##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------

For the quarterly period ended September 30, 2007

or



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------

Commission file number: 000-51487



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MICROMED CARDIOVASCULAR, INC.

(Exact name of small business issuer as
specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 90-0265161                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

8965 Interchange Drive

Houston, Texas 77054

(Address of principal executive offices)

(713) 838-9210

(Issuers
telephone number)



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Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).    YES ̈NO  x

Transitional Small Business Disclosure Format (Check one):    YES ̈NO  x

On November 8, 2007, there were outstanding 40,108,853 shares of the Registrants Common Stock, $0.001 par value.



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##### Table of Contents

MICROMED CARDIOVASCULAR, INC.

TABLE OF CONTENTS



|                                                                                                                                                                                       |  |         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                                                                                                                                                                                       |  | Page No.
|PART I. FINANCIAL INFORMATION                                                                                                                                                          |  | 3       
|                                                                                                                                                                                       | 
|Item 1. Financial Statements (Unaudited)                                                                                                                                               |  | 3       
|                                                                                                                                                                                       | 
|Consolidated Balance Sheets as of December 31, 2006 and September 30, 2007                                                                                                             |  | 3       
|Consolidated Statements of Operations for the period October 6, 1995 (date of inception) to September 30, 2007, and the three months and nine months ended September 30, 2007 and 2006 |  | 4       
|Consolidated Statements of Cash Flows for the period October 6, 1995 (date of inception) to September 30, 2007, and the nine months ended September 30, 2007 and 2006                  |  | 5       
|Notes to Consolidated Financial Statements                                                                                                                                             |  | 6       
|                                                                                                                                                                                       | 
|Item 2. Managements Discussion and Analysis or Plan of Operation                                                                                                                      |  | 12      
|                                                                                                                                                                                       | 
|Item 3. Controls and Procedures                                                                                                                                                        |  | 18      
|                                                                                                                                                                                       | 
|PART II. OTHER INFORMATION                                                                                                                                                             |  | 19      
|                                                                                                                                                                                       | 
|Item 6. Exhibits                                                                                                                                                                       |  | 19      
|                                                                                                                                                                                       | 
|SIGNATURES                                                                                                                                                                             |  | 19      
|                                                                                                                                                                                       | 
|Certifications pursuant to Section 13a-14                                                                                                                                              |  |         
|                                                                                                                                                                                       | 
|Certifications pursuant to U.S.C. Section 906                                                                                                                                          |  |         



2



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

MICROMED CARDIOVASCULAR, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                                                                               |  |                    |             |   |                   |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | ----------------- | - | ----------- | -
|                                                                                                                                                                                                                                                               |  | September 30, 2007 |             |   | December 31, 2006 |  
|                                                                                                                                                                                                                                                               |  | (Unaudited)        |             |   |                   |  
|ASSETS                                                                                                                                                                                                                                                         |  |                    |             |   |                   |   |             |  
|Current assets:                                                                                                                                                                                                                                                |  |                    |             |   |                   |   |             |  
|Cash and cash equivalents                                                                                                                                                                                                                                      |  | $                  | 4,042,280   |   |                   | $ | 9,830,273   |  
|Accounts receivable, net of allowance for doubtful accounts of $0 and $186,685, respectively                                                                                                                                                                   |  |                    | 216,081     |   |                   |   | 531,204     |  
|Inventory                                                                                                                                                                                                                                                      |  |                    | 2,648,343   |   |                   |   | 2,858,002   |  
|Prepaids and other assets                                                                                                                                                                                                                                      |  |                    | 325,045     |   |                   |   | 271,116     |  
|                                                                                                                                                                                                                                                               |  |                    |             |   |                   |   |             |  
|Total current assets                                                                                                                                                                                                                                           |  |                    | 7,231,749   |   |                   |   | 13,490,595  |  
|Property and equipment, net                                                                                                                                                                                                                                    |  |                    | 477,951     |   |                   |   | 384,925     |  
|Other assets                                                                                                                                                                                                                                                   |  |                    | 14,312      |   |                   |   | 13,085      |  
|                                                                                                                                                                                                                                                               |  |                    |             |   |                   |   |             |  
|Total assets                                                                                                                                                                                                                                                   |  | $                  | 7,724,012   |   |                   | $ | 13,888,605  |  
|                                                                                                                                                                                                                                                               |  |                    |             |   |                   |   |             |  
|                                                                                                                                                                                                                                                               |  |                   
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                           |  |                    |             |   |                   |   |             |  
|Current liabilities:                                                                                                                                                                                                                                           |  |                    |             |   |                   |   |             |  
|Accounts payable                                                                                                                                                                                                                                               |  | $                  | 275,726     |   |                   | $ | 219,245     |  
|Accrued liabilities                                                                                                                                                                                                                                            |  |                    | 627,974     |   |                   |   | 1,068,727   |  
|Deferred revenue                                                                                                                                                                                                                                               |  |                    | 117,000     |   |                   |   | 175,500     |  
|Current portion of long-term debt                                                                                                                                                                                                                              |  |                    | 44,310      |   |                   |   | 420,956     |  
|Note payable                                                                                                                                                                                                                                                   |  |                    | 133,815     |   |                   |   | 182,389     |  
|                                                                                                                                                                                                                                                               |  |                    |             |   |                   |   |             |  
|Total current liabilities                                                                                                                                                                                                                                      |  |                    | 1,198,825   |   |                   |   | 2,066,817   |  
|Long-term debt                                                                                                                                                                                                                                                 |  |                    | 83,278      |   |                   |   |            |  
|Commitments                                                                                                                                                                                                                                                    |  |                    |            |   |                   |   |            |  
|                                                                                                                                                                                                                                                               |  |                    |             |   |                   |   |             |  
|Total liabilities                                                                                                                                                                                                                                              |  |                    | 1,282,103   |   |                   |   | 2,066,817   |  
|                                                                                                                                                                                                                                                               |  |                    |             |   |                   |   |             |  
|Stockholders Equity:                                                                                                                                                                                                                                          |  |                    |             |   |                   |   |             |  
|Common Stock, $.001 par value, 100,000,000 shares authorized, 40,159,357 shares issued and 40,108,853 shares outstanding at September 30,
2007; 100,000,000 shares authorized, 39,952,404 shares issued and 39,915,402 shares outstanding at December 31, 2006 |  |                    | 40,109      |   |                   |   | 39,916      |  
|Additional paid-in capital                                                                                                                                                                                                                                     |  |                    | 106,255,011 |   |                   |   | 105,377,592 |  
|Accumulated other comprehensive income                                                                                                                                                                                                                         |  |                    | 9,811       |   |                   |   |            |  
|Deficit accumulated during development stage                                                                                                                                                                                                                   |  |                    | (99,863,022 | ) |                   |   | (93,595,720 | )
|                                                                                                                                                                                                                                                               |  |                    |             |   |                   |   |             |  
|Total stockholders equity                                                                                                                                                                                                                                     |  |                    | 6,441,909   |   |                   |   | 11,821,788  |  
|                                                                                                                                                                                                                                                               |  |                    |             |   |                   |   |             |  
|Total liabilities and stockholders equity                                                                                                                                                                                                                     |  | $                  | 7,724,012   |   |                   | $ | 13,888,605  |  
|                                                                                                                                                                                                                                                               |  |                    |             |   |                   |   |             |  

