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As filed with the Securities and Exchange Commission on March 3, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
CardioDynamics International Corporation
(Exact name of Registrant as specified in its charter)
CALIFORNIA 95-3533362
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
______________
6175 Nancy Ridge Drive, Suite 300, San Diego, California 92121
(858) 535-0202
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
______________
Michael K. Perry
Chief Executive Officer
CardioDynamics International Corporation
6175 Nancy Ridge Drive, Suite 300, San Diego, California 92121
(858) 535-0202
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
______________
Copy to:
David R. Snyder, Esq.
Pillsbury Madison & Sutro LLP
101 West Broadway, Suite 1800
San Diego, California 92101
______________
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. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum Proposed Maximum
Title of Each Class of Securities Amount To Be Offering Price Per Aggregate Offering Amount of
To Be Registered Registered Share/(2)/ Price/(2)/ Registration Fee
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<S> <C> <C> <C> <C>
common stock, no par value 1,320,000 shares/(1)/ $6.6875 $8,827,500 $2,330.46
per share
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Total 1,320,000 shares/(1)/ $8,827,500 $2,330.46
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</TABLE>
(1) Includes (i) 1,320,000 shares of common stock and (ii) an indeterminate
number of additional shares of common stock which may become issuable on
April 3, 2000 if the average closing price for the common stock for the
twenty (20) trading days preceding April 3, 2000 is below $2.50 per share,
which shares are registered hereunder pursuant to Rule 416 under the
Securities Act.
(2) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457 under the Securities Act of
1933, as amended, based upon the average of the high and low prices of the
common stock on February 29, 2000, as reported on the Nasdaq SmallCap
Market.
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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<PAGE>
PROSPECTUS
1,320,000 Shares
CardioDynamics International Corporation
Common Stock
Our common stock is traded on the Nasdaq SmallCap Market under the symbol
"CDIC." On March [ ], 2000, the closing sale price of CardioDynamics common
stock as reported on the Nasdaq SmallCap Market was $[ ] per share.
These shares of common stock are being sold by four (4) selling
shareholders, who obtained them through a private placement completed on
December 3, 1999 at $2.50 per share. We will not receive any part of the
proceeds from the sale.
See "Risk Factors" on page 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of the prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is [_____, 2000].
<PAGE>
CARDIODYNAMICS INTERNATIONAL CORPORATION
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
WHERE YOU CAN FIND MORE INFORMATION................................... 2
ABOUT CARDIODYNAMICS INTERNATIONAL CORPORATION........................ 2
RISK FACTORS.......................................................... 3
FORWARD-LOOKING STATEMENTS............................................ 11
USE OF PROCEEDS....................................................... 11
SELLING SHAREHOLDERS.................................................. 11
PLAN OF DISTRIBUTION.................................................. 12
LEGAL MATTERS......................................................... 13
EXPERTS............................................................... 13
INDEMNIFICATION....................................................... 13
</TABLE>
1
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, and Chicago. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them which means that we can disclose important information to you by
referring you to those documents instead of having to repeat the information in
this prospectus. The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by reference
(i) the documents listed below, (ii) any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after
the date of the initial registration statement and prior to the effectiveness of
the registration statement and (iii) any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
the selling shareholders sell all the shares.
-- Annual Report on Form 10-KSB for the year ended November 30, 1999;
-- Registration Statement on Form 8-A filed with the SEC on April 19,
1984. This filing describes the terms, rights and provisions
applicable to our common stock.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Shareholder Services
6175 Nancy Ridge Drive, Suite 300
San Diego, CA 92121
(858) 535-0202
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The selling shareholders will
not make an offer of these shares in any state where the offer is not permitted.
You should not assume that the information in this prospectus or any supplement
is accurate as of any date other than the date on the front of those documents.
This prospectus is part of a registration statement we filed with the SEC
(Registration No. 333-[ ]).
ABOUT CardioDynamics International Corporation
At CardioDynamics International Corporation, we develop, manufacture and
market heart monitoring devices which provide physicians with continuous data on
a wide range of parameters relating to blood flow and heart function. Unlike
other cardiac function monitoring technologies, our monitors are non-invasive.
Our primary products, the BioZ(R) System, the BioZ(TM) Portable, and the
BioZ.com(TM) use a technology called thoracic electrical bioimpedance to obtain
data which is typically available only through a time-consuming, costly, and
potentially dangerous invasive procedure known as right-heart catheterization,
or as pulmonary artery catheterization.
Our principal executive offices are located at 6175 Nancy Ridge Drive,
Suite 300, San Diego, California 92121, and our telephone number is (858) 535-
0202. Our common stock trades on the Nasdaq Stock Market(SM), under the symbol
CDIC.
