UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                -----------------
                                   FORM 10-QSB

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934. For the quarterly period ended March 31, 2006

                                       or

[ ]  Transition  report  pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange Act of 1934. For the transition period from  _________________  to
     _____________________.

                         Commission File Number: 0-22419

                                  CARDIMA, INC.
             (Exact name of registrant as specified in its charter)


           Delaware                                            94-3177883
 (State or Other Jurisdiction                               (I.R.S. Employer
of Incorporation or Organization)                          Identification No.)


                  47266 Benicia Street, Fremont, CA 94538-7330
               (Address of Principal Executive Offices)(Zip Code)

       Registrant's telephone number, including area code: (510) 354-0300

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

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). ____ Yes __X__ No

     As of April 30, 2006, there were 101,694,503 shares of Registrant's  Common
Stock outstanding.

     Transitional  Small  Business  Disclosure  Format  (Check one):  ______ Yes
__x__ No

================================================================================

<PAGE>
<TABLE>
<CAPTION>
                                  CARDIMA, INC.

                                TABLE OF CONTENTS



                           PART I. Financial Information


                                                     Description                                                          Page

<S>  <C>                                                                                                                   <C>
Item 1.       Financial Statements (unaudited)                                                                              3
              --------------------------------
              Condensed Balance Sheets as of March 31, 2006 and December 31, 2005                                           3
              -------------------------------------------------------------------
              Condensed Statements of Operations for the Three Months Ended March 31, 2006 and 2005                         4
              --------------------------------------------------------------------------------------
              Condensed Statement of Cash Flows for the Three Months Ended  March 31, 2006 and 2005                         5
              -------------------------------------------------------------------------------------
              Notes to Condensed Financial Statements                                                                       6
              ---------------------------------------
Item 2.       Management's Discussion and Analysis and Results of Operations                                               10
              ---------------------------------------------------------------
Item 3.       Controls and Procedures                                                                                      13
              -----------------------

                           PART II. Other Information


                                                      Description                                                         Page

Item 1.       Legal Proceedings                                                                                            15
              -----------------
Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds                                                  15
              -----------------------------------------------------------
Item 3.       Defaults Upon Senior Securities                                                                              15
              -------------------------------
Item 4.       Submission of Matters to a Vote of Security Holders                                                          15
              ---------------------------------------------------
Item 5.       Other Information                                                                                            15
              -----------------
Item 6.       Exhibits                                                                                                     15
              --------

Signatures                                                                                                                 16
</TABLE>

                                       2
<PAGE>
PART I.

ITEM 1.  Financial Statements
                                  CARDIMA, INC.
                                 BALANCE SHEETS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                      March 31,           December 31,
                                                                                        2006                 2005
                                                                                    (Unaudited)
                                                                                   --------------        --------------
ASSETS
Current assets:
<S>                                                                                      <C>                   <C>
 Cash and cash equivalents.......................................................  $         230         $         124
 Accounts receivable, net of allowances for doubtful accounts
         of $26 for March 31, 2006 and December 31, 2005.........................            267                   265
 Inventories.....................................................................            246                   387
 Prepaid expenses................................................................            173                   285
 Deferred charges................................................................            347                   304
 Other current assets............................................................             32                    28
                                                                                   --------------        --------------
     Total current assets........................................................          1,295                 1,393
Property and equipment, net......................................................            288                   318
Other assets.....................................................................             35                    35
                                                                                   --------------        --------------
             Total assets                                                          $       1,618         $       1,746
                                                                                   ==============        ==============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
 Accounts payable................................................................  $         936         $         956
 Accrued compensation............................................................            379                   351
 Warrant liabilities.............................................................          2,846                 1,200
 Other current liabilities.......................................................             39                    42
 Credit obligation...............................................................          4,574                 2,890
 Deferred rent...................................................................             16                    18
 Capital lease obligation - current portion......................................             25                    24
                                                                                   --------------        --------------
        Total current liabilities ...............................................          8,815                 5,481
                                                                                   --------------

Capital lease obligation - noncurrent portion....................................             21                    28
                                                                                   --------------        --------------

Commitments and contingencies (Note 2)

Stockholders' deficiency:
 Common stock, $0.001 par value; 300,000,000 shares authorized, 101,664,503 and
 101,613,658 shares issued and outstanding at
 March 31, 2006 and December 31, 2005, respectively..............................        118,120               117,999
 Accumulated deficit.............................................................       (125,338)             (121,762)
                                                                                   --------------        --------------
     Total stockholders' deficiency..............................................         (7,218)               (3,763)
                                                                                   --------------        --------------
             Total liabilities & stockholders' deficiency                          $       1,618         $       1,746
                                                                                   ==============        ==============
</TABLE>
                 See accompanying notes to financial statements.


