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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    June 30, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission file number
    000-51772
      CARDICA, INC.
 (Exact Name of Registrant as
    Specified in its Charter)
      Delaware

94-3287832(State of
    Incorporation)

(I.R.S. Employer
    Identification No.)   900 Saginaw Drive
 Redwood City, California 94063
 (Address of Principal Executive
    Offices, including Zip Code)
  (650) 364-9975
 (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, $0.001 par value
 (Title of Class)
      o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  12b-2
 Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2).  YES o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





CARDICA,
    INC.
  ANNUAL
    REPORT ON
    FORM 10-K
 For the
    Year Ended June 30, 2008
   TABLE OF
    CONTENTS
   
 PagePART IItem 1.

Business


1Item 1A.

Risk Factors


26Item 1B.

Unresolved Staff Comments


43Item 2

Properties


43Item 3

Legal Proceedings


43Item 4

Submission of Matters to a Vote of Security
    Holders


43PART IIItem 5.

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


44Item 6.

Selected Financial Data


46Item 7.

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


47Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


56Item 8.

Financial Statements and Supplementary Data


57Item 9.

Changes in Disagreements with Accountants on
    Accounting and Financial Disclosure


58Item 9A.

Controls and Procedures


58Item 9B.

Other Information


60PART IIIItem 10.

Directors and Executive Officers of the
    Registrant


60Item 11.

Executive Compensation


60Item 12.

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


60Item 13.

Certain Relationships and Related Transactions


60Item 14.

Principal Accountant Fees and Services


60PART IVItem 15.

Exhibits and Financial Statement Schedules


61Signatures


87EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




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PART
    I  Item 1.
    Business  Overview
  ® ®
    ® ® ® C-Port
    Industry
    Background
  Coronary
    Artery Disease
   1




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build-up
  Current
    Treatment Alternatives for Coronary Artery Disease
    Medical
    Treatment with Pharmaceuticals
    Interventional
    Cardiology Techniques
  Coronary Angioplasty.
  Stents.
  70-80%.
   2




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Bypass Surgery.
  
       3




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Types of
    CABG Procedures
    Conventional On-Pump CABG
    Procedures.
  Off-Pump CABG Procedures.
    Minimally Invasive Endoscopic
    Procedures.
 4




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Surgical
    Techniques for Anastomoses
      Our
    Solutions
    
    Physiological features.  Our clips use medical
    grade stainless steel that is identical to that used in
    conventional coronary stents, which is known to be compatible
    with the human body (in the absence of allergies to certain
    components of medical grade stainless steel). Our products
    minimize trauma to both the graft and target vessel during
    loading and deployment, thereby reducing the risk of scar
    formation and associated narrowings or occlusions. Additionally,
    our PAS-Port system can be used without clamping the aorta,
    which has been shown to be a cause of adverse events, including
    neurological complications. In addition, our C-Port system
    creates compliant anastomoses, which potentially allow the shape
    and size of the anastomosis to adapt to changes in flow and
    blood pressure.
    Handling features.  Our anastomotic systems can
    create anastomoses more rapidly than hand suturing, resulting in
    a surgical procedure that can be performed more quickly. For
    example the PAS-Port system can be
    set-up and
    deployed in approximately three minutes compared with
    approximately ten to 25 minutes for a hand-sewn anastomosis. In
    addition, the system is easy to use, typically requiring only a
    few hours of training to become technically proficient in the
    technique. The C-Port system is compatible with coronary
    arteries as small as 1.3 millimeters in internal diameter, which
    is typically the lower limit of target vessels considered to be
    candidates for revascularization. The C-Port system can also be
    deployed at various angles, allowing access to all coronary
    targets during both on- and off-pump procedures. Both the C-Port
    system and the PAS-Port system are designed as integrated
    products, where all steps necessary to create an anastomosis are
    performed by a single tool, with one user interface. The need
    for target vessel preparation is minimal for 5




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the PAS-Port system, a feature that is especially important in
    patients undergoing a second or third coronary bypass procedure
    with the presence of significant scarring in and around the
    heart and aorta.  
    Standardized results.  Our products enable
    consistent, reproducible anastomoses, largely independent of
    surgical technique and skill set, using a wide range in quality
    of graft tissues. In comparison with hand-sewn sutures, our
    systems offer mechanically-governed repeatability and reduced
    procedural complexity.
    Reduced costs.  Because our products can help
    to expedite the CABG procedure, we believe that they may
    contribute to reduced operating room time and associated
    expenses, partially offset by the increased direct cost of our
    products compared to current alternatives, such as sutures.
    Additionally, our C-Port system creates anastomoses rapidly and
    does not require the interruption of blood flow. It may reduce
    some of the technical challenges inherent in performing
    anastomosis in off-pump procedures, which may advance adoption
    of the off-pump approach. By helping more surgeons perform
    off-pump CABG, the need for a costly pump may also be reduced or
    eliminated, thereby potentially reducing the total costs of the
    procedure. The C-Port Flex A allows the surgeon to perform
    coronary revascularization through small openings in the chest
    wall, thereby reducing the trauma and morbidity associated with
    the CABG procedure, which therefore may help reduce costs by
    reducing the time to patient discharge. Finally, to the extent
    complications such as strokes or injury to the heart muscle
    decrease, post-operative costs of a CABG procedure may be
    significantly reduced.  Our
    Strategy
    step-by-step
    
    Driving market adoption of the C-Port and PAS-Port
    systems.We intend to drive commercial adoption
    of our C-Port systems, our PAS-Port system and future products
    by marketing them as integrated anastomotic tools for use in
    both on- and off-pump CABG procedures. We believe clinical data
    from our product trials and evidence of the cost-effective
    nature of our systems compared with alternatives will be key
    factors in driving physician adoption of our products. We intend
    to continue to seek to obtain persuasive clinical data on
    patient outcomes, procedure times and costs and quality of
    outcome through post-marketing studies, registry trials and
    physician-initiated studies to further drive market adoption.
    Expanding our sales and marketing effort.  We
    are building a direct sales force to market and sell the C-Port
    system and the PAS-Port system in the United States. Our
    U.S. sales force is initially targeting selected 6




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influential surgeons in high volume cardiac surgery centers.
    Through this effort, we will seek to increase both confidence in
    and demand for our products. If we obtain FDA clearance for the
    sale of other products in the United States in the field of
    cardiac surgery, we expect that the same sales force will be
    responsible for selling these products. We also intend to
    increase the number of distributors carrying our products in
    Europe and Asia.  
    Capitalizing on our proprietary technology to develop
    next-generation products for endoscopic cardiac
    procedures.We believe that the evolution of
    endoscopic CABG procedures, which would offer shorter lengths of
    stay in the hospital, faster post-operative patient recovery
    times, long-term graft patency and a low incidence of adverse
    outcomes, could increase the number of CABG procedures
    performed. To help propel the effort toward more viable cardiac
    endoscopic procedures, we plan to develop flexible,
    next-generation automated anastomotic systems designed to
    facilitate minimally invasive endoscopic CABG.
    Leveraging our core competency to develop innovative products
    for other surgical applications.We believe that
    our core technology, which comprises extensive technological
    innovations, can be adapted for a variety of surgical
    applications and disease indications. For example, we are
    currently developing products for use in other applications,
    such as vascular and patent foramen ovale, or PFO, closure. We
    plan to continue to seek market opportunities in related fields
    to develop additional products that leverage our core strengths
    in surgical micro-stapling and closure.
    Establishing a strong proprietary position.  As
    of June 30, 2008, we had 65 issued U.S. patents,
    62 additional patent applications in the United States,
    five issued foreign patents and another five patent applications
    filed in selected international markets. We plan to continue to
    invest in building our intellectual property portfolio.  Our
    Products
  C-Port X-CHANGE
  C-Port®
    Distal Anastomosis Systems
  C-Port®
    xA Anastomosis System
   7




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
    perform an end-to-side anastomosis without interruption of
    native coronary blood flow, which is not possible in a
    conventional hand-sewn anastomosis during off-pump surgery
    without the use of a temporarily placed vascular shunt;
    achieve nearly complete alignment of the natural blood lining
    surfaces of the coronary artery and the bypass graft to minimize
    scarring and potential occlusion of the anastomosis;
    minimize the amount of foreign material in the blood stream that
    may cause clotting and subsequent graft failure; and
    suitable for all grafts typically used in CABG procedures with
    wall thicknesses of less than 1.4 millimeters.  C-Port®
    Flex A Anastomosis System
    C-Port®
    X-CHANGE System
  X-CHANGE
    PAS-Port®
    Proximal Anastomosis System
     8




