CARDIOTECH INTERNATIONAL INC
10QSB, 2000-11-14
PHARMACEUTICAL PREPARATIONS
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB

(Mark  One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF  1934

                For the quarterly period ended September 30, 2000

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR 15(d) OF THE SECURITIES
     EXCHANGE  ACT  OF  1934

              For the transition period from _________ to _________
                          Commission File No.  0-28034
                                              --------

                         CardioTech International, Inc.
                         -----------------------------
           (Name of small business issuer as specified in its charter)

            Massachusetts                  04-3186647
    ------------------------------    -------------------
    State or other jurisdiction of     (I.R.S. Employer
    incorporation or organization     Identification No.)

      78 E Olympia Avenue, Woburn, Massachusetts          01801
   ------------------------------------------------     ----------
      (Address of principal executive offices)          (Zip Code)

Registrant's  telephone  number,  including  area  code     (781) 933-4772
                                                            --------------

The number of shares outstanding of the registrant's class of Common Stock as of
October  31,  2000  was  8,470,364.  No  shares  were  held  in  treasury.


<PAGE>
<TABLE>
<CAPTION>
                               CARDIOTECH INTERNATIONAL, INC.
                                       FORM 10-QSB
                          FOR THE QUARTER ENDED SEPTEMBER 30, 2000


                                   TABLE OF CONTENTS

                                                                                       Page
                                                                                       ----
<S>                                                                                    <C>
PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

         Condensed Consolidated Balance Sheets at
           September 30, 2000, and March 31, 2000                                         3

         Condensed Consolidated Statements of Operations for the three months and
           six months ended September 30, 2000 and 1999                                   4

         Condensed Consolidated Statements of Cash Flows for the
           six months ended September 30, 2000 and 1999                                   5

         Notes to Condensed Consolidated Financial Statements                           6-7

Item 2 - Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                           8-11

PART II - OTHER INFORMATION

Item 4 - Submission of Matters to a Vote of Security Holders                             12

Item 6 - Exhibits and Reports on Form 8-K                                                12

Signatures                                                                               13
</TABLE>


<PAGE>
PART  I.  FINANCIAL  INFORMATION
ITEM  1.    FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>
                               CARDIOTECH INTERNATIONAL, INC.
                           CONDENSED CONSOLIDATED BALANCE SHEETS


                                                              SEPTEMBER 30,     MARCH 31,
                                                                  2000            2000
                                                             ---------------  -------------
                                                               (UNAUDITED)
<S>                                                          <C>              <C>
ASSETS
Current Assets:
  Cash and cash equivalents                                  $    1,279,000   $  1,793,000
  Accounts receivable -- trade                                      180,000        102,000
  Accounts receivable -- other                                      364,000        343,000
  Inventory                                                         116,000        135,000
  Prepaid expenses                                                  122,000         53,000
                                                             ---------------  -------------
    Total Current Assets                                          2,061,000      2,426,000

Property and equipment, net                                         504,000        535,000
Other non-current assets                                          1,060,000      1,203,000
                                                             ---------------  -------------

    Total Assets                                             $    3,625,000   $  4,164,000
                                                             ===============  =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
  Accounts payable                                           $      565,000   $    654,000
  Accrued expenses                                                  539,000        608,000
  15% convertible subordinated notes due 2000                       527,000        575,000
                                                             ---------------  -------------
    Total Current Liabilities                                     1,631,000      1,837,000

Long Term Obligations:
7% convertible senior notes due 2003                              2,339,000      2,259,000
                                                             ---------------  -------------

    Total Liabilities                                             3,970,000      4,096,000
                                                             ---------------  -------------

Commitments and Contingencies

Stockholders' (Deficit) Equity:
  Common stock, $.01 par value, 20,000,000 shares
     authorized, 8,470,364 and 8,099,067 shares issued and
     outstanding at September 30, 2000 and March 31, 2000,
     respectively                                                    85,000         81,000
  Additional paid-in capital                                     14,516,000     14,092,000
  Accumulated deficit                                           (14,818,000)   (13,931,000)
  Notes receivable from officers                                   (150,000)      (150,000)
  Accumulated other comprehensive income (loss)                      22,000        (24,000)
                                                             ---------------  -------------
    Total Stockholders' (Deficit) Equity                           (345,000)        68,000
                                                             ---------------  -------------

    Total Liabilities and Stockholders' (Deficit) Equity     $    3,625,000   $  4,164,000
                                                             ===============  =============
</TABLE>

    The accompanying notes are an integral part of these condensed consolidated
                              financial statements.


