SURVIVALINK CORP, S-1/A, 1996-08-01

SURVIVALINK CORP
S-1/A, 1996-08-01
ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 26, 1996
REGISTRATION NO. 333-04475

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

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

MINNESOTA
(State or other jurisdiction of
incorporation or organization)

3845
(Primary Standard Industrial
Classification Code Number)

41-1719352
(I.R.S. Employer
Identification Number)

5420 FELTL ROAD
MINNEAPOLIS, MINNESOTA 55343
TELEPHONE: (612) 939-4181
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

BYRON L. GILMAN, CHIEF EXECUTIVE OFFICER
5420 FELTL ROAD
MINNEAPOLIS, MINNESOTA 55343
TELEPHONE: (612) 939-4181
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies of communications to:

ERIC O. MADSON, ESQ. EDWIN L. MILLER, JR., ESQ.
WINTHROP & WEINSTINE, P.A. TESTA, HURWITZ & THIBEAULT LLP
3000 DAIN BOSWORTH PLAZA HIGH STREET TOWER
60 SOUTH SIXTH STREET 125 HIGH STREET
MINNEAPOLIS, MN 55402 BOSTON, MA 02110
TELEPHONE: (612) 347-0622 TELEPHONE: (617) 248-7000
TELECOPIER: (612) 347-0600 TELECOPIER: (617) 248-7100

Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE 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. |_|

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.

SURVIVALINK CORPORATION
CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
ITEM NUMBER IN FORM S-1 AND TITLE OF ITEM CAPTION OR LOCATION IN PROSPECTUS
<S> <C> <C>
Item 1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus ........ Front of Registration Statement and Outside Front Cover Page
of Prospectus

Item 2. Inside Front and Outside Back Cover Pages of
Prospectus .................................... Inside Front and Outside Back Cover Pages of Prospectus

Item 3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges .................. Prospectus Summary; Risk Factors

Item 4. Use of Proceeds ............................... Use of Proceeds

Item 5. Determination of Offering Price ............... Outside Front Cover Page of Prospectus; Risk Factors;
Underwriting

Item 6. Dilution ...................................... Risk Factors; Dilution

Item 7. Selling Security Holders ...................... Not Applicable

Item 8. Plan of Distribution .......................... Outside Front Cover and Inside Front Cover Pages of
Prospectus; Underwriting

Item 9. Description of Securities to be Registered .... Outside Front Cover Page of Prospectus; Prospectus Summary;
Risk Factors; Dividend Policy; Description of Capital Stock

Item 10. Interests of Named Experts and Counsel ........ Legal Matters; Experts

Item 11. Information With Respect to the Registrant .... Prospectus Summary; Risk Factors; Capitalization; Dividend
Policy; Selected Financial Data; Management's Discussion and
Analysis of Financial Condition and Results of Operations;
Business; Management; Certain Transactions; Principal
Shareholders; Financial Statements

Item 12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities ................................... Not Applicable
</TABLE>

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 JULY 26, 1996
PROSPECTUS

2,500,000 Shares

[logo] SURVIVALINK CORPORATION

COMMON STOCK

All of the shares of Common Stock offered hereby are being sold by SurVivaLink
Corporation ("SurVivaLink" or the "Company"). Prior to this offering, there has
been no public market for the Common Stock. It is currently anticipated that the
initial public offering price will be between $6.00 and $8.00 per share. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price. The Company's Common Stock has been approved
for listing on the Nasdaq National Market under the symbol "SVLK."

THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 6.

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.

UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS (1) COMPANY (2)

Per Share $ $ $

Total (3) $ $ $

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting offering expenses payable by the Company estimated at
$600,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase
up to 375,000 additional shares of Common Stock to cover over-allotments,
if any. If such option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions 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 to and accepted by them, and to withdrawal,
cancellation or modification of the offer without notice. It is expected that
delivery of the shares of Common Stock will be made on or about _________, 1996.

NATWEST SECURITIES LIMITED

VECTOR SECURITIES INTERNATIONAL, INC.

JOHN G. KINNARD AND COMPANY,
Incorporated

The date of this Prospectus is _________________, 1996.

[photo: Police officer carrying VivaLink unit.
caption: The VivaLink automated external defibrillator
features one button operation making it ideal
for use by police officers and other minimally-
trained rescuers to treat victums of sudden
cardiac arrest.]

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 MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

FOR UNITED KINGDOM PURCHASERS: THE COMMON STOCK MAY NOT BE OFFERED OR SOLD IN
THE UNITED KINGDOM OTHER THAN TO PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM
IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS, WHETHER AS
PRINCIPAL OR AGENT (EXCEPT IN CIRCUMSTANCES THAT DO NOT CONSTITUTE AN OFFER TO
THE PUBLIC WITHIN THE MEANING OF THE PUBLIC OFFERS OF SECURITIES REGULATIONS
1995 OR THE FINANCIAL SERVICES ACT 1986), AND THIS PROSPECTUS MAY ONLY BE ISSUED
OR PASSED ON TO ANY PERSON IN THE UNITED KINGDOM IF THAT PERSON IS OF A KIND
DESCRIBED IN ARTICLE 11(3) OF THE FINANCIAL SERVICES ACT 1986 (INVESTMENT
ADVERTISEMENTS) (EXEMPTIONS) ORDER 1995 OR IS A PERSON TO WHOM THE PROSPECTUS
MAY OTHERWISE BE LAWFULLY PASSED ON.

Survivalink(R), VivaLink(R), RescueLink(R) and RescueReady(tm) are trademarks of
the Company.

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS OF THE COMPANY, INCLUDING THE NOTES
THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, THE
INFORMATION PRESENTED IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTION.

THE COMPANY

The Company has developed and is marketing an automated external defibrillator
("AED") which is used to treat victims of sudden cardiac arrest ("SCA"), one of
the leading causes of death in the United States. The Company began marketing
the VivaLink AED (the "VivaLink") following receipt of 510(k) marketing
clearance by the U.S. Food and Drug Administration in February 1995. The
VivaLink incorporates proprietary technologies which make it easy to use,
inexpensive and lightweight. In addition, the unit's automatic daily
self-testing feature ensures operational readiness. The Company believes that
the VivaLink, which is currently used by a broad range of minimally-trained
rescuers ("first responders"), such as firefighters, police officers and basic
life support ambulance personnel, is the easiest to use AED on the market. To
date, more than 20 lives have been saved using the VivaLink.

Sudden cardiac arrest, which based on a study conducted between 1980 and 1985 is
estimated to result in more than 350,000 deaths in the United States annually,
is caused by disturbances of the heart's electrical signals. As a consequence,
blood flow stops, resulting in death if not treated within minutes. Over 80% of
SCAs are caused by severe heart attacks. Other causes of SCA include
electrocution, drowning and suffocation. The only effective treatment for SCA is
the prompt administration of an electric shock with a device known as a
defibrillator. Timely defibrillation, with an AED or other type of defibrillator
is the most critical factor in rescuing an individual from SCA. Published
studies, including one study involving the use of the VivaLink, have indicated
that survival rates for out-of-hospital SCAs can exceed 50% if defibrillation is
administered within the first few minutes of SCA. Since response times by
paramedics and emergency medical technicians equipped with defibrillators are
often more than ten minutes, the average SCA survival rate in the United States
is only 7%.

In order to improve survival rates, the American Heart Association and other
organizations have recommended widespread deployment of AEDs to first responders
and ultimately the public. Despite the automated features of AEDs and the
benefits of early defibrillation, AEDs have only achieved limited market
acceptance and deployment. The Company believes that this is due to the high
maintenance requirements, relative complexity, large size and high cost of other
currently available AEDs. The Company believes the VivaLink overcomes these
limitations.

The VivaLink incorporates a number of proprietary technological advances that
make it suitable for use by minimally-trained rescuers. It is small, weighs 7.75
pounds and incorporates a patented electrode packaging system that is
preconnected to the unit. The VivaLink is the only AED currently available that
automatically conducts daily self-tests of all major systems, including the
electrodes. The unit also incorporates voice prompts and one-button operation
for ease-of-use. The VivaLink's proprietary algorithm makes the decision as to
whether or not a shock is warranted, thereby contributing to patient and
operator safety. The unit is also designed for low-cost production, and the
Company believes that the VivaLink is currently the lowest-priced AED on the
market.

The Company is developing its next-generation product, the VivaLink II, which is
based on its versatile high voltage circuit. The VivaLink II is capable of
delivering monophasic and biphasic waveform shocks with delivered energy ranging
from less than 50 Joules up to 360 Joules.

The Company focuses its marketing and sales efforts on first responders and
out-of-hospital medical facilities. The Company believes that the initial
markets for its AEDs include approximately 537,800 sites. To date, the Company
has sold units to first responders, hospitals, other medical facilities and
industrial and commercial sites. In the United States, the Company currently
markets the VivaLink through a seven person internal sales force and through 39
distributors and six manufacturer's representatives. Internationally, the
Company has signed a worldwide, non-exclusive agreement with a distributor of
electromedical equipment, which is currently selling the Company's products in
the United Kingdom and certain other countries. The Company continues to
significantly expand its distribution network by adding internal sales
personnel, distributors and manufacturer's representatives.

The Company was incorporated in the State of Minnesota in April 1992. Its
principal office is located at 5420 Feltl Road, Minnetonka, Minnesota 55343, and
its telephone number is (612) 939-4181.

THE OFFERING

Common Stock offered hereby ....... 2,500,000 shares

Common Stock to be outstanding
after the offering ................ 6,696,257 shares (1)

Use of proceeds ................... To fund expansion of the Company's
marketing and distribution
capabilities, introduction of new
products, research and development
and acquisition of manufacturing
equipment; to repay debt; and for
general corporate purposes. See "Use
of Proceeds."

Nasdaq National
Market symbol ..................... SVLK

(1) Does not include 1,479,033 shares issuable upon exercise of options and
warrants outstanding at the date of this Prospectus. See "Management --
Stock Options" and "Description of Capital Stock -- Stock Options and
Warrants."

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Risk factors include, but are not limited to, the Company's
history of operating losses, uncertainty of market acceptance of the VivaLink,
lack of product diversification, need to obtain the required regulatory
approvals, competition, possible obsolescence, ability to manage growth, and
dependence on key management. See "Risk Factors" for a discussion of the risks
that should be considered in connection with an investment in the shares of
Common Stock offered hereby.

SUMMARY FINANCIAL DATA
(in thousands, except per share data)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales $ -- $ 14 $ 1,038 $ 155 $ 434
Cost of goods sold -- 16 1,165 257 408

Gross profit -- (2) (127) (102) 26

Operating expenses:
Research and development 277 648 688 151 366
General and administrative 119 245 604 119 272
Sales and marketing 47 157 432 63 439
Operating loss (443) (1,052) (1,851) (435) (1,051)
Other income, net 1 7 5 2 32

Net loss $ (442) $(1,045) $(1,846) $ (433) $(1,019)

Net loss per share $ (.17) $ (.32) $ (.44) $ (.11) $ (.18)

Weighted average number of shares
outstanding 2,605 3,270 4,153 3,789 5,700
</TABLE>

MARCH 31, 1996
ACTUAL AS ADJUSTED (1)

BALANCE SHEET DATA:
Cash and cash equivalents $ 2,481 $18,156
Working capital 2,666 18,341
Total assets 3,577 19,252
Accumulated deficit (4,423) (4,423)
Total shareholders' equity 3,221 18,896

(1) Adjusted to give effect to the sale of the 2,500,000 shares of Common Stock
offered hereby at an assumed public offering price of $7.00 per share and
the application of the estimated net proceeds therefrom. Does not include
1,479,033 shares of Common Stock issuable upon exercise of stock options and
warrants outstanding at the date of this Prospectus. See "Use of Proceeds,"
"Capitalization," "Management -- Stock Options" and "Description of Capital
Stock -- Stock Options and Warrants."

RISK FACTORS

AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER THE FOLLOWING RISK
FACTORS IN EVALUATING AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED
HEREBY.

OPERATING LOSSES; UNCERTAIN MARKET ACCEPTANCE. The Company has accumulated net
losses from inception in April 1992 through March 31, 1996 of approximately $4.4
million. The Company expects to continue to incur operating losses at least
through 1997. Commercial sales of the Company's initial product, the VivaLink,
commenced in the first quarter of 1995. In order to achieve revenue growth and
profitability, the Company must successfully increase the market penetration of
the VivaLink as well as successfully develop and market additional products
currently in development. The Company's future success depends upon
substantially increasing the number of AEDs sold into the first responder market
segment as well as the emerging public access markets. There can be no assurance
that the VivaLink will gain market acceptance or that market demand for the
VivaLink will be sufficient to allow profitable operations. See "Business."

LACK OF PRODUCT DIVERSIFICATION; DEPENDENCE ON NEW PRODUCTS. Substantially all
of the Company's revenues to date have been derived from sales of the VivaLink,
and the Company expects that AEDs and related accessories will account for
substantially all of the Company's revenues for the foreseeable future. If the
market for AEDs fails to develop or if competition in the market for AEDs
intensifies, the Company's business and financial condition will be materially
adversely affected. The Company's future success will depend on its ability to
enhance its current products and to introduce new products which meet the needs
of an emerging market. There can be no assurance that the Company will
successfully complete the development and commercialization of such products.

STRICT GOVERNMENT REGULATION; NEED FOR ADDITIONAL REGULATORY APPROVALS. The
medical device industry is highly regulated by a variety of governmental bodies,
including the U.S. Food and Drug Administration ("FDA") and equivalent agencies
in foreign countries. The Company received marketing clearance from the FDA
pursuant to a 510(k) submission in February 1995 for sale of the VivaLink in the
United States, and the device is also registered as required by the Canadian
Ministry of Health. The Company will be required to obtain necessary device
approval in many of the countries which are potential markets. Future products
and substantial modifications to existing products will also require device
approvals from the FDA and international regulatory agencies. There can be no
assurance that any of such approvals will be obtained on a timely basis, if at
all. Regulatory approvals, if granted, may include significant limitations on
the indicated uses for which the product may be marketed. In the United States,
there also can be no assurance that any such approvals can be obtained under a
510(k) submission. If approval cannot be obtained under a 510(k) submission, the
Company would be required to file a more extensive regulatory submission known
as a premarket approval application, causing the Company to incur substantial
costs and delay.

The European Union has promulgated rules which require that by mid-1998 medical
products receive the right to affix the CE mark, an international symbol of
adherence to quality assurance standards and compliance with applicable European
medical device directives. In order to obtain the right to affix the CE mark to
the VivaLink, the Company will need to obtain certification that its processes
meet European quality standards. The Company has made a submission to a
certified testing laboratory (a "notified body") in the European Union to obtain
the right to affix the CE mark. Failure to receive the right to affix the CE
mark will prohibit the Company from selling the VivaLink in member countries of
the European Union.

In addition, the Company's manufacturing processes are required to comply with
Good Manufacturing Practices ("GMP") regulations of the FDA. These regulations
include design, testing, production, control, documentation and other
requirements. Enforcement of GMP regulations has increased significantly in the
last several years, and the FDA has publicly stated that compliance will be more
strictly scrutinized. The Company's facilities and manufacturing processes, as
well as those of certain of the Company's third-party suppliers, are subject to
periodic inspection by the FDA and other agencies. Failure to comply with these
and other applicable regulatory requirements 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 grant premarket clearance or premarket approval for devices,
withdrawal of approvals and criminal prosecution, which could have material
adverse effect on the Company's business, operating results or financial
condition.

Several states have enacted laws and regulations which govern the delivery of
emergency medical services, including the use of external defibrillators. These
laws and regulations in many cases currently restrict use of these devices to
specified categories of trained personnel, mandate levels of operator training
and, in some cases, require that certain features be incorporated into external
defibrillators, including features which are not currently incorporated into the
VivaLink. Accordingly, market acceptance of the VivaLink will be significantly
dependent upon the Company's ability to convince state and local government
bodies and medical directors of the safety and efficacy of the VivaLink and its
potential for widespread deployment. There can be no assurance that such
restrictions on the use of AEDs will be eased or removed, which would have a
material adverse effect on the Company's ability to market the VivaLink.

RELIANCE ON PROPRIETARY TECHNOLOGY; UNCERTAINTY OF PROPRIETARY RIGHTS
PROTECTION. Whether the Company is able to compete successfully depends in part
on its proprietary technology, which it seeks to protect with patents. The
Company currently holds three United States patents related to its products, has
received notice of allowance on two patents, and has applied for 23 additional
United States patents. The Company has also applied for corresponding foreign
patents where it deemed such applications necessary. The laws of certain foreign
countries do not protect the Company's intellectual property rights to the same
extent as do the laws of the United States. There can be no assurance that any
patent owned by the Company will not be invalidated, circumvented or challenged,
that the rights granted thereunder will provide competitive advantages to the
Company or that any of the Company's pending or future patent applications will
be issued with the scope of the claims sought by the Company, if at all. The
Company intends to vigorously defend and protect its patents and other
proprietary technology against infringement or misappropriation by others. There
can be no assurance, however, that steps taken by the Company will prevent
misappropriation of its technology or preclude competitors from developing
products similar to the Company's products. Further, the enforcement of
proprietary rights of the Company through litigation could result in costs to
the Company that could materially adversely affect its financial condition.
There can be no assurance that infringement or invalidity claims will not be
asserted against the Company in the future. An adverse determination in any
litigation based on such a claim could subject the Company to significant
liabilities to third parties, require the Company to seek licenses from third
parties, prevent the Company from selling its products or adversely affect the
Company's own intellectual property, any of which could have a material adverse
effect on the Company's business, operating results or financial condition. See
"Business -- Government Regulation."

The Company also relies on trade secrets and proprietary know-how which it seeks
to protect, in part, by confidentiality agreements with its collaborators,
employees and consultants. There can be no assurance that these agreements will
not be breached, that the Company would have adequate remedies for any breach or
that the Company's trade secrets will not otherwise become known or be
independently developed by competitors. See "Business -- Patents and Proprietary
Rights."

TECHNOLOGICAL CHANGE AND PRODUCT OBSOLESCENCE. The markets in which the Company
competes are subject to technological changes. A number of companies may be
engaged in the development of alternative approaches for the treatment of SCA
which differ from those utilized by the Company. There can be no assurance that
superior defibrillation technologies will not be developed,or that alternative
therapies or approaches, including pharmaceutical or other alternatives, will
not render the Company's technology or products under development obsolete or
noncompetitive. The development of such technologies, therapies or approaches
could have a material adverse effect on the Company's business, operating
results or financial condition. Whether the Company is able to compete
successfully will depend in part on its ability to continually advance its
technology and to develop and market new applications for its existing and
future products. See "Business -- Research and Development."