                                       3
<PAGE>
<TABLE>
<CAPTION>
                                  CARDIMA, INC.
                            STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (Unaudited)

                                                                                     Three months ended
                                                                                           March 31,
                                                                            --------------------------------------
                                                                                  2006                 2005
                                                                            -----------------    -----------------

<S>                                                                               <C>                  <C>
Net sales                                                                   $            384     $            555
Cost of goods sold                                                                       498                  465
                                                                            -----------------    -----------------

         Gross margin (loss)                                                            (114)                  90
                                                                            -----------------    -----------------
Operating expenses:
         Research and development                                                        416                  656
         Selling, general and administrative                                             670                1,720
                                                                            -----------------    -----------------

         .........Total operating expenses                                             1,086                2,376
                                                                            -----------------    -----------------

Operating loss                                                                        (1,200)              (2,286)

Interest expense                                                                      (2,151)                  (2)
Other income and expense                                                                (225)                 259

                                                                            -----------------    -----------------

Net loss                                                                    $         (3,576)    $         (2,029)
                                                                            =================    =================

Basic and diluted net loss per share                                        $          (0.04)    $          (0.02)
                                                                            =================    =================

 Shares used in computing basic and diluted net loss per share                       101,638              101,391
                                                                            =================    =================
</TABLE>

                 See accompanying notes to financial statements.


                                       4
<PAGE>
<TABLE>
<CAPTION>
                                  CARDIMA, INC.
                            STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)


                                                                                 Three months ended
                                                                                      March 31,
                                                                             --------------------------
                                                                                2006            2005
                                                                             -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                              <C>            <C>
Net loss                                                                     $   (3,576)    $   (2,029)
Adjustments to reconcile net loss to net cash provided by operations:
     Depreciation and amortization                                                   35            114
     Non-cash stock-based compensation                                              119              1
     Derivative revaluation                                                       1,646            ---
     Allowances for excess and obsolete inventory                                    85            ---
     Other reserves, payroll tax refund                                             ---           (245)

     Non-cash interest (income) charge on notes receivable from officers            ---             (3)
     Changes in operating assets and liabilities:
          Accounts receivable, net                                                   (2)            35
          Inventories, net                                                           56           (136)
          Prepaid expenses                                                          112            (81)
          Other assets                                                              (47)            47
          Accounts payable                                                          (20)           212
          Accrued employee compensation                                              28            105
          Short-term credit obligations                                             729            ---
          Other current liabilities                                                  (9)           ---
          Deferred rent                                                              (2)           (11)
                                                                             -----------    -----------
Net cash used in operating activities                                              (846)        (1,991)
                                                                             -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                                                                 (5)           (85)
                                                                             -----------    -----------
Net cash used in investing activities                                                (5)           (85)
                                                                             -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under capital leases and credit facility                          (5)           (71)
Proceed from loan financing                                                         960            ---

Payments of issuance costs                                                          ---            (31)

Net proceeds from sale of common stock                                                2             42
                                                                             -----------    -----------
Net cash provided by financing activities                                           957            (60)
                                                                             -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                106         (2,136)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                      124          3,854
                                                                             -----------    -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                     $      230     $    1,718
                                                                             ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
     Cash paid for interest                                                  $        1     $        2
                                                                             ===========    ===========
</TABLE>

                                       5
<PAGE>

                                  CARDIMA, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

1. INTERIM FINANCIAL INFORMATION

     Basis of Presentation

     The accompanying  unaudited interim financial statements have been prepared
by the Company in accordance with accounting  principles  generally  accepted in
the United States of America  pursuant to Regulation  S-B of the  Securities and
Exchange  Commission.  Certain  information  and footnote  disclosures  normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally  accepted  in the  United  States  of  America  have  been
condensed or omitted. Accordingly,  these interim financial statements should be
read in conjunction with the Company's audited financial  statements and related
notes as contained in the  Company's  Form 10-K for the year ended  December 31,
2005. In the opinion of management, the interim financial statements reflect all
adjustments,   including  normal  recurring  adjustments,   necessary  for  fair
presentation of the interim periods presented. The results of operations for the
three months ended March 31, 2006 are not  necessarily  indicative of results of
operations to be expected for the full year.

