<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION


                             Washington, D.C. 20549

                                    FORM 10-Q


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
    ACT OF 1934

                  For the quarterly period ended June 30, 1998.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

               For the Transition period from ________ to _______

                         Commission File Number: 0-28424

                            CARDIOGENESIS CORPORATION

             (Exact name of registrant as specified in its charter)


          Delaware                                             77-0352469
-------------------------------                            --------------------
(State or other jurisdiction of                              (I.R.S. employer
incorporation or organization)                             identification No.)


                               540 OAKMEAD PARKWAY
                           SUNNYVALE, CALIFORNIA 94086
                         (Address of principal executive
                          offices, including zip code)

                                 (408) 328-8500
                         (Registrant's telephone number,
                              including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

The number of shares of Common Stock outstanding as of July 31, 1998 was
12,210,561.



                                      -1-


<PAGE>   2


                            CARDIOGENESIS CORPORATION

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>  <C>                                                                      <C>
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         Condensed Consolidated Balance Sheets as of June 30, 1998
         and December 31, 1997                                               3

         Condensed Consolidated Statements of Operations for the three
         months and six months ended June 30, 1998 and 1997                  4

         Condensed Consolidated Statements of Cash Flows for the six
         months ended June 30, 1998 and 1997                                 5

         Notes to Condensed Consolidated Financial Statements                6

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS                                          7

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK         11

PART II. OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                          12

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS              13

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                   14

SIGNATURE                                                                   15

INDEX TO EXHIBITS                                                           16
</TABLE>



                                      -2-


<PAGE>   3

                            CARDIOGENESIS CORPORATION
                      Condensed Consolidated Balance Sheets
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                 JUNE 30,    DECEMBER 31,
                                                   1998          1997
                                                 --------    ------------
<S>                                               <C>          <C>    
                    ASSETS

Current assets:
  Cash and cash equivalents                       $ 9,934      $ 6,047
  Available-for-sale securities                     8,807       24,469
  Accounts receivable, net                          1,008        3,293
  Inventories                                       1,401        1,109
  Other current assets                              1,635        1,751
                                                  -------      -------
    Total current assets                           22,785       36,669
Property and equipment, net                         1,775        1,529
Available-for-sale securities, non-current         13,131       10,019
Other assets                                           24           23
                                                  -------      -------
    Total assets                                  $37,715      $48,240
                                                  =======      =======


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses           $ 5,726      $ 3,944
  Deferred revenue                                     --          150
                                                  -------      -------
    Total liabilities                               5,726        4,094

Contingencies (Note 3)

Stockholders' equity                               31,989       44,146
                                                  -------      -------

  Total liabilities and stockholders' equity      $37,715      $48,240
                                                  =======      =======
</TABLE>




                   The accompanying notes are an integral part
              of these condensed consolidated financial statements.



                                      -3-


<PAGE>   4

                            CARDIOGENESIS CORPORATION
                 Condensed Consolidated Statements of Operations
                      (in thousands, except per share data)
                                   (unaudited)


<TABLE>
<CAPTION>
                                     THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
                                     ---------------------------    ------------------------
                                         1998           1997           1998           1997
                                       --------       --------       --------       --------
<S>                                    <C>            <C>            <C>            <C>     
Sales                                  $  1,077       $  2,701       $  1,926       $  4,284
Cost of sales                               926          1,459          1,629          2,590
                                       --------       --------       --------       --------
    Gross profit                            151          1,242            297          1,694
                                       --------       --------       --------       --------

Operating expenses:
  Research and development                4,366          3,250          8,176          6,504
  General and administrative              1,572            921          2,909          1,692
  Sales and marketing                     1,696          1,496          2,838          2,297
                                       --------       --------       --------       --------
    Total operating expenses              7,634          5,667         13,923         10,493
                                       --------       --------       --------       --------
    Operating loss                       (7,483)        (4,425)       (13,626)        (8,799)
Interest income and other, net              504            713          1,059          1,492
                                       --------       --------       --------       --------
    Net loss                           $ (6,979)      $ (3,712)      $(12,567)      $ (7,307)
                                       ========       ========       ========       ========


Net loss per common share
  and per common share
  - assuming dilution                  $  (0.57)      $  (0.31)      $  (1.03)      $  (0.61)
                                       ========       ========       ========       ========

Shares used in computing
  net loss per common share
  and per common share
  - assuming dilution                    12,199         12,003         12,167         11,992
                                       ========       ========       ========       ========
</TABLE>




                  The accompanying notes are an integral part
             of these condensed consolidated financial statements.



