<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                   FORM 10-QSB
(Mark One)

    [ X ]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended              JUNE 30, 1997
                              -----------------------------------------

                                      OR

    [   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934

                         Commission file number 0-19567

                               CARDIAC SCIENCE, INC.
           -----------------------------------------------------------
             (Exact name of registrant as specified in its charter)


             DELAWARE                                       33-0465681 
 -------------------------------------------------------------------------------
 (State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                        Identification No.)


  1176 MAIN STREET, SUITE C, IRVINE, CALIFORNIA                92614
 -------------------------------------------------------------------------------
    (Address of principal executive offices)                 (Zip code)

Registrant's telephone number, including area code:        (714) 587-0357

  8 HAMMOND DRIVE, SUITE 111, IRVINE, CALIFORNIA               92618
 -------------------------------------------------------------------------------
        (Former name, former address and former fiscal year, if changed
                              since last report)

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 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
                                                             -----       -----

The number of shares of the Common Stock of the registrant outstanding as of 
July 31, 1997 was 37,471,177.
<PAGE>

                              CARDIAC SCIENCE, INC.
                                        
                               INDEX TO FORM 10-Q

                         PART I.  FINANCIAL INFORMATION
                                                                       PAGE NO.
                                                                       --------
Item 1.   Financial Statements:

          Consolidated Condensed Balance Sheets                    
              June 30, 1997 (Unaudited) and
              December 31, 1996                                             3

          Consolidated Condensed Statements of Operations (Unaudited) 
              Three and six months ended June 30, 1997
              and 1996                                                      4

          Consolidated Condensed Statements of Cash Flows (Unaudited)
              Six months ended June 30, 1997 and 1996                       5

          Consolidated Condensed Notes to Financial Statements 
              (Unaudited)                                                   6

Item 2.   Management's Discussion and analysis of                           9
          financial condition and results of operation

                           PART II.  OTHER INFORMATION
                                        
Item 1.   Legal Proceedings                                                12

Item 2.   Changes in Securities                                            12

Item 3.   Defaults Upon Senior Securities                                  12

Item 4.   Submission of Matters to a Vote of Security Holders              12

Item 5.   Other Information                                                13

Item 6.   Exhibits and Reports on Form 8-K                                 13

Signatures                                                                 14

                                      -2-
<PAGE>

                              CARDIAC SCIENCE, INC.
                                        

                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                        
                                     ASSETS     

                                                       JUNE 30,   DECEMBER 31,
                                                        1997         1996 
                                                    ----------   ------------
                                                    (Unaudited)
                                  
Current assets:
  Cash and cash equivalents . . . . . . . . . . .   $   15,783   $   413,311
  Trade accounts receivable . . . . . . . . . . .      195,362            --
  Inventories . . . . . . . . . . . . . . . . . .      119,634            --
  Other current assets  . . . . . . . . . . . . .       53,982        10,893
     -                                                ----------  -----------
     Total current assets . . . . . . . . . . . .      384,761       424,204
     
Equipment, at cost  . . . . . . . . . . . . . . .       98,332        70,286
  Less accumulated depreciation  . . . . . . . .       (51,658)      (45,639)
                                                     ----------  ------------