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RISK FACTORS
This offering involves a high degree of risk. You should carefully
consider the risks described below and the other information contained in this
prospectus before deciding to invest in shares of our common stock.
Dependence on BioZ(TM) Product Line Whose Market Acceptance is Unclear
Our future is dependent upon the success of the BioZ(TM) product line and
similar products that are based on the same core technology. The market for
thoracic electrical bioimpedance products is in a relatively early stage of
development, and it is possible that this market will never fully develop. The
long-term commercial success of the BioZ(TM) product line and any follow-on
products requires widespread acceptance of our thoracic electrical bioimpedance
products as safe, efficient, and cost-effective. Widespread acceptance would
represent a significant change in medical practice patterns. Historically, some
medical professionals have indicated hesitancy in using thoracic electrical
bioimpedance products such as previous generation analog-based monitors.
Invasive procedures, such as pulmonary artery catheterization, are generally
accepted in the medical community and have a long history of use.
We have limited clinical data with which to demonstrate the clinical
benefits of our products. However, we have sponsored and plan to continue to
sponsor and/or conduct clinical trials that we hope will demonstrate consistent
clinical benefits resulting from the use of our products. We cannot be certain
that these clinical trials will be completed or if they will have a positive
outcome or if a positive outcome in these trials would be sufficient to enable
widespread acceptance of the BioZ(TM) product line by the medical community
Some hemodynamic measurements using thoracic electrical bioimpedance are
subject to inaccuracies and may limit the accuracy of our products, such as:
. Severe septic shock;
. Significant pulmonary hypertension;
. Severe aortic valve regurgitation;
. Severe hypertension;
. Severe irregular ventricular heartbeats;
. Tachycardia rates greater than 180 beats per minute;
. Patients who are shorter than 47 inches;
. Patients who weigh less than 66 pounds or more than 342 pounds; and
. Extreme patient movement.
History of Losses and Expected Continued Losses
Since Bomed's emergence from bankruptcy proceedings in 1993, we have had
large annual losses in the course of researching, developing and enhancing our
technology and products and establishing our sales, marketing, and
administrative organizations. We anticipate that our operating expenses will
increase substantially in the foreseeable future as we increase our sales and
marketing activities, expand our operations and continue the development of our
technology. Accordingly, we expect to incur additional losses for fiscal 2000
and it is possible that we will never achieve or sustain adequate revenue levels
required for profitability.
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Future Additional Capital Requirements; No Assurance Future Capital Will Be
Available
Our commercialization of the BioZ(TM) product line and the development and
commercialization of any additional products will require substantial
expenditures. Our capital requirements will depend on numerous factors,
including:
. Our rate of sales growth--fast growth could actually increase our need
for additional capital to hire additional staff, purchase additional
component inventories, finance the increase in accounts receivable,
and supply additional support services;
. Our progress in marketing-related clinical evaluations and product
development programs--these programs represent potential avenues for
growth, but will require additional capital;
. Our receipt of, and the time required to obtain, regulatory clearances
and approvals--the longer regulatory approval takes, the more working
capital we need to support our regulatory and development efforts in
advance of sales;
. Resources we devote to the development, manufacture and marketing of
our products--any decision we make to improve, expand or simply change
our process, products or technology will require increased funds;
. Resources required to hire and develop medical sales representatives
and distributors and to develop internal manufacturing capacity--
requires substantial working capital;
. Facilities requirements--as we grow we may need additional
manufacturing, warehousing and administration facilities and the costs
of the facilities would be borne long before any increased revenue
from growth would occur;
. Market acceptance and demand for our products--although growth could
increase our capital needs, the lack of growth and continued losses
would also increase our need for capital; and
. Our ability to speed up hospitals' otherwise lengthy purchasing
processes by offering leasing programs as an alternative to outright
purchasing and provide outpatient offices with extended payment terms
and funding options.
The timing and amount of such capital requirements cannot be accurately
predicted. We may be required to raise additional funds through public or
private financing, bank loans, collaborative relationships or other arrangements
earlier than expected. It is possible that banks, venture capitalists and other
investors may perceive our current debt load, our history of losses or our
technology's lack of acceptance as too great a risk to bear and, as a result,
such additional funding may not be available on attractive terms, or at all. If
we cannot obtain additional capital when needed we might be forced to agree to
unattractive financing terms.
Competition From Other Producers; and Technological Change May Benefit Our
Competitors
We compete with other companies that are developing and marketing non-
invasive hemodynamic monitors. We are also subject to 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
we do. Such competitors may be able to devote greater resources to the
development, promotion and sales of their products.
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Competition from Other Producers & Technological Change may Benefit our
Competitors- (Con't)
The current widespread acceptance of PAC, and lack of widespread acceptance
of ICG, is an important competitive disadvantage that we must overcome. In
addition, our current and potential competitors 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 these could
hurt our business, results of operations and financial condition. It is possible
that we will not be able to compete successfully.
