SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               ------------------

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

        Date of Report (Date of Earliest Event Reported): August 9, 2005

                          MICROMED CARDIOVASCULAR, INC.
               (Exact Name of Registrant as Specified in Charter)


          DELAWARE                      333-111996                98-0228169
(State or other jurisdiction            (Commission             (IRS Employer
      of incorporation)                File Number)          Identification No.)


 8965 INTERCHANGE DRIVE, HOUSTON, TEXAS                              77054
(Address of principal executive offices)                           (Zip code)

Registrant's telephone number, including area code:              (713) 838-9210

                               SALMON EXPRESS INC.
                  6604 TOPAZ DRIVE, VERNON, BC, CANADA, V1H 1N8
          (Former Name or Former Address, If Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

|_|      Written communications pursuant to Rule 425 under the Securities Act
         (17 CFR 230.425)

|_|      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
         CFR 240.14a-12)

|_|      Pre-commencement communications pursuant to Rule 14d-2(b) under the
         Exchange Act (17 CFR 240.14d-2(b))

|_|      Pre-commencement communications pursuant to Rule 13e-4(c) under the
         Exchange Act (17 CFR 240.13e-4(c))


<PAGE>



ITEM 1.01       ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On August 9, 2005, a Third Amendment to Agreement and Plan of Merger (the
"Amendment"), was entered into by(and among the Salmon Express, Inc., a Nevada
corporation ("Salmon"), MicroMed Technology, Inc., a privately-held Delaware
corporation ("MicroMed Technology"), Salmon Acquisition Corp., a privately-held
Nevada corporation and wholly-owned subsidiary of the Salmon Express, Inc.
("Merger Sub") and Pete Smith, Sr., which updated the representation as to the
capitalization of MicroMed Technology, Inc. immediately prior to the merger. A
copy of the Amendment is attached hereto as Exhibit 2.1(c).

See Item 2.01, below, regarding the discussion of the Securities Purchase
Agreement, Registration Rights Agreement and Form of Warrant relating to
MicroMed Technology Inc.'s $4,991,683 private placement of its common stock and
warrants. These agreements are attached hereto as Exhibits 10.1, 4.2 and 4.1,
respectively.

ITEM 2.01      COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

MicroMed Cardiovascular, Inc. (referred to herein as the "Company" or
"MicroMed"), which operates through its wholly-owned subsidiary MicroMed
Technology, is a medical device company that has developed a miniaturized heart
pump, or VAD, known as the DeBakey VAD (the "DeBakey VAD") to address congestive
heart failure ("CHF"), a condition where the diseased heart cannot pump adequate
blood to meet the oxygen and nutritional needs of the body. The DeBakey VAD is a
small (1 inch x 3 inches) National Aeronautics and Space Administration ("NASA")
designed axial flow pump that can provide increased blood flow from the left
ventricle of the heart throughout the body for patients whose hearts are
diseased and unable to maintain adequate blood flow to sustain their lives.

On January 31, 2005, Salmon along with Merger Sub and certain existing
stockholders of Salmon entered into an Agreement and Plan of Merger (the "Merger
Agreement") with MicroMed Technology, pursuant to which Salmon would be acquired
by MicroMed Technology in a merger transaction wherein Merger Sub would merge
with and into MicroMed Technology, with MicroMed Technology being the surviving
corporation (the "Merger"). On August 10, 2005, the Merger closed and MicroMed
Technology became a wholly-owned subsidiary of Salmon. Salmon changed its name
to MicroMed Cardiovascular, Inc. and reincorporated in the State of Delaware.

PRINCIPAL TERMS OF THE MERGER

At the Effective Time of the Merger (as defined in the Merger Agreement), Merger
Sub was merged with and into MicroMed Technology, the separate existence of
Merger Sub ceased, and MicroMed Technology continued as the surviving
corporation at the subsidiary level. Salmon issued shares of its common stock on
a one-for-one basis to the stockholders of MicroMed Technology in exchange for
100% of the issued and outstanding shares of common stock of MicroMed
Technology. Additionally, Salmon assumed options to purchase shares of common
stock and warrants to purchase shares of common stock on the same terms and
conditions as previously issued by MicroMed Technology. All outstanding options
that were assumed by Salmon have been issued under the MicroMed Technology 1997
Stock Option Plan or the MicroMed Technology 2005 Stock Incentive Plan. Further
to the Merger, Salmon assumed the MicroMed Technology 1997 Stock Option Plan and
the MicroMed Technology 2005 Stock Incentive Plan as stock option plans of
Salmon. Salmon also issued 1,500,000 post-split shares into escrow to cover
indemnification obligations, if any, to MicroMed Technology and its stockholders
(the "Escrow Shares"). Immediately prior to the Merger, Salmon effectuated a
1-for-3.3528 reverse stock split of its common stock. After the Merger was
concluded, Salmon reincorporated from the State of Nevada to the State of
Delaware and changed its corporate name to MicroMed Technology Cardiovascular,
Inc. Further to the Merger, Salmon also canceled 10,010,800 shares of its
pre-split common stock held by Pete Smith, the founder of Salmon Express Inc.,
and distributed assets, and related liabilities, to him that Salmon held prior
to the Merger. Mr. Smith also received cash remuneration of $605,213 from third
parties unaffiliated with Salmon for his agreement to cancel such shares.

Immediately prior to the closing of the Merger, MicroMed Technology had
outstanding 17,013,145 shares of common stock, options to purchase 555,822
shares of common stock and warrants to purchase 2,251,887 shares of common
stock. Immediately after the closing of the Merger, MicroMed Cardiovascular had
18,513,145 outstanding shares of common stock (excluding the Escrow Shares),
options to purchase 555,822 shares of common stock and warrants to purchase
2,251,887 shares of common stock.



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<PAGE>

THE PRIVATE PLACEMENT

Immediately prior to the closing of the Merger, MicroMed Technology closed a
$4,991,683 private placement (the "Private Placement") of its common stock and
warrants. MicroMed Technology engaged Hunter World Markets, Inc. ("Hunter") as
its placement agent in connection with the Private Placement. Each investor in
the Private Placement purchased shares of MicroMed Technology common stock at
$1.33 per share and seven-year warrants, exercisable one year after the date of
issuance, to purchase 60% of the common stock purchased by such investor in the
Private Placement at a per share exercise price of $1.33 (all investors
introduced to MicroMed Technology by Hunter assigned their warrants to Hunter,
an aggregate of 1,804,511 warrants) pursuant to the terms of a Securities
Purchase Agreement entered into by and among MicroMed Technology, Salmon and
each of the investors, which is attached hereto as Exhibit 10.1. The warrants, a
form of which is attached hereto as Exhibit 4.1, are redeemable by the Company
under certain circumstances at any time after one year from the date of
issuance. The Company agreed to file a registration statement covering the
securities sold in the Private Placement within 30 days of the closing of the
Merger pursuant to the Registration Rights agreement attached hereto as Exhibit
4.2. As partial consideration for services rendered further to the Private
Placement, Hunter was issued 300,000 shares of MicroMed Technology's common
stock.

The shares of common stock of the Company are currently listed for quotation on
the Over-the-Counter Bulletin Board under the symbol "SXPI.OB." The Company is
in the process of obtaining a new trading symbol to reflect the recent corporate
name change.

THE SHARE CANCELLATION AND PURCHASE AGREEMENTS

Concurrent with the execution of the Merger Agreement, MicroMed Technology, Pete
Smith and Stone & Graves entered into a Share Cancellation Agreement on January
31, 2005 whereby Mr. Smith agreed to cancel an aggregate 10,010,080 shares of
Salmon common stock held by him on the effective date of the Merger. In
consideration for the cancellation of his shares, Mr. Smith received $605,213
from unaffiliated parties of Salmon and all assets and corresponding liabilities
held by Salmon immediately prior to the effective date of the Merger. The net
tangible book value as of November 30, 2004 of the assets and liabilities of
Salmon distributed to Mr. Smith immediately after the closing of the Merger is a
net deficit of $12,172.

Further to an Amended and Restated Purchase and Escrow Agreement, the $605,213
cash payment to Mr. Smith, as well as cash payments in the aggregate of $144,787
to certain other existing shareholders of Salmon, who were previously named as
selling shareholders in this prospectus, consisted of monies invested by Peyton,
Chandler, & Sullivan, Inc. ("PCS"), Hunter, Oxford Bioscience Partners II
(Annex) L.P., an affiliate of Oxford Biosciences, Inc., a greater than 5%
stockholder in MicroMed, and entities and individuals that were introduced by
PCS.

Hunter and its assignee, and Oxford Bioscience Partners II (Annex), acquired
485,798 and 72,160 shares of Salmon common stock from former shareholders of
Salmon. The following table indicates the number of shares of Salmon acquired
from former shareholders of Salmon by PCS, each investor introduced by PCS and
their assignees.

Peyton, Chandler & Sullivan, Inc.......................................  159,658
Richard S. From........................................................  197,337
Sara Mirza.............................................................   10,000
Stone & Graves.........................................................    5,000
Charles E. Frisco, Jr..................................................   27,500
John Chin M.D..........................................................   12,500
Henci Goer.............................................................    5,000
Morgan Stanley  DW Inc. Custodian for Henci Goer.......................    2,500
Stephanie Walton.......................................................    2,500
Daniel McCrimons.......................................................    2,500
Thiry Rajagopal........................................................    5,000
Ronald S. Weaver, M.D..................................................    2,500
Timothy R. Surgenor....................................................    7,645
Carl C. Hsu TTEE Carl C. Hsu Inc. PSP 7/01/84, FBO Kathleen Rollins....    5,000
Jeanny Leung...........................................................    5,000
Carl C. Hsu TTEE Carl C. Hsu Inc. PSP 7/01/84, FBO Kala Eswaran........    2,500
Carl C. Hsu TTEE Carl C. Hsu Inc. PSP 7/01/84, FBO Michael Chuang......    6,250
John Womach............................................................    2,500
Alan Hsu...............................................................    4,000
Herb Matsinger, Jr. Revocable Trust DTD 03/10/03.......................   12,500
Carl C. Hsu MD Inc. PSP 7/1/84, Carl Hsu TTEE..........................   15,000
Carl C. Hsu............................................................    2,500
Nathan H. Allen M.D....................................................    5,000
Huiya Hsu..............................................................    7,500
Neesan Zieour..........................................................   10,000
Richard Gould..........................................................    2,500
Nancy Rawlinson........................................................   25,000
Ronald W. Minor........................................................   37,500




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Each of PCS, Hunter, Oxford Bioscience Partners II (Annex) L.P. and the
individuals and entities introduced by PCS, and their assignees, are "accredited
investors" as that term is defined under Rule 501 of Regulation D.

MICROMED'S  BUSINESS AND OPERATIONS

BUSINESS OVERVIEW

With respect to this discussion, the terms "MicroMed," and the "Company" refer
to MicroMed Cardiovascular, Inc. and its wholly-owned subsidiary MicroMed
Technology, Inc. The Company is a medical device company focused on the
development of a miniaturized heart pump or VAD known as the DeBakey VAD. The
DeBakey VAD is a small (1 inch x 3 inches) auxiliary pump that can provide
increased blood flow from the left ventricle of the heart throughout the body
for patients whose hearts are diseased and unable to maintain adequate blood
flow to sustain their lives. In 1988, famed heart surgeon Dr. Michael E.
DeBakey, Dr. George P. Noon and NASA began joint research and development of the
DeBakey VAD using NASA-developed technology.

In November 1998, MicroMed received approval to begin clinical trials using the
DeBakey VAD in Germany with subsequent clinical trial approvals in France,
Austria, Italy and Switzerland. MicroMed received CE Mark approval in April 2001
and began marketing in Europe and select other international markets. In the
U.S., MicroMed is involved in pivotal Phase III trials for bridge-to-transplant
and destination therapy indications.

MARKET OPPORTUNITY

MECHANICAL CIRCULATORY SUPPORT: VENTRICULAR ASSIST DEVICES

Studies suggest that mechanical circulatory assistance may be the most practical
alternative to drug treatments for heart failure today and useful as an
alternative to or in combination with drug therapy.

The most widely used form of mechanical circulatory assistance is a VAD. These
devices aid the failing heart by mechanically rerouting blood flow using a pump.
The basic characteristics of VADs are as follows:

      o     a ventricle assist pump, which is typically implanted inside the
            body;



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      o     a portable power source for the pump located external to the body to
            maximize patient mobility; and

      o     tubing or cable with wires connecting the implanted pump with the
            external power source.

These implantable heart pumps have been demonstrated effective in supporting
blood circulation in patients with failing hearts, reversing end-organ
dysfunction and giving them a much improved quality of life as they await donor
hearts. Approximately 9,000 patients worldwide have been supported by currently
marketed VADs while awaiting transplant, many for more than two years.

MicroMed believes the advantages of VADs over heart transplantation and other
late-stage heart-failure therapies are as follows:

      o     Natural Heart is Not Removed. Unlike heart transplants or total
            artificial heart systems, VADs leave the natural heart intact and
            assist it by pumping blood from the apex of the left ventricle up to
            the ascending aorta thereby providing sufficient blood flow to
            maintain life. This approach provides the advantage of leaving in
            place the biologic control mechanisms of the natural heart. In some
            cases it has been noted in clinical observations that VADs have
            permitted recovery of natural heart function to the point where the
            VAD was removed and the patient no longer needed a transplant.

      o     Readily Available Supply. As a manufactured device, a VAD is readily
            available when needed, including on an emergency basis, to treat
            end-stage heart failure patients. Unlike heart transplant patients
            who must wait for a donor heart, patients can immediately receive a
            VAD implant whenever a physician deems it appropriate.

      o     Reduced Hospitalization. VAD patients are expected to be discharged
            from the hospital after a relatively short recovery period estimated
            to be a few weeks, thus reducing healthcare costs.

      o     Reduction in Medication Use. Unlike heart transplants, VADs do no
            cause rejection responses; therefore, VAD patients are not expected
            to need the administration of immunosuppressive drugs required by
            heart transplant patients.

      o     Improved Patient Health over Pharmacological Therapies. After VAD
            implantation, blood circulation throughout the body improves and
            patients experience improved levels of health and activity. This
            often leads to improvements in the functions of other organs, and in
            some cases, improvement in the overall function of the natural heart
            being assisted by a VAD. Drug therapy delays the progression of the
            disease, whereas VADs maintain the natural pumping of the heart.
            This restoration of more normal physiology also makes patients
            better candidates for a heart transplant should one be required.

VAD MARKET OPPORTUNITY

CURRENT INDICATIONS

Bridge-to-Transplant. Currently marketed VADs are FDA approved for use by Class
IV, end-stage heart failure patients waiting for a heart transplant, otherwise
known as bridge-to-transplant. Presently, most patients suffering from chronic,
end-stage heart disease (certain Class IV patients) have no options other than a
heart transplant or death. Heart transplantation is an expensive process and is
severely limited by a lack of donor hearts. The AHA estimates that in the U.S.,
there are approximately 2,200 donor hearts available annually, while there are
an estimated 70,000 - 100,000 people annually who need a heart transplant. VADs
have proven to be effective as a bridge-to-heart transplantation. VADs can
extend patients' lives and restore moribund patients to a more normal
physiological state, making them much better candidates for heart
transplantation.



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<PAGE>

Destination Therapy Alternative to Transplant. Recent studies demonstrate that
VADs may provide effective circulatory support for extended periods of time (> 2
years) in patients who have severe heart failure but who do not qualify for a
heart transplant. This use of VADs, termed "destination therapy," was approved
by the FDA in late 2002. Dr. Eric Rose, the principal investigator for
MicroMed's DELTA DT trial, was also principal investigator for the REMATCH
trial. In October 2003, the Center for Medicare and Medicaid Services ("CMS")
announced that Medicare would begin to provide coverage of VADs used for this
indication under DRG 525. MicroMed recently obtained approval for the use of the
DeBakey VAD as destination therapy in Europe and are conducting a randomized
pivotal clinical trial of the DeBakey VAD as destination therapy in the U.S.,
the first step toward U.S. market approval for that indication.

Pediatric Use. The FDA granted permission to MicroMed to market the DeBakey VAD
Child for pediatric use in the U.S. in the first quarter of 2004. The U.S.
approval was pursuant to a Humanitarian Device Exemption ("HDE"). MicroMed also
recently received expanded European CE Mark approval to use the DeBakey VAD
Child for pediatric use in the second quarter of 2004. The term "CE Mark" is
derived from the French expression "Conformite Europeene," which means "European
Conformity." The CE Mark represents approval to market the product in the
European Community). Currently marketed pulsatile VADs are limited in use to
1.5m(2) Body Surface Area, or BSA, a standard measurement of patient size. Under
the approved HDE, MicroMed can implant patients as small as 0.7m(2) BSA (5- to
16-year-old patients).

Other Alternatives. Besides the three current indications of our product, there
are several other alternatives available to patients: heart transplantation,
optimal medical therapy and the total artificial heart. Heart transplantation is
advantageous for patients with end-stage heart failure because it has the
highest and longest survival rate. Currently, it remains the treatment of choice
for those eligible for transplantation with end-stage heart failure. However,
there are approximately one hundred thousand patients with late stage heart
failure and only approximately two thousand hearts per year available through
donation for transplantation. Therefore for those who do not make the top of the
transplantation list and obtain one of the only two thousand hearts available,
ventricular assist devices and totally artificial hearts are the only viable
options, since optimal medical therapy still has mortality approaching 100%. The
totally artificial heart has the theoretical advantage of removing a heart which
may be susceptible to arrhythmia and mural thrombus, but the totally artificial
heart represents a totally irretrievable treatment. No totally artificial hearts
are approved for destination therapy. Implementations of the totally artificial
heart to date have been quite limited, even as bridge to transplant.
Furthermore, the current totally artificial hearts are large and usable only in
a relatively small group of patients.

FUTURE INDICATIONS

Bridge-to-Recovery. With regard to expanding VAD use for bridge-to-recovery,
human studies conducted by researchers at Royal Brompton in the United Kingdom,
Temple University and the German Heart Institute in Berlin indicate that VADs
could be useful as a means of promoting recovery of weakened heart muscles,
either alone or in combination with other myogenic agents. Preliminary data from
these studies suggest that a significant number of the Class III heart patients
in the U.S. could use the device as a bridge-to-recovery of heart function,
possibly allowing heart muscle cells to repair themselves such that the heart
remodels and recovers nearly normal function. The improved blood flow and organ
function obtained through use of a VAD could delay or may even prevent
progression of these patients to Class IV status.

PRODUCT

THE DEBAKEY VAD SYSTEM - COMPREHENSIVE NEXT-GENERATION VAD TECHNOLOGY OVERVIEW

MicroMed has developed the miniaturized DeBakey VAD, which MicroMed believes
physicians, surgeons and patients will favor over currently marketed pulsatile
VADs, as it is well suited for broader and long-term VAD use. Due to its
next-generation, NASA-designed characteristics, MicroMed believes the DeBakey
VAD will ease and shorten the time of VAD implantation for the physician and
patient, significantly decrease the risk of infection to the patient, and
together with the complete DeBakey VAD system, significantly improve patient
quality of life. After recovery from the implant procedure, many patients are
able to return home and to resume normal activities such as exercise, and in
some cases patients have returned to work. In addition, MicroMed believes that
the DeBakey VAD system offers these benefits without sacrificing any of the
recognized clinical efficacies of currently marketed VADs and at a price below
that of currently marketed pulsatile VADs.



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The titanium, electromagnetically actuated axial flow pump, a pump in which the
blood flow pathway is in line and flows continuously, can pump in excess of 10
liters per minute, is 1.2 inches (30.5 mm) in diameter, 3.0 inches (76.2 mm)
long, and weighs less than 4 ounces (93 g). The pump assembly consists of a
titanium inflow cannula (a tube that is inserted into the apex of the heart
residing within the left ventricle providing inflow to the pump) and an apical
sewing ring (a Dacron ring which is sewn to the apex of the heart and used to
secure the VAD to the apex of the heart), the DeBakey VAD pump, a flow probe, a
Dacron (R) outflow conduit graft (a woven graft which is used to connect the
pump to the outflow and is attached to the ascending aorta), and a percutaneous
cable assembly with controller connector. Inside the housing unit is the
inducer/impeller, which is the only moving part. Connected to the flow tube is a
curved titanium inflow cannula that is inserted into the apex of the left
ventricle. A Dacron woven sealed outflow conduit is connected to the pump and
sutured to the aorta. An ultrasonic flow probe placed around the outflow conduit
continually measures blood flow rate through the pump. The wiring from the
pump's flow probe and the motor are coated and bundled into a single cable
assembly that is enclosed in an outer polymer shell covered by Dacron velour,
which exits the skin just above the right iliac crest and connects to the
external controller system. Blood is pumped from the left ventricle into the
inflow cannula, through the inducer/impeller, then out through the Dacron
outflow conduit and into the ascending aorta. This axial flow pump provides
continuous flow; however, flow pulsatility does occur in most patients, as a
consequence of the patient's native cardiac contractility. Particular design
characteristics include:

      o     miniaturized size (approximately 1/10th the size of the currently
            marketed pulsatile VADs);

      o     light weight (less than 4 ounces versus over 2 pounds for currently
            marketed, fully implantable pulsatile VADs);

      o     hemolysis minimizing design by NASA so that damage to red cells,
            evidenced by hemolysis, is minimized from the mechanical action of
            the pump on the blood cells;

      o     virtually silent compared to the audible noise of currently marketed
            pulsatile VADs;

      o     only one moving part; and

      o     eliminates pump-life limiting valves; currently approved VADs have
            mechanical valves both at the inflow and outflow of the device to
            provide uni-directional flow necessary for perfusion, but this leads
            to a substantial failure rate due to the high flows, high pressures,
            and the high rate of the upstroke encountered in the pulsatile
            devices.

MicroMed believes these specific design characteristics will lead to the
following advantages over currently marketed pulsatile VADs currently on the
market:

      o     The miniaturization and light weight of the DeBakey VAD offer the
            potential for less invasive applications. MicroMed believes that
            patients using the DeBakey VAD experience less trauma and
            device-related infection than patients using currently marketed,
            fully implantable pulsatile VADs as a result of the shortened
            duration of the implant procedure, the small size of the device,
            less displacement of nearby organs and a smaller percutaneous cable
            that contains the lines from the pump and flow probe to the outside
            of the body through the skin; this cable allows delivery of power
            and a means to monitor the device and is small, pliable, and covered
            in Dacron to improve growth and incorporation into the tissues and
            to limit the potential for infection.

      o     In addition to the current market opportunity, because of the size
            of the DeBakey VAD, MicroMed expects to be able to penetrate a
            substantial portion of the market for smaller women and children. Up
            to now, these patients generally have not been implanted with VADs
            due to the larger size of currently marketed pulsatile VADs.
            (HeartMate and Novacor require a minimum 1.5m 2 BSA, versus as low
            as BSA of 0.7m(2) for the DeBakey VAD Child, in children from 5 to
            16 years old.) Moreover, MicroMed believes the specific design
            attributes of its DeBakey VAD make it well suited for broader
            clinical indications such as destination therapy, bridge-to-recovery
            and pediatric use.

The adverse effects sometimes witnessed in DeBakey VAD patients are similar to
those seen with other VADs. These include strokes, transient ischemic attacks,
infections and the bleeding effect of anticoagulation drugs. The incidence of
these effects are anticipated to be similar and within the range or lower than
those with other devices and are monitored through the clinical trial through a
data safety monitoring board. The Data Safety Monitoring Board concluded that
the trial should continue.



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DEBAKEY VAD SYSTEM

The DeBakey VAD system includes the DeBakey VAD, the Data Acquisition System,
the Patient Home Support System, the DeBakey VAD Controller, the VADPAK and VAD
system accessories. MicroMed believes the DeBakey VAD system design provides
patients with greater range of motion than the current market leading VADs.

Data Acquisition System. Clinicians use the DeBakey VAD Data Acquisition System
("DAS") during surgery and while the patient is in intensive care. However, when
the patients move out of intensive care or when they leave the hospital, the
patient can plug in to the DAS occasionally to allow clinicians to adjust the
speed of the pump and review all pump and patient parameters.

Patient Home Support System. The Patient Home Support System is designed to
provide primary power to the DeBakey VAD after surgery and recovery during
evening hours. In addition to providing power, it serves as a battery backup and
charges up to four batteries simultaneously. MicroMed designed the Patient Home
Support System to allow the DeBakey VAD patient, whether in the hospital or at
home, to sleep or rest without concern about discharging batteries while
tethered to the unit. The Patient Home Support System also charges batteries for
use with the DeBakey VAD Controller and VADPAK, which should offer the patient
improved physical mobility. The Patient Home Support System is approximately the
size of a small portable cooler, weighs approximately 10 pounds and is equipped
with an eight-foot power tether cable that connects to the DeBakey VAD
Controller. The Patient Home Support System will provide continuous power during
times when the DeBakey VAD is not operating on batteries. MicroMed adopted this
"home use" design to provide ergonomic benefits and cost savings to patients
using the DeBakey VAD system over competitive products.

DeBakey VAD Controller and VADPAK. The DeBakey VAD Controller and two batteries
are housed in the VADPAK. Together the VADPAK, the Controller and batteries
weigh just over five pounds, helping to provide patient mobility and the ability
to engage in most normal, everyday activities. The DeBakey VAD Controller
operates the DeBakey VAD and displays key operating information about the pump,
including flow rate, power usage and remaining battery life. Each battery will
power the DeBakey VAD for approximately three to four hours, giving a combined
battery time of approximately five to eight hours. The DeBakey VAD Controller
always uses the battery with the lower charge, thus preserving the battery with
the highest charge. The DeBakey VAD system includes extra batteries and a
separate recharger (in addition to the recharger in the Patient Home Support
System) that will completely charge a battery in approximately 75 minutes.

MicroMed anticipates that the commercial selling price for the DeBakey VAD
system in the U.S. will be substantially less than the cost of competitive
products currently on the market.

BUSINESS DIRECTION

MicroMed's mission is to be a leader in CHF therapy. Principal elements of its
strategy to achieve this are as follows:

      o     CONTINUE COMMERCIALIZATION OF THE DEBAKEY VAD IN EUROPE AND SELECT
            OTHER INTERNATIONAL MARKETS. MicroMed received CE Mark approval for
            the bridge-to-transplant indication in April 2001 and is CURRENTLY
            selling products in Germany, Austria, Switzerland, France, Italy,
            Turkey and Singapore. Because the prescribers, purchasers and end
            users of the DeBakey VAD are highly concentrated (relatively few
            sites perform most of these complex procedures), MicroMed believes
            it will be able to expand market penetration with the DeBakey VAD
            without an extensive sales and marketing organization through
            limited direct sales and the use of distributors in selected
            countries. MicroMed has established a strong distributor network to
            support sales and marketing in various international markets.

      o     LEVERAGE RELATIONSHIPS TO ENHANCE CLINICAL ACCEPTANCE OF THE DEBAKEY
            VAD. MicroMed intends to leverage its relationships among European
            clinical trial investigators, Dr. DeBakey, Dr. Rose, Dr. Noon and
            its investigators in the U.S. clinical trials with cardiologists and
            cardiac surgeons in other major international heart centers to
            promote the use of the DeBakey VAD in high-volume transplant centers
            around the world. MicroMed intends to augment this effort with a
            highly focused direct sales and marketing team, including members of
            senior management.


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<PAGE>

      o     LAUNCH DEBAKEY VAD CHILD FOR IMMEDIATE REVENUE OPPORTUNITY. MicroMed
            received approval to begin marketing the DeBakey VAD Child device in
            the U.S. in March 2004 and in the E.U. in June 2004 and have begun
            market roll out.

      o     COMPLETE U.S. MULTI-CENTER PHASE III/PIVOTAL BRIDGE-TO-TRANSPLANT
            CLINICAL TRIAL. MicroMed initiated the pivotal phase of its US
            Bridge to Transplant trial under the current protocol in April 2003.
            As of December 31, 2004, MicroMed has implanted 49 patients in the
            BTT study that MicroMed intends to submit in its PMA application (29
            of which were done in the pilot and feasibility phases of the study
            and may not be includable in the FDA analysis of the pivotal phase
            results). The study design compares the results of non-randomized
            implants of the DeBakey VAD to literature controls (published
            results) for the HeartMate XVE device.The overall results of our
            bridge to transplant ("BTT") trial to date have resulted in lower
            than expected survival to transplant percentages. The Company now
            believes that it is likely that it will not meet the performance
            goal survival rate for the patients in this trial. This is likely to
            substantially increase the time required to obtain FDA approval and
            the time when the Company would expect to generate revenues from
            commercial sales of the DeBakey VAD.


      o     COMPLETE U.S. MULTI-CENTER PHASE III/PIVOTAL DESTINATION THERAPY
            CLINICAL TRIAL. MicroMed received approval to initiate the pivotal
            phase of its U.S. destination therapy clinical trial and began
            initial implants in the fourth quarter of 2004. The study design is
            a randomized, dual arm comparison against a single control
            (HeartMate XVE). MicroMed anticipates implanting 240 DeBakey VAD
            patients and 120 HeartMate patients (2:1 ratio) in up to 40 sites.
            Upon completion of this clinical trial, MicroMed intends to submit
            the data to the FDA for PMA approval. To date, the Company has only
            enrolled 8 patients to date in its Destination Therapy trial and
            believes that it needs to redesign the structure of the trial to
            accommodate a shorter PMA pathway. Under the current design of its
            Destination Therapy trial (360 patients on a 2:1 randomization
            against the HeartMate XVE), the Company originally anticipated
            completing enrollment between late 2008 to late 2010, which it
            believed would result in PMA approval between early 2010 to early
            2012. The Company is presently in discussions with its clinical
            consultants to develop the specific new clinical trial parameters
            and protocols for the Destination Therapy trial which it intends to
            request from the FDA. However, there is no assurance that the
            Company will be able to convince the FDA to accept these changes.

      o     EXPAND CLINICAL INDICATIONS FOR THE DEBAKEY VAD TO INCLUDE SMALL
            ADULT PATIENTS. There is currently an unmet need for a VAD that can
            be implanted in small adults, such as small female patients with
            body surface areas ("BSA") of less than 1.5 m(2). Current FDA
            approved devices are only indicated for patients with a BSA greater
            than or equal to 1.5 m(2).

      o     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 bridge-to-transplant and destination therapy segments. MicroMed
            believes that the specific design attributes of the DeBakey VAD make
            it better suited than currently marketed pulsatile VADs for broader
            clinical indications. MicroMed intends to conduct clinical trials to
            support the use of the DeBakey VAD as a bridge-to-recovery.

CLINICAL TRIALS IN THE UNITED STATES

Unlike most pharmaceutical clinical trials, the duration of medical device
pivotal (Phase III) clinical trials is dependent on an availability of
investigational subjects (patients) that is unpredictable and which can have a
significant effect on the cost of the trial. Consequently, this variable alone
makes it difficult to accurately project completion times and trial costs. The
time necessary to complete implantable medical device trials is also dependent
on the complexity of the device, securing a patient sample size necessary to
statistically support the study hypothesis, the number of available study
centers, the number of device changes made during the trial and other factors.
Typical expenses for pivotal trials include fixed costs associated with clinical
affairs and regulatory affairs personnel, subcontracts with clinical research
organizations, patient testing charges, the cost of investigational devices and
travel expenses for clinical monitors to initiate centers, train clinicians,
monitor activities and perform center close-outs. MicroMed is presently
reimbursed for all investigational devices used during the trials. Additional
costs are incurred in the development of regulatory submissions and meetings
with the FDA, which include the PMA Panel Meeting.



                                       9
<PAGE>

The BTT trial is designed to compare the results of implanting the DeBakey VAD
in patients eligible for heart transplantation against results for the Thoratec
HeartMate XVE product as reported in published studies. The primary endpoint
measure of the trial is survival to transplantation, but MicroMed also measures
other adverse events typically associated with patients in this category, such
as stroke, infection and device malfunction.

The results of MicroMed's clinical trials for BTT and DT are not yet available.
The data is being collected and analyzed by a third party clinical research
organization on a blind basis so that results are not revealed until completion
in order to avoid study bias.

The overall results of our bridge to transplant ("BTT") trial to date have
resulted in lower than expected survival to transplant percentages. The Company
now believes that it is likely that it will not meet the performance goal
survival rate for the patients in this trial. This is likely to substantially
increase the time required to obtain FDA approval and the time when the Company
would expect to generate revenues from commercial sales of the DeBakey VAD. The
Company has only enrolled 8 patients to date in its Destination Therapy trial
and believes that it needs to redesign the structure of the trial to accommodate
a shorter PMA pathway. Under the current design of its Destination Therapy trial
(360 patients on a 2:1 randomization against the HeartMate XVE), the Company
originally anticipated completing enrollment between late 2008 to late 2010,
which it believed would result in PMA approval between early 2010 to early 2012.
The Company is presently in discussions with its clinical consultants to develop
the specific new clinical trial parameters and protocols for the Destination
Therapy trial which it intends to request from the FDA. However, there is no
assurance that the Company will be able to convince the FDA to accept these
changes. The Company, or regulatory authorities, may suspend or terminate
clinical trials at any time.

CLINICAL RESULTS

RESULTS OF PRECLINICAL STUDIES

MicroMed conducted substantial pre-clinical in vitro and animal in vivo tests
prior to commencement of its European clinical trial. MicroMed divided its
preclinical testing of the DeBakey VAD into several phases with distinct
objectives.

In Vitro Studies. The purpose of the first phase of studies was to identify a
pump design that minimized hemolysis (red blood cell destruction) and
thrombogenesis (blood clot formation). MicroMed conducted the first phase of
studies with a polycarbonate version of the pump. MicroMed used parametric bench
testing of iterative pump designs to identify the least hemolytic pump design.
Next, MicroMed conducted ex vivo tests of iterative pump designs to identify the
least thrombogenic pump design.

In addition, MicroMed conducted in vitro performance tests with mock circulation
to define characteristics of pump function in response to normal and abnormal
vascular conditions and ventricular performance. Studies demonstrate that the
DeBakey VAD can adequately unload the failing left ventricle and characterize
the relationship of heart rate to pump performance.

In Vivo Studies. MicroMed conducted the second phase of studies in vivo.
MicroMed fully implanted titanium pumps in the chests of calves. The purpose of
these studies was to ensure that MicroMed had identified the design least likely
to cause hemolysis or thrombogenesis using titanium and to determine the safety
of the DeBakey VAD for long-term support of the heart. The DeBakey VAD was shown
to operate safely in 27 animals for up to 145 days. During these studies, no
hemolysis or end-organ dysfunction occurred.



                                       10
<PAGE>

Mechanical Durability Studies. Durability studies show the DeBakey VAD should
operate effectively in excess of five years. To evaluate the potential uses for
the DeBakey VAD, MicroMed needed to understand its bearing-wear characteristics
and their effect on long-term use of the device. MicroMed engaged Marconi
Aerospace Defense Systems, Inc. (formerly Tracor) to perform studies with
respect to bearing and long-term pump durability of the DeBakey VAD. Marconi is
a major aerospace corporation that specializes in fault-to-failure vibration and
acoustical testing. Beginning in May 1997, 10 DeBakey VADs were operated
continuously, 24 hours per day, in saline solution, which is less of a lubricant
than human blood, with no signs of appreciable wear in the bearings or pumps.
MicroMed tested additional pumps with artificially induced wear to establish
wear signature characteristics as well as the effect of various levels of wear
on red blood cell destruction and pump performance. MicroMed completed these
tests in December 1999 and received a report from Marconi expressing its belief
that the DeBakey VAD bearings should have a life expectancy in excess of five
years.

Hemocompatibility and Biocompatibility Studies. MicroMed subjected implantable
components of the DeBakey VAD system to studies relating to both
hemocompatibility (blood compatibility) and biocompatibility as per the
requirements of ISO 10993. The purpose of hemocompatibility studies was to
identify blood-titanium interactions for the DeBakey VAD. These tests were
performed with human blood in mock circulation. The results of these studies
demonstrated that the pump was neither the source of thrombi (vascular
obstructions) or emboli (blood clots) and is otherwise hemocompatible. Completed
biocompatibility tests show the device to have no adverse results with respect
to: systemic toxicity, local toxicity, cytotoxicity (cell damage), genotoxicity
(DNA damage), pyrogenicity (inducing fever), physiochemical toxins, mutagenicity
(inducing genetic mutation), and sensitization (inducing an immune response).
Studies also validated the process by which implantable components are
sterilized in ethylene oxide.

Third-party ISO 9001 certified contractors manufacture the DeBakey VAD
Controller and the Data Acquisition System. These contractors have conducted
tests, and MicroMed has conducted independent testing to demonstrate that both
components meet various standards required by the Active Implantable Medical
Device Directive. All components have been tested to NRTL ("UL Testing") and
demonstrated to be electrically safe and to withstand environmental factors such
as electrical/electromagnetic interference, temperature, shock, etc. Third party
software validation of the VAD Controller has been performed confirming a safe
and robust design.

RESULTS OF EUROPEAN CLINICAL TRIAL

The first human implant of the DeBakey VAD was performed in November of 1998 in
Berlin, Germany initiating the original clinical trial of the DeBakey VAD as a
bridge-to-cardiac transplantation. During this trial, conducted wholly in the
European Union, 78 patients were implanted with the DeBakey VAD for durations up
to 518 days. The original European clinical trial of the DeBakey VAD included
key cardiovascular centers in Germany, Austria, France, Switzerland and Italy.
This first clinical trial was designed to establish safety and performance of
the DeBakey VAD as a bridge-to-cardiac transplantation and led to the award of
the CE Mark for the DeBakey VAD in April 2001 by TUV Product Services of Munich.

The early clinical results in Europe varied substantially from site to site,
ranging from a low of 18% to a high of 72%, with some users having poor success
to transplant rates, while others did well. Careful analysis showed several
reasons that likely contributed to the variability. These factors included the
early learning curve, patient selection, and anticoagulation. Because the device
at first was largely unproven, some of the early cases selected appeared to be
patients that were beyond the point of being helped by mechanical support. This
was suggested by a high incidence of multiple organ failure in the unsuccessful
patients and the fact that about 40% of the deaths were within the first 30 days
after implantation. Nearly all of these patients did not meet the clinical trial
enrollment criteria. With more experience and improved patient monitoring, the
DeBakey VAD was implanted in more salvageable patients. Patient selection varied
considerably from site to site. Experience has also demonstrated new insights
into risk factors for VAD patients, such as the realization of the importance of
chronic malnutrition as a risk factor.

All patients with artificial surface devices in their circulatory system,
whether valves or VADs, need anticoagulation. The extent of anticoagulation
therapy necessary in connection with a given device could vary from the use of
dipyridamole and aspirin to a more extensive regimen. The HeartMate is a volume
displacement pump that requires porcine tissue valves, bearings, and a flexible
membrane that can result in mechanical failure. The axial flow design of the
DeBakey VAD, with only one moving part, has a very low incidence of mechanical
failure (less than 3% as noted in Goldstein DJ, Woldwide Experience with the
MicroMed DeBakey Ventricular Assist Device(R) as a Bridge to Transplantation,
Circulation 2003; 108 [suppl II ]: II-272-II-277) but thrombus formation in the
pump has the potential to stop the pump and thus represents a potential
complication that must be managed with anti thrombotic drug therapy. Failure of
an implanted VAD requires therapeutic interventions, such as re-operation for
pump or component replacement in the case of the volume displacement pumps, or
administration of tissue plasminogen activator (tPA) or pump replacement.



                                       11
<PAGE>

In MicroMed's early experience, its anticoagulation knowledge for axial flow
VADs was limited (since it was the first axial flow device used in humans) and
different sites used different anticoagulation regimens. Local use of suboptimal
anticoagulation therapy may have contributed to the site-to-site variability in
success rates MicroMed saw in its early trials. MicroMed has now been able to
learn from its experience at different sites and the newer anticoagulation
technologies, resulting in newly available information that should improve
patient management strategies. MicroMed recently formed an Anticoagulation
Advisory Committee (the "Committee") co-chaired by Dr. Eric Rose, Chief Surgeon
at Columbia University in New York and Dr. Samuel Goldhaber, Director, Venous
Thromboembolism Research Group at Brigham and Women's Hospital in Boston. The
Committee includes cardiovascular surgeons, cardiologists, hematologists,
pharmacologists and pathologists from a diverse sampling of various universities
and clinical sites. The Committee has developed a guidance document for the
investigator sites to assist in the anticoagulation management of DeBakey VAD
patients.

The occurrence of adverse events during a clinical trial, whether expected or
unexpected, can have an impact on the enrollment rate in a clinical trial,
particularly at individual sites where such adverse events are noted. For
example, during the feasibility portion of MicroMed's BTT study, the perception
by certain clinicians of increased incidences of thrombus resulted in a
temporary reduction in the rate of patient enrollment early in that study.
MicroMed solicited the collective assistance and advice of several prominent
cardiovascular physicians, cardiologists and hematologists to develop an
anticoagulation protocol aimed at reducing the rate of thrombus in patients with
the test device. The introduction of this anticoagulation protocol had an
advantageous impact on the rate of thrombus and the rate of enrollment has
increased. As with any medical device in a clinical trial, MicroMed is
constantly evaluating potential modifications to the product during the clinical
trial in an effort to improve product performance and clinical outcomes.

The incidence rate of thrombus, as well as other adverse events noted during
MicroMed's European clinical trial, were within acceptable levels for MicroMed
to receive the CE Mark for the DeBakey VAD in April 2001 by TUV Product Services
of Munich.

End-Organ Function. One key way to evaluate the effectiveness of a VAD is to
monitor the device's ability to restore or improve end-organ function.
Restoration of end-organ function is an important component of left ventricular
assistance. With adequate ventricular support, organ perfusion generally
improves and allows organ function previously limited by heart failure to return
to normal.

Measurement of end-organ function is one of the best methods to determine the
efficacy of DeBakey VAD performance. An evaluation of pump flow or even pump
flow normalized to body index does not necessarily indicate whether the tissues
are receiving adequate circulation of oxygenated blood; the measures of
end-organ function described are indicative of whether or not a specific organ
has the blood supply it needs to operate properly.

Therefore, MicroMed typically evaluates a patient's pump performance or flow
output in terms of whether or not he or she is sufficiently supporting the
working organs of the body, i.e., the liver, kidneys, etc. End-organ function is
typically monitored by following the function of the kidney and liver systems.

The following table illustrates the parameters measured and the changes expected
with ventricular support such as that provided by a DeBakey VAD.

Parameter          Organ System     With Heart Failure          With VAD
--------------------------------------------------------------------------------
Creatinine             Kidney          Increased         Decreases toward normal

BUN                    Kidney          Increased         Decreases toward normal

Total Bilirubin        Liver           Increased         Decreases toward normal

SGOT                   Liver           Increased         Decreases toward normal

SGPT



                                       12
<PAGE>

Many patients who enrolled in MicroMed's European and U.S. clinical trials of
the DeBakey VAD experienced end-organ dysfunction (i.e., elevated laboratory
values) prior to VAD implantation. After implant, the patients, on average,
either maintained or improved their end-organ function. This was noted from
improvement in Blood Urea Nitrogen and Creatinine measures in patients after
implant (36.8 and 1.2, respectively) compared to patients pre-implant (45.2 and
1.5, respectively). MicroMed believes these results are comparable to currently
marketed VADs.

RESEARCH AND DEVELOPMENT

DEBAKEY VAD

The initial development of the DeBakey VAD began with the collaboration of NASA
and Dr. DeBakey's and Dr. Noon's research team at Baylor College of Medicine.
NASA first became involved in the development of the DeBakey VAD through the
struggle for life of a Johnson Space Center engineer, David Saucier. Following a
severe heart attack and triple bypass surgery, a team of doctors led by Drs.
DeBakey and Noon performed a heart transplant on Mr. Saucier. Six months later,
Mr. Saucier returned to the Johnson Space Center with the desire to apply
spacecraft technology to help people with heart disease. Based on the foundation
of NASA's technology and engineering along with personnel from Baylor College of
Medicine, joint design and development of the DeBakey VAD began in 1988.

NASA's Ames Research Center assisted MicroMed in the design and development of
the DeBakey VAD by using its Cray supercomputers to model blood flow using
computational fluid dynamics ("CFD"). The use of CFD enabled NASA to extensively
test different variations of each component of the DeBakey VAD pump, to optimize
performance of each component, minimizing the potential for hemolysis and
thrombosis. NASA's Johnson Space Center engineers, using their extensive
computer-aided design and computer-aided manufacturing capabilities, together
with Baylor College of Medicine engineers developed the complex milling machine
computer codes that helped ensure precise manufacturing tolerances and
repeatability of the manufacturing process for the DeBakey VAD.

In July 1996, after MicroMed obtained the license from NASA for the technology,
MicroMed became involved directly in the research and development of the DeBakey
VAD. MicroMed conducted testing, research and development activities related to
the DeBakey VAD through separate sponsored research agreements with Baylor
College of Medicine, the University of Utah Artificial Heart Laboratory, the
University of Vienna and Texas A&M University.

In addition, MicroMed subcontracted with Hi-tronics Designs, Inc. and Plexus
Technology Group (formerly SeaMED Inc.) to develop the ancillary support systems
for the DeBakey VAD. Hi-tronics, located in Budd Lake, New Jersey, developed the
DeBakey VAD Controller. Hi-tronics is an ISO 9001 certified electronics design
and manufacturing company with extensive experience in developing and
manufacturing cardiac implantable devices. Plexus, located in Redmond,
Washington, developed the DeBakey VAD Data Acquisition System. Plexus has
substantial experience with medical device requirements and is ISO 9001
certified. Hi-tronics and Plexus also provided MicroMed with documentation and
validation of the DeBakey VAD Controller and Data Acquisition System that have
accompanied its international and FDA regulatory applications.

Over the past few years, MicroMed has added several engineers to its Engineering
and Development staff to supervise and coordinate the activities of its
subcontractors and to facilitate development of the DeBakey VAD and
future-generation products. In addition, MicroMed continues to conduct contract
research and development activities with the University of Vienna and other
universities involved in its clinical trials.

REGULATORY

The DeBakey VAD has received CE Mark approval for commercialization in Europe
for bridge-to-transplant, destination therapy and pediatric use. With respect to
manufacturing, MicroMed received ISO 9001 and ISO 13485 certification in
September 1999 and have been recertified each year since with no
non-conformities (most recently in October 2004). MicroMed received additional
CE Mark approval for destination therapy and pediatric use in the second quarter
of 2004.



                                       13
<PAGE>

In the U.S., MicroMed is currently involved in two FDA approved clinical trials,
one for bridge-to-heart transplant indication and the other for destination
therapy indication.

Under the U.S. BTT indication trial, MicroMed implanted 49 patients as of
December 31, 2004 (29 under the pilot and feasibility phases and 20 under the
current protocol). The timing of approval will depend on the results from
MicroMed's trial and, among other things, whether the FDA allows MicroMed to use
European study data, as well as data from its feasibility clinical trial. Timing
is also dependent on the rate of patient enrollment.

MicroMed's DT clinical pivotal trial ("DELTA") is approved by the FDA and three
patients have been enrolled as of December 31, 2004. The DELTA trial will be
randomized 2:1 to the DT approved HeartMate XV of Thoratec (R) . MicroMed will
use up to 40 CMS approved sites. The majority of the DELTA sites will be the
same as its bridge-to-transplant clinical trial sites. These hospitals currently
implant the majority of LVADs thus reducing orientation and training.

In MicroMed's DT trial, Dr. Eric A. Rose is the Principal Investigator ("PI").
Dr. Rose is the Morris and Rose Milstein/Johnson and Johnson Professor,
Chairman, Department of Surgery and Surgeon-in-Chief for the Columbia
Presbyterian Medical Center, New York, and was PI for the successful Thoratec
(R) HeartMate REMATCH destination therapy trial that now has FDA PMA approval,
the first and only FDA approval to date of the use of VADs for this long-term
patient indication.

MicroMed plans to make product enhancements to the DeBakey VAD system from time
to time. Product enhancements require supplemental filings with and further
approval from regulatory authorities.

MANUFACTURING

MicroMed operates a 22,000 square foot leased facility located in Houston,
Texas, where it manufactures the DeBakey VAD. MicroMed believes this facility
can accommodate its anticipated manufacturing demand for the DeBakey VAD for at
least the next few years. In November 1999, MicroMed received notice that the
facility had fulfilled the applicable requirements and was certified as
compliant under ISO 9001, ISO 13485 and European Council Directive 90/385/EEC
(Active Implantable Medical Device Directive). These certifications have been
confirmed each year since then after annual audits by TUV Product Services of
Munich, Germany (the Notified Body). The facility has a Class 10,000 clean room
where final assembly and testing of the DeBakey VAD are performed. In late 2003,
MicroMed underwent and passed a Good Manufacturing Practice ("GMP") inspection
by FDA in anticipation of the approval of our HDE for pediatric use. MicroMed
has the equipment and technical capability to manufacture most of the parts and
components for the DeBakey VAD in this facility. MicroMed purchased several
other parts and components from various third-party suppliers, including some
parts that it has the equipment and technical ability to manufacture but cannot
produce in the quantities needed to satisfy MicroMed's requirements. For the
critical components being manufactured by third parties, all of these
third-party vendors are certified as ISO 9001 and/or ISO 13485. MicroMed also
dispatched its own quality assurance auditors to review its subcontractors'
facilities and manufacturing processes. In addition, MicroMed conducted a
thorough critical inspection of all incoming parts received from third-party
vendors. Some components are manufactured by sole source third-party vendors.
MicroMed believes that, in the event of the loss of any of the sole source
suppliers, the services and/or material being provided to it through that
supplier could be acquired from alternative suppliers or manufactured in
MicroMed's facility.

A company that intends to sell a product like the DeBakey VAD in the countries
of the European Economic Area must obtain a CE Mark. The CE Mark indicates
compliance with European regulatory, quality assurance and legal mandates. To
support MicroMed's CE Mark, its manufacturing facility is certified to ISO 13485
and European Council Directive 90/385/EEC (Active Implantable Medical Device
Directive), which was received in November 1999, and has been reconfirmed each
year thereafter by annual audits by TUV Product Services of Munich, Germany,
with no nonconformities noted in any of these audits.



                                       14
<PAGE>

In the U.S., medical devices are regulated by the FDA. On October 7, 1996, the
FDA published its "final rule" for medical devices, incorporating past GMP
requirements into a new regulation, Quality System Requirements, which became
effective June 1, 1997. MicroMed's regulatory staff is working closely with its
employees and subcontractors to ensure strict compliance with these regulations,
including design controls and reproducible manufacturing of devices. MicroMed
passed a PMA inspection for its HDE application for pediatric indications.

SUPPLIERS

MicroMed relies on third-party suppliers to provide key materials and components
of the DeBakey VAD system, some of which are single source suppliers. Three of
the key suppliers MicroMed relies on are Plexus, Hi-Tronics Designs and Micropaq
Corporation, which made up 27%, 19% and 14% of MicroMed's purchases for the year
ended December 31, 2004, respectively. Starting in 2005, MicroMed will begin
assembling in-house the Clinical Data Acquisition System that was previously
assembled by Plexus. MicroMed has not identified additional sources to
supplement its purchases from Hi-Tronics and Micropaq. In the event that
MicroMed is unable to replace a shortfall in supply, its revenue could be
negatively impacted in the short term.

U.S. MARKETING AND DIRECT SALES EFFORT

The market for heart transplants is highly concentrated. A limited number of
cardiac surgeons and cardiologists influence medical device selection and
purchase decisions for a large portion of the target cardiac patient population.
Because of the high concentration of heart transplant sites, MicroMed
anticipates that it will be able to generate sufficient demand for the DeBakey
VAD through a relatively small direct marketing team, including members of
senior management, and through introductions provided by clinicians who
participated in its clinical trials. The market adoption and commercial success
of the DeBakey VAD will require acceptance by cardiologists and cardiac
surgeons. The Principal Investigators (who are generally cardiovascular
surgeons) and the Co-Principal Investigators (who are generally cardiologists)
are critical to the clinical trial and future commercial success. Initial
acceptance will depend primarily on the demonstrated safety and effectiveness of
the DeBakey VAD system in clinical trials. The reliability and other advantages
of specific VADs will need to be introduced to both referring cardiologists as
well as cardiovascular surgeons who make the decisions on the type of device to
be implanted. Peer reviewed publications and surgeon awareness through
presentations at seminars and conventions are primary platforms. MicroMed
believes pricing will also play a significant role in VAD selection at
transplant centers.

For marketing and sales of the recently approved DeBakey VAD Child product,
MicroMed is focused on the top 12 pediatric centers in the U.S. MicroMed will
use a small, direct technical sales team to support these sites. MicroMed plans
to expand this team upon receipt of PMA in the U.S. for bridge-to-transport and
destination therapy indications.

Although there are 160 heart transplant centers in the U.S., only about 25% of
these centers perform the majority of transplants. The market for VADs is
site-specific in the U.S., as well as in other countries. There are
approximately 70 U.S. hospitals approved for reimbursement from the Center for
Medicare/Medicaid Services ("CMS") for use of VADs. MicroMed expects that
approximately one-half of these hospitals will account for 85% of the
destination therapy patients. The cardiologists at these sites maintain heart
failure patients with traditional medical (drug) therapy. As the patient moves
beyond the benefit of drugs, the alternative is a heart transplant, death or
mechanical support.

EUROPEAN BUSINESS AND DISTRIBUTION NETWORK

There are approximately 125 VAD implant sites in Europe, which MicroMed believes
establishes a solid market for commercialization of the DeBakey VAD in Europe.
MicroMed's plan is to penetrate key, high-volume VAD implant centers where
competitors VADs are presently implanted through the use of distributors in
certain markets and direct sales in others. The DeBakey VAD is attached to the
heart in a manner similar to other currently marketed VADs, which should make
adoption of the DeBakey VAD easier at these sites. These sites have experienced
surgical teams familiar with mechanical support implant procedures as well as
with post-operative care. Use of the DeBakey VAD at key European centers where
competitors VADs currently are implanted will provide exposure for and highlight
the significant advantages that the DeBakey VAD has over other currently
marketed VADs. MicroMed will try to stimulate referrals to cardiothoracic
surgeons by educating cardiologists about the success of DeBakey VAD implants.



                                       15
<PAGE>

MicroMed has distributors engaged in the European markets of Germany, UK, Italy,
France, Norway, Sweden, Holland, Turkey, Austria, Switzerland and Greece and in
Singapore. MicroMed currently has two directly employed technicians for its
operations in Europe. MicroMed plans to add more distributors and technical
support personnel as it expands the number of its European and Asian implant
sites.

INTELLECTUAL PROPERTY

The pump technology used in the DeBakey VAD is protected by a patent issued to
NASA in 1996. In 1996, MicroMed signed a patent license agreement with NASA to
be the exclusive licensee to this technology in the U.S. for use in
cardiovascular applications. Separate agreements with Baylor College of Medicine
and NASA give MicroMed the exclusive right to the continuation of the VAD
technology modifications. MicroMed has incorporated these modifications through
a continuation-in-part patent application, filed in December 1996 and issued in
September 1999. MicroMed also made foreign patent application filings covering
the technology in December 1996, which have been issued in certain foreign
jurisdictions. MicroMed has obtained an additional patent covering unique
features of an external controller and data acquisition system, and a patent for
a proprietary pulsatile loop system. MicroMed has filed five patents related to
suction detection and physiologic algorithms. In addition, MicroMed has received
a registered trademark for the use of the name "DeBakey VAD" for which Dr.
DeBakey has granted us rights in perpetuity. Dr. DeBakey also entered into a
Confidentiality and Intellectual Property Assignment Agreement with us in March
1999 as part of further efforts to commercialize the DeBakey VAD. In this
agreement, Dr. DeBakey agreed to assist MicroMed in its efforts to successfully
commercialize the DeBakey VAD. Dr. DeBakey also agreed to assign to MicroMed all
rights in any intellectual property that he creates, solely or jointly with
others that is directly or indirectly related to the DeBakey VAD, including any
related surgical procedures or surgical tools or any ancillary components
developed during the duration of the agreement. This agreement has a duration of
10 years. Dr. DeBakey and MicroMed may extend this agreement for additional
one-year periods by mutual written agreement.

In connection with obtaining its patent license agreement with NASA, MicroMed
signed a sublicense agreement with Nimbus, a predecessor entity to an entity
that entered into a merger with Thoratec Corporation, for several of the 49
claims in the original NASA patent granted in 1996. The sublicense agreement,
which expired in December 2002, required Nimbus to pay to NASA and to MicroMed
certain royalties based on net sales in the event any of the NASA patent claims
granted under the sublicense agreement was used in its products.

MicroMed will pay royalties under the agreements with NASA and Baylor of 2.8% of
net sales of the DeBakey VAD worldwide until U.S. PMA is achieved; afterwards,
the royalties only apply to U.S. sales.

In connection with MicroMed's prior financings, three separate patent law firms
have issued non-infringement opinions concerning its intellectual property base.

The following table describes patents licensed or granted to MicroMed by number
and includes information relating to the date the patent was filed, the date it
was granted and the date of its expiration.

<TABLE>
<CAPTION>
      Number                         Patent Name                        Filed Date      Grant Date      Expires
--------------------------------------------------------------------------------------------------------------------
<S>  <C>        <C>                                                     <C>             <C>           <C>
 1   5,527,159  Rotary Blood Pump (licensed from NASA)                  11/10/1993      6/18/1996     11/10/2013
--------------------------------------------------------------------------------------------------------------------
 2   5,678,306  Method for reducing pumping damage to blood              5/26/1995      10/21/1997     5/26/2015
                (licensed from NASA)
--------------------------------------------------------------------------------------------------------------------
 3   5,947,892  Rotary Blood Pump (licensed from NASA)                  12/13/1996       9/7/1999     12/13/2016
--------------------------------------------------------------------------------------------------------------------
 4   5,957,672  Blood Pump Bearing System (licensed from NASA)           6/17/1996      9/28/1999      6/17/2016
--------------------------------------------------------------------------------------------------------------------
 5   6,058,958  Pulsatile Flow System and Method                         11/5/1998       5/9/2000      11/5/2018
--------------------------------------------------------------------------------------------------------------------
 6   6,183,412  Implantable Pump System                                  10/2/1998       2/6/2001      10/2/2018
--------------------------------------------------------------------------------------------------------------------
 7   6,605,032  Implantable Pump System                                  2/5/2001       8/12/2003      2/5/2021
--------------------------------------------------------------------------------------------------------------------
 8   6,652,447  Method of Controlling an Implantable Pump System         2/5/2001       11/25/2003     2/5/2021
--------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       16
<PAGE>

Patents identified as 1, 3 and 4 are licensed from NASA and are the foundation
of the DeBakey VAD. The protection of rights and continued licensing of these
patents are material to MicroMed's business. Patents identified as 6, 7 and 8
are owned by MicroMed and are the foundation of the VAD's controller and data
acquisition system. The protection of rights of these patents is material to
MicroMed's business. The features claimed in patents identified as 2 (licensed
from NASA) and 5 (owned by MicroMed) are not used in MicroMed's clinical product
and loss of the ability to use the features claimed in these patents should not
prohibit MicroMed's ability to sell the product. The earliest of any patent to
expire is 2013.

COMPETITION

MicroMed faces competition from companies that develop, manufacture and market
cardiac assist therapy products and technology. MicroMed also competes with
universities and other research institutions in the development of cardiac
assist and therapy technologies. Many of MicroMed's competitors have greater
technical and financial resources. Some of these competitors have currently
marketed cardiac assist products as well as cardiac assist products and
technologies under development.

There are three basic categories of VADs: pulsatile, axial flow and centrifugal.
These devices are differentiated by the mechanical methodologies used to pump
blood.

      o     Pulsatile. All of the FDA approved devices in the U.S. are positive
            displacement or "pulsatile" devices. These larger sized devices were
            designed to mimic the pulsatile function of the native heart,
            utilizing chambers and valves and require exchanging air via large
            percutaneous conduits.

      o     Axial Flow. Axial flow devices like the DeBakey VAD represent a new
            generation of miniaturized heart pumps. Axial flow pumps move blood
            along a straight flow path utilizing a pumping mechanism that
            enables system pulsation due to the native heart's action. This
            system is similar in concept to the Archimedes screw, originally
            used to pump water in ancient times. These next-generation pumps are
            typically much smaller and operate much more quietly than pulsatile
            pumps and do not require valves or air exchange. There are several
            companies developing axial flow pumps, including Thoratec, the
            market leader in pulsatile pumps.

      o     Centrifugal Pumps. Centrifugal pumps operate by rotating rapidly on
            a central axis, thereby forcing the blood away from the center of
            the pump into an external conduit. There are several companies
            developing centrifugal pumps, which are generally smaller in size
            than pulsatile pumps but somewhat larger than axial flow pumps.
            Proponents of centrifugal pumps claim an advantage over axial flow
            pumps due to the lack of mechanical bearings, which they claim will
            cause the axial flow pumps to wear out more quickly. MicroMed
            believes the long-term durability of the DeBakey VAD has been proven
            in third-party bench testing and through the thorough examination of
            each of the DeBakey VAD pumps that have been explanted from patients
            during its clinical trial, none of which showed any indication of
            significant bearing wear. In addition, the durability of the
            magnetic bearings and required electrical controllers has not been
            clinically demonstrated.

Both axial flow and centrifugal pumps initially move blood in a continuous flow
pattern, as opposed to pulsatile flow generated by the positive displacement
devices. Blood flow from both axial flow and centrifugal pumps is pulsatile due
to the contractility of the native heart. Although the DeBakey VAD is a
continuous flow pump, in almost all cases the patients have exhibited pulsatile
blood flow within a few weeks of implantation. Pulsatile blood flow begins to
occur as the native heart begins to recover. As the native heart regains its
ability to contract, the pulsing of the ventricle creates pulsatility through
the pump. The stronger the heart becomes, the greater the pulsatility.

In addition, as a result of several laboratory tests and the available clinical
data, clinicians believe there is no apparent physiological or neurological
effect on having continuous, less-pulsatile blood flow versus pulsatile blood
flow.



                                       17
<PAGE>

CURRENTLY MARKETED VADS

Principal competitors of the DeBakey VAD that have currently marketed VADs in
the U.S. include Thoratec Corporation (HeartMate) and World Heart (Novacor). The
HeartMate device has received FDA approval for bridge-to-transplant and as
destination therapy (Novacor has only been approved for bridge-to-transplant in
the U.S.). Both of these FDA approved VADs are large, pulsatile devices.
Competitors with devices that have been approved in Europe include Thoratec
(HeartMate), World Heart (Novacor) and Berlin Heart (InCor), an axial flow
device.

In addition to other currently marketed VADs, MicroMed expects to face
competition from the technology and devices under development, including
products being developed by Thoratec and World Heart. Additionally, MicroMed is
aware of implantable ventricular assist devices being developed by Arrow
International, Jarvik Heart, Terumo Corporation, and Ventracor in Australia.

Several companies involved in the pacemaker industry (such as Medtronic, Guidant
and others) are testing the therapeutic benefits of using pacemaker technology
to provide biventricular pacing. Current studies suggest that biventricular
pacing can improve some patients' functional status, especially those earlier
stage patients (NYHA Class II & III) with dysynchrony and wide QRS complexes,
conditions that affect about a third of all congestive heart failure patients.
However, their role in end-stage heart failure appears to be minimal, if any.
These studies are continuing.

There are other therapies attempting to address the congestive heart failure
market, including "cuff" and "pin" technologies that attempt to contain and
prevent dilation of the ventricle, and surgical procedures, such as ventricular
reduction, which attempt to remodel the ventricle by removing a portion of the
dilated ventricle.

REIMBURSEMENT

In the U.S., healthcare expenditures are primarily financed by private health
insurance and by Medicare. Medicare and many private insurance companies
presently cover the cost of VADs used for the bridge-to-transplant and
destination therapy indications.

Medicare is a national health insurance coverage available for persons 65 years
of age and older. The Center for Medicare/Medicaid Services ("CMS") is charged
with the responsibility of administering Medicare, including making coverage
decisions. CMS has now issued national coverage guidelines for coverage of VADs
for both the bridge-to-transplant and the destination therapy indications.
Destination therapy reimbursement was approved in October 2003, at which time
CMS also increased the base level of reimbursement from approximately $55,000 to
approximately $70,000. CMS has approved higher reimbursement levels for fiscal
year 2005 under DRG 103 (heart transplantation), which raised the base level of
reimbursement to approximately $96,000 (the average total reimbursement at this
new level is $135,000). CMS has confirmed that the DeBakey VAD is eligible for
Medicare reimbursement at the increased reimbursement level.

In Europe (as in the U.S.) healthcare expenditures are primarily financed by
public institutions (similar to the Medicare and Medicaid systems in the U.S.)
and private insurance. Most of the hospitals where MicroMed will be focusing its
efforts are major public hospitals and teaching institutions. The majority of
these hospitals operate on a global budget that is established annually. In most
cases, the hospitals are allowed to purchase any medical device that has the CE
Mark.

GOVERNMENT REGULATION

U.S. REGULATIONS

The research and development, manufacturing, marketing and distribution of the
DeBakey VAD and related accessories in the U.S. are subject to regulation by
numerous authorities, including the FDA, and corresponding state agencies.
MicroMed must comply with the Federal Food, Drug, and Cosmetic Act and the
regulations promulgated under the Act administered by the FDA. The DeBakey VAD
is a Class III medical device and requires a PMA from the FDA prior to its
marketing or commercial sale in the U.S. Securing FDA clearances and approvals
will require submission of clinical data and supporting information to the FDA.
MicroMed has already passed a PMA inspection by the FDA as part of the approval
of its HDE for pediatric use.



                                       18
<PAGE>

Before MicroMed commenced clinical trials to support the PMA, it had to present
sufficient safety and performance data from preclinical studies to support an
IDE allowing clinical trials to begin. MicroMed had to design and perform
laboratory and animal tests that are sufficient to support the safety and
performance of the DeBakey VAD, as determined by the FDA.

MicroMed also must comply with other regulations administered by the FDA
including the Quality Systems Regulation, Good Clinical Practices and Good
Laboratory Practice regulations. These regulations require that MicroMed follow
certain prescribed testing, quality control, storage and documentation
procedures. The FDA monitors compliance with applicable regulatory requirements
through periodic site inspections. MicroMed passed an FDA biomonitoring audit
with no nonconformities for its U.S. feasibility trial.

FOREIGN REGULATIONS

MicroMed is marketing the DeBakey VAD in international markets. A number of
risks are inherent in international transactions. Sales of products outside of
the U.S. are subject to foreign regulatory requirements governing, among other
things, product testing and licensing standards, manufacturing processes,
pricing and reimbursement levels that may vary widely from country to country.
Regulations governing requirements for approvals or clearances to market, the
time required for regulatory review and sanctions imposed for violations also
vary from country to country. The time required to obtain clearance from a
foreign country may be longer or shorter than that required by the FDA or other
such agencies, and other regulatory requirements may differ.

Prior to commercial sale of medical devices in the countries of the European
Union, MicroMed was required to receive a CE Mark certification, an
international symbol of quality and compliance with applicable European
community medical device directives. In order to receive and continue CE Mark
certification, MicroMed must comply with the Essential Requirements of the
Medical Devices Directive, which primarily relates to safety and performance,
and to undergo conformity assessment certification by a Notified Body in order
to qualify for CE Mark approval. MicroMed passed a quality assessment audit of
its manufacturing facility in September 1999 that was required in order to file
for CE Mark approval and has maintained that certification each year thereafter
as being in compliance with ISO 13485 and Council Directive 90/385/EEC (European
Active Implantable Medical Device Directive) with no nonconformities.

EMPLOYEES

As of March 31, 2005, MicroMed employed 55 full-time employees and consultants,
of which 16 worked in manufacturing, 15 in regulatory, clinical affairs and
quality assurance, 6 in engineering and product development, 10 in marketing,
sales and customer support and 8 in administration. None of MicroMed's employees
are covered by a collective bargaining agreement.

FACILITIES

MicroMed's executive offices, product development and manufacturing operations
are located in Houston, Texas, in a leased facility consisting of approximately
22,000 square feet. The lease for its offices expires on May 31, 2007; however,
MicroMed can cancel the lease within 30 days of each anniversary without further
obligation.

LEGAL PROCEEDINGS

On June 23, 2004, MicroMed filed suit in the United States District Court for
the Southern District of Texas, Houston Division, against Thoratec Corporation,
claiming that Thoratec was exercising monopoly power against MicroMed by
providing the Thoratec HeartMate II VAD to clinical trial sites for free,
including sites where MicroMed already had established relationships. MicroMed
management believed this to represent predatory pricing under the antitrust
statutes and intentional interference with business relationships. The suit
sought damages and injunctive relief. Thoratec submitted a Memorandum of Law on
October 4, 2004 to the court in this matter in which they stated that the
requested injunction was unnecessary, "because Thoratec is no longer giving away
its Heartmate II continuous-flow VADs, having completed the fifteen-device
`pilot study' phase of its clinical trial, and therefore there is no conduct to
enjoin." While the court docket still reflects the suit as active, MicroMed
plans to imminently file a motion to dismiss the action without prejudice, which
counsel to Thoratec has indicated is acceptable. MicroMed is not a party to any
other material legal proceedings.