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                 CARDIOTECH INTERNATIONAL, INC.
                         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                           (UNAUDITED)


                                                THREE MONTHS ENDED         SIX MONTHS ENDED
                                                  SEPTEMBER 30,              SEPTEMBER 30,
                                                2000         1999         2000          1999
                                             -----------  -----------  -----------  ------------
<S>                                          <C>          <C>          <C>          <C>
Revenue:
  Product sales                              $  239,000   $  153,000   $  466,000   $   203,000
  Research grants and contracts                  94,000      139,000      161,000       283,000
  Royalties                                     115,000       89,000      240,000       114,000
                                             -----------  -----------  -----------  ------------
                                                448,000      381,000      867,000       600,000
                                             -----------  -----------  -----------  ------------
Operating Expense:
Cost of sales                                   278,000      194,000      529,000       425,000
Research and development                        111,000      255,000      281,000       626,000
Selling, general and administrative             468,000      556,000      910,000     1,057,000
                                             -----------  -----------  -----------  ------------
                                                857,000    1,005,000    1,720,000     2,108,000

Loss from operations                           (409,000)    (624,000)    (853,000)   (1,508,000)
                                             -----------  -----------  -----------  ------------

Interest Income and Expense:
Interest expense                                (54,000)     (43,000)    (107,000)      (85,000)
Interest income                                  35,000       12,000       74,000        36,000
                                             -----------  -----------  -----------  ------------
                                                (19,000)     (31,000)     (33,000)      (49,000)
                                             -----------  -----------  -----------  ------------

Net loss                                     $ (428,000)  $ (655,000)  $ (886,000)  $(1,557,000)
                                             ===========  ===========  ===========  ============

Other comprehensive income (loss):
Foreign currency translation adjustments         29,000       (3,000)      46,000        (3,000)
                                             -----------  -----------  -----------  ------------

Comprehensive loss                           $ (399,000)  $ (658,000)  $ (840,000)  $(1,560,000)
                                             ===========  ===========  ===========  ============


Net loss per common share basic and diluted  $    (0.05)  $    (0.10)  $    (0.11)  $     (0.24)
                                             ===========  ===========  ===========  ============

Shares used in computing Net Loss
  per common share, basic and diluted         8,438,637    6,585,069    8,342,546     6,365,650
                                             ===========  ===========  ===========  ============
</TABLE>

    The accompanying notes are an integral part of these condensed consolidated
                              financial statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                         CARDIOTECH INTERNATIONAL, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


                                                            SIX MONTHS ENDED
                                                             SEPTEMBER 30,
                                                          2000          1999
                                                       -----------  ------------
<S>                                                    <C>          <C>
Cash flows from operating activities:
  Net Loss                                             $ (886,000)  $(1,557,000)
  Adjustments to reconcile net loss to net
  cash used by operating activities:
    Interest on convertible senior notes                   80,000        64,000
    Depreciation and amortization                         160,000       143,000
    Changes in assets and liabilities: (net of effects
        of Tyndale Plains-Hunter acquisition in 1999)
      Accounts receivable                                 (99,000)      (62,000)
      Inventory                                            19,000       (32,000)
      Prepaid expenses                                    (69,000)      (41,000)
      Other non-current assets                                  -      (140,000)
      Accounts payable                                    (89,000)       80,000
      Accrued expenses and other current liabilities      (69,000)       (7,000)
                                                       -----------  ------------

    Net cash used by operating activities                (953,000)   (1,552,000)
                                                       -----------  ------------

