**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 June 30, 2007**

**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: 000-22419**

**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**

----

----

----

**CARDIMA,      INC**

**TABLE      OF CONTENTS**

**PART      I.  Financial Information**

| **Description**              | **Page**                                                                                                                                        |
|------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |                                                                                                                                            |   |
| Item                1.       | Financial                Statements (unaudited)                                                                                                 | 3 |
|                         | Condensed                Balance Sheets as of June 30, 2007 and December 31, 2006                                                               | 3 |
|                         | Condensed                Statement of Operations for the Three Months and Six Months Ended                June 30,                2007 and 2006 | 4 |
|                         |  Condensed                Statement of Cash Flows for the Six Months Ended June 30, 2007 and                2006                           |  5 |
|                         |  Notes                to Condensed Financial Statements                                                                                    |  6 |
|  Item                2. |  Management’s                Discussion and Analysis and Results of Operations                                                       |  18 |
|  Item                3. |  Controls                and Procedures                                                                                                    |  24 |

**PART      II.  Other Information**

| **Description**        | **Page**                                                                   |
|------------------------|----------------------------------------------------------------------------|
|                   |                                                                       |   |
| Item                1. | Legal                Proceedings                                           | 25 |
| Item                2. | Unregistered                Sales of Equity Securities and Use of Proceeds | 25 |
| Item                3. | Defaults                Upon Senior Securities                             | 25 |
| Item                4. | Submission                of Matters to a Vote of Security Holders         | 26 |
| Item                5. | Other                Information                                           | 27 |
| Item                6. | Exhibits                                                                   | 27 |
|                   |                                                                       |   |
| Signatures             | 28                                                                         |