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



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##### Table of Contents

MICROMED CARDIOVASCULAR, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                      |  |                                  |            |   |                                 |   |            |                                                              |  |   |            |   |  |      |            |   |  |   |              |  
|--------------------------------------------------------------------- |  | -------------------------------- | ---------- | - | ------------------------------- | - | ---------- | ------------------------------------------------------------ |  | - | ---------- | - |  | ---- | ---------- | - |  | - | ------------ | -
|                                                                      |  | Three Months Ended September 30, |            |   | Nine Months Ended September 30, |   |            | Period from Inception (October 6, 1995)Through September 30, | 
|                                                                      |  | 2007                             |            |   | 2006                            |   |            | 2007                                                         |  |   | 2006       |   |  | 2007 |           
|Revenues:                                                             |  |                                  |            |   |                                 |   |            |                                                              |  |   |            |   |  |      |            |   |  |   |              |  
|Clinical reimbursements                                               |  | $                                | 123,720    |   |                                 | $ | 245,480    |                                                              |  | $ | 312,365    |   |  | $    | 1,060,659  |   |  | $ | 17,715,594   |  
|International product sales                                           |  |                                  | 239,706    |   |                                 |   | 179,168    |                                                              |  |   | 1,197,315  |   |  |      | 1,357,863  |   |  |   | 10,629,059   |  
|                                                                      |  |                                  |            |   |                                 |   |            |                                                              |  |   |            |   |  |      |            |   |  |   |              |  
|Total revenues                                                        |  |                                  | 363,426    |   |                                 |   | 424,648    |                                                              |  |   | 1,509,680  |   |  |      | 2,418,522  |   |  |   | 28,344,653   |  
|Expenses:                                                             |  |                                  |            |   |                                 |   |            |                                                              |  |   |            |   |  |      |            |   |  |   |              |  
|Research and development                                              |  |                                  | 1,765,222  |   |                                 |   | 2,214,234  |                                                              |  |   | 5,792,038  |   |  |      | 6,212,794  |   |  |   | 82,480,678   |  
|General and administrative                                            |  |                                  | 824,205    |   |                                 |   | 618,885    |                                                              |  |   | 2,260,967  |   |  |      | 1,831,153  |   |  |   | 24,832,822   |  
|                                                                      |  |                                  |            |   |                                 |   |            |                                                              |  |   |            |   |  |      |            |   |  |   |              |  
|Total operating expenses                                              |  |                                  | 2,589,427  |   |                                 |   | 2,833,119  |                                                              |  |   | 8,053,005  |   |  |      | 8,043,947  |   |  |   | 107,313,500  |  
|                                                                      |  |                                  |            |   |                                
|Loss from operations                                                  |  |                                  | (2,226,001 | ) |                                 |   | (2,408,471 | )                                                            |  |   | (6,543,325 | ) |  |      | (5,625,425 | ) |  |   | (78,968,847  | )
|Interest income                                                       |  |                                  | 68,111     |   |                                 |   | 172,040    |                                                              |  |   | 276,048    |   |  |      | 226,330    |   |  |   | 2,229,717    |  
|Interest expense                                                      |  |                                  | (6,454     | ) |                                 |   | (39,034    | )                                                            |  |   | (24,679    | ) |  |      | (141,273   | ) |  |   | (1,299,600   | )
|Other income                                                          |  |                                  | 2,903      |   |                                 |   |           |                                                              |  |   | 24,654     |   |  |      |           |   |  |   | 44,147       |  
|                                                                      |  |                                  |            |   |                                 |   |            |                                                              |  |   |            |   |  |      |            |   |  |   |              |  
|Net loss                                                              |  |                                  | (2,161,441 | ) |                                 |   | (2,275,465 | )                                                            |  |   | (6,267,302 | ) |  |      | (5,540,368 | ) |  |   | (77,994,583  | )
|Convertible preferred stock dividends and accretion                   |  |                                  |           |   |                                 |   |           |                                                              |  |   |           |   |  |      |           |   |  |   | (22,327,217  | )
|                                                                      |  |                                  |            |   |                                 |   |            |                                                              |  |   |            |   |  |      |            |   |  |   |              |  
|Net loss available to common stockholders                             |  | $                                | (2,161,441 | ) |                                 | $ | (2,275,465 | )                                                            |  | $ | (6,267,302 | ) |  | $    | (5,540,368 | ) |  | $ | (100,321,800 | )
|                                                                      |  |                                  |            |   |                                 |   |            |                                                              |  |   |            |   |  |      |            |   |  |   |              |  
|Basic and diluted net loss per share available to common stockholders |  | $                                | (0.05      | ) |                                 | $ | (0.06      | )                                                            |  | $ | (0.16      | ) |  | $    | (0.17      | ) |  |   |              |  
|                                                                      |  |                                  |            |   |                                 |   |            |                                                              |  |   |            |   |  |      |            |   |  |   |              |  
|Weighted average common shares outstanding                            |  |                                  | 40,091,432 |   |                                 |   | 39,161,075 |                                                              |  |   | 40,035,480 |   |  |      | 32,615,102 |   |  |   |              |  
|                                                                      |  |                                  |            |   |                                 |   |            |                                                              |  |   |            |   |  |      |            |   |  |   |              |  

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



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MICROMED CARDIOVASCULAR, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                                               |  |                                 |            |   |                                                               |   |            |      |  |   |             |  
|-------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ------------------------------------------------------------- | - | ---------- | ---- |  | - | ----------- | -
|                                                                                                               |  | Nine Months Ended September 30, |            |   | Period from Inception (October 6,
1995) Through September
30, |  
|                                                                                                               |  | 2007                            |            |   | 2006                                                          |   |            | 2007 | 
|Cash flows from operating activities:                                                                          |  |                                 |            |   |                                                               |   |            |      |  |   |             |  
|Net loss                                                                                                       |  | $                               | (6,267,302 | ) |                                                               | $ | (5,540,368 | )    |  | $ | (77,994,583 | )
|Adjustments to reconcile net loss to net cash used in operating activities:                                    |  |                                 |            |   |                                                               |   |            |      |  |   |             |  
|Depreciation and amortization                                                                                  |  |                                 | 167,615    |   |                                                               |   | 165,121    |      |  |   | 2,980,302   |  
|Conversion of accrued interest on Series C and Series D Preferred                                              |  |                                 |           |   |                                                               |   |           |      |  |   | 346,866     |  
|Services contributed by stockholders                                                                           |  |                                 |           |   |                                                               |   |           |      |  |   | 300,050     |  
|Issuance of stock/warrants/options to non-employees                                                            |  |                                 |           |   |                                                               |   |           |      |  |   | 140,741     |  
|Employee and consultant stock-based compensation                                                               |  |                                 | 813,835    |   |                                                               |   | 1,395,202  |      |  |   | 2,515,673   |  
|Amortization of deferred compensation                                                                          |  |                                 |           |   |                                                               |   |           |      |  |   | 310,179     |  
|Amortization of warrants                                                                                       |  |                                 | 62,948     |   |                                                               |   | 75,729     |      |  |   | 171,697     |  
|Effect of exchange rate changes on cash and cash equivalents                                                   |  |                                 | 9,811      |   |                                                               |   |           |      |  |   | 9,811       |  
|(Gain) loss on disposal of fixed assets                                                                        |  |                                 |           |   |                                                               |   |           |      |  |   | (6,586      | )
|Bad debt expense                                                                                               |  |                                 |           |   |                                                               |   |           |      |  |   | 186,685     |  
|Changes in assets and liabilities:                                                                             |  |                                 |            |   |                                                               |   |            |      |  |   |             |  
|Accounts receivable                                                                                            |  |                                 | 315,123    |   |                                                               |   | 336,236    |      |  |   | (402,765    | )
|Inventory                                                                                                      |  |                                 | 209,659    |   |                                                               |   | 33,527     |      |  |   | (2,827,068  | )
|Prepaids and other assets                                                                                      |  |                                 | (55,157    | ) |                                                               |   | 3,842      |      |  |   | (432,069    | )
|Accounts payable and accrued liabilities                                                                       |  |                                 | (442,773   | ) |                                                               |   | (200,356   | )    |  |   | 1,063,844   |  
|                                                                                                               |  |                                 |            |   |                                                               |   |            |      |  |   |             |  
|Net cash used in operating activities                                                                          |  |                                 | (5,186,241 | ) |                                                               |   | (3,731,067 | )    |  |   | (73,637,223 | )
|                                                                                                               |  |                                 |           
|Cash flows from investing activities:                                                                          |  |                                 |            |   |                                                               |   |            |      |  |   |             |  
|Purchase of property and equipment                                                                             |  |                                 | (260,641   | ) |                                                               |   | (24,624    | )    |  |   | (3,212,933  | )
|                                                                                                               |  |                                 |            |   |                                                               |   |            |      |  |   |             |  
|Net cash used in investing activities                                                                          |  |                                 | (260,641   | ) |                                                               |   | (24,624    | )    |  |   | (3,212,933  | )
|                                                                                                               |  |                                 |           
|Cash flows from financing activities:                                                                          |  |                                 |            |   |                                                               |   |            |      |  |   |             |  
|Proceeds from bridge loan from stockholders                                                                    |  |                                 |           |   |                                                               |   |           |      |  |   | 16,458,987  |  
|Repayments of bridge loans from stockholders                                                                   |  |                                 |           |   |                                                               |   |           |      |  |   | (2,015,986  | )
|Proceeds from issuance of notes payable                                                                        |  |                                 | 340,880    |   |                                                               |   | 734,894    |      |  |   | 9,769,306   |  
|Repayments of notes payable                                                                                    |  |                                 | (682,822   | ) |                                                               |   | (1,641,513 | )    |  |   | (9,401,046  | )
|Proceeds from issuance of warrants and preferred stock, net of offering costs                                  |  |                                 |           |   |                                                               |   |           |      |  |   | 43,398,728  |  
|Proceeds from issuance of common stock and options and cash contributed by stockholders, net of offering costs |  |                                 | 831        |   |                                                               |   | 13,749,739 |      |  |   | 22,682,447  |  
|                                                                                                               |  |                                 |            |   |                                                               |   |            |      |  |   |             |  
|Net cash (used in) provided by financing activities                                                            |  |                                 | (341,111   | ) |                                                               |   | 12,843,120 |      |  |   | 80,892,436  |  
|Change in cash and cash equivalents                                                                            |  |                                 | (5,787,993 | ) |                                                               |   | 9,087,429  |      |  |   | 4,042,280   |  
|Beginning cash and cash equivalents                                                                            |  |                                 | 9,830,273  |   |                                                               |   | 2,871,071  |      |  |   |            |  
|                                                                                                               |  |                                 |            |   |                                                               |   |            |      |  |   |             |  
|Ending cash and cash equivalents                                                                               |  | $                               | 4,042,280  |   |                                                               | $ | 11,958,500 |      |  | $ | 4,042,280   |  
|                                                                                                               |  |                                 |            |   |                                                               |   |            |      |  |   |             |  

