<PAGE>   1

                                 UNITED 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, 1997

                                       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)

               CALIFORNIA                              95-3533362
   (State or other jurisdiction of                  (I.R.S. Employer
    incorporation or organization)                 Identification No.)

    6175 NANCY RIDGE DRIVE, SUITE 300                    92121
          SAN DIEGO, CALIFORNIA                        (Zip Code)
(Address of principal executive offices)

       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, 1997, were $477,588.

The aggregate market value of the common stock held by nonaffiliates of the
registrant at November 20, 1998, was approximately $88,331,191, based on the
closing price for the Common Stock in the Nasdaq SmallCap Market. At November
20, 1998, 32,120,434 shares of registrant's Common Stock were outstanding.

Indicate by check mark whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [X} No [ ]

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X].

<PAGE>   2


PART I, ITEM 7 Has been replaced in its entirety to eliminate the reference to 
          fiscal 1995 in the Independent Auditors' Report of Peterson & Co.


ITEM 7. FINANCIAL STATEMENTS


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders
CardioDynamics International Corporation

We have audited the accompanying balance sheet of CardioDynamics International
Corporation (the "Company") as of November 30, 1996, and the related statements
of operations, changes in shareholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CardioDynamics International
Corporation, as of November 30, 1996, and the results of its operations, changes
in shareholders' equity and its cash flows for the year then ended in conformity
with generally accepted accounting principles.


                                       /s/ PETERSON & CO.
                                       ------------------
                                          PETERSON & CO.

San Diego, CA
February 25, 1997


                                       2
<PAGE>   3

                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Shareholders
CardioDynamics International Corporation:

We have audited the accompanying balance sheet of CardioDynamics International
Corporation as of November 30, 1997, and the related statements of operations,
shareholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 1997 financial statements referred to above present fairly,
in all material respects, the financial position of CardioDynamics International
Corporation as of November 30, 1997, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.


                                       /s/ KPMG PEAT MARWICK LLP
                                       -------------------------

San Diego, California
March 11, 1998


                                       3
<PAGE>   4

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                                 BALANCE SHEETS

                           November 30, 1997 and 1996

<TABLE>
<CAPTION>
                 ASSETS (NOTES 4 AND 5)                               1997               1996
                                                                  ------------       -----------
<S>                                                               <C>                <C>
Current assets:
  Cash and cash equivalents                                         $2,655,349          $706,190
  Investments in marketable securities                                      --           262,619
  Accounts receivable, less allowance for doubtful accounts
  and returns of $161,824 in 1997 and $7,461 in 1996
  (notes 7 and 10)                                                      51,568            24,925
  Inventory, net (notes 2, 7 and 10)                                   906,111           293,629
  Other current assets                                                 137,735            68,336
                                                                  ------------       -----------
              Total current assets                                   3,750,763         1,355,699
                                                                  ------------       -----------
Property and equipment, net (note 3)                                   244,654           109,632
Deposits                                                                27,788             4,250
                                                                  ------------       -----------
              Total assets                                          $4,023,205        $1,469,581
                                                                  ============       ===========

            LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                    $295,524          $125,385
  Accrued expenses                                                      22,292            67,264
  Accrued salaries, wages and benefits                                  83,632            28,882
  Current maturities of long-term debt (note 4)                         11,300            12,100
  Customer deposits                                                      2,995            23,012
  Marketable securities held for redeemed preferred shares                  --            22,676
  Reserve for inventory returns (note 7)                               614,860                --
                                                                  ------------       -----------
              Total current liabilities                             1,030,603           279,319
                                                                  ------------       -----------
Long-term debt, less current maturities (note 4)                        26,523            37,822
                                                                  ------------       -----------