                                       19
<PAGE>

                                  RISK FACTORS

Any investment in the Company's common stock involves a high degree of risk.
Investors should carefully consider the risks described below and all of the
information contained in this Current Report on Form 8-K before deciding whether
to purchase the Company's common stock. The Company's business, financial
condition or results of operations could be materially adversely affected by
these risks if any of them actually occur. The trading price of the Company's
common stock could decline due to any of these risks, and an investor may lose
all or part of his investment. Some of these factors have affected the Company's
financial condition and operating results in the past or are currently affecting
the Company. This Current Report on Form 8-K also contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks faced by the
Company described below and elsewhere in this Current Report on Form 8-K. With
respect to this discussion, the terms "MicroMed," and the "Company" refer to
MicroMed Cardiovascular, Inc. and its wholly-owned subsidiary MicroMed
Technology, Inc.

RISKS RELATED TO BUSINESS

MICROMED TECHNOLOGY HAS INCURRED SIGNIFICANT OPERATING LOSSES SINCE INCEPTION
AND EXPECTS TO CONTINUE TO INCUR LOSSES, AND THE COMPANY CANNOT ASSURE YOU THAT
IT WILL ACHIEVE PROFITABILITY.

MicroMed Technology has not generated significant revenues from commercial sales
in international markets and from reimbursements from its U.S. clinical trials.
Since the MicroMed Technology's formation in 1995, it has incurred substantial
costs from research and product development efforts, preclinical and clinical
studies and general and administrative expenditures. The Company expects that
its expenses will increase as a result of increased clinical testing and
regulatory compliance costs. MicroMed Technology has incurred net losses every
year since its inception and had an accumulated deficit of approximately $76
million as of March 31, 2005. The Company expects to continue to incur losses
over the next several years, and the amount of future losses is uncertain. The
Company's ability to generate revenue and become profitable will depend on
obtaining regulatory approvals in the U.S. and achieving market acceptance for
the DeBakey VAD. Sales of the DeBakey VAD in the U.S. cannot begin until the
Company receives necessary regulatory approvals. The Company may never obtain
necessary regulatory approval, generate significant revenues from commercial
sales or achieve profitability.

If the Company's revenues fail to grow at a pace rapid enough to offset planned
increases in expenses, or if the Company is unable to curb its losses and
achieve profitability, its future prospects could be harmed.

MICROMED TECHNOLOGY HAS INCURRED SIGNIFICANT OPERATING LOSSES SINCE ITS
INCEPTION IN OCTOBER 1995 THAT RAISE DOUBTS ABOUT ITS ABILITY TO CONTINUE AS A
GOING CONCERN, AND IF THE COMPANY DOES NOT ACHIEVE PROFITABILITY YOU MAY LOSE
YOUR ENTIRE INVESTMENT.

MicroMed Technology began selling the DeBakey VAD System in Europe and select
international markets in April 2001 and has yet to demonstrate that it can
generate sufficient sales to become profitable. MicroMed Technology has incurred
significant net losses since its inception in October 1995, including a net loss
available to common stockholders of $14.2 million for the year ended December
31, 2004 and $4.0 million for the three months ended March 31, 2005. As of March
31, 2005, MicroMed Technology had an accumulated deficit of approximately $76
million. The Company expects to continue to incur operating losses at least
through 2007. Further, the Company expects operating expenses to increase as it
seeks U.S. regulatory clearance for the DeBakey VAD, build a technical support
organization for product introduction and market development, continue
engineering and development projects, and increase administrative activities to
support the Company's planned growth. The extent of the Company's future
operating losses and the timing of its profitability are highly uncertain, and
the Company may never generate sufficient revenues to achieve or sustain
profitability.



                                       20
<PAGE>

Based upon funds available to MicroMed Technology at December 31, 2004, its
independent auditors expressed doubt about its ability to continue as a going
concern if it is unable to raise additional funds. If revenues fail to grow at a
pace rapid enough to offset planned increases in the Company's expenses or if
the Company is unable to curb its losses and achieve profitability, the value of
your investment may be lost.

MICROMED'S SUCCESS DEPENDS ENTIRELY ON THE DEBAKEY VAD.

MicroMed depends entirely on the DeBakey VAD and related accessories for its
success. The DeBakey VAD will require regulatory approval before it can be
marketed in the U.S. MicroMed has not sold significant numbers of products in
international markets or in the U.S. and it cannot assure you that its efforts
will be successful or that the DeBakey VAD will be safe or effective, approved
by regulatory authorities or successfully marketed. Because the DeBakey VAD is
MicroMed's primary product focus, its inability to obtain the necessary
regulatory approvals or to market and commercialize the DeBakey VAD successfully
would materially affect its ability to achieve significant revenue and would
make it likely that MicroMed would not achieve profitability.

IF THE DEBAKEY VAD IS NOT ACCEPTED BY THE MEDICAL COMMUNITY MICROMED WILL NOT
ACHIEVE SIGNIFICANT REVENUES AND WILL NOT BE PROFITABLE.

The commercial success of the DeBakey VAD depends on its acceptance by
cardiologists and cardiac surgeons. Such acceptance will depend on clinical
trial results and the conclusion by these physicians that the DeBakey VAD is
safe, cost-effective and an acceptable method of treatment. MicroMed cannot
assure you that the DeBakey VAD will provide benefits considered adequate by
providers of cardiovascular treatments or that a sufficient number of providers
will use the DeBakey VAD for it to achieve commercial success. Even if MicroMed
establishes the safety and effectiveness of the DeBakey VAD, physicians may
elect not to use it for a number of reasons, including:

      o     Adverse medical effects suffered by patients implanted with the
            DeBakey VAD during clinical trials or after commercialization, even
            if unrelated to the DeBakey VAD;

      o     lack of experience with the DeBakey VAD;

      o     the perceived increased risk of patient complications associated
            with VADs generally;

      o     perceived liability risks generally associated with the use of new
            medical products; and

      o     adverse publicity regarding the DeBakey VAD, truthful or false, or
            favorable publicity regarding a competing VAD or medical alternative
            that could adversely affect acceptance of the DeBakey VAD by the
            medical community.

THE MAINTENANCE OF EXISTING AND THE ESTABLISHMENT OF ADDITIONAL RELATIONSHIPS
WITH CARDIAC SURGEONS AND CARDIOLOGISTS IS NECESSARY FOR MICROMED TO ACHIEVE
SIGNIFICANT RESPONSES.

A limited number of cardiac surgeons and cardiologists influence medical device
selection and purchase decisions for a large portion of MicroMed's target
cardiac patient population. MicroMed has developed working relationships with
cardiac surgeons and cardiologists at a number of leading medical centers in
connection with the development of the DeBakey VAD. In addition, surgical teams
at several leading foreign medical centers have performed clinical trials to
support the Company's applications for CE Mark regulatory approval. If MicroMed
fails to maintain existing relationships and arrangements or establish new
relationships with these and other physicians and medical centers in support of
the DeBakey VAD, MicroMed will not achieve significant revenues and will not be
profitable.



                                       21
<PAGE>

THE DEBAKEY VAD WILL LIKELY HAVE A LONG AND VARIABLE SALES AND DEPLOYMENT CYCLE,
WHICH MAY CAUSE ITS REVENUE AND OPERATING RESULTS TO FLUCTUATE SIGNIFICANTLY
FROM QUARTER-TO-QUARTER.

MicroMed expects that the DeBakey VAD will have a lengthy sales cycle and
MicroMed may incur substantial sales and marketing expenses and expend
significant effort without making significant sales. Even after making a
decision to purchase the DeBakey VAD, MicroMed expects that customers may deploy
products slowly. For example, MicroMed expects that the length of time between
initial contact with cardiac surgeons and the potential purchase of the DeBakey
VAD will generally be between nine and 18 months. In addition, the cardiac
centers that buy the majority of MicroMed's products are usually led by cardiac
surgeons who are heavily recruited by competing centers or by centers looking to
increase their profiles. When one of these surgeons moves between centers,
MicroMed may experience a temporary but significant reduction in purchases by
the departed center while it replaces its lead surgeon. As a result, it will be
difficult for MicroMed to predict the quarter in which its customers may
purchase the DeBakey VAD and MicroMed's revenue and operating results may vary
significantly from quarter to quarter, which increases the risk of an operating
loss for MicroMed for any given quarter.

FUTURE CHANGES IN TECHNOLOGY COULD RENDER THE DEBAKEY VAD OBSOLETE OR
UNCOMPETITIVE.
The field of technology relating to cardiac assistance and therapy and the
medical device industry has undergone rapid and significant technological
development. MicroMed expects that the technology associated with cardiac assist
devices will continue to develop rapidly, and its success will depend in large
part on its ability to establish a competitive position with respect to this
technology. Additionally, new surgical procedures and medications could develop
that replace or reduce the importance of the function we are developing the
DeBakey VAD to perform. Third parties may succeed in developing or marketing
technologies and products that are more effective than the DeBakey VAD or that
would render the DeBakey VAD obsolete or uncompetitive before MicroMed recovers
any or all of its research, development and commercialization expenses.

MICROMED MAY BE UNABLE TO COMPETE SUCCESSFULLY WITH ITS COMPETITORS.
MicroMed faces competition from companies that develop, manufacture and market
cardiac assist and therapy products and technology. MicroMed also competes with
universities and other research institutions in the development of cardiac
assist and therapy technologies. Many of MicroMed's competitors have greater
technical and financial resources than we do. Some of these competitors have
currently available and marketed cardiac assist products, as well as cardiac
assist products and technologies under development. For example, other companies
are currently developing axial flow and centrifugal VADs that, if successfully
commercialized, could compete with the DeBakey VAD.

MicroMed's ability to compete successfully is based on numerous factors,
including:

      o     the performance, effectiveness and size of the DeBakey VAD relative
            to competing products;

      o     the relative speed with which it is able to bring the DeBakey VAD to
            market in its target markets;

      o     the cost-effectiveness of the DeBakey VAD; and

      o     the ease of use of the DeBakey VAD.

If MicroMed is unable to distinguish the DeBakey VAD from competing products, or
if competing products reach the market first, MicroMed may be unable to compete
successfully with current or future competitors. This would cause its revenues
to decline and affect its ability to achieve profitability.

MICROMED'S CLINICAL TRIALS MAY PROVE UNSUCCESSFUL OR LEAD TO SIGNIFICANT
SETBACKS IN OBTAINING NECESSARY REGULATORY APPROVALS.

In order to obtain regulatory approvals for commercial sale of the DeBakey VAD,
MicroMed must demonstrate through clinical trials that the DeBakey VAD is safe
and performs as intended. MicroMed must demonstrate that the DeBakey VAD, which
was designed to provide increased blood flow to patients who suffer from
end-stage heart failure, can operate effectively and reliably within a patient
for an extended period of time.



                                       22
<PAGE>

MicroMed commenced clinical trials for the DeBakey VAD in Europe in November
1998 and in the U.S. in June 2000. During its clinical trials, patients have
died or suffered other adverse medical effects, including adverse effects
commonly associated with VAD use generally. For example, during MicroMed's
European and U.S. clinical trials, there have been instances of thrombus
formation (blood clots) in the DeBakey VAD which required therapeutic
intervention and/or caused serious adverse effects. Adverse medical effects may
continue to occur in future clinical trials. Patient deaths and other adverse
effects, even if unrelated to the DeBakey VAD, could adversely affect MicroMed's
clinical trial results and thus its ability to secure required regulatory
approval. The DeBakey VAD will require further trials in the U.S. before
obtaining or applying for regulatory approval for marketing and may require
further clinical trials in Europe for product enhancements.

Clinical trials may identify significant technical or other obstacles to be
overcome prior to obtaining necessary regulatory or reimbursement approvals. A
number of companies have suffered significant setbacks in advanced clinical
trials, even after promising results in earlier trials. The overall results of
our bridge to transplant ("BTT") trial to date have resulted in lower than
expected survival to transplant percentages. The Company now believes that it is
likely that it will not meet the performance goal survival rate for the patients
in this trial. This is likely to substantially increase the time required to
obtain FDA approval and the time when the Company would expect to generate
revenues from commercial sales of the DeBakey VAD. The Company has only enrolled
8 patients to date in its Destination Therapy trial and believes that it needs
to redesign the structure of the trial to accommodate a shorter PMA pathway.
Under the current design of its Destination Therapy trial (360 patients on a 2:1
randomization against the HeartMate XVE), the Company originally anticipated
completing enrollment between late 2008 to late 2010, which it believed would
result in PMA approval between early 2010 to early 2012. The Company is
presently in discussions with its clinical consultants to develop the specific
new clinical trial parameters and protocols for the Destination Therapy trial
which it intends to request from the FDA. However, there is no assurance that
the Company will be able to convince the FDA to accept these changes. The
Company, or regulatory authorities, may suspend or terminate clinical trials at
any time.

MicroMed also may encounter unexpected delays, expenses, technical problems or
other difficulties related to development, manufacturing and marketing of the
DeBakey VAD that could result in the abandonment or substantial change in the
design, development and commercialization of the DeBakey VAD. MicroMed's failure
or inability to address such problems adequately or timely would have a material
adverse effect on its ability to commercially market its products. Although
MicroMed has received CE Mark approval for the bridge-to-transplant ("BTT"),
destination therapy ("DT") and pediatric indications and has received U.S.
regulatory approval to commercialize the DeBakey VAD for pediatric indications
pursuant to a humanitarian device exemption ("HDE"), it cannot assure you as to
when its U.S. clinical trials will be completed or that it will obtain required
U.S. regulatory approvals or other non-U.S. regulatory approvals for the DeBakey
VAD and any product enhancements when expected or at all.

MICROMED MAY NOT OBTAIN OR MAINTAIN REGULATORY CLEARANCES OR APPROVALS REQUIRED
FOR MARKETING AND COMMERCIALLY SELLING THE DEBAKEY VAD IN THE U.S. AND SUCH
FAILURE OR DELAY IN OBTAINING OR MAINTAINING SUCH CLEARANCES OR APPROVALS COULD
ADVERSELY AFFECT ITS BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The research and development, manufacturing, marketing and distribution of the
DeBakey VAD system in the U.S. is subject to regulation by numerous authorities,
including the Food and Drug Administration ("FDA"). MicroMed must comply with
the Federal Food, Drug, and Cosmetic Act and the regulations promulgated under
the Act, administered by the FDA. Prior to marketing or commercial sale in the
U.S., MicroMed must obtain a Pre-Market Approval ("PMA") for the DeBakey VAD
from the FDA. The process of obtaining this approval is lengthy, expensive and
uncertain. Securing FDA clearances and approvals will require submission of
clinical data and supporting information to the FDA. Product clearances and
approvals can be withdrawn for failure to comply with regulatory requirements or
on the occurrence of unforeseen problems following initial marketing. MicroMed
also must comply with regulations administered by the FDA including the Quality
Systems Requirements and Good Laboratory Practice regulations. These regulations
require MicroMed to follow certain prescribed testing, quality, control, storage
and documentation procedures. The FDA monitors compliance with applicable
regulatory requirements through periodic site inspections.



                                       23
<PAGE>

MicroMed cannot assure you that it will be able to obtain necessary regulatory
clearances or approvals on a timely basis, if at all, and delays in receipt or
failure to receive such clearances or approvals, the loss of previously received
clearances or approvals, or failure to comply with existing or future regulatory
requirements could have a material adverse effect on MicroMed's business,
prospects, financial condition and results of operations. Moreover, regulatory
clearances or approvals for the DeBakey VAD, even if granted, may include
significant limitations on the uses for which the product may be marketed. In
addition, certain material changes to approved medical devices are subject to
FDA review and approval. MicroMed cannot assure you that it will be able to
maintain compliance with all regulatory requirements. Changes in existing laws,
regulations or policies and the adoption of new laws, regulations or policies
could prevent MicroMed from, or could affect the timing of, achieving compliance
with regulatory requirements, including current and future regulatory clearances
or approvals, where necessary.

MICROMED MAY BE UNABLE TO OBTAIN OR MAINTAIN NECESSARY CLEARANCES OR APPROVALS
REQUIRED FOR THE INTERNATIONAL COMMERCIALIZATION OF THE DEBAKEY VAD IN CERTAIN
COUNTRIES, WHICH COULD ADVERSELY AFFECT ITS BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

MicroMed intends to market the DeBakey VAD in international markets as well as
domestically. A number of risks are inherent in international transactions.
Sales of products outside of the U.S. are subject to foreign regulatory
requirements governing, among other things, product approval, product testing
and licensing standards, manufacturing processes, pricing and reimbursement
levels that may vary widely from country to country. Regulations governing
requirements for approvals or clearance to market, the time required for
regulatory review and sanctions imposed for violations also vary from country to
country. The time required to obtain clearance from a foreign country may be
longer or shorter than that required by the FDA or other such agencies, and
other regulatory requirements may differ.

Prior to commercial sale of medical devices in the countries of the European
Union, MicroMed was required to receive a CE Mark certification, an
international symbol of quality and compliance with applicable European
community medical device directives. In particular, MicroMed must comply with
the Essential Requirements of the Medical Devices Directive, which primarily
relate to safety and performance, and to undergo conformity assessment
certification by a Notified Body in order to qualify for CE Mark approval.

In Europe, MicroMed is also subject to the Active Implantable Medical Device
Directive, which regulates quality medical device manufacturing. In addition,
the Company must meet the technical standards established by the International
Organization for Standardization ("ISO"). ISO 9000 is a series of international
standards on quality management and assurance. ISO 13485 is the medical version
of ISO 9001, which incorporates all quality elements, including design.

Although MicroMed has received CE Mark approval for the bridge-to-transplant,
destination therapy and pediatric indications, it cannot assure you that it will
obtain or maintain regulatory approvals or clearances in countries of the
European Union or other foreign countries or that MicroMed will not have to
incur significant costs in obtaining or maintaining foreign regulatory approvals
or clearances. In addition, if existing regulations are changed or modified,
MicroMed cannot assure you that it will be able to comply with any such changes
or modifications or that such changes or modifications will not result in
significant costs in order to comply with such changes or modifications. Delays
in receipt of approvals or clearances to market the DeBakey VAD in international
countries, failure to receive such approvals or clearances or the future loss of
previously received approvals or clearances could have a material adverse effect
on MicroMed's business, prospects, financial condition and results of
operations. International sales also may be limited or disrupted by political
instability, failure to receive adequate reimbursement, price controls, trade
restrictions and the impositions of or changes in tariffs, any of which could
have a material adverse effect on its business, prospects, financial condition
and results of operations. Collection of receivables from some foreign countries
can be problematic. MicroMed cannot assure you that it will be able to
successfully commercialize the DeBakey VAD in any international market.


                                       24
<PAGE>

IF MICROMED IS UNABLE TO OBTAIN REGULATORY APPROVAL FOR MARKETING THE DEBAKEY
VAD FOR OTHER INDICATIONS, OR FOR PRODUCT ENHANCEMENTS TO THE DEBAKEY VAD, ITS
GROWTH PROSPECTS WILL BE LIMITED.

Even though MicroMed has received CE Mark approval for the bridge-to-transplant,
destination therapy and pediatric indications, and even if it receives a PMA
from the FDA for such indications and it is successful in marketing the DeBakey
VAD for such indications, MicroMed may be unable to expand its business as
intended to address these markets. MicroMed has not received, and may never
receive, regulatory approval for other indications such as bridge-to-recovery.
Additional regulatory approvals will be required for MicroMed to conduct
clinical trials to support the use of our DeBakey VAD and to commercialize the
DeBakey VAD for such other indications. If MicroMed is unsuccessful in
completing the required clinical trials and obtaining the necessary regulatory
approvals to market the DeBakey VAD for expanded uses, its growth prospects will
be limited. Even if MicroMed obtains the necessary regulatory approvals for
other indications, it may fail to gain market acceptance for the DeBakey VAD for
such other indications.

MicroMed plans to make product enhancements to the DeBakey VAD system from time
to time. Product enhancements require supplemental filings with and further
approval from regulatory authorities, and may require additional clinical
trials. The process of obtaining regulatory approval for a product enhancement
may take a long period of time, and MicroMed cannot assure you that it
ultimately will obtain approval for any product enhancement.

THE DEBAKEY VAD MAY NOT RECEIVE APPROVAL FOR REIMBURSEMENT BY GOVERNMENTS AND
OTHER THIRD-PARTY PAYORS.

Sales of the DeBakey VAD will depend largely on the availability of adequate
reimbursement from third-party payors such as governments and private insurers.
Healthcare providers that purchase medical devices for treatment of their
patients generally rely on third-party payors to reimburse all or part of the
costs associated with treatment. Medical devices incorporating new technologies,
such as the DeBakey VAD, are closely examined by governments and private
insurers to determine whether the device and associated medical procedures will
be covered for reimbursement, and, if so, the level of reimbursement that will
apply.

Government and other third-party payors are increasingly attempting to contain
healthcare costs by limiting both coverage and the level of reimbursement of
therapeutic products and by refusing in some cases to provide any coverage for
uses of approved products for indications other than those for which their
respective regulatory agencies (e.g., the FDA) have granted marketing approval.
MicroMed cannot predict whether reimbursement for the DeBakey VAD will be
sufficient from third-party payors to adequately compensate hospitals for
DeBakey VAD implants. Failure to obtain such adequate reimbursement could
influence selection of the DeBakey VAD for treatment and could have a material
adverse effect on MicroMed's business, financial condition and results of
operations.

MICROMED IS THE SOLE MANUFACTURER OF THE DEBAKEY VAD AND HAS ONLY ONE
MANUFACTURING FACILITY, THE LOSS OF WHICH WOULD HARM MICROMED'S REVENUES AND
DAMAGE ITS BUSINESS.

MicroMed currently produces the DeBakey VAD in its manufacturing facility
located in Houston, Texas, which is the sole source for production of the
DeBakey VAD. A natural disaster or other event that resulted in the destruction
or loss of part or all of the manufacturing facility or a work stoppage or other
employee issues that interrupted or stopped DeBakey VAD production would
significantly harm MicroMed's business and operations. Although Micromed
believes other manufacturing facilities could manufacture the DeBakey VAD in
compliance with the FDA's Quality System Regulation, MicroMed may not be able to
find an alternate facility that could meet production requirements on short
notice. Even if MicroMed finds an alternate facility, production costs likely
would increase, particularly if MicroMed needs the DeBakey VAD produced on short
notice.


                                       25
<PAGE>

MICROMED DEPENDS ON SUPPLIERS TO PROVIDE KEY MATERIALS AND COMPONENTS OF THE
DEBAKEY VAD, AND ANY CHANGE IN MICROMED'S RELATIONSHIP WITH ITS SUPPLIERS COULD
PREVENT MICROMED FROM DELIVERING THE DEBAKEY VAD IN A TIMELY MANNER, REDUCING
ITS FUTURE REVENUES OR INCREASING ITS COSTS.

MicroMed relies on third-party suppliers to provide key materials and components
of the DeBakey VAD system, some of which are single source suppliers. MicroMed's
reliance on these third-party suppliers subjects it to other risks that could
harm its business, including:

      o     suppliers could encounter manufacturing problems due to a variety of
            reasons, including failure to follow specific protocols and
            procedures, failure to comply with applicable regulations, including
            the FDA's Quality System Regulation, equipment malfunction and
            environmental factors;

      o     suppliers often manufacture medical or other devices for a range of
            customers, and fluctuations in demand for the products those
            suppliers make for others may affect their ability to deliver
            components to us in a timely manner;

      o     suppliers may encounter financial hardships unrelated to MicroMed's
            demand for products, which could inhibit their ability to fulfill
            our orders and meet delivery requirements;

      o     the suppliers may make errors in manufacturing materials and
            components that could negatively affect the efficacy or safety of
            the DeBakey VAD or cause delays in its shipment;

      o     MicroMed may not be able to obtain adequate inventories of the
            materials and components it needs in a timely manner or on
            commercially reasonable terms; and

      o     MicroMed may have difficulty locating and qualifying alternative
            suppliers for these products.


MICROMED'S ABILITY TO PROTECT ITS INTELLECTUAL PROPERTY
RIGHTS INVOLVES MANY COMPLEXITIES AND UNCERTAINTIES; COMMERCIALIZATION OF THE
DEBAKEY VAD COULD GIVE RISE TO CLAIMS THAT ITS TECHNOLOGY INFRINGES ON THE
RIGHTS OF OTHERS.

MicroMed's business depends significantly on its proprietary technology.
MicroMed relies on a combination of patents, trademarks and confidentiality
agreements and other contractual provisions to establish, maintain and protect
its proprietary rights, all of which afford only limited protection. MicroMed's
success will depend to a significant extent on its ability to obtain and
maintain patent and trademark protection for the DeBakey VAD and related
technologies, to preserve trade secrets and to operate without infringing the
proprietary rights of others.

MicroMed cannot assure you that it will obtain additional patents or that issued
patents will provide substantial protection against competitors with similar
technology or be of commercial benefit to MicroMed. The issuance of a patent is
not conclusive as to its validity or enforceability, nor does it provide the
patent holder with freedom to operate without infringing the patent rights of
others.

The medical device industry is characterized by a large number of patents and by
frequent and substantial intellectual property litigation. A patent could be
challenged by litigation and, if the outcome of such litigation were adverse to
the patent holder, competitors might be free to use the subject matter covered
by the patent, or the patent holder might license the technology to others in
settlement of such litigation. The invalidation of key patents owned by or
licensed to MicroMed or nonapproval of pending patent applications could create
increased competition, with potentially material adverse effects on MicroMed and
its business.

MicroMed is potentially subject to claims and litigation from third parties
claiming that MicroMed's products or processes infringe their patent or other
proprietary rights. If any such actions are successful, in addition to any
potential liability for damages, MicroMed could be required to obtain a license
in order to continue to manufacture, use or sell the affected product or
process. Litigation, which could result in substantial cost to MicroMed, also
may be necessary to enforce its patent and proprietary rights and/or to
determine the scope and validity of the patents or proprietary rights of others.
Any intellectual property litigation would be costly and could divert the
efforts and attention of MicroMed's management and technical personnel, which
could have a material adverse effect on its business, financial condition and
results of operations. MicroMed cannot assure you that infringement claims will
not be asserted in the future or that such assertions, if proven to be true,
will not prevent MicroMed from selling its products or materially and adversely
affect its business, financial condition and results of operations. If any such
claims are asserted against it, it may seek to enter into a royalty or licensing
arrangement. MicroMed cannot assure you that a license will be available on
commercially reasonable terms, or at all.



                                       26
<PAGE>

MicroMed also relies on unpatented trade secrets, and no assurance can be given
that others will not independently develop substantially equivalent proprietary
information and techniques, or otherwise gain access to its trade secrets or
disclose such technology, or that MicroMed can meaningfully protect its right to
unpatented trade secrets.

IF THE RIGHTS TO TECHNOLOGY THAT MICROMED HAS LICENSED TERMINATE, ITS
COMMERCIALIZATION EFFORTS COULD BE DELAYED OR FAIL.

Fundamental elements of the DeBakey VAD technology have been licensed from NASA
and Baylor College of Medicine. MicroMed has worldwide rights to that
technology, but these exclusive rights will terminate on the expiration of the
licensed patent relating to the technology or final abandonment of any pending
patent application. The licensed patent relating to the technology does not
expire before 2013. Additionally, MicroMed's exclusive rights may be terminated
if it breaches the terms of the license agreements and fails to cure the breach.

Termination of MicroMed's agreements with NASA or Baylor College of Medicine
could delay or suspend MicroMed's overall commercialization efforts. The failure
to maintain the right to license such technology could require MicroMed to cease
providing products or services using such licensed technology and, therefore,
would likely result in loss of revenue for its business.

MICROMED MAY BE SUBJECT TO CLAIMS OF TRADEMARK INFRINGEMENT, WHICH MAY HARM ITS
BUSINESS.

MicroMed may be subject to legal proceedings alleging claims of trademark
infringement in the future. MicroMed has recently become aware that other
parties are utilizing the "Micromed" mark, or other marks that incorporate the
letters "Micromed," and those parties may have rights to such mark that are
superior to those of MicroMed. In this event, MicroMed may be required to stop
using the name in particular markets or to obtain a license from these parties
to use it in such markets. If MicroMed must rebrand, it may result in
significant marketing expenses and additional management time and resources,
which may adversely affect its business.

PRODUCT LIABILITY CLAIMS IN EXCESS OF MICROMED'S INSURANCE COVERAGE COULD
ADVERSELY AFFECT ITS BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The research, development and commercialization of medical devices entails
significant product liability risks. The use of the DeBakey VAD in clinical
trials and its commercial sale may expose MicroMed to liability claims. These
claims might be made directly by consumers, healthcare providers or persons
selling the device. MicroMed currently maintains product liability insurance in
an aggregate amount of $20 million; however, MicroMed cannot assure you that it
will be able to maintain such insurance on acceptable terms or that such
insurance will be sufficient to protect it against potential claims or that
insurance will be available in the future in amounts sufficient to protect it. A
product liability claim, product recall or other claim, as well as any claims
for uninsured liabilities or in excess of insured liabilities, could result in
substantial costs to MicroMed, divert management attention from its operations
and generate adverse publicity. This could harm MicroMed's reputation, result in
a decline in revenues and increase expenses.

MICROMED MAY BE UNABLE TO SCALE ITS OPERATIONS SUCCESSFULLY.

MicroMed's plan is to grow rapidly. Its growth will place significant demands on
MicroMed's management and manufacturing capacity, as well as its financial,
administrative and other resources. MicroMed cannot guarantee that any of the
systems, procedures and controls it puts in place will be adequate to support
the commercialization of the DeBakey VAD or other operations. MicroMed's
operating results will depend substantially on the ability of its officers and
key employees to manage changing business conditions and to implement and
improve its financial, administrative and other resources. If MicroMed is unable
to respond to and manage changing business conditions, or the scale of its
products, services and operations, then the quality of its services, its ability
to retain key personnel and its business could be harmed.



                                       27
<PAGE>

MICROMED DEPENDS ON CERTAIN KEY EXECUTIVE PERSONNEL AND OTHER KEY SCIENTIFIC AND
MANAGERIAL PERSONNEL FOR ITS SUCCESS, THE LOSS OF WHOM COULD ADVERSELY AFFECT
ITS BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

MicroMed's success depends on the continued availability and contributions of
members of its scientific and senior management teams and other key personnel.
The loss of services of any of these persons could delay or reduce MicroMed's
product development and commercialization efforts. Furthermore, recruiting and
retaining qualified scientific personnel to perform future research and
development work will be critical to MicroMed's success. The loss of members of
MicroMed's management team, key clinical advisors or scientific personnel, or
its inability to attract or retain other qualified personnel or advisors, could
significant weaken its management, harm its ability to compete effectively and
harm its business.

MICROMED'S FUTURE CAPITAL NEEDS ARE UNCERTAIN. THE COMPANY WILL NEED TO RAISE
ADDITIONAL FUNDS IN THE FUTURE AND THESE FUNDS MAY NOT BE AVAILABLE ON
ACCEPTABLE TERMS OR AT ALL.

MicroMed Technology completed the Private Placement, including the conversion of
approximately $4.5 million of convertible notes issued in connection with the
2004 and 2005 Bridge Loans, prior to the closing of the Merger. Thus, the
Company believes that it will have sufficient cash and cash equivalents to meet
projected operating requirements for at least the through the end of 2005. The
Company cannot be certain that additional capital will be available on favorable
terms, or at all. Any subsequent equity financing could result in dilution to
your share holdings. If adequate funds are unavailable, MicroMed may be required
to scale back or discontinue its product development program or clinical trials,
or obtain funds through strategic alliances that may require MicroMed to
relinquish rights to certain of its technologies. Refer also to Item 5.01 under
"MICROMED'S OPERATIONS - Management's Discussion and Analysis of the Company's
Financial Condition and Results of Operations - Liquidity and Capital
Resources."

MICROMED'S NON-U.S. SALES PRESENT SPECIAL RISKS.

During the years ended December 31, 2004 and 2003, sales originating outside the
U.S. and U.S. export sales accounted for approximately 29% and 30%,
respectively, of MicroMed Technology's total revenues. MicroMed anticipates that
sales outside the U.S. will continue to account for a significant percentage of
its product sales and the Company intends to continue to expand its presence in
international markets. Non-U.S. sales are subject to a number of special risks.
For example:

      o     products may be sold a lower price outside the United States;

      o     competitors provide products for no charge during clinical trials;

      o     sales agreements may be difficult to enforce;

      o     receivables may be difficult to collect through a foreign country's
            legal system;

      o     foreign customers may have longer payment cycles;

      o     foreign countries may impose additional withholding taxes or
            otherwise tax foreign income, impose tariffs or adopt other
            restrictions on foreign trade;

      o     U.S. export licenses may be difficult to obtain;

      o     intellectual property rights may be more difficult to enforce in
            foreign countries;

      o     terrorist activity may interrupt distribution channels or adversely
            impact customers or employees; and

      o     fluctuations in exchange rates may affect product demand and
            adversely affect the profitability, in U.S. dollars, of products
            sold in foreign markets where payments are made in local currencies.


                                       28
<PAGE>

Any of these events could harm MicroMed's operations or operating results.

COMPLIANCE WITH CHANGING REGULATION OF CORPORATE GOVERNANCE AND PUBLIC
DISCLOSURE WILL RESULT IN ADDITIONAL EXPENSES.

Changing laws, regulations and standards relating to corporate governance and
public disclosure, including the Sarbanes-Oxley Act of 2002 and new Securities
and Exchange Commission regulations, are creating uncertainty for public
companies. Following the Merger, the Company's management team will need to
invest significant management time and financial resources to comply with both
existing and evolving standards for public companies, which will lead to
increased general and administrative expenses and a diversion of management time
and attention from revenue generating activities to compliance activities.

RISKS RELATED TO CAPITAL STRUCTURE

THERE IS NO ASSURANCE OF AN ESTABLISHED PUBLIC TRADING MARKET, WHICH WOULD
ADVERSELY AFFECT THE ABILITY OF INVESTORS IN THE COMPANY TO SELL THEIR
SECURITIES IN THE PUBLIC MARKET.

Although the Company's common stock is listed on the OTC Bulletin Board, a
regular trading market for the securities does not yet exist and may not exist
or be sustained in the future. The NASD has enacted recent changes that limit
quotations on the OTC Bulletin Board to securities of issuers that are current
in their reports filed with the Securities and Exchange Commission. The effect
on the OTC Bulletin Board of these rule changes and other proposed changes
cannot be determined at this time. The OTC Bulletin Board is an inter-dealer,
over-the-counter market that provides significantly less liquidity than the
NASD's automated quotation system (the "NASDAQ Stock Market"). Quotes for stocks
included on the OTC Bulletin Board are not listed in the financial sections of
newspapers as are those for the NASDAQ Stock Market. Therefore, prices for
securities traded solely on the OTC Bulletin Board may be difficult to obtain
and holders of common stock may be unable to resell their securities at or near
their original offering price or at any price. Market prices for the Company's
common stock will be influenced by a number of factors, including:

      o     the issuance of new equity securities pursuant to the Merger, or a
            future offering;

      o     changes in interest rates;

      o     competitive developments, including announcements by competitors of
            new products or services or significant contracts, acquisitions,
            strategic partnerships, joint ventures or capital commitments;

      o     variations in quarterly operating results;

      o     change in financial estimates by securities analysts;

      o     the depth and liquidity of the market for the Company's common
            stock;

      o     investor perceptions of the company and the medical device industry
            generally; and

      o     general economic and other national conditions.


                                       29
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET PRICE OF THE
COMPANY'S COMMON STOCK, AS THE FUTURE SALE OF A SUBSTANTIAL AMOUNT OF
OUTSTANDING STOCK IN THE PUBLIC MARKETPLACE COULD REDUCE THE PRICE OF THE
COMPANY'S COMMON STOCK.

The Company is obligated to file a registration statement with the Securities
and Exchange Commission within 30 days from the closing of the Private Placement
which covers the subsequent resale by investors of any shares of common stock or
shares of common stock underlying warrants purchased in any such offering.
Additionally, following the Merger, the former stockholders of Salmon and
MicroMed Technology, who received shares of the Company's common stock in the
Merger, may be eligible to sell all or some of their shares of common stock by
means of ordinary brokerage transactions in the open market pursuant to Rule
144, promulgated under the Securities Act ("Rule 144"), subject to certain
limitations. In general, pursuant to Rule 144, a stockholder (or stockholders
whose shares are aggregated) who has satisfied a one-year holding period may,
under certain circumstances, sell within any three-month period a number of
securities which does not exceed the greater of 1% of the then outstanding
shares of common stock or the average weekly trading volume of the class during
the four calendar weeks prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of securities, without any limitations, by a
non-affiliate that has satisfied a two-year holding period. Any substantial sale
of common stock pursuant to any resale prospectus or Rule 144 may have an
adverse effect on the market price of the Company's common stock by creating an
excessive supply.

THE COMPANY'S COMMON STOCK COULD BE CONSIDERED A "PENNY STOCK" AND MAY BE
DIFFICULT TO SELL.

The Company's common stock may be considered to be a "penny stock" if it meets
one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under
Section 15(g) of the Exchange Act. These include but are not limited to the
following: (i) the stock trades at a price less than $5.00 per share; (ii) it is
NOT traded on a "recognized" national exchange; (iii) it is NOT quoted on the
NASDAQ Stock Market, or even if so, has a price less than $5.00 per share; or
(iv) is issued by a company with net tangible assets less than $2.0 million, if
in business more than a continuous three years, or with average revenues of less
than $6.0 million for the past three years. The principal result or effect of
being designated a "penny stock" is that securities broker-dealers cannot
recommend the stock but must trade in it on an unsolicited basis.

Additionally, Section 15(g) of the Exchange Act and Rule 15g-2 promulgated
thereunder by the SEC require broker-dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny stocks and to
obtain a manually signed and dated written receipt of the document before
effecting any transaction in a penny stock for the investor's account.

Potential investors in the Company's common stock are urged to obtain and read
such disclosure carefully before purchasing any shares that are deemed to be
"penny stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to
approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for holders of the Company's
common stock to resell their shares to third parties or to otherwise dispose of
them in the market or otherwise.

FOLLOWING THE MERGER, THE FORMER PRINCIPAL STOCKHOLDERS OF MICROMED HAVE
SIGNIFICANT INFLUENCE OVER THE COMPANY.

Charterhouse Group Inc., Oxford Bioscience Partners, SV Life Sciences, Essex
Woodlands Health Ventures and Mitsui & Co. Venture Partners, and their
respective affiliates, beneficially own, in the aggregate, over 50% of the
Company's outstanding voting stock following the Merger. As a result, these
former principal stockholders of the MicroMed possess significant influence,
giving them the ability, among other things, to elect a majority of the Board of
Directors and to approve significant corporate transactions. Such stock
ownership and control may also have the effect of delaying or preventing a
future change in control, impeding a merger, consolidation, takeover or other
business combination or discourage a potential acquirer from making a tender
offer or otherwise attempting to obtain control of the Company.



                                       30
<PAGE>

IF THE COMPANY FAILS TO MAINTAIN EFFECTIVE INTERNAL CONTROLS OVER FINANCIAL
REPORTING, THE PRICE OF ITS COMMON STOCK MAY BE ADVERSELY AFFECTED.

The Company's internal control over financial reporting may have weaknesses and
conditions that need to be addressed, the disclosure of which may have an
adverse impact on the price of our common stock. The Company is required to
establish and maintain appropriate internal controls over financial reporting.
Failure to establish those controls, or any failure of those controls once
established, could adversely impact the Company's public disclosures regarding
our business, financial condition or results of operations. In addition,
management's assessment of internal controls over financial reporting may
identify weaknesses and conditions that need to be addressed in its internal
controls over financial reporting or other matters that may raise concerns for
investors. Any actual or perceived weaknesses and conditions that need to be
addressed in the Company's internal control over financial reporting, disclosure
of management's assessment of its internal controls over financial reporting or
disclosure of the Company's public accounting firm's attestation to or report on
management's assessment of the Company's internal controls over financial
reporting may have an adverse impact on the price of its common stock.

STANDARDS FOR COMPLIANCE WITH SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002 ARE
UNCERTAIN, AND IF THE COMPANY FAILS TO COMPLY IN A TIMELY MANNER, ITS BUSINESS
COULD BE HARMED AND ITS STOCK PRICE COULD DECLINE.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of
2002 require annual assessment of the Company's internal control over financial
reporting, and attestation of its assessment by the Company's independent
registered public accountants. On March 2, 2005, the SEC extended the compliance
dates for non-accelerated filers, as defined by the SEC, by one year.
Accordingly, the Company believes that this requirement will first apply to its
annual report for fiscal 2006. The standards that must be met for management to
assess the internal control over financial reporting as effective are new and
complex, and require significant documentation, testing and possible remediation
to meet the detailed standards. The Company may encounter problems or delays in
completing activities necessary to make an assessment of its internal control
over financial reporting. In addition, the attestation process by the Company's
independent registered public accountants is new and the Company may encounter
problems or delays in completing the implementation of any requested
improvements and receiving an attestation of its assessment by the Company's
independent registered public accountants. If the Company cannot assess its
internal control over financial reporting as effective, or its independent
registered public accountants are unable to provide an unqualified attestation
report on such assessment, investor confidence and share value may be negatively
impacted.

THE COMPANY DOES NOT FORESEE PAYING CASH DIVIDENDS IN THE FORESEEABLE FUTURE.
The Company has not paid cash dividends on its stock and does not plan to pay
cash dividends on its common stock in the foreseeable future.

            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some statements in this information statement contain certain "forward-looking"
statements. Forward-looking statements are statements that estimate the
happening of future events are not based on historical fact. Forward-looking
statements may be identified by the use of forward-looking terminology, such as
"may," "shall," "could," "expect," "estimate," "anticipate," "predict,"
"probable," "possible," "should," "continue," or similar terms, variations of
those terms or the negative of those terms. The forward-looking statements
specified in the following information have been compiled by our management on
the basis of assumptions made by management and considered by management to be
reasonable. The Company's future operating results, however, are impossible to
predict and no representation, guarantee, or warranty is to be inferred from
those forward-looking statements.

These risks and uncertainties include, without limitation, those described under
"Risk Factors" and those detailed from time to time in our filings with the SEC,
and include, among others, the following:

      o     The Company's history of operating losses;


                                       31
<PAGE>

      o     Market acceptance of the DeBakey VAD;

      o     The uncertainty of FDA and other government regulatory requirements
            may have a material adverse effect on the Company's ability to
            commercialize the DeBakey VAD;

      o     The degree and nature of the Company's competition;

      o     The Company's ability to employ and retain qualified employees;

      o     The limited trading market for our common stock; and

      o     The other factors referenced in this Form 8-K, including, without
            limitation, under the section entitled "Risk Factors."

The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. The Company cannot
guarantee that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.


ITEM 3.02       UNREGISTERED SALES OF EQUITY SECURITIES.

In August 2005, pursuant to the terms of the Merger Agreement by and between
Salmon, Merger Sub and MicroMed Technology, each share of MicroMed Technology
common stock (an aggregate of 12,960,000 shares) was converted into one share of
our common stock. Additionally, warrants and options to purchase 601,882 shares
of MicroMed Technology common stock, were assumed by us at the closing of the
Merger. The securities were offered and sold to investors in reliance upon
exemptions from registration pursuant to Section 4(2) under the Securities Act
of 1933, as amended, and Rule 506 promulgated thereunder. Each of the persons
and/or entities receiving our securities qualified as an accredited investor (as
defined by Rule 501 under the Securities Act of 1933, as amended).

In August 2005, MicroMed Technology completed a private placement, whereby
MicroMed Technology (i) sold 3,753,145 shares of its common stock at a price of
$1.33 per share for aggregate proceeds of $4,991,683; and (ii) seven-year
warrants, exercisable one year after the date of issuance, to purchase 60% of
the common stock purchased by each investor in the Private Placement at a per
share exercise price of $1.33 (all investors introduced to MicroMed Technology
by Hunter assigned their warrants to Hunter, an aggregate of 1,804,511
warrants). The warrants are redeemable by the Company under certain
circumstances at any time after one year from the date of issuance. The Company
agreed to file a registration statement covering the securities sold in the
Private Placement within 30 days of the closing of the Merger. As partial
consideration for services rendered further to the Private Placement, Hunter was
issued 300,000 shares of MicroMed Technology's common stock. The shares and
warrants were offered and sold to investors in reliance upon exemptions from
registration pursuant to Section 4(2) under the Securities Act of 1933, as
amended, and Rule 506 promulgated thereunder. Each of the investors qualified as
an accredited investor (as defined by Rule 501 under the Securities Act of 1933,
as amended). All proceeds from the private placement will be used for general
corporate purposes.

ITEM 5.01       CHANGES IN CONTROL OF REGISTRANT.

On January 31, 2005, Salmon, along with Merger Sub and certain existing
stockholders of Salmon entered into an Agreement and Plan of Merger with
MicroMed Technology, pursuant to which Salmon would be acquired by MicroMed
Technology in a merger transaction wherein Merger Sub would merge with and into
MicroMed Technology, with MicroMed Technology being the surviving corporation.


                                       32
<PAGE>

On August 10, 2005, the Merger closed and MicroMed Technology became a
wholly-owned subsidiary of Salmon.

The Merger resulted in a change-of-control by Salmon and its stockholders and
the assumption of MicroMed Technology's operations and liabilities. Immediately
prior to the Merger, Salmon effectuated a 1-for-3.3528 reverse stock split of
its common stock. At the effective time of the Merger:

      o     Salmon merged Merger Sub with and into MicroMed Technology and the
            separate corporate existence of Merger Sub has ceased;

      o     Salmon issued shares of its common stock on a one-for-one basis in
            exchange for 100% of the issued and outstanding shares of common
            stock MicroMed Technology;

      o     Salmon adopted the MicroMed 1997 Stock Option Plan and the MicroMed
            2005 Stock Incentive Plan as its own plans;

      o     Salmon assumed options and warrants to purchase shares of common
            stock previously issued by MicroMed on the same terms and
            conditions;

      o     Salmon issued the Escrow Shares into escrow to cover indemnification
            obligations, if any, of Salmon to MicroMed Technology and its
            stockholders;

      o     Salmon caused 10,010,800 pre-split shares of common stock held by
            Mr. Smith to be cancelled and extinguished; and

      o     In consideration for the aforementioned cancellation of shares,
            Salmon distributed its assets (and related liabilities) held prior
            to the Merger to Mr. Smith and certain third parties unaffiliated to
            Salmon paid Mr. Smith cash consideration of $0.060456 per share, or
            $605,213. The distribution of assets occurred immediately following
            the closing of the Merger. The net tangible book value as of
            November 30, 2004 of the assets and liabilities of the Company
            distributed to Mr. Smith immediately after the closing of the Merger
            is a net deficit of $12,172. This sum was not aggregated with the
            cash consideration he is receiving in exchange for the stock he
            holds in the Company. As a result, the per share value of the
            consideration Mr. Smith is receiving is $0.060456 compared to the
            per share price of $0.098482 to be received by the other
            stockholders (prior to the Effective Time of the Merger) of the
            Company.

As a result of the Merger, Salmon became the parent corporation and the
stockholders of MicroMed Technology became stockholders of Salmon. Immediately
prior to the closing of the Merger, MicroMed Technology had outstanding
17,013,145 shares of common stock, options to purchase 555,822 shares of common
stock and warrants to purchase 2,251,887 shares of common stock. Immediately
after the closing of the Merger, MicroMed Cardiovascular had 18,513,145
outstanding shares of common stock (excluding the Escrow Shares), options to
purchase 555,822 shares of common stock and warrants to purchase 2,251,887
shares of common stock. Based on the number of shares of common stock of
MicroMed Cardiovascular outstanding immediately after the closing of the Merger,
the stockholders of Salmon before the Merger currently own approximately 8.1% of
the Company's issued and outstanding shares of common stock.

After the Merger was concluded, Salmon reincorporated from the State of Nevada
to the State of Delaware and changed its corporate name to MicroMed
Cardiovascular, Inc.

Following the Merger, Travis E. Baugh, Dallas W. Anderson, Paul M. Frison, James
M. Garvey, Norwick B.H. Goodspeed, Phyllis Haberman, Cornelius T. Ryan and
Martin P. Sutter, each of whom are directors of MicroMed, were appointed to the
Board of Directors of the Company. In addition, the Company appointed Travis E.
Baugh as the Company's President and Chief Executive Officer, Betty Silverstein
Russell as Chief Operating Officer and Executive Vice President, Sales and
Marketing, Robert J. Benkowski as Senior Vice President, Engineering, and
Timothy R. Placek as Senior Vice President, Regulatory Affairs, Clinical Affairs
and Quality Systems and Michael A. Rutledge as Vice President, Controller and
Corporate Secretary. Pete Smith and Eric Weitzman resigned as officers and
directors of the Company immediately after the Effective Time of the Merger.


                                       33
<PAGE>

The transaction contemplated by the Merger Agreement is intended to be a
"tax-free" incorporation pursuant to the provisions of Section 351 and
368(a)(i)(A) of the Internal Revenue Code of 1986, as amended.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT FOLLOWING THE
MERGER

Beneficial ownership is determined in accordance with the rules of the SEC. In
computing the number of shares beneficially owned by a person and the percentage
of ownership of that person, shares of common stock subject to options held by
that person that are currently exercisable or become exercisable within 60 days
of the estimated closing of the Merger are deemed outstanding even if they have
not actually been exercised. Those shares, however, are not deemed outstanding
for the purpose of computing the percentage ownership of any other person.
Immediately prior to the closing of the Merger, MicroMed Technology had
outstanding 17,013,145 shares of common stock, options to purchase 555,822
shares of common stock and warrants to purchase 2,251,887 shares of common
stock. Immediately after the closing of the Merger, MicroMed Cardiovascular had
18,513,145 outstanding shares of common stock (excluding the Escrow Shares),
options to purchase 555,822 shares of common stock and warrants to purchase
2,251,887 shares of common stock.

The following table sets forth certain information with respect to beneficial
ownership of the Company common stock immediately after the closing of the
Merger based on 18,513,145 outstanding shares of common stock (excluding the
Escrow Shares), by (i) each director, (ii) each executive officer, (iii) all
directors and executive officers as a group, and (iv) each person who
beneficially owns more than five percent of the Company's common stock. Unless
otherwise indicated in the table, the persons and entities named in the table
have sole voting and sole investment power with respect to the shares set forth
opposite the stockholder's name, subject to community property laws, where
applicable. Unless otherwise indicated in the table, the address of each
stockholder listed in the table is c/o MicroMed Cardiovascular, Inc., 8965
Interchange Drive, Houston, TX 77054.


                                       34
<PAGE>

<TABLE>
<CAPTION>
                                                                        Number of Shares    Percent of
Title Of Class   Name and Address of Beneficial Owner                  Beneficially Owned      Class
------------------------------------------------------------------------------------------------------
<S>              <C>                                                   <C>                  <C>
                 DIRECTORS AND EXECUTIVE OFFICERS:

Common Stock     Travis E. Baugh                                               146,236(1)           *
                 President, Chief Executive Officer and Director

Common Stock     Betty Silverstein Russell                                      30,579(2)           *
                 Executive Vice President, Marketing
                 Chief Operating Officer
Common Stock     Robert J. Benkowski                                            25,910(3)           *
                 Senior Vice President, Engineering
Common Stock     Timothy R. Placek                                              19,588(4)           *
                 Senior Vice President, Regulatory Affairs, Clinical
                 Affairs and Quality Systems
Common Stock     Michael A. Rutledge                                             5,000(5)           *
                 Vice President, Controller
Common Stock     Dallas W. Anderson                                              9,345(6)           *
                 Director and Chairman of the Board
Common Stock     Paul M. Frison                                                  4,241(7)           *
                 Director
Common Stock     James M. Garvey                                             1,991,531(8)       10.8%
                 Director
Common Stock     Norwick B.H. Goodspeed                                          4,241(9)           *
                 Director
Common Stock     Phyllis Haberman                                           3,914,474(10)       21.1%
                 Director
Common Stock     Cornelius T. Ryan                                          2,263,557(11)       12.2%
                 Director
Common Stock     Martin P. Sutter                                           2,098,716(12)       11.3%
                 Director
Common Stock     All directors and executive officers                      10,513,152(13)       56.4%
                 as a group (12 persons)

                 FIVE PERCENT STOCKHOLDERS:

Common Stock     Oxford Bioscience Partners and affiliated entities         2,263,557(11)       12.2%
                 222 Berkeley St., Suite 1650
                 Boston, MA 02116
Common Stock     SV Life Sciences                                            1,991,531(8)       10.8%
                 60 State Street, Suite 3650
                 Boston, MA 02109
Common Stock     Charterhouse Equity Partners II, L.P.                      3,914,474(10)       21.1%
                 1105 North Market Street, Suite 1300
                 Wilmington, DE 19899
Common Stock     Essex Woodlands Health Ventures Fund IV, L.P.              2,098,716(12)       11.3%
                 10001 Woodloch Forest Drive
                 The Woodlands, TX 77380
Common Stock     Mitsui & Co. Venture Partners                              2,276,011(14)       12.3%
                 200 Park Avenue
                 New York, NY 10166-0130
Common Stock     Hunter World Markets, Inc.                                 1,085,798(15)        5.9%
                 9300 Wilshire Blvd, Penthouse Suite
                 Beverly Hills, CA 90212
Common Stock     Absolute Return Europe Fund LTD                            1,503,759(16)        8.1%
                 c/o Iron Shore Corporate Services Limited
                 P.O. Box 1234 GT Queensgate House
                 South Church Street, Georgetown
                 Grand Cayman
</TABLE>

* Indicates less than 1.0%

(1)   Includes options to purchase 30,911 shares of common stock exercisable
      within 60 days of the closing date of the Merger.

(2)   Includes options to purchase 30,579 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(3)   Includes options to purchase 25,426 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(4)   Includes options to purchase 19,588 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(5)   Includes options to purchase 5,000 shares of common stock exercisable
      within 60 days of the closing of the Merger.


                                       35
<PAGE>

(6)   Includes options to purchase 5,401 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(7)   Includes options to purchase 4,241 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(8)   Includes 1,258,769 shares held by Schroder Ventures International Life
      Sciences Fund LP1, 279,721 shares held by Schroder Ventures International
      Life Sciences Fund LP2, 443,085 shares held by Schroder Ventures
      International Life Sciences Fund Trust and 9,956 shares held by Schroder
      Ventures International Life Sciences Fund Co-Investment Scheme (together,
      the "Schroder entities"). Schroder Venture Managers Limited ("SVML") is
      the fund manager for all of the Schroder entities. James Garvey serves on
      the investment committee of SV Life Sciences Advisors Limited ("SVLSA"),
      which acts as the fund advisor to SVML. The investment committee of SVML
      has voting and dispositive power over these shares. Mr. Garvey is also a
      special limited partner in the Schroder entities. Mr. Garvey disclaims
      beneficial ownership of the shares held the Schroder entities, except to
      the extent of his proportionate pecuniary interest therein. Excludes
      warrants to purchase 73,299 shares of common stock at $1.33 per share
      exercisable commencing August 10, 2006.

(9)   Includes options to purchase 4,241 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(10)  Ms. Haberman is an executive officer of Charterhouse Group, Inc.
      ("Charterhouse"), the sole stockholder of Charterhouse Equity II, Inc.
      ("Charterhouse Equity II"). Charterhouse Equity II is the general partner
      of CHUSA Equity Investors II, L.P. ("CHUSA Equity II"). CHUSA Equity II is
      the general partner of Charterhouse Equity Partners II, L.P. ("CEP II").
      Ms. Haberman disclaims beneficial ownership of the shares beneficially
      owned by CEPII.

(11)  Includes 515,606 shares held by Oxford Bioscience Partners II L.P.,
      386,074 shares held by Oxford Bioscience Partners (Bermuda) II Limited
      Partnership, 312,639 shares held by Oxford Bioscience Partners
      (GS-Adjunct) II L.P., 130,504 shares held by Oxford Bioscience Partners
      (Adjunct) II L.P., 913,057 shares held by Oxford Bioscience Partners
      (Annex) II L.P., which includes 72,160 shares of Salmon common stock
      purchased from Salmon stockholders upon the closing of the Merger. Mr.
      Ryan, a Director of MicroMed since 2002, is Founding General Partner with
      Oxford Bioscience Partners, which is the general partner of the foregoing
      funds. As a general Founding General Partner with Oxford Bioscience
      Partners, Mr. Ryan may be deemed to share voting and investment powers for
      the shares held by the foregoing funds. Mr. Ryan disclaims beneficial
      ownership of the shares held by funds affiliated with Oxford Bioscience
      Partners except to the extent of his proportionate pecuniary interest
      therein. Excludes warrants to purchase 33,384 shares of common stock at
      $1.33 per share exercisable commencing August 10, 2006.

(12)  Includes 2,098,716 shares held by Essex Woodlands Health Ventures Fund IV
      L.P. As Managing Director of Essex Woodlands Health Ventures, Mr. Sutter
      may be deemed to share voting and investment powers for the shares held by
      the foregoing fund. Mr. Sutter disclaims beneficial ownership of the
      shares held by funds affiliated with Essex Woodlands Health Ventures
      except to the extent of his proportionate pecuniary interest therein.
      Excludes warrants to purchase 125,008 shares of common stock at $1.33 per
      share exercisable commencing August 10, 2006.

(13)  Includes options to purchase 125,387 shares of common stock exercisable
      within 60 days of the closing of the Merger. Refer also to footnotes 1-11
      above.

(14)  Koichi Ando is the Chief Executive Officer of Mitsui & Co. Venture
      Partners. As the Chief Executive Officer, Mr. Ando may be deemed to have
      voting and investment power over the shares held by Mitsui & Co. Venture
      Partners. Mr. Ando disclaims beneficial ownership of the shares held by
      Mitsui & Co. Venture Partners except to the extent of his pecuniary
      interest therein. Excludes warrants to purchase 45,113 shares of common
      stock at $1.33 per share exercisable commencing August 10, 2006.

(15)  Todd M. Ficeto is President, Chief Executive Officer, and control person
      of Hunter World Markets, Inc. and may be deemed to have voting and
      investment power over the shares held by Hunter World Markets, Inc. Mr.
      Ficeto disclaims beneficial ownership of the shares held by Hunter World
      Markets, Inc. except to the extent of his pecuniary interest therein.
      Excludes warrants to purchase 1,804,511 shares of common stock at $1.33
      per share exercisable commencing August 10, 2006.


                                       36
<PAGE>

(16)  As Investment Manager and control person of Absolute Return Europe Fund
      LTD, Florian Homm may be deemed to have voting and investment powers for
      the shares held by the foregoing funds. Mr. Homm disclaims beneficial
      ownership of the shares held by foregoing funds except to the extent of
      his proportionate pecuniary interest therein.

                EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT FOLLOWING THE MERGER

The following sets forth the name and position of each of the Companys's
directors and executive officers immediately after the Effective Time of the
Merger.

<TABLE>
<CAPTION>
                                                                                       YEAR FIRST APPOINTED
                                                                                      OFFICER OR DIRECTOR OF
NAME                     AGE   POSITION                                                      MICROMED
----------------------   ---   ----------------------------------------------------   ----------------------
<S>                      <C>   <C>                                                    <C>
Travis E. Baugh          50    President, Chief Executive Officer, Director                   2005

Betty Silverstein        55    Chief Operating Officer and Executive Vice President
Russell                        Sales and Marketing                                            2002

Robert J. Benkowski      40    Senior Vice President, Engineering                             1996

                         52    Senior Vice President, Regulatory Affairs, Clinical
Timothy R. Placek              Affairs and Quality Systems                                    1998

Michael A. Rutledge      35    Vice President, Controller and Corporate Secretary             2005

Dallas W. Anderson       63    Director and Chairman                                          1995

Paul M. Frison           67    Director                                                       2002

James M. Garvey          57    Director                                                       2004

Norwick B.H. Goodspeed   55    Director                                                       2003

Phyllis Haberman         56    Director                                                       2004

Cornelius T. Ryan        72    Director                                                       2000

Martin P. Sutter         49    Director                                                       2002
</TABLE>

TRAVIS E. BAUGH, 50, became MicroMed's President, Chief Executive Officer and a
Director in January 2005. Mr. Baugh served as MicroMed's Executive Vice
President, Finance and Operations from October 2003 until January 2005 and has
served as its Chief Financial Officer since its inception in 1995. From
MicroMed's inception to March 2003, Mr. Baugh served as a Director and also
served as its Senior Vice President from its inception to October 2003. From
1991 to 1994, Mr. Baugh served as Senior Vice President and Chief Financial
Officer of Grasso Corporation, a publicly traded company, where he also directly
managed the activities of Medic Systems, a division of Grasso that provided
remote paramedical services. Mr. Baugh was previously a Senior Accountant with
Arthur Young & Company and is a Certified Public Accountant.


                                       37
<PAGE>

BETTY SILVERSTEIN RUSSELL, 55, joined MicroMed in August 2002 as its Executive
Vice President of Marketing and Sales. In January 2005, Ms. Russell also became
MicroMed's Chief Operating Officer. From 2001 to 2002, Ms. Russell was Executive
Vice President of CardiacAssist, Inc. From January 2000 to 2001, she served as
Executive Vice President of Marketing and Sales of Biosense Webster, Inc., a
subsidiary of Johnson and Johnson, Inc. From 1988 to 1999, she served as Senior
Vice President of Thermo Cardiosystems, Inc. Ms. Russell received her Bachelor
of Science in nursing from Georgia State University and her Master of Science in
management and administration from Boston University. She is a member of Who's
Who in Professional and Executive Women, a contributing author to Biomedical
Business International and a member of the guest facility in the Graduate School
of Marketing at Boston College.

ROBERT J. BENKOWSKI, 40, joined MicroMed in August 1996 as its Director of
Engineering and became its Vice President of Engineering in April 2000. In
January 2005, Mr. Benkowski became Senior Vice President of Engineering. Mr.
Benkowski's background is in aerospace with an expertise in Computer Aided
Design, Manufacturing and Engineering (CAD/CAM/CAE). He worked on the
engineering of the B-1, C-17 and the CAD integration of the International Space
Station. He began working on the DeBakey VAD project in 1990, first while
working at NASA's Johnson Space Center, then at Baylor College of Medicine as a
member of Dr. DeBakey's team. He is a co-inventor of the original NASA
technology, our continuation-in-part patent, a pulsatile loop patent, a VAD
controller patent, four suction detection and physiologic algorithm patent
applications and a neonatal blood pump developed for another company. He has
received numerous awards for his work in this area including being inducted into
the United States Space Foundation's "Space Technology Hall of Fame," the Sezai
Innovative Research Award, Olsen-Medforte Clinical Award, and the NASA
Commercial Invention of the Year award.

TIMOTHY R. PLACEK, 52, joined MicroMed in March 1998 as its Director of Quality
Assurance and, after serving as its Vice President of Quality Systems from
February 2001 to December 2002, became its Vice President of Regulatory Affairs
and Quality Systems in January 2003. Mr. Placek became Senior Vice President of
Regulatory Affairs, Clinical Affairs and Quality Systems in October 2004. From
1997 to 1998, he served as Director of Regulatory Affairs and Quality Assurance
for CardioLogic Systems, Inc., a manufacturer of Class III cardiovascular
devices, where he coordinated IDE submissions and ISO 9000 and CE certification
programs. From 1996 to 1997, he served as Manager of Quality Assurance and
Configuration Control at Orthofix, Inc., a manufacturer of Class II and III bone
growth stimulators and tissue to bone fixation devices. From 1994 to 1996, he
served as Director of Quality Assurance and Regulatory Affairs for Everest &
Jennings, Inc., a manufacturer of Class I and II durable medical devices.

MICHAEL A. RUTLEDGE, 35, joined MicroMed in March 2005 as its Vice President,
Controller and Secretary. Mr. Rutledge joined Ernst & Young LLP in 1992 and
worked there for 13 years in various capacities, most recently as a Senior
Manager. Mr. Rutledge is a Certified Public Accountant.

DALLAS W. ANDERSON, 63, has served as a director of MicroMed since 1995. Mr.
Anderson served as MicroMed's President and Chief Executive Officer since its
inception in 1995 until January 2005. From 1991 to 1994, Mr. Anderson served as
President and Chief Executive Officer of Proclosure Inc., a medical device
company involved in laser tissue (wound closure) fusion. From 1986 to 1990, he
served as President, worldwide of Davis & Geck, medical device products division
of American Cyanamid Company. Prior to that, Mr. Anderson worked for Baxter
Healthcare as Director of Operations, New Products and with Johnson & Johnson in
progressive levels of operations management.

PAUL M. FRISON, 67, has served as a Director of MicroMed since October 2002. Mr.
Frison became President and Chief Executive Officer of the Houston Technology
Center ("HTC") in January 1999, a business accelerator for Houston-based
emerging technology companies. Prior to HTC, Mr. Frison was President and/or CEO
of three public companies (LifeMark (1975 - 1984), NYSE; ComputerCraft (1984 -
1986), NASDAQ; and LifeCell (1986 - 1999), NASDAQ), each technology based. He
received his BA from Occidental College in Los Angeles, California and currently
serves on the Board of Directors of the HTC, The Institute of Research and
Rehabilitation ("TIRR"), The Entrepreneurship Institute, The Houston
Entrepreneurs Foundation, The Lions Eye Foundation - Houston, Boy Scouts of
America - Houston, Texas Council of AEA, Texchange, and the Advisory Council of
the University of Houston - College of Technology.


                                       38
<PAGE>

JAMES M. GARVEY, 57, has served as a Director of MicroMed since May 2004. Mr.
Garvey joined SV Life Sciences ("SVLS"), a venture capital firm, in May 1995 and
is the Chief Executive Officer and Managing General Partner, overseeing its
approximately $900 million investment activity. Prior to joining SVLS, he was
Managing Director for the Venture Capital Division of Allstate Corporation. He
has held several senior management positions in companies with multinational
operations including Kendall (Tyco) & Millipore. He was also president of
start-ups Allegheny International Medical Technology and National Teledata. Mr.
Garvey has served on the boards of private and public companies in the U.S. and
Europe including public companies Allscripts Pharmaceuticals, Arris
Pharmaceuticals, LaserVision Centers, Orthovita, Shire Pharmaceuticals and
Sunrise Assisted Living. Mr. Garvey received a BS degree from Northern Illinois
University in 1969.

NORWICK B.H. GOODSPEED, 55, has served as a Director of MicroMed since March
2003. Mr. Goodspeed is President and Chief Executive Officer of FlowCardia,
Inc., where he has served since March 2004. From May 2000 to January 2004, he
was President and Chief Executive Officer of TransVascular, Inc., an
interveritional cardiology company acquired by Medtronic, Inc. in September
2003. From June 1997 to May 2000, he was President and Chief Executive Officer
of Ocular Sciences, a publicly traded contact lens manufacturer. Previously, Mr.
Goodspeed served as President of McGaw Inc. (a manufacturer of I.V. Solutions
and a subsidiary of Ivax ) and President and Chief Executive Officer of Vical,
Inc. (a gene therapy company). Earlier in his career, Mr. Goodspeed held
executive positions with BOC Healthcare and Baxter. He holds an MBA degree from
Stanford University and a BA from Yale University.

PHYLLIS HABERMAN, 56, has served as a Director of MicroMed since July 2004.
Since 1998, Ms. Haberman has been a partner at Charterhouse Group, a private
equity firm with over $1.3 billion currently under management. Ms. Haberman
joined Charterhouse in 1985. Previously, Ms. Haberman held various financial and
marketing positions at Celanese Corporation. She holds an MBA degree from
Columbia University and a BS from Simmons College.

CORNELIUS T. RYAN, 72, has served as a Director of MicroMed since July 2000. Mr.
Ryan is a Founding General Partner with Oxford Bioscience Partners, a venture
capital firm. Mr. Ryan has specialized in the healthcare field since 1981, when
he co-founded Oxford. Previously, Mr. Ryan was President of AMR International, a
private company in publishing and business education. He also served as
President of GTE New Venture Corp., a wholly owned subsidiary of General
Telephone and Electronics ("GTE"), and Vice President of Corporate Development
and Strategic Planning. Previously, he co-founded RCC, a publicly traded
computer services and financing company. Earlier, he was a Senior Associate and
Technology consultant for Arthur D. Little, where he created a healthcare and
medical device information service for Wall Street clients. He is the Founding
Chairman of the Healthcare Services/Medical Devices Venture Investors' Group.
Mr. Ryan serves on the board of directors of QuadraMed Corporation.