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Collaborations
    and Future Product Programs
    Cook
    Vascular Closure Device
  tm
    time-consuming
      
    a simple user interface;
    placement through the same introducer sheath used for the
    interventional procedure, thereby eliminating the need for the
    exchange of the introducer sheath as typically required in many
    of the competitive devices;
    minimal amount of foreign material in the vessel wall with only
    a fraction of this material exposed to blood; 9




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
    a low manufactured cost; and
    scalable to various sizes of introducer sheaths.    Agreements
    with Cook Incorporated
           10




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and/or
             11




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and/or
  Regulatory
    Status and Clinical Trial Summary
  Regulatory
    Status
  International
    United
    States
  PAS-Port. PAS-Port
  C-Port.
 12




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International
    and U.S. Clinical Studies
  Number and

EnrollmentLocation of

Completion

Number of



Length of

RegulatoryStudy

Sites

Date

Patients

Objective

Follow-up

StatusC-Port Pivotal Trial

5 European Sites

February 2004

133

Determine safety and efficacy of distal anastomotic device

12 months

 CE Mark received in Europe
 510(k) clearance obtained inUnited StatesPAS-Port European Pivotal Trial

3 European Sites

September 2002

55

Determine safety and efficacy of proximal anastomotic device

24 months

 CE Mark received in EuropePAS- Port II Trial

4 European Sites

February 2004

54

Increase data pool for study of safety and efficacy with an
    improved PAS-Port device

12 monthsPAS-Port

4 European Sites and 8 U.S. Sites

March 2007

220

510(k) clearance from U.S. FDA

9 months

 510(k) clearance obtained in United StatesC-Port xA

5 European Sites

Ongoing

170

Obtain results for use with arterial grafts

12 months

 CE Mark received in Europe     Sales and
    Marketing
     13




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Competition
    
    improved patient outcomes;
    access to and acceptance by leading physicians;
    product quality and reliability;
    ease of use;
    device cost-effectiveness;
    training and support;
    novelty;
    physician relationships; and
    sales and marketing capabilities.     14




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Manufacturing
          Third-Party
    Reimbursement
   15




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16




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Research
    and Development
    Patents
    and Intellectual Property
         17




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Government
    Regulation
      
    product design, development and manufacture;
    product safety, testing, labeling and storage;
    pre-clinical testing in animals and in the laboratory;
    clinical investigations in humans;
    marketing applications, such as 510(k) notifications and PMA
    applications;
    record keeping and document retention procedures;
    advertising and promotion;
    product marketing, distribution and recalls; and
    post-marketing surveillance and medical device reporting,
    including reporting of deaths, serious injuries, device
    malfunctions or other adverse events.  FDAs Premarket Clearance and Approval
    Requirements.
 18




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510(k) Clearance Pathway. and/or and/or
  Premarket Approval Pathway.
    Clinical Trials.
   19




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Pervasive and Continuing Regulation.
  
    product listing and establishment registration, which helps
    facilitate FDA inspections and other regulatory action;
    QSR, which requires manufacturers, including third-party
    manufacturers, to follow stringent design, testing, control,
    documentation and other quality assurance procedures during all
    aspects of the manufacturing process;
    labeling regulations and FDA prohibitions against the promotion
    of products for uncleared, unapproved or off-label use or
    indication;
    clearance or approval of product modifications that could
    significantly affect safety or efficacy or that would constitute
    a major change in intended use;
    medical device reporting regulations, which require that
    manufacturers comply with FDA requirements to report if their
    device may have caused or contributed to an adverse event, a
    death or serious injury or malfunctioned in a way that would
    likely cause or contribute to a death or serious injury if the
    malfunction were to recur;
    post-approval restrictions or conditions, including
    post-approval study commitments;
    post-market surveillance regulations, which apply when necessary
    to protect the public health or to provide additional safety and
    effectiveness data for the device; and
    notices of correction or removal and recall regulations.     20




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
    warning letters, fines, injunctions, consent decrees and civil
    penalties;
    customer notifications, repair, replacement, refunds, recall or
    seizure of our products;
    operating restrictions, partial suspension or total shutdown of
    production;
    delay in processing marketing applications for new products or
    modifications to existing products;
    mandatory product recalls;
    withdrawing approvals that have already been granted; and
    criminal prosecution.  Fraud and Abuse and False Claims.
       21




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International Regulation.
           22




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Employees
    Corporate
    Information
  (650) 364-9975. www.cardica.com
 23




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MANAGEMENT
  Executive
    Officers and Directors
    Name

Age

PositionBernard A. Hausen, M.D., Ph.D.


48


President, Chief Executive Officer, Chief Medical Officer and
    DirectorRobert Y. Newell


60


Vice President, Finance and Chief Financial OfficerFrederick M. Bauer


54


Vice President, OperationsDouglas T. Ellison


45


Vice President, Sales and MarketingBryan D. Knodel, Ph.D.


48


Vice President, Research and DevelopmentRichard M. Ruedy


41


Vice President of Regulatory, Clinical and Quality AffairsKevin T. Larkin(2)(3)


59


Chairman of the BoardJ. Michael Egan(1)


55


DirectorRichard P. Powers(1)


64


DirectorJeffrey Purvin(2)(3)


56


DirectorRobert C. Robbins, M.D.(2)


50


DirectorJohn Simon, Ph.D.


65


DirectorStephen A. Yencho, Ph.D.


47


DirectorWilliam H. Younger, Jr.(1)(3)


58


Director     (1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Nominating Committee  Executive
    Officers and Directors
  Bernard A. Hausen, M.D., Ph.D.
  Robert Y. Newell
  Frederick M. Bauer
 24




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Douglas T. Ellison
  Bryan D. Knodel, Ph.D.
  Richard M. Ruedy
  Kevin T. Larkin
  J. Michael Egan
  Richard P. Powers
  Jeffrey Purvin
 25




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Robert C. Robbins, M.D.
  John Simon, Ph.D.
  Stephen A. Yencho, Ph.D.
  William H. Younger, Jr.
  Item 1A.
    Risk
    Factors  We have identified the following additional risks and
    uncertainties that may have a material adverse effect on our
    business, financial condition or results of operations. The
    risks described below are not the only ones we face. Additional
    risks not presently known to us or that we currently believe are
    immaterial may also significantly impair our business
    operations.
  Risks
    Related to Our Business
  We are
    dependent upon the success of our current products, and we have
    U.S. regulatory clearance for our C-Port and PAS-Port systems
    only. We cannot be certain that any of our other products will
    receive regulatory clearance or approval or that any of our
    products, including the C-Port and PAS-Port systems, will be
    successfully commercialized in the United States. If we are
    unable to successfully commercialize our products in the United
    States, or experience significant delays in doing so, our
    ability to generate revenue will be significantly delayed or
    halted, and our business will be harmed.
  PAS-Port
 26




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C-Port PAS-Port
    C-Port C-Port PAS-Port
  Our
    PAS-Port and C-Port systems, as well as our other and future
    products, may still face future development and regulatory
    difficulties.
  post-market
  
    warning letters, fines, injunctions, consent decrees and civil
    penalties;
    customer notifications, repair, replacement, refunds, recall or
    seizure of our products;
    operating restrictions, partial suspension or total shutdown of
    production;
    delay in processing marketing applications for new products or
    modifications to existing products;
    withdrawing approvals that have already been granted; and
    criminal prosecution.   27




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follow-up
  If we
    do not achieve our projected development goals in the time
    frames we announce and expect, the commercialization of our
    product candidates may be delayed and, as a result, our stock
    price may decline.
    Our
    manufacturing facilities, and those of our suppliers, must
    comply with applicable regulatory requirements. Failure to
    obtain or maintain regulatory approval of our manufacturing
    facilities would harm our business and our results of
    operations.
        If we
    are unable to establish sales and marketing capabilities or
    enter into and maintain arrangements with third parties to
    market and sell our products, our business may be
    harmed.
   28




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Lack
    of third-party coverage and reimbursement for our products could
    delay or limit their adoption.
        We
    have limited data regarding the safety and efficacy of the
    PAS-Port and C-Port systems, have only recently commenced U.S.
    commercialization of our C-Port systems and have not commenced
    U.S. commercialization of our PAS-Port system. Any data that is
    generated in the future may not be positive or consistent with
    our existing data, which would affect market acceptance and the
    rate at which our devices are adopted.
   29




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Our
    products may never gain any significant degree of market
    acceptance, and a lack of market acceptance would have a
    material adverse effect on our business.
     30




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Our
    current and planned clinical trials may not begin on time, or at
    all, and may not be completed on schedule, or at
    all.
    
