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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
 þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal
    year ended December 31,
    2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    000-28288
      Cardiogenesis
    Corporation
 (Exact name of Registrant as
    specified in its charter)
  California

77-0223740(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)11 Musick, Irvine, California 92618(Address of principal
    executive offices)  (949) 420-1800
 (Registrants telephone number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
 None
  Securities registered pursuant to Section 12(g) of the
    Act:
    Common Stock, no par value
       o þ
   o þ
   þ o
  Regulation S-T
 o o
   Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company þ   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE:
  Form 10-K




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##### 





INDEX TO
    FORM 10-K
   
 PagePART IItem 1.


Business


1Item 1A.


Risk Factors


12Item 2.


Properties


24Item 3.


Legal Proceedings


24Item 4.


Submission of Matters to a Vote of Security
    Holders


25PART IIItem 5.


Market for Registrants Common Equity and
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


25Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


26Item 8.


Financial Statements and Supplementary Data


32Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


32Item 9A(T).


Controls and Procedures


32Item 9B.


Other Information


32PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


33Item 11.


Executive Compensation


33Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


33Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


33Item 14.


Principal Accountant Fees and Services


33Item 15.


Exhibits and Financial Statement Schedules


33Signatures





35EX-3.1EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1




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PART I  This Annual Report on
    Form 10-K
    contains 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, that are based on the beliefs of our management as well
    as assumptions made by and information currently available to
    us. When we use the words believe, plan,
    will likely result, expect,
    intend, will continue, is
    anticipated, estimate, project,
    may, could, would,
    should, and similar expressions in this
    Form 10-K
    as they relate to us or our management, we are intending to
    identify forward-looking information statements. These
    statements reflect our current views with respect to expected
    future plans, initiatives, operating conditions and other
    potential events and are subject to certain risks, assumptions,
    and uncertainties. The statements contained herein that are not
    purely historical are forward-looking statements including
    without limitation statements regarding our expectations,
    beliefs, intentions or strategies regarding the future. Such
    statements include information contained in this
    Form 10-K
    regarding pending legal proceedings and the results thereof as
    well as any statements regarding our future product development,
    governmental or other regulatory approval prospects and related
    matters. All forward-looking statements included in this
    document are based on information available to us on the date
    hereof, and we assume no obligation to update any such
    forward-looking statements. Our actual results could differ
    materially from those anticipated in these forward-looking
    statements as a result of certain factors, including those set
    forth in Risk Factors below.
  Form 10-K ® Form 10-K
  Item 1.
    Business.  Overview
    tm
     1




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Industry
    Background
  and/or
            The TMR
    Procedure
  ® 20-35
 2




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Our
    Strategy
    
    Expand the Market for our Products.  We are
    seeking to expand market awareness and acceptance of our FDA
    approved products among opinion leaders in the field of
    cardiovascular medicine, including cardiologists, and the
    referring physician community. Our strategy includes a
    thoughtful expansion of our direct sales force combined with
    development of key opinion leaders in the cardiothoracic and
    cardiology specialties.
    Add Innovative New Technology to our Current Product
    Offering.  Our focus is to add innovative new
    tools to help address ischemia associated with advanced
    cardiovascular disease. We are committed to expanding our TMR
    product offering with new product initiatives including our
    minimally invasive
    PEARLtm

    5.0 handpiece and PEARL 8.0 handpiece.
    Develop Proprietary Catheters to Incorporate the Delivery of
    Biologics and Stem Cells.  There is a tremendous
    enthusiasm on the use of stem cells as a novel treatment for
    heart disease. In particular, treatment with stem cells offers
    the possibility of reversing and repairing damaged myocardium
    resulting in improved cardiac function and clinical outcomes.
    Our PHOENIX handpiece combines the application of TMR with the
    intramyocardial delivery of biologic or pharmacologic
    therapeutic agents. The focus for us will be in proprietary
    delivery systems as opposed to development of specific biologic
    agents.
    Leverage Proprietary Technology.  We believe
    that our significant expertise in laser and surgical based
    systems for the treatment of ischemia related to advanced
    cardiovascular disease and the proprietary technologies we have
    developed are important factors in our efforts to demonstrate
    the safety and effectiveness of our procedures. We currently
    have multiple U.S. patent applications pending relating to
    various aspects of cardiovascular related devices and therapies,
    and we intend to develop additional proprietary technologies and
    maintain multiple U.S. and foreign patents.  Our
    Products and Technology
  Our
    TMR System
      Solargen 2100s Console.
  Sologrip®

    III.
 3




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##### Table of Contents



PEARL 5.0. da
    Vinci
  New
    Product Pipeline
  PEARL 8.0.
  PHOENIX.
  Sales and
    Marketing
            Research
    and Development
   4




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Clinical
    Trials
    30-day
  Manufacturing
      Competition
   5




