----------       ------------       -----------       ------------

Other (income) expense
   Interest expense                                  491            22,824                654            23,479            355,969
   Interest and other income                      (8,330)          (16,212)           (12,682)          (37,011)            (6,352)
                                            ------------       -----------       ------------       -----------       ------------
Total other (income) expense, net                 (7,839)            6,612            (12,028)          (13,532)           349,617
                                            ------------       -----------       ------------       -----------       ------------
Net loss from continuing operations             (985,214)         (863,504)        (2,764,350)       (4,781,311)        (1,251,845)

Reorganization item:
    Professional fees                                 --                --                 --                --            489,690
    Consulting - related party                        --                --                 --                --            119,526
                                            ------------       -----------       ------------       -----------       ------------
Net loss Before extraordinary items             (985,214)         (863,504)        (2,764,350)       (4,781,311)        (1,861,061)
                                            ------------       -----------       ------------       -----------       ------------

Extraordinary gain on discharge of
  prepetition liabilities                             --                --                 --                --          9,306,192
                                            ------------       -----------       ------------       -----------       ------------
Net income (loss)                               (985,214)         (863,504)        (2,764,350)       (4,781,311)         7,445,131

Preferred dividend on Series A and B
  preferred stock                                 65,674            55,379            176,428           287,187                 --
                                            ------------       -----------       ------------       -----------       ------------
Net income (loss) to common
  stockholders                              $ (1,050,888)      $  (918,883)      $ (2,940,778)      $(5,068,498)      $  7,445,131
                                            ============       ===========       ============       ===========       ============

Basic and diluted income (loss)
  per common share                          $      (0.09)      $     (0.10)      $      (0.25)                        $       0.58
                                            ============       ===========       ============                         ============

Weighted average shares outstanding           12,214,767         8,763,342         11,575,484                           12,746,482
                                            ============       ===========       ============                         ============



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


                                       2


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                 Condensed Statements of Cash Flows - Unaudited



                                                                                                                     Predecessor
                                                                                Successor Company                      Company
                                                                 ------------------------------------------------     -----------
                                                                                   July 1, 2002
                                                                  Nine Months       (Inception)      Three Months      Six Months
                                                                     Ended            Through           Ended             Ended
                                                                 September 30,     September 30,     September 30,       June 30,
                                                                      2003             2003              2002             2002
                                                                  -----------       -----------       -----------       ---------
                                                                                                            
Cash Flows from operating activities                              $(1,925,780)      $(3,870,646)      $  (872,068)      $(639,316)
                                                                  -----------       -----------       -----------       ---------

Cash flows from investing activities:
   Purchase of equipment                                              (12,903)         (317,774)          (98,438)        (28,724)
                                                                  -----------       -----------       -----------       ---------
         Net cash used in investing activities                        (12,903)         (317,774)          (98,438)        (28,724)
                                                                  -----------       -----------       -----------       ---------

Cash flows from financing activities:
   Proceeds from short-term borrowings                                     --                --                --         587,500
   Commissions on new money raised paid in cash                            --           (57,213)               --              --
   Proceeds from sale of common stock, net of offering costs        2,678,158         5,898,660         3,085,789              --
   Repayment of note payable                                          (66,066)         (118,175)               --              --
                                                                  -----------       -----------       -----------       ---------
         Net cash provided by financing activities                  2,612,092         5,723,272         3,085,789         587,500
                                                                  -----------       -----------       -----------       ---------

Net increase (decrease) in cash                                       673,409         1,534,852         2,115,283         (80,540)
Cash, beginning of period                                             965,298           103,855           103,855         184,395
                                                                  -----------       -----------       -----------       ---------
Cash, end of period                                               $ 1,638,707       $ 1,638,707       $ 2,219,138       $ 103,855
                                                                  ===========       ===========       ===========       =========


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


                                       3


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                     Notes to Condensed Financial Statements

NOTE 1 - BASIS OF PRESENTATION

The unaudited condensed financial statements included herein have been prepared
by Cytomedix. Inc. (the "Company" and "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 present 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.

These financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's 2002 Annual Report on
Form 10-KSB 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, 2003.


Cytomedix is a development stage enterprise, and accordingly, certain additional
financial information is required to be included in the condensed financial
statements from the adoption of fresh-start accounting to the date of this
balance sheet.

Basic and diluted net loss per share was calculated based upon the net loss
available to common shareholders divided by the weighted average number of
shares of common stock outstanding during the period. Shares associated with
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 are 5,916,188 and 2,827,917 at September 30, 2003 and 2002,
respectively.


The Company follows the provisions of SFAS No. 123 as amended by SFAS 148. As
permitted under SFAS No. 123, the Company has continued to utilize APB 25 in
accounting for its stock-based compensation to employees. Had compensation
expense for the quarters ended September 30, 2003 and 2002 been determined under
the fair value provisions of SFAS No. 123, as amended by SFAS 148, the Company's
net loss and net loss per share would have differed as follows:


                                       4


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                     Notes to Condensed Financial Statements

NOTE 1 - BASIS OF PRESENTATION (Continued)



                                                                                                         Predecessor
                                                                  Successor Company                        Company
                                                 --------------------------------------------------     ------------
                                                Three Months         Nine Months      Three Months        Six Months
                                                   Ended               Ended              Ended             Ended
                                                September 30,       September 30,     September 30,        June 30,
                                                    2003               2003                2002              2002
                                                -------------       -----------       -------------     -------------
                                                                                            
Net income (loss) to common stockholders,
   as reported                                  $  (1,050,888)      $(2,940,778)      $    (918,883)    $   7,445,131

Add:  Stock-based employee compensation
   expense included in reported net loss
    determined under APB No. 25,
    net of related tax effects                             --                --                  --                --
Deduct:  Total stock-based employee
   compensation expense determined under
   fair-value-based method for all awards,
    net of related tax effects                             --            70,832                  --                --
                                                -------------       -----------       -------------     -------------

Pro forma net income (loss)                     $  (1,050,888)      $(3,011,610)      $    (918,883)    $   7,445,131
                                                -------------       -----------       -------------     -------------

Earnings per share:
     Basic and diluted - as reported            $       (0.09)      $     (0.25)      $       (0.10)    $       (0.58)
     Basic and diluted - pro forma              $       (0.09)      $     (0.26)      $       (0.10)    $       (0.58)


These pro forma amounts may not be representative of future disclosures since
the estimated fair value of stock options is amortized to expense over the
vesting period and additional options may be issued in future years. The
estimated fair value of each option granted was calculated using the
Black-Scholes option pricing model. The following summarizes the weighted
average of the assumptions used in the model.

                                                   Successor        Predecessor
                                                    Company           Company
                                                 -------------     -------------
                                                  Nine Months       Six Months
                                                     Ended             Ended
                                                 September 30,       June 30,
                                                     2003              2002
                                                 -------------     -------------

Risk free rate                                      3.96%              N/A
Expected years until exercise                         10               N/A
Expected stock volatility                            100%              N/A
Dividend yield                                       N/A               N/A
                                                  ========          ========


                                       5


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                     Notes to Condensed Financial Statements

NOTE 1 - BASIS OF PRESENTATION (Continued)

Pursuant to the guidance provided by Statement of Position ("SOP") 90-7 the
Company adopted fresh-start accounting (see Note 5) upon emergence from
bankruptcy. As a result of fresh-start reporting, the Company reflected the
disposition of its pre-petition debt and changes in its equity structure
effected under the Company's First Amended Plan of Reorganization (the "Plan")
in its balance sheet as of June 30, 2002 (the effective date of the consummation
of the plan for accounting purposes). Accordingly, all financial statements
prior to July 1, 2002 (except for the June 30, 2002 balance sheet) are referred
to as the "Predecessor Company" as they reflect the periods prior to the
implementation of the fresh-start reporting and are not comparable to the
financial statements for periods after the implementation of fresh-start
reporting. The balance sheets as of September 30, 2003 and December 31, 2002 and
the financial statements for periods subsequent to June 30, 2002, are referred
to as the "Successor Company." Under fresh-start reporting, the Company's assets
and liabilities were adjusted to their fair values, and a reorganization value
for the entity was determined by the Company based upon the estimated fair value
of the enterprise before considering values allocated to debt to be settled in
the reorganization.

NOTE 2 - DESCRIPTION OF BUSINESS

NATURE OF OPERATIONS

Cytomedix, Inc. is a biotechnology company whose business model is premised upon
developing, producing, and licensing autologous cellular therapies (i.e.,
therapies using the patient's own body products) for the treatment of chronic
non-healing wounds using propriety platelet gel and related product therapies.
To create the proprietary platelet gel product, the patient's own platelets and
other essential blood components for the healing process are separated through
centrifugation and formed into a gel (the "AutoloGel(TM)") that is topically
applied to a wound under the direction of a physician. The Company's
headquarters are in Little Rock, Arkansas.

NOTE 3 - GOING CONCERN

The Company incurred a net loss of $2,940,778 during the nine-month period ended
September 30, 2003. Included in the calculation of net loss were non-cash
preferred stock dividends totaling $176,428.

The Company anticipates that the cash on-hand at September 30, 2003 and expected
revenues will be sufficient to finance its currently anticipated needs for
operating, clinical trials and capital expenditures to the first quarter of
2004.

Consequently, the aforementioned items raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. Continuing as a going concern is dependent
upon successfully obtaining additional working capital as described above. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets and amounts
and classifications of liabilities that might result from the outcome of this
uncertainty.

Management plans to address the negative cash flow and projected cash shortage
by increasing sales and raising capital through offerings of the Company's
securities. To increase sales, management is in the process of implementing a
network of independent sales representatives with wound care experience who will
focus on niche markets in chronic wound care.