    the FDA or other regulatory authorities suspend or place on hold
    a clinical trial, or do not approve a clinical trial protocol or
    a clinical trial;
    the data and safety monitoring committee of a clinical trial
    recommends that a trial be placed on hold or suspended;
    patients do not enroll in clinical trials at the rate we expect;
    patients are not
    followed-up
    at the rate we expect;
    clinical trial sites decide not to participate or cease
    participation in a clinical trial;
    patients experience adverse side effects or events related to
    our products;
    patients die or suffer adverse medical effects during a clinical
    trial for a variety of reasons, which may not be related to our
    product candidates, including the advanced stage of their
    disease and medical problems;
    third-party clinical investigators do not perform our clinical
    trials on our anticipated schedule or consistent with the
    clinical trial protocol and good clinical practices, or other
    third-party organizations do not perform data collection and
    analysis in a timely or accurate manner;
    regulatory inspections of our clinical trials or manufacturing
    facilities may, among other things, require us to undertake
    corrective action or suspend or terminate our clinical trials if
    investigators find us not to be in compliance with regulatory
    requirements;
    third-party suppliers fail to provide us with critical
    components that conform to design and performance specifications;
    the failure of our manufacturing process to produce finished
    products that conform to design and performance specifications;
    changes in governmental regulations or administrative actions;
    the interim results of the clinical trial are inconclusive or
    negative; 31




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
    pre-clinical or clinical data is interpreted by third parties in
    different ways; or
    our trial design, although approved, is inadequate to
    demonstrate safety
    and/or
    efficacy.    follow-up
    If the
    third parties on whom we rely to conduct our clinical trials do
    not perform as contractually required or expected, we may not be
    able to obtain regulatory approval for or commercialize our
    product candidates.
    Because
    one customer accounts for a substantial portion of our product
    sales, the loss of this significant customer would cause a
    substantial decline in our revenue.
   32




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If our
    competitors have products that are approved in advance of ours,
    marketed more effectively or demonstrated to be more effective
    than ours, our commercial opportunity will be reduced or
    eliminated and our business will be harmed.
      
    improved patient outcomes;
    access to and acceptance by leading physicians;
    product quality and reliability;
    ease of use;
    device cost-effectiveness;
    training and support;
    novelty;
    physician relationships; and
    sales and marketing capabilities.       33




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We are
    dependent upon a number of key suppliers, including single
    source suppliers, the loss of which would materially harm our
    business.
      We
    have limited manufacturing experience and may encounter
    difficulties in increasing production to provide an adequate
    supply to customers.
    
    maintaining product yields;
    maintaining quality control and assurance;
    providing component and service availability;
    maintaining adequate control policies and procedures; and
    hiring and retaining qualified personnel.         34




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We
    will need to increase the size of our organization, and we may
    experience difficulties in managing this growth.
    We may
    in the future be a party to patent litigation and administrative
    proceedings that could be costly and could interfere with our
    ability to sell our products.
    PAS-Port
  Intellectual
    property rights may not provide adequate protection, which may
    permit third parties to compete against us more
    effectively.
   35




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Our
    products face the risk of technological obsolescence, which, if
    realized, could have a material adverse effect on our
    business.
    We may
    not be successful in our efforts to expand our product
    portfolio, and our failure to do so could cause our business and
    prospects to suffer.
    We may
    be subject, directly or indirectly, to federal and state
    healthcare fraud and abuse laws and regulations and, if we are
    unable to fully comply with such laws, could face substantial
    penalties.
   36




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We
    could be exposed to significant product liability claims, which
    could be time consuming and costly to defend, divert management
    attention, and adversely impact our ability to obtain and
    maintain insurance coverage. The expense and potential
    unavailability of insurance coverage for our company or our
    customers could adversely affect our ability to sell our
    products, which would adversely affect our
    business.
        We
    sell our systems internationally and are subject to various
    risks relating to these international activities, which could
    adversely affect our revenue.
    
    export restrictions and controls relating to technology;
    the availability and level of reimbursement within prevailing
    foreign healthcare payment systems;
    pricing pressure that we may experience internationally;
    required compliance with existing and changing foreign
    regulatory requirements and laws;
    laws and business practices favoring local companies;
    longer payment cycles;
    difficulties in enforcing agreements and collecting receivables
    through certain foreign legal systems;
    political and economic instability; 37




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
    potentially adverse tax consequences, tariffs and other trade
    barriers;
    international terrorism and
    anti-American
    sentiment;
    difficulties and costs of staffing and managing foreign
    operations; and
    difficulties in enforcing intellectual property rights.    We are
    dependent upon key personnel, the loss of any of which could
    have a material adverse affect on our business.
    Our
    operations are currently conducted at a single location that may
    be at risk from earthquakes, terror attacks or other
    disasters.
    If we
    use hazardous materials in a manner that causes injury, we may
    be liable for damages.
    We may
    be subject to fines, penalties or injunctions if we are
    determined to be promoting the use of our products for
    unapproved or off-label uses.
  and/or
 38




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Risks
    Related to Our Finances and Capital Requirements
  We
    have a history of net losses, which we expect to continue for
    the foreseeable future, and we are unable to predict the extent
    of future losses or when we will become profitable, if at
    all.
      We
    currently lack a significant source of product sales, and we may
    not become or remain profitable.
    
    achievement of U.S. regulatory clearance or approval for
    our additional products;
    successful completion of ongoing clinical trials for our
    products; and
    successful sales, manufacturing, marketing and distribution of
    our products.      We
    will need substantial additional funding and may be unable to
    raise capital when needed, which would force us to delay, reduce
    or eliminate our research and development programs or
    commercialization efforts.
      
    market acceptance and adoption of our products;
    our revenue growth;
    costs associated with our sales and marketing initiatives and
    manufacturing activities;
    costs of obtaining and maintaining FDA and other regulatory
    clearances and approvals for our products; 39




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
    securing, maintaining and enforcing intellectual property rights
    and the costs thereof;
    costs of developing marketing and distribution capabilities;
    the extent of our ongoing research and development programs;
    the progress and results of clinical trials; and
    effects of competing technological and market developments.    If we
    do not generate sufficient cash flow through increased revenue
    or raising additional capital, then we may not be able to meet
    our debt obligation that becomes due in 2010.
    
    making it more difficult to obtain additional financing; and
    constraining our ability to react quickly in an unfavorable
    economic climate.    Existing
    creditors have rights to our assets that are senior to our
    stockholders.
    Our
    quarterly operating results and stock price may fluctuate
    significantly.
    
    the rate of physician adoption of our products;
    the results of clinical trials related to our products;
    the introduction by us or our competitors, and market acceptance
    of, new products; 40




---



##### Table of Contents




    the results of regulatory and reimbursement actions;
    the timing of orders by distributors or customers;
    the expenditures incurred in the research and development of new
    products; and
    competitive pricing.    Risks
    Related to Our Common Stock
  The
    price of our common stock may continue to be volatile, and the
    value of an investment in our common stock may
    decline.
    
    market acceptance and adoption of our products;
    regulatory clearance or approvals of our products;
    volume and timing of orders for our products;
    changes in earnings estimates, investors perceptions,
    recommendations by securities analysts or our failure to achieve
    analysts earning estimates;
    quarterly variations in our or our competitors results of
    operations;
    general market conditions and other factors unrelated to our
    operating performance or the operating performance of our
    competitors;
    the announcement of new products or product enhancements by us
    or our competitors;
    announcements related to patents issued to us or our competitors
    and to litigation; and
    developments in our industry.    The
    ownership of our common stock is highly concentrated, and your
    interests may conflict with the interests of our existing
    stockholders.
    Evolving
    regulation of corporate governance and public disclosure will
    result in additional expenses and continuing
    uncertainty.
   41




---



##### Table of Contents



If we
    sell shares of our common stock in future financings, common
    stockholders may experience immediate dilution and, as a result,
    our stock price may decline.
    Our
    future operating results may be below securities analysts
    or investors expectations, which could cause our stock
    price to decline.
    