Shareholders' equity: (notes 4, 5 and 6)
  Preferred stock, no par value; no shares authorized in
    1997 and 500,000 shares authorized in 1996; no shares
    issued and outstanding in 1997 and 183,115 shares issued
    and outstanding at November 30, 1996                                    --           457,791
  Common stock, no par value; 50,000,000 shares authorized;
    issued and outstanding 32,085,743 shares at November 30,
    1997 and 29,581,696 shares at November 30, 1996                 14,826,762         8,366,514
  Unrealized loss on marketable securities                                  --           (89,270)
  Accumulated deficit                                              (11,860,683)       (7,582,595)
                                                                  ------------       -----------
              Total shareholders' equity                            2,966,079         1,152,440
                                                                  ------------       -----------
Commitments and contingencies (notes 7, 9 and 10)
              Total liabilities and shareholders' equity           $4,023,205        $1,469,581
                                                                  ============       ===========
</TABLE>

See accompanying notes to financial statements.


                                       4
<PAGE>   5

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                            STATEMENTS OF OPERATIONS

                 For the years ended November 30, 1997 and 1996


<TABLE>
<CAPTION>
                                                         1997               1996
                                                     ------------       ------------
<S>                                                  <C>                <C>
Net sales                                               $477,588           $146,655
Cost of sales                                            582,344            240,987
                                                     -----------        -----------
              Gross margin                             (104,756)           (94,332)

Operating expenses:
  Research and development                             1,334,900            680,549
  Selling, general, and administrative expenses        2,832,908          1,690,710
                                                     -----------        -----------
              Total operating expenses                4,167,808          2,371,259
                                                     -----------        -----------

Loss from operations                                  (4,272,564)        (2,465,591)

Other income (expense):
  Interest, net                                          173,329             (7,514)
  Loss on sale of securities                            (164,853)                --
  Other, net                                             (13,200)           (36,762)
                                                     -----------        -----------
                                                          (4,724)           (44,276)
                                                     -----------        -----------

Loss before income taxes                              (4,277,288)        (2,509,867)
Income taxes                                                (800)              (800)
                                                     -----------        -----------
              Net loss                              $(4,278,088)       $(2,510,667)
                                                     ===========        ===========

Net loss per common share                                  $(.14)             $(.11)
                                                     ===========        ===========

Weighted-average number of common and common
  equivalent shares outstanding                       31,385,507         22,926,074
                                                     ===========        ===========
</TABLE>

See accompanying notes to financial statements.


                                       5
<PAGE>   6

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                       STATEMENTS OF SHAREHOLDERS' EQUITY

                 For the years ended November 30, 1997 and 1996

<TABLE>
<CAPTION>
                                                            PREFERRED STOCK                    COMMON STOCK
                                                      --------------------------       ---------------------------
                                                       SHARES           AMOUNT           SHARES           AMOUNT
                                                      --------       -----------       ----------      -----------
<S>                                                    <C>           <C>               <C>             <C>
Balance at November 30, 1995                           246,793          $616,986       19,251,320       $4,919,858

Issuance of common stock - private placement                --                --          236,220          625,000
Issuance of common stock - professional services            --                --           45,000           11,250
Issuance of common stock - related parties                  --                --        9,948,000        2,487,000
Compensatory stock options granted                          --                --               --           50,878
Preferred shares redeemed                              (63,678)         (159,195)          63,678          136,519
Unrealized gain on marketable securities                    --                --               --               -- 
Exercise of Class A warrants                                --                --              113              226
Exercise of Class B warrants                                --                --           25,350           93,730
Exercise of Class C warrants                                --                --           12,015           42,053
Net loss                                                    --                --               --               -- 
                                                      --------       -----------       ----------      -----------
Balance at November 30, 1996                           183,115           457,791       29,581,696        8,366,514

Issuance of common stock, net of issuance
  costs and rescinded stock purchases                       --                --        2,290,882        5,946,015
Issuance of common stock - upon exercise of
  stock options                                             --                --           30,000           37,600
Compensatory stock options granted                          --                --               --           18,642
Preferred shares converted                            (183,115)         (457,791)         183,115          457,791
Unrealized loss on marketable securities                    --                --               --               -- 
Exercise of Class C warrants                                --                --               50              200
Net loss                                                    --                --               --               -- 
                                                      --------       -----------       ----------      -----------
Balance at November 30, 1997                                --          $     --       32,085,743      $14,826,762
                                                      ========       ===========       ==========      ===========
</TABLE>