INTENSE COMPETITION. The Company encounters and expects to continue to encounter
intense competition in the sale of its products. The Company believes that the
principal competitive factors affecting the market for its products include
product features, product performance and reputation, price and service. The
Company's competitors include companies with established reputations in the
medical device field and that have substantially greater financial, technical,
marketing and other resources than the Company. As a result, such companies may
be able to adapt more quickly to new or emerging technologies and changes in
customer requirements or to devote greater resources to the promotion and sale
of their products than the Company. Competition could increase if new companies
enter the market or if existing competitors expand their product lines or
intensify efforts within existing product lines. There can be no assurance that
the Company's current products, products under development or ability to
discover new technologies will be sufficient to enable it to compete
effectively. See "Business -- Competition."

LIMITED MARKETING AND MANUFACTURING EXPERIENCE. The Company currently has only a
limited sales and marketing organization. In the United States, the Company
intends to sell its products primarily through an internal sales force,
manufacturer's representatives and distributors. The Company expects to expand
its sales and marketing organization substantially. In international markets,
the Company currently sells its products primarily through one non-exclusive
distributor. There can be no assurance that the Company will be able to
successfully expand its internal sales force or marketing organization, that
establishing an internal sales force or marketing organization will be
cost-effective, or that the Company's sales and marketing efforts will be
successful. There can be no assurance that the Company will be able to maintain
its existing agreements or enter into additional agreements with desired
distributors on a timely basis or at all, or that such distributors will devote
adequate resources to selling the Company's products. Failure to establish
appropriate distribution relationships could have a material adverse effect on
the Company's business, operating results or financial condition. Further, the
Company expects that many of the initial purchasers of its products will be
state and local governments and medical service providers under contract to such
entities, and that sales of the VivaLink may be characterized by long sales
cycles. See "Business -- Marketing, Distribution and Sales."

In addition, the Company has no experience manufacturing its products in high
volumes, and there can be no assurance that reliable, high-volume manufacturing
can be established or maintained at commercially reasonable costs. The Company
may encounter difficulties in scaling up production of its products, including
problems involving quality control and assurance and shortages of qualified
personnel. See "Business -- Manufacturing."

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. Shipments to international
distributors have accounted for, and are expected to continue to account for, a
material portion of the Company's net sales. Sales and operations outside of the
United States are subject to certain inherent risks, including fluctuations in
the value of the U.S. dollar relative to foreign currencies, tariffs, quotas,
taxes and other market barriers, political and economic instability,
restrictions on the export or import of technology, potentially limited
intellectual property protection, difficulties in staffing and managing
international operations, difficulties in collecting receivables and potentially
adverse tax consequences. There can be no assurance that any of these factors
will not have a material adverse effect on the Company's financial condition or
results of operations. In particular, because the Company's international sales
are denominated primarily in U.S. dollars, currency fluctuations in countries
where the Company does business may render the Company's products less price
competitive than those of foreign manufacturers.

NEED FOR ADDITIONAL CAPITAL. The Company believes that the proceeds from this
offering, together with revenue from sales of the VivaLink, will be sufficient
to fund its planned marketing and distribution efforts, new product
introductions, research and development activities, acquisitions of
manufacturing equipment and working capital requirements for at least 12 months
following this offering. However, there can be no assurance that the Company
will not require additional capital prior to such time. There can be no
assurance that additional capital will be available to the Company when needed
or on terms acceptable to the Company. Any additional equity financing may be
dilutive to stockholders, and debt financing, if available, may involve
restrictive covenants. See "Use of Proceeds" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

DEPENDENCE ON PRINCIPAL SUPPLIERS. The Company is dependent on a limited number
of suppliers for key components of the VivaLink, including the injection molded
case and various electronic components. In addition, the Company is dependent on
a single subcontractor for high volume manufacture of the electronic circuitry
of the device. Any disruption of its relationships with its current suppliers
would have a material adverse impact on the Company's operations in the short
term. Certain components of the Company's products are subject to long lead
times and, accordingly, the Company's ability to expand production rapidly could
be limited by the availability of such components. See "Business --
Manufacturing."

PRODUCT RELIABILITY AND RISK OF RECALL. The VivaLink is a complex electronic
medical device. Component failures, manufacturing errors or design defects could
result in unsafe conditions for patients and trained responders, additional
repair requirements or product recalls, and could significantly impair market
acceptance of the VivaLink. If there were any material deficiencies or defects
in the design or manufacture of the Company's products, the Company might be
required to recall or redesign them. The costs of a product recall or damage to
the Company's reputation could be significant. Any such product problems could
have a material adverse effect on the Company's business, financial condition
and results of operations.

In the third quarter of 1995, the Company initiated a recall by issuing a safety
alert relating to its electrodes. Several customers had reported difficulty
separating the electrodes from the packaging liner which, in some cases,
rendered the electrodes unusable. The Company has subsequently modified its
manufacturing processes to improve the ease of separating the electrodes.
Replacement of electrodes previously sold was commenced in May 1996 and is
expected to be completed in August 1996 at a total cost of less than $20,000.

PRODUCT LIABILITY. The Company could be liable for personal injuries allegedly
caused by a defect in one of the Company's products. The Company's current
product liability insurance coverage in the aggregate amount of $1 million may
not be adequate to cover the Company's product liability risk. Product liability
insurance is expensive, difficult to obtain and, in the future, may not be
available on acceptable terms or at all. In addition, the costs related to
defending any claim and/or negative publicity resulting from any liability
action could have a material adverse effect on the Company's business, operating
results or financial condition. See "Business -- Product Liability."

UNCERTAINTIES IN MANAGEMENT OF GROWTH. To date, the Company's management,
manufacturing, sales and marketing capabilities have been adequate to keep pace
with the growth of its business. If the Company is successful in pursuing its
growth strategy for its current products and its new products, the Company will
be required to expand or enhance these capabilities, and there can be no
assurance that the Company will be able to secure the management, staffing or
other resources required. There can be no assurance that the Company will be
successful in managing any such growth.

DEPENDENCE ON KEY MANAGEMENT. The Company's operations are materially
dependent upon the services of Byron L. Gilman, Chief Executive Officer,
Kenneth F. Olson, Vice President of Operations, and R. Eric Bosler, Chief
Financial Officer of the Company. The loss of these individuals' services
would adversely affect the Company's business. Mr. Gilman has entered into an
employment agreement with the Company. The Company does not have employment
agreements with Mr. Olson or Mr. Bosler nor key person insurance on the lives
of Mr. Gilman, Mr. Olson, or Mr. Bosler. The Company's future success also
depends on its continuing ability to attract and retain highly qualified
managerial and technical personnel. There can be no assurance that the
Company will be able to retain key employees or attract and retain other
qualified personnel in the future. See "Management."

CONTROL BY DIRECTORS, EXECUTIVE OFFICERS AND AFFILIATED ENTITIES. The Company's
directors, executive officers and entities affiliated with them will, in the
aggregate, beneficially own approximately 27.4% of the Company's outstanding
shares of Common Stock following the completion of this offering. These
stockholders, if acting together, would be able to significantly influence all
matters requiring approval by the stockholders of the Company, including the
election of directors and the approval of mergers or other business combination
transactions. See "Principal Shareholders."

NO PRIOR PUBLIC TRADING MARKET; POSSIBLE VOLATILITY OF STOCK PRICE. Prior to
this offering, there has been no public market for the Company's Common Stock,
and there can be no assurance that an active trading public market will develop
or, if one develops, that it will be sustained. The initial public offering
price, which will be determined by negotiations between the Company and the
Representatives of the Underwriters, may not be indicative of prices that will
prevail in the trading market. See "Underwriting." The market price for the
Common Stock may be highly volatile depending on various factors including,
among others, the Company's operating results, general conditions in the medical
device industry, announcements of technological innovations or new products by
the Company or its competitors, and the market for similar securities, which
market is subject to various pressures. In addition, the stock market is subject
to price and volume fluctuations unrelated to operating performance of the
Company.

POTENTIAL ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE. Sales of a
substantial amount of the currently outstanding shares of Common Stock in the
public market may adversely affect the market price of the Common Stock. See
"Shares Eligible for Future Sale" and "Underwriting."

POTENTIAL ADVERSE EFFECTS OF UNDESIGNATED PREFERRED STOCK. The Company's Board
of Directors is authorized, without further shareholder action, to establish
various series of Preferred Stock from time to time and to determine the rights,
preferences and privileges of any wholly unissued series, including, among other
matters, any dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, liquidation preferences, sinking fund terms, the number of
shares constituting any such series, and the description thereof, and to issue
any such shares. The Board of Directors of the Company may, without shareholder
approval, issue shares of a class or series of preferred stock with voting and
conversion rights which could adversely affect the voting power of the holders
of the Common Stock and may have the effect of delaying, deferring or preventing
a change in control of the Company. The creation and issuance of shares of such
a class or series of preferred stock could also adversely affect the market
price of the Common Stock. See "Description of Capital Stock -- Undesignated
Preferred Stock."

LIMITATIONS ON DIRECTOR LIABILITY. The Company's Articles of Incorporation
provide, as permitted by governing Minnesota law, that a director of the Company
shall not be personally liable to the Company or its shareholders for monetary
damages for breach of fiduciary duty as a director, with certain exceptions.
These provisions may discourage shareholders from bringing suit against a
director for breach of fiduciary duty and may reduce the likelihood of
derivative litigation brought by shareholders on behalf of the Company against a
director. In addition, the Company's Bylaws provide for mandatory
indemnification of directors and officers to the fullest extent permitted by
Minnesota law. See "Description of Capital Stock -- Limitation on Director
Liability."

MINNESOTA ANTI-TAKEOVER LAW. The Company is subject to the provisions of the
Minnesota Business Corporation Act, which includes provisions relating to
"control share acquisitions" and restricting "business combinations" with
"interested shareholders." Such provisions could have the effect of discouraging
an attempt to acquire control of the Company. Accordingly, shareholders may be
denied the opportunity to participate in a transaction which offers a premium to
the prevailing market price of the Common Stock. See "Description of Capital
Stock -- Certain Provisions of Minnesota Law."

NO CASH DIVIDENDS. The Company has not paid cash dividends on its Common
Stock in the past and does not intend to do so in the foreseeable future. See
"Dividend Policy."

DILUTION. The public offering price is substantially higher than the book value
per share of the outstanding Common Stock. Investors purchasing shares of Common
Stock in this offering will incur immediate dilution of $4.18 per share from the
assumed offering price of $7.00 per share. See "Dilution." In addition,
dilution will occur upon the exercise of outstanding stock options and warrants
of the Company and may occur upon future equity financings of the Company.

DISCRETIONARY USE OF PROCEEDS. Approximately $4.2 million, or 27%, of the net
proceeds to be received by the Company in the offering have been designated for
general and administrative expenses and working capital and general corporate
purposes. As such, those proceeds may be utilized for one or more alternative
purposes in the discretion of the Company. See "Use of Proceeds."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,500,000 shares of Common
Stock offered hereby at an assumed public offering price of $7.00 per share,
after deduction of the estimated underwriting discounts and commissions and
offering expenses payable by the Company, are estimated to be $15,675,000
($18,116,250 if the Underwriters' over-allotment option is exercised in full).

The Company currently intends to apply the estimated net proceeds of this
offering to support the Company's expansion of its business. Approximately $4.5
million of the net proceeds are intended to be used for sales and marketing,
$4.0 million for research and development, $2.0 million for general and
administrative expenses, and $2.2 million for capital expenditures, including
tooling and manufacturing equipment for new products. The Company also intends
to use approximately $1.0 million of the net proceeds from this offering to
repay bridge financing to be obtained by the Company. On June 5, 1996, the
Company obtained a $1.0 million bridge loan from Medtronic, Inc., an existing
shareholder of the Company. The bridge loan is evidenced by a promissory note
that is payable in May 1997 or upon the closing of this offering, if earlier,
and bears interest at a rate of prime plus 3% (currently 11.25%) per annum. In
addition, the Company has granted to Medtronic, Inc., in connection with the
bridge loan, a five-year warrant to purchase 100,000 shares of Common Stock at
an exercise price equal to the initial public offering price. See "Certain
Transactions." The remainder of the net proceeds of this offering, approximately
$2.0 million, will be used to provide working capital and will be available for
general corporate purposes. Pending the use of the net proceeds of this
offering, the Company will invest the funds in short-term investment grade
securities.

DIVIDEND POLICY

The Company has never paid or declared any cash dividends on its Common Stock
and does not intend to pay cash dividends on its Common Stock in the foreseeable
future. The Company presently expects to retain its earnings to finance the
development and expansion of its business. The payment by the Company of cash
dividends, if any, on its Common Stock in the future is subject to the
discretion of the Company's Board of Directors and will depend on the Company's
earnings, financial condition, capital requirements and other relevant factors.
See "Description of Capital Stock."

CAPITALIZATION

The following table sets forth as of March 31, 1996 the capitalization of the
Company after giving effect to a change in the number of authorized shares and a
change in par value on May 7, 1996, and such capitalization as adjusted to
reflect the sale of the 2,500,000 shares of Common Stock offered hereby at an
assumed public offering price of $7.00 per share and the application of the
estimated net proceeds therefrom (after deduction of estimated underwriting
discounts and commissions and offering expenses). This table should be read in
conjunction with the Company's financial statements and notes thereto included
elsewhere in this Prospectus. See "Use of Proceeds."

MARCH 31, 1996
ACTUAL AS ADJUSTED

<S> <C> <C>
Long-term debt $ -- $ --
Shareholders' equity:
Common Stock, $.01 par value,
50,000,000 shares authorized, 4,196,257 shares issued
and
outstanding (actual); 6,696,257 shares issued and
outstanding
(as adjusted) (1) 42 67
Additional paid-in capital 7,602 23,252
Accumulated deficit (4,423) (4,423)
Total shareholders' equity 3,221 18,896
Total capitalization $ 3,221 $18,896

</TABLE>

(1) Does not include 1,479,033 shares of Common Stock issuable upon exercise
of stock options and warrants outstanding at the date of this Prospectus.
See "Management -- Stock Options" and "Description of Capital Stock --
Stock Options and Warrants."

DILUTION

The net tangible book value of the Company at March 31, 1996 was approximately
$3,221,000, or $0.77 per share. "Net tangible book value" per share represents
the tangible assets less total liabilities divided by the number of outstanding
shares of Common Stock. After giving effect to the sale of the 2,500,000 shares
offered hereby at an assumed initial public offering price of $7.00 per share
after deducting estimated underwriting discounts and commissions and offering
expenses payable by the Company, the pro forma net tangible book value of the
Company at March 31, 1996 would have been approximately $18,896,000, or $2.82
per share. This represents an immediate dilution in net tangible book value to
new investors from the assumed offering price of $4.18 per share and an
immediate increase in net tangible book value to existing shareholders of $2.05
per share. The following table illustrates this per share dilution:

Assumed initial public offering price per share $7.00
Net tangible book value per share before offering $0.77
Increase per share attributable to new investors 2.05
Pro forma net tangible book value per share after
offering 2.82
Dilution per share to new investors $4.18

The following table sets forth the number of shares of Common Stock purchased
from the Company as of March 31, 1996, the total consideration paid and the
average price per share paid by the existing shareholders for shares of the
Company's Common Stock and to be paid by investors purchasing the 2,500,000
shares of Common Stock offered hereby.

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
<S> <C> <C> <C> <C> <C>
Current shareholders 4,196,257 62.7% $ 7,632,324 30.4% $1.82
New investors 2,500,000 37.3 17,500,000 69.6 $7.00
Total 6,696,257 100.0% $25,132,324 100.0%
</TABLE>

The foregoing does not include 1,479,033 shares of Common Stock issuable upon
exercise of stock options and warrants outstanding at the date of this
Prospectus. To the extent such options and warrants are exercised, there will be
further dilution to new investors. See "Management -- Stock Options" and
"Description of Capital Stock --Stock Options and Warrants."

SELECTED FINANCIAL DATA

The statement of operations data set forth below for the years ended December
31, 1993, 1994 and 1995, and the balance sheet data set forth below at December
31, 1994 and 1995, are derived from the Company's financial statements included
elsewhere in this Prospectus, which have been audited by Ernst & Young LLP,
independent auditors. The statement of operations data set forth below for the
period from April 16, 1992 (inception) to December 31, 1992 and the balance
sheet data set forth below at December 31, 1992 and 1993 are derived from
audited financial statements not included herein. The statement of operations
data and the balance sheet data set forth below as of and for the three months
ended March 31, 1995 and 1996, have been derived from the Company's unaudited
financial statements included elsewhere in this Prospectus, which, in the
opinion of management, include all adjustments (consisting solely of normal
recurring adjustments) necessary for a fair presentation of such information.
Results for the three months ended March 31, 1996 are not necessarily indicative
of the results that may be expected for the year ending December 31, 1996 or any
other period. The selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and the notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PERIOD FROM
APRIL 16, 1992 THREE MONTHS ENDED
(INCEPTION) TO YEAR ENDED DECEMBER 31, MARCH 31,
DECEMBER 31,
1992 1993 1994 1995 1995 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>

STATEMENT OF OPERATIONS DATA:
Net sales $ -- $ -- $ 14 $ 1,038 $ 155 $ 434
Cost of goods sold -- -- 16 1,165 257 408
Gross profit -- -- (2) (127) (102) 26
Operating expenses:
Research and development 41 277 648 688 151 366
General and administrative 30 119 245 604 119 272
Sales and marketing -- 47 157 432 63 439
Operating loss (71) (443) (1,052) (1,851) (435) (1,051)
Other income, net -- 1 7 5 2 32
Net loss $ (71) $ (442) $(1,045) $(1,846) $ (433) $(1,019)
Net loss per share $ (.03) $ (.17) $ (.32) $ (.44) $ (.11) $ (.18)
Weighted average number of
shares outstanding 2,351 2,605 3,270 4,153 3,789 5,700
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1992 1993 1994 1995 1995 1996
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents $ 40 $ 61 $ 194 $ 3,767 $ 34 $ 2,481
Working capital 15 34 325 3,813 111 2,666
Total assets 50 95 670 4,704 488 3,577
Accumulated deficit (71) (513) (1,558) (3,404) (1,991) (4,423)
Total shareholders'
equity 26 60 592 4,240 377 3,221
</TABLE>

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

GENERAL

The Company was organized in April 1992 for the purpose of developing and
marketing an AED that is easy to use, inexpensive and easy to maintain. The
Company's first product, the VivaLink, received 510(k) marketing clearance from
the FDA in February 1995, and commercial sales of the VivaLink commenced in the
first quarter of 1995. The Company's revenues in 1995 were derived principally
from sales to a major distributor, which purchased products for subsequent
resale to customers. In the third quarter of 1995, the Company initiated
development of a network of manufacturer's representatives and distributors. In
the fourth quarter of 1995, it began to augment this network with development of
an internal sales force. In the first quarter of 1996, the Company terminated
the distribution arrangement with its major distributor. With the commencement
of marketing and promotion of its products and the initiation of a distribution
network, the Company incurred increased sales and marketing expenses. In the
fourth quarter of 1995, the Company accelerated its efforts to develop
complementary and additional products, resulting in increased research and
development expenses. The Company also incurred additional general corporate
expenses related to the growth of the Company.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Net sales in the first quarter of 1996 were $434,000 compared to $155,000 in the
first quarter of 1995. Commercial sales of the VivaLink did not commence until
February 1995 following receipt of 510(k) marketing clearance from the FDA.
Sales to a major distributor represented approximately 19% and 100% of net sales
in the first quarter of 1996 and the first quarter of 1995, respectively. In the
first quarter of 1996, the Company terminated its distribution arrangement with
such distributor. The Company's products currently are being sold domestically
primarily through the Company's internal sales force, manufacturer's
representatives and distributors, and internationally primarily through one
non-exclusive distributor.

