<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended February 29, 2000
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Transition Period from ________ to _________
Commission File Number: 0-11868
CaridoDynamics International Corporation
(Exact name of registrant as specified in its charter)
California 95-3533362
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6175 Nancy Ridge Drive, Suite 300, San Diego, California 92121
(Address of principal executive offices) (Zip Code)
(858) 535-0202
(Registrant's telephone number)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X
----
No _____
As of April 11, 2000, 42,194,942 shares of Common Stock were outstanding.
Transitional Small Business Disclosure Format(check one):
Yes _____ No X
----
<PAGE>
CardioDynamics International Corporation
FORM 10-QSB
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets at February 29, 2000 (unaudited) and
November 30, 1999 (audited). 3
Statements of Operations (unaudited) for the three months
ended February 29, 2000 and February 28, 1999. 4
Statements of Cash Flows (unaudited) for the three months
ended February 29, 2000 and February 28, 1999. 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CardioDynamics International Corporation
Balance Sheets
<TABLE>
<CAPTION>
February 29, November 30,
2000 1999
Assets (Unaudited) (Audited)
------------------- -------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,796,845 $ 2,405,710
Accounts receivable, net of allowance for doubtful accounts
and returns of $677,502 in 2000 and $552,648 in 1999 4,469,011 4,226,470
Inventory, net 1,549,754 1,344,527
Other current assets 283,557 116,070
------------------- -------------------
Total current assets 10,099,167 8,092,777
------------------- -------------------
Property and equipment, net 363,048 335,760
Long-term receivables 13,570 25,973
Deposits 42,500 42,500
------------------- -------------------
Total assets $ 10,518,285 $ 8,497,010
=================== ===================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 777,431 $ 1,125,068
Accrued expenses 151,438 183,910
Accrued salaries, wages and benefits 334,159 309,083
Line of credit -- 1,000,000
Current maturities of long-term debt 1,083,348 885,932
Note payable - related parties 1,000,000 1,000,000
------------------- -------------------
Total current liabilities 3,346,376 4,503,993
Long-term debt, less current maturities 1,153,486 1,350,425
------------------- -------------------
Total liabilities 4,499,862 5,854,418
Shareholders' equity:
Common stock, no par value; 50,000,000 shares authorized; issued
and outstanding 41,679,831 shares at February 28, 2000 and 39,888,811
shares at November 30, 1999 28,013,644 24,079,981
Accumulated deficit (21,995,221) (21,437,389)
------------------- -------------------
Total shareholders' equity 6,018,423 2,642,592
------------------- -------------------
Commitments and contingencies
Total liabilities and shareholders' equity $ 10,518,285 $ 8,497,010
=================== ===================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
CardioDynamics International Corporation
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------
February 29, February 28,
2000 1999
------------ -----------
<S> <C> <C>
Net sales $ 2,624,436 $ 1,074,926
Cost of sales 789,338 407,071
------------ -----------
Gross margin 1,835,098 667,855
Operating expenses:
Research and development 505,537 471,523
Selling, general, and administrative expenses 1,853,343 1,248,747
------------ -----------
Total operating expenses 2,358,880 1,720,270
------------ ----------
Loss from operations (523,782) (1,052,415)
Other expense:
Interest, net (30,884) (58,090)
Other, net (2,366) (612)
------------ ----------
Total other expense (33,250) (58,702)
Loss before income taxes (557,032) (1,111,117)
Income taxes (800) (800)
------------ ----------
Net loss (557,832) (1,111,917)
Preferred stock dividends -- (16,315)
----------- -----------
Net loss to common shareholders $ (557,832) $(1,128,232)
=========== ===========
Net loss per common share, basic and diluted $ (.01) $ (.03)
=========== ===========
Weighted-average number of common shares outstanding 41,473,490 32,719,426
=========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
CardioDynamics International Corporation
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------
February 29, February 28,
2000 1999
----------------- ------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (557,832) $ (1,111,917)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 39,095 19,067
Change in allowance for warranty repairs (16,750) 35,955
Change in allowance for obsolete inventory (113,146) --
Change in allowance for refurbishment of demo inventory units 812 29,372
Change in allowance for doubtful receivables 124,854 55,776
Compensatory stock options granted 23,370 --
