NOVOSTE CORP \FL\, S-1/A, 1996-05-15

NOVOSTE CORP \FL\
S-1/A, 1996-05-15
MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1996

REGISTRATION NO. 333-3374
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

NOVOSTE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

FLORIDA 5047 59-2787476
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)

4350-C INTERNATIONAL BLVD.
NORCROSS, GEORGIA 30093
(770) 717-0904
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

THOMAS D. WELDON
NOVOSTE CORPORATION
4350-C INTERNATIONAL BLVD.
NORCROSS, GEORGIA 30093
(770) 717-0904
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:

SETH I. TRUWIT, ESQ. LAWRENCE S. WITTENBERG, ESQ.
EPSTEIN BECKER & GREEN, P.C.
250 PARK AVENUE TESTA, HURWITZ & THIBEAULT, LLP
HIGH STREET TOWER
NEW YORK, NEW YORK 10177 125 HIGH STREET
(212) 351-4500 BOSTON, MASSACHUSETTS 02110
(617) 248-7000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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<PAGE>

NOVOSTE CORPORATION

CROSS-REFERENCE SHEET
(BETWEEN ITEMS IN PART I OF FORM S-1 AND PROSPECTUS)

<TABLE>
<CAPTION>
FORM S-1 ITEM NO. AND CAPTION PROSPECTUS CAPTION
----------------------------- ------------------
<S> <C>
1.Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus..... Outside Front Cover Page; Underwriting
2.Inside Front and Outside Back
Cover Pages of Prospectus.... Inside Front Cover Page; Outside Back Cover
Page
3.Summary Information, Risk Fac-
tors and Ratio of Earnings to
Fixed Charges................ Prospectus Summary; Risk Factors
4.Use of Proceeds................ Prospectus Summary; Use of Proceeds
5.Determination of Offering
Price........................ Outside Front Cover Page; Underwriting
6.Dilution....................... Dilution
7.Selling Security Holders....... Not Applicable
8.Plan of Distribution........... Outside Front Cover Page; Underwriting
9.Description of Securities to be
Registered................... Description of Capital Stock
10.Interests of Named Experts and
Counsel...................... Not Applicable
11.Information with Respect to the
Registrant
a.Description of Business....... Prospectus Summary; Business
b.Description of Property....... Business
c.Legal Proceedings............. Not Applicable
d.Market Price of and Dividends
on the Registrant's Common
Equity and Related
Shareholder Matters......... Front Cover Page; Capitalization; Dividend
Policy Shares Eligible for Future Sale;
Description of Capital Stock;
e.Financial Statements.......... Financial Statements
f.Selected Financial Data....... Selected Financial Data
g.Supplementary Financial Infor-
mation...................... Not Applicable
h.Management's Discussion and
Analysis of Financial
Condition and Results of
Operations.................. Management's Discussion and Analysis of
Financial Condition and Results of
Operations
i.Changes in and Disagreements
with Accountants on
Accounting and Financial
Disclosure.................. Not Applicable
j.Directors and Executive Offi-
cers........................ Management
k.Executive Compensation........ Management
l.Security Ownership of Certain
Beneficial Owners and
Management.................. Principal Shareholders
m.Certain Relationships and
Related Transactions........ Certain Transactions
12.Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities.................. Not Applicable
</TABLE>
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to completion, dated May 15, 1996

Prospectus
dated , 1996

2,000,000 Shares

[LOGO] NOVOSTE/TM/
Common Stock

All of the 2,000,000 shares of Common Stock offered hereby are being issued and
sold by Novoste Corporation ("Novoste" or the "Company").

Prior to this offering, there has been no public market for the Common Stock of
the Company. It is currently estimated that the initial public offering price
will be between $12.00 and $14.00 per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price. The Common Stock has been approved for quotation on The Nasdaq
National Market subject to official notice of issuance under the symbol "NOVT."

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY
PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS"
BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
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<S> <C> <C> <C>
Per Share.................................... $ $ $
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Total (3).................................... $ $ $
</TABLE>
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."

(2) Before deducting expenses payable by the Company estimated at $475,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 300,000 shares of Common Stock solely to cover over-
allotments, if any, at the Price to Public less the Underwriting Discount.
If all such shares are purchased, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ , respectively.
See "Underwriting."

The shares of Common Stock are offered by the Underwriters subject to prior
sale when, as, and if delivered and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that
certificates for such shares will be available for delivery at the offices of
Piper Jaffray Inc. in Minneapolis, Minnesota on or about , 1996.

Piper Jaffray inc.
Montgomery Securities
<PAGE>

[LOGO] NOVOSTE/TM/

Novoste Corporation is developing the King Beta-Cath/TM/ System ("KBC System"),
an intraluminal beta radiation catheter delivery system designed to reduce the
frequency of restenosis subsequent to percutaneous transluminal coronary
angioplasty ("PTCA"). The guidewire previously utilized in a PTCA procedure is
used to direct the delivery catheter to the target site within the artery. The
KBC System's radiation source train is then hydraulically delivered from the
transfer device to the target site through the delivery catheter. After the
prescribed radiation dosage has been delivered, the radiation source train is
returned through the delivery catheter to the transfer device.

[ART]

The diagram above illustrates the KBC System currently used in the
Company's clinical trial. The design of the KBC System is expected to be
improved during its development and accordingly the final design is expected to
differ from that shown above.

The Company's KBC System is an investigational device and has not been
approved by the FDA for commercial sale in the United States. The KBC System is
in the early stage of clinical testing, and clinical data obtained to date are
insufficient to demonstrate safety and efficacy. There can be no assurance that
the KBC System will receive FDA approval if such approval is sought.

----------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH OTHERWISE MIGHT PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

The Company intends to furnish its shareholders with annual audited
financial statements examined by an independent accounting firm and quarterly
reports for the first three quarters of each fiscal year containing unaudited
financial information.

Novoste/TM/, PulsePlus/TM, King Beta-Cath/TM/ and the Novoste/TM/ logo are
trademarks of the Company.
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by and should be read in
conjunction with the more detailed information and the Financial Statements and
the Notes thereto appearing elsewhere in this Prospectus. Unless otherwise
indicated, all information in the Prospectus assumes no exercise of the
Underwriters' over-allotment option. This Prospectus contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
may differ materially from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in "Risk Factors."

THE COMPANY

Novoste Corporation ("Novoste" or the "Company") is developing the King Beta-
Cath System, an intraluminal beta radiation catheter delivery system designed
to reduce the frequency of restenosis subsequent to percutaneous transluminal
coronary angioplasty ("PTCA"). The King Beta-Cath System ("KBC System") applies
localized beta radiation to the site of the vascular injury caused by a PTCA
procedure and is designed to inhibit long-term cell proliferation
("hyperplasia") and vascular remodeling, each primary causes of restenosis. The
KBC System was developed in collaboration with certain physicians at Emory
University Hospital, including its Director of Interventional Cardiology, Dr.
Spencer B. King, III. The Company is conducting a human clinical trial at Emory
under an Investigational Device Exemption ("IDE") granted by the U.S. Food and
Drug Administration ("FDA") to determine the clinical safety of the KBC System
for use in coronary arteries. As of May 10, 1996, 11 of the 15 patients to be
included in the trial had been enrolled and treated without any adverse events
or complications.

More than 13 million people in the United States currently have been
diagnosed with coronary artery disease, the leading cause of death in the
United States. Coronary artery disease is characterized by the progressive
accumulation of plaque, which narrows the coronary artery and reduces blood
flow to the heart muscle. Coronary artery bypass graft surgery ("CABG"), in
which blood vessel grafts are used to bypass the site of a blocked artery, has
been shown to be highly effective in treating coronary artery disease. However,
CABG is a highly invasive, traumatic and expensive surgical procedure. PTCA, in
which a small balloon catheter is inflated in the narrowed section of a
coronary artery, has emerged as a highly effective, less invasive alternative
to CABG. In 1995, approximately 400,000 CABG and approximately 500,000 PTCA
procedures were performed in the United States.

The principal limitation of PTCA is a high rate of restenosis, a renarrowing
of the treated artery often requiring reintervention. Studies have shown
restenosis to affect between 25% to 45% of PTCA patients within six months
after the procedure. The use of coronary stents (expandable, implantable metal
devices) to reduce the rate of restenosis has grown rapidly as an adjunctive
therapy to PTCA. Recent studies have concluded that the rate of restenosis in
patients who receive coronary stents following PTCA is approximately 30% lower
than in patients treated only by PTCA. Restenosis can occur shortly after a
PTCA procedure due to elastic recoil, or over a longer period of time due to
cell proliferation ("hyperplasia") or geometric remodeling of the arterial
segment. Stents appear to be effective in reducing the frequency of restenosis
resulting from elastic recoil and appear to limit vascular remodeling, but they
may increase, rather than decrease, hyperplasia.

The KBC System targets the primary causes of restenosis by attempting to
prevent or inhibit hyperplasia and long-term vascular remodeling by applying
localized beta radiation to the treated site in the coronary artery immediately
following PTCA. Radiation has been used therapeutically in medicine for almost
50 years and is used extensively for the treatment of proliferative cell
diseases, such as cancer. The KBC System has been designed to use beta
radiation because the Company believes it is well-suited for intraluminal use
following PTCA, where the objective is to treat the wall of an artery with
minimal radiation exposure to adjacent tissue. The KBC System is designed to be
safe and to fit well with techniques currently employed by interventional
cardiologists in the cardiac catheterization lab. The Company expects that the
KBC System will provide significant cost savings, principally by reducing the
costs associated with reintervention required following PTCA and coronary
stenting. While the Company's current clinical trial seeks to demonstrate the
safety and efficacy of the KBC System alone to reduce the frequency of
restenosis following PTCA, pre-clinical studies have suggested that the KBC
System may also be effective in reducing the frequency of restenosis as a
combination therapy with coronary stenting.

3
<PAGE>

The Company's objective is to become the leader in the commercialization of
intravascular radiation devices for the treatment of restenosis. Key elements
of the Company's strategy include (i) achieving first to market position in the
United States, (ii) establishing beta radiation therapy as the standard therapy
to reduce the frequency of restenosis following PTCA, (iii) seeking early
commercialization in countries with favorable regulatory environments, and (iv)
leveraging the Company's core catheter and radioactive isotope technologies to
expand its product offerings to include peripheral angioplasty and other
potential applications.

Novoste, a development stage company with minimal revenues to date, was
incorporated in Florida in January 1987 and was capitalized and commenced
operations in May 1992. The Company's principal executive offices are located
at 4350-C International Blvd., Norcross, Georgia 30093, and its telephone
number is (770) 717-0904.

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

Unless otherwise indicated, all references in this Prospectus to the
Company's authorized and outstanding securities, other than in the Financial
Statements and the Notes thereto, give pro forma effect to (i) the conversion
of all shares of Class B Common Stock outstanding on May 10, 1996 into
1,611,269 shares of Common Stock, (ii) the cashless exercise of certain
outstanding stock purchase warrants for an aggregate of 861,300 shares of
Common Stock, assuming an offering price of $13.00 per share, (iii) the
exercise of the balance of all outstanding stock purchase warrants for an
aggregate of 47,104 shares of Common Stock at an aggregate exercise price of
$208,219, (iv) the conversion of all outstanding convertible notes and accrued
interest into an aggregate of 497,349 shares of Common Stock, assuming a
closing date of this Offering of May 30, 1996, (v) the conversion of accrued
salaries into 100,195 shares of Common Stock and (vi) an amendment to the
Company's Articles of Incorporation to remove the Company's existing Class B
Common Stock and to create a class of authorized but undesignated Preferred
Stock. The actions described in this paragraph shall occur on or immediately
prior to the closing of this Offering and are collectively referred to as the
"Recapitalization."

4
<PAGE>

THE OFFERING

Common Stock offered by the Company..... 2,000,000 shares

Common Stock to be outstanding after
the Offering........................... 7,648,275 shares(1)

Use of proceeds......................... To fund human clinical trials, to
establish sales and marketing
capabilities, to expand manufacturing
activities, to conduct further
research and development projects and
for general corporate purposes,
including repayment of debt and
working capital.

Proposed Nasdaq National Market
symbol................................. NOVT

SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PERIOD FROM
THREE MONTHS INCEPTION
ENDED MARCH (MAY 22, 1992)
YEAR ENDED DECEMBER 31, 31, THROUGH
------------------------- --------------- MARCH 31,
1993 1994 1995 1995 1996 1996
------- ------- ------- ------ ------- --------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues.............. $ -- $ 70 $ 3 $ 1 $ -- $ 273
Costs and expenses:
General and
administrative...... 724 924 1,327 251 372 4,067
Research and
development......... 500 1,094 1,659 313 741 4,185
Depreciation and
amortization........ 106 204 227 61 70 632
Other income
(expense)............ 5 (44) (8) (4) (28) (66)
------- ------- ------- ------ ------- -------
Net loss.............. $(1,325) $(2,196) $(3,218) $ (628) $(1,211) $(8,677)
======= ======= ======= ====== ======= =======
Net loss per
share(2)............. $ (0.38) $ (0.54) $ (0.69) $(0.14) $ (0.24)
======= ======= ======= ====== =======
Shares used to compute
net loss per
share(2)............. 3,443 4,031 4,671 4,541 4,947
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA(3) ADJUSTED(3)(4)
------- ------------ --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............... $(1,954) $ 416 $24,121
Total assets............................ 3,005 3,975 25,880
Deficit accumulated during development
stage.................................. (8,677) (8,700) (8,700)
Total shareholders' equity (deficit).... (599) 1,771 25,476
</TABLE>
- --------

(1) Based on the number of shares of Common Stock outstanding on May 10, 1996.
Excludes 1,831,575 shares of Common Stock issuable upon exercise of options
outstanding on such date, which had a weighted average exercise price of
$1.69 per share. Also excludes (i) 350,750 shares available for future
grant under the Company's Stock Option Plan and (ii) 826 shares subject to
issuance upon completion of consulting services. See "Management--Executive
Compensation" and "Certain Transactions."
(2) See Note 1 of the Notes to the Financial Statements for an explanation of
the method used to determine the number of shares to compute net loss per
share.

(3) Gives effect to (i) the issuance in April 1996 of promissory notes of
approximately $761,700 and (ii) the Recapitalization.

(4) Gives effect to the sale of the shares of Common Stock offered hereby, at
an assumed offering price of $13.00 per share, and the application of the
estimated net proceeds therefrom (including the repayment of $1.5 million
of promissory notes issued in March and April 1996, and $300,000 of bank
indebtedness), and after deducting underwriting discounts and commissions
and estimated offering expenses. See "Use of Proceeds" and
"Capitalization."

5
<PAGE>

RISK FACTORS

An investment in the shares of Common Stock being offered hereby involves a
high degree of risk. In addition to the other information in this Prospectus,
the following risk factors should be considered carefully.

ACCUMULATED DEFICIT; SUBSTANTIAL DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE
AS A GOING CONCERN; AND EXPECTATION OF FUTURE LOSSES

Novoste has received minimal revenues and experienced significant losses in
each year since its inception. The Company's losses are due primarily to
substantial expenditures related to the development of its products. At March
31, 1996, the Company had an accumulated deficit of approximately $8.7 million
since its inception in May 1992. The Company's financial statements have been
prepared assuming that the Company will continue as a going concern. The
auditors' report states that the accumulated deficit (approximately $7.5
million at December 31, 1995) and the Company's need to raise additional
financing to continue the development of its products raise substantial doubt
about the Company's ability to continue a going concern. See "Financial
Statements." The Company will incur significant additional operating losses
through at least 1998 and expects cumulative losses to increase significantly
as the Company continues to expand its research and development, clinical
trials, and marketing efforts. The Company's ability to achieve profitable
operations is dependent in large part on successfully commercializing its KBC
System. There can be no assurance that the Company will ever commercialize the
KBC System or any of its other products or achieve profitability. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Financial Statements--Independent Auditors' Report."

EARLY STAGE OF CLINICAL TESTING; NO ASSURANCE OF SAFETY AND EFFICACY

The KBC System is in an early stage of clinical testing, and there can be no
assurance as to when, if ever, its safety and efficacy in reducing the
frequency of restenosis will be demonstrated. In January 1996, the Company
began a feasibility study at Emory University Hospital, designed to
demonstrate the safety of the KBC System before beginning more extensive
trials to determine its efficacy. As of May 10, 1996, 11 of the 15 patients to
be enrolled in this study had been enrolled and treated without any adverse
events or complications. The Company plans to commence similar feasibility
studies at Rhode Island Hospital by the end of May 1996 and in Canada and
Europe by the end of 1996. There can be no assurance that these feasibility
studies will be successful in demonstrating the safety of the KBC System. If
the feasibility studies are successful, the Company will use their results to
support an application to the FDA for an IDE permitting a multi-center
clinical trial designed to establish the efficacy of the KBC System in
reducing the frequency of restenosis. The FDA may reject the Company's
application for an IDE or require additional information before granting it.
The Company currently expects to begin the multi-center trial no sooner than
1997, and various factors, including FDA requests for additional information,
difficulties in enrolling patients or physicians, and unforeseen problems in
producing the number of KBC Systems required to conduct the trial, could delay
the start of the trial for an indeterminate amount of time. The multi-center
trial will require the treatment of a statistically adequate number of
patients and following up with such patients for a period of at least six
months. It is only after completion of these trials that the Company would
apply for the regulatory approvals required to commence marketing of the KBC
System in the United States. There can be no assurance that the KBC System or
any of the Company's other products will prove to be safe and effective in
clinical trials or will ultimately be approved for marketing by United States
or foreign regulatory authorities. The Company does not expect to submit an
application for pre-market approval ("PMA") for its KBC System for at least
two years, and there can be no assurance that the Company will ever submit a
PMA or that, if submitted, such PMA will be approved by the FDA. If the KBC
System does not prove to be safe and effective in clinical trials or if the
Company is otherwise unable to commercialize the KBC System successfully, the
Company's business, financial condition and results of operations will be
materially adversely affected and could result in cessation of the Company's
business. In addition, the clinical trials may identify significant technical
or other obstacles to be overcome prior to obtaining necessary regulatory
approvals. Even if such obstacles are identified and overcome,
commercialization of the KBC System may be delayed. See "Business--Clinical
Status" and "--Government Regulation."

6
<PAGE>

NO ASSURANCE OF TIMELY REGULATORY APPROVAL; GOVERNMENT REGULATION

The Company will not be able to commence marketing or commercial sales of
the KBC System in the United States until it receives approval from the FDA of
a PMA application for the KBC System. The Company expects to begin the multi-
center clinical trial necessary to support a PMA no sooner than 1997, and the
Company cannot begin such trial until it has completed feasibility studies and
has received FDA approval of an IDE for such trial. Accordingly, the Company
does not expect to file a PMA for at least two years, and does not anticipate
receiving approval for at least one year after a PMA is accepted for filing,
if at all. There can be no assurance that the FDA will approve either the IDE
or the PMA. Accordingly, there can be no assurance as to when, or if, the
Company will complete clinical trials of the KBC System, or that data from
such trials, if completed, will be adequate to support approval of a PMA for
marketing. Furthermore, there can be no assurance that the Company will be
able to obtain PMA approval on a timely basis, if at all, and delays in the
receipt of or failure to receive such approvals would have a material adverse
effect on the Company's business, financial condition and results of
operations and could result in cessation of the Company's business.

Sales of the KBC System outside the United States will be subject to
regulatory requirements that vary widely from country to country. The time
required to obtain approval for sale in foreign countries may be longer or
shorter than required for FDA approval, and the requirements may differ. In
addition, there may be foreign regulatory barriers other than pre-market
approval, and the FDA must approve exports of devices. In Europe, commencing
in 1998 the Company will be required to obtain certifications necessary to
enable the CE mark to be affixed to the KBC System to market them throughout
the European Union. Additionally, the Company is required to maintain ISO
9001/EN 460001 certification subject to periodic surveillance audits. The
Company may be required to spend significant capital to respond to requests
for additional information by the FDA or foreign regulatory bodies or may
otherwise be required to spend significant amounts of capital to obtain FDA
and foreign regulatory approvals. Any such events could substantially delay or
preclude the Company from marketing the KBC System in the United States or
foreign countries.

Any devices manufactured or distributed by the Company pursuant to FDA
clearances or approvals are subject to pervasive and continuing regulation by
the FDA and certain state agencies. Foreign and domestic regulatory approvals,
if granted, may include significant limitations on the indicated uses for
which the product may be marketed. FDA enforcement policy strictly prohibits
the marketing of approved medical devices for unapproved uses. In addition,
product approvals could be withdrawn for failure to comply with regulatory
standards or the occurrence of unforeseen problems following the initial
marketing. In addition, the FDA and certain state and foreign regulatory
authorities impose numerous other requirements with which medical device
manufacturers must comply. Product approvals could be withdrawn for failure to
comply with regulatory standards or the occurrence of unforeseen problems
following initial marketing. The Company will also be required to adhere to
applicable FDA regulations setting forth current Good Manufacturing Practices
("GMP") requirements, which include testing, control and documentation
requirements. Ongoing compliance with GMP and other applicable regulatory
requirements are monitored through periodic inspections by state and federal
agencies, including the FDA, and by comparable agencies in other countries.
Failure to comply with applicable regulatory requirements, including marketing
products for unapproved uses, could result in, among other things, warning
letters, fines, injunctions, civil penalties, recall or seizure of products,
total or partial suspension of production, refusal of the government to clear
premarket notification or grant pre-market approval for the Company's
products, withdrawal of approvals and criminal prosecution. Changes in
existing regulations or adoption of new regulations or policies could prevent
the Company from obtaining, or affect the timing of, future regulatory
approvals or clearances.

7
<PAGE>

from the NRC to commercially distribute such radiation sources as well as
comply with all applicable regulations. The Company and/or its supplier of
radiation sources must also comply with NRC and U.S. Department of
Transportation regulations on the labeling and packaging requirements for
shipment of radiation sources to hospitals or other users of the KBC System.
In addition, hospitals may be required to obtain or expand their licenses to
use and handle beta radiation prior to receiving radiation sources for use in
the KBC System. Comparable radiation regulatory requirements and/or approvals
are anticipated in markets outside the United States. If any of the foregoing
approvals are significantly delayed or not obtained, the Company's business,
financial condition and results of operations could be materially adversely
affected. See "Business--Government Regulation."

UNCERTAINTY OF MARKET ACCEPTANCE

There can be no assurance that the KBC System will gain any significant
market acceptance among physicians, patients and health care payors, even if
required regulatory approvals are obtained. The Company believes that
achieving market acceptance will depend heavily on the results of clinical
trials and the Company's ability to demonstrate, through such trials, a
significant reduction in restenosis rates using the KBC System. There can be
no assurance that the Company's clinical trials will achieve such results.
Market acceptance of the KBC System may also depend on educating physicians
regarding the use of a new procedure, overcoming physician objections to the
use of radiation in the cardiac catheterization laboratory ("cath lab") and
convincing health care payors that the benefits of using the KBC System
outweigh its cost. There can be no assurance that the Company will be
successful in achieving these goals. See "Business--Sales and Marketing," "--
Government Regulation" and "--Third Party Reimbursement"

DEPENDENCE ON KBC SYSTEM

The Company, which has not yet commercialized any of its products,
anticipates that for the foreseeable future it will be solely dependent on the
successful development and commercialization of the KBC System. The KBC System
is in the early stages of development, and will require further development,
as well as regulatory clearance or approval, before it can be marketed in the
United States or internationally. There can be no assurance that the Company's
development efforts will be successful or that the KBC System will be shown to
be safe or effective, capable of being manufactured in commercial quantities
at acceptable costs, cleared or approved by regulatory authorities or
successfully marketed. In addition, there can be no assurance that demand for
the KBC System will be sufficient to allow profitable operations. Failure of
the KBC System to be successfully commercialized would have a material adverse
effect on the Company's business, financial condition and results of
operations. See "Business--The KBC System," "--Sales and Marketing," "--
Manufacturing" and "--Government Regulation."

SOLE SOURCE OF SUPPLY

The Company has obtained all of its requirements of radiation source
materials pursuant to an exclusive agreement (the "Supply Agreement") with a
single European supplier (the "Supplier"). Under the Supply Agreement, which
has an initial term ending in the year 2000 and renews automatically for
successive three year periods unless notice of termination is given two years
prior to a renewal date, the Company may not purchase radiation source
materials for use in restenosis therapy from anyone other than the Supplier.
Although the Supply Agreement permits the Company to use an alternative source
during any period in which the Supplier is unable to provide the materials,
the Company believes that because of the technical expertise and capital
investment required to manufacture the radiation source materials, it would be
extremely difficult to find an alternate source of supply in the event that
the Supplier is unable to provide the materials. In addition, portions of the
process used to manufacture the materials may be proprietary to the Supplier.
The Supplier has no obligation to make any of its know-how or technology
available to any alternate source of supply. Although the Company has an
option to purchase all of the Supplier's assets relating to the supply of
radiation source materials, the exercise of such option and the transfer of
the required technology and expertise to the Company or an alternative source
would be costly, time consuming, and uncertain of success. Any inability of
the Supplier to provide radiation

8
<PAGE>

source materials would limit the Company's ability to increase its business
beyond its then existing inventory of such radiation source material. As a
result of these factors, any failure or disruption in the ability of the
Supplier to provide the radiation source materials could have a material
adverse effect on the business, financial condition and results of operation
of the Company. See "Business--Manufacturing."

COMPETITION

Competition in the medical device industry, and specifically the markets for
cardiovascular devices and devices to improve the outcome of coronary
revascularization procedures, is intense. Guidant Corporation, Boston
Scientific Corporation, Medtronic Inc. and Johnson & Johnson, among others,
are developing devices to improve the outcome of coronary revascularization
procedures. Many companies are developing therapies to reduce the frequency of
restenosis. Johnson & Johnson, among others, currently markets coronary stents
which have been successful in reducing the frequency of restenosis. Other
companies have under development various radiation therapy products to reduce
the frequency of restenosis. In addition, drugs, gene therapy and other
minimally invasive catheter-based procedures are currently being developed.
Many of the Company's competitors and potential competitors have substantially
greater capital resources than does the Company and also have greater
resources and expertise in the areas of research and development, obtaining
regulatory approvals, manufacturing and marketing. There can be no assurance
that the Company's competitors and potential competitors will not succeed in
developing, marketing and distributing technologies and products that are more
effective than those developed and marketed by the Company or that would
render the Company's technology and products obsolete or noncompetitive.
Additionally, there is no assurance that the Company will be able to compete
effectively against such competitors and potential competitors in terms of
manufacturing, marketing and sales.

Any product developed by the Company that gains regulatory clearance or
approval will have to compete for market acceptance and market share. An
important factor in such competition may be the timing of market introduction
of competitive products. Accordingly, the relative speed with which the
Company can develop products, gain regulatory approval and reimbursement
acceptance and supply commercial quantities of the product to the market are
expected to be important competitive factors. In addition, the Company
believes that the primary competitive factors for products addressing
restenosis include safety, efficacy, ease of use, reliability, suitability for
use in cath labs, service and price. The Company also believes that physician
relationships, especially relationships with leaders in the interventional
cardiology community, are important competitive factors. Although the Company
believes that it is the first in the United States to have initiated an FDA-
approved human clinical trial of a radiation system for reducing the frequency
of restenosis, there can be no assurance that the Company will be first to
market such a system in the United States or to market such a system
effectively.

LIMITATIONS ON THIRD PARTY REIMBURSEMENT

9
<PAGE>

will not place certain restrictions on the circumstances in which coverage
will be available. In addition, payors may deny reimbursement if they
determine that a product was not used in accordance with established payor
protocol regarding cost-effective treatment methods or was used for an
unapproved indication. Third-party payors are also increasingly challenging
the prices charged for medical products and services and, in some instances,
have put pressure on medical device suppliers to lower their prices. The
Company is unable to predict what changes will be made in the reimbursement
methods used by third-party health care payors. There can be no assurance that
the KBC System will be considered cost effective by third-party payors, that
reimbursement for the KBC System will be available or, if available, that
payors' reimbursement levels will not adversely affect the Company's ability
to sell the KBC System on a profitable basis. In addition, the cost of health
care has risen significantly over the past decade, and there have been and may
continue to be proposals by legislators, regulators and third-party payors to
curb these costs. Failure by hospitals and physicians to obtain reimbursement
from third-party payors, changes in third-party payors' policies toward
reimbursement for the KBC System or legislative action could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Third Party Reimbursement."

LACK OF SALES AND MARKETING EXPERIENCE; RELIANCE ON DISTRIBUTORS AND CORPORATE
PARTNERS

At present, the Company has no sales and a limited marketing and sales
capability. The Company intends to sell its products in the United States
directly and outside the United States through international distributors and
corporate partners. There can be no assurance that the Company will be able to
recruit and train adequate sales and marketing personnel to successfully
commercialize the KBC System in the United States. The inability to recruit or
retain suitable international distributors or corporate partners could also
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company intends to select one or more
established market leaders in the radiation isotope business to inventory and
deliver the radiation sources and provide related training, testing and
support services to hospitals in both the United States and international
markets. The inability to recruit or retain one or more such entities for this
purpose could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Sales and
Marketing."