    FDA or other regulatory clearance or approval of future
    generations of our C-Port system or other products;
    demand for our products;
    the performance of third-party contract manufacturers and
    component suppliers;
    our ability to develop sales and marketing capabilities;
    our ability to develop, introduce and market new or enhanced
    versions of our products on a timely basis; and
    our ability to obtain and protect proprietary rights.    Anti-takeover
    defenses that we have in place could prevent or frustrate
    attempts to change our direction or management.
    
    limit who may call a special meeting of stockholders;
    establish advance notice requirements for nominations for
    election to our board of directors or for proposing matters that
    can be acted upon at stockholder meetings; 42




---



##### Table of Contents




    prohibit cumulative voting in the election of our directors,
    which would otherwise permit less than a majority of
    stockholders to elect directors;
    prohibit stockholder action by written consent, thereby
    requiring all stockholder actions to be taken at a meeting of
    our stockholders; and
    provide our board of directors with the ability to designate the
    terms of and issue a new series of preferred stock without
    stockholder approval.    We may
    become involved in securities class action litigation that could
    divert managements attention and harm our
    business.
    We
    have never paid dividends on our capital stock, and we do not
    anticipate paying any cash dividends in the foreseeable
    future.
    Item 1B.
    Unresolved
    Staff comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   43




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    for Common Equity
    High


LowFiscal year 2008First Quarter ended September 30, 2007

$
12.04


$
5.08Second Quarter ended December 31, 2007

$
15.15


$
6.50Third Quarter ended March 31, 2008

$
11.15


$
5.60Fourth Quarter ended June 30, 2008

$
10.10


$
6.27Fiscal year 2007First Quarter ended September 30, 2006

$
7.95


$
3.95Second Quarter ended December 31, 2006

$
9.62


$
3.84Third Quarter ended March 31, 2007

$
6.10


$
4.10Fourth Quarter ended June 30, 2007

$
6.45


$
4.80     Dividend
    Policy
    Equity
    Compensation Plan Information
    Recent
    Sales of Unregistered Securities
         44




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##### Table of Contents



Issuer
    Purchases of Equity Securities
    Performance
    Graph
  28-month
  COMPARISON
    OF 28 MONTH CUMULATIVE TOTAL RETURN
  
  
   2/3/06 1/31/06
 The stock price performance included in this graph is not
    necessarily indicative of future stock price performance.
 45




---



##### Table of Contents



ITEM 6.
    Selected
    Financial Data      Fiscal Year Ended June 30,2008


2007


2006


2005


2004(In thousands, except per share data)Statements of Operation Data:Net revenue:Product sales, net

$
4,934


$
2,103


$
1,028


$
719


$
212Development revenue


2,564



1,370



1,000







Product and royalty revenue from related-party, net


67



56



31



1,027



401Development revenue from related-party














310



223Total net revenue


7,565



3,529



2,059



2,056



836Operating costs and expenses:Cost of product sales (includes related-party costs of $1,180
    and $1,377 in fiscal years 2005 and 2004, respectively)


4,808



2,880



2,102



2,478



2,105Research and development


8,609



7,014



6,459



6,289



5,826Selling, general and administrative


13,175



9,057



5,645



3,753



1,809Total operating costs and expenses


26,592



18,951



14,206



12,520



9,740Loss from operations


(19,027
)


(15,422
)


(12,147
)


(10,464
)


(8,904
)Interest income


926



1,113



782



305



209Interest expense (includes related-party interest expense of
    $320, $897, $897 and $539 in fiscal years 2007, 2006, 2005 and
    2004, respectively)


(101
)


(458
)


(1,047
)


(1,048
)


(2,001
)Other income (expense), net (includes $250 income from
    related-party in fiscal year 2005)


6



2



(4
)


257



(14
)Gain on early retirement of notes payable to related-party






1,183











Net loss

$
(18,196
)

$
(13,582
)

$
(12,416
)

$
(10,950
)

$
(10,710
)Basic and diluted net loss per common share

$
(1.23
)

$
(1.25
)

$
(2.58
)

$
(7.82
)

$
(8.24
)Shares used in computing basic and diluted net loss per common
    share


14,844



10,878



4,817



1,401



1,299   As of June 30,2008


2007


2006


2005


2004Balance Sheet Data:Cash, cash equivalents and short-term investments

$
23,265


$
23,434


$
32,080


$
8,951


$
17,224Working capital


20,959



22,049



31,602



9,032



16,402Total assets


28,250



27,324



35,158



12,146



20,231Long-term liabilities


2,000



2,020



15,836



15,156



14,359Convertible preferred stock














39,683



39,683Total stockholders equity (deficit)


21,417



21,989



17,677



(43,685
)


(35,430
)  46




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion and analysis of our financial
    condition and results of operations should be read in
    conjunction with our financial statements and the related notes
    to those statements included elsewhere in this report. In
    addition to historical financial information, the following
    discussion and analysis contains forward-looking statements that
    involve risks, uncertainties and assumptions. Our actual results
    and timing of selected events may differ materially from those
    anticipated in these forward-looking statements as a result of
    many factors, including those discussed under Risk
    Factors and elsewhere in this Report.
  Overview
  ® C-Port C-Port ®
    PAS-Port
      Agreements
    with Cook Incorporated
   47




---



##### Table of Contents



royalty-bearing
  Critical
    Accounting Policies and Significant Judgments and
    Estimates
      Revenue Recognition. Revenue Recognition.
     48




---



##### Table of Contents



Inventory. first-in,
  Clinical Trial Accounting.
  Stock-Based Compensation. Share-Based Payment Accounting for
    Stock-Based Compensation Accounting for Stock
    Issued to Employees
     49




---



##### Table of Contents



No. 96-18, Accounting for Equity Instruments that Are Issued to
    Other than Employees for Acquiring, or in Conjunction with
    Selling, Goods or Services
  Results
    of Operations
  Comparison
    of Fiscal Years ended June 30, 2008 and 2007
  Net revenue.
  C-Port
      Cost of product sales.
      Research and development expense.
   50




---



##### Table of Contents



Selling, general and administrative
    expense.
      Interest income.
  Interest expense.
  Gain on early retirement of notes payable to related
    party.
  Comparison
    of Fiscal Years ended June 30, 2007 and 2006
  Net revenue. C-Port
    Cost of product sales.
 51




---



##### Table of Contents



C-Port
    Research and development expense.
  Selling, general and administrative
    expense.
    Interest income.
  Interest expense.
  Gain on early retirement of notes payable to
    related-party.
  Income
    Taxes
   52




---



##### Table of Contents



Accounting for Uncertainty in Income Taxes
    Liquidity
    and Capital Resources
        Less Than


1-3


More ThanContractual Obligations

Total


1 Year


Years


3 Years(In thousands)Operating lease  real estate

$
2,572


$
746


$
1,682


$
144Notes payable, including interest


2,253



117



2,136



Total

$
4,825


$
863


$
3,818


$
144      53




---



##### Table of Contents



Fiscal Year Ended June 30,2008


2007


2006(In thousands)Net cash used in operating activities

$
(14,222
)

$
(14,952
)

$
(8,997
)Net cash (used in) provided by investing activities


(6,613
)


18,291



(21,593
)Net cash provided by financing activities


15,517



7,098



32,741          54




---



##### Table of Contents




    market acceptance and adoption of our products;
    our revenue growth;
    costs associated with our sales and marketing initiatives and
    manufacturing activities;
    costs of obtaining and maintaining FDA and other regulatory
    clearances and approvals for our products;
    securing, maintaining and enforcing intellectual property rights;
    costs of developing marketing and distribution capabilities;
    the extent of our ongoing research and development programs;
    the progress of clinical trials; and
    the effects of competing technological and market developments.    Recent
    Accounting Pronouncements
  The Fair Value Option for Financial Assets and
    Financial Liabilities Including an Amendment of FASB Statement
    No. 115
  Fair Value Measurements
  Off-Balance
    Sheet Arrangements
   55




---



##### Table of Contents



ITEM 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk          DurationLess Than 1 Year


1 to 2 Years


TotalPrincipal amount

$
14,054


$



$
14,054Fair value

$
14,044


$



$
14,044Average interest rate


2.5
%






2.5
%    56




---



##### Table of Contents



ITEM 8.
    Financial
    Statements and Supplementary Data    Quarterly
    Financial Data
  1st Quarter


2nd Quarter


3rd Quarter


4th Quarter(Unaudited, in thousands, except per share data)Fiscal year 2008:Total net revenue

$
1,349


$
1,694


$
1,707


$
2,815Gross profit (loss) on product sales


13



84



(183
)


212Net loss


(3,659
)


(4,167
)


(5,543
)


(4,827
)Basic and diluted net loss per common share


(0.27
)


(0.29
)


(0.35
)


(0.31
)Shares used in computing basic and diluted net loss per common
    share


13,604



14,471



15,620



15,682   1st Quarter


2nd Quarter


3rd Quarter


4th Quarter(Unaudited, in thousands, except per share data)Fiscal year 2007:Total net revenue

$
471


$
928


$
1,125


$
1,005Gross loss on product sales


(221
)


(468
)


(41
)


(47
)Gain on early retirement of notes payable to related-party






1,183







Net loss


(3,641
)


(2,471
)


(3,459
)


(4,011
)Basic and diluted net loss per common share


(0.37
)


(0.23
)


(0.31
)