                                      -4-


<PAGE>   5

                            CARDIOGENESIS CORPORATION
                 Condensed Consolidated Statements of Cash Flows
                                 (in thousands)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                          SIX MONTHS ENDED JUNE 30,
                                                        ------------------------------
                                                            1998             1997
                                                        -------------    -------------
<S>                                                         <C>            <C>
Cash flows from operating activities:
     Net loss                                               $(12,567)      $ (7,307)
     Adjustments to reconcile net loss to
     net cash used in operating activities :
         Depreciation and amortization                           270            220
         Amortization of deferred compensation                   229            251
     Changes in assets and liabilities :
         Accounts receivable                                   2,285         (3,096)
         Inventories                                            (292)           428
         Other current assets                                    116            (49)
         Accounts payable and accrued expenses                 1,782            391
         Deferred revenue                                       (150)          (370)
                                                            --------       --------
             Net cash used in operating activities            (8,327)        (9,532)
                                                            --------       --------
Cash flows from investing activities:
     Purchase of available-for-sale securities                (7,463)       (29,501)
     Maturities of available-for-sale securities              20,013         44,070
     Acquisition of property and equipment                      (516)          (266)
     Other assets                                                 (1)            --
                                                            --------       --------
             Net cash provided by investing activities        12,033         14,303
                                                            --------       --------
Cash flows from financing activities :
     Proceeds from issuance of Common Stock, net                 181             93
                                                            --------       --------
             Net cash provided by financing activities           181             93
                                                            --------       --------
Effect of foreign currency translation adjustment                 --            (27)
                                                            --------       --------
Net increase in cash and cash equivalents                      3,887          4,837
Cash and cash equivalents, beginning of period                 6,047          2,080
                                                            --------       --------
Cash and cash equivalents, end of period                    $  9,934       $  6,917
                                                            ========       ========
</TABLE>


                  The accompanying notes are an integral part
             of these condensed consolidated financial statements.



                                      -5-


<PAGE>   6

                            CARDIOGENESIS CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - INTERIM CONSOLIDATED FINANCIAL STATEMENTS

         These interim consolidated financial statements are unaudited, but have
been prepared in accordance with generally accepted accounting principles for
interim information and with the instructions to Form 10-Q. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of financial position, results of operations
and cash flows at the dates and for the periods presented have been included.
The interim financial information herein is not necessarily indicative of
results for any future period. The interim consolidated financial statements
should be read in conjunction with the audited financial statements and the
notes thereto for the fiscal year ended December 31, 1997 included in the
Company's Form 10-K filed with the Securities and Exchange Commission.

NOTE 2 - INVENTORIES

         Inventories consisted of the following:


<TABLE>
<CAPTION>
                                                JUNE 30   DECEMBER 31
                                                  1998       1997
                                                -------   -----------
                                                    (in thousands)
                                                     (unaudited)
<S>                                              <C>         <C>   
Raw materials                                    $  988      $  736
Finished goods                                      413         373
                                                 ------      ------
                                                 $1,401      $1,109
                                                 ======      ======
</TABLE>


NOTE 3 - CONTINGENCIES

   In September 1996, the Company filed an action for declaratory relief against
PLC Systems, Inc. of Canada and its wholly-owned U.S. subsidiary, PLC Medical
Systems, Inc., (collectively, "PLC"), seeking a judgment that PLC's United
States patent No. 5,125,926 (the "PLC Patent") to a certain heart-synchronized
pulsed laser system is not infringed, is invalid and is unenforceable. In the
suit, filed in the United States District Court for the Northern District of
California, the Company initially requested the Court to enter judgment that the
Company's Transmyocardial Revascularization (TMR) systems do not infringe the
PLC Patent. In October 1996, PLC responded to the complaint. In its response,
PLC took the position that the PLC Patent has been infringed by the Company, but
made no further claims. In September 1997, the Company filed an amended
complaint asking the Federal District Court to consider evidence of inequitable
conduct in the U.S. Patent Office while the PLC Patent was being obtained by
PLC. The amended complaint asserts that the PLC Patent is invalid and
unenforceable because material prior work of another party was withheld from the
Patent Office. Trial is set to begin on January 11, 1999.