The introduction by others of products embodying new technologies and the
emergence of new industry standards could render our products obsolete and
unmarketable. Other companies may develop and introduce products and processes
competitive with or superior to ours. In addition, other technologies or
products may be developed that have an entirely different approach or means of
accomplishing the intended purposes of our products. Accordingly, our products'
life cycles are difficult to estimate. To compete successfully, we must
continually develop and introduce new products that keep pace with technological
advancements, respond to evolving consumer requirements and achieve market
acceptance.
We may not succeed in satisfactorily and timely developing and introducing
additional products. Even if we succeed in developing and marketing products
that achieve market acceptance, our competitors may develop and market products
that will replace ours.
Technological Change is Difficult to Predict and to Manage
Although not in fact a new company, we currently face many of the
challenges that are typically faced by new companies just emerging from the
development phase. The BioZ(TM) product line has required, and any future
products will require, substantial development efforts and compliance with all
governmental clearance/approval requirements. We have to continue to build up
our sales and marketing functions. We may encounter unforeseen technological or
scientific problems that may force abandonment or substantial change in the
development of a specific product or process. Technological change or product
developments by others may also have a significant negative effect on us.
Ability to Manage Growth
If successful, we will experience a period of growth that could place a
significant strain upon our managerial, financial and operational resources. Our
infrastructure, procedures and controls may not be adequate to support our
operations and to achieve the rapid execution necessary to fully exploit any
future market opportunity for our products. Our future operating results will
also depend on our ability to complete our geographic network of direct sales
persons and distributors, expand our sales and marketing organizations, and fill
out our support staff organization. If we are unable to manage expansion
effectively, our business, results of operations and financial condition will
suffer. However, we are not promising you that such expansion or growth will
occur.
We May Not Continue to Receive Necessary Approvals from the Food and Drug
Administration
Our 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 very negative effect on our business.
Our thoracic electrical bioimpedance 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 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.
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We May Not Continue to Receive Necessary Approvals from the FDA - (Continued)
Before a new device can be introduced into the market, the manufacturer
generally must obtain either FDA 510(k) clearance or approval of a pre-market
approval application (PMA). 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. We have received a marketing clearance for the BioZ(R)
System, the BioZ(R) Portable and the BioZ.com(TM). However, such clearances are
subject to continued FDA audits and can be rescinded. Further, we plan to submit
additional new products for FDA approval in the future. It is possible that our
future products might not gain FDA approval in a timely fashion, or at all. It
is also possible that our current products may someday lose their FDA approval.
We are also subject to routine inspection by the FDA and state agencies,
such as the California Department of Health Services, for compliance with GMP
requirements, Medical Device Reporting requirements and other applicable
regulations. Although we work hard at attempting to comply with all governmental
regulations, it is possible that an inspector could someday find a violation.
Such a violation could result in government action ranging from warning letters
to fines to criminal prosecution. Should we ever incur a significant penalty it
is possible it would be detrimental to us. The FDC Act requires that medical
devices be manufactured in accordance with Good Manufacturing Practice
requirements.
Good Manufacturing Practice requirements specify, among other things, that:
. the manufacturing process be regulated and controlled by the use of
written procedures;
. the ability to produce devices which meet the manufacturer's
specifications be validated by the extensive and detailed testing of
every aspect of the process; and
. 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 GMP requirements. Labeling and promotional
activities are regulated 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 us to submit a new 510(k) notice for any product
modification, we 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 like our products. The FDA is
reevaluating its regulation of such software, and if the FDA undertakes
increased or more rigorous regulation of such software, the BioZ(R) product line
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. Future changes in the regulations or interpretations made by
the FDA or other regulatory bodies, with possible retroactive effect, may
adversely affect us.
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Control by Our Co-Chairmen
Allen E. Paulson and James C. Gilstrap, the co-chairmen of CardioDynamics,
beneficially own, directly or through CardioDynamics Holdings, LLC, which they
control, approximately 35% of the outstanding shares of our common stock. In
addition, Mr. Paulson's sons beneficially own another seven percent of the
outstanding shares of common stock. Accordingly, Messrs. Paulson and Gilstrap,
as a group, are able to substantially control CardioDynamics and influence our
affairs and business, including any future issuances of common stock or other
securities, merger and acquisition decisions, declaration of dividends and the
election of directors. Further, in their position as holders of our stock, they
have no duty to act in the best interests of CardioDynamics. Our stock price and
our ability to raise capital could be injured if they were to sell even a
portion of their holdings on the open market. CDH has been sued in United States
Bankruptcy Court on behalf of the creditors of a party from whom CDH acquired
some of its CardioDynamics stock. Although CardioDynamics has been dismissed as
a defendant in this lawsuit, we cannot predict the impact on CardioDynamics of
an unfavorable outcome of this suit to CDH.