Changes in operating assets and liabilities:
Accounts receivable (367,395) (591,080)
Inventory (92,893) (115,679)
Other current assets (167,487) (14,477)
Long-term receivables 12,403 --
Accounts payable (347,637) (664)
Accrued expenses (15,722) 115,289
Accrued salaries, wages and benefits 25,076 111,008
----------------- ------------------
Net cash used in operating activities (1,453,252) (1,467,350)
----------------- ------------------
Cash flows from investing activities:
Purchases of property and equipment (44,953) (8,401)
----------------- ------------------
Net cash used in investing activities (44,953) (8,401)
----------------- ------------------
Cash flows from financing activities:
Repayment of long-term debt (20,953) (11,193)
Repayment of credit line (1,000,000) --
Proceeds from note payable to bank -- 208,600
Preferred stock issuance costs -- (7,070)
Exercise of warrants and options 823,925 1,940
Issuance of common stock, net 3,086,368 --
----------------- ------------------
Net cash provided by financing activities 2,889,340 192,277
----------------- ------------------
Net increase (decrease) in cash and cash equivalents 1,391,135 (1,283,474)
Cash and cash equivalents at beginning of period 2,405,710 2,633,086
----------------- ------------------
Cash and cash equivalents at end of period $ 3,796,845 $ 1,349,612
================= ==================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
CardioDynamics International Corporation
Notes to Financial Statements
(Unaudited)
Description of Business
CardioDynamics International Corporation is a medical technology and information
solutions company that develops, manufactures, and markets noninvasive heart-
monitoring devices using our proprietary impedance cardiography (ICG)
technology, DISQ(TM) technology, and ZMarc(TM) algorithm.
Our primary products, the BioZ(R) System, the BioZ(TM) Portable, and the
BioZ.com(TM) have FDA approval, CE Mark for international distribution, and
Health Care Finance Association (HCFA) mandated Medicare reimbursement. These
innovative devices provide physicians with continuous data on a wide range of
parameters relating to blood flow and heart function which previously were not
available in the physicians' offices or in many hospital departments. Unlike
other cardiac function monitoring technologies, this vital patient information
is measured noninvasively, providing physicians and patients with immediate,
safe and cost effective access to blood flow and heart function information.
Previously, this information was only available through a potentially dangerous,
costly and invasive procedure known as right heart catheterization (RHC) or
pulmonary artery catheterization (PAC). We are building awareness of the
availability of this new, accurate, innovative technology and its applications
to improve patient outcomes and reduce costs. Physicians are currently
utilizing the BioZ Systems to help them assess, diagnose, and aggressively treat
patients with high blood pressure, congestive heart failure, diabetes, high-risk
pregnancies, kidney dysfunction, and pacemakers.
We currently offer stand-alone ICG monitoring devices and proprietary sensors.
In the longer term, we see our business expanding to include integration of our
proprietary technology into leading patient monitors, cardiology, and anesthesia
delivery systems, increasing the mix of recurring sensor revenue, expanding
outpatient distribution, and eventually, generating income from home healthcare
products and a hemodynamic medical data warehouse. Our direct sales force
specializes in introducing medical technologies to the outpatient or physician
marketplace. We believe this core competency is of value to large medical device
companies such as General Electric Marquette Medical Systems and Agilent
Technologies, who primarily focus on hospital distribution and are in need of a
distribution channel for the physician marketplace. Therefore, our outpatient
distribution could include, not only our products, but strategic partners'
applicable products as well as new technologies.
6
<PAGE>
CardioDynamics International Corporation
Notes to Financial Statements
(Unaudited)
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the
requirements for Form 10-QSB and, therefore, do not include all the information
and footnotes which would be presented if these financial statements had been
prepared in accordance with generally accepted accounting principles.
These statements should be read along with the Financial Statements and Notes
that go along with our audited financial statements, as well as the other
financial information for the fiscal year ended November 30, 1999 as presented
in our Annual Report on Form 10-KSB. Financial presentations for prior periods
have been reclassified to provide consistency in reporting.
