Cardima Receives Notification of Default on Secured Loan.

FREMONT, Calif. -- Cardima, Inc. (Other OTC: CRDM) receives notification of default on secured loan.

As previously disclosed, on May 27, 2005, Cardima, Inc. (the "Company") entered into a secured Loan Agreement (the "Loan Agreement") with Agility Capital, LLC (the "Lender"), pursuant to which the Lender funded $300,000 of the loan at closing. To secure its obligations under the Loan Agreement, the Company granted the Lender a security interest in substantially all of its assets, including its intellectual property. Pursuant to the terms of the Loan Agreement, all amounts outstanding thereunder, including interest and fees, become due and payable on the earliest of an Event of Default (as defined below), August 15, 2005, or certain other events. The Loan Agreement also provides that the Company shall pay the Lender an "Exit Fee" upon an Event of Default, and certain other expenses and fees of the Lender. The Exit Fee would be $450,000 based on the amount of loans currently outstanding. Interest accrues at 12% per annum, or 18% after an Event of Default.

By letter dated June 16, 2005, the Lender notified the Company of the Lender's view that an Event of Default had occurred under the Loan Agreement and that all amounts outstanding thereunder (including principal, interest, fees and expenses), are immediately due and payable. The Lender also froze the Company's bank accounts, containing approximately $350,000. Correspondence from the Lender has indicated that the Lender is unwilling to fund further loans under the Loan Agreement. The Company is in discussions with the Lender about these matters but is unable to predict the outcome.

On June 17, 2005, the Company's interim Chief Financial Officer and Secretary, Barry D. Michaels, resigned effective immediately. On June 17, 2005, the Board of Directors appointed Gabriel B. Vegh, the Company's Chairman and Chief Executive Officer, to the additional positions of acting Chief Financial Officer and Secretary.

The Company will be unable to continue operations absent an immediate cash infusion, and the Company expects that its common stock will have no value upon a cessation of Company operations. As of June 17, 2005, the Company's cash balances, including the funds frozen by its secured lender, were insufficient to fund any ongoing operations after making provision for accrued and unpaid wages and other accrued obligations that would arise upon termination of employees.

On June 17, 2005, the Company's Board of Directors terminated the employment status of all employees to conserve resources.

About Cardima

Cardima, Inc. has developed the REVELATION Tx, REVELATION T-Flex and REVELATION Helix linear ablation microcatheters, the NAVIPORT deflectable guiding catheters, and the INTELLITEMP energy management system for the minimally invasive treatment of atrial fibrillation (AF) The REVELATION Tx, REVELATION T-Flex and REVELATION Helix systems and the INTELLITEMP have received CE Mark approval in Europe. The Company has also developed and obtained approval for in the USA a Surgical Ablation System, which targets market application by cardiac surgeons to ablate cardiac tissue during heart surgery using radio frequency (RF) energy.

Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such forward-looking statements. Potential risks and uncertainties include the uncertainties associated with the prospects for FDA approval of our premarket approval application for the REVELATION Tx, including the ramifications of our recent meeting with the FDA, the prospect for any future clinical trials or regulatory activities, the Company's ability to obtain funding under the Agility loan facility, the risks associated with the Agility loan facility's restrictive covenants, security interest, fee provisions and other terms and conditions, the risk that the Company will not be able to raise additional capital in the immediate term as needed to continue operations and the risk that we will be unable to secure a strategic transaction involving the Surgical Ablation System. Additional risks and uncertainties are set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2004, the Company's Quarterly Report on Form 10-Q for the first quarter ended March 31, 2005, and in the Company's subsequent SEC filings. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events or changes in the Company's plans or expectations.