Cash flows from investing activities:
    Purchase of property and equipment                    (36,000)      (44,000)
    Acquisition of Tyndale Plains-Hunter, net                   -      (327,000)
                                                       -----------  ------------

    Net cash used by investing activities                 (36,000)     (371,000)
                                                       -----------  ------------

Cash flows from financing activities:
  Net proceeds from issuance of common stock              467,000             -
  Net proceeds from issuance of convertible notes               -       340,000
                                                       -----------  ------------

    Net cash provided by financing activities             467,000       340,000
                                                       -----------  ------------

    Effect of exchange rate changes on cash                 8,000       (20,000)
                                                       -----------  ------------

    Net decrease in cash and cash equivalents            (514,000)   (1,603,000)

    Cash and cash equivalents at beginning of period    1,793,000     2,392,000
                                                       -----------  ------------

    Cash and cash equivalents at end of period         $1,279,000   $   789,000
                                                       ===========  ============
</TABLE>

    The accompanying notes are an integral part of these condensed consolidated
                              financial statements.


                                        5
<PAGE>
                         CARDIOTECH INTERNATIONAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (UNAUDITED)

1.     The unaudited consolidated financial statements included herein have been
prepared  by  CardioTech  International,  Inc.  (including  its  subsidiaries,
collectively  "CardioTech"  or  "the  Company"),  without audit, pursuant to the
rules  and regulations of the Securities and Exchange Commission and include, in
the  opinion  of  management,  all  adjustments, consisting of normal, recurring
adjustments,  necessary  for a fair presentation of interim period results.  The
preparation  of  financial  statements  in  conformity  with  generally accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities,  and disclosure of
contingent  assets  and liabilities at the date of the financial statements, and
the  reported  amounts  of  revenues  and  expenses during the reporting period.
Actual  results  could  differ  from  those  estimates.  Certain information and
footnote  disclosures  normally  included  in  financial  statements prepared in
accordance  with generally accepted accounting principles have been condensed or
omitted  pursuant to such rules and regulations.  The Company believes, however,
that  its  disclosures  are  adequate  to  make  the  information  presented not
misleading.  The  results  for the interim periods presented are not necessarily
indicative  of  results to be expected for the full fiscal year. It is suggested
that  these  statements  be  read in conjunction with the Company's Consolidated
Financial  Statements  and its notes thereto, for the year ended March 31, 2000,
included  in  the  Company's  Annual  Report  to  shareholders.

2.     The Company computes basic and diluted earnings/loss per share ("EPS") in
accordance  with  Statement of Financial Accountings Standards No. 128, Earnings
Per  Share.  Basic  earnings/loss  per  share is based upon the weighted average
number of common shares outstanding during the period. Diluted earnings/loss per
share  is  based  upon  the weighted average number of common shares outstanding
during  the  period  plus  additional  weighted average common equivalent shares
outstanding  during the period. Common equivalent shares result from the assumed
exercise  of  outstanding  stock options and warrants, the proceeds of which are
then  assumed to have been used to repurchase outstanding common stock using the
treasury  stock  method.  Common  equivalent  shares have been excluded from the
computation of diluted loss per share for all periods presented, as their effect
would  have  been  anti-dilutive.

     Common  equivalent  shares  result from the assumed exercise of outstanding
stock  options and warrants, the proceeds of which are then assumed to have been
used  to  repurchase  outstanding  common stock using the treasury stock method.
Options  to  purchase 2,381,428 and 1,308,055 shares of common stock outstanding
during  the  periods  ended  September  30,  2000  and  1999, respectively, were
excluded  from  the calculation of diluted earnings per share because the effect
of  their  inclusion  would  have  been  anti-dilutive.