We May Not Receive Approvals by Foreign Regulators Which Are Necessary for
Foreign Sales
Sales of medical devices outside of the United States are subject to
foreign regulatory requirements that vary from country to country. If we or our
international distributors fail to obtain or maintain required pre-market
approvals or fail to comply with foreign regulations, foreign regulatory
authorities may require us to file revised governmental notifications, cease
commercial sales of our products in the applicable countries, or otherwise cure
the problem Such enforcement action by regulatory authorities could be costly.
In order to sell our products within the European Economic Area, we have to
comply with the European Commission's Medical Device Directive and to affix a
"CE" marking on our products to attest such compliance. In November 1998 we
received authorization from independent certifying agency TUV Rhineland of North
America to place the CE Mark on our BioZ.com(TM). However, future regulatory
changes could limit our ability to use the CE Mark and any new products we
develop may not qualify for the CE Mark. Failure to obtain authorization to use
the CE Mark or loss of such authorization would render us unable to sell our
products in the European Economic Area and this would limit our potential.
Third-Party Reimbursement; Pricing Pressures
Our commercial success will depend in part on the availability of adequate
reimbursement from third-party healthcare payers, such as government and private
health insurers and managed care organizations. Third-party payers are
increasingly challenging the pricing of medical products and services. Even with
an FDA approved device, third-party payers may not cover the device and related
services, or they may place significant restrictions on the circumstances in
which coverage will be available. Medicare reimbursement for use of the BioZ(R)
product line is now available under the heading of plethysmography, but private
third-party payers are not required to follow Medicare's lead. We may not be
able to obtain a specific code for reimbursement of thoracic electrical
bioimpedance tests in a reasonable time frame, or at all, from either Medicare
or private third-party payers. In addition, reimbursement may not be at or stay
at price levels sufficient to allow medical professionals to realize an
appropriate return on an investment in our products. Downward pricing pressure
in the industry could hurt our operations.
Our business plan contemplates an income stream from sales of disposable
sensors that are compatible with an installed base of our monitors. We may be
subject to price competition from other sensor manufacturers.
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Dependence on Management and Other Key Personnel
We are dependent upon a limited number of key management and technical
personnel and we do not have insurance on these people. The loss of the services
of one or more of such key employees could hurt our business. In addition, our
success depends upon our ability to attract and retain additional highly
qualified sales, management, manufacturing and research and development
personnel. We face intense competition in our recruiting activities and we may
not be able to attract and/or retain qualified personnel.
Dependence on Rivertek Medical Systems for Development Services and Other Third
Parties for Development and Manufacturing Services
Our strategy for development and commercialization of certain of our
products depends upon entering into various arrangements with third parties and
upon the subsequent success of these parties in performing their obligations. It
is possible that we will not be able to negotiate acceptable arrangements in the
future or that our existing arrangements will not be successful. We rely heavily
on contracted development services, particularly from Rivertek Medical Systems,
Inc. Also, we currently assemble our Bio(R) product line from components
manufactured by others. Therefore, we are dependent on contract manufacturers.
Small Market Float Can Produce Both Stock Price Volatility and a Potential Lack
of Liquidity
Market float is the aggregate value of all of a company's publicly traded
stock. Our market float is smaller than that of many other publicly traded
companies. Because our market float is smaller, changes in the opinion of one
investor or one analyst can have a significant effect on our stock price. As a
result, the market price of our common stock is likely to be highly volatile and
could be subject to wide fluctuations in response to various factors beyond our
control, including:
. Quarterly variations in operating results;
. Announcements of technological innovations, new products or
pricing by our competitors;
. Changes in, or failure to meet, financial estimates of securities
analysts;
. The rate of adoption by physicians of thoracic electrical
bioimpedance technology in targeted markets;
. Timing of patent and regulatory approvals;
. Timing and extent of technological advancements;
. Results of clinical studies;
. The sales of stock by affiliates; and
. General market conditions.
In addition, the stock market has experienced significant price and volume
fluctuations that have affected the market prices of the stock of many medical
device companies and that often have been unrelated to the operating performance
of such companies. These broad market fluctuations may directly influence the
market price of our common stock. Our somewhat small market float may not be
entirely adequate to provide market liquidity and mitigate stock price
volatility.
No Dividends
We do not intend to pay any cash dividends on the common stock any time
soon. Payment of such cash dividends would, in any event, be prohibited or
limited under the terms of our bank loans.
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Reliance on Patents and Proprietary Technology
Although we believe that we have effective patent protection, our patents
and proprietary technology may not be able to prevent effective competition by
others and our products could possibly be found to infringe the rights of
others. Intellectual property litigation, whether defensive or offensive, would
have no certain outcome other than to drain our resources.
