<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 9)
CARDIODYNAMICS INTERNATIONAL CORPORATION
----------------------------------------
(NAME OF ISSUER)
COMMON STOCK
------------------------------
(TITLE OF CLASS OF SECURITIES)
141597104
--------------
(CUSIP NUMBER)
CARDIODYNAMICS HOLDINGS, LLC
C/O STEVE DECHANT
DEL MAR COUNTRY CLUB
P.O. BOX 9660
RANCHO SANTA FE, CA 92067
(619) 759-5990
-------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
FEBRUARY 7, 2000
------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING
OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
(Continued on following pages)
<PAGE> 2
- -------------------- --------------------
CUSIP NO. 141597104 13D Page 2 of 17 Pages
- -------------------- --------------------
- --------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CARDIODYNAMICS HOLDINGS, LLC
- --------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X] (b) [ ]
- --------- ----------------------------------------------------------------------
3 SEC USE ONLY
- --------- ----------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------- ----------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------- ----------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
- --------- ----------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER 102,243
OF ------- ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY ------- ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 102,243
WITH ------- ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------- ----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
102,243
- --------- ----------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[ ]
- --------- ----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0.2%
- --------- ----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
- --------- ----------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 17
<PAGE> 3
- -------------------- --------------------
CUSIP NO. 141597104 13D Page 3 of 17 Pages
- -------------------- --------------------
- --------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ALLEN PAULSON
- --------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X] (b) [ ]
- --------- ----------------------------------------------------------------------
3 SEC USE ONLY
- --------- ----------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------- ----------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------- ----------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------- ----------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER 10,565,234
OF ------- ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 102,243
OWNED BY ------- ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 10,667,477
WITH ------- ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------- ----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,667,477
- --------- ----------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[ ]
- --------- ----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
25.7%
- --------- ----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------- ----------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 17
<PAGE> 4
- -------------------- --------------------
CUSIP NO. 141597104 13D Page 4 of 17 Pages
- -------------------- --------------------
- --------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JAMES GILSTRAP
- --------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ] (b) [ ]
- --------- ----------------------------------------------------------------------
3 SEC USE ONLY
- --------- ----------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------- ----------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------- ----------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------- ----------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER 3,255,654
OF ------- ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 102,234
OWNED BY ------- ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 3,255,654
WITH ------- ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------- ----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,357,897
- --------- ----------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[ ]
- --------- ----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
8.1%
- --------- ----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------- ----------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 17
<PAGE> 5
- -------------------- --------------------
CUSIP NO. 141597104 13D Page 5 of 17 Pages
- -------------------- --------------------
- --------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NICHOLAS DIACO
- --------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ] (b) [ ]
- --------- ----------------------------------------------------------------------
3 SEC USE ONLY
- --------- ----------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------- ----------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------- ----------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------- ----------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER 284,306
OF ------- ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 102,243
OWNED BY ------- ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 284,306
WITH ------- ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------- ----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
386,549
- --------- ----------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[ ]
- --------- ----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
0.9%
- --------- ----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------- ----------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 5 of 17
<PAGE> 6
- -------------------- --------------------
CUSIP NO. 141597104 13D Page 6 of 17 Pages
- -------------------- --------------------
- --------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JOSEPH DIACO
- --------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ] (b) [ ]
- --------- ----------------------------------------------------------------------
3 SEC USE ONLY
- --------- ----------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------- ----------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------- ----------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------- ----------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER 405,306
OF ------- ------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 102,243
OWNED BY ------- ------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 405,306
WITH ------- ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------- ----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
507,549
- --------- ----------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[ ]
- --------- ----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
1.2%
- --------- ----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------- ----------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 6 of 17
<PAGE> 7
ITEM 1. SECURITY AND ISSUER
The class of securities to which this Statement relates is the common
stock (the "Common Stock") of CardioDynamics International Corporation, a
California corporation ("Issuer"), whose address is 6175 Nancy Ridge Drive,
Suite 300, San Diego, California 92121.