                                       6


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                     Notes to Condensed Financial Statements

NOTE 3 - GOING CONCERN (Continued)

The Company's ability to continue as a going concern is dependent upon the
Company's success in increasing revenues and raising capital through equity
financing. There can be no assurance that the Company will successfully raise
the required future financing on terms desirable to the Company or that sales of
AutoloGel(TM) will increase substantially.

NOTE 4 - REORGANIZATION ITEMS

In accordance with SOP 90-7, the Company has recorded all transactions incurred
as a result of the bankruptcy filings as reorganization items. A summary of the
principal categories of reorganization items follows:

                                                         Predecessor
                                                           Company
                                                        -------------
                                                         Six Months
                                                            Ended
                                                        June 30, 2002
                                                        -------------

      Professional fees                                    $489,690
      Consulting - related party                            119,526
                                                           --------

                                                           $609,216
                                                           ========

NOTE 5 - FRESH-START ACCOUNTING

In accordance with the provisions of AICPA SOP 90-7, the Company adopted
fresh-start reporting upon confirmation of the Plan. For financial reporting
purposes, the effective date of the adoption of fresh-start reporting was
considered to be June 30, 2002, although the Company's confirmation date was
July 11, 2002. The results of operations from July 1 to July 11, 2002 were not
significant. The financial statements for the Company for the periods subsequent
to June 30, 2002 are referred to as the financial statements of the "Successor
Company" and are not comparable to those for the periods prior to June 30, 2002,
which are referred to as the financial statements of the "Predecessor Company."

As of the effective date of the Plan, all of the Company's securities were
cancelled and of no further force or effect. Securities outstanding prior to the
effective date of the Plan are identified as Existing or Predecessor Company
securities. Securities issued upon or after the Effective Date are identified as
New or Successor Company securities.

The Company adopted fresh-start reporting because, as a result of implementation
of the Plan, holders of the Company's Existing common stock immediately before
confirmation of the Plan retained less than 50% of the New common stock and the
Company's reorganization value at confirmation was less than its post-petition
liabilities and allowed claims as shown below:

Post-petition liabilities                                            $ 1,524,973
Liabilities deferred pursuant to Chapter 11 proceedings                9,705,520
                                                                     -----------
           Total post-petition liabilities and allowed claims         11,230,493
Less:  reorganization value                                            5,000,000
                                                                     -----------

           Excess of liabilities over reorganization value           $ 6,230,493
                                                                     ===========


                                       7


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                     Notes to Condensed Financial Statements

NOTE 5 - FRESH-START ACCOUNTING (Continued)

Under fresh-start reporting, the Company's assets and liabilities were adjusted
to fair values and the effects of the Plan were recorded. A reorganization value
for the total assets was determined by the Company based upon the estimated fair
value of the enterprise before considering values allocated to debt settled in
the reorganization. The portion of the reorganization value which was not
attributed to specific tangible or identified intangible assets for the
Successor Company was referred to as reorganization value in excess of amounts
allocable to identifiable assets in the financial statements and will be treated
similar to goodwill. The adjustment of assets and liabilities to fair values was
included in net reorganization expense in the financial statements at June 30,
2002.

Consequently, the Successor Company had no accumulated deficit as of July 1,
2002. The reorganization value in excess of amounts allocable to identifiable
assets recognized in fresh-start reporting will not be amortized, but will be
reviewed annually for impairment in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Tangible Assets."
Future impairment of the excess reorganization value may result if actual
results of operations or changes in economic or industry conditions differ
significantly from assumptions used to derive the reorganization value.

The reorganization value of the Company on the effective date of the Plan was
established at $5,000,000 based upon a calculation of discounted cash flows
under the Company's financial projections and trading multiples of comparable
companies. The valuation was based upon a number of estimates and assumptions,
which are inherently subject to significant uncertainties and contingencies
beyond the Company's control. Accordingly, there can be no assurance that the
values reflected in the valuation will be realized, and actual results could
vary materially. Moreover, the value of our New common stock, as traded in the
over-the-counter market and quoted on the OTC Bulletin Board may differ
materially from the reorganization valuation.

The following reconciliation of the Predecessor Company's balance sheet as of
June 30, 2002 to that of the Successor Company as of June 30, 2002 was prepared
to present the adjustments that give effect to the reorganization and
fresh-start reporting.

The adjustments entitled "Reorganization Plan" and "Conversion of Liabilities
Not Subject to Compromise" reflect the consummation of the Plan, including the
elimination of existing liabilities subject to compromise, liabilities not
subject to compromise, Existing Series A Preferred Stock, Existing Common Stock
and Existing Series B Preferred Stock. Also recorded was the New common and
preferred stock which was issuable under the Plan.

The adjustments entitled "Fresh-Start Adjustments" reflect the adoption of
fresh-start reporting, including the adjustments to record property and
equipment and identifiable intangible assets at their fair values and to reflect
the aforementioned $5,000,000 reorganization value, which includes the
establishment of approximately $2,000,000 of reorganization value in excess of
amounts allocable to net identifiable assets. The assets and liabilities have
been recorded at their fair values based on a preliminary allocation. Management
estimated the fair values of the Company's assets and liabilities by utilizing
both independent appraisals and commonly used discounted cash flow valuation
methods. A reconciliation of fresh-start accounting recorded as of June 30,
2002, is as follows:


                                       8


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                     Notes to Condensed Financial Statements

NOTE 5 - FRESH-START ACCOUNTING (Continued)



                                                                                         Conversion of
                                            Predecessor      Reorgani-                  Liabilities Not       Successor
                                              Company         zation       Fresh-Start    Subject to           Company
                                            June 30,2002       Plan        Adjustments    Compromise         June 30, 2002
                                            ------------    -----------    ------------   ----------          ----------
                                                                                               
Current assets:
  Cash and cash equivalents                 $    103,855    $        --    $         --    $      --          $  103,855
  Receivables and prepaid expenses and
   other current assets                          375,631             --              --           --    (a)      375,631
  Note receivable - related party                  5,500         (5,500)             --           --                  --
  Inventory                                        8,796             --              --           --               8,796
                                            ------------    -----------    ------------    ---------          ----------

         Total current assets                    493,782         (5,500)             --           --             488,282

Property and equipment, net                       27,095             --              --           --              27,095
Intangibles                                      603,488             --       1,796,512           --    (b)    2,400,000
Prepaid expenses and deposits                     63,000             --              --           --              63,000
Reorganization value in excess of
 amounts allocable to identifiable assets             --             --       2,021,623           --    (c)    2,021,623
                                            ------------    -----------    ------------    ---------          ----------

                                            $  1,187,365    $    (5,500)   $  3,818,135    $      --          $5,000,000
                                            ============    ===========    ============    =========          ==========
Current liabilities
  Short-term borrowings and current
   portion of long-term debt                     800,000             --              --           --             800,000
  Accounts payable and accrued expenses        1,471,357        220,880              --      142,979    (d)    1,835,216
  Deferred revenue                                85,198             --              --           --              85,198
                                            ------------    -----------    ------------    ---------          ----------

         Total current liabilities             2,356,555        220,880              --      142,979           2,720,414

Long-term liabilities                                                --              --
  Liabilities not subject to compromise          173,920             --              --     (173,920)   (e)           --
  Liabilities subject to compromise            7,906,600     (7,906,600)             --           --    (f)           --
  Deferred revenue                               559,956             --              --           --             559,956
                                            ------------    -----------    ------------    ---------          ----------

         Total long-term liabilities           8,640,476     (7,906,600)             --     (173,920)            559,956
                                            ------------    -----------    ------------    ---------          ----------

         Total liabilities                    10,997,031     (7,685,720)             --      (30,941)          3,280,370
                                            ------------    -----------    ------------    ---------          ----------

Mandatorily Series A Preferred stock           1,625,000     (1,625,000)             --           --                  --
Stockholders' equity (deficit):
  Successor company Series A Preferred                --            137              --           --    (g)          137
  stock
  Successor company Series B Preferred                --            140              --           --    (g)          140
  stock
  Predecessor company Series B
   Preferred stock                                   512           (512)             --           --                  --
  Successor company common stock                      --            543              --            3    (g)          546
  Predecessor company common stock                 1,281         (1,281)             --           --    (g)           --
  Additional paid-in capital                  51,258,907             --     (49,571,038)      30,938    (g)    1,718,807
  Accumulated deficit                        (62,695,366)     9,306,193      53,389,173           --    (g)           --
                                            ------------    -----------    ------------    ---------          ----------
Total stockholders equity (deficit)           (9,809,666)     7,680,220       3,818,135       30,941    (g)    1,719,630
                                            ------------    -----------    ------------    ---------          ----------

                                            $  1,187,365    $    (5,500)   $  3,818,135    $      --          $5,000,000
                                            ============    ===========    ============    =========          ==========



                                       9


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                     Notes to Condensed Financial Statements

NOTE 5 - FRESH-START ACCOUNTING (Continued)

Explanation of Adjustments

(a)   Reflects the reclassification of note receivable - related party which was
      used to offset a portion of the liabilities subject to compromise

(b)   Reflects the adjustment of the intangible to fair value which was
      determined by an independent valuation

(c)   Reflects the establishment of reorganization value in excess of amounts
      allocable to identifiable assets determined by an independent valuation

(d)   Reflects the liability set up by the Company to pay the liabilities
      subject to compromise and the liabilities not subject to compromise at the
      determined amounts

(e)   Reflects the reclassification of the liabilities not subject to compromise
      to the new liability and a portion of the liabilities not subject to
      compromise to be paid in stock

(f)   Reflects the reclassification of the liabilities subject to compromise to
      either the new liability for the portion to be paid in cash or to the New
      common stock and New preferred stock for the portion to be paid by the
      issuance of stock

(g)   Reflects the cancellation of the Predecessor Company's Existing common
      stock, Existing options and warrants, Existing Preferred stock,
      accumulated deficit as of June 30, 2002, and the issuance of New common
      stock and New Series A Convertible Preferred stock and New Series B
      Convertible Preferred stock which was issuable.