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



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MICROMED CARDIOVASCULAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements of MicroMed Cardiovascular, Inc. (referred to herein as the
Company, MicroMed, us, or we), have been prepared on a going concern basis in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the rules
and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by U.S. accounting principles generally accepted for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2007, are not necessarily indicative of
the results that may be expected for the year ending December 31, 2007. The accompanying consolidated financial statements include the accounts of MicroMed and its subsidiaries, MicroMed Technology, Inc. (MicroMed Technology) and
MicroMed Cardiovascular Europe GmbH, a Swiss subsidiary established on March 29, 2007. Intercompany transactions and accounts are eliminated in consolidation. For further information regarding the basis of presentation, refer to the
consolidated financial statements and footnotes thereto included in MicroMeds Annual Report on Form 10-KSB for the year ended December 31, 2006, as filed with the SEC.

Net loss per share is computed using the weighted average number of shares of common stock outstanding during the applicable period. Shares associated
with stock options and warrants were not included because they are antidilutive. There is no difference between basic and diluted net loss per share for any period presented.

2. Going Concern

The accompanying unaudited consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. Since inception, the Company has incurred substantial expenses for research and product development and has not yet generated significant revenues from commercial sales. As of
September 30, 2007, the Company had an accumulated deficit of approximately $100 million. Because of its losses, the Company will require additional working capital to develop its business operations. The Company will need to seek
additional funds within the next 3 to 6 months through private placements, public offerings or debt financing in order to finance future cash needs. The Company cannot be certain that additional capital will be available on favorable terms, or at
all. If adequate funds are unavailable, the Company may be required to scale back or discontinue its product development program or clinical trials, or obtain funds through strategic alliances that may require the Company to relinquish rights to
certain of its technologies.

There are no assurances that the Company will be able to either achieve a level of revenues adequate to
generate sufficient cash flow from operations or obtain additional financing through private placements, public offerings or debt financing necessary to support the Companys cash requirements.

These conditions raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any
adjustments that might be necessary should the Company be unable to continue as a going concern.

3. Significant Accounting Policies

Comprehensive Income

The Company utilizes Statement
of Financial Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income. This statement establishes standards for reporting comprehensive income and its components in a financial statement. Comprehensive
income, as defined, includes all changes in equity (net assets) during a period from non-owner sources. Examples of items to be included in comprehensive income, which are excluded from net income, include foreign currency translation adjustments
and unrealized gains and losses on available-for-sale securities.

Foreign Currency Translation

All assets and liabilities of our non-U.S. operations are translated into U.S. dollars at the period-end exchange rates and the resulting translation
adjustments are included in comprehensive income. The period-end translation of the non-functional currency assets and liabilities at the period-end exchange rates result in foreign currency gains and losses, which are included in Other
Income.



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Stock-Based Compensation

From time to time our Board of Directors grants stock options to employees and non-employee directors and consultants pursuant to the 2005 Stock Incentive Plan. We adopted the guidance regarding Share Based
Compensation in FAS 123R on January 1, 2006. Since the adoption of FAS 123R we recognize the compensation costs associated with options granted ratably over the vesting period of the options and based on the fair value of the options at grant
date. We estimate the fair value using the Black-Scholes valuation model.

Income Taxes

In July 2006, the Financial Accounting Standard Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxesan Interpretation of FASB Statement No. 109(FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. The Company adopted the provisions of FIN 48 effective January 1, 2007.

Recently Issued Accounting
Pronouncements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157), which
defines fair value, provides a framework for measuring fair value, and expands the disclosures required for fair value measurements. SFAS 157 applies to all accounting pronouncements that require fair value measurements. It does not require any new
fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. Accordingly, the Company will adopt SFAS 157 commencing in the first quarter of 2008. The Company is currently assessing the potential impact of
SFAS 157 on its consolidated financial statements.

In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial
Assets and LiabilitiesIncluding an amendment of FASB Statement No. 115(SFAS 159).SFAS 159 permits entities to choose to measure certain financial assets and liabilities at fair value. Unrealized gains and losses,
arising subsequent to adoption, are reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007. Accordingly, the Company will adopt SFAS 159 commencing in the first quarter of 2008. The Company is currently
assessing the impact of SFAS 159 on its consolidated financial statements.

4. Equity

Common Stock

As of September 30, 2007, the Company had 40,108,853 outstanding shares of common
stock, outstanding options to purchase 3,513,764 shares of common stock and outstanding warrants to purchase 4,816,244 shares of common stock.

Warrants

On March 20, 2007, the placement agent for our August 2005 Private Placement and its affiliates exercised warrants to purchase
150,000 shares of common stock obtained in the August 2005 Private Placement in a cashless exercise transaction pursuant to the terms of the warrants, resulting in the issuance of 132,311 shares of common stock.

5. Options

The 1997 Stock Option Plan (the
1997 Plan) initially provided for the granting of options, either incentive or non-statutory, to purchase up to 1,266,500 shares of our common stock. In February 2001, the 1997 Plan was amended to increase the number of shares that could
be issued pursuant to the 1997 Plan to 3,266,500 shares. In September 2002, the 1997 Plan was amended to increase the number of shares that could be issued pursuant to the 1997 Plan to 7,103,689 shares. The 1997 Plan provides that stock options be
granted at fair market value on the date the option is granted, as determined by the board of directors.