ITEM 2. IDENTITY AND BACKGROUND
Pursuant to Rule 13d-1(f) promulgated under the Securities Exchange Act
of 1934, as amended (the "Act"), the undersigned hereby jointly file this
amended statement on Schedule 13D ("Statement") on behalf of CardioDynamics
Holdings, LLC ("LLC"), a California limited liability company, Allen Paulson, a
Member of LLC, James Gilstrap, a Member of LLC, Nicholas Diaco, a Member of LLC,
and Joseph Diaco, a Member of LLC. The foregoing persons are sometimes
hereinafter referred to collectively as the "Reporting Persons." The Reporting
Persons are making this single, joint filing to comply with the reporting
requirements with respect to Common Stock of the Issuer that each beneficially
owns. With respect to Mr. Paulson's 10,565,234 privately beneficially-owned
shares of Common Stock, this is also a group filing (Paulson and LLC).
On or about February 7, 2000, LLC's beneficial ownership decreased by
4,022,247 shares upon the expiration, pursuant to their terms, of certain
irrevocable proxies granted by third persons to LLC.
LLC no longer is a 5% stockholder of Issuer, and LLC will no longer
report under Schedule 13D. Neither Mr. N. Diaco and Mr. J. Diaco is any longer a
5% stockholder of Issuer, and they will no longer report under Schedule 13D
either through LLC's filings or otherwise. Mr. Paulson will file a new Schedule
13D in his own name. Mr. Gilstrap will file a new Schedule 13D in his own name.
A. CardioDynamics Holdings, LLC
(a) CardioDynamics Holdings, LLC.
(b) LLC's business address is c/o Del Mar Country Club, P.O. Box 9660,
Rancho Santa Fe, California 92067.
(c) LLC's business is to acquire and own the Common Stock and other
securities of Issuer as reported in this Statement.
(d)-(e) LLC has not, during the last five years, been convicted in any
criminal proceeding, excluding traffic violations or similar misdemeanors, nor
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which it was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Page 7 of 17
<PAGE> 8
(f) LLC is a limited liability company formed under the laws of
California.
B. Allen Paulson --Member of LLC
(a) Allen Paulson.
(b) Business address: 6001 Clubhouse Drive, P. O. Box 9660, Rancho Santa
Fe, CA 92067.
(c) Present principal occupation: private investor.
(d)-(e)Allen Paulson has not, during the last five years, been convicted
in any criminal proceeding, excluding traffic violations or similar
misdemeanors, nor been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(f) Citizenship: USA.
C. James Gilstrap --Member of LLC
(a) James Gilstrap.
(b) Residence address: 5067 Shore Drive, Carlsbad, CA 92008.
(c) Present principal occupation: private investor.
(d)-(e)James Gilstrap has not, during the last five years, been
convicted in any criminal proceeding, excluding traffic violations or similar
misdemeanors, nor been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(f) Citizenship: USA.
D. Nicholas Diaco--Member of LLC
(a) Nicholas Diaco.
(b) Business address: 1301 20th St., Suite 400, Santa Monica, CA 90404.
(c) Present principal occupation: Physician; Cardiology Consultants of
Santa Monica, 1301 20th St., Suite 400, Santa Monica, CA 90404.
Page 8 of 17
<PAGE> 9
(d)-(e)Nicholas Diaco has not, during the last five years, been
convicted in any criminal proceeding, excluding traffic violations or similar
misdemeanors, nor been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(f) Citizenship: USA.
E. Joseph Diaco--Member of LLC
(a) Joseph Diaco.
(b) Business address: 4700 N. Habana, Suite 403, Tampa, FL 33614.
(c) Present principal occupation: Physician.
(d)-(e)Joseph Diaco has not, during the last five years, been convicted
in any criminal proceeding, excluding traffic violations or similar
misdemeanors, nor been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(f) Citizenship: USA.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
LLC used $25,408 contributed by its four Members (from their personal
funds) to purchase the securities set forth in the first paragraph of Item 5(a)
of this Statement. This $25,408 figure is net of $2,849,592 (from their personal
funds) attributable to securities which were acquired by LLC and then on
September 9, 1997 distributed to the four Members.