3.     On  August  4,  2000,  CardioTech  entered into a Heads of Agreement (the
"Agreement")  with Nervation Limited ("Nervation"), FreeMedic PLC ("FreeMedic"),
CardioTech  International, Ltd ("CTL"), and certain members of the management of
CTL  (the  "Management")  to  divest  itself of CTL through the sale of its 100%
common  stock  ownership  in  CTL to Nervation.  The shareholders of the Company
approved  the  divestiture  of  CTL  at  the Annual Meeting of Shareholders held
October  26,  2000.  Nervation,  a  newly  formed UK company, is composed of key
members  of CTL's management, together with FreeMedic, a wholly owned subsidiary
of  University  College  London  based  at  the Royal Free Campus of its Medical
School.  The  newly  formed  management  team has accessed financing commitments
through  Winchester Capital Technology Partners, including $7,000,000 in cash to
be  used in connection with the purchase of all of the outstanding shares of CTL
from CardioTech.  In addition to CardioTech's receipt of $7,000,000 in cash, the
proposed  transaction will also benefit CardioTech as it involves the release of
certain  liabilities  and obligations, in particular, the release of a guarantee
of  $540,000 in CTL debt to FreeMedic in exchange for equity in Nervation.  As a
result  of the proposed transaction, Nervation will have the exclusive rights to
the  VascuLink  Vascular  Access  Graft  and  the MyoLink Arterial Bypass Graft.
CardioTech  will  retain  the exclusive rights to the CardioPass Coronary Artery
Bypass  Graft.  CardioTech  will also enter into a long term Supply agreement to
provide  "ChronoFlex  RC"  to Nervation, including a $200,000 advance payment on
supplies  to  be delivered to Nervation.  Nervation will supply grafts necessary


                                        6
<PAGE>
for  CardioTech's  pre-clinical  trials of the Coronary Artery Bypass Graft.  In
connection  with  this  transaction,  CardioTech  will redeem approximately $2.1
million  to  retire  part  of a long-term note held by Dresdner Kleinwort Benson
Private  Equity Partners, LP ("DKBPEP").  Also, the Company will grant Nervation
an  option  to  become  the  exclusive distributor of the Coronary Artery Bypass
Graft  in  EEA countries if CE marking is received for the product.  Despite the
fact that the Board of Directors and shareholders have approved the transaction,
and  DKBPEP  has  provided  its consent, there can be no assurances that a final
agreement will be reached with Nervation in which event CTL would not be sold to
them,  and the long term note to DKBPEP would not be relieved.  In addition, the
terms of the final agreement may change from that of the terms of the Agreement.
In  such event, the officers of the Company will enter into the final agreements
on  terms  that they believe are substantially similar to the terms as set forth
in  the  Agreement.


                                        7
<PAGE>
ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
             RESULTS  OF  OPERATIONS

OVERVIEW

     CardioTech  International,  Inc.  (including its subsidiaries, collectively
"CardioTech" or the "Company") is using its proprietary manufacturing technology
to  develop  and  manufacture  small  bore  vascular  grafts, or synthetic blood
vessels,  made  of  ChronoFlex,  a  family  of  polyurethanes  that  has  been
demonstrated  to  be  biocompatible  and non-toxic.  Vascular grafts are used to
replace,  bypass or provide a new lining or arterial wall for occluded, damaged,
dilated  or  severely  diseased arteries and are also used to provide access for
patients  undergoing  hemodialysis  treatments.  The  Company  develops layered,
microporous  small  bore  vascular grafts.  The Company has developed a vascular
access graft, called the VascuLink Vascular Access Graft and is developing (i) a
peripheral  graft,  called  the  MyoLink  Peripheral  Graft, and (ii) a coronary
artery  bypass  graft,  called  the  CardioPass  Coronary  Artery  Bypass Graft.

     Blood  is pumped from the heart throughout the body via arteries.  Blood is
returned  to  the heart at relatively low pressure via veins, which have thinner
walls  than  arteries  and  have  check  valves which force blood to move in one
direction.  Because  a  specific  area of the body is often supplied by a single
main  artery;  rupture,  severe  narrowing  or occlusion of the artery supplying
blood  to  that  area  is likely to cause an undesirable or catastrophic medical
outcome.

     Vascular grafts are used to replace or bypass occluded, damaged, dilated or
severely  diseased  arteries  and  are  sometimes  used to provide access to the
bloodstream  for  patients  undergoing  hemodialysis treatments.  Existing small
bore  graft technologies suffer from a variety of disadvantages in the treatment
of  certain  medical  conditions,  depending  upon  the  need for biodurability,
compliance  (elasticity)  and  other  characteristics  necessary  for  long-term
interface  with  the  human  body.