The validity and breadth of claims in medical technology patents involve
complex legal and factual questions. Future patent applications may not be
issued, the scope of any patent protection may not exclude competitors and it
may not provide competitive advantages to us. Further, our patents may be found
to be invalid, and other companies may claim rights in or ownership of the
patents and other proprietary rights held or licensed by us. Also, our existing
patents might not cover products we want to bring out in the future. Moreover,
when our key patents expire, the inventions will enter the public domain.
Since patent applications in the United States are maintained in secrecy
until patents issue, our patent applications may infringe patents that may be
issued to others. In the event our products are found to infringe patents held
by competitors, we may have to modify our product to avoid infringement, and it
is possible that our modified products would not be commercially successful.
We Could be Required to Issue Additional Shares of Common Stock
The holders of warrants to purchase our common stock and certain purchasers
of our common stock in our December 3, 1999 private placement could require us
to issue additional shares of common stock to them pursuant to anti-dilution
rights we have provided them. These rights would cause us to issue additional
common stock upon exercise of their warrants if we sell common stock at a price
less than the exercise price of their warrants or issue additional common stock
to the purchasers in the private placement if the market price falls below
certain target levels. If we need to sell common stock at a time when the market
price for our shares is depressed, these anti-dilution rights could further
depress the market price and could, in turn, impair our ability to raise needed
capital.
Anticipated Resales of Common Stock
We have filed or will file registration statements with the SEC covering
the potential resale by certain shareholders of up to 11,070,000 shares of
common stock (including the shares subject to this prospectus). The existence of
a substantial number of shares of common stock subject to immediate resale could
depress the market price for the common stock and, in turn, impair our ability
to raise needed capital.
Low Stock Price Could Result in Our Being De-Listed from NASDAQ and Subject Us
to Regulations Which Could Reduce Our Ability to Raise Funds
If our stock price were to drop below $1.00 per share and remain below
$1.00 per share for an extended period of time, certain NASDAQ regulations would
require the de-listing of our shares and then our shares could no longer be
traded on NASDAQ. In such an event, our shares could only be traded on over-the-
counter bulletin board systems. This method of trading could significantly
impair or completely remove our ability to raise new capital.
In the event that we were de-listed from NASDAQ due to low stock price, we
might be subject to certain rules, called penny stock rules, that impose
additional sales practice requirements on broker-dealers who sell such
securities. For any transaction involving a penny stock the rules require, among
other things, the delivery, prior to the transaction, of a disclosure schedule
required by the SEC relating to the market for penny stocks. The broker-dealer
also must disclose the commissions payable both to the broker-dealer and the
registered representative and current quotations for the securities, and monthly
statements must be sent disclosing recent price information.
In the event our common stock becomes characterized as a penny stock, our
market liquidity could be severely affected. In such event, the regulations
relating to penny stocks could limit the ability of broker-dealers to sell our
common stock and thus, the ability of purchasers in this offering to sell their
common stock in the secondary market.
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Risks Associated with International Activities
In fiscal 1999, international sales accounted for approximately 21% of our
revenue. We believe it is possible that international sales will represent a
meaningful portion of our revenue in the future. This would require significant
management attention and financial resources and subject us 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. We would have to
comply with a variety of foreign laws. In addition, fluctuations in the rates of
exchange could increase the price in local currencies of our products in foreign
markets and make our 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 our business exposes it to risks of product liability or
product recalls that are typical in the medical devices industry. Medical
devices as complex as ours frequently contain errors or failures, especially
when first introduced or when new versions are released. Our 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.
We did not carry product liability insurance during certain periods before
May 15, 1995. So far, this has not hurt us. Since then, we have maintained
product liability insurance at levels that we believe are sufficient and
consistent with industry standards for companies with our current sales levels.
We intend to increase our product liability insurance policy limits as sales
grow. Currently, our product liability insurance policy limits are $10,000,000
per occurrence and $10,000,000 in the aggregate. Our product liability insurance
may not be adequate and it is possible that such insurance coverage may not
continue to be available on commercially reasonable terms or at all. In
addition, product liability claims or recalls could hurt us in various ways even
if we have adequate insurance coverage.
Uncertainty and Potential Negative Effects of Healthcare Reform
The healthcare industry is undergoing fundamental changes resulting from
political, economic and regulatory influences. In the United States,
comprehensive programs have been proposed that seek to:
. Increase access to health care for the uninsured;
. Control the escalation of healthcare expenditures within the
economy; and
. Use health care reimbursement policies to help balance the
federal budget.