Research and development expenses were $366,000 in the first quarter of 1996
compared to $151,000 in the first quarter of 1995. The increase was due to the
Company's acceleration of product development in late 1995 which continued into
1996.

General and administrative expenses were $272,000 in the first quarter of 1996
compared to $119,000 in the first quarter of 1995. The increase in general and
administrative expenses reflects the hiring of additional personnel and costs in
connection with the Company's continued expansion.

Sales and marketing expenses were $439,000 in the first quarter of 1996 compared
to $63,000 in the first quarter of 1995. The increase in sales and marketing
expenses reflects commencement of commercial sales of the Company's initial
product and the Company's decision to promote and distribute its products
through the Company's internal sales force, manufacturer's representatives and
distributors, rather than through an exclusive distributor, as was the case in
1995.

Other income of $32,000 in the first quarter of 1996 and $2,000 in the first
quarter of 1995 consisted principally of interest earned on net proceeds from
financing transactions, pending utilization of such proceeds.

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Net sales in 1995 were $1,038,000 compared to $14,000 in 1994. 1995 was the
first year in which the Company had approval to begin commercial sales of the
VivaLink. Sales to a former distributor represented 81% of net sales in 1995.
Net sales in 1994 were derived from sales of demonstration units.

Research and development expenses were $688,000 in 1995 compared to $648,000 in
1994 and $277,000 in 1993. Research and development expenses in 1995 related
principally to the development of additional and complementary products, whereas
such expenses in 1994 and 1993 were incurred principally in connection with the
development of the Company's initial product, the VivaLink.

General and administrative expenses were $604,000 in 1995 compared to $245,000
in 1994 and $119,000 in 1993. The increase in general and administrative
expenses reflects the hiring of additional personnel and costs incurred in
connection with the Company's continued expansion plans. Such costs include
increased rental expenses commencing in August 1994, when the Company moved its
operations to the larger facility which it currently occupies.

Sales and marketing expenses were $432,000 in 1995 compared to $157,000 in 1994
and $47,000 in 1993. Sales and marketing expenses in 1995 reflected the first
year of marketing and promotion of the VivaLink. In 1994 and 1993, sales and
marketing expenses were incurred for market research activities.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception in April 1992, the Company has relied principally on
proceeds from the issuance of common stock to fund its operations, including net
proceeds of $5,191,000 and $1,524,000 in fiscal 1995 and 1994, respectively. The
Company had cash and cash equivalents of $2,481,000 and $3,767,000 and working
capital of $2,666,000 and $3,813,000 at March 31, 1996 and December 31, 1995,
respectively. In May 1996, the Company entered into a non-binding letter of
intent with Medtronic, Inc., an existing shareholder, for a proposed bridge loan
in the amount of $1,000,000 which would be repaid from the proceeds of this
offering.

The Company's operating activities used cash of $1,122,000, $1,579,000 and
$1,159,000 in the first quarter of 1996 and in fiscal 1995 and 1994,
respectively. Operating activities have used cash principally for research and
development of the Company's current and future products, general and
administrative expenses, and sales and marketing purposes.

Capital expenditures were $165,000, $233,000 and $248,000 in the first quarter
of 1996 and in fiscal 1995 and 1994, respectively. At March 31, 1996, the
Company had no material commitments for capital expenditures. The Company
anticipates total capital expenditures of approximately $1,300,000 in 1996 for
expansion of its facility, for additional tooling and manufacturing equipment
purchases associated with new product introductions and for an increase in
overall production capacity.

The Company estimates that the net proceeds from this offering, together with
revenue from sales of the VivaLink, will be sufficient to meet working capital
requirements for current operations and planned product development and
introductions for at least 12 months following the offering. The Company's
long-term capital requirements will depend upon numerous factors, including the
growth of the Company's internal sales force and marketing expenses, the cost of
research and development for new product introduction, capital expenditures and
revenues from the sale of the Company's products. The Company may need to raise
additional capital in the future, including the sale of equity securities which
may be dilutive to shareholders. There can be no assurance that the Company will
be able to raise additional funds when needed or that funds will be available on
terms acceptable to the Company.

The Company has not paid cash dividends. The Board of Directors currently
intends to retain all earnings for expansion of the Company's business.

The Company has not generated taxable income through March 1996. At March 31,
1996, the operating losses available to offset future taxable income were
approximately $4,195,000. The net operating loss carryforwards expire beginning
in 2007 and are subject to limitations under Section 382 of the Internal Revenue
Code due to changes in equity ownership of the Company. An ownership change
occurred in May 1994 and the Company estimates that the utilization of the net
operating loss carryforward for the period from April 16, 1992 (inception) to
May 1994 will be limited in any one fiscal year.

BUSINESS

INTRODUCTION

Sudden cardiac arrest, which based on a study conducted between 1980 and 1985 is
estimated to result in more than 350,000 deaths in the United States annually,
is caused by disturbances of the heart's electrical signals. As a consequence,
blood flow stops, resulting in death if not treated within minutes. Over 80% of
SCAs are caused by severe heart attacks. Other causes of SCA include
electrocution, drowning and suffocation. The only effective treatment for SCA is
the prompt administration of an electric shock with a device known as a
defibrillator. Timely defibrillation, with an AED or other type of
defibrillator, is the most critical factor in rescuing an individual from SCA.
Published studies, including one study involving the use of the VivaLink, have
indicated that survival rates for out-of-hospital SCAs can exceed 50% if
defibrillation is administered within the first few minutes of SCA. Since
response times by paramedics and emergency medical technicians ("EMTs") equipped
with defibrillators are often more than ten minutes, the average SCA survival
rate in the United States is only 7%.

In order to improve survival rates, the American Heart Association ("AHA") and
other organizations have recommended widespread deployment of AEDs to first
responders and ultimately the public. Despite the automated features of AEDs and
the benefits of early defibrillation, AEDs have only achieved limited market
acceptance and deployment. The Company believes that this is due to the high
maintenance requirements, relative complexity, large size and high cost of other
currently available AEDs. The Company believes the VivaLink AED overcomes these
limitations.

The Company focuses its marketing and sales efforts on first responders and
out-of-hospital medical facilities. The Company believes that the initial
markets for its AEDs include approximately 537,800 sites. To date, the Company
has sold units to first responders, hospitals, other medical facilities and
industrial and commercial sites. In the United States, the Company currently
markets the VivaLink through an internal sales force of seven persons and
through 39 distributors and six manufacturer's representatives. Internationally,
the Company has signed a worldwide, non-exclusive agreement with a distributor
of electromedical equipment, which is currently selling the Company's products
in the United Kingdom and certain other countries. The Company continues to
significantly expand its distribution network by adding internal sales
personnel, distributors and manufacturer's representatives.

BACKGROUND

SUDDEN CARDIAC ARREST

Based on a study conducted between 1980 and 1985, sudden cardiac arrest is
estimated to cause more than 350,000 deaths in the United States annually. SCA
is caused by disturbances of the heart's electrical signals called arrhythmias.
The most common arrhythmia associated with SCA is Ventricular Fibrillation
("VF"), chaotic electrical signals throughout the heart that produce no blood
flow. The only effective treatment for VF is prompt administration of an
electric shock by a device known as a defibrillator.

The critical factor determining survival from SCA is the time interval from
onset of VF to the delivery of a defibrillation shock. Since both the brain and
heart muscle deteriorate rapidly when blood flow is stopped, the probability of
survival for a cardiac arrest patient decreases rapidly with time. In the United
States the average response time for paramedics and EMTs, who generally are
equipped with defibrillators, is approximately 10 minutes, which results in a
nationwide survival rate of only 7%. In contrast, the average response time of
police officers is approximately three minutes, making police cars an ideal
location for the placement of AEDs. The following graph, which was prepared by
the Company by compiling published survival statistics, illustrates the
importance of early defibrillation:

RELATIONSHIP BETWEEN VF SURVIVAL RATE AND
TIME TO EXTERNAL DEFIBRILATION

[LINE GRAPH COMPARING THE SURVIVAL RATE TO TIME TO DEFIBRILAATION (IN MINUTES)]

Numerous studies have shown that defibrillation shocks must be delivered within
minutes to achieve higher survival rates. The individuals in a community who are
designated to arrive first in response to a medical emergency call and who have
a duty to respond are called "first responders." These first responders are most
often firefighters, police officers, basic life support ambulance personnel or
volunteer rescue squad members, who currently are not typically equipped with
defibrillators. In congested cities with long response times, such as New York
City, survival rates can be as low as 2%. In cities in which a concerted effort
has been made to encourage early CPR and to deliver early defibrillation by
first responders, survival rates of 50% (Rochester, Minnesota) and 30% (Seattle,
Washington) have been reported.

Patients who are successfully defibrillated have a wide range of available
long-term treatments, including coronary artery bypass grafting, coronary
angioplasty and implantable defibrillators. Recipients of these treatments have
one-year survival rates of over 80% and five-year survival rates of over 50%.

LIMITATIONS OF CURRENT AEDS

First in 1986, and again in 1990 and 1992, the American Heart Association
endorsed the implementation of early defibrillation by first responders. While
this policy statement was first made ten years ago, its implementation was
delayed by the lack of a suitable defibrillator. Portable manual defibrillators,
developed in the late 1960s, are not suitable because they require a medical
decision by highly-trained medical personnel as to whether or not defibrillation
is needed.

More recently, several companies have developed and are selling AEDs which are
somewhat easier to use than manual defibrillators. These AEDs are capable of
making a computer diagnosis of the patient's heart rhythm, eliminating the need
for highly trained operators. When the electrode pads are applied to the
victim's chest and the device detects an abnormal rhythm which requires
defibrillation, it advises the operator to deliver a shock. Despite the
automated features of AEDs and the benefits of early defibrillation, current
AEDs have only achieved limited market acceptance and deployment among EMTs,
first responders, medical professionals in clinics and other emergency response
personnel. The Company believes that this is due to the high maintenance
requirements, relative complexity, large size and high cost of other currently
available AEDs. Currently available units, other than the VivaLink, require
daily testing to assure operational readiness and include features such as
display screens which are not needed by first responders. Such units typically
weigh between 10 and 20 pounds and have list prices ranging from approximately
$3,750 to $7,600 per unit.

In response to these shortcomings, the AHA's Emergency Cardiac Care Committee
has specified three fundamental requirements for an AED to be suitable for use
by a broad range of first responders, as follows:

* The AED must be easy to operate and easily comprehended by users
with minimal training;

* The AED must be affordable in terms of its initial cost, initial
training and ongoing training; and

* The AED must be ready to perform its function at all times.

THE SURVIVALINK SOLUTION

The Company believes that the VivaLink overcomes the limitations of other AEDs
and meets all of the requirements specified by the AHA Emergency Cardiac Care
Committee. The Company began marketing the VivaLink following the receipt of
510(k) marketing clearance in February 1995. The VivaLink features proprietary
technologies, including one-button operation, pre-connected electrodes,
comprehensive voice prompting, automatic daily self-testing (including electrode
presence and condition) and versatile and reliable circuit technology. The
Company believes that this product is superior in all of these categories to all
currently available AEDs.

SURVIVALINK PRODUCTS

VIVALINK AED

[LINE DRAWING SHOWING THE VARIOUS COMPONENTS OF THE VIVALINK AED UNIT]

When the VivaLink's electrode pads are applied to the patient, the device
automatically analyzes the patient's heart rhythm with a proprietary algorithm.
If the device determines that a defibrillation shock is appropriate, it audibly
prompts the operator to deliver a potentially life saving shock by pushing the
rescue button. The following summarizes rescuer actions and VivaLink voice
prompts for a rescue where defibrillation is necessary:

Rescuer Action: Assess the patient. Conscious? Breathing? Pulse?
IF THE ANSWER IS NO TO ALL -- open VivaLink lid

VIVALINK PROMPT: "PLACE ELECTRODES"

Rescuer Action: Open electrodes, place on chest

VIVALINK PROMPT: "DO NOT TOUCH PATIENT -- ANALYZING RHYTHM"

Rescuer Action: Observe patient for approximately 10 seconds

VIVALINK PROMPT: "CHARGING"

Rescuer Action: Observe patient for approximately 10 seconds

VIVALINK PROMPT: "PUSH FLASHING BUTTON TO RESCUE"

Rescuer Action: Push flashing rescue button

VIVALINK PROMPT: "DO NOT TOUCH PATIENT -- ANALYZING RHYTHM"

IF A SHOCK IS NOT NEEDED, THE VIVALINK THEN PROMPTS:

"CHECK PULSE -- IF NO PULSE, GIVE CPR"

IF ADDITIONAL SHOCKS ARE REQUIRED, THE VIVALINK WILL
INSTRUCT THE RESCUER TO ADMINISTER ADDITIONAL SHOCKS.

The following are the key features of the VivaLink:

EASE OF USE. The Company believes that the VivaLink is easier to use than any
other AED currently on the market. The device features one-button operation,
pre-connected electrodes which are stored in an internal compartment, and
comprehensive voice prompting. Other AEDs have at least two or three buttons,
which are prone to cause confusion and improper rescue procedures in
life-threatening emergency situations. Extensive use of voice prompts in the
VivaLink guides the rescuer through a complete rescue. The voice prompt "check
pulse; if no pulse, give CPR", which is unique to the VivaLink, ensures that the
rescuer knows the proper next step in the rescue protocol. The Company has
received notice of allowance of a patent protecting the design of its simple
operator interface.

AFFORDABILITY. The VivaLink's list price of $2,800 makes it the most affordable
AED on the market. Its ease of use makes the initial and continuing training
affordable as well.

COMPLETE AUTOMATIC SELF-TEST. The VivaLink is the only currently available
defibrillator that incorporates a complete daily automatic self-test, including
a test of the pre-connected electrodes. This test verifies the functionality of
all of the essential subsystems needed for a rescue, such as battery charge,
electrodes and electronics. If a problem is detected, the unit will begin to
beep, similar to a smoke detector, and an indicator on the

outside of the case will turn from black to yellow. A record of the most recent
ten self-tests is kept in memory for quality assurance verification. The
automatic self-test feature eliminates the problem of improper maintenance,
which has been cited as the leading cause of defibrillator failure. The Company
has received a patent on the concept of packaging electrodes with the cable and
connector extending through the sealed package for the purpose of confirming
presence and quality of the electrodes. Patent continuations are pending
containing broader electrode pre-connection claims.

PROPRIETARY ELECTRONIC TECHNOLOGY. The Company has developed proprietary high
voltage circuit technology that uses all solid state circuitry, replacing the
expensive, bulky components used in other AEDs. The VivaLink produces the 360
Joule defibrillation energy prescribed by the AHA's rescue protocol. The Company
has been granted two patents covering the high voltage circuitry contained in
the VivaLink.

PATIENT AND OPERATOR SAFETY. The VivaLink one-button operation enables a
minimally-trained rescuer to safely administer a defibrillation shock. Patient
safety is ensured by the sophisticated, computerized decision-making process
which allows high voltage to be produced only if specific, life-threatening
cardiac rhythms are identified. In more than one year of field use, the Company
has received no reports of incorrect decisions made by the VivaLink. The
VivaLink also ensures operator safety by minimizing the possibility of contact
with high voltage. Voice and audible electronic warnings alert the rescuer when
the VivaLink is building a high voltage charge, allowing time to get clear of
the patient prior to shock delivery.

DURABILITY. AEDs are expected to receive rough use due to the rigorous demands
of operation during emergency situations. Consequently, the VivaLink is made of
a proprietary blend of high strength plastic, all solid state components and a
high voltage circuit capable of delivering over 250,000 shocks during its
lifetime. Prior to its market release, the VivaLink passed rigorous military
standards for temperature, humidity, shock, vibration and electromagnetic
compatibility.

DATA STORAGE AND RETRIEVAL. The VivaLink contains a memory chip for storing a
wide variety of data. Rescue data stored includes 20 minutes of
electrocardiogram ("ECG") rhythm, decisions made by the AED, shock delivery, CPR
prompts and the exact time at which these events occurred. The data may be
downloaded to any Windows-based PC using the Company's proprietary RescueLink
software. Medical directors use the rescue data to confirm that both the AED and
the rescue personnel are responding promptly and correctly. The maintenance
records are used by Company personnel to evaluate the AED's performance and aid
in maintenance.

PORTABILITY. The VivaLink features a comfortable "grab and go" handle and an
internal compartment for electrode storage. The VivaLink weighs 7.75 pounds and
measures 3.75" high, 10.5" wide and 12.25" long. The product's light weight,
small size and multiple source battery charging capability make it suitable for
deployment in a wide variety of settings, including emergency vehicles,
buildings and aircraft.

OTHER PRODUCTS

VIVALINK TRAINING UNIT. The VivaLink Training Unit ("VTU") is a low-cost replica
of the VivaLink used specifically for defibrillation training. The device does
not produce any energy output and consequently is completely safe for use in
training situations. The VTU also enables training sessions to be conducted with
or without a mannequin. The VTU is sold to defibrillation trainers and functions
as a promotional tool for the VivaLink.