Allen Paulson used $1,156,500 of his personal funds to directly purchase
4,626,000 shares of outstanding Common Stock, of which he subsequently sold
3,015,000 shares for a total of $757,500. He also used $35,295 of his personal
funds to directly purchase 11,500 shares of Common Stock in 1997 and 1998.
Approximately $2,200,000 of his personal funds, which is less than the larger
amount he contributed to LLC, is attributable to the 12,088,734 shares of Common
Stock distributed by LLC to him on September 9, 1997. He subsequently sold
3,000,000 of those shares for $3,600,000 pursuant to an agreement dated June 4,
1999. He sold another 200,000 shares on July 28, 1999 for $50,000 upon the
exercise of a private stock option he had granted. Any exercises of outstanding
stock options would be from his personal funds.
James Gilstrap used $219,000 of his personal funds to directly purchase
876,000 of the shares of outstanding Common Stock. Also, he earlier received
150,000 shares of
Page 9 of 17
<PAGE> 10
Common Stock from Issuer as a fee for services in connection with LLC's February
1995 investment in Issuer. Approximately $500,000 of his personal funds, which
is less than the larger amount he contributed to LLC, is attributable to the
2,780,654 shares of Common Stock distributed by LLC to him on September 9, 1997.
In December 1997, he gifted 5,000 shares of Common Stock to his daughters and
contributed 1,015,000 shares of Common Stock to the Jim and Sue Gilstrap Family
Limited Partnership. On February 19, 1999 he gifted 600,000 shares of Common
Stock to his daughters. Any exercises of outstanding stock options would be from
his personal funds.
Nicholas Diaco used $1,500 of his personal funds to directly purchase
6,000 of the shares of outstanding Common Stock. Also, he earlier received
150,000 shares of Common Stock from Issuer as a fee for services in connection
with LLC's February 1995 investment in Issuer. Approximately $75,000 of his
personal funds, which is less than the larger amount he contributed to LLC, is
attributable to the 405,306 shares of Common Stock distributed by LLC to him on
September 9, 1997. On June 10, 1998, he gifted 30,000 shares of Common Stock to
friends. On January 6, 1999, he gifted 20,000 shares of Common Stock to his
daughters, and on June 15, 1999, he gifted 24,000 shares of Common Stock to his
daughters. He made additional gifts of 13,000 shares of Common Stock between
October 21, 1999 and January 18, 2000. Between June 30, 1999 and January 20,
2000, he sold 342,000 shares of Common Stock on the open market for $1,690,000.
On January 13, 2000, he exercised options to buy 110,000 shares of Common Stock
for $141,450, from his personal funds. Any exercises of outstanding stock
options would be from his personal funds.
Approximately $75,000 of Joseph Diaco's personal funds, which is less
than the larger amount he contributed to LLC, is attributable to the 405,306
shares of Common Stock distributed by LLC to him on September 9, 1997.
ITEM 4. PURPOSE OF TRANSACTION
LLC acquired control of Issuer through election of a majority of
Issuer's Board of Directors on May 15, 1995, and it and its Members have
retained that control until now. With the expiration of the proxies in February
2000, dispositions by Members of certain shares, and the dilution of their
shares through the issuance of Issuer Common Stock to third parties, it is not
clear that any Members retain control of Issuer. Mr. Paulson and Mr. Gilstrap
remain Directors and substantial shareholders of Issuer. Clearly LLC no longer
controls Issuer. The individual Reporting Persons' acquisitions of securities
have been for investment purposes. The September 9, 1997 distribution of Issuer
shares by LLC to its Members may be deemed to have placed control of Issuer in
Allen Paulson (although, as noted, he may no longer actually have control). The
purpose of the distribution was to give the Members more flexibility in
utilizing and controlling the Issuer shares which they formerly indirectly owned
through LLC (e.g., Mr. Paulson's pledge of shares and subsequent sale of certain
shares; see Item 6(l) and Item 6(r)).