     CardioTech  is  developing  its  grafts  using  specialized  ChronoFlex
polyurethane  materials  that  it  believes  will provide significantly improved
performance  in  the  treatment  of  arterial  disorders.  The grafts have three
layers,  similar  to natural arteries and are designed to replicate the physical
characteristics  of  human  blood  vessels.

     Additionally,  through  its  Biomaterials  division,  the Company develops,
manufactures  and  markets polyurethane-based biomaterials for use in both acute
and  chronically  implanted  devices  such  as  stents,  artificial  hearts, and
vascular  ports.  These  premium  biomaterials  are  sold  under the tradenames:
ChronoFlex,  ChronoThane,  HydroThane,  ChronoFilm,  HydroMed  and  Hydroslip.

     CardioTech  owns  a  number  of  patents  relating  to  its  vascular graft
manufacturing  technology.  In  addition,  PolyMedica  Corporation  ("PMI")  has
granted  to  CardioTech an exclusive, perpetual, worldwide, royalty-free license
for  the  use  of  one  polyurethane  patent and related technology in the field
consisting  of  the  development,  manufacture  and  sale of implantable medical
devices  and biodurable polymer material to third parties for the use in medical
applications  (the  "Implantable  Device  and Materials Field").  PMI also owns,
jointly  with  Thermedics, Inc., the ChronoFlex polyurethane patents relating to
the ChronoFlex technology ("Joint Technology".)  PMI has granted to CardioTech a
non-exclusive,  perpetual,  worldwide,  royalty-free sublicense of these patents
for  use  in  the  Implantable  Devices  and  Materials  Field.

     The  Company  was founded in 1993 as a subsidiary of PMI. In June 1996, PMI
distributed  all  of the shares of CardioTech's common stock, par value $.01 per
share,  that  PMI  owned  to PMI stockholders of record as of June 3, 1996.  The
Company  is  headquartered  in  Woburn,  Massachusetts and also has a production
facility  in  Wrexham,  Brymbo  U.K.

     ChronoFilm  is  a registered trademark of PMI.  ChronoFlex, is a registered
trademark  of  CardioTech.  ChronoThane,  ChronoPrene, HydroThane, PolyBlend and
PolyWeld are tradenames of CardioTech. DuraGraft, VascuLink, MyoLink, CardioPass
are  trademarks  of  CardioTech.


                                        8
<PAGE>
RESULTS  OF  OPERATIONS

     Comparison  for  the  Three  Months  Ended  September  30,  2000  and 1999.

     Revenue  for  the  three  months  ended  September 30, 2000 was $448,000 as
compared  to $381,000 for the three months ended September 30, 1999, an increase
of  $67,000,  or  18%.  This  increase  was primarily the result of increases in
biomaterials  sales  and  related  royalties on biomaterial licenses of $83,000.
Product  sales  includes $29,000 of Vascular Grafts in the current quarter which
did not exist in the prior year quarter.  The increases in product and royalties
revenues  were offset by a decrease in research grant revenues of $45,000 due to
the  completion  of  NIH  grants  in  the  current  quarter.

     Cost of sales for the three months ended September 30, 2000 was $278,000 as
compared  to $194,000 for the three months ended September 30, 1999, an increase
of  $84,000,  or  43%.  This increase is directly related to the increase in the
level  of  biomaterial  sales.

     Research  and  development expense for the three months ended September 30,
2000  was  $111,000 as compared to $255,000 for the three months ended September
30,  1999,  a  decrease  of  $144,000,  or 56%.  This decrease was the result of
decreased  research  and  clinical  expenses  on  the Vascular Graft, which were
completed  in  the  last  fiscal year, and the completion of an NIH grant in the
current  quarter.

     Selling,  general  and  administrative  expense  for the three months ended
September  30,  2000  was  $468,000 as compared to $556,000 for the three months
ended September 30, 1999, a decrease of $88,000 or 16%.  This reduction reflects
the  favorable  impact  of  management's cost containment measures and continued
efforts  to  maintain  strict  controls  over  such  expenditures.