LIMITED MANUFACTURING EXPERIENCE; SCALE-UP RISK

To date, the Company has not yet commercialized any of its products and its
manufacturing activities have consisted of producing small quantities of its
products for use in pre-clinical studies and limited clinical trials. To
achieve profitability, the Company's products must be manufactured in
commercial quantities in compliance with regulatory requirements and at
acceptable costs. Production in commercial quantities will require the Company
to expand its manufacturing capabilities and to hire and train additional
personnel. The Company has no experience in manufacturing its products in
commercial quantities. Manufacturers often encounter difficulties in scaling
up production of new products, including problems involving production yields,
quality control and assurance, component supply and shortages of qualified
personnel. Difficulties encountered by Novoste in manufacturing scale-up could
have a material adverse effect on its business, financial condition and
results of operations. There can be no assurance that future manufacturing
difficulties, which could have a material adverse effect on the Company's
business, financial condition and results of operations, will not occur. See
"Business--Manufacturing."

UNCERTAINTY REGARDING PATENTS AND PROTECTION OF PROPRIETARY TECHNOLOGY

The Company currently has one pending United States patent application and a
related continuation-in-part application covering aspects of the KBC System,
and has filed a counterpart application under the Patent Cooperation Treaty
preserving the Company's right to file applications in the European Patent
Office and certain other countries. The United States Patent and Trademark
Office ("USPTO") has taken an initial action on the Company's pending patent
application, rejecting certain claims based only on objections to the content,
form or wording of the claims under Section 112 of the United States Patent
Law. The Company believes based upon advice of its patent counsel that such
objections may be overcome to the examiner's satisfaction by appropriate

10
<PAGE>

changes to the claim language or format. Allowance of the claims is also
subject to the examiner's review of additional prior art that may be more
pertinent than the prior art considered previously by the examiner. There can
be no assurance that any claims under the pending applications will be
allowed, or if allowed, will offer any protection or that they will not be
rejected, challenged, reexamined, invalidated or circumvented. In addition,
there can be no assurance that competitors will not obtain patents that will
prevent, limit or interfere with the Company's ability to make, use or sell
its products in either the United States or international markets.

The Company received a letter from NeoCardia, L.L.C. ("NeoCardia") dated
July 7, 1995, in which NeoCardia notified the Company that NeoCardia is the
exclusive licensee of U.S. Patent No. 5,199,939 (the "Dake Patent") and
requested that the Company confirm that its products did not infringe the
claims of the Dake Patent. The Company had previously concluded based upon
advice of patent counsel that the Company's proposed KBC System would not
infringe any valid claim of the Dake Patent. On August 25, 1995, on behalf of
the Company, its patent counsel responded that the Company did not infringe
the Dake Patent. The USPTO has ordered reexamination of the Dake Patent, and
the Company has been advised that on February 29, 1996, following
reexamination of the Dake Patent, the USPTO preliminarily rejected all claims
of the Dake Patent, as anticipated by or as obvious in view of prior art. In
April 1996, the holder of the Dake Patent submitted a response to the USPTO,
reasserting that the claims of the Dake Patent are valid and submitting
additional claims as well. Based upon such submission, the USPTO will again
consider the patentability of the claims and may make the rejection final,
confirm the patentability of the original claims, or allow new or amended
claims which might narrow or broaden the original claims. The holder of the
Dake Patent has the right to appeal any final rejection of its patent claims.
There can be no assurance that any or all claims of the Dake Patent will
ultimately be rejected or limited in any material respect or that broader
claims will not be allowed. In addition, there can be no assurance that the
Company's products will not infringe any original, amended or new claims of
the Dake Patent which survive the reexamination proceeding or that NeoCardia
will not sue the Company for patent infringement and obtain damages from the
Company and/or injunctive relief restraining the Company from commercializing
the KBC System, or that the Company will not be required to obtain a license
from NeoCardia or redesign the KBC System to avoid infringement, any of which
could have a material adverse effect on the Company's business, financial
condition and results of operations or could result in cessation of the
Company's business.

The medical device industry has been characterized by extensive litigation
regarding patents and other intellectual property rights, and companies in the
medical device industry have employed intellectual property litigation to gain
a competitive advantage. There can be no assurance that the Company will not
become subject to patent infringement claims or litigation or interference
proceedings declared by the USPTO to determine the priority of inventions. The
defense and prosecution of intellectual property suits, USPTO interference
proceedings and related legal and administrative proceedings are both costly
and time-consuming. Litigation may be necessary to enforce patents issued to
the Company, to protect trade secrets or know-how owned by the Company or to
determine the enforceability, scope and validity of the proprietary rights of
others. Any litigation or interference proceedings will result in substantial
expense to the Company and significant diversion of effort by the Company's
technical and management personnel. An adverse determination in litigation or
interference proceedings to which the Company may become a party could subject
the Company to significant liabilities to third parties or require the Company
to seek licenses from third parties or require the Company to redesign its
products or processes to avoid infringement or prevent the Company from
selling its products in certain markets, if at all. Although patent and
intellectual property disputes regarding medical devices have often been
settled through licensing or similar arrangements, costs associated with such
arrangements may be substantial and could include ongoing royalties.
Furthermore, there can be no assurance that the necessary licenses would be
available to the Company on satisfactory terms, if at all, or that the Company
could redesign its products or processes to avoid infringement. Any adverse
determination in a judicial or administrative proceeding or failure to obtain
necessary licenses could prevent the Company from manufacturing and selling
its products, which would have a material adverse effect on the Company's
business, financial condition and results of operations.

11
<PAGE>

that current and potential competitors or other third parties have not or will
not file applications for, or have not or will not receive, patents and will
not obtain additional proprietary rights relating to materials or processes
used or proposed to be used by the Company.

The Company has developed certain of its patent and proprietary rights
relating to the KBC System in conjunction with Emory University ("Emory"). To
obtain the exclusive rights to commercialize the KBC System for the treatment
of restenosis, the Company entered into a license agreement with Emory under
which Emory will be entitled to royalty payments based upon net sales of the
KBC System. If the agreement were terminated by Emory as a result of the
Company's failure to pay such royalties or any other breach of its obligations
under such agreement, the Company's rights to use jointly owned patents
(including any patent covering the continuation-in-part application which has
been filed) would become non-exclusive, the Company would have no rights to
practice future patents owned exclusively by Emory and the Company could be
required by Emory to cooperate in licensing the pending U.S. patent
application and its foreign counterparts to third parties so that they would
be able to commercialize and sell the KBC System.

All of the physicians on staff at Emory who were involved in the development
of the KBC System, including Spencer B. King, III, M.D., have assigned their
rights in the technology, if any, to Novoste and/or Emory, except that one
physician has not executed a formal assignment of his rights in the technology
covered by the Company's continuation-in-part application. Such physician
could assert non-exclusive ownership rights in such application. If he were
successful in this assertion, such physician would have the right to exploit
any technology covered by the continuation-in-part application but not covered
by the original application, and the Company's rights to such technology would
be non-exclusive. There can be no assurance that, in such event, the
physician's right to exploit such technology would not have a material adverse
effect on the Company's business, financial condition and results of
operations.

The Company typically obtains confidentiality and invention assignment
agreements in connection with employment, consulting and advisory
relationships. There can be no assurance, however, that these agreements will
not be breached or that the Company will have adequate remedies for any
breach. Furthermore, no assurance can be given that competitors will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's proprietary technology,
or that the Company can meaningfully protect its rights in unpatented
proprietary technology. See "Business--Patents and Proprietary Technology."

ADDITIONAL CAPITAL REQUIREMENTS

The Company has expended and will continue to expend substantial funds on
research, development and clinical trials of its products, the establishment
of commercial-scale manufacturing facilities and sales and marketing of the
KBC System. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." The Company's future liquidity and capital
requirements will depend upon numerous factors, including the progress and
costs of clinical trials, the potential requirement and the potential costs
for product modifications, the timing and costs of various U.S. and foreign
regulatory filings, and the timing or availability of various U.S. and foreign
governmental approvals. If regulatory approvals are received, the Company's
future liquidity and capital requirements will depend upon other factors,
including the timing and extent to which the Company's products gain market
acceptance, the timing and costs of product introduction, and the costs of
developing marketing, servicing and distribution capabilities. The Company may
require additional funds which it would seek to raise through equity or debt
financings, arrangements with corporate partners or from other sources.
Issuance of additional equity securities could result in dilution of ownership
and control to the then existing shareholders of the Company. There can be no
assurance that any such funds will be available to the Company on acceptable
terms, if at all. If adequate funds are not available from operations or
additional sources of financing, the Company's business could be materially
adversely affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

12
<PAGE>

EXPOSURE TO PRODUCT LIABILITY CLAIMS; LIMITED INSURANCE COVERAGE

The use of the Company's products entails an inherent risk of adverse
effects which could expose the Company to product liability claims. There can
be no assurance that the Company would have sufficient resources to satisfy
any liability resulting from such claims, that the Company's $2 million of
insurance coverage would be adequate to protect the Company against potential
liabilities, that any such insurance will continue to be available at
acceptable costs, if at all, or that a product liability claim would not
materially adversely affect the business or financial condition of the
Company. See "Business--Product Liability and Insurance."

DEPENDENCE ON KEY PERSONNEL

The Company's business and future operating results depend in significant
part upon the continued contributions of its key technical personnel and
senior management, many of whom would be difficult to replace. The Company's
business and future operating results also depend in significant part upon its
ability to attract and retain qualified management, manufacturing, technical,
marketing and sales and support personnel for its operations. Competition for
such personnel is intense, and there can be no assurance that the Company will
be successful in attracting or retaining such personnel. The loss of key
employees, the failure of any key employee to perform adequately or the
Company's inability to attract and retain skilled employees, as needed, could
materially adversely affect the Company's business, financial condition and
results of operations. See "Management--Executive Officers and Directors."

CONCENTRATION OF OWNERSHIP AND CONTROL

Following completion of this offering, the Company's executive officers,
directors and shareholders presently owning more than 5% of the outstanding
shares of Common Stock, collectively, will beneficially own approximately
58.9% of the outstanding Common Stock. See "Principal Shareholders."
Accordingly, such persons, if acting together, would have sufficient voting
power to control the outcome of matters (including the election of a majority
of the Board of Directors, and any merger, consolidation or sale of all or
substantially all of the Company's assets) submitted to the shareholders for
approval and also to have control over the management and affairs of the
Company. As a result of such control, certain transactions may not be possible
without the approval of such shareholders. These transactions include proxy
contests, mergers involving the Company, tender offers, open-market purchase
programs or other purchases of Common Stock that could give shareholders of
the Company the opportunity to realize a premium over the then-prevailing
market price for their shares of Common Stock. See "Principal Shareholders."

EFFECT OF ANTI-TAKEOVER PROVISIONS

Upon the closing of this Offering, the Company's Board of Directors will
have the authority to issue up to 5,000,000 shares of Preferred Stock and to
determine the price, rights, preferences and privileges of those shares
without any further vote or action by the Company's shareholders. The rights
of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any shares of Preferred Stock that
may be issued in the future. While the Company has no present intention to
issue shares of Preferred Stock, such issuance, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party
to acquire a majority of the outstanding voting stock of the Company. In
addition, such Preferred Stock may have other rights, including economic
rights senior to the Common Stock, and, as a result, the issuance thereof
could have a material adverse effect on the market value of the Common Stock.
The Amended and Restated Articles of Incorporation, which will be filed upon
the closing of this Offering (the "Amended and Restated Articles"), will
provide for a classified Board of Directors. Furthermore, the Company is
subject to the anti-takeover provisions of the Florida Business Corporation
Act, the application of which would also have the effect of delaying or
preventing a merger, takeover or other change of control of the Company and
therefore could discourage attempts to acquire the Company. See "Description
of Securities--Certain Charter and By-Law Provisions" and "--Anti-Takeover
Provisions of Florida Law."

13
<PAGE>

SUBSTANTIAL DILUTION

Purchasers of the Common Stock offered hereby will incur an immediate and
substantial dilution of approximately $9.72 per share in pro forma net
tangible book value from the $13.00 per share assumed initial public offering
price. Additional dilution is likely to occur upon the exercise of outstanding
options. See "Dilution."

NO PRIOR MARKET; STOCK PRICE VOLATILITY

Prior to this Offering, there has been no public market for the Company's
Common Stock. Consequently, the initial public offering price will be
determined by negotiations among the Company and the representatives of the
Underwriters. The initial public offering price of the Common Stock should not
be considered as an indication of the actual value of the Common Stock offered
hereby. There can be no assurance that an active public market for the Common
Stock will develop or be sustained after the Offering or that the market price
of the Common Stock will not decline below the initial public offering price.
The trading price of the Company's Common Stock could be subject to wide
fluctuations in response to quarter to quarter variations in operating
results, announcements of technological innovations or new products by the
Company or its competitors, governmental regulatory action, developments with
respect to patents or proprietary rights, general conditions in the medical
device or cardiovascular device industries, changes in earnings estimates by
securities analysts, or other events or factors, many of which are beyond the
Company's control. In addition, the stock market has experienced extreme price
and volume fluctuations, which have particularly affected the market prices of
many medical device companies and which have often been unrelated to the
operating performance of such companies. The Company's revenue or operating
results in future quarters may be below the expectations of securities
analysts and investors. In such event, the price of the Company's Common Stock
would likely decline, perhaps substantially. These Company-specific factors or
broad market fluctuations may materially adversely affect the market price of
the Company's Common Stock. See "Underwriting."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market after this
Offering could adversely affect the prevailing market price of the Common
Stock. In addition to the 2,000,000 shares of Common Stock offered hereby, as
of the date of this Prospectus (the "Effective Date"), based upon the shares
outstanding as of May 10, 1996, there will be approximately 5,648,275 shares
of Common Stock outstanding, all of which are "restricted" shares (the
"Restricted Shares") under the Securities Act of 1933, as amended (the
"Securities Act"). Approximately 131,509 Restricted Shares will be eligible
for sale immediately following the Effective Date in reliance on Rule 144(k)
promulgated under the Securities Act. Beginning 90 days and 180 days after the
Effective Date, approximately 43,362 and 3,097,957 additional Restricted
Shares, respectively, will first become eligible for sale in the public market
pursuant to Rule 144 promulgated under the Securities Act, or pursuant to Rule
144 in combination with the expiration of certain lock-up agreements with the
Company and Piper Jaffray Inc., as representative of the Underwriters. Of the
Restricted Shares that will first become eligible for sale in the public
market 90 and 180 days after the Effective Date, approximately 37,500 and
2,074,457 shares, respectively, will be subject to certain volume and other
resale restrictions pursuant to Rule 144.

The Company intends to file a registration statement on Form S-8
approximately 90 days after the Effective Date to register approximately
2,182,325 shares of Common Stock reserved for issuance under its Stock Option
Plan. Shares of Common Stock issued pursuant to the Stock Option Plan after
the effective date of the registration statement will be available for sale in
the public market, subject to Rule 144 volume limitations applicable to
affiliates. See "Shares Eligible for Future Sale."

ABSENCE OF DIVIDENDS

The Company has not paid any cash dividends and does not presently intend to
pay cash dividends. It is not likely that any cash dividends will be paid in
the foreseeable future. See "Dividend Policy."

14
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be approximately $23,705,000 ($27,332,000 if
the Underwriters' over-allotment option is exercised in full) after deducting
underwriting discount and estimated expenses of this Offering, and assuming an
offering price of $13.00 per share.

Of the net proceeds of this Offering, the Company intends to use
approximately $7.0 million to fund human clinical trials, approximately $1.6
million to establish sales and marketing capabilities, approximately $1.0
million to expand manufacturing activities and approximately $6.7 million to
conduct further research and development projects. In addition, a portion of
the net proceeds of this Offering will be used to repay (i) approximately $1.5
million borrowed from certain of its principal shareholders in March and April
1996 under promissory notes which bear compound interest at 8% per annum and
mature June 30, 1996 and (ii) $300,000 of bank indebtedness borrowed in March
1996 under a line of credit which expires on June 15, 1996 and bears interest
at the prime rate plus one percent. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Certain Transactions."
The balance of the net proceeds of this Offering will be added to working
capital. Exact allocation of the proceeds and the timing of such expenditures
will depend on various factors, including the timing of the Company's
regulatory applications and its clinical trials.

A portion of the net proceeds of this Offering may also be used for
investments in or acquisitions of complementary businesses, products or
technologies, although no such transactions are currently under negotiation.
Pending the use of the net proceeds of this Offering, the Company will invest
the funds in short-term, interest-bearing, investment-grade securities.

DIVIDEND POLICY

The Company has never declared or paid any cash dividends on its capital
stock. The Board of Directors currently intends to retain all future earnings,
if any, to fund the growth and development of the Company's business, and,
therefore, does not anticipate paying any cash dividends in the foreseeable
future.

15
<PAGE>

CAPITALIZATION

The following table sets forth, as of March 31, 1996: (i) the actual
capitalization of the Company; (ii) the pro forma capitalization of the
Company, after giving effect to the Recapitalization; and (iii) the pro forma
as adjusted capitalization of the Company after giving effect to the
Recapitalization and the sale of the 2,000,000 shares of Common Stock offered
hereby at an assumed offering price of $13.00 per share and the application of
the estimated net proceeds therefrom after deducting underwriting discounts
and commissions and estimated offering expenses. The information should be
read in conjunction with the Financial Statements and Notes thereto appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------
PRO FORMA
PRO FORMA AS ADJUSTED
ACTUAL (1) (1)(2) (1)(2)
---------- ---------- -----------
<S> <C> <C> <C>
Preferred Stock, $.01 par value; none
authorized, actual; 5,000,000 shares
authorized, no shares issued and
outstanding pro forma and pro forma as
adjusted................................. $ -- $ -- $ --
Class B Common Stock, $.01 par value
($5,698,509 liquidation value), 6,000,000
authorized, 1,611,269 issued and
outstanding, actual; no shares
authorized, issued or outstanding, pro
forma or pro forma as adjusted........... 16,113 -- --
Common Stock, $.01 par value, 14,000,000
shares authorized, 2,536,338 shares
issued and outstanding, actual;
25,000,000 shares authorized, 5,653,555
shares issued and outstanding, pro forma;
and 25,000,000 shares authorized,
7,653,555 shares issued and outstanding,
pro forma as adjusted.................... 25,363 56,535 76,535
Additional paid-in capital................ 8,053,389 10,431,255 34,116,255
Deficit accumulated during the development
stage.................................... (8,677,294) (8,700,492) (8,700,492)
---------- ---------- -----------
(583,429) 1,787,298 25,492,298
Less treasury stock, 5,280 shares, at
cost..................................... (15,840) (15,840) (15,840)
---------- ---------- -----------
Total shareholders' equity (deficit)...... $ (599,269) $1,771,458 $25,476,458
========== ========== ===========
</TABLE>
- --------

(1) Excludes 1,795,075 shares of Common Stock subject to outstanding options,
as of March 31, 1996, which had a weighted average exercise price of $1.46
per share. Also excludes (i) 387,250 shares available for future grant
under the Company's Stock Option Plan and (ii) 826 shares subject to
issuance upon completion of consulting services.

(2) Gives effect to (i) the conversion of all shares of Class B Common Stock
outstanding into 1,611,269 shares of Common Stock, (ii) the cashless
exercise of certain stock purchase warrants outstanding for 861,300 shares
of Common Stock, (iii) the exercise of the balance of all stock purchase
warrants outstanding for an aggregate of 47,104 shares of Common Stock at
an aggregate exercise price of $208,219, (iv) the issuance in April 1996
of promissory notes of approximately $761,700 and the conversion of all
outstanding convertible notes (including accrued interest) into an
aggregate of 497,349 shares of Common Stock, assuming a closing date of
this Offering of May 30, 1996, (v) the conversion of accrued salaries into
100,195 shares of Common Stock and (vi) an amendment to the Company's
Articles of Incorporation to remove the Company's existing Class B Common
Stock and to create a class of authorized but undesignated Preferred
Stock.

16
<PAGE>

DILUTION

The following discussion and tables give pro forma effect to the
Recapitalization and assume an offering price of $13.00 per share and a
closing date of this Offering of May 30, 1996.

The pro forma net tangible book value of the Company at March 31, 1996, was
$1,374,100 or $0.24 per share. Pro forma net tangible book value per share is
equal to the Company's total tangible assets less its total liabilities,
divided by the pro forma number of shares of Common Stock outstanding. After
giving effect to the sale by the Company of the shares of Common Stock offered
hereby and the application of the estimated net proceeds therefrom, the pro
forma net tangible book value of the Company at March 31, 1996, would have
been approximately $25,079,100 or $3.28 per share. This represents an
immediate increase in net tangible book value of $3.04 per share to existing
shareholders and an immediate dilution in net tangible book value of $9.72 per
share to purchasers of Common Stock in this offering, as illustrated in the
following table:

<TABLE>
<S> <C> <C>
Assumed initial public price per share........................ $13.00
Pro forma net tangible book value per share as of March 31,
1996....................................................... $0.24
Increase per share attributable to new investors............ 3.04
-----
Pro forma net tangible book value per share after the
offering..................................................... 3.28
------
Dilution per share to new investors........................... $ 9.72
======
</TABLE>

The foregoing computations assume no exercise of outstanding stock options.
In the event the 1,831,575 shares subject to options to purchase shares of
Common Stock outstanding as of May 10, 1996 at a weighted average exercise
price of $1.69 per share were exercised for cash and included in the foregoing
calculations, the net tangible book value per share before the offering would
be $0.60, the pro forma net tangible book value after the offering would be
$2.97 and the dilution to new investors would be $10.03.

If the Underwriters' over-allotment option is exercised in full, the pro
forma net tangible book value per share of the Common Stock after this
offering would be $3.61 per share, which would result in dilution to new
investors in this offering of $9.39 per share.

Based on the foregoing assumptions, the following table set forth, as of
March 31, 1996, the pro forma number of shares of Common Stock purchased from
the Company, the total consideration paid and the average price per share paid
by the existing shareholders and the new investors (before deducting the
underwriting discount and estimated offering expenses):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders... 5,648,275 73.9% $10,802,156 29.4% $ 1.91
New investors........... 2,000,000 26.1 26,000,000 70.6 13.00
--------- ----- ----------- -----
Total................. 7,648,275 100.0% $36,802,156 100.0%
========= ===== =========== =====
</TABLE>

The foregoing information excludes: 1,831,575 shares of Common Stock subject
to outstanding options as of May 10, 1996 at a weighted average exercise price
of $1.69 per share, granted under the Company's Stock Option Plan. In the
event that all such options to purchase 1,831,575 shares of Common Stock at an
aggregate exercise price of $3,097,231 were exercised, new investors would own
21.1% of the outstanding Common Stock and would have paid 65.2% of the total
consideration paid for all outstanding Common Stock. See "Management--Stock
Option Plan" and Note 7 of the Notes to the Financial Statements.

17
<PAGE>

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table sets forth selected financial data of the Company. The
selected financial data in the table as of and for the periods ended December
31, 1992, 1993, 1994 and 1995 are derived from the financial statements of the
Company which have been audited by Ernst & Young LLP, independent auditors, as
indicated in their report included elsewhere in this Prospectus. The audit
report includes an explanatory paragraph regarding certain conditions which
raise substantial doubt about the Company's ability to continue as a going
concern.

The selected financial data presented below for the three-month periods
ended March 31, 1995 and 1996 and the period from inception (May 22, 1992) to
March 31, 1996 and as of March 31, 1996 are derived from the unaudited
condensed financial statements of the Company included elsewhere in this
Prospectus. In the opinion of management, such unaudited condensed financial
statements reflect all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the results of operations for such
periods. Results of interim periods are not necessarily indicative of results
to be expected for the full fiscal year. The data should be read in
conjunction with the Financial Statements and notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
PERIOD FROM INCEPTION YEAR ENDED DECEMBER 31, MARCH 31, PERIOD FROM INCEPTION
(MAY 22, 1992) THROUGH ------------------------- --------------- (MAY 22, 1992) THROUGH
DECEMBER 31, 1992 1993 1994 1995 1995 1996 MARCH 31, 1996
---------------------- ------- ------- ------- ------ ------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenues................ $ 200 $ -- $ 70 $ 3 $ 1 $ -- $ 273
Costs and expenses:
General and
administrative....... 720 724 924 1,327 251 372 4,067
Research and
development.......... 192 500 1,094 1,659 313 741 4,185
Depreciation and
amortization......... 25 106 204 227 61 70 632
------ ------- ------- ------- ------ ------- -------
Loss from operations.... (737) (1,330) (2,152) (3,210) (624) (1,183) (8,611)
Other income (expense).. 9 5 (44) (8) (4) (28) (66)
------ ------- ------- ------- ------ ------- -------
Net loss................ $ (728) $(1,325) $(2,196) $(3,218) $ (628) $(1,211) $(8,677)
====== ======= ======= ======= ====== ======= =======
Net loss per share(1)... $(0.24) $ (0.38) $ (0.54) $ (0.69) $(0.14) $ (0.24)
====== ======= ======= ======= ====== =======
Shares used to compute
net loss per share(1).. 3,030 3,443 4,031 4,671 4,541 4,947
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------- MARCH 31,
1992 1993 1994 1995 1996
------ ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)........ $ 445 $ (149) $(1,267) $ (906) $(1,954)
Total assets..................... 1,157 1,583 982 2,057 3,005
Total liabilities................ 306 976 1,396 1,739 3,604
Deficit accumulated during
development stage............... (728) (2,053) (4,249) (7,467) (8,677)
Total shareholders' equity
(deficit)....................... 851 608 (413) 318 (599)
</TABLE>
- --------
(1) See Note 1 of the Notes to the Financial Statements for an explanation of
the method used to determine the number of shares to compute net loss per
share.

18
<PAGE>

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

OVERVIEW

Novoste, incorporated in January 1987, was first capitalized and commenced
operations in May 1992. To date the Company has been engaged primarily in
research and development efforts and clinical trials in interventional
cardiology, electrophysiology and critical care products. Commencing in 1994,
the Company has devoted its efforts to developing the KBC System. For the
period since its capitalization to March 31, 1996, the Company received
minimal non-recurring revenues from the sale of patent and option rights and
license and contract fees and experienced significant losses in each year. At
March 31, 1996, the Company had an accumulated deficit of approximately $8.7
million. Further, Novoste expects to continue to incur significant operating
losses through at least 1998 and expects cumulative losses to increase
significantly as the Company continues to initiate new research and
development projects, conduct its clinical trials in the United States, Canada
and Europe, seek regulatory approval or clearance for its products, expand its
sales and marketing efforts in contemplation of product introduction and
market development and increase its administrative activities to support
growth of the Company. The Company has granted an option to purchase 100,000
shares of Common Stock at $3.20 per share as to which options with respect to
75,000 shares have not yet vested. Vesting would occur as to 25,000 shares
upon the achievement of each of three specified milestones. Should any of such
milestones be achieved, the Company will record a non-cash compensation
expense to the extent the fair market value of the shares which vest exceeds
the exercise price.

The Company's financial statements have been prepared assuming that the
Company will continue as a going concern. The auditors' report states that the
accumulated deficit (approximately $7.5 million at December 31, 1995) and the
Company's need to raise additional financing to continue the development of
its products raise substantial doubt about the Company's ability to continue a
going concern. See "Financial Statements."

There can be no assurance that the Company's research and development
efforts will be successfully completed. Additionally, as clinical testing has
only recently commenced, there can be no assurance that the KBC System will be
safe and effective. There can be no assurance that the KBC System will be
approved by the FDA or any foreign government agency or that the KBC System or
any other product developed by Novoste will be successfully introduced or
attain any significant level of market acceptance. See "Risk Factors--Early
Stage of Clinical Testing; No Assurance of Safety and Efficacy," "--No
Assurance of Timely Regulatory Approval; Government Regulation," "--
Uncertainty of Market Acceptance" and "--Dependence on KBC System."

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996 AND 1995

REVENUE. No revenues were earned in the three months ended March 31, 1996 as
compared to the $1,200 of miscellaneous sales in the three months ended March
31, 1995.

RESEARCH AND DEVELOPMENT. Research and development expenses increased to
$741,000 in the three months ended March 31, 1996 from $313,000 in the same
period of 1995. This increase in expenses was due to the increase in outside
consulting and services attributable to the development of the KBC System and
the commencement of clinical studies.

GENERAL AND ADMINISTRATIVE. General and administrative expenses in the three
month period ended March 31, 1996 increased to $372,000 from $251,000 in the
three months ended March 31, 1995. This increase in expenses was due to
additions to the Company's management to support the Company's increased
activities and increased occupancy costs and utility costs resulting from
leasing additional space in mid 1995.

COMPARISON OF YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

Revenue. Revenues decreased to $3,000 in 1995 from $70,000 in 1994 as the
Company did not receive any contract or license fee revenue in 1995. No
revenues were earned in 1993.