  Equipment, net  . . . . . . . . . . . . . . . .       46,674        24,647

Goodwill, net of amortization of $ 10,952 . . . .      646,186            --
Other assets  . . . . . . . . . . . . . . . . . .        5,784         4,012
                                                    ----------   ------------
                                                    $1,083,405   $   452,863
                                                    ----------   ------------
                                                    ----------   ------------
             LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Bank line of credit . . . . . . . . . . . . . .    $  34,998   $        -- 
  Accounts payable and accrued expenses . . . . .      516,257       133,402 
  Accrued payroll . . . . . . . . . . . . . . . .       17,202        50,269
  Note payable  . . . . . . . . . . . . . . . . .       85,309            --
                                                    ----------   ------------
     Total current liabilities  . . . . . . . . .      653,766       183,671
                                                    ----------   ------------
                                                    ----------   ------------
Stockholders' equity:
  Preferred stock - $.001 par value; 
    1,000,000 shares authorized, 5,714 
    issued and outstanding at June 30, 
    1997 and 0 at December 31, 1996  . . . . . .       600,000            --
  Common stock - $.001 par value:
    Authorized shares - 40,000,000 
    Issued and outstanding shares 
    37,471,177 at June 30, 1997 
    and 37,321,177 at December 31, 
    1996   . . . . . . . . . . . . . . . . . . .        37,471        37,273
  Common stock subscribed  - 1,666,667 at 
    June 30, 1997 and 1,816,667 at 
    December 31, 1996  . . . . . . . . . . . . .       250,000       268,000
Additional paid-in capital . . . . . . . . . . .     4,936,776     4,918,974
Accumulated deficit    . . . . . . . . . . . . .    (5,394,608)   (4,955,055)
                                                    ----------   ------------
     Total stockholders' equity   . . . . . . . .      429,639       269,192
                                                    ----------   ------------
                                                  $  1,083,405   $   452,863
                                                    ----------   ------------
                                                    ----------   ------------
                                        
                             See accompanying notes.


                                    -3-

<PAGE>

                                 CARDIAC SCIENCE, INC.

                       CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS 
                                        (Unaudited)

<TABLE>
<CAPTION>
                                                                            Three months ended          Six months ended
                                                                            ------------------          ----------------
                                                                          June 30,      June 30,     June 30,      June 30,
                                                                           1997          1996         1997          1996
                                                                        ---------------------------------------------------
<S>                                                                       <C>         <C>          <C>         <C>

SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        408,998          ---      408,998          ---
   Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . .        209,447          ---      209,447          ---
                                                                       ----------   ----------   ----------   ----------
   Gross Profit. . . . . . . . . . . . . . . . . . . . . . . . . .        199,551          ---      199,551          ---

OPERATING EXPENSES:
   Research and development. . . . . . . . . . . . . . . . . . . .         51,392       98,446      129,928      222,068
   Selling expenses. . . . . . . . . . . . . . . . . . . . . . . .        115,193          ---      115,193          ---
   General and administrative. . . . . . . . . . . . . . . . . . .        299,283      111,736      392,759      219,464
                                                                       ----------   ----------   ----------   ----------
   LOSS FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . .       (266,317)    (210,182)    (438,329)    (441,532)

   Interest income, expense net. . . . . . . . . . . . . . . . . .         (4,656)      10,236       (1,119)      23,849
                                                                       ----------   ----------   ----------   ----------
Loss before provision for income taxes. .  . . . . . . . . . . . .       (270,973)    (199,946)    (439,448)    (417,683)
Provision for income taxes . . . . . . . . . . . . . . . . . . . .            105          183          105          383
                                                                       ----------   ----------   ----------   ----------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (271,078)    (200,129)    (439,553)    (418,066)
                                                                       ----------   ----------   ----------   ----------
                                                                       ----------   ----------   ----------   ----------
Net loss per share.. . . . . . . . . . . . . . . . . . . . . . . .           (.01)        (.01)        (.01)        (.01)
                                                                       ----------   ----------   ----------   ----------
                                                                       ----------   ----------   ----------   ----------

Number of shares used in the computation of loss per
share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     39,137,844   38,987,844   39,137,844   38,597,844
                                                                       ----------   ----------   ----------   ----------
                                                                       ----------   ----------   ----------   ----------
</TABLE>
         
                                                      See accompanying notes.

                                      -4-
<PAGE>

                                  CARDIAC SCIENCE, INC.

                      CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                        (Unaudited)

<TABLE>
<CAPTION>
                                                                    Six months ended
                                                                    ----------------
                                                              June 30,           June 30,
                                                                1997               1996
                                                         ---------------    ----------------
<S>                                                      <C>                <C>
Cash flows from operating activities:
 Net loss. . . . . . . . . . . . . . . . . . . . . .     $      (439,553)   $      (418,066)
    Adjustments to reconcile net loss to net                                
    cash used in operating activities:                                   
       Depreciation. . . . . . . . . . . . . . . . .               6,019              6,380
        Amortization . . . . . . . . . . . . . . . .              10,952                 --
        Changes in operating assets and liabilities 
          (net of Diagnostic Monitoring assets and 
          liabilities acquired):
             Trade receivables . . . . . . . . . . .             (65,787)                --
             Inventories . . . . . . . . . . . . . .               2,372                 --
             Other assets  . . . . . . . . . . . . .             (31,629)             3,919
             Accounts payable and accrued expenses .             104,552            (52,234)
             Accrued payroll . . . . . . . . . . . .             (33,067)             7,782
                                                         ---------------    ----------------