----

**PART      I.  ITEM 1.  Financial Statements**

**CARDIMA,      INC.**

**BALANCE      SHEETS**

**(In      thousands, except per share amounts)**

|                                                                                                                                                                                                                                                              |   | **June                30, 2007 (Unaudited**) |     |   | **December                31, 2006 (Restated)** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|----------|--------|-------------------------------------------------|--------|
| **ASSETS**                                                                                                                                                                                                                                                        |   |                                         |     |   |                                            |   |
| Current                assets:                                                                                                                                                                                                                                    |   |                                         |     |   |                                            |   |
| Cash                and cash equivalent                                                                                                                                                                                                                           |   | $                                            | 217      |   |                                            | $      | 942 |   |
| Accounts                receivable, net of allowances for doubtful accounts of $33 for June                30,                2007 and $14 for December 31, 2006                                                                                                  |   |                                         | 182      |   |                                            |   | 415 |   |
| Inventories                (Note 4)                                                                                                                                                                                                                               |   |                                         | 480      |   |                                            |   | 324 |   |
| Prepaid                expenses                                                                                                                                                                                                                                   |   |                                         | 11       |   |                                            |   | 123 |   |
| Deferred                expenses                                                                                                                                                                                                                                  |   |                                         | 1,746    |   |                                            |   | - |   |
| Other                current assets                                                                                                                                                                                                                               |   |                                         | 45       |   |                                            |   | 62 |   |
| Total                current assets                                                                                                                                                                                                                               |   | $                                            | 2,681    |   |                                            | $      | 1,866 |   |
|                                                                                                                                                                                                                                                              |   |                                         |     |   |                                            |   |   |   |
| Property                and equipment, net (Note 6)                                                                                                                                                                                                               |   |                                         | 258      |   |                                            |   | 280 |   |
| Other                assets                                                                                                                                                                                                                                       |   |                                         | 71       |   |                                            |   | 71 |   |
| TOTAL                ASSETS                                                                                                                                                                                                                                       |   | $                                            | 3,010    |   |                                            | $      | 2,217 |   |
|                                                                                                                                                                                                                                                              |   |                                         |     |   |                                            |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' DEFICIENCY**                                                                                                                                                                                                       |   |                                         |     |   |                                            |   |   |   |
| Current                liabilities:                                                                                                                                                                                                                               |   |                                         |     |   |                                            |   |   |   |
| Accounts                payable                                                                                                                                                                                                                                   |   | $                                            | 727      |   |                                            | $      | 971 |   |
| Accrued                compensation                                                                                                                                                                                                                               |   |                                         | 437      |   |                                            |   | 402 |   |
| Loans                payable (Note 7)                                                                                                                                                                                                                             |   |                                         | 11,205   |   |                                            |   | 8,160 |   |
| Warrant                liabilities                                                                                                                                                                                                                                |   |                                         | -        |   |                                            |   | 3,044 |   |
| Conversion                feature liabilities                                                                                                                                                                                                                     |   |                                         | 400      |   |                                            |   | 400 |   |
| Notes                payable to related parties - current portion (Note 8)                                                                                                                                                                                        |   |                                         | 8        |   |                                            |   | 8 |   |
| Capital                lease - current portion (Note 10)                                                                                                                                                                                                          |   |                                         | 19       |   |                                            |   | 21 |   |
| Accrued                interest and fee (Note 9)                                                                                                                                                                                                                  |   |                                         | 5,412    |   |                                            |   | 2,308 |   |
| Other                current liabilities                                                                                                                                                                                                                          |   |                                         | 32       |   |                                            |   | 96 |   |
| Total                current liabilities                                                                                                                                                                                                                          |   | $                                            | 18,240   |   |                                            | $      | 15,410 |   |
|                                                                                                                                                                                                                                                              |   |                                         |     |   |                                            |   |   |   |
| Capital                lease - noncurrent portion (Note 10)                                                                                                                                                                                                       |   |                                         | 14       |   |                                            |   | 22 |   |
| Notes                payable to related parties - noncurrent portion (Note 8)                                                                                                                                                                                     |   |                                         | 60       |   |                                            |   | 62 |   |
|                                                                                                                                                                                                                                                              |   |                                         |     |   |                                            |   |   |   |
| Commitments                and contingencies (see note 10)                                                                                                                                                                                                        |   |                                         |     |   |                                            |   |   |   |
| TOTAL                LIABILITIES                                                                                                                                                                                                                                  |   | $                                            | 18,314   |   |                                            | $      | 15,494 |   |
|                                                                                                                                                                                                                                                              |   |                                         |     |   |                                            |   |   |   |
| Stockholders'                deficiency:                                                                                                                                                                                                                          |   |                                         |     |   |                                            |   |   |   |
| Common                stock, $0.001 par value, 300,000,000 shares authorized, 10,289,839                (post-split) and 10,235,468 (post-split) shares issued and outstanding                at                June 30, 2007 and December 31, 2006, respectively |   |                                         | 103      |   |                                            |   | 102 |   |
| Preferred                stock, $0.001 par value, 10,000,000 shares authorized, 5,000,000                and none                issued and outstanding at June 30, 2007 and December 31, 2006,                respectively                                       |   |                                         | 5        |   |                                            |   | - |   |
| Additional                Paid-In-Capital                                                                                                                                                                                                                         |   |                                         | 118,939  |   |                                            |   | 118,316 |   |
| Accumulated                deficit                                                                                                                                                                                                                                |   |                                         | (134,351 | )      |                                            |   | (131,695 | ) |
| Total                stockholders' deficiency                                                                                                                                                                                                                     |   |                                         | (15,304  | )      |                                            |   | (13,277 | ) |
| TOTAL                LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                                     |   | $                                            | 3,010    |   |                                            | $      | 2,217 |   |
|                                                                                                                                                                                                                                                              |   |                                         |     |   |                                            |   |   |   |
| The                accompanying notes are an integral part of these condensed financial                statements.                                                                                                                                                |   |                                         |     |   |                                            |