MARTIN P. SUTTER, 49, has served on the Board of Directors of MicroMed since
June 2002. Mr. Sutter has over 25 years of management experience in operations,
marketing, finance and venture capital. He began his career with Peat Marwick,
Mitchell & Co. in 1977 and moved to Mitchell Energy and Development Corp
("MEDC") shortly thereafter, where he held various management positions
primarily in MEDC's chemical feedstock business segment. In 1984, he founded and
managed The Woodlands Venture Capital company, a wholly-owned subsidiary of
MEDC, and the Woodlands Venture Partners, an independent venture capital
partnership was formed in 1988. During his tenure with both organizations, he
founded and/or played a key role in the financing of a number of successful
healthcare companies. Mr. Sutter merged his venture practice with Essex Venture
Partners to form Essex Woodlands Health Ventures in 1994. Essex Woodlands Health
Ventures is one of the oldest U.S. venture capital partnerships focused solely
on healthcare and the life sciences, and has approximately $1 billion in capital
under management. He currently serves on the Board of Directors of BioForm
Medical, Confluent Surgical, EluSys Therapeutics, LifeCell Corporation (NASDAQ:
"LIFC"), and Rinat Neuroscience.

MEDICAL ADVISORY BOARD


                                       39
<PAGE>

DR. MICHAEL E. DEBAKEY, Chairman, Co-Principal Investigator of the
Bridge-to-Transplant trial, is Chancellor Emeritus of Baylor College of Medicine
and Director of the DeBakey Heart Center of Baylor and the Methodist Hospital in
Houston, Texas. Dr. DeBakey's surgical career has earned him worldwide
recognition as a premier surgeon, medical inventor and innovator, a gifted and
dedicated medical educator and an international medical statesman. He joined the
Baylor College of Medicine faculty in 1948, serving as Chairman of the
Department of Surgery until 1993 and as President of the College from 1969 to
1979. Dr. DeBakey is best known for his innovations in treating cardiovascular
disease. He was the first to perform successful excision and graft replacement
of arterial aneurysms and obstructive lesions and was a pioneer in the
development of an artificial heart, having been the first to use a heart pump
successfully in a patient. Dr. DeBakey performed the first successful carotid
endarterectomy, the first aortocoronary bypass with autogenous saphenous vein
graft. He is the recipient of numerous honorary degrees and citations from
universities and heads of state around the world, including the Medal of Freedom
(the highest honor the President of the United States can bestow on a civilian),
the Medal of Science and the Lasker Award (the American equivalent of the Nobel
Prize). Dr. DeBakey has published more than 1,300 medical articles and books on
various aspects of surgery, medical research and ethics.

DR. GEORGE P. NOON, Co-Principal Investigator, Bridge to Transplant Trial, has
been a key member of the DeBakey VAD development team since inception of the
project. Dr. Noon is Executive Director, Multi-Organ Transplant Center at
Methodist Hospital and Chief, Division of Transplant and Assist
Devices/Professor of Surgery at Baylor College of Medicine in Houston. Dr. Noon
is a practicing cardiovascular surgeon at Methodist Hospital in Houston, where
he has performed countless heart, lung and kidney transplants. He also served as
a Principal Investigator for the Novacor LVAS clinical trials and is a recipient
of the NASA Space Technology Hall of Fame Award.

DR. ERIC A. ROSE, M.D., Principal Investigator, Destination Therapy Trial, is
the Morris and Rose Milstein, Johnson & Johnson Professor of Surgery and
Chairman of the Department of Surgery at Columbia University College of
Physicians and Surgeons, and Surgeon-in-Chief at the Columbia Presbyterian
Medical Center. Dr. Rose has been on the faculty at Columbia since 1982 after
receiving his M.D. from and doing his residency training there. He is board
certified by the American Board of Thoracic Surgery and the American Board of
Surgery. Dr. Rose was the Principal Investigator for the landmark REMATCH trial
comparing Destination Therapy with a VAD to optimal Medical Therapy in end stage
heart failure patients. His research interests include: novel anticoagulants,
vascular biology, mechanical alternatives to transplantation, surgical clinical
trials and outcomes research. Dr. Rose holds several patents in the area of
blood coagulation including patents for Fibrin Glue, Inhibition of Thrombosis
due to extracorporeal circulation, methods for improving stroke outcome and a
method of inhibiting clot formation (inactive recombinant meutein). Dr. Rose has
received multiple honors over his career and belongs to 15 regional, national
and international medical societies. He has been the primary author of two books
and has numerous publications in prestigious medical journals. Dr. Rose's
clinical experience, expertise in blood surface reactions and widespread
recognition will ensure MicroMed's Destination Therapy Trial, known as
Destination Evaluation of Long Term Assist ("DELTA"), is one that not only
provides data needed for market approval, but also one that has significant
scientific impact on the entire VAD community.

FAMILY RELATIONSHIPS

None.

                             EXECUTIVE COMPENSATION

                           SUMMARY COMPENSATION TABLE

The following table presents summary information for the years ended December
31, 2004, 2003 and 2002 regarding the compensation of each of MicroMed
Technology's five most highly compensated executive officers.


                                       40
<PAGE>

<TABLE>
<CAPTION>
                                                                                       Long-Term Compensation
                                                                                 ----------------------------------
                                               Annual Compensation                       Awards            Payouts
                                  --------------------------------------------   -----------------------   --------
                                                                 Other                        Securities
                                                                 Annual          Restricted   Underling    LTIP       All Other
                                                                 Compensation    Stock        Options/     Payouts    Compensation
Name and Position                 Year   Salary($)   Bonus ($)   ($)(3)          Awards ($)   SARS (#)     ($)        ($)(4)
-------------------------------   ----   ---------   ---------   -------------   ----------   ----------   --------   -------------
<C>                               <C>    <C>         <C>         <C>             <C>          <C>          <C>        <C>
Dallas W. Anderson(1)             2004     286,000          --              --           --           --         --           4,295
President and Chief
Executive Officer                 2003     283,885      64,350              --           --           --         --           4,295
                                  2002     262,981      13,750              --           --           --         --           4,295

Travis E. Baugh(1)                2004     192,000          --              --           --           --         --              --
Executive Vice President,
Finance and Operations            2003     182,946      54,600              --           --           --         --              --
                                  2002     192,500      17,500              --           --           --         --              --

Betty Silverstein Russell (2)     2004     200,000          --              --           --           --         --              --
Executive Vice President of
Marketing and Sales               2003     200,000      50,000              --           --           --         --              --
                                  2002      69,231      50,000          20,324           --           --         --              --

Edward R. Teitel (3)              2004     175,000          --              --           --           --         --              --
Senior Vice President and Chief
Medical Officer                   2003     175,000      26,250              --           --           --         --              --
                                  2002      67,308      10,000              --           --                                      --

Robert J. Benkowski               2004     167,212          --              --           --           --         --              --
Vice President of Engineering     2003     166,000      25,000              --           --           --         --              --
                                  2002     159,612      12,731              --           --           --         --              --

Timothy R. Placek                 2004     147,539          --              --           --           --         --              --
Senior Vice President of
Regulatory Affairs, Clinical
Affairs and Quality Systems       2003     137,692      30,000              --           --           --         --              --
                                  2002     122,169      13,822              --           --           --         --              --
</TABLE>


(1)   On January 20, 2005, Mr. Baugh was elected President and Chief Executive
      Officer and Mr. Anderson retired.
(2)   Ms. Russell joined MicroMed in August 2002. Her base salary for 2002
      reflects compensation at an annualized rate of $188,000 for the portion of
      the year that she was an employee.
(3)   Mr. Teitel joined MicroMed in August 2002. His base salary for 2002
      reflects compensation at an annualized rate of $165,000 for the portion of
      the year that he was an employee.
(4)   Other compensation during 2004, 2003 and 2002 represents premiums paid by
      MicroMed for personal life insurance for Mr. Anderson and relocation
      expenses for Ms. Russell.


OPTION GRANTS IN 2004

There were no option grants in 2004.

AGGREGATED OPTION EXERCISES IN 2004 AND OPTION VALUES AT DECEMBER 31, 2004


                                       41
<PAGE>

The following table presents information about the number and value of the
shares of common stock underlying unexercised options that are held by each of
the individuals listed in the summary compensation table as of December 31,
2004.

There were no option exercises in 2004 by the individuals listed in the summary
compensation table. Amounts shown under the column "Value of Unexercised
In-the-Money Options at December 31, 2004" are based on the assumed fair market
value of MicroMed Technology common stock on December 31, 2004 of $0.03 per
share, without taking into account any taxes that may be payable in connection
with the Merger, less the exercise price payable for these shares.

<TABLE>
<CAPTION>
                                                      Number of Securities
                                                     Underlying Unexercised      Value of Unexercised In-
                                                          Options at                The-Money Options at
                                                       December 31, 2004              December 31, 2004
                                                  ---------------------------   ---------------------------
                            Shares
                            Acquired
                            on         Value
                            Exercise   Realized   Exercisable   Unexercisable   Exercisable   Unexercisable
                            --------   --------   -----------   -------------   -----------   -------------
<S>                         <C>        <C>        <C>           <C>             <C>           <C>
Dallas W. Anderson                --         --     1,405,002         367,045            --              --
Travis E. Baugh                   --         --       563,824         144,995            --              --
Betty Silverstein Russell         --         --       450,000         150,000            --              --
Edward R. Teitel                  --         --       187,500          62,500            --              --
Robert J. Benkowski               --         --       437,500         112,500            --              --
Timothy R. Placek                 --         --       216,250          58,750            --              --
</TABLE>


EMPLOYMENT AGREEMENTS AND SEVERANCE ARRANGEMENTS

MicroMed Technology is a party to employment agreements with its senior
executive officers, including Dallas W. Anderson, Travis E. Baugh, Robert J.
Benkowski, Timothy R. Placek, Betty Silverstein Russell and Edward R. Teitel.
Mr. Anderson and Mr. Baugh's employment agreements were amended effective March
1, 2000. Mr. Baugh's employment. Mr. Benkowski and Mr. Placek's employment
agreements were amended effective March 31, 2000. Mr. Teitel's employment
agreement was amended effective August 5, 2002 and Ms. Russell's employment
agreement was amended effective August 19, 2002.

As amended, the employment agreements of Dallas W. Anderson and Travis E. Baugh
provide that each of Messrs. Anderson and Baugh are entitled to receive a sum
equal to their annual salary, payable either in monthly payments or in a lump
sum at the election of MicroMed Technology, upon any termination without cause.
The same amount would become due to Mr. Anderson or Mr. Baugh, as the case may
be, in the event of a change of control of MicroMed, which is defined to include
a merger or consolidation, or an agreement to merge or consolidate, a sale, or
an agreement to sell, all or substantially all of MicroMed's assets, the
dissolution of MicroMed and the breach by MicroMed of any provision of the
employment agreement.

On January 20, 2005, Mr. Anderson retired and was granted a severance payment of
an aggregate $429,000 to be paid to Mr. Anderson in nine monthly installments of
$47,667, the first of which was made in January 2005.

As amended, the employment agreement of Robert J. Benkowski provides that he
will be entitled to receive a sum equal to his annual salary, payable in 12
monthly payments, upon any termination without cause. As amended, the employment
agreement of Timothy R. Placek provides that he will be entitled to receive a
sum equal to one half of his annual salary, payable in six monthly payments,
upon any termination without cause. While termination without cause is not
defined in the employment agreement of either Mr. Benkowski or Mr. Placek,
termination for cause in both employment agreements includes (i) a conviction or
guilty plea or plea of nolo contendere to a charge that the employee has
committed a crime under any federal, state or local law in the United States,
(ii) employee's gross neglect of the duties of his position, (iii) employee's
failure to work exclusively for MicroMed Technology , (iv) willful misconduct,
(v) commission of an act of moral turpitude, dishonesty, theft or unethical
business conduct, or conduct that impairs or injures MicroMed Technology , any
MicroMed Technology employee or MicroMed Technology's reputation, (vi)
disloyalty, including, but not limited to, aiding a competitor, (vii) any
material breach of the employment agreement or MicroMed Technology's policies or
rules, or (viii) employee's failure to fully and truthfully cooperate in any
investigation by MicroMed Technology.


                                       42
<PAGE>

As amended, the employment agreements of each of Betty Silverstein Russell and
Edward R. Teitel provide that each are entitled to receive a sum equal to their
annual salary, payable in bi-weekly payments, upon any termination without
cause. While termination without cause is not defined in the employment
agreement of either Ms. Russell or Mr. Teitel, termination for cause in both
employment agreements includes (i) a guilty plea or plea of nolo contendere to a
charge that the employee has committed a felony under the laws of the United
States, (ii) the commission of acts amounting to gross neglect of the employee's
duties to the material detriment of MicroMed Technology, or (iii) the material
breach of provisions of the employment agreement by the employee relating to his
or her employment duties or certain aspects of the required treatment of, or
disclosure relating to, the intellectual property of MicroMed Technology. Any of
these events is capable of a cure upon proper notice to the employee by MicroMed
Technology; however, if a cure is unavailing, the employee may be then
terminated by MicroMed Technology for cause.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See "MICROMED'S OPERATIONS - Management's Discussion and Analysis of MicroMed's
Financial Condition and Results of Operations - Related Party Transactions"
below.


               INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
                           AND LIMITATION OF LIABILITY

Under Section 145 of the General Corporation Law of the State of Delaware, the
Company can indemnify its directors and officers against liabilities they may
incur in such capacities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). The Company's certificate of
incorporation provides that, pursuant to Delaware law, its directors shall not
be liable for monetary damages for breach of the directors' fiduciary duty of
care to the Company and its stockholders. This provision in the certificate of
incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as injunctive or other forms of
nonmonetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Company or its stockholders, for acts or omissions not in
good faith or involving intentional misconduct or knowing violations of the law,
for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.

The Company's bylaws provide for the indemnification of its directors to the
fullest extent permitted by the Delaware General Corporation Law. The Company's
bylaws further provide that its Board of Directors has discretion to indemnify
its officers and other employees. The Company is required to advance, prior to
the final disposition of any proceeding, promptly on request, all expenses
incurred by any director or executive officer in connection with that proceeding
on receipt of an undertaking by or on behalf of that director or executive
officer to repay those amounts if it should be determined ultimately that he or
she is not entitled to be indemnified under the Company's bylaws or otherwise.
The Company is not, however, required to advance any expenses in connection with
any proceeding if a determination is reasonably and promptly made by its Board
of Directors by a majority vote of a quorum of disinterested Board members that
(a) the party seeking an advance acted in bad faith or deliberately breached his
or her duty to the Company or its stockholders and (b) as a result of such
actions by the party seeking an advance, it is more likely than not that it will
ultimately be determined that such party is not entitled to indemnification
pursuant to the applicable sections of its bylaws.


                                       43
<PAGE>

The Company has been advised that in the opinion of the Securities and Exchange
Commission, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to the Company's directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event a claim for indemnification against
such liabilities (other than the Company's payment of expenses incurred or paid
by its director, officer or controlling person in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by the Company is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The Company may enter into indemnification agreements with each of its directors
and officers that are, in some cases, broader than the specific indemnification
provisions permitted by Delaware law, and that may provide additional procedural
protection. The indemnification agreements require the Company, among other
things, to:

      o     indemnify officers and directors against certain liabilities that
            may arise because of their status as officers or directors;

      o     advance expenses, as incurred, to officers and directors in
            connection with a legal proceeding, subject to limited exceptions;
            or

      o     obtain directors' and officers' insurance.

At present, there is no pending litigation or proceeding involving any of the
Company's directors, officers or employees in which indemnification is sought,
nor is the Company aware of any threatened litigation that may result in claims
for indemnification.


                      POST-MERGER DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is authorized to issue up to 100,000,000 shares of common stock, par
value $0.001 per share, of which 18,513,145 are currently issued and outstanding
(excluding the Escrow Shares). Each outstanding share of common stock is
entitled to one vote, either in person or by proxy, on all matters that may be
voted upon by their holders at meetings of the stockholders. Holders of the
Company's common stock (i) have equal ratable rights to dividends from funds
legally available therefore, if declared by the Board of Directors; (ii) are
entitled to share ratably in all of the Company's assets available for
distribution upon liquidation, dissolution or winding up; and (iii) do not have
preemptive, subscription or conversion rights or redemption or sinking fund
provisions. All issued shares of the Company's common stock are fully paid for
and non-assessable.

PREFERRED STOCK

The Company is authorized to issue 50,000,000 shares of preferred stock, par
value $0.001 per share, of which no shares are currently issued and outstanding.
The preferred stock may be issued in one or more series and the Company's Board
of Directors, without further approval from its stockholders, is authorized to
fix the dividend rights and terms, conversion rights, voting rights, redemption
rights, liquidation preferences and other rights and restrictions relating to
any series. Issuances of preferred stock, while providing flexibility in
connection with possible financings, acquisitions and other corporate purposes,
could, among other things, adversely affect the voting power of the holders of
our common stock.

STOCK OPTIONS AND WARRANTS


                                       44
<PAGE>

In connection with the Merger, the Company assumed options to purchase shares of
common stock and warrants to purchase shares of common stock on the same terms
and conditions as previously issued by MicroMed Technology. All outstanding
options that were assumed by the Company have been issued under the MicroMed
1997 Stock Option Plan or the MicroMed 2005 Stock Incentive Plan. Further to the
Merger, the Company assumed the MicroMed 1997 Stock Option Plan and the MicroMed
2005 Stock Incentive Plan as stock option plans of the Company. Immediately
after the closing of the Merger, MicroMed Cardiovascular had options to purchase
555,822 shares of common stock and warrants to purchase 2,251,887 shares of
common stock.

MARKET PRICE OF THE COMPANY'S COMMON STOCK

The price of the Company's common stock will likely fluctuate in the future. The
stock market in general has experienced extreme stock price fluctuations in the
past few years. In some cases, these fluctuations have been unrelated to the
operating performance of the affected companies. Many companies have experienced
dramatic volatility in the market prices of their common stock. The Company
believes that a number of factors, both within and outside its control, could
cause the price of the Company's common stock to fluctuate, perhaps
substantially. Factors such as the following could have a significant adverse
impact on the market price of its common stock:

      o     The Company's ability to obtain additional financing and, if
            available, the terms and conditions of the financing;

      o     The Company's financial position and results of operations;

      o     Concern as to, or other evidence of, the safety or efficacy of the
            Company's proposed products and services or its competitors'
            products and services;

      o     Announcements of technological innovations or new products or
            services by the Company or its competitors;

      o     U.S. and foreign governmental regulatory actions;

      o     The development of litigation against the Company;

      o     Period-to-period fluctuations in the Company's operating results;

      o     Changes in estimates of the Company's performance by any securities
            analysts;

      o     Possible regulatory requirements on the Company's business;

      o     The issuance of new equity securities pursuant to a future offering;

      o     Changes in interest rates;

      o     Competitive developments, including announcements by competitors of
            new products or services or significant contracts, acquisitions,
            strategic partnerships, joint ventures or capital commitments;

      o     Variations in quarterly operating results;

      o     Change in financial estimates by securities analysts;

      o     The depth and liquidity of the market for the Company's common
            stock;

      o     Investor perceptions of the Company; and

      o     General economic and other national conditions.


                                       45
<PAGE>

DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS

The Company is subject to Section 203 of the Delaware General Corporation Law.
This provision generally prohibits a Delaware corporation from engaging in any
business combination with any interested stockholder for a period of three years
following the date the stockholder became an interested stockholder, unless:

      o     prior to such date, the Board of Directors approved either the
            business combination or the transaction that resulted in the
            stockholder becoming an interested stockholder;

      o     upon consummation of the transaction that resulted in the
            stockholder becoming an interested stockholder, the interested
            stockholder owned at least 85% of the voting stock of the
            corporation outstanding at the time the transaction commenced,
            excluding for purposes of determining the number of shares
            outstanding those shares owned by persons who are directors and also
            officers and by employee stock plans in which employee participants
            do not have the right to determine confidentially whether shares
            held subject to the plan will be tendered in a tender or exchange
            offer; or

      o     on or subsequent to such date, the business combination is approved
            by the Board of Directors and authorized at an annual meeting or
            special meeting of stockholders and not by written consent, by the
            affirmative vote of at least 66 2/3% of the outstanding voting stock
            that is not owned by the interested stockholder.

Section 203 defines a business combination to include:

      o     any merger or consolidation involving the corporation and the
            interested stockholder;

      o     any sale, transfer, pledge or other disposition of 10% or more of
            the assets of the corporation involving the interested stockholder;

      o     subject to certain exceptions, any transaction that results in the
            issuance or transfer by the corporation of any stock of the
            corporation to the interested stockholder;

      o     any transaction involving the corporation that has the effect of
            increasing the proportionate share of the stock of any class or
            series of the corporation beneficially owned by the interested
            stockholder; or

      o     the receipt by the interested stockholder of the benefit of any
            loans, advances, guarantees, pledges or other financial benefits
            provided by or through the corporation.

In general, Section 203 defines an "interested stockholder" as any entity or
person beneficially owning 15% or more of the outstanding voting stock of a
corporation, or an affiliate or associate of the corporation and was the owner
of 15% or more of the outstanding voting stock of a corporation at any time
within three years prior to the time of determination of interested stockholder
status; and any entity or person affiliated with or controlling or controlled by
such entity or person.

The Company's certificate of incorporation and bylaws contain provisions that
could have the effect of discouraging potential acquisition proposals or making
a tender offer or delaying or preventing a change in control of the Company,
including changes a stockholder might consider favorable. In particular, the
Company's certificate of incorporation and bylaws, as applicable, among other
things, will:

      o     provide the Company's board of directors with the ability to alter
            its bylaws without stockholder approval;

      o     provide for an advance notice procedure with regard to the
            nomination of candidates for election as directors and with regard
            to business to be brought before a meeting of stockholders;


                                       46
<PAGE>

      o     provide that vacancies on the Company's board of directors may be
            filled by a majority of directors in office, although less than a
            quorum.

Such provisions may have the effect of discouraging a third-party from acquiring
the Company, even if doing so would be beneficial to its stockholders. These
provisions are intended to enhance the likelihood of continuity and stability in
the composition of the Company's board of directors and in the policies
formulated by them, and to discourage some types of transactions that may
involve an actual or threatened change in control of the Company. These
provisions are designed to reduce the Company's vulnerability to an unsolicited
acquisition proposal and to discourage some tactics that may be used in proxy
fights. The Company believes that the benefits of increased protection of its
potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure the Company outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of their terms.
However, these provisions could have the effect of discouraging others from
making tender offers for the Company's shares that could result from actual or
rumored takeover attempts. These provisions also may have the effect of
preventing changes in the Company's management.

                MICROMED TECHNOLOGY AUDITED FINANCIAL STATEMENTS

The audited financial statements of MicroMed Technology for the years ended
December 31, 2004 and 2003 and the unaudited three months ended March 31, 2005
and 2004 are attached hereto as Exhibit A. Investors are encouraged to review
the financial statements and related notes.

                          SUMMARY FINANCIAL INFORMATION

The following gives a summary of the most recent balance sheet data of Salmon as
of November 30, 2004 and 2003 and May 31, 2005 and the statements of operations
data of Salmon for the years ended November 30, 2004 and 2003 and the six months
ended May 31, 2005 and 2004.

                                                        Six Months   Six Months
                          Year ended     Year ended     ended        ended
                          November 30,   November 30,   May 31,      May 31,
Statement of Operations    2004           2003           2005         2004
-----------------------   ------------   ------------   ----------   ----------
Revenue                   $          0   $          0   $        0   $        0
Net Loss                  $    (26,601)  $    (10,571)  $   (4,079)  $  (11,680)
Net Loss Per Share        $          0   $          0   $        0   $        0

                             November 30,    November 30,    May 31,
Balance Sheet                    2004            2003          2005
--------------------------   ------------    ------------    --------


Total Assets                 $      4,426    $     14,429    $      0
Total Liabilities            $     16,598    $          0    $ 10,000
Total Stockholders' Equity   $    (12,172)   $    (14,429)   $(10,000)


The following gives a summary of the most recent balance sheet data of MicroMed
Technology as of December 31, 2004 and 2003 and March 31, 2005 and the
statements of operations data of MicroMed Technology for the years ended
December 31, 2004 and 2003 and the three months ended March 31, 2005 and 2004.

                                       47
<PAGE>

<TABLE>
<CAPTION>
Statement of Operations                   Year ended              Year ended              Three Months          Three Months
                                         December 31,            December 31,           ended March 31,       ended March 31,
                                             2004                    2003                     2005                  2004
                                        ------------------   ----------------------     -------------------  --------------------
                                                                (Restated)(1)
<S>                                     <C>                  <C>                        <C>                  <C>

Revenue                                  $   5,936,188       $          6,701,990       $      1,617,477     $        1,434,542
Net loss                                 $  (8,939,596)      $         (6,155,130)      $     (2,675,654)    $       (2,442,471)
Net loss available to common             $ (14,255,988)      $        (11,445,248)      $     (3,989,754)    $       (3,766,570)
stockholders (2)
Net loss per share available to          $       (2.80)      $              (2.25)      $          (0.78)    $            (0.74)
common stockholders- basic and
diluted
</TABLE>


<TABLE>
<CAPTION>
Consolidated Balance Sheet                        December 31,          December 31,                  March 31,
                                                       2004                  2003                        2005
                                                  --------------     --------------------         -------------
<S>                                               <C>                <C>                          <C>

Total assets                                      $    6,367,481     $         10,825,755         $    5,617,755
Redeemable convertible preferred stock            $   72,070,894     $         66,764,502         $   73,394,994
Total liabilities                                 $    6,623,799     $          2,195,827         $    8,549,727
Total stockholders' deficit                       $  (72,337,212)    $        (58,134,574)        $  (76,326,966)
</TABLE>


(1)   The statement of operations of MicroMed Technology for the year ended
      December 31, 2003 has been restated to reflect preferred stock dividends
      and accretion as a component of Net loss available to common stockholders.
      See Note 2 of the MicroMed Technology financial statements.

(2)   Net loss available to common stockholders for the years ended December 31,
      2004 and 2003 and three-months ended March 31, 2005 and 2004 includes
      accrued preferred stock dividends and accretion of $5,316,392, $5,290,118,
      $1,314,100 and $1,324,099, respectively.

This information is only a summary. You should also read the historical
information, management's discussion and analysis and related notes of the
Company contained in its Annual Report on Form 10-KSB for the year ended
November 30, 2004 and its Quarterly Report on Form 10-QSB for the period ended
May 31, 2005, as filed with the SEC, which are both incorporated by reference
into this document and the historical financial statements, management's
discussion and analysis and related notes for the Company contained elsewhere in
this document.

The Company is providing financial and other information for informational
purposes only. It does not necessarily represent or indicate what the financial
position and results of operations of the Company will be now that the Merger is
concluded.

                         PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma consolidated financial statements give effect
to Merger and is based on the estimates and assumptions set forth herein and in
the notes to such statements. The transaction is being treated as a reverse
acquisition and a recapitalization. MicroMed Technology is the acquirer for
accounting purposes. The pro forma financial data does not purport to be
indicative of the results which actually would have been obtained had the
acquisition been effected on the dates indicated or the results which may be
obtained in the future.

The unaudited pro forma balance sheet information as of March 31, 2005 was
derived from the unaudited balance sheet information of MicroMed Technology as
of that date and our unaudited balance sheet information as of May 31, 2005. The
unaudited pro forma statement of operations information for the twelve months
ended December 31, 2004 was derived from the audited statement of operations for
MicroMed Technology for the twelve month period then ended and our audited
statement of operations information for the twelve month period ended November
30, 2004. Neither we nor MicroMed Technology assumes any responsibility for the
accuracy or completeness of the information provided by the other party. The
unaudited pro forma statement of operations information for the three months
ended March 31, 2005 was derived from the unaudited statement of operations for
MicroMed Technology for the three-month period then ended and our unaudited
statement of operations information for the six-month period ended May 31, 2005.

The following unaudited pro forma consolidating balance sheet as of March 31,
2005 gives effect to the transaction as if it had occurred on March 31, 2005.
The following unaudited pro forma consolidating statement of operations for the
year ended December 31, 2004 gives effect to the transaction as if it had
occurred on January 1, 2004. The following unaudited pro forma consolidating
statement of operations for the three months ended March 31, 2005 gives effect
to the transaction as if it had occurred on January 1, 2005.


                                       48
<PAGE>

The pro forma balance sheets and operating data presented are not necessarily
indicative of the results that actually would have occurred if the Merger had
been completed on the assumed date nor are the statements necessarily indicative
of future combined financial position or earnings. The data presented should be
read in conjunction with the financial statements of Salmon and MicroMed
Technology included herein..

Proforma Balance Sheet (Unaudited)
<TABLE>
<CAPTION>
                                                    MicroMed           Salmon         Pro Forma         Note         MicroMed
                                                 Technology, Inc.    Express, Inc.   Adjustments     Reference   Technology, Inc.
                                                      March 31,         May 31,                                      Pro Forma
                                                       2005              2005                                      Consolidated
                                                   ------------      ------------    ------------    ------------   ------------
<S>                                                <C>               <C>             <C>             <C>            <C>

Assets
Current assets:
Cash and cash equivalents                          $    211,272      $         --    $         --              1     $   211,272
Accounts receivable                                   1,432,446                --              --                      1,432,446
Inventory                                             3,332,847                --              --                      3,332,847
Prepaids and other assets                               122,482                --              --                        122,482
                                                   ------------      ------------    ------------                    ------------
Total current assets                                  5,099,847                --              --                        5,099,847
Property and equipment, net                             505,632                --              --                          505,632
Other assets                                             13,076                --              --                           13,076
                                                   ------------      ------------    ------------                    ------------
Total assets                                       $  5,617,755                --              --                    $  5,617,755
                                                   ============      ============    ============                    ============
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable                                   $  1,856,021                --              --                    $  1,856,021
Accrued liabilities                                   1,336,237             6,251          (6,251)              1       1,336,237
Notes payable                                           927,945                --              --                         927,945
Current portion of long-term debt                       911,437                --              --                         911,437
Bridge loans with                                     2,505,614            10,000         (10,000)              1              --
stockholders                                                                           (2,505,614)              2
                                                   ------------      ------------    ------------                    ------------
Total current liabilities                             7,537,254            16,251      (2,521,865)                      5,031,640
Long-term debt                                        1,012,473                --              --                       1,012,473
Redeemable convertible preferred stock               73,394,994                --     (73,394,994)              2              --
Stockholders' deficit:
Common stock                                              5,093            15,040           7,057               2          12,150
                                                             --                --         (15,040)              1
Additional paid-in                                           --             9,960      75,893,551               2      75,893,551
capital                                                                                    (9,960)              1
Deficit accumulated during the development stage    (76,332,059)          (41,251)         41,251               1    (76,332,059)
                                                   ------------      ------------    ------------                    ------------
Total stockholders' deficit                         (76,326,966)          (16,251)     75,916,859                       (426,358)
                                                   ------------      ------------    ------------                    ------------
Total liabilities and
stockholders' deficit                              $  5,617,755      $         --    $         --                    $  5,617,755
                                                   ============      ============    ============                    ============
</TABLE>


Proforma Consolidating Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
                                                           MicroMed               Salmon
                                                       Technology, Inc.       Express, Inc.                            MicroMed
                                                      ---------------------  ----------------
                                                        For the six           For the six                        Technology, Inc.
                                                         months ended          months ended
                                                          March 31,              May 31,       Pro Forma   Adjustment   Pro Forma
                                                             2005                  2005       Adjustments   Number   Consolidated
                                                          ------------        ------------   ------------  ----------------------
<S>                                                       <C>                 <C>            <C>           <C>

Revenues:
International product sales                               $  1,027,965        $         --   $         --            $  1,027,965
Clinical reimbursements                                      2,236,887                  --             --               2,236,887
                                                          ------------        ------------   ------------            ------------
  Total revenue                                              3,264,852                  --             --               3,264,852
Operating expenses:
Research and development                                     6,229,893                 823                        3     6,230,716
General and administrative                                   1,652,216               3,256                        3     1,655,472
                                                          ------------        ------------   ------------            ------------
  Total operating expenses                                   7,882,109               4,079             --             (7,886,188)
Loss from operations                                        (4,617,251)             (4,079)            --             (4,621,336)
                                                          ------------        ------------   ------------            ------------
Interest income                                                 43,317                  --             --                 43,317
Interest expense                                              (202,598)                 --             --               (202,598)
                                                          ------------        ------------   ------------            ------------
  Net loss                                                  (4,776,538)             (4,079)            --             (4,780,617)
                                                          ------------        ------------   ------------            ------------
Convertible preferred stock dividends and accretion         (2,648,198)                 --     (2,648,198)        2            --
                                                          ------------        ------------   ------------            ------------
Net loss available for common stockholders                $ (7,424,736)       $     (4,079)  $ (2,648,198)           $(4,780,617)
                                                          ============        ============   ============            ============
Basic and diluted net loss available to common
stockholders                                              $      (1.46)                                           3  $     (0.33)
                                                          ============                                               ============
Weighted average common shares outstanding                   5,093,040                                                 14,460,000
                                                          ============                                               ============
</TABLE>


                                       49
<PAGE>

<TABLE>
<CAPTION>
                                                       MicroMed          Salmon
                                                    Technology, Inc.   Express, Inc.                               MicroMed
                                                                                                                  Technology,
                                                      For the  twelve months ended                                   Inc.
                                                      December 31,     November 30,    Pro Forma      Note         Pro Forma
                                                         2004              2004       Adjustments   Reference     Consolidated
                                                      -----------      -----------    -----------   -----------   -----------
<S>                                                   <C>              <C>            <C>           <C>           <C>

Revenue:
International product sales                             1,717,477               --             --                   1,717,477
Clinical reimbursements                                 4,218,711               --             --                   4,218,711
                                                      -----------      -----------    -----------                 -----------
 Total revenue                                          5,936,188               --             --                   5,936,188
Operating expenses:
Research and development                               12,263,871           16,304                                 12,280,175
General and administrative                              2,505,185           10,297                                  2,515,482
                                                      -----------      -----------    -----------                 -----------
Total operating expenses                               14,769,056           26,601             --             4    14,795,657
                                                      -----------      -----------    -----------                 -----------
Loss from operations                                   (8,832,868)         (26,601)                                (8,859,469)
 Interest income                                           71,306               --             --                      71,306
 Interest expense                                        (178,034)              --             --                    (178,034)
                                                      -----------      -----------    -----------                 -----------
Net loss                                               (8,939,596)         (26,601)            --                  (8,966,197)
Convertible preferred stock dividends and accretion    (5,316,392)              --     (5,316,392)            2            --
                                                      -----------      -----------    -----------                 -----------
Net loss available to common stockholders             (14,255,988)         (26,601)   $ 5,316,392                  (8,966,197)
                                                      ===========      ===========    ===========                 ===========
Basic and diluted net loss per share available to
common stockholders                                   $     (2.80)                                                $     (0.62)
                                                      ===========                                                 ===========
Weighted average common shares outstanding              5,093,040                                             3    14,460,000
                                                      ===========                                                 ===========
</TABLE>


The adjustments related to the unaudited pro forma consolidating balance sheet
are computed assuming the acquisition of MicroMed Technology by Salmon was
consummated on March 31, 2005. The adjustments related to the unaudited pro
forma consolidating statement of operations for the three months ended March 31,
2005 and the year ended December 31, 2004 are computed assuming the acquisition
was consummated at January 1, 2005 and January 1, 2004, respectively.

NOTE 1

In connection with the acquisition by Salmon, MicroMed Technology did not assume
any assets or liabilities of Salmon and, in connection with the merger, as
consideration for the cancellation of shares by Mr. Smith, Salmon will
distribute its assets held prior to the Merger to Mr. Smith. Accordingly,
Adjustment 1 reflects the distribution of accrued liabilities and notes payable
of $16,251 to Mr. Smith. The capital structure of Salmon was converted to the
structure of MicroMed.

NOTE 2

Adjustment 2 reflects the recapitalization of Salmon and MicroMed Technology as
a result of the Merger, which includes the following adjustments:


                                       50
<PAGE>

      -     The effects of the 1-for-3.3528 reverse stock split by Salmon to be
            effected immediately preceding the Merger;
      -     The cancellation of 10,010,800 shares of common stock held by Mr.
            Smith;
      -     The conversion of all MicroMed preferred stock to common stock prior
            to the Merger;
      -     The cancellation of convertible preferred stock dividends and
            accretion. Amounts by class of redeemable convertible preferred
            stock cancelled are:

December 31, 2004


     Series A   $  497,199

     Series B   $  909,955
     Series C   $1,744,683
     Series D   $2,164,556
                ----------
                $5,316,392
                ==========

March 31, 2005


     Series A   $  248,600

     Series B   $  454,978

     Series C   $  867,994

     Series D   $1,076,626
                ----------
                $2,648,198

      -     The issuance of 12,960,000 shares of common stock to the
            stockholders of MicroMed Technology in exchange for the issued and
            outstanding common and preferred stock of MicroMed Technology and
            upon conversion of the 2004 and 2005 Bridge Loans.

NOTE 3

The following is a reconciliation of MicroMed's weighted average shares
outstanding from an historical basis to a pro forma basis at March 31, 2005 and
December 31, 2004.

<TABLE>
<CAPTION>
<S>                                                                <C>
Weighted average common shares outstanding - historical                 5,093,040

Add:
Redeemable convertible preferred stock:
Series A                                                               11,673,820 (a)
Series B                                                               47,924,359 (a)
Series C                                                              111,831,846 (a)
Series D                                                            1,085,774,873 (a)
                                                                   --------------
                                                                    1,262,297,938
Shares issuable upon conversion of 2004 and 2005 Bridge Loan (b)    2,989,653,013
                                                                   --------------
                                                                    4,251,950,951

Deduct:
Affect of reverse stock split (c)                                  (4,238,991,844)
                                                                   --------------
Subtotal                                                               12,960,000
Issuance of shares to existing Salmon stockholders (d)                  1,500,000
                                                                   --------------
Weighted average common shares outstanding - pro forma                 14,460,000
                                                                   --------------
</TABLE>


                                       51
<PAGE>

(a)   After giving affect to conversion at a ratio of 11.67-for-1, 23.96-for-1,
      31.79-for-1 and 236.40-for-1, respectively.

(b)   Assumes the utilization of the entire $3.0 million and $1.5 million
      available under the 2004 and 2005 Bridge Loans, respectively.

(c)   Gives affect to the 1-for-328.08 reverse stock split of MicroMed's common
      stock upon closing of the reverse merger.

(d)   Represents the shares issued at the time of the closing of the merger to
      existing Salmon stockholders.

NOTE 4

MicroMed Technology's results of operations would include an estimated $713,000
of stock compensation expense attributable to 540,000 options, at an exercise
price of $0.01, that will be granted at the time of the recapitalization of
Salmon and MicroMed Technology to employees and officers of MicroMed, had the
Merger taken place on January 1, 2004 or January 1, 2005.

                            CHANGE IN FISCAL YEAR END

Upon consummation of the Merger, the Company changed its fiscal year end from
November 30 to December 31.

                              MICROMED'S OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF MICROMED'S FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion of MicroMed's financial condition and results of
operations should be read in conjunction with its financial statements and the
related notes, and the other financial information included in this information
statement. With respect to this discussion, the terms "MicroMed," the "Company,"
"we," "us," and "our" refer to MicroMed Technology, Inc..

FORWARD-LOOKING STATEMENTS

The forward-looking comments 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. Additional
factors that could cause or contribute to such differences can be found in the
following discussion, as well as in the section entitled "Risks Related to
MicroMed."

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
March 31, 2005, we had an accumulated deficit of approximately $76 million. We
expect to continue to incur operating losses at least through 2007. Further, we
expect operating expenses to increase as we seek U.S. regulatory clearance for
the DeBakey VAD, build a technical support organization for product introduction
and market development, continue engineering and development projects, and
increase administrative activities to support our planned growth.


                                       52
<PAGE>

Our operations involve the manufacture and distribution of the DeBakey VAD. We
have received regulatory approval to sell the DeBakey VAD in Europe and are
involved in two clinical trials in the U.S., for which we receive reimbursements
for our products from hospitals involved in our clinical trials that are
categorized as revenues. We sell our products through distributors
internationally and have direct relationships with hospitals in our U.S. trials.

The role of implantable ventricular assist as a key therapeutic tool for the
treatment of advanced heart failure continues to emerge. Since the initial use
of VADs began in 1993 as a bridge to heart transplantation, the market has
recently grown to include patients that are ineligible for a heart transplant.
This use has been coined as "Destination Therapy" since it is considered a
complete therapy rather than a bridge to a next step in the therapeutic
spectrum. The demand for heart transplantation far exceeds the available supply
of donor hearts (the American Heart Association estimates that 100,000 persons
in the US need a heart transplant each year, but there are only approximately
2,000 heart transplants conducted each year in the U.S.). The bridge to
transplant market is a subset of the heart transplant market and is therefore a
relatively small market, estimated by analysts to be approximately $100 million
worldwide. Accordingly, adoption rate by physicians as a destination therapy is
the key to VAD market growth. Patients are referred to cardiovascular surgeons
for VAD implantation from heart failure cardiologists, mostly after the patient
has failed to respond to conventional drug therapy. Many heart failure
cardiologists are not familiar with VAD technologies or believe that VAD
technologies are not suitable for a large percentage of their patients. One of
the challenges faced by the VAD industry is to gain the confidence of these
heart failure cardiologists so that they will refer more patients for VAD
implantation.

The DeBakey VAD addresses the failure of the left ventricle, the main pumping
chamber of the heart, to pump adequate oxygenated blood throughout the body.
Right ventricular failure is commonly treated by pharmaceutical agents, but the
use of RVADs or support of both ventricles (BiVAD) could increase. The need for
support of the right ventricle may affect revenue since a matched right
ventricular system may be chosen from another company.

Adverse events are typically anticipated due to the advanced nature of the
patient's heart failure and other organ involvement. These may include, but are
not limited to thrombus, bleeding, infection, end of organ failure and device
malfunction. If trends of adverse events for the DeBakey VAD exceed those of
competitive devices, it would likely result in reduced product utilization and
lower revenues for MicroMed.

The VAD market is segmented by product type and specific indication. The advent
of other heart failure technologies geared toward healthier heart failure
patients may delay or preclude the referral of patients for DeBakey VAD device.
Moreover, although those products are not intended for the same patient
population as a VAD, overlap does occur. This is exemplified through
biventricular pacemakers, cardiac restraining devices and pharmaceutical agents.

The VAD industry is undergoing a period of substantial technological change. The
most obvious change is the shift from large pulsatile devices such as the
HeartMate XVE device to the much smaller continuous flow devices such as the
DeBakey VAD or the HeartMate II device. There are also differences in the
technologies of continuous flow VADs. For example, the DeBakey VAD and the
HeartMate II utilize mechanical bearings to stabilize the impeller. Some
companies are developing VADs with magnetically suspended impellers, under the
assumption that elimination of a mechanical shaft would avoid long term bearing
wear and reduce heat that can contribute to thrombus formation. New technologies
with superseding benefits may affect MicroMed's rate of enrollment in studies,
the date of study completion, commercial launch times and ultimate market
penetration. There is no way to predict which of these technologies, if any,
will succeed in the marketplace.

The current practice for some VAD companies is to place their products in
hospitals on a consignment basis. Broad adoption of this practice could delay
achievement of MicroMed's revenue objectives.

A typical total for billed charges of a VAD implantation is significant
(normally $175,000 to $200,000). VAD implantation is covered by most private
insurance and by CMS for Medicare-eligible patients. Although Medicare
reimbursement was increased to an average of $136,000 in October 2004, there is
no assurance that this reimbursement level will be sufficient enough of an
economic incentive to convince potential VAD hospital customers to develop or
expand a VAD implant program. Private insurance contracts vary by hospital and
by carrier; however, the reimbursement level from private insurance may not be
sufficient to support developing or expanding a VAD implant program.


                                       53
<PAGE>

The majority of implants of the DeBakey VAD and associated revenues over the
next two years are expected to be related to MicroMed's U.S. clinical trials.
Due to the protocols and the inclusion/exclusion criteria associated with the
trials, the number of potential implant patients that can receive a DeBakey VAD
during clinical trials is much smaller than the overall VAD patient population.
Accordingly, clinical trial implants and associated revenues, earnings and cash
flows are inherently difficult to predict and will continue to be so until
MicroMed receives commercial approval to market the product in the U.S.

MicroMed faces several potential challenges in its drive for commercial success,
including raising sufficient capital to fund its business plan, motivating
surgeons involved in MicroMed's clinical trials to continue to implant the
DeBakey VAD so that MicroMed can complete trials and gain FDA approval to market
the products in the U.S., competition from established, well funded companies
with competitive technologies, and future competition from companies that are
developing competitive technologies, some of whom are larger companies with
greater capital resources than MicroMed. Additionally, the overall results of
our bridge to transplant ("BTT") trial to date have resulted in lower than
expected survival to transplant percentages. The Company now believes that it is
likely that it will not meet the performance goal survival rate for the patients
in this trial. This is likely to substantially increase the time required to
obtain FDA approval and the time when the Company would expect to generate
revenues from commercial sales of the DeBakey VAD. Further, the Company has only
enrolled 8 patients to date in its Destination Therapy trial and believes that
it needs to redesign the structure of the trial to accommodate a shorter PMA
pathway. Under the current design of its Destination Therapy trial (360 patients
on a 2:1 randomization against the HeartMate XVE), the Company originally
anticipated completing enrollment between late 2008 to late 2010, which it
believed would result in PMA approval between early 2010 to early 2012. The
Company is presently in discussions with its clinical consultants to develop the
specific new clinical trial parameters and protocols for the Destination Therapy
trial which it intends to request from the FDA. However, there is no assurance
that the Company will be able to convince the FDA to accept these changes.

MicroMed plans to achieve commercial success by:

o     Expanding usage of the DeBakey VAD in foreign markets

o     Completing the BTT and DT clinical trials in the U.S.

o     Providing strong customer service and response to customer requests and
      needs for product enhancements

o     Continually upgrading the product line to maintain technological
      advantages over other products and competitors

o     Raising sufficient capital to accomplish MicroMed's plans through the U.S.
      public capital markets

RESEARCH AND DEVELOPMENT

Our research and development activities have been primarily focused on the
development and pilot clinical trials of the DeBakey VAD. Since our inception in
1995 and through March 31, 2005 we have incurred research and development costs
of approximately $61.3 million.

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 product candidates, 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 candidates, we are unable to estimate
with any certainty the costs we will incur in the continued development of our
product candidates 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 candidates, as well as continue and expand
our research programs.


                                       54
<PAGE>

The lengthy process of seeking regulatory approvals for our product candidates,
and the subsequent compliance with applicable regulations, require the
expenditure of substantial resources. Any failure by us to obtain, or any delay
in obtaining, regulatory approvals could cause our 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. While our significant accounting policies are
described in more detail in Note 2 to our financial statements, we believe the
following accounting policy 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 our DeBakey VAD ventricular assist devices and related equipment to
international hospitals involved in heart transplantation, to customers with
whom we have distribution agreements in certain international markets and to
hospitals in the U.S. (for our DeBakey VAD Child product only, which is approved
for sale in the U.S.). Under FDA rules, we are not allowed to sell products in
the U.S. until such time as we receive a Pre-Market Approval 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) 104, Revenue Recognition, when persuasive evidence of
an arrangement exists, fees are fixed or determinable, title has passed
(generally upon shipment), 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 30-180 days, depending on the customer and country, and we do not require
collateral. We periodically assess the collectibility of our receivables and
establish reserves, as necessary, based on various considerations including
customer credit history, payment patterns, and aging of accounts. Once
management determines an account receivable is not collectible, the account is
written off. We have not experienced significant collectibility problems to
date. If the collection history or aging of accounts receivable deteriorates, we
may have to record a charge to operations to establish an allowance for doubtful
accounts.

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 can not recover our costs as a result of such review, we
would have to record a charge to operations classified as cost of products sold.

Stock-Based Compensation. Statement of Financial Accounting Standards ("SFAS")
No. 123, Accounting for Stock-Based Compensation, allows us to adopt one of two
methods of accounting for stock options. We have elected the method that
requires disclosure only of stock-based compensation. Because of this election,
we continue to account for our employee stock-based compensation plans under
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees, and the related interpretations. Under APB No. 25, no compensation
expense is recorded for stock option grants to employees with an exercise price
equal to or greater than the fair value of underlying stock as determined by our
board of directors at the date of grant. For purposes of the SFAS No. 123
proforma disclosure, the estimated fair value of the options is assumed to be
amortized to expense over the options' vesting period. Compensation expense for
options granted to non-employees has been determined in accordance with SFAS No.
123 as the fair value of the consideration received or the fair value of the
equity instruments issued.


                                       55
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued FAS 123(R) Shared-Based Payment. The statement
eliminates the ability to account for stock-based compensation using APB 25 and
requires such transactions be recognized as compensation expense in the
statement of operations based on their fair value on the date of grant, with the
compensation expense recognized over the period in which an employee is required
to provide service in exchange for the stock award. The statement is effective
for public companies at the beginning of the first interim or annual period
beginning after June 15, 2005; in the event the Merger is consummated, MicroMed
will adopt this statement on July 1, 2005 using a modified prospective
application. As such, the compensation expense recognition provisions will apply
to new awards and to any awards modified, repurchased or cancelled after the
adoption date. Additionally, for any unvested awards outstanding at the adoption
date, MicroMed will recognize compensation expense over the remaining vesting
period. MicroMed is currently evaluating the impact of SFAS 123(R) on its
financial condition and results of operation. In the event the Merger is
consummated there will be no unvested options at the date of adoption, thus
there will be no future compensation expense related to options granted as of
December 31, 2004. Grants awarded subsequent to December 31, 2004 will result in
increased compensation expense.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires an issuer to classify financial instruments that is within its scope as
a liability (or an asset in some circumstances). SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. The adoption of SFAS No. 150 had no impact on MicroMed.

In April 2004, the FASB issued FSP FASB Statement of Accounting Standards
("FAS") No. 129-1, "Disclosure of Information about Capital Structure, Relating
to Contingently Convertible Securities," to provide disclosure guidance for
contingently convertible securities. MicroMed adopted the disclosure provisions
in 2004 as they apply to MicroMed's convertible redeemable preferred stock.

RELATED PARTY TRANSACTIONS

In December 2004, we entered into a loan agreement with several of our
stockholders who have been party to sales of Series A, Series B, Series C and
Series D preferred stock to borrow up to $3 million (the "2004 Bridge Loan"). In
March 2005, we entered into a loan agreement (the "2005 Bridge Loan") with the
same stockholders that were party to the 2004 Bridge Loan. The parties to the
2004 and 2005 Bridge Loans were: Oxford Bioscience Partners and affiliated
entities, SV Life Sciences, Charterhouse Equity Partners II, L.P., Essex
Woodlands Health Ventures Fund IV, L.P., Mitsui & Co. Venture Partners, Trellis
Health Ventures LP, David Schecter and Travis E. Baugh. Refer to "Liquidity and
Capital Resources" below for more information regarding the 2004 Bridge Loan.

PRIVATE PLACEMENT AND RECAPITALIZATION

Immediately prior to the closing of the Merger, we closed a $4,991,683 private
placement (the "Private Placement") of its common stock and warrants. We engaged
Hunter World Markets, Inc. ("Hunter") as our placement agent in connection with
the Private Placement. Each investor in the Private Placement purchased shares
of our common stock at $1.33 per share and seven-year warrants, exercisable one
year after the date of issuance, to purchase 60% of the common stock purchased
by such investor in the Private Placement at a per share exercise price of $1.33
(all investors introduced to us by Hunter assigned their warrants to Hunter, an
aggregate of 1,804,511 warrants). The warrants are redeemable by the Company at
any time after one year from the date of issuance.

Prior to the closing of the Merger and prior to the closing of the Private
Placement, we effected a recapitalization whereby (i) all of our outstanding
shares of series A, B, C and D preferred stock will convert into shares of our
common stock at a conversion ratio of 11.67-for -1, 23.96-for-1, 31.79-for-1 and
236.40-for-1, respectively; (ii) amounts outstanding under our $3 million 2004
Bridge Loan converted into shares of our common stock; (iii) amounts outstanding
under our $1.5 million 2005 Bridge Loan converted into shares of our common
stock; and (iv) lastly, we effected a 1-for-328.08 reverse stock split of our
outstanding common stock. Following the recapitalization, but prior to the
closing of the Private Placement, we had 12,960,000 shares of outstanding common
stock and no outstanding shares of preferred stock.


                                       56
<PAGE>

In addition, we plan to issue 540,000 post-split stock options under our new
2005 stock Incentive Plan. The per share price of all such newly issued options
under the 2005 Stock Incentive Plan will be $0.01 (post the reverse stock split
referenced above). After giving effect to the aforementioned stock split, there
will be 540,000 options outstanding under the 2005 Stock Incentive Plan and
15,822 options outstanding under the 1997 Stock Option Plan at the closing of
the Merger. This will result in the recognition of additional stock compensation
expense of $0.2 million for the three months ending March 31, 2005 and $0.2
million for each quarter thereafter through the three months ending March 31,
2010.

THREE MONTHS ENDED MARCH 31, 2005 AND 2004

REVENUES

We had revenues of $1.6 million for the three months ended March 31, 2005, as
compared to revenues of $1.4 million for the same period in 2004. The revenues
were higher due to $0.3 million more revenue from clinical trial reimbursements
in the United States as a result of more sites being recruited to join the
studies. The increase from clinical trial reimbursements was partially offset by
a $.01 decrease in international sales due primarily to additional competition
internationally, where two companies began clinical trials for VADs and were
providing their products at little or no charge to several hospitals.

RESEARCH AND DEVELOPMENT

Research and development expenses were $3.2 million for the three months ended
March 31, 2005 versus $3.4 million for the three months ended March 31, 2004,
representing a $0.2 million, or 6%, decrease. Significant components of the
change are as follows (in million):

                                    2005      2004     $ Change   % Change
                                   -------   -------   --------   --------

Production                         $   0.3   $   0.3      $(0.0)         0%
Engineering and Development            0.9       1.1       (0.2)       -20%
Quality, Clinical and Regulatory       1.4       1.3        0.1          7%
Sales and Marketing                    0.5       0.6       (0.1)       -17%
                                   -------   -------
                                   $   3.2   $   3.4
                                   =======   =======


      o     Production costs have decreased due to a change in certain supplies
            of various components of our products which have lowered our overall
            costs of production.

      o     Sales and Marketing costs have decreased due to lower travel related
            costs.

GENERAL AND ADMINISTRATIVE

General and administrative expenses were $1.0 million for the three months ended
March 31, 2005 versus $0.5 million for the three months ended March 31, 2004,
representing a $0.5 million, or 100%, increase. The increase was due to higher
legal and accounting costs associated with the pending reverse merger with
Salmon Express.

INTEREST EXPENSE

Interest expense was $0.1 million for the three months ended March 31, 2005
versus $0 for the three months ended March 31, 2004. The increase was due to
interest on the Venture Lending & Leasing loan entered into in 2004, our Bridge
Loans entered into in December 2004 and March 2004, and advances under the
working capital line from Silicon Valley Bank (see "Liquidity and Capital
Resources").

CONVERTIBLE PREFERRED STOCK DIVIDENDS AND ACCRETION


                                       57
<PAGE>

Convertible preferred stock dividends and accretion are attributable to our
Series A, Series B, Series C and Series D Redeemable Convertible Preferred Stock
(see Note 7 of the audited financial statements). Dividends and accretions
related to our preferred stock remained consistent at $1.3 million for the three
months ended March 31, 2005 and 2004.

NET LOSS AND NET LOSS PER SHARE AVAILABLE TO COMMON STOCKHOLDERS

Net loss available to common stockholders increased to $4.0 million in the first
three months of 2005 from $3.8 million in the same period of 2004. Net loss per
share available to common stockholders increased to $0.78 in 2005 from $0.74 in
2004.

YEARS ENDED DECEMBER 31, 2004 AND 2003

REVENUES

We had revenues of $5.9 million for the year ended December 31, 2004 versus
revenues of $6.7 million in 2003. The decrease was due to lower revenues from
international sales of $316,000 and lower clinical reimbursements in the United
States of $450,000. International sales were down due to additional competition
internationally, where two companies began clinical trials for VADs and were
providing their products at little or no charge to several hospitals. Clinical
reimbursements were down in the United States due to slower than expected
implant rates in our BTT and DT clinical trials.

RESEARCH AND DEVELOPMENT

Research and development expenses were $12.3 million for the year ended December
31, 2004 versus $11.1 million for the year ended December 31, 2003, representing
a $1.2 million, or 11%, increase. Significant components of the change are as
follows (in million):

                                     2004      2003    $ CHANGE   % CHANGE
                                   -------   -------   --------   --------
Production                         $   3.7   $   3.8      $(0.1)        (2%)
Engineering and Development            1.8       1.5        0.3         20%
Quality, Clinical and Regulatory       3.6       2.5        1.1         44%
Sales and Marketing                    3.2       3.3       (0.1)        (3%)
                                   -------   -------
Total                              $  12.3   $  11.1
                                   =======   =======


o     Engineering and Development costs increased due to a write off of
      approximately $0.5 million of controllers that were returned with the
      Carmeda(R) coated VADs. Although the controllers were new and in working
      condition, we had instituted several engineering design changes which
      improved the controller to the point where we believed our customers would
      not want to use the older controllers.
o     Quality, Clinical, and Regulatory expenses consist of the expenses
      associated with maintaining our Quality Systems, the costs of our clinical
      trials, including travel and fees and expenses of our third-party Clinical
      Research Organization (CRO) and clinical trial monitoring costs, and the
      costs associated with dealing with the FDA, as well as other regulatory
      agencies around the world. The increase was due to expanded clinical trial
      activity in the U.S., particularly fees and expenses related to our CRO.

GENERAL AND ADMINISTRATIVE

General and administrative expenses were $2.5 million for the year ended
December 31, 2004 versus $1.9 million for the year ended December 31, 2003,
representing a $0.6 million, or 32%, increase. The increase was due to higher
personnel expenses, higher recruiting expenses and higher legal and travel
expenses in 2004 associated with a private placement process that was terminated
in the later half of the year.


                                       58
<PAGE>

INTEREST INCOME

Interest income was $0.1 million for the year ended December 31, 2004 compared
to $0.1 million for the year ended December 31, 2003.

INTEREST EXPENSE

Interest expense was $0.2 million for the year ended December 31, 2004 versus $0
for the year ended December 31, 2003. The increase was due to interest on the
Venture Lending & Leasing loan entered into in 2004 along with advances under
the working capital line from Silicon Valley Bank (see "Liquidity and Capital
Resources").

CONVERTIBLE PREFERRED STOCK DIVIDENDS AND ACCRETION

Convertible preferred stock dividends and accretion are attributable to our
Series A, Series B, Series C and Series D Redeemable Convertible Preferred Stock
(see Note 7 of the audited financial statements). Dividends and accretions
related to our preferred stock remained consistent at $5.3 million for the years
ended December 31, 2004 and 2003.

NET LOSS AND NET LOSS PER SHARE AVAILABLE TO COMMON STOCKHOLDERS

Net loss available to common stockholders increased to $14.3 million in 2004
from $11.4 million in 2003. Net loss per share available to common stockholders
increased to $2.80 in 2004 from $2.25 in 2003.

RESTATEMENT OF FINANCIAL STATEMENTS

Effective July 1, 2003, in connection with the adoption of SFAS No. 150,
MicroMed treated its redeemable convertible preferred securities as mandatorily
redeemable and recorded the securities as a liability with the related dividends
and accretions accrued as interest expense. Upon additional evaluation of the
terms of the redeemable convertible preferred stock in 2004, it was determined
that the securities are contingently redeemable rather than mandatorily
redeemable, and the related dividends should have remained as part of
stockholders deficit and should not have been recorded as interest expense.
Because the shares are contingently redeemable under terms not controlled by
MicroMed, the redeemable convertible preferred stock is classified as mezzanine
equity in accordance with Article 5-02.28 of Regulation S-X expanded by ASR 268.
Accordingly, the financial statements as of December 31, 2003 have been restated
for the correction of this error surrounding the redemption features of the
redeemable convertible preferred securities. The restatement had no impact on
net loss available to common stockholders; however, it did impact net loss.
MicroMed has restated the statement of operations for the year ending December
31, 2003 as follows:

<TABLE>
<CAPTION>
                                            As Reported     Adjustments    2003 Restated
                                            ------------    -----------    -------------
<S>                                         <C>             <C>            <C>

Loss from operations                        $ (6,276,524)   $        --    $  (6,276,524)
Interest income                                  129,120             --          129,120
Interest expense                              (2,675,922)     2,668,196           (7,726)
                                            ------------    -----------    -------------
Net loss                                      (8,823,326)     2,668,196       (6,155,130)
Convertible preferred stock dividends         (2,621,922)    (2,668,196)      (5,290,118)
                                            ------------    -----------    -------------
Net loss available to common shareholders   $(11,445,248)   $        --    $ (11,445,248)
                                            ============    ===========    =============
</TABLE>


LIQUIDITY AND CAPITAL RESOURCES


                                       59
<PAGE>

As of March 31, 2005, cash and cash equivalents were $0.2 million. From our
inception through March 31, 2005, we used approximately $55.7 million in cash
for our operations. We have funded our cash requirements through the private
sale of equity, debt and credit facilities.

For the three months ended March 31, 2005, we used approximately $1.5 million in
cash for operations principally as a result of a net loss of $2.7 million, along
with net changes in other operating assets and liabilities of $1.1 million
offset by non-cash charges of $0.1 million for deprecation.

We used minimal cash in investing activities. We expect to continue to invest in
our infrastructure, including property and equipment to support our operations.
We anticipate that we will spend approximately $200,000-$300,000 in fiscal 2005
on capital expenditures.

Financing activities provided cash of $1.0 million during the three months ended
March 31, 2005, primarily from the receipt of proceeds of $1.5 million from a
bridge loan with certain stockholders (see below). These inflows were offset by
net payments of $0.5 million on the long-term note and credit facility during
the quarter.

In May 2004, we received $2.5 million (net $2.4 million after initial $0.1
million prepayment of principal) from a loan agreement we executed in May 2004
with Venture Lending & Leasing IV, Inc. ("VLL and the VLL Loan"). Pursuant to
the VLL Loan agreement, we borrowed $2.5 million, repayable in monthly principal
payments beginning in July 2004 and terminating in February 2007. Interest on
the promissory note is 11.137%. Amounts outstanding under the line of credit are
collateralized by a second lien on all of our assets, excluding our intellectual
property. In connection with the VLL Loan, we agreed to issue to VLL a warrant
to purchase $275,000 of our Series D preferred stock, which will be converted
into a warrant to purchase $275,000 of our common stock at a later date. The
warrant was issued to VLL on May 31, 2005. We were in default of the VLL Loan
agreement as of August 1, 2005 due to non-payment of our August payment. VLL
agreed to waive the event of default for non-payment for a period of two months,
with payments to VLL commencing again starting October 1, 2005.

In July 2004, we entered into a $4.5 million loan agreement with Silicon Valley
Bank, which replaced our working capital line of credit with Silicon Valley
Bank. Under the revised loan agreement, a new working capital line of credit is
available under a formula-based calculation applied to eligible accounts
receivable. Interest on draws under the new working capital line ranges from the
prime rate plus 1.25% to prime plus 1.5%, depending on our quick ratio at the
time of the advance. The loan agreement also requires the payment of collateral
handling fees that range from 0.15% to 0.50% (also dependent on our quick
ratio). The collateral handling fees are applied monthly to the daily gross
account balances. Amounts outstanding on the line of credit are collateralized
by all of our assets, excluding our intellectual property. The terms and
conditions of the line of credit prevent us from pledging our intellectual
property but do not require any financial covenants. Availability under the line
is based on the following formula: (1) 80% of the eligible U.S. accounts
receivable, up to a maximum loan balance of $4 million, and (2) 80% of eligible
foreign accounts receivable up to a maximum loan balance of $500,000. The
revised loan agreement expires April 15, 2006. At March 31, 2005, we had
availability under the working capital line and equipment line to draw an
additional $3.7 million

In December 2004, we entered into a loan agreement with several of our
stockholders (the "2004 Bridge Loan"). Under the terms of the 2004 Bridge Loan,
we may borrow up to $3 million (the "Loan Commitment") until August 31, 2005
(the "Loan Commitment Termination Date"), as amended. The notes issued under the
2004 Bridge Loan, as amended, are unsecured, bear interest at prime plus 3% and
are convertible into shares of our capital stock. As of March 31, 2005, we had
drawn $2.5 million of the $3 million commitment.

In March 2005, we executed a bridge loan agreement with the same stockholders
that were party to the 2004 Bridge Loan (the "2005 Bridge Loan"). Under the
terms of the 2005 Bridge Loan, we may borrow up to $1.5 million ("2005 Loan
Commitment") with terms identical to those of the notes issued under the 2004
Bridge Loan including the commitment to issue warrants to purchase common stock
to the stockholders on the unutilized portion of the 2005 Bridge Loan at the
expiration date, August 31, 2005, as amended. We do not anticipate issuing
warrants related to unutilized 2005 Bridge Loan Commitments since we expect to
draw the entire amount of the Loan Commitment.


                                       60
<PAGE>

As consideration to the lenders for making both the Loan Commitment and the 2005
Loan Commitment, we agreed to issue warrants to purchase common stock to each
lender in an amount equal (rounded down to the nearest whole number) to the
quotient of (x) the product of (A) .25 and (B) the amount of the Loan Commitment
from that lender that we do not borrow prior to the earlier of the Loan
Commitment Termination Date and a sale of MicroMed by asset sale, merger or
other business combination ("Business Combination") and (y) the Exercise Price
(as defined below). The warrants are to be issued promptly following the Loan
Commitment Termination Date or, if we complete a Business Combination prior to
the Loan Commitment Termination Date, the warrants shall be issued prior to the
Business Combination. For purposes of the 2004 Bridge Loan and the 2005 Bridge
Loan, "Exercise Price" means $0.7721 per share (appropriately adjusted for any
stock dividends, stock splits, reverse stock splits, recapitalizations and
similar transactions ("Recapitalizations"), subject to further adjustment as
provided in the agreement. In the event all of the Loan Commitment and 2005 Loan
Commitment is drawn, no warrants will be issued with respect to the 2004 and
2005 Bridge Loans. We do not anticipate issuing warrants related to unutilized
2004 or 2005 Bridge Loan Commitments since we expect to draw the entire amount
of the Loan Commitment and 2005 Loan Commitment.

Notwithstanding the provisions of described above, if prior to issuing the
warrants as contemplated by the 2004 and 2005 Bridge Loans, we have not
completed a recapitalization whereby all shares of our preferred stock
outstanding on the date of the agreement are converted into common stock, then,
in lieu of issuing warrants to purchase common stock, we will issue warrants to
purchase preferred stock exercisable for a new series of preferred. The warrants
to issue preferred stock shall be issued to each lender in an amount equal
(rounded down to the nearest whole number) to the quotient of (x) the product of
(A) .25 and (B) the amount of Loan Commitment from that lender that we do not
borrow prior to the earlier of the Loan Commitment Termination Date and a
Business Combination and (y) $5.00. The new series of preferred stock (i) will
have a liquidation preference of $5.00 per share prior to distributions on any
other series or class, (ii) will convert into a number of shares of common stock
equal to the quotient of (x) $5.00 and (y) the Exercise Price, and (iii)
otherwise will have terms as nearly as possible identical to our existing Series
D Preferred Stock.

In the event we complete an equity financing of at least $2 million on or prior
to the Loan Commitment Termination Date, and in that financing we issue
securities with a common stock equivalent price per share lower than the
Exercise Price, then the Exercise Price for the warrants shall be reduced to the
Common Stock equivalent price per share of securities issued in that financing,
and appropriate adjustments to the number of shares issuable on exercise of the
warrants shall be made as provided in the warrants.

In the event we do not complete an equity financing of at least $2 million on or
prior to the Loan Commitment Termination Date, but we do complete a Business
Combination on or prior to June 30, 2005, then the exercise price for the
warrants, shall be reduced to 85% of the common stock equivalent price per share
to be paid by the purchaser in the Business Combination, if such reduced price
is less than the exercise price.

Immediately prior to the closing of the Merger, MicroMed Technology closed a
$4,991,683 private placement (the "Private Placement") of its common stock and
warrants. MicroMed Technology engaged Hunter World Markets, Inc. ("Hunter") as
its placement agent in connection with the Private Placement. Each investor in
the Private Placement purchased shares of MicroMed Technology common stock at
$1.33 per share and seven-year warrants, exercisable one year after the date of
issuance, to purchase 60% of the common stock purchased by such investor in the
Private Placement at a per share exercise price of $1.33 (all investors
introduced to MicroMed Technology by Hunter assigned their warrants to Hunter,
an aggregate of 1,804,511 warrants). The warrants are redeemable by the Company
under certain circumstances at any time after one year from the date of
issuance. The Company agreed to file a registration statement covering the
securities sold in the Private Placement within 30 days of the closing of the
Merger. As partial consideration for services rendered further to the Private
Placement, Hunter was issued 300,000 shares of MicroMed Technology's common
stock.