 Net cash used in operating activities . . . . . . .            (446,141)          (452,219)
                                                         ---------------    ----------------
 Cash flows from investing activities:
    Purchase of equipment. . . . . . . . . . . . . .             (10,705)                --
    Cash acquired in Diagnostic Monitoring 
      acquisition. . . . . . . . . . . . . . . . . .              43,223                 --
                                                         ---------------    ----------------
    Net cash provided by investing activities. . . .              32,518                 --

    Cash flows from financing activities:                                        
       Proceeds from line of credit. . . . . . . . .              16,095                 --
       Proceeds from issuance of and subscription  
         for Common Stock. . . . . . . . . . . . . .                  --             16,050
                                                         ---------------    ----------------
       Net cash provided by financing activities . .              16,095             16,050
                                                         ---------------    ----------------
       Net decrease in cash and cash equivalents . .            (397,528)          (436,169)
                                                         ---------------    ----------------
       Cash and cash equivalents at beginning 
          of period . . . . . . . . . . . . . . . .              413,311          1,177,806
                                                         ---------------    ----------------            
       Cash and cash equivalents at end of 
          period. . . . . . . . . . . . . . . . . .      $        15,783    $       741,637
                                                         ---------------    ----------------
                                                         ---------------    ----------------
       Supplemental cash flow disclosures:               
         Cash paid during the period for:                
           Income taxes. . . . . . . . . . . . . . .     $            --    $           383
           Interest. . . . . . . . . . . . . . . . .     $            --    $            --
       Non cash investing and financing activities:
         On April 11, 1997, the Company acquired
           Diagnostic Monitoring (see note 2). . . .     $       600,000                 --
           Accounts payable and accrued interest
           paid by issuance of common stock. . . . .     $            --             13,402
</TABLE>

                            See accompanying notes.


                                     -5-

<PAGE>


                             CARDIAC SCIENCE, INC.

            CONSOLIDATED CONDENSED NOTES TO FINANCIAL STATEMENTS
                                  (UNAUDITED)
                                 JUNE 30, 1997
                                                   
1.  ORGANIZATION AND OPERATIONS OF THE COMPANY
                 
       Until the acquisition of Innovative Physician Services, Inc. d/b/a 
Diagnostic Monitoring ("Diagnostic Monitoring") on April 11, 1997 (see note 
2) Cardiac Science, Inc. ("Cardiac Science" or the "Company") was a 
development stage company engaged in the development of a line of 
non-surgical, non-invasive automatic external cardioverter defibrillator 
("AECD-Registered Trademark-") devices (the "Products") for the treatment of 
cardiac arrest. Cardiac Science has one wholly owned subsidiary, Diagnostic 
Monitoring, which develops, manufactures and distributes cardiac devices and 
supplies, primarily PC-based Ambulatory ECG ("Holter") systems and Holter 
recorders on a worldwide basis. 

    BASIS OF PRESENTATION AND CONTINUED EXISTENCE

       The consolidated condensed financial statements include the accounts 
of the Company and of its wholly owned subsidiary, Diagnostic Monitoring. All 
inter-company accounts and transactions have been eliminated in 
consolidation. 
                 
       Until April 11, 1997, the Company was in the development stage. 
Subsequent to that date, the Company, through its subsidiary, engaged in the 
manufacture and sale of diagnostic medical equipment. For the quarter 
ending June 30,1997, the Company generated its first revenue of $408,998. 

       From May 20, 1991 (inception) through June 30, 1997, the Company 
incurred losses of approximately $5.4 million. Recovery of the Company's 
assets is dependent upon future events, the outcome of which is 
indeterminable. Additionally, successful completion of the Company's 
development program and its transition, ultimately, to attaining profitable 
operations is dependent upon achieving a level of revenues adequate to 
support the Company's cost structure.  