----

| **CARDIMA,                INC.****STATEMENTS                OF OPERATIONS****(In                thousands, except per share amounts)  ****(Unaudited)****  ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                               |   | **Three                Months Ended June 30, 2007** |   |   | **Three                Months Ended June 30, 2006 (Restated**) |   |
|--------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|--------|----------------------------------------------------------------|--------|
|                                                                                                               |   |                                                |   |   |                                                           |   |
| Net                sales                                                                                           |   | $                                                   | 260    |   |                                                           | $      | 335 |   |
| Cost                of goods sold                                                                                  |   |                                                | 531    |   |                                                           |   | 440 |   |
|      Gross                losses                                                          |   |                                                | (271   | )      |                                                           |   | (105 | ) |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Operating                expenses:                                                                                 |   |                                                |   |   |                                                           |   |   |   |
|      Research                and development                                              |   |                                                | 792    |   |                                                           |   | 374 |   |
|      Selling,                general and administrative                                   |   |                                                | 864    |   |                                                           |   | 709 |   |
| Total                operating expenses                                                                            |   |                                                | 1,656  |   |                                                           |   | 1,083 |   |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Operating                loss                                                                                      |   |                                                | (1,927 | )      |                                                           |   | (1,188 | ) |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Interest                expense                                                                                    |   |                                                | (1,665 | )      |                                                           |   | (1,194 | ) |
| Other                income /(expense) (Note 11)                                                                   |   |                                                | 7,959  |   |                                                           |   | (1,671 | ) |
| Net                loss                                                                                            |   | $                                                   | 4,367  |   |                                                           |   | (4,053 | ) |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Basic                and diluted net loss per share                                                                |   | $                                                   | 0.42   |   |                                                           | $      | (0.40 | ) |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Shares                used in computing basic and diluted net loss per share                (post-split)           |   |                                                | 10,286 |   |                                                           |   | 10,169 |   |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
|                                                                                                               |   | **Six                Months Ended June 30, 2007**   |   |   | **Six                Months Ended June 30, 2006 (Restated)**   |   |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Net                sales                                                                                           |   | $                                                   | 579    |   |                                                           | $      | 719 |   |
| Cost                of goods sold                                                                                  |   |                                                | 955    |   |                                                           |   | 938 |   |
|      Gross                losses                                                          |   |                                                | (376   | )      |                                                           |   | (219 | ) |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Operating                expenses:                                                                                 |   |                                                |   |   |                                                           |   |   |   |
|      Research                and development                                              |   |                                                | 1,695  |   |                                                           |   | 790 |   |
|      Selling,                general and administrative                                   |   |                                                | 1,748  |   |                                                           |   | 1,379 |   |
| Total                operating expenses                                                                            |   |                                                | 3,443  |   |                                                           |   | 2,169 |   |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Operating                loss                                                                                      |   |                                                | (3,819 | )      |                                                           |   | (2,388 | ) |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Interest                expense                                                                                    |   |                                                | (1,886 | )      |                                                           |   | (3,345 | ) |
| Other                income /(expense)                                                                             |   |                                                | 3,048  |   |                                                           |   | (3,324 | ) |
| Net                loss                                                                                            |   | $                                                   | (2,657 | )      |                                                           | $      | (9,057 | ) |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Basic                and diluted net loss per share                                                                |   | $                                                   | (0.26  | )      |                                                           | $      | (0.89 | ) |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| Shares                used in computing basic and diluted net loss per share                (post-split)           |   |                                                | 10,285 |   |                                                           |   | 10,167 |   |
|                                                                                                               |   |                                                |   |   |                                                           |   |   |   |
| The                accompanying notes are an integral part of these condensed financial                statements. |   |