NOTE 6 - CAPITAL STOCK ACTIVITY

During the nine months ended September 30, 2003, the Company issued 2,481,976
shares of common stock.

The Company received $177,500 of additional monies in the original private
placement commenced in connection with the Plan and issued 177,500 shares of
common stock, 44,375 Class A warrants and 26,625 Class B warrants before closing
the private placement in April 2003.

On June 4, 2003, the Company initiated a new private offering at $1.25 per share
to provide the Company with working capital to implement a new business plan and
to fund the Company's prospective clinical trials. As of June 30, 2003, the
Company has raised $1,050,000 under the new private placement and issued 840,000
shares of common stock. From July 1 through September 30, 2003, an additional
$1,449,000 was raised under the new private placement with 1,159,200 shares of
common stock issued or immediately issuable. The Company incurred $41,565 of
offering costs related to the private placement.

On May 29, 2003, the Company issued 25,500 shares of common stock for
commissions on monies raised in the private placement terminated in April 2003.
On June 24, 2003, the Company issued 15,000 shares of common stock for
commission on monies raised in the new private placement.


                                       10


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                     Notes to Condensed Financial Statements

NOTE 6 - CAPITAL STOCK ACTIVITY (Continued)

On March 5, 2003, the Company issued an aggregate of 105,076 shares of common
stock to its attorneys at Robert F. Coleman & Associates in consideration for
legal services rendered during the period September 1, 2002 through December 31,
2002. The value of these services amounted to $105,076. The Company had an
agreement to pay its attorneys at Robert F. Coleman & Associates two-thirds of
their legal fees in shares of common stock with all expenses being paid in cash.
On March 5, 2003, the Company issued stock to pay its legal bills in the
following manner: 39,261 shares for legal fees provided in September 2002,
20,623 shares for legal fees provided in October 2002, 25,457 shares for legal
fees provided in November 2002, and 19,735 shares for legal fees provided in
December 2002. On June 19, 2003, the Company issued an additional 68,318 shares
of common stock to Robert F. Coleman & Associates in consideration for legal
services rendered during the period of January 1, 2003 through March 31, 2003 as
follows: 20,714 shares for legal fees provided in January 2003, 22,152 shares
for legal fees provided in February 2003, and 25,452 shares for legal fees
provided in March 2003. The value of these services amounted to $91,169.

On June 19, 2003, the Company issued 31,037 shares of common stock to the
Company's attorney Cummins & Cronin, LLC for legal services rendered October 1,
2002 through March 31, 2003 as follows: 6,997 shares for legal fees provided in
October 2002, 2,807 shares for legal fees provided in November 2002, 5,963
shares for legal fees provided in December 2002, 1,267 shares for legal fees
provided in January 2003, 3,020 shares for legal fees provided in February 2003,
and 10,983 shares for legal fees provided in March 2003. The value of these
services amounted to $15,540. The Company has agreed to pay Cummins & Cronin,
LLC two-thirds of their legal fees in shares of common stock with all expenses
being paid in cash. Subsequent to the first quarter of 2003, the Company no
longer utilized these services.

On July 7, 2003, the Company issued 20,345 shares of common stock in exchange
for warrants with a total exercise price of $24,160.

On August 27, 2003, the Company entered into an agreement with The Research
Works, Inc. ("Research Works"), whereby Research Works will prepare an equity
research report on Cytomedix. This research report is to be published on the
Research Works website and periodically updated. Cytomedix authorized and issued
40,000 shares of Common Stock to Research Works as consideration under the
agreement. The shares were valued at the current market price totaling $68,000.

As stated in the Plan, holders of the Company's Series A Convertible Preferred
Stock and the Company's Series B Convertible Preferred Stock are entitled to
dividends at the rate of eight percent per annum, payable quarterly in arrears.
The first year dividend is to be paid in additional shares of Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock.

As of September 30, 2003, there were 254,155 shares of Series A Convertible
Preferred Stock issuable, but not yet issued, to holders of the Series A
Convertible Preferred Stock, as dividends on the Series A Convertible Preferred
Stock. As of September 30, 2003, there were 260,989 shares of Series B
Convertible Preferred Stock issuable, but not yet issued, to holders of the
Series B Convertible Preferred Stock, as dividends on the Series B Convertible
Preferred Stock. The Company is currently in the process of issuing these
additional shares of Preferred Stock to its holders of Preferred Stock.


                                       11


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                     Notes to Condensed Financial Statements

NOTE 7- LONG -TERM INCENTIVE PLAN

On February 4, 2003, the Board of Directors resolved to grant stock options to
three employees under the Company's Long-Term Incentive Plan. The Company
granted an aggregate of 80,000 stock options with an exercise price of $1.50 per
share, with immediate vesting and an exercise period of 10 years from the date
of issue.

NOTE 8 - DEFERRED COMPENSATION

On April 1, 2003, the Company entered into a consulting agreement with Nadine C.
Smith (the "Consultant") to provide consulting services for a period of twelve
months. The Consultant will receive $125,000 per annum paid monthly as
compensation for providing consulting services to the Company. The Consultant
was also issued a warrant to purchase 1,000,000 shares of the Company's common
stock at an exercise price of $1.00. The first 500,000 shares vested upon
signing and are exercisable immediately and the remaining 500,000 shares vest
and are exercisable after the first anniversary date of the issuance unless the
consulting agreement is terminated by the Company for cause. This warrant
expires on April 1, 2010. The Company has recorded deferred compensation of
$852,750 in relation to this agreement of which $426,375 was amortized as of
September 30, 2003 as a non-cash charge to the Company. In connection with the
warrant, the Company has agreed to provide certain registration rights.

During the second quarter 2003, the Company entered into various sales
representative agreements in which the representatives received an option
representing the right to purchase an aggregate of 4,500 shares of common stock
at an exercise price of $1.50. These options vest immediately. The agreements
provide for future options being granted contingent on quarterly sales. Deferred
compensation of $2,776 was recorded of which $712 was expensed through September
30, 2003 as a non-cash charge to the Company.

During the third quarter 2003, the Company entered into a further sales
representative agreement in which the representative received an option
representing the right to purchase an aggregate of 500 shares of common stock at
an exercise price of $1.50. These options vest immediately. The agreements
provide for future options being granted on quarterly sales. Deferred
compensation of $630 was recorded of which $105 was expensed through September
30, 2003 as a non-cash charge to the Company.

NOTE 9 - RELATED PARTY TRANSACTIONS

BDR Inc. is affiliated with BDR Investment LLC through common ownership. The
principal in both entities, Jimmy D. Swink, Jr., provided consulting services to
the Company amounting to $202,635 and $180,103 for the nine months ended
September 30, 2003 and 2002, respectively. The consulting expense consisted of
monthly payments of $9,000 and amortization of deferred compensation expense
arising out of options issued to BDR Consulting Inc.

The Carmen Group, Inc. was engaged during the second quarter 2003 as a business
consultant to strategically position and represent the Company before the
federal government. A director of the Company is also a senior consultant with
the Carmen Group, Inc. As of September 30, 2003, the Carmen Group, Inc. provided
services to the Company amounting to $64,892 for the nine months ended September
30, 2003.


                                       12


                                 Cytomedix, Inc.
                          (A Development Stage Entity)
                     Notes to Condensed Financial Statements

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Post-Bankruptcy Commitments and Contingencies

Under the Plan the Predecessor Company's Existing Series A Preferred stock and
the dividends accrued on the Series A Preferred stock are exchanged into one
share of New common stock for every five shares of Existing Series A Preferred
shares held as of the effective date of the plan. This exchange is contingent on
the successor Company's attaining aggregate gross revenues for four consecutive
quarters of at least $10,000,000.

We outsource the manufacturing of The AutoloGel(TM) System kits to Tri-State
Hospital Supply Corporation. Under a purchase agreement dated August 1, 2002,
Cytomedix agreed to purchase kits in pre-established usage levels. Should the
Company terminate the 36-month agreement, it is required to purchase unique
components and finished goods inventory up to a maximum amount of approximately
$50,000.

On July 30, 2003, Cytomedix entered into an agreement with Fitch, Even, Tabin,
and Flannery, Attorneys ("Fitch"), of Chicago. Fitch will provide litigation and
licensing legal representation of a straight contingency basis with respect to
certain litigation and licensing matters relating to the Company's intellectual
property utilized in connection with The AutoloGel(TM) System.

NOTE 11 - RECLASSIFICATION

For comparability purposes, certain figures for the 2002 and cumulative periods
have been reclassified where appropriate to conform with the financial statement
presentation used in 2003. These reclassifications had no effect on the reported
net loss.

NOTE 12 - SUBSEQUENT EVENTS

On October 21, 2003, the Company's Board of Directors approved a Services
Agreement with IVC Group ("IVC"). Pursuant to the Services Agreement, IVC
received options to purchase 400,000 shares of Common Stock at an exercise price
of $1.00 per share. The options vest immediately and expire three years from the
date of issue. The transaction was exempt from registration pursuant to Section
4(20) of the Securities Act of 1933.

On October 21, 2003, the Board of Directors authorized Kent Smith and Carelyn
Fylling to be issued 47,693 and 19,077 options to purchase common stock at $1.25
per share, respectively, as required under their employment agreements which
were entered into in 2002.

On October 21, 2003, the Company's Board of Directors approved a Services
Agreement with Stern & Co. ("Stern"). Pursuant to the Services Agreement, Stern
received options to purchase 100,000 shares of Common Stock at an exercise price
of $1.25 per share. The options vest immediately and expire three years from the
date of issue. The transaction was exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.

