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As filed with the Securities and Exchange Commission on August 1, 1997
Registration No. 333-31275
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CARDIODYNAMICS INTERNATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
CALIFORNIA 95-3533362
(State or other juris- (I.R.S. Employer
diction of incorpo- Identification No.)
ration or organization)
6155 Cornerstone Court East, Suite 125, San Diego, California 92121
(619) 535-0202
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Richard E. Otto
Chief Executive Officer
CARDIODYNAMICS INTERNATIONAL CORPORATION
6155 Cornerstone Court East, Suite 125, San Diego, California 92121
(619) 535-0202
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
Hayden J. Trubitt, Esq.
James T. Whaley, Esq.
BROBECK, PHLEGER & HARRISON LLP
550 West C Street, Suite 1300
San Diego, California 92101
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Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following
box. [ ]
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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
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. [ ]
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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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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2,527,101 SHARES
CARDIODYNAMICS INTERNATIONAL CORPORATION
COMMON STOCK
This Prospectus relates to the public offering, which is not being
underwritten, of 2,527,101 shares of Common Stock, no par value per share (the
"Shares"), of CardioDynamics International Corporation ("CardioDynamics" or the
"Company"). All of these Shares are held and may be offered by certain
shareholders of the Company (the "Selling Shareholders") who received such
Shares pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") provided by Section
4(2) thereof in connection with a private placement of the Shares consummated in
February and March, 1997 (the "Private Placement"). The Shares are being
registered by the Company pursuant to purchase agreements with the respective
Selling Shareholders executed by the Company and the respective Selling
Shareholders in connection with the Private Placement. See "The Company" and
"Selling Shareholders."
The sale of the Shares may be effected by the Selling Shareholders from
time to time in transactions in the over-the-counter market, in negotiated
transactions or a combination of such methods of sale, at fixed prices which may
be changed, at market prices prevailing at the time of sale, at prices related
to prevailing market prices or at negotiated prices. The Selling Shareholders
may effect such transactions by selling the Shares to or through broker-dealers,
and such broker-dealers may receive compensation in the form of discounts,
concession or commission from the Selling Shareholders and/or the purchasers of
the Shares for whom such broker-dealers may act as agents or to whom they may
sell as principals or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions). See "Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed, among
other things, to bear certain expenses (other than fees and expenses of counsel
and underwriting discounts and commission and brokerage commissions and fees) in
connection with the registration and sale of the Shares being offered by the
Selling Shareholders. See "Selling Shareholders."
CardioDynamics Common Stock is traded on the Nasdaq SmallCap Market
("Nasdaq SmallCap Market") under the symbol "CDIC." On July 31, 1997, the
closing sale price of CardioDynamics Common Stock as reported on the Nasdaq
SmallCap Market was $3.3125 per share.
The Selling Shareholders and any broker-dealers, agents or underwriters
that participate with the Selling Shareholders in the distribution of Shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of Distribution"
for a description of indemnification arrangements.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" ON PAGE 3 FOR INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE
INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is August 4, 1997.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY SELLING SHAREHOLDER OR BY ANY OTHER PERSON. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES TO ANY PERSON OR BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE
MADE.
AVAILABLE INFORMATION
CardioDynamics is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as applicable
to small business issuers such as CardioDynamics, and in accordance therewith
files annual and quarterly reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected at the Commission's Public
Reference Section, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as
well as at the Commission's regional offices at 7 World Trade Center, 13th
Floor, New York, New York 10048; and at Northwest Atrium Center, 500 West
Madison Street, Room 1400, Chicago, Illinois 60661-2511. Copies of such material
can also be obtained at prescribed rates at the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The Common
Stock of the Company is traded on the Nasdaq SmallCap Market and such reports,
proxy and information statements and other information concerning the Company
may be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the shares of Common Stock offered
hereby, reference is hereby made to the Registration Statement. The Registration
Statement may be inspected at the public reference facilities maintained by the
Commission at the addresses set forth in the preceding paragraph. Statements
contained herein concerning any document filed as an exhibit are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission
(Commission File No. 0-11868) are hereby incorporated by reference in this
Prospectus:
(1) The Annual Report of the Company on Form 10-KSB for the fiscal
year ended November 30, 1996;
(2) The Quarterly Reports of the Company on Form 10-QSB for the
fiscal quarters ended February 28, 1997 and May 31, 1997;
and
(3) The Company's Registration Statement on Form 8-A filed with the
Commission on April 19, 1984 pursuant to Section 12 of the
Exchange Act, in which there is described the terms, rights and
provisions applicable to the Company's Common Stock.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of this Offering shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such reports and documents. Any statement incorporated herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
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The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such document). Requests for such documents
should be submitted in writing to the Secretary, at CardioDynamics International
Corporation, 6155 Cornerstone Court East, Suite 125, San Diego, California 92121
or by telephone at (619) 535-0202.
THE COMPANY
CardioDynamics International Corporation ("CardioDynamics" or the
"Company") develops, manufactures and markets noninvasive digital heart
monitoring devices which provide continuous data on a wide range of hemodynamic
parameters. The Company also develops, manufactures and markets related products
such as electrodes. The Company's primary product, the BioZ(TM) System, uses
Thoracic Electrical Bioimpedance ("TEB") technology to obtain such data, which
is typically available only through a time consuming, costly, potentially
dangerous invasive procedure.