     Stock Options Expensed

     Prior to March 2006,  the Company used  Statement  of Financial  Accounting
Standards No. 148  "Accounting  for  Stock-Based  Compensation  - Transition and
Disclosure"  (SFAS  No.  148)  to  account  for  our  stock  based  compensation
arrangements.  This statement amended the disclosure provision of FASB statement
No. 123 to require prominent disclosure about the effects on reported net income
of an entity's accounting policy decisions with respect to stock-based  employee
compensation.  As  permitted  by SFAS No. 123 and amended by SFAS No.  148,  the
Company   continued  to  apply  the  intrinsic  value  method  under  Accounting
Principles  Board  ("APB")  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees," to account for its stock-based employee compensation arrangements.

     In December 2004, the Financial Accounting Standards Board issued Statement
Number 123 ("FASB 123 (R)"),  Share-Based  Payments,  which is effective for the
reporting  period  beginning on January 1, 2006.  The  statement  required us to
recognize  compensation  expense  in an  amount  equal  to  the  fair  value  of
share-based  payments such as stock options  granted to employees.  The Company,
which has the  option to either  apply  FASB 123 (R) on a  modified  prospective
method or to  restate  previously  issued  financial  statements,  has chosen to
utilize the  modified  prospective  method.  Under this  method,  the Company is
required to record  compensation  expense (as previous  awards continue to vest)
for the unvested portion of previously granted awards that remain outstanding at
the date of adoption.

     In January 2006, the Company adopted the expense recognition  provisions of
FASB No.  123 (R),  and for the  three  months  ended  March 31,  2006  recorded
approximately  $119,000  in  stock  compensation  expense.  If the  Company  had
expensed  stock  options for the three months  ended March 31,  2005,  the stock
compensation expense would have been approximately $201,000.


                                       6
<PAGE>
     Net Loss Per Common Share

     Net loss per share has been computed  using the weighted  average number of
shares of common stock outstanding  during the period.  The Company has excluded
all  warrants  and stock  options  from the  computation  of basic  and  diluted
earnings per share because all such securities are anti-dilutive for all periods
presented. Excluded common stock equivalent shares included the following:

                                            March 31,              December 31,
                                               2006                   2005
                                        -----------------     ------------------

    Warrants.........................         81,169,168             49,369,168
    Stock Options....................          6,374,066              7,557,035
                                        -----------------     ------------------

    Total Warrants and Options......          87,543,234             56,926,203
                                        -----------------     ------------------


2. CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The Company's  significant  accounting  policies are described in Note 1 to
the Financial  Statements  included in the Company's  annual report on Form 10-K
for the year ended December 31, 2005. The accounting  policies used in preparing
the Company's interim 2006 condensed financial  statements are the same as those
described in the Company's  annual  report.  The Company's  critical  accounting
policies are those both having the most impact to the reporting of the Company's
financial  condition  and  results,  and  requiring  significant  judgments  and
estimates.  The Company's critical  accounting policies include those related to
revenue recognition, stock-based compensation and valuation of inventories.

3. DEBT FINANCING TRANSACTIONS

     In  August  2005,  the  Company  entered  into a  $3,000,000  Secured  Loan
Agreement with Apix International  Limited (Apix),  which has been fully funded.
On February 14, 2006,  the Company  entered into a new loan  facility term sheet
with Apix,  which  provided for the rollover of the original loan  agreement and
the  grant of an  additional  loan  facility  in the  amount of  $660,000  at an
interest rate of 10% per annum. In addition, the Company and Apix have agreed to
the  following  terms:  (i) the maturity  date of the original  loan facility is
extended from February 28, 2006 to May 18, 2006;  (ii) the exercise price of the
original warrant has been adjusted to $0.06 per share. Moreover, the Company has
granted Apix a new warrant to purchase  23,800,000 shares of our common stock at
an exercise price of $0.06 per share for a term of ten years. Furthermore,  upon
completion  of the full  funding  under the new loan  facility,  the Company has
granted Apix warrants to purchase an additional  8,000,000  shares of its common
stock at an exercise price of $0.06 per share for a term of ten years; (iii) the
Company has  granted  Apix the right to convert  the loan  principal,  interest,
facility  fees and exit fees into  shares of its  common  stock at a  conversion
price of $0.06 per share;  (iv) the facility fee has been increased from $60,000
to  $80,000.  In  addition,  the exit fee has been  increased  from  $900,000 to
$1,300,000; (v) upon completion of the full funding under the new loan facility,


                                       7
<PAGE>
the exit fee would be increased by $260,000; (vi) the Company agrees to register
the shares  underlying  the loan  principal,  facility  fees,  and warrants on a
registration  statement  as soon as  practicable  after the date of issuing  the
warrant,  but in any event no later  than May 31,  2006.  The  Company  received
funding  under this  agreement  of $200,000  and  $460,000 in February and March
2006,  respectively.  In April 2006, Apix provided an additional  advance to the
Company in the amount of $675,000.