----

**CARDIMA,      INC.**

**STATEMENTS      OF CASH FLOWS**

**(In      thousands)**

**(Unaudited)**

|                                                                                                                                                            |   |     |   | **Six                Months Ended June 30,** |   |     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------------------|--------|----------|--------|
|                                                                                                                                                            |   | **2007** |   |                                         |   | **2006** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                                                                                                        |   |     |   |                                         |   |     |   |
| Net                loss                                                                                                                                         |   | $        | (2,657 | )                                            |   |     | $      | (9,057 | ) |
| Adjustments                to reconcile net loss to net cash used in operating activities provided                by                operations:                 |   |     |   |                                         |   |     |   |   |   |
|        Depreciation                and amortization                                                                          |   |     | 49     |                                         |   |     |   | 62 |   |
|        Non-cash                stock-based compensation                                                                      |   |     | 110    |                                         |   |     |   | 215 |   |
|        Non-cash                interest expense                                                                              |   |     | 280    |                                         |   |     |   | - |   |
|        Non-cash                change to warrant liability                                                                   |   |     | (3,044 | )                                            |   |     |   | 4,127 |   |
|        Excess                and obsolete inventory provision                                                                |   |     | 142    |                                         |   |     |   | 97 |   |
|        Allowance                for doubtful accounts                                                                        |   |     | 19     |                                         |   |     |   | (13 | ) |
|        Loss                on assets disposals                                                                               |   |     | -      |                                         |   |     |   | 7 |   |
|        Changes                in operating assets and liabilities:                                                           |   |     |   |                                         |   |     |   |   |   |
|                Accounts                receivable                                    |   |     | 252    |                                         |   |     |   | 115 |   |
|                Inventories                                                           |   |     | (298   | )                                            |   |     |   | 89 |   |
|                Prepaid                and other assets                               |   |     | 113    |                                         |   |     |   | 482 |   |
|               Accounts                payable, accrued compensation and other liabilities |   |     | (312   | )                                            |   |     |   | 147 |   |
|               Accrued                interest and fees                                    |   |     | 1,594  |                                         |   |     |   | 1,789 |   |
|      Net                cash used in operating activities                                                                              |   |     | (3,752 | )                                            |   |     |   | (1,940 | ) |
|                                                                                                                                                            |   |     |   |                                         |   |     |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**                                                                                                         |   |     |   |                                         |   |     |   |   |   |
| Purchase                of property and equipment                                                                                                               |   |     | (27    | )                                            |   |     |   | (18 | ) |
|      Net                cash used in investing activities                                                                              |   |     | (27    | )                                            |   |     |   | (18 | ) |
|                                                                                                                                                            |   |     |   |                                         |   |     |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                                                                                         |   |     |   |                                         |   |     |   |   |   |
| Principal                payments under capital leases and credit facility                                                                                      |   |     | (10    | )                                            |   |     |   | (11 | ) |
| Net                proceeds from loan financing                                                                                                                 |   |     | 3,045  |                                         |   |     |   | 2,535 |   |
| Net                proceeds from sale of common stock                                                                                                           |   |     | 19     |                                         |   |     |   | 2 |   |
|      Net                cash provided by financing activities                                                                          |   |     | 3,054  |                                         |   |     |   | 2,526 |   |
| Change                in cash and cash equivalents                                                                                                              |   |     | (725   | )                                            |   |     |   | 568 |   |
| Beginning                cash and cash equivalents                                                                                                              |   |     | 942    |                                         |   |     |   | 124 |   |
| Ending                cash and equivalents                                                                                                                      |   | $        | 217    |                                         |   |     | $      | 692 |   |
|                                                                                                                                                            |   |     |   |                                         |   |     |   |   |   |
| **SUPPLEMENTAL                DISCLOSURE OF CASH FLOWS INFORMATION**                                                                                            |   |     |   |                                         |   |     |   |   |   |
| Cash                paid for interest                                                                                                                           |   | $        | 11     |                                         |   |     | $      | 2 |   |
| **SUPPLEMENTAL                SCHEDULE OF NON-CASH INVESTING AND FINANCING                ACTIVITIES**                                                          |   |     |   |                                         |   |     |   |   |   |
| Property                and equipment acquired via capital lease obligations                                                                                    |   | $        | -      |                                         |   |     | $      | 37 |   |
| Issuance                of preferred stock to pay for accrued fees                                                                                              |   | $        | 500    |                                         |   |     | $      | - |   |
|                                                                                                                                                            |   |     |   |                                         |   |     |   |   |   |
| The                accompanying notes are an integral part of these condensed financial                statements.                                              |   |     |   |                                         |   |     |