In our opinion, the information contained in this report reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of our operations. All such adjustments are of a normal
recurring nature. The results of operations for the three months ended February
29, 2000 are not necessarily indicative of the results that may be expected for
the full fiscal year ended November 30, 2000. Options and warrants to purchase
6,634,615 shares of common stock were outstanding during the quarter ended
February 29, 2000 but were not included in the computation of loss per share
because the effect would be anti-dilutive.
Common Stock Private Placement
On December 3, 1999 we completed a $3.3 million dollar private placement of
common stock to institutional investors which purchased unregistered shares with
a four-month holding restriction for $2.50 per share, representing a 9% discount
from the 30-day average closing bid price.
Debt
In February of 2000 we renewed our secured revolving credit line with Imperial
Bank. The credit line provides for borrowing of up to $3,000,000 at the bank's
prime rate through February 2001. The credit line is collateralized by all the
assets of our company. At February 29, 2000, we had no borrowings under the
credit line.
In February of 1999 we entered into a three-year $2,000,000 unsecured term loan
agreement with City National Bank. Under the terms of the agreement we borrowed
$2,000,000 with monthly interest only payments for the first 12 months at the
bank's prime rate. In May 2000 we will begin to make monthly principal
installments of $83,333 each, plus interest at one percent above the bank's
prime rate. In connection with the loan, we issued to the bank 50,000 warrants
to purchase our common stock at $2.20 per share. The co-chairmen of our Board
of Directors guaranteed the loan. At February 29, 2000, $2,000,000 is
outstanding under this agreement.
7
<PAGE>
CardioDynamics International Corporation
Notes to Financial Statements
(Unaudited)
Subsequent Event
In March 2000, we entered into an agreement to provide 5,000 BioZ monitors and
20 million sensors sets over a five year period to Profiles in Health, Inc., a
privately held California corporation presently in capital formation stage.
Under the terms of the agreement we will manufacture and sell custom BioZ
monitors called BioZ.pc, which will be integrated into the Profiles in Health
Proveillance(TM) System. The contract contemplates a three phase development
program whereby we will be developing and providing to Profiles in Health custom
ICG components and sensors for their profiling system for use by healthcare
providers and managed care organizations throughout the United States. Under the
terms of the contract, Profiles in Health may defer a declining portion of the
purchase price for the BioZ.pc's and sensors through a three-year convertible
secured promissory note. Profiles in Health may defer up to $6,275,000 under the
note, which bears interest payable quarterly at nine percent per annum. The note
is convertible, at our option, into a maximum of three percent of Profiles in
Health stock. Pricing of the custom ICG components and sensors under the
Profiles in Health agreement reflect a substantial volume discount consistent
with the magnitude of the quantities purchased.
8
<PAGE>
CardioDynamics International Corporation
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion should be read along with the Financial Statements and
Notes that go along with our audited financial statements, as well as the other
financial information for the fiscal year ended November 30, 1999. Some of our
discussion is forward-looking and involve risks and uncertainties. For
information regarding risk factors that could have a material adverse effect on
the Company's business, refer to our November 30, 1999 Form 10-KSB and page 14
of this report.
Results of Operations (Quarters referred to herein are fiscal quarters ended
- ---------------------
February 29, 2000 and February 28, 1999.)
Net sales for the first quarter of fiscal 2000 were $2,624,436, an increase of
144% over 1999's first fiscal quarter sales of $1,074,926. The significant
sales growth during the first fiscal quarter of 2000 was primarily due to the
continued expansion of our direct sales force, as well as our international
distributor network and increased shipments under our strategic alliance with
GE Marquette Medical Systems.
Our direct sales force targets individual physician offices as well as hospitals
in the United States with under 100 beds. In the first quarter of fiscal 2000,
we had 24 direct sales representatives, up from 15 in the first fiscal quarter
of 1999. In fiscal 2000 we plan to continue to expand our direct sales force as
we identify qualified candidates in targeted metropolitan areas.
In October 1999, we entered into a distribution agreement with GE Marquette
Medical Systems for the distribution of the BioZ.com(TM) in the United States
hospital market. The agreement provides GE Marquette exclusive rights to market
and sell our BioZ.com(TM) in hospitals with 100 beds or more. GE Marquette has
a significant presence in the market and is widely recognized for their success
at introducing new technologies, particularly in the areas of diagnostic
cardiology, clinical information systems, and patient monitoring systems.