4. CONCENTRATIONS OF RISK

     During the quarter ended March 31, 2006, the Company's net sales to foreign
customers increased to 55% of total, with 32% to Asia (Japan), 22% to Europe and
1% to others.  During the  quarter  ended March 31,  2005,  net sales to foreign
customers were 52%, with 39% to Asia (Japan),  13% to Europe.  The Company's net
sales by country in the quarter  ending  March 31, 2006 was 45% to US and 32% to
Japan and for the same quarter in 2005,  the net sales by country was 48% to US,
39% to Japan.

     During the quarter ended March 31, 2006, revenues to one customer comprised
32.5% of the company's total net product sales.  During the quarter ending March
31, 2005, one customer comprised 39.4% of the company's total net product sales.

5.  INVENTORIES

     Inventories  are  stated at the lower of cost or  market.  Cost is based on
actual costs computed on a first-in, first-out basis. Inventories consist of the
following (in thousands):

                                      March 31,              December 31,
                                        2006                     2005
                                   ---------------          --------------
         Raw materials             $           97           $          90
         Work-in-process                       55                     101
         Finished goods                        94                     196
                                   ---------------          --------------
                                              246                     387
                                   ===============          ==============

     Inventories  shown  above are net of  allowances  for excess  and  obsolete
inventory  of $748,000  and  $663,000 at March 31, 2006 and  December  31, 2005,
respectively.  The Company provides  allowances for: (i) inventory which is slow
moving,  (ii) inventory  with expiring shelf life, and (iii)  inventory that has
become  obsolete as a result of  technological  advancements.

                                        8
<PAGE>
6. SHORT-TERM CREDIT OBLIGATIONS

     The Company had the following short-term credit obligations outstanding:

                                      March 31, 2006         December 31, 2005
                                      --------------         -----------------

Apix Loan                             $   3,660,000          $      2,700,000

Apix Loan Fees                            1,715,000                 1,035,000

Apix Loan Accrued Interest                  147,395                    70,014

Insurance Financing                               -                    47,475
                                      --------------         -----------------
                                      $   5,522,395          $      3,852,488


Less: Notes Discount                       (947,827)                 (961,957)
                                      --------------         -----------------
                                      $   4,574,568          $      2,890,532
                                      ==============         =================

7. WARRANT LIABILITIES
<TABLE>
<CAPTION>
     The Company had the following warrant liabilities outstanding:

                             Total             Value at                  Value at              Value at
                             -----             ---------                 --------              --------
                         Warrant Shares        Inception              March 31, 2006       December 31, 2005
                         --------------        ---------             ----------------      -----------------


<S>                            <C>                  <C>                       <C>                  <C>
August 2005 Loan             30,000,000    $     3,000,000           $     1,377,000      $       1,200,000
February 2006 Loan           31,800,000    $     1,469,160           $     1,421,740      $               -
                                                                     ---------------------------------------
                                                                     $     2,846,160      $       1,200,000
                                                                     =======================================
</TABLE>

8. SUBSEQUENT EVENTS

     In May 2006, the Company received  notification from the Labor Commissioner
of the State of  California  that  penalties  of $24,000 to be former  employees
pursuant to  California  Labor Code Section 203 have been  assessed  against the
Company. The Company disputes the penalties and plans to defend against them.