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
    the timing of receipt of requisite regulatory approvals,
    favorable reimbursement for the procedure,
    efficacy and ease of use of our TMR products and applications,
    breadth of product line, system reliability,
    brand name recognition, and
    effectiveness of distribution channels and cost of capital
    equipment and disposable devices.  Government
    Regulation
  United States
     6




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Fraud and
    Abuse
   7




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Foreign
    Regulation
    Patents
    and Proprietary Rights
   8




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Third
    Party Reimbursement
     9




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Product
    Liability and Insurance
    Employees
   10




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Executive
    Officers
    Name

Age

PositionPaul J. McCormick


56


Executive ChairmanWilliam R. Abbott


53


Senior Vice President, Chief Financial Officer, Secretary and
    TreasurerRichard P. Lanigan


50


Executive Vice President, Marketing   Paul J. McCormick
  William R. Abbott Coca-Cola
  Richard P. Lanigan
  General
    Information
  (949) 420-1800.
    
    our annual reports on
    Form 10-K;
    our policies related to corporate governance, including our Code
    of Conduct and Ethics, which apply to our directors, officers
    and employees (including our principal executive officer and
    principal financial officer), that we have adopted to meet the
    requirements set forth in the rules and regulations of the
    Commission and its corporate governance principles; and
    the charters of the Audit, Compensation and Nominating and
    Corporate Governance Committees of our Board of Directors.   11




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1-800-SEC-0330.
  Item 1A.
    Risk
    Factors  Form 10-K, Form 10-K,
  Our
    ability to maintain current operations is dependent upon
    achieving profitable operations or obtaining financing in the
    future.
      Our
    ability to maintain revenues and operating income and achieve
    growth in sales and operating income in the future is dependent
    upon physician awareness of our products as a safe, efficacious
    and appropriate treatment for their patients.
  and/or
  We may
    not be able to successfully market our products if third party
    reimbursement for the procedures performed with our products is
    not available for our health care provider
    customers.
     12




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If we
    fail to maintain regulatory approvals and clearances, or are
    unable to obtain, or experience significant delays in obtaining,
    FDA clearances or approvals for our future products or product
    modifications, our ability to commercially distribute and market
    these products could suffer.
      If we,
    our suppliers, or our manufacturers fail to comply with ongoing
    FDA or other foreign regulatory authority requirements, our
    business may be negatively impacted.
    
    warning letters or untitled letters;
    fines and civil penalties;
    unanticipated expenditures to address or defend such actions; 13




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
    delays in clearing or approving, or refusal to clear or approve,
    our products;
    withdrawal or suspension of approval of our products or those of
    our third-party suppliers by the FDA or other regulatory bodies;
    product recall or seizure;
    orders for physician notification or device repair, replacement
    or refund;
    interruption of production;
    operating restrictions;
    injunctions; and
    criminal prosecution.          In the
    future, the FDA could restrict the current uses of our TMR
    System and thereby restrict our ability to generate
    revenues.
   14




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We may
    fail to comply with international regulatory requirements and
    could be subject to regulatory delays, fines or other
    penalties.
    
    delays in receipt of, or failure to receive, foreign regulatory
    approvals or clearances;
    the loss of previously obtained approvals or clearances; or
    the failure to comply with existing or future regulatory
    requirements.      We
    purchase some of the key components of our products from single
    suppliers. The loss of these suppliers could prevent or delay
    shipments of our products or delay our clinical trials or
    otherwise adversely affect our business.
     15




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If our
    independent contract manufacturers fail to timely deliver to us
    sufficient quantities of some of our products and components in
    a timely manner, our operations may be harmed.
    
    inadequate capacity of the manufacturers facilities;
    interruptions in access to certain process technologies; and
    reduced control over product availability, quality, delivery
    schedules, manufacturing yields and costs.        If
    clinical trials of our current or future product candidates do
    not produce results necessary to support regulatory clearance or
    approval in the United States or elsewhere, we will be unable to
    commercialize these products.
    
    the FDA, institutional review boards or other regulatory
    authorities do not approve a clinical study protocol, force us
    to modify a previously approved protocol, or place a clinical
    study on hold;
    patients do not enroll in, or enroll at the expected rate, or
    complete a clinical study;
    patients or investigators do not comply with study protocols;
    patients do not return for post-treatment
    follow-up at
    the expected rate;
    patients experience serious or unexpected adverse side effects
    for a variety of reasons that may or may not be related to our
    products such as the advanced stage of co-morbidities that may
    exist at the time of treatment, causing a clinical study to be
    put on hold;
    sites participating in an ongoing clinical study may withdraw,
    requiring us to engage new sites;
    difficulties or delays associated with bringing additional
    clinical sites on-line;
    third-party clinical investigators decline to participate in our
    clinical studies, do not perform the clinical studies on the
    anticipated schedule or consistent with the investigator
    agreement, clinical study protocol, good clinical practices, and
    other FDA and Institutional Review Board requirements;
    third-party organizations do not perform data collection and
    analysis in a timely or accurate manner;
    regulatory inspections of our clinical studies require us to
    undertake corrective action or suspend or terminate our clinical
    studies;
    changes in U.S. federal, state, or foreign governmental
    statutes, regulations or policies; 16