Our direct sales force accounted for 62% of our revenue during the first fiscal
quarter of 2000, with the balance generated through our distributor network,
including GE Marquette. Of the sales generated through our distributor network
in the first fiscal quarter of 2000, 2% were sold through our international
distributors and the remaining 36% was sold through our domestic distributors.
The BioZ.com(TM) accounted for 100% of our overall equipment sales in the first
quarter of fiscal 2000, up from 74% in the same quarter of fiscal 1999.
Each time our BioZ.com(TM) products are used, disposable sets of four dual
sensors are required. The disposable sensors have a list price of $9.95 per
application. For the quarter ended February 29, 2000 recurring revenue from
these sensors and accessory sales accounted for $212,190 of revenue, a 470%
increase over recurring revenues of $37,160 for the first fiscal quarter of
1999. As the installed base of BioZ.com(TM) equipment grows, we anticipate that
the revenue generated by our disposable sensors will comprise an increasingly
larger percentage of our overall sales.
9
<PAGE>
CardioDynamics International Corporation
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations (Continued)
- ---------------------
Our gross margin for the quarter ended February 29, 2000 was $1,835,098, or
69.9% of sales, up nearly 8% over the first quarter of fiscal 1999's gross
margin of $667,855, or 62.1%. The improvement in our gross margin percentage is
attributable to: (i) greater utilization of our manufacturing capacity based on
increased volume of units produced, (ii) the higher priced BioZ.com(TM)
comprising a greater percentage of our overall product mix, (iii) reduced
direct material costs due to higher quantity purchases and concerted cost
reduction efforts and, (iv) reduction of inventory reserves no longer necessary
due to our sales agreement with Profiles in Health, which was not contemplated
at November 30, 1999.
Our research and development costs for the first fiscal quarter of 2000
increased 7% over the first fiscal quarter of 1999's expenditures of $471,523.
We continue to invest a significant portion of our resources into research,
clinical studies, and further enhancements to the BioZ.com(TM) systems and new
product development. Over the past year, we have increased our internal
capabilities for research and development, decreasing our reliance on outside
engineering consulting services. We anticipate that the costs associated with
research, clinical studies further enhancements to the Bioz.com(TM) systems and
new product development will accelerate and continue to comprise a substantial
portion of our overall expense structure in the balance of fiscal 2000.
Selling, general and administrative costs for the first fiscal quarter of 2000
increased to $1,853,343, a 48% increase over the same period in 1999, with costs
of $1,248,747. We attribute the majority of the increase to continued expansion
of both our domestic direct sales force and our distribution capabilities. In
the first quarter of fiscal 2000, we had 25 direct sales representatives, up
from 15 in the first quarter of fiscal 1999 and we plan to continue to expand
our direct sales force and increase our investment in sales and marketing
activities during the balance of fiscal 2000 and beyond.
Included in selling, general and administrative expenses in the first quarter of
fiscal 2000 was $375,156 of administrative expenses related to the overall
infrastructure and management of the company. As a result of our ongoing focus
on cost containment and targeting our investments to areas of the business that
directly contribute to revenue growth, our general and administrative expenses
decreased as a percentage of sales, from 29% in the first fiscal quarter of
1999, to 14% in the first fiscal quarter of 2000.
We incurred interest expense of $82,109 in the first quarter of 2000, up
slightly from the first quarter of fiscal 1999 in which we incurred $79,514 of
interest expense. We earned $51,226 of interest income on our invested funds in
the first fiscal quarter of 2000, up 139% from the $21,424 earned in the first
quarter of 1999, primarily due to increased funds available for investment
during the quarter.
10
<PAGE>
CardioDynamics International Corporation
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations (Continued)
- ---------------------
We reduced the net loss to common shareholders for the first quarter of fiscal
2000 to $557,832 or $.01 per common share, from $1,128,232, or $.03 per share
for the quarter ended February 28, 1999. The weighted average number of common
shares outstanding during the first fiscal quarter of 2000 increased by 27%,
primarily due to the conversion during fiscal 1999 of 2,240 shares of Series A
preferred stock, and shares issued in the May 28, 1999 and December 3, 1999
private placements, as well as the exercise of various warrants and options
during the period.