ITEM 2. Management's Discussion and Analysis and Results of Operations

Forward Looking Statements

     The information in this discussion may contain  forward-looking  statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section  21E  of  the  Securities  Exchange  Act  of  1934,  as  amended.  These
forward-looking statements involve risks and uncertainties, including statements
regarding our capital needs, business strategy and expectations.  Any statements
that are not of historical fact may be deemed to be forward-looking  statements.
These forward-looking statements involve substantial risks and uncertainties. In
some cases you can identify  forward-looking  statements by terminology  such as


                                       9
<PAGE>
"may," "will," "should,"  "expect," "plan," "intend,"  "anticipate,"  "believe,"
"estimate," "predict," "potential," or "continue",  the negative of the terms or
other comparable terminology. Forward-looking statements in this Report may also
include  references to  anticipated  sales volume and product  margins,  efforts
aimed at establishing new or improving  existing  relationships  with customers,
other  business  development  activities,   anticipated  financial  performance,
business  prospects  and similar  matters.  Actual  events or results may differ
materially from the anticipated  results or other expectations  expressed in the
forward-looking  statements. In evaluating these statements, you should consider
various factors, including the risks included from time to time in other reports
or registration  statements filed with the United States Securities and Exchange
Commission. These factors may cause our actual results to differ materially from
any  forward-looking  statements.  We disclaim any obligation to publicly update
these  statements,  or disclose any difference  between actual results and those
reflected in these statements.

Overview

     We are a publicly traded company headquartered in Fremont,  California. Our
stock is quoted on the Over-The-Counter  Bulletin Board under the symbol "CRDM".
Since our incorporation in November 1992, we have developed, produced and sold a
variety of  micro-catheters  designed for the diagnosis and treatment of the two
most  common  forms  of  cardiac  arrhythmias:   atrial  fibrillation  (AF)  and
ventricular  tachycardia (VT). Since 2001,  however,  our efforts have primarily
focused on  developing  differentiated  products  that diagnose and treat atrial
fibrillation  (AF),  including our REVELATION(R) Tx microcatheter for use in the
Electrophysiology (EP) market, and our Surgical Ablation System (SAS) for use in
the surgical market.

     In January 2003,  the US Food and Drug  Administration  (FDA)  approved the
commercialization  of our SAS for use in ablating  cardiac tissue during cardiac
surgery.  Currently we do not plan to market the SAS ourselves,  and are seeking
to sell or otherwise consummate a strategic transaction for this system.

     In May 2004,  we received a letter from the FDA,  stating  that our amended
Pre-Market  Approval (PMA)  application  for the  REVELATION Tx linear  ablation
micro-catheter system was not approvable based on the requirements of applicable
regulations.  In June  2005,  we met with  the  FDA's  Center  for  Devices  and
Radiological  Health to continue the process  towards  seeking  approval for the
REVELATION(R)  Tx ablation  catheter for  treatment of AF. No  conclusions  were
reached at the end of the  meeting,  but both  parties  agreed to  continue  the
dialog. The  parties have not set a date for a follow-up meeting.  Obtaining FDA
approval in the United States of the REVELATION(R) Tx micro-catheter  system for
the treatment of AF remains one of our highest priorities.

     We had cash of  approximately  $230,000 as of March 31,  2006.  From August
2005 to March 2006,  Apix has  provided  loan  financing  to us in the amount of
$3,660,000.  In April 2006, Apix made an additional  advance to us in the amount
of $675,000..  Our  management  estimates  that our cash balance as of March 31,
2006 is  inadequate  to meet our cash  requirements  beyond May 31,  2006.  As a
result,  our management  recognizes  that we will require  additional  financing
proceeds in order to sustain our operations beyond May 31, 2006. However,  there
can be no assurance that we will be successful in obtaining additional financing
proceeds.  If  additional  financing  proceeds  are  obtained,  there  can be no
assurance  that its terms and  conditions  will not be  unfavorable  to us.  Any


                                       10
<PAGE>
failure by us to obtain  additional  funding will have a material adverse effect
on our business,  and will likely result in our inability to continue as a going
concern. In its opinion accompanying our December 31, 2005 financial statements,
our independent registered public accounting firm expressed substantial doubt as
to our ability to continue as a going  concern for a reasonable  period of time,
and provided an explanatory paragraph describing the events that have given rise
to this uncertainty.

Results Of Operations - Three Months Ended March 31, 2006 and 2005

Net Sales

     Net sales for the quarter  ended March 31, 2006  decreased  31% to $384,000
from  $555,000  for the  same  period  in 2005.  The  decrease  in net  sales is
primarily  attributable  to the  limited  manufacturing  capacity  caused by the
company-wide  furlough  instituted  in June 2005.  Regionally,  net sales in the
United States  decreased 35% or $94,000 to $174,000 in the first quarter of 2006
from  $268,000  for the same  period  in 2005.  This  was due  primarily  to the
termination  of our U.S. sales force in August 2005. Net sales in our Japan/Asia
region  decreased 43% to $125,000 in the first quarter of 2006 from $219,000 for
the same period in 2005 while net sales in our Europe region  increased  $14,000
or 21% to  $82,000  in the  first  quarter  of  2006,  from  $68,000  for in the
comparable  period of 2005.  These changes were  basically  due to  management's
decision to shift its shipment priority from Asia to Europe in this quarter.