The mission of CardioDynamics is to be a leading provider of innovative
bio-medical products and services aimed at improving the quality of life.
In November 1996, the Company received 510(k) clearance from the United
States Food and Drug Administration (the "FDA") to market the BioZ System, a
completely re-engineered, digital signal processing-based version of an earlier,
previously-approved analog TEB machine developed by the Company. To complement
the receipt of its marketing clearance, the Company is currently designing and
initiating broad-based, significant clinical trials to compare the outputs
received from the BioZ with those obtained through Right Heart Catheterization
("RHC").
The Company's principal executive offices are located at 6155
Cornerstone Court East, Suite 125, San Diego, California 92121, and its
telephone number is (619) 535-0202.
FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated herein by reference
contain forward-looking statements that are based on current expectations,
estimates and projections about the Company's industry, management's beliefs,
and assumptions made by management. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," and variations of such
words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict; therefore, actual results may differ materially from those expressed or
forecasted in any such forward- looking statements. Such risks and uncertainties
include those noted in "Risk Factors" below and in the documents incorporated
herein by reference. The Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
RISK FACTORS
An investment in the Shares involves a high degree of risk. In addition
to the other information contained in this Prospectus, the following risk
factors should be considered carefully in evaluating an investment in the
Shares.
DEPENDENCE ON PRIMARY PRODUCT; UNCERTAINTY OF MARKET ACCEPTANCE
The Company's future is substantially dependent upon the success of the
BioZ System and follow-on products. The market for TEB products is in a
relatively early stage of development, and there can be no assurance that this
market will develop. The long-term commercial success of the BioZ System and any
follow-on TEB products requires widespread acceptance, by a significant portion
of the medical community, of the Company's TEB products as safe, efficacious and
cost-effective alternatives to invasive procedures. Widespread acceptance would
represent a significant change in practice patterns. Historically, some medical
professionals have indicated hesitancy in using TEB products such as
analog-based TEB monitors previously manufactured by the Company. Invasive
procedures, such as right heart catheterization, are generally accepted in the
medical community and have a long history of use.
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The Company currently has limited clinical data with which to
demonstrate the clinical benefits of its products but plans to conduct clinical
trials which it hopes will demonstrate consistent clinical benefits resulting
from the use of its products (including reduced procedure time, reduced patient
trauma and lower costs). There can be no assurance as to when such clinical
trials will be completed, that such clinical trials will have a positive outcome
or that a positive outcome in such trial would be sufficient to enable
acceptance of the BioZ System by the medical community. The Company is unable to
predict how quickly, if at all, its products may be accepted by members of the
medical community.
Technological limitations of TEB make it subject to inaccuracies where a
patient has certain identified clinical circumstances such as (a) severe septic
shock, significant pulmonary hypertension, aortic valve regurgitation, severe
hypertension (MAP>130mmHg), and tachycardia rates>180BPM, and (b) until
algorithm development for pediatric and exercise applications is completed,
patient height measuring <47"(120cm), patient weight measuring<66 lbs(30kg) or
>342 lbs. (155kg), and extreme patient movement.
Failure of the BioZ System or other of the Company's TEB products to
gain widespread acceptance in the medical community, and to maintain such
acceptance, would have a material adverse effect on the Company's business,
financial condition and results of operations.
COMPETITION AND TECHNOLOGICAL CHANGE
The Company competes with other entities developing and marketing
non-invasive hemodynamic monitors. The Company also is subject to severe
competition from invasive-technology companies, including Baxter Healthcare
Corporation, which have more established and larger marketing and sales
organizations, significantly greater financial and technical resources and a
larger installed base of customers than the Company. Such competitors may be
able to devote greater resources to the development, promotion and sales of
their products than the Company. The current widespread acceptance of RHC, and
lack of widespread acceptance of TEB, is an important competitive disadvantage
which the Company must overcome. In addition, current and potential small
competitors of the Company may establish cooperative relationships with large
medical equipment companies to gain access to greater research and development
or marketing resources. Competition may result in price reductions, reduced
gross margins and loss of market share, any of which could have a material
adverse effect on the Company's business, results of operations and financial
condition. There can be no assurance that the Company will be able to compete
successfully.
In addition, the introduction by others of products embodying new
technologies and the emergence of new hemodynamic monitoring equipment industry
standards could render the Company's products obsolete and unmarketable. Other
companies may develop and introduce products and processes competitive with or
superior to those of the Company. In addition, other technologies or products
may be developed that have an entirely different approach or means of
accomplishing the intended purposes of the Company's products. Accordingly, the
life cycles of the Company's products are difficult to estimate. To compete
successfully, the Company must develop and introduce new products that keep pace
with technological developments, respond to evolving consumer requirements and
achieve market acceptance.
There can be no assurance that the Company can satisfactorily and timely
develop and introduce additional products. Even if the Company succeeds in
developing and marketing products that achieve market acceptance, there can be
no assurance that competitors will not in the future develop and market products
that will replace those of the Company.
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The Company's business plan contemplates an income stream from sales of
electrodes toward an installed base of Company monitors. The Company may be
subject, however, to price competition from other electrode manufacturers.