(a) Regarding LLC: See Items 6(d), 6(h), and 6(i), which are
incorporated herein by reference. Regarding Allen Paulson and James Gilstrap:
See Item 5(c)(1), which is incorporated herein by reference. Regarding Nicholas
Diaco: See Item 5(c)(2), which is
Page 10 of 17
<PAGE> 11
incorporated herein by reference. Issuer is likely to require further
third-party equity capitalization.
On December 9, 1997, James Gilstrap transferred 1,015,000 shares of
Issuer Common Stock to the Jim and Sue Gilstrap Family Limited Partnership. As
Mr. Gilstrap and his wife are the sole general partners of the partnership, and
he is the managing general partner of the partnership, he retains sole voting
and dispositive power. However, the economic benefit of 95.0495% of the
partnership, in the form of limited partner interests, was donated later in
December 1997 to the Jim and Sue Gilstrap Family Foundation, which is a
supporting organization for Scripps Research Institute. Accordingly, Mr.
Gilstrap disclaims any pecuniary interest in the 964,752 shares of Issuer Common
Stock (95.0495% of the partnership's 1,015,000 shares) corresponding to the
foundation's 95.0495% limited partner interest in the partnership
(b) None.
(c) None.
(d) See original Statement and previous amendments.
(e) See Item 4(a).
(f) None.
(g) None.
(h) None.
(i) None.
(j) None.
The Members of LLC have no such plans or proposals, or purposes, apart
from LLC's or as stated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) LLC beneficially owns 2,243 shares of Common Stock. LLC also
beneficially owns, by virtue of its right to acquire them from Issuer, 100,000
shares of Common Stock issuable upon conversion of the Amended and Restated
Secured Convertible Promissory Note. Together, all this represents 0.2% of the
Common Stock under the Rule 13d-3(d)(1) calculation (with 41,428,277 shares
outstanding at December 31, 1999). Various proxies giving LLC the right to vote
shares held by others expired on or about February 7, 2000.
Other than through LLC, the Members have no such beneficial ownership of
Common Stock except for 10,565,234 shares beneficially owned by Mr. Paulson,
Page 11 of 17
<PAGE> 12
3,255,654 shares beneficially owned by Mr. Gilstrap, 284,306 shares beneficially
owned by Mr. N. Diaco and 405,306 shares beneficially owned by Mr. J. Diaco.
The total number of shares of Issuer Common Stock beneficially owned by
each respective Reporting Person, followed in parentheses by the percentage of
the class and the number of such shares--included in the total--which the
Reporting Person has the right to acquire, is:
<TABLE>
<S> <C> <C>
LLC: 102,243 (0.2%; 100,000)
Allen Pauson: 10,667,477 (25.7%; 54,000 plus LLC's 100,000)
James Gilstrap: 3,357,897 (8.1%; 54,000 plus LLC's 100,000)
Nicholas Diaco: 386,549 (0.9%; 42,000 plus LLC's 100,000)
Joseph Diaco: 507,549 (1.2%; LLC's 100,000)
</TABLE>
Together, LLC and Mr. Paulson beneficially own 25.7% of the Issuer's
Common Stock.
(b) The Reporting Persons' voting and dispositive power is set forth in
the cover pages under items 7-10 on pages 2-6 of this Statement. Each of Mr.
Paulson, Mr. Gilstrap, Mr. N. Diaco and Mr. J. Diaco has sole voting power and
sole dispositive power for his respective Issuer shares. In addition, each
Member of LLC has given Mr. Paulson a proxy to vote his own respective LLC
interests. Mr. Paulson has a sufficient interest in the LLC, even without the
proxies, to control the disposition of LLC's Issuer shares.
(c) No other transactions in the Common Stock were effected by LLC, Mr.