       While the acquisition of Diagnostic Monitoring provides Cardiac 
Science with a revenue base, additional capital will be needed to fulfill the 
Company's research and product development goals. The Company is currently 
seeking equity capital through a private placement of its common stock (see 
note 3).

       In the opinion of the Company's management, the accompanying 
consolidated condensed unaudited financial statements include all adjustments 
(which consist only of normal recurring adjustments) necessary for a fair 
presentation of its financial position at June 30, 1997 and results of 
operations and cash flows for the periods presented.  Although the Company 
believes that the disclosures in these financial statements are adequate to 
make the information presented not misleading, certain information and 
disclosures normally included in financial statements prepared

                                       -6-

<PAGE>

in accordance with generally accepted accounting principles have been 
condensed or omitted and should be read in conjunction with the Company's 
audited financial statements included in the Company's 1996 Annual Report on 
Form 10-K/A No.1. Results of operations for the three and six months ended 
June 30, 1997 are not necessarily indicative of results for the full year. 
                 
2.  ACQUISITION OF DIAGNOSTIC MONITORING 

       On April 11, 1997, the Company acquired from Raymond W. Cohen, the 
President and Chief Executive Officer of the Company, Diagnostic Monitoring, 
a Nevada corporation engaged in the sale of medical diagnostic equipment, 
particularly Holter technology, through a network of domestic and 
international distributors, for 5,714 shares of the Company's Series A 
Convertible Preferred Stock (the "Preferred Stock") plus a non-interest 
bearing promissory note (the "Note") in the principal amount of $100,000, 
payable in eighteen (18) equal consecutive monthly installments commencing 
upon the earlier of April 9, 1999 or the completion of an equity financing by 
the Company of not less than $2,000,000 of gross proceeds.  Each share of 
Series A Preferred Stock  is entitled to 1,000 votes per share; is 
convertible into 1,000 shares of the Company's common stock, par value $0.001 
per share (the "Common Stock"), at any time, and from time to time, at the 
holder's option, without the payment of any additional consideration, and 
automatically shall convert into 1,000 shares of Common Stock (subject to 
adjustment for any reverse stock split, etc.) upon there being a sufficient 
number of authorized but unissued shares of Common Stock to allow such 
conversion.  

The total purchase price was estimated at $600,000, the fair market value of 
preferred stock issued. The fair market value of the preferred stock issued 
was estimated based on the trading value of the Company's common stock less a 
30% discount to take into consideration the lack of the ability to trade and 
other features of the preferred stock.  The fair market value of the note 
payable represents the discounted value (at 11.25%) of the note over 20 
months.

       The transaction was accounted for under the purchase method and the 
purchase price was allocated to the fair market value of the assets and 
liabilities acquired as follows:

          Cash. . . . . . . . . . . . . . . . . . $  43,223
          Accounts receivable . . . . . . . . . .   129,575
          Inventory . . . . . . . . . . . . . . .   122,006
          Other assets. . . . . . . . . . . . . .    13,232
          Property and equipment. . . . . . . . .    17,341
          Goodwill. . . . . . . . . . . . . . . .   657,138
          Bank line of credit . . . . . . . . . .   (18,903)
          Accounts payable and accrued expenses .  (280,637)
          Note Payable. . . . . . . . . . . . . .   (82,975)
                                                   --------
    
      Preferred Stock Consideration . . . . . . . $ 600,000
                                                   --------
                                                   --------

       The $657,138 goodwill resulting from the purchase price allocation is 
being amortized over 15 years using the straight line method.


                                       -7-

<PAGE>

3.  PRIVATE PLACEMENT

       In January 1997, the Company entered into an advisory and consulting 
agreement (the "Sorbus Agreement") with Sorbus Asset Strategies, S.A., a 
Swiss company ("Sorbus"), a partner of which is a member of the Company's 
Board of Directors. Sorbus agreed, among other things, to locate, on a best 
efforts basis, potential investors to purchase shares of Common Stock. The 
Sorbus Agreement contemplates a financing of $2,000,000 (the "Financing") 
with a minimum of $1,500,000. As a condition precedent to the Financing, the 
Sorbus Agreement provides, among other things, that the Company shall have 
obtained the approval of its Board of Directors and stockholders to amend the 
Charter (i) to effectuate effect a one-for-11.42857143 reverse stock split of 
the issued and outstanding shares of the common stock and (ii) to reduce the 
number of authorized shares of Common Stock from 40,000,000 to 20,000,000 
shares. On April 9, 1997, the Board of Directors of the Company unanimously 
approved the Reverse Stock Split and the Stock Reduction. 