On November 7, 2003, the Company received notice of intent to resign from the
Company's Chief Executive Officer and President, Mr. Kent Smith. Mr. Smith
served in these capacities from August 22, 2002, and will continue to serve as
the Company's President until his successor is named.


                                       13


Item 2. Management's Discussion and Analysis.

      The terms "Cytomedix" and the "Company," as used in this quarterly report,
refer to Cytomedix, Inc. The following discussion and analysis should be read in
conjunction with the financial statements, including notes thereto, filed under
Item 1 of this report. The Company's financial condition and results of
operation are not intended to be indicative of future performance.

      In addition to the historical information included in this report, you are
cautioned that this report contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. When the words
"believes," "feels," "plans," "anticipates," "will likely result," "will
continue," "projects," "expects," and similar expressions are used in this
report, they are intended to identify "forward-looking statements," and such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. Furthermore, the
Company's plans, strategies, objectives, expectations and intentions are subject
to change at any time at the discretion of management and the Board of
Directors.

      These forward-looking statements speak only as of the date this report is
filed. The Company does not intend to update the forward-looking statements
contained in this report, so as to reflect events or circumstances after the
date of this report or to reflect the occurrence of unanticipated events, except
as may be reported in the Company's future reports filed with the Securities and
Exchange Commission.

      This report should be read in conjunction with the Company's Form 10-KSB
for the year ended December 31, 2002, and the Company's Forms 10-QSB for the
periods ended March 31, 2003, and June 30, 2003.

OVERVIEW OF BUSINESS

      Cytomedix is a biotechnology company incorporated in Delaware with its
principal offices in Arkansas. Its business model is premised upon developing,
producing, licensing, and distributing autologous cellular therapies (i.e.,
therapies using the patient's own body products), including Cytomedix's
proprietary platelet-rich plasma gel, "AutoloGel(TM)", for the treatment of
chronic, non-healing wounds. To create AutoloGel(TM), the patient's own
platelets and other essential blood components for the healing process are
separated through centrifugation and formed into a gel that is topically applied
to a wound (under the direction of a physician). The process of creating and
utilizing AutoloGel(TM) is referred to as "The AutoloGel(TM) System".

      The Company is implementing a business strategy focused generally on three
areas: (1) commencing a prospective, multi-center, randomized, blinded,
controlled clinical trial ("Trial" and "Trials") as discussed below; (2)
retaining a carefully selected network of independent sales representatives with
knowledge and relationships within the wound care sector to market The
AutoloGel(TM) System; and (3) implementing a contingency-based patent
enforcement and intellectual property licensing initiative pursuant to a
contingency-based agreement with Fitch, Even, Tabin, and Flannery, attorneys.

      The Company is planning and implementing strategies to meet each of the
requirements that are necessary for submitting and obtaining a national
reimbursement code for The AutoloGel(TM) System. The process is multi-faceted,
time intensive, and expensive. In order to obtain a national reimbursement code,
the Company will need to initiate the Trials to potentially prove the safety and
efficacy of The AutoloGel(TM) System. The ultimate goals of the Trials are (1)
to gain an approval from the United States Food and Drug Administration ("FDA")
the use of The AutoloGel(TM) System in the treatment of diabetic foot ulcers,
and (2) to provide sufficient data as is necessary to obtain Medicare
reimbursement for the therapy. FDA approval is the standard by which Medicare,
health care providers and private insurance payors accept a new therapy, drug,
or device for use and reimbursement. The Company has submitted its application
seeking the necessary FDA approval to initiate the Trials.

      The Company's goal is to complete the Trials, publish and submit the
results to appropriate regulatory bodies during the fourth quarter of 2004. Many
factors affecting completion, publication, and submission of the Trials are out
of the Company's control; therefore, no assurance can be given that all of


                                       14


the requirements will be satisfied during this time period. While the Trials are
designed to achieve FDA approval and a national reimbursement code, there can be
no assurance that the Trial results will be sufficient to obtain these goals.

      In order to obtain the preliminary funds necessary to perform the Trials,
the Company commenced a private offering of its Common Stock in June 2003 (the
"Second Offering"). The Second Offering was closed in October 2003, generating
gross proceeds of $2,499,000. There is no assurance that the amount raised in
the Second Offering will be sufficient to initiate, perform and complete the
Trials or publish and submit the results from the Trials. Cytomedix believes it
will be required to seek further financing in connection with its efforts to
complete the Trials.

RESULTS OF OPERATION

      The Company is a development stage company as defined in Statement of
Financial Accounting Standards No. 7. The Company's main activities during this
start-up phase have consisted of recruiting and hiring a new management team and
corresponding personnel, recruiting a network of independent sales
representatives, and developing the licensing strategy for, and market expansion
of, The AutoloGel(TM) System and related disposable component kits and
proprietary system. In connection with the market expansion of The AutoloGel(TM)
System, the Company has worked to develop and implement plans to conduct the
Trials and to satisfy other requirements necessary to obtain FDA approval and a
national reimbursement code for the company's wound treatment technologies.

      Cytomedix filed for bankruptcy on August 7, 2001, and did not emerge from
bankruptcy until July 11, 2002. In accordance with the provisions of AICPA SOP
90-7, the Company adopted fresh-start reporting upon confirmation of the Plan.
For financial reporting purposes, the effective date of the adoption of
fresh-start reporting was considered to be June 30, 2002, although the Company's
confirmation date was July 11, 2002. The results of operations from July 1 to
July 11, 2002, were not significant. The financial statements for the Company
for the periods subsequent to June 30, 2002, are referred to as the financial
statements of the "Successor Company" and are not comparable to those for the
periods prior to June 30, 2002, which are referred to as the financial
statements of the "Predecessor Company." The bankruptcy had a direct impact on
all of the Company's revenues and expenses described below.

      Three Months Ended September 30, 2003 Compared to Three Months Ended
September 30, 2002

      The Company's gross revenues from sales for the three months ended
September 30, 2003, decreased as compared to the same period in 2002. During the
three-month period ended September 30, 2003, the Company generated $104,892 in
gross revenues from sales compared to $135,140 for the three-month period ended
September 30, 2002. This decrease is due principally to revenues of
approximately $100,000 resulting from an initial order and servicing of a
national contract during the three-month period ended September 30, 2002. For
the three months ended September 30, 2003, the Company realized royalty income
of $166,431 from DePuy Acromed, Inc., a division of Johnson & Johnson, Inc. For
the corresponding three-month period ended September 30, 2002, royalty income
totaled $35,289.

      The cost of revenue was $177,859 resulting in gross profit of $93,464 for
the three-month period ended September 30, 2003. For the corresponding
three-month period in 2002, the cost of revenue was $29,652 resulting in gross
profit of $140,777. The increase in cost of revenue is due mainly to training
expenses, supply expenses, and patient evaluation expenses resulting from the
Company's retention and equipping of its team of independent sales
representatives.

      Compensation expense for the three months ended September 30, 2003, was
approximately $239,098 as compared to $173,847 for the same period in 2002. The
increase in the compensation expense was due primarily to the retention of new
personnel to expand Company operations. During the third quarter of 2003, the
Company employed a Chief Executive Officer/President, Vice-President of
Professional Services, Controller, one sales employee, four clinicians and three
administrative employees.


                                       15


      Consulting expense for the three months ended September 30, 2003, totaled
approximately $370,663 as compared to $147,326 for the same period in 2002. The
increase in consulting expense results from the addition of Nadine C. Smith as a
consultant and the additional consulting expenses incurred in connection with
the Trials. Deferred compensation totaled $599,651, after $225,500 was expensed
as a non-cash consulting services expense during the three months ended
September 30, 2003. The remaining $145,163 of consulting expenses for the three
months ended September 30, 2003, related to consulting services in the areas of
clinical research, information technology, marketing, and investor relations.
Related party consulting expense for the three months ended September 30, 2003,
totaled $65,971. BDR, Inc. was paid $9,000 per month for its activities as
consultant to the Board of Directors. BDR, Inc.'s president is a significant
shareholder and provides full-time consulting services to Cytomedix. BDR, Inc.
was also granted a warrant which was recorded to deferred compensation as of
December 31, 2002. $24,314 of this deferred compensation was expensed as a
non-cash consulting services expense for the three months ended September 30,
2003.

      Professional fees for the three months ended September 30, 2003, totaled
approximately $157,595 as compared to $386,879 for the same period in 2002.
After the Company emerged from bankruptcy, the need for bankruptcy-related
professional services was alleviated greatly. The Company also reduced
professional fees through execution of a contingency-based contract with Fitch,
Even, Tabin, and Flannery, attorneys, with respect to certain litigation and
licensing matters relating to the Company's intellectual property utilized in
connection with The AutoloGel(TM) System. The professional fees for the three
months ended September 30, 2003, were incurred primarily for legal services,
including corporate and securities compliance, the Second Offering, patent
maintenance and patent litigation. For the three months ended September 30,
2003, $11,382 of the total professional fees related to accounting fees.

      General and administrative expenses for the three months ended September
30, 2003, were $234,440 as compared to $270,867 for the same period in 2002. The
decrease was due to improved cost controls in 2003. General and administrative
expenses for the three months ended September 30, 2003, include $6,582 for the
rental of the Company's principal executive offices. The Company subleases its
offices from Mr. Charles E. Worden, Sr., a related party, for $2,194 per month.
This rental payment reduces the amount of royalty payments actually paid to Mr.
Worden. Also included in the general and administrative expense is depreciation
and amortization of $53,990 for the three months ended September 30, 2003.

      The Company incurred a related party royalty expense of $18,750 payable to
Mr. Charles E. Worden, Sr. during the three months ended September 30, 2003.
This royalty expense totaled $18,750 for the three months ended September 30,
2002.