----

**CARDIMA,        INC.**

**NOTES        TO CONDENSED FINANCIAL STATEMENTS**

**(Unaudited)**

*Basis      of Presentation*

*Restatement      of Previously Reported Financial Results*

| **CARDIMA,                INC.****STATEMENTS                OF****OPERATIONS****(In                thousands,except  per share amounts)****(Unaudited)** |   |                                   |    |   |            |   |   |                                  |                                  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|--------|-----------------|--------|--------|---------------------------------------|---------------------------------------|
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |
|                                                                                                                                                          |   | **Three                months ended**  |    |   |            |   |   | **Three                months ended** |                                  |
|                                                                                                                                                          |   | **31-Mar-06**                          |    |   | **Adjustments** |   |   | **31-Mar-06**                         |                                  |
|                                                                                                                                                          |   | **As                originally filed** |    |   | **(DR)/CR**     |   |   | **As                restated**        |                                  |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |
| Net                sales                                                                                                                                      |   | $                                      | 384     |   |            |   |   |                                  | $                                     | 384 |   |
| Cost                of goods sold                                                                                                                             |   |                                   | 498     |   |            |   |   |                                  |                                  | 498 |   |
| Gross                margin                                                                                                                                   |   |                                   | (114    | )      |            |   |   |                                  |                                  | (114 | ) |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |
| Operating                expenses:                                                                                                                            |   |                                   |    |   |            |   |   |                                  |                                  |   |   |
| Research                and development                                                                                                                       |   |                                   | 416     |   |            |   |   |                                  |                                  | 416 |   |
| Selling,                general and administrative                                                                                                            |   |                                   | 670     |   |            |   |   |                                  |                                  | 670 |   |
| Total                operating expenses                                                                                                                       |   |                                   | 1,086   |   |            |   |   |                                  |                                  | 1,086 |   |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |
| Operating                loss                                                                                                                                 |   |                                   | (1,200  | )      |            |   |   |                                  |                                  | (1,200 | ) |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |
| Interest                expense                                                                                                                               |   |                                   | (2,151  | )      |            |   |   |                                  |                                  | (2,151 | ) |
| Other                Income/(Expense)                                                                                                                         |   |                                   | (225    | )      |            |   | (1,428 | )                                     |                                  |   | (1,653 | ) |
| Net                loss                                                                                                                                       |   | $                                      | (3,576  | )      |            |   | (1,428 | )                                     |                                  | $ | (5,004 | ) |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
| Basic                and diluted net loss per share                                                                                                           |   | $                                      | (0.04   | )      |            |   |   |                                  |                                  | $ | (0.05 | ) |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
| Shares                used in computing basic and diluted net loss per share                                                                                  |   |                                   | 101,638 |   |            |   |   |                                  |                                  |   | 101,638 |   |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
|                                                                                                                                                          |   | **Three                months ended**  |    |   |            |   |   |                                  | **Three                months ended** |   |
|                                                                                                                                                          |   | **30-Jun-06**                          |    |   | **Adjustments** |   |   | **30-Jun-06**                         |                                  |
|                                                                                                                                                          |   | **As                originally filed** |    |   | **(DR)/CR**     |   |   | **As                restated**        |                                  |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
| Net                sales                                                                                                                                      |   | $                                      | 335     |   |            |   |   |                                  |                                  | $ | 335 |   |
| Cost                of goods sold                                                                                                                             |   |                                   | 440     |   |            |   |   |                                  |                                  |   | 440 |   |
| Gross                margin                                                                                                                                   |   |                                   | (105    | )      |            |   |   |                                  |                                  |   | (105 | ) |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
| Operating                expenses:                                                                                                                            |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
| Research                and development                                                                                                                       |   |                                   | 374     |   |            |   |   |                                  |                                  |   | 374 |   |
| Selling,                general and administrative                                                                                                            |   |                                   | 709     |   |            |   |   |                                  |                                  |   | 709 |   |
| Total                operating expenses                                                                                                                       |   |                                   | 1,083   |   |            |   |   |                                  |                                  |   | 1,083 |   |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
| Operating                loss                                                                                                                                 |   |                                   | (1,188  | )      |            |   |   |                                  |                                  |   | (1,188 | ) |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
| Interest                expense                                                                                                                               |   |                                   | (1,412  | )      |            |   | 218    |                                  |                                  |   | (1,194 | ) |
| Other                Income/(Expense)                                                                                                                         |   |                                   | (2,481  | )      |            |   | 810    |                                  |                                  |   | (1,671 | ) |
| Net                loss                                                                                                                                       |   | $                                      | (5,081  | )      |            |   | 1,028  |                                  |                                  | $ | (4,053 | ) |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
| Basic                and diluted net loss per share                                                                                                           |   | $                                      | (0.05   | )      |            |   |   |                                  |                                  | $ | (0.04 | ) |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |
| Shares                used in computing basic and diluted net loss per share                                                                                  |   |                                   | 101,688 |   |            |   |   |                                  |                                  |   | 101,688 |   |
|                                                                                                                                                          |   |                                   |    |   |            |   |   |                                  |                                  |   |   |   |

----

*Stock      Options Expensed*

*Net      Income (Loss) Per Common Share*

|                                                   |   | **June                30,** |       |   | **December                31,** |   |
|--------------------------------------------------------|--------|-----------------------------|------------|--------|---------------------------------|--------|
|                                                   |   | **2007**                    |       |   | **2006**                        |   |
|                                                   |   |                        |       |   |                            |   |
| Warrants                (post-split)                   |   |                        | 20,945,493 |   |                            |   | 7,579,352 |   |
| Stock                Options (post-split)              |   |                        | 446,063    |   |                            |   | 510,863 |   |
| Total                Warrants and Options (post-split) |   |                        | 21,391,556 |   |                            |   | 8,090,215 |   |

----

*Recent      Accounting Pronouncements*

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|                          |   | **June                30, 2007** |   |   | **December                31, 2006** |   |
|-------------------------------|--------|----------------------------------|--------|--------|--------------------------------------|--------|
|                          |   |                             |   |   |                                 |   |
| Raw                Materials  |   | $                                | 116    |   |                                 | $      | 139 |   |
| Work-In-Process               |   |                             | 149    |   |                                 |   | 86 |   |
| Finished                Goods |   |                             | 215    |   |                                 |   | 99 |   |
|                          |   | $                                | 480    |   |                                 | $      | 324 |   |