Prior to the closing of the
reverse merger of MicroMed Technology, Inc. into a subsidiary of Salmon Express, Inc., following which Salmon Express, Inc. was renamed MicroMed Cardiovascular, Inc., our Board of Directors and stockholders adopted the MicroMed Technology, Inc. 2005
Stock Incentive Plan (the 2005 Stock Incentive Plan). The 2005 Stock Incentive Plan was assumed by the Company in connection with the Merger. The 2005 Stock Incentive Plan provides for the grant of up to 2,189,147 shares of common stock
pursuant to incentive stock options, nonqualified stock options, stock appreciation rights, common stock and units representing the right to receive shares of common stock under certain circumstances (Stock Awards) and other restricted
stock awards and stock units for employees, non-employee directors, consultants and advisors.



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On June 13, 2006, the Board of Directors amended the 2005 Stock Incentive Plan to increase the
maximum number of shares of common stock issuable pursuant to awards granted under the Plan to 6,729,147 shares of common stock, all of which may be available for incentive stock options. The amendment was approved by the stockholders at the annual
meeting held on May 31, 2007.

Incentive stock options may not be granted at less than the fair market value of our common stock at
the date of grant. The options can be exercisable at various dates, as determined by the Board of Directors, or a committee designated by the Board of Directors (the Committee), and will expire no more than 10 years from the date of
grant. Stock appreciation rights of a term of no more than 10 years and stock awards may be granted by the Board of Directors, or the Committee, with terms, conditions and limitations to be decided by the Board of Directors or the Committee.
Options, stock appreciation rights and stock awards may be granted to consultants and non-employee directors, with terms, conditions and limitations to be decided by the Board of Directors or the Committee. Options granted under the 2005 Stock
Incentive Plan may contain provisions relating to a change of control and various means of payment upon exercise. While grant documentation will govern the expiration and vesting of the various types of grants available under the 2005 Stock
Incentive Plan, replacement options will expire on the earlier of the 10th anniversary of the grant date, and with respect to any exercisable portion of the grant, the expiration of 90 days following termination of employment for reasons other than
death, disability or cause, the first anniversary of termination by reason of death or disability, the date of the termination of employment for cause and the date of termination for any reason.

The Company records the expense of options issued to non-employee consultants at the fair value of the options issued. The expense is recognized over the
service period or at the date of issuance if the options are fully vested and no performance obligation exists.

Options to purchase shares
of common stock were granted to certain employees and non-employee directors at various dates throughout 2007. All of the grants were made at the fair market value on the date of grant. Options for 140,000 shares were granted on March 7, 2007,
options for 70,000 were granted on April 6, 2007, and options for 200,000 shares were granted on September 13, 2007. The options vest 25% on the date of grant and 25% at each of the next three anniversary dates of the date of grant.
Options to purchase 1,600,000 shares of common stock were granted to one employee on July 11, 2007. Options for 600,000 shares vest 33% on the date of grant and 33% at each of the next two anniversary dates of the date of grant. Options for the
remaining 1,000,000 shares of common stock vest only if certain provisions regarding a change of control of the Company are met. Stock based compensation expense for these 1,000,000 options has not been recorded by the Company. Should these options
vest the estimated expense which would be recorded is $780,000.

On March 21, 2007, and again on August 24, 2007, certain
employees, a non-employee director, and a non-employee consultant exercised in cashless exercise transactions, vested options previously granted on August 10, 2005. To cover employee and non-employee minimum statutory withholding taxes related
to this exercise of options, the Company withheld 22,006 shares of common stock at the then fair market value.

For the three months ended
September 30, 2007 and 2006, we recorded $292,000 and $299,000 of stock-based compensation expense, respectively. For the nine months ended September 30, 2007 and 2006, we recorded $758,000 and $1,395,000 of stock-based compensation
expense, respectively. Stock-based compensation for all non-vested options outstanding as of September 30, 2007 was $1.2 million, which will be recognized over a weighted-average period of 2.5 years. Stock-based compensation for all non-vested
options outstanding as of September 30, 2006, was $2.9 million, which was to be recognized over a weighted-average period of 2.5 years. We amortize stock-based compensation expense on a straight-line basis over the expected life of the vesting
period. Based on historical data, the Company estimated a 30.0% and 12.0% forfeiture rate at September 30, 2007 and 2006, respectively. To the extent actual forfeitures differ from our current estimates, cumulative adjustments to stock-based
compensation expense will be recorded in the period estimates are revised.

The Company estimated the fair value of stock options granted
during the three and nine months ended September 30, 2007 using the Black-Scholes option pricing model. The assumptions used under this model are as follows:



|                                          |  |                                       |   |  |                                      |  
|----------------------------------------- |  | ------------------------------------- | - |  | ------------------------------------ | -
|                                          |  | Three Months ended September 30, 2007 |   |  | Nine Months ended September 30, 2007 |  
|Expected dividend yield                   |  | 0                                     | % |  | 0                                    | %
|Expected volatility                       |  | 178-191                               | % |  | 103-191                              | %
|Weighted-average expected life (in years) |  | 7                                     |   |  | 7                                    |  
|Risk-free interest rate                   |  | 4.00                                  | % |  | 4.00                                 | %
|                                          |  |                                       |   |  |                                      |  



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The following table summarizes stock option activity for the nine months ended September 30, 2007:



|                                |  |                 |   |  |                               |      |                                         |     |                         |   |          
|------------------------------- |  | --------------- | - |  | ----------------------------- | ---- | --------------------------------------- | --- | ----------------------- | - | ---------
|                                |  | Number ofShares |   |  | WeightedAverage ExercisePrice |      | WeightedAverageRemainingContractualLife |     | AggregateIntrinsicValue
|Outstanding, December 31, 2006  |  | 2,729,685       |   |  | $                             | 1.43 |                                         |     |                         |   |          
|Granted                         |  | 2,010,000       |   |  |                               | 0.73 |                                         |     |                         |   |          
|Forfeited                       |  | (1,142,796      | ) |  |                               | 1.59 |                                         |     |                         |   |          
|Exercised                       |  | (83,125         | ) |  |                               | 0.01 |                                         |     |                         |   |          
|                                |  |                 |   |  |                               |      |                                         |     |                         |   |          
|Outstanding, September 30, 2007 |  | 3,513,764       |   |  | $                             | 1.10 |                                         | 9.2 |                         | $ | 4,064,000
|                                |  |                 |   |  |                               |      |                                         |     |                         |   |          
|Exercisable, September 30, 2007 |  | 750,764         |   |  | $                             | 1.22 |                                         | 8.9 |                         | $ | 900,000  
|                                |  |                 |   |  |                               |      |                                         |     |                         |   |          

As of September 30, 2007, there were 10,319,072 options available for grant under the Plans.
Options exercisable as of September 30, 2007, were 750,764. As of September 30, 2007, the weighted average remaining contractual life for options was 9.2 years.

6. Inventory

Inventory consists of raw materials, work in progress, and finished goods. Inventory is
stated at the lower of cost or market using the first-in, first-out (FIFO) method. Cost includes the acquisition cost of raw materials and components and direct labor. A summary of inventory is as follows:



|                 |  |                   |           |                  |   |          
|---------------- |  | ----------------- | --------- | ---------------- | - | ---------
|                 |  | September 30,2007 |           | December 31,2006
|                 |  | (Unaudited)       |           |                 
|Raw materials    |  | $                 | 1,048     |                  | $ | 125,662  
|Work in progress |  |                   | 1,908,158 |                  |   | 1,945,730
|Finished goods   |  |                   | 739,137   |                  |   | 786,610  
|                 |  |                   |           |                  |   |          
|Total            |  | $                 | 2,648,343 |                  | $ | 2,858,002
|                 |  |                   |           |                  |   |          



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7. Supplemental Disclosure of Cash Flow Information