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
    interim results are inconclusive or unfavorable as to immediate
    and long-term safety or efficacy; or
    the study design is inadequate to demonstrate safety and
    efficacy.  and/or
  If the
    third parties on which we rely to conduct our clinical trials
    and to assist us with pre-clinical development do not perform as
    contractually required or expected, we may not be able to obtain
    regulatory clearance or approval for or commercialize our
    products.
    Our
    third-party distributors may not effectively distribute our
    products.
    The
    use, misuse or off-label use of our products may harm our image
    in the marketplace or result in injuries that lead to product
    liability suits, which could be costly to our business or result
    in FDA sanctions if we are deemed to have engaged in such
    promotion.
   17




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Expansion
    of our business may put added pressure on our management and
    operational infrastructure affecting our ability to meet any
    increased demand for our products and possibly having an adverse
    effect on our operating results.
    
    the dependence on the growth of the market for our currently
    approved and reimbursed products;
    our ability to successfully expand sales to potential customers
    and increasing clinical adoption of the TMR procedure;
    domestic and international regulatory developments;
    rapid technological change;
    the highly competitive nature of the medical devices
    industry; and
    the risk of entering emerging markets in which we have limited
    or no direct experience.    Our
    operating results are expected to fluctuate and
    quarter-to-quarter
    comparisons of our results may not indicate future
    performance.
  quarter-to-quarter quarter-to-quarter quarter-to-quarter
  Potential
    acquisitions or strategic relationships may be more costly or
    less profitable than anticipated and may adversely affect the
    price of our stock.
    Our
    international operations subject us to certain operating risks,
    which could adversely impact our net sales, results of
    operations and financial condition.
   18




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
    the imposition of additional U.S. and foreign governmental
    controls or regulations;
    the imposition of costly and lengthy new export licensing
    requirements;
    the imposition of U.S. or international sanctions against a
    country, company, person or entity with whom we do business that
    would restrict or prohibit continued business with the
    sanctioned country, company, person or entity;
    economic instability;
    a shortage of high-quality sales people and distributors;
    changes in third-party reimbursement policies that may require
    some of the patients who receive our products to directly absorb
    medical costs or that may necessitate the reduction of the
    selling prices of our products;
    changes in duties and tariffs, license obligations and other
    non-tariff barriers to trade;
    the imposition of new trade restrictions;
    the imposition of restrictions on the activities of foreign
    agents, representatives and distributors;
    scrutiny of foreign tax authorities which could result in
    significant fines, penalties and additional taxes being imposed
    on us;
    pricing pressure that we may experience internationally;
    laws and business practices favoring local companies;
    longer payment cycles;
    difficulties in maintaining consistency with our internal
    guidelines;
    difficulties in enforcing agreements and collecting receivables
    through certain foreign legal systems; and
    difficulties in enforcing or defending intellectual property
    rights.    Our
    operations are currently conducted at a single location that may
    be at risk from earthquakes or other natural
    disasters.
   19




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Our
    stock is currently listed on the Pink Sheets which may have an
    unfavorable impact on our stock price and
    liquidity.
    Applicability
    of penny stock rules to broker-dealer sales of our
    common stock could have a negative effect on the liquidity and
    market price of our common stock.
    The
    price of our common stock may fluctuate significantly, which may
    result in losses for investors.
    
    actual or anticipated variations in our quarterly operating
    results;
    the timing and amount of conversions and subsequent sales of
    common stock issuable upon exercise of outstanding options and
    warrants;
    announcements of technological innovations or new products or
    services by us or our competitors;
    announcements relating to strategic relationships or
    acquisitions;
    additions or terminations of coverage of our common stock by
    securities analysts;
    statements by securities analysts regarding us or our industry;
    conditions or trends in the medical device industry;
    the lack of liquidity in the market for our common
    stock; and
    changes in the economic performance
    and/or
    market valuations of other medical device companies.    We
    face competition from products of our competitors which could
    limit market acceptance of our products and render our products
    obsolete.
   20




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
    are more effective than our products;
    are more effectively marketed than our products; or
    may render our products or technology obsolete.  Third
    party intellectual property rights may limit the development and
    protection of our intellectual property, which could adversely
    affect our competitive position.
    
    obtain patent protection for our products and processes;
    preserve our trade secrets and proprietary technology; and
    operate without infringing upon the patents or proprietary
    rights of third parties.      We
    have been named as a defendant in a patent infringement lawsuit
    and costly litigation may be necessary to protect or defend our
    intellectual property rights.
    Form 10-K,
  
    enforce our issued patents;
    protect our trade secrets or know-how; or
    determine the enforceability, scope and validity of the
    proprietary rights of others.    
    subject us to significant liabilities to third parties;
    require us to seek licenses from third parties;
    prevent us from selling our products in certain markets or at
    all; or
    require us to modify our products. 21