<TABLE>
<CAPTION>
                                                     UNREALIZED
                                                      LOSS ON
                                                     MARKETABLE      ACCUMULATED
                                                     SECURITIES        DEFICIT             TOTAL
                                                     ----------      ------------       -----------
<S>                                                   <C>            <C>                <C>
Balance at November 30, 1995                          $(92,738)       $(5,071,928)         $372,178

Issuance of common stock - private placement                --                 --           625,000
Issuance of common stock - professional services            --                 --            11,250
Issuance of common stock - related parties                  --                 --         2,487,000
Compensatory stock options granted                          --                 --            50,878
Preferred shares redeemed                                   --                 --           (22,676)
Unrealized gain on marketable securities                 3,468                 --             3,468
Exercise of Class A warrants                                --                 --               226
Exercise of Class B warrants                                --                 --            93,730
Exercise of Class C warrants                                --                 --            42,053
Net loss                                                    --         (2,510,667)       (2,510,667)
                                                      --------       ------------       -----------
Balance at November 30, 1996                           (89,270)        (7,582,595)        1,152,440

Issuance of common stock, net of issuance
  costs and rescinded stock purchases                       --                 --         5,946,015
Issuance of common stock - upon exercise of
  stock options                                             --                 --            37,600
Compensatory stock options granted                          --                 --            18,642
Preferred shares converted                                  --                 --                --
Unrealized loss on marketable securities                89,270                 --            89,270
Exercise of Class C warrants                                --                 --               200
Net loss                                                    --         (4,278,088)       (4,278,088)
                                                      --------       ------------       -----------
Balance at November 30, 1997                                --       $(11,860,683)       $2,966,079
                                                      ========       ============       ===========
</TABLE>

See accompanying notes to financial statements.


                                       6
<PAGE>   7

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                            STATEMENTS OF CASH FLOWS

                 For the years ended November 30, 1997 and 1996

<TABLE>
<CAPTION>
                                                                    1997              1996
                                                                -----------       -----------
<S>                                                             <C>               <C>
Cash flows from operating activities:
  Net loss                                                      $(4,278,088)      $(2,510,667)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
    Depreciation and amortization                                    82,678            92,029
    Loss on disposal of fixed assets                                     --            37,348
    Loss on disposition of marketable securities                    164,853                --
    Provision for refurbishment of demonstration inventory
      units                                                          69,337            73,766
    Provision for doubtful receivables                              154,363             7,575
    Compensatory stock options granted                               18,642            50,878
    Changes in operating assets and liabilities:
      Accounts receivable                                          (181,006)           43,361
      Inventory                                                    (681,819)         (133,303)
      Other current assets                                          (69,399)          (67,694)
      Deposits                                                      (23,538)            2,365
      Accounts payable                                              170,139           (60,642)
      Accrued expenses                                              (44,972)          (17,268)
      Accrued salaries, wages and related benefits                   54,750           (18,975)
      Customer deposits                                             (20,017)           (3,063)
      Reserve for inventory returns                                 614,860                --
                                                                -----------       -----------
              Net cash used in operating activities              (3,969,217)       (2,504,290)
                                                                -----------       -----------
Cash flows from investing activities:
  Purchases of property and equipment                              (217,700)          (43,415)
  Proceeds from sale of marketable securities                       164,360                --
                                                                -----------       -----------
              Net cash used in investing activities                 (53,340)          (43,415)
                                                                -----------       -----------
Cash flows from financing activities:
  Repayment of long-term debt                                       (12,099)          (12,805)
  Proceeds from debt issuance to related party                           --         1,800,000
  Issuance of common stock                                        5,983,815         1,459,259
                                                                -----------       -----------
              Net cash provided by financing activities           5,971,716         3,246,454
                                                                -----------       -----------
Net increase in cash and cash equivalents                         1,949,159           698,749
Cash and cash equivalents at beginning of year                      706,190             7,441
                                                                -----------       -----------
Cash and cash equivalents at end of year                        $ 2,655,349       $   706,190
                                                                ===========       ===========
Supplemental disclosures of cash flow information:
  Cash paid for interest                                        $     5,943       $     9,490
  Cash paid for income taxes                                    $       800       $       800