NEW MANAGEMENT AND PRODUCTS
Although not in fact a new company, since 1995 the Company has entirely
new management and personnel, and its products and operations have been
redeveloped. Therefore, currently the Company faces many of the challenges
characteristic of new companies in or just emerging from the development phase.
The BioZ System has required, and any future products will require,
substantial development efforts and compliance with all governmental
clearance/approval requirements. The Company may encounter unforeseen
technological or scientific problems, which may force abandonment or substantial
change in the development of a specific product or process, or technological
change or product developments by others, any of which may have a material
adverse effect on the Company. Further, even after successful technical
development and receipt of governmental approval, a product may not achieve
commercial success.
HISTORY OF LOSSES
Since its emergence from bankruptcy proceedings in 1993, the Company has
incurred substantial losses in the course of researching, developing and
enhancing its technology and products and establishing an administrative
organization. The Company anticipates that its operating expenses will increase
substantially in the foreseeable future as it increases its sales and marketing
activities, expands its operations and management and continues the development
of its technology. Accordingly, the Company expects to incur additional losses
for fiscal 1997, and there can be no assurance that the Company will achieve or
sustain revenue growth or profitability.
ABILITY TO MANAGE GROWTH
The Company, if successful, will experience a period of growth that
would place a significant strain upon its managerial, financial and operational
resources. There can be no assurance that the Company's systems, procedures or
controls will be adequate to support the Company's operations or that the
Company's management will be able to achieve the rapid execution necessary to
fully exploit any future market opportunity for the Company's products. The
Company's future operating results will also depend on its ability to complete
its geographic network of distributors, expand its sales and marketing
organizations, and fill out its staff support organization. If the Company is
unable to manage expansion effectively, the Company's business, results of
operations and financial condition will be materially and adversely affected.
There can be no assurance, however, that such expansion or growth will occur.
GOVERNMENT REGULATION
The Company's products and activities are subject to extensive
regulation by the FDA and other governmental authorities. Delays in receipt of,
or failure to obtain, regulatory clearances and approvals, or any failure to
comply with regulatory requirements could have a material adverse effect on the
Company's business, financial condition and results of operations.
The Company's TEB products are subject to extensive and rigorous
regulation by the FDA and, to varying degrees, by state and foreign regulatory
agencies. Under the federal Food, Drug, and Cosmetic Act (the "FDC Act"), the
FDA regulates the clinical testing, manufacture, labeling, packaging, marketing,
distribution and record keeping for medical devices, in order to ensure that
medical devices distributed in the United States are safe and effective for
their intended use.
Before a new device can be introduced into the market, the manufacturer
generally must obtain FDA clearance of a 510(k) or approval of a premarket
approval ("PMA") application. Following submission of a 510(k) or PMA
application, the manufacturer may not market the new device until an order is
issued by the FDA granting clearance or approval, which can entail an expensive,
lengthy and uncertain process.
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The Company is also subject to routine inspection by the FDA and state
agencies, such as the California Department of Health Services, for compliance
with Good Manufacturing Practice requirements, Medical Device Reporting
requirements and other applicable regulations. Noncompliance with applicable
requirements can result in warning letters, import detentions, fines, civil
penalties, injunctions, suspensions or losses of regulatory approvals, recall or
seizure of products, operating restrictions, refusal of the government to
approve product export applications or allow the Company to enter into supply
contracts and criminal prosecution. Delays in receipt of, or failure to obtain,
regulatory clearances and approvals, if obtained, or any failure to comply with
regulatory requirements could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company has
received a marketing clearance for its BioZ System.
The FDC Act requires that medical devices be manufactured in accordance
with the current Good Manufacturing Practice requirements. Good Manufacturing
Practice requirements require, among other things that (i) the manufacturing
process be regulated and controlled by the use of written procedures, (ii) the
ability to produce devices which meet the manufacturer's specifications be
validated by extensive and detailed testing of every aspect of the process and
(iii) any deficiencies in the manufacturing process or in the products produced
be investigated and detailed records kept. Manufacturing facilities are subject
to FDA inspection on a periodic basis to monitor compliance with current Good
Manufacturing Practice requirements. Labeling and promotional activities are
subject to scrutiny by the FDA and, in certain circumstances, by the Federal
Trade Commission. Current FDA enforcement policy prohibits the marketing of
approved medical devices for unapproved uses. For any medical device cleared
through the 510(k) process, modifications or enhancements that could
significantly affect the safety or effectiveness of the device or that
constitute a major change to the intended use of the device require a new 510(k)
submission. If the FDA requires the Company to submit a new 510(k) notice for
any product modification, the Company may be prohibited from marketing the
modified product until the 510(k) notice is cleared by the FDA.
The FDA regulates computer software that performs the function of a
regulated device or that is intimately associated with a given device, such as
control software for diagnostic devices. The FDA is in the process of
reevaluating its regulation of such software, and if the FDA undertakes
increased or more rigorous regulation of such software, the BioZ System and
related products may become subject to further regulatory processes and
clearance requirements.
Laws and regulations regarding the manufacture, sale and use of medical
devices are subject to change and depend heavily on administrative
interpretations. There can be no assurance that future changes in the
regulations or interpretations made by the FDA or other regulatory bodies, with
possible retroactive effect, will not adversely affect the Company.