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|                                                          |   | **June                30, 2007** |   |   | **December                31, 2006** |   |
|---------------------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------------|--------|
|                                                          |   |                             |   |   |                                 |   |
| Equipment                                                     |   | $                                | 1,913  |   |                                 | $      | 1,888 |   |
| Leasehold                improvements                         |   |                             | 259    |   |                                 |   | 259 |   |
|                                                          |   |                             | 2,172  |   |                                 | $      | 2,147 |   |
| Less                accumulated depreciation and amortization |   |                             | (1,914 | )      |                                 |   | (1,867 | ) |
|                                                          |   | $                                | 258    |   |                                 | $      | 280 |   |
|                                                          |   |                             |   |   |                                 |   |   |   |
| Idle                Equipment                                 |   | $                                | 1,290  |   |                                 | $      | 1,290 |   |
| Less                accumulated depreciation and amortization |   |                             | (1,290 | )      |                                 |   | (1,290 | ) |
|                                                          |   | $                                | -      |   |                                 | $      | - |   |

----

----

| ·   | Additional                loan facility - Apix has granted the Company an additional loan facility                in the amount of $5,625,000. Advances pursuant to the additional                facility                shall be made on a bi-weekly basis the Company’s discretion in                denominations of $225,000 per                advance; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | New                maturity date - the maturity date of the New Facility and Prior Facilities                is the earlier of (a) December 31, 2007 or (b) the date that Apix                makes a                demand for payment; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Facility                fee adjustment - the aggregate facility fee for the Prior Facilities                and                the New Facility shall be $500,000 (the “Facility Fee”) which is payable                through the issuance of five million shares of our preferred stock                with                the following minimum preferences: (a) 2.8 votes per share (post-split)                at                any general or extraordinary meeting of the common shares of the                company                convened by the Company or its shareholders for a total of 14 million                votes (post-split) at any such meeting; and (b) convertible into                common                shares of the Company at any time at the sole and absolute discretion                of                the holder on the basis of 0.2 common shares (post-split) for each                preferred share tendered for conversion for a total of one (1) million                common shares (post-split) in the event all preferred shares are                tendered                for conversion; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Exit                fees - the aggregate exit fees for the Prior Facilities and the New                Facility shall be $2,800,000 plus $80,000 for each advance made which                shall be due and payable on the earliest to occur of: (1) the maturity                date, (2) generally the sale of the company or substantially all                of its                assets, a reorganization or a new loan facility in excess of $1,000,000,                or (3) an event of default; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Price                adjustment to existing warrant and new warrants - pursuant to the                Prior                Facilities, the Company agreed to issue to Apix warrants to purchase                11,880,000 shares (post-split) of the Company's common stock at an                exercise price of $0.60 per share (post-split) (the “Existing Warrants”).                Pursuant to the New Facility, the exercise price of the Existing                Warrants                has been adjusted to $0.40 per share (post-split). In addition, the                Company has agreed to issue to Apix additional warrants to purchase                2,000,000 shares (post-split) of the Company’s common stock at an exercise                price of $0.30 per share (post-split) (the “New Warrants”). All warrants                have a term of ten years; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Conversion                price adjustment - the loan principal and exit fees are convertible                into                shares of the Company’s common stock at a conversion price of $0.40 per                share (post-split); and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Registration                rights - the Company agrees to register a percentage of the shares                underlying the loan principal, facility fees, and warrants on a                registration statement at its best                efforts. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  · |  Accrued                interest              |  $1,067,000                   |
|--------------|--------------------------------------------------------------|------------------------------------|
|  · |  Accrued                exit fees                       |                    $2,800,000 |
|  · |  Accrued                drawdown fees         |                    $1,120,000 |
|  · |  Accrued                legal and other fees            |  $425,000                     |
|         |                                                         |                               |
|         |  Total                accrued interest and loan fees is |   $5,412,000.            |