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We
    rely on patent and trade secret laws, which are complex and may
    be difficult to enforce.
      
    may have developed or will develop similar products;
    may duplicate our products; or
    may design around any patents issued to or licensed by us.    
    others may have filed applications for inventions covered by our
    pending patent applications before us; or
    we may infringe upon patents that may eventually be issued to
    others on such applications.    We may
    suffer losses from product liability claims if our products
    cause harm to patients.
        We
    depend heavily on key personnel and turnover of key employees
    and senior management could harm our business.
   22




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Future
    sales of our common stock could lower our stock
    price.
      Provisions
    of our articles of incorporation as well as our rights agreement
    could discourage potential acquisition proposals and could deter
    or prevent a change of control.
    Changes
    in, or interpretations of, accounting rules and regulations
    could result in unfavorable accounting charges.
    Our
    internal controls over financial reporting may not be effective,
    which could have a significant and adverse effect on our
    business.
     23




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We do
    not anticipate declaring any cash dividends on our common
    stock.
    Unstable
    market conditions may have severe adverse consequences on our
    business.
      Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.  No. 1.08-cv-10285)
   24




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Item 4:
    Submission
    of Matters to a Vote of Security Holders.   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder
    Matters, and Issuer Purchases of Equity
    Securities.  Price
    Range of Common Stock
  write-up,
  2008

High

LowFirst Quarter

$
0.43


$
0.28Second Quarter

$
0.36


$
0.23Third Quarter

$
0.38


$
0.21Fourth Quarter

$
0.31


$
0.11   2009

High

LowFirst Quarter

$
0.34


$
0.08Second Quarter

$
0.24


$
0.16Third Quarter

$
0.22


$
0.15Fourth Quarter

$
0.25


$
0.13   Holders
    of Common Stock
    Dividend
    Policy
   25




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Equity
    Compensation Plan
    (a)


(b)


(c)


(d)Number of SecuritiesRemaining Available forIssuance Under EquityNumber of Securities





Compensation Plansto be Issued


Weighted Average


(Excluding


Total of SecuritiesUpon Exercise of


Exercise Price of


Securities Reflected in


Reflected in ColumnsPlan Category

Outstanding Options


Outstanding Options


Column (a))


(a) and (c)Equity compensation plans approved by security holders(1)


3,222,634


$
0.49



5,087,848



8,310,482     (1)
    
    Consists of: (i) the Stock Option Plan and the Director
    Stock Option Plan and (ii) the Employee Stock Purchase
    Plan. The Board of Directors suspended the Employee Stock
    Purchase Plan effective May 15, 2009. There are currently
    no shares available for issuance under the Employee Stock
    Purchase Plan.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Form 10-K.
  Overview
     26




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Results
    of Operations
  Year
    Ended December 31, 2009 Compared to Year Ended
    December 31, 2008
  Net
    Revenues
           27




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Gross
    Profit
    Research
    and Development
    follow-up
  Sales and
    Marketing
      General
    and Administrative
    Other
    Income (Expense)
    Years Ended December 31,2009


2008($ In thousands)Interest expense


(36
)


(23
)Interest income


3



59Other expense


(63
)


Total other income (expense), net

$
(96
)

$
36  28




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Liquidity
    and Capital Resources
            
    the success of the commercialization of our products and our
    refocused sales strategy;
    sales and marketing activities, and expansion of our commercial
    infrastructure, related to our approved products and product
    candidates;
    the results of our clinical trials and requirements to conduct
    additional clinical trials;
    the rate of progress of our research and development programs;
    the time and expense necessary to obtain regulatory approvals;
    activities and payments in connection with potential
    acquisitions of companies, products or technology; and
    competitive, technological, market and other developments.     29




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Critical
    Accounting Policies and Estimates
      Revenue
    Recognition:
            Accounts
    Receivable:
   30




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Inventories:
  first-in,
  Accounting
    for the Impairment or Disposal of Long-Lived
    Assets:
    Income
    Taxes:
    Stock-Based
    Compensation:
    Recently
    Issued Accounting Standards
     31




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Item 8.
    Financial
    Statements and Supplementary Data.    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A(T).
    Controls
    and Procedures.  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Rule 13a-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f).
    Changes
    in Internal Control Over Financial Reporting
    Item 9B.
    Other
    Information.   32




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PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Form 10-K.
  Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Form 10-K
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14:
    Principal
    Accountant Fees and Services.    Item 15.
    Exhibits.  EXHIBIT INDEX
  Exhibit No.