ACCESSORIES. The Company markets accessories for the VivaLink, including
various battery chargers, additional electrodes, a soft-sided case and a
voice recorder to document the rescue event.

FUTURE PRODUCTS

VIVALINK II. The VivaLink II incorporates an enhancement of the Company's
initial proprietary circuit technology making it a versatile platform capable of
delivering monophasic, biphasic or new waveform shocks with delivered energy
ranging from less than 50 Joules up to 360 Joules. In a monophasic waveform, the
current flows through the body in only one direction from one electrode to the
other, and in a biphasic waveform, the direction of the current is reversed
during the pulse. In the VivaLink II, the shock waveform and energy sequence can
be preselected from among factory-defined waveforms and energy settings. This
feature will enable the VivaLink II to deliver the most up-to-date waveforms as
they evolve. The Company expects to release its VivaLink II in the first half of
1997 with the standard 360 Joules monophasic waveform selected. In the second
half of 1997, the Company expects to release a software upgrade enabling the
VivaLink II to deliver a lower energy optimized waveform, which may be biphasic,
as well as the traditional 360 Joule shock.

PUBLIC ACCESS DEFIBRILLATOR. In December 1994, the AHA sponsored a conference
regarding Public Access Defibrillation (PAD). PAD refers to the concept of
making AEDs available to non-traditional rescuers, ranging from the designated
citizen responder (such as a security guard, store manager, flight attendant,
shop foreman, or floor captain of an apartment building) to the concerned
citizen responder (the first person regardless of training to identify a victim
of SCA). The conference resulted in an AHA policy statement endorsing PAD and
encouraging individuals and organizations to assist in its adoption. While the
Company believes that the VivaLink is nearly suitable for the concerned citizen
responder, it still intends to develop a Public Access Defibrillator
specifically for this segment.

THE AED MARKET

The Company estimates that worldwide sales of automated external defibrillators
were approximately $47.6 million in 1995, or approximately 8,750 units. The
Company's sales represented approximately 2.2% of the worldwide AED sales in
1995. The Company believes this market has developed despite the absence of an
optimized first responder defibrillator. The market for AEDs can be broadly
segmented into the United States out-of-hospital market, the United States
hospital market, and the international market. Collectively, these segments
amount to approximately 544,400 sites, and certain of these sites may require
more than one AED. The Company has sold AEDs into all of the following segments.

UNITED STATES MARKETS

OUT-OF-HOSPITAL MARKET. A high percentage of SCAs occur outside of a hospital.
Several studies have shown that early defibrillation has a significant impact on
survival from SCA. The AHA has identified the need for early defibrillation and
has issued several statements supporting the principle of early defibrillation.
At its 1992 national conference, the AHA concluded that all emergency vehicles
should be equipped with a defibrillator. In addition, the AHA stated that all
personnel whose jobs require that they perform basic CPR be trained to operate
and permitted to use defibrillators. In 1995, the AHA further endorsed the
principle of early defibrillation by advocating the use of AEDs by laypersons at
home and by firefighters, police, security personnel and non-physician care
providers in the community. Currently, the use of an AED is governed in many
jurisdictions by law and regulation, allowing only adequately trained personnel,
such as paramedics and EMTs, to use the devices. The United States Department of
Transportation recently revised its guidelines to include AED training for EMTs.
As training becomes more widely administered, the Company anticipates the future
placement of defibrillators and increased authorization to defibrillate for
designated citizen responders and concerned citizen responders.

The out-of-hospital market for AEDs can be further segmented based on the skill
levels of these various groups as follows:

FIRST RESPONDERS. The individuals in a community who are designated to
arrive first in response to an emergency call and have a duty to respond are
called "first responders." Generally 40 hours of training in basic first aid
and CPR is required for these individuals. Typically, first responders are
firefighters, police officers, basic life support ambulance personnel and
volunteer rescue squad members. First responders are typically the only
emergency service personnel who are consistently able to respond to an SCA
event within the time limit needed to administer effective defibrillation.
Since firefighters, police officers and basic life support personnel are
tied into the emergency dispatch network, they are frequently able to
respond to calls in less than five minutes. Statistics indicate that there
are approximately 75,000 fire vehicles and 15,000 basic life support
ambulances in the United States. The Company estimates that only 30% of
these vehicles are equipped with defibrillators. The Company also estimates
that there are approximately 210,000 marked law enforcement vehicles in the
United States capable of carrying an AED. The Company believes that only 2%
of these vehicles are presently equipped with AEDs.

OUT-OF-HOSPITAL MEDICAL FACILITIES. This segment consists of allied
medical sites, including clinics, office-based surgical facilities, extended
care facilities, nursing homes, assisted living centers, military sites and
other locations where professional medical services are provided out of the
hospital. These locations have a greater chance of being the site of SCA for
a variety of reasons, including the use of anesthesia and the demographics
of those under care. The Company estimates that there are more than 190,000
physicians offices, 12,000 assisted living facilities, 16,600 nursing homes,
13,000 oral surgeons, 4,000 urgent care centers and 2,200 surgery centers
that are potential sites for placement of AEDs.

OTHER FACILITIES WITH DESIGNATED RESPONDERS. This segment includes other
sites where large numbers of people gather or are isolated from emergency
medical services and where designated personnel are trained and responsible
for responding to medical emergencies. Such locations include airports,
airplanes, corporate medical stations, stadium/arena medical stations,
cruise ships, high-rise office buildings and athletic facilities. To date,
only a limited number of AEDs have been placed in such locations.

CONCERNED CITIZEN RESPONDERS/PUBLIC ACCESS. The concerned citizen
responder/public access market is anticipated to consist of
minimally-trained personnel, such as security personnel, flight attendants,
and public facility staff. Through awareness and acceptance, it is believed
that concerned citizen responders will emerge as users of AEDs. This market
is at an early stage. While its potential size is substantial, there are
regulatory, funding, training, legal and awareness issues that limit the use
of defibrillators by lay rescuers without supervision by a medical director.
The Company believes that AEDs sold to this user group must be easy to use,
low maintenance, low cost, and require minimal training.

HOSPITAL MARKET. The hospital market in the United States consists of
approximately 5,600 acute care hospitals and 1,000 other hospitals.
Traditionally, the hospital market has utilized manual defibrillators requiring
the operator to read and interpret a patient's ECG. In addition to an ECG
display, many of these devices include additional features, such as printers,
manual energy selection, external pacing and cardioversion, which add to the
cost, complexity, maintenance and training expenses associated with manual
defibrillators. These devices are located on wheeled carts, called "crash
carts," containing other needed emergency equipment. When an SCA event occurs, a
trained team is alerted and responds by rushing the crash cart from a
strategically located position to the SCA victim. The Company believes that the
deployment of AEDs in other areas of the hospital will enable hospitals to
improve their ability to deliver defibrillation faster and at a lower cost. As
hospitals continue to search for areas to reduce health care delivery costs, the
cost/benefit of AED use could cause a transition from the use of manual
defibrillators in some areas of the hospital to the use of AEDs.

INTERNATIONAL MARKETS

Similar to the endorsement of early defibrillation in the United States, the
United Kingdom and Canada have embraced this concept. The European Resuscitation
Council has endorsed early defibrillation concepts similar to those of the AHA.
Adoption of early defibrillation in other countries is an emerging concept.

MARKETING, DISTRIBUTION, AND SALES

The Company focuses its marketing and sales efforts on and has sold the VivaLink
to police and fire departments, basic life support ambulance services,
hospitals, out-of-hospital medical facilities and commercial and industrial
sites. The Company uses a complementary set of distribution channels, including
an internal sales force, distributors and manufacturer's representatives. The
Company currently has three regional sales managers, four direct sales
representatives, six manufacturer's representative organizations and 39
distributors. The Company intends to significantly expand its distribution
network. The Company's strategy has evolved from reliance on a sole
distributorship which was terminated in January 1996. Sales to the Company's
former sole distributor represented 81% of the Company's net sales in 1995.

Internationally, the Company has signed a worldwide, non-exclusive agreement
with Vida Medizinelektronik GmbH ("Vida"), a manufacturer and distributor of a
variety of electromedical equipment, including manual defibrillators. Vida is
currently distributing the Company's products through its dealers in the United
Kingdom, Australia and Northern Africa and plans to distribute the VivaLink,
pending regulatory approval, through its dealer network in Western Europe and
other regions.

There can be no assurance that the Company will be able to strengthen its
distribution or maintain its existing distribution network. Further,
international distribution will depend significantly on the ability of the
Company to obtain required regulatory approvals in foreign countries. There can
be no assurance that the Company will be able to obtain necessary foreign
regulatory approvals or that international distributors will devote adequate
resources to selling the Company's products. Because the concept of early
defibrillation is not as advanced throughout the rest of the world, the Company
anticipates that the international market will develop at a slower rate than the
domestic market. See "Risk Factors -- Limited Marketing and Manufacturing
Experience."

CUSTOMER SERVICE

The Company is committed to rapid response to customer service requests. A
Company representative is available 24 hours a day, 7 days a week. Most customer
service calls can be resolved over the telephone. If factory service is
necessary, the Company is committed to 24 hour delivery of an AED loaner. The
customer's unit will then be repaired or replaced. The Company's standard
warranty covers parts and labor for one year.

MANUFACTURING

Manufacturing operations performed at the Company's headquarters consist
primarily of final assembly and testing of the VivaLink and related accessories.
The Company believes that it has sufficient manufacturing capacity for the
foreseeable future. The Company believes that it is in compliance with FDA good
manufacturing practices and has established a goal for obtaining ISO 9001
certification by mid-1997.

The VivaLink was designed with the goal of minimizing manufacturing cost and
production time. The Company believes that this design gives it a competitive
advantage in cost of goods and production time, which should enhance the
Company's ability to respond rapidly to changes in market demand. The VivaLink
primarily utilizes standard components and consists of a molded case, electronic
circuit boards and wire harness assemblies.

As part of the Company's strategy, the Company outsources circuit boards, cable
assemblies, electrodes and plastic injection-molded parts. The Company has
formed relationships with external suppliers to ensure the cost-effective
procurement of high quality materials and components. This allows the Company to
benefit from greater purchasing power, economies of scale and technical
competencies of industry specialists. Electrodes and certain other materials and
components used in the Company's products are purchased from single sources. The
Company believes that additional sources for such components and materials could
be utilized if necessary. However, there can be no assurance that alternative
sources of supply will be available if needed. The success of the Company
depends, in part, on its ability to increase production and maintain access to
adequate production components and materials. Shortages or poor quality of
materials and components could have a material adverse effect on the Company's
business, operating results or financial condition. While the Company seeks to
maintain an inventory of components sufficient for its anticipated needs,
certain components are subject to long lead times and, accordingly, the
Company's ability to expand production rapidly could be limited by the
availability of such components. The expansion of the Company's manufacturing
operations is subject to a number of other risks. See "Risk Factors -- Limited
Marketing and Manufacturing Experience; -- Management of Growth; and --
Dependence on Principal Suppliers."

RESEARCH AND DEVELOPMENT

The Company is committed to continued product innovation in external
defibrillation and enhancement of existing products. The Company's primary
product development effort is focused on the VivaLink II, a versatile platform
capable of multiple waveforms and high/low energy output. The Company believes
that this product will provide AED users the capability of optimizing energy and
waveform delivery under software control without expensive factory upgrades or
replacement units. The Company is also actively studying waveform efficacy in
order to identify and develop an optimized waveform technology for transthoracic
defibrillation. Product development expenses are generally incurred for product
design and qualification, manufacturing process development and validation,
clinical trials, and governmental approvals. For the years ended December 31,
1993, 1994 and 1995, the Company's research and development expenditures were
approximately $277,000, $648,000 and $688,000, respectively. The Company's
research and development expenses are expected to increase as the Company
continues its current product development plans.

PATENTS AND PROPRIETARY TECHNOLOGY

The Company's success will depend in part on its ability to obtain patent
protection for its products and processes, to preserve its trade secrets and to
operate without infringing the proprietary rights of third parties. The
Company's strategy is to actively pursue patent protection in the United States
and selected foreign jurisdictions for technology that it believes to be
proprietary and that offers a potential competitive advantage for its products.
The Company currently holds three U.S. patents and has received notice of
allowance on two additional U.S. patents.

The first patent relates to specialized electrode packaging; this invention
allows the electrodes to be preconnected to the VivaLink and the unit to
complete its daily self test. The Company's second patent covers the Company's
high voltage circuit; this invention allows for a reduction in the cost of the
high voltage components, which the Company believes gives it a manufacturing
cost advantage. The third patent covers a novel method for protecting the
patient from electrical leakage currents and circuit malfunctions; the Company
believes this invention has broad applications and may have value in licensing
rights to manufacturers of both implantable and external defibrillators. The
fourth and fifth patents, for which notices of allowance have been received,
address the design of the VivaLink and its soft-sided carrying bag. The Company
has 23 additional patents pending in the United States and six internationally.
The patents pending address such items as the user interface, self-testing
features, electrodes, unique electrical circuits, and advanced waveform
technologies as well as continuations on previously issued patents. The Company
plans to file additional patent applications to seek protection for other
proprietary aspects of its technology in the future.

There can be no assurance that any patents from pending patent applications or
from any future patent application will be issued, that the scope of any patent
protection will exclude competitors or provide competitive advantages to the
Company, that any of the Company's patents will be held valid if subsequently
challenged or that others will not claim rights in or ownership of the patents
and other proprietary rights held by the Company. In addition, the laws of
certain foreign countries do not protect the Company's intellectual property
rights to the same extent as do the laws of the United States. Litigation or
regulatory proceedings, which could result in substantial costs and uncertainty
to the Company, may also be necessary to enforce patent or other intellectual
property rights of the Company or to determine the scope and validity of other
parties' proprietary rights. There can be no assurance that third parties will
not assert infringement claims in the future with respect to the Company's
current or future products or that any such claims will not require the Company
to enter into license arrangements or result in litigation, regardless of the
merits of such claims. No assurance can be given that any necessary licenses can
be obtained on commercially reasonable terms, or at all. Should litigation with
respect to any such claims commence, such litigation could be extremely
expensive and time consuming and could have a material adverse effect on the
Company's business, financial condition or results of operations regardless of
the outcome of such litigation. See "Risk Factors -- Reliance on Proprietary
Technology; Uncertainty of Proprietary Rights Protection."

COMPETITION

The market for AEDs is highly competitive. The Company competes with a number of
companies, some of which may have significantly greater financial, technical,
research and development, and marketing and sales resources than the Company.
Competition for AED sales comes from established defibrillator manufacturers,
including Physio-Control International Corporation, Laerdal Medical, Inc.,
Marquette Electronics, Inc. and Zoll Medical Corporation. Physio-Control,
Laerdal and Marquette have developed AEDs based on the technology platforms of
earlier defibrillators. The Company believes these AEDs, while an improvement
over manual defibrillators, have complexities which inhibit their widespread use
by first responders, future designated citizen responders or concerned citizen
first responders. A recently announced AED designed for use by first responders
by a development stage company, Heartstream, Inc., is expected to be introduced
in 1996. In addition, the Company expects additional competitive product
entrants from established and new defibrillator manufacturers.

The Company believes that the key issues for customers in selecting an AED
include ease of use, ease of maintenance, purchase price, training cost,
reliability and field service. The Company believes that the VivaLink and
related accessories compete favorably in these areas. There can be no assurance,
however, that superior defibrillation technologies or products will not be
developed by the Company's current competitors or others or that alternative
therapies or approaches, including pharmaceutical or other alternatives, will
not render the Company's technology or products under development obsolete or
noncompetitive, which could have a material adverse effect on the Company's
business, operating results or financial condition. See "Risk Factors -- Intense
Competition and -- Technological Change and Product Obsolescence."

GOVERNMENT REGULATION

The medical devices developed, manufactured and marketed by the Company are
subject to extensive and rigorous regulation by the FDA and similar agencies in
other countries. The FDA granted 510(k) marketing clearance for the VivaLink in
February 1995, enabling the Company to begin marketing of the device in the
United States. The Company is registered as required by Canadian regulations. In
the United Kingdom, the Company is in the final stages of review by the British
Standards Institute. The Company is working in conjunction with its European
distributor to obtain a CE mark for the VivaLink.

Pursuant to the Federal Food, Drug, and Cosmetic Act of 1976, as amended, and
the regulations promulgated thereunder (the "Act"), the FDA regulates the
design, 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 necessary approvals, withdrawal of marketing approvals 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. 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 effectiveness. Under FDA regulations, Class I
devices are subject to general controls (for example, labeling, pre-market
notification and adherence to GMP) and Class II devices are subject to general
and special controls (for example, performance standards, post-market
surveillance, patient registries and FDA guidelines). Generally, Class III
devices are those which must receive pre-market approval by the FDA to ensure
their safety and effectiveness (for example, life-sustaining, life-supporting
and implantable devices, or new devices which have not been found substantially
equivalent to legally marketed devices). The FDA has also recently established a
task force, which is considering requiring post-market studies in an effort to
obtain better data on the safety of AEDs and their diagnostic algorithms. Such
post-market studies may result in the imposition of additional regulatory
requirements on the Company.

Before a new medical device can be introduced into the U.S. market, the
manufacturer must generally obtain FDA clearance through either a 510(k)
notification or Pre-Market Approval ("PMA"). A 510(k) clearance will be granted
if the submitted information establishes that the proposed device is
"substantially equivalent" to a legally marketed Class I or II medical device,
or to a Class III medical device for which the FDA has not called for PMAs.

The Company is also subject to state regulations in the United States. Many
states have enacted laws and regulations regarding emergency medical services.
In some states, defibrillation therapy, including the use of AEDs, has been
limited to specified categories of trained personnel. In some cases, specific
features are identified as required for external defibrillators, which may not
currently be part of the VivaLink. There is no assurance that such restrictions
or laws will be changed, which could have a material adverse effect on the
Company's ability to market its products in certain states.

In order for the Company to market the VivaLink and its related accessories in
Europe and certain other foreign countries, the Company and its distributors and
agents must obtain required regulatory approvals and clearances specific to
those jurisdictions. These regulations and marketing clearance protocols are
specific to each country. There can be no assurance the Company will be able to
obtain required regulatory approvals or that it will not incur significant costs
in obtaining such approvals. Delays in receipt of such approvals could
significantly impact the Company's ability to market its products
internationally and could have a material adverse effect on the Company's
business, operating results or financial condition.