*Commitments*

| Fiscal                    Year                             |   | **Operating                Leases** |   |   | **Capital                Leases** |   |
|------------------------------------------------------------|--------|-------------------------------------|--------|--------|-----------------------------------|--------|
| 2007                                                       |   | $                                   | 178    |   |                              | $      | 14 |   |
| 2008                                                       |   |                                | 265    |   |                              |   | 22 |   |
| 2009                                                       |   |                                | 272    |   |                              |   | - |   |
| 2010                                                       |   |                                | 115    |   |                              |   | - |   |
| Total                minimum lease payments                |   | $                                   | 830    |   |                              | $      | 36 |   |
| Less                amounts representing interest          |   | N/A                                 |   |   |                              | 3      |   |
| Present                value of net minimum lease payments |   | $                                   | 830    |   |                              | $      | 33 |   |

*Contingencies*

----

----

|                           |   | **Three                Months Ended June 30,** |   |
|--------------------------------|--------|------------------------------------------------|--------|
|                           |   | **2007**                                       |   |   | **2006** |   |
|                           |   |                                           |   |   |   |   |   |   |   |   |   |   |
| United                States   |   | $                                              | 225    |   |   |   | 87 | % |   | $ | 157 |   |   |   | 47 | % |
| Europe                         |   |                                           | 120    |   |   |   | 46 | % |   |   | 54 |   |   |   | 16 | % |
| Asia                -- Japan   |   |                                           | (85    | ) |   |   | -33 | % |   |   | 121 |   |   |   | 36 | % |
| Others                         |   |                                           | -      |   |   |   | 0 | % |   |   | 3 |   |   |   | 1 | % |
| Total                Net Sales |   | $                                              | 260    |   |   |   |   |   |   | $ | 335 |   |   |   |   |   |
|                           |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   | **Six                Months Ended June 30,**   |   |
|                           |   | **2007**                                       |   |   | **2006** |   |
|                           |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United                States   |   | $                                              | 475    |   |   |   | 82 | % |   | $ | 331 |   |   |   | 46 | % |
| Europe                         |   |                                           | 188    |   |   |   | 33 | % |   |   | 137 |   |   |   | 19 | % |
| Asia                -- Japan   |   |                                           | (85    | ) |   |   | -15 | % |   |   | 244 |   |   |   | 34 | % |
| Others                         |   |                                           | 1      |   |   |   | 0 | % |   |   | 7 |   |   |   | 1 | % |
| Total                Net Sales |   | $                                              | 579    |   |   |   |   |   |   | $ | 719 |   |   |   |   |   |

----

----

**ITEM      2. Management’s Discussion and Analysis and Results of      Operations**

***Cautionary      Statement Regarding 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 “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***

----

| ·   | Additional                loan facility - Apix has granted the Company an additional loan facility                in the amount of $5,625,000. Advances pursuant to the additional                facility                shall be made on a bi-weekly basis the Company’s discretion in                denominations of $225,000 per                advance; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | New                maturity date - the maturity date of the New Facility and Prior Facilities                is the earlier of (a) December 31, 2007 or (b) the date that Apix                makes a                demand for payment; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Facility                fee adjustment - the aggregate facility fee for the Prior Facilities                and                the New Facility shall be $500,000 (the “Facility Fee”) which was paid on                June 7, 2007 through the issuance of five million shares of our preferred                stock with the following minimum preferences: (a) 2.8 votes per share                (post-split) at any general or extraordinary meeting of the common                shares                of the company convened by the Company or its shareholders for a                total of                14 million votes (post-split) at any such meeting; and resulting                in a                change of control as discussed in Part II, Item 2, “Unregistered sales of                equity securities and use of proceeds.”, (b) convertible into common                shares of the Company at any time at the sole and absolute discretion                of                the holder on the basis of 0.2 common shares (post-split) for each                preferred share tendered for conversion for a total of one (1) million                common shares (post-split) in the event all preferred shares are                tendered                for conversion; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Exit                fees - the aggregate exit fees for the Prior Facilities and the New                Facility shall be $2,800,000 plus $80,000 for each advance made which                shall be due and payable on the earliest to occur of: (1) the maturity                date, (2) generally the sale of the company or substantially all                of its                assets, a reorganization or a new loan facility in excess of $1,000,000,                or (3) an event of default; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Price                adjustment to existing warrant and new warrants - pursuant to the                Prior                Facilities, the Company agreed to issue to Apix warrants to purchase                11,880,000 shares (post-split) of the Company's common stock at an                exercise price of $0.60 per share (post-split) (the “Existing Warrants”).                Pursuant to the New Facility, the exercise price of the Existing                Warrants                has been adjusted to $0.40 per share (post-split). In addition, the                Company has agreed to issue to Apix additional warrants to purchase                2,000,000 shares (post-split) of the Company’s common stock at an exercise                price of $0.30 per share (post-split) (the “New Warrants”). All warrants                have a term of ten years; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Conversion                price adjustment - the loan principal and exit fees are convertible                into                shares of the Company’s common stock at a conversion price of $0.40 per                share (post-split); and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Registration                rights - the Company agrees to register a percentage of the shares                underlying the loan principal, facility fees, and warrants on a                registration statement at its best                efforts. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Results      Of Operations – Three and Six Months Ended June 30, 2007 and 2006***