Supplemental cash flow information is summarized below:



|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|-------------------------------------------------------------------------- |  | ------------------------------------ | ------ | ------------------------------------ | - | ----------------------------------------------------------------- |  | - | ----------
|                                                                           |  | Nine Months Ended September 30, 2007 |        | Nine Months Ended September 30, 2006 |   | Period from Inception(October 6, 1995) Through September 30, 2007
|Cash paid for interest                                                     |  | $                                    | 21,884 |                                      | $ | 141,273                                                           |  | $ | 592,706   
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|                                                                           |  |                                      |       
|Supplemental Disclosure of Noncash financing activity:                     |  |                                      |        |                                      |   |                                                                   |  |   |           
|Conversion of notes payable to Series C Preferred Stock                    |  | $                                    |       |                                      | $ |                                                                  |  | $ | 5,000,000 
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Conversion of notes payable to Series D Preferred Stock                    |  | $                                    |       |                                      | $ |                                                                  |  | $ | 5,194,088 
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Dividends and accretion to redeemable convertible preferred stockholders   |  | $                                    |       |                                      | $ |                                                                  |  | $ | 22,627,219
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Conversion of Bridge Loans from stockholders to common stock               |  | $                                    |       |                                      | $ |                                                                  |  | $ | 4,500,001 
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Conversion of Preferred Stock from stockholders to common stock            |  | $                                    |       |                                      | $ |                                                                  |  | $ | 76,164,733
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Issuance of options below fair market value                                |  | $                                    |       |                                      | $ |                                                                  |  | $ | 698,540   
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Issuance of warrants in connection with financing                          |  | $                                    |       |                                      | $ | 4,173,042                                                         |  | $ | 11,511,541
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Issuance of common stock into escrow                                       |  | $                                    |       |                                      | $ |                                                                  |  | $ | 1,500     
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Cancellation of shares in connection with Recapitalization                 |  | $                                    |       |                                      | $ |                                                                  |  | $ | 5,077     
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Withholding of stock upon option exercises                                 |  | $                                    | 22     |                                      | $ |                                                                  |  | $ | 49,203    
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Noncash transfer of Rental Assets from Inventory to Property and Equipment |  | $                                    |       |                                      | $ |                                                                  |  | $ | 178,725   
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           
|Exercise of Warrants                                                       |  | $                                    | 132    |                                      | $ | 3,887                                                             |  | $ | 4,019     
|                                                                           |  |                                      |        |                                      |   |                                                                   |  |   |           

8. Comprehensive Income

Comprehensive income, net of taxes, is as follows:



|                                                                                       |  |                                       |            |   |                                       |   |            |  
|-------------------------------------------------------------------------------------- |  | ------------------------------------- | ---------- | - | ------------------------------------- | - | ---------- | -
|                                                                                       |  | Three Months Ended September 30, 2007 |            |   | Three Months Ended September 30, 2006 |  
|Net loss:                                                                              |  | $                                     | (2,161,441 | ) |                                       | $ | (2,275,465 | )
|Other net comprehensive income:                                                        |  |                                       |            |   |                                       |   |            |  
|Foreign currency translation adjustments (net of taxes of $0 as of September 30, 2007) |  |                                       | 8,648      |   |                                       |   |           |  
|                                                                                       |  |                                       |            |   |                                       |   |            |  
|Total comprehensive loss                                                               |  | $                                     | (2,152,793 | ) |                                       | $ | (2,275,465 | )
|                                                                                       |  |                                       |            |   |                                       |   |            |  



|                                                                                       |  |                                      |            |   |                                      |   |            |                                                                   |  |   |              |  
|-------------------------------------------------------------------------------------- |  | ------------------------------------ | ---------- | - | ------------------------------------ | - | ---------- | ----------------------------------------------------------------- |  | - | ------------ | -
|                                                                                       |  | Nine Months Ended September 30, 2007 |            |   | Nine Months Ended September 30, 2006 |   |            | Period from Inception (October 6,
1995)Through September 30, 2007 | 
|Net loss:                                                                              |  | $                                    | (6,267,302 | ) |                                      | $ | (5,540,368 | )                                                                 |  | $ | (100,321,800 | )
|Other net comprehensive income:                                                        |  |                                      |            |   |                                      |   |            |                                                                   |  |   |              |  
|Foreign currency translation adjustments (net of taxes of $0 as of September 30, 2007) |  |                                      | 9,811      |   |                                      |   |           |                                                                   |  |   | 9,811        |  
|                                                                                       |  |                                      |            |   |                                      |   |            |                                                                   |  |   |              |  
|Total comprehensive loss                                                               |  | $                                    | (6,257,491 | ) |                                      | $ | (5,540,368 | )                                                                 |  | $ | (100,311,989 | )
|                                                                                       |  |                                      |            |   |                                      |   |            |                                                                   |  |   |              |  



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9. Income Taxes

The Company adopted the provisions of FIN 48 effective January 1, 2007. The Company has historically incurred net losses and has not incurred Federal tax liability, nor used any tax benefits. Therefore
valuation allowances have been established for the full amount of any deferred tax assets and the implementation of FIN 48 did not result in adjustment to the value of the deferred tax asset, the valuation allowance or require a liability to be
established in the event any deferred tax asset recognition was deemed uncertain, nor did it have impact on the accumulated deficit as of January 1, 2007. As of January 1, 2007, the gross amount of unrecognized tax benefits was $25.9
million, substantially all of which would have an impact on the Companys effective tax rate if subsequently recognized. For the nine months ended September 30, 2007, the amount of unrecognized tax benefits relating to tax positions
taken during the nine months increased by $2.1 million.

At September 30, 2007, the Company had federal and state tax net operating
loss, or NOL, carryforwards of approximately $60 million and $11.2 million, respectively. The Company has capitalized research and development expense of $12.5 million at September 30, 2007. The Company also had federal and state
research and development, or R&D, credit carryforwards of $1.4 million and $0.2 million, respectively at September 30, 2007. The Federal tax credits will begin to expire in 2011, unless previously utilized. Texas has replaced the FTR
taxes with a state margin tax effective January 1, 2007. The new Texas state margin tax will allow 2.25% per year of the NOL to be used through September 1, 2017 and 7.75% per year to be used through 2027. We have
established a valuation allowance for the full value of our federal and state net operating loss, federal and state research and development credits.

Utilization of the NOL and R&D credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously or that could occur in the future provided by
Sections 382 and 383 of the Internal Revenue Code of 1986, as well as similar state and foreign provisions. These ownership changes may limit the amount of NOL and R&D credit carryforwards than can be utilized annually to offset future
taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50
percentage points over a three-year period. Since the Companys formation, the Company has raised capital through the issuance of capital stock which, combined with the purchasing shareholders subsequent disposition of those shares,
may have resulted in a change of control, as defined by Section 382, or could result in a change of control in the future upon subsequent disposition. The Company has not currently completed a study to assess whether a change in control
has occurred or whether there have been multiple changes of control since the Companys formation due to the significant complexity and cost associated with such study and that there could be additional changes in the future. Any
limitation due to ownership change may result in expiration of a portion of the NOL or R&D credit carryforwards before utilization. Further, until a study is completed and any limitation known, no amounts are being presented as an uncertain
tax position under FIN 48.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various states and
foreign jurisdictions. With few exceptions, we are subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years after 1995. Although the timing of any audits and their resolution is highly
uncertain, the Company does not believe it is reasonably possible that the unrecognized tax benefits would materially change in the next twelve months a result of any audit.

10. Commitments

The Company currently leases office and manufacturing space under an operating lease
which expires in 2010. As of September 30, 2007, the future minimum rental payments related to this commitment total $638,000.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis or Plan of Operation
|------- | ---------------------------------------------------------

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related
notes, and the other financial information included in this quarterly report, and in our Annual Report on Form 10-KSB for the year ended December 31, 2006. With respect to this discussion, the terms MicroMed, Company,
we, us, and our refer to MicroMed Cardiovascular, Inc. and our wholly-owned subsidiaries.