Cost of Goods Sold

     Cost of  goods  sold  primarily  includes  raw  materials  costs,  catheter
fabrication  costs,  system  assembly and testing  costs,  shipping and handling
costs, and manufacturing labor and overhead.  Cost of goods sold for the quarter
ended March 31, 2006 increased 7%, or $33,000, to $498,000 from $465,000 for the
same period in 2005.  Cost of goods sold as a percentage of net sales  increased
by 55%, from 84% to 130%,  for the three months ended March 31, 2006 as compared
to the same period of the prior year.  The increase in the cost of goods sold as
a percentage of net sales was due to: (i) products selling at low and below cost
margins  and (ii) the  charge of  $85,000  allowance  for  excess  and  obsolete
inventory  per the  Company  policy in the  quarter  ended  March 31,  2006,  as
compared to no charge for the comparable period in 2005.

Research and Development Expenses

     Research and development  expenses  include product  development,  clinical
testing and regulatory expenses. Total research and development expenses for the
quarter ended March 31, 2006 decreased  37%, to $416,000 from $656,000,  for the
same  period in 2005.  This  decrease is  primarily  attributable  to  declining
revenue.  The Company's  research and  development  staff has decreased  from 11
employees at March 31, 2005 to four employees at March 31, 2006. .

Selling, Marketing, General and Administrative Expenses

     Selling,  marketing,  general and  administrative  expenses for the quarter
ended March 31, 2006 decreased  $1,050,000,  or 61%, to $670,000 from $1,720,000
for the same period in 2005.  Selling  expenses for the three months ended March
31, 2006  decreased  $161,000,  or 70%, to $68,000  from  $229,000  for the same


                                       11
<PAGE>
period  in 2005.  Marketing  expenses  for the first  three  months of 2006 also
decreased 70%, or $88,000, to $37,000 from $125,000 for the same period in 2005.
The decrease was primarily due to the company-wide  furlough  instituted in June
2005.  General and  administrative  expenses  for the first three months of 2006
decreased by $837,000,  or 62%, to $514,000 from  $1,351,000 for the first three
months of 2005.  This  decrease  was mainly due to the  headcount  reduction  in
August 2005 and offsetting  partially the  stock-based  compensation  expense of
$119,000  with the  adoption  of FASB  123(R) in the first  quarter of 2006.  In
addition,  there was a  $255,000  charge  relating  to the  implementation  of a
Sarbanes-Oxley Act compliance program in the first quarter in 2005. There was no
such charge in the same period in 2006.

Interest Expense

     Interest   expense  for  the  quarter   ended  March  31,  2006   increased
approximately  $2,149,000 to $2,151,000 from $2,000 for the same period in 2005.
The increase was primarily  due to (i) Apix loan interest of $77,000,  (ii) Apix
February 2006 loan fees  amortization  of $333,000,  (iii) Apix August 2005 loan
fees  amortization  of $304,000,  and (iv) Apix  warrant-related  loan  discount
amortization of $1,436,000.

Liquidity and Capital Resources

     We had cash of approximately  $230,000 as of March 31, 2006. Our management
estimates  that our  financial  resources  will be  sufficient  to  sustain  our
operations  until May 31, 2006.  Although our management  recognizes the need to
raise funds in the immediate future,  there can be no assurances that we will be
successful  in doing so, or, if we do consummate a financing  transaction,  that
its terms and  conditions  will not be  unfavorable  to us. If we fail to obtain
additional  funding in the  immediate  future,  our  business  will fail and our
stockholders  will  likely  lose  the  entire  value of  their  investment.  Our
independent   registered  public   accountants  have  concluded  that  there  is
substantial  doubt  as to our  ability  to  continue  as a going  concern  for a
reasonable  period of time,  and have,  therefore,  modified their report in the
form of an explanatory  paragraph  describing the events that have given rise to
this uncertainty.