Liquidity and Capital Resources
- -------------------------------
In August of 1998, we raised $3 million through the issuance of Series A
convertible preferred stock and in May of 1999 we raised $5.2 million through a
private placement of common stock to institutional and accredited investors.
On December 3, 1999, we completed a $3.3 million dollar private placement of
common stock to institutional investors. The investors purchased unregistered
shares with a four-month holding restriction for $2.50 per share, representing a
9% discount from the 30-day average closing bid price at the time of the
transaction.
To date, these financings, together with the bank loans and chairman's line of
credit described below, have provided the capital required to fund
commercialization of our BioZ products, ongoing research and development
efforts, expansion of our direct sales force and international sales presence,
capital expenditures and to meet our working capital requirements, including the
significant increase in accounts receivable resulting from the higher sales
volumes and extended payment terms.
In March 1998, we entered into an 18-month unsecured private line of credit
agreement with the co-chairmen of our Board of Directors. Under the terms of
the agreement we can borrow up to $3,000,000 on an as-needed basis with at an
annual interest rate of 10.0%. In August of 1998 the Company borrowed
$1,000,000. In February 1999, this line of credit was extended to September 30,
2000. At February 29, 2000, $1,000,000 was outstanding under this agreement.
On February 26, 1999 we entered into a three-year $2,000,000 unsecured term loan
agreement with City National Bank at the bank's prime rate. The co-chairmen of
our Board of Directors guaranteed the loan. Under the terms of the agreement we
have made interest only payments. Beginning in May 2000, we will commence
monthly principal installments of $83,333 each, plus interest at one percent
above the bank's prime rate. At February 29, 2000, $2,000,000 was outstanding
under this agreement.
11
<PAGE>
CardioDynamics International Corporation
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources - (Continued)
- --------------------------------
To help provide the cash flow necessary to meet the increasing demand for our
products, in January 1999, we established a secured revolving credit line with
Imperial Bank. The credit line provides for borrowings of up to $3,000,000 at
the bank's prime rate. Under the terms of the agreement, we are required to
meet certain loan covenants, including maintenance of minimum quick ratio and
maximum quarterly losses. All the assets of our company collateralize the
credit line. In February 2000, the credit line was renewed through February 29,
2001 at the bank's prime rate with the same borrowing limit of $3,000,000. At
February 29, 2000 there are no borrowings under the line of credit.
Nonetheless, without additional debt or equity financing, our ability to
continue expansion of our direct sales strategy will be constrained, due to the
strategy's high cash requirements. We expect our operating losses to continue
through at least the short term. Longer term, our liquidity will depend on our
ability to successfully commercialize the BioZ(TM) systems and other diagnostic
products and raise additional funds through public or private financings, bank
loans, collaborative relationships or other arrangements. We can give no
assurance that such additional funding will be available on terms attractive to
us, or at all.
Other Matters
Year 2000 Compliance
- --------------------
During 1999 we implemented a plan to assure the internal readiness of our
computer systems and the ability of products to handle the Year 2000 issue. The
plan was comprehensive, however we did not have to spend significant amounts of
money to assure our compliance. Thus far, we have not experienced any
significant disruptions to our financial or operating activities caused by
failure of our computer systems resulting for Year 2000 issues. We are not
aware of any Year 2000 related product performance issues. We do not expect
Year 2000 issues to have a material adverse effect on our business, results of
operations, or financial condition.
12
<PAGE>
CardioDynamics International Corporation
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 1/st/ Amendment and extension to Line of Credit agreement with
Imperial Bank, Dated February 14, 2000.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
On December 15, 1999 the Company filed a report on Form 8-K with
regard to a December 3, 1999 event: the completion of a $3.3 million
dollar common stock private placement with institutional investors.
The Report included material under Item 5 and Item 7 of Form 8-K.