     Net  interest  expense  for  the  three months ended September 30, 2000 was
$19,000  as compared to $31,000 for the three months ended September 30, 1999, a
decrease of $12,000 or 39%.  The decrease primarily resulted from an increase in
interest  income  of  $23,000 on excess cash held in money market funds, and was
partially  offset  by  an increase in interest expense of $11,000 on outstanding
loans  during  the  period.

     Net  loss  for  the  three  months ended September 30, 2000 was $428,000 as
compared  to  $655,000 for the three months ended September 30, 1999, a decrease
in  net  loss  of $227,000 or 35%.  The decrease in net loss is attributable, in
part,  to  the increase in revenues generated from biomaterial sales and related
royalties,  decreases in costs associated with the completion of clinical trials
on  the  Vascular  Graft  and  completion  of  an  NIH grant, and continued cost
containment  measures  as implemented by management.  Net loss per share for the
three  months  ended September 30, 2000 was $0.05 per share as compared to $0.10
per  share for the three months ended September 30, 1999, a decrease in net loss
per  share  of  $0.05,  or  50%.

     Comparison  for  the  Six  Months  Ended  September  30,  2000  and  1999.

     Revenue  for  the  six  months  ended  September  30,  2000 was $867,000 as
compared to $600,000 for the six months ended September 30, 1999, an increase of
$267,000,  or 45%.  This increase was primarily the result of additional revenue
from  biomaterial  sales  and  related  royalties  that  were  derived  from the
Company's  core  biomaterial  products  as  well as increases resulting from its
Tyndale Plains-Hunter.  The increase was partially offset by a decrease in grant
revenues  resulting  from  the  completion  of  an  NIH  grant.

     Cost  of  sales for the six months ended September 30, 2000 was $529,000 as
compared to $425,000 for the six months ended September 30, 1999, an increase of
$104,000,  or  24%.  This  increase is primarily attributable to the increase in
the  level  of  biomaterial  sales.

     Research  and  development  expense  for the six months ended September 30,
2000 was $281,000 as compared to $626,000 for the six months ended September 30,
1999, a decrease of $345,000, or 55%.  This decrease was the result of decreased
research  and  clinical  expenses on the Vascular Graft, which were completed in
the  last  fiscal year, and the completion of an NIH grant in the second quarter
of  fiscal  2001.

     Selling,  general  and  administrative  expense  for  the  six months ended
September  30,  2000  was  $910,000 as compared to $1,057,000 for the six months
ended  September  30,  1999,  a  decrease of $147,000 or 14%.  This decrease was
primarily  due  to  decreased salaries and employee related costs resulting from
headcount  reductions  in the prior fiscal year.  Additionally, the reduction in
selling,  general  and administrative expenses continue to be favorably affected
by  management's  implementation  of  cost  containment  measures.


                                        9
<PAGE>
     Net  interest  expense  for  the  six  months  ended September 30, 2000 was
$33,000 as compared to $49,000 for the six months ended September 30, 1999.  The
decrease  primarily  resulted  from an increase in interest income of $38,000 on
excess  cash held in money market funds, and was partially offset by an increase
in  interest  expense  of  $22,000  on  outstanding  loans  during  the  period.

     Net  loss  for  the  six  months  ended  September 30, 2000 was $886,000 as
compared  to  $1,557,000 for the six months ended September 30, 1999, a decrease
in  net  loss  of $671,000 or 43%.  The decrease in net loss is attributable, in
part,  to  the increase in revenues generated from biomaterial sales and related
royalties,  decreases in costs associated with the completion of clinical trials
on  the  Vascular  Graft  and  completion  of  an  NIH grant, and continued cost
containment  measures  as implemented by management.  Net loss per share for the
six months ended September 30, 2000 was $0.11 per share as compared to $0.24 per
share  for  the  six  months  ended June 30, 1999, or a decrease in net loss per
share  of  $0.13,  or  54%.