The shares of common stock of the Company are currently listed for quotation on
the Over-the-Counter Bulletin Board under the symbol "SXPI.OB." The Company is
in the process of obtaining a new trading symbol to reflect the recent corporate
name change.

We currently occupy approximately 22,000 square feet of space under a lease
which expires on May 31, 2007. The lease may be canceled by us by giving the
landlord 30 days notice prior to May 31 of any of the remaining years of the
lease. This space supports our immediate operational activities. As we expand
our leased space to support our growth, our occupancy costs will increase.


                                       61
<PAGE>

We expect our cash requirements to increase significantly during 2005 as we
expand our U.S. clinical trial efforts, expand our technical support staff,
develop our administrative support activities and expand our international
marketing efforts. Additionally, as we achieve projected growth in revenues, we
anticipate significant working capital requirements, capital expenditures and
investments in our infrastructure. 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. If we complete the Private
Placement of at least $5 million and up to $20 million, we believe that we will
have sufficient cash and cash equivalents to meet projected operating
requirements for at least the next 12 months. However, if we do not complete the
Private Placement prior to the closing of the Merger, we will need to seek
additional funds from public and private stock offerings, borrowings under
credit lines or other sources. We cannot be certain that additional capital will
be available on favorable term, or at all. If adequate funds are unavailable, we
may be required to scale back or discontinue our product development program or
clinical trials, or obtain funds through strategic alliances that may require us
to relinquish rights to certain of our technologies.

CONTRACTUAL OBLIGATIONS

Below is a table setting forth our contractual obligations as of December 31,
2004:

<TABLE>
<CAPTION>
                                              Less than                              More than 5
                                   Total       One Year    1-3 Years    4-5 Years       years
                                 ----------   ----------   ----------   ----------   ------------
<S>                              <C>          <C>          <C>          <C>          <C>
Operating Leases                 $  233,811   $  233,811   $       --   $       --   $         --

Notes Payable                    $1,177,472   $1,177,472           --           --             --

Bridge loans with stockholders   $1,000,000   $1,000,000           --           --             --

Long-term debt                   $2,162,015   $  927,945   $1,234,070           --             --
                                 ----------   ----------   ----------   ----------   ------------
TOTAL                            $4,573,928   $3,339,228   $1,234,070   $       --   $         --
                                 ----------   ----------   ----------   ----------   ------------
</TABLE>

As of March 31, 2005, our Bridge loans with stockholders due in less than one
year increased to $2.5 million.

OFF-BALANCE SHEET ARRANGEMENTS

      As of March 31, 2005, we had no off-balance sheet arrangements.

        ANTICIPATED LIQUIDITY AND CAPITAL RESOURCES FOLLOWING THE MERGER

The Company assumed MicroMed Technology's assets and liabilities following the
Merger. Prior to the Merger, MicroMed Technology completed the Private Placement
of $4,991,683, including the conversion of approximately $4.5 million of
convertible notes issued in connection with the 2004 and 2005 Bridge Loans,
prior to the closing of the Merger. Therefore, the Company believes that it will
have sufficient cash and cash equivalents to meet projected operating
requirements for at least through the end of 2005. There can be no assurance
that additional financing will be available on terms favorable to us or at all.
If adequate funds are not available or are not available on acceptable terms,
the Company may not be able to fund expansion, take advantage of unanticipated
acquisition opportunities, develop or enhance services or products or respond to
competitive pressures. Such inability could harm the Company's business, results
of operations and financial condition.


ITEM 5.02       DEPARTURE OF DIRECTORS AND PRINCIPAL OFFICERS; ELECTION OF
                DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.


                                       62
<PAGE>

Peter Smith Sr. and Eric Weitzman resigned as officers and directors of the
Company immediately after the Effective Time of the Merger.

Following the Merger, Travis E. Baugh, Dallas W. Anderson, Paul M. Frison, James
M. Garvey, Norwick B.H. Goodspeed, Phyllis Haberman, Cornelius T. Ryan and
Martin P. Sutter, each of whom are directors of MicroMed, were appointed to the
Board of Directors of the Company. In addition, the Company appointed Travis E.
Baugh as the Company's President and Chief Executive Officer, Betty Silverstein
Russell as Chief Operating Officer and Executive Vice President, Marketing,
Robert J. Benkowski as Senior Vice President, Engineering, and Timothy R. Placek
as Senior Vice President, Regulatory Affairs, Clinical Affairs and Quality
Systems and Michael A. Rutledge as Vice President, Controller and Corporate
Secretary. For complete information regarding the new officers and directors,
refer to "EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES" under Item 5.01
above.


ITEM 5.03       AMENDMENTS TO CERTIFICATE OF INCORPORATION OR BYLAWS; CHANGE IN
                FISCAL YEAR.

On August 10, 2005, the Company filed a Certificate of Amendment to its Articles
of Incorporation with the Nevada Secretary of State to effectuated a
1-for-3.3528 reverse stock split of its common stock immediately prior to the
Merger. A copy is attached hereto as Exhibit 3.1.

On August 10, 2005, the Company filed a Certificate of Incorporation to (i)
effectuate a reincorporation from the State of Nevada to the State of Delaware
and (ii) a corporate name change to "MicroMed Cardiovascular, Inc." A copy is
attached hereto as Exhibit 3.2.

Upon consummation of the Merger, the Company changed its fiscal year end from
November 30 to December 31.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements of Business Acquired. The financial statements of
MicroMed Technology, Inc. for the years ended December 31, 2004 and 2003 are
attached.

(b) Pro Forma Financial Statements. The required pro forma financial information
is included in item 5.01.

(c) Exhibits:

2.1      Agreement and Plan of Merger, dated as of January 31, 2005, by and
         among Salmon Express, Inc., MicroMed Technology, Inc., Salmon
         Acquisition Corp. and Pete Smith, Sr. (incorporated by reference to
         Exhibit 2.1 of the Registrant's Form 8-K filed February 1, 2005).
2.1(a)   First Amendment to Agreement and Plan of Merger, dated as of May 16,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr. (incorporated by reference
         to Exhibit 2.1 of the Registrant's quarterly report on Form 10-QSB for
         the three months ended May 31, 2005).
2.1(b)   Second Amendment to Agreement and Plan of Merger, dated as of July 29,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr. (incorporated by reference
         to Exhibit 2.1 of the Registrant's Form 8-K filed August 1, 2005).
2.1(c)   Third Amendment to Agreement and Plan of Merger, dated as of August 9,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr.

3.1      Certificate of Amendment to Articles of Incorporation.
3.2      Certificate of Incorporation of MicroMed Cardiovascular, Inc..
4.1      Form of Stock Purchase Warrant.
4.2      Registration Rights Agreement dated August 9, 2005.
10.1     Securities Purchase Agreement dated August 9, 2005.
99.1     Press Release.


                                       63
<PAGE>

                                   SIGNATURES

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

Date: August 12, 2005                       MICROMED CARDIOVASCULAR, INC.


                                            By: /s/ Travis E. Baugh
                                               ---------------------------------
                                            Name   Travis E. Baugh
                                            Title: Chief Executive Officer


                                       64
<PAGE>

                                 EXHIBIT INDEX

2.1      Agreement and Plan of Merger, dated as of January 31, 2005, by and
         among Salmon Express, Inc., MicroMed Technology, Inc., Salmon
         Acquisition Corp. and Pete Smith, Sr. (incorporated by reference to
         Exhibit 2.1 of the Registrant's Form 8-K filed February 1, 2005).
2.1(a)   First Amendment to Agreement and Plan of Merger, dated as of May 16,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr. (incorporated by reference
         to Exhibit 2.1 of the Registrant's quarterly report on Form 10-QSB for
         the three months ended May 31, 2005).
2.1(b)   Second Amendment to Agreement and Plan of Merger, dated as of July 29,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr. (incorporated by reference
         to Exhibit 2.1 of the Registrant's Form 8-K filed August 1, 2005).
2.1(c)   Third Amendment to Agreement and Plan of Merger, dated as of August 9,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr.
3.1      Certificate of Amendment to Articles of Incorporation.
3.2      Certificate of Incorporation of MicroMed Cardiovascular, Inc..
4.1      Form of Stock Purchase Warrant.
4.2      Registration Rights Agreement dated August 9, 2005.
10.1     Securities Purchase Agreement dated August 9, 2005.
99.1     Press Release.


                                       65
<PAGE>


                                    EXHIBIT A

Financial Statements

MicroMed Technology, Inc.
(a development stage company)

Years ended December 31, 2004 and 2003 (Restated) and three months ended March
31, 2005 and period from inception (October 6, 1995) through March 31, 2005


                                       66
<PAGE>

                            MicroMed Technology, Inc.

                          (a development stage company)

                              Financial Statements

                Years ended December 31, 2004 and 2003 (Restated)

                                    Contents

Report of Independent Registered Public Accounting Firm                  3

Report of Independent Public Accountants                                 4
Financial Statements
Balance Sheet                                                            5
Statements of Operations                                                 6
Statements of Stockholders' Deficit                                      7
Statements of Cash Flows                                                 8
Notes to Financial Statements                                            9


                                       67
<PAGE>

             Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
MicroMed Technology, Inc.

We have audited the accompanying balance sheet of MicroMed Technology, Inc. (a
Delaware corporation in the development stage), as of December 31, 2004, and the
related statements of operations, and stockholders' deficit, and cash flows for
the years ended December 31, 2003 (Restated) and 2004 and for the period from
inception (October 6, 1995) through December 31, 2004. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements for the period from inception (October 6,
1995) through December 31, 2000, were audited by other auditors who have ceased
operations and whose report dated April 11, 2001, expressed an unqualified
opinion on those statements. The financial statements for the period from
inception (October 6, 1995) through December 31, 2000, include total revenues
and net loss of $640,000 and $26,771,117, respectively. Our opinion on the
statements of operations, stockholders' deficit, and cash flows for the period
from inception (October 6, 1995) through December 31, 2004, insofar as it
relates to amounts for prior periods through December 31, 2000, is based solely
on the report of other auditors.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit on the Company's internal control over financial reporting . Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of MicroMed Technology, Inc. , at December 31, 2004, and
the results of its operations and its cash flows for the years ended December
31, 2003 (Restated) and 2004, and for the period from inception (October 6,
1995) through December 31, 2004 , in conformity with U.S. generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that MicroMed
Technology, Inc. will continue as a going concern. As more fully described in
Note 1, the Company has incurred recurring operating losses and has a working
capital deficiency. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

As discussed in Note 2 to the financial statements, the Company has restated its
financial statements for the year ended December 31, 2003.
/s/ Ernst & Young LLP

March 15, 2005
Houston, Texas


                                       68
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To MicroMed Technology, Inc.:

We have audited the accompanying consolidated balance sheets of MicroMed
Technology, Inc. (a Delaware corporation in the development stage ), and
subsidiary as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years then
ended, and for the period from inception (October 6, 1995) through December 31,
2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of MicroMed
Technology, Inc., and subsidiary, as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for the years then ended, and
for the period from inception (October 6, 1995) through December 31, 2000, in
conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Houston, Texas
April 11, 2001

THIS IS A COPY OF THE REPORT ISSUED BY ARTHUR ANDERSEN LLP, MICROMED'S FORMER
INDEPENDENT PUBLIC ACCOUNTANTS, IN CONNECTION WITH THE COMPANY'S FINANCIAL
STATEMENTS FOR THE PERIOD FROM INCEPTION (OCTOBER 6, 1995) THROUGH DECEMBER 31,
2000. THIS REPORT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP IN CONNECTION
WITH MICROMED'S FINANCIAL STATEMENTS FOR THE PERIOD FROM INCEPTION (OCTOBER 6,
1995) THROUGH DECEMBER 31, 2004.


                                       69
<PAGE>

                            MICROMED TECHNOLOGY, INC.

                          (A development stage company)

                                  Balance Sheet

<TABLE>
<CAPTION>
                                                                                  December 31,       March 31,
                                                                                      2004             2005
                                                                                  ------------      -----------

ASSETS                                                                                             (unaudited)
-------
<S>                                                                               <C>               <C>
Current assets:
Cash and cash equivalents                                                         $    687,162      $   211,272
Accounts receivable                                                                  1,616,283        1,432,446
Inventory                                                                            3,229,863        3,332,847
Prepaids and other assets                                                              221,897          122,482
                                                                                  ------------      -----------
Total current assets                                                                 5,755,205        5,099,047
Property and equipment, net                                                            572,198          505,632
Other assets                                                                            40,078           13,076
                                                                                  ------------      -----------
Total assets                                                                      $  6,367,481      $ 5,617,755
                                                                                  ============     ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable                                                                  $  1,267,572      $ 1,856,021
Accrued liabilities                                                                  1,016,740        1,336,237
Current portion of  long-term debt                                                     927,945          927,945
Note payable                                                                         1,177,472          911,437
Bridge loans from stockholders                                                       1,000,000        2,505,614
                                                                                  ------------      -----------
Total current liabilities                                                            5,389,729        7,537,254
Long-term debt                                                                       1,234,070        1,012,473
Redeemable convertible preferred stock:
Series A Preferred stock, $.001 par value, 1,000,000 shares authorized,
issued and outstanding                                                               6,201,682        6,325,982
Series B Preferred stock, $.001 par value, 2,000,000 shares authorized,
issued and outstanding                                                              12,668,718       12,896,207
Series C Preferred stock, $.001 par value, 3,700,000 shares authorized,
3,518,153 shares issued and outstanding                                             25,052,402       25,482,067
Series D Preferred stock, $.001 par value, 5,000,000 shares authorized,
4,593,011 shares issued and outstanding                                             28,158,092       28,690,738
Commitments and Contingencies
Stockholders' Deficit:
Common Stock, $.001 par value, 65,000,000 shares authorized, 5,093,040 shares
issued and outstanding                                                                   5,093            5,093
Deficit accumulated during development stage                                       (72,342,305)     (76,332,059)
                                                                                  ------------     ------------
Total stockholders' deficit                                                        (72,337,212)     (76,326,966)
                                                                                  ------------     ------------
Total liabilities and stockholders' deficit                                       $  6,367,481      $ 5,617,755
                                                                                  ============     ============
</TABLE>

The accompanying notes are an integral part of these financial statements


                                       70
<PAGE>

                            MICROMED TECHNOLOGY, INC.

                          (A development stage company)
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                               Years ended December 31,       Period from
                                               ------------------------       Inception
                                                                              (October 6,
                                                                                 1995)
                                                                               Through
                                                                               December
                                                                                  31,
                                                 2003            2004            2004
                                             ------------    ------------    ------------
                                              (Restated)
<S>                                            <C>               <C>               <C>
International product sales                  $  2,033,281    $  1,717,477    $  5,949,084

Clinical reimbursements                         4,668,709       4,218,711      12,768,301
                                             ------------    ------------    ------------
Total revenue                                   6,701,990       5,936,188      18,627,385

Expenses:
Research and development                       11,059,714      12,263,871      58,198,966

General and administrative                      1,918,800       2,505,185      15,971,399
                                             ------------    ------------    ------------
Total operating expenses                       12,978,514      14,769,056      74,170,365
                                             ------------    ------------    ------------
Loss from operations                           (6,276,524)     (8,832,868)    (55,542,980)

Interest income                              $    129,120    $     71,306    $  1,596,287

Interest expense                                   (7,726)       (178,034)       (605,933)
                                             ------------    ------------    ------------
Net loss                                     $ (6,155,130)   $ (8,939,596)   $(54,552,625)

Convertible preferred stock dividends and
accretion                                      (5,290,118)     (5,316,392     (18,543,381)
                                             ------------    ------------    ------------
Net loss available to common stockholders     (11,445,248)    (14,255,988)   $(73,096,006)
                                             ============    ============    ============
Basic and diluted net loss per share
available to common stockholders             $      (2.25)   $      (2.80)
                                             ============    ============
Weighted average common shares outstanding      5,092,618       5,093,040
                                             ============    ============
</TABLE>


                                       71
<PAGE>

<TABLE>
<CAPTION>
                                                                                  Period from
                                                                                   Inception
                                              Three months ended March 31,     (October 6, 1995)
                                            ---------------------------------  Through March 31,
                                                2004               2005              2005
                                            --------------    --------------- ---------------
                                             (Unaudited)         (Unaudited)       (Unaudited)
<S>                                            <C>               <C>               <C>
International product sales                    $    587,673      $    441,327      $  6,390,412

Clinical reimbursements                             846,869         1,176,150        13,854,451
                                               ------------      ------------      ------------
Total revenue                                     1,434,542         1,617,477        20,244,862

Expenses:
Research and development                          3,398,947         3,150,908        61,349,874

General and administrative                          495,471         1,013,279        16,984,678
                                               ------------      ------------      ------------
Total operating expenses                          3,894,418         4,164,187        78,334,552
                                               ------------      ------------      ------------
Loss from operations                             (2,459,877)       (2,546,710)      (58,089,689)

Interest income                                      20,125             7,835         1,604,122

Interest expense                                     (2,720)         (136,779)         (742,712)
                                               ------------      ------------      ------------
Net loss                                         (2,442,471)       (2,675,654)      (57,228,279)

Convertible preferred stock dividends and        (1,324,099)       (1,314,100)      (19,857,481)
accretion

Net loss available to common stockholders      $ (3,766,570)     $ (3,989,754)     $(77,085,760)
                                               ============      ============      ============
Basic and diluted net loss per share           $      (0.74)     $      (0.78)
available to common stockholders               ============      ============
Weighted average common shares outstanding        5,093,040         5,093,040
                                               ============      ============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                       72
<PAGE>

                           MICROMED TECHNOLOGY , INC.

                         ( A development stage company )

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                                                                         Deficit
                                                                                                        Accumulated
                                                     Common Stock         Additional      Deferred     During the
                                              ------------------------     Paid-In                      Development
                                                 Shares        Amount      Capital      Compensation       Stage          Total
                                              ------------   ---------   ------------    ----------    ------------    ------------
<S>                                              <C>         <C>         <C>             <C>           <C>             <C>
Issuance of common stock to founders
for cash in October 1995 at $0.01 per share      5,011,665   $   5,012   $     44,988    $       --    $         --    $   50,000
Services contributed by stockholders                    --          --        129,000            --              --       129,000
Net loss                                                --          --             --            --        (173,041)    (173,041)
                                              ------------   ---------   ------------    ----------    ------------   -----------
Balance, December 31, 1995                       5,011,665       5,012        173,988            --        (173,041)        5,959
Services contributed by stockholders                    --          --        171,050            --              --       171,050
Cash contributed by stockholders                        --          --         55,999            --              --        55,999
Net loss                                                --          --             --            --      (1,069,007)  (1,069,007)
                                              ------------   ---------   ------------    ----------    ------------  ------------
Balance, December 31, 1996                       5,011,665       5,012        401,037            --      (1,242,048)    (835,999)
Deferred compensation                                   --          --         48,380       (48,380)             --           --
Amortization of deferred compensation                   --          --             --        12,095              --       12,095
Net loss                                                --          --             --            --      (3,712,342)  (3,712,342)
                                              ------------   ---------   ------------    ----------    ------------  ------------
Balance, December 31, 1997                       5,011,665       5,012        449,417       (36,285)     (4,954,390)  (4,536,246)
Deferred compensation                                   --          --         29,020       (29,020)             --           --
Amortization of deferred compensation                   --          --             --        59,263              --       59,263
Net loss                                                --          --             --            --      (7,076,108)  (7,076,108)
                                              ------------   ---------   ------------    ----------    ------------  ------------
Balance, December 31, 1998                       5,011,665       5,012        478,437        (6,042)    (12,030,498) (11,553,091)
Issuance of warrants to
purchase common stock                                   --          --         64,207            --              --       64,207
Amortization of deferred compensation                   --          --             --         3,334              --        3,334
Dividends and accretion on redeemable stock             --          --        (70,070)           --              --      (70,070)
Net loss                                                --          --             --            --      (8,329,116)  (8,329,116)
Balance, December 31, 1999                       5,011,665       5,012        472,574        (2,708)    (20,359,614) (19,884,736)
Issuance of warrants to purchase common stock           --          --         85,859            --              --       85,859
Deferred compensation                                   --          --        243,216      (243,216)             --           --
Amortization of deferredcompensation                    --          --             --        23,000              --       23,000
Exercise of stock options                            4,250           4          3,326            --              --        3,330
Dividends and accretion on redeemable stock             --          --       (804,975)           --      (2,433,138)  (3,238,113)

<CAPTION>

                                                                                                        Deficit
                                                                                                      Accumulated
                                                 Common Stock          Additional                      During the
                                                         Paid-In                       Deferred       Development
                                          Shares          Amount        Capital       Compensation       Stage           Total
                                        ------------   ------------   ------------    ------------    ------------   ------------
<S>                                              <C>         <C>         <C>             <C>           <C>             <C>
Net loss                                          --             --             --              --      (6,411,503)   (6,411,503)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, December 31, 2000                 5,015,915          5,016             --        (222,924)    (29,204,255)  (29,422,163)
Issuance of warrants to purchase
common stock                                  11,250             11          2,364              --              --         2,375
Deferred compensation                             --             --          9,110          (9,110)             --            --
Amortization of deferred compensation             --             --             --          45,768              --        45,768
Dividends and accretion on
redeemable stock                                  --             --        (11,474)             --      (3,153,533)   (3,165,007)
Net loss                                          --             --             --              --      (6,276,699)   (6,276,699)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, December 31, 2001                 5,027,165          5,027             --        (186,266)    (38,634,487)  (38,815,726)
Deferred Compensation                             --             --          2,406          (2,406)             --            --
Amortization of deferred compensation             --             --             --         (15,416)             --       (15,416)
Exercises of stock options                    58,875             59         11,716              --              --        11,775
Dividends and accretion on
redeemable stock                                  --             --        (14,122)             --      (1,449,559)   (1,463,681)
Net loss                                          --             --             --              --      (6,410,084)   (6,410,084)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, December 31, 2002                 5,086,040          5,086             --        (204,088)    (46,494,130)  (46,693,132)
Amortization of deferred compensation             --             --             --           2,406              --         2,406
Exercises of stock options                     7,000              7          1,393              --              --         1,400
Dividends and accretion on redeemable
stock (Restated)                                  --             --         (1,393)             --      (5,288,725)   (5,290,118)
Net loss (Restated)                               --             --             --              --      (6,155,130)   (6,155,130)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, December 31, 2003 (Restated)      5,093,040          5,093             --        (201,682)    (57,937,985)  (58,134,574)
Reversal of deferred compensation                 --             --             --         201,682        (201,682)           --
Issuance of warrant                               --             --         53,350              --              --        53,350
Dividends and accretion on
redeemable stock                                  --             --        (53,350)             --      (5,263,042)   (5,316,392)
Net loss                                          --             --             --              --      (8,939,596)   (8,939,596)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, December 31, 2004                 5,093,040          5,093             --    $         --     (72,342,305)  (72,337,212)
Dividends and accretion on redeemable
stock (unaudited)                                 --             --             --              --      (1,314,100)   (1,314,100)
Net loss (unaudited)                              --             --             --              --      (2,675,654)   (2,675,654)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, March 31, 2005                    5,093,040   $      5,093             --              --    $(76,332,059) $(76,326,966)
                                        ============   ============   ============    ============    ============  =============
</TABLE>

   The accompanying notes are an integral part of these financial statements


                                       73
<PAGE>

                            MICROMED TECHNOLOGY, INC.

                          (A development stage company)
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    Years ended December 31,      Period from
                                                                 ----------------------------      Inception
                                                                                                  (October 6,
                                                                                                    1995)
                                                                                                  December 31,
                                                                     2003            2004            2004
                                                                 ------------    ------------    ------------
                                                                  (Restated)

Cash flows from operating activities
<S>                                                              <C>             <C>             <C>
Net loss                                                         $ (6,155,130)   $ (8,939,596)   $(54,552,625)

Adjustments to reconcile net loss to net cash used
Depreciation and amortization                                         318,195         346,490       2,327,039

Conversion of accrued interest in Series C Preferred Stock                 --              --          95,778

Conversion of accrued interest in Series D Preferred Stock                 --              --         251,088

Services contributed by stockholders                                       --              --         300,050

Issuance of warrant                                                        --          53,350          53,350

Amortization of deferred compensation                                   2,406              --         130,450

Loss on disposal of fixed assets                                           --           1,798           1,798

Changes in assets and liabilities:
Accounts receivable                                                  (706,289)       (233,829)     (1,616,283)

Inventory                                                             717,883      (1,195,422)     (3,229,863)

Prepaids and other assets                                             150,783         (24,009)       (321,988)

Accounts payable and accrued liabilities                              680,607         331,627       2,327,454
                                                                 ------------    ------------    ------------

Net cash used in operating activities                              (4,991,545)     (9,659,591)    (54,233,752)

Cash flows from investing activities :
Purchase of property and equipment                                   (170,891)       (352,721)     (2,841,023)
                                                                 ------------    ------------    ------------

Net cash used in investing activities                                (170,891)       (352,721)     (2,841,023)

Cash flows from financing activities:
Proceeds from bridge loan from stockholders                                --       1,015,986      12,958,986

Repayments of bridge loans from stockholders                               --         (15,986)     (2,015,986)

Proceeds from issuance of notes payable                               200,000       4,015,415       4,215,415

Repayments of notes payable                                                --        (919,070)       (919,070)

Proceeds from issuance of warrants and preferred stock, net of             --              --      43,397,713
offering cost
Proceeds from issuance of common stock and cash contributed by          1,400              --         124,879
stockholders
                                                                 ------------    ------------    ------------

Net cash provided by financing activities                             201,400       4,096,345      57,761,937

Change in cash and cash equivalents                                (4,961,036)     (5,915,967)        687,162

Beginning cash and cash equivalents                                11,564,165       6,603,129              --
                                                                 ------------    ------------    ------------

Ending cash and cash equivalents                                 $  6,603,129    $    687,162    $    687,162
                                                                 ============    ============    ============

Supplemental disclosure of information:
Cash paid for interest                                           $      4,872    $    161,882    $    166,754

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      $  5,290,118    $  5,316,392    $ 18,543,381
stockholders

<CAPTION>
                                                                                                          Period from
                                                                                                           Inception
                                                                       Three months ended March 31,    (October 6, 1995)
                                                                 -----------------------------------   Through March 31,
                                                                      2004               2005                2005
                                                                 ----------------    ---------------  ------------------
                                                                   (Unaudited)        (Unaudited)       (Unaudited)
<S>                                                               <C>                 <C>             <C>
Cash flows from operating activities

Net loss                                                          $ (2,442,471)       (2,675,654)     $(57,228,279)

Adjustments to reconcile net loss to net cash used                      93,009            74,646         2,401,685
Depreciation and amortization                                               --                --            95,778
Conversion of accrued interest in Series C Preferred Stock                  --                --           251,088
Conversion of accrued interest in Series D Preferred Stock                  --                --           300,050
Services contributed by stockholders                                        --                --            53,350
Issuance of warrant                                                         --                --           130,450
Amortization of deferred compensation
Loss on disposal of fixed assets                                            --             4,639             6,437

Changes in assets and liabilities:
Accounts receivable                                                    204,559           183,837        (1,432,447)

Inventory                                                             (458,025)         (102,984)       (3,332,847)

Prepaids and other assets                                               (2,820)          126,417          (195,571)

Accounts payable and accrued liabilities                               (46,918)          907,946         3,235,401
                                                                  ------------      ------------      ------------

Net cash used in operating activities                               (2,652,667)       (1,481,153)      (55,714,905)

Cash flows from investing activities:
Purchase of property and equipment                                    (142,781)          (12,719)       (2,853,742)
                                                                  ------------      ------------      ------------

Net cash used in investing activities                                 (142,781)          (12,719)       (2,853,742)

Cash flows from financing activities:
Proceeds from bridge loan from stockholders                                 --         1,505,613        14,464,599

Repayments of bridge loans from stockholders                                --                --        (2,015,986)

Proceeds from issuance of notes payable                                     --         1,293,780         5,509,195

Repayments of notes payable                                                 --        (1,781,411)       (2,700,481)

Proceeds from issuance of warrants and preferred stock, net of
offering cost                                                               --                --        43,397,713
Proceeds from issuance of common stock and cash contributed by
stockholders                                                                --                --           124,879
                                                                  ------------      ------------      ------------

Net cash provided by financing activities                                   --         1,017,982        58,779,919
                                                                  ------------      ------------      ------------
Change in cash and cash equivalents                                 (2,795,448)         (475,890)          211,272

Beginning cash and cash equivalents                                  6,603,129           687,162                --
                                                                  ------------      ------------      ------------

Ending cash and cash equivalents                                  $  3,807,681      $    211,272      $    211,272
                                                                  ============      ============      ============

Supplemental disclosure of information:
Cash paid for interest                                            $      6,560      $     86,149      $    252,903

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       $  1,324,099      $  1,314,100      $ 19,857,481
stockholders
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                       74
<PAGE>

                            MICROMED TECHNOLOGY, INC.

                          (A DEVELOPMENT STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2004
                    (INFORMATION AS OF MARCH 31, 2005 AND THE
                      THREE MONTHS ENDED MARCH 31, 2005 AND
                               2004 IS UNAUDITED)

1. ORGANIZATION

MicroMed Technology, Inc. ("MicroMed" or the "Company"), was incorporated in the
State of Texas on October 6, 1995 and was subsequently reincorporated on June
12, 1996, in the state of Delaware. MicroMed is a development stage company
which has devoted most of its efforts to research and product development of
medical products.

The Company's primary product is the DeBakey Ventricular Assist Device (the
"DeBakey VAD (R) "), a miniaturized heart pump. The DeBakey VAD (R) was designed
by a team of engineers and scientists with the National Aeronautics and Space
Administration ("NASA"), Baylor College of Medicine ("Baylor"), and the Company,
led by the famed heart surgeons Dr. Michael E. DeBakey and Dr. George P. Noon.
The Company received an exclusive license from NASA in June 1996 for the primary
technology for the DeBakey VAD (R) .

The Company began European clinical trials at various hospitals in Austria,
France, Germany, Italy, and Switzerland in 1998. The Company received CE Mark
approval to begin marketing the DeBakey VAD (R) in the European Union in April
2001, with a subsequent approval of an upgraded product in July 2002. The
Company received permission from the Food and Drug Administration ("FDA") to
begin clinical trials in the United States in May 2000 and is now in Phase III,
pivotal trials for two separate indications: bridge to heart transplant and
alternative to heart transplant/destination therapy. The Company received a
humanitarian device exemption (HDE) from the FDA to commercially sell the
DeBakey VAD(R) Child , a pediatric version of the device, in the U.S. in 2004.

The research and development activities engaged in by the Company involve a high
degree of risk and uncertainty. The ability of the Company to develop,
manufacture, and market its proprietary product is dependent on many factors
including, but not limited to, obtaining additional financing, attracting and
retaining key personnel, and successfully developing expanded manufacturing and
marketing capabilities. The Company's ability to develop these operations may be
impacted by uncertainties related to proprietary technologies, technological
change and obsolescence, successful completion of its U.S. regulatory clinical
trials, competition, government regulations and approvals, healthcare reform,
and product liability exposure. Additionally, the Company is reliant on its
exclusive license with NASA for the DeBakey VAD (R) technology, which is the
basis for the Company's main product. Accordingly, there can be no assurance of
the Company's future success. The Company will require additional financing in
order to complete the U.S. regulatory clinical trials of its proprietary
product, and there can be no assurances that such additional financing will be
available at terms acceptable to the Company.

To facilitate such financing, in January 2005, the Company executed an agreement
to merge with Salmon Express, Inc., a publicly traded Nevada Corporation. Once
effective, the combined entity will be renamed, "MicroMed Cardiovascular, Inc.,
and will reincorporate in the State of Delaware. Prior to the merger, and
subsequent to stockholder approval, the Company plans to affect a
recapitalization where all redeemable preferred stock will convert to common
stock and affect a reverse stock split. The Company will be the accounting
acquiror in the transaction.



                                       75
<PAGE>

1. ORGANIZATION (CONTINUED)

The Company also entered into an engagement letter with the investment banking
firm to assist the Company in raising additional capital associated with the
merger. Under the terms of the engagement letter, the Company will pay the
investment bank a fee of 7% of all funds raised, excluding sales to our existing
shareholders and will issue warrants upon completion of an equity financing. The
funding contemplated under the engagement letter is anticipated to close at the
same time as the merger is consummated.

Should such financing not be obtained, the Company may be required to adjust its
current plan in order to retain adequate capital for conducting its operations.
The Company expects to continue to incur losses for the next few years. There
can be no assurances that the Company will successfully complete the transition
from a development stage company to a commercial company with successful
operations.

The Company believes that it can conserve its cash resources to fund operations
through at least mid 2005 if the funding, as described above, does not take
place. The Company's longer-term funding requirements will depend on many
factors, including the progress of the Company's research and development, the
success of the Company in bringing its proprietary products to market, and the
establishment of other collaborative relationships. There can be no assurances
additional funding will be available.

The Company has recurring operating losses and has a working capital deficiency.
Based on this information, management believes there is substantial risk that
the Company will not continue as a going concern. The financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM FINANCIAL STATEMENTS

The financial statements as of March 31, 2005 and for the three months ended
March 31, 2004 and 2005 are unaudited. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation in accordance with U.S. generally accepted accounting
principles have been included. Operating results for interim periods are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2005.

USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of three
months or less to be cash equivalents. Cash equivalents consist of investments
in high-grade commercial paper and money market securities.

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.


                                       76
<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

A summary of inventory is as follows:

                                                 December 31,         March 31,

                                                   2004                  2005
                                                ----------            ----------
Raw materials                                   $  138,590            $   74,408
Work in progress                                 2,046,651             2,283,474
Finished goods                                   1,044,622               974,965
                                                ----------            ----------
                                                $3,229,863            $3,332,847
                                                ==========            ==========

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the balance sheet for cash and cash
equivalents, accounts receivable, accounts payable, accrued liabilities, notes
payable and long-term debt approximate their fair values due to the short-term
or variable rate nature of these instruments.

PROPERTY AND EQUIPMENT

Property and equipment consists of leasehold improvements, furniture and
laboratory production and office equipment. Property and equipment are carried
at cost less accumulated depreciation and amortization. Depreciation is
calculated using the straight-line method over a three to five-year estimated
useful life. Leasehold improvements are amortized over the shorter of the lease
term or the estimated useful life of the asset. Maintenance and repairs that do
not significantly improve or extend the life of assets are expensed as incurred.
Expenditures which improve or extend the life of assets are capitalized.

LONG-LIVED ASSETS

The Company routinely evaluates the carrying value of its long-lived assets. The
Company records impairment losses on long-lived assets used in operations when
events and circumstances indicate that assets may be impaired and the
undiscounted cash flows estimated to be generated by the assets are less than
the carrying amount of those assets. To date, no impairment charges have been
recognized.

REVENUE RECOGNITION

Revenue is recognized 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 (R) ventricular assist devices and related equipment to international
hospitals involved in heart transplantation, to customers with whom we have
distribution agreements in certain international markets and to hospitals in the
U.S. (for our DeBakey VAD (R) Child product only, which is approved for sale in
the U.S.). Clinical reimbursements consist of billings for products shipped to
hospitals participating in the Company's clinical trials. Product sales and
clinical trial reimbursements are recognized when evidence of an arrangement
exists, title has passed (generally upon shipment), the selling price is fixed
and determinable and collectibility is reasonably assured in according with SAB
104 "Revenue Recognition". The Company has no post-delivery obligations or
product sales containing, multiple elements. Shipping and handling costs are
included in research and development expense and totaled $128,461 and $70,900,
respectively for the years ended December 31, 2003 and 2004 and $20,841 and
$16,714, respectively, for the three months ended March 31, 2004 and 2005.
Shipping and handling costs recovered from customers and recorded in revenue
were approximately $27,000 and $18,995, respectively, for the years ended
December 31, 2003 and 2004 and $5,675 and $8,703, respectively, for the three
months ended March 31, 2004 and 2005.

The Company had one customer that made up 11% of total revenues during 2003 and
one customer that made up 12% of revenues during 2004. The Company had six
customers that each made up 16%, 15%, 13%, 13%, 12%, and 10% of total revenues
for the three months ended March 31, 2004. The Company had five customers that
each made up 14%, 12%, 12%, 10%, and 10% of total revenues for the three months
ended March 31, 2005.


                                       77
<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RESEARCH AND DEVELOPMENT

Costs incurred in connection with research and development activities are
expensed as incurred. These costs consist of direct and indirect costs
associated with specific projects as well as fees paid to various entities that
perform certain research and testing on behalf of the Company.

STOCK-BASED COMPENSATION

Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for
Stock-Based Compensation , allows the Company to adopt one of two methods of
accounting for stock options. The Company has elected the method that requires
disclosure only of stock-based compensation. Because of this election, the
Company continues to account for its employee stock-based compensation plans
under Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock
Issued to Employees , and the related interpretations. Under APB No. 25, no
compensation expense is recorded for stock option grants to employees with an
exercise price equal to or greater than the fair value of underlying stock as
determined by the Company's board of directors at the date of grant. For
purposes of the SFAS No. 123 proforma disclosure, the estimated fair value of
the options is assumed to be amortized to expense over the options' vesting
period. Compensation expense for options granted to non-employees has been
determined in accordance with SFAS No. 123 as the fair value of the
consideration received.

<TABLE>
<CAPTION>
                                                                 Year ended December 31             Three months ended March 31

                                                                 2003               2004               2004              2005
                                                           --------------     --------------     --------------    --------------

<S>                                                        <C>                <C>                <C>                 <C>
Net loss available to common stockholders                  $  (11,445,248)    $  (14,255,988)    $   (3,766,570)     $(3,989,754)
Deduct: total compensation expense for options                   (153,172)          (149,471)           (38,585)         (38,340)
determined under fair value based methods for all awards   --------------     --------------     --------------    --------------
Pro forma net loss available to common stockholders        $  (11,598,420)    $ ( 14,405,459)    $   (3,805,155)     $(4,028,094)
                                                           ==============     ==============     ==============    ==============
Basic and diluted net loss per share available to common   $        (2.25)    $        (2.80)    $        (0.74)     $     (0.78)
stockholders                                               ==============     ==============     ==============    ==============
Pro forma basic and diluted net loss per share available   $        (2.28)    $        (2.83)    $        (0.75)     $     (0.79)
to common stockholders                                     ==============     ==============     ==============    ==============
</TABLE>

The fair value of employee stock options granted was determined using the
Black-Scholes method based on the following weighted-average assumptions:

                                            Year ended December 31
                                           ------------------------

                                           2003                2004
                                           ----                ----
Expected dividend yield                     0.0%                0.0%
Risk-free interest rate                     3.5%                3.5%
Expected life (years)                        7                    7
Volatility                                  55%                  45%

INCOME TAXES

The Company accounts for income taxes under SFAS No. 109, Accounting for Income
Taxes , which provides for a liability approach to accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
the differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates that will be in effect
when the differences are expected to reverse.


                                       78
<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NET LOSS PER SHARE

Basic and diluted net loss per share has been computed using the
weighted-average number of shares of common stock outstanding during the period.
Shares associated with stock options, warrants and preferred stock are not
included because they are antidilutive.

The following table presents the calculation of basic and diluted net loss per
share:

<TABLE>
<CAPTION>
                                                   Year ended December 31           Three Months ended March 31
                                               ------------------------------    ------------------------------
                                                   2003              2004              2004              2005
                                               ------------      ------------      ------------    ------------
<S>                                            <C>               <C>               <C>             <C>
Net loss available to common shareholders      $(11,445,248)     $(14,255,988)     $ (3,766,570)   $(3,989,754)
                                               ============      ============      ============    ============
Weighted average common shares outstanding        5,092,618         5,093,040         5,093,040      5,093,040
                                               ============      ============      ============    ============
Basic and diluted net loss per share           $      (2.25)     $      (2.80)     $      (0.74)     $   (0.75)
available to common shareholders               ============      ============      ============    ============
</TABLE>

The following historical outstanding anti-dilutive securities are not included
in the calculation of diluted net loss per share attributable to common
stockholders.

<TABLE>
<CAPTION>
                                                                Year ended December 31              Three Months ended March 31
                                                             ----------------------------           ---------------------------
                                                                2003              2004                 2004             2005
                                                             ----------        ----------           ----------       ----------
<S>                                                          <C>               <C>                  <C>              <C>
Redeemable convertible preferred stock                       11,111,164        11,111,164           11,111,164       11,111,164
Options to purchase common stock                              5,851,366         5,757,866            5,851,366        5,757,866
Warrants to purchase common stock                             4,019,408         2,216,686            4,019,408          845,219
                                                             ----------        ----------           ----------       ----------
                                                             20,981,938        19,085,716           20,981,938       17,714,249
                                                             ==========        ==========           ==========       ==========
</TABLE>

SEGMENT INFORMATION

The Company operates in one business segment, which primarily focuses on the
development, manufacture and sale of heart assist devices. All of the Company's
revenues have been derived from this business segment.

RESTATEMENT

Effective July 1, 2003, in connection with the adoption of SFAS No. 150, the
Company treated its redeemable convertible preferred securities as mandatorily
redeemable and recorded the securities as a liability with the related dividends
and accretion accrued as interest expense. Upon additional evaluation of the
terms of the redeemable convertible preferred stock in 2004 it was determined
that the securities are contingently redeemable rather than mandatorily
redeemable, and the related dividends should have remained as part of
stockholders' deficit and should not have been recorded as interest expense.
Because the shares are contingently redeemable under terms not controlled by the
Company, the redeemable convertible preferred stock is classified as mezzanine
equity in accordance with Article 5-02.28 of Regulation S-X expanded by ASR 268.
Accordingly, the financial statements as of December 31, 2003 have been restated
for the correction of this error surrounding the redemption features of its
redeemable convertible preferred securities. The restatement had no impact on
net loss available to common stockholders; however, it did impact net loss. The
Company has restated the statement of operations for the year ending December
31, 2003 as follows:


                                       79
<PAGE>

<TABLE>
<CAPTION>
                                               As Reported       Adjustments      2003 Restated
                                              ------------      ------------      -------------

<S>                                           <C>               <C>               <C>
Loss from operations                          $ (6,276,524)     $         --      $ (6,276,524)
Interest income                                    129,120                --           129,120
Interest expense                                (2,675,922)        2,668,196            (7,726)
                                              ------------      ------------      ------------
Net loss                                        (8,823,326)        2,668,196        (6,155,130)
Convertible preferred stock dividends           (2,621,922)       (2,668,196)       (5,290,118)
                                              ------------      ------------      ------------
Net loss available to common stockholders     $(11,445,248)     $         --      $(11,445,248)
                                              ============      ============      ============
</TABLE>

There was no impact on net loss per share available to common stockholders.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

There was no impact on net loss per share available to common stockholders.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued FAS 123(R) Shared-Based Payment. The statement
eliminates the ability to account for stock-based compensation using APB 25 and
requires such transactions be recognized as compensation expense in the
statement of operations based on their fair values on the date of grant, with
the compensation expense recognized over the period in which an employee is
required to provide service in exchange for the stock award. The statement is
effective for public companies at the beginning of the first interim or annual
period beginning after June 15, 2005 in the event the merger is consummated, the
Company will adopt this statement on July 1, 2005 using a modified prospective
application. As such, the compensation expense recognition provisions will apply
to new awards and to any awards modified, repurchased or cancelled after the
adoption date. Additionally, for any unvested awards outstanding at the adoption
date, the Company will recognize compensation expense over the remaining vesting
period. The Company is currently evaluating the impact of SFAS 123 (R) on its
financial condition and results of operation. In the event the merger is
consummated their will be no unvested options at the date of adoption, thus
there will be no future compensation expense related to options granted as of
December 31, 2004. Grants awarded subsequent to December 31, 2004 will result in
increased compensation expense.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires an issuer to classify financial instruments that is within its scope as
a liability (or an asset in some circumstances). SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. The adoption of SFAS No. 150 had no impact on the Company.

In April 2004, the FASB issued FSP FASB Statement of Accounting Standards
("FAS") No. 129-1, " Disclosure of Information about Capital Structure, Relating
to Contingently Convertible Securities " to provide disclosure guidance for
contingently convertible securities. We adopted the disclosure provisions in
2004 as they apply to the convertible redeemable preferred stock (see Note 7).
The 11,111,164 shares underlying our convertible redeemable preferred stock are
reportable under this new disclosure are antidilutive and, therefore, have been
excluded from the calculation of diluted net loss per share.

3. CONCENTRATION OF CREDIT RISK

Accounts receivable represent amounts due from customers for goods shipped. The
Company extends various terms to customers, with payment terms from 30-180 days,
depending on the customer and country, and does not require collateral. The
Company periodically assesses the collectibility of our receivables and
establishes reserves, as necessary, based on various considerations including
customer credit history, payment patterns, and aging of accounts. Once
management determines an account receivable is not collectible, the account is
written off. The


                                       80
<PAGE>

3. CONCENTRATION OF CREDIT RISK (CONTINUED)

Company has not experienced significant collectibility problems to date. If the
collection history or aging of accounts receivable deteriorates, the Company may
have to record a charge to operations to establish an allowance for doubtful
accounts.

The Company's commercial customers are based in Europe and in the U.S. (for
DeBakery VAD Child product sales in the U.S., and the Company receives
reimbursements from hospitals in the U.S. from its clinical trials

4. PROPERTY AND EQUIPMENT

A summary of property and equipment is as follows:

                                                 December 31        March 31

                                                    2004              2005
                                                -------------     -------------
Office furniture and equipment                  $   1,057,539     $     906,545
Laboratory and production equipment                 1,253,699         1,240,769
Leasehold improvements                                508,155           508,907
                                                -------------     -------------
                                                    2,819,393         2,656,221
Less accumulated depreciation and                  (2,247,195)       (2,150,589)
amortization                                    -------------     -------------
                                                $     572,198     $     505,632
                                                =============     =============

Amortization of leasehold improvements for the years ended December 31, 2003 and
2004 and the three months ended March 31, 2004 and 2005 was $81,729, $86,256,
$21,304 and $22,093, respectively.

5. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

                                            December 31        March 31

                                               2004              2005
                                           -------------     -------------
Accrued pump replacement costs             $     113,250     $      56,962
Accrued payroll and vacation                     257,898           167,318
Accrued CRO costs                                238,987           738,987
Other accrued expenses                           406,605           372,970
                                           -------------     -------------
Total                                      $   1,016,740     $   1,336,237
                                           =============     =============

6. DEBT

Line of Credit

The Company has borrowings outstanding under two lines of credit with the same
financial institution. Both lines of credit are considered current liabilities
based on their terms.

The Company has borrowings under a previous line of credit used to purchased
equipment for which the commitment to borrow expired on December 18, 2003. At
December 31, 2004 and March 31, 2005, the Company had outstanding borrowings of
$78,489 and $70,615, respectively, at an interest rate of 6.75% that is being
paid on a monthly amortization through December 18, 2005.


                                       81
<PAGE>

6. DEBT (CONTINUED)

The second line of credit is a $4,500,000 working capital line based on
receivables (the AR Line) entered into in July 2004. The AR Line provides for
borrowings under a formula-based calculation applied to eligible accounts
receivable. Interest on draws ranges from the prime rate plus 1.25% to prime
plus 1.5% (6.5% to 6.75% at December 31, 2004 and March 31, 2005), depending on
the Company's quick ratio at the time of the advance. The loan agreement also
requires the payment of collateral handling fees that range from 0.15% to 0.50%
(also dependent on the Company's quick ratio). The collateral handling fees are
applied monthly to the daily gross account balances. Availability under the line
is based on the following formula: (1) 80% of the eligible U.S. accounts
receivable, up to a maximum loan balance of $4 million, and (2) 80% of eligible
foreign accounts receivable up to a maximum loan balance of $500,000. Advances
made on eligible receivables are required to be repaid upon collection of the
receivables or at the end of 90 days, whichever comes first. The loan agreement
expires April 15, 2006.

As of December 31, 2004, there was $1,043,498 and $78,489 outstanding under the
AR and expired line, respectively, leaving the Company the ability to borrow up
to an additional $3,456,502 under the AR line. As of March 31, 2005, there was
$840,821 and $70,615 outstanding under the AR and expired line, respectively,
leaving the Company the ability to borrow up to an additional $3,659,179 under
the AR Line.

The AR Line is collateralized by all of the Company's assets, excluding the
Company's intellectual property.

Bridge Loan

In December 2004, the Company executed a bridge loan agreement with certain
stockholders (the 2004 Bridge Loan). Under the terms of the 2004 Bridge Loan,
the Company may borrow up to $3 million. The notes issued under the 2004 Bridge
Loan are unsecured and bear interest at prime plus 3% (fixed at the time of
issuance) (8.25% on advances outstanding as of December 31, 2004). All amounts
outstanding under the 2004 Bridge Loan are due on or before June 30, 2005 and
are convertible into common stock at a defined exchange ratio in the event of an
Equity Financing (as defined). In the event an Equity Financing does not take
place prior to June 30, 2005, the 2004 Bridge Loans may be converted, at the
option of the holders, into a new series of preferred stock with terms similar
to Series D Redeemable Convertible Participating Preferred Stock (see Note 7) .
As of December 31, 2004 and March 31, 2005, the Company has drawn $1 million and
$2.5 million, respectively, of the $3 million commitment. As specified in the
2004 Bridge Loan, warrants to purchase common stock will be issued to the
stockholders on the unutilized portion of the 2004 Bridge Loan at the expiration
date, June 30, 2005. No value has been ascribed to the warrants at December 31,
2004 as the Company expects to utilize all amounts under the 2004 Bridge Loan.
Subsequent to March 31, 2005, the Company has borrowed the remaining $0.5
million under the 2004 Bridge Loan.

On March 28, 2005, the Company executed a bridge loan agreement with the same
stockholders that were party to the 2004 Bridge Loan (the 2005 Bridge Loan).
Under the terms of the 2005 Bridge Loan, the Company may borrow up to $1.5
million with terms identical to those of the notes issued under the 2004 Bridge
Loan including the commitment to issue warrants to purchase common stock to the
stockholders on the unutilized portion of the 2005 Bridge Loan at the expiration
date, June 30, 2005. As of March 31, 2005, the Company had not borrowed any
funds under the 2005 Bridge Loan. No value has been ascribed to the warrants as
the Company expects to utilize all amounts under the 2005 Bridge Loan.

Long-term debt

In May 2004, the Company received $2.5 million (net $2.4 million after initial
$0.1 million prepayment of principal) from a loan agreement executed in May 2004
with Venture Lending & Leasing IV, Inc. ("VLL" and the "VLL Loan"). Pursuant to
the VLL Loan agreement, the Company borrowed $2.5 million, repayable in monthly
principal payments beginning in July 2004 and terminating in February 2007.
Interest on the promissory note is 11.137%. Amounts outstanding under the
agreement are collateralized by a second lien on all of the Company's assets,
excluding the Company's intellectual property. In connection with the VLL Loan,
the Company agreed to issue VLL a warrant to purchase preferred stock (see Note
7).


                                       82
<PAGE>

The following table includes the aggregate future principal payments of the
Company's long term debt as of December 31, 2004:

2005                                                  $     927,945
2006                                                      1,046,960
2007                                                        187,110
                                                      -------------
                                                          2,162,015
Less current portion of long-term debt                     (927,945)
                                                      -------------
Total long-term debt                                  $   1,234,070
                                                      =============

7. STOCKHOLDERS' EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK

COMMON STOCK

The Company is authorized to issue 65,000,000 shares of common stock. Holders of
common stock are entitled to one vote per share on all matters to be voted upon
by the stockholders of the Company. In December 2004, the Board of Directors
authorized, and the stockholders approved, an amendment to the Restated
Certificate of Incorporation allowing for an increase in the Company's
authorized stock, increasing the total authorized common stock to 100,000,000
shares and authorizing a new series of Preferred Stock, Series E, to be issued
in the event of a conversion of the 2004 Bridge Loan, with terms similar to
Series D (see below). The Company has not yet filed the Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware, and
accordingly, has not reflected these amounts as authorized at December 31, 2004.

No dividends have been declared to date. The loan with Venture Lending & Leasing
IV, Inc. restricts the Company from paying dividends until an underwritten
public offering of our common stock with gross proceeds of at least $20,000,000
is completed.

REDEEMABLE CONVERTIBLE PREFERRED STOCK

The Company's preferred stock carries voting privileges based on its common
stock equivalent and contains certain protection against dilution, including
adjustment upon the occurrence of certain events. In addition, the holders of
preferred stock have certain registration rights that may be exercised after the
earlier of (a) December 31, 2003, or (b) 180 days after the closing of the
Company's first underwritten initial public offering of its capital stock.

In December 1999, the Company amended its Certificate of Incorporation
("Certificate") to provide for the redemption of its preferred stock. The
redemption provisions of the Certificate were amended again in June 2002 in
connection with the issuance of the Series D convertible preferred stock (see
below). The amended Certificate provides that at any time on or after the fifth
anniversary of the original issuance date of the Series D preferred stock, the
Company must, at the request of at least 66-2/3% of the holders of the
then-outstanding shares of the Series A, Series B, Series C, and Series D
preferred stock (collectively, the "Preferred Stock"), redeem all Preferred
Stock shares that are then outstanding in the following manner: 33-1/3% of all
shares of Preferred Stock shall be redeemed by the Company 90 days after such
redemption request is received by the Company; another 33-1/3% of the shares of
Preferred Stock shall be redeemed by the Company 455 days after the original
redemption request is received by the Company; and the final 33-1/3% of the
shares of Preferred Stock shall be redeemed by the Company 820 days after the
original redemption request is received by the Company.

The price at which the Preferred Stock shall be redeemed is the original
per-share purchase price (adjusted for any recapitalizations that occur) which
is $5.00 per share for each series of Preferred Stock plus (a), for Series A
preferred stock and Series B preferred stock, an amount determined by
multiplying the shares outstanding by $.0375 times the number of whole months
elapsed from the original issuance date of the Series D preferred stock and (b),
for Series C and Series D preferred stock, any accrued and unpaid dividends
since the original issuance date of the Series D preferred stock which accrue at
an annual rate of $.45 per share. At December 31, 2004, the amounts


                                       83
<PAGE>

7. STOCKHOLDERS' EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

recorded in the balance sheet for all series of Preferred Stock reflects the
redemption amount that would be required to be paid if said Preferred Stock was
redeemed, which includes, cumulative unpaid dividends of $8,563,528 and
$5,758,393 for Series C and D, and accretion of redemption value of $1,491,596
and $2,729,864 for Series A and B. At March 31, 2005, the amounts recorded in
the balance sheet for all series of Preferred Stock reflects the redemption
amount that would be required to be paid if said Preferred Stock was redeemed,
which includes, cumulative unpaid dividends or $8,923,123 and $6,291,039 for
Series C and D, and accretion of redemption value of $1,615,896 and $2,957,354
for Series A and B. The earliest date that a redemption can occur is March 2007.

Series A Redeemable Convertible Preferred Stock - Each share of Series A
convertible preferred stock ("Series A Preferred Stock") may be converted at the
option of the holder (or is automatically converted in the event of an
underwritten initial public offering meeting certain conditions) into 4.5556
shares of common stock. The holders of Series A Preferred Stock are entitled to
receive dividends and other distributions equivalent to those paid on common
stock but have certain preferences over the holders of common stock with respect
to distributions in the event of sale or liquidation of the Company.

Series B Redeemable Convertible Preferred Stock - Each share of Series B
convertible preferred stock ("Series B Preferred Stock") may be converted at the
option of the holder (or is automatically converted in the event of an
underwritten initial public offering meeting certain conditions) into 2.704084
shares of common stock. The holders of Series B Preferred Stock are entitled to
receive dividends and other distributions equivalent to those paid on common
stock but have certain preferences over the holders of common stock and Series A
Preferred Stock with respect to distributions in the event of sale or
liquidation of the Company.

Series C Redeemable Convertible Participating Preferred Stock - Each share of
Series C convertible preferred stock ("Series C Preferred Stock") may be
converted at the option of the holder (or is automatically converted in the
event of an underwritten initial public offering meeting certain conditions)
into 2.704084 shares of common stock. Dividends accrue on each share of the
Series C Preferred Stock at the rate of $0.45 per share per annum and are
cumulative. The holders of Series C Preferred Stock are entitled to receive
dividends and other distributions equivalent to those paid on common stock but
have certain preferences over the holders of common stock, Series A Preferred
Stock, and Series B Preferred Stock with respect to distributions in the event
of sale or liquidation of the Company.

Series D Redeemable Convertible Participating Preferred Stock

Each share of Series D Preferred Stock may be converted at the option of the
holder (or is automatically converted in the event of an underwritten initial
public offering meeting certain conditions) into 6.475845 shares of common
stock. Dividends accrue on each share of the Series D Preferred Stock at the
rate of $0.45 per share per annum and are cumulative. The holders of Series D
Preferred Stock are also entitled to receive dividends and other distributions
equivalent to those paid on common stock but have certain preferences over the
holders of common stock, Series A Preferred Stock, Series B Preferred Stock, and
Series C Preferred Stock with respect to distributions in the event of sale or
liquidation of the Company.

Following the payments of liquidation preferences of $7.50 for Series D, and
$5.00 per share for all other series of Preferred stock, plus accrued but unpaid
dividends, an amount approximating a return of 8% per annum on the original
per-share purchase price will be paid first, to the holders of Series B, and
second, to the extent funds remain available, to the holders of Series A. After
full payments of the previously mentioned amounts, any remaining assets or
surplus funds would then be distributed to the holders of Preferred Stock and
common stock on a pro rata basis.

In connection with the 1999 Bridge Financing Agreement, the Company issued
warrants to purchase common stock to certain existing stockholders that provided
funding pursuant to the 1999 Bridge Financing Agreement. The warrants, which
contain certain antidilution provisions, allow the holders to purchase 777,095
shares of common stock at $1.29 per share (after giving affect to the
antidilution feature triggered by the issuance of Series D Preferred Stock) and
were exercisable in whole or in part until August 31, 2004. The fair value of
the warrants was determined to be de minimis at the measurement date based on
Black-Scholes pricing model with the following assumptions:


                                       84
<PAGE>

7. STOCKHOLDERS' EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

volatility of 1%, an expected life of one year, a risk free interest rate of 5%
and no dividend yield. These warrants expired unexercised in August 2004.

WARRANTS

In connection with the Series C private offerings in 2000 and 1999, the Company
issued warrants to purchase common stock to the purchasers of the Series C
Preferred Stock. The warrants, which contain certain antidilution provisions,
allow the holders to purchase 2,397,094 shares of common stock at $1.29 per
share (after giving affect to the antidilution feature triggered by the issuance
of Series D Preferred Stock) and are exercisable in whole or in part until
December 2004 through February 2005 (depending on which date a particular
investment in the Series C financing was closed). The Company recognized the
fair value of the warrants of approximately $151,000 as additional paid-in
capital. The fair value of the warrants was determined using the Black-Scholes
pricing model and the following assumptions: volatility of 1%, an expected life
of one year, a risk free interest rate of 5% and no dividend yield. In December
2004, warrants to purchase an aggregate of 1,025,627 shares of common stock
expired unexercised. The remaining warrants outstanding at December 31, 2004 to
purchase an aggregate of 1,371,467 shares of common stock expired in February
2005.

In connection with a 2001 bridge loan that converted into shares of Series D
Preferred Stock, the Company issued warrants to purchase common stock to certain
existing stockholders. The warrants, which contain certain antidilution
provisions, allow the holders to purchase 534,379 shares of common stock at
$0.7721 per share and are exercisable in whole or in part until the expiration
dates ranging from June 2006 through February 2007 (based on the original date
the bridge loans were issued). The Company recognized the fair value of the
warrants of approximately $25,000. The fair value was determined using the
Black-Scholes pricing model with the following assumptions: volatility of 60%,
an expected life of five years, a risk free interest rate of 4% and no dividend
yield.

In connection with the Series D private offering in 2002, the Company issued
warrants to purchase common stock to an investment banking firm that acted as
placement agent for a portion of the offering. The warrants, which contain
certain antidilution provisions, allow the holders to purchase 310,840 shares of
common stock at $0.7721 per share and are exercisable in whole or in part until
August 2007. The value of the warrants was determined to be de minimis based on
the Black-Scholes pricing model using the following assumptions: volatility of
35%, an expected life of two years, a risk free interest rate of 4% and no
dividend yield.

In connection with the VLL Loan, the Company has committed to issue to VLL a
warrant (the "VLL Warrant" to purchase Series D Redeemable Convertible
Participating Preferred Stock with an aggregate exercise price of $275,000. The
warrant is to be issued at a triggering date which is the earlier of (a) the
Next Round Financing (as defined), (b) a Liquidity Event (as defined), or (c)
May 31, 2005. Although not issued until one of the triggering events, the
warrant was earned at the time the VLL Loan was signed. The Company determined
the value of the warrant based on the most reasonably likely scenario of
issuance which is May 31, 2005. The fair value of the warrant was determined to
be $53,350 using the Black-Scholes pricing model and the following assumptions:
volatility of 45%, an expected life of one year, a risk free interest rate of
4%, and a dividend yield of 9%. The fair value was recorded as debt issuance
costs and is being amortized to interest expense over the life of the VLL Loan.

STOCK OPTIONS

The 1997 Stock Option Plan (the "Plan"), as amended, provided for the granting
of options, either incentive or nonstatutory, to purchase up to 1,266,500 shares
of the Company's common stock. In February 2001, the Company's board of
directors and stockholders approved an increase in the number of shares that
could be issued pursuant to the Plan to 3,266,500 shares. In September 2002, the
Company's board of directors and stockholders approved an increase in the number
of shares that could be issued pursuant to the Plan to 7,103,689 shares. The
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. During 2003 and
2002, options were issued to certain officers and employees which vest over a
period of up to three years. Options expire ten years after the date of grant.


                                       85
<PAGE>

7. STOCKHOLDERS' EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

Deferred compensation is recorded for stock-based compensation grants based on
the excess of the fair value of the common stock on the measurement date over
the exercise price ("Intrinsic Value"). The deferred compensation is amortized
over the vesting period of each unit of stock-based compensation grant,
generally three years. If the exercise price of the stock-based compensation
grants is equal to the estimated fair value of the Company's stock on the date
of grant, no compensation expense is recorded.

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

In June 2000, the Company reduced the exercise price of all its outstanding
options to $.20 per share. As a result, these options are subject to variable
accounting until they are exercised, cancelled or expire. Variable accounting
requires that increases in the intrinsic value of the options as measured at
each reporting date would be recorded as compensation. Fluctuations in future
deferred compensation and related compensation expense may be significant to the
extent the Company realizes changes in the fair value of its underlying common
stock. As of December 31, 2004 and March 31, 2005, 967,204 options were subject
to variable plan accounting.

During 2004, the Company reversed deferred compensation totaling $201,682 that
was originally recorded in 2000 in error related to the options that were
repriced. The error was corrected in the current year as it was not material
from a quantitative or qualitative standpoint to the Company's stockholders'
equity for the year ended December 31, 2004.

The following is a summary of option activity under the Plan:

<TABLE>
<CAPTION>
                                                                         Weighted-Average
                                                                    --------------------------
                                          Options Outstanding       Exercise Price  Fair Value
                                          -------------------       --------------  ----------

<S>                                                <C>                  <C>            <C>
Balance, December 31, 2000                         1,244,704            0.20           0.26
Granted during the year                               18,500            0.20           0.20
Exercised during the year                            (11,250)           0.20           0.20
Cancellations and forfeitures during the year         (3,750)           0.20           0.20
                                                   ---------            ----           ----
Balance, December 31, 2001                         1,248,204            0.20           0.20
Granted during the year                            4,988,662            0.20           0.20
Exercised during the year                            (58,875)           0.20           0.20
Cancellations and forfeitures during the year        (48,125)           0.20           0.20
                                                   ---------            ----           ----
Balance, December 31, 2002                         6,129,866            0.20           0.20
Granted during the year                              183,000            0.20           0.20
Exercised during the year                             (7,000)           0.20           0.20
Cancellations and forfeitures during the year       (454,500)           0.20           0.20
                                                   ---------            ----           ----
Balance, December 31, 2003                         5,851,366            0.20           0.20
Cancellations and forfeitures                        (93,500)           0.20           0.20
                                                   ---------            ----           ----
Balance, December 31, 2004                         5,757,866            0.20           0.20
                                                   ---------            ----           ----

Balance, March 31, 2005                            5,757,866            0.20           0.20
                                                   =========            ====           ====
</TABLE>

As of December 31, 2004 and March 31, 2005, there were 1,345,823 options
available for grant under the Plan. Options exercisable as of December 31, 2004
and March 31, 2005 are 4,525,701 and 4,571,451, respectively. As of December 31,
2004 and March 31, 2005, the weighted-average remaining contractual life for
options outstanding was 7.0 and 6.8 years, respectively.


                                       86
<PAGE>

7. STOCKHOLDERS' EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

STOCK OPTIONS GRANTED TO NON-EMPLOYEES

Stock compensation arrangements with non-employees are accounted for in
accordance with SFAS No. 123, as amended by SFAS No. 148, and EITF 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services , using a fair
value approach. The compensation costs of these arrangements are subject to
remeasurement over the vesting terms as earned. During the year ended December
31, 2004, the Company did not issue any options to non-employees. For the years
ending December 31, 2003 and 2004, and the three month periods ending March 31,
2004 and 2005, the Company recognized expense of $2,406, $-0-, $-0- and $-0-,
respectively, related to options granted to non-employees in 2000 and 2001.

RESERVED SHARES

The Company has reserved shares of common stock for future issuance as follows:

<TABLE>
<CAPTION>
                                                           December 31        March 31
                                                              2004               2005
                                                           ----------       ----------

Conversion of redeemable convertible preferred stock:
<S>                                                         <C>              <C>
Series A                                                    4,555,550        4,555,550
Series B                                                    5,408,161        5,408,161
Series C                                                    9,513,354        9,513,354
Series D                                                   29,743,616       29,743,616
Exercise of warrants to purchase common stock               2,216,686          845,219
1997 Stock Plan                                             7,103,689        7,103,689
                                                           ----------       ----------
Total                                                      58,541,056       57,169,589
                                                           ==========       ==========
</TABLE>

8. RELATED-PARTY TRANSACTIONS

The Company has entered into employment agreements with several of its key
employees. The agreements specify various employment-related matters, including
the length of the agreement (ranging from six months to one year),
confidentiality requirements, competitive restrictions, assignment of
inventions, annual compensation, and severance benefits ranging from three
months' to eighteen months' salary in the event of termination without cause.

The Company entered into bridge loans with certain stockholders in December 2004
and March 2005 (see Note 6).

9. LICENSE AGREEMENTS

The Company has an exclusive license agreement with NASA (the "License
Agreement") which may be terminated in the event of a material breach of the
terms of the agreement or for failure to endeavor to convert the licensed
subject matter to a commercial form. However, the Company believes its ongoing
research and development efforts currently satisfy this obligation to endeavor
to commercialize the licensed subject matter. The License Agreement and related
agreements require the Company to pay royalties based on net sales of licensed
products. Additionally, the Company has executed several additional licenses
under which it has secured the rights provided under certain patents. Royalties
and milestone payments, payable under the terms of these agreements, are
expensed as incurred. During the years ended December 31, 2003 and 2004, and the
three month periods ending March 31, 2004 and 2005, the Company incurred
royalties and milestone payments of $59,634, $34,986, $0 and $0, respectively.


                                       87
<PAGE>

10. COMMITMENTS AND CONTINGENCIES

COMMITMENTS

The Company currently leases office and manufacturing space under noncancelable
operating leases. Rental expense was approximately $210,000, $237,550, $59,412
and $64,956 for the years ended December 31, 2003 and 2004, and the three months
ended March 31, 2004 and 2005, respectively. The Company renewed its lease on
the above referenced office and manufacturing space in 2002 for five years, only
one of which the Company is committed to remain in the space and is
noncancelable. As of December 31, 2004, the future minimum noncancelable payment
related to this one year commitment is $233,811.

The Company has a standby letter of credit for $25,000 to secure its value-added
tax obligation in France. The Company has a Certificate of Deposit approximating
this amount collateralizing the standby letter of credit.

CONTINGENCIES

The Company is subject to numerous risks and uncertainties because of the nature
of and status of its operations and could be subject to claims and legal actions
arising in the ordinary course of business. The Company maintains insurance
coverage for events in amounts that it deems appropriate. Management believes
that uninsured losses, if any, will not be materially adverse to the Company's
financial position or results of operations.

11. 401(K) PLAN

The Company has a 401(k) plan ("the 401(k) Plan") whereby eligible employees
(employees over 21 years of age and have completed six months of service) may
contribute a percentage of eligible compensation but not greater than 20% of
their earnings up to the maximum as required by law. Company contributions are
discretionary. No such Company contributions have been made since inception of
the 401(k) Plan.

