Industry sources estimate that 30,000 patients are diagnosed with ruptured cerebral aneurysms each year in the United States. Embolic coiling is currently being used to treat approximately 30% of patients diagnosed with cerebral aneurysms in the United States. Industry sources also indicate that a significant percentage of patients diagnosed with cerebral aneurysms in European countries are treated using embolic coiling procedures and it is believed that embolic coiling procedures can be used to treat a similar percentage of patients with cerebral aneurysms in the United States as awareness grows among patients and physicians of the advantages of embolic coiling.

In 2002, The Lancet, a leading medical journal, published the results of the International Subarachnoid Aneurysm Trial, an independent, randomized clinical trial involving 2,143 patients in Europe, North America and Australia that compared aneurysm clipping with embolic coiling as a method of treating cerebral aneurysms. Known as ISAT, this trial concluded, based on a survey of patients one year after the trial, that among the patients participating in the trial, endovascular intervention with detachable platinum coils resulted in a 22.6% relative reduction in the risk of major brain injury or death compared with neurosurgical clipping of the aneurysm.

In a report published in 2002, Frost & Sullivan projected that the compound annual growth rate in the number of embolic coiling procedures in the U.S. would be 17% for the period from 2001 to 2008. It is believed that additional drivers of the growth in the market for embolic coiling products include the overall trend towards less invasive procedures, an increased number of interventionalists trained to perform embolic coiling procedures, and the aging population in whom aneurysms occur with greater frequency.

The Company’s microcoil delivery system consists of four main components, which are sold and provided individually. The Company’s Microcoil System is a single use sterile product which includes a deployable embolic microcoil attached to a device positioning unit. The Company’s Connecting Cable is a single use sterile product which carries the necessary electrical current from the power supply to allow deployment of the microcoil from the device positioning unit. The Company’s Device Control Box is a reusable non-sterile product, which is battery powered and provides the electrical energy to achieve microcoil deployment at the clinician’s command. The Company’s Concourse 14 Microcatheter is a device that is used to deliver microcoils to the aneurysm opening.

Endovascular treatment of cerebral aneurysms utilizes three different types of microcoils fabricated from platinum alloy wire: framing, filling and finishing microcoils. Cerecyte is the Company’s new proprietary microcoil product line that incorporates a filament comprised of polyglycolic acid (PGA) into most of the Company’s current line of microcoils. Because the PGA filament runs through the center of the Company’s microcoils, the Cerecyte microcoils possess the same handling characteristics as the standard platinum microcoils.

The Company’s microcoil delivery system is comprised of a device positioning unit (DPU), a connecting cable and a deployment control box. DPU is a flexible catheter to which a microcoil is attached. The DPU allows transport of the microcoil through the vasculature to the brain and final positioning within the aneurysm. Connecting cables allow attachment of the DPU to a control box.

The Company’s Concourse microcatheter has been designed to provide the interventionalist with the ability to navigate the torturous vasculature of the brain. The Teflon liner on the interior portion of the microcatheter and the hydrophilic coating on the exterior portion enable a high level of pushability, torquability and over all tracking. The Company is also developing a line of guidewires which can be used with its microcatheters and microcoils.

Cost of goods sold increased by $1.7 million or 43% from $3.9 million for the nine months ended December 31, 2003 to $5.6 million for the nine months ended December 31, 2004.

Research and development expenses decreased by $0.2 million or 11% from $2.0 million for the nine months ended December 31, 2003 to $1.8 million for the nine months ended December 31, 2004.

Sales and marketing expenses increased by $1.8 million or 43% from $4.2 million for the nine months ended December 31, 2003 to $6.0 million for the nine months ended December 31, 2004.

Total other income increased from $445,000 for the nine months ended December 31, 2003 to $546,000 for the nine months ended December 31, 2004.