       On May 15, 1997, the Company held a special meeting of its 
stockholders to approve a proposed amendment to the Company's Certificate of 
Incorporation to (a) effect a one-for-11.42857143 reverse stock split of the 
issued and outstanding shares of Common Stock and (b) reduce the number of 
authorized shares of Common Stock from 40,000,000 to 20,000,000 shares. These 
resolutions were approved by a majority vote of the stockholders on May 15, 
1997.
                 
       On that date there were 37,471,177 shares of Common Stock issued and 
outstanding, each of which was given one vote on each matter presented at the 
meeting, and 5,714 shares of Preferred Stock issued and outstanding, each of 
which was given 1,000 votes on each Proposal. The holders of each class of 
stock voted as if they held one class of stock. In addition, the holders of 
Common Stock voted as a separate class on the Proposal to amend the Company's 
Certificate of Incorporation to reduce the number of authorized shares of 
Common Stock from 40,000,000 to 20,000,000 shares. 

       As of August 14, 1997, Sorbus raised $1,200,000 on behalf of the 
Company, and the Company anticipates, but there can be no assurance, that the 
minimum required of $1,500,000 will be attained by August 31, 1997. Such 
$1,200,000 is being held in escrow pending (and release to the Company is 
subject to) the meeting of the $1,500,000 minimum requirement, the 
satisfaction of certain conditions precedent to the Financing, and the 
consent of the investors to an extension of the offering termination date.

                                     -8-

<PAGE>

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATION

GENERAL

     The Company is engaged in the development of non-invasive 
automatic defibrillator devices to treat persons suffering from or at high 
risk of, life threatening arrhythmias. The Company commenced operations in 
May, 1991. Until its acquisition of  Diagnostic Monitoring in April, 1997, 
its operations have consisted primarily of research and development, 
organizational activities, FDA testing, and financing related activities.

     Cardiac Science's AECD devices are designed to treat persons suffering 
from, or at high risk of, life-threatening arrhythmias (abnormal rhythms of 
the heart), such as ventricular tachycardia (dangerously rapid heart rate) 
and ventricular fibrillation (quivering of the heart), that lead to cardiac 
arrest.  The Products will continuously monitor a patient's cardiac activity, 
detect abnormalities within seconds, and automatically, without human 
interaction, via disposable defibrillator pads attached to the patient's 
chest, transmit electrical shock (defibrillation) to convert the patient's 
heart to a normal rhythm. Reducing time to defibrillation is widely 
recognized as the most effective way to increase survival from cardiac arrest.

     There are four AECD devices under development by the Company: (i) the 
Powerheart-Registered Trademark- bedside model for in-hospital use; (ii) a 
Powerheart portable model, which can be transported within the hospital; 
(iii) a light-weight, ambulatory vest model which can be worn continuously by 
at-risk patients; and (iv) a public access defibrillator which can be used by 
non-technical individuals outside of the hospital environment. The Company's 
primary objective is to pioneer the commercialization of AECD devices that 
obviate the need for human intervention to successfully treat arrhythmias and 
cardiac arrest.  The Company believes that the Products will be ideally 
suited for hospitalized and non-hospitalized patients temporarily at risk 
(periods ranging from days to months) of suffering cardiac arrest.  Through 
its investment in clinical research, the Company believes it has established 
competitive functional and technological advantages in the development of 
AECD devices.  The Company has been issued one patent, and has one additional 
patent under exclusive license relating to its AECD technology.

     On February 26, 1997, the Company filed for 510(k) clearance from the 
United States Food and Drug Administration ("FDA") to allow it to begin 
marketing its Powerheart Automatic External Cardioverter Defibrillator in the 
United States. The filing is currently under review by the FDA.