Paulson or any of the other Members since the filing of Amendment No. 8 to
Schedule 13D, except for the following:
(1) Pursuant to Issuer's 1995 Stock Option/Stock Issuance Plan,
each of Messrs. Paulson and Gilstrap has, on the last day of each month
beginning August 1995, been automatically granted options to purchase 1,000
shares of Issuer Common Stock, with an exercise price equal to the fair market
value of such stock as of each such date, in respect of his service as a
non-employee director. Such automatic option grants were not considered to
constitute beneficial ownership of the underlying shares until June 12, 1996,
when Issuer's shareholders voted to approve such Plan. Through January 31, 2000,
each of Messrs. Paulson and Gilstrap has received automatic option grants for a
per-person total of 54,000 shares. Mr. N. Diaco also received such grants from
August 1995 through June 1999. Beginning in October 1997, new automatic option
grants to 10% shareholders (i.e., Mr. Paulson and, for a time, Mr. Gilstrap)
have had an exercise price equal to 110% of the fair market value of the stock
as of the grant date.
(2) In a number of transactions between June 30, 1999 and
January 20, 2000, Mr. N. Diaco sold 342,000 shares of Common Stock on the open
market and gifted 13,000 shares of Common Stock. Also, on January 13, 2000, Mr.
N. Diaco exercised options to buy 110,000 shares of Common Stock.
(3) On July 28, 1999, Mr. Paulson sold 200,000 shares of Common
Page 12 of 17
<PAGE> 13
Stock to one of his employees upon the employee's exercise of a private stock
option which Mr. Paulson had previously granted. Also, in transactions which
have not been previously reported, Mr. Paulson purchased 11,000 shares of Common
Stock on the open market in 1997 and 500 shares of Common Stock on the open
market in 1998.
(d) No other person is known to have the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the sale of, the
securities.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
(a) The relationship among the Members of LLC is governed by the
Operating Agreement of LLC, as amended from time to time.
(b) Purchase Agreement. See Item 7(c).
(c) Amendment of Purchase Agreement. See Item 7(m).
(d) Sixth Amended and Restated Secured Convertible Promissory Note
(convertible into Common Stock at $0.25 per share). See Item 7(q).
(e) Agreement and Irrevocable Proxy (five-year proxy to LLC from DaVinci
Scientific Corporation -- 3,902,956 shares of Common Stock; includes an
agreement to vote such shares so as to cause the election of one nominee of
DaVinci Scientific Corporation as a director of Issuer). See Item 7(e). Now
applicable to those shares in the hands of various transferees.
(f) Agreement and Irrevocable Proxy (five-year proxy to LLC from Dr.
L.S. Smith -- 96,291 shares of Common Stock currently outstanding and 120,365
shares of Common Stock issuable upon exercise of warrants). See Item 5(a). See
Item 7(f).
(g) Agreement and Irrevocable Proxy (five-year proxy to LLC from Dallas
Gold & Silver Exchange, Inc. -- 523,000 shares of Common Stock). See Item 5(a).
See Item 7(g).
(h) Agreement of Right of First Refusal (Dr. L.S. Smith in favor of LLC
for three years). See Item 7(h).
(i) Agreement of Right of First Refusal (Dallas Gold & Silver Exchange,
Inc. in favor of LLC for three years). See Item 7(i).
(j) Investment Agreement. See Item 7(l).
(k) 1995 Stock Option/Stock Issuance Plan of Issuer, as amended through
October 8, 1997 (entitling each non-employee director of Issuer to automatic
grants of 1,000 stock options on the last day of each month of service beginning
August 1995).
Page 13 of 17
<PAGE> 14
Messrs. Paulson, Gilstrap and N. Diaco are non-employee directors of Issuer. See
Item 7(r).
(l) Pledge Agreement (Allen Paulson, in favor of Madeleine,
L.L.C.--13,310,734 shares of Common Stock). See Item 7(s). The 3,000,000 shares
sold by Mr. Paulson on June 7, 1999 (see Items 6(r) and 7(ee)) were duly
released from pledge.