Supplemental disclosures of noncash investing and
    financing activities:
  Common stock issued upon redemption or conversion of          $   457,791       $   136,519
    preferred stock
  Decrease in unrealized loss on marketable securities          $    89,270       $     3,468
  Common stock issued upon conversion of long-term debt         $        --       $ 1,800,000
  Marketable securities held for redeemed preferred shares      $        --       $    22,676
</TABLE>

See accompanying notes to financial statements.


                                       7
<PAGE>   8

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

                           November 30, 1997 and 1996


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    DESCRIPTION OF BUSINESS

    CardioDynamics International Corporation (the "Company") develops,
    manufactures and markets noninvasive digital heart monitoring devices which
    provide continuous data on a wide range of hemodynamic parameters
    (measurements of the heart's ability to deliver oxygen-rich blood throughout
    the body). The Company's primary product, the BioZ(TM) System, uses Thoracic
    Electrical Bioimpedance (TEB) technology to obtain data which is typically
    available only through a time consuming, costly, potentially dangerous
    invasive procedure called Pulmonary Artery Catheterization (PAC). Since TEB
    monitoring is noninvasive, it eliminates procedure risk and potentially
    decreases the length of a hospital stay, thereby reducing patient cost. The
    Company was incorporated as a California corporation in June 1980 as Bomed
    Medical Manufacturing Ltd. and changed its name to CardioDynamics
    International Corporation in October 1993.

    LIQUIDITY

    The Company has incurred significant operating losses and negative cash
    flows from operations. Continuation of the Company's operations is dependent
    upon the success of the Company's current and follow-on products. The market
    for the Company's products is in a relatively early stage of development,
    and there can be no assurance that the market will ultimately develop or
    that the Company will be successful in marketing its products.

    Until such time, if ever, the Company is able to successfully market its
    products and attain positive cash flow and profitability, the Company will
    be dependent on outside financing sources to meet its liquidity needs. There
    can be no assurance that such additional future funding will be available on
    terms attractive to the Company, or at all.

    CASH EQUIVALENTS

    Cash equivalents consist of short-term money market funds and commercial
    paper and are stated at cost, which approximates fair market value. The
    Company considers all highly liquid debt instruments with original
    maturities of three months or less to be cash equivalents.

    The Company maintains its cash in bank deposit accounts which, at times, may
    exceed the federally insured limits. The Company has not experienced any
    losses in such accounts and management believes it places its cash on
    deposit with financial institutions which are financially stable. At
    November 30, 1997, the Company has cash deposits in excess of federally
    insured limits totaling $275,062.


                                       8
<PAGE>   9

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


    INVESTMENTS IN MARKETABLE SECURITIES

    In accordance with Statement of Financial Accounting Standards ("SFAS") No.
    115, Accounting for Certain Investments in Debt and Equity Securities,
    management has classified the Company's investments as available-for-sale
    securities in the accompanying financial statements. Available-for-sale
    securities are carried at fair-value, with the unrealized gains and losses,
    net of tax (if applicable), reported as a separate component of
    shareholders' equity until realized. Realized gains and losses and declines
    in value deemed to be other-than-temporary are charged to operations, and a
    new cost basis for the security is established. The cost of securities sold
    is based on the specific identification method. Interest on securities
    available-for-sale is included in other expense, net. As of November 30,
    1996, the Company's investments consisted of equity securities with an
    amortized cost of $351,889 and estimated fair value of $262,619. During
    fiscal 1997, these equity securities were sold for a loss of $164,853. The
    Company had no investments in marketable securities as of November 30, 1997.