12. INCOME TAXES

The reconciliation of the statutory federal income tax rate to the Company's
effective income tax rate for the years ended December 31, 2003 and 2004, is as
follows:

                                                              DECEMBER 31
                                                        ----------------------
                                                         2003            2004
                                                        ------          ------
Statutory rate                                          (34.0)%         (34.0)%
Increase in deferred tax valuation allowance             34.4            33.9
Tax credit                                               (0.6)           (0.1)
Other                                                     0.2             0.2
                                                        ------          ------
                                                          0.0%            0.0%
                                                        ======          ======

Significant components of the Company's deferred tax assets and liabilities are
as follows:


                                       88
<PAGE>

12. INCOME TAXES (CONTINUED)

                                                                   DECEMBER 31
                                                                      2004
                                                                 --------------
Deferred tax assets:
Federal net operating loss carryforwards                         $   14,917,343
                                                                 --------------
Research and development credits                                      2,998,800
Capitalized research and development expense                          1,285,900
Other deferred tax assets                                               261,567
Total deferred tax assets                                            19,463,600
                                                                 --------------
Less: valuation allowance                                           (19,463,600)
                                                                 --------------
Net deferred tax assets                                          $           --
                                                                 ==============

At December 31, 2004 the Company had net operating loss ("NOL") carryforwards
for income tax purposes of approximately $43.8 million, capitalized research and
development expense of $8.8 million, and research and development credits of
approximately $1.3 million . Changes in ownership as defined by federal income
tax regulations could limit the Company's ability to utilize these NOLs and tax
credits. Accordingly, the Company's ability to utilize the above NOL and tax
credit carryforwards to reduce future taxable income and tax liabilities may be
limited. Additionally, because U.S. tax laws limit the time during which NOLs
may be applied against future taxable income and tax liabilities, the Company
may not be able to take full advantage of its NOLs for federal income tax
purposes. The carryforwards will begin to expire in 2011 if not otherwise used.
A valuation allowance has been established to offset the Company's deferred tax
assets as the Company has had losses since inception.

13. SUBSEQUENT EVENT (UNAUDITED)

On May 31, 2005, the Company issued the VLL Warrant in accordance with the terms
described in Note 7.
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SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               ------------------

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

        Date of Report (Date of Earliest Event Reported): August 9, 2005

                          MICROMED CARDIOVASCULAR, INC.
               (Exact Name of Registrant as Specified in Charter)

          DELAWARE                      333-111996                98-0228169
(State or other jurisdiction            (Commission             (IRS Employer
      of incorporation)                File Number)          Identification No.)

 8965 INTERCHANGE DRIVE, HOUSTON, TEXAS                              77054
(Address of principal executive offices)                           (Zip code)

Registrant's telephone number, including area code:              (713) 838-9210

                               SALMON EXPRESS INC.
                  6604 TOPAZ DRIVE, VERNON, BC, CANADA, V1H 1N8
          (Former Name or Former Address, If Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

|_|      Written communications pursuant to Rule 425 under the Securities Act
         (17 CFR 230.425)

|_|      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
         CFR 240.14a-12)

|_|      Pre-commencement communications pursuant to Rule 14d-2(b) under the
         Exchange Act (17 CFR 240.14d-2(b))

|_|      Pre-commencement communications pursuant to Rule 13e-4(c) under the
         Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01       ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On August 9, 2005, a Third Amendment to Agreement and Plan of Merger (the
"Amendment"), was entered into by(and among the Salmon Express, Inc., a Nevada
corporation ("Salmon"), MicroMed Technology, Inc., a privately-held Delaware
corporation ("MicroMed Technology"), Salmon Acquisition Corp., a privately-held
Nevada corporation and wholly-owned subsidiary of the Salmon Express, Inc.
("Merger Sub") and Pete Smith, Sr., which updated the representation as to the
capitalization of MicroMed Technology, Inc. immediately prior to the merger. A
copy of the Amendment is attached hereto as Exhibit 2.1(c).

See Item 2.01, below, regarding the discussion of the Securities Purchase
Agreement, Registration Rights Agreement and Form of Warrant relating to
MicroMed Technology Inc.'s $4,991,683 private placement of its common stock and
warrants. These agreements are attached hereto as Exhibits 10.1, 4.2 and 4.1,
respectively.

ITEM 2.01      COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

MicroMed Cardiovascular, Inc. (referred to herein as the "Company" or
"MicroMed"), which operates through its wholly-owned subsidiary MicroMed
Technology, is a medical device company that has developed a miniaturized heart
pump, or VAD, known as the DeBakey VAD (the "DeBakey VAD") to address congestive
heart failure ("CHF"), a condition where the diseased heart cannot pump adequate
blood to meet the oxygen and nutritional needs of the body. The DeBakey VAD is a
small (1 inch x 3 inches) National Aeronautics and Space Administration ("NASA")
designed axial flow pump that can provide increased blood flow from the left
ventricle of the heart throughout the body for patients whose hearts are
diseased and unable to maintain adequate blood flow to sustain their lives.

On January 31, 2005, Salmon along with Merger Sub and certain existing
stockholders of Salmon entered into an Agreement and Plan of Merger (the "Merger
Agreement") with MicroMed Technology, pursuant to which Salmon would be acquired
by MicroMed Technology in a merger transaction wherein Merger Sub would merge
with and into MicroMed Technology, with MicroMed Technology being the surviving
corporation (the "Merger"). On August 10, 2005, the Merger closed and MicroMed
Technology became a wholly-owned subsidiary of Salmon. Salmon changed its name
to MicroMed Cardiovascular, Inc. and reincorporated in the State of Delaware.

PRINCIPAL TERMS OF THE MERGER

At the Effective Time of the Merger (as defined in the Merger Agreement), Merger
Sub was merged with and into MicroMed Technology, the separate existence of
Merger Sub ceased, and MicroMed Technology continued as the surviving
corporation at the subsidiary level. Salmon issued shares of its common stock on
a one-for-one basis to the stockholders of MicroMed Technology in exchange for
100% of the issued and outstanding shares of common stock of MicroMed
Technology. Additionally, Salmon assumed options to purchase shares of common
stock and warrants to purchase shares of common stock on the same terms and
conditions as previously issued by MicroMed Technology. All outstanding options
that were assumed by Salmon have been issued under the MicroMed Technology 1997
Stock Option Plan or the MicroMed Technology 2005 Stock Incentive Plan. Further
to the Merger, Salmon assumed the MicroMed Technology 1997 Stock Option Plan and
the MicroMed Technology 2005 Stock Incentive Plan as stock option plans of
Salmon. Salmon also issued 1,500,000 post-split shares into escrow to cover
indemnification obligations, if any, to MicroMed Technology and its stockholders
(the "Escrow Shares"). Immediately prior to the Merger, Salmon effectuated a
1-for-3.3528 reverse stock split of its common stock. After the Merger was
concluded, Salmon reincorporated from the State of Nevada to the State of
Delaware and changed its corporate name to MicroMed Technology Cardiovascular,
Inc. Further to the Merger, Salmon also canceled 10,010,800 shares of its
pre-split common stock held by Pete Smith, the founder of Salmon Express Inc.,
and distributed assets, and related liabilities, to him that Salmon held prior
to the Merger. Mr. Smith also received cash remuneration of $605,213 from third
parties unaffiliated with Salmon for his agreement to cancel such shares.

Immediately prior to the closing of the Merger, MicroMed Technology had
outstanding 17,013,145 shares of common stock, options to purchase 555,822
shares of common stock and warrants to purchase 2,251,887 shares of common
stock. Immediately after the closing of the Merger, MicroMed Cardiovascular had
18,513,145 outstanding shares of common stock (excluding the Escrow Shares),
options to purchase 555,822 shares of common stock and warrants to purchase
2,251,887 shares of common stock.

                                       2
THE PRIVATE PLACEMENT

Immediately prior to the closing of the Merger, MicroMed Technology closed a
$4,991,683 private placement (the "Private Placement") of its common stock and
warrants. MicroMed Technology engaged Hunter World Markets, Inc. ("Hunter") as
its placement agent in connection with the Private Placement. Each investor in
the Private Placement purchased shares of MicroMed Technology common stock at
$1.33 per share and seven-year warrants, exercisable one year after the date of
issuance, to purchase 60% of the common stock purchased by such investor in the
Private Placement at a per share exercise price of $1.33 (all investors
introduced to MicroMed Technology by Hunter assigned their warrants to Hunter,
an aggregate of 1,804,511 warrants) pursuant to the terms of a Securities
Purchase Agreement entered into by and among MicroMed Technology, Salmon and
each of the investors, which is attached hereto as Exhibit 10.1. The warrants, a
form of which is attached hereto as Exhibit 4.1, are redeemable by the Company
under certain circumstances at any time after one year from the date of
issuance. The Company agreed to file a registration statement covering the
securities sold in the Private Placement within 30 days of the closing of the
Merger pursuant to the Registration Rights agreement attached hereto as Exhibit
4.2. As partial consideration for services rendered further to the Private
Placement, Hunter was issued 300,000 shares of MicroMed Technology's common
stock.

The shares of common stock of the Company are currently listed for quotation on
the Over-the-Counter Bulletin Board under the symbol "SXPI.OB." The Company is
in the process of obtaining a new trading symbol to reflect the recent corporate
name change.

THE SHARE CANCELLATION AND PURCHASE AGREEMENTS

Concurrent with the execution of the Merger Agreement, MicroMed Technology, Pete
Smith and Stone & Graves entered into a Share Cancellation Agreement on January
31, 2005 whereby Mr. Smith agreed to cancel an aggregate 10,010,080 shares of
Salmon common stock held by him on the effective date of the Merger. In
consideration for the cancellation of his shares, Mr. Smith received $605,213
from unaffiliated parties of Salmon and all assets and corresponding liabilities
held by Salmon immediately prior to the effective date of the Merger. The net
tangible book value as of November 30, 2004 of the assets and liabilities of
Salmon distributed to Mr. Smith immediately after the closing of the Merger is a
net deficit of $12,172.

Further to an Amended and Restated Purchase and Escrow Agreement, the $605,213
cash payment to Mr. Smith, as well as cash payments in the aggregate of $144,787
to certain other existing shareholders of Salmon, who were previously named as
selling shareholders in this prospectus, consisted of monies invested by Peyton,
Chandler, & Sullivan, Inc. ("PCS"), Hunter, Oxford Bioscience Partners II
(Annex) L.P., an affiliate of Oxford Biosciences, Inc., a greater than 5%
stockholder in MicroMed, and entities and individuals that were introduced by
PCS.

Hunter and its assignee, and Oxford Bioscience Partners II (Annex), acquired
485,798 and 72,160 shares of Salmon common stock from former shareholders of
Salmon. The following table indicates the number of shares of Salmon acquired
from former shareholders of Salmon by PCS, each investor introduced by PCS and
their assignees.

Peyton, Chandler & Sullivan, Inc.......................................  159,658
Richard S. From........................................................  197,337
Sara Mirza.............................................................   10,000
Stone & Graves.........................................................    5,000
Charles E. Frisco, Jr..................................................   27,500
John Chin M.D..........................................................   12,500
Henci Goer.............................................................    5,000
Morgan Stanley  DW Inc. Custodian for Henci Goer.......................    2,500
Stephanie Walton.......................................................    2,500
Daniel McCrimons.......................................................    2,500
Thiry Rajagopal........................................................    5,000
Ronald S. Weaver, M.D..................................................    2,500
Timothy R. Surgenor....................................................    7,645
Carl C. Hsu TTEE Carl C. Hsu Inc. PSP 7/01/84, FBO Kathleen Rollins....    5,000
Jeanny Leung...........................................................    5,000
Carl C. Hsu TTEE Carl C. Hsu Inc. PSP 7/01/84, FBO Kala Eswaran........    2,500
Carl C. Hsu TTEE Carl C. Hsu Inc. PSP 7/01/84, FBO Michael Chuang......    6,250
John Womach............................................................    2,500
Alan Hsu...............................................................    4,000
Herb Matsinger, Jr. Revocable Trust DTD 03/10/03.......................   12,500
Carl C. Hsu MD Inc. PSP 7/1/84, Carl Hsu TTEE..........................   15,000
Carl C. Hsu............................................................    2,500
Nathan H. Allen M.D....................................................    5,000
Huiya Hsu..............................................................    7,500
Neesan Zieour..........................................................   10,000
Richard Gould..........................................................    2,500
Nancy Rawlinson........................................................   25,000
Ronald W. Minor........................................................   37,500

                                       3
Each of PCS, Hunter, Oxford Bioscience Partners II (Annex) L.P. and the
individuals and entities introduced by PCS, and their assignees, are "accredited
investors" as that term is defined under Rule 501 of Regulation D.

MICROMED'S  BUSINESS AND OPERATIONS

BUSINESS OVERVIEW

With respect to this discussion, the terms "MicroMed," and the "Company" refer
to MicroMed Cardiovascular, Inc. and its wholly-owned subsidiary MicroMed
Technology, Inc. The Company is a medical device company focused on the
development of a miniaturized heart pump or VAD known as the DeBakey VAD. The
DeBakey VAD is a small (1 inch x 3 inches) auxiliary pump that can provide
increased blood flow from the left ventricle of the heart throughout the body
for patients whose hearts are diseased and unable to maintain adequate blood
flow to sustain their lives. In 1988, famed heart surgeon Dr. Michael E.
DeBakey, Dr. George P. Noon and NASA began joint research and development of the
DeBakey VAD using NASA-developed technology.

In November 1998, MicroMed received approval to begin clinical trials using the
DeBakey VAD in Germany with subsequent clinical trial approvals in France,
Austria, Italy and Switzerland. MicroMed received CE Mark approval in April 2001
and began marketing in Europe and select other international markets. In the
U.S., MicroMed is involved in pivotal Phase III trials for bridge-to-transplant
and destination therapy indications.

MARKET OPPORTUNITY

MECHANICAL CIRCULATORY SUPPORT: VENTRICULAR ASSIST DEVICES

Studies suggest that mechanical circulatory assistance may be the most practical
alternative to drug treatments for heart failure today and useful as an
alternative to or in combination with drug therapy.

The most widely used form of mechanical circulatory assistance is a VAD. These
devices aid the failing heart by mechanically rerouting blood flow using a pump.
The basic characteristics of VADs are as follows:

      o     a ventricle assist pump, which is typically implanted inside the
            body;

                                       4
o     a portable power source for the pump located external to the body to
            maximize patient mobility; and

      o     tubing or cable with wires connecting the implanted pump with the
            external power source.

These implantable heart pumps have been demonstrated effective in supporting
blood circulation in patients with failing hearts, reversing end-organ
dysfunction and giving them a much improved quality of life as they await donor
hearts. Approximately 9,000 patients worldwide have been supported by currently
marketed VADs while awaiting transplant, many for more than two years.

MicroMed believes the advantages of VADs over heart transplantation and other
late-stage heart-failure therapies are as follows:

      o     Natural Heart is Not Removed. Unlike heart transplants or total
            artificial heart systems, VADs leave the natural heart intact and
            assist it by pumping blood from the apex of the left ventricle up to
            the ascending aorta thereby providing sufficient blood flow to
            maintain life. This approach provides the advantage of leaving in
            place the biologic control mechanisms of the natural heart. In some
            cases it has been noted in clinical observations that VADs have
            permitted recovery of natural heart function to the point where the
            VAD was removed and the patient no longer needed a transplant.

      o     Readily Available Supply. As a manufactured device, a VAD is readily
            available when needed, including on an emergency basis, to treat
            end-stage heart failure patients. Unlike heart transplant patients
            who must wait for a donor heart, patients can immediately receive a
            VAD implant whenever a physician deems it appropriate.

      o     Reduced Hospitalization. VAD patients are expected to be discharged
            from the hospital after a relatively short recovery period estimated
            to be a few weeks, thus reducing healthcare costs.

      o     Reduction in Medication Use. Unlike heart transplants, VADs do no
            cause rejection responses; therefore, VAD patients are not expected
            to need the administration of immunosuppressive drugs required by
            heart transplant patients.

      o     Improved Patient Health over Pharmacological Therapies. After VAD
            implantation, blood circulation throughout the body improves and
            patients experience improved levels of health and activity. This
            often leads to improvements in the functions of other organs, and in
            some cases, improvement in the overall function of the natural heart
            being assisted by a VAD. Drug therapy delays the progression of the
            disease, whereas VADs maintain the natural pumping of the heart.
            This restoration of more normal physiology also makes patients
            better candidates for a heart transplant should one be required.

VAD MARKET OPPORTUNITY

CURRENT INDICATIONS

Bridge-to-Transplant. Currently marketed VADs are FDA approved for use by Class
IV, end-stage heart failure patients waiting for a heart transplant, otherwise
known as bridge-to-transplant. Presently, most patients suffering from chronic,
end-stage heart disease (certain Class IV patients) have no options other than a
heart transplant or death. Heart transplantation is an expensive process and is
severely limited by a lack of donor hearts. The AHA estimates that in the U.S.,
there are approximately 2,200 donor hearts available annually, while there are
an estimated 70,000 - 100,000 people annually who need a heart transplant. VADs
have proven to be effective as a bridge-to-heart transplantation. VADs can
extend patients' lives and restore moribund patients to a more normal
physiological state, making them much better candidates for heart
transplantation.

                                       5
Destination Therapy Alternative to Transplant. Recent studies demonstrate that
VADs may provide effective circulatory support for extended periods of time (> 2
years) in patients who have severe heart failure but who do not qualify for a
heart transplant. This use of VADs, termed "destination therapy," was approved
by the FDA in late 2002. Dr. Eric Rose, the principal investigator for
MicroMed's DELTA DT trial, was also principal investigator for the REMATCH
trial. In October 2003, the Center for Medicare and Medicaid Services ("CMS")
announced that Medicare would begin to provide coverage of VADs used for this
indication under DRG 525. MicroMed recently obtained approval for the use of the
DeBakey VAD as destination therapy in Europe and are conducting a randomized
pivotal clinical trial of the DeBakey VAD as destination therapy in the U.S.,
the first step toward U.S. market approval for that indication.

Pediatric Use. The FDA granted permission to MicroMed to market the DeBakey VAD
Child for pediatric use in the U.S. in the first quarter of 2004. The U.S.
approval was pursuant to a Humanitarian Device Exemption ("HDE"). MicroMed also
recently received expanded European CE Mark approval to use the DeBakey VAD
Child for pediatric use in the second quarter of 2004. The term "CE Mark" is
derived from the French expression "Conformite Europeene," which means "European
Conformity." The CE Mark represents approval to market the product in the
European Community). Currently marketed pulsatile VADs are limited in use to
1.5m(2) Body Surface Area, or BSA, a standard measurement of patient size. Under
the approved HDE, MicroMed can implant patients as small as 0.7m(2) BSA (5- to
16-year-old patients).

Other Alternatives. Besides the three current indications of our product, there
are several other alternatives available to patients: heart transplantation,
optimal medical therapy and the total artificial heart. Heart transplantation is
advantageous for patients with end-stage heart failure because it has the
highest and longest survival rate. Currently, it remains the treatment of choice
for those eligible for transplantation with end-stage heart failure. However,
there are approximately one hundred thousand patients with late stage heart
failure and only approximately two thousand hearts per year available through
donation for transplantation. Therefore for those who do not make the top of the
transplantation list and obtain one of the only two thousand hearts available,
ventricular assist devices and totally artificial hearts are the only viable
options, since optimal medical therapy still has mortality approaching 100%. The
totally artificial heart has the theoretical advantage of removing a heart which
may be susceptible to arrhythmia and mural thrombus, but the totally artificial
heart represents a totally irretrievable treatment. No totally artificial hearts
are approved for destination therapy. Implementations of the totally artificial
heart to date have been quite limited, even as bridge to transplant.
Furthermore, the current totally artificial hearts are large and usable only in
a relatively small group of patients.

FUTURE INDICATIONS

Bridge-to-Recovery. With regard to expanding VAD use for bridge-to-recovery,
human studies conducted by researchers at Royal Brompton in the United Kingdom,
Temple University and the German Heart Institute in Berlin indicate that VADs
could be useful as a means of promoting recovery of weakened heart muscles,
either alone or in combination with other myogenic agents. Preliminary data from
these studies suggest that a significant number of the Class III heart patients
in the U.S. could use the device as a bridge-to-recovery of heart function,
possibly allowing heart muscle cells to repair themselves such that the heart
remodels and recovers nearly normal function. The improved blood flow and organ
function obtained through use of a VAD could delay or may even prevent
progression of these patients to Class IV status.

PRODUCT

THE DEBAKEY VAD SYSTEM - COMPREHENSIVE NEXT-GENERATION VAD TECHNOLOGY OVERVIEW

MicroMed has developed the miniaturized DeBakey VAD, which MicroMed believes
physicians, surgeons and patients will favor over currently marketed pulsatile
VADs, as it is well suited for broader and long-term VAD use. Due to its
next-generation, NASA-designed characteristics, MicroMed believes the DeBakey
VAD will ease and shorten the time of VAD implantation for the physician and
patient, significantly decrease the risk of infection to the patient, and
together with the complete DeBakey VAD system, significantly improve patient
quality of life. After recovery from the implant procedure, many patients are
able to return home and to resume normal activities such as exercise, and in
some cases patients have returned to work. In addition, MicroMed believes that
the DeBakey VAD system offers these benefits without sacrificing any of the
recognized clinical efficacies of currently marketed VADs and at a price below
that of currently marketed pulsatile VADs.

                                       6
The titanium, electromagnetically actuated axial flow pump, a pump in which the
blood flow pathway is in line and flows continuously, can pump in excess of 10
liters per minute, is 1.2 inches (30.5 mm) in diameter, 3.0 inches (76.2 mm)
long, and weighs less than 4 ounces (93 g). The pump assembly consists of a
titanium inflow cannula (a tube that is inserted into the apex of the heart
residing within the left ventricle providing inflow to the pump) and an apical
sewing ring (a Dacron ring which is sewn to the apex of the heart and used to
secure the VAD to the apex of the heart), the DeBakey VAD pump, a flow probe, a
Dacron (R) outflow conduit graft (a woven graft which is used to connect the
pump to the outflow and is attached to the ascending aorta), and a percutaneous
cable assembly with controller connector. Inside the housing unit is the
inducer/impeller, which is the only moving part. Connected to the flow tube is a
curved titanium inflow cannula that is inserted into the apex of the left
ventricle. A Dacron woven sealed outflow conduit is connected to the pump and
sutured to the aorta. An ultrasonic flow probe placed around the outflow conduit
continually measures blood flow rate through the pump. The wiring from the
pump's flow probe and the motor are coated and bundled into a single cable
assembly that is enclosed in an outer polymer shell covered by Dacron velour,
which exits the skin just above the right iliac crest and connects to the
external controller system. Blood is pumped from the left ventricle into the
inflow cannula, through the inducer/impeller, then out through the Dacron
outflow conduit and into the ascending aorta. This axial flow pump provides
continuous flow; however, flow pulsatility does occur in most patients, as a
consequence of the patient's native cardiac contractility. Particular design
characteristics include:

      o     miniaturized size (approximately 1/10th the size of the currently
            marketed pulsatile VADs);

      o     light weight (less than 4 ounces versus over 2 pounds for currently
            marketed, fully implantable pulsatile VADs);

      o     hemolysis minimizing design by NASA so that damage to red cells,
            evidenced by hemolysis, is minimized from the mechanical action of
            the pump on the blood cells;

      o     virtually silent compared to the audible noise of currently marketed
            pulsatile VADs;

      o     only one moving part; and

      o     eliminates pump-life limiting valves; currently approved VADs have
            mechanical valves both at the inflow and outflow of the device to
            provide uni-directional flow necessary for perfusion, but this leads
            to a substantial failure rate due to the high flows, high pressures,
            and the high rate of the upstroke encountered in the pulsatile
            devices.

MicroMed believes these specific design characteristics will lead to the
following advantages over currently marketed pulsatile VADs currently on the
market:

      o     The miniaturization and light weight of the DeBakey VAD offer the
            potential for less invasive applications. MicroMed believes that
            patients using the DeBakey VAD experience less trauma and
            device-related infection than patients using currently marketed,
            fully implantable pulsatile VADs as a result of the shortened
            duration of the implant procedure, the small size of the device,
            less displacement of nearby organs and a smaller percutaneous cable
            that contains the lines from the pump and flow probe to the outside
            of the body through the skin; this cable allows delivery of power
            and a means to monitor the device and is small, pliable, and covered
            in Dacron to improve growth and incorporation into the tissues and
            to limit the potential for infection.

      o     In addition to the current market opportunity, because of the size
            of the DeBakey VAD, MicroMed expects to be able to penetrate a
            substantial portion of the market for smaller women and children. Up
            to now, these patients generally have not been implanted with VADs
            due to the larger size of currently marketed pulsatile VADs.
            (HeartMate and Novacor require a minimum 1.5m 2 BSA, versus as low
            as BSA of 0.7m(2) for the DeBakey VAD Child, in children from 5 to
            16 years old.) Moreover, MicroMed believes the specific design
            attributes of its DeBakey VAD make it well suited for broader
            clinical indications such as destination therapy, bridge-to-recovery
            and pediatric use.

The adverse effects sometimes witnessed in DeBakey VAD patients are similar to
those seen with other VADs. These include strokes, transient ischemic attacks,
infections and the bleeding effect of anticoagulation drugs. The incidence of
these effects are anticipated to be similar and within the range or lower than
those with other devices and are monitored through the clinical trial through a
data safety monitoring board. The Data Safety Monitoring Board concluded that
the trial should continue.

                                       7
DEBAKEY VAD SYSTEM

The DeBakey VAD system includes the DeBakey VAD, the Data Acquisition System,
the Patient Home Support System, the DeBakey VAD Controller, the VADPAK and VAD
system accessories. MicroMed believes the DeBakey VAD system design provides
patients with greater range of motion than the current market leading VADs.

Data Acquisition System. Clinicians use the DeBakey VAD Data Acquisition System
("DAS") during surgery and while the patient is in intensive care. However, when
the patients move out of intensive care or when they leave the hospital, the
patient can plug in to the DAS occasionally to allow clinicians to adjust the
speed of the pump and review all pump and patient parameters.

Patient Home Support System. The Patient Home Support System is designed to
provide primary power to the DeBakey VAD after surgery and recovery during
evening hours. In addition to providing power, it serves as a battery backup and
charges up to four batteries simultaneously. MicroMed designed the Patient Home
Support System to allow the DeBakey VAD patient, whether in the hospital or at
home, to sleep or rest without concern about discharging batteries while
tethered to the unit. The Patient Home Support System also charges batteries for
use with the DeBakey VAD Controller and VADPAK, which should offer the patient
improved physical mobility. The Patient Home Support System is approximately the
size of a small portable cooler, weighs approximately 10 pounds and is equipped
with an eight-foot power tether cable that connects to the DeBakey VAD
Controller. The Patient Home Support System will provide continuous power during
times when the DeBakey VAD is not operating on batteries. MicroMed adopted this
"home use" design to provide ergonomic benefits and cost savings to patients
using the DeBakey VAD system over competitive products.

DeBakey VAD Controller and VADPAK. The DeBakey VAD Controller and two batteries
are housed in the VADPAK. Together the VADPAK, the Controller and batteries
weigh just over five pounds, helping to provide patient mobility and the ability
to engage in most normal, everyday activities. The DeBakey VAD Controller
operates the DeBakey VAD and displays key operating information about the pump,
including flow rate, power usage and remaining battery life. Each battery will
power the DeBakey VAD for approximately three to four hours, giving a combined
battery time of approximately five to eight hours. The DeBakey VAD Controller
always uses the battery with the lower charge, thus preserving the battery with
the highest charge. The DeBakey VAD system includes extra batteries and a
separate recharger (in addition to the recharger in the Patient Home Support
System) that will completely charge a battery in approximately 75 minutes.

MicroMed anticipates that the commercial selling price for the DeBakey VAD
system in the U.S. will be substantially less than the cost of competitive
products currently on the market.

BUSINESS DIRECTION

MicroMed's mission is to be a leader in CHF therapy. Principal elements of its
strategy to achieve this are as follows:

      o     CONTINUE COMMERCIALIZATION OF THE DEBAKEY VAD IN EUROPE AND SELECT
            OTHER INTERNATIONAL MARKETS. MicroMed received CE Mark approval for
            the bridge-to-transplant indication in April 2001 and is CURRENTLY
            selling products in Germany, Austria, Switzerland, France, Italy,
            Turkey and Singapore. Because the prescribers, purchasers and end
            users of the DeBakey VAD are highly concentrated (relatively few
            sites perform most of these complex procedures), MicroMed believes
            it will be able to expand market penetration with the DeBakey VAD
            without an extensive sales and marketing organization through
            limited direct sales and the use of distributors in selected
            countries. MicroMed has established a strong distributor network to
            support sales and marketing in various international markets.

      o     LEVERAGE RELATIONSHIPS TO ENHANCE CLINICAL ACCEPTANCE OF THE DEBAKEY
            VAD. MicroMed intends to leverage its relationships among European
            clinical trial investigators, Dr. DeBakey, Dr. Rose, Dr. Noon and
            its investigators in the U.S. clinical trials with cardiologists and
            cardiac surgeons in other major international heart centers to
            promote the use of the DeBakey VAD in high-volume transplant centers
            around the world. MicroMed intends to augment this effort with a
            highly focused direct sales and marketing team, including members of
            senior management.

                                       8
o     LAUNCH DEBAKEY VAD CHILD FOR IMMEDIATE REVENUE OPPORTUNITY. MicroMed
            received approval to begin marketing the DeBakey VAD Child device in
            the U.S. in March 2004 and in the E.U. in June 2004 and have begun
            market roll out.

      o     COMPLETE U.S. MULTI-CENTER PHASE III/PIVOTAL BRIDGE-TO-TRANSPLANT
            CLINICAL TRIAL. MicroMed initiated the pivotal phase of its US
            Bridge to Transplant trial under the current protocol in April 2003.
            As of December 31, 2004, MicroMed has implanted 49 patients in the
            BTT study that MicroMed intends to submit in its PMA application (29
            of which were done in the pilot and feasibility phases of the study
            and may not be includable in the FDA analysis of the pivotal phase
            results). The study design compares the results of non-randomized
            implants of the DeBakey VAD to literature controls (published
            results) for the HeartMate XVE device.The overall results of our
            bridge to transplant ("BTT") trial to date have resulted in lower
            than expected survival to transplant percentages. The Company now
            believes that it is likely that it will not meet the performance
            goal survival rate for the patients in this trial. This is likely to
            substantially increase the time required to obtain FDA approval and
            the time when the Company would expect to generate revenues from
            commercial sales of the DeBakey VAD.

      o     COMPLETE U.S. MULTI-CENTER PHASE III/PIVOTAL DESTINATION THERAPY
            CLINICAL TRIAL. MicroMed received approval to initiate the pivotal
            phase of its U.S. destination therapy clinical trial and began
            initial implants in the fourth quarter of 2004. The study design is
            a randomized, dual arm comparison against a single control
            (HeartMate XVE). MicroMed anticipates implanting 240 DeBakey VAD
            patients and 120 HeartMate patients (2:1 ratio) in up to 40 sites.
            Upon completion of this clinical trial, MicroMed intends to submit
            the data to the FDA for PMA approval. To date, the Company has only
            enrolled 8 patients to date in its Destination Therapy trial and
            believes that it needs to redesign the structure of the trial to
            accommodate a shorter PMA pathway. Under the current design of its
            Destination Therapy trial (360 patients on a 2:1 randomization
            against the HeartMate XVE), the Company originally anticipated
            completing enrollment between late 2008 to late 2010, which it
            believed would result in PMA approval between early 2010 to early
            2012. The Company is presently in discussions with its clinical
            consultants to develop the specific new clinical trial parameters
            and protocols for the Destination Therapy trial which it intends to
            request from the FDA. However, there is no assurance that the
            Company will be able to convince the FDA to accept these changes.

      o     EXPAND CLINICAL INDICATIONS FOR THE DEBAKEY VAD TO INCLUDE SMALL
            ADULT PATIENTS. There is currently an unmet need for a VAD that can
            be implanted in small adults, such as small female patients with
            body surface areas ("BSA") of less than 1.5 m(2). Current FDA
            approved devices are only indicated for patients with a BSA greater
            than or equal to 1.5 m(2).

      o     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 bridge-to-transplant and destination therapy segments. MicroMed
            believes that the specific design attributes of the DeBakey VAD make
            it better suited than currently marketed pulsatile VADs for broader
            clinical indications. MicroMed intends to conduct clinical trials to
            support the use of the DeBakey VAD as a bridge-to-recovery.

CLINICAL TRIALS IN THE UNITED STATES

Unlike most pharmaceutical clinical trials, the duration of medical device
pivotal (Phase III) clinical trials is dependent on an availability of
investigational subjects (patients) that is unpredictable and which can have a
significant effect on the cost of the trial. Consequently, this variable alone
makes it difficult to accurately project completion times and trial costs. The
time necessary to complete implantable medical device trials is also dependent
on the complexity of the device, securing a patient sample size necessary to
statistically support the study hypothesis, the number of available study
centers, the number of device changes made during the trial and other factors.
Typical expenses for pivotal trials include fixed costs associated with clinical
affairs and regulatory affairs personnel, subcontracts with clinical research
organizations, patient testing charges, the cost of investigational devices and
travel expenses for clinical monitors to initiate centers, train clinicians,
monitor activities and perform center close-outs. MicroMed is presently
reimbursed for all investigational devices used during the trials. Additional
costs are incurred in the development of regulatory submissions and meetings
with the FDA, which include the PMA Panel Meeting.

                                       9
The BTT trial is designed to compare the results of implanting the DeBakey VAD
in patients eligible for heart transplantation against results for the Thoratec
HeartMate XVE product as reported in published studies. The primary endpoint
measure of the trial is survival to transplantation, but MicroMed also measures
other adverse events typically associated with patients in this category, such
as stroke, infection and device malfunction.

The results of MicroMed's clinical trials for BTT and DT are not yet available.
The data is being collected and analyzed by a third party clinical research
organization on a blind basis so that results are not revealed until completion
in order to avoid study bias.

The overall results of our bridge to transplant ("BTT") trial to date have
resulted in lower than expected survival to transplant percentages. The Company
now believes that it is likely that it will not meet the performance goal
survival rate for the patients in this trial. This is likely to substantially
increase the time required to obtain FDA approval and the time when the Company
would expect to generate revenues from commercial sales of the DeBakey VAD. The
Company has only enrolled 8 patients to date in its Destination Therapy trial
and believes that it needs to redesign the structure of the trial to accommodate
a shorter PMA pathway. Under the current design of its Destination Therapy trial
(360 patients on a 2:1 randomization against the HeartMate XVE), the Company
originally anticipated completing enrollment between late 2008 to late 2010,
which it believed would result in PMA approval between early 2010 to early 2012.
The Company is presently in discussions with its clinical consultants to develop
the specific new clinical trial parameters and protocols for the Destination
Therapy trial which it intends to request from the FDA. However, there is no
assurance that the Company will be able to convince the FDA to accept these
changes. The Company, or regulatory authorities, may suspend or terminate
clinical trials at any time.

CLINICAL RESULTS

RESULTS OF PRECLINICAL STUDIES

MicroMed conducted substantial pre-clinical in vitro and animal in vivo tests
prior to commencement of its European clinical trial. MicroMed divided its
preclinical testing of the DeBakey VAD into several phases with distinct
objectives.

In Vitro Studies. The purpose of the first phase of studies was to identify a
pump design that minimized hemolysis (red blood cell destruction) and
thrombogenesis (blood clot formation). MicroMed conducted the first phase of
studies with a polycarbonate version of the pump. MicroMed used parametric bench
testing of iterative pump designs to identify the least hemolytic pump design.
Next, MicroMed conducted ex vivo tests of iterative pump designs to identify the
least thrombogenic pump design.

In addition, MicroMed conducted in vitro performance tests with mock circulation
to define characteristics of pump function in response to normal and abnormal
vascular conditions and ventricular performance. Studies demonstrate that the
DeBakey VAD can adequately unload the failing left ventricle and characterize
the relationship of heart rate to pump performance.

In Vivo Studies. MicroMed conducted the second phase of studies in vivo.
MicroMed fully implanted titanium pumps in the chests of calves. The purpose of
these studies was to ensure that MicroMed had identified the design least likely
to cause hemolysis or thrombogenesis using titanium and to determine the safety
of the DeBakey VAD for long-term support of the heart. The DeBakey VAD was shown
to operate safely in 27 animals for up to 145 days. During these studies, no
hemolysis or end-organ dysfunction occurred.

                                       10
Mechanical Durability Studies. Durability studies show the DeBakey VAD should
operate effectively in excess of five years. To evaluate the potential uses for
the DeBakey VAD, MicroMed needed to understand its bearing-wear characteristics
and their effect on long-term use of the device. MicroMed engaged Marconi
Aerospace Defense Systems, Inc. (formerly Tracor) to perform studies with
respect to bearing and long-term pump durability of the DeBakey VAD. Marconi is
a major aerospace corporation that specializes in fault-to-failure vibration and
acoustical testing. Beginning in May 1997, 10 DeBakey VADs were operated
continuously, 24 hours per day, in saline solution, which is less of a lubricant
than human blood, with no signs of appreciable wear in the bearings or pumps.
MicroMed tested additional pumps with artificially induced wear to establish
wear signature characteristics as well as the effect of various levels of wear
on red blood cell destruction and pump performance. MicroMed completed these
tests in December 1999 and received a report from Marconi expressing its belief
that the DeBakey VAD bearings should have a life expectancy in excess of five
years.

Hemocompatibility and Biocompatibility Studies. MicroMed subjected implantable
components of the DeBakey VAD system to studies relating to both
hemocompatibility (blood compatibility) and biocompatibility as per the
requirements of ISO 10993. The purpose of hemocompatibility studies was to
identify blood-titanium interactions for the DeBakey VAD. These tests were
performed with human blood in mock circulation. The results of these studies
demonstrated that the pump was neither the source of thrombi (vascular
obstructions) or emboli (blood clots) and is otherwise hemocompatible. Completed
biocompatibility tests show the device to have no adverse results with respect
to: systemic toxicity, local toxicity, cytotoxicity (cell damage), genotoxicity
(DNA damage), pyrogenicity (inducing fever), physiochemical toxins, mutagenicity
(inducing genetic mutation), and sensitization (inducing an immune response).
Studies also validated the process by which implantable components are
sterilized in ethylene oxide.

Third-party ISO 9001 certified contractors manufacture the DeBakey VAD
Controller and the Data Acquisition System. These contractors have conducted
tests, and MicroMed has conducted independent testing to demonstrate that both
components meet various standards required by the Active Implantable Medical
Device Directive. All components have been tested to NRTL ("UL Testing") and
demonstrated to be electrically safe and to withstand environmental factors such
as electrical/electromagnetic interference, temperature, shock, etc. Third party
software validation of the VAD Controller has been performed confirming a safe
and robust design.

RESULTS OF EUROPEAN CLINICAL TRIAL

The first human implant of the DeBakey VAD was performed in November of 1998 in
Berlin, Germany initiating the original clinical trial of the DeBakey VAD as a
bridge-to-cardiac transplantation. During this trial, conducted wholly in the
European Union, 78 patients were implanted with the DeBakey VAD for durations up
to 518 days. The original European clinical trial of the DeBakey VAD included
key cardiovascular centers in Germany, Austria, France, Switzerland and Italy.
This first clinical trial was designed to establish safety and performance of
the DeBakey VAD as a bridge-to-cardiac transplantation and led to the award of
the CE Mark for the DeBakey VAD in April 2001 by TUV Product Services of Munich.

The early clinical results in Europe varied substantially from site to site,
ranging from a low of 18% to a high of 72%, with some users having poor success
to transplant rates, while others did well. Careful analysis showed several
reasons that likely contributed to the variability. These factors included the
early learning curve, patient selection, and anticoagulation. Because the device
at first was largely unproven, some of the early cases selected appeared to be
patients that were beyond the point of being helped by mechanical support. This
was suggested by a high incidence of multiple organ failure in the unsuccessful
patients and the fact that about 40% of the deaths were within the first 30 days
after implantation. Nearly all of these patients did not meet the clinical trial
enrollment criteria. With more experience and improved patient monitoring, the
DeBakey VAD was implanted in more salvageable patients. Patient selection varied
considerably from site to site. Experience has also demonstrated new insights
into risk factors for VAD patients, such as the realization of the importance of
chronic malnutrition as a risk factor.

All patients with artificial surface devices in their circulatory system,
whether valves or VADs, need anticoagulation. The extent of anticoagulation
therapy necessary in connection with a given device could vary from the use of
dipyridamole and aspirin to a more extensive regimen. The HeartMate is a volume
displacement pump that requires porcine tissue valves, bearings, and a flexible
membrane that can result in mechanical failure. The axial flow design of the
DeBakey VAD, with only one moving part, has a very low incidence of mechanical
failure (less than 3% as noted in Goldstein DJ, Woldwide Experience with the
MicroMed DeBakey Ventricular Assist Device(R) as a Bridge to Transplantation,
Circulation 2003; 108 [suppl II ]: II-272-II-277) but thrombus formation in the
pump has the potential to stop the pump and thus represents a potential
complication that must be managed with anti thrombotic drug therapy. Failure of
an implanted VAD requires therapeutic interventions, such as re-operation for
pump or component replacement in the case of the volume displacement pumps, or
administration of tissue plasminogen activator (tPA) or pump replacement.

                                       11
In MicroMed's early experience, its anticoagulation knowledge for axial flow
VADs was limited (since it was the first axial flow device used in humans) and
different sites used different anticoagulation regimens. Local use of suboptimal
anticoagulation therapy may have contributed to the site-to-site variability in
success rates MicroMed saw in its early trials. MicroMed has now been able to
learn from its experience at different sites and the newer anticoagulation
technologies, resulting in newly available information that should improve
patient management strategies. MicroMed recently formed an Anticoagulation
Advisory Committee (the "Committee") co-chaired by Dr. Eric Rose, Chief Surgeon
at Columbia University in New York and Dr. Samuel Goldhaber, Director, Venous
Thromboembolism Research Group at Brigham and Women's Hospital in Boston. The
Committee includes cardiovascular surgeons, cardiologists, hematologists,
pharmacologists and pathologists from a diverse sampling of various universities
and clinical sites. The Committee has developed a guidance document for the
investigator sites to assist in the anticoagulation management of DeBakey VAD
patients.

The occurrence of adverse events during a clinical trial, whether expected or
unexpected, can have an impact on the enrollment rate in a clinical trial,
particularly at individual sites where such adverse events are noted. For
example, during the feasibility portion of MicroMed's BTT study, the perception
by certain clinicians of increased incidences of thrombus resulted in a
temporary reduction in the rate of patient enrollment early in that study.
MicroMed solicited the collective assistance and advice of several prominent
cardiovascular physicians, cardiologists and hematologists to develop an
anticoagulation protocol aimed at reducing the rate of thrombus in patients with
the test device. The introduction of this anticoagulation protocol had an
advantageous impact on the rate of thrombus and the rate of enrollment has
increased. As with any medical device in a clinical trial, MicroMed is
constantly evaluating potential modifications to the product during the clinical
trial in an effort to improve product performance and clinical outcomes.

The incidence rate of thrombus, as well as other adverse events noted during
MicroMed's European clinical trial, were within acceptable levels for MicroMed
to receive the CE Mark for the DeBakey VAD in April 2001 by TUV Product Services
of Munich.

End-Organ Function. One key way to evaluate the effectiveness of a VAD is to
monitor the device's ability to restore or improve end-organ function.
Restoration of end-organ function is an important component of left ventricular
assistance. With adequate ventricular support, organ perfusion generally
improves and allows organ function previously limited by heart failure to return
to normal.

Measurement of end-organ function is one of the best methods to determine the
efficacy of DeBakey VAD performance. An evaluation of pump flow or even pump
flow normalized to body index does not necessarily indicate whether the tissues
are receiving adequate circulation of oxygenated blood; the measures of
end-organ function described are indicative of whether or not a specific organ
has the blood supply it needs to operate properly.

Therefore, MicroMed typically evaluates a patient's pump performance or flow
output in terms of whether or not he or she is sufficiently supporting the
working organs of the body, i.e., the liver, kidneys, etc. End-organ function is
typically monitored by following the function of the kidney and liver systems.

The following table illustrates the parameters measured and the changes expected
with ventricular support such as that provided by a DeBakey VAD.

Parameter          Organ System     With Heart Failure          With VAD
--------------------------------------------------------------------------------
Creatinine             Kidney          Increased         Decreases toward normal

BUN                    Kidney          Increased         Decreases toward normal

Total Bilirubin        Liver           Increased         Decreases toward normal

SGOT                   Liver           Increased         Decreases toward normal

SGPT

                                       12
Many patients who enrolled in MicroMed's European and U.S. clinical trials of
the DeBakey VAD experienced end-organ dysfunction (i.e., elevated laboratory
values) prior to VAD implantation. After implant, the patients, on average,
either maintained or improved their end-organ function. This was noted from
improvement in Blood Urea Nitrogen and Creatinine measures in patients after
implant (36.8 and 1.2, respectively) compared to patients pre-implant (45.2 and
1.5, respectively). MicroMed believes these results are comparable to currently
marketed VADs.

RESEARCH AND DEVELOPMENT

DEBAKEY VAD

The initial development of the DeBakey VAD began with the collaboration of NASA
and Dr. DeBakey's and Dr. Noon's research team at Baylor College of Medicine.
NASA first became involved in the development of the DeBakey VAD through the
struggle for life of a Johnson Space Center engineer, David Saucier. Following a
severe heart attack and triple bypass surgery, a team of doctors led by Drs.
DeBakey and Noon performed a heart transplant on Mr. Saucier. Six months later,
Mr. Saucier returned to the Johnson Space Center with the desire to apply
spacecraft technology to help people with heart disease. Based on the foundation
of NASA's technology and engineering along with personnel from Baylor College of
Medicine, joint design and development of the DeBakey VAD began in 1988.

NASA's Ames Research Center assisted MicroMed in the design and development of
the DeBakey VAD by using its Cray supercomputers to model blood flow using
computational fluid dynamics ("CFD"). The use of CFD enabled NASA to extensively
test different variations of each component of the DeBakey VAD pump, to optimize
performance of each component, minimizing the potential for hemolysis and
thrombosis. NASA's Johnson Space Center engineers, using their extensive
computer-aided design and computer-aided manufacturing capabilities, together
with Baylor College of Medicine engineers developed the complex milling machine
computer codes that helped ensure precise manufacturing tolerances and
repeatability of the manufacturing process for the DeBakey VAD.

In July 1996, after MicroMed obtained the license from NASA for the technology,
MicroMed became involved directly in the research and development of the DeBakey
VAD. MicroMed conducted testing, research and development activities related to
the DeBakey VAD through separate sponsored research agreements with Baylor
College of Medicine, the University of Utah Artificial Heart Laboratory, the
University of Vienna and Texas A&M University.

In addition, MicroMed subcontracted with Hi-tronics Designs, Inc. and Plexus
Technology Group (formerly SeaMED Inc.) to develop the ancillary support systems
for the DeBakey VAD. Hi-tronics, located in Budd Lake, New Jersey, developed the
DeBakey VAD Controller. Hi-tronics is an ISO 9001 certified electronics design
and manufacturing company with extensive experience in developing and
manufacturing cardiac implantable devices. Plexus, located in Redmond,
Washington, developed the DeBakey VAD Data Acquisition System. Plexus has
substantial experience with medical device requirements and is ISO 9001
certified. Hi-tronics and Plexus also provided MicroMed with documentation and
validation of the DeBakey VAD Controller and Data Acquisition System that have
accompanied its international and FDA regulatory applications.

Over the past few years, MicroMed has added several engineers to its Engineering
and Development staff to supervise and coordinate the activities of its
subcontractors and to facilitate development of the DeBakey VAD and
future-generation products. In addition, MicroMed continues to conduct contract
research and development activities with the University of Vienna and other
universities involved in its clinical trials.

REGULATORY

The DeBakey VAD has received CE Mark approval for commercialization in Europe
for bridge-to-transplant, destination therapy and pediatric use. With respect to
manufacturing, MicroMed received ISO 9001 and ISO 13485 certification in
September 1999 and have been recertified each year since with no
non-conformities (most recently in October 2004). MicroMed received additional
CE Mark approval for destination therapy and pediatric use in the second quarter
of 2004.

                                       13
In the U.S., MicroMed is currently involved in two FDA approved clinical trials,
one for bridge-to-heart transplant indication and the other for destination
therapy indication.

Under the U.S. BTT indication trial, MicroMed implanted 49 patients as of
December 31, 2004 (29 under the pilot and feasibility phases and 20 under the
current protocol). The timing of approval will depend on the results from
MicroMed's trial and, among other things, whether the FDA allows MicroMed to use
European study data, as well as data from its feasibility clinical trial. Timing
is also dependent on the rate of patient enrollment.

MicroMed's DT clinical pivotal trial ("DELTA") is approved by the FDA and three
patients have been enrolled as of December 31, 2004. The DELTA trial will be
randomized 2:1 to the DT approved HeartMate XV of Thoratec (R) . MicroMed will
use up to 40 CMS approved sites. The majority of the DELTA sites will be the
same as its bridge-to-transplant clinical trial sites. These hospitals currently
implant the majority of LVADs thus reducing orientation and training.

In MicroMed's DT trial, Dr. Eric A. Rose is the Principal Investigator ("PI").
Dr. Rose is the Morris and Rose Milstein/Johnson and Johnson Professor,
Chairman, Department of Surgery and Surgeon-in-Chief for the Columbia
Presbyterian Medical Center, New York, and was PI for the successful Thoratec
(R) HeartMate REMATCH destination therapy trial that now has FDA PMA approval,
the first and only FDA approval to date of the use of VADs for this long-term
patient indication.

MicroMed plans to make product enhancements to the DeBakey VAD system from time
to time. Product enhancements require supplemental filings with and further
approval from regulatory authorities.

MANUFACTURING

MicroMed operates a 22,000 square foot leased facility located in Houston,
Texas, where it manufactures the DeBakey VAD. MicroMed believes this facility
can accommodate its anticipated manufacturing demand for the DeBakey VAD for at
least the next few years. In November 1999, MicroMed received notice that the
facility had fulfilled the applicable requirements and was certified as
compliant under ISO 9001, ISO 13485 and European Council Directive 90/385/EEC
(Active Implantable Medical Device Directive). These certifications have been
confirmed each year since then after annual audits by TUV Product Services of
Munich, Germany (the Notified Body). The facility has a Class 10,000 clean room
where final assembly and testing of the DeBakey VAD are performed. In late 2003,
MicroMed underwent and passed a Good Manufacturing Practice ("GMP") inspection
by FDA in anticipation of the approval of our HDE for pediatric use. MicroMed
has the equipment and technical capability to manufacture most of the parts and
components for the DeBakey VAD in this facility. MicroMed purchased several
other parts and components from various third-party suppliers, including some
parts that it has the equipment and technical ability to manufacture but cannot
produce in the quantities needed to satisfy MicroMed's requirements. For the
critical components being manufactured by third parties, all of these
third-party vendors are certified as ISO 9001 and/or ISO 13485. MicroMed also
dispatched its own quality assurance auditors to review its subcontractors'
facilities and manufacturing processes. In addition, MicroMed conducted a
thorough critical inspection of all incoming parts received from third-party
vendors. Some components are manufactured by sole source third-party vendors.
MicroMed believes that, in the event of the loss of any of the sole source
suppliers, the services and/or material being provided to it through that
supplier could be acquired from alternative suppliers or manufactured in
MicroMed's facility.

A company that intends to sell a product like the DeBakey VAD in the countries
of the European Economic Area must obtain a CE Mark. The CE Mark indicates
compliance with European regulatory, quality assurance and legal mandates. To
support MicroMed's CE Mark, its manufacturing facility is certified to ISO 13485
and European Council Directive 90/385/EEC (Active Implantable Medical Device
Directive), which was received in November 1999, and has been reconfirmed each
year thereafter by annual audits by TUV Product Services of Munich, Germany,
with no nonconformities noted in any of these audits.

                                       14
In the U.S., medical devices are regulated by the FDA. On October 7, 1996, the
FDA published its "final rule" for medical devices, incorporating past GMP
requirements into a new regulation, Quality System Requirements, which became
effective June 1, 1997. MicroMed's regulatory staff is working closely with its
employees and subcontractors to ensure strict compliance with these regulations,
including design controls and reproducible manufacturing of devices. MicroMed
passed a PMA inspection for its HDE application for pediatric indications.

SUPPLIERS

MicroMed relies on third-party suppliers to provide key materials and components
of the DeBakey VAD system, some of which are single source suppliers. Three of
the key suppliers MicroMed relies on are Plexus, Hi-Tronics Designs and Micropaq
Corporation, which made up 27%, 19% and 14% of MicroMed's purchases for the year
ended December 31, 2004, respectively. Starting in 2005, MicroMed will begin
assembling in-house the Clinical Data Acquisition System that was previously
assembled by Plexus. MicroMed has not identified additional sources to
supplement its purchases from Hi-Tronics and Micropaq. In the event that
MicroMed is unable to replace a shortfall in supply, its revenue could be
negatively impacted in the short term.

U.S. MARKETING AND DIRECT SALES EFFORT

The market for heart transplants is highly concentrated. A limited number of
cardiac surgeons and cardiologists influence medical device selection and
purchase decisions for a large portion of the target cardiac patient population.
Because of the high concentration of heart transplant sites, MicroMed
anticipates that it will be able to generate sufficient demand for the DeBakey
VAD through a relatively small direct marketing team, including members of
senior management, and through introductions provided by clinicians who
participated in its clinical trials. The market adoption and commercial success
of the DeBakey VAD will require acceptance by cardiologists and cardiac
surgeons. The Principal Investigators (who are generally cardiovascular
surgeons) and the Co-Principal Investigators (who are generally cardiologists)
are critical to the clinical trial and future commercial success. Initial
acceptance will depend primarily on the demonstrated safety and effectiveness of
the DeBakey VAD system in clinical trials. The reliability and other advantages
of specific VADs will need to be introduced to both referring cardiologists as
well as cardiovascular surgeons who make the decisions on the type of device to
be implanted. Peer reviewed publications and surgeon awareness through
presentations at seminars and conventions are primary platforms. MicroMed
believes pricing will also play a significant role in VAD selection at
transplant centers.

For marketing and sales of the recently approved DeBakey VAD Child product,
MicroMed is focused on the top 12 pediatric centers in the U.S. MicroMed will
use a small, direct technical sales team to support these sites. MicroMed plans
to expand this team upon receipt of PMA in the U.S. for bridge-to-transport and
destination therapy indications.

Although there are 160 heart transplant centers in the U.S., only about 25% of
these centers perform the majority of transplants. The market for VADs is
site-specific in the U.S., as well as in other countries. There are
approximately 70 U.S. hospitals approved for reimbursement from the Center for
Medicare/Medicaid Services ("CMS") for use of VADs. MicroMed expects that
approximately one-half of these hospitals will account for 85% of the
destination therapy patients. The cardiologists at these sites maintain heart
failure patients with traditional medical (drug) therapy. As the patient moves
beyond the benefit of drugs, the alternative is a heart transplant, death or
mechanical support.

EUROPEAN BUSINESS AND DISTRIBUTION NETWORK

There are approximately 125 VAD implant sites in Europe, which MicroMed believes
establishes a solid market for commercialization of the DeBakey VAD in Europe.
MicroMed's plan is to penetrate key, high-volume VAD implant centers where
competitors VADs are presently implanted through the use of distributors in
certain markets and direct sales in others. The DeBakey VAD is attached to the
heart in a manner similar to other currently marketed VADs, which should make
adoption of the DeBakey VAD easier at these sites. These sites have experienced
surgical teams familiar with mechanical support implant procedures as well as
with post-operative care. Use of the DeBakey VAD at key European centers where
competitors VADs currently are implanted will provide exposure for and highlight
the significant advantages that the DeBakey VAD has over other currently
marketed VADs. MicroMed will try to stimulate referrals to cardiothoracic
surgeons by educating cardiologists about the success of DeBakey VAD implants.

                                       15
MicroMed has distributors engaged in the European markets of Germany, UK, Italy,
France, Norway, Sweden, Holland, Turkey, Austria, Switzerland and Greece and in
Singapore. MicroMed currently has two directly employed technicians for its
operations in Europe. MicroMed plans to add more distributors and technical
support personnel as it expands the number of its European and Asian implant
sites.

INTELLECTUAL PROPERTY

The pump technology used in the DeBakey VAD is protected by a patent issued to
NASA in 1996. In 1996, MicroMed signed a patent license agreement with NASA to
be the exclusive licensee to this technology in the U.S. for use in
cardiovascular applications. Separate agreements with Baylor College of Medicine
and NASA give MicroMed the exclusive right to the continuation of the VAD
technology modifications. MicroMed has incorporated these modifications through
a continuation-in-part patent application, filed in December 1996 and issued in
September 1999. MicroMed also made foreign patent application filings covering
the technology in December 1996, which have been issued in certain foreign
jurisdictions. MicroMed has obtained an additional patent covering unique
features of an external controller and data acquisition system, and a patent for
a proprietary pulsatile loop system. MicroMed has filed five patents related to
suction detection and physiologic algorithms. In addition, MicroMed has received
a registered trademark for the use of the name "DeBakey VAD" for which Dr.
DeBakey has granted us rights in perpetuity. Dr. DeBakey also entered into a
Confidentiality and Intellectual Property Assignment Agreement with us in March
1999 as part of further efforts to commercialize the DeBakey VAD. In this
agreement, Dr. DeBakey agreed to assist MicroMed in its efforts to successfully
commercialize the DeBakey VAD. Dr. DeBakey also agreed to assign to MicroMed all
rights in any intellectual property that he creates, solely or jointly with
others that is directly or indirectly related to the DeBakey VAD, including any
related surgical procedures or surgical tools or any ancillary components
developed during the duration of the agreement. This agreement has a duration of
10 years. Dr. DeBakey and MicroMed may extend this agreement for additional
one-year periods by mutual written agreement.

In connection with obtaining its patent license agreement with NASA, MicroMed
signed a sublicense agreement with Nimbus, a predecessor entity to an entity
that entered into a merger with Thoratec Corporation, for several of the 49
claims in the original NASA patent granted in 1996. The sublicense agreement,
which expired in December 2002, required Nimbus to pay to NASA and to MicroMed
certain royalties based on net sales in the event any of the NASA patent claims
granted under the sublicense agreement was used in its products.

MicroMed will pay royalties under the agreements with NASA and Baylor of 2.8% of
net sales of the DeBakey VAD worldwide until U.S. PMA is achieved; afterwards,
the royalties only apply to U.S. sales.

In connection with MicroMed's prior financings, three separate patent law firms
have issued non-infringement opinions concerning its intellectual property base.

The following table describes patents licensed or granted to MicroMed by number
and includes information relating to the date the patent was filed, the date it
was granted and the date of its expiration.
Number                         Patent Name                        Filed Date      Grant Date      Expires
--------------------------------------------------------------------------------------------------------------------
1   5,527,159  Rotary Blood Pump (licensed from NASA)                  11/10/1993      6/18/1996     11/10/2013
--------------------------------------------------------------------------------------------------------------------
 2   5,678,306  Method for reducing pumping damage to blood              5/26/1995      10/21/1997     5/26/2015
                (licensed from NASA)
--------------------------------------------------------------------------------------------------------------------
 3   5,947,892  Rotary Blood Pump (licensed from NASA)                  12/13/1996       9/7/1999     12/13/2016
--------------------------------------------------------------------------------------------------------------------
 4   5,957,672  Blood Pump Bearing System (licensed from NASA)           6/17/1996      9/28/1999      6/17/2016
--------------------------------------------------------------------------------------------------------------------
 5   6,058,958  Pulsatile Flow System and Method                         11/5/1998       5/9/2000      11/5/2018
--------------------------------------------------------------------------------------------------------------------
 6   6,183,412  Implantable Pump System                                  10/2/1998       2/6/2001      10/2/2018
--------------------------------------------------------------------------------------------------------------------
 7   6,605,032  Implantable Pump System                                  2/5/2001       8/12/2003      2/5/2021
--------------------------------------------------------------------------------------------------------------------
 8   6,652,447  Method of Controlling an Implantable Pump System         2/5/2001       11/25/2003     2/5/2021
--------------------------------------------------------------------------------------------------------------------
16
Patents identified as 1, 3 and 4 are licensed from NASA and are the foundation
of the DeBakey VAD. The protection of rights and continued licensing of these
patents are material to MicroMed's business. Patents identified as 6, 7 and 8
are owned by MicroMed and are the foundation of the VAD's controller and data
acquisition system. The protection of rights of these patents is material to
MicroMed's business. The features claimed in patents identified as 2 (licensed
from NASA) and 5 (owned by MicroMed) are not used in MicroMed's clinical product
and loss of the ability to use the features claimed in these patents should not
prohibit MicroMed's ability to sell the product. The earliest of any patent to
expire is 2013.

COMPETITION

MicroMed faces competition from companies that develop, manufacture and market
cardiac assist therapy products and technology. MicroMed also competes with
universities and other research institutions in the development of cardiac
assist and therapy technologies. Many of MicroMed's competitors have greater
technical and financial resources. Some of these competitors have currently
marketed cardiac assist products as well as cardiac assist products and
technologies under development.

There are three basic categories of VADs: pulsatile, axial flow and centrifugal.
These devices are differentiated by the mechanical methodologies used to pump
blood.

      o     Pulsatile. All of the FDA approved devices in the U.S. are positive
            displacement or "pulsatile" devices. These larger sized devices were
            designed to mimic the pulsatile function of the native heart,
            utilizing chambers and valves and require exchanging air via large
            percutaneous conduits.

      o     Axial Flow. Axial flow devices like the DeBakey VAD represent a new
            generation of miniaturized heart pumps. Axial flow pumps move blood
            along a straight flow path utilizing a pumping mechanism that
            enables system pulsation due to the native heart's action. This
            system is similar in concept to the Archimedes screw, originally
            used to pump water in ancient times. These next-generation pumps are
            typically much smaller and operate much more quietly than pulsatile
            pumps and do not require valves or air exchange. There are several
            companies developing axial flow pumps, including Thoratec, the
            market leader in pulsatile pumps.

      o     Centrifugal Pumps. Centrifugal pumps operate by rotating rapidly on
            a central axis, thereby forcing the blood away from the center of
            the pump into an external conduit. There are several companies
            developing centrifugal pumps, which are generally smaller in size
            than pulsatile pumps but somewhat larger than axial flow pumps.
            Proponents of centrifugal pumps claim an advantage over axial flow
            pumps due to the lack of mechanical bearings, which they claim will
            cause the axial flow pumps to wear out more quickly. MicroMed
            believes the long-term durability of the DeBakey VAD has been proven
            in third-party bench testing and through the thorough examination of
            each of the DeBakey VAD pumps that have been explanted from patients
            during its clinical trial, none of which showed any indication of
            significant bearing wear. In addition, the durability of the
            magnetic bearings and required electrical controllers has not been
            clinically demonstrated.

Both axial flow and centrifugal pumps initially move blood in a continuous flow
pattern, as opposed to pulsatile flow generated by the positive displacement
devices. Blood flow from both axial flow and centrifugal pumps is pulsatile due
to the contractility of the native heart. Although the DeBakey VAD is a
continuous flow pump, in almost all cases the patients have exhibited pulsatile
blood flow within a few weeks of implantation. Pulsatile blood flow begins to
occur as the native heart begins to recover. As the native heart regains its
ability to contract, the pulsing of the ventricle creates pulsatility through
the pump. The stronger the heart becomes, the greater the pulsatility.

In addition, as a result of several laboratory tests and the available clinical
data, clinicians believe there is no apparent physiological or neurological
effect on having continuous, less-pulsatile blood flow versus pulsatile blood
flow.

                                       17
CURRENTLY MARKETED VADS

Principal competitors of the DeBakey VAD that have currently marketed VADs in
the U.S. include Thoratec Corporation (HeartMate) and World Heart (Novacor). The
HeartMate device has received FDA approval for bridge-to-transplant and as
destination therapy (Novacor has only been approved for bridge-to-transplant in
the U.S.). Both of these FDA approved VADs are large, pulsatile devices.
Competitors with devices that have been approved in Europe include Thoratec
(HeartMate), World Heart (Novacor) and Berlin Heart (InCor), an axial flow
device.

In addition to other currently marketed VADs, MicroMed expects to face
competition from the technology and devices under development, including
products being developed by Thoratec and World Heart. Additionally, MicroMed is
aware of implantable ventricular assist devices being developed by Arrow
International, Jarvik Heart, Terumo Corporation, and Ventracor in Australia.

Several companies involved in the pacemaker industry (such as Medtronic, Guidant
and others) are testing the therapeutic benefits of using pacemaker technology
to provide biventricular pacing. Current studies suggest that biventricular
pacing can improve some patients' functional status, especially those earlier
stage patients (NYHA Class II & III) with dysynchrony and wide QRS complexes,
conditions that affect about a third of all congestive heart failure patients.
However, their role in end-stage heart failure appears to be minimal, if any.
These studies are continuing.

There are other therapies attempting to address the congestive heart failure
market, including "cuff" and "pin" technologies that attempt to contain and
prevent dilation of the ventricle, and surgical procedures, such as ventricular
reduction, which attempt to remodel the ventricle by removing a portion of the
dilated ventricle.

REIMBURSEMENT

In the U.S., healthcare expenditures are primarily financed by private health
insurance and by Medicare. Medicare and many private insurance companies
presently cover the cost of VADs used for the bridge-to-transplant and
destination therapy indications.

Medicare is a national health insurance coverage available for persons 65 years
of age and older. The Center for Medicare/Medicaid Services ("CMS") is charged
with the responsibility of administering Medicare, including making coverage
decisions. CMS has now issued national coverage guidelines for coverage of VADs
for both the bridge-to-transplant and the destination therapy indications.
Destination therapy reimbursement was approved in October 2003, at which time
CMS also increased the base level of reimbursement from approximately $55,000 to
approximately $70,000. CMS has approved higher reimbursement levels for fiscal
year 2005 under DRG 103 (heart transplantation), which raised the base level of
reimbursement to approximately $96,000 (the average total reimbursement at this
new level is $135,000). CMS has confirmed that the DeBakey VAD is eligible for
Medicare reimbursement at the increased reimbursement level.

In Europe (as in the U.S.) healthcare expenditures are primarily financed by
public institutions (similar to the Medicare and Medicaid systems in the U.S.)
and private insurance. Most of the hospitals where MicroMed will be focusing its
efforts are major public hospitals and teaching institutions. The majority of
these hospitals operate on a global budget that is established annually. In most
cases, the hospitals are allowed to purchase any medical device that has the CE
Mark.

GOVERNMENT REGULATION

U.S. REGULATIONS

The research and development, manufacturing, marketing and distribution of the
DeBakey VAD and related accessories in the U.S. are subject to regulation by
numerous authorities, including the FDA, and corresponding state agencies.
MicroMed must comply with the Federal Food, Drug, and Cosmetic Act and the
regulations promulgated under the Act administered by the FDA. The DeBakey VAD
is a Class III medical device and requires a PMA from the FDA prior to its
marketing or commercial sale in the U.S. Securing FDA clearances and approvals
will require submission of clinical data and supporting information to the FDA.
MicroMed has already passed a PMA inspection by the FDA as part of the approval
of its HDE for pediatric use.

                                       18
Before MicroMed commenced clinical trials to support the PMA, it had to present
sufficient safety and performance data from preclinical studies to support an
IDE allowing clinical trials to begin. MicroMed had to design and perform
laboratory and animal tests that are sufficient to support the safety and
performance of the DeBakey VAD, as determined by the FDA.

MicroMed also must comply with other regulations administered by the FDA
including the Quality Systems Regulation, Good Clinical Practices and Good
Laboratory Practice regulations. These regulations require that MicroMed follow
certain prescribed testing, quality control, storage and documentation
procedures. The FDA monitors compliance with applicable regulatory requirements
through periodic site inspections. MicroMed passed an FDA biomonitoring audit
with no nonconformities for its U.S. feasibility trial.

FOREIGN REGULATIONS

MicroMed is marketing the DeBakey VAD in international markets. A number of
risks are inherent in international transactions. Sales of products outside of
the U.S. are subject to foreign regulatory requirements governing, among other
things, product testing and licensing standards, manufacturing processes,
pricing and reimbursement levels that may vary widely from country to country.
Regulations governing requirements for approvals or clearances to market, the
time required for regulatory review and sanctions imposed for violations also
vary from country to country. The time required to obtain clearance from a
foreign country may be longer or shorter than that required by the FDA or other
such agencies, and other regulatory requirements may differ.

Prior to commercial sale of medical devices in the countries of the European
Union, MicroMed was required to receive a CE Mark certification, an
international symbol of quality and compliance with applicable European
community medical device directives. In order to receive and continue CE Mark
certification, MicroMed must comply with the Essential Requirements of the
Medical Devices Directive, which primarily relates to safety and performance,
and to undergo conformity assessment certification by a Notified Body in order
to qualify for CE Mark approval. MicroMed passed a quality assessment audit of
its manufacturing facility in September 1999 that was required in order to file
for CE Mark approval and has maintained that certification each year thereafter
as being in compliance with ISO 13485 and Council Directive 90/385/EEC (European
Active Implantable Medical Device Directive) with no nonconformities.