13
<PAGE>
CardioDynamics International Corporation
This Form 10-KSB contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements include statements regarding our plans,
goals, strategies, intent, beliefs or current expectations. These statements
are expressed in good faith and we believe had a reasonable basis when
expressed, but there can be no assurance that these expectations will be
achieved or accomplished. Sentences in this document containing verbs such as
"plan," "intend," "anticipate," "target," "estimate," "expect," etc., and/or
future-tense or conditional constructions ("will," "may," "could," "should,"
etc.) constitute forward-looking statements that involve risks and
uncertainties. Items contemplating, or making assumptions about, actual or
potential future sales, market size, collaborations, trends or operating results
also constitute such forward-looking statements. These statements are only
predictions and actual results could differ materially. Certain factors that
might cause such a difference are discussed throughout this Form 10-KSB
including the section entitled "Risk Factors" on pages 16 to 25 of this
document. Any forward-looking statement speaks only as of the date we made the
statement, and we do not undertake to update the disclosures contained in this
document or reflect events or circumstances that occur subsequently or the
occurrence of unanticipated events.
SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CardioDynamics International Corporation
Date: April 14, 2000 By: /s/ Michael K. Perry
-------------- -----------------------------------------
Michael K. Perry
Chief Executive Officer
Date: April 14, 2000 By: /s/ Stephen P. Loomis
-------------- ---------------------------------------
Stephen P. Loomis
Vice President, Finance
Chief Financial Officer and
Corporate Secretary
14
<PAGE>
Exhibit 10.1
1/ST/ AMENDMENT TO
CREDIT AGREEMENT
This First Amendment ("Amendment") amends that certain Credit Agreement (the
"Agreement) dated January 15, 1999, by and between CardioDynamics International
Corporation ("Borrower") and Imperial Bank ("Bank") as follows:
1. The date "January 14, 2000" in the last line of the fourth paragraph of
Section 1.01(a)(2) of the Agreement is hereby amended to read as "January 14,
2001."
2. Section 4.06 of the Agreement is hereby amended to read in its entirety as
follows:
"Quick Ratio. Maintain on monthly basis a quick ratio of cash plus net
accounts receivable divided by current liabilities of a least 1.50:1 for
quarters ending February 29, 2000, May 31, 2000, August 31, 2000 and
November 30, 2000."
3. Section 4.07 of the Agreement is hereby amended to read in its entirety as
follows:
"Profitability. Maintain maximum quarterly losses not to exceed the
following: Quarter ending February 29, 2000 not to exceed ($1,500,000);
quarter ending May 31, 2000 not to exceed ($1,450,000); quarter ending
August 31, 2000 not to exceed ($1,400,000) and quarter ending November 30,
2000 not to exceed ($1,350,000).
4. Except as provided above, the Agreement remains unchanged.
5. This Amendment is effective as of February 14, 2000, upon receipt of a
$150.00 loan documentation renewal fee, and the parties hereby confirm that the
Agreement as amended is in full force and effect.
CARDIODYNAMICS INTERNATIONAL
CORPORATION IMPERIAL BANK
"BORROWER" "BANK"
By: /s/ Michael K. Perry By: /s/ Anna Maria Frost-Jensen
------------------------ ----------------------------
Michael Perry, CEO Anna Maria Frost-Jensen
By: /s/ Steve Loomis Title: Vice President
----------------
Steve Loomis, CFO & Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTER IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000719722
<NAME> CARDIO DYNAMICS INTERNATIONAL CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-2000
<PERIOD-START> DEC-01-1999
<PERIOD-END> FEB-29-2000
<CASH> 3,796,845
<SECURITIES> 0
<RECEIVABLES> 5,146,513
<ALLOWANCES> 677,502
<INVENTORY> 1,549,754
<CURRENT-ASSETS> 10,099,167
<PP&E> 691,673
<DEPRECIATION> 328,625
<TOTAL-ASSETS> 10,518,285
<CURRENT-LIABILITIES> 3,346,376
<BONDS> 0
0
0
<COMMON> 28,013,644
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10,518,285
<SALES> 2,624,436
<TOTAL-REVENUES> 2,624,436
<CGS> 789,338
<TOTAL-COSTS> 2,358,880
<OTHER-EXPENSES> 2,366
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,884
<INCOME-PRETAX> (557,032)
<INCOME-TAX> 800
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (557,832)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