    INVENTORY

    Inventory is stated at the lower of cost or market, cost being determined on
    a first-in, first-out (FIFO) basis.

    PROPERTY AND EQUIPMENT

    Property and equipment are stated at cost. Leasehold improvements are
    amortized using the straight-line method over the shorter of the remaining
    lease term or the estimated useful life. Depreciation is computed using the
    straight-line method over the estimated useful lives of the assets,
    generally three to seven years.

    REVENUE RECOGNITION

    Revenue is recognized when a product is shipped or a service is provided to
    the customer with appropriate provisions for returns and allowances. During
    the first three quarters of 1997, the Company recognized revenue upon
    shipment to distributors. As a result of the Company's decision to sell its
    products primarily through a direct sales force (Note 7), a 100% reserve for
    returns was established for sales to distributors which had not, as of
    November 30, 1997, been resold to end users.

    WARRANTY COST

    The Company provides, by a current charge to operations, an amount it
    estimates will be needed to cover future warranty obligations for products
    sold during the year. The accrued liability for warranty costs is included
    in accrued expenses in the accompanying balance sheets.

    RESEARCH AND DEVELOPMENT

    All research and development costs are expensed in the period incurred.

    ADVERTISING

    All advertising costs are expensed in the period incurred. Advertising
    costs, including trade show expenses, amounted to $329,354 and $137,895 in
    1997 and 1996, respectively.


                                       9
<PAGE>   10

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


    PATENTS

    Costs to obtain, maintain and defend patents are expensed in the period
    incurred.

    INCOME TAXES

    Income taxes are accounted for under the asset and liability method.
    Deferred tax assets and liabilities are recognized for the future tax
    consequences attributable to differences between the financial statement
    carrying amounts of existing assets and liabilities and their respective tax
    bases and operating loss and tax credit carryforwards. Deferred tax assets
    and liabilities are measured using enacted tax rates expected to apply to
    taxable income in the years in which those temporary differences are
    expected to be recovered or settled. The effect on deferred tax assets and
    liabilities of a change in tax rates is recognized in income in the period
    that includes the enactment date.

    NET LOSS PER SHARE

    Net loss per common share is based on the weighted-average number of common
    shares outstanding during each period adjusted for the assumed conversion of
    dilutive stock options and warrants using the treasury stock method. In 1997
    and 1996, the effects of warrants and stock options are not considered in
    the calculation as they are anti-dilutive.

    SIGNIFICANT CUSTOMERS

    During fiscal years 1997 and 1996, the Company's sales to customers and
    distributors outside of the United Stated accounted for 30% and 77% of net
    sales, respectively. In 1997, one distributor accounted for 29% and one end
    user accounted for 12% of total net sales. In 1996, the top four
    distributors accounted for 64% of net sales of the Company.

    FAIR VALUE OF FINANCIAL INSTRUMENTS

    The carrying amount of cash, cash equivalents, investments in marketable
    securities, accounts receivable, accounts payable and accrued expenses are
    considered to be representative of their fair values because of the
    short-term nature of these financial instruments. The carrying amount of
    long-term debt is a reasonable estimate of fair value as the loans bear
    interest based on market rates available for debt with similar terms.

    STOCK-OPTION PLAN

    The Company accounts for its stock option plan in accordance with the
    provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting
    for Stock Issued to Employees, and related interpretations. As such,
    compensation expense is recorded on the date of grant only if the current
    market price of the underlying stock exceeded the exercise price. On
    December 1, 1996, the Company adopted SFAS No. 123, Accounting for
    Stock-Based Compensation, which permits entities to recognize as expense
    over the vesting period the fair value of all stock-based awards on the date
    of grant. Alternatively, SFAS No. 123 also allows entities to continue to
    apply the provisions of APB Opinion No. 25 and provide pro forma net income
    and pro forma earnings per share disclosures for employee stock option
    grants made in 1995 and future years as if the fair-value-based method
    defined in SFAS No. 123 had been applied. The Company has elected to
    continue to apply the provisions of APB Opinion No. 25 and provide the pro
    forma disclosure provisions of SFAS No. 123.