Description3
.1

Restated Articles of Incorporation, as amended.3
.2

Amended and Restated Bylaws (incorporated by reference to
    Exhibit 3.2 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2003, filed with the
    Commission on March 10, 2004).4
.1

Rights Agreement, dated as of August 17, 2001, between the
    Company and EquiServe Trust Company, N.A., as Rights Agent
    (incorporated by reference to Exhibit 4.1 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on August 20, 2001).4
.2

First Amendment to Rights Agreement, dated as of
    January 17, 2002, between the Company and EquiServe
    Trust Company, N.A., as Rights Agent (incorporated by
    reference to Exhibit 4.1 to the Companys Current
    Report on
    Form 8-K,
    filed with the Commission on January 18, 2002).4
.3

Second Amendment to Rights Agreement, dated as of
    January 21, 2004, between the Company and EquiServe
    Trust Company, N.A., as Rights Agent (incorporated by
    reference to Exhibit 4.1 to the Companys Current
    Report on
    Form 8-K,
    filed with the Commission on January 26, 2004).4
.4

Third Amendment to Rights Agreement, dated October 26,
    2004, between the Company and Equiserve Trust Company N.A.,
    as Rights Agent (incorporated by reference to Exhibit 4.1
    to the Companys Current Report on
    Form 8-K,
    filed with the Commission on October 28, 2004).4
.5

Common Stock Purchase Warrant, dated October 21, 2004
    (incorporated by reference to Exhibit 4.5 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on October 28, 2004). 33




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Exhibit No.

Description10
.1

Form of Indemnification Agreement by and among the Company and
    each of its officers and directors (incorporated by reference to
    Exhibit 10.1 to the Companys Registration Statement
    on
    Form S-1
    (File
    No. 333-03770),
    as amended, filed with the Commission on April 18, 1996).10
.2*

Stock Option Plan (incorporated by reference to
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K,
    filed with the Commission on April 3, 2009).10
.3*

Form of Stock Option Agreement under the Stock Option Plan
    (incorporated by reference to Exhibit 10.3 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on August 4, 2005).10
.4*

Director Stock Option Plan (incorporated by reference to
    Exhibit 10.5 to the Companys Quarterly Report on
    Form 10-Q,
    filed with the Commission on May 14, 2009).10
.5*

Form of Stock Option Agreement under the Director Stock Option
    Plan (incorporated by reference to Exhibit 10.6 to the
    Companys Quarterly Report on
    Form 10-Q,
    filed with the Commission on May 14, 2009).10
.6*

Employee Stock Purchase Plan (incorporated by reference to
    Exhibit 10.4 to the Companys Annual Report on
    Form 10-K,
    filed with the Commission on August 21, 2006).10
.7

Standard Industrial/Commercial Multi-Tenant Lease, dated as of
    August 8, 2006, between the Company and John Robert Meehan
    (Incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on August 25, 2006).10
.8*

Employment Agreement, dated as of July 30, 2007, between
    the Company and Richard P. Lanigan (incorporated by reference to
    Exhibit 99.1 to the Companys Current Report on
    Form 8-K,
    filed with the Commission on August 1, 2007).10
.8.1*

First Amendment to Employment Agreement, dated as of
    July 1, 2009, by and between the Company and Richard P.
    Lanigan (incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on June 26, 2009).10
.9*

Employment Agreement, dated as of July 30, 2007, between
    the Company and William R. Abbott (incorporated by reference to
    Exhibit 99.2 to the Companys Current Report on
    Form 8-K,
    filed with the Commission on August 1, 2007).10
.10*

Employment Agreement, dated July 1, 2009, by and between
    the Company and Paul J. McCormick (incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K,
    filed with the Commission on June 26, 2009).10
.11

Form of Restricted Stock Purchase Agreement under the Stock
    Option Plan (incorporated by reference to Exhibit 10.1 to
    the Companys Current Report on
    Form 8-K,
    filed with the Commission on April 3, 2009).21
.1

List of Subsidiaries23
.1

Consent of KMJ Corbin & Company LLP24
.1

Power of Attorney (included in the signature page)31
.1

Certification of the Principal Executive Officer pursuant to
    Rule 13a-14(a)
    of Securities Exchange Act of 193431
.2

Certification of the Principal Financial Officer pursuant to
    Rule 13a-14(a)
    of Securities Exchange Act of 193432
.1

Certifications of the Principal Executive Officer and Principal
    Financial Officer pursuant to
    Rule 13a-14(b)/15d-14(b)
    of the Securities Exchange Act of 1934 and18 U.S.C.
    Section 1350     *
    
    Management contract, compensatory plan or arrangement 34




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##### Table of Contents



SIGNATURES      By:
    /s/  PAUL
    J. MCCORMICK   Executive Chairman
    POWER OF
    ATTORNEY
  Form 10-K,
    Signature

Title

Date/s/  PAUL
    J. MCCORMICKPaul
    J. McCormick

Executive Chairman
    (Principal Executive Officer)

March 12, 2010/s/  WILLIAM
    R. ABBOTTWilliam
    R. Abbott

Senior Vice President, Chief Financial Officer, Secretary and
    Treasurer
    (Principal Financial and Accounting Officer)

March 12, 2010/s/  RAYMOND
    W. COHENRaymond
    W. Cohen

Director

March 12, 2010/s/  ANN
    T. SABAHATAnn
    T. Sabahat

Director

March 12, 2010/s/  MARVIN
    J. SLEPIAN, M.D.Marvin
    J. Slepian, M.D.