   On February 9, 1998, PLC submitted the PLC Patent to the U.S. Patent Office
seeking reissue on the basis that the PLC Patent as granted is "wholly or partly
inoperative or invalid."



                                      -6-

<PAGE>   7

   In January 1997, the Company filed an Opposition to a European Patent owned
by PLC (the "European Patent") that is a counterpart to the PLC Patent. The
Opposition seeks to have the European Patent declared invalid. The Company
believes it has meritorious positions with respect to the invalidity of the
European Patent and intends to pursue the Opposition proceeding vigorously.
There is also a second opposition to the European Patent being pursued by a
third party.

   In September 1997, the Company was served with a complaint filed by PLC in
Munich, Germany alleging that the Company and its former German sales agent have
infringed EP 0 553 576, a European counterpart of the PLC Patent. The Company
has referred the complaint to patent counsel and is proceeding in its defense.


NOTE 4 - COMPUTATION OF NET LOSS PER COMMON SHARE AND PER COMMON SHARE --
         ASSUMING DILUTION

   The Company adopted Financial Accounting Standards Board Statement No. 128
"Earnings Per Share" and the provisions of the Securities and Exchange
Commission Staff Accounting Bulletin (SAB) No. 98, and accordingly all prior
periods have been restated. Net loss per common share and per common share
-- assuming dilution are computed using the weighted average number of shares of
common stock outstanding. Common equivalent shares from stock options are
excluded from the computation of diluted net loss per common share as their
effect is antidilutive.

   Stock options to purchase 2,029,306 shares of common stock at prices ranging
from $.1220 per share to $12.875 per share were outstanding at June 30, 1998,
but were not included in the computation of diluted net loss per common share
because they were antidilutive. The aforementioned stock options could
potentially dilute earnings per share in the future.


NOTE 5 - LINE OF CREDIT

In June 1998, the Company entered into a loan and security agreement with a bank
which provides an $8 million line of credit. Amounts borrowed under the
agreement bear interest at a rate equal to the bank's prime rate and are
collateralized by the Company's assets. The agreement contains certain financial
covenants and is available until May 15, 1999. There was no outstanding balance
as of June 30, 1998.



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

This Report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements involve a number of risks and uncertainties, including the factors
described throughout this Report, and in the Company's Form 10-K filed with the
Securities and Exchange Commission, particularly the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Risk Factors." The actual results the Company achieves may differ
materially from any forward-looking statements due to such risks and
uncertainties. The Company has identified by an asterisk (*) various sentences
within this Report which contain such forward-looking statements, and words such
as "believes", "anticipates", "expects", "intends" and similar expressions are
intended to identify forward-looking statements, but are not the exclusive means
of identifying such statements. The Company undertakes no obligation to revise
any forward-looking statements to reflect events or circumstances that may arise
after the date of this Report. Readers are urged to carefully review and
consider the various disclosures made by the Company in this Report and in the
Company's 1997 Form 10-K for the year ended December 31, 1997 filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect the Company's business.



                                      -7-

<PAGE>   8

OVERVIEW

Since its inception, CardioGenesis has been primarily engaged in the design,
development, and marketing of its transmyocardial revascularization ("TMR")
systems. The Company has only a limited operating history and has experienced
significant operating losses since its inception. The Company incurred a net
loss of $7.0 million in the three months ended June 30, 1998. The development
and potential commercialization of the Company's products will continue to
require significant research and development, regulatory, sales and marketing,
manufacturing and other expenditures. *Operating losses are expected to continue
at least through 1999 as the Company continues to perform research and
development, to fund clinical trials in support of regulatory and reimbursement
approvals, and to expand its marketing and sales activities in the U.S. and
internationally by supporting Boston Scientific Corporation ("BSC"), the
Company's exclusive distributor in international markets. There can be no
assurance that the Company's TMR systems will ever generate significant revenues
or that the Company will achieve or sustain profitability.