(0.34
)Shares used in computing basic and diluted net loss per common
    share


9,778



10,642



11,265



11,826    57




---



##### Table of Contents



ITEM 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    ITEM 9A.
    Controls
    and Procedures  Managements
    Report on Internal Control over Financial Reporting.
  Rules 13a-15(f) 15d-15(f).
      Changes
    in Internal Controls.
    Limitations
    on the Effectiveness of Controls.
   58




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                 
    59




---



##### Table of Contents



ITEM 9B.
    Other
    Information    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  Security
    Ownership
    Equity
    Compensation Plan Information
    ITEM 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    ITEM 14.
    Principal
    Accountant Fees and Services   60




---



##### 



PART IV  ITEM 15.
    Exhibits
    and Financial Statement Schedules    Financial Statements
  Cardica,
    Inc.
    Index to Financial Statements
   
 PageReport of Independent Registered Public
    Accounting Firm


62Balance Sheets


63Statements of Operations


64Statements of Convertible Preferred Stock and
    Stockholders Equity (Deficit)


65Statements of Cash Flows


66Notes to Financial Statements


67   61




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm               
    62




---



##### Table of Contents



Cardica,
    Inc.
  BALANCE
    SHEETS
  June 30,2008


2007(In thousands, except share and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
9,221


$
14,539Short-term investments


14,044



8,895Accounts receivable


716



283Inventories


1,393



1,229Prepaid expenses and other current assets


418



418Total current assets


25,792



25,364Property and equipment, net


1,948



1,450Restricted cash


510



510Total assets

$
28,250


$
27,324LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
1,200


$
758Accrued compensation


1,011



516Other accrued liabilities


1,117



926Current portion of leasehold improvement obligation


11



122Deferred development revenue


1,485



882Deferred rent


9



111Total current liabilities


4,833



3,315Deferred rent






9Note payable


2,000



2,000Leasehold improvement obligation






11Commitments and contingenciesStockholders equity:Preferred stock, $0.001 par value: 5,000,000 shares
    authorized, no shares issued and outstanding at June 30,
    2008 and 2007






Common stock, $0.001 par value, 45,000,000 shares
    authorized, 15,784,655 and 13,606,333 shares issued and
    outstanding at June 30, 2008 and 2007, respectively


16



14Additional paid-in capital


114,494



97,171Treasury stock at cost (66,227 shares at June 30, 2008
    and 2007)


(596
)


(596
)Deferred stock-based compensation


(282
)


(591
)Accumulated other comprehensive loss


(12
)


(2
)Accumulated deficit


(92,203
)


(74,007
)Total stockholders equity


21,417



21,989Total liabilities and stockholders equity

$
28,250


$
27,324    63




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##### Table of Contents



Cardica,
    Inc.
  STATEMENTS
    OF OPERATIONS
  Fiscal Year Ended June 30,2008


2007


2006(In thousands, except per share data)Net revenue:Product sales, net

$
4,934


$
2,103


$
1,028Development revenue


2,564



1,370



1,000Product and royalty revenue from related party, net


67



56



31Total net revenue


7,565



3,529



2,059Operating costs and expenses:Cost of product sales


4,808



2,880



2,102Research and development


8,609



7,014



6,459Selling, general and administrative


13,175



9,057



5,645Total operating costs and expenses


26,592



18,951



14,206Loss from operations


(19,027
)


(15,422
)


(12,147
)Interest income


926



1,113



782Interest expense (includes related-party interest expense of
    $320 and $897 in fiscal years 2007 and 2006, respectively)


(101
)


(458
)


(1,047
)Other income (expense), net


6



2



(4
)Gain on early retirement of notes payable to related-party






1,183



Net loss

$
(18,196
)

$
(13,582
)

$
(12,416
)Basic and diluted net loss per common share

$
(1.23
)

$
(1.25
)

$
(2.58
)Shares used in computing basic and diluted net loss per common
    share


14,844



10,878



4,817    64




---



##### Table of Contents





Cardica,
    Inc.
  STATEMENTS
    of CONVERTIBLE PREFERRED STOCK and STOCKHOLDERS EQUITY
    (DEFICIT)
  ReceivableDeferred


Notes


from


Accumulated





TotalAdditional





Stock-


Receivable


Stock


Other





StockholdersConvertible Preferred Stock



Common Stock


Paid-in


Treasury


Based


from


Option


Comprehensive


Accumulated


EquityShares


Amount



Shares


Amount


Capital


Stock


Compensation


Stockholders


Exercises


Loss


Deficit


(Deficit)(In thousands, except share data)Balance at June 30, 2005


4,259,328


$
39,683




1,748,960


$
2


$
5,202


$



$
(431
)

$
(449
)

$



$



$
(48,009
)

$
(43,685
)Issuance of common stock upon exercise of stock options for
    promissory note



















7











(7
)














Issuance of common stock upon exercise of employee stock options
    for cash











135,057







237















(79
)










158Repurchase of common stock











(4,618
)






(6
)


























(6
)Stock-based compensation expense related to accounting of
    certain employee stock options



















583



























583Issuance of stock options to non- employees for services



















55



























55Conversion of preferred stock to common stock


(5,112
)


(25
)



5,112







25



























25Repayment of stockholders notes with common stock











(66,227
)










(596
)






456















(140
)Issuance of common stock to preferred stockholders in connection
    with the automatic conversion upon the initial public offering


(4,254,216
)


(39,658
)



4,254,216



4



39,654



























39,658Issuance of common stock upon Initial public offering, net of
    offering expenses











3,700,000



4



32,585



























32,589Issuance of common stock to a director for services











3,333







30



























30Issuance of restricted stock award











20,000



































Stock-based compensation expense accounted for under
    FAS 123(R)



















392



























392Early exercise of stock options no longer subject to repurchase



















39



























39Deferred stock-based compensation, net of forfeitures



















1,040







(1,040
)


















Amortization of deferred stock- based compensation



























442



















442Comprehensive loss:Net loss











































(12,416
)


(12,416
)Net change in unrealized loss on marketable securities







































(47
)






(47
)Comprehensive loss















































(12,463
)Balance at June 30, 2006











9,795,833



10



79,843



(596
)


(1,029
)






(79
)


(47
)


(60,425
)


17,677Issuance of common stock upon exercise of employee stock options
    for cash











76,613







161



























161Discount received on initial public offering expenses



















(38
)


























(38
)Issuance of common stock upon exercise of stock options for
    promissory note



















18



























18Payment of receivable from stockholder



































79











79Common stock issued to related- party for cancellation of note
    payable











1,432,550



2



5,727



























5,729Sale of common stock, net of financing costs of $932











2,301,337



2



10,942



























10,944Issuance of stock options to non- employees for services



















3



























3Issuance of stock options to employees for services



















38



























38Stock-based compensation expense accounted for under
    FAS 123(R)



















561



























561Early exercise of stock options no longer subject to repurchase



















1



























1Reversal of deferred stock-based compensation for terminated
    employees



















(85
)






85



















Amortization of deferred stock- based compensation



























353



















353Comprehensive loss:Net loss











































(13,582
)


(13,582
)Net change in unrealized loss on marketable securities







































45







45Comprehensive loss















































(13,537
)Balance at June 30, 2007











13,606,333



14



97,171



(596
)


(591
)










(2
)


(74,007
)


21,989Issuance of common stock upon exercise of employee stock options
    for cash











77,036







167



























167Sale of common stock, net of financing costs of $1,481











1,981,170



2



15,348



























15,350Issuance of stock options to non- employees for services



















10



























10Issuance of common stock for settlement of patent litigation











60,000







425



























425Issuance of shares pursuant to net exercise of warrants











7,666



































Issuance of restricted stock awards











52,450



































Stock-based compensation expense accounted for under
    FAS 123(R)



















1,365



























1,365Early exercise of stock options no longer subject to repurchase



















10



























10Reversal of deferred stock-based compensation for terminated
    employees



















(2
)






2



















Amortization of deferred stock- based compensation



























307



















307Comprehensive loss:Net loss











































(18,196
)


(18,196
)Net change in unrealized loss on marketable securities







































(10
)






(10
)Comprehensive loss















































(18,206
)Balance at June 30, 2008





$





15,784,655


$
16


$
114,494


$
(596
)

$
(282
)

$



$



$
(12
)


(92,203
)

$
21,417


65




---



##### Table of Contents



Cardica,
    Inc.
  STATEMENTS
    OF CASH FLOWS
  Fiscal Year Ended June 30,2008


2007


2006(In thousands)Operating activities:Net loss

$
(18,196
)

$
(13,582
)

$
(12,416
)Adjustments to reconcile net loss to net cash used in operating
    activities:Depreciation and amortization


944



763



750Loss on disposal of property and equipment


12



25



28Amortization of deferred stock-based compensation expense


307



353



442Issuance of common stock to settle intellectual property
    litigation


425







Gain on early retirement of notes payable to related party






(1,433
)