Sales of medical devices outside of the United States are subject to
foreign regulatory requirements that vary from country to country. The Company
currently relies on its international distributors and sub-distributors for the
receipt of premarket approvals and compliance with clinical trial requirements
in those countries that require them, and it expects to continue to rely on
distributors in those countries where the Company continues to use distributors.
In the event that the Company's international distributors fail to obtain or
maintain required premarket approvals or fail to comply with foreign
regulations, foreign regulatory authorities may require the Company to cause the
applicable distributor to file revised governmental notifications, cease
commercial sales of its products in the applicable countries or otherwise act so
as to stop any ongoing noncompliance in such countries. Such enforcement action
by regulatory authorities could have a material adverse effect on the Company's
business, financial condition and results of operations.
In order to sell its products within the European Economic Area
following June 14, 1998, the Company will be required to achieve compliance with
the requirements of the EEA's Medical Devices Directive and to affix CE marking
on its products to attest such compliance. Failure by the Company to comply with
CE marking requirements by June 1998 would mean that the Company would be unable
to sell its products in the European Economic Area unless and until compliance
was achieved, which could have a material adverse effect upon the Company's
business, financial condition and results of operations.
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FUTURE ADDITIONAL CAPITAL REQUIREMENTS; NO ASSURANCE FUTURE CAPITAL WILL BE
AVAILABLE
Commercialization by the Company of the BioZ System and the development
and commercialization of any additional products will require substantial
expenditures. The Company's capital requirements will depend on numerous
factors, including the rate of sales growth; the progress of the Company's
marketing-related clinical evaluations and product development programs; the
receipt of, and the time required to obtain, regulatory clearances and
approvals; the resources the Company devotes to the development, manufacture and
marketing of its products; the resources required to hire and develop medical
sales representatives and independent distributors and to develop internal
manufacturing capacity; facilities requirements; market acceptance and demand
for its products; the ability of the Company and its distributors to avoid
increased working capital requirements arising from hospitals' lengthy capital
equipment purchase processes by offering leasing programs; and other factors.
The timing and amount of such capital requirements cannot be accurately
predicted. The Company may be required to raise additional funds through public
or private financings, bank loans, collaborative relationships or other
arrangements earlier than expected. There can be no assurance that such
additional funding will be available on terms attractive to the Company, or at
all.
CONTROL BY OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS
Allen E. Paulson and James C. Gilstrap, the co-chairmen of the Company,
beneficially own, directly or through CardioDynamics Holdings, LLC, which they
control, approximately 71% of the outstanding shares of the Company's Common
Stock (including shares owned by others which CardioDynamics Holdings, LLC has
the right to vote). In addition, Mr. Paulson's sons beneficially own another 9%
of the outstanding shares of Common Stock. Accordingly, these persons,
individually and as a group, are able to control the Company and direct its
affairs and business, including any future issuances of Common Stock or other
securities by the Company, merger and acquisition decisions, declaration of
dividends and the election of directors. CardioDynamics Holdings, LLC also has a
contractual right to purchase at $0.25 per share the same number of shares of
Common Stock as the Company may from time to time issue to any other person,
although this right was waived with respect to the private offering in which
the Selling Shareholders acquired the Shares.
DEPENDENCE ON MANAGEMENT AND OTHER KEY PERSONNEL
The Company is dependent upon a limited number of key management and
technical personnel. The loss of the services of one or more of such key
employees could have a material adverse effect on the Company's business,
financial condition, and results of operations. In addition, the Company's
success depends upon its ability to attract and retain additional highly
qualified sales, management, manufacturing and research and development
personnel. The Company faces intense competition in its recruiting activities
and there can be no assurance that the Company will be able to attract and/or
retain qualified personnel.
DEPENDENCE ON DISTRIBUTOR NETWORK
The Company intends to sell its products through distributors. There can
be no assurance that the Company will succeed in entering into or in maintaining
satisfactory relationships with distributors.
RELIANCE ON PATENTS AND PROPRIETARY TECHNOLOGY
The Company's patents and proprietary technology may not be able to
prevent effective competition by others. Although the Company believes that it
has effective patent protection, no assurance can be given that the Company's
products will not be found to infringe the rights of others. Intellectual
property litigation, whether defensive or offensive, would have no certain
outcome other than to drain the Company's resources.
The validity and breadth of claims in medical technology patents involve
complex legal and factual questions. No assurance can be given that any future
patent applications 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 or licensed by the Company or that the Company's
existing patents will cover the Company's future products. Moreover, when the
Company's key patents expire, the inventions will be in the public domain. Since
patent applications
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in the United States are maintained in secrecy until patents issue, the Company
cannot be certain that it will not infringe any patents that may be issued to
others. In the event the Company's products are found to infringe patents held
by competitors, there can be no assurance that the Company will be able to
modify successfully its product to avoid infringement, or that any modified
products will be commercially successful.