The European Union has promulgated rules which require that medical products
receive by mid-1998 the right to affix the CE mark, an international symbol of
adherence to quality assurance standards and compliance with applicable European
medical device directives. In order to obtain the right to affix the CE mark to
the VivaLink or other Company products, the Company must obtain certification
that its processes meet European quality standards. Failure to obtain
certification will prohibit the Company from obtaining the CE mark and marketing
its products in the member European Union countries. There can be no assurance
that the Company will be successful in obtaining the required certifications or
CE mark.

The Company is working in conjunction with Vida, its European distributor, to
obtain a CE mark for the VivaLink. A final decision on this is expected in the
third quarter of 1996. The Company has also engaged T\(V Product Services in
Munich, Germany to obtain regulatory approval to market the VivaLink II in
Germany and other European Union member countries. See "Risk Factors -- Strict
Government Regulation; Need for Additional Regulatory Approvals."

PRODUCT LIABILITY

The Company inherently faces the potential business risk of product liability
claims in the event that use of its products results in personal injury or
death. There can be no assurance that the Company will not be subjected to such
claims and losses related to such claims. The Company currently maintains
product liability insurance with coverage limits of $1 million per occurrence
and $1 million in the aggregate. There can be no assurance that the coverage
limits of the Company's insurance policies will be adequate. Product liability
insurance is expensive, difficult to obtain, and may not be available in the
future to the Company. To date, there have not been any product liability claims
asserted against the Company. Any claims asserted against the Company could have
a material adverse effect on the Company's business, results of operations or
financial condition. See "Risk Factors -- Product Liability."

EMPLOYEES

At April 30, 1996, the Company had approximately 40 full-time employees, of whom
17 were involved in research and development, 9 in sales and marketing, 8 in
manufacturing, and 6 in administration and management. None of the Company's
employees is represented by a labor union or is covered by a collective
bargaining agreement. The Company has not experienced any work stoppages and
believes its employee relations to be good.

The Company expects to hire additional employees during the next twelve
months, principally in sales, manufacturing and product development. See
"Risk Factors -- Management of Growth; -- Dependence on Key Management."

FACILITIES AND EQUIPMENT

The Company is headquartered in a leased facility of 10,625 square feet located
at 5420 Feltl Road, Minnetonka, Minnesota. The facility is leased pursuant to a
five-year lease that expires August 31, 1999. The Company has signed an addendum
to the lease for an additional 7,633 square feet adjacent to the existing
facility. The Company intends to occupy the additional space beginning in July
1996. The Company believes these facilities are adequate space for its current
and reasonably foreseeable needs.

LITIGATION

The Company is not a party to any material legal proceedings.

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The directors, executive officers and key employees of the Company are as
follows:

NAME AGE POSITION WITH COMPANY

Byron L. Gilman 49 Chairman, Chief Executive Officer and Director
Kenneth F. Olson 34 Vice President of Operations
R. Eric Bosler 28 Chief Financial Officer
Douglas M. Graham 46 Director of Sales
Thomas K. Klein 45 Director of Marketing
James E. Brewer 42 Director of Research and Regulatory Affairs
Richard B. Emmitt 51 Director
David S. Goldsteen, M.D. 42 Director
Karl J.F. Kroll 34 Director
Mark W. Kroll, Ph.D. 43 Director
Kenneth C. Maki 48 Director
Warren S. Watson 44 Director

BYRON L. GILMAN, a founder of the Company, has been Chairman, Chief Executive
Officer and a Director of the Company since its inception in April 1992. From
1990 to December 1992, Mr. Gilman served as an independent consultant in the
biomedical field. From 1987 to 1990, Mr. Gilman was Vice President of Product
Development and a director of Medilase Inc. (now Clarus Medical), a laser
angioplasty company, of which he was a co-founder.

KENNETH F. OLSON has been Vice President of Operations of the Company since July
1995, and served as Director of Engineering of the Company from January 1993 to
July 1995. From June 1992 to December 1992 Mr. Olson was a Senior Design
Engineer for Ancor Communications, a high speed communications switching
company. From June 1990 to June 1992 Mr. Olson was a Senior Design Engineer for
Network Systems Corp., a computer network design company.

R. ERIC BOSLER has been Chief Financial Officer of the Corporation since
March 1996, and served as Controller of the Company from July 1994 to March
1996. Mr. Bosler was employed by Ernst & Young LLP from July 1993 to July
1994 as an auditor. From March 1991 to June 1993, Mr. Bosler was enrolled as
a student in the Masters of Business Administration program at the University
of Denver. Mr. Bosler is a certified public accountant.

DOUGLAS M. GRAHAM has been Director of Sales of the Company since June 1995. Mr.
Graham was employed by Aerosport as Director of Sales from December 1994 to June
1995. Prior to Aerosport, Mr. Graham was employed by Medical Graphics
Corporation, a manufacturer of cardiac stress testing equipment, as Sales
Director from August 1993 to August 1994 and was not employed from September
1994 to December 1994. From November 1986 to July 1993 Mr. Graham was employed
as a District Manager by Siemens Burdick, Inc., a manufacturer of cardiac
monitoring equipment.

THOMAS K. KLEIN has been Director of Marketing of the Corporation since February
1996. From 1990 to February 1996, Mr. Klein was Vice President, Marketing and
Customer Service of Recovery Engineering, Inc., a manufacturer of small-scale
drinking water systems.

JAMES E. BREWER has been Director of Research and Regulatory Affairs of the
Company since October 1995. From June 1993 to October 1995, Mr. Brewer was a
Senior Research Scientist for Angeion Corp., a manufacturer of implantable
defibrillators. From March 1987 to May 1993, Mr. Brewer was Vice President of
Research for Vital Heart Systems, a manufacturer of signal averaging ECG
equipment.

RICHARD B. EMMITT has been a Director of the Company since December 1995. Mr.
Emmitt has been an investment manager with The Vertical Group, L.P., a
private investment entity, since 1989. He is also a director of Xomed
Surgical Products, Inc. and Cardiotronics Systems, Inc.

DAVID S. GOLDSTEEN, M.D., has been a Director of the Company since June 1994.
Dr. Goldsteen has been Medical Director of Healthspan Transportation, a
wholly owned subsidiary of Allina Health Systems, since 1987. Dr. Goldsteen
has also been the President and Chief Executive Officer of Global Capital
Investments, a merchant banking firm, since 1995. Dr. Goldsteen currently
serves on the Board of Directors of TraceNet Technology, Inc. and is the
Chairman of the Board of Advanced Vascular Systems, Inc.

KARL J.F. KROLL, a founder of the Company, has been a Director of the Company
since its inception in April 1992. Mr. Kroll has been employed as a
mechanical engineer, by Intercomp Co., a manufacturer of portable scales for
the transportation industry since November 1994. From June 1990 to November
1994, Mr. Kroll was employed by Dahlberg, Inc., a manufacturer of hearing
aids, as a mechanical engineer.

MARK W. KROLL, PH.D., a founder of the Company, has been a Director of the
Company since its inception in April 1992. Since October 1995, Dr. Kroll has
been employed by Pacesetter, Inc., a St. Jude Medical company, as a Vice
President of the tachycardia business unit. From 1991 to October 1995, he was
employed by Angeion Corporation, an implantable defibrillator/medical device
development company, most recently as Vice President of Research and Product
Planning. Mr. Kroll holds a Ph.D. in Mathematics.

KENNETH C. MAKI, a founder of the Company, has been a Director of the Company
since its inception in April 1992. Mr. Maki has been Chief Executive Officer of
Tekna-Seal, Inc., a manufacturer of electronic seals for medical and industrial
equipment, since December 1994. From 1982 to December 1994, he was Chief
Executive Officer of Tau-Med, Inc., a manufacturer's representative for sales of
medical equipment.

WARREN S. WATSON has been a Director of the Company since June 1994. Mr.
Watson has been employed by Medtronic, Inc. since 1976, in various positions,
and he currently serves as Vice President and General Manager of Brady Leads
for Medtronic, Inc., a manufacturer of medical devices.

Directors of the Company are elected annually to serve until the next annual
meeting of shareholders. Certain shareholders have the right to nominate
persons to serve on the Company's Board of Directors, and the Company has
agreed to use its best efforts to secure the election of such nominees to the
Board of Directors. Dr. Goldsteen, Mr. Emmitt and Mr. Watson have been
elected directors of the Company pursuant to such arrangements. See "Certain
Transactions." These arrangements will terminate upon the closing of this
offering. Karl J.F. Kroll and Mark W. Kroll are brothers.

COMMITTEES OF BOARD OF DIRECTORS

The Board of Directors has established a Compensation Committee and an Audit
Committee, each of which consists of independent, non-management members of the
Board. The Audit Committee, consisting of Mr. Emmitt, Dr. Goldsteen and Mr.
Maki, is responsible for recommending independent auditors, reviewing with the
independent auditors the scope and results of the audit engagement, establishing
and monitoring the Company's financial policies and control procedures, and
reviewing and monitoring the provision of non-audit services by the Company's
auditors. The Compensation Committee, consisting of Dr. Goldsteen, Dr. Mark
Kroll and Mr. Watson, determines and establishes the salaries, bonuses and other
compensation of the executive officers of the Company and administers the
Company's stock option program.

SCIENTIFIC ADVISORS

The Company has established a Scientific Advisory Board ("SAB") to assist the
Company's development team. Specifically, the role of the SAB is to help in
establishing product requirements, usage protocols and features required in
pre-hospital defibrillation; contribute technical expertise to the design of
the AED; and assist with design and implementation of product testing. Dr. G.
Patrick Lilja, Dr. Charles D. Swerdlow, and Dr. Patrick J. Tchou are
currently members of the SAB. Dr. Lilja is the Chief of the Department of
Emergency Medicine at North Memorial Medical Center in Minneapolis,
Minnesota. Dr. Swerdlow is Clinical Associate Professor of Medicine at UCLA
Medical School and Cedars-Sinai Medical Center in Los Angeles, California.
Dr. Tchou is the Head of Cardiac Electrophysiology for the Cleveland Clinic
Foundation in Cleveland, Ohio.

EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth certain information
regarding compensation earned by or awarded to Byron L. Gilman for the years
ended December 31, 1995, 1994 and 1993. No other executive officer has earned or
been awarded annual compensation in excess of $100,000.

LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS

Byron L. Gilman 1995 $106,500 $13,300 50,000
Chairman of the Board and 1994 $ 84,000 -- --
Chief Executive Officer 1993 $ 84,000 -- --

The following table sets forth certain information regarding stock options
granted to the executive officer named in the Summary Compensation Table during
the Company's fiscal year ended December 31, 1995.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
PERCENT OF TOTAL STOCK
OPTIONS GRANTED PRICE APPRECIATION
TO EXERCISE FOR
OPTIONS EMPLOYEES IN PRICE EXPIRATION OPTION TERM(1)
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Byron L.
Gilman 50,000(2) 33.4% $3.00 01/04/05 $94,334 $239,061
</TABLE>

(1) Represents the potential net realizable value of each grant of options
assuming that the market price of the underlying common stock appreciates in
value from its fair market value on the date of grant to the end of the
option term at the indicated annual rates.

(2) Mr. Gilman was granted an option for 50,000 shares of Common Stock on
September 15, 1995. Such option vests with respect to 25% of the option
shares on the first, second, third and fourth anniversaries of the grant
date.

The following table sets forth certain information regarding the number and
value of unexercised stock options held by the executive officer named in the
Summary Compensation Table as of the end of the Company's fiscal year ended
December 31, 1995.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT YEAR-END (#) AT YEAR-END ($)(1)
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>

Byron L.
Gilman 0 $0 0 50,000 $0 $200,000

</TABLE>

(1) Based on the difference between the assumed public offering price of $7.00
per share and the exercise price of the options multiplied by the number of
shares underlying the option. The executive officer named in the table did
not exercise any stock options during the year ended December 31, 1995.

EMPLOYMENT AGREEMENT

Mr. Gilman has entered into an employment agreement with the Company,
effective May 2, 1996, for an initial term of three years, with automatic
one-year extensions of the term on each anniversary date of the agreement. The
agreement provides for a base salary of not less than $120,000 annually. In the
event Mr. Gilman's employment is terminated by the Company without "cause" (as
defined in the agreement), and not due to death or disability, his salary will
continue for a period of 12 months after the date of termination. If, after a
"change in control" (as defined in the agreement), Mr. Gilman's employment is
terminated by the Company without "cause" and not due to death or disability, or
is terminated by Mr. Gilman for good reason (as specified in the agreement), his
salary will continue through the end of the scheduled employment term or, if
longer, for a period of 12 months after the date of termination. The agreement
prohibits Mr. Gilman from competing with the Company for a period of 12 months
after termination of employment.

STOCK OPTIONS

The Company's 1992 Stock Option and Incentive Plan (the "Option Plan") was
adopted by the Board of Directors of the Company and approved by the
shareholders in 1992. The Option Plan permits the granting of awards to
employees and consultants of the Company in the form of stock options and grants
of restricted stock. As of the date of this Prospectus, a total of 1,000,000
shares of the Company's Common Stock has been reserved for issuance pursuant to
awards granted under the Option Plan. As of the date of this Prospectus, 447,500
shares were subject to outstanding stock options under the Option Plan, and
518,000 shares were available for grant. Options for a total of 34,500 shares
have been exercised under the Option Plan. The exercise prices for currently
outstanding stock options range from $1.00 to $6.00 per share. Options granted
under the Option Plan generally expire five or ten years from the date of grant
or, if earlier, upon termination of employment.

The Option Plan is administered by the Board of Directors of the Company (the
"Board"), or by a committee appointed by the Board. The Option Plan gives broad
powers to the Board to administer and interpret the Option Plan, including the
authority to select the individuals to be granted options and to prescribe the
particular form and conditions of each option granted. Options may be granted
pursuant to the Option Plan through May 22, 2002. The Option Plan may be
terminated earlier by the Board of Directors in its sole discretion.

The Company has also granted non-qualified stock options, not under the Option
Plan, to certain consultants to the Company in lieu of cash compensation for
their services. At the date of this Prospectus, 362,538 shares were subject to
such options, at exercise prices ranging from $.10 to $4.00 per share. Such
options generally expire five years from the date of grant.

CERTAIN TRANSACTIONS

From December 1993 through March 1994, the Company conducted a private placement
in which it sold an aggregate of 268,999 shares of Common Stock at a price of
$1.50 per share. In December 1993, Dr. David Goldsteen acquired an aggregate of
33,333 shares of Common Stock in such offering. In addition, in exchange for Dr.
Goldsteen's consent to the immediate use by the Company of the funds provided by
Dr. Goldsteen pending the sale of the minimum number of shares in such offering,
the Company issued to Dr. Goldsteen warrants exercisable through December 1998
for the purchase of an additional 33,333 shares of Common Stock at a price of
$1.50 per share, and granted to Dr. Goldsteen the right to make a further
investment of up to $500,000 within a period of two months after completion of
such offering. Pursuant to such investment right, Dr. Goldsteen and others
invested an aggregate of $340,000 in May 1994, as described below, following the
Company's sale of Common Stock to Medtronic, Inc. in April 1994.

In April 1994, the Company entered into an agreement with Medtronic, Inc.
pursuant to which it sold to Medtronic 200,000 shares of Common Stock at a
purchase price of $1.50 per share, and a warrant exercisable through April 1999
for the purchase of an additional 75,000 shares of Common Stock at a price of
$1.50 per share. The holder of the warrant has demand registration rights that
may be exercised one time, and "piggy-back" registration rights that may be
exercised from time to time, prior to April 1999. In addition, the agreement
provides that, so long as Medtronic owns at least 100,000 shares of Common
Stock, Medtronic will have the right to nominate one person to serve on the
Company's Board of Directors, and the Company will use its best efforts to
secure the election of such nominee to the Board of Directors. In June 1994, Mr.
Watson was elected to the Board of Directors pursuant to this arrangement. This
arrangement will terminate upon the closing of this offering.

In May 1994, the Company entered into agreements with Dr. Goldsteen and other
private investors for the sale of an aggregate of 226,667 shares of Common Stock
at a purchase price of $1.50 per share, and warrants exercisable through May
1999 for the purchase of an additional 85,000 shares of Common Stock at a price
of $1.50 per share. Pursuant to such agreements, Dr. Goldsteen acquired 133,333
shares of Common Stock and warrants for an additional 50,000 shares, and four
other investors acquired an aggregate of 93,334 shares of Common Stock and
warrants for an additional 35,000 shares. The holders of the warrants have
demand registration rights that may be exercised one time, and "piggy-back"
registration rights that may be exercised from time to time, prior to April
1999. In addition, the agreements provide that, so long as such investors, as a
group, own at least 100,000 shares of Common Stock, they will have the right to
nominate one person to serve on the Company's Board of Directors, and the
Company will use its best efforts to secure the election of such nominee to the
Board of Directors. In June 1994, Dr. Goldsteen was elected to the Board of
Directors pursuant to this arrangement. This arrangement will terminate upon the
closing of this offering.

In September 1994, the Company offered Units (each Unit consisting of one
share of Common Stock and one Common Stock Purchase Warrant) for sale to its
existing shareholders at $2.25 per Unit. The sale of Units was completed in
October 1994. An aggregate of 153,778 Units was sold, resulting in net
proceeds to the Company of approximately $336,000. Mr. Gilman and Dr.
Goldsteen purchased 11,000 Units and 2,000 Units, respectively. Medtronic,
Inc. purchased 33,333 Units.

In mid-1995, the Company secured $305,000 in bridge loans for working capital
purposes. The loans were unsecured, bore interest at the prime rate plus two
percent, and were payable on demand. The loans included, as additional
compensation to the lenders, warrants for the purchase of 203,333 shares of
Common Stock. In addition, in May 1995, certain key employees of the Company
agreed to defer their salaries pending the sale of the minimum number of shares
in a private placement of Common Stock of the Company conducted during the
period from June to December 1995. The minimum number of shares was sold and the
deferred salaries were repaid in September 1995. In consideration for the salary
deferral, each of the key employees received warrants entitling such employee to
purchase 33 shares of Common Stock for each $100 of salary that was deferred. An
aggregate of $193,968 in bridge loans was converted into 64,556 shares of Common
Stock, and the remainder of the bridge loans were repaid, with interest, from
proceeds of the Company's 1995 private placement of Common Stock. Pursuant to
these arrangements, warrants and options, exercisable at a price of $3.00 per
share, were received by Dr. Goldsteen (33,334 shares), Mr. Gilman (12,834 shares
directly and 13,333 shares indirectly by a family trust), Mr. Bosler (3,184
shares), Mr. Mark Kroll (3,333 shares), and Mr. Olson (5,866 shares).