     Diagnostic Monitoring develops, manufactures and distributes cardiac 
devices and supplies, primarily PC-based Ambulatory ECG ("Holter") systems 
and Holter recorders on a worldwide basis. Sales are made through qualified 
domestic and international distributors, pursuant to strategic distribution 
agreements, and managed by DM employees on a country-by-country basis. 
Distribution is currently in place with market coverage in 47 countries 
worldwide. In the United States, products are sold by distributors, as well 
as directly by the company to hospitals, physicians, and medical centers at 
prices that reflect market conditions. The 


                                   -9-
<PAGE>

company's products are primarily made in the United States. Certain products 
and components are subcontracted and manufactured to the company's 
specifications.
                 
     RESULTS OF OPERATIONS

     For the three and six months ended June 30, 1997, the Company had 
revenues of $408,998, and a net loss of $271,078 and $439,553, respectively, 
compared to no revenues and a net loss of $200,129 for the three month period 
ended June 30, 1996 and a net loss of $418,066 for the six month period 
ending June 30, 1996. 

     In the quarter ending June 30,1997, the Company generated revenue of 
$408,998 attributed to the sale of products by its subsidiary, Diagnostic 
Monitoring. This is the first time in the Company's history that it has 
generated revenue. Gross profit on sales was 49% for the period. Sales of 
Diagnostic Monitoring's Windows 95-Registered Trademark- compatible Holter 
software and systems, Holter Recorder products, and related Holter supplies 
represented 81% of the company's total revenue. Sales of Spirometers 
accounted for 6.7% and PC-based Electrocardiographs accounted for 7.6%. 
Export sales of the products to international countries represented 72% of 
the company's revenue, with the balance of sales coming from within the 
United States.
         
     The increased loss for the period ended June 30, 1997 is primarily 
attributed to the Company's increase of personnel expenses and period costs 
relating to the acquisition of Diagnostic Monitoring.

     Research and development expenses decreased to $51,392, and $129,928, 
respectively, for the three and six months ended June 30, 1997, from $98,446 
and $222,068, respectively, for the three and six months ended June 30, 1996. 
Decreased research and development expenses is related to decreased overall 
expenses for research and a focus on engineering and manufacturing for its 
initial AECD product, the Powerheart.

     General and administrative expenses increased to $299,283 and $392,759, 
respectively, for the three and six months ended June 30, 1997, from 
$111,736, and $219,464 for the three and six months ended June 30, 1996, due 
to higher payroll expenses relating, in part, to the addition of its chief 
executive officer during the quarter, moving expenses and period costs 
relating to the acquisition of Diagnostic Monitoring.

     Sales and marketing expenses for the period ending June 30, 1997 were 
$115,193 compared to no expenses in the three and six months ending June 30, 
1996 reflecting the marketing efforts for Diagnostic Monitoring's products.

     Interest income net, decreased to ($4,656) for the three and six months 
ended June 30, 1997, from $10,236 in the same period in the prior year, due 
to the decrease in investable cash as a result of expenditures for operations 
and the interest expense inputed on the note payable resulting from the 
Diagnostic Monitoring acquisition.


                                     -10-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
         
     At June 30, 1997, the Company had cash and cash equivalents and negative 
working capital of $15,783, and $269,005 as compared to cash and cash 
equivalents and negative working capital of $413,311 and $240,533 at December 
31, 1996, respectively. Cash of $446,141 was used for operations, and cash of 
$32,518 and $16,095 was provided by investing and financing activities 
respectively. 
         
     In April 1997, the Company acquired Diagnostic Monitoring, a corporation 
involved in the worldwide distribution of cardiac devices and supplies. The 
acquisition of Diagnostic Monitoring provides Cardiac Science with a revenue 
base, however, additional capital will be required to finance the Company's 
research and product development plans.

     Cardiac Science is currently seeking equity capital through a private 
placement of its Common Stock (See Note 3 Private Placement herein). On July 
1, 1997, the Company received a cash contribution of $100,000 from Sorbus 
Asset Strategies, S.A. ("Sorbus") as an advance against the proceeds of the 
private placement. As of August 14, 1997, Sorbus raised $1,200,000 on behalf 
of the Company, and the Company anticipates, but there can be no assurance, 
that the minimum required of $1,500,000 will be attained by August 31, 1997. 
Such $1,200,000 is being held in escrow pending (and release to the Company 
is subject to) the meeting of the $1,500,000 minimum requirement, the 
satisfaction of certain conditions precedent to the Financing, and the 
consent of the investors to an extension of the offering termination date. In 
the event the Company is unable to finalize the financing, the Company will 
be unable to complete development of its products, will have to curtail 
operations and may be unable to continue as a going concern.