Research and Development. Research and development expenses increased to
$1,659,000 in 1995 from $1,094,000 in 1994 and from $500,000 in 1993. This
increase in expenses was due to the hiring of additional personnel, an
increase in outside consulting and services attributable to the development of
the KBC System, and the support of pre-clinical studies.

19
<PAGE>

General and Administrative. General and administrative expenses in 1995
increased to $1,327,000 from $924,000 in 1994 and from $724,000 in 1993. This
increase in expenses was due to additions to the Company's management to
support the Company's increased activities.

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its activities since inception principally through
private placements of its Common Stock, Class B Common Stock and promissory
notes. Since inception through March 31, 1996, the Company had obtained funds
aggregating approximately $6.7 million in net proceeds from the issuance of
Common Stock and Class B Common Stock, and approximately $1.8 million in net
proceeds from the issuance of convertible promissory notes. In March and April
1996 certain shareholders of the Company made loans to the Company in the
aggregate of approximately $1.5 million. The Company intends to use the net
proceeds of this Offering to repay such debt plus interest thereon. Cash used
to fund operations since inception was approximately $6.7 million. The
Company's capital expenditures have aggregated approximately $1.4 million
through March 31, 1996. At March 31, 1996, the Company had cash and cash
equivalents of $1.6 million.

The Company has a revolving line of credit with a commercial bank under
which the Company may borrow up to $300,000 at the prime rate plus one
percent. The line of credit, which expires on June 15, 1996, is subject to
commitment fees of .65% of the unused line of credit. As of April 1, 1996,
borrowings of $300,000 were outstanding under this arrangement. The line of
credit is guaranteed in the amount of $100,000 each by Messrs. Thomas Weldon,
Norman Weldon and Charles Larsen. See "Certain Transactions."

The Company expects to incur significant additional operating loses over
each of the next several years and expects cumulative losses to increase
significantly as the Company continues to expand its research and development,
clinical trials and marketing efforts. The Company anticipates that the
proceeds of the Offering and interest thereon, together with existing cash and
cash equivalents, will be sufficient to fund its operations and planned new
product development, including increased working capital expenditures, through
at least 1997.

Future liquidity and capital requirements of the Company will depend upon a
number of factors. This will include the progress and costs of clinical
trials, the potential requirement and related costs for product modifications,
the timing and costs of various U.S. and foreign regulatory filings, the
timing of receipt of various U.S. and foreign governmental approvals, the
timing and extent to which the Company's products gain market acceptance, the
timing and costs of product introduction, and the costs of developing
marketing, servicing, and distribution capabilities, if regulatory approvals
are received. The Company will be required to seek additional funds through
debt or equity financing, arrangements with corporate partners or from other
sources. Issuance of additional equity securities could result in substantial
dilution in ownership and control to the then existing shareholders. There can
be no assurance that any such funds will be available on terms acceptable to
the Company, or at all. The Company's inability to fund its capital
requirements would have a material adverse effect on the Company's business,
financial condition and results of operations.

At December 31, 1995, the Company has net operating loss carryforwards for
income tax purposes of approximately $7.1 million for federal and state
purposes, which will expire at various dates through 2010, if not utilized.
The Company also has research and development credits available to reduce
future federal and state income taxes, if any, of approximately $127,000. The
Tax Reform Act of 1986 contains provisions that may limit the net operating
loss carryforwards and research and development credits available to be used
in any given year should certain events occur, including additional sales of
equity securities and other changes in ownership. The Company has concluded
that it is more likely than not that these net operating loss carryforwards
and development credits will not be realized based on a weighing of available
evidence at December 31, 1995 and, as a result, a 100% deferred tax valuation
allowance has been recorded against these assets. See Note 4 of the Notes to
the Financial Statements.

The Company is also subject to a recent accounting pronouncement concerning
accounting for long-lived assets. See Note 1 of Notes to Financial Statements.

20
<PAGE>

BUSINESS

GENERAL

Novoste Corporation ("Novoste" or the "Company") is developing the King
Beta-Cath System, an intraluminal beta radiation catheter delivery system
designed to reduce the frequency of restenosis subsequent to percutaneous
transluminal coronary angioplasty ("PTCA"). The King Beta-Cath System ("KBC
System") applies localized beta radiation to the site of the vascular injury
caused by a PTCA procedure and is designed to inhibit long-term cell
proliferation ("hyperplasia") and vascular remodeling, each primary causes of
restenosis. The KBC System was developed in collaboration with certain
physicians at Emory University Hospital, including its Director of
Interventional Cardiology, Dr. Spencer B. King, III. The Company is conducting
a human clinical trial at Emory under an Investigational Device Exemption
("IDE") granted by the U.S. Food and Drug Administration ("FDA") to determine
the clinical safety of the KBC System for use in coronary arteries. As of May
10, 1996, 11 of the 15 patients to be included in the trial had been enrolled
and treated without any adverse events or complications.

INDUSTRY OVERVIEW

Coronary Artery Disease. Coronary artery disease is the leading cause of
death in the United States. More than 13 million people in the United States
currently have been diagnosed with coronary artery disease, which is generally
characterized by the progressive accumulation of plaque as a result of the
deposit of cholesterol and other fatty materials on the walls of the arteries.
The accumulation of plaque leads to a narrowing of the interior passage, or
lumen, of the arteries, reducing blood flow to the heart muscle. When blood
flow to the heart muscle becomes insufficient, oxygen supply is restricted and
a heart attack and death may result. Each year more than 900,000
revascularization procedures are performed in the United States, and
approximately 1.5 million of such procedures are performed worldwide, to treat
coronary artery disease to increase blood flow to the heart muscle.

Coronary Artery Bypass Graft. Coronary artery bypass surgery ("CABG") was
introduced as a treatment for coronary artery disease in the 1950s, when
technology was developed to enable physicians to stop a patient's heart during
surgery. CABG is a highly invasive, open surgical procedure in which blood
vessel grafts are used to bypass the site of a blocked artery, thereby
restoring blood flow. CABG, still considered the most effective and long-
lasting treatment for coronary artery disease, is generally the primary
treatment for severe coronary artery disease involving multiple vessels. In
addition, CABG is often a treatment of last resort for patients who have
undergone other less invasive procedures but require reintervention. However,
CABG has significant limitations, including medical complications, such as
stroke, multiple organ dysfunction, inflammatory response, respiratory failure
and post-operative bleeding, each of which may result in death. In addition,
CABG is a very expensive procedure and requires a long recovery period. In the
United States, the cost of undergoing CABG is approximately $36,000, the
average post-operative hospital stay following CABG is approximately five to
seven days and the average recuperation period following discharge from the
hospital is approximately six to eight weeks. In 1995, approximately 400,000
CABG procedures were performed in the United States. Currently, several
minimally invasive surgical techniques are being developed to lessen the cost
and trauma of CABG procedures.

PTCA and Other Catheter Based Technologies. Since its clinical introduction
in the late 1970s, PTCA has emerged as the principal, less invasive
alternative to CABG. PTCA is a procedure performed in a cath lab by an
interventional cardiologist. During PTCA, a guidewire is inserted into a blood
vessel through a puncture in the leg (or arm in some cases) and guided through
the vasculature to a diseased site in the coronary artery. A balloon-tipped
catheter is then guided over the wire to the deposit of plaque ("lesion")
occluding the artery. Once the balloon is positioned across the lesion inside
the vessel, the balloon is inflated and deflated several times. Frequently,
successively larger balloons are inflated at the lesion site, requiring the
use of multiple balloon catheters. The inflation of the balloon cracks or
reshapes the plaque and the arterial wall, thereby expanding the arterial
lumen. Though injury to the arterial wall often occurs under balloon pressure,
PTCA typically results in increased blood flow without the actual removal of
any plaque. In 1995, more than 500,000 PTCA procedures were performed in the
United States. The average cost of each PTCA procedure is approximately
$15,000, or

21
<PAGE>

less than one-half of the average cost of CABG, and the length of stay and
recuperation period are substantially less than those required for CABG.

Though PTCA has grown rapidly as a highly effective, less invasive therapy
to treat coronary artery disease, the principal limitation of PTCA is the high
rate of restenosis, a re-narrowing of a treated artery, which generally
requires reintervention. Due to the effects of restenosis, the long-term cost-
effectiveness of PTCA has not proven greater than that of CABG. Studies have
indicated that within six months after PTCA, between 25% and 45% of PTCA
patients experience restenosis. In addition, 60% of patients with multi-vessel
coronary artery disease who received PTCA have been shown to require
reintervention within three years of treatment. Finally, although the average
cost of PTCA is less than one-half of that of CABG, a recent study indicated
that three years after the procedure, PTCA has no cost advantage over CABG due
to the need for subsequent interventional treatment.

A variety of other catheter-based, minimally invasive, interventional
devices for coronary artery disease have been developed in an attempt to
reduce the frequency of restenosis following PTCA. These devices include
atherectomy devices (catheter devices that cut and remove plaque from the
arterial wall), rotational ablation devices (catheter devices which use a
rotating burr to remove plaque), and laser catheter devices (devices that use
laser energy to reduce plaque in arteries). Although these new approaches to
coronary artery disease have been found to be effective in certain lesion
types and in certain locations in the coronary arteries, like PTCA they also
exhibit high rates of restenosis.

Pathology of Restenosis. Clinical restenosis is typically defined as a
renarrowing of a coronary artery within six months of a revascularization
treatment to less than 50% of its original size. Restenosis is a vascular
response to arterial injury and occurs frequently after a revascularization
procedure, which stretches coronary arteries or otherwise damages the treated
segment of the artery. Due to multiple mechanisms controlling vascular repair,
restenosis may occur within a short period after a revascularization procedure
or may develop over the course of months or years. Restenosis that occurs
shortly after a revascularization procedure is usually attributed to elastic
recoil (acute loss of lumen diameter) of the artery.

Longer term, restenosis may result from excessive proliferation of cells at
the treatment site ("hyperplasia") or from a generalized geometric remodeling
of the arterial segment, the causes of which are not well understood.
Hyperplasia is a physiological response to injury, similar to scarring which
occurs in wound healing. In response to an arterial injury from
revascularization, the body sets off a biochemical response to repair the
injury site and protect it from further harm. This response will include a
signal to adjacent cells of the arterial wall to multiply. Often this cell
proliferation goes unchecked, resulting in a much thicker and inelastic
arterial wall and in reduced blood flow. The Company believes that hyperplasia
and vascular remodeling are responsible for a large portion of the overall
effect of restenosis.

Coronary Stenting. Coronary stents are expandable, implantable metal devices
permanently deployed at a lesion site. Stents maintain increased lumen
diameter by mechanically supporting the diseased site in a coronary artery. Of
all the non-surgical treatments which have sought to improve upon PTCA, stents
have demonstrated the best results in reducing the rate of restenosis. In a
typical stent procedure, the artery is pre-dilated at the lesion site with a
balloon catheter and the stent is delivered to the site of the lesion and
deployed with the use of a second balloon catheter, which expands the stent
and firmly positions it in place. This positioning is often followed by a
third dilatation using a high pressure balloon to fully expand and secure the
stent. Once placed, stents exert radial force against the walls of the
coronary artery to enable the artery to remain open and functional.

Recent studies have concluded that the rate of restenosis in patients who
receive coronary stents following PTCA is approximately 30% lower than in
patients treated only by PTCA. Additional clinical studies with stents which
incorporate a specialized coating may show a greater reduction in the rate of
restenosis. Stents appear to

22
<PAGE>

be effective in reducing the frequency of restenosis resulting from elastic
recoil and appear to limit vascular remodeling, but may increase, rather than
decrease, hyperplasia.

The use of stents has grown rapidly since commercial introduction in the
United States in 1994, and they were utilized in approximately 100,000 of the
approximately 500,000 PTCA procedures performed in the United States in 1995.
Despite their rapid adoption, stents have certain drawbacks. Not only are they
permanent implants which may result in unforeseen long-term adverse effects,
but they cannot be used in cases where the coronary arteries are too tortuous
or too narrow. In addition, the use of stents approximately doubles the cost
of a PTCA procedure and restenosis may still occur, often requiring
reintervention in patients who receive stents.

THE NOVOSTE SOLUTION

The Company's KBC System is designed to reduce the frequency of restenosis
following PTCA by applying localized beta radiation to the treatment site in
the coronary artery. The KBC System is designed to be safe and cost-effective
and to fit well with techniques currently used by interventional cardiologists
in the cardiac catheterization lab. The KBC System targets the primary causes
of restenosis by attempting to prevent or inhibit hyperplasia and long-term
vascular remodeling. Its localized beta radiation sources can be handled with
little risk to the health care workers or to the patients because the
penetration of electrons associated with beta radiation is quite limited and
easily shielded. The Company expects that the KBC System will provide
significant cost savings, principally by reducing the costs associated with
reintervention required following PTCA and coronary stenting.

The KBC System is founded on the Company's belief, based on recent clinical
and pre-clinical studies, that localized beta radiation is likely to reduce
coronary artery restenosis rates by inhibiting cell proliferation which occurs
in response to PTCA. Radiation has been used therapeutically in medicine for
almost 50 years, and is extensively used for the treatment of proliferative
cell diseases, such as cancer. Cancer therapy has primarily involved the use
of gamma radiation, which is highly penetrating and may be dangerous unless
handled and used with great care. The Company has designed the KBC System to
use beta radiation, which is much less penetrating and thus easier to use and
control than gamma radiation while providing equivalent efficacy. Beta
radiation has been used less frequently in medicine (primarily in a topical
application to treat certain skin and eye disorders) because of its more
limited depth of penetration, but is viewed by the Company as well-suited for
intraluminal use following PTCA, where the objective is to treat the inner
surface and the wall of the artery with minimal exposure to adjacent tissues.

The Company is aware of four clinical studies of the use of intraluminal
radiation to reduce the frequency of restenosis in humans. Three of these
studies have been conducted outside the United States: two used gamma
radiation delivered using methods and equipment designed for use in cancer
therapy, and one applied beta radiation using a wire positioned through the
lumen of a special balloon catheter. The fourth study, using gamma radiation,
was initiated by a researcher in the United States, but was halted by the FDA
for the lack of a required IDE before results could be fully reported. These
studies, while involving a limited number of patients, tend to show a
reduction in restenosis rates and no adverse effects from intraluminal
radiation. The Company's animal studies, conducted at Emory University under
the direction of Dr. Spencer King and his colleagues, Ron Waksman, M.D., Ian
Crocker, M.D. and Keith Robinson, Ph.D., have also supported the conclusion
that intraluminal radiation, and particularly beta radiation, can be effective
in reducing the frequency of restenosis whether used alone following PTCA or
as a combination therapy with coronary stenting. See "--Clinical Status."

23
<PAGE>

THE KBC SYSTEM

The KBC System is designed to deliver localized, intraluminal beta radiation
to reduce the frequency of restenosis following PTCA.

[INSERT DIAGRAM OF KBC SYSTEM (TO COME)]

The primary components of the KBC System are:

Radiation Source Train. The beta radiation administered by the KBC System
emanates from a "train" of several miniature cylindrical sealed sources
("radiation sources") containing Strontium 90
(/9//0/ Strontium//9//0/ Yttrium), a beta emitting radioisotope. The use of
beta, rather than gamma, radiation is intended to make the KBC System safer
and less invasive. The delivered dose of the Company's radiation sources
has been validated by standards established by the U.S. Department of
Commerce National Institute of Standards and Technology, enabling a
physician to accurately determine appropriate dosing levels. In addition,
due to their relatively long half lives (approximately 28 years) and
because they will not come into contact with a patient's blood or tissue,
the radiation sources are expected to be reused for numerous patients. Beta
radiation from the Strontium 90 source can be easily shielded from health
care workers by the use of approximately one-half inch thick quartz.

Transfer Device. The transfer device is a multiple use, hand held
instrument used to store the radiation sources while in the cath lab. The
transfer device (i) transfers the radiation sources to and from the
delivery catheter via a mechanical gating system, (ii) contains a switching
device that directs hydraulic force to move the radiation sources to or
from the treatment zone and (iii) completely shields the beta radiation
energy from health care workers while being handled in the hospital
setting.

Delivery Catheter. The delivery catheter is a single use, disposable,
multi-lumen catheter which provides a pathway for the radiation sources to
be rapidly delivered and retrieved from the coronary arterial segment to be
treated. The delivery catheter is positioned by advancing it over the same
guidewire used during the immediately preceding PTCA procedure. The
radiation sources are delivered through a dual lumen closed hydraulic
circuit, which is powered by a standard syringe.

The KBC System is intended to be used in a cath lab by an interventional
cardiologist immediately after a PTCA procedure. The cardiologist uses a
previously positioned guidewire utilized in the PTCA procedure to direct the
delivery catheter into the vasculature of the patient until the treatment zone
of the delivery catheter

24
<PAGE>

reaches the targeted site. The radiation sources are hydraulically driven from
the transfer device to the target site in a matter of seconds through the
radiation source train lumen of the delivery catheter. The radiation sources
remain at the targeted site for less than five minutes to deliver a
predetermined dose of radiation. They are then returned, through the same
lumen, by the use of positive hydraulic pressure applied through the delivery
catheter's fluid lumen. Upon completion of the procedure, the train of
radiation sources is stored safely inside the transfer device and delivered to
a designated radiation storage site within the hospital for safekeeping before
use with another procedure. The procedure currently requires the participation
of both an interventional cardiologist and a physician licensed to prescribe
radiation therapy.

The Company believes the KBC System, when fully developed and tested, will
have the following advantages:

. Non-implantable, Site-specific Therapy. The KBC System was designed to
accurately treat only the area required to prevent restenosis without
leaving a permanent implant in the body. The length of the radiation
source train may be varied to coincide with lesion length.

. Utilization of Existing PTCA Techniques. Although intracoronary
radiation is a new concept in coronary artery disease treatment, the KBC
System was designed to be easily adopted and used by the cardiologist.
The delivery catheter is very similar to a balloon angioplasty catheter,
and it is positioned by advancing it over the guidewire already in place
from the previous PTCA procedure.

. Flexibility. The cylinders that make up the KBC System's radiation
source train, as well as the KBC System's delivery catheter material,
are designed to be very flexible, giving the KBC System a very tight
radius of curvature and the capability of navigating tortuous coronary
anatomies.

. Short Procedure Times. The KBC System was designed to enhance patient
safety and comfort by delivering the recommended dosage in less than
five minutes of radiation exposure time per lesion.

. Multiple Use System. The radiation source train can be reused for
numerous patients due to the long half-life of the isotope and because
the source train does not come into contact with the patient's blood. As
a result, inventory planning will be very straightforward, procedure
costs will be attractive and last minute treatment decisions can be
made. In addition, a single delivery catheter and source train may be
used to treat multiple lesions within the same patient.

. Ease and Accuracy of Dosing. Because of the relatively long half-life of
the Company's radiation sources, prescribed treatment times will remain
stable over the approved shelf life of the KBC isotope. Intracoronary
radiation systems which utilize short half-life isotopes are likely to
require complex case by case dose calculations based on the current
decay state of the isotope.

. Designed for Safety. The KBC System utilizes localized beta radiation,
which results in total body radiation exposure significantly less than
that received during routine x-ray during PTCA. Other safety mechanisms
include: a closed source train lumen, special locking mechanisms to
connect the delivery catheter to the transfer device and sufficient
shielding in the transfer device to protect health care workers from
radiation exposure.

OTHER INTRACORONARY RADIATION THERAPY APPROACHES

The Company is aware of two other types of medical devices currently under
development to deliver intracoronary radiation therapy: (i) a radioactive
tipped guidewire, and (ii) a radioactive stent. Guidewires with gamma-emitting
radioactive tips have been used for some time in cancer therapy, and some
researchers have used them to deliver intracoronary radiation to prevent
restenosis. Gamma radiation is more penetrating and therefore more hazardous
than beta radiation. Accordingly, this method requires the automated
administration of radiation with a complex and expensive piece of computerized
equipment (an "afterloader"), while healthcare workers are out of the room
behind a protective barrier. The Company believes this method is impractical,
because the use of gamma radiation subjects patients and healthcare workers to
excessive radiation exposure and the use of an afterloader does not fit easily
into the cath lab. The Company is also aware of at least one company
developing a beta radiation tipped guidewire to be used in conjunction with an
afterloader.

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Novoste is also aware of at least one company developing a radioactive
stent. In theory, such a stent would address both elastic recoil and vascular
remodeling and inhibit longer term hyperplasia. However, this method retains
the problems inherent in leaving a permanent implant in the coronary artery.
In addition, this approach would not effectively treat areas of the artery
beyond the ends of the stent, areas which have been known to be restenotic.
Finally, because it is a permanent implant, a radioactive stent requires the
use of a radiation source with a short half-life. As a result, a hospital
would have difficulty keeping an inventory of stents that have sufficient
radioactivity at the time of implant.

THE NOVOSTE BUSINESS STRATEGY

The following discussion contains forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ materially
from the results discussed in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, those discussed
in "Risk Factors."

The Company's objective is to become the leader in the commercialization of
intravascular radiation devices for the treatment of restenosis. Elements of
the Company's strategy include:

. Achieve First to Market Position in United States. Novoste intends to be
the first to market in the United States an intracoronary radiation
device to treat coronary restenosis. The Company is conducting a human
clinical trial in the United States under an IDE granted by the FDA to
determine the clinical safety of the KBC System for use in coronary
arteries. As of May 10, 1996, 11 of the 15 patients to be included in
the trial had been enrolled and treated.

. Establish Beta Radiation Therapy as the Standard Therapy to Prevent
Restenosis. The Company's strategy is to introduce the KBC System into
the cath lab as standard therapy to reduce the frequency of restenosis
following PTCA, either on a stand-alone basis or in conjunction with
coronary stenting. The Company seeks to establish interventional
cardiologists as the primary providers of this therapy and plans to
target top tier medical institutions and leading cardiologists for sale
of the KBC System. In addition, the Company intends to conduct intensive
physician training seminars to familiarize the cardiologists with the
use of the KBC System.

. International Commercialization. The Company anticipates marketing the
KBC System in Canada and Europe through international distributors or
corporate partners prior to its receipt of pre-marketing approval in the
United States. A human clinical safety study by the Company similar to
the initial study currently being conducted at Emory University Hospital
is anticipated to commence at a single site in Canada by the end of June
1996 with two additional parallel studies anticipated to commence in
Canada and Europe by the end of 1996.

. Establish Radiation Therapy for Peripheral Vascular
Applications. Restenosis is common following angioplasty of the
peripheral arteries. In addition, a similar phenomena frequently occurs
in veins adjacent to an arterial-venous shunt used for patients
undergoing hemodialysis for end stage renal disease. The Company intends
to leverage its core catheter and localized radiation technologies to
expand its product offerings to other vascular markets where cell
proliferation is of clinical significance.

. Protect and Enhance Proprietary Technology. The Company believes that
its patent position may offer a significant competitive advantage. The
Company currently has a pending U.S. patent application and a related
continuation-in-part application covering key aspects of the KBC System.
The Company has also filed a counterpart application under the Patent
Cooperation Treaty preserving the Company's right to file applications
in the European Patent Office and certain other countries. The Company
intends to obtain further protection of its proprietary technology and
to defend its intellectual property rights against infringement.

CLINICAL STATUS

In June 1995, the Company applied for an IDE to conduct a human clinical
trial to determine the short-term clinical safety of the KBC System for use in
the coronary arteries, and received such approval 29 days later. The

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IDE was based upon the Company's animal studies, conducted at Emory University
under the direction of Dr. Spencer King and his colleagues Drs. Ron Waksman,
Ian Crocker and Keith Robinson. These studies have supported the conclusion
that intraluminal radiation, and particularly localized beta radiation, may be
effective in reducing the frequency of restenosis whether used alone or as a
combination therapy with coronary stenting. The Company has sponsored three
such studies, the results of which have been published in three articles in
Circulation, a primary cardiology journal. The objectives of the first two
sets of animal experiments were to evaluate the effect of intraluminal gamma
and beta radiation on neointimal cell formation in pig coronary arteries
following balloon overstretch injury, a widely accepted method of modeling the
restenosis response, and to determine whether the results would be similar
using beta or gamma radiation. In both experiments, arteries treated with beta
or gamma radiation equally demonstrated significantly decreased neointimal
formation compared with control arteries, and a dose-response relationship was
demonstrated. The objective of the third set of experiments was to determine
whether intravascular radiation prior to stent implantation would also impact
neointimal formation. Both gamma radiation and beta radiation were used with
equal effectiveness to reduce the levels of neointimal formation after stent
implantation.

As approved in July 1995, the IDE authorized the Company to commence a
single site human clinical trial at Emory University Hospital on a total of 15
patients, each of whom will have a single vessel de novo (previously
untreated) lesion. In April 1996, the IDE was amended to authorize the Company
to commence a parallel feasibility study utilizing substantially the same
protocol on a total of eight patients at a second site at Rhode Island
Hospital in Providence. The IDE protocol provides that the patient will be
treated with standard PTCA and immediately thereafter with intravascular
radiation using the KBC System. A follow-up review of the patient 30 days
after treatment and a follow-up angiogram six months after the initial
treatment will be performed to observe the treated artery. The IDE has four
objectives: (i) to examine the safety of different dosing parameters; (ii) to
evaluate the feasibility of the KBC System to deliver beta radiation to the
coronary arteries; (iii) to confirm the operational specifications of the KBC
System; and (iv) to compare the incidence of restenosis following PTCA coupled
with the KBC System to results of a comparable trial showing the incidence of
restenosis following PTCA alone.

On January 31, 1996, employing the protocol approved by the FDA, the Company
commenced a human clinical trial at Emory. As of May 10, 1996, 11 of the 15
patients to be enrolled and treated in the trial had been treated, none of
whom demonstrated any adverse events or complications. The parallel
feasibility study at Rhode Island Hospital is expected to commence by the end
of May 1996. The Company also expects to commence a similar feasibility study
in Canada by the end of July 1996 and two additional studies in Canada and
Europe by the end of 1996. If the U.S. human clinical trials meet the
objectives of the initial IDE (e.g., demonstrate safety), the Company
anticipates commencing, subject to FDA approval of an additional IDE,
multicenter, double-blinded, randomized human clinical trials in 1997. There
can be no assurance that these or other trials will demonstrate the safety or
efficacy of the KBC System. See "Risk Factors--Early Stage of Clinical
Testing; No Assurance of Safety and Efficacy" and "--No Assurance of Timely
Regulatory Approval; Government Regulation."

RESEARCH AND DEVELOPMENT

Research and development activities are performed by a 14-person product
development team. The Company has also retained consultants to assist in many
research and development activities, including design of the KBC System,
conducting and monitoring the clinical trials relating to the KBC System and
advising on key aspects of radiation health physics and dosimetry.

The focus of the Company's current development efforts is to design future
generation components of the KBC System. The commercial design of the delivery
catheter will have a smaller outer diameter and be more flexible than the
design currently being used in clinical trials. Likewise, the transfer device
will be modified to have a more ergonomic design and to incorporate additional
safety features. Future development efforts will focus on modifying the KBC
System for use in peripheral vascular applications and potentially in
arterial-venous shunt applications. There can be no assurance that the Company
will be successful in developing these or other products.

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Research and development expenses for the years ended December 31, 1993,
1994, and 1995 and for the three months ended March 31, 1996 were
approximately $500,000, $1.1 million, $1.7 million, and $741,000,
respectively.

OTHER PRODUCTS

In addition to the KBC System, the Company has three other products in
development, which the Company intends to commercialize through corporate
partners (although the Company does not currently have any such corporate
partners). The Company's patented PulsePlus(TM) product, for which the Company
has received 510(k) clearance from the FDA, attaches to an entry needle to
contain blood during vascular punctures so that healthcare workers are
protected from inadvertent exposure to patient blood. This device provides
tactile, as well as visual, feedback of proper arterial placement. Novoste is
also developing a patented electronic catheter tip cooling technology which is
intended to enable electrophysiology procedures to become safer and more
efficient. The "cold-mapping" feature of the technology will enable physicians
to confirm the correct site of an arrhythmia (irregular heartbeat) within the
heart muscle before treating it with radiofrequency ablation, a currently
unguided method which, although highly efficacious, can create unnecessary
damage to healthy tissues because of the trial and error nature of its
application. In addition, Novoste has designed a proprietary needleless valve
for use in the critical care fluid delivery setting. This luer activated valve
is intended to replace access sites containing a rubber septum, which require
use of a needle to gain fluid access and thereby present an opportunity for an
accidental needlestick to health care workers.