We anticipate that Congress and state legislatures will continue to review
and assess such proposals, and public debate of these issues will likely
continue. We cannot predict which, if any, of such reform proposals will be
adopted and when they might be adopted. Other countries also are considering
healthcare reform. Significant changes in healthcare systems could have a
substantial impact on the manner in which we conduct our business and could
disrupt our strategies.
We Have No Experience with Home Health Care or the Internet
We intend to enter the home health care market and the Health field in
conjunction with other parties. We have not concluded any agreements or
understandings with any third parties and we may not be able to achieve such
arrangements on terms satisfactory to us. Even if we are successful in
negotiating acceptable arrangements with third parties, the parties may not
perform their obligations to us for reasons beyond our control. If we are not
able to negotiate arrangements with other parties to implement our home health
care and eHealth strategies, or if such arrangements, once negotiated, are not
successful, we will not be able to meet our business objectives
-10-
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements that are based on current
expectations, estimates and projections about our 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 forward-looking statements. Such risks and
uncertainties include those noted in "Risk Factors" above and in the documents
incorporated by reference. We undertake no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of our
common stock by the selling shareholders.
SELLING SHAREHOLDERS
We completed a private placement of our common stock on December 3, 1999 in
which we sold an aggregate of 1,320,000 shares of common stock to four (4)
different investors, the selling shareholders, for $2.50 per share. The
subscription agreements we entered into with each of the four (4) investors
provide that if the average closing price for our common stock for the twenty
(20) trading days preceding April 3, 2000 is less than $2.50, we must issue to
each of the investors additional shares of common stock, for no additional
payment by the investors. The number of additional shares we must issue in this
case is calculated by dividing the purchase price paid by the investor by the
average closing price for the twenty (20) trading days preceding April 3, 2000,
then deducting the number of shares initially purchased.
Except as otherwise indicated in this prospectus, the selling shareholders
have not had a material relationship with us within the past three years other
than as a result of ownership of our securities. The numbers set forth in the
column "Number of Shares Being Offered" below constitute all of the shares
(excluding the additional shares we might be required to issue on April 3, 2000)
that the investors listed below, as 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. 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 after the shares are issued upon exercise.
In connection with the receipt of the shares, each selling shareholder
represented that it was acquiring the shares for investment and not with a view
to distributing our common stock, and that the selling shareholder was an
accredited investor, as defined in Rule 501(a) under the Securities Act. We
agreed in the subscription agreements that the shares purchased by the selling
shareholders would be registered for resale in a Registration Statement on Form
S-3. The registration rights provisions require us to bear all registration
expenses other than fees and expenses of counsel for the selling shareholders
and underwriting discounts and commissions and brokerage commissions and fees.
Accordingly, we filed with the Commission a Registration Statement on Form S-3,
of which this Prospectus forms a part, with respect to the resale of the shares
from time to time. We also 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 of our common stock offered hereby
has been sold or until the shares are no longer, by reason of Rule 144 under the
Securities Act, required to be registered for resale.
-11-
<PAGE>
SELLING SHAREHOLDERS - (Continued)
The following table sets forth the name of the selling shareholders and the
number of shares of our common stock which may be offered pursuant to this
Prospectus (excluding the additional shares we might be required to issue on
April 3, 2000).
Number of
Shares Being
Selling Shareholders Offered
---------------------------- ------------
Cantrade Invest Biotech Fund 100,000
Crescent International Ltd. 120,000
FIM Securities Ltd. 600,000
Veritas SG Investments 500,000
TOTALS 1,320,000
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling shareholders and any
donees and pledgees who may sell shares received from the named selling
shareholders after the date of this Prospectus. All costs, expenses and fees in
connection with the registration of the shares offered hereby (other than
certain fees and expenses of the selling shareholders' counsel) will be borne by
us. Brokerage commissions and similar selling expenses, if any, attributable to
the sale of shares will be borne by the selling shareholders. Sales of shares
may be effected by the selling shareholders from time to time in one or more
types of transactions (which may include block transactions) on the Nasdaq
SmallCap Market, in the over-the-counter market, in negotiated transactions,
through put or call transactions relating to the shares, through short sales of
shares, or a combination of such methods of sale, at market prices prevailing at
the time of sale, or at negotiated prices. Such transactions may or may not
involve brokers or dealers. Each selling shareholder has advised us that it has
not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of its securities, nor is
there an underwriter or coordinating broker acting in connection with the
proposed sale of shares by the selling shareholders.
The selling shareholders may effect such transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the selling shareholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular broker-
dealer might be in excess of customary commissions).
The selling shareholders and any broker-dealers that act in connection with
the sale of shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. The selling shareholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against certain liabilities, including liabilities arising under
the Securities Act.