The research, manufacture, sale and distribution of medical devices such as the
Company's TMR systems are subject to numerous regulations imposed by
governmental authorities, principally the Food and Drug Administration ("FDA")
and corresponding state and foreign agencies. The regulatory process is lengthy,
expensive and uncertain. FDA approval of a Pre-market Approval ("PMA")
application is required before any of the Company's TMR systems can be marketed
in the United States. Securing FDA approvals and clearances will require
submission to the FDA of extensive clinical data and technical information.
Also, many foreign governments and the European Union also have review processes
for medical devices. The Company has received CE Mark approval to market its
intraoperative TMR (ITMR) System and percutaneous Axcis(TM) PMR System in the
European Union. The CE Mark is granted to companies whose products meet the
essential requirements of the European Medical Device Directive ("MDD") and
provides the regulatory approval necessary for commercialization in Europe. The
Company will be subject to continued supervision by regulators and will be
required to report any serious adverse incidents to the appropriate authorities.
The Company also will be required to comply with additional national
requirements that are outside the scope of the MDD. *The Company plans to
continue to seek regulatory approvals to allow for marketing and distribution of
its products in international markets.

The Company commenced clinical trials of its ITMR System in October 1995 and
began clinical trials of its PMR System in November 1996. Clinical trials of the
Company's thoracoscopic TMR (TTMR) System have not commenced.

In July 1996, the Company began a Phase II clinical trial under an
investigational device exemption ("IDE") that allowed a prospective, randomized,
multi-center clinical trial of its ITMR System in "no-option" patients with
severe coronary artery disease ("CAD"). Enrollment in the Phase II, randomized,
no-option trial is now complete. The Company continues to submit data and
information on the CardioGenesis ITMR System in a modular format to the FDA.
*The Company plans to continue submitting information and updates in a modular
format to the FDA and to respond to periodic inquiries from the FDA for the next
several months.

In August 1996, the Company received an IDE from the FDA and has begun a major
clinical study of its ITMR System used as an adjunctive therapy to coronary
artery bypass graft ("CABG") surgery in patients with severe angina who are only
partially treatable by CABG. The adjunct to CABG clinical trials are ongoing.

Clinical trials for the Company's Axcis PMR System commenced in Europe in
November 1996. In January 1998, the Company received the CE Mark approval for
use of its Axcis PMR System in the European Community. In July 1997, the Company
received an IDE from the FDA which allows a multi-center clinical trial of the
Axcis PMR System to treat angina in no-option patients. Enrollment and treatment
for the prospective randomized Phase II trial of the Company's Axcis PMR System
has been completed and the trials are ongoing with three, six and twelve month
patient follow ups.

The trial, which includes over 290 patients, is being conducted at 12 major
cardiovascular treatment centers in both the U.S. and Europe. * The Company
plans to pursue a modular submission for regulatory approval and intends to
submit information and updates for the formal follow up period of the study.
*This proactive and collaborative 



                                      -8-

<PAGE>   9

approach to submissions provides the Company with a means for frequent reviews
by the FDA of information required for PMA of the Axcis PMR System.

The Company recorded sales of $1.9 million for the first six months of 1998 from
sales of its ITMR Systems, PMR Systems and disposable probes and catheters to
its international distributor, BSC and to clinical trial sites in the U.S. The
Company recognizes product revenues upon shipment of its products to customers
and fulfillment of acceptance terms, if any, and when no significant contractual
obligations remain outstanding. Deferred revenue consists of shipments that have
been made which are subject to limited rights of return or other contingencies.
*The Company anticipates that it will continue to derive significant revenues
from product sales over the next several years from international sales to BSC.
*As a result, the revenue levels of the Company are and will be dependent on the
efforts of BSC and the demand for the Company's TMR Systems in the international
market. *Any such international sales will be subject to a number of risks,
including foreign currency fluctuations, economic or political instability,
foreign tax laws, shipping delays, various tariffs and trade regulations and
restrictions and foreign medical regulations, any of which could have a material
adverse impact on the Company's revenues.