Director

March 12, 2010/s/  GREGORY
    D. WALLERGregory
    D. Waller

Director

March 12, 2010  35




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##### Table of Contents



INDEX TO
    FINANCIAL STATEMENTS
  PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated balance sheets at December 31,
    2009 and 2008


F-3Consolidated statements of operations for the
    years ended December 31, 2009 and 2008


F-4Consolidated statements of shareholders
    equity for the years ended December 31, 2009 and 2008


F-5Consolidated statements of cash flows for the
    years ended December 31, 2009 and 2008


F-6Notes to consolidated financial statements


F-7  F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           
      F-2




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  CONSOLIDATED
    BALANCE SHEETS
 December 31,
    2009 and 2008
  December 31,


December 31,2009


2008(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
2,568


$
2,907Accounts receivable, net of allowance for doubtful accounts of
    $6 and $20, respectively


933



1,330Inventories


914



1,164Short-term investments in marketable securities






75Prepaids and other current assets


253



395Total current assets


4,668



5,871Property and equipment, net


341



382Other assets


9



18Total assets

$
5,018


$
6,271LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
127


$
200Accrued salaries and related


604



554Accrued liabilities


299



549Deferred revenue


744



800Note payable


88



Current portion of capital lease obligations


9



6Total current liabilities


1,871



2,109Capital lease obligations, less current portion


14



13Total liabilities


1,885



2,122Commitments and contingenciesShareholders equity:Preferred stock:no par value; 5,000 shares authorized; none issued and
    outstanding






Common stock:no par value; 75,000 shares authorized; 45,549 and
    45,487 shares issued and outstanding, respectively


174,217



173,999Accumulated deficit


(171,084
)


(169,850
)Total shareholders equity


3,133



4,149Total liabilities and shareholders equity

$
5,018


$
6,271  F-3




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 For
    the Years Ended December 31, 2009 and 2008
  2009


2008(In thousands, except per share amounts)Net revenues

$
10,354


$
12,150Cost of revenues


1,807



2,239Gross profit


8,547



9,911Operating expenses:Research and development


1,331



904Sales and marketing


5,558



6,487General and administrative


2,776



2,840Total operating expenses


9,665



10,231Operating loss


(1,118
)


(320
)Other income (expense):Interest expense


(36
)


(23
)Interest income


3



59Other expense


(63
)


Total other income (expense), net


(96
)


36Loss before income taxes


(1,214
)


(284
)Provision for income taxes


20



31Net loss

$
(1,234
)

$
(315
)Net loss per share:Basic and diluted

$
(0.03
)

$
(0.01
)Weighted average shares outstanding:Basic and diluted


45,526



45,320  F-4




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
 For
    the Years Ended December 31, 2009 and 2008
  Common Stock


AccumulatedShares


Amount


Deficit


Total(In thousands)Balances, January 1, 2008


45,274


$
173,826


$
(169,535
)

$
4,291Issuance of common stock pursuant to stock purchased under the
    Employee Stock Purchase Plan


209



35







35Issuance of common stock for option exercises


4



1







1Vesting of share-based awards






137







137Net loss










(315
)


(315
)Balances, December 31, 2008


45,487


$
173,999


$
(169,850
)

$
4,149Issuance of common stock pursuant to stock purchased under the
    Employee Stock Purchase Plan


62



22







22Issuance of restricted stock






74







74Vesting of share-based awards






122







122Net loss










(1,234
)


(1,234
)Balances, December 31, 2009


45,549


$
174,217


$
(171,084
)

$
3,133  F-5




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 For
    the Years Ended December 31, 2009 and 2008
  2009


2008(In thousands)Cash flows from operating activities:Net loss

$
(1,234
)

$
(315
)Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities:Depreciation and amortization


299



299Provision for doubtful accounts


10



21Stock-based compensation expense


208



137Changes in operating assets and liabilities:Accounts receivable


387



412Inventories


36



341Prepaids and other current assets


300



91Other assets


9



9Accounts payable


(73
)


31Accrued liabilities


(200
)


(355
)Deferred revenue


(56
)


(410
)Net cash (used in) provided by operating activities


(314
)


261Cash flows from investing activities:Acquisition of property and equipment


(32
)


(127
)Purchase of investments in marketable securities






(150
)Proceeds from the sale of marketable securities


75



75Net cash provided by (used in) investing activities


43



(202
)Cash flows from financing activities:Net proceeds from issuance of common stock from exercise of
    options and from stock purchased under the Employee Stock
    Purchase Plan


10



36Payments on short term borrowings


(70
)


Repayments of capital lease obligations


(8
)


(12
)Net cash (used in) provided by financing activities


(68
)


24Net (decrease) increase in cash and cash equivalents


(339
)