      The Company's losses of $985,214 from operations during the three months
ended September 30, 2003, increased as compared to losses of $863,504 for the
same period in 2002.

      The Company recorded a non-cash preferred stock dividend in connection
with its cumulative 8% Series A and B Convertible Preferred Stock in the amount
of $65,674 for the three months ended September 30, 2003. On the date the
dividends are to be paid, the Board may pay the dividend either in additional
shares of Preferred Stock or in cash.

      The Company received $1,499,000 in proceeds from the Second Offering
during the three months ended September 30, 2003. In connection therewith, the
Company accrued $41,565 in commissions during


                                       16


the three months ended September 30, 2003. The Company also issued 10,200 shares
of Common Stock for commissions payable in connection with the Second Offering
for the three months ended September 30, 2003.

      Nine Months Ended September 30, 2003 Compared to Nine Months Ended
September 30, 2002.

      Cytomedix filed for bankruptcy on August 7, 2001, and did not emerge from
bankruptcy until July 11, 2002. In accordance with the provisions of AICPA SOP
90-7, the Company adopted fresh-start reporting upon confirmation of the Plan.
For financial reporting purposes, the effective date of the adoption of
fresh-start reporting was considered to be June 30, 2002, although the Company's
confirmation date was July 11, 2002. The results of operations from July 1 to
July 11, 2002, were not significant. The financial statements for the Company
for the periods subsequent to June 30, 2002, are referred to as the financial
statements of the "Successor Company" and are not comparable to those for the
periods prior to June 30, 2002, which are referred to as the financial
statements of the "Predecessor Company."

LIQUIDITY AND CAPITAL RESOURCES AS OF SEPTEMBER 30, 2003

      For the nine months ended September 30, 2003, but prior to the Company's
April 2003 termination of the private offering initiated in connection with the
Company's bankruptcy (the "Bankruptcy Offering"), the Company received $177,500
in proceeds from seven investors. During the second quarter of 2003, the Company
refocused its resources on initiating the prospective, clinical Trials necessary
to obtain FDA approval, and ultimately, a national reimbursement code. In
connection therewith, the Company terminated the Bankruptcy Offering and
commenced the Second Offering. The Company received $2,499,000 in proceeds from
the Second Offering during the nine months ended September 30, 2003. The Second
Offering was terminated in October 2003. In connection therewith, the Company
paid $33,899 and accrued an additional $41,565 in commissions during the nine
months ended September 30, 2003. The Company also issued 25,200 shares of Common
Stock for commissions payable in connection with the Second Offering.

      All working capital required to implement the Company's business plan
will be provided by funds obtained through offerings of the Company's securities
and revenues generated by the Company. The Company will need to obtain
additional funds to support its future operational expenses. Based on current
plans, the Company believes that it has cash on hand sufficient to meet its
operating expenses and capital requirements to approximately the first quarter
of 2004. Therefore, the Company will be required to commence further financing
activities in order to continue operations beyond the first quarter of 2004.

      Net cash used in operating activities during the nine months ended
September 30, 2003, was $1,925,780. The primary use of cash during the period
was to fund the net loss. Net cash used in investing activities during the nine
months ended September 30, 2003, was $12,903 and consisted of purchases of
equipment. Net cash provided by financing activities during the nine months
ended September 30, 2003, was $2,612,092 and consisted primarily of the monies
raised in the Bankruptcy Offering and the Second Offering, net of offering
costs.

      Working capital totaled $1,404,080 at September 30, 2003, compared to
$575,912 as of December 31, 2002, an increase of $828,168. This increase was
primarily due in cash from the monies raised in the Bankruptcy Offering and the
Second Offering. The Company's unrestricted cash balance at September 30, 2003,
was $1,618,247. This amount includes $2,499,000 of proceeds from the Second
Offering.

      The Company estimates that without raising additional funds through
offerings of the Company's securities and/or without increasing revenues, it
will be unable to meet its cash requirements during the first quarter of 2004.
If the Company does not have sufficient working capital and is unable to
generate revenues or raise additional funds, the following may occur: delaying
the implementation of the new business plan or significantly reducing the scope
of the business plan; delaying the Trials; delaying plans to


                                       17


initiate government regulatory and reimbursement approval processes; postponing
the hiring or retention of new personnel; or, in the extreme situation, ceasing
operations.

RISK FACTORS

      Cytomedix cautions readers of this report not to place undue reliance on
any forward-looking statements, which are based on certain assumptions and
expectations which may or may not be valid or actually occur. Readers should
also consider the following risk factors which may cause actual results to
differ materially from those expressed or implied by any forward-looking
statement. The risk factors described below are not to be deemed an exhaustive
list of all potential risks and should be read in conjunction with the other
detailed information in this report.

      The Company has limited working capital and immediate needs for additional
capital.

      Because the Company has been in bankruptcy, the Company will not be
obtaining extensive debt financing. All working capital required to implement
the Company's business plan will be provided by funds obtained through offerings
of the Company's securities and revenues generated by the Company.

      The Company will need to obtain additional funds to support its future
operational expenses and capital requirements. It will need to generate
increased revenues or will need to raise additional funds through securities
offerings or otherwise. No assurance can be given that the Company will be able
to increase revenues or that it will successfully sell equity interests in the
Company. Even if such transactions are possible, there is no assurance that they
will be on terms reasonable to Cytomedix or that they will enable Cytomedix to
satisfy its capital requirements.

      If adequate funds are not available or are not available on acceptable
terms when required, the Company may be required to significantly curtail its
operations or may not be able to fund expansion, fund the Trials, take advantage
of unanticipated opportunities, develop or enhance services or products or
respond to competitive pressures. Such inability could have a material adverse
effect on the Company's business, results of operations and financial condition.
If additional funds are raised through the issuance of equity or convertible
debt securities, the percentage ownership of Cytomedix stockholders will be
reduced, stockholders may experience additional dilution and such securities may
have rights, preferences and privileges senior to those of Cytomedix Common
Stock.

      The Company has a history of losses.

      The Company has a history of losses and expects to incur substantial
losses and negative operating cash flows for the foreseeable future. The Company
may never achieve or maintain profitability. The Company is not currently
profitable and expects to continue to incur net losses in the foreseeable
future. The Company also expects to experience negative cash flow for the
foreseeable future. The Company will need to generate significant revenues to
achieve and maintain profitability. The Company cannot guarantee that it will be
able to generate these revenues, and it may never achieve profitability in the
future.

      As a result of the Company's losses and the matters described in this
report and prior reports filed with the SEC, the Independent Auditors' Report on
the audited financial statements for the fiscal year ended December 31, 2002,
included a paragraph indicating substantial doubt about the Company's ability to
continue as a going concern.

      The Company has a short operating history and limited operating
experience.

      The Company must be evaluated in light of the uncertainties and
complexities affecting a development stage biotechnology company. The Company is
a development stage company which has been fully operational under current
management only since it emerged from bankruptcy in July 2002. Beginning in the
second quarter of 2003, the Company initiated a new, more aggressive business
plan to provide sales and service support locally to markets with significant
populations of chronic wound patients. This new business plan will be
implemented through a network of independent sales representatives to


                                       18


market and sell component kits for The AutoloGel(TM) System. Thus, the Company
has a very limited operating history and limited experience in conducting
operations pursuant to the new business plan. The Company's inability to
successfully implement its new business plan and strategy would adversely affect
its business, operating results, and financial condition.

      Continued operating losses, together with the risks associated with the
Company's ability to gain new customers in the sale of The AutoloGel(TM) System
component kits may have a material adverse effect on the Company's liquidity.
The Company may also be forced to respond to unforeseen difficulties, such as
decreasing demand for its products and services, regulatory requirements and
unanticipated market pressures.

      The Company's intellectual property assets are critical to its success.

      Cytomedix regards its patents, trademarks, trade secrets, and other
intellectual property (collectively, the "Intellectual Property Assets") as
critical to its success. Cytomedix relies on a combination of patents,
trademarks, and trade secret and copyright laws, as well as confidentiality
procedures, contractual provisions, and other similar measures, to establish and
protect its Intellectual Property Assets. Cytomedix has endeavored to inhibit
disclosure of its trade secrets through a number of means, including restricting
access to Cytomedix's proprietary information and requiring substantially all of
its employees, consultants, and other persons with access to Cytomedix's
proprietary information to execute confidentiality agreements with Cytomedix.
Despite these efforts, Cytomedix may not be able to prevent misappropriation of
its technology or deter others from developing similar technology in the future.
Furthermore, policing the unauthorized use of its Intellectual Property Assets
is difficult and expensive. Litigation has been necessary in the past and may be
necessary in the future in order to enforce Cytomedix's Intellectual Property
Assets. Litigation could result in substantial costs and diversion of resources.

      The AutoloGel(TM) System is subject to governmental regulation.

      The Company's success is also impacted by factors outside of the Company's
control. The Company's current therapies may be subject to extensive regulation
by numerous governmental authorities in the United States, both federal and
state, and in foreign countries by national and provincial regulatory agencies.
Specifically, the Company's therapies may be subject to regulation by the FDA
and state regulatory agencies. The FDA regulates drugs, medical devices and
biologics that move in interstate commerce and requires that such products
receive pre-marketing approval based on evidence of safety and efficacy. The
regulations of government health ministries in foreign countries are analogous
to those of the FDA in both application and scope. In addition, any change in
current regulatory interpretations or positions of state regulatory officials
where The AutoloGel(TM) System is practiced, could materially and adversely
affect the Company's ability to sell products in those states.

      As the Company expands and offers additional products in the United States
and in foreign countries, the Company may require approval from the FDA and
comparable foreign regulatory authorities prior to introduction of any such
products into the market. The Company has no assurance that it will be able to
obtain all necessary approvals from the FDA or comparable regulatory authorities
in foreign countries for these products. Failure to obtain the required
approvals would have a material adverse impact on the Company's business and
financial condition.