POTENTIAL VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock is likely to be highly
volatile and could be subject to wide fluctuations in response to various
factors beyond the control of the Company, including (i) quarterly variations in
operating results, (ii) announcements of technological innovations, new products
or pricing by the Company's competitors, (iii) changes in, or failure of the
Company to meet, financial estimates of securities analysts, (iv) the rate of
adoption by physicians of TEB technology in markets targeted by the Company, (v)
timing of patent and regulatory approvals, (vi) timing and extent of
technological advancements, (vii) results of clinical studies and (viii) general
market conditions. In addition, the stock market has experienced significant
price and volume fluctuations that have affected the market prices of equity
securities of many medical device companies and that often have been unrelated
to the operating performance of such companies. These broad market fluctuations
may adversely affect the market price of the Company's Common Stock.
RISKS ASSOCIATED WITH INTERNATIONAL ACTIVITIES
The Company believes it is possible that international sales will
represent a meaningful portion of revenue in the future. This would require
significant management attention and financial resources and subject the Company
further to the risks of selling internationally. These risks include unexpected
changes in regulatory requirements, tariffs and other barriers and restrictions,
and an adverse effect from reduced protection for intellectual property rights
and the burdens of complying with variety of foreign laws. In addition,
fluctuations in the rates of exchange could increase the price in local
currencies of the Company's products in foreign markets and make the Company's
products relatively more expensive than competitors' products that are
denominated in local currencies.
PRODUCT LIABILITY RISK AND PRODUCT RECALL; LIMITED INSURANCE COVERAGE
The nature of the Company's business exposes it to risks of product
liability or product recalls that are inherent in the design, development,
manufacture and marketing of medical devices, in the event that use of the
Company's products is alleged to have caused adverse effects on a patient or
such products are believed to be defective. Medical devices as complex as those
offered by the Company frequently contain errors or failures, especially when
first introduced or when new versions are released. The Company's products are
designed to be used in certain procedures where there is a high risk of serious
injury or death. Such risks will exist even with respect to those products that
have received, or may in the future receive, regulatory clearance for commercial
sale.
The Company did not carry product liability insurance during certain
periods prior to May 15, 1995. Therefore, it has no coverage for analog TEB
monitors manufactured and sold during certain times. Since then, the Company has
maintained product liability insurance at levels which it believes to be
sufficient and consistent with industry standards for companies with its current
sales levels. The Company intends to increase its product liability insurance
policy limit as sales grow. There can be no assurance that the Company's product
liability insurance is adequate or that such insurance coverage will continue to
be available on commercially reasonable terms or at all. In addition, product
liability claims or recalls could result in loss of revenue or delay in market
acceptance, diversion of development resources, damage to the Company's
reputation or increased service and warranty costs.
UNCERTAINTY AND POTENTIAL NEGATIVE EFFECTS OF HEALTH CARE REFORM
The health care industry is undergoing fundamental changes resulting
from political, economic and regulatory influences. In the United States,
comprehensive programs have been proposed that seek to (i) increase access to
health care for the uninsured, (ii) control the escalation of health care
expenditures within the economy, and (iii) use health care reimbursement
policies to help control the federal deficit. The Company anticipates that
Congress and state legislatures will continue to review and assess such
proposals, and public debate of these issues will likely continue. The Company
-8-
<PAGE> 10
cannot predict which, if any, of such reform proposals will be adopted and when
they might be adopted. Other countries also are considering health care reform.
Significant changes in health care systems are likely to have a substantial
impact over time on the manner in which the Company conducts its business and
could have a material adverse effect on the Company's business, financial
condition and results of operations, and ability to market its products as
currently contemplated.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares. All proceeds from the sale of the Shares will be for the account of the
Selling Shareholders, as described below. See "Selling Shareholders" and "Plan
of Distribution" described below.
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the Selling
Shareholders' beneficial ownership of the Company's Common Stock as of June 30,
1997. Except as otherwise indicated in this Prospectus, the Selling Shareholders
have not had a material relationship with the Company within the past three
years other than as a result of the ownership of the Shares. The numbers set
forth in the column "Number of Shares Being Offered" below constitute all of the
Shares that the Selling Shareholders may distribute in this offering; however,
there are currently no agreements, arrangements or understandings with respect
to the sale of any of the Shares and the table below assumes the sale of all
Shares held by the Selling Shareholders. The Shares are being registered to
permit public secondary trading of the Shares, and the Selling Shareholders may
offer the Shares for resale from time to time. See "Plan of Distribution."
The Selling Shareholders purchased the Shares in connection with a private
placement offering completed in February and March, 1997. In connection with the
purchase of such Shares, each Selling Shareholder entered into a purchase
agreement pursuant to which such Selling Shareholder represented that he, she or
it was acquiring the Shares for investment and with no present intention of
distributing the Shares. The Company agreed, in such purchase agreements, to
prepare and file a registration statement as soon as practicable and to bear all
expenses other than fees and expenses of counsel for a Selling Shareholder and
underwriting discounts and commissions and brokerage commissions and fees. In
addition, and in recognition of the fact that the Selling Shareholders, even
though purchasing the Shares without a view to distribution, may wish to be
legally permitted to sell the Shares when each deems appropriate, the Company
filed with the Commission a Registration Statement on Form S-3, of which this
Prospectus forms a part, with respect to, among other things, the resale of the
Shares from time to time at prevailing prices in the over-the-counter market or
in privately-negotiated transactions and has agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective until all Shares offered hereby have
been sold pursuant thereto or until such Shares are no longer, by reason of Rule
144(K) under the Securities Act or any other rule of similar effect, required to
be registered for the sale thereof by the Selling Shareholders.