SALES AND MARKETING

The Company anticipates marketing the KBC System through a small direct
sales force in the United States and through a combination of international
distributors and corporate marketing partners outside the United States. If
marketing approval is obtained, the Company plans to focus its marketing
efforts on a top tier of approximately 200 hospitals where the Company
believes a vast majority of the PTCA procedures in the United States are
performed, and on leading cardiologists at those institutions. Through this
effort the Company initially aims to identify well-respected clinical
supporters for the KBC System and to leverage their reputation in the clinical
community to generate wider demand. The Company will also conduct physician
training seminars to educate physicians about the KBC System. The Company
believes that it can market the KBC System to these hospitals and
cardiologists with a moderately sized direct sales organization, initially
consisting of the Vice President of Marketing and Sales and approximately 6 to
10 sales representatives, augmented by a small number of clinical specialists.
The Company's business and future operating results will depend in significant
part upon its ability to attract and retain skilled sales and marketing
personnel. Competition for such personnel is intense, and there can be no
assurance that the Company will be successful in attracting or retaining such
personnel. The Company's inability to attract and retain skilled sales and
marketing personnel, as needed, could materially adversely affect the
Company's business, financial condition and results of operations. In
addition, the Company plans to utilize distributors and/or one or more
corporate marketing partners to market products outside the United States. The
Company believes such distribution or corporate partnering arrangements will
be cost-effective, will be implemented more quickly than a direct sales force
established by the Company in such countries and will enable the Company to
capitalize on local marketing expertise in such countries.

The Company intends to select one or more established market leaders in the
radiation isotope business to inventory and deliver the radiation sources and
to provide related training, delivery, testing and disposal services to the
purchasing hospital. Novoste does not intend to inventory or deliver the
radiation sources used in the KBC System. There can be no assurance that the
Company will be able to secure any arrangements with international
distributors, corporate marketing partners or radiation isotope providers on
satisfactory terms or at all.

MANUFACTURING

Near term, the Company will focus its manufacturing resources on the
production of the KBC System. The Company anticipates that it will manufacture
the delivery catheter component of the KBC System directly and manufacture the
transfer device jointly with third parties. The radiation source trains are
expected to be supplied by a third party. The Company intends to manufacture
its products at its 25,000 square foot facility in Norcross,

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Georgia. The Company believes that if marketing approvals of the KBC System
are obtained, it will be able to utilize its existing facility and the
expertise of its management to manufacture commercial quantities of the
catheter-based components of the KBC System at a reasonable cost. However, to
date, the Company has not yet commercialized any of its products and its
manufacturing activities have consisted of building a small number of
prototypes of the KBC System for use in pre-clinical and clinical trials, and
the Company does not have experience in manufacturing its products in
commercial quantities. See "Risk Factors--Limited Manufacturing Experience;
Scale-Up Risk."

Any products of the Company, for which FDA clearances or approvals have been
obtained, must be manufactured in accordance with GMP regulations which would
impose certain procedural and documentation requirements upon the Company with
respect to manufacturing and quality assurance activities. The Company will
rely on independent suppliers for certain components of the KBC System. Such
components are either standard throughout the industry or will be built to the
Company's specifications. All suppliers of such components also must be in
compliance with GMP regulations. See "--Government Regulation."

The Company has obtained all of its requirements of radiation source
materials pursuant to an exclusive agreement (the "Supply Agreement") with a
single European supplier (the "Supplier"). Under the Supply Agreement, the
supplier has agreed to manufacture prototype radiation source "trains" at an
agreed upon base price, which is subject to certain adjustment to accommodate
significant changes in design specifications, materials costs, labor costs,
currency exchange rates and to take into account multiple re-use of the trains
by the Company's customers. The Supplier is required to comply with various
regulatory requirements with respect to the supply of radiation sources. See
"--Government Regulation."

Under the Supply Agreement, which has an initial term ending in the year
2000 and renews automatically for successive three year periods unless notice
of termination is given two years prior to a renewal date, the supplier has
agreed not to sell, lease, license or otherwise transfer radioactive sources
of a similar isotope to any other party for use in the treatment of restenosis
and the Company, in turn, has agreed not to purchase, lease, or otherwise
acquire directly or indirectly a radioactive source of "like" isotope for use
in the treatment of restenosis from any other party.

Although the Supply Agreement permits the Company to use an alternative
source during any period in which the Supplier is unable to provide the
materials, the Company believes that because of the technical expertise and
capital investment required to manufacture the radiation source materials, it
would be extremely difficult to find an alternate source of supply in the
event that the Supplier is unable to provide the materials. In addition,
portions of the process used to manufacture the materials may be proprietary
to the Supplier, who has no obligation to make any of its know-how or
technology available to any potential alternate source of supply.

The Company holds an option to purchase those assets of the supplier used or
useful in producing the radioactive isotopes sold to the Company by the
supplier in connection with the KBC System. The option is exercisable at any
time on or prior to August 22, 2002, for $5,000,000, 50% of which is payable
upon exercise and the balance in 12 equal consecutive monthly installments
following such exercise, and provides that the $90,000 payment made to obtain
the option will be credited against the purchase price of the assets. Upon the
exercise, if at all, of the option, the supplier is obligated for a period of
up to three months, to assign to the Company personnel to assist the Company
in facilitating the transfer of the assets, both for purposes of technical
training and operations and for administrative and regulatory matters relating
to licensure and governmental approvals. Nevertheless, the exercise of such
option and the transfer of the required technology and expertise to the
Company or an alternative source would be costly, time consuming, and
uncertain of success.

While the Company anticipates that the radiation source materials it
purchases from the Supplier will be able to be used for numerous patients, the
inability of the Supplier to provide radiation source materials would limit
the Company's ability to increase its business beyond its then existing
inventory of such radiation source material. As a result of the foregoing, any
failure or disruption in the ability of the Supplier to provide the radiation
source materials could have a material adverse effect on the business,
financial condition and results of operation of the Company.

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PATENTS AND PROPRIETARY TECHNOLOGY

The Company's policy is to protect its proprietary position by, among other
methods, filing United States and foreign patent applications. The Company
currently has one pending U.S. patent application and a related continuation-
in-part application covering aspects of the KBC System, and has filed a
counterpart application under the Patent Cooperation Treaty preserving the
Company's right to file applications in the European Patent Office and certain
other countries. The USPTO has taken an initial action on the Company's
pending patent application, rejecting certain claims based solely on
objections to the content, form or wording of the claims under Section 112 of
the United States Patent Law. The Company believes based upon the advice of
its patent counsel that such objections may be overcome to the examiner's
satisfaction by appropriate changes to the claim language or format. Allowance
of the claims is also subject to the examiner's review of additional prior art
that may be more pertinent than the prior art considered previously by the
examiner. The Company also holds seven issued United States patents and one
issued foreign patent, and has filed nine pending United States patent
applications and has filed, or will file, counterpart applications in several
foreign countries with respect to its other products. The Company employs a
full time intellectual property administrator to prepare invention records and
to coordinate the prosecution of new intellectual property.

There can be no assurance that the claims under the Company's pending U.S.
patent applications covering certain aspects of the KBC System will be
allowed, or if allowed, will offer any protection to the Company. In addition,
there can be no assurance that the Company's United States and foreign patents
or other pending applications will offer any protection or that they will not
be rejected, challenged, reexamined, invalidated or circumvented. In addition,
there can be no assurance that competitors will not obtain patents that will
prevent, limit or interfere with the Company's ability to make, use or sell
its products in either the United States or international markets.

The Company received a letter from NeoCardia, L.L.C. ("NeoCardia") dated
July 7, 1995, in which NeoCardia notified the Company that NeoCardia is the
exclusive licensee of U.S. Patent No. 5,199,939 (the "Dake Patent") and
requested that the Company confirm that its products did not infringe the
claims of the Dake Patent. The Company had previously concluded based upon
advice of patent counsel that the Company's proposed KBC System would not
infringe any valid claim of the Dake Patent. On August 22, 1995, on behalf of
the Company, its patent counsel responded that the Company did not infringe
the Dake Patent. The USPTO has ordered reexamination of the Dake Patent, and
the Company has been advised that on February 29, 1996, following
reexamination of the Dake Patent, the USPTO preliminarily rejected all claims
of the Dake Patent, as anticipated by or as obvious in view of prior art. In
April 1996, the holder of the Dake Patent submitted a response to the USPTO,
reasserting that the claims of the Dake Patent are valid and submitting
additional claims as well. Based upon such submission, the USPTO will again
consider the patentability of the claims and may make the rejection final,
confirm the patentability of the original claims, or allow new or amended
claims which might narrow or broaden the original claims. The holder of the
Dake Patent has the right to appeal any final rejection of its patent claims.
There can be no assurance that any or all claims of the Dake Patent will
ultimately be rejected or limited in any material respect or that broader
claims will not be allowed. In addition, there can be no assurance that the
Company's products will not infringe any original, amended or new claims of
the Dake Patent which survive the reexamination proceeding or that NeoCardia
will not sue the Company for patent infringement and obtain damages from the
Company and/or injunctive relief restraining the Company from commercializing
the KBC System, or that the Company will not be required to obtain a license
from NeoCardia or redesign the KBC System to avoid infringement, any of which
could have a material adverse effect on the Company's business, financial
condition and results of operations or could result in cessation of the
Company's business.

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Company or to determine the enforceability, scope and validity of the
proprietary rights of others. Any litigation or interference proceedings will
result in substantial expense to the Company and significant diversion of
effort by the Company's technical and management personnel. An adverse
determination in litigation or interference proceedings to which the Company
may become a party could subject the Company to significant liabilities to
third parties or require the Company to seek licenses from third parties or
require the Company to redesign its products or processes to avoid
infringement or prevent the Company from selling its products in certain
markets, if at all. Although patent and intellectual property disputes
regarding medical devices have often been settled through licensing or similar
arrangements, costs associated with such arrangements may be substantial and
could include ongoing royalties. Furthermore, there can be no assurance that
the necessary licenses would be available to the Company on satisfactory
terms, if at all, or that the Company could redesign its products or processes
to avoid infringement. Any adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could
prevent the Company from manufacturing and selling its products, which would
have a material adverse effect on the Company's business, financial condition
and results of operations.

Patent applications in the United States are maintained in secrecy until
patents issue, and patent applications in foreign countries are maintained in
secrecy for a period after filing. Accordingly, there can be no assurance that
current and potential competitors or other third parties have not or will not
file applications for, or have not or will not receive, patents and will not
obtain additional proprietary rights relating to materials or processes used
or proposed to be used by the Company.

The Company has developed certain of its patent and proprietary rights
relating to the KBC System in conjunction with Emory University ("Emory"), a
leader in the use of intravascular radiation therapy. To obtain the exclusive
rights to commercialize the KBC System for the treatment of restenosis, the
Company entered into a license agreement with Emory, under which, Emory
assigned to the Company all of Emory's rights to one pending U.S. patent
application, as to which Emory made no representation or warranty with respect
to its ownership thereof, and licensed other technology thereunder relating to
the KBC System, but made only limited representations as to the ownership of
such other technology. Under the agreement, Emory will be entitled to royalty
payments based upon net sales of the KBC System. The term of the agreement
runs through the later of (i) the expiration of the last patent covered by the
agreement to expire or (ii) January 2016 (unless earlier terminated as
provided in the agreement). Any inventions developed jointly by personnel of
the Company and Emory during the term of the license agreement are owned
jointly by the Company and Emory. If the agreement were terminated by Emory as
a result of the Company's failure to pay such royalties or any other breach of
its obligations under such agreement, the Company's rights to use jointly
owned patents (including any patent covering the continuation-in-part
application which has been filed) would become non-exclusive, it would have no
rights to practice future patents owned exclusively by Emory and the Company
could be required by Emory to cooperate in licensing the pending U.S. patent
application and its foreign counterparts to third parties so that they would
be able to commercialize and sell the KBC System.

All of the physicians on staff at Emory who were involved in the development
of the KBC System, including Spencer B. King, III, M.D., have assigned their
rights in the technology, if any, to Novoste and/or Emory, except one
physician has not executed a formal assignment of his rights in the technology
covered by the Company's continuation-in-part application. Such physician
could assert non-exclusive ownership rights in such application. If he were
successful in this assertion, such physician would have the right to exploit
any technology covered by the continuation-in-part application but not covered
by the original application, and the Company's rights to such technology would
be non-exclusive. See "Risk Factors--Uncertainty Regarding Patents and
Protection of Proprietary Technology."

In addition, the Company has entered into a license agreement with Dr. King
pursuant to which Dr. King is entitled to receive a royalty on the net sales
of the KBC System (excluding consideration paid for the radioactive isotope),
subject to a maximum of $5,000,000 to be paid to Dr. King, in exchange for the
right granted thereunder to the Company to use his name in connection with
sales and marketing of the KBC System.

The Company is a party to a license/product supply agreement with, among
others, Sumitomo Bakelite Co., Ltd., a Japanese corporation ("SBL"). Under the
agreement, the Company granted to SBL a right of first refusal,

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expiring on May 11, 2002, on all licenses of certain technology in Japan,
China, Korea, Singapore, Taiwan, The Philippines, Thailand, Indonesia, Hong
Kong and Malaysia. Specifically, in the event that the Company, on or before
the above date, proposes to license, in any such country, technology relating
to any of its products to a third party, it must first offer such license to
SBL on the same terms.

COMPETITION

Competition in the medical device industry, and specifically the markets for
cardiovascular devices and devices to improve the outcome of coronary
revascularization procedures, is intense. Guidant Corporation, Boston
Scientific Corporation, Medtronic Inc. and Johnson & Johnson, among others,
are developing devices to improve the outcome of coronary revascularization
procedures. Many companies are developing therapies to reduce the frequency of
restenosis. Johnson & Johnson, among others, currently markets coronary stents
which have been successful in reducing the frequency of restenosis. Other
companies have under development various radiation therapy products to reduce
restenosis. In addition, drugs, gene therapy and other minimally invasive
catheter-based procedures are currently being developed. Many of the Company's
competitors and potential competitors have substantially greater capital
resources than does the Company and also have greater resources and expertise
in the areas of research and development, obtaining regulatory approvals,
manufacturing and marketing. There can be no assurance that the Company's
competitors and potential competitors will not succeed in developing,
marketing and distributing technologies and products that are more effective
than those developed and marketed by the Company or that would render the
Company's technology and products obsolete or noncompetitive. Additionally,
there is no assurance that the Company will be able to compete effectively
against such competitors and potential competitors in terms of manufacturing,
marketing and sales.

GOVERNMENT REGULATION

United States

The Company's KBC System is regulated in the United States as a medical
device. As such, the Company is subject to extensive regulation by the FDA,
and, in some instances, by foreign governments. The FDA regulates the clinical
testing, manufacture, labeling, distribution and promotion of medical devices.
Noncompliance with applicable requirements can result in, among other things,
fines, injunctions, civil penalties, recall or seizure of products, total or
partial suspension of production, failure of the government to grant premarket
clearance or premarket approval for devices, withdrawal of marketing
approvals, a recommendation by the FDA that the Company not be permitted to
enter into government contracts and criminal prosecution. The FDA also has the
authority to request repair, replacement or refund of the cost of any device
manufactured or distributed by the Company.

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In the United States, medical devices are classified into one of three
classes (Class I, II or III) on the basis of the controls deemed necessary by
the FDA to reasonably assure their safety and efficacy. Under FDA regulations,
Class I devices are subject to general controls (for example, labeling,
premarket notification and adherence to Good Manufacturing Procedures
("GMPs")) and Class II devices are subject to general and special controls
(for example, performance standards, patient registries, and FDA guidelines).
Generally, Class III devices are those that must receive premarket approval by
the FDA after evaluation of their safety and efficacy (for example, life-
sustaining, life-supporting and implantable devices, or new devices that have
not been found substantially equivalent to legally marketed devices). The KBC
System is a Class III device which will require pre-market approval ("PMA") by
the FDA prior to its commercialization.

A PMA application must be supported by valid scientific evidence which
typically includes extensive data, including preclinical and human clinical
trial data to demonstrate safety and efficacy of the device. If human clinical
trials of a device are required and the device presents a "significant risk,"
the sponsor of the trial (usually the manufacturer or the distributor of the
device) is required to file an IDE application with the FDA prior to
commencing human clinical trials. The IDE application must be supported by
data, typically including the results of animal and laboratory testing. If the
IDE application is approved by the FDA and one or more appropriate
Institutional Review Boards ("IRBs"), human clinical trials may begin at a
specific number of investigational sites with a specific number of patients,
as approved by the FDA.

The PMA application must also contain the results of all relevant bench
tests, laboratory and animal studies, a complete description of the device and
its components, and a detailed description of the methods, facilities and
controls used to manufacture the device. In addition, the submission must
include the proposed labeling, advertising literature and training methods (if
required). Upon receipt of a PMA application, the FDA makes a threshold
determination as to whether the application is sufficiently complete to permit
a substantive review. If the FDA determines that the PMA application is
sufficiently complete to permit a substantive review, the FDA will accept the
application for filing and begin an in-depth review of the PMA. An FDA review
of a PMA application generally takes one to two years from the date the PMA
application is accepted for filing, but may take significantly longer. The
review time is often significantly extended by the FDA asking for more
information or clarification of information previously submitted. During the
review period, an advisory committee, primarily comprised of clinicians, will
likely be convened to review and evaluate the application and provide
recommendations to the FDA as to whether the device should be approved. The
FDA is not bound by those recommendations. Toward the end of the PMA review
process, the FDA generally will conduct an inspection of the manufacturer's
facilities to ensure that the facilities are in compliance with the applicable
GMP requirements.

If the FDA's evaluations of both the PMA application and the manufacturing
facilities are favorable, the FDA will either issue an approval letter or an
"approvable letter" containing a number of conditions which must be satisfied
in order to secure the final approval of the PMA. When and if those conditions
have been fulfilled to the satisfaction of the FDA, the agency will issue a
PMA approval letter, authorizing commercial marketing of the device for
certain indications. If the FDA's evaluation of the PMA application or
manufacturing facilities is not favorable, the FDA will deny approval of the
PMA application or issue a "not approvable letter." The FDA may also determine
that additional clinical trials are necessary, in which case PMA approval
could be delayed for several years while additional clinical trials are
conducted and submitted in an amendment to the PMA. The PMA process can be
expensive, uncertain and lengthy, and a number of devices for which FDA
approval has been sought by other companies have never been approved for
marketing.

To date, the Company has obtained an IDE for a feasibility clinical trial to
collect data necessary to gain FDA approval to begin a multi-center,
randomized, prospective clinical trial needed to support a PMA application.
There can be no assurance as to when, or if, the Company will complete
clinical trials of its KBC System or that data from such trials, if completed,
will be adequate to support approval of a PMA. Furthermore, there can be no
assurance that the Company will be able to obtain PMA approval on a timely
basis, or at all, and delays in the receipt of, or failure to receive, such
approvals would have a material adverse effect on the Company's business,
financial condition and results of operations, and could result in cessation
of the Company's business.

33
<PAGE>

For Class I and Class II devices, FDA approval may be obtained through a
510(k) notification, pursuant to which the FDA determines that a medical
device is "substantially equivalent" to an existing, legally marketed device.
The Company's PulsePlus device has been cleared for marketing under a 510(k)
notification.

Any products manufactured or distributed by the Company pursuant to FDA
clearances or approvals are subject to pervasive and continuing regulation by
the FDA, including record keeping requirements and reporting of adverse
experiences with the use of the device. Device manufacturers are required to
register their establishments and list their devices with the FDA and certain
state agencies, and are subject to periodic inspections by the FDA and certain
state agencies. The FDA Act requires devices to be manufactured in accordance
with GMP regulations which impose certain procedural and documentation
requirements upon the Company with respect to manufacturing and quality
assurance activities. The FDA has proposed changes to the GMP regulations that
would, among other things, require design controls and maintenance of service
records, which if finalized, would likely increase the cost of complying with
GMP requirements.

Because the KBC System utilizes radiation sources, its manufacture,
distribution, transportation, import/export, use and disposal will also be
subject to federal, state and/or local laws and regulations relating to the
use and handling of radioactive materials. Specifically, after PMA approval is
obtained, approval by the U.S. Nuclear Regulatory Commission ("NRC"), or an
equivalent state agency, of the Company's radiation sources for certain
medical uses will be required to commercially distribute the radiation sources
to licensed recipients in the United States. In addition, the Company and/or
its supplier of radiation sources must obtain a specific license from the NRC
to commercially distribute such radiation sources as well as comply with all
applicable regulations. The Company and/or its supplier of radiation sources
must also comply with NRC and U.S. Department of Transportation regulations on
the labeling and packaging requirements for shipment of radiation sources to
hospitals or other users of the KBC System. In addition, hospitals may be
required to obtain or expand their licenses to use and handle beta radiation
prior to receiving radiation sources for use in the KBC System. Comparable
radiation regulatory requirements and/or approvals are anticipated in markets
outside the United States. If any of the foregoing approvals are significantly
delayed or not obtained, the Company's business, financial condition and
results of operations could be materially adversely affected.

The Company is also subject to numerous federal, state and local laws
relating to such matters as safe working conditions, manufacturing practices,
environmental protection, fire hazard control and disposal of hazardous or
potentially hazardous substances. There can be no assurance that the Company
will not be required to incur significant costs to comply with such laws and
regulations now or in the future or that such laws or regulations will not
have a material adverse effect upon the Company's ability to do business.

Changes in existing requirements or adoption of new requirements or policies
could adversely affect the ability of the Company to comply with regulatory
requirements. Failure to comply with regulatory requirements could have a
material adverse effect on the Company's business, financial condition or
results of operations. There can be no assurance that the Company will not be
required to incur significant costs to comply with laws and regulations in the
future or that laws and regulations will not have a material adverse effect
upon the Company's business, financial condition or results of operations.

International

Sales of the KBC System outside the United States are subject to regulatory
requirements that vary from country to country. The time required to obtain
approval for sale in foreign countries may be longer or shorter than that
required for FDA approval, and the requirements may differ. In addition, there
may be foreign regulatory barriers other than premarket approval (including
regulations concerning the distribution, use and handling of the radiation
sources), and the FDA must approve exports of devices that require a PMA but
are not yet approved domestically. The current rules provide that, in order to
obtain FDA export approval, the Company must provide the FDA with
documentation related to the medical device. The Company anticipates
commencing a clinical trial in Canada by the end of June 1996 and additional
clinical trials in Canada and Europe by the end of 1996. In Europe, commencing
in 1998 the Company will be required to obtain certifications necessary to

34
<PAGE>

enable the CE mark to be affixed to the KBC System, to market the KBC System
throughout the European Union. Additionally, to market products in Europe, the
Company is required to maintain ISO 9001/EN 46001 certification subject to
periodic surveillance audits.

Other countries in which the Company intends to market the KBC System may
adopt regulations in the future that could prevent the Company from marketing
its KBC System in those countries. In addition, the Company may be required to
spend significant amounts of capital in order to respond to requests for
additional information by foreign regulatory bodies or may otherwise be
required to spend significant amounts of capital in order to obtain foreign
regulatory approvals. Any such events could substantially delay or preclude
the Company from marketing the KBC System in foreign countries.

THIRD-PARTY REIMBURSEMENT

The KBC System, if approved for commercial sale, will be purchased primarily
by hospitals. Hospitals and physicians bill various third-party payors, such
as government health programs, private health insurance plans, managed care
organizations and other similar programs, for the health care services
provided to their patients. The FDA has classified the KBC System as an
experimental device and accordingly its use in the human clinical trials will
not be reimbursable under the Medicare program or by private insurers until
after the PMA approval is achieved, if ever. The classification of the KBC
System as experimental will materially increase the costs of conducting
clinical trials in the United States, and such costs could have a material
adverse effect on the Company's business, financial condition and results of
operations. Such classification may cause the Company to conduct the majority
of its clinical trials outside the United States. Relying on foreign clinical
trials may subject the Company to certain risks, including the necessity to
obtain FDA approval to export the products from the United States, the risk
that the FDA may not accept data from certain foreign countries, the
difficulty in identifying clinical sites able to conform to FDA requirements,
foreign medical regulations and foreign radiation regulations. Even if the KBC
System were to receive approval for marketing by the FDA, there can be no
assurance that third-party payors will cover the KBC System, or, if covered,
that third-party payors will not place certain restrictions on the
circumstances in which coverage will be available. In addition, payors may
deny reimbursement if they determine that a product was not used in accordance
with established payor protocol regarding cost-effective treatment methods or
was used for an unapproved indication. Third-party payors are also
increasingly challenging the prices charged for medical products and services
and, in some instances, have put pressure on medical device suppliers to lower
their prices. The Company is unable to predict what changes will be made in
the reimbursement methods used by third-party health care payors. There can be
no assurance that the KBC System will be considered cost effective by third-
party payors, that reimbursement for the KBC System will be available or, if
available, that payors' reimbursement levels will not adversely affect the
Company's ability to sell the KBC System on a profitable basis. In addition,
the cost of health care has risen significantly over the past decade, and
there have been and may continue to be proposals by legislators, regulators
and third-party payors to curb these costs. Failure by hospitals and
physicians to obtain reimbursement from third-party payors, changes in third-
party payors' policies toward reimbursement for the KBC System or legislative
action could have a material adverse effect on the Company's business,
financial condition and results of operations.

PRODUCT LIABILITY AND INSURANCE

The business of the Company entails the risk of product liability claims.
Although the Company has not experienced any product liability claims to date,
there can be no assurance that such claims will not be asserted or that the
Company will have sufficient resources to satisfy any liability resulting from
such claims. The Company maintains product liability insurance with coverage
of an annual aggregate maximum of $2 million. There can be no assurance that
product liability claims will not exceed such insurance coverage limits, that
such insurance will continue to be available on commercially reasonable terms
or at all, or that a product liability claim would not materially adversely
affect the business, financial condition or results of operations of the
Company.

35
<PAGE>

FACILITIES

The Company occupies approximately 25,600 square feet of office and
laboratory space in an office park in Norcross, Georgia under a five-year
lease expiring in 2000. All of the Company's operations (other than clinical
research activities and services of its consultants) are conducted in that
facility. The Company believes that such facility is adequate for its
immediate needs, but that additional facilities may be needed within two years
in order to commercialize the KBC System.

EMPLOYEES

As of March 31, 1996, the Company directly employed 30 full-time
individuals. Most of the Company's employees have prior experience with
medical device or pharmaceutical companies. The Company believes it maintains
good relations with its employees. None of the Company's employees is
represented by a union or covered by a collective bargaining agreement. The
Company's success will depend, in large part, upon its ability to attract and
retain qualified employees. The Company faces competition in this regard from
other companies, research and academic institutions and other organizations.

36
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Thomas D. Weldon........ 40 President, Chief Executive Officer and Director
Charles E. Larsen....... 44 Senior Vice President, Chief Operating Officer and Director
Jonathan J. Rosen,
Ph.D................... 48 Vice President, Product Development
William P. Lane......... 56 Vice President, Finance, Chief Financial Officer and Treasurer
Thomas K. Brooks........ 39 Vice President, Sales, Marketing and Business Development
Joan M. Macdonald,
Ph.D................... 38 Vice President, Regulatory and Clinical Affairs
Cheryl R. Johnson....... 33 Director of Administration and Business Development and Secretary
Norman R. Weldon,
Ph.D................... 61 Chairman of the Board of Directors
J. Stephen Holmes....... 51 Director (1)
Richard M. Johnston..... 61 Director (1)(2)
Pieter J. Schiller...... 58 Director (2)
Jack R. Kelly, Jr....... 62 Director (1)
William E. Whitmer...... 63 Director (2)
</TABLE>
- --------
(1) Member of Stock Option and Compensation Committee.
(2) Member of Audit Committee.

Thomas D. Weldon. Mr. Weldon co-founded the Company and has served as its
President and Chief Executive Officer and as a Director since its
capitalization in May 1992. Mr. Weldon co-founded and was President, Chief
Executive Officer and a Director of Novoste Puerto Rico Inc. ("Novoste Puerto
Rico"), a manufacturer of disposable cardiovascular medical devices, from 1987
to May 1992, prior to its sale. Previous responsibilities included management
positions at Arthur Young & Co. and Key Pharmaceuticals. Mr. Weldon received a
B.S. in industrial engineering from Purdue University and an M.B.A. in
operations and systems management from Indiana University.

Charles E. Larsen. Mr. Larsen co-founded the Company and has served as its
Senior Vice President and Chief Operating Officer and as a Director since its
capitalization in May 1992. Mr. Larsen co-founded and was Vice President and a
Director of Novoste Puerto Rico from 1987 to May 1992. From 1983 through 1987,
Mr. Larsen was a manager of manufacturing engineering at Cordis Corporation.
Mr. Larsen received a B.S. in mechanical engineering from New Jersey Institute
of Technology.

Jonathan J. Rosen, Ph.D. Dr. Rosen has served as Vice President, Product
Development of the Company since July 1992. From March 1990 until joining the
Company, Dr. Rosen was President and a Director of CDX Corporation, a
publicly-traded medical device company. From 1979 through March 1990, Dr.
Rosen served in various senior management product development capacities at
Johnson & Johnson. Dr. Rosen received the following degrees: a Ph.D. in
Biomaterials Science from Case Western Reserve University, an M.S. in Business
Policy from Columbia University, and an M.S. in Materials Science and a B.S.E.
in Metallurgical Engineering from the University of Michigan.