     Net cash used in  operating  activities  for the first three months of 2006
was approximately $846,000,  compared to the net cash used of $1,991,000 for the
first three months of 2005.  The decrease was primarily  due to lower  operating
expenses.  Net cash used in investing activities was approximately $5,000 in the
first three months of 2006 related to the capital  expenditures  of property and
equipment, as compared to $85,000 for the same period in 2005. Net cash provided
by financing activities was approximately $957,000 for the first three months of
2006,  compared to net cash used of $60,000  for the same  period in 2005.  This
change was primarily due to the loan proceeds received from Apix.

     We have financed our operations to date  principally  through:  (i) private
placements  of  equity  securities,  which  have  resulted  in net  proceeds  of
approximately  $117,177,000  through  December 31, 2004, (ii) the initial public
offering of our common  stock in June 1997,  which  resulted in net  proceeds of
approximately  $13,600,000,  together  with  interest  income on such  proceeds,
(iii)_borrowings  under a $3,000,000 line of credit, (iv) sale of certain of our


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<PAGE>
non-core patents to Medtronic, Inc. for $8,000,000,  and (v) equipment leases to
finance certain capital  equipment which have provided proceeds in the amount of
$4,700,000.

     During 2005, we entered into a loan  facility  term sheet with Apix,  which
provided us a $3 million loan  financing  (the  "Original  Loan  Facility").  On
February 14, 2006,  we entered  into a new loan  facility  term sheet with Apix,
which  provided for the rollover of the original loan agreement and the grant of
an additional  loan facility in the amount of $660,000 at a stated interest rate
of 10% per annum (the "New Loan  Facility").  We received  funding under the New
Loan Facility of $200,000 and $460,000 in February and March 2006, respectively.
In April 2006, Apix provided an additional  advance to the Company in the amount
of $675,000.

     Pursuant to the Original Loan Facility, the Company issued a warrant to the
Lender  to  purchase  30,000,000  shares  of the  Company's  common  stock at an
exercise price of $0.10 per share (the "Original Warrant").  Pursuant to the New
Loan Facility,  the exercise price of the Original  Warrant has been adjusted to
$0.06 per share.  In addition,  the Company has granted the Lender a new warrant
to purchase 31,800,000 shares of the Company's common stock at an exercise price
of $0.06 per share for a term of ten years.  In addition to the new warrants and
the reduction in the exercise price of the old warrants, the Company also agreed
to pay Apix  increased  fees in the amount of  $680,000.  The  Company  has also
granted Apix the right to convert the loan  principal,  interest,  facility fees
and exit fees into shares of the Company's common stock at a conversion price of
$0.06 per share.


ITEM 3.       CONTROLS AND PROCEDURES

(a)  Evaluation of disclosure controls and procedures.

     We maintain  "disclosure  controls and procedures," as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities  Exchange Act of 1934 (the
"Exchange  Act"),  that are designed to ensure that  information  required to be
disclosed  by us in reports  that we file or submit  under the  Exchange  Act is
recorded, processed,  summarized, and reported within the time periods specified
in Securities and Exchange Commission rules and forms, and that such information
is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer,  as appropriate,  to allow timely decisions
regarding  required  disclosure.  In designing  and  evaluating  our  disclosure
controls and procedures,  management  recognized  that  disclosure  controls and
procedures,  no  matter  how well  conceived  and  operated,  can  provide  only
reasonable,  not  absolute,  assurance  that the  objectives  of the  disclosure
controls and procedures are met. Additionally,  in designing disclosure controls
and procedures, our management necessarily was required to apply its judgment in
evaluating the  cost-benefit  relationship of possible  disclosure  controls and
procedures.  The design of any disclosure  controls and procedures also is based
in part upon certain  assumptions  about the  likelihood of future  events,  and
there can be no assurance  that any design will succeed in achieving  its stated
goals under all potential future conditions.

     As of the  end of the  period  covered  by this  report,  we  conducted  an
evaluation,  under  the  supervision  and with the  participation  of our  chief
executive  officer and chief  financial  officer of our disclosure  controls and
procedures  (as defined in Rule  13a-15(e)  and Rule  15d-15(e)  of the Exchange
Act).  Based  upon  this  evaluation,  our  chief  executive  officer  and chief
financial officer concluded that our disclosure  controls and procedures are not
effective  to ensure  that  information  required to be  disclosed  by us in the
reports that we file or submit  under the  Exchange Act is recorded,  processed,
summarized and reported,  within the time periods  specified in the Commission's
rules and forms. This conclusion is based on the following developments:

o    The existence of comments  issued by the reviewing  staff of the Securities
     and Exchange Commission relating to disclosure and classification issues in
     the Company's  Annual and Periodic  filings,  which  comments have not been
     fully resolved; and
o    The failure to file or submit the Company's  Annual Report on Form 10-K for
     the year ending December 31, 2005 within the time periods  specified in the
     Commission's rules and forms.