*Results of the Company's operations have varied and are expected to fluctuate
significantly from quarter to quarter depending on numerous factors, including:
(i) reliance on BSC; (ii) demand for the Company's products, new product
introductions by the Company or its competitors or transitions to new products;
(iii) the timing of orders and shipments; (iv) the degree of acceptance of TMR
therapy by the medical community; (v) competition, including pricing pressures;
(vi) potential third-party patent infringement claims; (vii) the timing of
regulatory and third-party reimbursement approvals; (viii) expansion of the
Company's manufacturing capacity and the Company's ability to manufacture its
products efficiently; (ix) the timing of research and development expenses,
including clinical trial-related expenditures; and (x) seasonal factors
affecting the number of procedures performed. *Due to such fluctuations in
operating results, period-to-period comparisons of the Company's operating
results are not necessarily meaningful and should not be relied upon as
indicators of likely future performance.

RESULTS OF OPERATIONS

Sales. Sales of the Company's ITMR Systems, PMR Systems and disposable products
for commercial use in Europe and for use at clinical trial sites in both the
U.S. and Europe decreased approximately $1.6 million to $1.1 million for the
three months ended June 30, 1998 from $2.7 million for the same period in 1997.
Sales decreased approximately $2.4 million to $1.9 million for the six months
ended June 30, 1998 from $4.3 million for the same period in 1997. This
reduction in sales is due primarily to constraints on capital equipment
purchases resulting from hospital budgets and government overview outside the
U.S., and by the limited current availability of reimbursement for TMR
procedures in Europe.

Cost of Sales. Cost of sales consists of direct and indirect costs of providing
ITMR Systems, PMR Systems and disposable products to customers. Cost of sales
was approximately $926,000, or 86% of sales, for the three months ended June 30,
1998 and $1.5 million, or 54% of sales, for the same period in 1997. Cost of
sales was approximately $1.6 million, or 85% of sales, for the six months ended
June 30, 1998 and $2.6 million, or 60% of sales, for the same period in 1997.
The increase in cost of sales as a percent of sales from 1997 to 1998 was
primarily due to the allocation of fixed overhead costs over fewer units.

Research and Development Expenses. Research and development expenses increased
approximately $1.1 million to $4.4 million for the three months ended June 30,
1998 from $3.3 million for the same period in 1997. Research and development
expenses increased approximately $1.7 million to $8.2 million for the six months
ended June 30, 1998 from $6.5 million for the same period in 1997. The increase
in 1998 was primarily due to increased activity in the clinical trials and
continued investment in research in the field of TMR. *The Company expects
research and development expenses to continue to increase at least through 1998
as the Company continues to enroll patients in its ongoing clinical trials,
initiates additional clinical trials, and continues to invest in TMR mechanism
research.

General and Administrative Expenses. General and administrative expenses
increased approximately $651,000 to $1.6 million for the three months ended June
30, 1998 from $921,000 for the same period in 1997. General and 



                                      -9-

<PAGE>   10

administrative expenses increased approximately $1.2 million to $2.9 million for
the six months ended June 30, 1998 from $1.7 million for the same period in
1997. The increase in 1998 was primarily due to legal fees related to the
lawsuit by the Company against PLC seeking a judgment that the PLC patent is not
infringed by the Company and is invalid and unenforceable. *The Company expects
that general and administrative expenses will continue to increase at least
through 1998.

Sales and Marketing Expenses. Sales and marketing expenses increased
approximately $200,000 to $1.7 million for the three months ended June 30, 1998
from $1.5 million for the same period in 1997. Sales and marketing expenses
increased approximately $541,000 to $2.8 million for the six months ended June
30, 1998 from $2.3 million for the same period in 1997. The increase in 1998 was
primarily due to increased sales and marketing costs associated with the
distribution of the ITMR and PMR systems in Europe. *The Company expects that
sales and marketing expenses will continue to increase in 1998 as the Company
expands clinical studies, conducts physician training, and expands sales and
marketing activities in the U.S. and in Europe.

Interest Income and Other, Net. Interest income and other, net decreased
$209,000 to $504,000 for the three months ended June 30, 1998 from $713,000 for
the same period in 1997. Interest income and other, net decreased $433,000 to
$1.1 million for the six months ended June 30, 1998 from $1.5 million for the
same period in 1997. The decrease is primarily due to decreases in the Company's
cash and cash equivalents and short-term investments balances.