                                       10
<PAGE>   11

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


    IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

    The Company adopted the provisions of SFAS No. 121, Accounting for the
    Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,
    on January 1, 1996. This Statement requires that long-lived assets and
    certain identifiable intangibles be reviewed for impairment whenever events
    or changes in circumstances indicate that the carrying amount of an asset
    may not be recoverable. Recoverability of assets to be held and used is
    measured by a comparison of the carrying amount of an asset to future net
    cash flows expected to be generated by the asset. If such assets are
    considered to be impaired, the impairment to be recognized is measured by
    the amount by which the carrying amounts of the assets exceed the fair
    values of the assets. Assets to be disposed of are reported at the lower of
    the carrying amount or fair value less costs to sell. Adoption of this
    Statement did not have a material impact on the Company's financial position
    or results of operations.

    USE OF ESTIMATES

    Management of the Company has made a number of estimates and assumptions
    relating to the reporting of assets and liabilities, revenue and expenses,
    and the disclosure of contingent assets and liabilities to prepare these
    financial statements in conformity with generally accepted accounting
    principles. Actual results could differ from those estimates.

    RECLASSIFICATIONS

    Certain reclassifications have been made to certain prior year balances in
    order to conform with current year presentation.

(2) INVENTORY

    Inventory at November 30 consists of the following:

<TABLE>
<CAPTION>
                                                        1997          1996
                                                      --------      --------
   <S>                                                <C>           <C>
   Electronic components and subassemblies            $490,707      $134,371
   Finished goods                                           --       115,905
   Demonstration units                                  48,037        43,353
   Distributor inventory to be returned (note 7)       367,367            --
                                                      --------      --------
                                                      $906,111      $293,629
                                                      ========      ========
</TABLE>

    The Company purchases most electronic components and subassemblies from
    three suppliers. The Company believes that, should these suppliers not be
    able to provide inventory to the Company, it would be able to obtain
    alternate suppliers within a reasonable amount of time to meet production
    demands.


                                       11
<PAGE>   12

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


(3) PROPERTY AND EQUIPMENT

    Property and equipment at November 30 consist of the following:

<TABLE>
<CAPTION>
                                                          1997            1996
                                                       ---------       ---------
   <S>                                                 <C>             <C>      
   Furniture                                           $  82,840       $  40,084
   Exhibit booth                                          48,013          48,013
   Other equipment                                        91,924          69,222
   Lab equipment                                          68,122          48,381
   Manufacturing equipment and fixtures                   13,532           3,500
   Sales equipment                                        55,040          48,917
   Computers                                              10,814           7,664
   Leasehold improvements                                113,196              --
                                                       ---------       ---------
                                                         483,481         265,781
   Less accumulated depreciation and amortization       (238,827)       (156,149)
                                                       ---------       ---------
                                                       $ 244,654       $ 109,632
                                                       =========       =========
</TABLE>

    Depreciation and amortization expense for property and equipment for the
    years ended November 30, 1997 and 1996 was $82,678 and $62,739,
    respectively.