(m) Limited Partnership Agreement of Jim and Sue Gilstrap Family Limited
Partnership. See Item 7(t).
(n) On March 11, 1998, Mr. Paulson and Mr. Gilstrap entered into a
Private Line of Credit Agreement with Issuer pursuant to which they agreed to,
upon requests by Issuer, lend to Issuer up to $3,000,000. All of such loans
would be funded 85% by Mr. Paulson and 15% by Mr. Gilstrap, would bear interest
at 10% per annum, and would mature on September 30, 1999. This Agreement was
amended on February 5, 1999 to extend the private line of credit from September
30, 1999 to September 30, 2000. See Items 7(u), 7(v), 7(w) and 7(bb).
(o) On May 14, 1998, Mr. Paulson and Mr. Gilstrap guaranteed the
repayment of loans of up to $4,000,000 from Imperial Bank to Issuer. See Items
7(x) and 7(y).
(p) On August 19, 1998, upon Issuer's request, Mr. Paulson and Mr.
Gilstrap loaned Issuer $1,000,000 under the Private Line of Credit Agreement.
This was used to pay down a portion of the guaranteed Imperial Bank loan which
was thereafter capped at a principal balance of $2,000,000.
(q) On April 26, 1999, Mr. Paulson and Mr. Gilstrap guaranteed (as of
February 25, 1999) the repayment of loans of up to $2,000,000 from City National
Bank to Issuer. See Items 7(cc) and 7(dd).
(r) On June 4, 1999, Mr. Paulson entered into a letter agreement with
Domain Associates to sell 3,000,000 shares of Issuer Common Stock for $3,600,000
to accounts managed by Domain Associates. See Item 7(ee). The sale was
consummated on June 7, 1999.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
(a) Letter dated January 6, 1995 from Messrs. Paulson, Gilstrap and
Walters to Messrs. Tate and Schmeltzer (previously filed).
(b) Letter dated February 6, 1995 from Arter & Hadden to Messrs.
Paulson, Gilstrap and Walters (previously filed).
(c) Purchase Agreement dated February 7, 1995 between LLC and Issuer
(previously filed).
(d) Secured Convertible Promissory Note dated February 7, 1995 from
Issuer to LLC (previously filed).
Page 14 of 17
<PAGE> 15
(e) Agreement and Irrevocable Proxy dated February 2, 1995 between LLC
and DaVinci Scientific Corporation (previously filed).
(f) Agreement and Irrevocable Proxy dated February 7, 1995 between LLC
and Dr. L.S. Smith (previously filed).
(g) Agreement and Irrevocable Proxy dated February 7, 1995 between LLC
and Dallas Gold & Silver Exchange, Inc. (previously filed).
(h) Agreement of Right of First Refusal dated February 7, 1995 between
LLC and Dr. L.S. Smith (previously filed).
(i) Agreement of Right of First Refusal dated February 7, 1995 between
LLC and Dallas Gold & Silver Exchange, Inc. (previously filed).
(j) First Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended March 30, 1995 (previously filed).
(k) Second Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended May 19, 1995 (previously filed).
(l) Investment Agreement, as amended, dated as of April 12, 1995 between
Issuer and LLC (previously filed).
(m) Amendment of Purchase Agreement, dated March 31, 1996 between LLC
and Issuer (previously filed).
(n) Third Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended March 31, 1996 (previously filed).
(o) Fourth Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended as of June 30, 1996 (previously filed).
(p) Fifth Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended as of February 1, 1997 (previously filed).
(q) Sixth Amended and Restated Secured Convertible Promissory Note from
Issuer to LLC, as amended as of August 15, 1998 (previously filed).
(r) 1995 Stock Option/Stock Issuance Plan of Issuer, as amended through
October 8, 1997 (previously filed).
(s) Pledge Agreement between Allen Paulson and Madeleine, L.L.C., dated
September 18, 1997 (previously filed).