Deferred Compensation Expense. The Company recorded deferred compensation
expense of approximately $1.4 million and $874,000 with respect to options to
purchase Common Stock granted and Preferred Stock issued during 1996 and 1995,
respectively. Deferred compensation expense is being amortized over the vesting
period of the options, which is generally four years. Compensation expense of
$114,000 and $114,000 was recognized for the three months ended June 30, 1998
and 1997, respectively. Compensation expense of $229,000 and $251,000 was
recognized for the six months ended June 30, 1998 and 1997, respectively.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its operations since inception primarily through the
private sale of capital stock and interest income on proceeds from private
financings as well as proceeds and interest thereon from its initial public
offering in May 1996. Through June 30, 1998, the Company had raised
approximately $77.2 million from the sale of stock, net of issuance costs.

In June 1998, the Company entered into a loan and security agreement with a bank
which provides an $8 million line of credit. Amounts borrowed under the
agreement bear interest at a rate equal to the bank's prime rate and are
collateralized by the Company's assets. The agreement contains certain financial
covenants and is available until May 15, 1999. There was no outstanding balance
as of June 30, 1998.

Net cash used in the Company's operations was $8.3 million and $9.5 million for
the six months ended June 30, 1998 and 1997, respectively. The Company's
acquisition of property and equipment was $516,000 and $266,000 for the six
months ended June 30, 1998 and 1997, respectively. The increase from 1997 to
1998 is attributed to the purchase of lasers for research & development
purposes.

At June 30, 1998, the Company had cash, cash equivalents and available-for-sale
securities, totaling $31.9 million. *The Company plans to finance its operations
and capital needs principally from cash, cash equivalents, and
available-for-sale securities, and, to the extent available, from bank and lease
financing, and believes these sources of cash will be sufficient to fund its
operations through 1998. However, the Company's future liquidity and capital
requirements will depend upon numerous factors, including the level of sales of
the Company's products generated by BSC in major and emerging international
markets; market acceptance of, and demand for the Company's products; the
Company's clinical research and product development programs; the receipt of,
and the time required to obtain regulatory clearances and approvals; the
resources the Company devotes to the development, manufacture and marketing of
its products; the resources required to hire and develop a direct sales force in
the United States, and to expand manufacturing capacity; facilities
requirements; and other factors. *Although the Company believes



                                      -10-

<PAGE>   11

its current levels of cash, cash equivalents, and available-for-sale securities,
together with cash generated from operations, will provide adequate funding for
its operations and capital requirements through 1998, the Company may be
required to raise additional funds through public or private debt or equity
financings, collaborative relationships, bank facilities or other arrangements.
There can be no assurance the Company will not require additional funding sooner
or that such additional funding, if needed, will be available on terms
attractive to the Company, or at all. *Any additional equity financing may be
dilutive to stockholders, and debt financing, if available, may involve
restrictive covenants.

IMPACT OF THE YEAR 2000 ON INFORMATION SYSTEMS

The Company relies on computers and computer software to run its business, as do
its vendors, suppliers and customers. These computers and computer software may
not be able to properly recognize the dates commencing in the Year 2000. The
Company has not completed an assessment of the impact this may have on its
businesses and does not have a reasonable basis to conclude whether the impact
of the Year 2000 dates will or will not materially affect future results. To
date the Company has not found any material impact which may result from failure
of its computers and computer software or that of its vendors, suppliers, and
customers. *However, the Company is in the process of making an assessment and
is developing an action plan to correct it.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the FASB issued Statement of Financial Accounting Standards No.
131, "Disclosure about Segments of an Enterprise and Related Information." SFAS
No. 131 requires publicly-held companies to report financial and other
information about key revenue-producing segments of the entity for which such
information is available and is utilized by the chief operating decision maker.
Specific information to be reported for individual segments includes profit or
loss, certain revenue and expense items and total assets. A reconciliation of
segment financial information to amounts reported in the financial statements
would be provided. SFAS No. 131 is effective for the Company for the year ending
December 31, 1998. The Company operates in one business segment; namely, the
research, development, manufacture and sale of cardiovascular surgical devices.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.