Forward-Looking
Statements

The forward-looking statements contained in this discussion involve risks and uncertainties. Our actual results may differ
materially from those discussed here due to factors such as, among others, limited operating history, difficulty in developing, exploiting and protecting proprietary technologies, intense competition and substantial regulation in the healthcare
industry. Any forward-looking statements should be considered in light of these factors. We cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after
the date of this report to conform our prior statements to actual results.

Our common stock is currently listed for quotation on the
Over-the-Counter Bulletin Board under the symbol MMCV.

Risk Factors

For a detailed discussion of the risk factors that should be understood by any investor contemplating investment in our stock, please refer to the section
entitled, Risk Factors in our 2006 Form 10-KSB, as supplemented by the going concern risk factor set forth below.

Going Concern

From inception through September 30, 2007, we have incurred an accumulated deficit of $100 million. For the nine months ended
September 30, 2007, we incurred losses in the amount of $6.27 million. We anticipate that we will continue to incur losses for the foreseeable future. Our future revenues may never exceed operating expenses, and we may never generate positive
cash flow from operations, thereby making our ability to continue operations dependent on our ability to raise capital from outside sources.

We have not generated positive cash flow from operations and have relied primarily on external sources of capital to fund operations. At September 30, and October 31, 2007, we had approximately $4.0 million and $3.5 million,
respectively, in cash and cash equivalents. Our net cash used by operations for the nine months ended September 30, 2007, was approximately $5.2 million. We will need to seek additional funds within the next 3-6 months from public and private
stock offerings, borrowings under credit facilities or other sources to finance our future cash needs. We cannot be certain that additional capital will be available on favorable terms, or at all. If adequate funds are unavailable, we may be
required to scale back or discontinue our product development program, the marketing of our newest product modification or clinical trials. We may also obtain funds through strategic alliances that may require us to relinquish rights to certain of
our technologies.

If we are unable to raise sufficient capital from external sources to fund our operations, there is substantial doubt
about our ability to continue as a going concern.

Business Overview

We were formed in 1995 to develop the DeBakey VAD for commercial use. We have devoted substantially all of our efforts to research and product development, and have not yet generated significant revenues from
commercial sales. As of September 30, 2007, we had an accumulated deficit of approximately $100 million. We expect to continue to incur operating losses for at least the next several years. Further, operating expenses may increase as we
seek international and U.S. regulatory clearance for the DeBakey VAD, build a technical support organization for product introduction and market development internationally, continue engineering and development projects, and increase administrative
activities to support our planned growth.

Our continuing operations involve the manufacture and distribution of the DeBakey VAD and are
contingent upon receiving additional funding. We have received regulatory approval to sell the DeBakey VAD in Europe and are involved in a clinical trial in the U.S., for which we receive reimbursements for our products from hospitals involved in
our clinical trial.



12



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##### Table of Contents

These reimbursements are categorized as revenues. We sell our products through distributors internationally and have direct relationships with hospitals in
our U.S. trial.

Business Strategy

Our
mission is to lead in the innovation of heart failure therapies to improve patient quality of life. Principal elements of our strategy to achieve this are as follows:



| |  |  | Continue product evolution of the DeBakey VAD. Over the past several years we have made refinements to the DeBakey VAD to improve the performance of
the device so that it can be used for longer term Destination Therapy (DT) and Bridge to Recovery Therapy, as well as the Bridge to Transplant Therapy (BTT) which drove the initial product development. While these refinements
create some delay in the regulatory approval process we expect that the improved clinical results achieved as a result of the changes will make it worthwhile to delay the approval in order to implement the refinements.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continue commercialization of the DeBakey VAD in Europe and select other international markets. We have CE mark approval through April 2011 to market
the current version of the DeBakey VAD in the European Union. We have submitted the most recent product improvements for approval and anticipate the CE mark to be updated to include the most recent changes. We currently sell our products in Austria,
Italy, Sweden, England, France, Russia and Turkey. We anticipate expanding the sales of our products into Germany, Switzerland, Spain, and China in 2008. Because the prescribers, purchasers and end users of the DeBakey VAD are highly concentrated
(relatively few sites perform most of these complex procedures), we believe we will be able to expand market penetration with the DeBakey VAD using our sales force in Europe and the office we opened in Switzerland in March 2007 as well as through
limited direct sales and the use of distributors in selected countries. We have established a distributor network to support sales and marketing in various international markets.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Leverage relationships to enhance clinical acceptance of the DeBakey VAD. We intend to leverage our relationships with European clinical trial
investigators, Dr. DeBakey, Dr. Noon and our investigators in the U.S. clinical trials and with cardiologists and cardiac surgeons in other major international heart centers to promote the use of the DeBakey VAD in high-volume implanting
centers around the world. We intend to augment this effort with a highly focused direct sales and marketing team, including members of senior management.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continue marketing the DeBakey VAD Child. We received FDA HDE approval to begin marketing the DeBakey VAD Child device in the United States and CE
Mark approval to market the device in the European Union. To date, we have implanted a total of seven pediatric VADs under our HDE approval.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Complete U.S. Multi-Center Phase III/Pivotal Bridge-to-Transplant Clinical Trial. We initiated the pivotal phase of our US BTT trial under the current
protocol in April 2003. As of September 30, 2007, we have implanted 126 patients in the feasibility and pivotal phase of the BTT trial. The trial design compares the results of non-randomized implants of the DeBakey VAD to literature controls
(published results) for the HeartMate VE device. We have periodically made certain modifications to the device that we believe may result in improved clinical results. Pending the outcomes of the final patients in the BTT trial, we may ask the FDA
to modify our clinical trial protocol to allow implantation of additional patients with the most recent version of the DeBakey VAD or we may submit the Premarket Approval Application (PMA) to the FDA.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Initiate a New U.S. Study using the most recent VAD design.Once the latest product design is approved in the European Union and implants begin, we
will likely submit a new clinical study protocol to the FDA for the improved VAD.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Initiate a new U.S. Multi-Center Phase III/Pivotal Destination Therapy Clinical Trial. Our previous DT study was a randomized trial against a single
control arm (HeartMate XVE) and was to include a total of 360 patients. As of November 2006, we had only enrolled 12 patients in this DT study and on November 17, 2006, we terminated the study due to the low enrollment rate.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Explore opportunities to expand clinical indications for the DeBakey VAD to include bridge-to-recovery indication. The cardiology community is
increasingly advocating the importance of mechanical circulatory assistance for a broader subset of heart failure patients than just the BTT and DT segments. We believe that the specific design attributes of the DeBakey VAD make it better suited
than currently marketed pulsatile VADs for broader clinical indications. We intend to use results we obtain from any clinical trial patients that have sufficiently recovered and have successfully had their VAD removed to provide the feasibility
clinical data to support a future clinical trial or an expansion of an ongoing clinical trial to expand the indications for the DeBakey VAD to include use as bridge-to-recovery. As such clinical data becomes available, we intend to support
publication of patient case study reports in appropriate medical journals by physicians.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Research and Development

Our research and development activities have been primarily focused on the development and clinical trials of the DeBakey VAD. Since our inception in 1995 and through September 30, 2007, we have incurred research
and development costs of approximately $82 million. During this time we have received CE mark approval for the marketing of our product in the European Union, as well have been given FDA permission to use our product in clinical trials and as a
humanitarian device in pediatric treatments.

Our research and development expenses consist primarily of compensation and other expenses
for research and development personnel, costs associated with the clinical trials of our products, facility costs, supplies and materials, costs for consultants and related contract research and depreciation. We charge all research and development
expenses to operations as they are incurred.

In the future, the rate of spending on the DeBakey VAD system is likely to increase as
additional clinical trials are performed. At this time, due to the risks inherent in the clinical trial process and given the stage of development of our product, we are unable to estimate with any certainty the costs we will incur in the continued
development of our product for commercialization. However, we expect our research and development costs to be substantial and to increase as we continue the development of our current product, as well as continue and expand our research programs.