Stock-based compensation on grants of stock options to
    non-employees


10



2



45Stock-based compensation related to issuance of stock to a
    director for services










30Stock-based compensation on grants of stock options to employees


1,365



599



1,006Changes in assets and liabilities:Accounts receivable


(433
)


(119
)


(60
)Accounts receivable from related party










5Prepaid expenses and other current assets






153



(226
)Inventories


(164
)


(797
)


94Interest receivable from shareholders










(3
)Accounts payable and other accrued liabilities


643



470



4 93Accrued compensation


495



280



103Deferred rent


(111
)


(93
)


(63
)Deferred development revenue


603



882



Leasehold improvement obligation


(122
)


(122
)


(122
)Interest payable to related party






(2,333
)


897Net cash used in operating activities


(14,222
)


(14,952
)


(8,997
)Investing activities:Purchases of property and equipment


(1,454
)


(837
)


(574
)Proceeds from sale of equipment










6Purchases of short-term investments


(45,981
)


(17,172
)


(32,635
)Proceeds from maturities of short-term investments


40,822



36,300



11,610Net cash (used in) provided by investing activities


(6,613
)


18,291



(21,593
)Financing activities:Proceeds from sales of common stock, net of issuance costs


15,350



10,945



32,589Payment of notes payable to related-party






(3,087
)


Payment of note payable






(1,000
)


Proceeds from issuance of common stock pursuant to the exercise
    of stock options


167



161



158Proceeds from payment of receivable from stock option exercises






79



Repurchase of common stock










(6
)Net cash provided by financing activities


15,517



7,098



32,741Net increase (decrease) in cash and cash equivalents


(5,318
)


10,437



2,151Cash and cash equivalents at beginning of period


14,539



4,102



1,951Cash and cash equivalents at end of period

$
9,221


$
14,539


$
4,102Supplemental disclosure of cash flow information:Cash paid for interest (related party of $2,652 in fiscal year
    2007)

$
101


$
2,799


$
150Supplemental disclosure of non-cash activities:Issuance of common stock to related-party for early retirement
    of notes payable

$



$
7,163


$
Deferred stock-based compensation, (reversal) net of forfeitures

$
(2
)

$
(85
)

$
1,039Repayment of shareholders notes payable with common stock

$



$



$
596Vesting of shares issued upon early exercise of stock options

$
10


$
18


$
46Automatic conversion of preferred stock into common stock

$



$



$
39,658    66




---



##### Table of Contents



Cardica,
    Inc.
  Notes
    to Financial Statements
  Note 1.
    Organization
    and Summary of Significant Accounting Policies  Organization
    Use of
    Estimates
    Cash
    and Cash Equivalents
    Available-for-Sale
    Securities
        Restricted
    Cash
     67




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
  Fair
    Value of Financial Instruments
    Concentrations
    of Credit Risk and Certain Other Risks
        Fiscal Year Ended June 30,2008


2007


2006United States


82
%


71
%


64
%Japan


13
%


25
%


32
%Europe


4
%


4
%


4
%Rest of world


1
%






     Percent of Total NetRevenue for


Percent of TotalFiscal Year Ended


Accounts ReceivableJune 30,


as of June 30,2008


2007


2006


2008


2007Century Medical


13
%


25
%


32
%






15
%Cook Incorporated


34
%


39
%


49
%






     Inventories
  first-in, work-in-process
 68




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
  Property
    and Equipment
    Impairment
    of Long-Lived Assets
    Revenue
    Recognition
  Revenue Recognition.
      Research
    and Development
    Clinical
    Trials
   69




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
    Income
    Taxes
    Accounting for Uncertainty in Income
    Taxes
    Segments
    Comprehensive
    Loss
    Fiscal Year Ended June 30,2008


2007


2006Net loss

$
(18,196
)

$
(13,582
)

$
(12,416
)Change in unrealized gain (loss) on investments


(10
)


45



(47
)Comprehensive loss

$
(18,206
)

$
(13,537
)

$
(12,463
)     Net
    Loss per Share
    70




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
  Fiscal Year Ended June 30,2008


2007


2006Numerator:Net loss

$
(18,196
)

$
(13,582
)

$
(12,416
)Denominator:Weighted-average common shares outstanding


14,893



10,901



4,940Less: Weighted-average non-vested common shares subject to
    repurchase


(1
)


(6
)


(22
)Less: Vested common shares outstanding exercised with Promissory
    notes subject to variable accounting










(96
)Less: Weighted  average non-vested restricted stock
    awards


(48
)


(17
)


(5
)Denominator for basic and diluted net loss per common share


14,844



10,878



4,817Basic and diluted net loss per common share

$
(1.23
)

$
(1.25
)

$
(2.58
)   Outstanding
    securities not included in diluted net loss per common share
    calculation:
  Fiscal Year Ended June 30,2008


2007


2006(In thousands)Options to purchase common stock


1,334



1,316



1,018Non-vested restricted stock awards


59



13



20Non-vested common shares subject to repurchase






11



3Warrants


680



732



1572,073



2,072



1,198   Stock-Based
    Compensation
  Share-Based Payment Accounting for Stock-Based
    Compensation Accounting for Stock Issued to
    Employees
 71




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
    Fiscal Year Ended June 30,2008


2007


2006Risk-free interest rate


2.39%-3.70%



4.51%-5.02%



4.67%Dividend yield










Weighted-average expected life


4.56 years



4.8 years



6 yearsVolatility


58%



70%



70%         Fiscal Year Ended June 30,2008


2007


2006Cost of product sales

$
51


$
61


$
30Research and development


605



129



413Selling, general and administrative


1,026



765



1,055Total

$
1,682


$
955


$
1,498   No. 96-18, Accounting for Equity Instruments That Are Issued to
    Other than Employees for Acquiring, or in Conjunction with
    Selling, Goods or Services
   72




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
  non-recourse
    Fiscal year ending June 30,2009


2632010


19$
282   Recent
    Accounting Pronouncements
  The Fair Value Option for Financial Assets and
    Financial Liabilities Including an Amendment of FASB Statement
    No. 115
  Fair Value Measurements
  Note 2.
    Short-Term
    Investments    June 30, 2008Gross


GrossAmortized


Unrealized


UnrealizedAvailable-for-sale securities:

Cost


Gains


Losses


Fair ValueCommercial paper

$
4,786


$



$
(6
)

$
4,780Federal agency bonds


9,268



2



(6
)


9,264Total

$
14,054


$
2


$
(12
)

$
14,044   73




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
  June 30, 2007Gross


GrossAmortized


Unrealized


UnrealizedAvailable-for-sale securities:

Cost


Gains


Losses


Fair ValueAuction rate preferred

$
5,850


$



$



$
5,850Commercial paper


1,298







(1
)


1,297Federal agency bonds


1,749







(1
)


1,748Total

$
8,897






$
(2
)

$
8,895   June 30, 2008


June 30, 2007Amortized





AmortizedRemaining contractual maturity:

Cost


Fair Value


Cost


Fair ValueMaturing in one year or less

$
14,054


$
14,044


$
8,897


$
8,895       Note 3.
    Inventories    June 30,2008


2007Raw materials

$
634


$
405Work in progress


209



296Finished goods


550



528$
1,393


$
1,229  74




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
  Note 4.
    Property
    and Equipment    June 30,2008


2007Computer hardware and software

$
463


$
416Office furniture and equipment


210



210Machinery and equipment


5,149



3,688Leasehold improvements


565



541Construction in process


111



2486,498



5,103Less: accumulated depreciation and amortization


(4,550
)


(3,653
)$
1,948


$
1,450     Note 5.
    Leases
    and Commitments      OperatingLeasesFiscal years ending June 30, 2009

$
7462010


8262011


8562012


144Total minimum lease payments

$
2,572     Note 6.
    License,
    Development and Commercialization Agreements   75




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
      Note 7.
    Related-Party
    Transactions  Financing
    Activities
      Loan
    Agreements
   76




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
    Development
    and Supply Agreement
      Note 8.
    Note
    Payable    Note 9.
    Stockholders
    Equity    Reverse
    Stock Split and Initial Public Offering
     77




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
    Private
    Placement Offering
    Public
    Offering
    Common
    Stock
    Preferred
    Stock
    Notes
    Receivable from Stockholders
   78




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
        Shares
    Reserved
    June 30,2008Stock options outstanding


1,334,132Shares available for grant under stock option plan


470,355Warrants for common stock


679,7802,484,267   Stock
    Options
       79




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
    EITF 00-23,
    Outstanding OptionsWeighted-AverageShares Available





Exercise Price Perfor Grant


Number of Shares


ShareBalance at June 30, 2005


244,771



766,251



2.16Shares reserved


400,000







Options granted


(508,193
)