William P. Lane. Mr. Lane has served as Vice President, Finance and Chief
Financial Officer since January 1994. From 1988 to 1993, Mr. Lane was the
general partner and majority owner of Professional Health Care Services, L.P.,
an employment agency providing temporary professional personnel to the
healthcare industry. Prior thereto, Mr. Lane served in various senior
management positions with Naragansett Capital Corporation, a publicly-traded
venture capital firm, most recently as Vice President and Treasurer. Mr. Lane
received a B.S. in accounting from Boston College and is a certified public
accountant.

Thomas K. Brooks. Mr. Brooks has served as the Company's Vice President,
Sales, Marketing and Business Development since January 1995. From 1986
through December 1994, Mr. Brooks served in various

37
<PAGE>

sales, marketing and business development positions with Boston Scientific
Corporation, a manufacturer of medical devices, most recently as manager of
new business development. From 1983 through 1986, Mr. Brooks held various
sales positions for the Ethicon Endo-Surgery Division of Johnson & Johnson.
Mr. Brooks received a B.A. in business administration from Monmouth College.

Joan M. Macdonald, Ph.D. Dr. Macdonald joined the Company in January 1994,
as its Director of Regulatory Affairs, and has been its Vice President,
Regulatory and Clinical Affairs since January 1996. From September 1990
through September 1993, Dr. Macdonald worked for CIBA Vision Corporation, a
manufacturer of ophthalmic products, having served most recently as Director,
Worldwide Regulatory Strategy. Dr. Macdonald received a Ph.D. degree in
physiology from the Medical College of Wisconsin, and M.S. and B.S. degrees in
zoology from the University of Wisconsin and has currently completed more than
50% of the course work for an M.P.H. degree at Emory University.

Cheryl R. Johnson. Ms. Johnson joined the Company in July 1992 as Director
of Marketing and Business Development and Secretary and has served as Director
of Administration and Business Development of the Company since January 1996.
From August 1989 to June 1992, Ms. Johnson worked in planning and business
development capacities at BOC Health Care, most recently as its business
development manager. Ms. Johnson received an M.B.A. from the Kellogg School at
Northwestern University and a B.S. degree in Chemical Engineering from the
Georgia Institute of Technology.

Norman R. Weldon, Ph.D. Dr. Weldon co-founded the Company and has been
Chairman of the Board since its capitalization in May 1992. Dr. Weldon is
Managing Director of Partisan Management Group, a venture capital fund he co-
founded four years ago. From 1986 until May 1996, Dr. Weldon served as
President and Chief Executive Officer and as a Director of Corvita
Corporation, a publicly-traded medical device company Dr. Weldon co-founded in
1986. In April 1996, Pfizer Corporation agreed to acquire Corvita. From 1979
to 1987, Dr. Weldon served as President and Chief Executive Officer of Cordis
Corporation. From 1964 to 1979, Dr. Weldon served CTS Corporation in various
capacities, including as its President and Chief Executive Officer beginning
in 1976. Dr. Weldon also serves as a Director of The New Economy Fund and
SmallCap World Fund and as a member of the Advisory Board of The Investment
Company of America. Dr. Weldon received, from Purdue University, a Ph.D. in
economics, an M.S. in industrial management and a B.S. in biochemistry.

J. Stephen Holmes. Mr. Holmes has served as a Director of the Company since
August 1992. In 1994, Mr. Holmes founded Paincare Associates, Inc. and has
served as its Chief Executive Officer since its inception. Mr. Holmes has
founded several start-ups during the past fifteen years, including Adler
Instrument Company, Inc., SOLOS Ophthalmology, Inc. and SOLOS Endoscopy, Inc.,
which he founded in 1982, 1988 and 1990, respectively, and in which he sold
his interest in 1988, 1991 and 1991, respectively. From 1970 to 1979 Mr.
Holmes served in various marketing and sales positions with Baxter/American
Hospital Supply. Mr. Holmes received a B.S. in marketing from the University
of Evansville and an M.B.A. from Northwestern University.

Richard M. Johnston. Mr. Johnston has served as a Director of the Company
since December 1993. Mr. Johnston has been employed by The Hillman Company, an
investment holding company with diversified operations, since 1961 and has
been Vice-President--Investments since 1970 and a Director since 1993. Mr.
Johnston is Chairman of the Board of Metrocall, Inc. Mr. Johnston has also
served as Chairman of the Board of Western Pennsylvania Healthcare System
since 1978. Mr. Johnston received an M.B.A. from the Wharton School of Finance
and Commerce, University of Pennsylvania and a B.S. in commerce from
Washington & Lee University.

Pieter J. Schiller. Mr. Schiller has served as a Director of the Company
since March 1996. Since 1986, Mr. Schiller has been a general partner of
Advanced Technology Ventures, a venture capital firm located in Boston,
Massachusetts, where he specializes in healthcare investing. Mr. Schiller
served Allied Signal and its predecessor companies from 1961 through 1986 in
various capacities, including Treasurer and Vice-President, Planning and
Development. From 1983 to 1986, he served as Executive Vice-President of
Allied Health and

38
<PAGE>

Scientific Products Company, a multi-national manufacturer of biomedical and
analytical instruments and supplies. Mr. Schiller received his M.B.A. from New
York University and a B.A. in economics from Middlebury College.

Jack R. Kelly, Jr. Mr. Kelly has served as a director of the Company since
January 1995. Since July 1983, Mr. Kelly has been a general partner of Noro-
Moseley Partners, a venture capital firm. From 1958 to 1983, Mr. Kelly served
Scientific-Atlanta, Inc., most recently as Vice President, Chief Operating
Officer and a Director. Mr. Kelly is a Director of Minnesota Power & Light
Company and its subsidiary, ADESA Corporation. Mr. Kelly received an Associate
Degree in engineering technology from Southern Tech University and a B.S. in
physics from Georgia State University.

William E. Whitmer. Mr. Whitmer has served as a Director of the Company
since August 1992. Mr. Whitmer is a certified public accountant and management
consultant. From 1989 until his retirement in 1992, he was a partner of Ernst
& Young, having served as the Associate Managing Director of that firm's
southern U.S. management consulting group. From 1968 through 1989, Mr. Whitmer
was a partner of Arthur Young & Company, having served as the managing partner
of its East and Southeast U.S. regions of the management consulting practice
from 1975 through 1989. Mr. Whitmer received a B.A. in Economics from Denison
University.

Dr. Norman R. Weldon is the father of Mr. Thomas D. Weldon. Because of their
managerial positions and stock ownership in the Company, and their activities
relating to the organization of the Company, Dr. Weldon and Messrs. Weldon and
Larsen may be deemed "promoters" as that term is defined in the Securities
Act.

The Company's Board of Directors is divided into three classes, each of
which will serve a term of three years, with one class being elected each
year. Each of the Company's directors has been elected to serve until his
successor has been elected and duly qualified. See "Description of
Securities--Certain Charter and Bylaw Provisions--Classified Board of
Directors." The terms of J. Stephen Holmes and William E. Whitmer will expire
at the annual meeting of shareholders in 1997; the terms of Richard M.
Johnston, Pieter J. Schiller and Jack R. Kelly, Jr. will expire at the annual
meeting of shareholders in 1998; and the terms of Thomas D. Weldon, Charles E.
Larsen and Norman R. Weldon will expire at the annual meeting of shareholders
in 1999.

The Board of Directors has a Stock Option and Compensation Committee,
comprised of Richard M. Johnston, Jack R. Kelly, Jr. and J. Stephen Holmes,
which establishes the compensation policies and determines compensation for
the executive officers of the Company. The Board of Directors also has an
Audit Committee, comprised of Messrs. William E. Whitmer, Pieter J. Schiller
and Richard M. Johnston, which is responsible for reviewing the scope of the
work performed by the Company's independent accountants.

Officers are elected annually and serve at the pleasure of the Board of
Directors, subject to rights, if any, under contracts of employment.

The Company has obtained key-man life insurance policies on the lives of Mr.
Thomas D. Weldon, Mr. Larsen and Dr. Rosen in the amount of $1,000,000,
$750,000 and $500,000, respectively, under each of which the Company is the
sole beneficiary.

39
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth a summary of the compensation paid or accrued
by the Company during 1995 to the Company's Chief Executive Officer and to the
only other executive officer during 1995 whose compensation exceeded $100,000:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
1995 ANNUAL COMPENSATION COMPENSATION
-------------------------------- ------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTIONS(1)
- --------------------------- -------- ------- ------------ ------------
<S> <C> <C> <C> <C>
Thomas D. Weldon................ $102,812 -- -- --
Chief Executive Officer
Thomas K. Brooks................ $ 65,708 $80,000(2) $15,000(3) 120,000
Vice President, Sales,
Marketing and
Business Development
</TABLE>
- --------
(1) Number of shares of Common Stock purchasable. See Option Grant Table below
for exercise price and vesting terms.
(2) Of which, $60,000 consists of the issuance of 16,000 shares of Common
Stock on March 24, 1995 and 2,750 shares of Common Stock on February 12,
1996, based on the $3.20 per share fair market value of the Common Stock
on March 24, 1995, the date of grant of the sign-on bonus.
(3) Consists of reimbursement of moving expenses.

The following table sets forth certain information concerning options
granted in 1995 to Thomas K. Brooks, the only individual named in the Summary
Compensation Table who was granted options in 1995:

OPTION GRANTS DURING 1995

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(3)
OPTIONS EMPLOYEES EXERCISE PRICE ----------------------------
NAME GRANTED IN FISCAL YEAR PER SHARE EXPIRATION DATE 5% 10%
- ---- ---------- -------------- -------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Thomas K. Brooks........ 100,000(1) $3.20 01/23/2005 $201,246 $509,998
20,000(2) 36.4% 3.20 11/17/2005 40,249 102,000
</TABLE>
- --------
(1) Ten-year stock option granted under the Company's stock option plan,
exercisable cumulatively at the annual rate of one quarter of the number
of underlying shares, commencing one year from the date of grant, such
vesting to accelerate in full upon the closing of this Offering, based
upon the valuation of the Company immediately prior to this Offering. See
"Stock Option Plan."
(2) Ten-year stock option granted under the Company's stock option plan,
exercisable cumulatively at the annual rate of one quarter of the number
of underlying shares, commencing one year from the date of grant. See "--
Stock Option Plan."
(3) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration
of their term, assuming the specified compounded rates of appreciation of
the Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission. Actual gains, if any, in stock option exercises are dependent
on the time of such exercise and the future performance of the Common
Stock.

40
<PAGE>

The following table sets forth certain information concerning the number of
unexercised options as at December 31, 1995 held by the individuals named in
the Summary Compensation Table. No options were exercised by such individuals
in 1995.

OPTION VALUES AT DECEMBER 31, 1995

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
NAME OPTIONS AT DECEMBER 31, 1995(#) AT DECEMBER 31, 1995 (1)
- ---- ---------------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas D. Weldon........ 391,875 -- $4,996,406 --
Thomas K. Brooks........ -- 120,000 -- $1,176,000
</TABLE>
- --------
(1) Based on the $13.00 per share assumed initial public offering price of the
Common Stock offered hereby minus the applicable exercise price.

In 1993, the Company granted to Thomas Weldon, Norman Weldon and Charles
Larsen the right to convert, at any time on or prior to December 31, 1998,
their respective accrued salaries through December 31, 1993, which aggregated
$320,629, into shares of Common Stock at a conversion price equal to $3.20 per
share. Simultaneously with the consummation of this offering, the accrued
salaries will be converted into 100,195 shares of Common Stock, with Thomas
Weldon, Norman Weldon and Charles Larsen receiving 56,394, 5,312 and 38,489
shares, respectively.

Each of the individuals named in the Summary Compensation Table is employed
at will, but is subject to an agreement containing certain non-competition and
confidentiality provisions.

Compensation of Directors Directors who are not full-time employees of the
Company are reimbursed their expenses and receive a fee of $750 per board
meeting attended and, upon their election and reelection to the Board, options
to purchase 5,000 shares of Common Stock at the fair market value of the
Common Stock on the date of the grant pursuant to the formula award provision
of the Company's Stock Option Plan. See "Stock Option Plan" below.

In November 1995, prior to the amendment to the Stock Option Plan to provide
for formula awards for outside directors, J. Stephen Holmes, William E.
Whitmer and Richard Johnston and Noro-Moseley Partners, of which Mr. Jack R.
Kelly, Jr., a director of the Company, is a general partner, were each granted
a ten-year option to purchase 5,000 shares of Common Stock at an exercise
price of $3.20 per share, all of which options became exercisable in full on
the date of grant.

STOCK OPTION PLAN

Under the Company's Stock Option Plan, as amended, (the "Plan"), which was
approved by the Company's shareholders, an aggregate of 2,500,000 shares are
reserved for issuance upon exercise of options thereunder. Under the Plan,
incentive stock options, as defined in section 422 of the Internal Revenue
Code, may be granted to employees and non-incentive stock options may be
granted to employees, directors and such other persons as the Stock Option and
Compensation Committee appointed by the Board of Directors (the "Committee")
determines will contribute to the Company's success, at exercise prices equal
to at least 100% (with respect to incentive stock options) and at least 85%
(with respect to non-incentive stock options) of the fair market value of the
Common Stock on the date of grant. In addition to selecting the optionees, the
Committee determines the number of shares of Common Stock subject to each
option, the term of each non-incentive stock option, the time or times when
the non-incentive stock option becomes exercisable, and otherwise administers
the Plan. Options are granted for a term determined by the Committee and
incentive stock options are exercisable

41
<PAGE>

cumulatively at the annual rate of one quarter of the number of shares
underlying the option commencing one year from the date of grant. Generally,
options granted under the Plan may not be exercised following termination of
employment, death or disability. However, the Committee may in its discretion
extend the time required to exercise an option up to six months following such
an event. Under the terms of the Plan, directors who are not full-time
employees of the Company are granted five-year options to purchase 5,000
shares of Common Stock upon their election and reelection at an exercise price
equal to the fair market value on the date of grant, exercisable cumulatively
at the annual rate of one third of the number of shares underlying the option,
commencing one year from the date of grant, and subject to earlier termination
in the event of termination of service as a director. Options to purchase
2,149,250 shares of Common Stock have been granted under the Plan.

42
<PAGE>

PRINCIPAL SHAREHOLDERS

The following table sets forth as of May 10, 1996, giving pro forma effect
to the Recapitalization assuming a closing date of this Offering of May 30,
1996, information with respect to the beneficial ownership of the Common Stock
by (i) each person known by the Company to own beneficially five percent or
more of such Common Stock, (ii) each director of the Company, (iii) each
person named in the Summary Compensation Table and (iv) all executive officers
and directors as a group, together with their respective percentage ownership
of such shares before this offering and as adjusted to reflect the sale of the
Common Stock offered hereby:

<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING
SHARES OWNED (1)
------------------------------
NAME AND ADDRESS SHARES BENEFICIALLY OWNED (1) BEFORE OFFERING AFTER OFFERING
- ---------------- ----------------------------- --------------- --------------
<S> <C> <C> <C>
Thomas D. Weldon(2)..... 814,831 13.5% 10.1%
c/o Novoste Corporation
4350-C International
Blvd.
Norcross, GA 30093
Charles E. Larsen....... 781,311 12.9% 9.7%
c/o Novoste Corporation
4350-C International
Blvd.
Norcross, GA 30093
Henry L. Hillman, Elsie
Hilliard Hillman and 441,935 7.8% 5.8%
C.G. Grefenstette,
Trustees(3)(7) ........
2000 Grant Building
Pittsburgh, PA 15219
C.G. Grefenstette and 578,178 10.2% 7.6%
Thomas G. Bigley,
Trustees(4)............
2000 Grant Building
Pittsburgh, PA 15219
Venhill Limited 433,588 7.7% 5.7%
Partnership(5).........
158 Main Street
New Canaan, Connecticut
06840
Advanced Technology 784,153 13.9% 10.3%
Ventures IV, L.P. .....
10 Post Office Square
#970
Boston, MA 02109
Noro-Moseley Partners- 527,944 9.3% 6.9%
III, L.P...............
4200 Northside Parkway
N.W.
Atlanta, GA 30327
Norman R. Weldon, 395,383 7.0% 5.2%
Ph.D.(6)...............
2968 Birkdale
Fort Lauderdale, FL
33332
J. Stephen Holmes....... 20,000 * *
William E. Whitmer...... 10,000 * *
Richard M. Johnston(7).. -- * *
Pieter J. Schiller(8)... -- * *
Jack R. Kelly, Jr.(9)... -- * *
Thomas K. Brooks........ 118,750 2.1% 1.5%
All executive officers
and directors as a
group
(13 persons)(10)....... 2,470,850 35.9% 27.8%
</TABLE>
- --------
*Less than 1%.

(1) A person is deemed to be the beneficial owner of Common Stock that can be
acquired within 60 days from May 10, 1996 upon the exercise of options,
and that person's options are assumed to have been exercised (and the
underlying shares of Common Stock outstanding) in determining such
person's percentage ownership. Accordingly, the following shares issuable
upon exercise of options have been included in the shares beneficially
owned by the following persons: Thomas D. Weldon--391,875 shares; Charles
E. Larsen

43
<PAGE>

--391,875 shares; J. Stephen Holmes--10,000 shares; William E. Whitmer--
10,000 shares; Thomas K. Brooks--100,000 shares; Richard Johnston--8,334
shares; and Noro-Moseley Partners-III, L.P.--5,000 shares.
(2) Includes 15,000 shares held in trust for the benefit of Mr. Weldon's
children.

(3) Consists of 433,398 shares held by a trust for the benefit of Henry L.
Hillman (the "HLH Trust") and 8,334 shares subject to options which were
granted to Richard M. Johnston, an officer of The Hillman Company, which
are exercisable within 60 days following the date hereof. Pursuant to an
agreement with The Hillman Company, if Mr. Johnston exercises these
options, he does so on behalf of The Hillman Company or a wholly-owned
subsidiary thereof. The Trustees of the HLH Trust are Henry L. Hillman,
Elsie Hilliard Hillman and C.G. Grefenstette (the "HLH Trustees"). The HLH
Trustees share voting and investment power with respect to the shares of
record held by the HLH Trust. Does not include an aggregate of 577,860
shares held by four trusts for the benefit of members of the Hillman
family (see note 4 below) or 433,398 shares owned by Venhill Limited
Partnership (see note 5 below), as to which shares the HLH Trustees (other
than Mr. Grefenstette with respect to the shares described in note 4
below) disclaim beneficial interest.
(4) Includes 144,465 shares held by each of four irrevocable trusts for the
benefit of members of the Hillman family (the "Hillman Family Trusts").
Mr. Grefenstette and Mr. Bigley are trustees of these four trusts and
share voting and dispositive power over the trusts' assets.
(5) Consists of 433,398 shares held by Venhill Limited Partnership. Howard B.
Hillman is the general partner of Venhill Limited Partnership and is a
step-brother of Henry L. Hillman.
(6) Includes 14,250 shares held by Dr. Weldon's spouse but excludes all shares
held by Dr. Weldon's adult children, none of whom reside with Dr. Weldon.

(7) Does not include shares held by the HLH Trust, the Hillman Family Trusts
and Venhill Limited Partnership (collectively, the "Hillman Related
Shareholders"), as to which Mr. Johnston disclaims beneficial ownership.
Mr. Johnston is Vice President-Investments and a Director of The Hillman
Company, a private firm engaged in diversified investments and operations
which is controlled by the HLH Trust. Mr. Johnston also disclaims
beneficial ownership of any of the 8,334 shares subject to options which
were granted to him. Pursuant to an agreement with The Hillman Company, if
Mr. Johnston exercises these options, he does so on behalf of The Hillman
Company or a wholly-owned subsidiary thereof. See note 3 above.

(8) Does not include shares held by Advanced Technology Ventures IV, L.P.
("ATV"), for which Mr. Schiller serves as a General Partner. Mr. Schiller
disclaims beneficial ownership of such shares, except to the extent of his
proportionate interest in ATV.

(9) Does not include shares held by Noro-Moseley Partners-III, L.P. ("Noro-
Moseley"), for which Mr. Kelly serves as a member of the General Partner.
Mr. Kelly disclaims beneficial ownership of such shares, except to the
extent of his proportionate interest in Noro-Moseley.

(10) See notes 1, 2 and 6 above. Also includes options to purchase 330,575
shares by executive officers other than Messrs. T. Weldon, Larsen and
Brooks. Does not include options described in note 7 above.

44
<PAGE>

CERTAIN TRANSACTIONS

The Company was incorporated on January 8, 1987 and remained dormant until
May 22, 1992, at which time it acquired certain assets valued at approximately
$186,700 from Novoste Puerto Rico Inc. ("Novoste Puerto Rico"), for 746,894
shares of Common Stock. None of the assets so acquired related to the KBC
System. Novoste Puerto Rico thereafter made a dividend of the Common Stock to
its shareholders, including Thomas D. Weldon, Norman R. Weldon, Ph.D., and
Charles E. Larsen, co-founders, executive officers, directors and principal
shareholders of the Company, who received 122,312, 64,571 and 117,697 shares,
respectively (valued at $0.25 per share). Thomas Weldon, Norman Weldon and
Charles Larsen also had co-founded and Messrs. Thomas Weldon and Charles
Larsen were senior executives of Novoste Puerto Rico.

On May 26, 1992, the Company granted the following executive officers
options to purchase shares of Common Stock (at $0.25 per share) for the number
of shares set forth opposite their respective names: Thomas Weldon--400,000
shares; Norman Weldon--200,000 shares: Charles Larsen--400,000 shares;
Jonathan J. Rosen, Ph.D., Vice President, Product Development--200,000 shares;
and Cheryl R. Johnson, Director of Administration and Business Development and
Secretary--140,000 shares. On June 3, 1992, Norman Weldon exercised in full
his options to purchase 200,000 shares with the Company, the purchase price
for which was paid by conversion of $35,000 of salary relating to current and
future services and $15,000 in cash. The other executives have exercised such
options in part from time to time, by purchasing an aggregate of 102,675
shares, each executive exercising options to purchase the number of shares set
forth opposite his or her name: Thomas Weldon--8,125 shares; Charles Larsen--
8,125 shares; Jonathan Rosen--60,125 shares; and Cheryl Johnson--26,300 shares
with the Company receiving an aggregate $25,669 in proceeds therefrom.
(Certain of such executives received additional options subsequent to the May
1992 grants that to the extent currently exercisable are reflected, either
individually or as part of all directors and executive officers as a group, in
the table of beneficial ownership set forth in the section of this Prospectus
entitled "Principal Shareholders.")

In June 1992, the Company issued Thomas Weldon, Norman Weldon and Charles
Larsen 500,000 shares of Common Stock for $500,000 (or $1.00 per share) with
Norman Weldon receiving 100,000 shares and Thomas Weldon and Charles Larsen
each receiving 200,000 shares.

In December 1992, the Company issued 10,000 shares of Common Stock, Thomas
Weldon and Charles Larsen each receiving 5,000 shares, for an aggregate of
$30,000 (or $3.00 per share) for their services.

On July 7, 1993, the Company issued three Senior Secured Promissory Notes,
each in the principal amount of $100,000, payable with interest accruing
thereon at 8% per annum to Thomas Weldon, Norman Weldon and Charles Larsen,
such promissory notes being convertible into one share of Common Stock at a
conversion price equal to the greater of $3.20 or the fair market value of the
Common Stock on the date of conversion. In December 1995, the holder of each
promissory note converted in full his promissory note into, and was issued,
31,250 shares of Common Stock.

In September 1993, the Company issued 312,500 shares of Common Stock to a
certain entity and trustees of certain Hillman family trusts, which together
are principal shareholders of the Company (collectively, the "Hillman Related
Shareholders"), for $1,000,000 (or $3.20 per share) and warrants to purchase
an additional 750,000 shares of Common Stock (at $3.75 per share). In March
1994, the Hillman Related Shareholders purchased an additional 312,500 shares
of Common Stock from the Company for $1,000,000 (or $3.20 per share).

In October 1993, the Company granted to Thomas Weldon, Norman Weldon and
Charles Larsen the right to convert, at any time on or prior to December 31,
1998, their respective accrued salaries through December 31, 1993, which
aggregated $320,629, into shares of Common Stock at $3.20 per share. As part
of the

45
<PAGE>

Recapitalization, the accrued salaries will be converted into 100,195 shares
of Common Stock, with Thomas Weldon, Norman Weldon and Charles Larsen
receiving 56,394, 5,312 and 38,489 shares, respectively.

In September 1994, Messrs. Thomas Weldon and Charles Larsen each guaranteed
$100,000 of $200,000 of debt borrowed by the Company from a commercial bank.
Such debt, which was payable on demand at any time after January 1, 1995 with
interest accrued thereon at 10% per annum was repaid on January 27, 1995. In
June 1995, the Company entered into a line of credit with the same commercial
bank under which the Company may borrow up to $300,000 at the prime rate of
such bank plus 1%. The line of credit, which expires on June 15, 1996, is
subject to commitment fees of .65% of the unused line of credit. The line of
credit is guaranteed by the September 1994 guarantees of Messrs. Thomas Weldon
and Charles Larsen and a June 1995 guaranty of Norman R. Weldon, also in the
amount of $100,000. As of April 1, 1996, the entire $300,000 available under
such line of credit was drawn down. A portion of the net proceeds of this
Offering will be used to repay this indebtedness.

In November 1994, the Company received a bridge loan from an affiliate of
the Hillman Related Shareholders in the amount of $250,000. The note was
payable on demand at any time after January 1, 1995, with accrued interest at
10% per annum. The loan was repaid on January 27, 1995.

In January 1995, the Company issued 266,667 shares of Common Stock to Noro-
Moseley Partners-III, L.P. ("Noro-Moseley"), a principal shareholder, for
$1,000,000 (or $3.75 per share) and warrants to purchase an additional 266,667
shares of Common Stock at $4.50 per share. Also in January 1995, the Hillman
Related Shareholders exercised warrants to purchase 266,664 shares of Class B
Common Stock, with the Company receiving proceeds therefrom of $999,990.

In July 1995, the Company issued 400,000 shares of Class B Common Stock to
Advanced Technology Ventures IV, L.P. ("ATV") for $1,500,000 (or $3.75 per
share) and warrants to purchase an additional 400,000 shares of Class B Common
Stock (at $4.50 per share). As part of the ATV financing, the Hillman Related
Shareholders and Noro-Moseley exchanged their shares of Common Stock for an
equivalent number of shares of Class B Common Stock and their warrants to
purchase an aggregate of 750,000 shares of Class B Common Stock for new
warrants adding a cashless exercise provision and extending the expiration
date to December 31, 1999, but otherwise containing substantially similar
terms, including the right to purchase the identical number of shares of Class
B Common Stock.

In December 1995 and January 1996, the Company issued a series of Fixed Rate
Convertible Promissory Notes to Noro-Moseley, the Hillman Related
Shareholders, ATV and Dr. Weldon's daughter, in the principal amounts of
$295,380, $761,550, $443,070 and $300,000, respectively. Each of these notes
accrued interest at a rate of 8% compounded annually on the unpaid principal
amount, and provided that the holder thereof may convert all or a portion of
the outstanding principal amount plus accrued interest into one share of Class
B Common Stock for each $3.75 in principal amount plus accrued interest of
such note being converted. As part of the Recapitalization, the holders are
converting the principal of and accrued interest on such notes into 497,349
shares of Common Stock assuming a closing date of this Offering of May 30,
1996.

See "Management--Executive Compensation" for shares issued and options
granted to one executive officer as compensation for services rendered in
1995.

In March and April 1996, the Company received bridge loans from the Hillman
Related Shareholders, Noro-Moseley and ATV of $761,700, $295,350 and $443,100,
respectively, or an aggregate of $1,500,150. The promissory notes evidencing
such indebtedness mature June 30, 1996 with compounded interest at 8% per
annum. A portion of the net proceeds of this Offering will be applied to repay
such indebtedness.

Messrs. Jack R. Kelly, Jr. and Pieter J. Schiller, directors of the Company,
are affiliates of Noro-Moseley and ATV, respectively. Richard M. Johnston is
an officer and a director of The Hillman Company, a corporation controlled by
one of the Hillman Related Shareholders. See "Management."

46
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, based on the number of shares of Common
Stock outstanding as of May 10, 1996, and assuming no exercise of the options
to purchase 1,831,575 shares of Common Stock outstanding on such date, and
giving effect to the Recapitalization and assuming a closing date of this
Offering of May 30, 1996, the Company will have 7,648,275 shares of Common
Stock outstanding. Of these shares, 2,000,000 shares sold in this Offering
will be freely tradeable without restriction or further registration under the
Securities Act, except that any shares purchased by "affiliates" of the
Company, as that term is defined in Rule 144 ("Rule 144") under the Securities
Act ("Affiliates"), may generally only be sold in compliance with the
limitations of Rule 144 described below.