The process of seeking regulatory approvals for our product candidates, and the subsequent compliance with applicable regulations, require
the expenditure of substantial resources. The regulatory process is lengthy, however the approval process in the EU does not require as much time as the U.S. approval process and we expect the CE mark approval of the new VAD product design to be in
place so that the marketing of the product can begin early in 2008. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could cause our revenues to decline or research and development expenditures to increase and, in turn,
have a material adverse effect on our results of operations.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of
contingent assets and liabilities. We review our estimates on an on going basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following accounting policies to be critical to the judgments
and estimates used in the preparation of our financial statements:

Revenue Recognition. We recognize revenue from product sales and
reimbursements for products used in our clinical trials in the U.S. Product sales consist of sales of our DeBakey VAD products and related equipment to international hospitals involved in heart failure therapy, to customers with whom we have
distribution agreements in certain international markets and to hospitals in the United States (for our DeBakey VAD Child product only, which is approved for sale in the United States). Under FDA rules, we are not allowed to sell products in the
United States until such time as we receive a PMA for the products. We are allowed to receive reimbursement of expenses associated with our clinical trials, including our research and development expenses, with such reimbursements included in
Revenues under the separate heading Clinical Trial Reimbursements. Product sales and clinical trial reimbursements are recognized as revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin (SAB)
No. 104, Revenue Recognition, when persuasive evidence of an arrangement exists, fees are fixed or determinable, title has passed (generally upon shipment or implantation for certain instances in Europe), and collection is
reasonably assured. We have no post-delivery obligations nor do our product sales contain multiple elements.

Accounts Receivable.
Accounts receivable represent amounts due from customers for goods shipped. We extend various terms to our customers, with payment terms from 30 to 180 days, depending on the customer and country, and we do not require collateral.

Allowance for Doubtful Accounts. We use the allowance method to account for uncollectible accounts receivable. Our estimate is based on
historical collection experience and a review of the current status of accounts receivable. We review our accounts receivable balances by customer for accounts greater than 180 days old and make a determination regarding the collectibility of the
accounts based on specific circumstances and the payment history that exists with such customers. We also take into account our prior experience, the customers ability to pay and an assessment of the current economic conditions in determining
the net realizable value of its receivables. We also review our allowances for doubtful accounts in aggregate for adequacy following this assessment. Accordingly, we believe that our allowances for doubtful accounts fairly represent the underlying
collectibility risks associated with its accounts receivable.



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##### Table of Contents

Inventories. Inventory consists of raw materials, work in progress, and finished goods. Inventory
is stated at the lower of cost or market using the first-in, first-out (FIFO) method. Cost includes the acquisition cost of raw materials and components and direct labor. We periodically review our inventory for excess, obsolescence or
quality issues. Should we conclude that we have inventory for which we cannot recover our costs as a result of such review, we would record a charge to operations.

Foreign Currency Translation.All assets and liabilities of our non-U.S. operations are translated into U.S. dollars at the period-end exchange rates and the resulting translation adjustments are included in
comprehensive income. The period-end translation of the non-functional currency assets and liabilities at the period-end exchange rates result in foreign currency gains and losses, which are included in Other Income.

Stock-Based Compensation. From time to time our Board of Directors grants stock options to employees and non-employee directors and consultants
pursuant to the 2005 Stock Incentive Plan. We adopted the guidance regarding Share Based Compensation in FAS 123R on January 1, 2006. Since the adoption of FAS 123R we recognize the compensation costs associated with options granted ratably
over the vesting period of the options and based on the fair value of the options at grant date. We estimate the fair value using the Black-Scholes valuation model.

Results of Operations

Three Months Ended September 30, 2007 compared to 2006

Revenues

Revenues were $363,000 for the three
months ended September 30, 2007, as compared to revenues of $425,000 for the same period in 2006, a decrease of $62,000, or 15%. The decrease was due to a decrease of $122,000 in clinical reimbursements partially offset by an increase of
$60,000 in international sales. Clinical reimbursements declined because of a reduction in the number of sites participating in our clinical trials and the suspension of enrollment of patients in our DT trial. International sales increased due to
our focused marketing efforts as part of our process to reestablish our European marketing efforts.

Research and Development

Research and development expenses were $1,765,000 for the three months ended September 30, 2007 versus $2,214,000 for the three months ended
September 30, 2006, a decrease of $449,000 or 20%. Significant components of the change are as follows (in thousands):



|                                 |  |                                                   |       |                                                   |   |          |  |   |          |   |  |     |   
|-------------------------------- |  | ------------------------------------------------- | ----- | ------------------------------------------------- | - | -------- |  | - | -------- | - |  | --- | --
|                                 |  | Three Months Ended September 30, 2007 (Unaudited) |       | Three Months Ended September 30, 2006 (Unaudited) |   | $ Change |  |   | % Change |  
|Production                       |  | $                                                 | 517   |                                                   | $ | 751      |  | $ | (234     | ) |  | (31 | )%
|Engineering and development      |  |                                                   | 266   |                                                   |   | 263      |  |   | 3        |   |  | 1   | % 
|Quality, clinical and regulatory |  |                                                   | 380   |                                                   |   | 558      |  |   | (178     | ) |  | (32 | )%
|Sales and marketing              |  |                                                   | 602   |                                                   |   | 642      |  |   | (40      | ) |  | (6  | )%
|                                 |  |                                                   |       |                                                   |   |          |  |   |          |   |  |     |   
|Total                            |  | $                                                 | 1,765 |                                                   | $ | 2,214    |  | $ | (449     | ) |  | (20 | )%
|                                 |  |                                                   |       |                                                   |   |          |  |   |          |   |  |     |   



| |  |  | Productionexpenses decreased by 31%, resulting from both the decrease in sales and a reduction in 2007 of expenses incurred in 2006 associated with
exchanging product due to a design modification.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Engineering and development expenses remained fairly constant as the number of employees was consistent in the current quarter as compared to the same period
in 2006.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Quality, clinical, and regulatory expenses consist of the expenses associated with maintaining our quality systems, the costs of our clinical trials, and the
costs associated with dealing with the FDA, as well as other regulatory agencies around the world. The decrease of 32% in expenses was primarily due to a reduction in recruiting and staffing expenses in 2007 as compared to 2006.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sales and marketingexpenses decreased in 2007 primarily due to decreases in compensation expenses, offset partially by increased international marketing
costs related to focused marketing efforts in the international market.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

General and Administrative

General and administrative expenses were $824,000 for the three months ended September 30, 2007, compared to $619,000 for the three months ended September 30, 2006, an increase of $205,000, or 33%. The
increase was primarily due to the increase in stock-based compensation expense relating to the option grants made during the third quarter of 2007, as well as other compensation expense.

Net Loss

Net loss was $2.16 million for the three months ended September 30, 2007,
compared to $2.28 million for the three months ended September 30, 2006, a decrease of $0.12 million or 5%. Net loss per share decreased to $0.05 for the three months ended September 30, 2007, from $0.06 for the same period of 2006,
primarily due to the slight decrease in the net loss and the increase in the weighted average number of shares. The increase in the weighted average number of shares outstanding is attributable to the exercise of warrants for 1,176,239 shares of
common stock in August 2006, exercise of warrants for 132,311 shares of common stock in March 2007, the exercise of options for 31,474 shares of common stock in March 2007, and the exercise of options for 29,645 shares of common stock in August
2007.

Nine Months Ended September 30, 2007 compared to 2006

Revenues

Revenues were $1.5 million for the nine months ended September 30, 2007, as
compared to revenues of $2.4 million for the same period in 2006, a decrease of $0.9 million, or 38%. The decrease was due to a decrease in clinical reimbursements and in international sales revenue. Clinical reimbursements declined because of a
reduction in the number of sites participating in our clinical trials and the suspension of our DT trial. International sales decreased due to a reduced international marketing effort in early 2007. In late 2007, as reflected in the three month
revenue comparison, the international revenues increased, as our marketing efforts resumed.