      The Company's success could be adversely affected if customers cannot
obtain reimbursement.

      The AutoloGel(TM) System is provided to health care providers. Some of
these providers, in turn, seek reimbursement from third party payors such as
Medicare, Medicaid, and other private insurers. Many foreign countries also have
comprehensive government-managed health care programs that provide reimbursement
for health care products. Under such health care programs, reimbursement is
often a determining factor in predicting a product's success, with some
physicians and patients strongly favoring


                                       19


only those products for which they will be reimbursed. To date, The
AutoloGel(TM) System has been approved for Medicaid reimbursement in certain
circumstances by the Illinois Department of Public Aid and the Company is in
discussions with appropriate agencies in four other states seeking approval for
Medicaid reimbursement. The Company has no assurance that these four state
agencies, or agencies in other states or foreign countries will approve The
AutoloGel(TM) System for Medicaid reimbursement, or that the Illinois Department
of Public Aid or any other state agency or foreign countries that approve
reimbursement will continue to do so.

      In order to achieve a national reimbursement product code for The
AutoloGel(TM) System, the Company will have to undertake a prospective,
multi-center, randomized, blinded, controlled clinical trial to receive FDA
approval. This type of approval and data is required by the Center for Medicare
and Medicaid Services ("CMS"), formerly known as the Healthcare Financing Agency
("HCFA"). In addition, a 1992 HCFA ruling prohibiting the reimbursement of
growth factor products for chronic wounds may have to be dismissed in order to
secure a national reimbursement product code. In May 2003, CMS announced a
review of "Autologous Blood-Derived Products for Chronic Non-Healing Wounds" and
Cytomedix provided materials to CMS for its use in connection with the review.
To date, CMS has not announced the results of its review. The Company's ability
to obtain reimbursement approval from governmental agencies and private insurers
may be a significant factor in determining its abilities to increase its
revenues. The Company cannot guarantee that third-party payors will elect to
reimburse treatments using the Company's products or processes or, if such
reimbursement is approved, that the level of reimbursement granted will be
sufficient to cover the cost of the product or procedure to the physician or to
the patient.

      Health care providers' inability to obtain third-party reimbursement for
the treatment could have an adverse effect on the Company's success.

      The success of The AutoloGel(TM) System is dependent on acceptance by the
medical community.

      The commercial success of the Company's products and processes will depend
upon the medical community and patients accepting the therapies as safe and
effective. If the medical community and patients do not ultimately accept the
therapies as safe and effective, the Company's ability to sell the products and
processes will be materially and adversely affected.

      Cytomedix may be unable to attract and retain key personnel.

      The future success of the Company depends on the ability to attract,
retain and motivate highly-skilled management, and the Company's ability to
locate and engage independent sales representatives with expertise and contacts
in the wound care market. The Company has retained a team of highly-qualified
officers, consultants and independent sales representatives, but the Company
cannot assure that it will be able to successfully integrate these officers,
consultants and independent sales representatives into its operations, retain
any or all of them or be successful in recruiting additional personnel as
needed. The Company's inability to do so will materially and adversely affect
the business prospects, operating results and financial condition.

      The Company's ability to maintain and provide additional services to its
existing customers depends upon its ability to hire and retain business
development and scientific and technical personnel with the skills necessary to
keep pace with continuing changes in cellular therapy technologies. Competition
for such personnel is intense; the Company competes with pharmaceutical,
biotechnology and health care companies. The Company's inability to retain
additional qualified personnel may lead to higher recruiting and compensation
costs for such personnel. These increased costs may reduce the Company's profit
margins or make retaining new personnel impractical.


                                       20


      Legislative and administrative action may have an adverse effect on the
Company.

      Political, economic and regulatory influences are subjecting the health
care industry in the United States to fundamental change. The Company cannot
predict what other legislation relating to its business or to the health care
industry may be enacted, including legislation relating to third-party
reimbursement, or what effect such legislation may have on the Company's
business, prospects, operating results and financial condition. The Company
expects federal and state legislators to continue to review and assess
alternative health care delivery and payment systems, and possibly adopt
legislation affecting fundamental changes in the health care delivery system.
Such laws may contain provisions, which may change the operating environment for
the Company's targeted customers, including hospitals and managed care
organizations.

      Health care industry participants may react to such legislation by
curtailing or deferring expenditures and initiatives, including those relating
to the Company's products. Future legislation could result in modifications to
the existing public and private health care insurance systems that would have a
material adverse effect on the reimbursement policies discussed above.

      The Company could be affected by malpractice claims.

      Providing medical care entails an inherent risk of professional
malpractice and other claims. The Company does not control or direct the
practice of medicine by physicians or health care providers who use the products
and does not assume responsibility for compliance with regulatory and other
requirements directly applicable to physicians. The Company cannot guarantee
that claims, suits or complaints relating to the use of The AutoloGel(TM) System
ordered by physicians will not be asserted against the Company in the future.

      The production, marketing and sale and use of The AutoloGel(TM) System
carry the risk that product liability claims will be asserted against the
Company. These risks cannot be eliminated, and the Company could be held liable
for any damages that might result from adverse reactions or infectious disease
transmission. Such liability could materially and adversely affect the Company's
business, prospects, operating results and financial condition.

      The Company currently maintains professional and product liability
insurance coverage, but the Company cannot provide assurance that the coverage
limits of this insurance would be adequate to protect us against all potential
claims. The Company cannot guarantee that it will be able to obtain or maintain
professional and product liability insurance in the future on acceptable terms
or with adequate coverage against potential liabilities.

      The AutoloGel(TM) System has existing competition in the marketplace.

      In the market for biotechnology products, the Company faces competition
from pharmaceutical companies, biopharmaceutical companies and other
competitors. Other companies have developed or are developing products which may
be in direct competition with The AutoloGel(TM) System. Biotechnology
development projects are characterized by intense competition. Thus, the Company
cannot assure any investor that it will be the first to the market with any
newly developed products or that it will successfully be able to market these
products. If the Company is not able to participate and compete in the cellular
therapy market, the Company's financial condition will be materially and
adversely affected. The Company cannot guarantee that it will be able to compete
effectively against such companies in the future. Many of these companies have
substantially greater capital resources, larger marketing staffs and more
experience in commercializing products. Recently developed technologies, or
technologies that may be developed in the future, may be the basis for
developments which will compete with the Company's products.

      The Company's Common Stock is traded in the over-the-counter market, and
it may never be listed on a national exchange.

      The Company's Common Stock is currently traded in the over-the-counter
market and quoted on the Over-The-Counter Bulletin Board ("OTCBB") under the
symbol "CYME." Although Cytomedix is currently a publicly-held company, there
can be no assurance that the Company's Common Stock will ever


                                       21


be listed on a national securities exchange. This means that it may be hard or
impossible to find a willing buyer for the Company's Common Stock in the future.

      The price of the Company's Common Stock could be affected adversely by
sales of the Common Stock.

      To date, there has been very limited trading volume in Cytomedix Common
Stock. As long as this condition continues, the sale of a significant number of
shares of Common Stock at any particular time could be difficult to achieve at
the market prices prevailing immediately before such shares are offered. In
addition, sales of substantial amounts of Common Stock, including shares issued
upon the exercise of outstanding options and warrants, under Securities and
Exchange Commission Rule 144 or otherwise could adversely affect the prevailing
market price of Cytomedix Common Stock and could impair the Company's ability to
raise capital through the sale of securities.

      The price of the Company's Common Stock is likely to be volatile and
subject to swings based on sales and other market conditions.

      The market price of the Company's Common Stock is likely to be highly
volatile. In addition to market volatility unrelated to the Company's operating
performance, the relatively low trading volume of the Company's Common Stock
increases the likelihood and severity of volume fluctuations. These volume
fluctuations will likely result in a corresponding increase in the volatility of
the Company's Common Stock price. Factors that could cause such volatility in
the price of Cytomedix Common Stock may include among other things: (a) actual
or anticipated fluctuations in the Company's quarterly operating results; (b)
announcements of technological innovations or new sales; (c) changes in
financial estimates by securities analysts; (d) governmental regulations; (e)
developments in efforts to protect Intellectual Property Assets; (f) conditions
or trends in the health care industry; (g) changes in the market valuations of
other comparable companies; (h) general market conditions; and (i) timing of
decisions by existing shareholders to sell large positions in Cytomedix Common
Stock.

      Purchases of Cytomedix shares are subject to the SEC's penny stock rules.

      The Company is uncertain as to whether the market price of the Common
Stock will be above $5.00 per share. Securities which trade below $5.00 per
share are subject to the requirements of certain rules promulgated under the
Securities Exchange Act of 1934. These rules require additional disclosure by
broker-dealers in connection with any trades involving the stock defined as a
"Penny Stock." Generally, any non-NASDAQ equity security that has a market price
of less than $5.00 per share is a Penny Stock. As a result of the Company's
Common Stock being characterized as a Penny Stock, the market liquidity for the
Common Stock may be adversely affected by the regulations. This could restrict
an investor's ability to sell the Common Stock in a secondary market.

      The rules governing Penny Stock require the delivery, prior to any Penny
Stock transaction, of a disclosure schedule explaining the Penny Stock market
and the risks associated therewith, and impose various sales practice
requirements on broker-dealers who sell Penny Stocks to persons other than
established customers and accredited investors (generally defined as an investor
with a net worth in excess of $1,000,000 or annual income exceeding $200,000,
$300,000 together with a spouse). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. The broker-dealer also must disclose the commissions payable to the
broker-dealer, current bid and offer quotations for the Penny Stock and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Such information
must be provided to the customer orally or in writing prior to effecting the
transaction and in writing before or with the customer confirmation. Monthly
statements must be sent disclosing recent price information for the Penny Stock
held in the account and information on the limited market in Penny Stock.