From June 1995 to December 1995, the Company conducted a private placement of
Common Stock, pursuant to which it sold an aggregate of 1,686,011 shares of
common stock at a price of $3.00 per share. On September 6, 1995, the Company
sold 250,000 shares ($750,000) to The Vertical Group, a venture capital firm, at
a price of $3.00 per share. The subscription from The Vertical Group comprised
the minimum number of shares required for the first closing of the offering. The
Vertical Group subsequently purchased an additional 76,000 shares in the
offering. In connection with the initial sale to The Vertical Group, the Company
agreed that The Vertical Group may nominate one person to serve as a director of
the Company and that the Company will use its best efforts to cause such nominee
to be elected to the Board of Directors. Such right shall continue until such
time as The Vertical Group's percentage ownership of the Company's Common Stock
is reduced to less than 2.9%. In December 1995, Mr. Emmitt was elected to the
Board of Directors pursuant to this arrangement. The Vertical Group also has the
right to be represented at meetings of the Board of Directors by an additional
observer. This arrangement will terminate upon the closing of this offering.

On June 5, 1996, the Company obtained a $1.0 million bridge loan from Medtronic,
Inc., an existing shareholder of the Company. The bridge loan is evidenced by a
promissory note that is payable in May 1997 or upon the closing of this
offering, if earlier, and bears interest at a rate of prime plus 3% (currently
11.25%) per annum. In addition, the Company has granted to Medtronic, Inc., in
connection with the bridge loan, a five-year warrant to purchase 100,000 shares
of Common Stock at an exercise price equal to the initial public offering price.
Including the warrants issued in connection with the bridge loan, Medtronic,
Inc. beneficially owns approximately 10.4% of the Company's Common Stock prior
to this offering. Warren S. Watson, a director of the Company, is an officer of
Medtronic, Inc.

PRINCIPAL SHAREHOLDERS

The following table sets forth information regarding the beneficial ownership of
shares of Common Stock of the Company by each director of the Company, by each
executive officer named in the compensation table, by all directors and
executive officers of the Company as a group, and by each shareholder known by
the Company to own beneficially more than five percent (5%) of the outstanding
shares of the Company's Common Stock as of the date of this Prospectus. Unless
otherwise noted, each person or group identified possesses sole voting and
investment power with respect to such shares.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF OUTSTANDING SHARES(1)
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED BEFORE OFFERING AFTER OFFERING
<S> <C> <C> <C>

DIRECTORS AND EXECUTIVE OFFICERS:
Byron L. Gilman (2)(3) 378,072 8.9% 5.6%
5420 Feltl Road
Minnetonka, Minnesota 55343

Richard B. Emmitt (3)(4) 334,000 7.9% 5.0%
18 Bank Street
Summit, New Jersey 07901

David S. Goldsteen, M.D. (3) 310,333 7.2% 4.5%
4885 E. Lake Harriet Parkway
Minneapolis, Minnesota 55409

Karl J.F. Kroll, Ph.D. (3)(5) 181,667 4.3% 2.7%
6427 Ithaca Lane N.
Maple Grove, Minnesota 55311

Mark W. Kroll, Ph.D. (3) 118,500 2.8% 1.8%
15900 Valley View Court
Sylmar, California 91392

Kenneth C. Maki (3) 139,667 3.3% 2.1%
505 N.W. 127th Lane
Coon Rapids, Minnesota 55433

Warren S. Watson (6) -- -- --
7000 Central Avenue N.E.
Fridley, Minnesota 55432

All directors and executive
officers 1,520,812 33.8% 21.7%
as a group (9 individuals) (3)

OTHER PRINCIPAL SHAREHOLDERS:

Medtronic, Inc. (7) 459,666 10.4% 6.6%
7000 Central Avenue N.E.
Fridley, Minnesota 55432

Vertical Fund Associates, L.P. (8) 326,000 7.8% 4.9%
18 Bank Street
Summit, New Jersey 07901

</TABLE>
*Less than one percent

(1) Based on 4,196,257 shares outstanding as of the date of this Prospectus and
6,696,257 shares outstanding after the offering. Does not include (i)
965,500 shares available for issuance under the Company's 1992 Stock Option
and Incentive Plan, of which 447,500 shares are subject to options currently
outstanding; (ii) 362,538 shares issuable upon exercise of options granted
to consultants, contract advisors or employees in lieu of cash compensation
for services to the Company; (iii) 668,995 shares issuable upon exercise of
outstanding warrants to purchase Common Stock. Each figure showing the
percentage of outstanding shares owned beneficially has been calculated by
treating as outstanding and owned the shares which could be purchased by the
indicated person(s) within 60 days upon the exercise of existing stock
options and warrants.

(2) Includes 26,739 shares held by a trust for members of Mr. Gilman's
family, of which he is the Trustee.

(3) Includes shares of Common Stock which could be purchased within 60 days
upon the exercise of existing stock options or warrants, as follows: Mr.
Gilman, 16,834 shares directly and 23,333 shares by a family trust; Mr.
Emmitt, 8,000 shares; Dr. Goldsteen, 136,667 shares; Mr. Karl Kroll,
23,000 shares; Dr. Mark Kroll, 21,333 shares; Mr. Maki, 23,000 shares;
and all directors and executive officers as a group, 297,467 shares.

(4) Includes 326,000 shares held by Vertical Fund Associates, L.P., of which Mr.
Emmitt is managing partner.

(5) Includes 7,500 shares held by members of Mr. Karl Kroll's family.

(6) Does not include shares held by Medtronic, Inc., of which Mr. Watson is
an officer.

(7) Includes 226,333 shares of Common Stock which could be purchased within 60
days upon the exercise of existing stock warrants.

(8) Said shares are also included in the number of shares beneficially owned
by Mr. Emmitt.

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

The Company is authorized to issue up to 50,000,000 shares of Common Stock,
par value $.01 per share. As of April 30, 1996, there were 4,196,257 shares
outstanding and approximately 215 holders of record of the Company's Common
Stock. The Board of Directors has the authority to establish additional
classes of stock. See "Undesignated Preferred Stock."

Holders of Common Stock are entitled to receive such dividends as are declared
by the Board of Directors of the Company out of funds legally available for the
payment of dividends. In the event of any liquidation, dissolution or winding up
of the Company, the holders of Common Stock will be entitled to receive a pro
rata share of the net assets of the Company remaining after payment or provision
for payment of the debts and other liabilities of the Company. Holders of Common
Stock are entitled to one vote per share in all matters to be voted upon by
shareholders. There is no cumulative voting for the election of directors, which
means that the holders of shares entitled to exercise more than 50% of the
voting rights in the election of directors are able to elect all of the
directors. Holders of Common Stock have no preemptive rights to subscribe for or
to purchase any additional shares of Common Stock.

All of the outstanding shares of Common Stock are fully paid and non-assessable,
and the shares offered hereby will be fully paid and non-assessable. Holders of
Common Stock of the Company are not liable for further calls or assessments.

UNDESIGNATED PREFERRED STOCK
The Company's Board of Directors is authorized, without further shareholder
action, to establish various series of Preferred Stock from time to time and to
determine the rights, preferences and privileges of any wholly unissued series,
including, among other matters, any dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, liquidation preferences, sinking
fund terms, the number of shares constituting any such series, and the
description thereof, and to issue any such shares. Although there is no current
intention to do so, the Board of Directors of the Company may, without
shareholder approval, issue shares of a class or series of preferred stock with
voting and conversion rights which could adversely affect the voting power of
the holders of the Common Stock and may have the effect of delaying, deferring
or preventing a change in control of the Company.

OUTSTANDING OPTIONS AND WARRANTS

The Company has reserved an aggregate of 1,000,000 shares for issuance under its
1992 Stock Option and Incentive Plan. At the date of this Prospectus, options
for 447,500 shares were outstanding under the Plan. In addition, stock options
for an aggregate of 362,538 shares had been granted, not under the Plan, to
consultants, contract advisors or employees in lieu of cash in exchange for
services. In connection with prior financing transactions, the Company has
issued warrants for the purchase of an aggregate of 668,995 shares of Common
Stock. See "Management -- Stock Options" and "Certain Transactions."

CERTAIN PROVISIONS OF MINNESOTA LAW

Minnesota law contains certain provisions, described below, that could delay,
defer or prevent a change in control of the Company and could have the effect of
making it more difficult to acquire the Company or remove incumbent management.

Section 302A.671 of the Minnesota Statutes applies, with certain exceptions, to
any acquisition of voting stock of the Company from a person other than the
Company, and other than in connection with certain mergers and exchanges to
which the Company is a party, resulting in certain percentages of voting control
of the Company (in excess of 20%, 33-1/3% or 50%) by such acquiring person.
Section 302A.671 requires approval of any such acquisitions by a majority vote
of the shareholders of the Company (other than the acquiring person) prior to
its consummation. In general, shares acquired in the absence of such approval
are denied voting rights and are redeemable at their then fair market value by
the Company within 30 days after the acquiring person has failed to give a
timely information statement to the Company or the date the shareholders voted
not to grant voting rights to the acquiring person's shares.

Section 302A.673 of the Minnesota Statutes generally prohibits any business
combination by the Company, or any subsidiary of the Company, with any
shareholder which purchases 10% or more of the Company's voting shares (an
"interested shareholder") within four years following such interested
shareholder's share acquisition date, unless the business combination is
approved by a committee of all of the disinterested members of the Board of
Directors of the Company before the interested shareholder's share acquisition
date.

In the event of certain tender offers for stock of the Company, Section 302A.675
of the Minnesota Statutes precludes the tender offeror from acquiring additional
shares of stock (including acquisitions pursuant to mergers, consolidations or
statutory share exchanges) within two years following the completion of such an
offer unless the selling shareholders are given the opportunity to sell the
shares on terms that are substantially equivalent to those contained in the
earlier tender offer. Section 302A.675 does not apply if a committee of the
Board of Directors consisting of all of its disinterested directors (excluding
present and former officers of the corporation) approves the subsequent
acquisition before shares are acquired pursuant to the earlier tender offer.

The foregoing provisions may have the effect of preventing a change in control
of the Company, thereby denying shareholders the opportunity to sell shares in
such transactions and may also have a depressive effect on the market price of
the Company's Common Stock.

LIMITATION ON DIRECTOR LIABILITY

The Company has adopted in its Articles of Incorporation a provision that
eliminates, to the extent permitted by statute, the personal liability of
directors in their capacities as directors for monetary damages to the Company
or its shareholders for breaches of the directors' duty of care. The principal
effect of the provision is to prevent the Company and its shareholders from
suing any director for monetary damages arising out of a breach of that
director's duty of care or grossly negligent business decisions. The provision
does not affect the ability of the Company or its shareholders to seek
injunctive or other equitable remedies to enforce the directors' duty of loyalty
to the Company or its shareholders, for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, or for any
transaction from which the director derived an improper personal benefit. It
also does not eliminate or limit a director's liability for participating in
unlawful payments of dividends or stock repurchases or redemptions, or for
violations of state or federal securities laws.

TRANSFER AGENT AND REGISTRAR

Norwest Bank Minnesota, N.A., South Saint Paul, Minnesota is the transfer agent
and registrar for the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 6,696,257 shares of
Common Stock outstanding (assuming no exercise of outstanding options or
warrants). Of these shares, the 2,500,000 shares sold in this offering will be
freely tradeable without restriction or further registration under the
Securities Act of 1933, as amended (the "Act"), except that any shares purchased
by "affiliates" of the Company, as that term is defined in Rule 144 ("Rule 144")
under the Act ("Affiliates"), may generally only be sold in compliance with the
limitations of Rule 144 described below.

SALES OF RESTRICTED SHARES

The remaining 4,196,257 shares of Common Stock are deemed "Restricted Shares"
under Rule 144. Of the Restricted Shares, up to 368,440 shares may be eligible
for sale in the public market immediately after this offering pursuant to Rule
144(k) under the Act; 333,107 of these shares are subject to the lock-up
agreements described below (the "Lock-up Agreements"). Approximately 1,570,617
additional Restricted Shares may be eligible for sale in the public market in
accordance with Rule 144 or Rule 701 under the Act beginning 90 days after the
date of this prospectus; 1,393,950 of these shares are subject to Lock-up
Agreements. The remaining 2,257,200 outstanding Restricted Shares will not be
eligible for resale under Rule 144 until after the expiration of a two-year
holding period from the date such Restricted Shares were acquired from the
Company or an Affiliate, and may be resold in the public market only in
compliance with the registration requirements of the Act or pursuant to a valid
exemption therefrom; 1,915,517 of these shares are subject to Lock-up
Agreements. Certain security holders have the right to have their Restricted
Shares registered by the Company under the Act 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 such shares that does not exceed the greater of
(i) one percent of the then outstanding shares of Common Stock (approximately
66,963 shares immediately after this offering) or (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.
Sales under Rule 144 are also subject to certain limitations on manner of sale,
notice requirements, and availability of current public information about the
Company. In addition, 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 announced a proposal to
reduce the two-year Rule 144 and the three-year Rule 144(k) holding periods by
one year.

Rule 701 under the Act provides that the shares of Common Stock acquired on the
exercise of currently outstanding options may be resold by persons, other than
Affiliates, beginning 90 days after the date of this Prospectus, subject only to
the manner of sale provisions of Rule 144, and by Affiliates under Rule 144
without compliance with its two-year minimum holding period, subject to certain
limitations.

OPTIONS AND WARRANTS

As of the date of this prospectus, options and warrants to purchase a total of
1,479,033 shares of Common Stock were outstanding; 1,400,005 of the shares
issuable pursuant to such options and warrants are not yet exercisable, are
subject to Lock-up Agreements or are otherwise restricted from sale. An
additional 518,000 shares of Common Stock are available for future grants under
the Company's stock option and purchase plans. See "Management -- Stock Plans."

The Company intends to file one or more registration statements on Form S-8
under the Act to register all shares of Common Stock subject to outstanding
stock options and Common Stock issuable pursuant to the Company's stock option
and purchase plans that do not qualify for an exemption under Rule 701 from the
registration requirements of the Act. The Company expects to file these
registration statements promptly following the closing of this offering, and
such registration statements are expected to become effective upon filing.
Shares covered by these registration statements will thereupon be eligible for
sale in the public markets, subject to the Lock-up Agreements, to the extent
applicable.

LOCK-UP AGREEMENTS

Certain security holders and all officers and directors of the Company, who in
the aggregate hold substantially all of the outstanding shares of Common Stock
and options or warrants to purchase substantially all of the outstanding shares
of Common Stock, have agreed, pursuant to the Lock-up Agreements, that they will
not, without the prior written consent of the Representatives of the
Underwriters, offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, 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, certain security holders of the Company (the
"Rights Holders") will be entitled to require the Company to register under the
Act the sale of up to a total of 1,062,329 shares of outstanding Common Stock
and Common Stock issuable upon exercise of certain outstanding options (the
"Registrable Shares") under the terms of certain agreements between the Company
and the Rights Holders (the "Registration Agreements"). The Registration
Agreements provide that in the event the Company proposes to register any of its
securities under the Act at any time or times, the Rights Holders, subject to
certain exceptions, shall be entitled to include Registrable Shares in such
registration. However, the managing underwriter of any such offering may exclude
for marketing reasons some or all of such Registrable Shares from such
registration. Certain Rights Holders have, subject to certain conditions and
limitations, additional rights to require the Company to prepare and file a
registration statement under the Act with respect to their Registrable Shares.
The Company is generally required to bear the expenses of all such
registrations, except underwriting discounts and commissions. Certain Rights
Holders who in the aggregate hold 942,412 Registrable Shares have signed Lock-up
Agreements covering such Registrable Shares.

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement,
each of the Underwriters named below, for whom NatWest Securities Limited,
Vector Securities International, Inc. and John G. Kinnard and Company,
Incorporated are acting as Representatives (the "Representatives"), has
severally agreed to purchase from the Company the following respective number of
shares of Common Stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus:

NUMBER
UNDERWRITER OF SHARES

NatWest Securities Limited
Vector Securities International, Inc.
John G. Kinnard and Company, Incorporated

Total 2,500,000

The Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent. The nature of the Underwriters'
obligations is that they are committed to purchase all shares of Common Stock
offered hereby if any such shares are purchased.

The Company has been advised by the Representatives that the Underwriters
propose to offer shares of Common Stock directly to the public at the public
offering price set forth on the cover page of this Prospectus, and to certain
selected dealers (who may include the Underwriters) at such price less a selling
concession not in excess of $___ per share. The Underwriters may allow and such
dealers may re-allow a concession not in excess of $___ per share to certain
other dealers (who may include the Underwriters). After commencement of the
offering to the public, the public offering price and other selling terms may be
changed by the Representatives. The Representatives have informed the Company
that the Underwriters do not intend to confirm sales of shares of Common Stock
to any accounts over which they exercise discretionary authority.

The Company has granted to the several Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to 375,000
additional shares of Common Stock at the public offering price, less the
aggregate underwriting discounts and commissions, set forth on the cover page of
this Prospectus, solely to cover over-allotments. To the extent that the
Underwriters exercise such option, each of the Underwriters will be committed,
subject to certain conditions, to purchase a number of option shares
proportionate to such Underwriter's initial commitment.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments that the Underwriters may be
required to make in respect thereof.

The Company, its directors and officers and certain other stockholders of the
Company, have agreed that they will not, without the Representatives' prior
written consent, offer, sell, grant any options to purchase or otherwise dispose
of any shares of Common Stock within 180 days after the date of this Prospectus,
other than in the case of the Company (i) the shares of Common Stock to be sold
to the Underwriters in this offering, (ii) the issuance of options and sales of
Common Stock pursuant to currently existing stock-based compensation plans and
(iii) the issuance of shares of Common Stock as consideration for the
acquisition of one or more businesses (provided that such Common Stock may not
be resold prior to the expiration of the 180-day period referenced above). See
"Shares Eligible for Future Sale" and "Risk Factors -- Shares Eligible for
Future Sale."

Certain of the Underwriters from time to time have performed various investment
banking services for the Company.

NatWest Securities Limited, a United Kingdom broker-dealer and a member of the
Securities and Futures Authority Limited, has agreed that, as part of the
distribution of the shares of Common Stock offered hereby and subject to certain
exceptions, it will not offer or sell any shares of Common Stock within the
United States, its territories or possessions or to persons who are citizens
thereof or residents therein. The Underwriting Agreement does not limit sales of
shares of Common Stock offered hereby outside of the United States.