SALE OF RESTRICTED SHARES

The remaining 5,648,275 shares of Common Stock are deemed "Restricted
Shares" under Rule 144. Of the Restricted Shares, up to 131,509 may be
eligible for sale in the public market immediately after this Offering
pursuant to Rule 144(k) under the Securities Act. Of the remaining 5,516,766
outstanding Restricted Shares, 43,362 will be eligible for resale under Rule
144 commencing 90 days after the effective date of this Offering. 5,438,661
shares of Restricted Shares are subject to lock-up agreements as described
below (the "Lock-up Agreements"). In addition, 2,645,173 of the Restricted
Shares are entitled to registration rights as described below.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an Affiliate, who has beneficially
owned Restricted Shares for at least two years is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of (i)
one percent of the then outstanding shares of Common Stock (approximately
76,000 shares immediately after this offering) and (ii) the average weekly
trading volume in the Common Stock in the over-the-counter market during the
four calendar weeks preceding the date on which notice of such sale is filed,
provided certain requirements concerning the availability of public
information, manner of sale and notice of sale are satisfied. In addition,
Affiliates must comply with the restrictions and requirements of Rule 144,
other than the two-year holding period requirement, in order to sell shares of
Common Stock which are not restricted securities. Also, under Rule 144(k), a
person who is not an Affiliate and has not been an Affiliate for at least
three months prior to the sale and who has beneficially owned Restricted
Shares for at least three years may resell such shares without compliance with
the foregoing requirements. In meeting the two and three year holding periods
described above, a holder of Restricted Shares can include the holding periods
of a prior owner who was not an Affiliate. The Securities and Exchange
Commission has proposed an amendment to Rule 144 which would reduce the
holding period required for shares subject to Rule 144 to become eligible for
sale in the public market from two years to one year, and from three years to
two years in the case of Rule 144(k). If this proposal is adopted, an
additional 1,476,369 shares will be eligible for sale to the public 180 days
after the Effective Date.

OPTIONS

As of May 10, 1996, options to purchase an aggregate of 1,831,575 shares of
Common Stock were outstanding (of which options to purchase 1,214,409 shares
were then currently exercisable); 1,825,075 shares issuable pursuant to such
outstanding options are subject to Lock-up Agreements. An additional 350,750
shares of Common Stock are available for future grants under the Company's
Stock Option Plan. See "Management--Stock Option Plan."

The Company intends to file a Registration Statement on Form S-8 under the
Securities Act to register all shares of Common Stock subject to outstanding
options and Common Stock issuable pursuant to the Company's Stock Option Plan.
The Company expects to file such Registration Statement 90 days following the
closing of this Offering, and such Registration Statement is expected to
become effective upon filing. Shares covered by

47
<PAGE>

such Registration Statement will thereupon be eligible for sale in the public
markets, subject (to the extent applicable) to Rule 144 limitations for
Affiliates and to the Lock-up Agreements described below.

LOCK-UP AGREEMENTS

The Company, certain security holders and all officers and directors of the
Company, who in the aggregate will hold, following this Offering, 5,438,661
shares of Common Stock and options to purchase 1,825,075 shares of Common
Stock, have agreed, pursuant to the Lock-up Agreements, not to directly or
indirectly, without the prior written consent of Piper Jaffray Inc., as
representative of the Underwriters, offer, sell, offer to sell, contract to
sell or otherwise dispose of any shares of Common Stock beneficially owned by
them for a period of 180 days after the date of this Prospectus.

REGISTRATION RIGHTS

At the completion of this Offering, the holders of an aggregate of 2,645,173
shares of Common Stock (the "Registrable Shares") will be entitled to certain
rights to register the sale of their shares of Common Stock under the
Securities Act under certain circumstances.

The Hillman Related Shareholders, ATV and Noro-Moseley, which hold an
aggregate of 2,338,140 Registrable Shares, may give written notice to the
Company at any time and from time to time six months after the date of this
Prospectus to require the Company to use its best efforts to register all or a
portion of such holder's Registrable Shares under the Securities Act, provided
the Registrable Shares to be registered have a proposed maximum aggregate
offering price (to be set forth on the facing page of the applicable
registration statement) of at least $5,000,000, and the holders making such
election must in the aggregate hold at least 40% of such shares of Common
Stock. Additionally, a holder of 79,208 shares of Common Stock may give
written notice to the Company at any time after April 26, 1999, to require the
Company to use its best efforts to register all or a portion of such holder's
Registrable Shares under the Securities Act. The Company is obligated to
register the Registrable Shares of any such holder pursuant to any such
election on only two occasions, and is not obligated to cause to become
effective more than one registration statement of any such holder in any six-
month period. Certain exceptions exist to the demand elections, including the
right of the managing underwriter of an offering to require a limitation of
the number of shares to be registered.

The Hillman Related Shareholders, ATV and Noro-Moseley (either individually
or in any combination) may also require the Company at any time to file a
registration statement on Form S-3 or any successor thereto for a public
offering of all or a portion of their Registrable Shares, provided that the
reasonably anticipated aggregate price to the public of such offering would
exceed $1,000,000 and the Company is entitled to use Form S-3. There is no
limitation on the number or frequency of registrations on Form S-3 that may be
requested by these investors.

In addition, if, at any time, the Company proposes to file a registration
statement with the Securities and Exchange Commission to register any of its
Common Stock or any of its other equity securities under the Securities Act
for its own account or for the account of selling securityholders, then the
Company generally must give notice of such registration to all holders of
Registrable Shares at least 20 business days prior to the filing of any such
registration statement with the Securities and Exchange Commission. These
holders generally may elect, within 15 business days of their receipt of the
Company's notice, to require the Company to include all or a portion of their
respective Registrable Shares within the registration statement. Certain
exceptions exist to a "piggyback" election including the right of a managing
underwriter to require a limitation on the number of shares to be registered.

The Company is generally required to bear all registration and selling
expenses (apart from underwriters' discounts and commissions and attorneys'
fees and disbursements, in which holders of Registrable Shares included within
such registration statement are to pay their pro rata share) in connection
with the registration of Registrable Shares.

48
<PAGE>

No predictions can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the
prevailing market price for the Common Stock. Sales of substantial amounts of
Common Stock, or the perception that such sales could occur, could adversely
affect the prevailing market prices for the Common Stock and could impair the
Company's future ability to obtain capital through an offering of equity
securities.

DESCRIPTION OF SECURITIES

After giving effect to the Recapitalization and assuming a closing date of
this Offering of May 30, 1996, the Company will be authorized to issue
5,000,000 shares of Preferred Stock, $.01 par value, none of which is
outstanding, and 25,000,000 shares of Common Stock, $.01 par value, 7,648,275
of which will be issued and outstanding and held by approximately 114
shareholders.

PREFERRED STOCK

The Preferred Stock, may be issued from time to time by the Board of
Directors in one or more series and classes and with such dividend rights,
conversion rights, voting rights, redemption provisions, liquidation
preferences and other rights and restrictions as the Board of Directors may
determine. The issuance of the Preferred Stock permits the Board of Directors,
without shareholder approval, to utilize the Preferred Stock as an anti-
takeover device which could have an adverse effect on shareholders. The
Company has no present intention to issue any shares of Preferred Stock.

COMMON STOCK

The holders of outstanding shares of Common Stock are entitled to share
ratably on a share-for-share basis with respect to any dividends when, as and
if declared by the Board of Directors out of funds legally available therefor.
Each holder of Common Stock is entitled to one vote for each share held of
record. The Common Stock is not entitled to conversion or preemptive rights
and is not subject to redemption. Upon liquidation, dissolution or winding up
of the Company, the holders of Common Stock (and the holders of any series of
Preferred Stock that do not possess preferential rights upon liquidation,
dissolution or winding up) are entitled to share ratably in the net assets
legally available for distribution. All outstanding shares of Common Stock
are, and the shares of Common Stock offered hereby will upon issuance and
payment be, fully paid and nonassessable.

CERTAIN CHARTER AND BY-LAW PROVISIONS

Classified Board of Directors. The Restated Articles of Incorporation
provide for the Board of Directors to be divided into three classes of
directors, with the terms of each class expiring in a different year. See
"Management." The Restated Articles of Incorporation provide that the number
of directors will be fixed from time to time exclusively by the Board of
Directors, but shall consist of not more than twelve nor less than six
directors with no class of directors consisting of more than four nor less
than two directors. A vacancy on the Board may be filled by vote of a majority
of the Board of Directors then in office or by the shareholders by the
affirmative vote of a majority of the shares of capital stock present in
person or represented by proxy at a duly convened meeting of the shareholders
(excluding for purposes of calculating the number of votes cast, broker non-
votes and abstentions).

Limited Liability and Indemnification. Under the Florida Business
Corporation Act (the "FBCA"), a director is not personally liable for monetary
damages to the corporation or any other person for any statement, vote,
decision, or failure to act, regarding corporate management or policy, by a
director unless (i) the director breached or failed to perform his duties as a
director; and (ii) the director's breach of, or failure to perform, those
duties constitutes: (1) a violation of the criminal law, unless the director
had reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful; (2) a transaction from which the
director derived an improper personal benefit, either directly or indirectly,
(3) a circumstance under

49
<PAGE>

which an unlawful distribution is made; (4) in a proceeding by or in the right
of the corporation to procure a judgment in its favor or by or in the right of
a shareholder, conscious disregard for the best interest of the corporation or
willful misconduct; or (5) in a proceeding by or in the right of someone other
than the corporation or a shareholder, recklessness or an act or omission
which was committed in bad faith or with malicious purpose or in a manner
exhibiting wanton and willful disregard of human rights, safety, or property.
A corporation may purchase and maintain insurance on behalf of any director or
officer against any liability asserted against him and incurred by him in his
capacity or arising out of his status as such, whether or not the corporation
would have the power to indemnify him in his capacity or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the FBCA. The Company may elect to
purchase such insurance on behalf of its directors and officers.

The Restated Articles of Incorporation provide that the Company shall
indemnify all directors and officers of the Company, as well as any employees
or agents of the Company to whom the Company has agreed to grant
indemnification. Section 607.0850(1) of the FBCA provides that a Florida
corporation, such as the Company, shall have the power to indemnify any person
who is or was or is a party to any proceeding (other than an action by, or in
the right of, the corporation), by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation or is or was serving
at the request of the corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust, or other enterprise
against liability incurred in connection with such proceeding, including any
appeal thereof, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful, to the fullest extent permitted by
applicable law, as amended from time to time. This indemnification includes
the right to advancement of expenses when allowed pursuant to applicable law.

In addition, the Restated Articles of Incorporation provide that a director
of the Company shall not be personally liable to the Company or its
shareholders for monetary damages for breach of the director's fiduciary duty.
However, the Restated Articles of Incorporation do not eliminate or limit the
liability of a director for any of the following reasons: (i) a breach of the
director's duty of loyalty to the Company or its shareholders; (ii) acts or
omissions not in good faith or that involve intentional misconduct or a
knowing violation of law; (iii) a violation under Section 607.0834 of the FBCA
(which imposes liability upon directors for unlawful dividends and other
distributions); (iv) a transaction from which the director derived an improper
personal benefit; or (v) an act or omission occurring before the effective
date of the Articles.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

ANTI-TAKEOVER PROVISIONS OF FLORIDA LAW

Following the offering to which this Prospectus relates, the Company may be
subject to the anti-takeover provisions of Section 607.0901 of the Florida
Business Corporation Act (the "Affiliated Transaction Statute"). In general,
the Affiliated Transaction Statute requires the approval of the holders of
two-thirds of the voting shares of a corporation, other than shares owned by
an "interested shareholder," in order to effectuate an "affiliated
transaction," such as a merger, sale of assets, or sale of shares, between a
corporation and an interested shareholder. An "interested shareholder" is
defined as the beneficial owner of more than 10% of the outstanding voting
securities of the corporation. Such approval is not required where (i) the
affiliated transaction is approved by a majority of the disinterested
directors, (ii) the interested shareholder owns 90% or more of the
corporation's outstanding voting stock, or has owned 80% or more for five
years, or (iii) the consideration paid in connection with the affiliated
transaction satisfies the statutory "fair price" formula and the transaction
meets certain other requirements. A corporation may elect, by the vote of a
majority of the outstanding voting securities of the corporation (not
including shares held by an interested shareholder), or by amendment to the
articles or bylaws of the corporation, not to be subject to the provisions of
the Affiliated Transaction Statute. The election

50
<PAGE>

will not be effective until 18 months after it is made, and will not apply to
any affiliated transaction between the corporation and someone who was an
interested shareholder prior to the effective date of the election.

The application of the Affiliated Transaction Statute could prohibit or
delay a merger, takeover or other change in control of the Company, and
therefore could discourage attempts to acquire the Company.

TRANSFER AGENT

American Stock Transfer & Trust Company, 40 Wall Street, New York, New York
10005 is the transfer agent and registrar for the Common Stock.

51
<PAGE>

UNDERWRITING

The Company has entered into a Purchase Agreement (the "Purchase Agreement")
with the underwriters listed in the table below (the "Underwriters"), for whom
Piper Jaffray Inc. and Montgomery Securities are acting as representatives
(the "Representatives"). Subject to the terms and conditions set forth in the
Purchase Agreement, the Company has agreed to sell to the Underwriters, and
each of the Underwriters has severally agreed to purchase, the following
number of shares of Common Stock set forth opposite each Underwriter's name in
the table below:

<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
---- ---------
<S> <C>
Piper Jaffray Inc...............................................
Montgomery Securities...........................................

---------
Total......................................................... 2,000,000
=========
</TABLE>

Subject to the terms and conditions of the Purchase Agreement, the
Underwriters have agreed to purchase all of the Common Stock being sold
pursuant to the Purchase Agreement, if any is purchased (excluding shares
covered by the over-allotment option granted therein). In the event of a
default by any Underwriter, the Purchase Agreement provides that in certain
circumstances purchase commitments of the nondefaulting Underwriters may be
increased or the Purchase Agreement may be terminated.

The Representatives have advised the Company that the Underwriters propose
to offer Common Stock directly to the public initially at the public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession of not more than $ per share. Additionally, the
Underwriters may allow, and such dealers may reallow a concession not in
excess of $ per share to certain other dealers. After the public offering,
the public offering price and other selling terms may be changed by the
Underwriters.

The Company has granted to the Underwriters an option, exercisable by the
Representatives within 30 days after the date of the Purchase Agreement, to
purchase up to an additional 300,000 shares of Common Stock at the same price
per share to be paid by the Underwriters for the other shares offered hereby.
If the Underwriters purchase any of such additional shares pursuant to this
option, each Underwriter will be committed to purchase such additional shares
in approximately the same proportion as set forth in the table above. The
Underwriters may exercise the option only for the purpose of covering over-
allotments, if any, made in connection with the distribution of the Common
Stock offered hereby.

The Representatives have informed the Company that neither they, nor any
other member of the National Association of Securities Dealers, Inc. (the
"NASD") participating in the distribution of this offering, will make sales of
the Common Stock offered hereby to accounts over which they exercise
discretionary authority without the prior specific written approval of the
customer.

The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the
right to reject an order for the purchase of shares in whole or in part.

52
<PAGE>

The officers and directors of the Company and certain other shareholders
designated by the Representatives, who will beneficially own in the aggregate
5,438,661 shares of Common Stock after the Offering, have agreed that they
will not sell, offer to sell, issue, distribute or otherwise dispose of any
shares of Common Stock owned by them prior to the date of this Prospectus for
a period of 180 days after the date of this Prospectus, without the prior
written consent of Piper Jaffray Inc. See "Shares Eligible for Future Sale--
Lock-up Agreements." The Company has agreed that it will not, without the
Representatives' prior written consent, offer, sell or otherwise dispose of
any shares of Common Stock, options or warrants to acquire shares of Common
Stock or securities exchangeable for or convertible into Common Stock during
the 180-day period following the date of this Prospectus, except that the
Company may issue shares upon the exercise of options granted prior to the
date hereof, and may grant additional options under the Stock Option Plan.

Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price for the Common Stock will be determined by
negotiation among the Company and the Representatives. Among the factors
considered in determining the initial public offering price will be prevailing
market and economic conditions, the Company's revenue and earnings, estimates
of the business potential and prospects of the Company, the present state of
the Company's business operations, an assessment of the Company's management
and the consideration of the above factors in relation to the market
valuations of companies in related businesses. The initial public offering
price for the Common Stock should not be considered as an indication of the
actual value of the Common Stock offered hereby. In addition, there can be no
assurance that the Common Stock may be resold at a price equal to or greater
than the initial public offering price. See "Risk Factors--No Prior Market;
Potential Volatility of Common Stock Price."

The Company has agreed to indemnify the Underwriters and their controlling
persons against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.

LEGAL MATTERS

Certain legal matters with respect to the validity of the shares of Common
Stock offered hereby will be passed upon for the Company by Epstein Becker &
Green, P.C., New York, New York. Certain legal matters will be passed upon for
the Underwriters by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.

EXPERTS

The financial statements of the Company as of December 31, 1994 and 1995,
and for each of the three years ended December 31, 1995, and for the period
from inception (May 22, 1992) through December 31, 1995, appearing in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph with respect to certain factors which raise substantial
doubt about the Company's ability to continue as a going concern as discussed
in Note 1 to the Financial Statements) appearing elsewhere herein, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing. Reference is made to "Risk Factors--
Accumulated Deficit; Substantial Doubt about the Company's Ability to Continue
as a Going Concern; and Expectation of Future Losses."

53
<PAGE>

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act,
with respect to the Common Stock offered by this Prospectus. This Prospectus
does not contain all of the information set forth in the Registration
Statement and the exhibits thereto. For further information, reference is made
to the Registration Statement and the exhibits thereto. Statements made in
this Prospectus as to the contents of any contract or any other document are
not necessarily complete and, in each instance, reference is made to the copy
of such contract or document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. Copies of the Registration Statement, including all exhibits
thereto, may be obtained from the Public Reference Section of the Commission,
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: Midwest Regional
Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and
Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, New
York 10048, upon payment of the fees prescribed by the Commission, or may be
examined without charge at the offices of the Commission.

The Company has not previously been subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Upon
completion of this offering, the Company will become subject to the
informational requirements of the Exchange Act, and, in accordance therewith,
will file reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information filed by the Company with
the Commission can be inspected, without charge, and copies may be obtained at
prescribed rates, at the offices of the Commission referenced above.

54
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS

CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Financial Statements at December 31, 1994 and 1995 and for the Years
Ended December 31, 1993, 1994 and 1995 and the Period from Inception
(May 22, 1992) Through December 31, 1995
Report of Independent Auditors........................................ F-2
Balance Sheets........................................................ F-3
Statements of Operations.............................................. F-4
Statements of Shareholders' Equity (Deficit).......................... F-5
Statements of Cash Flows.............................................. F-6
Notes to Financial Statements......................................... F-7
Unaudited Condensed Financial Statements at March 31, 1996 and for the
Three Months Ended March 31, 1995 and 1996
Balance Sheets........................................................ F-15
Statements of Operations.............................................. F-16
Statements of Cash Flows.............................................. F-17
Notes to Unaudited Condensed Financial Statements..................... F-18
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Novoste Corporation

We have audited the accompanying balance sheets of Novoste Corporation (a
Development Stage Company) (the "Company") as of December 31, 1994 and 1995,
and the related statements of operations, shareholders' equity (deficit), and
cash flows for each of the three years in the period ended December 31, 1995
and for the period from inception (May 22, 1992) through December 31, 1995.
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 generally accepted auditing
standards. 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 financial position of the Company as of December
31, 1994 and 1995, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1995 and for the
period from inception (May 22, 1992) through December 31, 1995 in conformity
with generally accepted accounting principles.

We also previously have audited, in accordance with generally accepted
auditing standards, the balance sheets as of December 31, 1992 and 1993 and
the related statements of operations, shareholders' equity, and cash flows for
the period from inception (May 22, 1992) through December 31, 1992 (none of
which are presented separately herein), and we expressed unqualified opinions
on those financial statements. In our opinion, the information set forth in
the selected financial data for each of the four periods in the period ended
December 31, 1995, and for the period from inception (May 22, 1992) through
December 31, 1995, appearing on page 18, is fairly stated in all material
respects in relation to the financial statements from which it has been
derived.

The accompanying financial statements and selected financial data have been
prepared assuming that the Company will continue as a going concern. The
Company is a Development Stage Company engaged primarily in developing the
King Beta-Cath System. As discussed in Note 1 to the financial statements, the
Company has accumulated a significant deficit during the development stage and
requires additional financing to continue the development of its products.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans concerning these matters are
also described in Note 1. Such financial statements and selected financial
data referred to above do not include any adjustments that might result from
the outcome of these uncertainties.

Ernst & Young LLP

Atlanta, Georgia
February 9, 1996

F-2
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 79,496 $ 817,587
Prepaid expenses and other......................... 48,769 14,628
----------- -----------
Total current assets................................. 128,265 832,215
Property and equipment............................... 640,110 932,681
License agreements................................... 155,603 166,934
Other................................................ 58,438 125,388
----------- -----------
$ 982,416 $ 2,057,218
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Fixed rate convertible promissory notes with re-
lated parties..................................... $ -- $ 1,038,450
Demand note payable to related party............... 100,000 --
Bridge loan payable to related party............... 250,000 --
Note payable to bank............................... 200,000 --
Accounts payable................................... 122,157 217,543
Accrued expenses and taxes withheld................ 90,725 137,955
8% notes payable to shareholders................... 300,000 --
Accrued compensation............................... 332,629 344,629
----------- -----------
Total current liabilities............................ 1,395,511 1,738,577
Shareholders' equity (deficit):
Common stock, $.01 par value, 14,000,000 shares
authorized; 2,960,759 and 2,482,622 shares
issued............................................ 29,607 24,826
Class B common stock, $.01 par value ($5,698,509
liquidation value), 6,000,000 shares authorized;
1,611,269 shares issued........................... -- 16,113
Additional paid-in capital........................... 3,821,745 7,760,175
Deficit accumulated during the development stage..... (4,248,607) (7,466,633)
----------- -----------
(397,255) 334,481
Less treasury stock, 5,280 shares of common stock, at
cost................................................ (15,840) (15,840)
----------- -----------
Total shareholders' equity (deficit)................. (413,095) 318,641
----------- -----------
$ 982,416 $ 2,057,218
=========== ===========
</TABLE>

See accompanying notes.

F-3
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FROM INCEPTION
(MAY 22, 1992)
FOR THE YEARS ENDED DECEMBER 31, THROUGH
------------------------------------- DECEMBER 31,
1993 1994 1995 1995
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Revenues:
Option fees........... $ -- $ -- $ -- $ 110,000
Contract fees......... -- 29,740 -- 29,740
Miscellaneous sales... -- -- 3,600 3,600
License fees.......... -- 40,000 -- 130,000
----------- ----------- ----------- -----------
-- 69,740 3,600 273,340
Costs and expenses:
General and
administrative....... 724,045 929,591 1,327,366 3,695,429
Research and
development.......... 500,185 1,087,591 1,659,114 3,444,483
Depreciation and
amortization......... 105,534 204,373 227,373 561,793
----------- ----------- ----------- -----------
1,329,764 2,221,555 3,213,853 7,701,705
----------- ----------- ----------- -----------
Loss from operations.... (1,329,764) (2,151,815) (3,210,253) (7,428,365)
Other income (expense):
Miscellaneous......... 165 2,037 12,907 15,109
Interest, net......... 4,369 (45,911) (20,680) (53,377)
----------- ----------- ----------- -----------
4,534 (43,874) (7,773) (38,268)
----------- ----------- ----------- -----------
Net loss................ $(1,325,230) $(2,195,689) $(3,218,026) $(7,466,633)
=========== =========== =========== ===========
Net loss per share ..... $ (0.38) $ (0.54) $ (0.69)
=========== =========== ===========
Weighted average shares
outstanding ........... 3,442,590 4,031,307 4,671,147
=========== =========== ===========
</TABLE>

See accompanying notes.

F-4
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

FOR THE PERIOD FROM INCEPTION (MAY 22, 1992) TO DECEMBER 31, 1995

<TABLE>
<CAPTION>
DEFICIT
CLASS B ACCUMULATED
COMMON STOCK COMMON STOCK ADDITIONAL DURING THE
------------------ ----------------- PAID-IN DEVELOPMENT TREASURY
SHARES AMOUNT SHARES AMOUNT CAPITAL STAGE STOCK TOTAL
--------- ------- --------- ------- ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Exchange of stock for
license agreement at
$.25 per share......... 746,894 $ 7,469 -- $ -- $ 179,255 $ -- $ -- $ 186,724
Sale of stock at $1.00
per share.............. 820,000 8,200 -- -- 811,800 -- -- 820,000
Sale of stock at $3.00
per share.............. 86,667 867 -- -- 259,133 -- -- 260,000
Exercise of stock
options at $.25
per share.............. 205,000 2,050 -- -- 49,200 -- -- 51,250
Issuance of stock for
consulting services,
117,500 shares at $.25
per share, 88,500
shares at $1.00 per
share and 37,585 shares
at $3.00 per share..... 243,585 2,435 -- -- 228,195 -- -- 230,630
Issuance of stock to
employees for
settlement of
obligation for
consulting services, at
$3.00 per share........ 10,000 100 -- -- 29,900 -- -- 30,000
Net loss................ -- -- -- -- -- (727,688) -- (727,688)
--------- ------- --------- ------- ---------- ----------- -------- -----------
Balance at December 31,
1992................... 2,112,146 21,121 -- -- 1,557,483 (727,688) -- 850,916
Sale of stock at $3.20
per share, net of
$138,932 of offering
costs.................. 331,250 3,312 -- -- 917,756 -- -- 921,068
Exercise of stock
options at $.25 to
$1.00 per share........ 67,875 679 -- -- 23,790 -- -- 24,469
Issuance of stock for
consulting services, at
$3.00 per share........ 50,862 509 -- -- 152,077 -- -- 152,586
Repurchase of stock at
$3.00 per share........ (5,280) -- -- -- -- -- (15,840) (15,840)
Net loss................ -- -- -- -- -- (1,325,230) -- (1,325,230)
--------- ------- --------- ------- ---------- ----------- -------- -----------
Balance at December 31,
1993................... 2,556,853 25,621 -- -- 2,651,106 (2,052,918) (15,840) 607,969
Sale of stock at $3.20
per share.............. 312,500 3,125 -- -- 996,875 -- -- 1,000,000
Exercise of stock
options at $.25 to
$1.00 per share........ 35,500 355 -- -- 12,270 -- -- 12,625
Issuance of stock for
consulting services, at
$3.20 per share........ 50,626 506 -- -- 161,494 -- -- 162,000
Net loss................ -- -- -- -- -- (2,195,689) -- (2,195,689)
--------- ------- --------- ------- ---------- ----------- -------- -----------
Balance at December 31,
1994................... 2,955,479 29,607 -- -- 3,821,745 (4,248,607) (15,840) (413,095)
Sale of stock at $3.75
per share, net of
$191,274 of offering
costs.................. -- -- 986,269 9,863 3,497,372 -- -- 3,507,235
Exercise of stock
options at $.25
per share.............. 9,300 93 -- -- 2,232 -- -- 2,325
Issuance of stock for
consulting services, at
$3.20 per share........ 27,813 278 -- -- 88,724 -- -- 89,002
Issuance of stock for
compensation to an
employee, at $3.20 per
share.................. 16,000 160 -- -- 51,040 -- -- 51,200
Conversion of debt to
common................. 93,750 938 -- -- 299,062 -- -- 300,000
Exchange of common for
Class B common......... (625,000) (6,250) 625,000 6,250 -- -- -- --
Net loss................ -- -- -- -- -- (3,218,026) -- (3,218,026)
--------- ------- --------- ------- ---------- ----------- -------- -----------
Balance at December 31,
1995................... 2,477,342 $24,826 1,611,269 $16,113 $7,760,175 $(7,466,633) $(15,840) $ 318,641
========= ======= ========= ======= ========== =========== ======== ===========
</TABLE>
See accompanying notes.

F-5
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FROM INCEPTION
(MAY 22, 1992)
THROUGH
FOR THE YEARS ENDED DECEMBER 31, DECEMBER 31,
------------------------------------- 1995
1993 1994 1995 CUMULATIVE
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss................. $(1,325,230) $(2,195,689) $(3,218,026) $(7,466,633)
Adjustments to reconcile
net loss to net cash
used by operating
activities:
Depreciation and
amortization........... 105,534 204,373 227,373 561,793
Issuance of stock for
services or
compensation........... 95,586 162,000 140,202 539,280
Change in assets and
liabilities:
Prepaid expenses and
other................. (22,924) (18,866) 34,141 (14,628)
Other assets........... -- -- (100) (7,459)
Accounts payable....... 61,413 48,249 95,386 217,543
Accrued expenses and
taxes withheld and
accrued compensation.. 95,927 33,677 59,230 482,584
----------- ----------- ----------- -----------
Net cash used in
operations.............. (989,694) (1,766,256) (2,661,794) (5,687,520)
CASH FLOWS FROM INVESTING
ACTIVITIES
Sale (purchase) of short-
term investments........ (94,280) 194,280 -- --
Purchase of property and
equipment............... (190,653) (510,939) (489,579) (1,307,929)
Option to purchase
assets.................. -- -- (90,000) (90,000)
Proceeds from sale of
property and equipment.. -- -- 5,233 5,233
License agreements....... -- -- (23,779) (23,779)
----------- ----------- ----------- -----------
Net cash used by
investing activities.... (284,933) (316,659) (598,125) (1,416,475)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of
notes payable........... 300,000 550,000 1,358,450 2,208,450
Repayment of notes
payable................. -- -- (870,000) (870,000)
Proceeds from issuance of
common stock............ 945,537 1,012,625 3,509,560 6,598,972
Purchase of treasury
stock................... (15,840) -- -- (15,840)
----------- ----------- ----------- -----------
Net cash provided by
financing activities.... 1,229,697 1,562,625 3,998,010 7,921,582
----------- ----------- ----------- -----------
Net increase (decrease)
in cash and cash
equivalents............. (44,930) (520,290) 738,091 817,587
Cash and cash equivalents
at beginning of period.. 644,716 599,786 79,496 --
----------- ----------- ----------- -----------
Cash and cash equivalents
at end of period........ $ 599,786 $ 79,496 $ 817,587 $ 817,587
=========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION
Cash paid for interest... $ -- $ 25,084 $ 38,741 $ 63,825
=========== =========== =========== ===========
</TABLE>

See accompanying notes.