Because the selling shareholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Act, the selling shareholders will be
subject to the prospectus delivery requirements of the Securities Act. We have
informed the selling shareholders that the anti-manipulative provisions of
Regulation M promulgated under the Exchange Act may apply to its sales in the
market.
The selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided it meets the criteria and conforms to the requirements of such Rule.
-12-
<PAGE>
PLAN OF DISTRIBUTION - (Continued)
When any selling shareholder notifies us that a material arrangement has
been entered into with a broker-dealer for the sale of shares through a block
trade, special offering, exchange distribution or secondary distribution or a
purchase by a broker or dealer, a supplement to this Prospectus will be filed,
if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i)
the name of the selling shareholder and of the participating broker-dealer(s),
(ii) the number of shares involved, (iii) the price at which such shares were
sold, (iv) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this Prospectus and (vi) other facts material to the transaction.
In addition, when any selling shareholder notifies us that a donee or pledgee
intends to sell more than 500 shares, we will file a supplement 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.
LEGAL MATTERS
Our outside law firm, Pillsbury Madison & Sutro LLP, San Diego, California
will issue an opinion about the legality of the shares.
EXPERTS
The financial statements of CardioDynamics International Corporation as of
November 30, 1999 and 1998, and for the years then ended, have been incorporated
by reference herein and in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
INDEMNIFICATION
Section 317 of the California General Corporation Law allows companies to
indemnify their officers and directors against expenses, judgments, fines and
amounts paid in settlement under certain conditions and subject to certain
limitations.
Article Three of our Bylaws provides that we shall indemnify any person who
is or was a director, officer, employee or agent of ours, or any person who is
or was serving at our request 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 lawsuit by
reason of that person's relationship with us, may be paid by us in advance of
the final disposition of such lawsuit after we receive an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by us.
-13-
<PAGE>
INDEMNIFICATION - (Continued)
Our Articles of Incorporation, as amended, provide that none of our
directors shall be liable for monetary damages in an action by or in
CardioDynamics' right for breach of a director's duties to us and our
shareholders, as set forth in Section 309 of the California Corporations Code.
However, such provision does not eliminate or limit the liability of a director:
(i) for acts or omissions that involve intentional misconduct or knowing
or culpable violation of law;
(ii) for acts or omissions that a director believes to be contrary to our
best interests or those of our shareholders or that involve the
absence of good faith on the part of a director;
(iii) for any transaction from which a director derives an improper
personal benefit;
(iv) for acts or omissions that show a reckless disregard of the
director's duty 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 us or to our
shareholders;
(v) for acts or omissions that constitute an unexecuted pattern of
inattention that amounts to an abdication of the director's duty to
us;
(vi) under Section 310 of the California Corporations Code; or
(vii) under Section 316 of the California Corporations Code.
Such provision eliminating liability does not eliminate or limit the liability
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.
We are authorized to provide indemnification of our agents (as defined in
Section 317 of the California Corporations Code) for breach of duty to us and
our 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. We
have entered into such indemnification agreements with each of our 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
CardioDynamics pursuant to these provisions, or otherwise, we have been advised
that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.
-14-
<PAGE>
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 we are paying
with respect to the sale and distribution of the securities being registered.
All of the amounts shown are estimates except the SEC registration fee.
<TABLE>
<S> <C>
SEC Registration Fee................................................................ $ 2,330.46
Printing Expenses *................................................................. $ 1,000.00
Expenses associated with complying with various states' registrations*.............. $ 1,000.00
Legal Fees and Expenses*............................................................ $ 3,000.00
Nasdaq SmallCap Market Listing Fee*................................................. $ 7,500.00
Accounting Fees and Expenses*....................................................... $ 3,000.00
Miscellaneous*...................................................................... $ 169.54
Total............................................................................. $18,000.00
==========
</TABLE>
_______________
*Estimated
Item 15. Indemnification of Directors and Officers
Section 317 of the California General Corporation Law allows companies to
indemnify their officers and directors against expenses, judgments, fines and
amounts paid in settlement under certain conditions and subject to certain
limitations.
Article Three of our Bylaws provides that we shall indemnify any person who
is or was a director, officer, employee or agent of ours, or any person who is
or was serving at our request 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 lawsuit by
reason of that person's relationship with us, may be paid by us in advance of
the final disposition of such lawsuit after we receive an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by us.
Our Articles of Incorporation, as amended, provide that none of our
directors shall be liable for monetary damages in an action by or in
CardioDynamics' right for breach of a director's duties to us and our
shareholders, as set forth in Section 309 of the California Corporations Code.