NatWest Securities Limited has also represented and agreed that (i) it has not
offered or sold and will not offer or sell any Common Stock to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, managing, holding or disposing of investments (as principal or agent)
for the purpose of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995 or the
Financial Services Act 1986 (the "Act"), (ii) it has complied and will comply
with all applicable provisions of the Act with respect to anything done by it in
relation to the Common Stock in, from or otherwise involving the United Kingdom,
and (iii) it has only issued or passed on and will only issue or pass on, in the
United Kingdom any document received by it in connection with the issue of the
Common Stock, other than any document which consists of or any part of listing
particulars, supplementary listing particulars or any other document or
instrument required or permitted to be published by listing rules under Part IV
of the Act, to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995
or is a person to whom the document may otherwise be lawfully issued or passed
on.

Prior to this 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. The factors to be
considered in determining the initial public offering price will be prevailing
market and economic conditions, estimates of the business potential and
prospects of the Company, the state of the Company's business operations, an
assessment of the Company's management, and the consideration of the above
factors in relation to market valuations of companies in related businesses.

LEGAL MATTERS

The validity of the shares of Common Stock being offered hereby will be passed
upon for the Company by Winthrop & Weinstine, P.A., Minneapolis, Minnesota. Eric
O. Madson, a shareholder in Winthrop & Weinstine, P.A., is the Secretary of the
Company and beneficially owns 2,000 shares of Common Stock. 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 in the period ended December 31, 1995, included in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon, appearing elsewhere
herein, and in the Registration Statement, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on
Form S-1 under the Act with respect to the offering of the shares of Common
Stock made hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits thereto. For further
information with respect to the Company and the Common Stock, reference is made
to such Registration Statement and exhibits. Statements made in this Prospectus
as to the contents of any contract, agreement or other documents referred to are
not necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved. All material
terms of the subject contracts and documents are included in this Prospectus.
The Registration Statement may be inspected without charge and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549; 500 West Madison, Suite 1400, Chicago, Illinois
60661; and 7 World Trade Center, New York, New York 10048. Copies of such
material may be obtained at prescribed rates from the Commission's Public
Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a Web site that contains reports, proxy statements and
information statements and other information regarding registrants that file
electronically with the Commission, including the Company. The address of
such site is http://www.sec.gov.

REPORTS TO SHAREHOLDERS

Prior to this offering, the Company has not been subject to the reporting
requirements of the Securities Exchange Act of 1934. After completion of this
offering, the Company intends to distribute to its shareholders an annual report
containing audited financial statements and quarterly reports containing
unaudited financial information for the first three quarters of each fiscal
year.

SURVIVALINK CORPORATION
INDEX TO FINANCIAL STATEMENTS

PAGE

Report of Independent Auditors F-2
Balance Sheets F-3
Statements of Operations F-4
Statement of Shareholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7

REPORT OF INDEPENDENT AUDITORS

Board of Directors
SurVivaLink Corporation

We have audited the accompanying balance sheets of SurVivaLink Corporation as of
December 31, 1994 and 1995, and the related statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended 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 SurVivaLink Corporation 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 in conformity
with generally accepted accounting principles.

Ernst & Young LLP

Minneapolis, Minnesota
April 9, 1996, except for Note 6
as to which the date
is June 28, 1996

SURVIVALINK CORPORATION
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 194,203 $ 3,767,281 $ 2,480,786
Accounts receivable 2,828 146,776 174,079
Inventories 195,555 316,737 354,439
Prepaid expenses and other current
assets 10,316 46,522 12,572
Total current assets 402,902 4,277,316 3,021,876
Property and equipment:
Office and computer equipment 123,560 263,975 423,739
Manufacturing equipment 142,771 157,233 160,162
Leasehold improvements -- 77,779 79,904
266,331 498,987 663,805
Less accumulated depreciation 20,449 102,749 138,287
245,882 396,238 525,518
Deposits and other assets 21,296 30,904 29,518

Total assets $ 670,080 $ 4,704,458 $ 3,576,912

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 46,019 $ 324,386 $ 261,073
Accrued salaries and wages 529 65,300 38,227
Accrued warranty costs 14,250 15,000 15,000
Accrued expenses 16,969 18,667 5,929
Total current liabilities 77,767 423,353 320,229
Rental Abatement -- 40,994 35,473
Shareholders' equity:
Common Stock, $.01 par value:
Authorized shares -- 50,000,000
Issued and outstanding shares:
December 31, 1994 -- 2,190,890;
December 31, 1995 and March 31,
1996 -- 4,196,257 21,909 41,963 41,963
Additional paid-in capital 2,128,218 7,602,318 7,602,318
Accumulated deficit (1,557,814) (3,404,170) (4,423,071)
Total shareholders' equity 592,313 4,240,111 3,221,210
Total liabilities and
shareholders' equity $ 670,080 $ 4,704,458 $ 3,576,912
</TABLE>

See accompanying notes.

SURVIVALINK CORPORATION
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales $ -- $ 13,809 $ 1,037,978 $ 154,755 $ 434,321
Cost of goods sold -- 16,194 1,165,277 256,945 408,301
Gross profit -- (2,385) (127,299) (102,190) 26,020
Operating expenses:
Research and development 276,538 648,076 688,084 151,072 365,829
General and administrative 119,318 245,175 603,578 118,659 271,518
Sales and marketing 46,918 157,154 432,125 62,892 439,506
Operating loss (442,774) (1,052,790) (1,851,086) (434,813) (1,050,833)
Other income, net 776 7,792 4,730 1,583 31,932

Net loss $ (441,998) $(1,044,998) $(1,846,356) $ (433,230) $(1,018,901)

Net loss per share $ (.17) $ (.32) $ (.44) $ (.11) $ (.18)

Weighted average number of
shares outstanding 2,604,658 3,269,942 4,153,274 3,789,471 5,700,138
</TABLE>

See accompanying notes.

SURVIVALINK CORPORATION
STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993 898,571 $ 8,986 $ 87,800 $ (70,818) $ 25,968
Issuance of Common Stock at $.80 per share in
exchange for services 31,809 318 25,087 -- 25,405
Sale of Common Stock at $1.00 per share in
May 1993, net of offering costs 281,000 2,810 273,793 -- 276,603
Value of options granted for services -- -- 63,900 -- 63,900
Sale of Common Stock at $1.50 per share in
November 1993 73,333 733 109,267 -- 110,000
Net loss -- -- -- (441,998) (441,998)

Balance at December 31, 1993 1,284,713 12,847 559,847 (512,816) 59,878
Sale of Common Stock at $1.50 per share in
January 1994, net of offering costs 195,666 1,957 284,030 -- 285,987
Sale of Common Stock at $1.50 per share in
April through May 1994 426,667 4,267 635,733 -- 640,000
Issuance of Common Stock at $1.50 per share
in exchange for services 11,511 115 17,151 -- 17,266
Value of options granted for services -- -- 35,730 -- 35,730
Sale of Common Stock at $2.25 per share in
September 1994, net of offering costs 153,778 1,538 336,795 -- 338,333
Sale of Common Stock at $2.25 per share in
November 1994, net of offering costs 118,555 1,185 258,932 -- 260,117
Net loss -- -- -- (1,044,998) (1,044,998)

Balance at December 31, 1994 2,190,890 21,909 2,128,218 (1,557,814) 592,313
Sale of Common Stock at $2.25 per share in
January 1995, net of offering costs 84,700 847 188,376 -- 189,223
Exercise of stock options 34,500 345 34,155 -- 34,500
Sale of Common Stock at $3.00 per share in
June through December 1995, net of offering
costs 1,686,011 16,860 4,814,422 -- 4,831,282
Value of warrants granted in connection
with notes payable -- -- 4,000 -- 4,000
Conversion of notes payable to Common Stock
at $3.00 per share in June 1995 64,656 647 193,321 -- 193,968
Value of options granted for services -- -- 105,681 -- 105,681
Exercise of stock warrants 135,500 1,355 134,145 -- 135,500
Net loss -- -- -- (1,846,356) (1,846,356)

Balance at December 31, 1995 4,196,257 41,963 7,602,318 (3,404,170) 4,240,111
Net loss -- -- -- (1,018,901) (1,018,901)
Balance at March 31, 1996 (unaudited) 4,196,257 $41,963 $7,602,318 $(4,423,071) $ 3,221,210

</TABLE>

See accompanying notes.

SURVIVALINK CORPORATION
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(441,998) $(1,044,998) $(1,846,356) $(433,230) $(1,018,901)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 2,154 20,990 82,300 13,805 35,538
Gain on disposal of equipment -- (9,466) -- -- --
Issuance of Common Stock for services 25,405 17,266 -- -- --
Value of options granted for services 63,900 35,730 105,681 13,465 --
Value of warrants issued in connection
with notes payable -- -- 4,000 -- --
Changes in operating assets and
liabilities:
Accounts receivable (937) (1,891) (143,948) (55,188) (27,303)
Inventories (8,091) (187,464) (121,182) 79,321 (37,702)
Prepaid expenses and other assets 2,198 (26,666) (45,814) 4,730 35,336
Accounts payable 2,335 38,479 278,367 28,986 (63,313)
Accrued expenses 9,055 (1,093) 108,213 1,545 (45,332)
Net cash used in operating activities (345,979) (1,159,113) (1,578,739) (346,566) (1,121,677)

INVESTING ACTIVITIES
Purchase of property and equipment (19,339) (248,039) (232,656) (17,756) (164,818)
Proceeds from disposal of equipment -- 15,930 -- -- --
Net cash used in investing activities (19,339) (232,109) (232,656) (17,756) (164,818)

FINANCING ACTIVITIES
Net proceeds from issuance of
Common Stock 386,603 1,524,437 5,190,505 204,222 --
Proceeds from notes payable -- -- 305,000 -- --
Payments on notes payable -- -- (111,032) -- --
Net cash provided by financing activities 386,603 1,524,437 5,384,473 204,222 --
Increase (decrease) in cash and
cash equivalents 21,285 133,215 3,573,078 (160,100) (1,286,495)
Cash and cash equivalents at
beginning of year 39,703 60,988 194,203 194,203 3,767,281
Cash and cash equivalents at end of year $ 60,988 $ 194,203 $ 3,767,281 $ 34,103 $ 2,480,786

SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING ACTIVITIES:
Conversion of notes payable into
Common Stock $ -- $ -- $ 193,968 $ -- $ --

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ -- $ -- $ 15,478 $ -- $ --
</TABLE>

See accompanying notes.

SURVIVALINK CORPORATION

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995
(UNAUDITED WITH RESPECT TO MARCH 31, 1996 AND THE
THREE-MONTH PERIODS ENDED MARCH 31, 1995 AND 1996)

1. SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS
SurVivaLink Corporation was founded in April 1992 to develop, manufacture and
distribute cost-effective therapeutic solutions for emergency cardiac care. The
Company has released its first automated external defibrillator, the VivaLink,
which is intended for use by minimally-trained rescuers in the treatment of
sudden cardiac arrest. Principal market segments for the VivaLink include first
responders (police, fire and basic life support ambulances), industrial
(factories, office buildings) and medical (nursing stations, pre-hospital
medical clinics, alternate care sites). The VivaLink and accessories are sold
primarily through worldwide wholesale distributors. Sales to date have been
predominantly to domestic dealers focusing on the first responder market
segment. The Company is no longer considered a development stage enterprise.

CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less at the time of purchase to be cash equivalents. Cash equivalents
are carried at cost which approximates market and consist of money market funds.

INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market. The
majority of inventory consists of purchased components.

PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets ranging from
3 to 7 years. Leasehold improvements are amortized using the straight-line
method over 4 years, representing the shorter of the related lease term or
estimated useful lives.

INCOME TAXES
Income taxes are accounted for under the liability method. Deferred income taxes
are provided for temporary differences between the financial reporting and tax
basis of assets and liabilities.

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.

STOCK-BASED COMPENSATION
The Company follows Accounting Principles Board Opinion No. 25, ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES (APB 25) and related interpretations in accounting for
its stock options. Under APB 25, when the exercise price of stock options equals
the market price of the underlying stock on the date of grant, no compensation
expense is recognized.

In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The Company has not determined the impact of the new statement on
its financial statements.

REVENUE RECOGNITION
The Company recognizes revenue at the time of shipment of the product.

WARRANTY
The Company's warranty policy generally provides for one-year coverage on
labor and materials for each unit sold. Estimated warranty costs are accrued
at the date of sale.

IMPAIRMENT OF LONG-LIVED ASSETS
In March 1995, the Financial Accounting Standards Board (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 recorded 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 amount. Statement No. 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The
Company adopted the Statement in the first quarter of fiscal 1996 and, based on
current circumstances, there was no effect relating to the adoption of Statement
No. 121.

NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of shares of
common stock outstanding during the periods presented. Pursuant to Securities
and Exchange Commission Staff Accounting Bulletin No. 83 ("SAB No. 83"), shares
of common stock issued by the Company at prices less than the initial offering
price during the twelve months immediately preceding the initial public
offering, plus stock options granted at an exercise price less than the initial
public offering price during the same period, have been included in the
determination of shares used in the calculation of net loss per share, using the
treasury method, as if they were outstanding for all periods presented.

INTERIM FINANCIAL INFORMATION
The accompanying financial statements as of March 31, 1996 and for the
three-month periods ended March 31, 1995 and 1996 are unaudited. In the opinion
of the management of the Company, these financial statements reflect all
adjustments, consisting only of normal and recurring adjustments, necessary for
a fair presentation of the financial statements. The results of operations for
the three-month period ended March 31, 1996 are not necessarily indicative of
the results that may be expected for the full year ending December 31, 1996.

2. LEASES

The Company occupies office space under an operating lease agreement which
expires in 1999. Under the agreement, the Company is required to pay a base rent
plus certain operating expenses. The Company is recognizing the benefit of
certain abatements made by the landlord over the term of the lease on a
straight-line basis.

Future minimum rental payments required under the non-cancelable operating lease
as of December 31, 1995 are as follows:

1996 ...................... $ 53,692
1997 ...................... 78,377
1998 ...................... 85,531
1999 ...................... 57,021
$274,621

Rent expense was $345, $37,305, $108,345, $5,764, and $16,306 for the years
ended December 31, 1993, 1994 and 1995 and the three months ended March 31, 1995
and 1996, respectively.

3. INCOME TAXES

At December 31, 1995 and March 31, 1996, the Company had net operating loss
carryforwards of approximately $3,189,000 and $4,195,000, respectively, plus
research and development tax credit carryforwards of approximately $112,000. The
net operating loss carryforwards are available to offset future taxable income
through 2010 and are subject to the limitations under Section 382 of the
Internal Revenue Code due to changes in the equity ownership of the Company. An
ownership change occurred on May 23, 1994 and the Company estimates that the net
operating loss deduction of approximately $825,000 for the period from April 16,
1992 (inception) to May 23, 1994 will be subject to an annual limitation of
approximately $155,000.

Components of deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995 1996
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 568,000 $ 1,270,000 $ 1,678,000
Research and development credits 84,000 112,000 112,000
Other accruals -- 54,000 30,000
652,000 1,436,000 1,820,000
Deferred tax liabilities:
Depreciation -- (8,000) (15,000)
Other -- (11,000) --
-- (19,000) (15,000)
Net deferred tax assets before valuation allowance 652,000 1,417,000 1,805,000
Less valuation allowance (652,000) (1,417,000) (1,805,000)
Net deferred tax assets $ -- $ -- $ --
</TABLE>

4. COMMON STOCK

In January 1994, the Company sold 195,666 shares of Common Stock at $1.50 per
share. In connection with the offering, the Company granted warrants to purchase
33,333 shares of Common Stock at $1.50 per share exercisable over five years.

In April through May 1994, the Company sold a total of 426,667 shares of Common
Stock at $1.50 per share. In connection with the offering the Company granted
warrants to purchase 160,000 shares of Common Stock at $1.50 per share
exercisable over five years.

In September 1994, the Company sold 153,778 shares of Common Stock at $2.25 per
share. In connection with the offering, the Company granted warrants to purchase
153,778 shares of Common Stock at $2.25 per share exercisable over three years.

In May 1996, the Board of Directors increased the authorized shares of Common
Stock from 5,000,000 to 50,000,000 and adjusted the par value from no par to
$.01 par value. As a result, all periods presented have been adjusted to reflect
the new par value.

5. NOTES PAYABLE

In 1995, the Company issued $305,000 of notes payable with an interest rate of
11% per annum payable March 16, 1996. In connection with the sale of Common
Stock in June 1995, note holders were offered the option to convert the
outstanding balance of principal and interest to shares of the Company's Common
Stock at a conversion rate of $3.00 per share. A total of $193,968 of the notes
payable was converted into 64,656 shares of Common Stock with the remaining
balance of the notes paid from proceeds of the sale of Common Stock. In
connection with the issuance of the notes, the Company granted warrants to
purchase 203,333 shares of Common Stock at $3.00 per share. The warrants are
exercisable over five years and were deemed to have a value of $4,000 which was
recorded as interest expense for the year ended December 31, 1995.

6. STOCK OPTIONS AND WARRANTS

The Company has a stock option plan (the "Plan") under which incentive stock
options and non-statutory options may be granted to certain eligible employees,
consultants and non-employee directors of the Company. As of June 28, 1996 the
maximum number of shares of Common Stock reserved for issuance under the Plan is
1,000,000 shares.

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING SHARES PRICE
PLAN NON-PLAN WARRANTS EXERCISABLE PER SHARE
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 190,000 103,033 183,333 262,866 $ .10 - $2.25
Granted 116,800 30,679 313,778 -- .10 - 2.25
Becoming exercisable -- -- -- 400,457
Balance at December 31, 1994 306,800 133,712 497,111 663,323 .10 - 2.25
Expired (66,500) -- (14,500) -- 1.00
Exercised (34,500) -- (135,500) (170,000) 1.00
Granted 148,400 80,826 221,884 -- .22 - 3.00
Becoming exercisable -- -- -- 356,660 .22 - 3.00
Balance at December 31, 1995 354,200 214,538 568,995 849,983 .10 - 3.00
Granted 65,300 48,000 -- -- 3.00 - 4.00
Becoming exercisable -- -- -- 64,200 1.50 - 2.25
Balance at March 31, 1996
(unaudited) 419,500 262,538 568,995 914,183 $ .10 - $4.00
</TABLE>

Warrants have been granted in connection with debt and equity offerings and in
lieu of cash payment for services provided. The warrants are exercisable at
prices ranging from $1.00 to $3.00. The warrants expire at various dates through
August 2000.