Research and Development

Research and development expenses were $5,792,000 for the nine months ended September 30, 2007 compared to $6,213,000 for the nine months ended
September 30, 2006. Significant components are as follows (in thousands):



|                                 |  |                                                  |       |                                                  |   |          |  |   |          |   |  |     |   
|-------------------------------- |  | ------------------------------------------------ | ----- | ------------------------------------------------ | - | -------- |  | - | -------- | - |  | --- | --
|                                 |  | Nine Months Ended September 30, 2007 (Unaudited) |       | Nine Months Ended September 30, 2006 (Unaudited) |   | $ Change |  |   | % Change |  
|Production                       |  | $                                                | 1,404 |                                                  | $ | 1,813    |  | $ | (409     | ) |  | (23 | )%
|Engineering and development      |  |                                                  | 949   |                                                  |   | 898      |  |   | 51       |   |  | 6   | % 
|Quality, clinical and regulatory |  |                                                  | 1,320 |                                                  |   | 1,437    |  |   | (117     | ) |  | (8  | )%
|Sales and marketing              |  |                                                  | 2,118 |                                                  |   | 2,065    |  |   | 53       |   |  | 3   | % 
|                                 |  |                                                  |       |                                                  |   |          |  |   |          |   |  |     |   
|Total                            |  | $                                                | 5,791 |                                                  | $ | 6,213    |  | $ | (422     | ) |  | (7  | )%
|                                 |  |                                                  |       |                                                  |   |          |  |   |          |   |  |     |   



| |  |  | Productionexpenses declined in 2007 in connection with lower overall revenues.
| | - |  | ------------------------------------------------------------------------------



| |  |  | Engineering and development expenses increased slightly in 2007 due to increases in travel expenses, subcontracted services, and depreciation expense
associated with equipment purchased.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Quality, clinical, and regulatory expenses decreased in 2007 primarily due to a decrease in expenses for subcontractors and professional fees for our
clinical trials and a decrease in expenses for the regulatory department for the first nine months of 2007 as compared to the corresponding period in 2006.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sales and marketingexpenses increased in 2007 primarily due to increased marketing efforts in the international market, including compensation, travel and
marketing efforts in Russia, China and other countries.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

General and Administrative

General and administrative expenses were $2.26 million for the nine months ended September 30, 2007, compared to $1.83 million for the nine
months ended September 30, 2006, an increase of $0.43 million or 23%. The increase was primarily due to an increase in compensation expense and stock-based compensation expense associated with option grants made in the third quarter of 2007.



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##### Table of Contents

Net Loss

Net loss was $6.27 million for the nine months ended September 30, 2007, compared to $5.54 million for the nine months ended September 30, 2006, an increase of $0.73 million or 13%. The increase in the net loss is due to the
reduced revenue experienced as a result of fewer patients enrolled in clinical trials and the temporary reduction of European marketing efforts. Net loss per share decreased to $0.16 for the nine months ended September 30, 2007, from $0.17 for
the same period of 2006 due to the increase in the weighted average number of shares. The increase in the weighted average number of shares outstanding is attributable to the exercise of warrants for 1,176,239 shares of common stock in August 2006,
exercise of warrants for 132,311 shares of common stock in March 2007, the cashless exercise of options for 31,474 shares of common stock in March 2007, and the cashless exercise of options for 29,645 shares of common stock in August 2007.

Liquidity and Capital Resources

As of
September 30, 2007, cash and cash equivalents were $4.0 million. From our inception through September 30, 2007, we used approximately $74 million in cash for our operations. We have funded our cash requirements through the
private issuance of equity and debt securities and through credit facilities.

For the nine months ended September 30, 2007, we used
approximately $5.2 million in cash for operations principally as a result of a net loss of $6.27 million less non-cash expenses related to stock-based compensation of $758,000 attributable to options grants, $56,000 attributable to the
exercise of options and depreciation of $168,000.

We used about $261,000 of cash in investing activities for the purchase of property and
equipment. We do not expect to invest further in our infrastructure unless the funding required for future operations is in place.

Financing activities for the nine months ended September 30, 2007, included proceeds of $341,000 from borrowings to purchase capital equipment and financing our annual insurance premiums. Financing uses of cash included repayment of
notes payable of $683,000 for the nine months ended September 30, 2007.

We currently occupy approximately 17,414 square feet of space
under a lease which will expire on June 30, 2010. This space supports our current and near-term operational activities.

We expect our
cash requirements to increase during the next 12 months as we expect a short-term reduction in revenues. The recent product refinements require regulatory approval prior to marketing the modified product. We expect the timing of the approval to
allow us to begin marketing the product early in 2008. The cash requirements associated with U.S. clinical trial efforts, technical and clinical support staff, administrative support activities, and international marketing efforts are expected to
remain fairly constant over the next 12 months. The amount and timing of cash requirements will depend on market acceptance of our products, if any, and the resources we devote to developing and supporting our products.

Historically, the company has not generated cash in amounts adequate to meet its operating needs, but has instead relied upon third-party funding. We are
seeking additional funds and need to obtain those funds within the next 3-6 months. We are pursuing a capital raise from public and private stock offerings, borrowings under credit lines or other sources to finance our future cash needs. We cannot
be certain that additional capital will be available on favorable terms, or at all. If adequate funds are unavailable, we may be required to scale back or discontinue our product development program or the marketing of our newest product
modification. We may also obtain funds through strategic alliances that may require us to relinquish rights to certain of our technologies. If we are unable to arrange additional financing there is substantial doubt about our ability to maintain our
operations as a going concern. Furthermore, our liquidity could be adversely affected by the factors affecting future operating results that are discussed in Risk Factors in our 2006 Form 10-KSB.

Off-Balance Sheet Arrangements

As of
September 30, 2007, we had no off-balance sheet arrangements.



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##### Table of Contents

|Item 3. | Controls and Procedures
|------- | -----------------------

(a) Evaluation of
disclosure controls and procedures

In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, under the
supervision and with the participation of management, including our Chief Executive Officer and Acting Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based
on that evaluation, our Chief Executive Officer and Acting Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2007, to provide reasonable assurance that information required to be
disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.

(b) Changes in internal control over financial reporting

There has been no change in our internal controls over financial reporting that occurred during the three months ended September 30, 2007, that has materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.

(c) Inherent Limitations on Controls and Procedures

Our management, including the Chief Executive Officer and the Acting Chief Financial Officer do not expect that internal controls will prevent all error
and all fraud. A control system, no matter how well designed and operated, can only provide reasonable assurances that the objectives of the control system are met. The design of a control system reflects resource constraints; the benefits of
controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company
have been or will be detected. As these inherent limitations are known features of the financial reporting process, it is possible to design into the process safeguards to reduce, though not eliminate, these risks. These inherent limitations include
the realities that judgments in decision-making can be faulty and that breakdowns occur because of simple error or mistake. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management
override of the control. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. While our disclosure controls and procedures are designed to provide reasonable assurance of achieving
their objectives, there can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of
compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

We intend to review and evaluate the design and effectiveness of our disclosure controls and procedures on an ongoing basis and to improve our controls
and procedures over time and to correct any deficiencies that we may discover in the future. While our Chief Executive Officer and the Acting Chief Financial Officer have concluded that, as of September 30, 2007, the design of our disclosure
controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, was effective, future events affecting our business may cause us to significantly modify our disclosure controls and procedures.



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 6. | Exhibits
|------- | --------



|     |  |                                                                                                                                                                                          
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of the Chief Executive Officer pursuant to Section 13a-14 of the Securities Exchange Act.                                                                                  
|     | 
|31.2 |  | Certification of the Acting Chief Financial Officer pursuant to Section 13a-14 of the Securities Exchange Act.                                                                           
|     | 
|32.1 |  | Certification of the Chief Executive Officer and Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.



MICROMED CARDIOVASCULAR, INC.By:

/s/ Robert J. BenkowskiName:

Robert J. BenkowskiTitle:

Chief Executive OfficerBy:

/s/ Deanne YartzName:

Deanne YartzTitle:

Acting Chief Financial Officer


Date: November 14, 2007



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