EMPLOYEES

As of March 31, 2005, MicroMed employed 55 full-time employees and consultants,
of which 16 worked in manufacturing, 15 in regulatory, clinical affairs and
quality assurance, 6 in engineering and product development, 10 in marketing,
sales and customer support and 8 in administration. None of MicroMed's employees
are covered by a collective bargaining agreement.

FACILITIES

MicroMed's executive offices, product development and manufacturing operations
are located in Houston, Texas, in a leased facility consisting of approximately
22,000 square feet. The lease for its offices expires on May 31, 2007; however,
MicroMed can cancel the lease within 30 days of each anniversary without further
obligation.

LEGAL PROCEEDINGS

On June 23, 2004, MicroMed filed suit in the United States District Court for
the Southern District of Texas, Houston Division, against Thoratec Corporation,
claiming that Thoratec was exercising monopoly power against MicroMed by
providing the Thoratec HeartMate II VAD to clinical trial sites for free,
including sites where MicroMed already had established relationships. MicroMed
management believed this to represent predatory pricing under the antitrust
statutes and intentional interference with business relationships. The suit
sought damages and injunctive relief. Thoratec submitted a Memorandum of Law on
October 4, 2004 to the court in this matter in which they stated that the
requested injunction was unnecessary, "because Thoratec is no longer giving away
its Heartmate II continuous-flow VADs, having completed the fifteen-device
`pilot study' phase of its clinical trial, and therefore there is no conduct to
enjoin." While the court docket still reflects the suit as active, MicroMed
plans to imminently file a motion to dismiss the action without prejudice, which
counsel to Thoratec has indicated is acceptable. MicroMed is not a party to any
other material legal proceedings.

                                       19
RISK FACTORS

Any investment in the Company's common stock involves a high degree of risk.
Investors should carefully consider the risks described below and all of the
information contained in this Current Report on Form 8-K before deciding whether
to purchase the Company's common stock. The Company's business, financial
condition or results of operations could be materially adversely affected by
these risks if any of them actually occur. The trading price of the Company's
common stock could decline due to any of these risks, and an investor may lose
all or part of his investment. Some of these factors have affected the Company's
financial condition and operating results in the past or are currently affecting
the Company. This Current Report on Form 8-K also contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks faced by the
Company described below and elsewhere in this Current Report on Form 8-K. With
respect to this discussion, the terms "MicroMed," and the "Company" refer to
MicroMed Cardiovascular, Inc. and its wholly-owned subsidiary MicroMed
Technology, Inc.

RISKS RELATED TO BUSINESS

MICROMED TECHNOLOGY HAS INCURRED SIGNIFICANT OPERATING LOSSES SINCE INCEPTION
AND EXPECTS TO CONTINUE TO INCUR LOSSES, AND THE COMPANY CANNOT ASSURE YOU THAT
IT WILL ACHIEVE PROFITABILITY.

MicroMed Technology has not generated significant revenues from commercial sales
in international markets and from reimbursements from its U.S. clinical trials.
Since the MicroMed Technology's formation in 1995, it has incurred substantial
costs from research and product development efforts, preclinical and clinical
studies and general and administrative expenditures. The Company expects that
its expenses will increase as a result of increased clinical testing and
regulatory compliance costs. MicroMed Technology has incurred net losses every
year since its inception and had an accumulated deficit of approximately $76
million as of March 31, 2005. The Company expects to continue to incur losses
over the next several years, and the amount of future losses is uncertain. The
Company's ability to generate revenue and become profitable will depend on
obtaining regulatory approvals in the U.S. and achieving market acceptance for
the DeBakey VAD. Sales of the DeBakey VAD in the U.S. cannot begin until the
Company receives necessary regulatory approvals. The Company may never obtain
necessary regulatory approval, generate significant revenues from commercial
sales or achieve profitability.

If the Company's revenues fail to grow at a pace rapid enough to offset planned
increases in expenses, or if the Company is unable to curb its losses and
achieve profitability, its future prospects could be harmed.

MICROMED TECHNOLOGY HAS INCURRED SIGNIFICANT OPERATING LOSSES SINCE ITS
INCEPTION IN OCTOBER 1995 THAT RAISE DOUBTS ABOUT ITS ABILITY TO CONTINUE AS A
GOING CONCERN, AND IF THE COMPANY DOES NOT ACHIEVE PROFITABILITY YOU MAY LOSE
YOUR ENTIRE INVESTMENT.

MicroMed Technology began selling the DeBakey VAD System in Europe and select
international markets in April 2001 and has yet to demonstrate that it can
generate sufficient sales to become profitable. MicroMed Technology has incurred
significant net losses since its inception in October 1995, including a net loss
available to common stockholders of $14.2 million for the year ended December
31, 2004 and $4.0 million for the three months ended March 31, 2005. As of March
31, 2005, MicroMed Technology had an accumulated deficit of approximately $76
million. The Company expects to continue to incur operating losses at least
through 2007. Further, the Company expects operating expenses to increase as it
seeks U.S. regulatory clearance for the DeBakey VAD, build a technical support
organization for product introduction and market development, continue
engineering and development projects, and increase administrative activities to
support the Company's planned growth. The extent of the Company's future
operating losses and the timing of its profitability are highly uncertain, and
the Company may never generate sufficient revenues to achieve or sustain
profitability.

                                       20
Based upon funds available to MicroMed Technology at December 31, 2004, its
independent auditors expressed doubt about its ability to continue as a going
concern if it is unable to raise additional funds. If revenues fail to grow at a
pace rapid enough to offset planned increases in the Company's expenses or if
the Company is unable to curb its losses and achieve profitability, the value of
your investment may be lost.

MICROMED'S SUCCESS DEPENDS ENTIRELY ON THE DEBAKEY VAD.

MicroMed depends entirely on the DeBakey VAD and related accessories for its
success. The DeBakey VAD will require regulatory approval before it can be
marketed in the U.S. MicroMed has not sold significant numbers of products in
international markets or in the U.S. and it cannot assure you that its efforts
will be successful or that the DeBakey VAD will be safe or effective, approved
by regulatory authorities or successfully marketed. Because the DeBakey VAD is
MicroMed's primary product focus, its inability to obtain the necessary
regulatory approvals or to market and commercialize the DeBakey VAD successfully
would materially affect its ability to achieve significant revenue and would
make it likely that MicroMed would not achieve profitability.

IF THE DEBAKEY VAD IS NOT ACCEPTED BY THE MEDICAL COMMUNITY MICROMED WILL NOT
ACHIEVE SIGNIFICANT REVENUES AND WILL NOT BE PROFITABLE.

The commercial success of the DeBakey VAD depends on its acceptance by
cardiologists and cardiac surgeons. Such acceptance will depend on clinical
trial results and the conclusion by these physicians that the DeBakey VAD is
safe, cost-effective and an acceptable method of treatment. MicroMed cannot
assure you that the DeBakey VAD will provide benefits considered adequate by
providers of cardiovascular treatments or that a sufficient number of providers
will use the DeBakey VAD for it to achieve commercial success. Even if MicroMed
establishes the safety and effectiveness of the DeBakey VAD, physicians may
elect not to use it for a number of reasons, including:

      o     Adverse medical effects suffered by patients implanted with the
            DeBakey VAD during clinical trials or after commercialization, even
            if unrelated to the DeBakey VAD;

      o     lack of experience with the DeBakey VAD;

      o     the perceived increased risk of patient complications associated
            with VADs generally;

      o     perceived liability risks generally associated with the use of new
            medical products; and

      o     adverse publicity regarding the DeBakey VAD, truthful or false, or
            favorable publicity regarding a competing VAD or medical alternative
            that could adversely affect acceptance of the DeBakey VAD by the
            medical community.

THE MAINTENANCE OF EXISTING AND THE ESTABLISHMENT OF ADDITIONAL RELATIONSHIPS
WITH CARDIAC SURGEONS AND CARDIOLOGISTS IS NECESSARY FOR MICROMED TO ACHIEVE
SIGNIFICANT RESPONSES.

A limited number of cardiac surgeons and cardiologists influence medical device
selection and purchase decisions for a large portion of MicroMed's target
cardiac patient population. MicroMed has developed working relationships with
cardiac surgeons and cardiologists at a number of leading medical centers in
connection with the development of the DeBakey VAD. In addition, surgical teams
at several leading foreign medical centers have performed clinical trials to
support the Company's applications for CE Mark regulatory approval. If MicroMed
fails to maintain existing relationships and arrangements or establish new
relationships with these and other physicians and medical centers in support of
the DeBakey VAD, MicroMed will not achieve significant revenues and will not be
profitable.

                                       21
THE DEBAKEY VAD WILL LIKELY HAVE A LONG AND VARIABLE SALES AND DEPLOYMENT CYCLE,
WHICH MAY CAUSE ITS REVENUE AND OPERATING RESULTS TO FLUCTUATE SIGNIFICANTLY
FROM QUARTER-TO-QUARTER.

MicroMed expects that the DeBakey VAD will have a lengthy sales cycle and
MicroMed may incur substantial sales and marketing expenses and expend
significant effort without making significant sales. Even after making a
decision to purchase the DeBakey VAD, MicroMed expects that customers may deploy
products slowly. For example, MicroMed expects that the length of time between
initial contact with cardiac surgeons and the potential purchase of the DeBakey
VAD will generally be between nine and 18 months. In addition, the cardiac
centers that buy the majority of MicroMed's products are usually led by cardiac
surgeons who are heavily recruited by competing centers or by centers looking to
increase their profiles. When one of these surgeons moves between centers,
MicroMed may experience a temporary but significant reduction in purchases by
the departed center while it replaces its lead surgeon. As a result, it will be
difficult for MicroMed to predict the quarter in which its customers may
purchase the DeBakey VAD and MicroMed's revenue and operating results may vary
significantly from quarter to quarter, which increases the risk of an operating
loss for MicroMed for any given quarter.

FUTURE CHANGES IN TECHNOLOGY COULD RENDER THE DEBAKEY VAD OBSOLETE OR
UNCOMPETITIVE.
The field of technology relating to cardiac assistance and therapy and the
medical device industry has undergone rapid and significant technological
development. MicroMed expects that the technology associated with cardiac assist
devices will continue to develop rapidly, and its success will depend in large
part on its ability to establish a competitive position with respect to this
technology. Additionally, new surgical procedures and medications could develop
that replace or reduce the importance of the function we are developing the
DeBakey VAD to perform. Third parties may succeed in developing or marketing
technologies and products that are more effective than the DeBakey VAD or that
would render the DeBakey VAD obsolete or uncompetitive before MicroMed recovers
any or all of its research, development and commercialization expenses.

MICROMED MAY BE UNABLE TO COMPETE SUCCESSFULLY WITH ITS COMPETITORS.
MicroMed faces competition from companies that develop, manufacture and market
cardiac assist and therapy products and technology. MicroMed also competes with
universities and other research institutions in the development of cardiac
assist and therapy technologies. Many of MicroMed's competitors have greater
technical and financial resources than we do. Some of these competitors have
currently available and marketed cardiac assist products, as well as cardiac
assist products and technologies under development. For example, other companies
are currently developing axial flow and centrifugal VADs that, if successfully
commercialized, could compete with the DeBakey VAD.

MicroMed's ability to compete successfully is based on numerous factors,
including:

      o     the performance, effectiveness and size of the DeBakey VAD relative
            to competing products;

      o     the relative speed with which it is able to bring the DeBakey VAD to
            market in its target markets;

      o     the cost-effectiveness of the DeBakey VAD; and

      o     the ease of use of the DeBakey VAD.

If MicroMed is unable to distinguish the DeBakey VAD from competing products, or
if competing products reach the market first, MicroMed may be unable to compete
successfully with current or future competitors. This would cause its revenues
to decline and affect its ability to achieve profitability.

MICROMED'S CLINICAL TRIALS MAY PROVE UNSUCCESSFUL OR LEAD TO SIGNIFICANT
SETBACKS IN OBTAINING NECESSARY REGULATORY APPROVALS.

In order to obtain regulatory approvals for commercial sale of the DeBakey VAD,
MicroMed must demonstrate through clinical trials that the DeBakey VAD is safe
and performs as intended. MicroMed must demonstrate that the DeBakey VAD, which
was designed to provide increased blood flow to patients who suffer from
end-stage heart failure, can operate effectively and reliably within a patient
for an extended period of time.

                                       22
MicroMed commenced clinical trials for the DeBakey VAD in Europe in November
1998 and in the U.S. in June 2000. During its clinical trials, patients have
died or suffered other adverse medical effects, including adverse effects
commonly associated with VAD use generally. For example, during MicroMed's
European and U.S. clinical trials, there have been instances of thrombus
formation (blood clots) in the DeBakey VAD which required therapeutic
intervention and/or caused serious adverse effects. Adverse medical effects may
continue to occur in future clinical trials. Patient deaths and other adverse
effects, even if unrelated to the DeBakey VAD, could adversely affect MicroMed's
clinical trial results and thus its ability to secure required regulatory
approval. The DeBakey VAD will require further trials in the U.S. before
obtaining or applying for regulatory approval for marketing and may require
further clinical trials in Europe for product enhancements.

Clinical trials may identify significant technical or other obstacles to be
overcome prior to obtaining necessary regulatory or reimbursement approvals. A
number of companies have suffered significant setbacks in advanced clinical
trials, even after promising results in earlier trials. The overall results of
our bridge to transplant ("BTT") trial to date have resulted in lower than
expected survival to transplant percentages. The Company now believes that it is
likely that it will not meet the performance goal survival rate for the patients
in this trial. This is likely to substantially increase the time required to
obtain FDA approval and the time when the Company would expect to generate
revenues from commercial sales of the DeBakey VAD. The Company has only enrolled
8 patients to date in its Destination Therapy trial and believes that it needs
to redesign the structure of the trial to accommodate a shorter PMA pathway.
Under the current design of its Destination Therapy trial (360 patients on a 2:1
randomization against the HeartMate XVE), the Company originally anticipated
completing enrollment between late 2008 to late 2010, which it believed would
result in PMA approval between early 2010 to early 2012. The Company is
presently in discussions with its clinical consultants to develop the specific
new clinical trial parameters and protocols for the Destination Therapy trial
which it intends to request from the FDA. However, there is no assurance that
the Company will be able to convince the FDA to accept these changes. The
Company, or regulatory authorities, may suspend or terminate clinical trials at
any time.

MicroMed also may encounter unexpected delays, expenses, technical problems or
other difficulties related to development, manufacturing and marketing of the
DeBakey VAD that could result in the abandonment or substantial change in the
design, development and commercialization of the DeBakey VAD. MicroMed's failure
or inability to address such problems adequately or timely would have a material
adverse effect on its ability to commercially market its products. Although
MicroMed has received CE Mark approval for the bridge-to-transplant ("BTT"),
destination therapy ("DT") and pediatric indications and has received U.S.
regulatory approval to commercialize the DeBakey VAD for pediatric indications
pursuant to a humanitarian device exemption ("HDE"), it cannot assure you as to
when its U.S. clinical trials will be completed or that it will obtain required
U.S. regulatory approvals or other non-U.S. regulatory approvals for the DeBakey
VAD and any product enhancements when expected or at all.

MICROMED MAY NOT OBTAIN OR MAINTAIN REGULATORY CLEARANCES OR APPROVALS REQUIRED
FOR MARKETING AND COMMERCIALLY SELLING THE DEBAKEY VAD IN THE U.S. AND SUCH
FAILURE OR DELAY IN OBTAINING OR MAINTAINING SUCH CLEARANCES OR APPROVALS COULD
ADVERSELY AFFECT ITS BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The research and development, manufacturing, marketing and distribution of the
DeBakey VAD system in the U.S. is subject to regulation by numerous authorities,
including the Food and Drug Administration ("FDA"). MicroMed must comply with
the Federal Food, Drug, and Cosmetic Act and the regulations promulgated under
the Act, administered by the FDA. Prior to marketing or commercial sale in the
U.S., MicroMed must obtain a Pre-Market Approval ("PMA") for the DeBakey VAD
from the FDA. The process of obtaining this approval is lengthy, expensive and
uncertain. Securing FDA clearances and approvals will require submission of
clinical data and supporting information to the FDA. Product clearances and
approvals can be withdrawn for failure to comply with regulatory requirements or
on the occurrence of unforeseen problems following initial marketing. MicroMed
also must comply with regulations administered by the FDA including the Quality
Systems Requirements and Good Laboratory Practice regulations. These regulations
require MicroMed to follow certain prescribed testing, quality, control, storage
and documentation procedures. The FDA monitors compliance with applicable
regulatory requirements through periodic site inspections.

                                       23
MicroMed cannot assure you that it will be able to obtain necessary regulatory
clearances or approvals on a timely basis, if at all, and delays in receipt or
failure to receive such clearances or approvals, the loss of previously received
clearances or approvals, or failure to comply with existing or future regulatory
requirements could have a material adverse effect on MicroMed's business,
prospects, financial condition and results of operations. Moreover, regulatory
clearances or approvals for the DeBakey VAD, even if granted, may include
significant limitations on the uses for which the product may be marketed. In
addition, certain material changes to approved medical devices are subject to
FDA review and approval. MicroMed cannot assure you that it will be able to
maintain compliance with all regulatory requirements. Changes in existing laws,
regulations or policies and the adoption of new laws, regulations or policies
could prevent MicroMed from, or could affect the timing of, achieving compliance
with regulatory requirements, including current and future regulatory clearances
or approvals, where necessary.

MICROMED MAY BE UNABLE TO OBTAIN OR MAINTAIN NECESSARY CLEARANCES OR APPROVALS
REQUIRED FOR THE INTERNATIONAL COMMERCIALIZATION OF THE DEBAKEY VAD IN CERTAIN
COUNTRIES, WHICH COULD ADVERSELY AFFECT ITS BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

MicroMed intends to market the DeBakey VAD in international markets as well as
domestically. A number of risks are inherent in international transactions.
Sales of products outside of the U.S. are subject to foreign regulatory
requirements governing, among other things, product approval, product testing
and licensing standards, manufacturing processes, pricing and reimbursement
levels that may vary widely from country to country. Regulations governing
requirements for approvals or clearance to market, the time required for
regulatory review and sanctions imposed for violations also vary from country to
country. The time required to obtain clearance from a foreign country may be
longer or shorter than that required by the FDA or other such agencies, and
other regulatory requirements may differ.

Prior to commercial sale of medical devices in the countries of the European
Union, MicroMed was required to receive a CE Mark certification, an
international symbol of quality and compliance with applicable European
community medical device directives. In particular, MicroMed must comply with
the Essential Requirements of the Medical Devices Directive, which primarily
relate to safety and performance, and to undergo conformity assessment
certification by a Notified Body in order to qualify for CE Mark approval.

In Europe, MicroMed is also subject to the Active Implantable Medical Device
Directive, which regulates quality medical device manufacturing. In addition,
the Company must meet the technical standards established by the International
Organization for Standardization ("ISO"). ISO 9000 is a series of international
standards on quality management and assurance. ISO 13485 is the medical version
of ISO 9001, which incorporates all quality elements, including design.

Although MicroMed has received CE Mark approval for the bridge-to-transplant,
destination therapy and pediatric indications, it cannot assure you that it will
obtain or maintain regulatory approvals or clearances in countries of the
European Union or other foreign countries or that MicroMed will not have to
incur significant costs in obtaining or maintaining foreign regulatory approvals
or clearances. In addition, if existing regulations are changed or modified,
MicroMed cannot assure you that it will be able to comply with any such changes
or modifications or that such changes or modifications will not result in
significant costs in order to comply with such changes or modifications. Delays
in receipt of approvals or clearances to market the DeBakey VAD in international
countries, failure to receive such approvals or clearances or the future loss of
previously received approvals or clearances could have a material adverse effect
on MicroMed's business, prospects, financial condition and results of
operations. International sales also may be limited or disrupted by political
instability, failure to receive adequate reimbursement, price controls, trade
restrictions and the impositions of or changes in tariffs, any of which could
have a material adverse effect on its business, prospects, financial condition
and results of operations. Collection of receivables from some foreign countries
can be problematic. MicroMed cannot assure you that it will be able to
successfully commercialize the DeBakey VAD in any international market.

                                       24
IF MICROMED IS UNABLE TO OBTAIN REGULATORY APPROVAL FOR MARKETING THE DEBAKEY
VAD FOR OTHER INDICATIONS, OR FOR PRODUCT ENHANCEMENTS TO THE DEBAKEY VAD, ITS
GROWTH PROSPECTS WILL BE LIMITED.

Even though MicroMed has received CE Mark approval for the bridge-to-transplant,
destination therapy and pediatric indications, and even if it receives a PMA
from the FDA for such indications and it is successful in marketing the DeBakey
VAD for such indications, MicroMed may be unable to expand its business as
intended to address these markets. MicroMed has not received, and may never
receive, regulatory approval for other indications such as bridge-to-recovery.
Additional regulatory approvals will be required for MicroMed to conduct
clinical trials to support the use of our DeBakey VAD and to commercialize the
DeBakey VAD for such other indications. If MicroMed is unsuccessful in
completing the required clinical trials and obtaining the necessary regulatory
approvals to market the DeBakey VAD for expanded uses, its growth prospects will
be limited. Even if MicroMed obtains the necessary regulatory approvals for
other indications, it may fail to gain market acceptance for the DeBakey VAD for
such other indications.

MicroMed plans to make product enhancements to the DeBakey VAD system from time
to time. Product enhancements require supplemental filings with and further
approval from regulatory authorities, and may require additional clinical
trials. The process of obtaining regulatory approval for a product enhancement
may take a long period of time, and MicroMed cannot assure you that it
ultimately will obtain approval for any product enhancement.

THE DEBAKEY VAD MAY NOT RECEIVE APPROVAL FOR REIMBURSEMENT BY GOVERNMENTS AND
OTHER THIRD-PARTY PAYORS.

Sales of the DeBakey VAD will depend largely on the availability of adequate
reimbursement from third-party payors such as governments and private insurers.
Healthcare providers that purchase medical devices for treatment of their
patients generally rely on third-party payors to reimburse all or part of the
costs associated with treatment. Medical devices incorporating new technologies,
such as the DeBakey VAD, are closely examined by governments and private
insurers to determine whether the device and associated medical procedures will
be covered for reimbursement, and, if so, the level of reimbursement that will
apply.

Government and other third-party payors are increasingly attempting to contain
healthcare costs by limiting both coverage and the level of reimbursement of
therapeutic products and by refusing in some cases to provide any coverage for
uses of approved products for indications other than those for which their
respective regulatory agencies (e.g., the FDA) have granted marketing approval.
MicroMed cannot predict whether reimbursement for the DeBakey VAD will be
sufficient from third-party payors to adequately compensate hospitals for
DeBakey VAD implants. Failure to obtain such adequate reimbursement could
influence selection of the DeBakey VAD for treatment and could have a material
adverse effect on MicroMed's business, financial condition and results of
operations.

MICROMED IS THE SOLE MANUFACTURER OF THE DEBAKEY VAD AND HAS ONLY ONE
MANUFACTURING FACILITY, THE LOSS OF WHICH WOULD HARM MICROMED'S REVENUES AND
DAMAGE ITS BUSINESS.

MicroMed currently produces the DeBakey VAD in its manufacturing facility
located in Houston, Texas, which is the sole source for production of the
DeBakey VAD. A natural disaster or other event that resulted in the destruction
or loss of part or all of the manufacturing facility or a work stoppage or other
employee issues that interrupted or stopped DeBakey VAD production would
significantly harm MicroMed's business and operations. Although Micromed
believes other manufacturing facilities could manufacture the DeBakey VAD in
compliance with the FDA's Quality System Regulation, MicroMed may not be able to
find an alternate facility that could meet production requirements on short
notice. Even if MicroMed finds an alternate facility, production costs likely
would increase, particularly if MicroMed needs the DeBakey VAD produced on short
notice.

                                       25
MICROMED DEPENDS ON SUPPLIERS TO PROVIDE KEY MATERIALS AND COMPONENTS OF THE
DEBAKEY VAD, AND ANY CHANGE IN MICROMED'S RELATIONSHIP WITH ITS SUPPLIERS COULD
PREVENT MICROMED FROM DELIVERING THE DEBAKEY VAD IN A TIMELY MANNER, REDUCING
ITS FUTURE REVENUES OR INCREASING ITS COSTS.

MicroMed relies on third-party suppliers to provide key materials and components
of the DeBakey VAD system, some of which are single source suppliers. MicroMed's
reliance on these third-party suppliers subjects it to other risks that could
harm its business, including:

      o     suppliers could encounter manufacturing problems due to a variety of
            reasons, including failure to follow specific protocols and
            procedures, failure to comply with applicable regulations, including
            the FDA's Quality System Regulation, equipment malfunction and
            environmental factors;

      o     suppliers often manufacture medical or other devices for a range of
            customers, and fluctuations in demand for the products those
            suppliers make for others may affect their ability to deliver
            components to us in a timely manner;

      o     suppliers may encounter financial hardships unrelated to MicroMed's
            demand for products, which could inhibit their ability to fulfill
            our orders and meet delivery requirements;

      o     the suppliers may make errors in manufacturing materials and
            components that could negatively affect the efficacy or safety of
            the DeBakey VAD or cause delays in its shipment;

      o     MicroMed may not be able to obtain adequate inventories of the
            materials and components it needs in a timely manner or on
            commercially reasonable terms; and

      o     MicroMed may have difficulty locating and qualifying alternative
            suppliers for these products.

MICROMED'S ABILITY TO PROTECT ITS INTELLECTUAL PROPERTY
RIGHTS INVOLVES MANY COMPLEXITIES AND UNCERTAINTIES; COMMERCIALIZATION OF THE
DEBAKEY VAD COULD GIVE RISE TO CLAIMS THAT ITS TECHNOLOGY INFRINGES ON THE
RIGHTS OF OTHERS.

MicroMed's business depends significantly on its proprietary technology.
MicroMed relies on a combination of patents, trademarks and confidentiality
agreements and other contractual provisions to establish, maintain and protect
its proprietary rights, all of which afford only limited protection. MicroMed's
success will depend to a significant extent on its ability to obtain and
maintain patent and trademark protection for the DeBakey VAD and related
technologies, to preserve trade secrets and to operate without infringing the
proprietary rights of others.

MicroMed cannot assure you that it will obtain additional patents or that issued
patents will provide substantial protection against competitors with similar
technology or be of commercial benefit to MicroMed. The issuance of a patent is
not conclusive as to its validity or enforceability, nor does it provide the
patent holder with freedom to operate without infringing the patent rights of
others.

The medical device industry is characterized by a large number of patents and by
frequent and substantial intellectual property litigation. A patent could be
challenged by litigation and, if the outcome of such litigation were adverse to
the patent holder, competitors might be free to use the subject matter covered
by the patent, or the patent holder might license the technology to others in
settlement of such litigation. The invalidation of key patents owned by or
licensed to MicroMed or nonapproval of pending patent applications could create
increased competition, with potentially material adverse effects on MicroMed and
its business.

MicroMed is potentially subject to claims and litigation from third parties
claiming that MicroMed's products or processes infringe their patent or other
proprietary rights. If any such actions are successful, in addition to any
potential liability for damages, MicroMed could be required to obtain a license
in order to continue to manufacture, use or sell the affected product or
process. Litigation, which could result in substantial cost to MicroMed, also
may be necessary to enforce its patent and proprietary rights and/or to
determine the scope and validity of the patents or proprietary rights of others.
Any intellectual property litigation would be costly and could divert the
efforts and attention of MicroMed's management and technical personnel, which
could have a material adverse effect on its business, financial condition and
results of operations. MicroMed cannot assure you that infringement claims will
not be asserted in the future or that such assertions, if proven to be true,
will not prevent MicroMed from selling its products or materially and adversely
affect its business, financial condition and results of operations. If any such
claims are asserted against it, it may seek to enter into a royalty or licensing
arrangement. MicroMed cannot assure you that a license will be available on
commercially reasonable terms, or at all.

                                       26
MicroMed also relies on unpatented trade secrets, and no assurance can be given
that others will not independently develop substantially equivalent proprietary
information and techniques, or otherwise gain access to its trade secrets or
disclose such technology, or that MicroMed can meaningfully protect its right to
unpatented trade secrets.

IF THE RIGHTS TO TECHNOLOGY THAT MICROMED HAS LICENSED TERMINATE, ITS
COMMERCIALIZATION EFFORTS COULD BE DELAYED OR FAIL.

Fundamental elements of the DeBakey VAD technology have been licensed from NASA
and Baylor College of Medicine. MicroMed has worldwide rights to that
technology, but these exclusive rights will terminate on the expiration of the
licensed patent relating to the technology or final abandonment of any pending
patent application. The licensed patent relating to the technology does not
expire before 2013. Additionally, MicroMed's exclusive rights may be terminated
if it breaches the terms of the license agreements and fails to cure the breach.

Termination of MicroMed's agreements with NASA or Baylor College of Medicine
could delay or suspend MicroMed's overall commercialization efforts. The failure
to maintain the right to license such technology could require MicroMed to cease
providing products or services using such licensed technology and, therefore,
would likely result in loss of revenue for its business.

MICROMED MAY BE SUBJECT TO CLAIMS OF TRADEMARK INFRINGEMENT, WHICH MAY HARM ITS
BUSINESS.

MicroMed may be subject to legal proceedings alleging claims of trademark
infringement in the future. MicroMed has recently become aware that other
parties are utilizing the "Micromed" mark, or other marks that incorporate the
letters "Micromed," and those parties may have rights to such mark that are
superior to those of MicroMed. In this event, MicroMed may be required to stop
using the name in particular markets or to obtain a license from these parties
to use it in such markets. If MicroMed must rebrand, it may result in
significant marketing expenses and additional management time and resources,
which may adversely affect its business.

PRODUCT LIABILITY CLAIMS IN EXCESS OF MICROMED'S INSURANCE COVERAGE COULD
ADVERSELY AFFECT ITS BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The research, development and commercialization of medical devices entails
significant product liability risks. The use of the DeBakey VAD in clinical
trials and its commercial sale may expose MicroMed to liability claims. These
claims might be made directly by consumers, healthcare providers or persons
selling the device. MicroMed currently maintains product liability insurance in
an aggregate amount of $20 million; however, MicroMed cannot assure you that it
will be able to maintain such insurance on acceptable terms or that such
insurance will be sufficient to protect it against potential claims or that
insurance will be available in the future in amounts sufficient to protect it. A
product liability claim, product recall or other claim, as well as any claims
for uninsured liabilities or in excess of insured liabilities, could result in
substantial costs to MicroMed, divert management attention from its operations
and generate adverse publicity. This could harm MicroMed's reputation, result in
a decline in revenues and increase expenses.

MICROMED MAY BE UNABLE TO SCALE ITS OPERATIONS SUCCESSFULLY.

MicroMed's plan is to grow rapidly. Its growth will place significant demands on
MicroMed's management and manufacturing capacity, as well as its financial,
administrative and other resources. MicroMed cannot guarantee that any of the
systems, procedures and controls it puts in place will be adequate to support
the commercialization of the DeBakey VAD or other operations. MicroMed's
operating results will depend substantially on the ability of its officers and
key employees to manage changing business conditions and to implement and
improve its financial, administrative and other resources. If MicroMed is unable
to respond to and manage changing business conditions, or the scale of its
products, services and operations, then the quality of its services, its ability
to retain key personnel and its business could be harmed.

                                       27
MICROMED DEPENDS ON CERTAIN KEY EXECUTIVE PERSONNEL AND OTHER KEY SCIENTIFIC AND
MANAGERIAL PERSONNEL FOR ITS SUCCESS, THE LOSS OF WHOM COULD ADVERSELY AFFECT
ITS BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

MicroMed's success depends on the continued availability and contributions of
members of its scientific and senior management teams and other key personnel.
The loss of services of any of these persons could delay or reduce MicroMed's
product development and commercialization efforts. Furthermore, recruiting and
retaining qualified scientific personnel to perform future research and
development work will be critical to MicroMed's success. The loss of members of
MicroMed's management team, key clinical advisors or scientific personnel, or
its inability to attract or retain other qualified personnel or advisors, could
significant weaken its management, harm its ability to compete effectively and
harm its business.

MICROMED'S FUTURE CAPITAL NEEDS ARE UNCERTAIN. THE COMPANY WILL NEED TO RAISE
ADDITIONAL FUNDS IN THE FUTURE AND THESE FUNDS MAY NOT BE AVAILABLE ON
ACCEPTABLE TERMS OR AT ALL.

MicroMed Technology completed the Private Placement, including the conversion of
approximately $4.5 million of convertible notes issued in connection with the
2004 and 2005 Bridge Loans, prior to the closing of the Merger. Thus, the
Company believes that it will have sufficient cash and cash equivalents to meet
projected operating requirements for at least the through the end of 2005. The
Company cannot be certain that additional capital will be available on favorable
terms, or at all. Any subsequent equity financing could result in dilution to
your share holdings. If adequate funds are unavailable, MicroMed may be required
to scale back or discontinue its product development program or clinical trials,
or obtain funds through strategic alliances that may require MicroMed to
relinquish rights to certain of its technologies. Refer also to Item 5.01 under
"MICROMED'S OPERATIONS - Management's Discussion and Analysis of the Company's
Financial Condition and Results of Operations - Liquidity and Capital
Resources."

MICROMED'S NON-U.S. SALES PRESENT SPECIAL RISKS.

During the years ended December 31, 2004 and 2003, sales originating outside the
U.S. and U.S. export sales accounted for approximately 29% and 30%,
respectively, of MicroMed Technology's total revenues. MicroMed anticipates that
sales outside the U.S. will continue to account for a significant percentage of
its product sales and the Company intends to continue to expand its presence in
international markets. Non-U.S. sales are subject to a number of special risks.
For example:

      o     products may be sold a lower price outside the United States;

      o     competitors provide products for no charge during clinical trials;

      o     sales agreements may be difficult to enforce;

      o     receivables may be difficult to collect through a foreign country's
            legal system;

      o     foreign customers may have longer payment cycles;

      o     foreign countries may impose additional withholding taxes or
            otherwise tax foreign income, impose tariffs or adopt other
            restrictions on foreign trade;

      o     U.S. export licenses may be difficult to obtain;

      o     intellectual property rights may be more difficult to enforce in
            foreign countries;

      o     terrorist activity may interrupt distribution channels or adversely
            impact customers or employees; and

      o     fluctuations in exchange rates may affect product demand and
            adversely affect the profitability, in U.S. dollars, of products
            sold in foreign markets where payments are made in local currencies.

                                       28
Any of these events could harm MicroMed's operations or operating results.

COMPLIANCE WITH CHANGING REGULATION OF CORPORATE GOVERNANCE AND PUBLIC
DISCLOSURE WILL RESULT IN ADDITIONAL EXPENSES.

Changing laws, regulations and standards relating to corporate governance and
public disclosure, including the Sarbanes-Oxley Act of 2002 and new Securities
and Exchange Commission regulations, are creating uncertainty for public
companies. Following the Merger, the Company's management team will need to
invest significant management time and financial resources to comply with both
existing and evolving standards for public companies, which will lead to
increased general and administrative expenses and a diversion of management time
and attention from revenue generating activities to compliance activities.

RISKS RELATED TO CAPITAL STRUCTURE

THERE IS NO ASSURANCE OF AN ESTABLISHED PUBLIC TRADING MARKET, WHICH WOULD
ADVERSELY AFFECT THE ABILITY OF INVESTORS IN THE COMPANY TO SELL THEIR
SECURITIES IN THE PUBLIC MARKET.

Although the Company's common stock is listed on the OTC Bulletin Board, a
regular trading market for the securities does not yet exist and may not exist
or be sustained in the future. The NASD has enacted recent changes that limit
quotations on the OTC Bulletin Board to securities of issuers that are current
in their reports filed with the Securities and Exchange Commission. The effect
on the OTC Bulletin Board of these rule changes and other proposed changes
cannot be determined at this time. The OTC Bulletin Board is an inter-dealer,
over-the-counter market that provides significantly less liquidity than the
NASD's automated quotation system (the "NASDAQ Stock Market"). Quotes for stocks
included on the OTC Bulletin Board are not listed in the financial sections of
newspapers as are those for the NASDAQ Stock Market. Therefore, prices for
securities traded solely on the OTC Bulletin Board may be difficult to obtain
and holders of common stock may be unable to resell their securities at or near
their original offering price or at any price. Market prices for the Company's
common stock will be influenced by a number of factors, including:

      o     the issuance of new equity securities pursuant to the Merger, or a
            future offering;

      o     changes in interest rates;

      o     competitive developments, including announcements by competitors of
            new products or services or significant contracts, acquisitions,
            strategic partnerships, joint ventures or capital commitments;

      o     variations in quarterly operating results;

      o     change in financial estimates by securities analysts;

      o     the depth and liquidity of the market for the Company's common
            stock;

      o     investor perceptions of the company and the medical device industry
            generally; and

      o     general economic and other national conditions.

                                       29
SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET PRICE OF THE
COMPANY'S COMMON STOCK, AS THE FUTURE SALE OF A SUBSTANTIAL AMOUNT OF
OUTSTANDING STOCK IN THE PUBLIC MARKETPLACE COULD REDUCE THE PRICE OF THE
COMPANY'S COMMON STOCK.

The Company is obligated to file a registration statement with the Securities
and Exchange Commission within 30 days from the closing of the Private Placement
which covers the subsequent resale by investors of any shares of common stock or
shares of common stock underlying warrants purchased in any such offering.
Additionally, following the Merger, the former stockholders of Salmon and
MicroMed Technology, who received shares of the Company's common stock in the
Merger, may be eligible to sell all or some of their shares of common stock by
means of ordinary brokerage transactions in the open market pursuant to Rule
144, promulgated under the Securities Act ("Rule 144"), subject to certain
limitations. In general, pursuant to Rule 144, a stockholder (or stockholders
whose shares are aggregated) who has satisfied a one-year holding period may,
under certain circumstances, sell within any three-month period a number of
securities which does not exceed the greater of 1% of the then outstanding
shares of common stock or the average weekly trading volume of the class during
the four calendar weeks prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of securities, without any limitations, by a
non-affiliate that has satisfied a two-year holding period. Any substantial sale
of common stock pursuant to any resale prospectus or Rule 144 may have an
adverse effect on the market price of the Company's common stock by creating an
excessive supply.

THE COMPANY'S COMMON STOCK COULD BE CONSIDERED A "PENNY STOCK" AND MAY BE
DIFFICULT TO SELL.

The Company's common stock may be considered to be a "penny stock" if it meets
one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under
Section 15(g) of the Exchange Act. These include but are not limited to the
following: (i) the stock trades at a price less than $5.00 per share; (ii) it is
NOT traded on a "recognized" national exchange; (iii) it is NOT quoted on the
NASDAQ Stock Market, or even if so, has a price less than $5.00 per share; or
(iv) is issued by a company with net tangible assets less than $2.0 million, if
in business more than a continuous three years, or with average revenues of less
than $6.0 million for the past three years. The principal result or effect of
being designated a "penny stock" is that securities broker-dealers cannot
recommend the stock but must trade in it on an unsolicited basis.

Additionally, Section 15(g) of the Exchange Act and Rule 15g-2 promulgated
thereunder by the SEC require broker-dealers dealing in penny stocks to provide
potential investors with a document disclosing the risks of penny stocks and to
obtain a manually signed and dated written receipt of the document before
effecting any transaction in a penny stock for the investor's account.

Potential investors in the Company's common stock are urged to obtain and read
such disclosure carefully before purchasing any shares that are deemed to be
"penny stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to
approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for holders of the Company's
common stock to resell their shares to third parties or to otherwise dispose of
them in the market or otherwise.

FOLLOWING THE MERGER, THE FORMER PRINCIPAL STOCKHOLDERS OF MICROMED HAVE
SIGNIFICANT INFLUENCE OVER THE COMPANY.

Charterhouse Group Inc., Oxford Bioscience Partners, SV Life Sciences, Essex
Woodlands Health Ventures and Mitsui & Co. Venture Partners, and their
respective affiliates, beneficially own, in the aggregate, over 50% of the
Company's outstanding voting stock following the Merger. As a result, these
former principal stockholders of the MicroMed possess significant influence,
giving them the ability, among other things, to elect a majority of the Board of
Directors and to approve significant corporate transactions. Such stock
ownership and control may also have the effect of delaying or preventing a
future change in control, impeding a merger, consolidation, takeover or other
business combination or discourage a potential acquirer from making a tender
offer or otherwise attempting to obtain control of the Company.

                                       30
IF THE COMPANY FAILS TO MAINTAIN EFFECTIVE INTERNAL CONTROLS OVER FINANCIAL
REPORTING, THE PRICE OF ITS COMMON STOCK MAY BE ADVERSELY AFFECTED.

The Company's internal control over financial reporting may have weaknesses and
conditions that need to be addressed, the disclosure of which may have an
adverse impact on the price of our common stock. The Company is required to
establish and maintain appropriate internal controls over financial reporting.
Failure to establish those controls, or any failure of those controls once
established, could adversely impact the Company's public disclosures regarding
our business, financial condition or results of operations. In addition,
management's assessment of internal controls over financial reporting may
identify weaknesses and conditions that need to be addressed in its internal
controls over financial reporting or other matters that may raise concerns for
investors. Any actual or perceived weaknesses and conditions that need to be
addressed in the Company's internal control over financial reporting, disclosure
of management's assessment of its internal controls over financial reporting or
disclosure of the Company's public accounting firm's attestation to or report on
management's assessment of the Company's internal controls over financial
reporting may have an adverse impact on the price of its common stock.

STANDARDS FOR COMPLIANCE WITH SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002 ARE
UNCERTAIN, AND IF THE COMPANY FAILS TO COMPLY IN A TIMELY MANNER, ITS BUSINESS
COULD BE HARMED AND ITS STOCK PRICE COULD DECLINE.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of
2002 require annual assessment of the Company's internal control over financial
reporting, and attestation of its assessment by the Company's independent
registered public accountants. On March 2, 2005, the SEC extended the compliance
dates for non-accelerated filers, as defined by the SEC, by one year.
Accordingly, the Company believes that this requirement will first apply to its
annual report for fiscal 2006. The standards that must be met for management to
assess the internal control over financial reporting as effective are new and
complex, and require significant documentation, testing and possible remediation
to meet the detailed standards. The Company may encounter problems or delays in
completing activities necessary to make an assessment of its internal control
over financial reporting. In addition, the attestation process by the Company's
independent registered public accountants is new and the Company may encounter
problems or delays in completing the implementation of any requested
improvements and receiving an attestation of its assessment by the Company's
independent registered public accountants. If the Company cannot assess its
internal control over financial reporting as effective, or its independent
registered public accountants are unable to provide an unqualified attestation
report on such assessment, investor confidence and share value may be negatively
impacted.

THE COMPANY DOES NOT FORESEE PAYING CASH DIVIDENDS IN THE FORESEEABLE FUTURE.
The Company has not paid cash dividends on its stock and does not plan to pay
cash dividends on its common stock in the foreseeable future.

            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some statements in this information statement contain certain "forward-looking"
statements. Forward-looking statements are statements that estimate the
happening of future events are not based on historical fact. Forward-looking
statements may be identified by the use of forward-looking terminology, such as
"may," "shall," "could," "expect," "estimate," "anticipate," "predict,"
"probable," "possible," "should," "continue," or similar terms, variations of
those terms or the negative of those terms. The forward-looking statements
specified in the following information have been compiled by our management on
the basis of assumptions made by management and considered by management to be
reasonable. The Company's future operating results, however, are impossible to
predict and no representation, guarantee, or warranty is to be inferred from
those forward-looking statements.

These risks and uncertainties include, without limitation, those described under
"Risk Factors" and those detailed from time to time in our filings with the SEC,
and include, among others, the following:

      o     The Company's history of operating losses;

                                       31
o     Market acceptance of the DeBakey VAD;

      o     The uncertainty of FDA and other government regulatory requirements
            may have a material adverse effect on the Company's ability to
            commercialize the DeBakey VAD;

      o     The degree and nature of the Company's competition;

      o     The Company's ability to employ and retain qualified employees;

      o     The limited trading market for our common stock; and

      o     The other factors referenced in this Form 8-K, including, without
            limitation, under the section entitled "Risk Factors."

The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. The Company cannot
guarantee that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.

ITEM 3.02       UNREGISTERED SALES OF EQUITY SECURITIES.

In August 2005, pursuant to the terms of the Merger Agreement by and between
Salmon, Merger Sub and MicroMed Technology, each share of MicroMed Technology
common stock (an aggregate of 12,960,000 shares) was converted into one share of
our common stock. Additionally, warrants and options to purchase 601,882 shares
of MicroMed Technology common stock, were assumed by us at the closing of the
Merger. The securities were offered and sold to investors in reliance upon
exemptions from registration pursuant to Section 4(2) under the Securities Act
of 1933, as amended, and Rule 506 promulgated thereunder. Each of the persons
and/or entities receiving our securities qualified as an accredited investor (as
defined by Rule 501 under the Securities Act of 1933, as amended).

In August 2005, MicroMed Technology completed a private placement, whereby
MicroMed Technology (i) sold 3,753,145 shares of its common stock at a price of
$1.33 per share for aggregate proceeds of $4,991,683; and (ii) seven-year
warrants, exercisable one year after the date of issuance, to purchase 60% of
the common stock purchased by each investor in the Private Placement at a per
share exercise price of $1.33 (all investors introduced to MicroMed Technology
by Hunter assigned their warrants to Hunter, an aggregate of 1,804,511
warrants). The warrants are redeemable by the Company under certain
circumstances at any time after one year from the date of issuance. The Company
agreed to file a registration statement covering the securities sold in the
Private Placement within 30 days of the closing of the Merger. As partial
consideration for services rendered further to the Private Placement, Hunter was
issued 300,000 shares of MicroMed Technology's common stock. The shares and
warrants were offered and sold to investors in reliance upon exemptions from
registration pursuant to Section 4(2) under the Securities Act of 1933, as
amended, and Rule 506 promulgated thereunder. Each of the investors qualified as
an accredited investor (as defined by Rule 501 under the Securities Act of 1933,
as amended). All proceeds from the private placement will be used for general
corporate purposes.

ITEM 5.01       CHANGES IN CONTROL OF REGISTRANT.

On January 31, 2005, Salmon, along with Merger Sub and certain existing
stockholders of Salmon entered into an Agreement and Plan of Merger with
MicroMed Technology, pursuant to which Salmon would be acquired by MicroMed
Technology in a merger transaction wherein Merger Sub would merge with and into
MicroMed Technology, with MicroMed Technology being the surviving corporation.

                                       32
On August 10, 2005, the Merger closed and MicroMed Technology became a
wholly-owned subsidiary of Salmon.

The Merger resulted in a change-of-control by Salmon and its stockholders and
the assumption of MicroMed Technology's operations and liabilities. Immediately
prior to the Merger, Salmon effectuated a 1-for-3.3528 reverse stock split of
its common stock. At the effective time of the Merger:

      o     Salmon merged Merger Sub with and into MicroMed Technology and the
            separate corporate existence of Merger Sub has ceased;

      o     Salmon issued shares of its common stock on a one-for-one basis in
            exchange for 100% of the issued and outstanding shares of common
            stock MicroMed Technology;

      o     Salmon adopted the MicroMed 1997 Stock Option Plan and the MicroMed
            2005 Stock Incentive Plan as its own plans;

      o     Salmon assumed options and warrants to purchase shares of common
            stock previously issued by MicroMed on the same terms and
            conditions;

      o     Salmon issued the Escrow Shares into escrow to cover indemnification
            obligations, if any, of Salmon to MicroMed Technology and its
            stockholders;

      o     Salmon caused 10,010,800 pre-split shares of common stock held by
            Mr. Smith to be cancelled and extinguished; and

      o     In consideration for the aforementioned cancellation of shares,
            Salmon distributed its assets (and related liabilities) held prior
            to the Merger to Mr. Smith and certain third parties unaffiliated to
            Salmon paid Mr. Smith cash consideration of $0.060456 per share, or
            $605,213. The distribution of assets occurred immediately following
            the closing of the Merger. The net tangible book value as of
            November 30, 2004 of the assets and liabilities of the Company
            distributed to Mr. Smith immediately after the closing of the Merger
            is a net deficit of $12,172. This sum was not aggregated with the
            cash consideration he is receiving in exchange for the stock he
            holds in the Company. As a result, the per share value of the
            consideration Mr. Smith is receiving is $0.060456 compared to the
            per share price of $0.098482 to be received by the other
            stockholders (prior to the Effective Time of the Merger) of the
            Company.

As a result of the Merger, Salmon became the parent corporation and the
stockholders of MicroMed Technology became stockholders of Salmon. Immediately
prior to the closing of the Merger, MicroMed Technology had outstanding
17,013,145 shares of common stock, options to purchase 555,822 shares of common
stock and warrants to purchase 2,251,887 shares of common stock. Immediately
after the closing of the Merger, MicroMed Cardiovascular had 18,513,145
outstanding shares of common stock (excluding the Escrow Shares), options to
purchase 555,822 shares of common stock and warrants to purchase 2,251,887
shares of common stock. Based on the number of shares of common stock of
MicroMed Cardiovascular outstanding immediately after the closing of the Merger,
the stockholders of Salmon before the Merger currently own approximately 8.1% of
the Company's issued and outstanding shares of common stock.

After the Merger was concluded, Salmon reincorporated from the State of Nevada
to the State of Delaware and changed its corporate name to MicroMed
Cardiovascular, Inc.

Following the Merger, Travis E. Baugh, Dallas W. Anderson, Paul M. Frison, James
M. Garvey, Norwick B.H. Goodspeed, Phyllis Haberman, Cornelius T. Ryan and
Martin P. Sutter, each of whom are directors of MicroMed, were appointed to the
Board of Directors of the Company. In addition, the Company appointed Travis E.
Baugh as the Company's President and Chief Executive Officer, Betty Silverstein
Russell as Chief Operating Officer and Executive Vice President, Sales and
Marketing, Robert J. Benkowski as Senior Vice President, Engineering, and
Timothy R. Placek as Senior Vice President, Regulatory Affairs, Clinical Affairs
and Quality Systems and Michael A. Rutledge as Vice President, Controller and
Corporate Secretary. Pete Smith and Eric Weitzman resigned as officers and
directors of the Company immediately after the Effective Time of the Merger.

                                       33
The transaction contemplated by the Merger Agreement is intended to be a
"tax-free" incorporation pursuant to the provisions of Section 351 and
368(a)(i)(A) of the Internal Revenue Code of 1986, as amended.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT FOLLOWING THE
MERGER

Beneficial ownership is determined in accordance with the rules of the SEC. In
computing the number of shares beneficially owned by a person and the percentage
of ownership of that person, shares of common stock subject to options held by
that person that are currently exercisable or become exercisable within 60 days
of the estimated closing of the Merger are deemed outstanding even if they have
not actually been exercised. Those shares, however, are not deemed outstanding
for the purpose of computing the percentage ownership of any other person.
Immediately prior to the closing of the Merger, MicroMed Technology had
outstanding 17,013,145 shares of common stock, options to purchase 555,822
shares of common stock and warrants to purchase 2,251,887 shares of common
stock. Immediately after the closing of the Merger, MicroMed Cardiovascular had
18,513,145 outstanding shares of common stock (excluding the Escrow Shares),
options to purchase 555,822 shares of common stock and warrants to purchase
2,251,887 shares of common stock.

The following table sets forth certain information with respect to beneficial
ownership of the Company common stock immediately after the closing of the
Merger based on 18,513,145 outstanding shares of common stock (excluding the
Escrow Shares), by (i) each director, (ii) each executive officer, (iii) all
directors and executive officers as a group, and (iv) each person who
beneficially owns more than five percent of the Company's common stock. Unless
otherwise indicated in the table, the persons and entities named in the table
have sole voting and sole investment power with respect to the shares set forth
opposite the stockholder's name, subject to community property laws, where
applicable. Unless otherwise indicated in the table, the address of each
stockholder listed in the table is c/o MicroMed Cardiovascular, Inc., 8965
Interchange Drive, Houston, TX 77054.

                                       34
Number of Shares    Percent of
Title Of Class   Name and Address of Beneficial Owner                  Beneficially Owned      Class
------------------------------------------------------------------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS:

Common Stock     Travis E. Baugh                                               146,236(1)           *
                 President, Chief Executive Officer and Director

Common Stock     Betty Silverstein Russell                                      30,579(2)           *
                 Executive Vice President, Marketing
                 Chief Operating Officer
Common Stock     Robert J. Benkowski                                            25,910(3)           *
                 Senior Vice President, Engineering
Common Stock     Timothy R. Placek                                              19,588(4)           *
                 Senior Vice President, Regulatory Affairs, Clinical
                 Affairs and Quality Systems
Common Stock     Michael A. Rutledge                                             5,000(5)           *
                 Vice President, Controller
Common Stock     Dallas W. Anderson                                              9,345(6)           *
                 Director and Chairman of the Board
Common Stock     Paul M. Frison                                                  4,241(7)           *
                 Director
Common Stock     James M. Garvey                                             1,991,531(8)       10.8%
                 Director
Common Stock     Norwick B.H. Goodspeed                                          4,241(9)           *
                 Director
Common Stock     Phyllis Haberman                                           3,914,474(10)       21.1%
                 Director
Common Stock     Cornelius T. Ryan                                          2,263,557(11)       12.2%
                 Director
Common Stock     Martin P. Sutter                                           2,098,716(12)       11.3%
                 Director
Common Stock     All directors and executive officers                      10,513,152(13)       56.4%
                 as a group (12 persons)

                 FIVE PERCENT STOCKHOLDERS:

Common Stock     Oxford Bioscience Partners and affiliated entities         2,263,557(11)       12.2%
                 222 Berkeley St., Suite 1650
                 Boston, MA 02116
Common Stock     SV Life Sciences                                            1,991,531(8)       10.8%
                 60 State Street, Suite 3650
                 Boston, MA 02109
Common Stock     Charterhouse Equity Partners II, L.P.                      3,914,474(10)       21.1%
                 1105 North Market Street, Suite 1300
                 Wilmington, DE 19899
Common Stock     Essex Woodlands Health Ventures Fund IV, L.P.              2,098,716(12)       11.3%
                 10001 Woodloch Forest Drive
                 The Woodlands, TX 77380
Common Stock     Mitsui & Co. Venture Partners                              2,276,011(14)       12.3%
                 200 Park Avenue
                 New York, NY 10166-0130
Common Stock     Hunter World Markets, Inc.                                 1,085,798(15)        5.9%
                 9300 Wilshire Blvd, Penthouse Suite
                 Beverly Hills, CA 90212
Common Stock     Absolute Return Europe Fund LTD                            1,503,759(16)        8.1%
                 c/o Iron Shore Corporate Services Limited
                 P.O. Box 1234 GT Queensgate House
                 South Church Street, Georgetown
                 Grand Cayman
* Indicates less than 1.0%

(1)   Includes options to purchase 30,911 shares of common stock exercisable
      within 60 days of the closing date of the Merger.

(2)   Includes options to purchase 30,579 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(3)   Includes options to purchase 25,426 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(4)   Includes options to purchase 19,588 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(5)   Includes options to purchase 5,000 shares of common stock exercisable
      within 60 days of the closing of the Merger.

                                       35
(6)   Includes options to purchase 5,401 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(7)   Includes options to purchase 4,241 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(8)   Includes 1,258,769 shares held by Schroder Ventures International Life
      Sciences Fund LP1, 279,721 shares held by Schroder Ventures International
      Life Sciences Fund LP2, 443,085 shares held by Schroder Ventures
      International Life Sciences Fund Trust and 9,956 shares held by Schroder
      Ventures International Life Sciences Fund Co-Investment Scheme (together,
      the "Schroder entities"). Schroder Venture Managers Limited ("SVML") is
      the fund manager for all of the Schroder entities. James Garvey serves on
      the investment committee of SV Life Sciences Advisors Limited ("SVLSA"),
      which acts as the fund advisor to SVML. The investment committee of SVML
      has voting and dispositive power over these shares. Mr. Garvey is also a
      special limited partner in the Schroder entities. Mr. Garvey disclaims
      beneficial ownership of the shares held the Schroder entities, except to
      the extent of his proportionate pecuniary interest therein. Excludes
      warrants to purchase 73,299 shares of common stock at $1.33 per share
      exercisable commencing August 10, 2006.

(9)   Includes options to purchase 4,241 shares of common stock exercisable
      within 60 days of the closing of the Merger.

(10)  Ms. Haberman is an executive officer of Charterhouse Group, Inc.
      ("Charterhouse"), the sole stockholder of Charterhouse Equity II, Inc.
      ("Charterhouse Equity II"). Charterhouse Equity II is the general partner
      of CHUSA Equity Investors II, L.P. ("CHUSA Equity II"). CHUSA Equity II is
      the general partner of Charterhouse Equity Partners II, L.P. ("CEP II").
      Ms. Haberman disclaims beneficial ownership of the shares beneficially
      owned by CEPII.

(11)  Includes 515,606 shares held by Oxford Bioscience Partners II L.P.,
      386,074 shares held by Oxford Bioscience Partners (Bermuda) II Limited
      Partnership, 312,639 shares held by Oxford Bioscience Partners
      (GS-Adjunct) II L.P., 130,504 shares held by Oxford Bioscience Partners
      (Adjunct) II L.P., 913,057 shares held by Oxford Bioscience Partners
      (Annex) II L.P., which includes 72,160 shares of Salmon common stock
      purchased from Salmon stockholders upon the closing of the Merger. Mr.
      Ryan, a Director of MicroMed since 2002, is Founding General Partner with
      Oxford Bioscience Partners, which is the general partner of the foregoing
      funds. As a general Founding General Partner with Oxford Bioscience
      Partners, Mr. Ryan may be deemed to share voting and investment powers for
      the shares held by the foregoing funds. Mr. Ryan disclaims beneficial
      ownership of the shares held by funds affiliated with Oxford Bioscience
      Partners except to the extent of his proportionate pecuniary interest
      therein. Excludes warrants to purchase 33,384 shares of common stock at
      $1.33 per share exercisable commencing August 10, 2006.

(12)  Includes 2,098,716 shares held by Essex Woodlands Health Ventures Fund IV
      L.P. As Managing Director of Essex Woodlands Health Ventures, Mr. Sutter
      may be deemed to share voting and investment powers for the shares held by
      the foregoing fund. Mr. Sutter disclaims beneficial ownership of the
      shares held by funds affiliated with Essex Woodlands Health Ventures
      except to the extent of his proportionate pecuniary interest therein.
      Excludes warrants to purchase 125,008 shares of common stock at $1.33 per
      share exercisable commencing August 10, 2006.

(13)  Includes options to purchase 125,387 shares of common stock exercisable
      within 60 days of the closing of the Merger. Refer also to footnotes 1-11
      above.

(14)  Koichi Ando is the Chief Executive Officer of Mitsui & Co. Venture
      Partners. As the Chief Executive Officer, Mr. Ando may be deemed to have
      voting and investment power over the shares held by Mitsui & Co. Venture
      Partners. Mr. Ando disclaims beneficial ownership of the shares held by
      Mitsui & Co. Venture Partners except to the extent of his pecuniary
      interest therein. Excludes warrants to purchase 45,113 shares of common
      stock at $1.33 per share exercisable commencing August 10, 2006.

(15)  Todd M. Ficeto is President, Chief Executive Officer, and control person
      of Hunter World Markets, Inc. and may be deemed to have voting and
      investment power over the shares held by Hunter World Markets, Inc. Mr.
      Ficeto disclaims beneficial ownership of the shares held by Hunter World
      Markets, Inc. except to the extent of his pecuniary interest therein.
      Excludes warrants to purchase 1,804,511 shares of common stock at $1.33
      per share exercisable commencing August 10, 2006.

                                       36
(16)  As Investment Manager and control person of Absolute Return Europe Fund
      LTD, Florian Homm may be deemed to have voting and investment powers for
      the shares held by the foregoing funds. Mr. Homm disclaims beneficial
      ownership of the shares held by foregoing funds except to the extent of
      his proportionate pecuniary interest therein.

                EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT FOLLOWING THE MERGER

The following sets forth the name and position of each of the Companys's
directors and executive officers immediately after the Effective Time of the
Merger.
YEAR FIRST APPOINTED
                                                                                      OFFICER OR DIRECTOR OF
NAME                     AGE   POSITION                                                      MICROMED
----------------------   ---   ----------------------------------------------------   ----------------------
Travis E. Baugh          50    President, Chief Executive Officer, Director                   2005

Betty Silverstein        55    Chief Operating Officer and Executive Vice President
Russell                        Sales and Marketing                                            2002

Robert J. Benkowski      40    Senior Vice President, Engineering                             1996

                         52    Senior Vice President, Regulatory Affairs, Clinical
Timothy R. Placek              Affairs and Quality Systems                                    1998

Michael A. Rutledge      35    Vice President, Controller and Corporate Secretary             2005

Dallas W. Anderson       63    Director and Chairman                                          1995

Paul M. Frison           67    Director                                                       2002

James M. Garvey          57    Director                                                       2004

Norwick B.H. Goodspeed   55    Director                                                       2003

Phyllis Haberman         56    Director                                                       2004

Cornelius T. Ryan        72    Director                                                       2000

Martin P. Sutter         49    Director                                                       2002
TRAVIS E. BAUGH, 50, became MicroMed's President, Chief Executive Officer and a
Director in January 2005. Mr. Baugh served as MicroMed's Executive Vice
President, Finance and Operations from October 2003 until January 2005 and has
served as its Chief Financial Officer since its inception in 1995. From
MicroMed's inception to March 2003, Mr. Baugh served as a Director and also
served as its Senior Vice President from its inception to October 2003. From
1991 to 1994, Mr. Baugh served as Senior Vice President and Chief Financial
Officer of Grasso Corporation, a publicly traded company, where he also directly
managed the activities of Medic Systems, a division of Grasso that provided
remote paramedical services. Mr. Baugh was previously a Senior Accountant with
Arthur Young & Company and is a Certified Public Accountant.

                                       37
BETTY SILVERSTEIN RUSSELL, 55, joined MicroMed in August 2002 as its Executive
Vice President of Marketing and Sales. In January 2005, Ms. Russell also became
MicroMed's Chief Operating Officer. From 2001 to 2002, Ms. Russell was Executive
Vice President of CardiacAssist, Inc. From January 2000 to 2001, she served as
Executive Vice President of Marketing and Sales of Biosense Webster, Inc., a
subsidiary of Johnson and Johnson, Inc. From 1988 to 1999, she served as Senior
Vice President of Thermo Cardiosystems, Inc. Ms. Russell received her Bachelor
of Science in nursing from Georgia State University and her Master of Science in
management and administration from Boston University. She is a member of Who's
Who in Professional and Executive Women, a contributing author to Biomedical
Business International and a member of the guest facility in the Graduate School
of Marketing at Boston College.

ROBERT J. BENKOWSKI, 40, joined MicroMed in August 1996 as its Director of
Engineering and became its Vice President of Engineering in April 2000. In
January 2005, Mr. Benkowski became Senior Vice President of Engineering. Mr.
Benkowski's background is in aerospace with an expertise in Computer Aided
Design, Manufacturing and Engineering (CAD/CAM/CAE). He worked on the
engineering of the B-1, C-17 and the CAD integration of the International Space
Station. He began working on the DeBakey VAD project in 1990, first while
working at NASA's Johnson Space Center, then at Baylor College of Medicine as a
member of Dr. DeBakey's team. He is a co-inventor of the original NASA
technology, our continuation-in-part patent, a pulsatile loop patent, a VAD
controller patent, four suction detection and physiologic algorithm patent
applications and a neonatal blood pump developed for another company. He has
received numerous awards for his work in this area including being inducted into
the United States Space Foundation's "Space Technology Hall of Fame," the Sezai
Innovative Research Award, Olsen-Medforte Clinical Award, and the NASA
Commercial Invention of the Year award.

TIMOTHY R. PLACEK, 52, joined MicroMed in March 1998 as its Director of Quality
Assurance and, after serving as its Vice President of Quality Systems from
February 2001 to December 2002, became its Vice President of Regulatory Affairs
and Quality Systems in January 2003. Mr. Placek became Senior Vice President of
Regulatory Affairs, Clinical Affairs and Quality Systems in October 2004. From
1997 to 1998, he served as Director of Regulatory Affairs and Quality Assurance
for CardioLogic Systems, Inc., a manufacturer of Class III cardiovascular
devices, where he coordinated IDE submissions and ISO 9000 and CE certification
programs. From 1996 to 1997, he served as Manager of Quality Assurance and
Configuration Control at Orthofix, Inc., a manufacturer of Class II and III bone
growth stimulators and tissue to bone fixation devices. From 1994 to 1996, he
served as Director of Quality Assurance and Regulatory Affairs for Everest &
Jennings, Inc., a manufacturer of Class I and II durable medical devices.

MICHAEL A. RUTLEDGE, 35, joined MicroMed in March 2005 as its Vice President,
Controller and Secretary. Mr. Rutledge joined Ernst & Young LLP in 1992 and
worked there for 13 years in various capacities, most recently as a Senior
Manager. Mr. Rutledge is a Certified Public Accountant.

DALLAS W. ANDERSON, 63, has served as a director of MicroMed since 1995. Mr.
Anderson served as MicroMed's President and Chief Executive Officer since its
inception in 1995 until January 2005. From 1991 to 1994, Mr. Anderson served as
President and Chief Executive Officer of Proclosure Inc., a medical device
company involved in laser tissue (wound closure) fusion. From 1986 to 1990, he
served as President, worldwide of Davis & Geck, medical device products division
of American Cyanamid Company. Prior to that, Mr. Anderson worked for Baxter
Healthcare as Director of Operations, New Products and with Johnson & Johnson in
progressive levels of operations management.

PAUL M. FRISON, 67, has served as a Director of MicroMed since October 2002. Mr.
Frison became President and Chief Executive Officer of the Houston Technology
Center ("HTC") in January 1999, a business accelerator for Houston-based
emerging technology companies. Prior to HTC, Mr. Frison was President and/or CEO
of three public companies (LifeMark (1975 - 1984), NYSE; ComputerCraft (1984 -
1986), NASDAQ; and LifeCell (1986 - 1999), NASDAQ), each technology based. He
received his BA from Occidental College in Los Angeles, California and currently
serves on the Board of Directors of the HTC, The Institute of Research and
Rehabilitation ("TIRR"), The Entrepreneurship Institute, The Houston
Entrepreneurs Foundation, The Lions Eye Foundation - Houston, Boy Scouts of
America - Houston, Texas Council of AEA, Texchange, and the Advisory Council of
the University of Houston - College of Technology.

                                       38
JAMES M. GARVEY, 57, has served as a Director of MicroMed since May 2004. Mr.
Garvey joined SV Life Sciences ("SVLS"), a venture capital firm, in May 1995 and
is the Chief Executive Officer and Managing General Partner, overseeing its
approximately $900 million investment activity. Prior to joining SVLS, he was
Managing Director for the Venture Capital Division of Allstate Corporation. He
has held several senior management positions in companies with multinational
operations including Kendall (Tyco) & Millipore. He was also president of
start-ups Allegheny International Medical Technology and National Teledata. Mr.
Garvey has served on the boards of private and public companies in the U.S. and
Europe including public companies Allscripts Pharmaceuticals, Arris
Pharmaceuticals, LaserVision Centers, Orthovita, Shire Pharmaceuticals and
Sunrise Assisted Living. Mr. Garvey received a BS degree from Northern Illinois
University in 1969.

NORWICK B.H. GOODSPEED, 55, has served as a Director of MicroMed since March
2003. Mr. Goodspeed is President and Chief Executive Officer of FlowCardia,
Inc., where he has served since March 2004. From May 2000 to January 2004, he
was President and Chief Executive Officer of TransVascular, Inc., an
interveritional cardiology company acquired by Medtronic, Inc. in September
2003. From June 1997 to May 2000, he was President and Chief Executive Officer
of Ocular Sciences, a publicly traded contact lens manufacturer. Previously, Mr.
Goodspeed served as President of McGaw Inc. (a manufacturer of I.V. Solutions
and a subsidiary of Ivax ) and President and Chief Executive Officer of Vical,
Inc. (a gene therapy company). Earlier in his career, Mr. Goodspeed held
executive positions with BOC Healthcare and Baxter. He holds an MBA degree from
Stanford University and a BA from Yale University.

PHYLLIS HABERMAN, 56, has served as a Director of MicroMed since July 2004.
Since 1998, Ms. Haberman has been a partner at Charterhouse Group, a private
equity firm with over $1.3 billion currently under management. Ms. Haberman
joined Charterhouse in 1985. Previously, Ms. Haberman held various financial and
marketing positions at Celanese Corporation. She holds an MBA degree from
Columbia University and a BS from Simmons College.