                                       22


      The additional burdens imposed on broker-dealers may discourage them from
effecting transactions in the Company's Common Stock, which could severely limit
the liquidity of the Common Stock and the ability of shareholders to sell
Cytomedix Common Stock in the secondary market.

PROSPECTS FOR THE FUTURE

      Cytomedix's success is directly dependent on the success of The
AutoloGel(TM) System, and the Company believes that The AutoloGel(TM) System has
a good chance for success in the marketplace for several reasons. In the
long-term care and long-term acute care markets, and with health maintenance
organizations (HMOs), preferred provider organizations (PPOs), and home health
providers where health care products and services are delivered in a capitated
environment, the weekly use of The AutoloGel(TM) System is a cost effective
treatment modality that saves the expense of daily and multiple dressing changes
as well as the labor needed to perform these tasks. Combining these significant
cost savings in this economically-driven environment with a faster wound-healing
rate as reported by clinicians, the Company expects that both the facility and
agency providing the care as well as the wound patient will see added value
through the use of The AutoloGel(TM) System. The Company believes that this
model of providing easy-to-access advanced therapy with reported increased
healing in a shorter period of time will be very attractive to all types of
capitated health care providers.

      The Company believes that obtaining favorable results from the Trials and
a subsequent national reimbursement code will directly affect the long-term
success of the Company. Whether a product or system is reimbursed by Medicare is
a deciding factor for many patients and providers. The Illinois Department of
Public Aid has decided to provide reimbursement for The AutoloGel(TM) System
kits used to treat Medicaid patients in home health agencies, outpatient
facilities, and physician's offices. The Company believes that this decision by
the Illinois Department of Public Aid could serve as a precedent that other
states agencies could choose to follow. If other state agencies begin to
reimburse The AutoloGel(TM) System and/or the Company is successful in obtaining
a national reimbursement code, the Company believes that sales of The
AutoloGel(TM) System will increase.

      The Company's success in marketing The AutoloGel(TM) System is directly
dependent on the Company's ability to protect its patents. The Company has
commenced lawsuits against alleged infringers of its patents and parties it
believes are inducing end-users to infringe its patents. In most of these cases,
the Company has sought damages and injunctive relief in order to stop the
infringement of the Company's intellectual property. The Company's ability to
protect its patented technology and to enter into licensing and royalty
agreements with persons desiring to use the Company's intellectual property will
be vital to the Company's success.

      In summary, the Company believes that The AutoloGel(TM) System provides an
economic benefit to health care providers and reimbursement sources, based on
the cost of current treatments and competitive wound care products. Combined
with what the Company believes to be a strong patent position, Cytomedix feels
it is positioned to successfully market The AutoloGel(TM) System to the
capitated care market. Thereafter, upon the successful completion of a strategy
to have The AutoloGel(TM) System approved by the FDA and reimbursed by third
party payors such as Medicare, Medicaid and other private insurers, the Company
intends to aggressively market The AutoloGel(TM) System to all segments of the
large and rapidly growing wound care market with the objective of securing a
significant market share position.

Item 3. Controls and Procedures.

      The Company's two Executive Officers and Controller have reviewed and
evaluated the effectiveness of the Company's disclosure controls and procedures
(as defined in Rules 13a-14(c) and 15d-14(c) promulgated under the Securities
Exchange Act of 1934) as of the end of the period covered by this report. Based
on their evaluation, they have concluded that the Company's disclosure controls
and procedures are, to the best of their knowledge, effective to ensure that
information required to be disclosed by Cytomedix in its reports filed with the
SEC is recorded, processed, summarized, and reported within the governing time
periods. Given the Company's size and limited number of employees, these persons
have


                                       23


determined that weekly meetings of all executive officers and significant
employees and consultants assist in ensuring that material information is
communicated throughout the Company. The Company's two Executive Officers and
Controller have concluded that there were no significant changes in the
Company's internal controls or in other factors that could significantly affect
its internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.

                                     PART II

                               OTHER INFORMATION

Item 1. Legal Proceedings.

      One of the key elements of the Company's current business strategy is
the use of a contingency-based patent enforcement and licensing initiative to
further the Company's operational goals. To that end, the Company has
commenced lawsuits against certain alleged infringers of its Intellectual
Property Assets and parties it believes are inducing end-users to infringe its
Intellectual Property Assets. In connection with this effort, the Company has
executed an agreement with Fitch, Even, Tabin, and Flannery, Attorneys
("Fitch"), of Chicago. Fitch will provide litigation and licensing legal
representation on straight contingency basis with respect to certain litigation
and licensing matters relating to the Company's intellectual property utilized
in connection with The AutoloGel(TM) System.

      The Company has the following litigation pending in the District Court for
the Northern District of Illinois, Eastern Division: (i) Cytomedix, Inc. v.
Perfusion Partners & Associates, Inc., Case No. 02 C 4776, filed July 3, 2002;
(ii) Cytomedix, Inc. v. James Gandy, et al., Case No. 02 C 4779, filed July 3,
2002; (iii) Cytomedix, Inc. v. Little Rock Foot Clinic, P.A., et al., Case No.
02 C 4782, filed July 3, 2002; and (iv) Cytomedix, Inc. v. Autologous Blood
Technology, L.L.C., et al., Case No. 02 C 4863, filed July 10, 2002. In each of
these lawsuits, the Company has asserted that the Defendants have infringed upon
the Company's patents and engaged in unfair competition. In all of these actions
the Company seeks unspecified damages and injunctive relief. A fifth case in the
same court, Cytomedix, Inc. v. LB Hyperbarics, Inc., et al., Case No. 02 C 4774,
filed July 3, 2002, was dismissed on procedural grounds in May 2003.

      In September 2002, the Company restyled its objection and counterclaims to
the claims of Keith Bennett and affiliates into an adversary proceeding
captioned Cytomedix, Inc. v. Keith Bennett, et al., Adv. No. 02 A 01292. In this
action, the Company objects to Bennett's $1.1 million claim asserted as a Class
3 general unsecured claim under Option 3A (under which Bennett would receive a
12% cash recovery on his Allowed Claim, if any) in the Company's bankruptcy
case. In addition, the Company asserts affirmative claims of patent
infringement, breach of contract, and unfair competition. Management intends to
vigorously pursue the litigation. The Illinois federal district court withdrew
the reference of this case from the Illinois Bankruptcy Court, and recently
ordered bifurcation of the case such that the patent infringement claims would
be transferred to the District Court for the Western District of Arkansas for
further proceedings and the Company's objections to Bennett's filed proofs of
claim would be referred back to the Bankruptcy Court for further proceedings.

      On October 23, 2002, Harvest Technologies Corp. initiated an action
against the Company in the United States District Court for the District of
Massachusetts, Case No. 02-12077. Plaintiff seeks a declaratory judgment that
its activities do not constitute the infringement of any patent rights claimed
by the Company, and it seeks damages for alleged false advertising, unfair
competition, intentional interference with contractual rights or a prospective
business relationship and unfair and deceptive trade acts or practices as
defined by Massachusetts law. The claim for damages is unliquidated. The Company
vigorously disputes the allegations and, on March 27, 2003, filed its answer and
counterclaims against Harvest Technologies Corp. for patent infringement,
tortious interference with prospective business relationships, unfair
competition, and deceptive trade practices. The Company seeks damages and
permanent injunctive relief against Harvest Technologies Corp.

      On May 23, 2003, the Company initiated an action against Landmark
Healthcare, LLC, ("Landmark") in the United States District Court for the
Eastern District of Arkansas, Civil Action No. 4:03CV00387GTE. In this case, the
Company alleges patent infringement, breach of both a referral agreement and
supply agreement, and misappropriation of trade secrets. The Company has sought


                                       24


damages, declaratory judgment, and injunctive relief. On July 16, 2003, Landmark
filed its answer and counterclaim denying the Company's claims. Landmark's
counterclaim asserts that the Company breached its supply contract with
Landmark, interfered with prospective business advantage, and breached its
obligation of good faith and fair dealing in performance. Landmark seeks damages
against the Company.

      On June 6, 2003, the Company commenced a lawsuit against Safeblood
Technologies, Inc., Jim Limbird, and Charles Worden, Jr. (collectively,
"Safeblood Defendants") in the United States District Court for the Eastern
District of Arkansas, Civil Action No. 4-03-CV-00422JMM. In this complaint, the
Company has sought damages and injunctive relief for its patent infringement
claim. The Safeblood Defendants filed their answer and counterclaim on June 27,
2003. In their answer, the Safeblood Defendants deny any infringement. Their
counterclaim alleges that the Company has violated the Lanham Act, has
tortiously interfered with contractual relations and prospective economic
advantage, and has engaged in unfair competition. The Safeblood Defendants seek
damages and a declaratory judgment.

      Unfavorable resolutions of, settlements of, or costs related to these
lawsuits could have a material adverse effect on the Company's business, results
of operations or financial condition.

Item 2. Changes in Securities.

OUTSTANDING COMMON STOCK AND DIVIDENDS

      There are approximately 13,211,839 shares of Common Stock outstanding as
of November 13, 2003.

      All shares immediately issuable under the Plan have been issued as of the
date of this report. Under the Plan, the Company may have an obligation to issue
353,356 shares of Common Stock if the Company has revenues exceeding $10,000,000
in four consecutive quarters. None of these shares are currently issuable and
the revenue goal must be satisfied before these shares can be issued. The
Company does not anticipate issuing these shares in the near future.