83Cash and cash equivalents at beginning of year


2,907



2,824Cash and cash equivalents at end of year

$
2,568


$
2,907Supplemental schedule of cash flow information:Interest paid

$
36


$
23Taxes paid

$
13


$
14Supplemental schedule of noncash investing and financing
    activities:Financing of insurance premiums under note payable

$
158


$
Financing property and equipment

$
12


$
Reclassification of inventories to property and equipment

$
214


$
97  F-6




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Nature of
    Operations:          2.
    Summary
    of Significant Accounting Policies:    Use of
    Estimates:
    Reclassification:
    Cash
    and Cash Equivalents:
    Investments
    in Marketable Securities:
   F-7




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                  DescriptionBalance at December 31, 2008

$
75Transfers into Level 3


Settlements


(75
)Total unrealized losses


Balance at December 31, 2009

$
   Accounts
    Receivable:
    Inventories:
  first-in,
 F-8




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Patent
    Expenses:
    Property
    and Equipment:
    Accounting
    for the Impairment or Disposal of Long-Lived
    Assets:
    Fair
    Value of Financial Instruments:
    Revenue
    Recognition:
         F-9




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Shipping
    and Handling Costs and Revenues:
    Research
    and Development:
    Warranties:
    Advertising:
    Income
    Taxes:
      Stock-Based
    Compensation:
   F-10




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Description
    of Plans:
  10-year
      Summary
    of Assumptions and Activity
        Year Ended

Year EndedDecember 31,

December 31,2009

2008Expected term

5.56 - 6.35 years

4.09 yearsExpected volatility

97.60 - 105.51%

91.50 - 99.02%Risk-free interest rate

1.63 - 2.87%

2.21 - 3.53%Expected dividends



  F-11




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended


Year EndedDecember 31,


December 31,2009


2008Expected term


0.50 years



0.50 yearsExpected volatility


104.82 - 105.51
%


91.50 - 99.02
%Risk-free interest rate


1.63 - 2.03
%


2.21 - 3.53
%Expected dividends






     WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term (Years)


Value(In thousands)Options outstanding at January 1, 2009


3,295


$
0.66







Options granted


968


$
0.17







Options exercised














Options forfeited/canceled


(310
)

$
0.28







Options expired


(730
)

$
0.93







Options outstanding and expected to vest at December 31,


3,223


$
0.49



6.8


$
59Options exercisable at December 31, 2009


1,872


$
0.69



5.2


$
2   in-the-money
       F-12




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year EndedDecember 31,2009(In thousands)Unvested Restricted Stock Outstanding at January 1, 2009


Granted


1,508Forfeited


(252
)Vested


Unvested Restricted Stock Outstanding at December 31, 2009


1,256     Year


YearEnded


EndedDecember 31,


December 31,2009


2008Research and development

$
14


$
4Sales and marketing


97



80General and administrative


97



53$
208


$
137   Net
    Income (Loss) Per Share:
      Subsequent
    events
  Form 10-K,
  Recently
    Issued Accounting Standards
   F-13




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        3.
    Inventories:  (in thousands)
  December 31,


December 31,2009


2008Raw materials

$
141


$
139Work in process


192



70Finished goods


581



955$
914


$
1,164   4.
    Property
    and Equipment:  (in
    thousands):
  December 31,


December 31,2009


2008Computers and equipment

$
516


$
533Manufacturing and demonstration equipment


334



333Leasehold improvements


102



102Loaned lasers


1,549



1,5492,501



2,517Less accumulated depreciation and amortization


(2,160
)


(2,135
)$
341


$
382    F-14




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   5.
    Commitments
    and Contingencies:  Operating
    Lease
  (in thousands):
  Year Ending December 31,2010


1262011


120$
246     Indemnities
    and Guarantees
    Litigation
        No. 1.08-cv-10285)
   F-15




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            6.
    Note
    Payable:    7.
    Shareholders
    Equity:  Issuances
    of Common Stock:
      Warrants:
     F-16




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Options
    Granted to Employees:
    Stockholder
    Rights Plan:
    Stock
    Option Plan:
    Directors
    Stock Option Plan:
    Employee
    Stock Purchase Plan:
   F-17




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   8.
    Employee
    Retirement Plan:    9.
    Segment
    Disclosures:    10.
    Income
    Taxes:  (in thousands):
  December 31,


December 31,2009


2008Net operating losses

$
53,813


$
54,688Credits


3,242



3,402Research and development






47Reserves


277



298Accrued liabilities


422



456Depreciation/Amortization


261



382Net deferred tax asset


58,015



59,273Less valuation allowance


(58,015
)


(59,273
)Net deferred tax assets

$



$
     2009


2008Statutory federal income tax rate


34
%


34
%State income taxes, net of federal benefit


4
%


(6
)%Meals and entertainment expenses


(2
)%


(12
)%Incentive stock options


(3
)%


(13
)%Return to accrual adjustments


(116
)%


(137
)%Change in blended state rate


(21
)%


0
%Change in federal valuation allowance


102.4
%


123
%Provision for income taxes


(1.6
)%


(11
)%    F-18




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            11.
    Related
    Party Transactions:     F-19




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          12.
    Risks and
    Concentrations:     F-20




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##### Table of Contents



CARDIOGENESIS
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       F-21




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##### Table of Contents



EXHIBIT INDEX
  Exhibit No.