CORNELIUS T. RYAN, 72, has served as a Director of MicroMed since July 2000. Mr.
Ryan is a Founding General Partner with Oxford Bioscience Partners, a venture
capital firm. Mr. Ryan has specialized in the healthcare field since 1981, when
he co-founded Oxford. Previously, Mr. Ryan was President of AMR International, a
private company in publishing and business education. He also served as
President of GTE New Venture Corp., a wholly owned subsidiary of General
Telephone and Electronics ("GTE"), and Vice President of Corporate Development
and Strategic Planning. Previously, he co-founded RCC, a publicly traded
computer services and financing company. Earlier, he was a Senior Associate and
Technology consultant for Arthur D. Little, where he created a healthcare and
medical device information service for Wall Street clients. He is the Founding
Chairman of the Healthcare Services/Medical Devices Venture Investors' Group.
Mr. Ryan serves on the board of directors of QuadraMed Corporation.

MARTIN P. SUTTER, 49, has served on the Board of Directors of MicroMed since
June 2002. Mr. Sutter has over 25 years of management experience in operations,
marketing, finance and venture capital. He began his career with Peat Marwick,
Mitchell & Co. in 1977 and moved to Mitchell Energy and Development Corp
("MEDC") shortly thereafter, where he held various management positions
primarily in MEDC's chemical feedstock business segment. In 1984, he founded and
managed The Woodlands Venture Capital company, a wholly-owned subsidiary of
MEDC, and the Woodlands Venture Partners, an independent venture capital
partnership was formed in 1988. During his tenure with both organizations, he
founded and/or played a key role in the financing of a number of successful
healthcare companies. Mr. Sutter merged his venture practice with Essex Venture
Partners to form Essex Woodlands Health Ventures in 1994. Essex Woodlands Health
Ventures is one of the oldest U.S. venture capital partnerships focused solely
on healthcare and the life sciences, and has approximately $1 billion in capital
under management. He currently serves on the Board of Directors of BioForm
Medical, Confluent Surgical, EluSys Therapeutics, LifeCell Corporation (NASDAQ:
"LIFC"), and Rinat Neuroscience.

MEDICAL ADVISORY BOARD

                                       39
DR. MICHAEL E. DEBAKEY, Chairman, Co-Principal Investigator of the
Bridge-to-Transplant trial, is Chancellor Emeritus of Baylor College of Medicine
and Director of the DeBakey Heart Center of Baylor and the Methodist Hospital in
Houston, Texas. Dr. DeBakey's surgical career has earned him worldwide
recognition as a premier surgeon, medical inventor and innovator, a gifted and
dedicated medical educator and an international medical statesman. He joined the
Baylor College of Medicine faculty in 1948, serving as Chairman of the
Department of Surgery until 1993 and as President of the College from 1969 to
1979. Dr. DeBakey is best known for his innovations in treating cardiovascular
disease. He was the first to perform successful excision and graft replacement
of arterial aneurysms and obstructive lesions and was a pioneer in the
development of an artificial heart, having been the first to use a heart pump
successfully in a patient. Dr. DeBakey performed the first successful carotid
endarterectomy, the first aortocoronary bypass with autogenous saphenous vein
graft. He is the recipient of numerous honorary degrees and citations from
universities and heads of state around the world, including the Medal of Freedom
(the highest honor the President of the United States can bestow on a civilian),
the Medal of Science and the Lasker Award (the American equivalent of the Nobel
Prize). Dr. DeBakey has published more than 1,300 medical articles and books on
various aspects of surgery, medical research and ethics.

DR. GEORGE P. NOON, Co-Principal Investigator, Bridge to Transplant Trial, has
been a key member of the DeBakey VAD development team since inception of the
project. Dr. Noon is Executive Director, Multi-Organ Transplant Center at
Methodist Hospital and Chief, Division of Transplant and Assist
Devices/Professor of Surgery at Baylor College of Medicine in Houston. Dr. Noon
is a practicing cardiovascular surgeon at Methodist Hospital in Houston, where
he has performed countless heart, lung and kidney transplants. He also served as
a Principal Investigator for the Novacor LVAS clinical trials and is a recipient
of the NASA Space Technology Hall of Fame Award.

DR. ERIC A. ROSE, M.D., Principal Investigator, Destination Therapy Trial, is
the Morris and Rose Milstein, Johnson & Johnson Professor of Surgery and
Chairman of the Department of Surgery at Columbia University College of
Physicians and Surgeons, and Surgeon-in-Chief at the Columbia Presbyterian
Medical Center. Dr. Rose has been on the faculty at Columbia since 1982 after
receiving his M.D. from and doing his residency training there. He is board
certified by the American Board of Thoracic Surgery and the American Board of
Surgery. Dr. Rose was the Principal Investigator for the landmark REMATCH trial
comparing Destination Therapy with a VAD to optimal Medical Therapy in end stage
heart failure patients. His research interests include: novel anticoagulants,
vascular biology, mechanical alternatives to transplantation, surgical clinical
trials and outcomes research. Dr. Rose holds several patents in the area of
blood coagulation including patents for Fibrin Glue, Inhibition of Thrombosis
due to extracorporeal circulation, methods for improving stroke outcome and a
method of inhibiting clot formation (inactive recombinant meutein). Dr. Rose has
received multiple honors over his career and belongs to 15 regional, national
and international medical societies. He has been the primary author of two books
and has numerous publications in prestigious medical journals. Dr. Rose's
clinical experience, expertise in blood surface reactions and widespread
recognition will ensure MicroMed's Destination Therapy Trial, known as
Destination Evaluation of Long Term Assist ("DELTA"), is one that not only
provides data needed for market approval, but also one that has significant
scientific impact on the entire VAD community.

FAMILY RELATIONSHIPS

None.

                             EXECUTIVE COMPENSATION

                           SUMMARY COMPENSATION TABLE

The following table presents summary information for the years ended December
31, 2004, 2003 and 2002 regarding the compensation of each of MicroMed
Technology's five most highly compensated executive officers.

                                       40
Long-Term Compensation
                                                                                 ----------------------------------
                                               Annual Compensation                       Awards            Payouts
                                  --------------------------------------------   -----------------------   --------
                                                                 Other                        Securities
                                                                 Annual          Restricted   Underling    LTIP       All Other
                                                                 Compensation    Stock        Options/     Payouts    Compensation
Name and Position                 Year   Salary($)   Bonus ($)   ($)(3)          Awards ($)   SARS (#)     ($)        ($)(4)
-------------------------------   ----   ---------   ---------   -------------   ----------   ----------   --------   -------------
Dallas W. Anderson(1)             2004     286,000          --              --           --           --         --           4,295
President and Chief
Executive Officer                 2003     283,885      64,350              --           --           --         --           4,295
                                  2002     262,981      13,750              --           --           --         --           4,295

Travis E. Baugh(1)                2004     192,000          --              --           --           --         --              --
Executive Vice President,
Finance and Operations            2003     182,946      54,600              --           --           --         --              --
                                  2002     192,500      17,500              --           --           --         --              --

Betty Silverstein Russell (2)     2004     200,000          --              --           --           --         --              --
Executive Vice President of
Marketing and Sales               2003     200,000      50,000              --           --           --         --              --
                                  2002      69,231      50,000          20,324           --           --         --              --

Edward R. Teitel (3)              2004     175,000          --              --           --           --         --              --
Senior Vice President and Chief
Medical Officer                   2003     175,000      26,250              --           --           --         --              --
                                  2002      67,308      10,000              --           --                                      --

Robert J. Benkowski               2004     167,212          --              --           --           --         --              --
Vice President of Engineering     2003     166,000      25,000              --           --           --         --              --
                                  2002     159,612      12,731              --           --           --         --              --

Timothy R. Placek                 2004     147,539          --              --           --           --         --              --
Senior Vice President of
Regulatory Affairs, Clinical
Affairs and Quality Systems       2003     137,692      30,000              --           --           --         --              --
                                  2002     122,169      13,822              --           --           --         --              --
(1)   On January 20, 2005, Mr. Baugh was elected President and Chief Executive
      Officer and Mr. Anderson retired.
(2)   Ms. Russell joined MicroMed in August 2002. Her base salary for 2002
      reflects compensation at an annualized rate of $188,000 for the portion of
      the year that she was an employee.
(3)   Mr. Teitel joined MicroMed in August 2002. His base salary for 2002
      reflects compensation at an annualized rate of $165,000 for the portion of
      the year that he was an employee.
(4)   Other compensation during 2004, 2003 and 2002 represents premiums paid by
      MicroMed for personal life insurance for Mr. Anderson and relocation
      expenses for Ms. Russell.

OPTION GRANTS IN 2004

There were no option grants in 2004.

AGGREGATED OPTION EXERCISES IN 2004 AND OPTION VALUES AT DECEMBER 31, 2004

                                       41
The following table presents information about the number and value of the
shares of common stock underlying unexercised options that are held by each of
the individuals listed in the summary compensation table as of December 31,
2004.

There were no option exercises in 2004 by the individuals listed in the summary
compensation table. Amounts shown under the column "Value of Unexercised
In-the-Money Options at December 31, 2004" are based on the assumed fair market
value of MicroMed Technology common stock on December 31, 2004 of $0.03 per
share, without taking into account any taxes that may be payable in connection
with the Merger, less the exercise price payable for these shares.
Number of Securities
                                                     Underlying Unexercised      Value of Unexercised In-
                                                          Options at                The-Money Options at
                                                       December 31, 2004              December 31, 2004
                                                  ---------------------------   ---------------------------
                            Shares
                            Acquired
                            on         Value
                            Exercise   Realized   Exercisable   Unexercisable   Exercisable   Unexercisable
                            --------   --------   -----------   -------------   -----------   -------------
Dallas W. Anderson                --         --     1,405,002         367,045            --              --
Travis E. Baugh                   --         --       563,824         144,995            --              --
Betty Silverstein Russell         --         --       450,000         150,000            --              --
Edward R. Teitel                  --         --       187,500          62,500            --              --
Robert J. Benkowski               --         --       437,500         112,500            --              --
Timothy R. Placek                 --         --       216,250          58,750            --              --
EMPLOYMENT AGREEMENTS AND SEVERANCE ARRANGEMENTS

MicroMed Technology is a party to employment agreements with its senior
executive officers, including Dallas W. Anderson, Travis E. Baugh, Robert J.
Benkowski, Timothy R. Placek, Betty Silverstein Russell and Edward R. Teitel.
Mr. Anderson and Mr. Baugh's employment agreements were amended effective March
1, 2000. Mr. Baugh's employment. Mr. Benkowski and Mr. Placek's employment
agreements were amended effective March 31, 2000. Mr. Teitel's employment
agreement was amended effective August 5, 2002 and Ms. Russell's employment
agreement was amended effective August 19, 2002.

As amended, the employment agreements of Dallas W. Anderson and Travis E. Baugh
provide that each of Messrs. Anderson and Baugh are entitled to receive a sum
equal to their annual salary, payable either in monthly payments or in a lump
sum at the election of MicroMed Technology, upon any termination without cause.
The same amount would become due to Mr. Anderson or Mr. Baugh, as the case may
be, in the event of a change of control of MicroMed, which is defined to include
a merger or consolidation, or an agreement to merge or consolidate, a sale, or
an agreement to sell, all or substantially all of MicroMed's assets, the
dissolution of MicroMed and the breach by MicroMed of any provision of the
employment agreement.

On January 20, 2005, Mr. Anderson retired and was granted a severance payment of
an aggregate $429,000 to be paid to Mr. Anderson in nine monthly installments of
$47,667, the first of which was made in January 2005.

As amended, the employment agreement of Robert J. Benkowski provides that he
will be entitled to receive a sum equal to his annual salary, payable in 12
monthly payments, upon any termination without cause. As amended, the employment
agreement of Timothy R. Placek provides that he will be entitled to receive a
sum equal to one half of his annual salary, payable in six monthly payments,
upon any termination without cause. While termination without cause is not
defined in the employment agreement of either Mr. Benkowski or Mr. Placek,
termination for cause in both employment agreements includes (i) a conviction or
guilty plea or plea of nolo contendere to a charge that the employee has
committed a crime under any federal, state or local law in the United States,
(ii) employee's gross neglect of the duties of his position, (iii) employee's
failure to work exclusively for MicroMed Technology , (iv) willful misconduct,
(v) commission of an act of moral turpitude, dishonesty, theft or unethical
business conduct, or conduct that impairs or injures MicroMed Technology , any
MicroMed Technology employee or MicroMed Technology's reputation, (vi)
disloyalty, including, but not limited to, aiding a competitor, (vii) any
material breach of the employment agreement or MicroMed Technology's policies or
rules, or (viii) employee's failure to fully and truthfully cooperate in any
investigation by MicroMed Technology.

                                       42
As amended, the employment agreements of each of Betty Silverstein Russell and
Edward R. Teitel provide that each are entitled to receive a sum equal to their
annual salary, payable in bi-weekly payments, upon any termination without
cause. While termination without cause is not defined in the employment
agreement of either Ms. Russell or Mr. Teitel, termination for cause in both
employment agreements includes (i) a guilty plea or plea of nolo contendere to a
charge that the employee has committed a felony under the laws of the United
States, (ii) the commission of acts amounting to gross neglect of the employee's
duties to the material detriment of MicroMed Technology, or (iii) the material
breach of provisions of the employment agreement by the employee relating to his
or her employment duties or certain aspects of the required treatment of, or
disclosure relating to, the intellectual property of MicroMed Technology. Any of
these events is capable of a cure upon proper notice to the employee by MicroMed
Technology; however, if a cure is unavailing, the employee may be then
terminated by MicroMed Technology for cause.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See "MICROMED'S OPERATIONS - Management's Discussion and Analysis of MicroMed's
Financial Condition and Results of Operations - Related Party Transactions"
below.

               INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
                           AND LIMITATION OF LIABILITY

Under Section 145 of the General Corporation Law of the State of Delaware, the
Company can indemnify its directors and officers against liabilities they may
incur in such capacities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). The Company's certificate of
incorporation provides that, pursuant to Delaware law, its directors shall not
be liable for monetary damages for breach of the directors' fiduciary duty of
care to the Company and its stockholders. This provision in the certificate of
incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as injunctive or other forms of
nonmonetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Company or its stockholders, for acts or omissions not in
good faith or involving intentional misconduct or knowing violations of the law,
for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.

The Company's bylaws provide for the indemnification of its directors to the
fullest extent permitted by the Delaware General Corporation Law. The Company's
bylaws further provide that its Board of Directors has discretion to indemnify
its officers and other employees. The Company is required to advance, prior to
the final disposition of any proceeding, promptly on request, all expenses
incurred by any director or executive officer in connection with that proceeding
on receipt of an undertaking by or on behalf of that director or executive
officer to repay those amounts if it should be determined ultimately that he or
she is not entitled to be indemnified under the Company's bylaws or otherwise.
The Company is not, however, required to advance any expenses in connection with
any proceeding if a determination is reasonably and promptly made by its Board
of Directors by a majority vote of a quorum of disinterested Board members that
(a) the party seeking an advance acted in bad faith or deliberately breached his
or her duty to the Company or its stockholders and (b) as a result of such
actions by the party seeking an advance, it is more likely than not that it will
ultimately be determined that such party is not entitled to indemnification
pursuant to the applicable sections of its bylaws.

                                       43
The Company has been advised that in the opinion of the Securities and Exchange
Commission, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to the Company's directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event a claim for indemnification against
such liabilities (other than the Company's payment of expenses incurred or paid
by its director, officer or controlling person in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by the Company is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The Company may enter into indemnification agreements with each of its directors
and officers that are, in some cases, broader than the specific indemnification
provisions permitted by Delaware law, and that may provide additional procedural
protection. The indemnification agreements require the Company, among other
things, to:

      o     indemnify officers and directors against certain liabilities that
            may arise because of their status as officers or directors;

      o     advance expenses, as incurred, to officers and directors in
            connection with a legal proceeding, subject to limited exceptions;
            or

      o     obtain directors' and officers' insurance.

At present, there is no pending litigation or proceeding involving any of the
Company's directors, officers or employees in which indemnification is sought,
nor is the Company aware of any threatened litigation that may result in claims
for indemnification.

                      POST-MERGER DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is authorized to issue up to 100,000,000 shares of common stock, par
value $0.001 per share, of which 18,513,145 are currently issued and outstanding
(excluding the Escrow Shares). Each outstanding share of common stock is
entitled to one vote, either in person or by proxy, on all matters that may be
voted upon by their holders at meetings of the stockholders. Holders of the
Company's common stock (i) have equal ratable rights to dividends from funds
legally available therefore, if declared by the Board of Directors; (ii) are
entitled to share ratably in all of the Company's assets available for
distribution upon liquidation, dissolution or winding up; and (iii) do not have
preemptive, subscription or conversion rights or redemption or sinking fund
provisions. All issued shares of the Company's common stock are fully paid for
and non-assessable.

PREFERRED STOCK

The Company is authorized to issue 50,000,000 shares of preferred stock, par
value $0.001 per share, of which no shares are currently issued and outstanding.
The preferred stock may be issued in one or more series and the Company's Board
of Directors, without further approval from its stockholders, is authorized to
fix the dividend rights and terms, conversion rights, voting rights, redemption
rights, liquidation preferences and other rights and restrictions relating to
any series. Issuances of preferred stock, while providing flexibility in
connection with possible financings, acquisitions and other corporate purposes,
could, among other things, adversely affect the voting power of the holders of
our common stock.

STOCK OPTIONS AND WARRANTS

                                       44
In connection with the Merger, the Company assumed options to purchase shares of
common stock and warrants to purchase shares of common stock on the same terms
and conditions as previously issued by MicroMed Technology. All outstanding
options that were assumed by the Company have been issued under the MicroMed
1997 Stock Option Plan or the MicroMed 2005 Stock Incentive Plan. Further to the
Merger, the Company assumed the MicroMed 1997 Stock Option Plan and the MicroMed
2005 Stock Incentive Plan as stock option plans of the Company. Immediately
after the closing of the Merger, MicroMed Cardiovascular had options to purchase
555,822 shares of common stock and warrants to purchase 2,251,887 shares of
common stock.

MARKET PRICE OF THE COMPANY'S COMMON STOCK

The price of the Company's common stock will likely fluctuate in the future. The
stock market in general has experienced extreme stock price fluctuations in the
past few years. In some cases, these fluctuations have been unrelated to the
operating performance of the affected companies. Many companies have experienced
dramatic volatility in the market prices of their common stock. The Company
believes that a number of factors, both within and outside its control, could
cause the price of the Company's common stock to fluctuate, perhaps
substantially. Factors such as the following could have a significant adverse
impact on the market price of its common stock:

      o     The Company's ability to obtain additional financing and, if
            available, the terms and conditions of the financing;

      o     The Company's financial position and results of operations;

      o     Concern as to, or other evidence of, the safety or efficacy of the
            Company's proposed products and services or its competitors'
            products and services;

      o     Announcements of technological innovations or new products or
            services by the Company or its competitors;

      o     U.S. and foreign governmental regulatory actions;

      o     The development of litigation against the Company;

      o     Period-to-period fluctuations in the Company's operating results;

      o     Changes in estimates of the Company's performance by any securities
            analysts;

      o     Possible regulatory requirements on the Company's business;

      o     The issuance of new equity securities pursuant to a future offering;

      o     Changes in interest rates;

      o     Competitive developments, including announcements by competitors of
            new products or services or significant contracts, acquisitions,
            strategic partnerships, joint ventures or capital commitments;

      o     Variations in quarterly operating results;

      o     Change in financial estimates by securities analysts;

      o     The depth and liquidity of the market for the Company's common
            stock;

      o     Investor perceptions of the Company; and

      o     General economic and other national conditions.

                                       45
DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS

The Company is subject to Section 203 of the Delaware General Corporation Law.
This provision generally prohibits a Delaware corporation from engaging in any
business combination with any interested stockholder for a period of three years
following the date the stockholder became an interested stockholder, unless:

      o     prior to such date, the Board of Directors approved either the
            business combination or the transaction that resulted in the
            stockholder becoming an interested stockholder;

      o     upon consummation of the transaction that resulted in the
            stockholder becoming an interested stockholder, the interested
            stockholder owned at least 85% of the voting stock of the
            corporation outstanding at the time the transaction commenced,
            excluding for purposes of determining the number of shares
            outstanding those shares owned by persons who are directors and also
            officers and by employee stock plans in which employee participants
            do not have the right to determine confidentially whether shares
            held subject to the plan will be tendered in a tender or exchange
            offer; or

      o     on or subsequent to such date, the business combination is approved
            by the Board of Directors and authorized at an annual meeting or
            special meeting of stockholders and not by written consent, by the
            affirmative vote of at least 66 2/3% of the outstanding voting stock
            that is not owned by the interested stockholder.

Section 203 defines a business combination to include:

      o     any merger or consolidation involving the corporation and the
            interested stockholder;

      o     any sale, transfer, pledge or other disposition of 10% or more of
            the assets of the corporation involving the interested stockholder;

      o     subject to certain exceptions, any transaction that results in the
            issuance or transfer by the corporation of any stock of the
            corporation to the interested stockholder;

      o     any transaction involving the corporation that has the effect of
            increasing the proportionate share of the stock of any class or
            series of the corporation beneficially owned by the interested
            stockholder; or

      o     the receipt by the interested stockholder of the benefit of any
            loans, advances, guarantees, pledges or other financial benefits
            provided by or through the corporation.

In general, Section 203 defines an "interested stockholder" as any entity or
person beneficially owning 15% or more of the outstanding voting stock of a
corporation, or an affiliate or associate of the corporation and was the owner
of 15% or more of the outstanding voting stock of a corporation at any time
within three years prior to the time of determination of interested stockholder
status; and any entity or person affiliated with or controlling or controlled by
such entity or person.

The Company's certificate of incorporation and bylaws contain provisions that
could have the effect of discouraging potential acquisition proposals or making
a tender offer or delaying or preventing a change in control of the Company,
including changes a stockholder might consider favorable. In particular, the
Company's certificate of incorporation and bylaws, as applicable, among other
things, will:

      o     provide the Company's board of directors with the ability to alter
            its bylaws without stockholder approval;

      o     provide for an advance notice procedure with regard to the
            nomination of candidates for election as directors and with regard
            to business to be brought before a meeting of stockholders;

                                       46
o     provide that vacancies on the Company's board of directors may be
            filled by a majority of directors in office, although less than a
            quorum.

Such provisions may have the effect of discouraging a third-party from acquiring
the Company, even if doing so would be beneficial to its stockholders. These
provisions are intended to enhance the likelihood of continuity and stability in
the composition of the Company's board of directors and in the policies
formulated by them, and to discourage some types of transactions that may
involve an actual or threatened change in control of the Company. These
provisions are designed to reduce the Company's vulnerability to an unsolicited
acquisition proposal and to discourage some tactics that may be used in proxy
fights. The Company believes that the benefits of increased protection of its
potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure the Company outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of their terms.
However, these provisions could have the effect of discouraging others from
making tender offers for the Company's shares that could result from actual or
rumored takeover attempts. These provisions also may have the effect of
preventing changes in the Company's management.

                MICROMED TECHNOLOGY AUDITED FINANCIAL STATEMENTS

The audited financial statements of MicroMed Technology for the years ended
December 31, 2004 and 2003 and the unaudited three months ended March 31, 2005
and 2004 are attached hereto as Exhibit A. Investors are encouraged to review
the financial statements and related notes.

                          SUMMARY FINANCIAL INFORMATION

The following gives a summary of the most recent balance sheet data of Salmon as
of November 30, 2004 and 2003 and May 31, 2005 and the statements of operations
data of Salmon for the years ended November 30, 2004 and 2003 and the six months
ended May 31, 2005 and 2004.

                                                        Six Months   Six Months
                          Year ended     Year ended     ended        ended
                          November 30,   November 30,   May 31,      May 31,
Statement of Operations    2004           2003           2005         2004
-----------------------   ------------   ------------   ----------   ----------
Revenue                   $          0   $          0   $        0   $        0
Net Loss                  $    (26,601)  $    (10,571)  $   (4,079)  $  (11,680)
Net Loss Per Share        $          0   $          0   $        0   $        0

                             November 30,    November 30,    May 31,
Balance Sheet                    2004            2003          2005
--------------------------   ------------    ------------    --------

Total Assets                 $      4,426    $     14,429    $      0
Total Liabilities            $     16,598    $          0    $ 10,000
Total Stockholders' Equity   $    (12,172)   $    (14,429)   $(10,000)

The following gives a summary of the most recent balance sheet data of MicroMed
Technology as of December 31, 2004 and 2003 and March 31, 2005 and the
statements of operations data of MicroMed Technology for the years ended
December 31, 2004 and 2003 and the three months ended March 31, 2005 and 2004.

                                       47
Statement of Operations                   Year ended              Year ended              Three Months          Three Months
                                         December 31,            December 31,           ended March 31,       ended March 31,
                                             2004                    2003                     2005                  2004
                                        ------------------   ----------------------     -------------------  --------------------
                                                                (Restated)(1)
Revenue                                  $   5,936,188       $          6,701,990       $      1,617,477     $        1,434,542
Net loss                                 $  (8,939,596)      $         (6,155,130)      $     (2,675,654)    $       (2,442,471)
Net loss available to common             $ (14,255,988)      $        (11,445,248)      $     (3,989,754)    $       (3,766,570)
stockholders (2)
Net loss per share available to          $       (2.80)      $              (2.25)      $          (0.78)    $            (0.74)
common stockholders- basic and
diluted
Consolidated Balance Sheet                        December 31,          December 31,                  March 31,
                                                       2004                  2003                        2005
                                                  --------------     --------------------         -------------
Total assets                                      $    6,367,481     $         10,825,755         $    5,617,755
Redeemable convertible preferred stock            $   72,070,894     $         66,764,502         $   73,394,994
Total liabilities                                 $    6,623,799     $          2,195,827         $    8,549,727
Total stockholders' deficit                       $  (72,337,212)    $        (58,134,574)        $  (76,326,966)
(1)   The statement of operations of MicroMed Technology for the year ended
      December 31, 2003 has been restated to reflect preferred stock dividends
      and accretion as a component of Net loss available to common stockholders.
      See Note 2 of the MicroMed Technology financial statements.

(2)   Net loss available to common stockholders for the years ended December 31,
      2004 and 2003 and three-months ended March 31, 2005 and 2004 includes
      accrued preferred stock dividends and accretion of $5,316,392, $5,290,118,
      $1,314,100 and $1,324,099, respectively.

This information is only a summary. You should also read the historical
information, management's discussion and analysis and related notes of the
Company contained in its Annual Report on Form 10-KSB for the year ended
November 30, 2004 and its Quarterly Report on Form 10-QSB for the period ended
May 31, 2005, as filed with the SEC, which are both incorporated by reference
into this document and the historical financial statements, management's
discussion and analysis and related notes for the Company contained elsewhere in
this document.

The Company is providing financial and other information for informational
purposes only. It does not necessarily represent or indicate what the financial
position and results of operations of the Company will be now that the Merger is
concluded.

                         PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma consolidated financial statements give effect
to Merger and is based on the estimates and assumptions set forth herein and in
the notes to such statements. The transaction is being treated as a reverse
acquisition and a recapitalization. MicroMed Technology is the acquirer for
accounting purposes. The pro forma financial data does not purport to be
indicative of the results which actually would have been obtained had the
acquisition been effected on the dates indicated or the results which may be
obtained in the future.

The unaudited pro forma balance sheet information as of March 31, 2005 was
derived from the unaudited balance sheet information of MicroMed Technology as
of that date and our unaudited balance sheet information as of May 31, 2005. The
unaudited pro forma statement of operations information for the twelve months
ended December 31, 2004 was derived from the audited statement of operations for
MicroMed Technology for the twelve month period then ended and our audited
statement of operations information for the twelve month period ended November
30, 2004. Neither we nor MicroMed Technology assumes any responsibility for the
accuracy or completeness of the information provided by the other party. The
unaudited pro forma statement of operations information for the three months
ended March 31, 2005 was derived from the unaudited statement of operations for
MicroMed Technology for the three-month period then ended and our unaudited
statement of operations information for the six-month period ended May 31, 2005.

The following unaudited pro forma consolidating balance sheet as of March 31,
2005 gives effect to the transaction as if it had occurred on March 31, 2005.
The following unaudited pro forma consolidating statement of operations for the
year ended December 31, 2004 gives effect to the transaction as if it had
occurred on January 1, 2004. The following unaudited pro forma consolidating
statement of operations for the three months ended March 31, 2005 gives effect
to the transaction as if it had occurred on January 1, 2005.

                                       48
The pro forma balance sheets and operating data presented are not necessarily
indicative of the results that actually would have occurred if the Merger had
been completed on the assumed date nor are the statements necessarily indicative
of future combined financial position or earnings. The data presented should be
read in conjunction with the financial statements of Salmon and MicroMed
Technology included herein..

Proforma Balance Sheet (Unaudited)
MicroMed           Salmon         Pro Forma         Note         MicroMed
                                                 Technology, Inc.    Express, Inc.   Adjustments     Reference   Technology, Inc.
                                                      March 31,         May 31,                                      Pro Forma
                                                       2005              2005                                      Consolidated
                                                   ------------      ------------    ------------    ------------   ------------
Assets
Current assets:
Cash and cash equivalents                          $    211,272      $         --    $         --              1     $   211,272
Accounts receivable                                   1,432,446                --              --                      1,432,446
Inventory                                             3,332,847                --              --                      3,332,847
Prepaids and other assets                               122,482                --              --                        122,482
                                                   ------------      ------------    ------------                    ------------
Total current assets                                  5,099,847                --              --                        5,099,847
Property and equipment, net                             505,632                --              --                          505,632
Other assets                                             13,076                --              --                           13,076
                                                   ------------      ------------    ------------                    ------------
Total assets                                       $  5,617,755                --              --                    $  5,617,755
                                                   ============      ============    ============                    ============
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable                                   $  1,856,021                --              --                    $  1,856,021
Accrued liabilities                                   1,336,237             6,251          (6,251)              1       1,336,237
Notes payable                                           927,945                --              --                         927,945
Current portion of long-term debt                       911,437                --              --                         911,437
Bridge loans with                                     2,505,614            10,000         (10,000)              1              --
stockholders                                                                           (2,505,614)              2
                                                   ------------      ------------    ------------                    ------------
Total current liabilities                             7,537,254            16,251      (2,521,865)                      5,031,640
Long-term debt                                        1,012,473                --              --                       1,012,473
Redeemable convertible preferred stock               73,394,994                --     (73,394,994)              2              --
Stockholders' deficit:
Common stock                                              5,093            15,040           7,057               2          12,150
                                                             --                --         (15,040)              1
Additional paid-in                                           --             9,960      75,893,551               2      75,893,551
capital                                                                                    (9,960)              1
Deficit accumulated during the development stage    (76,332,059)          (41,251)         41,251               1    (76,332,059)
                                                   ------------      ------------    ------------                    ------------
Total stockholders' deficit                         (76,326,966)          (16,251)     75,916,859                       (426,358)
                                                   ------------      ------------    ------------                    ------------
Total liabilities and
stockholders' deficit                              $  5,617,755      $         --    $         --                    $  5,617,755
                                                   ============      ============    ============                    ============
Proforma Consolidating Statement of Operations (Unaudited)
MicroMed               Salmon
                                                       Technology, Inc.       Express, Inc.                            MicroMed
                                                      ---------------------  ----------------
                                                        For the six           For the six                        Technology, Inc.
                                                         months ended          months ended
                                                          March 31,              May 31,       Pro Forma   Adjustment   Pro Forma
                                                             2005                  2005       Adjustments   Number   Consolidated
                                                          ------------        ------------   ------------  ----------------------
Revenues:
International product sales                               $  1,027,965        $         --   $         --            $  1,027,965
Clinical reimbursements                                      2,236,887                  --             --               2,236,887
                                                          ------------        ------------   ------------            ------------
  Total revenue                                              3,264,852                  --             --               3,264,852
Operating expenses:
Research and development                                     6,229,893                 823                        3     6,230,716
General and administrative                                   1,652,216               3,256                        3     1,655,472
                                                          ------------        ------------   ------------            ------------
  Total operating expenses                                   7,882,109               4,079             --             (7,886,188)
Loss from operations                                        (4,617,251)             (4,079)            --             (4,621,336)
                                                          ------------        ------------   ------------            ------------
Interest income                                                 43,317                  --             --                 43,317
Interest expense                                              (202,598)                 --             --               (202,598)
                                                          ------------        ------------   ------------            ------------
  Net loss                                                  (4,776,538)             (4,079)            --             (4,780,617)
                                                          ------------        ------------   ------------            ------------
Convertible preferred stock dividends and accretion         (2,648,198)                 --     (2,648,198)        2            --
                                                          ------------        ------------   ------------            ------------
Net loss available for common stockholders                $ (7,424,736)       $     (4,079)  $ (2,648,198)           $(4,780,617)
                                                          ============        ============   ============            ============
Basic and diluted net loss available to common
stockholders                                              $      (1.46)                                           3  $     (0.33)
                                                          ============                                               ============
Weighted average common shares outstanding                   5,093,040                                                 14,460,000
                                                          ============                                               ============
49
MicroMed          Salmon
                                                    Technology, Inc.   Express, Inc.                               MicroMed
                                                                                                                  Technology,
                                                      For the  twelve months ended                                   Inc.
                                                      December 31,     November 30,    Pro Forma      Note         Pro Forma
                                                         2004              2004       Adjustments   Reference     Consolidated
                                                      -----------      -----------    -----------   -----------   -----------
Revenue:
International product sales                             1,717,477               --             --                   1,717,477
Clinical reimbursements                                 4,218,711               --             --                   4,218,711
                                                      -----------      -----------    -----------                 -----------
 Total revenue                                          5,936,188               --             --                   5,936,188
Operating expenses:
Research and development                               12,263,871           16,304                                 12,280,175
General and administrative                              2,505,185           10,297                                  2,515,482
                                                      -----------      -----------    -----------                 -----------
Total operating expenses                               14,769,056           26,601             --             4    14,795,657
                                                      -----------      -----------    -----------                 -----------
Loss from operations                                   (8,832,868)         (26,601)                                (8,859,469)
 Interest income                                           71,306               --             --                      71,306
 Interest expense                                        (178,034)              --             --                    (178,034)
                                                      -----------      -----------    -----------                 -----------
Net loss                                               (8,939,596)         (26,601)            --                  (8,966,197)
Convertible preferred stock dividends and accretion    (5,316,392)              --     (5,316,392)            2            --
                                                      -----------      -----------    -----------                 -----------
Net loss available to common stockholders             (14,255,988)         (26,601)   $ 5,316,392                  (8,966,197)
                                                      ===========      ===========    ===========                 ===========
Basic and diluted net loss per share available to
common stockholders                                   $     (2.80)                                                $     (0.62)
                                                      ===========                                                 ===========
Weighted average common shares outstanding              5,093,040                                             3    14,460,000
                                                      ===========                                                 ===========
The adjustments related to the unaudited pro forma consolidating balance sheet
are computed assuming the acquisition of MicroMed Technology by Salmon was
consummated on March 31, 2005. The adjustments related to the unaudited pro
forma consolidating statement of operations for the three months ended March 31,
2005 and the year ended December 31, 2004 are computed assuming the acquisition
was consummated at January 1, 2005 and January 1, 2004, respectively.

NOTE 1

In connection with the acquisition by Salmon, MicroMed Technology did not assume
any assets or liabilities of Salmon and, in connection with the merger, as
consideration for the cancellation of shares by Mr. Smith, Salmon will
distribute its assets held prior to the Merger to Mr. Smith. Accordingly,
Adjustment 1 reflects the distribution of accrued liabilities and notes payable
of $16,251 to Mr. Smith. The capital structure of Salmon was converted to the
structure of MicroMed.

NOTE 2

Adjustment 2 reflects the recapitalization of Salmon and MicroMed Technology as
a result of the Merger, which includes the following adjustments:

                                       50
-     The effects of the 1-for-3.3528 reverse stock split by Salmon to be
            effected immediately preceding the Merger;
      -     The cancellation of 10,010,800 shares of common stock held by Mr.
            Smith;
      -     The conversion of all MicroMed preferred stock to common stock prior
            to the Merger;
      -     The cancellation of convertible preferred stock dividends and
            accretion. Amounts by class of redeemable convertible preferred
            stock cancelled are:

December 31, 2004

     Series A   $  497,199

     Series B   $  909,955
     Series C   $1,744,683
     Series D   $2,164,556
                ----------
                $5,316,392
                ==========

March 31, 2005

     Series A   $  248,600

     Series B   $  454,978

     Series C   $  867,994

     Series D   $1,076,626
                ----------
                $2,648,198

      -     The issuance of 12,960,000 shares of common stock to the
            stockholders of MicroMed Technology in exchange for the issued and
            outstanding common and preferred stock of MicroMed Technology and
            upon conversion of the 2004 and 2005 Bridge Loans.

NOTE 3

The following is a reconciliation of MicroMed's weighted average shares
outstanding from an historical basis to a pro forma basis at March 31, 2005 and
December 31, 2004.
Weighted average common shares outstanding - historical                 5,093,040

Add:
Redeemable convertible preferred stock:
Series A                                                               11,673,820 (a)
Series B                                                               47,924,359 (a)
Series C                                                              111,831,846 (a)
Series D                                                            1,085,774,873 (a)
                                                                   --------------
                                                                    1,262,297,938
Shares issuable upon conversion of 2004 and 2005 Bridge Loan (b)    2,989,653,013
                                                                   --------------
                                                                    4,251,950,951

Deduct:
Affect of reverse stock split (c)                                  (4,238,991,844)
                                                                   --------------
Subtotal                                                               12,960,000
Issuance of shares to existing Salmon stockholders (d)                  1,500,000
                                                                   --------------
Weighted average common shares outstanding - pro forma                 14,460,000
                                                                   --------------
51
(a)   After giving affect to conversion at a ratio of 11.67-for-1, 23.96-for-1,
      31.79-for-1 and 236.40-for-1, respectively.

(b)   Assumes the utilization of the entire $3.0 million and $1.5 million
      available under the 2004 and 2005 Bridge Loans, respectively.

(c)   Gives affect to the 1-for-328.08 reverse stock split of MicroMed's common
      stock upon closing of the reverse merger.

(d)   Represents the shares issued at the time of the closing of the merger to
      existing Salmon stockholders.

NOTE 4

MicroMed Technology's results of operations would include an estimated $713,000
of stock compensation expense attributable to 540,000 options, at an exercise
price of $0.01, that will be granted at the time of the recapitalization of
Salmon and MicroMed Technology to employees and officers of MicroMed, had the
Merger taken place on January 1, 2004 or January 1, 2005.

                            CHANGE IN FISCAL YEAR END

Upon consummation of the Merger, the Company changed its fiscal year end from
November 30 to December 31.

                              MICROMED'S OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF MICROMED'S FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion of MicroMed's financial condition and results of
operations should be read in conjunction with its financial statements and the
related notes, and the other financial information included in this information
statement. With respect to this discussion, the terms "MicroMed," the "Company,"
"we," "us," and "our" refer to MicroMed Technology, Inc..

FORWARD-LOOKING STATEMENTS

The forward-looking comments 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. Additional
factors that could cause or contribute to such differences can be found in the
following discussion, as well as in the section entitled "Risks Related to
MicroMed."

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
March 31, 2005, we had an accumulated deficit of approximately $76 million. We
expect to continue to incur operating losses at least through 2007. Further, we
expect operating expenses to increase as we seek U.S. regulatory clearance for
the DeBakey VAD, build a technical support organization for product introduction
and market development, continue engineering and development projects, and
increase administrative activities to support our planned growth.

                                       52
Our operations involve the manufacture and distribution of the DeBakey VAD. We
have received regulatory approval to sell the DeBakey VAD in Europe and are
involved in two clinical trials in the U.S., for which we receive reimbursements
for our products from hospitals involved in our clinical trials that are
categorized as revenues. We sell our products through distributors
internationally and have direct relationships with hospitals in our U.S. trials.

The role of implantable ventricular assist as a key therapeutic tool for the
treatment of advanced heart failure continues to emerge. Since the initial use
of VADs began in 1993 as a bridge to heart transplantation, the market has
recently grown to include patients that are ineligible for a heart transplant.
This use has been coined as "Destination Therapy" since it is considered a
complete therapy rather than a bridge to a next step in the therapeutic
spectrum. The demand for heart transplantation far exceeds the available supply
of donor hearts (the American Heart Association estimates that 100,000 persons
in the US need a heart transplant each year, but there are only approximately
2,000 heart transplants conducted each year in the U.S.). The bridge to
transplant market is a subset of the heart transplant market and is therefore a
relatively small market, estimated by analysts to be approximately $100 million
worldwide. Accordingly, adoption rate by physicians as a destination therapy is
the key to VAD market growth. Patients are referred to cardiovascular surgeons
for VAD implantation from heart failure cardiologists, mostly after the patient
has failed to respond to conventional drug therapy. Many heart failure
cardiologists are not familiar with VAD technologies or believe that VAD
technologies are not suitable for a large percentage of their patients. One of
the challenges faced by the VAD industry is to gain the confidence of these
heart failure cardiologists so that they will refer more patients for VAD
implantation.

The DeBakey VAD addresses the failure of the left ventricle, the main pumping
chamber of the heart, to pump adequate oxygenated blood throughout the body.
Right ventricular failure is commonly treated by pharmaceutical agents, but the
use of RVADs or support of both ventricles (BiVAD) could increase. The need for
support of the right ventricle may affect revenue since a matched right
ventricular system may be chosen from another company.

Adverse events are typically anticipated due to the advanced nature of the
patient's heart failure and other organ involvement. These may include, but are
not limited to thrombus, bleeding, infection, end of organ failure and device
malfunction. If trends of adverse events for the DeBakey VAD exceed those of
competitive devices, it would likely result in reduced product utilization and
lower revenues for MicroMed.

The VAD market is segmented by product type and specific indication. The advent
of other heart failure technologies geared toward healthier heart failure
patients may delay or preclude the referral of patients for DeBakey VAD device.
Moreover, although those products are not intended for the same patient
population as a VAD, overlap does occur. This is exemplified through
biventricular pacemakers, cardiac restraining devices and pharmaceutical agents.

The VAD industry is undergoing a period of substantial technological change. The
most obvious change is the shift from large pulsatile devices such as the
HeartMate XVE device to the much smaller continuous flow devices such as the
DeBakey VAD or the HeartMate II device. There are also differences in the
technologies of continuous flow VADs. For example, the DeBakey VAD and the
HeartMate II utilize mechanical bearings to stabilize the impeller. Some
companies are developing VADs with magnetically suspended impellers, under the
assumption that elimination of a mechanical shaft would avoid long term bearing
wear and reduce heat that can contribute to thrombus formation. New technologies
with superseding benefits may affect MicroMed's rate of enrollment in studies,
the date of study completion, commercial launch times and ultimate market
penetration. There is no way to predict which of these technologies, if any,
will succeed in the marketplace.

The current practice for some VAD companies is to place their products in
hospitals on a consignment basis. Broad adoption of this practice could delay
achievement of MicroMed's revenue objectives.

A typical total for billed charges of a VAD implantation is significant
(normally $175,000 to $200,000). VAD implantation is covered by most private
insurance and by CMS for Medicare-eligible patients. Although Medicare
reimbursement was increased to an average of $136,000 in October 2004, there is
no assurance that this reimbursement level will be sufficient enough of an
economic incentive to convince potential VAD hospital customers to develop or
expand a VAD implant program. Private insurance contracts vary by hospital and
by carrier; however, the reimbursement level from private insurance may not be
sufficient to support developing or expanding a VAD implant program.

                                       53
The majority of implants of the DeBakey VAD and associated revenues over the
next two years are expected to be related to MicroMed's U.S. clinical trials.
Due to the protocols and the inclusion/exclusion criteria associated with the
trials, the number of potential implant patients that can receive a DeBakey VAD
during clinical trials is much smaller than the overall VAD patient population.
Accordingly, clinical trial implants and associated revenues, earnings and cash
flows are inherently difficult to predict and will continue to be so until
MicroMed receives commercial approval to market the product in the U.S.

MicroMed faces several potential challenges in its drive for commercial success,
including raising sufficient capital to fund its business plan, motivating
surgeons involved in MicroMed's clinical trials to continue to implant the
DeBakey VAD so that MicroMed can complete trials and gain FDA approval to market
the products in the U.S., competition from established, well funded companies
with competitive technologies, and future competition from companies that are
developing competitive technologies, some of whom are larger companies with
greater capital resources than MicroMed. Additionally, the overall results of
our bridge to transplant ("BTT") trial to date have resulted in lower than
expected survival to transplant percentages. The Company now believes that it is
likely that it will not meet the performance goal survival rate for the patients
in this trial. This is likely to substantially increase the time required to
obtain FDA approval and the time when the Company would expect to generate
revenues from commercial sales of the DeBakey VAD. Further, the Company has only
enrolled 8 patients to date in its Destination Therapy trial and believes that
it needs to redesign the structure of the trial to accommodate a shorter PMA
pathway. Under the current design of its Destination Therapy trial (360 patients
on a 2:1 randomization against the HeartMate XVE), the Company originally
anticipated completing enrollment between late 2008 to late 2010, which it
believed would result in PMA approval between early 2010 to early 2012. The
Company is presently in discussions with its clinical consultants to develop the
specific new clinical trial parameters and protocols for the Destination Therapy
trial which it intends to request from the FDA. However, there is no assurance
that the Company will be able to convince the FDA to accept these changes.

MicroMed plans to achieve commercial success by:

o     Expanding usage of the DeBakey VAD in foreign markets

o     Completing the BTT and DT clinical trials in the U.S.

o     Providing strong customer service and response to customer requests and
      needs for product enhancements

o     Continually upgrading the product line to maintain technological
      advantages over other products and competitors

o     Raising sufficient capital to accomplish MicroMed's plans through the U.S.
      public capital markets

RESEARCH AND DEVELOPMENT

Our research and development activities have been primarily focused on the
development and pilot clinical trials of the DeBakey VAD. Since our inception in
1995 and through March 31, 2005 we have incurred research and development costs
of approximately $61.3 million.

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 product candidates, 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 candidates, we are unable to estimate
with any certainty the costs we will incur in the continued development of our
product candidates 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 candidates, as well as continue and expand
our research programs.

                                       54
The lengthy process of seeking regulatory approvals for our product candidates,
and the subsequent compliance with applicable regulations, require the
expenditure of substantial resources. Any failure by us to obtain, or any delay
in obtaining, regulatory approvals could cause our 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. While our significant accounting policies are
described in more detail in Note 2 to our financial statements, we believe the
following accounting policy 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 our DeBakey VAD ventricular assist devices and related equipment to
international hospitals involved in heart transplantation, to customers with
whom we have distribution agreements in certain international markets and to
hospitals in the U.S. (for our DeBakey VAD Child product only, which is approved
for sale in the U.S.). Under FDA rules, we are not allowed to sell products in
the U.S. until such time as we receive a Pre-Market Approval 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) 104, Revenue Recognition, when persuasive evidence of
an arrangement exists, fees are fixed or determinable, title has passed
(generally upon shipment), 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 30-180 days, depending on the customer and country, and we do not require
collateral. We periodically assess the collectibility of our receivables and
establish reserves, as necessary, based on various considerations including
customer credit history, payment patterns, and aging of accounts. Once
management determines an account receivable is not collectible, the account is
written off. We have not experienced significant collectibility problems to
date. If the collection history or aging of accounts receivable deteriorates, we
may have to record a charge to operations to establish an allowance for doubtful
accounts.

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 can not recover our costs as a result of such review, we
would have to record a charge to operations classified as cost of products sold.

Stock-Based Compensation. Statement of Financial Accounting Standards ("SFAS")
No. 123, Accounting for Stock-Based Compensation, allows us to adopt one of two
methods of accounting for stock options. We have elected the method that
requires disclosure only of stock-based compensation. Because of this election,
we continue to account for our employee stock-based compensation plans under
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees, and the related interpretations. Under APB No. 25, no compensation
expense is recorded for stock option grants to employees with an exercise price
equal to or greater than the fair value of underlying stock as determined by our
board of directors at the date of grant. For purposes of the SFAS No. 123
proforma disclosure, the estimated fair value of the options is assumed to be
amortized to expense over the options' vesting period. Compensation expense for
options granted to non-employees has been determined in accordance with SFAS No.
123 as the fair value of the consideration received or the fair value of the
equity instruments issued.

                                       55
RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued FAS 123(R) Shared-Based Payment. The statement
eliminates the ability to account for stock-based compensation using APB 25 and
requires such transactions be recognized as compensation expense in the
statement of operations based on their fair value on the date of grant, with the
compensation expense recognized over the period in which an employee is required
to provide service in exchange for the stock award. The statement is effective
for public companies at the beginning of the first interim or annual period
beginning after June 15, 2005; in the event the Merger is consummated, MicroMed
will adopt this statement on July 1, 2005 using a modified prospective
application. As such, the compensation expense recognition provisions will apply
to new awards and to any awards modified, repurchased or cancelled after the
adoption date. Additionally, for any unvested awards outstanding at the adoption
date, MicroMed will recognize compensation expense over the remaining vesting
period. MicroMed is currently evaluating the impact of SFAS 123(R) on its
financial condition and results of operation. In the event the Merger is
consummated there will be no unvested options at the date of adoption, thus
there will be no future compensation expense related to options granted as of
December 31, 2004. Grants awarded subsequent to December 31, 2004 will result in
increased compensation expense.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires an issuer to classify financial instruments that is within its scope as
a liability (or an asset in some circumstances). SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. The adoption of SFAS No. 150 had no impact on MicroMed.

In April 2004, the FASB issued FSP FASB Statement of Accounting Standards
("FAS") No. 129-1, "Disclosure of Information about Capital Structure, Relating
to Contingently Convertible Securities," to provide disclosure guidance for
contingently convertible securities. MicroMed adopted the disclosure provisions
in 2004 as they apply to MicroMed's convertible redeemable preferred stock.

RELATED PARTY TRANSACTIONS

In December 2004, we entered into a loan agreement with several of our
stockholders who have been party to sales of Series A, Series B, Series C and
Series D preferred stock to borrow up to $3 million (the "2004 Bridge Loan"). In
March 2005, we entered into a loan agreement (the "2005 Bridge Loan") with the
same stockholders that were party to the 2004 Bridge Loan. The parties to the
2004 and 2005 Bridge Loans were: Oxford Bioscience Partners and affiliated
entities, SV Life Sciences, Charterhouse Equity Partners II, L.P., Essex
Woodlands Health Ventures Fund IV, L.P., Mitsui & Co. Venture Partners, Trellis
Health Ventures LP, David Schecter and Travis E. Baugh. Refer to "Liquidity and
Capital Resources" below for more information regarding the 2004 Bridge Loan.

PRIVATE PLACEMENT AND RECAPITALIZATION

Immediately prior to the closing of the Merger, we closed a $4,991,683 private
placement (the "Private Placement") of its common stock and warrants. We engaged
Hunter World Markets, Inc. ("Hunter") as our placement agent in connection with
the Private Placement. Each investor in the Private Placement purchased shares
of our common stock at $1.33 per share and seven-year warrants, exercisable one
year after the date of issuance, to purchase 60% of the common stock purchased
by such investor in the Private Placement at a per share exercise price of $1.33
(all investors introduced to us by Hunter assigned their warrants to Hunter, an
aggregate of 1,804,511 warrants). The warrants are redeemable by the Company at
any time after one year from the date of issuance.

Prior to the closing of the Merger and prior to the closing of the Private
Placement, we effected a recapitalization whereby (i) all of our outstanding
shares of series A, B, C and D preferred stock will convert into shares of our
common stock at a conversion ratio of 11.67-for -1, 23.96-for-1, 31.79-for-1 and
236.40-for-1, respectively; (ii) amounts outstanding under our $3 million 2004
Bridge Loan converted into shares of our common stock; (iii) amounts outstanding
under our $1.5 million 2005 Bridge Loan converted into shares of our common
stock; and (iv) lastly, we effected a 1-for-328.08 reverse stock split of our
outstanding common stock. Following the recapitalization, but prior to the
closing of the Private Placement, we had 12,960,000 shares of outstanding common
stock and no outstanding shares of preferred stock.

                                       56
In addition, we plan to issue 540,000 post-split stock options under our new
2005 stock Incentive Plan. The per share price of all such newly issued options
under the 2005 Stock Incentive Plan will be $0.01 (post the reverse stock split
referenced above). After giving effect to the aforementioned stock split, there
will be 540,000 options outstanding under the 2005 Stock Incentive Plan and
15,822 options outstanding under the 1997 Stock Option Plan at the closing of
the Merger. This will result in the recognition of additional stock compensation
expense of $0.2 million for the three months ending March 31, 2005 and $0.2
million for each quarter thereafter through the three months ending March 31,
2010.

THREE MONTHS ENDED MARCH 31, 2005 AND 2004

REVENUES

We had revenues of $1.6 million for the three months ended March 31, 2005, as
compared to revenues of $1.4 million for the same period in 2004. The revenues
were higher due to $0.3 million more revenue from clinical trial reimbursements
in the United States as a result of more sites being recruited to join the
studies. The increase from clinical trial reimbursements was partially offset by
a $.01 decrease in international sales due primarily to additional competition
internationally, where two companies began clinical trials for VADs and were
providing their products at little or no charge to several hospitals.

RESEARCH AND DEVELOPMENT

Research and development expenses were $3.2 million for the three months ended
March 31, 2005 versus $3.4 million for the three months ended March 31, 2004,
representing a $0.2 million, or 6%, decrease. Significant components of the
change are as follows (in million):

                                    2005      2004     $ Change   % Change
                                   -------   -------   --------   --------

Production                         $   0.3   $   0.3      $(0.0)         0%
Engineering and Development            0.9       1.1       (0.2)       -20%
Quality, Clinical and Regulatory       1.4       1.3        0.1          7%
Sales and Marketing                    0.5       0.6       (0.1)       -17%
                                   -------   -------
                                   $   3.2   $   3.4
                                   =======   =======

      o     Production costs have decreased due to a change in certain supplies
            of various components of our products which have lowered our overall
            costs of production.

      o     Sales and Marketing costs have decreased due to lower travel related
            costs.

GENERAL AND ADMINISTRATIVE

General and administrative expenses were $1.0 million for the three months ended
March 31, 2005 versus $0.5 million for the three months ended March 31, 2004,
representing a $0.5 million, or 100%, increase. The increase was due to higher
legal and accounting costs associated with the pending reverse merger with
Salmon Express.

INTEREST EXPENSE

Interest expense was $0.1 million for the three months ended March 31, 2005
versus $0 for the three months ended March 31, 2004. The increase was due to
interest on the Venture Lending & Leasing loan entered into in 2004, our Bridge
Loans entered into in December 2004 and March 2004, and advances under the
working capital line from Silicon Valley Bank (see "Liquidity and Capital
Resources").

CONVERTIBLE PREFERRED STOCK DIVIDENDS AND ACCRETION

                                       57
Convertible preferred stock dividends and accretion are attributable to our
Series A, Series B, Series C and Series D Redeemable Convertible Preferred Stock
(see Note 7 of the audited financial statements). Dividends and accretions
related to our preferred stock remained consistent at $1.3 million for the three
months ended March 31, 2005 and 2004.

NET LOSS AND NET LOSS PER SHARE AVAILABLE TO COMMON STOCKHOLDERS

Net loss available to common stockholders increased to $4.0 million in the first
three months of 2005 from $3.8 million in the same period of 2004. Net loss per
share available to common stockholders increased to $0.78 in 2005 from $0.74 in
2004.

YEARS ENDED DECEMBER 31, 2004 AND 2003

REVENUES

We had revenues of $5.9 million for the year ended December 31, 2004 versus
revenues of $6.7 million in 2003. The decrease was due to lower revenues from
international sales of $316,000 and lower clinical reimbursements in the United
States of $450,000. International sales were down due to additional competition
internationally, where two companies began clinical trials for VADs and were
providing their products at little or no charge to several hospitals. Clinical
reimbursements were down in the United States due to slower than expected
implant rates in our BTT and DT clinical trials.

RESEARCH AND DEVELOPMENT

Research and development expenses were $12.3 million for the year ended December
31, 2004 versus $11.1 million for the year ended December 31, 2003, representing
a $1.2 million, or 11%, increase. Significant components of the change are as
follows (in million):

                                     2004      2003    $ CHANGE   % CHANGE
                                   -------   -------   --------   --------
Production                         $   3.7   $   3.8      $(0.1)        (2%)
Engineering and Development            1.8       1.5        0.3         20%
Quality, Clinical and Regulatory       3.6       2.5        1.1         44%
Sales and Marketing                    3.2       3.3       (0.1)        (3%)
                                   -------   -------
Total                              $  12.3   $  11.1
                                   =======   =======

o     Engineering and Development costs increased due to a write off of
      approximately $0.5 million of controllers that were returned with the
      Carmeda(R) coated VADs. Although the controllers were new and in working
      condition, we had instituted several engineering design changes which
      improved the controller to the point where we believed our customers would
      not want to use the older controllers.
o     Quality, Clinical, and Regulatory expenses consist of the expenses
      associated with maintaining our Quality Systems, the costs of our clinical
      trials, including travel and fees and expenses of our third-party Clinical
      Research Organization (CRO) and clinical trial monitoring costs, and the
      costs associated with dealing with the FDA, as well as other regulatory
      agencies around the world. The increase was due to expanded clinical trial
      activity in the U.S., particularly fees and expenses related to our CRO.

GENERAL AND ADMINISTRATIVE

General and administrative expenses were $2.5 million for the year ended
December 31, 2004 versus $1.9 million for the year ended December 31, 2003,
representing a $0.6 million, or 32%, increase. The increase was due to higher
personnel expenses, higher recruiting expenses and higher legal and travel
expenses in 2004 associated with a private placement process that was terminated
in the later half of the year.

                                       58
INTEREST INCOME

Interest income was $0.1 million for the year ended December 31, 2004 compared
to $0.1 million for the year ended December 31, 2003.

INTEREST EXPENSE

Interest expense was $0.2 million for the year ended December 31, 2004 versus $0
for the year ended December 31, 2003. The increase was due to interest on the
Venture Lending & Leasing loan entered into in 2004 along with advances under
the working capital line from Silicon Valley Bank (see "Liquidity and Capital
Resources").

CONVERTIBLE PREFERRED STOCK DIVIDENDS AND ACCRETION

Convertible preferred stock dividends and accretion are attributable to our
Series A, Series B, Series C and Series D Redeemable Convertible Preferred Stock
(see Note 7 of the audited financial statements). Dividends and accretions
related to our preferred stock remained consistent at $5.3 million for the years
ended December 31, 2004 and 2003.

NET LOSS AND NET LOSS PER SHARE AVAILABLE TO COMMON STOCKHOLDERS

Net loss available to common stockholders increased to $14.3 million in 2004
from $11.4 million in 2003. Net loss per share available to common stockholders
increased to $2.80 in 2004 from $2.25 in 2003.

RESTATEMENT OF FINANCIAL STATEMENTS

Effective July 1, 2003, in connection with the adoption of SFAS No. 150,
MicroMed treated its redeemable convertible preferred securities as mandatorily
redeemable and recorded the securities as a liability with the related dividends
and accretions accrued as interest expense. Upon additional evaluation of the
terms of the redeemable convertible preferred stock in 2004, it was determined
that the securities are contingently redeemable rather than mandatorily
redeemable, and the related dividends should have remained as part of
stockholders deficit and should not have been recorded as interest expense.
Because the shares are contingently redeemable under terms not controlled by
MicroMed, the redeemable convertible preferred stock is classified as mezzanine
equity in accordance with Article 5-02.28 of Regulation S-X expanded by ASR 268.
Accordingly, the financial statements as of December 31, 2003 have been restated
for the correction of this error surrounding the redemption features of the
redeemable convertible preferred securities. The restatement had no impact on
net loss available to common stockholders; however, it did impact net loss.
MicroMed has restated the statement of operations for the year ending December
31, 2003 as follows:
As Reported     Adjustments    2003 Restated
                                            ------------    -----------    -------------
Loss from operations                        $ (6,276,524)   $        --    $  (6,276,524)
Interest income                                  129,120             --          129,120
Interest expense                              (2,675,922)     2,668,196           (7,726)
                                            ------------    -----------    -------------
Net loss                                      (8,823,326)     2,668,196       (6,155,130)
Convertible preferred stock dividends         (2,621,922)    (2,668,196)      (5,290,118)
                                            ------------    -----------    -------------
Net loss available to common shareholders   $(11,445,248)   $        --    $ (11,445,248)
                                            ============    ===========    =============
LIQUIDITY AND CAPITAL RESOURCES

                                       59
As of March 31, 2005, cash and cash equivalents were $0.2 million. From our
inception through March 31, 2005, we used approximately $55.7 million in cash
for our operations. We have funded our cash requirements through the private
sale of equity, debt and credit facilities.

For the three months ended March 31, 2005, we used approximately $1.5 million in
cash for operations principally as a result of a net loss of $2.7 million, along
with net changes in other operating assets and liabilities of $1.1 million
offset by non-cash charges of $0.1 million for deprecation.

We used minimal cash in investing activities. We expect to continue to invest in
our infrastructure, including property and equipment to support our operations.
We anticipate that we will spend approximately $200,000-$300,000 in fiscal 2005
on capital expenditures.

Financing activities provided cash of $1.0 million during the three months ended
March 31, 2005, primarily from the receipt of proceeds of $1.5 million from a
bridge loan with certain stockholders (see below). These inflows were offset by
net payments of $0.5 million on the long-term note and credit facility during
the quarter.

In May 2004, we received $2.5 million (net $2.4 million after initial $0.1
million prepayment of principal) from a loan agreement we executed in May 2004
with Venture Lending & Leasing IV, Inc. ("VLL and the VLL Loan"). Pursuant to
the VLL Loan agreement, we borrowed $2.5 million, repayable in monthly principal
payments beginning in July 2004 and terminating in February 2007. Interest on
the promissory note is 11.137%. Amounts outstanding under the line of credit are
collateralized by a second lien on all of our assets, excluding our intellectual
property. In connection with the VLL Loan, we agreed to issue to VLL a warrant
to purchase $275,000 of our Series D preferred stock, which will be converted
into a warrant to purchase $275,000 of our common stock at a later date. The
warrant was issued to VLL on May 31, 2005. We were in default of the VLL Loan
agreement as of August 1, 2005 due to non-payment of our August payment. VLL
agreed to waive the event of default for non-payment for a period of two months,
with payments to VLL commencing again starting October 1, 2005.

In July 2004, we entered into a $4.5 million loan agreement with Silicon Valley
Bank, which replaced our working capital line of credit with Silicon Valley
Bank. Under the revised loan agreement, a new working capital line of credit is
available under a formula-based calculation applied to eligible accounts
receivable. Interest on draws under the new working capital line ranges from the
prime rate plus 1.25% to prime plus 1.5%, depending on our quick ratio at the
time of the advance. The loan agreement also requires the payment of collateral
handling fees that range from 0.15% to 0.50% (also dependent on our quick
ratio). The collateral handling fees are applied monthly to the daily gross
account balances. Amounts outstanding on the line of credit are collateralized
by all of our assets, excluding our intellectual property. The terms and
conditions of the line of credit prevent us from pledging our intellectual
property but do not require any financial covenants. Availability under the line
is based on the following formula: (1) 80% of the eligible U.S. accounts
receivable, up to a maximum loan balance of $4 million, and (2) 80% of eligible
foreign accounts receivable up to a maximum loan balance of $500,000. The
revised loan agreement expires April 15, 2006. At March 31, 2005, we had
availability under the working capital line and equipment line to draw an
additional $3.7 million

In December 2004, we entered into a loan agreement with several of our
stockholders (the "2004 Bridge Loan"). Under the terms of the 2004 Bridge Loan,
we may borrow up to $3 million (the "Loan Commitment") until August 31, 2005
(the "Loan Commitment Termination Date"), as amended. The notes issued under the
2004 Bridge Loan, as amended, are unsecured, bear interest at prime plus 3% and
are convertible into shares of our capital stock. As of March 31, 2005, we had
drawn $2.5 million of the $3 million commitment.

In March 2005, we executed a bridge loan agreement with the same stockholders
that were party to the 2004 Bridge Loan (the "2005 Bridge Loan"). Under the
terms of the 2005 Bridge Loan, we may borrow up to $1.5 million ("2005 Loan
Commitment") with terms identical to those of the notes issued under the 2004
Bridge Loan including the commitment to issue warrants to purchase common stock
to the stockholders on the unutilized portion of the 2005 Bridge Loan at the
expiration date, August 31, 2005, as amended. We do not anticipate issuing
warrants related to unutilized 2005 Bridge Loan Commitments since we expect to
draw the entire amount of the Loan Commitment.

                                       60
As consideration to the lenders for making both the Loan Commitment and the 2005
Loan Commitment, we agreed to issue warrants to purchase common stock to each
lender in an amount equal (rounded down to the nearest whole number) to the
quotient of (x) the product of (A) .25 and (B) the amount of the Loan Commitment
from that lender that we do not borrow prior to the earlier of the Loan
Commitment Termination Date and a sale of MicroMed by asset sale, merger or
other business combination ("Business Combination") and (y) the Exercise Price
(as defined below). The warrants are to be issued promptly following the Loan
Commitment Termination Date or, if we complete a Business Combination prior to
the Loan Commitment Termination Date, the warrants shall be issued prior to the
Business Combination. For purposes of the 2004 Bridge Loan and the 2005 Bridge
Loan, "Exercise Price" means $0.7721 per share (appropriately adjusted for any
stock dividends, stock splits, reverse stock splits, recapitalizations and
similar transactions ("Recapitalizations"), subject to further adjustment as
provided in the agreement. In the event all of the Loan Commitment and 2005 Loan
Commitment is drawn, no warrants will be issued with respect to the 2004 and
2005 Bridge Loans. We do not anticipate issuing warrants related to unutilized
2004 or 2005 Bridge Loan Commitments since we expect to draw the entire amount
of the Loan Commitment and 2005 Loan Commitment.

Notwithstanding the provisions of described above, if prior to issuing the
warrants as contemplated by the 2004 and 2005 Bridge Loans, we have not
completed a recapitalization whereby all shares of our preferred stock
outstanding on the date of the agreement are converted into common stock, then,
in lieu of issuing warrants to purchase common stock, we will issue warrants to
purchase preferred stock exercisable for a new series of preferred. The warrants
to issue preferred stock shall be issued to each lender in an amount equal
(rounded down to the nearest whole number) to the quotient of (x) the product of
(A) .25 and (B) the amount of Loan Commitment from that lender that we do not
borrow prior to the earlier of the Loan Commitment Termination Date and a
Business Combination and (y) $5.00. The new series of preferred stock (i) will
have a liquidation preference of $5.00 per share prior to distributions on any
other series or class, (ii) will convert into a number of shares of common stock
equal to the quotient of (x) $5.00 and (y) the Exercise Price, and (iii)
otherwise will have terms as nearly as possible identical to our existing Series
D Preferred Stock.

In the event we complete an equity financing of at least $2 million on or prior
to the Loan Commitment Termination Date, and in that financing we issue
securities with a common stock equivalent price per share lower than the
Exercise Price, then the Exercise Price for the warrants shall be reduced to the
Common Stock equivalent price per share of securities issued in that financing,
and appropriate adjustments to the number of shares issuable on exercise of the
warrants shall be made as provided in the warrants.

In the event we do not complete an equity financing of at least $2 million on or
prior to the Loan Commitment Termination Date, but we do complete a Business
Combination on or prior to June 30, 2005, then the exercise price for the
warrants, shall be reduced to 85% of the common stock equivalent price per share
to be paid by the purchaser in the Business Combination, if such reduced price
is less than the exercise price.

Immediately prior to the closing of the Merger, MicroMed Technology closed a
$4,991,683 private placement (the "Private Placement") of its common stock and
warrants. MicroMed Technology engaged Hunter World Markets, Inc. ("Hunter") as
its placement agent in connection with the Private Placement. Each investor in
the Private Placement purchased shares of MicroMed Technology common stock at
$1.33 per share and seven-year warrants, exercisable one year after the date of
issuance, to purchase 60% of the common stock purchased by such investor in the
Private Placement at a per share exercise price of $1.33 (all investors
introduced to MicroMed Technology by Hunter assigned their warrants to Hunter,
an aggregate of 1,804,511 warrants). The warrants are redeemable by the Company
under certain circumstances at any time after one year from the date of
issuance. The Company agreed to file a registration statement covering the
securities sold in the Private Placement within 30 days of the closing of the
Merger. As partial consideration for services rendered further to the Private
Placement, Hunter was issued 300,000 shares of MicroMed Technology's common
stock.

The shares of common stock of the Company are currently listed for quotation on
the Over-the-Counter Bulletin Board under the symbol "SXPI.OB." The Company is
in the process of obtaining a new trading symbol to reflect the recent corporate
name change.

We currently occupy approximately 22,000 square feet of space under a lease
which expires on May 31, 2007. The lease may be canceled by us by giving the
landlord 30 days notice prior to May 31 of any of the remaining years of the
lease. This space supports our immediate operational activities. As we expand
our leased space to support our growth, our occupancy costs will increase.