LIQUIDITY  AND  CAPITAL  RESOURCES

     The  Company  used  $953,000 to fund operations during the six months ended
September 30, 2000 compared to $1,552,000 for the six months ended September 30,
1999.  The  principal  uses of funds for the six months ended September 30, 2000
were  to  fund  a  net  loss  of $886,000, an increase in accounts receivable of
$99,000,  an increase in prepaid expenses of $69,000, and a decrease in accounts
payable  and  accrued  expenses  of  $158,000.  The  uses of operating cash were
offset  by  the  effect  of  non-cash  items  that  included interest accrued on
convertible  senior  notes  of  $80,000  and  depreciation  and  amortization of
$160,000.

     The Company issued a total of 371,363 shares of common stock during the six
months  ended  September  30,  2000  as a result of the exercise of common stock
purchase  warrants  and  employee  incentive  stock options.  As a result of the
exercise  of  warrants  to  purchase  the  Company's  common  stock, the Company
received  proceeds  of  $82,000.  In  addition, the Company received proceeds of
$385,000  upon  the  exercise  of  employee  incentive  stock  options.

     CardioTech's future growth will depend upon its ability to raise capital to
support  research and development activities and to market and sell its vascular
graft  technology.  Through September 30, 2000, CardioTech continued to generate
revenues  from  the sale of vascular grafts, the sale of and royalties earned on
biomaterials,  and NIH research grants.  Since March 31, 2000, the Company began
distribution  and  commercial  sales  of  its Vasculink Vascular Access Graft in
Europe.  The  Company  has  distributors  located in, but not limited to, Spain,
Italy,  Germany,  France,  Sweden,  and  the  Benelux  countries.

     CardioTech  will  require  substantial  funds  for  further  research  and
development,  future  pre-clinical  and  clinical  trials, regulatory approvals,
establishment  of commercial-scale manufacturing capabilities, and the marketing
of  its products.  CardioTech's capital requirements depend on numerous factors,
including  but  not  limited  to,  the  progress of its research and development
programs;  the progress of pre-clinical and clinical testing; the time and costs
involved  in  obtaining  regulatory  approvals; the cost of filing, prosecuting,
defending  and  enforcing  any  intellectual  property  rights;  competing
technological  and  market  developments; changes in CardioTech's development of
commercialization  activities  and  arrangements; and the purchase of additional
facilities  and  capital  equipment.

     On  August  4,  2000,  CardioTech  entered  into  a Heads of Agreement (the
"Agreement")  with Nervation Limited ("Nervation"), FreeMedic PLC ("FreeMedic"),
CardioTech International, Ltd. ("CTL"), and certain members of the management of
CTL  (the  "Management")  to  divest  itself of CTL through the sale of its 100%
common  stock  ownership  in  CTL to Nervation.  The shareholders of the Company
approved  the  divestiture  of  CTL  at  the Annual Meeting of Shareholders held
October  26,  2000.  Nervation,  a  newly  formed UK company, is composed of key
members  of CTL's management, together with FreeMedic, a wholly owned subsidiary
of  University  College  London  based  at  the Royal Free Campus of its Medical
School.  The  newly  formed  management  team has accessed financing commitments
through  Winchester Capital Technology Partners, including $7,000,000 in cash to
be  used in connection with the purchase of all of the outstanding shares of CTL
from CardioTech.  In addition to CardioTech's receipt of $7,000,000 in cash, the


