General Surgical Innovations was co-founded in April 1992 by Dr. Thomas Fogarty, who remains a director of the Company today. Since its inception, GSI has been a pioneer in the techniques of balloon dissection technology as applied to minimally invasive surgery. The Company has worked with Dr. Peter Bonutti, an orthopaedic surgeon practicing in Effingham, Illinois, and with Dr. Maciej Kieturakis, a surgeon practicing in the San Francisco Bay Area, with regard to innovations in balloon dissection. Many of the Company's patents are based on inventions made by Dr. Bonutti and by Dr. Kieturakis.

In September 1993, after a brief development period, the Company began commercial sales of its balloon dissection systems for minimally invasive hernia repair under the trademark SPACEMAKER^®. In March 1994, GSI contracted with U.S. Surgical Corporation (USSC) to distribute the Company's balloon dissection systems in the hernia repair market. In February 1996, GSI acquired Adjacent Surgical, Inc., a company engaged in the development of balloon dissection systems for use in vascular applications. In November 1996, GSI terminated its distribution agreement with USSC. In December 1996, GSI entered into an OEM supply agreement with Ethicon EndoSurgery, a division of Johnson and Johnson, to sell SPACEMAKER^® balloon dissection systems in the minimally invasive hernia repair and stress urinary incontinence markets. In October 1997, the Company received its CE mark certification, pursuant to the Medical Devices Directive, which enables the Company to affix CE marking on its products and sell them within the European Economic Community.

Industry Background
Much of the trauma suffered in connection with open surgery is a result of gaining access to the surgical site. Open surgery often involves:
Large incisions through several layers of muscle and tissue, which may cause muscle or nerve damage, bleeding, scarring, infection, temporary or permanent debilitation and pain.
Extended operating times, exposing the patient to the risks of general anesthesia, lengthy hospitalization and prolonged recovery.
Severe trauma, which often prevents the elderly and weak from undergoing some surgical procedures, thereby depriving them of treatment.

Minimally invasive surgery (MIS) techniques have overcome many of the disadvantages outlined above, but have generally been applied only to procedures conducted within the abdominal cavity. Despite the documented benefits of MIS within the abdominal cavity, broad adoption of MIS for other procedures has been limited due to absence of other cavities suitable for use as surgical operating spaces. (MIS represented only about 15% of all surgical procedures performed in the U.S. in 1995). With the advent of GSI's balloon dissection technology, however, simple, atraumatic access to these new sites became available, and the performance of extraperitoneal procedures utilizing minimally invasive techniques is now increasing steadily.

GSI Solution
GSI develops and distributes surgical instruments that can facilitate the adoption of MIS for this broader range of surgical procedures. GSI's proprietary balloon dissection products create a predictable working space for a surgical procedure by separating natural tissue layers in the body. Because working spaces can be created at many different tissue levels, GSI's SPACEMAKER^® products have been adapted for breast augmentation and reconstruction, tissue flap harvesting for reconstruction, saphenous vein harvesting, subfascial endoscopic perforator surgery (SEPS), tissue expansion, hernia repair, and treatment of stress urinary incontinence.