508,193



6.37Restricted stock award


(20,000
)






Options exercised






(135,054
)


1.75Options forfeited


121,651



(121,651
)


2.14Unvested stock repurchased


4,618







1.35Balance at June 30, 2006


242,847



1,017,739


$
4.32Shares reserved


250,000







Options granted


(498,783
)


498,783



5.77Options exercised






(76,613
)


2.08Options forfeited


123,903



(123,903
)


7.87Balance at June 30, 2007


117,967



1,316,006


$
4.67Shares reserved


500,000







Options granted


(155,450
)


155,450



7.61Restricted stock awards


(52,450
)






Options exercised






(77,036
)


2.19Options forfeited


60,288



(60,288
)


5.98Balance at June 30, 2008


470,355



1,334,132


$
5.10  80




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
    Options Outstanding


Options exercisableWeighted-


Weighted





WeightedAverage


Average





AverageRemaining


Exercise





ExerciseNumber of


Contractual Life


Price Per


Number


Price PerRange of Exercise Prices

Shares


(years)


Share


Exercisable


Share$0.75 - $2.25


162,449



4.32


$
2.03



162,449


$
2.03$2.85


379,655



6.45



2.85



318,780



2.85$4.38 - $6.00


155,141



5.37



5.34



67,842



5.10$6.03


271,404



5.86



6.03



65,134



6.03$6.75 - $8.00


287,271



6.83



7.72



120,937



7.89$8.30 - 9.75


78,212



6.25



9.05



30,346



9.53Total outstanding


1,334,132



6.01


$
5.10



765,488


$
4.21Options vested and expected to vest


1,212,718



6.00


$
4.96       EITF 96-18,
  Fiscal Year Ended June 30,2008


2007


2006Risk-free interest rate


1.55% - 4.71%



4.53% - 4.95%



4.71%Dividend yield










Contractual expected life in years


5.6 - 7.7 years



3-8.2 years



4-6 yearsVolatility


66%



100%



100%   Common
    Stock Subject to Repurchase
   81




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
    Restricted
    Stock Awards
    Warrants
    ExerciseShares




Price Per Share


Expiration12,270




$
4.89



March 2010575,347





5.65



June 201232,146





11.58



June 200960,017





11.58



October 2010679,780   Note 10.
    Income
    Taxes    June 30,2008


2007Net operating loss carry-forwards

$
30,412


$
26,289Research credits


2,004



2,417Capitalized research and development expenses


136



166Other


317



159Total deferred tax assets


32,869



29,031Valuation allowance


(32,869
)


(29,031
)Net deferred tax assets

$



$
      82




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
      AmountBalance at July 1, 2007

$
574Additions based on tax positions related to current year


72Additions for tax positions of prior year


Reductions for tax positions of current year


Reductions for tax positions of prior year


(7
)Settlements


Balance at June 30, 2008

$
639         Fiscal Year Ended June 30,2008


2007


2006Tax benefit at U.S. statutory rate

$
(6,186
)

$
(4,624
)

$
(4,222
)Loss for which no tax benefit is currently recognizable


5,726



4,298



4,010Other, net


460



326



212$



$



$
     Note 11.
    Employee
    Benefit Plan   83




---



##### Table of Contents



Cardica,
    Inc.
  Notes to
    Financial Statements  (Continued)
    Note 12.
    Indemnification   84




---



##### Table of Contents



Financial Statement Schedules
    The following exhibits are included herein or
    incorporated herein by reference:
  ITEM 15.
    Exhibits
    and Financial Statement Schedules.    ExhibitNumber

Description3
.1(1)

Amended and Restated Certificate of Incorporation of the
    Registrant as currently in effect.3
.2(8)

Bylaws of the Registrant as currently in effect.3
.3(1)

Specimen Common Stock certificate of the Registrant.4
.1(1)

Warrant dated March 17, 2000 exercisable for
    36,810 shares of common stock (on a pre-split basis).4
.2(1)

Warrant dated July 5, 2001 exercisable for
    31,251 shares of common stock (on a pre-split basis).4
.3(1)

Warrant dated July 5, 2001 exercisable for
    124,999 shares of common stock (on a pre-split basis).4
.4(1)

Warrant dated June 13, 2002 exercisable for
    96,439 shares of common stock (on a pre-split basis).4
.5(1)

Warrant dated October 31, 2002 exercisable for
    180,052 shares of common stock (on a pre-split basis).4
.5.1(10)

Amendment of Registration Rights Agreement, dated
    October 15, 2007.4
.6(2)

Form of Warrant dated June 2007.4
.7(2)

Securities Purchase Agreement, dated June 27, 2007, by and
    among Cardica, Inc., and purchasers listed on the signature
    pages thereto.10
.1(1)

1997 Equity Incentive Plan and forms of related agreements and
    documents.10
.2(3)

2005 Equity Incentive Plan and forms of related agreements and
    documents.10
.3(1)

Amended and Restated Investor Rights Agreement, dated
    August 19, 2003, by and among the Registrant and certain
    stockholders.10
.4(1)

Benefit Agreement with Bernard Hausen, M.D., Ph.D.+10
.5(1)

Office Lease Agreement dated April 25, 2003, and First
    Amendment to Office Lease Agreement dated January 21, 2004.10
.6(1)

Distribution Agreement by and between Cardica, Inc. and Century
    Medical, Inc. dated June 16, 2003.10
.6.1(4)

First Amendment to Distribution Agreement, dated March 30,
    2007, by and between Cardica, Inc. and Century Medical,
    Inc.10
.7(1)

Subordinated Convertible Note Agreement with Century Medical,
    Inc. dated June 16, 2003, and Amendment No. 1 thereto,
    dated August 6, 2003.10
.7.1(4)

Amendment No. 2 to Subordinated Convertible Note Agreement,
    dated March 30, 2007, by and between Cardica, Inc. and
    Century Medical, Inc.10
.8(1)

Note issued pursuant to Subordinated Convertible Note Agreement
    with Century Medical, Inc.10
.8.1(4)

Amended and Restated Note issued pursuant to Amendment
    No. 2 to Subordinated Convertible Note Agreement with
    Century Medical, Inc.10
.9(1)

Agreement by and between the Company and the Guidant Investment
    Corporation, dated August 19, 2003.10
.10(1)

Allen & Company LLC letter of intent dated
    September 12, 2005.10
.11(1)

License, Development and Commercialization Agreement by and
    between Cardica, Inc. and Cook Incorporated, dated
    December 9, 2005.10
.12(5)

Note Conversion Agreement, dated November 7, 2006, by and
    between Cardica, Inc. and Guidant Investment Corporation.10
.14(5)

Consent to Grant of Registration Rights and Amendment to Amended
    and Restated Investor Rights Agreement, dated November 7,
    2006, by and between Cardica, Inc. and the investors set forth
    therein.10
.15(14)

Cardica, Inc. Non-Employee Director Compensation.+10
.16(6)

Registration Rights Agreement, dated June 7, 2007, by and
    among Cardica, Inc., and the purchasers listed on the signature
    pages thereto.10
.17(7)

License, Development and Commercialization Agreement by and
    between the Company and Cook Incorporated, dated June 12,
    2007.10
.18(8)

Bonus arrangement for Vice President of Worldwide Sales and
    Marketing, effective August 13, 2008.+ 85




---



##### Table of Contents



ExhibitNumber

Description10
.19(8)

Additional Compensation Information for named executive
    officers.+10
.20(9)

Amendment to License, Development and Commercialization
    Agreement by and between Cardica, Inc. and Cook Incorporated,
    dated September 19, 2007.10
.21(11)

Second Amendment to Office Lease Agreement, executed and
    delivered on December 3, 2007, and effective
    November 19, 2007.10
.23(12)

Summary of 2008 Cash Bonus Plan+10
.24(13)

Fiscal 2008 Bonus Compensation Information for Named Executive
    Officers.+21
.1(1)

Subsidiaries of Registrant.23
.1

Consent of Independent Registered Public Accounting Firm.24
.1

Power of Attorney (included on signature page).31
.1

Certification of chief executive officer.31
.2

Certification of chief financial officer.32
.1

Section 1350 Certification.     
    