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<PAGE>
proposed  transaction will also benefit CardioTech as it involves the release of
certain  liabilities  and obligations, in particular, the release of a guarantee
of  $540,000 in CTL debt to FreeMedic in exchange for equity in Nervation.  As a
result  of the proposed transaction, Nervation will have the exclusive rights to
the  VascuLink  Vascular  Access  Graft  and  the MyoLink Arterial Bypass Graft.
CardioTech  will  retain  the exclusive rights to the CardioPass Coronary Artery
Bypass  Graft.  CardioTech  will also enter into a long term Supply agreement to
provide  "ChronoFlex  RC"  to Nervation, including a $200,000 advance payment on
supplies  to  be delivered to Nervation.  Nervation will supply grafts necessary
for  CardioTech's  pre-clinical  trials of the Coronary Artery Bypass Graft.  In
connection  with  this  transaction,  CardioTech  will redeem approximately $2.1
million  to  retire  part  of a long-term note held by Dresdner Kleinwort Benson
Private  Equity Partners, LP ("DKBPEP").  Also, the Company will grant Nervation
an  option  to  become  the  exclusive distributor of the Coronary Artery Bypass
Graft  in  EEA countries if CE marking is received for the product.  Despite the
fact that the Board of Directors and shareholders have approved the transaction,
and  DKBPEP  has  provided  its consent, there can be no assurances that a final
agreement will be reached with Nervation in which event CTL would not be sold to
them,  and the long term note to DKBPEP would not be relieved.  In addition, the
terms of the final agreement may change from that of the terms of the Agreement.
In  such event, the officers of the Company will enter into the final agreements
on  terms  that they believe are substantially similar to the terms as set forth
in  the  Agreement.

     As  of  September  30,  2000, CardioTech was conducting its operations with
approximately  $1,279,000  in  cash  and cash equivalents.  CardioTech estimates
such  amount  combined  with its cash flow from operations will be sufficient to
fund  its  working  capital  and research and development activities in the next
twelve months.  Future expenditures for product development, especially relating
to  outside testing and clinical trials, are discretionary and, accordingly, can
be  adjusted  based  on  the  availability  of  cash.

FORWARD-LOOKING  STATEMENTS

     The  Company  believes  that  this  Form  10-QSB  contains  forward-looking
statements  that  are  subject  to  certain  risks  and  uncertainties.  These
forward-looking  statements  include  statements  such  as  (i)  the  expected
performance  of its grafts, including their needle-hole sealing capability, (ii)
the  expected  size  of  the  market  for the Company's products that are either
commercially  available  or  in  development,  (iii)  the  Company's  ability to
manufacture  grafts  that  taper,  (iv)  HydroThane's bacterial resistance, clot
resistance, and biocompatibility, (v) the sufficiency of the Company's liquidity
and  capital  and  the  steps  that  would  be taken in the event funding is not
available.  Such  statements  are based on management's current expectations and
are  subject  to  a  number of factors and uncertainties that could cause actual
results  to  differ materially from the forward-looking statements.  The Company
cautions  investors  that  there  can  be  no  assurance  that actual results or
business conditions will not differ materially from those projected or suggested
in  such  forward-looking  statements  as  a  result  of  various  factors.


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PART  II.    OTHER  INFORMATION


ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     The  Company  held  its  annual  shareholders' meeting on October 26, 2000.
Michael  Adams,  Anthony  Armini  and  Robert  Chartoff  were elected as Class I
directors  of  the  Company  to hold office until the 2003 annual meeting of the
shareholders.  In  addition, the shareholders approved a proposal to sell all of
the  shares  of  Cardiotech  International  Ltd.,  the  Company's  wholly  owned
subsidiary  in England, to Nervation Limited.  There were 4,962,802 shares voted
for, 38,325 shares voted against and 32,111 shares abstaining.  The shareholders
also  approved  a  proposal  to increase the number of shares that may be issued
under  the  1996  Stock  Option  Plan to 4,000,000 shares.  There were 4,247,085
shares  voted  for,  604,036 shares voted against and 182,017 shares abstaining.


ITEM  6.    EXHIBITS  AND  REPORTS  ON  FORM  8-K:


(a)      Exhibits:

           Exhibit  27       Financial  Data  Schedule


(b)      Reports  on  Form  8-K

           None


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SIGNATURES


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


                                CardioTech  International,  Inc.



                                /s/  Michael Szycher
                                ----------------------------------------
                                Michael Szycher, Ph.D.
                                Chairman and Chief Executive Officer


                                /s/  David C. Volpe
                                -----------------------------------------
                                David C. Volpe
                                Acting Chief Financial Officer



                                /s/  Thomas Lovett
                                -----------------------------------------
                                Thomas Lovett
                                Controller



Dated:  November  14,  2000


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