The following table sets forth the name of each Selling Shareholder, the
number of shares of CardioDynamics Common Stock owned beneficially by each
Selling Shareholder as of July 30, 1997, and the number of shares which may be
offered pursuant to this Prospectus. CardioDynamics will not receive any of the
proceeds from the sale of Shares by the Selling Shareholders.
-9-
<PAGE> 11
<TABLE>
<CAPTION>
Shares Beneficially Number of
Owned Prior to Shares Being
Offering(1) Offered
----------- -------
Selling Shareholder Number Number
------------------- ------ ------
<S> <C> <C>
The British Life Office 180,000 180,000
Veritas SG Investment Trust GmbH 1,000,000 1,000,000
Ryco and Co Nominee 170,000 170,000
Banco Central Hispano 66,667 66,667
Banque Pictet (Luxembourg) 122,807 122,807
Banque Privee Edmond De Rothchild 21,053 21,053
Banco Banif Renta Variable/Transcont 140,351 140,351
Banco Banif/Universal 26,316 26,316
Banco Banif/Invermanher 35,088 35,088
Banco Banif/Siglo XXI 26,316 26,316
Faisal Finance (Switzerland) S.A. 70,000 70,000
Swiss Bank Corporation Trust 100,000 100,000
Heritage Small Cap Fund 200,000 200,000
Roger Dee Alsabrook 35,088 35,088
Suzy W. Duff 104,561 104,561
Mid America Ent. Money Purchase Pension Plan 29,102 29,102
Alan Charles Newman and Janet Marie Newman, 94,488 94,488
Trustees of the Alan Charles Newman and Janet
Marie Newman Family Trust UDT dated
December 10, 1991
Henry Abrams Trust 52,632 52,632
Mark Milstein Revocable Trust U/A Dtd 8/27/92 52,632 52,632
</TABLE>
- ---------------
(1) The persons named in the table have sole voting and sole investment
power with respect to all shares beneficially owned.
-10-
<PAGE> 12
PLAN OF DISTRIBUTION
The Shares offered hereunder may be sold from time to time by the
Selling Shareholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on the Nasdaq SmallCap Market or in the
over-the-counter market or otherwise, at prices and on terms then prevailing or
related to the then-current market price, or in negotiated transactions. The
Shares may be sold to or through one or more broker-dealers, acting as agent or
principal, in underwritten offerings, block trades, agency placements, exchange
distributions, brokerage transactions or otherwise, or in any combination of
transactions.
At the time a particular offer of Shares is made, to the extent
required, a supplemental Prospectus will be distributed which will set forth the
number of shares being offered and the terms of the offering including the name
or names of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the Shares purchased from the Selling Shareholders, any
discounts, commissions and other items constituting compensation from the
Selling Shareholders and any discounts, concessions or commissions allowed or
reallowed or paid to dealers.
In connection with any transaction involving the Shares, broker-dealers
or others may receive from the Selling Shareholders, and may in turn pay to
other broker-dealers or others, compensation in the form of commissions,
discounts or concessions in amounts to be negotiated at the time (which
compensation may be in excess of customary commissions). Broker-dealers and any
other persons participating in a distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Act in connection with such
distribution, and any such commissions, discounts or concessions may be deemed
to be underwriting discounts or commissions under the Act.
Any or all of the sales or other transactions involving the Shares
described above, whether effected by the Selling Shareholders, any broker-dealer
or others, may be made pursuant to this prospectus. In addition, any Shares that
qualify for sale pursuant to Rule 144 under the Act may be sold under Rule 144
rather than pursuant to this prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold in such jurisdictions only through registered
or licensed brokers or dealers. In addition, in certain states the Shares may
not be sold unless they have been registered or qualified for sale or an
exemption from registration or qualification requirements is available and is
complied with.
CardioDynamics and the Selling Shareholders may agree to indemnify
certain persons, including broker-dealers or others, against certain liabilities
in connection with any offering of the Shares, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, San Diego, California.
EXPERTS
The financial statements of CardioDynamics International Corporation
appearing in CardioDynamics International Corporation's Annual Report (Form
10-KSB) for the year ended November 30, 1996, have been audited by Peterson &
Co., independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
INDEMNIFICATION
Section 317 of the California General Corporation Law provides for the
indemnification of officers and directors of the Company against expenses,
judgments, fines and amounts paid in settlement under certain conditions and
subject to certain limitations.
-11-
<PAGE> 13
Article Three of the Bylaws of the Company provides that the Company
shall indemnify any person who is or was a director, officer, employee or agent
of the Company (or predecessor corporation of the Company), or any person who is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, subject to certain limitations. In addition,
expenses incurred by a director, officer, employee or agent in defending a civil
or criminal action, suit or proceeding by reason of the fact that he or she is
or was a director, officer, employee or agent of the Company may be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Company.