                                      -11-

<PAGE>   12


PART II. OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

On May 21, 1996, the Company commenced an offering of Common Stock and issued
3.0 million shares. The aggregate offering price of the shares sold was $60.0
million. Expenses and underwriting discounts and commissions incurred in
connection with the issuance totaled $5,533,000. Net offering proceeds to the
Company were $54,467,000. The table below shows all amounts from the effective
date of the registration statement to June 30, 1998. All amounts are rounded to
the nearest $1,000.


<TABLE>
<CAPTION>
                                 Direct or indirect             Direct or indirect
                                 payments to directors,         payments to others
                                 officers, general partners
                                 of the issuer or their
                                 associates; to persons
                                 owning ten percent or more
                                 of any class of equity
                                 securities of the issuer;
                                 and to affiliates of the
                                 issuer
                                 ----------------------------   ----------------------------
                                             (A)                            (B)
                                 ----------------------------   ----------------------------
<S>                                          <C>                             <C>
Construction of plant, 
building and facilities                      --                             --
Purchase and installation of
machinery and equipment                      --                             --
Purchase of real estate                      --                             --
Acquisition of other
    business(es)                             --                             --
Repayment of indebtedness                    --                             --
Working capital                              --                         22,595,000
Temporary investment                         --                         31,872,000
                                 ============================   ============================
Net offering proceeds                        $0                        $54,467,000
                                 ============================   ============================
</TABLE>



                                      -12-


<PAGE>   13


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

        On June 2, 1998, the Company held its annual meeting of shareholders. At
that meeting, the following individuals were elected to serve as directors until
the next annual meeting of shareholders or until their earliest resignation or
removal :

<TABLE>
<CAPTION>
                                                                                    Broker
Nominee                                 For             Withheld    Abstentions    Non-Votes
-------                              ----------         --------    -----------    ---------
<S>                                  <C>                   <C>                <C>          <C>
Jack M. Gill                         10,035,618            9,825              0            0
Roseanne Hirsch                      10,033,122           12,321              0            0
Allen W. Hill                        10,033,318           12,125              0            0
David C. Hull, Jr.                   10,035,668            9,775              0            0
Thomas D. Kiley                      10,035,718            9,725              0            0
E. Walter Lange                      10,035,518            9,925              0            0
Robert C. Strauss                    10,035,368           10,075              0            0
</TABLE>

        Also at that meeting, the following matters were voted upon with the
number of votes cast for, against or withheld as set forth in the columns
opposite the respective matters.

<TABLE>
<CAPTION>
                                                                                                  BROKER
MATTER                                            FOR            AGAINST         ABSTENTIONS    NON-VOTES
------                                         ----------       ---------        -----------    ---------
<S>                                             <C>             <C>                 <C>            <C>   
(1)   Increase the number of shares of 
      Common Stock reserved for issuance 
      under the Company's 1996 Equity 
      Incentive Plan by 400,000 shares          8,928,650       1,041,893           5,845          15,055

(2)   Increase the number of shares of
      Common Stock reserved for issuance 
      under the Company's 1996 Employee 
      Stock Purchase Plan by 100,000 shares     9,629,408         396,335           4,645          15,055

(3)   Ratify the selection of 
      PricewaterhouseCoopers LLP as 
      independent accountants for the
      Company  for  the  fiscal
      year ending December 31, 1998            10,032,262           6,100           7,081               0
</TABLE>



                                      -13-


<PAGE>   14

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a) The following exhibits are filed as part of this report on Form 10-Q
:

<TABLE>
<CAPTION>
            Number         Description
            ------         -----------
<S>                        <C>
              27.01        Financial Data Schedule
</TABLE>

        (b) Reports on Form 8-K

            None.



                                      -14-


<PAGE>   15

                                    SIGNATURE

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


                                       CARDIOGENESIS CORPORATION
                                       (Registrant)


Date: August 14, 1998                  By: /s/ Richard P. Powers
                                          --------------------------------------
                                           Richard P. Powers
                                           Executive Vice President, Chief
                                           Financial Officer and Secretary
                                           (Duly Authorized Officer, Principal
                                           Financial Officer, and Principal
                                           Accounting Officer)



                                      -15-
<PAGE>   16

                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT
-------
<S>         <C>
   27.01    Financial Data Schedule
</TABLE>


                                      -16-