    Portions of this exhibit (indicated by asterisks) have been
    omitted pursuant to a request for confidential treatment and
    this exhibit has been filed separately with the SEC.+
    
    Indicates management contract or compensatory plan.(1)
    
    Filed as an exhibit to the Registrants Registration
    Statement on
    Form S-1,
    file
    no. 333-129497,
    declared effective on February 2, 2006, as amended, and
    incorporated herein by reference.(2)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    June 13, 2007, excluding Item 3.02 and incorporated
    herein by reference.(3)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    November 14, 2006 and incorporated herein by reference.(4)
    
    Filed as exhibits to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    April 5, 2007 and incorporated herein by reference.(5)
    
    Filed as exhibits to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    November 8, 2006 and incorporated herein by reference.(6)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    June 13, 2007 and incorporated herein by reference.(7)
    
    Filed as exhibits to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    June 21, 2007, excluding Items 3.01 and incorporated
    herein by reference.(8)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    August 19, 2008 and incorporated herein by reference.(9)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2007.(10)
    
    Filed as an exhibit to the Companys Registration Statement
    on
    Form S-3
    filed with the Securities and Exchange Commission on
    October 15, 2007 and incorporated herein by reference.(11)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    December 5, 2007 and incorporated herein by reference.(12)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended December 31, 2007.(13)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    February 11, 2008 and incorporated herein by reference.(14)
    
    Included in the Companys Definitive Proxy Statement Filed
    Pursuant to Section 14(a) of the Securities Exchange Act of
    1934 on October 12, 2007 and incorporated herein by
    reference.    86




---



##### Table of Contents



SIGNATURES         September 10,
    2008
    /s/  Robert
    Y. Newell  Date
    Robert Y. Newell    POWER OF
    ATTORNEY
  Form 10-K,
    Name and Signature

Title

Date/s/  Bernard
    A. HausenBernard
    A. Hausen, M.D., Ph.D.

President, Chief Executive Officer and Director
    (Principal Executive Officer)

September 10, 2008/s/  Robert
    Y. NewellRobert
    Y. Newell

Chief Financial Officer
    (Principal Financial and Accounting Officer)

September 10, 2008/s/  J.
    Michael EganJ.
    Michael Egan

Director

September 10, 2008/s/  Kevin
    T. LarkinKevin
    T. Larkin

Director

September 10, 2008/s/  Richard
    P. PowersRichard
    P. Powers

Director

September 10, 2008/s/  Jeffrey
    L. PurvinJeffrey
    L. Purvin

Director

September 10, 2008/s/  Robert
    C. Robbins,Robert
    C. Robbins, M.D.

Director

September 10, 2008/s/  John
    SimonJohn
    Simon, Ph.D.

Director

September 10, 2008/s/  Stephen
    A. YenchoStephen
    A. Yencho, Ph.D.

Director

September 10, 2008/s/  William
    H. Younger, Jr.William
    H. Younger, Jr.

Director

September 10, 2008  87




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##### Table of Contents



Exhibit Index
  ExhibitNumber

Description3
.1(1)

Amended and Restated Certificate of Incorporation of the
    Registrant as currently in effect.3
.2(8)

Bylaws of the Registrant as currently in effect.3
.3(1)

Specimen Common Stock certificate of the Registrant.4
.1(1)

Warrant dated March 17, 2000 exercisable for
    36,810 shares of common stock (on a pre-split basis).4
.2(1)

Warrant dated July 5, 2001 exercisable for
    31,251 shares of common stock (on a pre-split basis).4
.3(1)

Warrant dated July 5, 2001 exercisable for
    124,999 shares of common stock (on a pre-split basis).4
.4(1)

Warrant dated June 13, 2002 exercisable for
    96,439 shares of common stock (on a pre-split basis).4
.5(1)

Warrant dated October 31, 2002 exercisable for
    180,052 shares of common stock (on a pre-split basis).4
.5.1(10)

Amendment of Registration Rights Agreement, dated
    October 15, 2007.4
.6(2)

Form of Warrant dated June 2007.4
.7(2)

Securities Purchase Agreement, dated June 27, 2007, by and
    among Cardica, Inc., and purchasers listed on the signature
    pages thereto.10
.1(1)

1997 Equity Incentive Plan and forms of related agreements and
    documents.10
.2(3)

2005 Equity Incentive Plan and forms of related agreements and
    documents.10
.3(1)

Amended and Restated Investor Rights Agreement, dated
    August 19, 2003, by and among the Registrant and certain
    stockholders.10
.4(1)

Benefit Agreement with Bernard Hausen, M.D., Ph.D.+10
.5(1)

Office Lease Agreement dated April 25, 2003, and First
    Amendment to Office Lease Agreement dated January 21, 2004.10
.6(1)

Distribution Agreement by and between Cardica, Inc. and Century
    Medical, Inc. dated June 16, 2003.10
.6.1(4)

First Amendment to Distribution Agreement, dated March 30,
    2007, by and between Cardica, Inc. and Century Medical,
    Inc.10
.7(1)

Subordinated Convertible Note Agreement with Century Medical,
    Inc. dated June 16, 2003, and Amendment No. 1 thereto,
    dated August 6, 2003.10
.7.1(4)

mendment No. 2 to Subordinated Convertible Note Agreement,
    dated March 30, 2007, by and between Cardica, Inc. and
    Century Medical, Inc.10
.8(1)

Note issued pursuant to Subordinated Convertible Note Agreement
    with Century Medical, Inc.10
.8.1(4)

Amended and Restated Note issued pursuant to Amendment
    No. 2 to Subordinated Convertible Note Agreement with
    Century Medical, Inc.10
.9(1)

Agreement by and between the Company and the Guidant Investment
    Corporation, dated August 19, 2003.10
.10(1)

Allen & Company LLC letter of intent dated
    September 12, 2005.10
.11(1)

License, Development and Commercialization Agreement by and
    between Cardica, Inc. and Cook Incorporated, dated
    December 9, 2005.10
.12(5)

Note Conversion Agreement, dated November 7, 2006, by and
    between Cardica, Inc. and Guidant Investment Corporation.10
.14(5)

Consent to Grant of Registration Rights and Amendment to Amended
    and Restated Investor Rights Agreement, dated November 7,
    2006, by and between Cardica, Inc. and the investors set forth
    therein.10
.15(14)

Cardica, Inc. Non-Employee Director Compensation.+10
.16(6)

Registration Rights Agreement, dated June 7, 2007, by and
    among Cardica, Inc., and the purchasers listed on the signature
    pages thereto.10
.17(7)

License, Development and Commercialization Agreement by and
    between the Company and Cook Incorporated, dated June 12,
    2007.10
.18(8)

Bonus arrangement for Vice President of Worldwide Sales and
    Marketing, effective August 13, 2008.+10
.19(8)

Additional Compensation Information for named executive
    officers.+10
.20(9)

Amendment to License, Development and Commercialization
    Agreement by and between Cardica, Inc. and Cook Incorporated,
    dated September 19, 2007.




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##### Table of Contents



ExhibitNumber

Description10
.21(11)

Second Amendment to Office Lease Agreement, executed and
    delivered on December 3, 2007, and effective
    November 19, 2007.10
.23(12)

Summary of 2008 Cash Bonus Plan+10
.24(13)

Fiscal 2008 Bonus Compensation Information for Named Executive
    Officers.+21
.1(1)

Subsidiaries of Registrant.23
.1

Consent of Independent Registered Public Accounting Firm.24
.1

Power of Attorney (included on signature page).31
.1

Certification of chief executive officer.31
.2

Certification of chief financial officer.32
.1

Section 1350 Certification.     
    
    Portions of this exhibit (indicated by asterisks) have been
    omitted pursuant to a request for confidential treatment and
    this exhibit has been filed separately with the SEC.+
    
    Indicates management contract or compensatory plan.(1)
    
    Filed as an exhibit to the Registrants Registration
    Statement on
    Form S-1,
    file
    no. 333-129497,
    declared effective on February 2, 2006, as amended, and
    incorporated herein by reference.(2)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    June 13, 2007, excluding Item 3.02 and incorporated
    herein by reference.(3)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    November 14, 2006 and incorporated herein by reference.(4)
    
    Filed as exhibits to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    April 5, 2007 and incorporated herein by reference.(5)
    
    Filed as exhibits to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    November 8, 2006 and incorporated herein by reference.(6)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    June 13, 2007 and incorporated herein by reference.(7)
    
    Filed as exhibits to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    June 21, 2007, excluding Items 3.01 and incorporated
    herein by reference.(8)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    August 19, 2008 and incorporated herein by reference.(9)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2007.(10)
    
    Filed as an exhibit to the Companys Registration Statement
    on
    Form S-3
    filed with the Securities and Exchange Commission on
    October 15, 2007 and incorporated herein by reference.(11)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    December 5, 2007 and incorporated herein by reference.(12)
    
    Filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended December 31, 2007.(13)
    
    Filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    February 11, 2008 and incorporated herein by reference.(14)
    
    Included in the Companys Definitive Proxy Statement Filed
    Pursuant to Section 14(a) of the Securities Exchange Act of
    1934 on October 12, 2007 and incorporated herein by
    reference.