(t) Agreement of Limited Partnership of Jim and Sue Gilstrap Family
Limited Partnership (previously filed).
Page 15 of 17
<PAGE> 16
(u) Private Line of Credit Agreement, dated March 11, 1998, among Allen
Paulson, James Gilstrap and Issuer (previously filed via incorporation by
reference to Issuer's Form 10-QSB for the quarter ended May 31, 1998).
(v) Optional Advance Note dated March 11, 1998 (Paulson) (previously
filed).
(w) Optional Advance Note dated March 11, 1998 (Gilstrap) (previously
filed).
(x) Commercial Guaranty dated May 14, 1998 (Paulson) (previously filed).
(y) Commercial Guaranty dated May 14, 1998 (Gilstrap) (previously
filed).
(z) Certificate of Amendment of Issuer's Restated Articles of
Incorporation, as filed July 24, 1998 (previously filed via incorporation by
reference to Issuer's Form 8-K for an event of August 21, 1998, filed September
3, 1998).
(aa) Certificate of Determination of Preferences of Series A Convertible
Preferred Stock, as filed August 21, 1998 (previously filed via incorporation by
reference to Issuer's Form 8-K for an event of August 21, 1998, filed September
3, 1998).
(bb) Amendment of Private Line of Credit Agreement, dated February 5,
1999, among Allen Paulson, James Gilstrap and Issuer (previously filed via
incorporation by reference to Issuer's Form 10-QSB for the quarter ended
February 28, 1999).
(cc) Limited Guaranty dated April 26, 1999 (as of February 25, 1999)
(Paulson) (previously filed).
(dd) Limited Guaranty dated April 26, 1999 (as of February 25, 1999)
(Gilstrap) (previously filed).
(ee) Letter agreement between Allen Paulson and Domain Associates, on
behalf of Domain Partners IV, L.P. and DP IV Associates, L.P., dated June 4,
1999 (previously filed via incorporation by reference to Schedule 13D for an
event of June 7, 1999, with respect to Issuer, filed by Domain Partners IV, L.P.
and DP IV Associates, L.P. on June 16, 1999).
(ff) Agreement of Joint Filing, dated February 7, 2000 among LLC and
Messrs. A. Paulson, J. Gilstrap, N. Diaco and J. Diaco.
Page 16 of 17
<PAGE> 17
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
February 7, 2000 CARDIODYNAMICS HOLDINGS, LLC
By: /s/ Allen Paulson
---------------------------------
Allen Paulson, Member
By: /s/ James Gilstrap
---------------------------------
James Gilstrap, Member
/s/ Allen Paulson
------------------------------------
ALLEN PAULSON
/s/ James Gilstrap
------------------------------------
JAMES GILSTRAP
/s/ Nicholas Diaco
------------------------------------
NICHOLAS DIACO
/s/ Joseph Diaco
------------------------------------
JOSEPH DIACO
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (see 18 U.S.C. 1001).
<PAGE> 1
EXHIBIT 7.ff
Agreement of Joint Filing
The undersigned hereby agree that they are filing jointly pursuant to
Rule 13d-1(f)(1) of the Securities Exchange Act of 1934, as amended, the
Statement dated February 7, 2000 containing the information required by Schedule
13D, for the shares of Common Stock of CardioDynamics International Corporation,
held by CardioDynamics Holdings, LLC, a California limited liability company,
and by the undersigned individuals.
February 7, 2000 CARDIODYNAMICS HOLDINGS, LLC
By: /s/ Allen Paulson
---------------------------------
Allen Paulson, Member
By: /s/ James Gilstrap
---------------------------------
James Gilstrap, Member
/s/ Allen Paulson
------------------------------------
ALLEN PAULSON
/s/ James Gilstrap
------------------------------------
JAMES GILSTRAP
/s/ Nicholas Diaco
------------------------------------
NICHOLAS DIACO
/s/ Joseph Diaco
------------------------------------
JOSEPH DIACO
EXHIBIT 7FF-1