F-6
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Organization

Novoste Corporation (the "Company") was incorporated on January 8, 1987 and
remained dormant until May 22, 1992 (date of inception) at which time it was
capitalized. In connection with the Company's capitalization, a license
agreement valued at approximately $186,700 was transferred to the Company in
exchange for 746,894 shares of the Company's common stock.

The Company is primarily engaged in developing the King Beta-Cath System, an
intraluminal beta radiation catheter delivery system designed to reduce
restenosis subsequent to percutaneous transluminal coronary angio- plasty.

The majority of the Company's efforts to date have been in the organization
of the Company, establishing its management team, raising capital and
initiating new product development. All revenues received to date have been
from the sale of certain patent rights, option payments made by a potential
strategic partner to the Company in exchange for the sole right for the
potential partner to enter into future agreements with the Company and
contract fees. Substantially all of the Company's products are in research or
various stages of development. To achieve profitable operations, the Company
must successfully complete the development and clinical trials of its
products, obtain required regulatory approvals and achieve market acceptance.
There can be no assurance that these efforts will be successful.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has accumulated a
significant deficit during the development stage and requires additional
financing to continue funding the development of its products. These
conditions raise substantial doubt about the Company's ability to continue as
a going concern. Management will seek additional funds through private
financings in order to continue funding the development of its products. There
can be no assurance that any such financings can be accomplished. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties. Management will seek on behalf of the Company
additional public or private financings to meet the Company's capital
requirements in order to continue funding the development of the Company's
products.

Use of Estimates

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

Net Loss Per Share

The net loss per share is computed based on the weighted average number of
common shares outstanding after giving effect to certain adjustments described
below. Common equivalent shares are not included in the per share calculations
where the effect of their inclusion would be antidilutive, except that, in
accordance with Securities and Exchange Commission requirements, common and
common stock equivalent shares issued during the twelve-month period prior to
the proposed initial public offering have been included in the calculation as
if they were outstanding for all periods, using the treasury stock method and
an estimated initial public offering price of $13.00 per share.

F-7
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Historical net loss per share information presented in accordance with GAAP
is as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Net loss per share........................ $ (0.59) $ (0.77) $ (0.87)
========= ========= =========
Shares used in computing net loss per
share.................................... 2,248,179 2,836,896 3,679,361
========= ========= =========
</TABLE>

Cash and Cash Equivalents

The Company considers all highly liquid investment instruments with an
original maturity of three months or less to be cash equivalents. Cash
equivalents consist of amounts invested in money market accounts and certain
government securities.

Property and Equipment

Property and equipment are stated at cost and depreciated using the
straight-line method based on the estimated useful lives of the related assets
ranging from approximately 5 to 7 years. Leasehold improvements are amortized
over the remaining term of the related lease using the straight-line method.

Property and equipment is comprised of the following:

<TABLE>
<CAPTION>
1994 1995
--------- ----------
<S> <C> <C>
Furniture and fixtures................................. $ 147,051 $ 232,112
Office equipment....................................... 146,663 220,851
Laboratory equipment................................... 57,202 98,001
Leasehold improvements................................. 258,335 334,162
Production equipment................................... 209,099 412,382
--------- ----------
818,350 1,297,508
Less accumulated depreciation and amortization ........ 178,240 364,827
--------- ----------
$ 640,110 $ 932,681
========= ==========
</TABLE>

Other Assets

License agreements are amortized on a straight-line basis over periods
ranging from fifteen to twenty years. The amortization periods are based on
the lives of the license agreements or the approximate remaining lives of the
related patents, whichever is appropriate. Accumulated amortization at
December 31, 1994 and 1995 totaled $31,121 and $43,569, respectively.

Deferred compensation costs are charged to expense on the straight-line
basis over the term of the related agreements, principally one to three years.

At December 31, 1995 other assets includes $90,000 paid to a supplier for an
option, exerciseable through August 25, 2002, to purchase certain assets of
the supplier for $5,000,000. The amount paid for the option will be credited
toward the purchase price of the assets upon its exercise or expensed upon the
Company's decision not to exercise the option or upon the option's expiration.

Research and Development

All research and development costs are charged to operations as incurred.

F-8
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Patent Costs

Legal fees and other direct costs incurred in obtaining and protecting
patents are expensed as incurred.

Stock Based Compensation

The Company grants stock options generally for a fixed number of shares to
employees, directors, consultants and independent contractors with an exercise
price equal to the fair value of the shares at the date of grant. The Company
accounts for stock option grants in accordance with APB Opinion No. 25,
Accounting for Stock Issued to Employees, and, accordingly, recognizes no
compensation expense for stock option grants for which the terms are fixed.
Compensation expense is recognized for increases in the estimated fair value
of common stock for stock options with variable terms.

In October 1995, the FASB issued Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation, which provides an
alternative to APB Opinion No. 25 in accounting for stock-based compensation
issued to employees. However, the Company plans to continue to account for
stock-based compensation in accordance with APB Opinion No. 25.

Impact Of Recently Issued Accounting Standards

In March 1995 the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recognized on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amounts. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company will adopt Statement
121 in 1996 and, based on current circumstances, does not believe such
adoption will have a material effect on the Company's financial position or
results of operations.

2. CONSULTING AGREEMENTS

The Company has agreements with the members of its Scientific Advisory
Board, various consultants and others with terms ranging from one to five
years. Substantially all of these agreements provide for stock grants on the
agreement dates with such shares valued at per share amounts ranging from $.25
to $3.00 per share and include certain registration rights. During the years
ended December 31, 1993, 1994 and 1995 $58,792, $50,000 and $21,348,
respectively, were charged to operations as amortization of amounts
capitalized under these consulting agreements ($141,751 from inception through
December 31, 1995).

3. COMMITMENTS

The Company is committed under an operating lease for a facility which is
used as a research and development and commercial production facility. Rent
expense was approximately $62,800, $62,400 and $116,400 for the years ended
December 31, 1993, 1994 and 1995, respectively ($273,200 from inception
through December 31, 1995). The total future minimum rental payments are as
follows for the years ending December 31:

F-9
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Under the terms of a license agreement to manufacture and market certain
technology (see Note 1), the Company has agreed to pay royalties ranging from
3.5% to 10% of net sales of the related products and a one time fee of
$115,000. Such fee is payable when gross revenues from the sales of a
specified product total $1,000,000.

4. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the corresponding amounts used for income tax purposes.
Significant components of the Company's deferred tax assets for federal and
state income taxes are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1995
----------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards ................ $ 1,504,146 $ 2,697,752
R&D tax credit carryforwards..................... 71,063 127,069
Other............................................ 139,840 140,504
----------- -----------
1,715,049 2,965,325
Valuation allowance................................ (1,715,049) (2,965,325)
----------- -----------
$ -- $ --
=========== ===========
</TABLE>

The Company has approximately $7,065,000 of net operating losses for income
tax reporting purposes available to offset future taxable income. Such losses
expire $470,000 in 2007, $1,335,000 in 2008, $2,140,000 in 2009 and $3,120,000
in 2010 and may be subject to certain limitations for changes in ownership.
Approximately $309,000 of the net operating loss carryforwards will result in
a credit to contributed capital when recognized. Additionally, the Company has
research and development tax credits of approximately $24,000 expiring in
2008, $47,000 expiring in 2009 and $56,000 expiring in 2010 unless utilized
earlier.

The actual income tax expense (benefit) differs from the "expected" amount
(computed by applying the U.S. Federal corporate income tax rate of 34% to
income or loss before income taxes) as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1993 1994 1995
--------- --------- -----------
<S> <C> <C> <C>
Tax benefit computed at statutory
rates.................................. $(450,578) $(746,534) $(1,094,129)
State income taxes, net of Federal
effect................................. (53,009) (87,828) (128,721)
Other, net.............................. (26,499) (100,622) (27,426)
Change in valuation allowance........... 530,086 934,984 1,250,276
--------- --------- -----------
Income tax expense (benefit) ........... $ -- $ -- $ --
========= ========= ===========
</TABLE>

5. SHORT-TERM DEBT

The bridge loan payable to related party was payable to an affiliate of
certain shareholders together with accrued interest at the rate of 10%, upon
demand at any time after January 1, 1995. This loan was repaid on January 27,
1995.

The note payable to bank with interest at 2% over the prime rate (10.5% at
December 31, 1994) was repaid on January 27, 1995.

F-10
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

On June 15, 1995 the Company entered into a line-of-credit arrangement for
short-term debt with a bank under which the Company may borrow up to $300,000
at the prime rate plus one percent. The line of credit, which expires on June
15, 1996, is subject to commitment fees of .65% of the unused line-of-credit
and borrowings thereunder are guaranteed up to $100,000 each by three
officer/directors of the Company. No borrowings were outstanding at December
31, 1995 under this line-of-credit.

The fixed rate convertible promissory notes with related parties, bear
interest at the rate of 8% and are payable to certain shareholders, together
with accrued interest, on June 1, 1996. At any time prior to the payment of
these notes, the holders may convert all or any portion of the outstanding
principal balance (plus accrued interest ) into Class B common stock at the
rate of $3.75 per share. The conversion price of $3.75 per share is subject to
adjustment in the event the Company issues or sells, or is deemed to have
issued or sold, any of its common stock for consideration of less than $3.75
per share.

Additionally, in connection with the placement of this indebtedness, the
Company issued to a third party a warrant for the purchase of 9,395 shares of
common stock at $3.75 per share exercisable through December 1, 2000. The
carrying amounts of the promissory notes approximate their fair values at
December 31, 1995.

Subsequent to December 31, 1995, the Company issued to certain other
shareholders $761,550 of additional fixed rate convertible promissory notes
with the same terms as described above.

The weighted average interest rates on short-term borrowings as of December
31, 1994 and 1995 were 9.7% and 8.0%, respectively.

6. 8% NOTES PAYABLE TO SHAREHOLDERS

The 8% notes payable to shareholders and related accrued interest were
payable to the extent that the Company met certain earnings requirements and
raised a minimum of $1,000,000 of equity capital prior to March 24, 1995,
excluding the 312,500 shares sold in 1994. Any unpaid balances of principal
and accrued interest at March 24, 1995 were convertible into common stock of
the Company at the greater of fair market value or $3.20 per share on that
date. On December 1, 1995 the Company elected to have those notes converted at
the estimated fair market value of $3.20 per share into 93,750 shares of
common stock. The accrued interest on those notes was paid effective that same
date.

7. SHAREHOLDERS' EQUITY (DEFICIT)

Stock Purchase Agreements

The Company has entered into a stock purchase agreement under which it sold
312,500 shares of common stock at $3.20 per share for cash in each of 1993 and
1994. The Company also granted to these investors warrants for the purchase of
an additional 750,000 shares of common stock at $4.00 per share, which were
subsequently canceled (see January 25, 1995 transaction below). The stock
purchase agreement contains restrictions and covenants primarily related to
limitations on indebtedness, payment of dividends, registration rights and
changes in authorized capital stock. In conjunction with this agreement, the
Company and certain of its shareholders entered into a shareholders' agreement
defining certain rights as to the transfer or sale of common stock owned by
such shareholders. Additionally, as related to the placement of this equity
capital, the Company issued to a third party a warrant for the purchase of
31,250 shares of common stock at $3.20 per share in each of 1993 and 1994
exercisable through September 23, 1998.

F-11
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
On January 25, 1995 the Company amended its Articles of Incorporation to
designate 2,000,000 of its 10,000,000 authorized shares of common stock as
Class B common stock, $.01 par value. The Company further amended the Articles
of Incorporation on July 27, 1995 and December 18, 1995 to increase the total
authorized shares of the Company to 20,000,000, of which 14,000,000 shares are
designated as common stock and 6,000,000 shares are designated as Class B
common stock. The Class B common stock has certain liquidation preferences and
holders thereof are entitled to elect three members of the board of directors.

On January 25, 1995 the Company entered into a stock and warrant purchase
agreement with an investor under which it sold 266,667 shares of Class B
common stock at $3.75 per share for cash ($1,000,000). The Company also
granted to the investor warrants for the purchase of an additional 266,667
shares of Class B common stock at $4.50 per share which were subsequently
cancelled (see April, July and September 1995 transactions below). This
agreement contains restrictions and covenants primarily related to limitations
on indebtedness, payment of dividends, registration rights and changes in
authorized capital stock. In conjunction with this agreement the Company and
certain of its shareholders entered into a shareholders' agreement granting
the investor and certain prior investors certain preemptive rights and placing
certain restrictions on stock transactions by such shareholders. Additionally,
in connection with this transaction, the Company issued to a third party a
warrant for the purchase of 26,667 shares of common stock at $3.75 per share
exercisable through January 24, 2000.

Concurrent with the above investment, prior investors surrendered 625,000
shares of common stock of the Company for the same number of Class B common
shares, and warrants held by such investors for the purchase of an additional
750,000 shares of common stock at $4.00 per share were canceled in exchange
for the purchase of 266,664 shares of Class B common stock at $3.75 per share
for cash ($999,990) and warrants to purchase an additional 483,336 shares of
Class B common stock (see April, July and September 1995 transactions below).

A portion of the proceeds from the January 25, 1995 equity investments were
used to pay off $550,000 of the Company's short-term debt and accrued interest
of $18,708.

In April, July and September 1995 the Company entered into stock and warrant
purchase agreements with investors under which it sold 452,938 shares of its
Class B common stock at $3.75 per share for cash ($1,698,519). The Company
also granted to the investors warrants for the purchase of an additional
452,938 shares of Class B common stock at $4.50 per share. Such warrants
expire on December 31, 1999. These stock purchase agreements contain the same
restrictions and covenants as those described above.

Concurrent with the July investment, warrants to purchase 483,336 and
266,667 shares of Class B common stock at $3.75 and $4.50 per share,
respectively, which had earlier expiration dates, were canceled in exchange
for the same number of warrants at the same per share amounts with an
expiration date of December 31, 1999. The new warrants received include a
cashless exercise provision, but otherwise contain substantially the same
terms as the cancelled warrants.

Stock Option Plan

The Company's Board of Directors adopted, on May 26, 1992, the Novoste
Corporation Stock Option Plan (the "Plan") under which options designated as
either incentive or non-qualified stock options may be issued to employees,
officers, directors, consultants and independent contractors of the Company or
any parent, subsidiary or affiliate of the Company. Options granted under the
Plan are at prices not less than the fair market value on the date of grant
and may be exercised for a period of ten years from the date of grant. Options
granted under the Plan have vesting periods ranging from immediately to four
years or, in the case of options as to 75,000 shares at $3.20 per share, upon
achieving three specified milestones at the rate of 25,000 shares per
milestone. Should such milestones be achieved, the Company will record a non-
cash compensation expense to the extent the fair market value of the shares
which vest exceeds the exercise price.

F-12
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Activity under the Plan is summarized as follows:

<TABLE>
<CAPTION>
NUMBER PRICE
OF SHARES PER SHARE
--------- ----------
<S> <C> <C>
Options granted........................................ 1,380,000 $ .25-1.00
Options exercised...................................... (205,000) .25
---------
Outstanding at December 31, 1992....................... 1,175,000 .25-1.00
Options granted........................................ 223,000 3.00-3.20
Options exercised...................................... (67,875) .25-1.00
---------
Outstanding at December 31, 1993....................... 1,330,125 .25-3.20
Options granted........................................ 166,000 3.00-3.20
Options exercised...................................... (35,500) .25-1.00
Options canceled....................................... (16,000) 3.20
---------
Outstanding at December 31, 1994....................... 1,444,625 .25-3.20
Options granted........................................ 359,750 3.20
Options exercised...................................... (9,300) .25
---------
Outstanding at December 31, 1995....................... 1,795,075 .25-3.20
=========
Exercisable at December 31, 1995....................... 1,164,159 .25-3.20
=========
</TABLE>

Stock Warrants

The Company grants warrants to consultants, investors and certain third
parties. In conjunction with a sale of common stock in 1993, the Company
issued warrants to the investors to purchase an additional 22,500 shares of
common stock at $4.00 per share. Such warrants expire as to 15,000 and 7,500
shares on March 24, 1996 and March 24, 1997, respectively. Stock warrant
activity, including the activity discussed in this note under Stock Purchase
Agreements, is summarized as follows:

<TABLE>
<CAPTION>
COMMON STOCK CLASS B COMMON STOCK
------------------------- ------------------------
NUMBER OF EXERCISE PRICE NUMBER OF EXERCISE PRICE
WARRANTS PER SHARE WARRANTS PER SHARE
--------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Outstanding at December
31, 1992 .............. -- $ -- -- $ --
Granted................. 803,750 3.20-4.00 -- --
-------- ---------
Outstanding at December
31, 1993............... 803,750 3.20-4.00 -- --
Granted................. 31,250 3.20 -- --
-------- ---------
Outstanding at December
31, 1994............... 835,000 3.20-4.00 -- --
Cancelled............... (750,000) 4.00 -- --
Granted................. 36,062 3.75 1,202,941 3.75-4.50
-------- ---------
Outstanding at December
31, 1995............... 121,062 3.20-3.75 1,202,941 3.75-4.50
======== =========
</TABLE>

Other

During 1993 the Company granted to three officers, directors and
shareholders the right to convert their respective accrued salaries earned
through December 31, 1993 into shares of the Company's common stock for a
period of five years at a conversion rate of $3.20 per share. At December 31,
1995 accrued salaries of $320,629 were convertible into 100,195 shares of
common stock.

F-13
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
At December 31, 1995 the Company had reserved 2,403,583 shares of common
stock for issuance upon future exercise of options and warrants and conversion
of accrued salaries. The Company had also reserved 1,481,382 shares of Class B
common stock for future exercise of warrants and conversion of fixed rate
convertible promissory notes to shareholders outstanding at December 31, 1995.

8. SUBSEQUENT EVENTS

On January 30, 1996 the Company entered into a license agreement whereby the
licensor assigned its claim for certain of the Company's technology back to
the Company for royalties based on net sales (as defined in the agreement) of
products derived from such technology, subject to certain minimum royalties.
The royalty agreement term is consistent with the life of the related patent
and applies to assignments of the patent technology to a third party. The
royalty agreement provides for a reduction of the royalty fees and term of the
agreement if the patent for the technology is not received within three years
of execution of the agreement. Under the terms of this license, the Company
agreed to issue as additional consideration 10,000 shares of Novoste common
stock to the licensor and its affiliates.

F-14
<PAGE>

NOVOSTE CORPORATION

(A DEVELOPMENT STAGE COMPANY)

UNAUDITED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
MARCH 31, 1996 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $ 1,629,208 $ 2,599,121
Prepaid expenses and other..................... 20,366 20,366
----------- -----------
Total current assets............................. 1,649,574 2,619,487
Property and equipment........................... 957,708 957,708
License agreements............................... 163,822 163,822
Other............................................ 233,536 233,536
----------- -----------
$ 3,004,640 $ 3,974,553
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Fixed rate convertible promissory notes with
related parties............................... $ 1,800,000 $ --
Fixed rate promissory notes with related par-
ties.......................................... 738,450 1,500,150
Note payable to bank........................... 300,000 300,000
Accounts payable............................... 302,809 302,809
Accrued expenses and taxes withheld............ 115,021 73,136
Accrued compensation........................... 347,629 27,000
----------- -----------
Total current liabilities........................ 3,603,909 2,203,095
Shareholders' equity (deficit):
Common stock, $.01 par value, 14,000,000 shares
authorized; 2,536,338 shares issued at March
31, 1996, 5,653,555 pro forma shares issued... 25,363 56,535
Class B common stock, $.01 par value
($5,698,509 liquidation value), 6,000,000
shares authorized; 1,611,269 shares issued at
March 31, 1996, no pro forma shares issued.... 16,113 --
Additional paid-in capital....................... 8,053,389 10,431,255
Deficit accumulated during the development
stage........................................... (8,677,294) (8,700,492)
----------- -----------
(583,429) 1,787,278
Less treasury stock, 5,280 shares of common
stock, at cost.................................. (15,840) (15,840)
----------- -----------
Total shareholders' equity (deficit)............. (599,269) 1,771,458
----------- -----------
$ 3,004,640 $ 3,974,553
=========== ===========
</TABLE>

See accompanying notes to unaudited condensed financial statements.

F-15
<PAGE>

NOVOSTE CORPORATION
(A DEVELOPMENT STAGE COMPANY)

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FROM INCEPTION
FOR THE THREE MONTHS (MAY 22, 1992)
ENDED MARCH 31, THROUGH
---------------------- MARCH 31,
1995 1996 1996
--------- ----------- --------------
<S> <C> <C> <C>
Revenues:
Option fees........................... $ -- $ -- $ 110,000
Contract fees......................... -- -- 29,740
Miscellaneous sales................... 1,200 -- 3,600
License fees.......................... -- -- 130,000
--------- ----------- -----------
1,200 -- 273,340
Costs and expenses:
General and administrative............ 251,026 371,943 4,067,372
Research and development.............. 312,591 740,714 4,185,197
Depreciation and amortization......... 61,051 70,217 632,010
--------- ----------- -----------
624,668 1,182,874 8,884,579
--------- ----------- -----------
Loss from operations.................... (623,468) (1,182,874) (8,611,239)
Other income (expense):
Miscellaneous......................... 54 2,438 17,547
Interest, net......................... (4,129) (30,225) (83,602)
--------- ----------- -----------
(4,075) (27,787) (66,055)
--------- ----------- -----------
Net loss................................ $(627,543) $(1,210,661) $(8,677,294)
========= =========== ===========
Net loss per share ..................... $ (0.14) $ (0.24)
========= ===========
Weighted average shares outstanding .... 4,541,355 4,947,222
========= ===========
</TABLE>

See accompanying notes to unaudited condensed financial statements.

F-16
<PAGE>

NOVOSTE CORPORATION

(A DEVELOPMENT STAGE COMPANY)

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FROM INCEPTION
(MAY 22, 1992)
FOR THREE MONTHS THROUGH
ENDED MARCH 31, MARCH 31,
---------------------- 1995
1995 1996 CUMULATIVE
--------- ----------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss............................... $(627,543) $(1,210,661) $(8,677,294)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization......... 61,051 70,217 632,010
Issuance of stock for services or
compensation......................... -- 139,511 678,791
Change in assets and liabilities:
Prepaid expenses and other........... 39,170 (5,738) (20,366)
Other assets......................... -- (21,499) (28,958)
Accounts payable..................... (38,946) 85,266 302,809
Accrued expenses and taxes withheld
and accrued compensation............ (23,947) (19,934) 462,650
--------- ----------- -----------
Net cash used in operations............ (590,215) (962,838) (6,650,358)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment..... (119,929) (83,081) (1,391,010)
Option to purchase assets.............. -- -- (90,000)
Proceeds from sale of property and
equipment............................. -- -- 5,233
License agreements..................... -- -- (23,779)
--------- ----------- -----------
Net cash used by investing activities.. (119,929) (83,081) (1,499,556)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes
payable............................... 20,000 1,800,000 4,008,450
Repayment of notes payable............. (570,000) -- (870,000)
Proceeds from issuance of common
stock................................. 1,831,732 57,540 6,656,512
Purchase of treasury stock............. -- -- (15,840)
--------- ----------- -----------
Net cash provided by financing
activities............................ 1,281,732 1,857,540 9,779,122
--------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents...................... 571,588 811,621 1,629,208
Cash and cash equivalents at beginning
of period............................. 79,496 817,587 --
--------- ----------- -----------
Cash and cash equivalents at end of
period................................ $ 651,084 $ 1,629,208 $ 1,629,208
========= =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid for interest................. $ 21,024 $ 8,986 $ 72,811
========= =========== ===========
</TABLE>

See accompanying notes to unaudited condensed financial statements.

F-17
<PAGE>

NOVOSTE CORPORATION

(A DEVELOPMENT STAGE COMPANY)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and in accordance with the instructions to Article 10 of
Regulation S-X. Accordingly, such financial statements do not include all of
the information and disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included.

2. NET LOSS PER SHARE

The net loss per share is computed based on the weighted average number of
common shares outstanding after giving effect to certain adjustments described
below. Common equivalent shares are not included in the per share calculations
where the effect of their inclusion would be antidilutive, except that, in
accordance with Securities and Exchange Commission requirements, common and
common stock equivalent shares issued during the twelve-month period prior to
the proposed initial public offering have been included in the calculations as
if they were outstanding for all periods, using the treasury stock method and
an estimated initial public offering price of $13.00 per share.

Historical net loss per share information presented in accordance with GAAP
is as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1995 1996
---------- ----------
<S> <C> <C>
Net loss per share...................................... $ (0.19) $ (0.29)
========== ==========
Shares used in computing net loss per share............. 3,346,944 4,110,195
========== ==========
</TABLE>

3. LICENSE AGREEMENT

4. DEBT

During the three months ended March 31, 1996, the Company borrowed an
additional $761,550 under fixed rate convertible promissory notes with related
parties under the same terms as the amounts outstanding under such notes at
December 31, 1995.

The $738,450 of fixed rate promissory notes with related parties at March
31, 1996 represents amounts borrowed by the Company in March 1996. The notes
mature June 3, 1996 with interest at 8% per annum. The Company borrowed an
additional $761,700 in April 1996 from related parties under notes with the
same terms.

During the three months ended March 31, 1996, the Company borrowed $300,000
under its line-of-credit arrangement with a bank, as more fully described in
Note 5 to the audited financial statements.

F-18
<PAGE>

NOVOSTE CORPORATION

(A DEVELOPMENT STAGE COMPANY)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)

5. SHAREHOLDERS' EQUITY

During the three months ended March 31, 1996, the Company issued 38,716
shares of common stock valued at $237,339 related principally to payment for
consulting services. In addition, warrants to purchase 15,000 shares of common
stock were exercised for gross proceeds of $60,000.

Unaudited pro forma shareholders' equity as of March 31, 1996 is set forth
in the accompanying pro forma balance sheet, as adjusted to reflect the
following actions which shall occur on or immediately prior to the closing of
the Offering, as follows: (i) the conversion of all shares of Class B Common
Stock outstanding into 1,611,269 shares of Common Stock, (ii) the cashless
exercise of certain outstanding stock purchase warrants for an aggregate of
861,300 shares of Common Stock, assuming an offering price of $13.00 per
share, (iii) the exercise of the balance of all outstanding stock purchase
warrants for an aggregate of 47,104 shares of Common Stock at an aggregate
exercise price of $208,219, (iv) the conversion of all outstanding convertible
notes and accrued interest into an aggregate of 497,349 shares of Common
Stock, assuming a closing date of this Offering of May 30, 1996, (v) the
conversion of accrued salaries into 100,195 shares of Common Stock, (vi) an
amendment to the Company's Articles of Incorporation to remove the Company's
existing Class B Common Stock and to create a class of authorized but
undesignated Preferred Stock and (vii) the issuance of an additional $761,700
of fixed rate promissory notes with related parties in April 1996.

F-19
<PAGE>

[LOGO] NOVOSTE/TM/

The above is an artist's rendering of a future generation of the KBC System,
currently under development. The KBC System is in an early stage of development,
and therefore the final design of the KBC System may differ from that shown
here.