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<PAGE>

     Notwithstanding  the foregoing,  as previously  disclosed,  the Company has
taken the following steps to improve its disclosure controls and procedures:

In October, 2005, the Company hired Chris Mak to serve as its new Controller; In
October, 2005, the Company hired Jim Pardee to serve as a finance and accounting
consultant.

     While  management  believes  progress  had been made with  respect to these
issues, it nevertheless believes that there continues to exist material weakness
in this area. We believe additional  progress in this area will continue through
the fiscal year of 2006.

     In  addition,  the  Company  has  adopted a  procedure  to ensure  that new
accounting  standards are reviewed and applied correctly.  Under this procedure,
the Company's  Controller will monitor the release of new accounting  standards.
Once the Controller becomes aware of a new accounting standard,  he will present
the new standard to members of the Audit  Committee  and schedule a meeting with
members of the Audit Committee to discuss the application of the new standard to
the Company.  Thereafter,  once a determination  concerning the application of a
new standard has been made,  the Company will present its  determination  to its
auditor for review and comment.

(b)  Limitations on Effectiveness of Disclosure Controls and Procedures.

     Disclosure  controls and procedures  cannot provide  absolute  assurance of
achieving financial reporting objectives because of their inherent  limitations.
Disclosure  controls and procedures is a process that involves  human  diligence
and  compliance  and is subject to lapses in judgment and  breakdowns  resulting
from human failures. Disclosure controls and procedures also can be circumvented
by collusion or improper management override. Because of such limitations, there
is a risk that  material  misstatements  may not be  prevented  or detected on a
timely basis by disclosure  controls and  procedures.  However,  these  inherent
limitations are known features of the financial reporting process. Therefore, it
is  possible  to design  into the  process  safeguards  to  reduce,  though  not
eliminate, this risk.


PART II. OTHER INFORMATION

ITEM 1.   Legal Proceedings

     The Company has been subject to certain legal  proceedings  and claims that
arose in the ordinary  course of business.  The Company  currently is a party to
various legal proceedings and claims,  including claims from private  placements
agents in  conjunction  with  private  placements.  While the Company  currently
believes that the ultimate outcome of these proceedings will not have a material
adverse  event on our results of  operations,  litigation is subject to inherent
uncertainties,  and unfavorable rulings could occur. Depending on the amount and
timing,  an  unfavorable  outcome of some or all of these  matters  could have a
material  adverse  effect on the  Company's  cash  flows,  business,  results of
operations  or financial  position.  An estimate of potential  loss from pending


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<PAGE>
proceedings cannot be made at this time. However, as further explained in Note 8
to the  financial  statements,  the  Company  has  been  ordered  by  the  Labor
Commissioner  of the State of  California  to pay  penalties  to several  former
employees in the aggregate amount of $24,000. The Company disputes the penalties
and plans to defend against them.

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

     None.

ITEM 3.   Defaults Upon Senior Securities

     None.

ITEM 4.   Submission of Matters to a Vote of the Security Holders

     None.

ITEM 5.   Other Information

     None.

ITEM 6.   Exhibits


    10.1  Loan Facility Term Sheet with Apix  International  (as incorporated by
          reference to Form 8-K filed on February 21, 2006).

    31.1  Certification  of the Chief  Executive  Officer  and  Chief  Financial
          Officer  of  Cardima,  Inc.,  pursuant  to Rule  13a-14(a)  under  the
          Securities Exchange Act of 1934.

    32.1  Certification  of the Chief  Executive  Officer  and  Chief  Financial
          Officer of Cardima furnished pursuant to Section 1350 of Chapter 63 of
          18 U.S.C. as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
          of 2002


                                       15
<PAGE>
                                  CARDIMA, INC.

                                    SIGNATURE

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


DATE:   May 15, 2006             CARDIMA, INC.



                                 /s/ Gabriel B. Vegh
                                 ---------------------
                                 Gabriel B. Vegh
                                 Chairman,  Chief  Executive  Officer and Acting
                                 Chief Financial Officer
                                 (Principal Executive and Financial Officer)


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