<PAGE>
 
                         UNITED  STATESUNITED  STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  FORM 10-KSB/A

(Mark One)
[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES   EXCHANGE ACT OF
     1934

              For the fiscal year ended:  November 30, 1998

                                      OR

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

                       Commission file number:  0-11868


                   CARDIODYNAMICS  INTERNATIONAL  CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE> 
<S>                                                        <C> 
         California                                                   95-3533362
(State or other jurisdiction of                            (I.R.S. Employer Identification No.)
incorporation or organization)

6175 Nancy Ridge Drive, Suite 300, San Diego, California                  92121
     (Address of principal executive offices)                           (Zip Code)
</TABLE> 

       Registrant's telephone number, including area code: (619) 535-0202


          Securities registered pursuant to Section 12(b) of the Act:
                                      None

          Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value
                                (Title of Class)


Indicate by check mark whether the registrant (1) 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 
                                       ---    ---       

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

The issuer's revenues for the year ending November 30, 1998, were $2,098,696.

The aggregate market value of the Common Stock held by nonaffiliates of the
registrant at February 20, 1999, was approximately $ 21,855,716 based on the
closing price for the Common Stock in the Nasdaq SmallCap Market.  At February
20, 1999,  32,741,126  shares of registrant's Common Stock were outstanding.

Transitional Small Business Disclosure Format (check one): Yes      No  X 
                                                               ---     --- 
<PAGE>
 
                               EXPLANATORY NOTE

The purpose of this Amendment Number 1 is to amend and restate the Registrant's 
Balance Sheet included in its Annual Report on Form 10-KSB for the fiscal year 
ended November 30, 1998 in order to correct a typographical error reflected on 
the Balance Sheet.
<PAGE>
 
                    CARDIODYNAMICS INTERNATIONAL CORPORATION
                                 Balance Sheets

                           November 30, 1998 and 1997
<TABLE>
<CAPTION>
                     Assets (notes 4, 5, and 6)
                                                                                     1998                    1997
                                                                                  ----------              ---------- 
<S>                                                                             <C>                     <C>
Current assets:
 Cash and cash equivalents                                                      $ 2,633,086             $ 2,655,349   
 Accounts receivable, net of allowance for doubtful accounts                    
 and returns of $32,728 in 1998 and $161,824 in 1997 (note 9)                       632,190                  51,568  
 Inventory, net (notes 2 and 9 )                                                    995,364                 906,111
 Other current assets                                                                81,229                 137,735
                                                                                -----------             -----------  
          Total current assets                                                  
                                                                                  4,341,869               3,750,763
                                                                                -----------             -----------   
Property and equipment, net (note 3)                                                266,917                 244,654
Deposits                                                                             40,099                  27,788
                                                                                -----------             -----------   
          Total assets                                                          $ 4,648,885             $ 4,023,205
                                                                                ===========             ===========
                                                                                                        
                Liabilities and Shareholders' Equity                                                    
Current liabilities:                                                                                    
 Accounts payable                                                               $   577,836             $   295,524
 Accrued expenses                                                                    89,663                  25,287
 Accrued salaries, wages and benefits                                               276,179                  83,632
 Current maturities of long-term debt (note 5)                                       37,816                  11,300
 Note payable to bank (note 4)                                                    2,000,000                      --
 Provision for inventory returns (note 9)                                            23,040                 614,860
                                                                                -----------             -----------   
          Total current liabilities                                               3,004,534               1,030,603

Note payable related parties (notes 4 and 5)                                      1,000,000                      --
Long-term debt, less current maturities (note 5)                                    112,215                  26,523
                                                                                -----------             -----------    
          Total liabilities                                                       4,116,749               1,057,126

Convertible Preferred stock, no par value; 18,000,000 shares                                            
 authorized;  issued and outstanding 2,240 Series A shares at                                           
 November 30, 1998 and no shares authorized or outstanding at                                           
 November 30, 1997 (Note 7)                                                       2,152,294                      --
                                                                                                        
Shareholders' equity: (notes  5, 6, 7 and 8)                                                            
Common stock, no par value; 50,000,000 shares authorized;  issued                                       
 and outstanding 32,676,029 shares at November 30, 1998 and                                             
 32,085,743 shares at November 30, 1997                                          15,598,274              14,826,762
Accumulated deficit                                                             (17,218,432)            (11,860,683)
                                                                                -----------             -----------  
          Total shareholders' equity (deficit)                                   (1,620,158)              2,966,079
                                                                                -----------             -----------  
Commitments and contingencies (notes 9 and 11)                                                      

          Total liabilities and shareholders' equity                            $ 4,648,885             $ 4,023,205
                                                                                ============            ============
</TABLE>

See accompanying notes to financial statements.
<PAGE>
 
                                   SIGNATURES


In accordance with the requirements of Section 13 or 15(d) of the Exchange Act,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


Dated: February  28, 1999     CARDIODYNAMICS  INTERNATIONAL  CORPORATION

 

                              By: /s/ Michael K. Perry
                                  --------------------         
                              Michael K. Perry
                              Director and Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
 
Signature                                     Title                    Date
-------------------------------   ------------------------------   -------------
<S>                               <C>                              <C>
 
/s/ Michael K. Perry              Director and Chief               February 28, 1999
-------------------------------   Executive Officer
Michael K. Perry                  
 
/s/ Stephen P. Loomis             Vice President, Finance,         February 28, 1999
-------------------------------   Chief Financial Officer and  
Stephen P. Loomis                 Corporate Secretary (Principal
                                  Accounting Officer)           
                                  
/s/ Stephenson M. Dechant         Director                         February 28, 1999
-------------------------------
Stephenson M. Dechant
 
/s/ Nicholas V. Diaco, M.D.       Director                         February 28, 1999
-------------------------------
Nicholas V. Diaco, M.D.
 
/s/ Louis P. Ferrero              Director                         February 28, 1999
-------------------------------
Louis P. Ferrero
 
/s/ Richard E. Otto               Director                         February 28, 1999
-------------------------------
Richard E. Otto
 
/s/ Cam L. Garner                 Director                         February 28, 1999
-------------------------------
Cam L. Garner
 
/s/ James C. Gilstrap             Director                         February 28, 1999
-------------------------------
James C. Gilstrap
 
/s/ Richard O. Martin, Ph.D.      Director                         February 28, 1999
-------------------------------
Richard O. Martin, Ph.D.
 
/s/ Michael D. Padilla            Director                         February 28, 1999
-------------------------------
Michael D. Padilla
 
/s/ Allen E. Paulson              Director                         February 28, 1999
-------------------------------
Allen E. Paulson

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