                                       61
We expect our cash requirements to increase significantly during 2005 as we
expand our U.S. clinical trial efforts, expand our technical support staff,
develop our administrative support activities and expand our international
marketing efforts. Additionally, as we achieve projected growth in revenues, we
anticipate significant working capital requirements, capital expenditures and
investments in our infrastructure. 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. If we complete the Private
Placement of at least $5 million and up to $20 million, we believe that we will
have sufficient cash and cash equivalents to meet projected operating
requirements for at least the next 12 months. However, if we do not complete the
Private Placement prior to the closing of the Merger, we will need to seek
additional funds from public and private stock offerings, borrowings under
credit lines or other sources. We cannot be certain that additional capital will
be available on favorable term, or at all. If adequate funds are unavailable, we
may be required to scale back or discontinue our product development program or
clinical trials, or obtain funds through strategic alliances that may require us
to relinquish rights to certain of our technologies.

CONTRACTUAL OBLIGATIONS

Below is a table setting forth our contractual obligations as of December 31,
2004:
Less than                              More than 5
                                   Total       One Year    1-3 Years    4-5 Years       years
                                 ----------   ----------   ----------   ----------   ------------
Operating Leases                 $  233,811   $  233,811   $       --   $       --   $         --

Notes Payable                    $1,177,472   $1,177,472           --           --             --

Bridge loans with stockholders   $1,000,000   $1,000,000           --           --             --

Long-term debt                   $2,162,015   $  927,945   $1,234,070           --             --
                                 ----------   ----------   ----------   ----------   ------------
TOTAL                            $4,573,928   $3,339,228   $1,234,070   $       --   $         --
                                 ----------   ----------   ----------   ----------   ------------
As of March 31, 2005, our Bridge loans with stockholders due in less than one
year increased to $2.5 million.

OFF-BALANCE SHEET ARRANGEMENTS

      As of March 31, 2005, we had no off-balance sheet arrangements.

        ANTICIPATED LIQUIDITY AND CAPITAL RESOURCES FOLLOWING THE MERGER

The Company assumed MicroMed Technology's assets and liabilities following the
Merger. Prior to the Merger, MicroMed Technology completed the Private Placement
of $4,991,683, including the conversion of approximately $4.5 million of
convertible notes issued in connection with the 2004 and 2005 Bridge Loans,
prior to the closing of the Merger. Therefore, the Company believes that it will
have sufficient cash and cash equivalents to meet projected operating
requirements for at least through the end of 2005. There can be no assurance
that additional financing will be available on terms favorable to us or at all.
If adequate funds are not available or are not available on acceptable terms,
the Company may not be able to fund expansion, take advantage of unanticipated
acquisition opportunities, develop or enhance services or products or respond to
competitive pressures. Such inability could harm the Company's business, results
of operations and financial condition.

ITEM 5.02       DEPARTURE OF DIRECTORS AND PRINCIPAL OFFICERS; ELECTION OF
                DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.

                                       62
Peter Smith Sr. and Eric Weitzman resigned as officers and directors of the
Company immediately after the Effective Time of the Merger.

Following the Merger, Travis E. Baugh, Dallas W. Anderson, Paul M. Frison, James
M. Garvey, Norwick B.H. Goodspeed, Phyllis Haberman, Cornelius T. Ryan and
Martin P. Sutter, each of whom are directors of MicroMed, were appointed to the
Board of Directors of the Company. In addition, the Company appointed Travis E.
Baugh as the Company's President and Chief Executive Officer, Betty Silverstein
Russell as Chief Operating Officer and Executive Vice President, Marketing,
Robert J. Benkowski as Senior Vice President, Engineering, and Timothy R. Placek
as Senior Vice President, Regulatory Affairs, Clinical Affairs and Quality
Systems and Michael A. Rutledge as Vice President, Controller and Corporate
Secretary. For complete information regarding the new officers and directors,
refer to "EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES" under Item 5.01
above.

ITEM 5.03       AMENDMENTS TO CERTIFICATE OF INCORPORATION OR BYLAWS; CHANGE IN
                FISCAL YEAR.

On August 10, 2005, the Company filed a Certificate of Amendment to its Articles
of Incorporation with the Nevada Secretary of State to effectuated a
1-for-3.3528 reverse stock split of its common stock immediately prior to the
Merger. A copy is attached hereto as Exhibit 3.1.

On August 10, 2005, the Company filed a Certificate of Incorporation to (i)
effectuate a reincorporation from the State of Nevada to the State of Delaware
and (ii) a corporate name change to "MicroMed Cardiovascular, Inc." A copy is
attached hereto as Exhibit 3.2.

Upon consummation of the Merger, the Company changed its fiscal year end from
November 30 to December 31.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements of Business Acquired. The financial statements of
MicroMed Technology, Inc. for the years ended December 31, 2004 and 2003 are
attached.

(b) Pro Forma Financial Statements. The required pro forma financial information
is included in item 5.01.

(c) Exhibits:

2.1      Agreement and Plan of Merger, dated as of January 31, 2005, by and
         among Salmon Express, Inc., MicroMed Technology, Inc., Salmon
         Acquisition Corp. and Pete Smith, Sr. (incorporated by reference to
         Exhibit 2.1 of the Registrant's Form 8-K filed February 1, 2005).
2.1(a)   First Amendment to Agreement and Plan of Merger, dated as of May 16,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr. (incorporated by reference
         to Exhibit 2.1 of the Registrant's quarterly report on Form 10-QSB for
         the three months ended May 31, 2005).
2.1(b)   Second Amendment to Agreement and Plan of Merger, dated as of July 29,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr. (incorporated by reference
         to Exhibit 2.1 of the Registrant's Form 8-K filed August 1, 2005).
2.1(c)   Third Amendment to Agreement and Plan of Merger, dated as of August 9,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr.

3.1      Certificate of Amendment to Articles of Incorporation.
3.2      Certificate of Incorporation of MicroMed Cardiovascular, Inc..
4.1      Form of Stock Purchase Warrant.
4.2      Registration Rights Agreement dated August 9, 2005.
10.1     Securities Purchase Agreement dated August 9, 2005.
99.1     Press Release.

                                       63
SIGNATURES

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

Date: August 12, 2005                       MICROMED CARDIOVASCULAR, INC.

                                            By: /s/ Travis E. Baugh
                                               ---------------------------------
                                            Name   Travis E. Baugh
                                            Title: Chief Executive Officer

                                       64
EXHIBIT INDEX

2.1      Agreement and Plan of Merger, dated as of January 31, 2005, by and
         among Salmon Express, Inc., MicroMed Technology, Inc., Salmon
         Acquisition Corp. and Pete Smith, Sr. (incorporated by reference to
         Exhibit 2.1 of the Registrant's Form 8-K filed February 1, 2005).
2.1(a)   First Amendment to Agreement and Plan of Merger, dated as of May 16,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr. (incorporated by reference
         to Exhibit 2.1 of the Registrant's quarterly report on Form 10-QSB for
         the three months ended May 31, 2005).
2.1(b)   Second Amendment to Agreement and Plan of Merger, dated as of July 29,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr. (incorporated by reference
         to Exhibit 2.1 of the Registrant's Form 8-K filed August 1, 2005).
2.1(c)   Third Amendment to Agreement and Plan of Merger, dated as of August 9,
         2005, by and among Salmon Express, Inc., MicroMed Technology, Inc.,
         Salmon Acquisition Corp. and Pete Smith, Sr.
3.1      Certificate of Amendment to Articles of Incorporation.
3.2      Certificate of Incorporation of MicroMed Cardiovascular, Inc..
4.1      Form of Stock Purchase Warrant.
4.2      Registration Rights Agreement dated August 9, 2005.
10.1     Securities Purchase Agreement dated August 9, 2005.
99.1     Press Release.

                                       65
EXHIBIT A

Financial Statements

MicroMed Technology, Inc.
(a development stage company)

Years ended December 31, 2004 and 2003 (Restated) and three months ended March
31, 2005 and period from inception (October 6, 1995) through March 31, 2005

                                       66
MicroMed Technology, Inc.

                          (a development stage company)

                              Financial Statements

                Years ended December 31, 2004 and 2003 (Restated)

                                    Contents

Report of Independent Registered Public Accounting Firm                  3

Report of Independent Public Accountants                                 4
Financial Statements
Balance Sheet                                                            5
Statements of Operations                                                 6
Statements of Stockholders' Deficit                                      7
Statements of Cash Flows                                                 8
Notes to Financial Statements                                            9

                                       67
Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
MicroMed Technology, Inc.

We have audited the accompanying balance sheet of MicroMed Technology, Inc. (a
Delaware corporation in the development stage), as of December 31, 2004, and the
related statements of operations, and stockholders' deficit, and cash flows for
the years ended December 31, 2003 (Restated) and 2004 and for the period from
inception (October 6, 1995) through December 31, 2004. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements for the period from inception (October 6,
1995) through December 31, 2000, were audited by other auditors who have ceased
operations and whose report dated April 11, 2001, expressed an unqualified
opinion on those statements. The financial statements for the period from
inception (October 6, 1995) through December 31, 2000, include total revenues
and net loss of $640,000 and $26,771,117, respectively. Our opinion on the
statements of operations, stockholders' deficit, and cash flows for the period
from inception (October 6, 1995) through December 31, 2004, insofar as it
relates to amounts for prior periods through December 31, 2000, is based solely
on the report of other auditors.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit on the Company's internal control over financial reporting . Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of MicroMed Technology, Inc. , at December 31, 2004, and
the results of its operations and its cash flows for the years ended December
31, 2003 (Restated) and 2004, and for the period from inception (October 6,
1995) through December 31, 2004 , in conformity with U.S. generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that MicroMed
Technology, Inc. will continue as a going concern. As more fully described in
Note 1, the Company has incurred recurring operating losses and has a working
capital deficiency. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

As discussed in Note 2 to the financial statements, the Company has restated its
financial statements for the year ended December 31, 2003.
/s/ Ernst & Young LLP

March 15, 2005
Houston, Texas

                                       68
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To MicroMed Technology, Inc.:

We have audited the accompanying consolidated balance sheets of MicroMed
Technology, Inc. (a Delaware corporation in the development stage ), and
subsidiary as of December 31, 2000 and 1999, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years then
ended, and for the period from inception (October 6, 1995) through December 31,
2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of MicroMed
Technology, Inc., and subsidiary, as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for the years then ended, and
for the period from inception (October 6, 1995) through December 31, 2000, in
conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Houston, Texas
April 11, 2001

THIS IS A COPY OF THE REPORT ISSUED BY ARTHUR ANDERSEN LLP, MICROMED'S FORMER
INDEPENDENT PUBLIC ACCOUNTANTS, IN CONNECTION WITH THE COMPANY'S FINANCIAL
STATEMENTS FOR THE PERIOD FROM INCEPTION (OCTOBER 6, 1995) THROUGH DECEMBER 31,
2000. THIS REPORT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP IN CONNECTION
WITH MICROMED'S FINANCIAL STATEMENTS FOR THE PERIOD FROM INCEPTION (OCTOBER 6,
1995) THROUGH DECEMBER 31, 2004.

                                       69
MICROMED TECHNOLOGY, INC.

                          (A development stage company)

                                  Balance Sheet
December 31,       March 31,
                                                                                      2004             2005
                                                                                  ------------      -----------

ASSETS                                                                                             (unaudited)
-------
Current assets:
Cash and cash equivalents                                                         $    687,162      $   211,272
Accounts receivable                                                                  1,616,283        1,432,446
Inventory                                                                            3,229,863        3,332,847
Prepaids and other assets                                                              221,897          122,482
                                                                                  ------------      -----------
Total current assets                                                                 5,755,205        5,099,047
Property and equipment, net                                                            572,198          505,632
Other assets                                                                            40,078           13,076
                                                                                  ------------      -----------
Total assets                                                                      $  6,367,481      $ 5,617,755
                                                                                  ============     ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable                                                                  $  1,267,572      $ 1,856,021
Accrued liabilities                                                                  1,016,740        1,336,237
Current portion of  long-term debt                                                     927,945          927,945
Note payable                                                                         1,177,472          911,437
Bridge loans from stockholders                                                       1,000,000        2,505,614
                                                                                  ------------      -----------
Total current liabilities                                                            5,389,729        7,537,254
Long-term debt                                                                       1,234,070        1,012,473
Redeemable convertible preferred stock:
Series A Preferred stock, $.001 par value, 1,000,000 shares authorized,
issued and outstanding                                                               6,201,682        6,325,982
Series B Preferred stock, $.001 par value, 2,000,000 shares authorized,
issued and outstanding                                                              12,668,718       12,896,207
Series C Preferred stock, $.001 par value, 3,700,000 shares authorized,
3,518,153 shares issued and outstanding                                             25,052,402       25,482,067
Series D Preferred stock, $.001 par value, 5,000,000 shares authorized,
4,593,011 shares issued and outstanding                                             28,158,092       28,690,738
Commitments and Contingencies
Stockholders' Deficit:
Common Stock, $.001 par value, 65,000,000 shares authorized, 5,093,040 shares
issued and outstanding                                                                   5,093            5,093
Deficit accumulated during development stage                                       (72,342,305)     (76,332,059)
                                                                                  ------------     ------------
Total stockholders' deficit                                                        (72,337,212)     (76,326,966)
                                                                                  ------------     ------------
Total liabilities and stockholders' deficit                                       $  6,367,481      $ 5,617,755
                                                                                  ============     ============
The accompanying notes are an integral part of these financial statements

                                       70
MICROMED TECHNOLOGY, INC.

                          (A development stage company)
                            STATEMENTS OF OPERATIONS
Years ended December 31,       Period from
                                               ------------------------       Inception
                                                                              (October 6,
                                                                                 1995)
                                                                               Through
                                                                               December
                                                                                  31,
                                                 2003            2004            2004
                                             ------------    ------------    ------------
                                              (Restated)
International product sales                  $  2,033,281    $  1,717,477    $  5,949,084

Clinical reimbursements                         4,668,709       4,218,711      12,768,301
                                             ------------    ------------    ------------
Total revenue                                   6,701,990       5,936,188      18,627,385

Expenses:
Research and development                       11,059,714      12,263,871      58,198,966

General and administrative                      1,918,800       2,505,185      15,971,399
                                             ------------    ------------    ------------
Total operating expenses                       12,978,514      14,769,056      74,170,365
                                             ------------    ------------    ------------
Loss from operations                           (6,276,524)     (8,832,868)    (55,542,980)

Interest income                              $    129,120    $     71,306    $  1,596,287

Interest expense                                   (7,726)       (178,034)       (605,933)
                                             ------------    ------------    ------------
Net loss                                     $ (6,155,130)   $ (8,939,596)   $(54,552,625)

Convertible preferred stock dividends and
accretion                                      (5,290,118)     (5,316,392     (18,543,381)
                                             ------------    ------------    ------------
Net loss available to common stockholders     (11,445,248)    (14,255,988)   $(73,096,006)
                                             ============    ============    ============
Basic and diluted net loss per share
available to common stockholders             $      (2.25)   $      (2.80)
                                             ============    ============
Weighted average common shares outstanding      5,092,618       5,093,040
                                             ============    ============
71
Period from
                                                                                   Inception
                                              Three months ended March 31,     (October 6, 1995)
                                            ---------------------------------  Through March 31,
                                                2004               2005              2005
                                            --------------    --------------- ---------------
                                             (Unaudited)         (Unaudited)       (Unaudited)
International product sales                    $    587,673      $    441,327      $  6,390,412

Clinical reimbursements                             846,869         1,176,150        13,854,451
                                               ------------      ------------      ------------
Total revenue                                     1,434,542         1,617,477        20,244,862

Expenses:
Research and development                          3,398,947         3,150,908        61,349,874

General and administrative                          495,471         1,013,279        16,984,678
                                               ------------      ------------      ------------
Total operating expenses                          3,894,418         4,164,187        78,334,552
                                               ------------      ------------      ------------
Loss from operations                             (2,459,877)       (2,546,710)      (58,089,689)

Interest income                                      20,125             7,835         1,604,122

Interest expense                                     (2,720)         (136,779)         (742,712)
                                               ------------      ------------      ------------
Net loss                                         (2,442,471)       (2,675,654)      (57,228,279)

Convertible preferred stock dividends and        (1,324,099)       (1,314,100)      (19,857,481)
accretion

Net loss available to common stockholders      $ (3,766,570)     $ (3,989,754)     $(77,085,760)
                                               ============      ============      ============
Basic and diluted net loss per share           $      (0.74)     $      (0.78)
available to common stockholders               ============      ============
Weighted average common shares outstanding        5,093,040         5,093,040
                                               ============      ============
The accompanying notes are an integral part of these financial statements

                                       72
MICROMED TECHNOLOGY , INC.

                         ( A development stage company )

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Deficit
                                                                                                        Accumulated
                                                     Common Stock         Additional      Deferred     During the
                                              ------------------------     Paid-In                      Development
                                                 Shares        Amount      Capital      Compensation       Stage          Total
                                              ------------   ---------   ------------    ----------    ------------    ------------
Issuance of common stock to founders
for cash in October 1995 at $0.01 per share      5,011,665   $   5,012   $     44,988    $       --    $         --    $   50,000
Services contributed by stockholders                    --          --        129,000            --              --       129,000
Net loss                                                --          --             --            --        (173,041)    (173,041)
                                              ------------   ---------   ------------    ----------    ------------   -----------
Balance, December 31, 1995                       5,011,665       5,012        173,988            --        (173,041)        5,959
Services contributed by stockholders                    --          --        171,050            --              --       171,050
Cash contributed by stockholders                        --          --         55,999            --              --        55,999
Net loss                                                --          --             --            --      (1,069,007)  (1,069,007)
                                              ------------   ---------   ------------    ----------    ------------  ------------
Balance, December 31, 1996                       5,011,665       5,012        401,037            --      (1,242,048)    (835,999)
Deferred compensation                                   --          --         48,380       (48,380)             --           --
Amortization of deferred compensation                   --          --             --        12,095              --       12,095
Net loss                                                --          --             --            --      (3,712,342)  (3,712,342)
                                              ------------   ---------   ------------    ----------    ------------  ------------
Balance, December 31, 1997                       5,011,665       5,012        449,417       (36,285)     (4,954,390)  (4,536,246)
Deferred compensation                                   --          --         29,020       (29,020)             --           --
Amortization of deferred compensation                   --          --             --        59,263              --       59,263
Net loss                                                --          --             --            --      (7,076,108)  (7,076,108)
                                              ------------   ---------   ------------    ----------    ------------  ------------
Balance, December 31, 1998                       5,011,665       5,012        478,437        (6,042)    (12,030,498) (11,553,091)
Issuance of warrants to
purchase common stock                                   --          --         64,207            --              --       64,207
Amortization of deferred compensation                   --          --             --         3,334              --        3,334
Dividends and accretion on redeemable stock             --          --        (70,070)           --              --      (70,070)
Net loss                                                --          --             --            --      (8,329,116)  (8,329,116)
Balance, December 31, 1999                       5,011,665       5,012        472,574        (2,708)    (20,359,614) (19,884,736)
Issuance of warrants to purchase common stock           --          --         85,859            --              --       85,859
Deferred compensation                                   --          --        243,216      (243,216)             --           --
Amortization of deferredcompensation                    --          --             --        23,000              --       23,000
Exercise of stock options                            4,250           4          3,326            --              --        3,330
Dividends and accretion on redeemable stock             --          --       (804,975)           --      (2,433,138)  (3,238,113)
Deficit
                                                                                                      Accumulated
                                                 Common Stock          Additional                      During the
                                                         Paid-In                       Deferred       Development
                                          Shares          Amount        Capital       Compensation       Stage           Total
                                        ------------   ------------   ------------    ------------    ------------   ------------
Net loss                                          --             --             --              --      (6,411,503)   (6,411,503)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, December 31, 2000                 5,015,915          5,016             --        (222,924)    (29,204,255)  (29,422,163)
Issuance of warrants to purchase
common stock                                  11,250             11          2,364              --              --         2,375
Deferred compensation                             --             --          9,110          (9,110)             --            --
Amortization of deferred compensation             --             --             --          45,768              --        45,768
Dividends and accretion on
redeemable stock                                  --             --        (11,474)             --      (3,153,533)   (3,165,007)
Net loss                                          --             --             --              --      (6,276,699)   (6,276,699)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, December 31, 2001                 5,027,165          5,027             --        (186,266)    (38,634,487)  (38,815,726)
Deferred Compensation                             --             --          2,406          (2,406)             --            --
Amortization of deferred compensation             --             --             --         (15,416)             --       (15,416)
Exercises of stock options                    58,875             59         11,716              --              --        11,775
Dividends and accretion on
redeemable stock                                  --             --        (14,122)             --      (1,449,559)   (1,463,681)
Net loss                                          --             --             --              --      (6,410,084)   (6,410,084)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, December 31, 2002                 5,086,040          5,086             --        (204,088)    (46,494,130)  (46,693,132)
Amortization of deferred compensation             --             --             --           2,406              --         2,406
Exercises of stock options                     7,000              7          1,393              --              --         1,400
Dividends and accretion on redeemable
stock (Restated)                                  --             --         (1,393)             --      (5,288,725)   (5,290,118)
Net loss (Restated)                               --             --             --              --      (6,155,130)   (6,155,130)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, December 31, 2003 (Restated)      5,093,040          5,093             --        (201,682)    (57,937,985)  (58,134,574)
Reversal of deferred compensation                 --             --             --         201,682        (201,682)           --
Issuance of warrant                               --             --         53,350              --              --        53,350
Dividends and accretion on
redeemable stock                                  --             --        (53,350)             --      (5,263,042)   (5,316,392)
Net loss                                          --             --             --              --      (8,939,596)   (8,939,596)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, December 31, 2004                 5,093,040          5,093             --    $         --     (72,342,305)  (72,337,212)
Dividends and accretion on redeemable
stock (unaudited)                                 --             --             --              --      (1,314,100)   (1,314,100)
Net loss (unaudited)                              --             --             --              --      (2,675,654)   (2,675,654)
                                        ------------   ------------   ------------    ------------    ------------   ------------
Balance, March 31, 2005                    5,093,040   $      5,093             --              --    $(76,332,059) $(76,326,966)
                                        ============   ============   ============    ============    ============  =============
The accompanying notes are an integral part of these financial statements

                                       73
MICROMED TECHNOLOGY, INC.

                          (A development stage company)
                            STATEMENTS OF CASH FLOWS
Years ended December 31,      Period from
                                                                 ----------------------------      Inception
                                                                                                  (October 6,
                                                                                                    1995)
                                                                                                  December 31,
                                                                     2003            2004            2004
                                                                 ------------    ------------    ------------
                                                                  (Restated)

Cash flows from operating activities
Net loss                                                         $ (6,155,130)   $ (8,939,596)   $(54,552,625)

Adjustments to reconcile net loss to net cash used
Depreciation and amortization                                         318,195         346,490       2,327,039

Conversion of accrued interest in Series C Preferred Stock                 --              --          95,778

Conversion of accrued interest in Series D Preferred Stock                 --              --         251,088

Services contributed by stockholders                                       --              --         300,050

Issuance of warrant                                                        --          53,350          53,350

Amortization of deferred compensation                                   2,406              --         130,450

Loss on disposal of fixed assets                                           --           1,798           1,798

Changes in assets and liabilities:
Accounts receivable                                                  (706,289)       (233,829)     (1,616,283)

Inventory                                                             717,883      (1,195,422)     (3,229,863)

Prepaids and other assets                                             150,783         (24,009)       (321,988)

Accounts payable and accrued liabilities                              680,607         331,627       2,327,454
                                                                 ------------    ------------    ------------

Net cash used in operating activities                              (4,991,545)     (9,659,591)    (54,233,752)

Cash flows from investing activities :
Purchase of property and equipment                                   (170,891)       (352,721)     (2,841,023)
                                                                 ------------    ------------    ------------

Net cash used in investing activities                                (170,891)       (352,721)     (2,841,023)

Cash flows from financing activities:
Proceeds from bridge loan from stockholders                                --       1,015,986      12,958,986

Repayments of bridge loans from stockholders                               --         (15,986)     (2,015,986)

Proceeds from issuance of notes payable                               200,000       4,015,415       4,215,415

Repayments of notes payable                                                --        (919,070)       (919,070)

Proceeds from issuance of warrants and preferred stock, net of             --              --      43,397,713
offering cost
Proceeds from issuance of common stock and cash contributed by          1,400              --         124,879
stockholders
                                                                 ------------    ------------    ------------

Net cash provided by financing activities                             201,400       4,096,345      57,761,937

Change in cash and cash equivalents                                (4,961,036)     (5,915,967)        687,162

Beginning cash and cash equivalents                                11,564,165       6,603,129              --
                                                                 ------------    ------------    ------------

Ending cash and cash equivalents                                 $  6,603,129    $    687,162    $    687,162
                                                                 ============    ============    ============

Supplemental disclosure of information:
Cash paid for interest                                           $      4,872    $    161,882    $    166,754

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      $  5,290,118    $  5,316,392    $ 18,543,381
stockholders
Period from
                                                                                                           Inception
                                                                       Three months ended March 31,    (October 6, 1995)
                                                                 -----------------------------------   Through March 31,
                                                                      2004               2005                2005
                                                                 ----------------    ---------------  ------------------
                                                                   (Unaudited)        (Unaudited)       (Unaudited)
Cash flows from operating activities

Net loss                                                          $ (2,442,471)       (2,675,654)     $(57,228,279)

Adjustments to reconcile net loss to net cash used                      93,009            74,646         2,401,685
Depreciation and amortization                                               --                --            95,778
Conversion of accrued interest in Series C Preferred Stock                  --                --           251,088
Conversion of accrued interest in Series D Preferred Stock                  --                --           300,050
Services contributed by stockholders                                        --                --            53,350
Issuance of warrant                                                         --                --           130,450
Amortization of deferred compensation
Loss on disposal of fixed assets                                            --             4,639             6,437

Changes in assets and liabilities:
Accounts receivable                                                    204,559           183,837        (1,432,447)

Inventory                                                             (458,025)         (102,984)       (3,332,847)

Prepaids and other assets                                               (2,820)          126,417          (195,571)

Accounts payable and accrued liabilities                               (46,918)          907,946         3,235,401
                                                                  ------------      ------------      ------------

Net cash used in operating activities                               (2,652,667)       (1,481,153)      (55,714,905)

Cash flows from investing activities:
Purchase of property and equipment                                    (142,781)          (12,719)       (2,853,742)
                                                                  ------------      ------------      ------------

Net cash used in investing activities                                 (142,781)          (12,719)       (2,853,742)

Cash flows from financing activities:
Proceeds from bridge loan from stockholders                                 --         1,505,613        14,464,599

Repayments of bridge loans from stockholders                                --                --        (2,015,986)

Proceeds from issuance of notes payable                                     --         1,293,780         5,509,195

Repayments of notes payable                                                 --        (1,781,411)       (2,700,481)

Proceeds from issuance of warrants and preferred stock, net of
offering cost                                                               --                --        43,397,713
Proceeds from issuance of common stock and cash contributed by
stockholders                                                                --                --           124,879
                                                                  ------------      ------------      ------------

Net cash provided by financing activities                                   --         1,017,982        58,779,919
                                                                  ------------      ------------      ------------
Change in cash and cash equivalents                                 (2,795,448)         (475,890)          211,272

Beginning cash and cash equivalents                                  6,603,129           687,162                --
                                                                  ------------      ------------      ------------

Ending cash and cash equivalents                                  $  3,807,681      $    211,272      $    211,272
                                                                  ============      ============      ============

Supplemental disclosure of information:
Cash paid for interest                                            $      6,560      $     86,149      $    252,903

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       $  1,324,099      $  1,314,100      $ 19,857,481
stockholders
The accompanying notes are an integral part of these financial statements

                                       74
MICROMED TECHNOLOGY, INC.

                          (A DEVELOPMENT STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2004
                    (INFORMATION AS OF MARCH 31, 2005 AND THE
                      THREE MONTHS ENDED MARCH 31, 2005 AND
                               2004 IS UNAUDITED)

1. ORGANIZATION

MicroMed Technology, Inc. ("MicroMed" or the "Company"), was incorporated in the
State of Texas on October 6, 1995 and was subsequently reincorporated on June
12, 1996, in the state of Delaware. MicroMed is a development stage company
which has devoted most of its efforts to research and product development of
medical products.

The Company's primary product is the DeBakey Ventricular Assist Device (the
"DeBakey VAD (R) "), a miniaturized heart pump. The DeBakey VAD (R) was designed
by a team of engineers and scientists with the National Aeronautics and Space
Administration ("NASA"), Baylor College of Medicine ("Baylor"), and the Company,
led by the famed heart surgeons Dr. Michael E. DeBakey and Dr. George P. Noon.
The Company received an exclusive license from NASA in June 1996 for the primary
technology for the DeBakey VAD (R) .

The Company began European clinical trials at various hospitals in Austria,
France, Germany, Italy, and Switzerland in 1998. The Company received CE Mark
approval to begin marketing the DeBakey VAD (R) in the European Union in April
2001, with a subsequent approval of an upgraded product in July 2002. The
Company received permission from the Food and Drug Administration ("FDA") to
begin clinical trials in the United States in May 2000 and is now in Phase III,
pivotal trials for two separate indications: bridge to heart transplant and
alternative to heart transplant/destination therapy. The Company received a
humanitarian device exemption (HDE) from the FDA to commercially sell the
DeBakey VAD(R) Child , a pediatric version of the device, in the U.S. in 2004.

The research and development activities engaged in by the Company involve a high
degree of risk and uncertainty. The ability of the Company to develop,
manufacture, and market its proprietary product is dependent on many factors
including, but not limited to, obtaining additional financing, attracting and
retaining key personnel, and successfully developing expanded manufacturing and
marketing capabilities. The Company's ability to develop these operations may be
impacted by uncertainties related to proprietary technologies, technological
change and obsolescence, successful completion of its U.S. regulatory clinical
trials, competition, government regulations and approvals, healthcare reform,
and product liability exposure. Additionally, the Company is reliant on its
exclusive license with NASA for the DeBakey VAD (R) technology, which is the
basis for the Company's main product. Accordingly, there can be no assurance of
the Company's future success. The Company will require additional financing in
order to complete the U.S. regulatory clinical trials of its proprietary
product, and there can be no assurances that such additional financing will be
available at terms acceptable to the Company.

To facilitate such financing, in January 2005, the Company executed an agreement
to merge with Salmon Express, Inc., a publicly traded Nevada Corporation. Once
effective, the combined entity will be renamed, "MicroMed Cardiovascular, Inc.,
and will reincorporate in the State of Delaware. Prior to the merger, and
subsequent to stockholder approval, the Company plans to affect a
recapitalization where all redeemable preferred stock will convert to common
stock and affect a reverse stock split. The Company will be the accounting
acquiror in the transaction.

                                       75
1. ORGANIZATION (CONTINUED)

The Company also entered into an engagement letter with the investment banking
firm to assist the Company in raising additional capital associated with the
merger. Under the terms of the engagement letter, the Company will pay the
investment bank a fee of 7% of all funds raised, excluding sales to our existing
shareholders and will issue warrants upon completion of an equity financing. The
funding contemplated under the engagement letter is anticipated to close at the
same time as the merger is consummated.

Should such financing not be obtained, the Company may be required to adjust its
current plan in order to retain adequate capital for conducting its operations.
The Company expects to continue to incur losses for the next few years. There
can be no assurances that the Company will successfully complete the transition
from a development stage company to a commercial company with successful
operations.

The Company believes that it can conserve its cash resources to fund operations
through at least mid 2005 if the funding, as described above, does not take
place. The Company's longer-term funding requirements will depend on many
factors, including the progress of the Company's research and development, the
success of the Company in bringing its proprietary products to market, and the
establishment of other collaborative relationships. There can be no assurances
additional funding will be available.

The Company has recurring operating losses and has a working capital deficiency.
Based on this information, management believes there is substantial risk that
the Company will not continue as a going concern. The financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM FINANCIAL STATEMENTS

The financial statements as of March 31, 2005 and for the three months ended
March 31, 2004 and 2005 are unaudited. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation in accordance with U.S. generally accepted accounting
principles have been included. Operating results for interim periods are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2005.

USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of three
months or less to be cash equivalents. Cash equivalents consist of investments
in high-grade commercial paper and money market securities.

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.

                                       76
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

A summary of inventory is as follows:

                                                 December 31,         March 31,

                                                   2004                  2005
                                                ----------            ----------
Raw materials                                   $  138,590            $   74,408
Work in progress                                 2,046,651             2,283,474
Finished goods                                   1,044,622               974,965
                                                ----------            ----------
                                                $3,229,863            $3,332,847
                                                ==========            ==========

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the balance sheet for cash and cash
equivalents, accounts receivable, accounts payable, accrued liabilities, notes
payable and long-term debt approximate their fair values due to the short-term
or variable rate nature of these instruments.

PROPERTY AND EQUIPMENT

Property and equipment consists of leasehold improvements, furniture and
laboratory production and office equipment. Property and equipment are carried
at cost less accumulated depreciation and amortization. Depreciation is
calculated using the straight-line method over a three to five-year estimated
useful life. Leasehold improvements are amortized over the shorter of the lease
term or the estimated useful life of the asset. Maintenance and repairs that do
not significantly improve or extend the life of assets are expensed as incurred.
Expenditures which improve or extend the life of assets are capitalized.

LONG-LIVED ASSETS

The Company routinely evaluates the carrying value of its long-lived assets. The
Company records impairment losses on long-lived assets used in operations when
events and circumstances indicate that assets may be impaired and the
undiscounted cash flows estimated to be generated by the assets are less than
the carrying amount of those assets. To date, no impairment charges have been
recognized.

REVENUE RECOGNITION

Revenue is recognized 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 (R) ventricular assist devices and related equipment to international
hospitals involved in heart transplantation, to customers with whom we have
distribution agreements in certain international markets and to hospitals in the
U.S. (for our DeBakey VAD (R) Child product only, which is approved for sale in
the U.S.). Clinical reimbursements consist of billings for products shipped to
hospitals participating in the Company's clinical trials. Product sales and
clinical trial reimbursements are recognized when evidence of an arrangement
exists, title has passed (generally upon shipment), the selling price is fixed
and determinable and collectibility is reasonably assured in according with SAB
104 "Revenue Recognition". The Company has no post-delivery obligations or
product sales containing, multiple elements. Shipping and handling costs are
included in research and development expense and totaled $128,461 and $70,900,
respectively for the years ended December 31, 2003 and 2004 and $20,841 and
$16,714, respectively, for the three months ended March 31, 2004 and 2005.
Shipping and handling costs recovered from customers and recorded in revenue
were approximately $27,000 and $18,995, respectively, for the years ended
December 31, 2003 and 2004 and $5,675 and $8,703, respectively, for the three
months ended March 31, 2004 and 2005.

The Company had one customer that made up 11% of total revenues during 2003 and
one customer that made up 12% of revenues during 2004. The Company had six
customers that each made up 16%, 15%, 13%, 13%, 12%, and 10% of total revenues
for the three months ended March 31, 2004. The Company had five customers that
each made up 14%, 12%, 12%, 10%, and 10% of total revenues for the three months
ended March 31, 2005.

                                       77
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RESEARCH AND DEVELOPMENT

Costs incurred in connection with research and development activities are
expensed as incurred. These costs consist of direct and indirect costs
associated with specific projects as well as fees paid to various entities that
perform certain research and testing on behalf of the Company.

STOCK-BASED COMPENSATION

Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for
Stock-Based Compensation , allows the Company to adopt one of two methods of
accounting for stock options. The Company has elected the method that requires
disclosure only of stock-based compensation. Because of this election, the
Company continues to account for its employee stock-based compensation plans
under Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock
Issued to Employees , and the related interpretations. Under APB No. 25, no
compensation expense is recorded for stock option grants to employees with an
exercise price equal to or greater than the fair value of underlying stock as
determined by the Company's board of directors at the date of grant. For
purposes of the SFAS No. 123 proforma disclosure, the estimated fair value of
the options is assumed to be amortized to expense over the options' vesting
period. Compensation expense for options granted to non-employees has been
determined in accordance with SFAS No. 123 as the fair value of the
consideration received.
Year ended December 31             Three months ended March 31

                                                                 2003               2004               2004              2005
                                                           --------------     --------------     --------------    --------------
Net loss available to common stockholders                  $  (11,445,248)    $  (14,255,988)    $   (3,766,570)     $(3,989,754)
Deduct: total compensation expense for options                   (153,172)          (149,471)           (38,585)         (38,340)
determined under fair value based methods for all awards   --------------     --------------     --------------    --------------
Pro forma net loss available to common stockholders        $  (11,598,420)    $ ( 14,405,459)    $   (3,805,155)     $(4,028,094)
                                                           ==============     ==============     ==============    ==============
Basic and diluted net loss per share available to common   $        (2.25)    $        (2.80)    $        (0.74)     $     (0.78)
stockholders                                               ==============     ==============     ==============    ==============
Pro forma basic and diluted net loss per share available   $        (2.28)    $        (2.83)    $        (0.75)     $     (0.79)
to common stockholders                                     ==============     ==============     ==============    ==============
The fair value of employee stock options granted was determined using the
Black-Scholes method based on the following weighted-average assumptions:

                                            Year ended December 31
                                           ------------------------

                                           2003                2004
                                           ----                ----
Expected dividend yield                     0.0%                0.0%
Risk-free interest rate                     3.5%                3.5%
Expected life (years)                        7                    7
Volatility                                  55%                  45%

INCOME TAXES

The Company accounts for income taxes under SFAS No. 109, Accounting for Income
Taxes , which provides for a liability approach to accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
the differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates that will be in effect
when the differences are expected to reverse.

                                       78
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NET LOSS PER SHARE

Basic and diluted net loss per share has been computed using the
weighted-average number of shares of common stock outstanding during the period.
Shares associated with stock options, warrants and preferred stock are not
included because they are antidilutive.

The following table presents the calculation of basic and diluted net loss per
share:
Year ended December 31           Three Months ended March 31
                                               ------------------------------    ------------------------------
                                                   2003              2004              2004              2005
                                               ------------      ------------      ------------    ------------
Net loss available to common shareholders      $(11,445,248)     $(14,255,988)     $ (3,766,570)   $(3,989,754)
                                               ============      ============      ============    ============
Weighted average common shares outstanding        5,092,618         5,093,040         5,093,040      5,093,040
                                               ============      ============      ============    ============
Basic and diluted net loss per share           $      (2.25)     $      (2.80)     $      (0.74)     $   (0.75)
available to common shareholders               ============      ============      ============    ============
The following historical outstanding anti-dilutive securities are not included
in the calculation of diluted net loss per share attributable to common
stockholders.
Year ended December 31              Three Months ended March 31
                                                             ----------------------------           ---------------------------
                                                                2003              2004                 2004             2005
                                                             ----------        ----------           ----------       ----------
Redeemable convertible preferred stock                       11,111,164        11,111,164           11,111,164       11,111,164
Options to purchase common stock                              5,851,366         5,757,866            5,851,366        5,757,866
Warrants to purchase common stock                             4,019,408         2,216,686            4,019,408          845,219
                                                             ----------        ----------           ----------       ----------
                                                             20,981,938        19,085,716           20,981,938       17,714,249
                                                             ==========        ==========           ==========       ==========
SEGMENT INFORMATION

The Company operates in one business segment, which primarily focuses on the
development, manufacture and sale of heart assist devices. All of the Company's
revenues have been derived from this business segment.

RESTATEMENT

Effective July 1, 2003, in connection with the adoption of SFAS No. 150, the
Company treated its redeemable convertible preferred securities as mandatorily
redeemable and recorded the securities as a liability with the related dividends
and accretion accrued as interest expense. Upon additional evaluation of the
terms of the redeemable convertible preferred stock in 2004 it was determined
that the securities are contingently redeemable rather than mandatorily
redeemable, and the related dividends should have remained as part of
stockholders' deficit and should not have been recorded as interest expense.
Because the shares are contingently redeemable under terms not controlled by the
Company, the redeemable convertible preferred stock is classified as mezzanine
equity in accordance with Article 5-02.28 of Regulation S-X expanded by ASR 268.
Accordingly, the financial statements as of December 31, 2003 have been restated
for the correction of this error surrounding the redemption features of its
redeemable convertible preferred securities. The restatement had no impact on
net loss available to common stockholders; however, it did impact net loss. The
Company has restated the statement of operations for the year ending December
31, 2003 as follows:

                                       79
As Reported       Adjustments      2003 Restated
                                              ------------      ------------      -------------
Loss from operations                          $ (6,276,524)     $         --      $ (6,276,524)
Interest income                                    129,120                --           129,120
Interest expense                                (2,675,922)        2,668,196            (7,726)
                                              ------------      ------------      ------------
Net loss                                        (8,823,326)        2,668,196        (6,155,130)
Convertible preferred stock dividends           (2,621,922)       (2,668,196)       (5,290,118)
                                              ------------      ------------      ------------
Net loss available to common stockholders     $(11,445,248)     $         --      $(11,445,248)
                                              ============      ============      ============
There was no impact on net loss per share available to common stockholders.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

There was no impact on net loss per share available to common stockholders.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued FAS 123(R) Shared-Based Payment. The statement
eliminates the ability to account for stock-based compensation using APB 25 and
requires such transactions be recognized as compensation expense in the
statement of operations based on their fair values on the date of grant, with
the compensation expense recognized over the period in which an employee is
required to provide service in exchange for the stock award. The statement is
effective for public companies at the beginning of the first interim or annual
period beginning after June 15, 2005 in the event the merger is consummated, the
Company will adopt this statement on July 1, 2005 using a modified prospective
application. As such, the compensation expense recognition provisions will apply
to new awards and to any awards modified, repurchased or cancelled after the
adoption date. Additionally, for any unvested awards outstanding at the adoption
date, the Company will recognize compensation expense over the remaining vesting
period. The Company is currently evaluating the impact of SFAS 123 (R) on its
financial condition and results of operation. In the event the merger is
consummated their will be no unvested options at the date of adoption, thus
there will be no future compensation expense related to options granted as of
December 31, 2004. Grants awarded subsequent to December 31, 2004 will result in
increased compensation expense.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires an issuer to classify financial instruments that is within its scope as
a liability (or an asset in some circumstances). SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. The adoption of SFAS No. 150 had no impact on the Company.

In April 2004, the FASB issued FSP FASB Statement of Accounting Standards
("FAS") No. 129-1, " Disclosure of Information about Capital Structure, Relating
to Contingently Convertible Securities " to provide disclosure guidance for
contingently convertible securities. We adopted the disclosure provisions in
2004 as they apply to the convertible redeemable preferred stock (see Note 7).
The 11,111,164 shares underlying our convertible redeemable preferred stock are
reportable under this new disclosure are antidilutive and, therefore, have been
excluded from the calculation of diluted net loss per share.

3. CONCENTRATION OF CREDIT RISK

Accounts receivable represent amounts due from customers for goods shipped. The
Company extends various terms to customers, with payment terms from 30-180 days,
depending on the customer and country, and does not require collateral. The
Company periodically assesses the collectibility of our receivables and
establishes reserves, as necessary, based on various considerations including
customer credit history, payment patterns, and aging of accounts. Once
management determines an account receivable is not collectible, the account is
written off. The

                                       80
3. CONCENTRATION OF CREDIT RISK (CONTINUED)

Company has not experienced significant collectibility problems to date. If the
collection history or aging of accounts receivable deteriorates, the Company may
have to record a charge to operations to establish an allowance for doubtful
accounts.

The Company's commercial customers are based in Europe and in the U.S. (for
DeBakery VAD Child product sales in the U.S., and the Company receives
reimbursements from hospitals in the U.S. from its clinical trials

4. PROPERTY AND EQUIPMENT

A summary of property and equipment is as follows:

                                                 December 31        March 31

                                                    2004              2005
                                                -------------     -------------
Office furniture and equipment                  $   1,057,539     $     906,545
Laboratory and production equipment                 1,253,699         1,240,769
Leasehold improvements                                508,155           508,907
                                                -------------     -------------
                                                    2,819,393         2,656,221
Less accumulated depreciation and                  (2,247,195)       (2,150,589)
amortization                                    -------------     -------------
                                                $     572,198     $     505,632
                                                =============     =============

Amortization of leasehold improvements for the years ended December 31, 2003 and
2004 and the three months ended March 31, 2004 and 2005 was $81,729, $86,256,
$21,304 and $22,093, respectively.

5. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

                                            December 31        March 31

                                               2004              2005
                                           -------------     -------------
Accrued pump replacement costs             $     113,250     $      56,962
Accrued payroll and vacation                     257,898           167,318
Accrued CRO costs                                238,987           738,987
Other accrued expenses                           406,605           372,970
                                           -------------     -------------
Total                                      $   1,016,740     $   1,336,237
                                           =============     =============

6. DEBT

Line of Credit

The Company has borrowings outstanding under two lines of credit with the same
financial institution. Both lines of credit are considered current liabilities
based on their terms.

The Company has borrowings under a previous line of credit used to purchased
equipment for which the commitment to borrow expired on December 18, 2003. At
December 31, 2004 and March 31, 2005, the Company had outstanding borrowings of
$78,489 and $70,615, respectively, at an interest rate of 6.75% that is being
paid on a monthly amortization through December 18, 2005.

                                       81
6. DEBT (CONTINUED)

The second line of credit is a $4,500,000 working capital line based on
receivables (the AR Line) entered into in July 2004. The AR Line provides for
borrowings under a formula-based calculation applied to eligible accounts
receivable. Interest on draws ranges from the prime rate plus 1.25% to prime
plus 1.5% (6.5% to 6.75% at December 31, 2004 and March 31, 2005), depending on
the Company's quick ratio at the time of the advance. The loan agreement also
requires the payment of collateral handling fees that range from 0.15% to 0.50%
(also dependent on the Company's quick ratio). The collateral handling fees are
applied monthly to the daily gross account balances. Availability under the line
is based on the following formula: (1) 80% of the eligible U.S. accounts
receivable, up to a maximum loan balance of $4 million, and (2) 80% of eligible
foreign accounts receivable up to a maximum loan balance of $500,000. Advances
made on eligible receivables are required to be repaid upon collection of the
receivables or at the end of 90 days, whichever comes first. The loan agreement
expires April 15, 2006.

As of December 31, 2004, there was $1,043,498 and $78,489 outstanding under the
AR and expired line, respectively, leaving the Company the ability to borrow up
to an additional $3,456,502 under the AR line. As of March 31, 2005, there was
$840,821 and $70,615 outstanding under the AR and expired line, respectively,
leaving the Company the ability to borrow up to an additional $3,659,179 under
the AR Line.

The AR Line is collateralized by all of the Company's assets, excluding the
Company's intellectual property.

Bridge Loan

In December 2004, the Company executed a bridge loan agreement with certain
stockholders (the 2004 Bridge Loan). Under the terms of the 2004 Bridge Loan,
the Company may borrow up to $3 million. The notes issued under the 2004 Bridge
Loan are unsecured and bear interest at prime plus 3% (fixed at the time of
issuance) (8.25% on advances outstanding as of December 31, 2004). All amounts
outstanding under the 2004 Bridge Loan are due on or before June 30, 2005 and
are convertible into common stock at a defined exchange ratio in the event of an
Equity Financing (as defined). In the event an Equity Financing does not take
place prior to June 30, 2005, the 2004 Bridge Loans may be converted, at the
option of the holders, into a new series of preferred stock with terms similar
to Series D Redeemable Convertible Participating Preferred Stock (see Note 7) .
As of December 31, 2004 and March 31, 2005, the Company has drawn $1 million and
$2.5 million, respectively, of the $3 million commitment. As specified in the
2004 Bridge Loan, warrants to purchase common stock will be issued to the
stockholders on the unutilized portion of the 2004 Bridge Loan at the expiration
date, June 30, 2005. No value has been ascribed to the warrants at December 31,
2004 as the Company expects to utilize all amounts under the 2004 Bridge Loan.
Subsequent to March 31, 2005, the Company has borrowed the remaining $0.5
million under the 2004 Bridge Loan.

On March 28, 2005, the Company executed a bridge loan agreement with the same
stockholders that were party to the 2004 Bridge Loan (the 2005 Bridge Loan).
Under the terms of the 2005 Bridge Loan, the Company may borrow up to $1.5
million with terms identical to those of the notes issued under the 2004 Bridge
Loan including the commitment to issue warrants to purchase common stock to the
stockholders on the unutilized portion of the 2005 Bridge Loan at the expiration
date, June 30, 2005. As of March 31, 2005, the Company had not borrowed any
funds under the 2005 Bridge Loan. No value has been ascribed to the warrants as
the Company expects to utilize all amounts under the 2005 Bridge Loan.

Long-term debt

In May 2004, the Company received $2.5 million (net $2.4 million after initial
$0.1 million prepayment of principal) from a loan agreement executed in May 2004
with Venture Lending & Leasing IV, Inc. ("VLL" and the "VLL Loan"). Pursuant to
the VLL Loan agreement, the Company borrowed $2.5 million, repayable in monthly
principal payments beginning in July 2004 and terminating in February 2007.
Interest on the promissory note is 11.137%. Amounts outstanding under the
agreement are collateralized by a second lien on all of the Company's assets,
excluding the Company's intellectual property. In connection with the VLL Loan,
the Company agreed to issue VLL a warrant to purchase preferred stock (see Note
7).

                                       82
The following table includes the aggregate future principal payments of the
Company's long term debt as of December 31, 2004:

2005                                                  $     927,945
2006                                                      1,046,960
2007                                                        187,110
                                                      -------------
                                                          2,162,015
Less current portion of long-term debt                     (927,945)
                                                      -------------
Total long-term debt                                  $   1,234,070
                                                      =============

7. STOCKHOLDERS' EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK

COMMON STOCK

The Company is authorized to issue 65,000,000 shares of common stock. Holders of
common stock are entitled to one vote per share on all matters to be voted upon
by the stockholders of the Company. In December 2004, the Board of Directors
authorized, and the stockholders approved, an amendment to the Restated
Certificate of Incorporation allowing for an increase in the Company's
authorized stock, increasing the total authorized common stock to 100,000,000
shares and authorizing a new series of Preferred Stock, Series E, to be issued
in the event of a conversion of the 2004 Bridge Loan, with terms similar to
Series D (see below). The Company has not yet filed the Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware, and
accordingly, has not reflected these amounts as authorized at December 31, 2004.

No dividends have been declared to date. The loan with Venture Lending & Leasing
IV, Inc. restricts the Company from paying dividends until an underwritten
public offering of our common stock with gross proceeds of at least $20,000,000
is completed.

REDEEMABLE CONVERTIBLE PREFERRED STOCK

The Company's preferred stock carries voting privileges based on its common
stock equivalent and contains certain protection against dilution, including
adjustment upon the occurrence of certain events. In addition, the holders of
preferred stock have certain registration rights that may be exercised after the
earlier of (a) December 31, 2003, or (b) 180 days after the closing of the
Company's first underwritten initial public offering of its capital stock.

In December 1999, the Company amended its Certificate of Incorporation
("Certificate") to provide for the redemption of its preferred stock. The
redemption provisions of the Certificate were amended again in June 2002 in
connection with the issuance of the Series D convertible preferred stock (see
below). The amended Certificate provides that at any time on or after the fifth
anniversary of the original issuance date of the Series D preferred stock, the
Company must, at the request of at least 66-2/3% of the holders of the
then-outstanding shares of the Series A, Series B, Series C, and Series D
preferred stock (collectively, the "Preferred Stock"), redeem all Preferred
Stock shares that are then outstanding in the following manner: 33-1/3% of all
shares of Preferred Stock shall be redeemed by the Company 90 days after such
redemption request is received by the Company; another 33-1/3% of the shares of
Preferred Stock shall be redeemed by the Company 455 days after the original
redemption request is received by the Company; and the final 33-1/3% of the
shares of Preferred Stock shall be redeemed by the Company 820 days after the
original redemption request is received by the Company.

The price at which the Preferred Stock shall be redeemed is the original
per-share purchase price (adjusted for any recapitalizations that occur) which
is $5.00 per share for each series of Preferred Stock plus (a), for Series A
preferred stock and Series B preferred stock, an amount determined by
multiplying the shares outstanding by $.0375 times the number of whole months
elapsed from the original issuance date of the Series D preferred stock and (b),
for Series C and Series D preferred stock, any accrued and unpaid dividends
since the original issuance date of the Series D preferred stock which accrue at
an annual rate of $.45 per share. At December 31, 2004, the amounts

                                       83
7. STOCKHOLDERS' EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

recorded in the balance sheet for all series of Preferred Stock reflects the
redemption amount that would be required to be paid if said Preferred Stock was
redeemed, which includes, cumulative unpaid dividends of $8,563,528 and
$5,758,393 for Series C and D, and accretion of redemption value of $1,491,596
and $2,729,864 for Series A and B. At March 31, 2005, the amounts recorded in
the balance sheet for all series of Preferred Stock reflects the redemption
amount that would be required to be paid if said Preferred Stock was redeemed,
which includes, cumulative unpaid dividends or $8,923,123 and $6,291,039 for
Series C and D, and accretion of redemption value of $1,615,896 and $2,957,354
for Series A and B. The earliest date that a redemption can occur is March 2007.

Series A Redeemable Convertible Preferred Stock - Each share of Series A
convertible preferred stock ("Series A Preferred Stock") may be converted at the
option of the holder (or is automatically converted in the event of an
underwritten initial public offering meeting certain conditions) into 4.5556
shares of common stock. The holders of Series A Preferred Stock are entitled to
receive dividends and other distributions equivalent to those paid on common
stock but have certain preferences over the holders of common stock with respect
to distributions in the event of sale or liquidation of the Company.

Series B Redeemable Convertible Preferred Stock - Each share of Series B
convertible preferred stock ("Series B Preferred Stock") may be converted at the
option of the holder (or is automatically converted in the event of an
underwritten initial public offering meeting certain conditions) into 2.704084
shares of common stock. The holders of Series B Preferred Stock are entitled to
receive dividends and other distributions equivalent to those paid on common
stock but have certain preferences over the holders of common stock and Series A
Preferred Stock with respect to distributions in the event of sale or
liquidation of the Company.

Series C Redeemable Convertible Participating Preferred Stock - Each share of
Series C convertible preferred stock ("Series C Preferred Stock") may be
converted at the option of the holder (or is automatically converted in the
event of an underwritten initial public offering meeting certain conditions)
into 2.704084 shares of common stock. Dividends accrue on each share of the
Series C Preferred Stock at the rate of $0.45 per share per annum and are
cumulative. The holders of Series C Preferred Stock are entitled to receive
dividends and other distributions equivalent to those paid on common stock but
have certain preferences over the holders of common stock, Series A Preferred
Stock, and Series B Preferred Stock with respect to distributions in the event
of sale or liquidation of the Company.

Series D Redeemable Convertible Participating Preferred Stock

Each share of Series D Preferred Stock may be converted at the option of the
holder (or is automatically converted in the event of an underwritten initial
public offering meeting certain conditions) into 6.475845 shares of common
stock. Dividends accrue on each share of the Series D Preferred Stock at the
rate of $0.45 per share per annum and are cumulative. The holders of Series D
Preferred Stock are also entitled to receive dividends and other distributions
equivalent to those paid on common stock but have certain preferences over the
holders of common stock, Series A Preferred Stock, Series B Preferred Stock, and
Series C Preferred Stock with respect to distributions in the event of sale or
liquidation of the Company.

Following the payments of liquidation preferences of $7.50 for Series D, and
$5.00 per share for all other series of Preferred stock, plus accrued but unpaid
dividends, an amount approximating a return of 8% per annum on the original
per-share purchase price will be paid first, to the holders of Series B, and
second, to the extent funds remain available, to the holders of Series A. After
full payments of the previously mentioned amounts, any remaining assets or
surplus funds would then be distributed to the holders of Preferred Stock and
common stock on a pro rata basis.

In connection with the 1999 Bridge Financing Agreement, the Company issued
warrants to purchase common stock to certain existing stockholders that provided
funding pursuant to the 1999 Bridge Financing Agreement. The warrants, which
contain certain antidilution provisions, allow the holders to purchase 777,095
shares of common stock at $1.29 per share (after giving affect to the
antidilution feature triggered by the issuance of Series D Preferred Stock) and
were exercisable in whole or in part until August 31, 2004. The fair value of
the warrants was determined to be de minimis at the measurement date based on
Black-Scholes pricing model with the following assumptions:

                                       84
7. STOCKHOLDERS' EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

volatility of 1%, an expected life of one year, a risk free interest rate of 5%
and no dividend yield. These warrants expired unexercised in August 2004.

WARRANTS

In connection with the Series C private offerings in 2000 and 1999, the Company
issued warrants to purchase common stock to the purchasers of the Series C
Preferred Stock. The warrants, which contain certain antidilution provisions,
allow the holders to purchase 2,397,094 shares of common stock at $1.29 per
share (after giving affect to the antidilution feature triggered by the issuance
of Series D Preferred Stock) and are exercisable in whole or in part until
December 2004 through February 2005 (depending on which date a particular
investment in the Series C financing was closed). The Company recognized the
fair value of the warrants of approximately $151,000 as additional paid-in
capital. The fair value of the warrants was determined using the Black-Scholes
pricing model and the following assumptions: volatility of 1%, an expected life
of one year, a risk free interest rate of 5% and no dividend yield. In December
2004, warrants to purchase an aggregate of 1,025,627 shares of common stock
expired unexercised. The remaining warrants outstanding at December 31, 2004 to
purchase an aggregate of 1,371,467 shares of common stock expired in February
2005.

In connection with a 2001 bridge loan that converted into shares of Series D
Preferred Stock, the Company issued warrants to purchase common stock to certain
existing stockholders. The warrants, which contain certain antidilution
provisions, allow the holders to purchase 534,379 shares of common stock at
$0.7721 per share and are exercisable in whole or in part until the expiration
dates ranging from June 2006 through February 2007 (based on the original date
the bridge loans were issued). The Company recognized the fair value of the
warrants of approximately $25,000. The fair value was determined using the
Black-Scholes pricing model with the following assumptions: volatility of 60%,
an expected life of five years, a risk free interest rate of 4% and no dividend
yield.

In connection with the Series D private offering in 2002, the Company issued
warrants to purchase common stock to an investment banking firm that acted as
placement agent for a portion of the offering. The warrants, which contain
certain antidilution provisions, allow the holders to purchase 310,840 shares of
common stock at $0.7721 per share and are exercisable in whole or in part until
August 2007. The value of the warrants was determined to be de minimis based on
the Black-Scholes pricing model using the following assumptions: volatility of
35%, an expected life of two years, a risk free interest rate of 4% and no
dividend yield.

In connection with the VLL Loan, the Company has committed to issue to VLL a
warrant (the "VLL Warrant" to purchase Series D Redeemable Convertible
Participating Preferred Stock with an aggregate exercise price of $275,000. The
warrant is to be issued at a triggering date which is the earlier of (a) the
Next Round Financing (as defined), (b) a Liquidity Event (as defined), or (c)
May 31, 2005. Although not issued until one of the triggering events, the
warrant was earned at the time the VLL Loan was signed. The Company determined
the value of the warrant based on the most reasonably likely scenario of
issuance which is May 31, 2005. The fair value of the warrant was determined to
be $53,350 using the Black-Scholes pricing model and the following assumptions:
volatility of 45%, an expected life of one year, a risk free interest rate of
4%, and a dividend yield of 9%. The fair value was recorded as debt issuance
costs and is being amortized to interest expense over the life of the VLL Loan.

STOCK OPTIONS

The 1997 Stock Option Plan (the "Plan"), as amended, provided for the granting
of options, either incentive or nonstatutory, to purchase up to 1,266,500 shares
of the Company's common stock. In February 2001, the Company's board of
directors and stockholders approved an increase in the number of shares that
could be issued pursuant to the Plan to 3,266,500 shares. In September 2002, the
Company's board of directors and stockholders approved an increase in the number
of shares that could be issued pursuant to the Plan to 7,103,689 shares. The
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. During 2003 and
2002, options were issued to certain officers and employees which vest over a
period of up to three years. Options expire ten years after the date of grant.

                                       85
7. STOCKHOLDERS' EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

Deferred compensation is recorded for stock-based compensation grants based on
the excess of the fair value of the common stock on the measurement date over
the exercise price ("Intrinsic Value"). The deferred compensation is amortized
over the vesting period of each unit of stock-based compensation grant,
generally three years. If the exercise price of the stock-based compensation
grants is equal to the estimated fair value of the Company's stock on the date
of grant, no compensation expense is recorded.

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

In June 2000, the Company reduced the exercise price of all its outstanding
options to $.20 per share. As a result, these options are subject to variable
accounting until they are exercised, cancelled or expire. Variable accounting
requires that increases in the intrinsic value of the options as measured at
each reporting date would be recorded as compensation. Fluctuations in future
deferred compensation and related compensation expense may be significant to the
extent the Company realizes changes in the fair value of its underlying common
stock. As of December 31, 2004 and March 31, 2005, 967,204 options were subject
to variable plan accounting.

During 2004, the Company reversed deferred compensation totaling $201,682 that
was originally recorded in 2000 in error related to the options that were
repriced. The error was corrected in the current year as it was not material
from a quantitative or qualitative standpoint to the Company's stockholders'
equity for the year ended December 31, 2004.

The following is a summary of option activity under the Plan:
Weighted-Average
                                                                    --------------------------
                                          Options Outstanding       Exercise Price  Fair Value
                                          -------------------       --------------  ----------
Balance, December 31, 2000                         1,244,704            0.20           0.26
Granted during the year                               18,500            0.20           0.20
Exercised during the year                            (11,250)           0.20           0.20
Cancellations and forfeitures during the year         (3,750)           0.20           0.20
                                                   ---------            ----           ----
Balance, December 31, 2001                         1,248,204            0.20           0.20
Granted during the year                            4,988,662            0.20           0.20
Exercised during the year                            (58,875)           0.20           0.20
Cancellations and forfeitures during the year        (48,125)           0.20           0.20
                                                   ---------            ----           ----
Balance, December 31, 2002                         6,129,866            0.20           0.20
Granted during the year                              183,000            0.20           0.20
Exercised during the year                             (7,000)           0.20           0.20
Cancellations and forfeitures during the year       (454,500)           0.20           0.20
                                                   ---------            ----           ----
Balance, December 31, 2003                         5,851,366            0.20           0.20
Cancellations and forfeitures                        (93,500)           0.20           0.20
                                                   ---------            ----           ----
Balance, December 31, 2004                         5,757,866            0.20           0.20
                                                   ---------            ----           ----

Balance, March 31, 2005                            5,757,866            0.20           0.20
                                                   =========            ====           ====
As of December 31, 2004 and March 31, 2005, there were 1,345,823 options
available for grant under the Plan. Options exercisable as of December 31, 2004
and March 31, 2005 are 4,525,701 and 4,571,451, respectively. As of December 31,
2004 and March 31, 2005, the weighted-average remaining contractual life for
options outstanding was 7.0 and 6.8 years, respectively.

                                       86
7. STOCKHOLDERS' EQUITY AND REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

STOCK OPTIONS GRANTED TO NON-EMPLOYEES

Stock compensation arrangements with non-employees are accounted for in
accordance with SFAS No. 123, as amended by SFAS No. 148, and EITF 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services , using a fair
value approach. The compensation costs of these arrangements are subject to
remeasurement over the vesting terms as earned. During the year ended December
31, 2004, the Company did not issue any options to non-employees. For the years
ending December 31, 2003 and 2004, and the three month periods ending March 31,
2004 and 2005, the Company recognized expense of $2,406, $-0-, $-0- and $-0-,
respectively, related to options granted to non-employees in 2000 and 2001.

RESERVED SHARES

The Company has reserved shares of common stock for future issuance as follows:
December 31        March 31
                                                              2004               2005
                                                           ----------       ----------

Conversion of redeemable convertible preferred stock:
Series A                                                    4,555,550        4,555,550
Series B                                                    5,408,161        5,408,161
Series C                                                    9,513,354        9,513,354
Series D                                                   29,743,616       29,743,616
Exercise of warrants to purchase common stock               2,216,686          845,219
1997 Stock Plan                                             7,103,689        7,103,689
                                                           ----------       ----------
Total                                                      58,541,056       57,169,589
                                                           ==========       ==========
8. RELATED-PARTY TRANSACTIONS

The Company has entered into employment agreements with several of its key
employees. The agreements specify various employment-related matters, including
the length of the agreement (ranging from six months to one year),
confidentiality requirements, competitive restrictions, assignment of
inventions, annual compensation, and severance benefits ranging from three
months' to eighteen months' salary in the event of termination without cause.

The Company entered into bridge loans with certain stockholders in December 2004
and March 2005 (see Note 6).

9. LICENSE AGREEMENTS

The Company has an exclusive license agreement with NASA (the "License
Agreement") which may be terminated in the event of a material breach of the
terms of the agreement or for failure to endeavor to convert the licensed
subject matter to a commercial form. However, the Company believes its ongoing
research and development efforts currently satisfy this obligation to endeavor
to commercialize the licensed subject matter. The License Agreement and related
agreements require the Company to pay royalties based on net sales of licensed
products. Additionally, the Company has executed several additional licenses
under which it has secured the rights provided under certain patents. Royalties
and milestone payments, payable under the terms of these agreements, are
expensed as incurred. During the years ended December 31, 2003 and 2004, and the
three month periods ending March 31, 2004 and 2005, the Company incurred
royalties and milestone payments of $59,634, $34,986, $0 and $0, respectively.

                                       87
10. COMMITMENTS AND CONTINGENCIES

COMMITMENTS

The Company currently leases office and manufacturing space under noncancelable
operating leases. Rental expense was approximately $210,000, $237,550, $59,412
and $64,956 for the years ended December 31, 2003 and 2004, and the three months
ended March 31, 2004 and 2005, respectively. The Company renewed its lease on
the above referenced office and manufacturing space in 2002 for five years, only
one of which the Company is committed to remain in the space and is
noncancelable. As of December 31, 2004, the future minimum noncancelable payment
related to this one year commitment is $233,811.

The Company has a standby letter of credit for $25,000 to secure its value-added
tax obligation in France. The Company has a Certificate of Deposit approximating
this amount collateralizing the standby letter of credit.

CONTINGENCIES

The Company is subject to numerous risks and uncertainties because of the nature
of and status of its operations and could be subject to claims and legal actions
arising in the ordinary course of business. The Company maintains insurance
coverage for events in amounts that it deems appropriate. Management believes
that uninsured losses, if any, will not be materially adverse to the Company's
financial position or results of operations.

11. 401(K) PLAN

The Company has a 401(k) plan ("the 401(k) Plan") whereby eligible employees
(employees over 21 years of age and have completed six months of service) may
contribute a percentage of eligible compensation but not greater than 20% of
their earnings up to the maximum as required by law. Company contributions are
discretionary. No such Company contributions have been made since inception of
the 401(k) Plan.

12. INCOME TAXES

The reconciliation of the statutory federal income tax rate to the Company's
effective income tax rate for the years ended December 31, 2003 and 2004, is as
follows:

                                                              DECEMBER 31
                                                        ----------------------
                                                         2003            2004
                                                        ------          ------
Statutory rate                                          (34.0)%         (34.0)%
Increase in deferred tax valuation allowance             34.4            33.9
Tax credit                                               (0.6)           (0.1)
Other                                                     0.2             0.2
                                                        ------          ------
                                                          0.0%            0.0%
                                                        ======          ======

Significant components of the Company's deferred tax assets and liabilities are
as follows:

                                       88
12. INCOME TAXES (CONTINUED)

                                                                   DECEMBER 31
                                                                      2004
                                                                 --------------
Deferred tax assets:
Federal net operating loss carryforwards                         $   14,917,343
                                                                 --------------
Research and development credits                                      2,998,800
Capitalized research and development expense                          1,285,900
Other deferred tax assets                                               261,567
Total deferred tax assets                                            19,463,600
                                                                 --------------
Less: valuation allowance                                           (19,463,600)
                                                                 --------------
Net deferred tax assets                                          $           --
                                                                 ==============

At December 31, 2004 the Company had net operating loss ("NOL") carryforwards
for income tax purposes of approximately $43.8 million, capitalized research and
development expense of $8.8 million, and research and development credits of
approximately $1.3 million . Changes in ownership as defined by federal income
tax regulations could limit the Company's ability to utilize these NOLs and tax
credits. Accordingly, the Company's ability to utilize the above NOL and tax
credit carryforwards to reduce future taxable income and tax liabilities may be
limited. Additionally, because U.S. tax laws limit the time during which NOLs
may be applied against future taxable income and tax liabilities, the Company
may not be able to take full advantage of its NOLs for federal income tax
purposes. The carryforwards will begin to expire in 2011 if not otherwise used.
A valuation allowance has been established to offset the Company's deferred tax
assets as the Company has had losses since inception.

13. SUBSEQUENT EVENT (UNAUDITED)

On May 31, 2005, the Company issued the VLL Warrant in accordance with the terms
described in Note 7.