      The Company did not pay dividends to holders of its Common Stock during
2001, 2002, or any quarter in 2003. The Company does not anticipate paying cash
dividends on its Common Stock in the foreseeable future, but instead will retain
any earnings to fund its growth. In fact, Cytomedix is prohibited from declaring
dividends on its Common Stock as long as any shares of Series A Convertible
Preferred or Series B Convertible Preferred are outstanding. Once there are no
shares of Series A or Series B Convertible Preferred outstanding, any decision
to pay cash dividends will depend on the Company's ability to generate earnings,
its need for capital, its overall financial condition, and other factors the
Board deems relevant.

SALES OF NON-REGISTERED SECURITIES IN THE THIRD QUARTER OF 2003

      In June 2003, the Company commenced the Second Offering. The Second
Offering was a private offering of Cytomedix Common Stock to accredited
investors only (as said term is defined by Rule 501(a) of Regulation D). The
Second Offering was exempt from registration under the Securities Act of 1933
pursuant to Section 4(2) of the Securities Act of 1933 and Rule 506 of
Regulation D promulgated thereunder. During the second quarter of 2003,
Cytomedix sold 840,000 shares of Common Stock in this private offering for an
aggregate price of $1,050,000 in securities in this private offering. These
840,000 shares of Common Stock were issuable at June 30, 2003, but were not
issued until July 24, 2003. During the third quarter of 2003, Cytomedix sold
1,159,200 shares of Common Stock in this private offering for an aggregate price
of $1,499,000.

      The Company agreed to pay commissions to certain selling agents for their
services in connection with the Second Offering. The Company has agreed to pay
commissions equal to 6% of the securities sold by such selling agent, with up to
50% of the commission amount to be paid in cash and the remaining amount to be
paid in shares of Common Stock. All of the shares offered have not been sold by


                                       25


commissioned selling agents. Commissions earned during the quarter ended
September 30, 2003 totaled $41,565. The Company also issued 10,200 shares of
Common Stock for commissions payable in connection with the Second Offering
during the three months ended September 30, 2003. These shares were issued in a
transaction exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933.

      On August 27, 2003, the Company entered into an agreement with The
Research Works, Inc. ("Research Works"), whereby Research Works shall prepare an
equity research report on Cytomedix. This research report will be published on
the Research Works website and periodically updated. Cytomedix authorized and
issued 40,000 shares of Common Stock to Research Works as consideration under
the agreement. These shares were issued to Research Works on October 14, 2003,
in a transaction exempt from registration under the Securities Act of 1933
pursuant to Section 4(2) of the Securities Act of 1933.

SALES OF NON-REGISTERED SECURITIES SUBSEQUENT TO THE THIRD QUARTER OF 2003

      On October 21, 2003, the Company's Board of Directors approved a Services
Agreement with IVC Group ("IVC"). Pursuant to the Services Agreement, IVC Group
received options to purchase 400,000 shares of Common Stock at an exercise price
of $1.00 per share. The options vest immediately and expire three years from the
date of issue. The transaction was exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.

      On October 21, 2003, the Company's Board of Directors approved a Services
Agreement with Stern & Co. ("Stern"). Pursuant to the Services Agreement, Stern
received options to purchase 100,000 shares of Common Stock at an exercise price
of $1.25 per share. The options vest immediately and expire three years from the
date of issue. The transaction was exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities.

      As stated in the Plan, holders of the Company's Series A Convertible
Preferred Stock and the Company's Series B Convertible Preferred Stock are
entitled to dividends at the rate of eight percent per annum, payable quarterly
in arrears. The first year dividend is to be paid in additional shares of Series
A Convertible Preferred Stock and Series B Convertible Preferred Stock.

      As of September 30, 2003, there were 254,155 shares of Series A
Convertible Preferred Stock issuable, but not yet issued, to holders of the
Series A Convertible Preferred Stock, as dividends on the Series A Convertible
Preferred Stock. As of September 30, 2003, there were 260,989 shares of Series B
Convertible Preferred Stock issuable, but not yet issued, to holders of the
Series B Convertible Preferred Stock, as dividends on the Series B Convertible
Preferred Stock. The Company is currently in the process of issuing these
additional shares of Preferred Stock to its holders of Preferred Stock.

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

      No matter was submitted to a vote of the security holders during the
first, second or third quarter of 2003. Because of the Company's bankruptcy, it
was unable to hold an annual meeting in 2002 or 2003. The Company plans to hold
an annual meeting in the first half of 2004.

Item 5. Other Information.

      On October 2, 2003, the Company received a notice of resignation from Mr.
Stephen Holden. Mr. Holden served as a Director of Cytomedix from August 16,
2002, until his resignation.

      On November 7, 2003, the Company received a notice of intent to resign
from the Company's Chief Executive Officer and President, Mr. Kent T. Smith. Mr.
Smith served in these positions from August 22, 2002, and will continue to serve
as the Company's President until his successor is named.


                                       26


Item 6. Exhibits and Reports on Forms 8-K.

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

      No Forms 8-K were filed during the third quarter of 2003.


                                       27


                                   SIGNATURES

      In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

CYTOMEDIX, INC.:


/s/Kent T. Smith
- -----------------------------------
Kent T. Smith,
Chief Executive Officer

Date: November 14, 2003


/s/Carelyn P. Fylling
- -----------------------------------
Carelyn P. Fylling, Vice President
of Professional Services

Date: November 14, 2003


/s/Lance Jones
- -----------------------------------
Lance Jones, Controller

Date: November 14, 2003

Signed originals of this written statement have been provided to Cytomedix, Inc.
and will be retained by Cytomedix, Inc. and furnished to the Securities and
Exchange Commission or its staff upon request.


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                                  EXHIBIT LIST

2.1   First Amended Plan of Reorganization with All Technical Amendments
      (Previously filed on June 28, 2002, on Form 8-K, File No. 000-28443).

3.1   Restated Certificate of Incorporation of Cytomedix, Inc. (Previously filed
      on November 7, 2002, on Form 10-QSB for quarter ended June 30, 2001, File
      No. 000-28443).

3.2   Restated Bylaws of Cytomedix, Inc. (Previously filed on November 7, 2002,
      on Form 10-QSB for quarter ended June 30, 2001, File No. 000-28443).

4.1   Amended and Restated Certificate of Designation of the Relative Rights and
      Preferences of Series A Preferred, Series B Preferred and Common Stock of
      Cytomedix, Inc. (Previously filed on November 7, 2002, on Form 10-QSB for
      quarter ended June 30, 2001, File No. 000-28443).

4.2   Form of Class A Warrant issued to New Investors and DIP Lenders.
      (Previously filed on December 5, 2002, on Form 10-QSB for quarter ended
      September 30, 2001, File No. 000-28443).

4.3   Form of Class B Warrant issued to New Investors and DIP Lenders.
      (Previously filed on December 5, 2002, on Form 10-QSB for quarter ended
      September 30, 2001, File No. 000-28443).

10.1  Royalty Agreement, dated as of December 26, 2000, by and between
      Cytomedix, Inc. and Curative Health Services, Inc. (Previously filed on
      January 17, 2001, on Form 8-K, File No. 000-28443).

10.2  First Amendment to Royalty Agreement, dated as of April 20, 2001, by and
      between Cytomedix, Inc. and Curative Health Services, Inc. (Previously
      filed on May 25, 2001, on SB-2/A, File No. 333-55818).

10.3  Second Amendment to Royalty Agreement, dated as of December 5, 2002, by
      and between Cytomedix, Inc. and Curative Health Services, Inc. (Previously
      filed on March 31, 2003, on Form 10-KSB for fiscal year ended December 31,
      2002, File No. 000-28443).

10.4  Cytomedix, Inc. Long-Term Incentive Plan (Previously filed on November 7,
      2002, on Form 10-QSB for quarter ended June 30, 2001, File No. 000-28443).

10.5  License Agreement dated March 21, 2001, by and between Cytomedix, Inc. and
      DePuy AcroMed, Inc. (Previously filed on April 16, 2001, on Form 10-KSB
      for year ended December 31, 2000, File No. 000-28443).

10.6  Employment Agreement with Mr. Kent T. Smith (Previously filed on December
      5, 2002, on Form 10-QSB for quarter ended September 30, 2001, File No.
      000-28443).

10.7  Employment Agreement with Ms. Carelyn P. Fylling (Previously filed on
      December 5, 2002, on Form 10-QSB for quarter ended September 30, 2001,
      File No. 000-28443).

10.8  Registration Rights Agreement by and between Cytomedix, Inc. and the New
      Investors and Cytomedix, Inc. and the DIP Lenders (Previously filed on
      December 5, 2002, on Form 10-QSB for quarter ended September 30, 2001,
      File No. 000-28443).

10.9  BDR/Cytomedix Consulting Arrangement (Previously filed on December 5,
      2002, on Form 10-QSB for quarter ended September 30, 2001, File No.
      000-28443).

10.10 Cytomedix, Inc. Long-Term Incentive Plan (Previously filed on November 7,
      2002, on Form 10-QSB for quarter ended June 30, 2001, File No. 000-28443).


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16.1  Letter from KPMG dated August 22, 2002 (Previously filed on August 26,
      2002, on Form 8-K, File No. 000-28443).

20.1  Notice to Shareholders of Cytomedix, Inc. dated October 17, 2001
      (Previously filed on November 12, 2002, on Form 10-QSB, File No.
      000-28443).

31.1  Certification of Chief Executive Officer of Cytomedix, Inc., pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.

31.2  Certification of Vice President of Professional Services of Cytomedix,
      Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3  Certification of Controller of Cytomedix, Inc., pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002.

32.1  Certification of Chief Executive Officer of Cytomedix, Inc., pursuant to
      18 U.S.C.ss.1350.

32.2  Certification of Controller of Cytomedix, Inc., pursuant to 18
      U.S.C.ss.1350.


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