The Company's Articles of Incorporation, as amended, provide that no
director of the Company shall be liable for monetary damages in an action by or
in the right of the Company for breach of a director's duties to the Company and
its shareholders, as set forth in Section 309 of the California Corporations
Code, provided however that: (a) such provision does not eliminate or limit the
liability of a director of the Company: (i) for acts or omissions that involve
intentional misconduct or knowing or culpable violation of law, (ii) for acts or
omissions that a director of the Company believes to be contrary to the best
interests of the Company or its shareholder or that involves the absence of good
faith on the part of a director of the Company, (iii) or any transaction from
which a director of the Company derives an improper personal benefit, (iv) for
acts or omissions that show a reckless disregard of the director's duty to the
Company or its shareholders in circumstances in which the director was aware, or
should have been aware in the ordinary course of performing the director's
duties, of a risk of serious injury to the Company or its shareholders, (v) for
acts or omissions that constitute an unexecuted pattern of inattention that
amounts to an abdication of the director's duty to the Company or its
shareholders, (vi) under Section 310 of the California Corporations Code, or
(vii) under Section 316 of the California Corporations Code; such provision
eliminating liability shall not eliminate or limit the ability of an officer for
any act or omission as an officer notwithstanding that the officer is also a
director or that his or her actions, if negligent or improper, have been
ratified by the directors.
The Company is authorized to provide indemnification of its
agents (as defined in Section 317 of the California Corporations Code) for
breach of duty to the Company and its shareholders through bylaw provisions or
through agreements with the agents, or both, in excess of the indemnification
otherwise permitted by Section 317 of the California Corporations Code, subject
to the limits on such excess indemnification set forth in Section 204 of the
California Corporations Code. The Company has entered into such indemnification
agreements with each of its directors and officers.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
-12-
<PAGE> 14
CARDIODYNAMICS INTERNATIONAL CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information..........................................................2
Information Incorporated by Reference..........................................2
The Company....................................................................3
Forward-Looking Statements.....................................................3
Risk Factors...................................................................3
Use of Proceeds................................................................9
Selling Shareholders...........................................................9
Plan of Distribution..........................................................11
Legal Matters.................................................................11
Experts.......................................................................11
Indemnification...............................................................11
</TABLE>
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various costs and expenses to be paid by
the Company with respect to the sale and distribution of the securities being
registered. All of the amounts shown are estimates except the Securities and
Exchange Commission registration fee.
<TABLE>
<S> <C>
SEC Registration Fee.......................................... $ 3,661
Printing Expenses *........................................... $ 1,000
Blue Sky Fees and Expenses *.................................. $10,000
Legal Fees and Expenses*...................................... $12,000
Accounting Fees and Expenses*................................. $ 1,000
Miscellaneous*................................................ $ 1,000
Total................................................ $28,661
======
</TABLE>
- --------------------
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) Section 317 of the California General Corporation Law provides for the
indemnification of officers and directors of the Company against expenses,
judgments, fines and amounts paid in settlement under certain conditions and
subject to certain limitations.
(b) Article Three of the Bylaws of the Company provides that the Company
shall indemnify any person who is or was a director, officer, employee or agent
of the Company (or predecessor corporation of the Company), or any person who is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, subject to certain limitations. In addition,
expenses incurred by a director, officer, employee or agent in defending a civil
or criminal action, suit or proceeding by reason of the fact that he or she is
or was a director, officer, employee or agent of the Company may be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Company.
(c) The Company's Articles of Incorporation, as amended, provided that no
director of the Company shall be liable for monetary damages in an action by or
in the right of the Company for breach of a director's duties to the Company and
its shareholders, as set forth in Section 309 of the California Corporations
Code, provided however that: (a) such provision does not eliminate or limit the
liability of a director of the Company: (i) for acts or omissions that involve
intentional misconduct or knowing or culpable violation of law, (ii) for acts or
omissions that a director of the Company believes to be contrary to the best
interests of the Company or its shareholder or that involves the absence of good
faith on the part of a director of the Company, (iii) or any transaction from
which a director of the Company derives an improper personal benefit, (iv) for
acts or omissions that show a reckless disregard of the director's duty to the
Company or its shareholders in circumstances in which the director was aware, or
should have been aware in the ordinary course of performing the director's
duties, of a risk of serious injury to the Company or its shareholders, (v) for
acts or omissions that constitute an unexecuted pattern of inattention that
amounts to an abdication of the director's duty to the Company or its
shareholders, (vi) under Section 310 of the California Corporations Code, or
(vii) under Section
II-1
<PAGE> 16
316 of the California Corporations Code; such provision eliminating liability
shall not eliminate or limit the ability of an officer for any act or omission
as an officer notwithstanding that the officer is also a director or that his or
her actions, if negligent or improper, have been ratified by the directors.
The Company is authorized to provide indemnification of its agents (as
defined in Section 317 of the California Corporations Code) for breach of duty
to the Company and its shareholders through bylaw provisions or through
agreements with the agents, or both, in excess of the indemnification otherwise
permitted by Section 317 of the California Corporations Code, subject to the
limits on such excess indemnification set forth in Section 204 of the California
Corporations Code. The Company has entered into such indemnification agreements
with each of its directors and officers.
ITEM 16. EXHIBITS
EXHIBIT NUMBER
+ 4.1 Form of Stock Purchase Agreement between the Company and
the Selling Shareholders (incorporated by reference to
February 28, 1997 Form 10-QSB (Exhibit 10.2)).
