Income Taxes

3 Months Ended

12 Months Ended

Mar. 31, 2013

Dec. 31, 2012

Dec. 31, 2011

Aldagen Inc [Member]

Income Tax Disclosure [Text Block]

Note 13 — Income Taxes

The Company accounts for income taxes using the asset and liability approach. This approach requires the recognition of tax benefits or expenses on the temporary differences between the financial reporting and tax bases of the Company’s assets and liabilities. For interim periods, the Company recognizes a provision (benefit) for income taxes based on an estimated annual effective tax rate expected for the entire year. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company also recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. The Company’s policy is to recognize interest and penalties on uncertain tax positions as a component of income tax expense.

Note 16 — Income Taxes

Income tax (expense) benefit for the years ended December 31, 2012, 2011, and 2010 consisted of the following:

	2012			2011			2010
Current:
Federal	$	—		$	—		$	—
State		—			—			—
Deferred:
Federal		1,267,000			56,000			133,000
State		(653,000	)		(18,000	)		(25,000	)
Net operating loss carryforward		4,635,000			1,310,000			2,023,000
Valuation Allowance		(5,267,000	)		(1,366,000	)		(2,145,000	)
Total income tax (expense) benefit	$	(18,000	)	$	(18,000	)	$	(14,000	)

Significant components of Cytomedix’s deferred tax assets and liabilities consisted of the following at December 31:

	2012			2011
Deferred tax assets:
Stock-based compensation	$	5,087,000		$	3,948,000
Tax credits		2,512,000			—
Deferred financing costs		714,000			—
Start-up and organizational costs		272,000			—
Tax deductible Goodwill		136,000			—
Property and equipment		244,000			—
Derivative liabilities		522,000			713,000
Other		109,000			168,000
Total deferred tax assets		9,596,000			4,829,000
Deferred tax liabilities:
Intangible Assets		(12,353,000	)		—
Discount on Note Payable		(377,000	)		(617,000	)
Other		(50,000	)		(32,000	)
Total deferred tax liabilities		(12,780,000	)		(649,000	)
Net deferred tax assets, excluding net operating loss carryforwards		(3,184,000	)		4,180,000
Net operating loss carryforwards		41,540,000			15,488,000
		38,356,000			19,668,000
Less valuation allowance		(38,406,000	)		(19,700,000	)
Total deferred tax assets (liabilities)	$	(50,000	)	$	(32,000	)

The following table reflects the change in the valuation allowance for deferred tax assets at December 31:

Valuation allowance - January 1, 2010	$	16,042,000
2010 provision		2,292,000
Valuation allowance - December 31, 2010		18,334,000
2011 provision		1,366,000
Valuation allowance - December 31, 2011		19,700,000
Purchase Accounting changes		13,439,000
2012 provision		5,267,000
Valuation allowance - December 31, 2012	$	38,406,000

The following table presents a reconciliation between the U.S. federal statutory income tax rate and the Company’s effective tax rate:

	2012			2011			2010
U.S. Federal statutory income tax		35.0	%		35.0	%		35.0	%
State and local income tax benefits		4.2	%		3.4	%		3.2	%
Fair value of Derivatives		(6.8	)%		4.7	%		(3.0	)%
Nondeductible guarantee fees		(3.7	)%		(2.0	)%		(1.4	)%
Other		(2.1	)%		(1.5	)%		0.2	%
Valuation allowance for deferred income tax assets		(26.6	)%		(39.1	)%		(33.8	)%
Effective income tax rate		0.1	%		0.5	%		0.2	%

The Company had loss carry-forwards of approximately $107,392,000 as of December 31, 2012 that may be offset against future taxable income. The carry-forwards will expire between 2021 and 2032. Use of these carry-forwards may be subject to annual limitations based upon previous significant changes in stock wnership. Management has determined that realization of the net deferred tax assets is not assured and accordingly has established a valuation allowance of $38,406,000 and $19,700,000 at December 31, 2012 and 2011, respectively.

 In 2012, the Company recorded an income tax provision of $18,000 related to a deferred tax liability resulting from the amortization of Goodwill for tax purposes.

The Company’s source of income (loss) before income tax provision (benefit) is primarily domestic.

The Company does not believe it has any uncertain income tax positions as described in its discussion of Income Tax accounting policy in Note 3.

9. Income Taxes

For the years ended December 31, 2011 and December 31, 2010, the Company incurred no income tax expense.