Non-plan options have been granted to consultants and employees in lieu of cash
payment for services provided. The options are exercisable at prices ranging
from $.10 to $4.00. The options expire at various dates through April 2001.

On April 2, 1996, the Company entered into an advisory agreement with a
consultant (Advisor). Under the agreement, the Company agreed to pay the Advisor
$3,000 per month and granted the Advisor an option to purchase 100,000 shares of
Common Stock at an exercise price of $4.00. The option expires in five years.

On June 5, 1996, the Company obtained a $1 million bridge loan with an existing
shareholder of the Company. The bridge loan is evidenced by a promissory note
that is payable in May 1997 or upon the closing of an initial public offering,
if earlier, and bears interest at prime rate plus 3% per annum. In connection
with the bridge loan, the Company granted the shareholder a five-year warrant to
purchase 100,000 shares of common stock at an exercise price equal to the
initial public offering price.

7. SOURCES OF SUPPLY

Components of the Company's products consist mainly of electronic circuitry. The
Company currently purchases a significant portion of the components of its
product from one supplier. Management believes that alternative sources could
provide equivalent components, however, the time required to identify and
qualify alternative suppliers could cause a delay in manufacturing that may be
financially disruptive to the Company.

8. MAJOR CUSTOMERS

The Company had net sales of 100%, 81%, and 100% from one customer for the years
ended December 31, 1994 and 1995 and for the three months ended March 31, 1995,
respectively. Approximately 44% of net sales for the three months ended March
31, 1996, were a result of sales to two customers.

[INSIDE BACK COVER PHOTOS]

[PHOTO: FIREMAN CARRYING VIVALINK AED.]
The VivaLink's proprietary circuitry delivers the American Heart Association's
prescribed defibrillation energy, and performs a complete self-test daily to
ensure that it is RescueReady.

[PHOTO: PLACEMENT OF ELECTRODES SHOWN ON SIMULATED PATIENT.]
The VivaLink automatically determines whether a life-saving shock is needed,
ensuring patient and operator safety.

[PHOTO: VIVALINK AED MOUNTED ON WALL NEXT TO FIRE EXTINGUISHER.]
The VivaLink's ease of use and low cost make its placement at industrial and
commercial sites possible.

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION 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 SECURITY OTHER THAN THE SECURITIES OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE SECURITIES BY ANY PERSON IN ANY JURISDICTION WHERE 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 ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF
THIS PROSPECTUS.
TABLE OF CONTENTS

Page

Prospectus Summary 3
Risk Factors 6
Use of Proceeds 11
Dividend Policy 11
Capitalization 12
Dilution 13
Selected Financial Data 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations 15
Business 17
Management 29
Certain Transactions 32
Principal Shareholders 34
Description of Capital Stock 35
Shares Eligible for Future Sale 37
Underwriting 39
Legal Matters 40
Experts 40
Available Information 41
Reports to Shareholders 41
Index to Financial Statements F-1

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL DEALERS EFFECTING
TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

2,500,000 SHARES

[LOGO] SURVIVALINK CORPORATION

COMMON STOCK

PROSPECTUS

NATWEST SECURITIES LIMITED

VECTOR SECURITIES INTERNATIONAL, INC.

JOHN G. KINNARD AND COMPANY,
INCORPORATED

_____________, 1996

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated expenses to be borne by the Company
in connection with the issuance and distribution of the shares of Common Stock
offered hereby;

SEC registration fee $ 15,704
NASD filing fee 5,054
Nasdaq listing fee 47,866
Legal fees and expenses 85,000
Accounting fees and expenses 75,000
Blue Sky fees and expenses 15,000
Printing expenses 60,000
Transfer agent fees and expenses 10,000
D&O Insurance Premium 250,000
Miscellaneous 36,376
TOTAL $600,000

Each amount set forth above, except the SEC registration fee and the NASD filing
fee, is estimated.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 302A.521 of the Minnesota Statutes provides that unless prohibited or
limited by a corporation's articles of incorporation or bylaws, the Company must
indemnify its current and former officers, directors, employees and agents
against expenses (including attorneys' fees), judgments, penalties, fines and
amounts paid in settlement and which were incurred in connection with actions,
suits, or proceedings in which such persons are parties by reason of the fact
that they are or were an officer, director, employee or agent of the
corporation, if they (i) have not been indemnified by another organization, (ii)
acted in good faith, (iii) received no improper personal benefit, (iv) in the
case of a criminal proceeding, had no reasonable cause to believe the conduct
was unlawful, and (v) reasonably believed that the conduct was in the best
interests of the corporation. Section 302A.521 also permits a corporation to
purchase and maintain insurance on behalf of its officers, directors, employees
and agents against any liability which may be asserted against, or incurred by,
such persons in their capacities as officers, directors, employees and agents of
the corporation, whether or not the corporation would have been required to
indemnify the person against the liability under the provisions of such section.

Article VI of the Bylaws of the Company provides that the directors, officers,
committee members, of the Company and other persons shall have the rights to
indemnification provided by Section 302A.521 of the Minnesota Statutes.

Section 6 of the Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement provides certain indemnification rights to officers and
directors of the Registrant.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, the Company has issued the following securities
pursuant to exemptions from registration under the Securities Act of 1933, as
amended (the "Securities Act"):

From May 1993 to October 1993, the Registrant issued 281,000 Units (one share of
Common Stock and one-half stock purchase warrant) at a price of $1.00 per Unit.
The offer and sale of the Units was made to 25 investors pursuant to the
exemption provided by Section 3(b) of the Securities Act and Rule 504 of
Regulation D. Each purchaser of such Units acquired them for his own account and
not with a view to any distribution thereof to the public. The certificates
evidencing the shares and warrants bear a legend stating that the shares and
warrants may not be offered, sold or transferred other than pursuant to an
effective registration statement under the Securities Act, or an exemption from
such registration requirements.

In December 1993, the Registrant issued 33,333 Units (one share of Common Stock
and one-half stock purchase warrant) at a price of $1.50 per Unit. The offer and
sale of the Units was made to a single investor pursuant to the exemption
provided by Section 3(b) of the Securities Act and Rule 504 of Regulation D. The
purchaser of such Units acquired them for his own account and not with a view to
any distribution thereof to the public. The certificates evidencing the shares
and warrants bear a legend stating that the shares and warrants may not be
offered, sold or transferred other than pursuant to an effective registration
statement under the Securities Act, or an exemption from such registration
requirements.

From January 1994 to March 1994, the Registrant issued 235,666 shares of Common
Stock at a price of $1.50 per share to 23 investors. The offer and sale of the
shares was made pursuant to the exemption provided by Section 3(b) of the
Securities Act and Rule 504 of Regulation D. Each purchaser of such shares
acquired them for his own account and not with a view to any distribution
thereof to the public. The certificates evidencing the shares bear a legend
stating that the shares may not be offered, sold or transferred other than
pursuant to an effective registration statement under the Securities Act, or an
exemption from such registration requirements.

In February 1994, the Registrant issued 1,511 shares of Common Stock, valued at
$2,266.50, to consultants in exchange for services. Such issuance was made in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act.

In March 1994, the Registrant issued 10,000 shares of Common Stock, valued at
$15,000, to its landlord in payment of rent. Such issuance was made in reliance
on the exemption from registration provided by Section 4(2) of the Securities
Act.

In April 1994, the Registrant issued 200,000 shares of Common Stock and 75,000
stock purchase warrants for an aggregate price of $300,000. The offer and sale
of the shares and warrants was made to a single investor pursuant to the
exemptions provided by Section 4(2) and 4(6) of the Securities Act and Rules 505
and 506 of Regulation D. The purchaser of such shares and warrants acquired them
for its own account and not with a view to any distribution thereof to the
public. The certificates evidencing the shares and warrants bear a legend
stating that the shares and warrants may not be offered, sold or transferred
other than pursuant to an effective registration statement under the Securities
Act, or an exemption from such registration requirements.

In May 1994, the Registrant issued 226,667 shares of Common Stock and 85,000
stock purchase warrants for an aggregate price of $340,000. The offer and sale
of the shares and warrants was made to a group of 5 investors pursuant to the
exemptions provided by Section 4(2) and 4(6) of the Securities Act and Rules 505
and 506 of Regulation D. Each of the purchasers of such shares and warrants
acquired them for his own account and not with a view to any distribution
thereof to the public. The certificates evidencing the shares and warrants bear
a legend stating that the shares and warrants may not be offered, sold or
transferred other than pursuant to an effective registration statement under the
Securities Act, or an exemption from such registration requirements.

From September 1994 to October 1994, the Registrant issued 153,778 Units (one
share of Common Stock and one stock purchase warrant) at a price of $2.25 per
Unit to 32 investors. The offer and sale of the Units was made pursuant to the
exemption provided by Section 4(2) of the Securities Act and Rules 505 and 506
of Regulation D. Each purchaser of such Units acquired them for his own account
and not with a view to any distribution thereof to the public. The certificates
evidencing the shares and warrants bear a legend stating that the shares and
warrants may not be offered, sold or transferred other than pursuant to an
effective registration statement under the Securities Act, or an exemption from
such registration requirements.

From October 1994 to January 1995, the Registrant issued 203,255 shares of
Common Stock at a price of $2.25 per share to 29 investors. The offer and sale
of the shares was made pursuant to the exemption provided by Section 4(2) of the
Securities Act and Rules 505 and 506 of Regulation D. Each purchaser of such
shares acquired them for his own account and not with a view to any distribution
thereof to the public. The certificates evidencing the shares bear a legend
stating that the shares may not be offered, sold or transferred other than
pursuant to an effective registration statement under the Securities Act, or an
exemption from such registration requirements.

From September 1995 to December 1995, the Registrant issued 1,686,011 shares of
Common Stock at a price of $3.00 per share to 104 investors. The offer and sale
of the shares was made pursuant to the exemption provided by Section 4(2) of the
Securities Act and Rules 505 and 506 of Regulation D. Each purchaser of such
shares acquired them for his own account and not with a view to any distribution
thereof to the public. The certificates evidencing the shares bear a legend
stating that the shares may not be offered, sold or transferred other than
pursuant to an effective registration statement under the Securities Act, or an
exemption from such registration requirements.

ITEM 16. EXHIBITS

EXHIBIT
NO. DESCRIPTION

1.1 Form of Underwriting Agreement*

3.1 Restated Articles of Incorporation of SurVivaLink Corporation*

3.2 Bylaws of SurVivaLink Corporation*

4.1 Specimen of Common Stock Certificate*

5.1 Opinion of Winthrop & Weinstine, P.A.*

10.1 Lease Agreement dated August 17, 1994, between A.M.W. Properties
Corp. and SurVivaLink Corporation*

10.2 First Amendment to Lease dated May 1, 1996 by and between A.M.W.
Properties Corp. and SurVivaLink Corporation*

10.3 SurVivaLink Corporation 1992 Stock Option and Incentive Plan, as
amended*

10.4 Employment Agreement between Byron L. Gilman and SurVivaLink
Corporation*

10.5 Form of Director Stock Option Agreements*

10.6 Investment Agreement dated April 29, 1994 by and among SurVivaLink
Corporation, Medtronic, Inc., Byron L. Gilman, Karl J. F. Kroll,
Kenneth C. Maki and Mark W. Kroll*

10.7 Warrant to Purchase 75,000 shares of Common Stock of SurVivaLink
Corporation dated April 29, 1994 and issued to Medtronic, Inc.*

10.8 Form of Stock Purchase Agreement dated May 29, 1994 for shares of
Common Stock of SurVivaLink Corporation*

10.9 Form of Warrant to Purchase shares of Common Stock of SurVivaLink
Corporation dated May 29, 1994*

10.10 Supplement to Subscription Agreement dated September 6, 1995
between SurVivaLink Corporation and Vertical Fund Associates, L.P.*

10.11 Form of Dealer Sales Agreement*

10.12 Form of Manufacturer Representative Agreement*

10.13 Form of Confidentiality Agreement*

10.14 Promissory Note dated June 5, 1996 in the principal amount of
$1,000,000 issued by SurVivaLink Corporation to Medtronic, Inc.*

10.15 Warrant to purchase 100,000 shares of Common Stock of SurVivaLink
Corporation dated June 5, 1996 and issued to Medtronic, Inc.*

10.16 Agreement dated July 22, 1996 between SurVivaLink Corporation and
Medtronic, Inc.*

10.17 Agreement dated July 18, 1996 between SurVivaLink Corporation and
Goldsteen Investor Group*

10.18 Agreement dated July 23, 1996 between SurVivaLink Corporation and
The Vertical Fund Associates, L.P.*

11.1 Statement re: Computation of Net Loss per Share

23.1 Consent of Ernst & Young LLP

23.2 Consent of Winthrop & Weinstine, P.A. (included in Exhibit 5.1)

24.1 Powers of Attorney*

27.1 Financial Data Schedule*

*Previously filed.

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the provisions summarized in Item 14
above, or otherwise, the 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
the registrant of expenses incurred or paid by a director, officer or
controlling person of the 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, the 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, as
amended, and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities
Act of 1933, 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 the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
be the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 3 to registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis, State of Minnesota, on July 26, 1996.

SurVivaLink Corporation

By /s/ BYRON L. GILMAN
Byron L. Gilman
Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to registration statement has been signed by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>

* Chairman, Chief Executive Officer, and July 26, 1996
Byron L. Gilman Director (Principal Executive Officer)

* Chief Financial Officer (Principal July 26, 1996
R. Eric Bosler Financial and Accounting Officer)

* Director July 26, 1996
Richard B. Emmitt

* Director July 26, 1996
David S. Goldsteen

* Director July 26, 1996
Karl J.F. Kroll

* Director July 26, 1996
Mark W. Kroll

* Director July 26, 1996
Kenneth C. Maki

* Director July 26, 1996
Warren S. Watson
* By /s/ BYRON L. GILMAN

Byron L. Gilman
Attorney-in-fact
</TABLE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

EXHIBITS
TO
AMENDMENT NO. 3
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

SURVIVALINK CORPORATION

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
<S> <C> <C>
1.1 Form of Underwriting Agreement *

3.1 Restated Articles of Incorporation of SurVivaLink Corporation *

3.2 Bylaws of SurVivaLink Corporation *

4.1 Specimen of Common Stock Certificate *

5.1 Opinion of Winthrop & Weinstine, P.A. *

10.1 Lease Agreement dated August 17, 1994, between A.M.W. Properties Corp. and SurVivaLink
Corporation *

10.2 First Amendment to Lease dated May 1, 1996 by and between A.M.W. Properties Corp.
and SurVivaLink Corporation *

10.3 SurVivaLink Corporation 1992 Stock Option and Incentive Plan, as amended *

10.4 Employment Agreement between Byron L. Gilman and SurVivaLink Corporation *

10.5 Form of Director Stock Option Agreements *

10.6 Investment Agreement dated April 29, 1994 by and among SurVivaLink Corporation,
Medtronic, Inc., Byron L. Gilman, Karl J. F. Kroll, Kenneth C. Maki and Mark W.
Kroll *

10.7 Warrant to Purchase 75,000 shares of Common Stock of SurVivaLink Corporation dated
April 29, 1994 and issued to Medtronic, Inc. *

10.8 Form of Stock Purchase Agreement dated May 29, 1994 for shares of Common Stock of
SurVivaLink Corporation *

10.9 Form of Warrant to Purchase shares of Common Stock of SurVivaLink Corporation dated
May 29, 1994 *

10.10 Supplement to Subscription Agreement dated September 6, 1995 between SurVivaLink
Corporation and Vertical Fund Associates, L.P. *

10.11 Form of Dealer Sales Agreement *

10.12 Form of Manufacturer Representative Agreement *

10.13 Form of Confidentiality Agreement *

10.14 Promissory Note dated June 5, 1996 in the principal amount of
$1,000,000 issued by SurVivalink Corporation to Medtronic, Inc. *

10.15 Warrant to Purchase 100,000 shares of Common Stock of SurVivalink
Corporation dated June 6, 1996 and issued to Medtronic, Inc. *

10.16 Agreement dated July 22, 1996 between SurVivaLink Corporation and Medtronic, Inc. *

10.17 Agreement dated July 18, 1996 between SurVivaLink Corporation and Goldsteen *
Investor Group

10.18 Agreement dated July 23, 1996 between SurVivaLink Corporation and Vertical Funds *
Associates, L.P.

11.1 Statement re: Computation of Net Loss per Share

23.1 Consent of Ernst & Young LLP

23.2 Consent of Winthrop & Weinstine, P.A. (included in Exhibit 5.1)

24.1 Powers of Attorney *

27.1 Financial Data Schedule *
</TABLE>
* Previously filed.

Exhibit 11.1

SURVIVALINK CORPORATION
STATEMENT RE: COMPUTATION OF NET LOSS PER SHARE

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------- ----------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PRIMARY:
Average shares outstanding ............... 1,100,777 1,766,061 2,649,393 2,285,590 4,196,257

SAB No. 83 -- for stock issued
and options granted at exercise price
less than the initial public offering
price during the 12 months preceding
the initial public offering using the
treasury method ......................... 1,503,881 1,503,881 1,503,881 1,503,881 1,503,881
----------- ----------- ----------- ----------- -----------

Total .................................... 2,604,658 3,269,942 4,153,274 3,789,471 5,700,138
=========== =========== =========== =========== ===========

Net loss ................................. $ (441,998) $(1,044,998) $(1,846,356) $ (433,230) $(1,018,901)
=========== =========== =========== =========== ===========

Net loss per share ....................... $ (.17) $ (.32) $ (.44) $ (.11) $ (.18)
=========== =========== =========== =========== ===========

FULLY DILUTED:

Average shares outstanding ............... 1,100,777 1,766,061 2,649,393 2,285,590 4,196,257

Total .................................... 2,604,658 3,269,942 4,153,274 3,789,471 5,700,138
=========== =========== =========== =========== ===========

Net loss ................................. $ (441,998) $(1,044,998) $(1,846,356) $ (433,230) $(1,018,901)
=========== =========== =========== =========== ===========

Net loss per share ....................... $ (.17) $ (.32) $ (.44) $ (.11) $ (.18)
=========== =========== =========== =========== ===========
</TABLE>

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP

We consent to the reference to our firm under the captions "Selected Financial
Data" and "Experts" and to the use of our report dated April 9, 1996, except
for Note 6 as to which the date is June 28, 1996, in Amendment No. 3 to the
Registration Statement (Form S-1 No. 333-04475) and related Prospectus of
SurVivaLink Corporation for the registration of 2,500,000 shares of its Common
Stock.

Ernst & Young LLP

Minneapolis, Minnesota
July 25, 1996