                                     -11-


<PAGE>

                           CARDIAC SCIENCE, INC.
                                             
                        PART II.  OTHER INFORMATION


Item 1.  LEGAL PROCEEDINGS

         None.

Item 2.  CHANGES IN SECURITIES


         On April 11, 1997, the Company acquired from Raymond Cohen, the 
President and Chief Executive Officer of the Company, Innovative Physicians 
Services, Inc. d/b/a/ Diagnostic Monitoring, a Nevada corporation engaged in 
the sale of medical diagnostic equipment, particularly Holter technology, 
through a network of domestic and international distributors, for 5,714.285 
shares of the Company's Series A Convertible Preferred Stock (the "Preferred 
Stock") plus a non-interest bearing promissory note (the "Note") in the 
principal amount of $100,000, payable in eighteen (18) equal consecutive 
monthly installments commencing upon the earlier of April 9, 1999 or the 
completion of an equity financing by the Company of not less than $2,000,000 
of gross proceeds.  Each share of Series A Preferred Stock  is entitled to 
1,000 votes per share; is convertible into 1,000 shares of the Company's 
common stock, par value $0.001 per share (the "Common Stock"), at any time, 
and from time to time, at the holder's option, without the payment of any 
additional consideration, and automatically shall convert into 1,000 shares 
of Common Stock (subject to adjustment for any reverse stock split, etc.) 
upon there being a sufficient number of authorized but unissued shares of 
Common Stock to allow such conversion.  A more complete description of the 
transaction was filed on a Form 8-K, dated April 9, 1997 (as amended June 13, 
1997).

Item 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         On May 15, 1997, the Company held a special meeting of its 
stockholders to approve a proposed amendment to the Company's Certificate of 
Incorporation to (a) effect a one-for-11.42857143 reverse stock split of the 
issued and outstanding shares of the Common Stock of the Company, and (b) 
reduce the number of authorized shares of Common Stock from 40,000,000 to 
20,000,000 shares. These resolutions were approved by a majority vote of the 
stockholders on May 15, 1997.

                                  -12-
<PAGE>

        On that date there were 37,471,177 shares of the Common Stock issued 
and outstanding, each of which was given one vote on each matter presented at 
the meeting, and 5,714 shares of the Preferred Stock, issued and outstanding, 
each of which was given 1,000 votes on each Proposal. The holders of each 
class of stock voted as if they held one class of stock. In addition, the 
holders of Common Stock voted as a separate class on the Proposal to amend 
the Company's Certificate of Incorporation to reduce the number of authorized 
shares of Common Stock from 40,000,000 to 20,000,000 shares. 

        All 5,714 shares of the Preferred Stock voted in favor of each 
proposal. With respect to the proposal to effect the reverse stock split, the 
shares of Common Stock were voted as follows: 28,836,384 for, and 2,612,370 
against and 2,800 withheld. With respect to the proposal to reduced the 
authorized shares, the shares of Common Stock were voted as follows: 
23,411,119 for, and 1,989,917 against, and 336,233 votes withheld.

Item 5.  OTHER INFORMATION

         None.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a)  Exhibit 11 - Computation of Per Share Information.

         b)  The Company filed a report on Form 8-K, dated April 9, 1997, 
             (as amended on June 13, 1997) with the Commission relating to 
             the acquisition of Diagnostic Monitoring. 








                                  -13-
<PAGE>


                      SIGNATURES
                                                   
                                                   
         Pursuant to the requirements of the Securities Exchange Act of 1934, 
the registrant has duly caused this report to be signed on its behalf by the 
undersigned hereunto duly authorized.
         
         
         
         
                          CARDIAC SCIENCE, INC.
         
         
         
Date: August 14, 1997    By:   Raymond W. Cohen          
                         ---------------------
                          Raymond W. Cohen 
                          President, 
                          Chief Executive Officer and Chief Financial Officer
















                                  -14-