The Company's KBC System is an investigational device and has not been approved
by the FDA for commercial sale in the United States. The KBC System is in the
early stage of clinical testing, and clinical data obtained to date are
insufficient to demonstrate safety and efficacy. There can be no assurance that
the KBC System will receive FDA approval if such approval is sought.
<PAGE>

NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMA-
TION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE AF-
FAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 15
Dividend Policy.......................................................... 15
Capitalization........................................................... 16
Dilution................................................................. 17
Selected Financial Data.................................................. 18
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 19
Business................................................................. 21
Management............................................................... 37
Principal Shareholders................................................... 43
Certain Transactions..................................................... 45
Shares Eligible for Future Sale.......................................... 47
Description of Securities................................................ 49
Underwriting............................................................. 52
Legal Matters............................................................ 53
Experts.................................................................. 53
Available Information.................................................... 54
Index to Financial Statements............................................ F-1
Report of Independent Auditors........................................... F-2
</TABLE>

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

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EF-
FECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT PAR-
TICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS
IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACT-
ING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
2,000,000 Shares

[LOGO] NOVOSTE/TM/

Common Stock

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

PROSPECTUS

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

Piper Jaffray inc.
Montgomery Securities

, 1996

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses of this offering are as follows:

<TABLE>
<S> <C>
S.E.C. Registration Fee............................................ $ 11,104
N.A.S.D. Filing Fee................................................ 3,720
Nasdaq National Market Qualification Fee........................... 36,616
Accounting Fees.................................................... 80,000
Legal Fees and Expenses............................................ 180,000
Blue Sky Qualification Fees and Expenses........................... 25,000
Printing and Engraving............................................. 90,000
Transfer Agent's Fees and Expenses................................. 10,000
Miscellaneous Expenses............................................. 38,560
--------
Total............................................................ $475,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 607.0850 of the Florida Business Corporation Act grants corporations
the power to indemnify their directors, officers, employees and agents in
accordance with the provisions thereof, Article VI of Registrant's Amended and
Restated Articles of Incorporation and Article VIII of Registrant's By-laws
provide for indemnification of Registrant's directors, officers, agents and
employees to the full extent permissible under Section 607.0850 of the Florida
Business Corporation Act.

See also Section 6 of the Purchase Agreement.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

From April 8, 1993 to June 9, 1993, Registrant issued an aggregate of 26,862
shares of Common Stock to four consultants for services valued at an aggregate
of $80,586 (or $3.00 per share) as follows:

<TABLE>
<CAPTION>
DATE OF ISSUANCE NAME OF CONSULTANT NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
4/8/93 Towey & Associates 8,000
5/18/93 Longbow Partners 18,000
6/9/93 William Mack 431
6/9/93 Jack Snoke 431
</TABLE>

On July 7, 1993, Registrant issued three Senior Secured Promissory Notes,
each in the principal amount of $100,000, payable with interest accruing
thereon at 8% per annum to Thomas Weldon, Norman Weldon and Charles Larsen,
such promissory notes being convertible into one share of Common Stock at a
conversion price equal to the greater of $3.20 or the fair market value of the
Common Stock on the date of conversion. In December 1995, the holder of each
promissory note converted in full his promissory note into, and was issued,
31,250 shares of Common Stock.

On October 16, 1993, Registrant granted to Thomas Weldon, Norman Weldon and
Charles Larsen the right to convert, at any time on or prior to December 31,
1998, their respective accrued salaries through December 31, 1993, which
aggregated $320,629, into shares of Common Stock at $3.20 per share.
Simultaneously with the consummation of this offering, the accrued salaries
will be converted into 100,196 shares of Common Stock, with Thomas Weldon,
Norman Weldon and Charles Larsen receiving 56,395, 5,313 and 38,488 shares,
respectively.

In September 1993, Registrant issued 312,500 shares of Common Stock to
Venhill Limited Partnership, Henry L. Hillman, Elsie Hilliard and C.G.
Grefenstette, Trustees, and C.G. Grefenstette and Thomas G. Bigley,

II-1
<PAGE>

Trustees, which together are principal shareholders of Registrant
(collectively, the "Hillman Related Shareholders"), for $1,000,000 (or $3.20
per share) and, for no additional consideration, warrants to purchase an
additional 750,000 shares of Class B Common Stock (at $3.75 per share).
Concurrently therewith, as a finder's fee for securing the investment by the
Hillman Related Shareholders, Registrant issued The Kriegsman Group warrants
to purchase 31,250 shares of Common Stock at $3.20 per share.

In November 1993, two private investors were issued an aggregate of 18,750
shares of Common Stock for $60,000 (or $3.20 per share) and, for no additional
consideration, warrants to purchase an aggregate of 22,500 shares of Common
Stock at $4.00 per share as follows:

<TABLE>
<CAPTION>
DATE OF ISSUANCE NAME OF PURCHASER NO. OF SHARES
---------------- --------------------- -------------
<S> <C> <C>
11/8/93 G&G Diagnostics LP II 15,625
11/8/93 Irwin Gruverman 3,125
</TABLE>

In December 1993, Registrant issued 13,000 shares of Common Stock to two
consultants for services valued at $39,000 (or $3.00 per share) as follows:

<TABLE>
<CAPTION>
DATE OF ISSUANCE NAME OF CONSULTANT NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
12/27/93 Longbow Partners 12,000
12/28/93 Raphael Meloul 1,000
</TABLE>

On each of February 23, 1994 and July 8, 1994, Registrant issued 7,500
shares of Common Stock to Towey & Associates for consulting services valued at
$24,000 (or $3.20 per share).

In March 1994, the Hillman Related Shareholders purchased 312,500 shares of
Common Stock from Registrant for $1,000,000 (or $3.20 per share). Concurrently
therewith, in payment of finder's fee for securing the investment by the
Hillman Related Shareholders, Registrant issued The Kriegsman Group warrants
to purchase 31,250 shares of Common Stock at $3.20 per share.

In November 1994, the Registrant received a bridge loan from an affiliate of
the Hillman Related Shareholders in the amount of $250,000. The note was
payable on demand at any time after January 1, 1995, with accrued interest at
10% per annum. The loan was repaid on January 27, 1995.

On December 29, 1994, Registrant issued an aggregate of 21,563 shares of
Common Stock to two consultants for an aggregate of $69,002 (or $3.20 per
share) as follows:

<TABLE>
<CAPTION>
DATE OF ISSUANCE NAME OF CONSULTANT NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
12/29/94 Towey & Associates 7,500
12/29/94 Longbow Partners 14,063
</TABLE>

In January 1995, Registrant issued 266,667 shares of Common Stock to Noro-
Moseley Partners III, L.P. ("Noro-Moseley"), a principal shareholder, for
$1,000,000 (or $3.75 per share) and, for no additional consideration, warrants
to purchase an additional 266,667 shares of Common Stock at $4.50 per share.
Concurrently therewith, in payment of a finder's fee for securing the Noro-
Moseley investment, Registrant issued The Kriegsman Group warrants to purchase
26,667 shares of Common Stock at $3.75 per share. Also in January 1995, the
Hillman Related Shareholders exercised warrants to purchase 266,664 shares of
Class B Common Stock, with Registrant receiving proceeds therefrom of
$999,990.

On April 25, 1995, Registrant issued to ABS Employees' Venture Fund Limited
Partnership 39,604 shares of Class B Common Stock for $148,515 (or $3.75 per
share) and, for no additional consideration, warrants to purchase an
additional 39,604 shares of Class B Common Stock at $4.50 per share.

In July 1995, Registrant issued 400,000 shares of Class B Common Stock to
Advanced Technology Ventures IV, L.P. ("ATV") for $1,500,000 (or $3.75 per
share) and, for no additional consideration, warrants to purchase an
additional 400,000 shares of Class B Common Stock (at $4.50 per share). As
part of the ATV

II-2
<PAGE>

financing, the Hillman Related Shareholders and Noro-Moseley exchanged their
shares of Common Stock for an equivalent number of shares of Class B Common
Stock and their warrants to purchase an aggregate of 750,000 shares of Class B
Common Stock for new warrants adding a cashless exercise provision and
extending the expiration date to December 31, 1999, but otherwise containing
substantially similar terms, including the right to purchase the identical
number of shares of Class B Common Stock.

On September 18, 1995, Registrant issued to Karen Vinjamuri 13,334 shares of
Class B Common Stock for $50,003 (or $3.75 per share) and warrants to purchase
13,334 shares of Class B Common Stock at $4.50 per share.

On December 6, 1995, Registrant issued 27,813 shares of Common Stock to two
consultants for services valued at $89,002 (or $3.20 per share) as follows:

<TABLE>
<CAPTION>
DATE OF ISSUANCE NAME OF CONSULTANT NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
12/6/95 Longbow Partners 25,313
12/6/95 Herbert Kontges 2,500
</TABLE>

In December 1995 and January 1996, Registrant issued a series of Fixed Rate
Convertible Promissory Notes to Noro-Moseley, the Hillman Related
Shareholders, ATV and Cynthia Weldon, in the principal amounts of $295,380,
$761,550, $443,070 and $300,000, respectively. Each of these notes had a
maturity date of June 1, 1996 and accrued interest at a rate of 8% compounded
annually on the unpaid principal amount, and provided that the holder thereof
may convert all or a portion of the outstanding principal amount plus accrued
interest into one share of Class B Common Stock for each $3.75 in principal
amount plus accrued interest of such note being converted. As part of the
Recapitalization, offering, the holders are converting the principal of and
accrued interest on such notes into 495,766 shares of Class B Common Stock,
assuming a closing date of this Offering of May 15, 1996. As part of the
December 1995 debt financing, in payment of a finder's fee, Registrant issued
The Kriegsman Group warrants to purchase 9,395 shares of Common Stock at $3.75
per share.

On January 30, 1996, Registrant issued 2,433 shares of Common Stock to Ian
Crocker, M.D., for consulting services rendered in the fourth quarter of 1995
valued at $14,598 (or $6.00 per share).

On January 30, 1996, Registrant issued 3,800 shares of Common Stock to Emory
University valued at $24,244 (or $6.38 per share) as partial consideration for
the rights granted under the license agreement between Emory University and
Registrant of even date. Registrant also issued 6,200 shares of Common Stock
to two physicians employed by Emory University valued at $39,556 (or $6.38 per
share) as consideration for services rendered under the license agreement of
even date as follows:

<TABLE>
<CAPTION>
DATE OF ISSUANCE NAME OF CONSULTANT NO. OF SHARES
---------------- ------------------ -------------
<S> <C> <C>
1/30/96 Ian Crocker, M.D. 1,800
1/30/96 Ron Waksman, M.D. 4,400
</TABLE>

On February 5, 1996, the Company granted 15,000 shares of Common Stock to
Spencer B. King, III, M.D., for consulting services valued at $95,700 (or
$6.38 per share) as follows:

On March 31, 1996, Registrant issued 1,010 shares of Common Stock to Ian
Crocker, M.D., for consulting services rendered in the first quarter of 1996
valued at $6,450 ( or $6.38 per share).

On March 31, 1996, Registrant issued 7,523 shares of Common Stock to Towey &
Associates for consulting services valued at $48,000 (or $6.38 per share).

See "Management--Executive Compensation" of the Prospectus for shares issued
in 1995 and 1996 to one executive officer as compensation for services
rendered in 1995.

From April 1, 1993 through April 1, 1994, Registrant granted under its Stock
Option Plan 182,000 options at $3.20 per share to 8 holders.

II-3
<PAGE>

From April 1, 1994 through April 1, 1995, Registrant granted under its Stock
Option Plan 294,000 options at $3.20 per share to 9 holders.

From April 1, 1995 through December 31, 1995, Registrant granted under its
Stock Option Plan 224,750 options at $3.20 per share to 24 holders.

From January 1, 1996 through May 10, 1996, Registrant granted under its
Stock Option Plan 36,500 options at the greater of $13.00 per share or the
initial public offering price per share in the offering covered by this
Registration Statement.

In March and April 1996, Registrant received bridge loans in the aggregate
amount of $1,500,150 from the Hillman Related Shareholders, Noro-Moseley and
ATV in exchange for Fixed Rate Promissory Notes in the aggregate principal
amount of the loan, due June 30, 1996 with interest at the rate of 8.0%
compounded annually.

The foregoing transactions of Registrant were exempt from registration under
the Securities Act of 1933, as amended, under Sections 3(a)(9) and 4(2)
thereunder, and all stock certificates issued in connection therewith were
legended to reflect their restricted status.

ITEM 16. EXHIBITS

(a) EXHIBITS:

<TABLE>
<C> <S>
*1 --Form of Underwriting Agreement.
*3.1 --Articles of Incorporation of Registrant, as amended.
*3.2 --Form of Amended and Restated Articles of Incorporation of
Registrant to be filed prior to the closing of this offering.
*3.3 --Form of Amended and Restated By-Laws of Registrant to be adopted
prior to the closing of this Offering.
4.1 --Form of Specimen Common Stock Certificate of Registrant.
*4.2 --Registration Rights Agreement, dated July 28, 1995, by and among
Registrant, Norman R. Weldon, Thomas D. Weldon, Charles E.
Larsen, the Hillman Investors (as defined therein), Noro-Moseley
Partners-III, L.P. and Advanced Technology Ventures IV, L.P.
*4.3 --Registration Rights Agreement, dated April 26, 1995, between
Registrant and ABS Employees' Venture Fund Limited Partnership.
*4.4 --Registration Rights Agreement, dated September 20, 1995, between
Registrant and Karen C. Vinjamuri.
*4.5 --Stock Purchase Warrant, dated September 24, 1993, between
Registrant and The Kriegsman Group.
*4.6 --Stock Purchase Warrant, dated March 24, 1994, between Registrant
and The Kriegsman Group.
*4.7 --Stock Purchase Warrant, dated August 1995, between Registrant
and The Kriegsman Group.
*4.8 --Stock Purchase Warrant, dated December 1, 1995, between
Registrant and The Kriegsman Group.
*4.9 --Consulting Agreement, dated July 30, 1992, between Registrant
and Spencer B. King III, M.D.
*4.10 --Consulting Agreement, dated February 1, 1996, between Registrant
and Spencer B. King III, M.D.
*4.11 --Consulting Agreement, dated February 1, 1993, between Registrant
and Harry A. Kopelman, M.D.
</TABLE>

II-4
<PAGE>

<TABLE>
<C> <S>
*4.12 --Consulting Agreement, dated October 4, 1992, between
Registrant and Robert Langer.
*4.13 --Consulting Agreement, dated July 30, 1992, between
Registrant and John B. Martin.
*4.14 --Consulting Agreement, dated November 4, 1992, between
Registrant and Raphael Meloul.
*4.15 --Consulting Agreement, dated June 30, 1992, between
Registrant and David O. Williams, M.D.
*4.16 --Form of Fixed Rate Promissory Notes by Registrant, in the
aggregate principal amount of $1,500,150, at the interest
rate of 8.0% compounded annually.
5 --Opinion by Epstein Becker & Green, P.C., as to legality.
*10.1 --Form of Stock Option Plan of Registrant, as amended.
*+10.2 --License Agreement, dated January 30, 1996, between Emory
University and Registrant.
*+10.3 --Clinical Research Study Agreement, dated January 30, 1996,
by Emory University and Registrant.
*+10.4 --License Agreement, dated January 31, 1996, between Spencer
B. King III, M.D. and Registrant.
*+10.5 --Restenosis Therapy Project Development and Supply Agreement,
dated November 28, 1994, with Registrant, relating to the
supply of radioactive beta isotopes.
*+10.6 --Option to Purchase Assets Agreement dated August 22, 1995,
with Registrant relating to the purchase of assets of
Registrant's supplier of radioactive beta isotopes.
*10.7 --License/Product Supply Agreement, dated as of May 11, 1992,
by and among Sumitomo Bakelite Co., Ltd., Sumitomo Plastics
America, Inc., Norman R. Weldon,
Thomas D. Weldon, Charles E. Larsen and Registrant.
*10.8 --Lease, dated July 9, 1992, between Weeks Master Partnership,
L.P. and Registrant, as amended.
*10.9(a) --Agreement, dated June 15, 1995, between NationsBank of
Georgia, N.A. and Registrant, superseding the indebtedness
originally evidenced by documents dated September 1994.
*10.9(b) --Continuing and Unconditional Guaranty dated September 15,
1994, by Charles Larsen.
*10.9(c) --Continuing and Unconditional Guaranty dated September 15,
1994, by
Thomas D. Weldon.
*10.9(d) --Continuing and Unconditional Guaranty, dated June 15, 1995,
by Norman R. Weldon.
11 --Computation of Per Share Earnings.
23.1 --Consent of Ernst & Young LLP (contained on page II-9).
23.2 --Consent of Epstein Becker & Green, P.C. (included in Exhibit
5).
*24 --Power of Attorney.
</TABLE>
- --------

* Previously filed.

+ Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.

(B) FINANCIAL STATEMENT SCHEDULES:

Schedules have been omitted for the reason that they are not required or are
not applicable or because the required information is included in the financial
statements or the notes thereto.

II-5
<PAGE>

ITEM 17. UNDERTAKINGS.

Registrant hereby undertakes to provide to the Underwriters at the closing
specified in the Purchase Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1993, as amended (the "Act") may be permitted to directors, officers and
controlling persons of Registrant pursuant to the provisions of its Amended
and Restated Certificate of Incorporation, its By-Laws, or otherwise,
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
for expenses incurred or paid by a director, officer or controlling person of
Registrant 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, Registrant 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 whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

Registrant hereby further undertakes that:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-6
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, REGISTRANT HAS
DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA,
STATE OF GEORGIA, ON THE 14TH DAY OF MAY, 1996.

Novoste Corporation

* Norman R. Weldon, Ph.D.
By: _________________________________

Norman R. Weldon, Ph.D.

Chairman of the Board

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

Chairman of the
* Norman R. Weldon, Ph.D. Board and Director May 14, 1996
- -------------------------------------
NORMAN R. WELDON, PH.D.

President, Chief
* Thomas D. Weldon Executive Officer May 14, 1996
- ------------------------------------- and Director
THOMAS D. WELDON (Principal
Executive Officer)

Vice President,
* William P. Lane Finance and Chief May 14, 1996
- ------------------------------------- Financial Officer
WILLIAM P. LANE (Principal
Financial and
Accounting Officer)

Director
* Charles E. Larsen May 14, 1996
- -------------------------------------
CHARLES E. LARSEN

* J. Stephen Holmes Director May 14, 1996
- -------------------------------------
J. STEPHEN HOLMES

* Richard M. Johnston Director May 14, 1996
- -------------------------------------
RICHARD M. JOHNSTON

II-7
<PAGE>

SIGNATURE TITLE DATE

Director
* Pieter J. Schiller May 14, 1996
- -------------------------------------
PIETER J. SCHILLER

Director
* Jack R. Kelly, Jr. May 14, 1996
- -------------------------------------
JACK R. KELLY, JR.

Director
* William E. Whitmer May 14, 1996
- -------------------------------------
WILLIAM E. WHITMER

/s/ Norman R. Weldon, Ph.D.
*By: ___________________________

NORMAN R. WELDON, PH.D.,
ATTORNEY-IN-FACT

II-8
<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our report dated February 9,
1996 in the Registration Statement (Form S-1 No. 333-3374) and related
Prospectus of Novoste Corporation for the Registration of 2,000,000 shares of
its Common Stock.

Ernst & Young LLP

Atlanta, Georgia

May 14, 1996

II-9
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
------- ----------- --------
<C> <S> <C>
*1 --Form of Underwriting Agreement.
*3.1 --Articles of Incorporation of Registrant, as amended.
*3.2 --Form of Amended and Restated Articles of Incorporation of
Registrant to be filed prior to the closing of this
offering.
*3.3 --Form of Amended and Restated By-Laws of Registrant to be
adopted prior to the closing of this Offering.
4.1 --Form of Specimen Common Stock Certificate of Registrant.
*4.2 --Registration Rights Agreement, dated July 28, 1995, by
and among Registrant, Norman R. Weldon, Thomas D. Weldon,
Charles E. Larsen, the Hillman Investors (as defined
therein), Noro-Moseley Partners-III, L.P. and Advanced
Technology Ventures IV, L.P.
*4.3 --Registration Rights Agreement, dated April 26, 1995,
between Registrant and ABS Employees' Venture Fund Limited
Partnership.
*4.4 --Registration Rights Agreement, dated September 20, 1995,
between Registrant and Karen C. Vinjamuri.
*4.5 --Stock Purchase Warrant, dated September 24, 1993, between
Registrant and The Kriegsman Group.
*4.6 --Stock Purchase Warrant, dated March 24, 1994, between
Registrant and The Kriegsman Group.
*4.7 --Stock Purchase Warrant, dated August 1995, between
Registrant and The Kriegsman Group.
*4.8 --Stock Purchase Warrant, dated December 1, 1995, between
Registrant and The Kriegsman Group.
*4.9 --Consulting Agreement, dated July 30, 1992, between
Registrant and Spencer B. King III, M.D.
*4.10 --Consulting Agreement, dated February 1, 1996, between
Registrant and Spencer B.
King III, M.D.
*4.11 --Consulting Agreement, dated February 1, 1993, between
Registrant and Harry A. Kopelman, M.D.
*4.12 --Consulting Agreement, dated October 4, 1992, between
Registrant and Robert Langer.
*4.13 --Consulting Agreement, dated July 30, 1992, between
Registrant and John B. Martin.
*4.14 --Consulting Agreement, dated November 4, 1992, between
Registrant and Raphael Meloul.
*4.15 --Consulting Agreement, dated June 30, 1992, between
Registrant and David O. Williams, M.D.
*4.16 --Form of Fixed Rate Promissory Notes by Registrant, in the
aggregate principal amount of $1,500,150, at the interest
rate of 8.0% compounded annually.
5 --Opinion by Epstein Becker & Green, P.C., as to legality.
*10.1 --Form of Stock Option Plan of Registrant, as amended.
*+10.2 --License Agreement, dated January 30, 1996, between Emory
University and Registrant.
*+10.3 --Clinical Research Study Agreement, dated January 30,
1996, by Emory University and Registrant.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
------- ----------- --------
<C> <S> <C>
*+10.4 --License Agreement, dated January 31, 1996, between
Spencer B. King III, M.D. and Registrant.
*+10.5 --Restenosis Therapy Project Development and Supply
Agreement, dated November 28, 1994, with Registrant,
relating to the supply of radioactive beta isotopes.
*+10.6 --Option to Purchase Assets Agreement dated August 22,
1995, with Registrant relating to the purchase of assets
of Registrant's supplier of radioactive beta isotopes.
*10.7 --License/Product Supply Agreement, dated as of May 11,
1992, by and among Sumitomo Bakelite Co., Ltd., Sumitomo
Plastics America, Inc., Norman R. Weldon,
Thomas D. Weldon, Charles E. Larsen and Registrant.
*10.8 --Lease, dated July 9, 1992, between Weeks Master
Partnership, L.P. and Registrant, as amended.
*10.9(a) --Agreement, dated June 15, 1995, between NationsBank of
Georgia, N.A. and Registrant, superseding the
indebtedness originally evidenced by documents dated
September 1994.
*10.9(b) --Continuing and Unconditional Guaranty dated September
15, 1994, by Charles Larsen.
*10.9(c) --Continuing and Unconditional Guaranty dated September
15, 1994, by
Thomas D. Weldon.
*10.9(d) --Continuing and Unconditional Guaranty, dated June 15,
1995, by Norman R. Weldon.
11 --Computation of Per Share Earnings.
23.1 --Consent of Ernst & Young LLP (contained on page II-9).
23.2 --Consent of Epstein Becker & Green, P.C. (included in
Exhibit 5).
*24 --Power of Attorney.
</TABLE>
- --------

* Previously filed.

+ Portions have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.

<PAGE>

[LOGO] Novoste/TM/

NUMBER SHARES

NOVOSTE CORPORATION

INCORPORATED UNDER THE LAWS SEE REVERSE FOR
OF THE STATE OF FLORIDA CERTAIN DEFINITIONS

THIS IS TO CERTIFY THAT CUSIP 670100 10 0

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK
OF THE PAR VALUE OF $.01 PER SHARE OF

- ----------------------------NOVOSTE CORPORATION--------------------------------

transferable upon the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.

Dated:

/s/ Cheryl R. Johnson [NOVOSTE CORPORATION SEAL] /s/ Thomas D. Weldon

SECRETARY PRESIDENT

COUNTERSIGNED AND REGISTERED
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK) TRANSFER AGENT
AND REGISTRAR
by AUTHORIZED SIGNATURE

<PAGE>

The Corporation will furnish without charge to each shareholder who so
requests a statement of the designations, relative rights, preferences, and
limitations applicable to each class of shares and the variations in rights,
preferences, and limitations determined for each series thereof (and the
authority of the Board of Directors to determine variations for future series).
Such request may be addressed to the Secretary of the Corporation or to the
Transfer Agent and Registrar named on the face of this Certificate.

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM--as tenants in common UNIF GIFT MIN ACT--_______Custodian_________
TEN ENT--as tenants by the (Class) (Minor)
entireties under Uniform Gifts to
IT TEN--as joint tenants with Minors Act_____________
right of survivorship and (State)
not as tenants in common

Additional abbreviations may also be used though not in the above list.

For value received, _____________________________ hereby sell, assign and
transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------

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

- -----------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

_____________________________________________________________________________

______________________________________________________________________ shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated___________________________

----------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.

- -------------------------------------------------------------------------------
AMERICAN BANKNOTE COMPANY PRODUCTION COORDINATOR-TRICIA O'CONNOR
660 S AIR MILL ROAD 215-030-2190 PROOF OF MAY 13, 1996
HORSHAM, PA 18044 NOVOSTE
215-857-3400 H 4391 bk
- -------------------------------------------------------------------------------
SALESPERSON: R JOHNS 212-682-9200 Opr eg/h/c/eg REV 2
- -------------------------------------------------------------------------------
/home/ed/progress/home13/Novoste49691 /net/banknote/home13/N
- -------------------------------------------------------------------------------

<PAGE>

EXHIBIT 5

[LETTERHEAD OF EPSTEIN BECKER & GREEN, P.C.]

351-4500

May 14, 1996

Novoste Corporation
4350-C International Blvd.
Norcross, Georgia 30093

Ladies and Gentlemen:

We have acted as counsel to Novoste Corporation (the "Company") in
connection with its filing of a registration statement on Form S-1 (File No.
333-3374, such registration statement, as amended at the time of its
effectiveness, hereinafter the "Registration Statement") covering shares of the
Company's authorized and unissued shares of Common Stock, $.01 par value,
including shares subject to an over-allotment option (collectively, the
"Shares").

As such counsel, we have examined original copies, or copies certified to
our satisfaction, of the corporate records of the Company, agreements and other
instruments, certificates of public officials and such other documents as we
deemed necessary as a basis for the opinion hereinafter set forth.

On the basis of the foregoing, we are of the opinion that the Shares have
been validly authorized and, when sold as contemplated by the Registration
Statement, will be legally issued, fully paid and nonassessable.
<PAGE>

Novoste Corporation
May 14, 1996
Page 2

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference made to us under the caption "Legal
Matters" in the prospectus constituting part of the Registration Statement.

Very truly yours,

EPSTEIN BECKER & GREEN, P.C.

By: /s/ Seth I. Truwit
----------------------------
Seth I. Truwit, Esq.

<PAGE>

EXHIBIT 11

NOVOSTE CORPORATION

COMPUTATION OF EARNINGS (LOSS) PER SHARE

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED THREE MONTHS THREE MONTHS
DECEMBER 31, DECEMBER 31, DECEMBER 31, ENDED ENDED
1993 1994 1995 MARCH 31, 1995 MARCH 31, 1996
------------ ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
PRIMARY
Weighted average number
of shares of common
stock outstanding
during the year........ 2,248,179 2,836,896 3,476,736 3,346,944 3,752,811
Effect of dilutive
common stock
equivalents outstanding
during the year........ -- -- -- -- --
Effect of common stock
issued and stock
options and warrants
granted during the 12-
month period preceding
April 11, 1996(1)...... 1,194,411 1,194,411 1,194,411 1,194,411 1,194,411
----------- ----------- ----------- --------- -----------
Total common and common
equivalent shares...... 3,442,590 4,031,307 4,671,147 4,541,355 4,947,222
=========== =========== =========== ========= ===========
Net loss................ $(1,325,229) $(2,195,689) $(3,218,026) $(627,543) $(1,210,661)
=========== =========== =========== ========= ===========
Net loss per share...... $ (0.38) $ (0.54) $ (0.69) $ (0.14) $ (0.24)
=========== =========== =========== ========= ===========
FULLY DILUTED
Weighted average number
of shares of common
stock outstanding
during the year........ 2,248,179 2,836,896 3,476,736 3,346,944 3,752,811
Effect of dilutive
common stock
equivalents outstanding
during the year........ -- -- -- -- --
Effect of common stock
issued and stock
options and warrants
granted during the 12-
month period preceding
April 11, 1996(1)...... 1,194,411 1,194,411 1,194,411 1,194,411 1,194,411
----------- ----------- ----------- --------- -----------
Total common and common
equivalent shares...... 3,442,590 4,031,307 4,671,147 4,541,355 4,947,222
=========== =========== =========== ========= ===========
Net loss................ $(1,325,229) $(2,195,689) $(3,218,026) $(627,543) $(1,210,661)
=========== =========== =========== ========= ===========
Net loss per share...... $ (0.38) $ (0.54) $ (0.69) $ (0.14) $ (0.24)
=========== =========== =========== ========= ===========
</TABLE>
- --------
(1) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, Common Stock issued and stock options and warrants granted at
prices below the initial public offering price per share during the 12-
month period immediately preceding the initial filing date of the
Company's Registration Statement for its initial public offering have been
included as outstanding for all periods presented using the treasury stock
method.