However, such provision does not eliminate or limit the liability of a director:
(i) for acts or omissions that involve intentional misconduct or knowing
or culpable violation of law;
(ii) for acts or omissions that a director believes to be contrary to our
best interests or those of our shareholders or that involve the
absence of good faith on the part of a director;
(iii) for any transaction from which a director derives an improper
personal benefit;
(iv) for acts or omissions that show a reckless disregard of the
director's duty 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 us or to our
shareholders;
(v) for acts or omissions that constitute an unexecuted pattern of
inattention that amounts to an abdication of the director's duty to
us;
II-1
<PAGE>
(vi) under Section 310 of the California Corporations Code; or
(vii) under Section 316 of the California Corporations Code;
Such provision eliminating liability does not eliminate or limit the liability
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.
We are authorized to provide indemnification of our agents (as defined in
Section 317 of the California Corporations Code) for breach of duty to us and
our 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.
We have entered into such indemnification agreements with each of our 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
CardioDynamics pursuant to these provisions, or otherwise, we have been advised
that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.
Item 16. Exhibits
Exhibit Number
5.1 Opinion of Pillsbury Madison & Sutro LLP.
23.1 Consent of KPMG LLP, Independent Auditors.
23.2 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1).
99.1 Form of Common Stock Subscription Agreement dated December 3, 1999
between the Company and the Purchasers of common stock (incorporated
by reference from CardioDynamics' Current Report on Form 8-K dated
December 15, 1999 - Exhibit 99.1).
Item 17. Undertakings
We hereby undertake:
(1) To file, during any period in which we offer or sell 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 our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the SEC 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 us of expenses incurred or paid by our director, officer, or
controlling person 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, we will, unless in the opinion of our counsel
the question has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, we certify that
we have reasonable grounds to believe that we meet all of the requirements for
filing on Form S-3 and have duly caused this Registration Statement to be signed
on our behalf by the undersigned, thereunto duly authorized, in the City of San
Diego, State of California, on the twenty ninth day of February, 2000.
CARDIODYNAMICS INTERNATIONAL CORPORATION
By /s/ Michael K. Perry
------------------------------------------
Michael K. Perry, Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Michael
K. Perry and Stephen P. Loomis, and each of them, as attorneys-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 SEC, granting to said
attorneys-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 attorneys-in-fact or their 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/ Michael K. Perry Director and Chief Executive Officer February 29, 2000
- ---------------------------
Michael K. Perry (Principal Executive Officer)
/s/ Stephen P. Loomis Vice President, Finance and Chief Financial February 29, 2000
- ---------------------------
Stephen P. Loomis Officer (Principal Financial Officer and
Principal Accounting Officer)
/s/ Louis P. Ferrero Director February 29, 2000
- ---------------------------
Louis P. Ferrero
/s/ Cam L. Garner Director February 29, 2000
- ---------------------------
Cam L. Garner
/s/ James C. Gilstrap Director February 29, 2000
- ---------------------------
James C. Gilstrap
/s/ Richard O. Martin Director February 29, 2000
- ---------------------------
Richard O. Martin
/s/ Allen E. Paulson Director February 29, 2000
- ---------------------------
Allen E. Paulson
</TABLE>
II-3
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-3
UNDER
SECURITIES ACT OF 1933
CARDIODYNAMICS INTERNATIONAL CORPORATION
II-4
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Exhibit
- ------- -------
5.1 Opinion of Pillsbury Madison & Sutro LLP.
23.1 Consent of KPMG LLP, Independent Auditors.
23.2 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit
5.1).
99.1 Form of Common Stock Subscription Agreement dated December 3,
2000 between the Company and the Purchasers of common stock
(incorporated by reference from CardioDynamics' Current Report on
Form 8-K dated December 15, 1999 - Exhibit 99.1).
II-5
<PAGE>
EXHIBIT 5.1
OPINION OF PILLSBURY MADISON & SUTRO LLP
March 2, 2000
CardioDynamics International Corporation
6175 Nancy Ridge Drive
Suite 300
San Diego, California 92121
Re: CardioDynamics International Corporation Registration Statement on
Form S-3 for Resale of 1,320,000 Shares of common stock
Ladies and Gentlemen:
We have acted as counsel to CardioDynamics International Corporation, a
California corporation (the "Company"), in connection with the registration for
resale of 1,320,000 shares of common stock (the "Shares"). The Shares were
purchased pursuant to a private placement completed as of December 3, 1999, 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.
We have reviewed the Company's charter documents, the corporate proceedings
taken by the Company in connection with the original issuance of the Shares, and
a certificate of a Company officer regarding (among other things) the Company's
receipt of consideration upon the original issuance of the Shares. Based on
such review, we are of the 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, the rules and regulations
of the Securities and Exchange Commission promulgated thereunder, or Item 509 of
Regulation S-B.
This opinion letter is rendered as of the date first written above and we
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and 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/ Pillsbury Madison & Sutro LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
CardioDynamics International Corporation:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
San Diego, California
March 2, 2000