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2011 and 2010 consist of the following:

	2011			2010
Current
Deferred tax assets:
Domestic net operating loss carryforwards	$	–		$	39,600
Accrued Severance		–			4,900
Deferred Transaction Costs		43,100			–
Deferred Rent		47,400			–
Inventory Reserve		7,000
Less Valuation Allowance		(97,500	)		–
Deferred tax assets, current		–			44,500
Deferred tax liabilities:
Deferred rent		–			44,500
Deferred tax asset (liabilities), current		–			44,500
Net current deferred tax asset (liability)	$	–		$	–

	2011			2010
Noncurrent
Deferred tax assets:
Domestic net operating loss carryforwards	$	22,025,100		$	20,110,800
Charitable contribution carryforwards		1,300			1,500
Start-up costs		266,600			266,600
Organizational costs		1,000			1,000
Share-based compensation		256,100			230,800
Intangible assets		14,900			18,700
Deferred financing costs		618,800			–
Federal income tax credits		2,311,600			2,159,400
Fixed assets		54,300			111,600
Less valuation allowance		(25,549,700	)		(22,900,400	)
Deferred tax assets, noncurrent		–			–
Deferred tax liabilities:
Fixed assets		–			–
Deferred tax asset (liabilities), noncurrent		–			–
Net deferred tax asset (liability)	$	–		$	–

As of December 31, 2011, the Company provided a full valuation allowance against its net deferred tax assets since realization of these benefits could not be reasonably assured. The increase in valuation allowance resulted primarily from the additional net operating loss carryforward generated.

As of December 31, 2011, the Company had federal and state net operating loss carryforwards of $56,795,900 and $59,658,800, respectively. These net operating loss carryforwards begin to expire in 2020 and 2015 for federal and state purposes. The Tax Reform Act of 1986 contains provisions which limit the ability to utilize the net operating loss carryforwards in the case of certain events including significant changes in ownership interests. If the Company’s net operating loss carryforwards are limited, and the Company has taxable income which exceeds the permissible yearly net operating loss carryforwards, the Company would incur a federal income tax liability even though net operating loss carryforwards would be available in future years. The Company has completed a study to assess whether an ownership change has occurred and has determined that an ownership change occurred during 2009. Additional ownership changes in the future may result in additional limitations in the utilization of the carryforward net operating losses and credits.

The American Recovery and Reinvestment Tax Act of 2010 amended the original election to accelerate AMT and research and development tax credits in lieu of bonus depreciation enacted by the Housing Assistance Tax Act of 2009. The provisions which allowed businesses to refund a portion of their pre-2006 research and development tax credits in lieu of certain accelerated depreciation methods on fixed asset additions was extended for one year to apply to property that was placed in service in 2009. The Company received a refund of $36,039 for the year ended December 31, 2010 as a result of this provision.

Taxes computed at the statutory federal income tax rate of 34% are reconciled to the provision for income taxes for the years ended December 31, 2010 and 2011 as follows:

	Years Ended December 31
	2011						2010
	Amount			% of Pretax Earnings			Amount			% of Pretax Earnings
United States Federal tax at statutory rate	$	(2,310,400	)		(34.0	)%	$	(3,269,800	)		(34.0	)%
State taxes (net of Federal benefit)		(309,100	)		(4.5	)		(437,600	)		(4.6	)
Change in valuation reserves		2,746,800			41.0			3,464,100			36.0
Federal income tax credits		(149,800	)		(3.0	)		(433,600	)		(4.5	)
Amortization of debt discount		468,200			9.0			969,400			10.1
Other nondeductible expenses		(454,600	)		(8.7	)		(471,700	)		(4.9	)
Other		8,900			0.2			179,200			1.9
Provision for income taxes	$	–			0.0	%	$	–			0.0	%

In September 2006, the Financial Accounting Standards Board (FASB) issued interpretation No. 48, Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109 (FIN 48). The guidance was subsequently codified in ASC 740-10. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company adopted the provisions of ASC 740-10 on January 1, 2007. The ASC 740 liability at December 31, 2010, and December 31, 2011, was zero. It is the Company’s policy to record and classify interest and penalties as income tax expense, although no liability for potential interest or penalties was recorded during the year and no amounts for penalties or interest were accrued at December 31, 2010 or December 31, 2011.

The Company has not, as yet, conducted a study of its research and development credit carryforwards. A study may result in an adjustment to the Company's research and development credit carryforwards; however, until such a study is completed and any adjustment is known, no amounts are being presented as uncertain tax positions under FIN 48. A full valuation allowance has been provided against our research and development credits; and, if an adjustment is required, this adjustment would be offset by a corresponding adjustment to the valuation allowance. Thus, there would be no impact to the balance sheet or statement of operations.

The Company files U.S. and state income tax returns in jurisdictions with varying statutes of limitations. The 2000 through 2011 tax years remain subject to examination by federal and state authorities.