Description3
.1

Restated Articles of Incorporation, as amended.3
.2

Amended and Restated Bylaws (incorporated by reference to
    Exhibit 3.2 to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2003, filed with the
    Commission on March 10, 2004).4
.1

Rights Agreement, dated as of August 17, 2001, between the
    Company and EquiServe Trust Company, N.A., as Rights Agent
    (incorporated by reference to Exhibit 4.1 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on August 20, 2001).4
.2

First Amendment to Rights Agreement, dated as of
    January 17, 2002, between the Company and EquiServe
    Trust Company, N.A., as Rights Agent (incorporated by
    reference to Exhibit 4.1 to the Companys Current
    Report on
    Form 8-K,
    filed with the Commission on January 18, 2002).4
.3

Second Amendment to Rights Agreement, dated as of
    January 21, 2004, between the Company and EquiServe
    Trust Company, N.A., as Rights Agent (incorporated by
    reference to Exhibit 4.1 to the Companys Current
    Report on
    Form 8-K,
    filed with the Commission on January 26, 2004).4
.4

Third Amendment to Rights Agreement, dated October 26,
    2004, between the Company and Equiserve Trust Company N.A.,
    as Rights Agent (incorporated by reference to Exhibit 4.1
    to the Companys Current Report on
    Form 8-K,
    filed with the Commission on October 28, 2004).4
.5

Common Stock Purchase Warrant, dated October 21, 2004
    (incorporated by reference to Exhibit 4.5 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on October 28, 2004).10
.1

Form of Indemnification Agreement by and among the Company and
    each of its officers and directors (incorporated by reference to
    Exhibit 10.1 to the Companys Registration Statement
    on
    Form S-1
    (File
    No. 333-03770),
    as amended, filed with the Commission on April 18, 1996).10
.2*

Stock Option Plan (incorporated by reference to
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K,
    filed with the Commission on April 3, 2009).10
.3*

Form of Stock Option Agreement under the Stock Option Plan
    (incorporated by reference to Exhibit 10.3 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on August 4, 2005).10
.4*

Director Stock Option Plan (incorporated by reference to
    Exhibit 10.5 to the Companys Quarterly Report on
    Form 10-Q,
    filed with the Commission on May 14, 2009).10
.5*

Form of Stock Option Agreement under the Director Stock Option
    Plan (incorporated by reference to Exhibit 10.6 to the
    Companys Quarterly Report on
    Form 10-Q,
    filed with the Commission on May 14, 2009).10
.6*

Employee Stock Purchase Plan (incorporated by reference to
    Exhibit 10.4 to the Companys Annual Report on
    Form 10-K,
    filed with the Commission on August 21, 2006).10
.7

Standard Industrial/Commercial Multi-Tenant Lease, dated as of
    August 8, 2006, between the Company and John Robert Meehan
    (Incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on August 25, 2006).10
.8*

Employment Agreement, dated as of July 30, 2007, between
    the Company and Richard P. Lanigan (incorporated by reference to
    Exhibit 99.1 to the Companys Current Report on
    Form 8-K,
    filed with the Commission on August 1, 2007).10
.8.1*

First Amendment to Employment Agreement, dated as of
    July 1, 2009, by and between the Company and Richard P.
    Lanigan (incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on June 26, 2009).10
.9*

Employment Agreement, dated as of July 30, 2007, between
    the Company and William R. Abbott (incorporated by reference to
    Exhibit 99.2 to the Companys Current Report on
    Form 8-K,
    filed with the Commission on August 1, 2007).10
.10*

Employment Agreement, dated July 1, 2009, by and between
    the Company and Paul J. McCormick (incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K,
    filed with the Commission on June 26, 2009).10
.11

Form of Restricted Stock Purchase Agreement under the Stock
    Option Plan (incorporated by reference to Exhibit 10.1 to
    the Companys Current Report on
    Form 8-K,
    filed with the Commission on April 3, 2009).21
.1

List of Subsidiaries




---



##### Table of Contents



Exhibit No.

Description23
.1

Consent of KMJ Corbin & Company LLP24
.1

Power of Attorney (included in the signature page)31
.1

Certification of the Principal Executive Officer pursuant to
    Rule 13a-14(a)
    of Securities Exchange Act of 193431
.2

Certification of the Principal Financial Officer pursuant to
    Rule 13a-14(a)
    of Securities Exchange Act of 193432
.1

Certifications of the Principal Executive Officer and Principal
    Financial Officer pursuant to
    Rule 13a-14(b)/15d-14(b)
    of the Securities Exchange Act of 1934 and18 U.S.C.
    Section 1350     *
    
    Management contract, compensatory plan or arrangement