*Net      Sales*

----

*Cost      of Goods Sold*

*Research      and Development Expenses*

*Selling,      Marketing, General and Administrative Expenses*

----

*Interest      Expense*

*Other      Income/(Expense)*

*Net      Income/(Loss)*

----

***Liquidity      and Capital Resources***

----

**ITEM      3. Controls and Procedures**

***Evaluation      of Disclosure Controls and Procedures***

| ·   | Period-end                review of allowances for excess and obsolete inventory was not performed                accurately; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                will have to restate prior period financial statements, in particular                with                respect to the loan financing with Apix International Limited in                February                2006 that we concluded should be treated as a debt extinguishment                in the                first quarter of 2006. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Changes      in Internal Controls***

***Limitations      on the Effectiveness of Controls***

----

**PART      II.                      OTHER      INFORMATION**

**ITEM      1.                      Legal      Proceedings**

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

**ITEM      3.                      Defaults      Upon Senior Securities**

----

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

** **

| A.   | Election                of Directors.  The number of shares voted in favor of the                election of the following nominees for director is set forth opposite                each                nominee's name. The election of each nominee was approved by the                shareholders. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Director**                          | **For**                                                                             | **Withheld**                                                        |
|---------------------------------------|-------------------------------------------------------------------------------------|---------------------------------------------------------------------|
| Gabriel                Vegh           |             146,771,012 |           509,594 |
| Phillip                Radlick, Ph.D. |             146,659,999 |           620,607 |
| Tina                Sim               |             146,793,349 |           487,257 |
| Tony                Shum              |             146,797,014 |           483,592 |
| John                R. Cheney         |             146,713,514 |           567,092 |
| Andrew                Lee             |             146,793,349 |           487,257 |

| B.   | To                increase the number of authorized shares of common stock issuable                pursuant                to the 1997 Employee Stock Purchase Plan from 2,500,000 to 3,500,000                shares. This proposal was approved by the                shareholders. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For                            |             145,042,021                                                                                             |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Against                        |                 2,146,983                                                                       |
| Abstain                        |                      91,602                                            |
| Broker                Non-Vote |                              - |

| C.   | To                ratify appointment of Marc Lumer & Company as independent registered                public accounting firm. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------|

| For     |             146,821,418                                       |
|---------|---------------------------------------------------------------------------------------------------------------------------|
| Against |                    325,560 |
| Abstain |                    133,628 |

| D.   | To                authorize our Board of Directors, in its discretion, to amend our                Certificate of Incorporation to effect a non-for-ten reverse stock                split                of the issued and outstanding shares of the common stock of the Company                without further approval from our stockholders. This proposal was                approved                by the shareholders. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For                            |             144,960,074                                                                                             |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Against                        |                 2,306,530                                                                       |
| Abstain                        |                      14,002                                            |
| Broker                Non-Vote |                              - |

----

| E.   | To                authorize our Board of Directors to amend the Company’s Certificate of                Incorporation to increase the number of authorized preferred stock                from                5,000,000 to 10,000,000 shares. This proposal was approved by the                shareholders. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For                            |             144,378,266                                                                                             |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Against                        |                 2,771,616                                                                       |
| Abstain                        |                    130,724                                                       |
| Broker                Non-Vote |                              - |

**ITEM      5.                      Other Information**

**ITEM      6.                      Exhibits**

|  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. |

----

**CARDIMA,      INC.**

**SIGNATURE**

|                             | CARDIMA,                INC. |                                                                                                                                       |
|----------------------------------|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|
|                             |                         |                                                                                                                                       |   |
| August                  24, 2007 | By:                          | /s/ Gabriel              B. Vegh                                                                                                      |   |
|                             |                         | Gabriel                B. Vegh                                                                                                             |   |
|                             |                         | Chairman,              Chief Executive Officer and Acting Chief Financial Officer (Principal              Executive and Financial Officer) |   |
|                             |                         |                                                                                                                                       |   |

----