* 5.1 Opinion of Brobeck, Phleger & Harrison LLP.
* 23.1 Consent of Peterson & Co., Independent Auditors.
* 23.2 Consent of Brobeck, Phleger & Harrison LLP (included in
Exhibit 5.1).
+ 24.1 Power of Attorney (see page II-3).
* Filed herewith.
+ Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to include any
additional or changed material information on the plan of distribution;
(2) That, for determining liability under the Securities Act, each such
post-effective amendment shall be treated as a new registration statement of the
securities offered, and the offering of the securities at that time shall be
treated as the initial bona fide offering; and
(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, 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 Securities 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
question 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 Securities Act and will be governed by
the final adjudication of such issue.
II-2
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on the 1st day
of August, 1997.
CARDIODYNAMICS INTERNATIONAL CORPORATION
By /s/ RICHARD E. OTTO
----------------------------------------
Richard E. Otto, Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Richard
E. Otto, as attorney-in-fact, with the power of substitution, for him in any and
all capacities, to sign any amendment to this Registration Statement and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting to said attorney-in-fact
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ RICHARD E. OTTO
- ---------------------------------------------- DIRECTOR AND CHIEF EXECUTIVE OFFICER August 1, 1997
Richard E. Otto (PRINCIPAL EXECUTIVE OFFICER)
/s/ STEPHEN P. LOOMIS
- ---------------------------------------------- VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL
Stephen P. Loomis OFFICER (PRINCIPAL FINANCIAL OFFICER AND August 1, 1997
PRINCIPAL ACCOUNTING OFFICER)
/s/ STEPHENSON M. DECHANT* DIRECTOR August 1, 1997
- ----------------------------------------------
Stephenson M. Dechant
/s/ NICHOLAS V. DIACO, M.D.* DIRECTOR August 1, 1997
- ----------------------------------------------
Nicholas V. Diaco, M.D.
/s/ JAMES C. GILSTRAP* DIRECTOR August 1, 1997
- ----------------------------------------------
James C. Gilstrap
DIRECTOR
- ----------------------------------------------
Louis P. Ferrero
DIRECTOR
- ----------------------------------------------
Cam L. Garner
/s/ MICHAEL D. PADILLA* DIRECTOR August 1, 1997
- ----------------------------------------------
Michael D. Padilla
/s/ ALLEN E. PAULSON* DIRECTOR August 1, 1997
- ----------------------------------------------
Allen E. Paulson
DIRECTOR
- ----------------------------------------------
Richard O. Martin
</TABLE>
* By Richard E. Otto, as attorney-in-fact
II-3
<PAGE> 18
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-3
UNDER
SECURITIES ACT OF 1933
CARDIODYNAMICS INTERNATIONAL CORPORATION
II-4
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------ -------
<S> <C>
+ 4.1 Form of Stock Purchase Agreement between the Company and
the Selling Shareholders (incorporated by reference to
February 28, 1997 Form 10-QSB (Exhibit 10.2)).
* 5.1 Opinion of Brobeck, Phleger & Harrison LLP.
* 23.1 Consent of Peterson & Co., Independent Auditors.
* 23.2 Consent of Brobeck, Phleger & Harrison LLP (included in
Exhibit 5.1).
+ 24.1 Power of Attorney (see page II-3).
</TABLE>
* Filed herewith.
+ Previously filed.
II-5
<PAGE> 1
EXHIBIT 5.1
OPINION OF BROBECK, PHLEGER & HARRISON LLP
August 1, 1997
CardioDynamics International Corporation
6155 Cornerstone Court East
Suite 125
San Diego, California 92121
Ladies and Gentlemen:
We have acted as counsel to CardioDynamics International Corporation, a
California corporation (the "Company"), in connection with the registration of
2,527,101 shares of Common Stock (the "Shares"), as described in the Company's
Registration Statement on Form S-3 ("Registration Statement"), filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act").
This opinion is being furnished in accordance with the requirements of
Item 16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-B under the Act.
We are familiar with the corporate proceedings taken by the Company in
connection with the issuance and sale of the Shares. It is our opinion that the
Shares are duly authorized, validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus which is part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
This opinion is expressed as of the date hereof and we disclaim any
undertaking to advise you of any subsequent changes in applicable law or in the
facts stated or assumed herein which may alter, affect or modify the opinion
expressed herein. Our opinion is expressly limited to the matters set forth
above and we render no opinion, whether by implication or otherwise, as to any
other matters relating to the Company or the Shares.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF PETERSON & CO., INDEPENDENT AUDITORS
We consent to the reference of our firm under the caption "Experts" and to
the incorporation by reference in CardioDynamics International Corporation's
Amendment No. 1 to Registration Statement on Form S-3 (pertaining to 2,527,101
common shares) and in the related prospectuses of our report dated February 25,
1997 (except for Note 14, as to which the date is March 6, 1997) on the
financial statements of CardioDynamics International Corporation for the fiscal
year ended November 30, 1996.
/s/ Peterson & Co.
PETERSON & CO.
August 1, 1997
San Diego, California
EXHIBIT 23.1
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY (SEE PAGE II-3)
EXHIBIT 24.1