(4) LONG-TERM DEBT

    Long-term debt at November 30 consists of the following:

<TABLE>
<CAPTION>
                                                                                 1997           1996
                                                                               --------       --------
   <S>                                                                         <C>            <C>     
   Capitalized equipment lease payable in 60
     monthly installments of $350 including
     interest at 18% through March 31, 1997                                    $     --       $    820

   Prepetition and postpetition payroll taxes
     payable in installments including interest at
     8% through March 1999                                                       12,823         24,102

   Note payable to CardioDynamics Holdings, LLC, a related party,
     collateralized by substantially all assets of the Company, bearing
     interest at 7.5% per annum with interest-only payments due
     quarterly, maturing March 31, 2000, convertible into common stock at
     a rate of $.25 per share through March 30, 1998, $.30
     per share through March 30, 1999, and $.36 per
     share thereafter                                                            25,000         25,000
                                                                               --------       --------
                                                                                 37,823         49,922
  Less current maturities of long-term debt                                     (11,300)       (12,100)
                                                                               --------       --------
                                                                               $ 26,523       $ 37,822
                                                                               ========       ========
</TABLE>

    The aggregate maturities of long-term debt subsequent to November 30, 1997
    are as follows: 1998, $11,300; 1999, $1,523; and 2000, $25,000.


                                       12
<PAGE>   13

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


(5) SHAREHOLDERS' EQUITY

    During February 1995, the Company entered into an agreement with a related
    party, CardioDynamics Holdings, LLC ("CDH"), a California limited liability
    company, for the purchase of approximately 37.6% of the Company's common
    stock. In exchange for the issuance of these shares, the Company received
    $225,000. Additionally, the Company issued a five-year secured promissory
    note (the "CDH note") in the amount of $100,000. In fiscal 1996 and 1997,
    the CDH note was amended to increase the loan amount, establish a per share
    conversion price of $0.25 per share, subject to adjustment under specified
    circumstances, and change the maturity date to March 31, 2000. In March
    1996, CDH advanced $1,800,000 under the CDH note. This advance was converted
    into 7,200,000 shares of common stock of the Company in June 1996 at a rate
    of $0.25 per share. The CDH note is collateralized by an unsubordinated
    interest in substantially all of the assets of the Company. Advances under
    the CDH note accrue interest at 7.5% with interest-only payable quarterly
    through maturity at March 31, 2000. At any time after February 6, 1997, the
    CDH note is convertible into the shares of the Company's common stock at
    CDH's option at predetermined conversion prices. Additionally, CDH obtained
    the right to purchase, at $0.25 per share, the same number of shares of
    common stock as the Company may from time to time issue to others. At
    November 30, 1997 and 1996, $25,000 was outstanding under this note.

    At various times during fiscal 1996, a shareholder and board member
    purchased a total of 2,300,000 shares of common stock and another
    shareholder and board member purchased a total of 360,000 shares of common
    stock all from the Company for $0.25 cash per share.

    On March 6, 1997, the Company completed the offering of 2,527,102 shares of
    common stock in a $7.2 million private placement. EVEREN Securities, Inc.
    served as placement agent for 2,298,950 shares ($6.6 million), and another
    228,152 shares ($0.6 million) were sold pursuant to a related offering.
    After issuance costs of approximately $550,000, the Company received net
    proceeds of approximately $6,650,000. Under the terms of the Private
    Placement Memorandum (the "Memorandum"), the Company registered such common
    stock for public resale.

    In accordance with the terms of their stock purchase agreements, several
    private investors rescinded their purchases of a total of 236,220 shares of
    common stock (purchased in fiscal 1996 for $0.6 million cash) and reinvested
    the $0.6 million in 228,152 shares of common stock, issued under and subject
    to the terms of the Memorandum, at a price of $2.85 per share.

    The Company converted all outstanding preferred stock to common stock during
    1997.

    At November 30, 1997, the Company has outstanding warrants to purchase
    shares of common stock as follows:

<TABLE>
<CAPTION>
                                 COMMON STOCK     EXERCISE       EXERCISABLE
                                    SHARES         PRICE         ON OR BEFORE
                                 ------------     --------     -----------------
    <S>                            <C>             <C>         <C>
    EVEREN Securities, Inc.        276,514         $3.56       March 6, 2002
    Series C warrants              231,747          6.00       December 31, 1997
                                   -------

   Total warrants exercisable
     for common stock              508,261
                                   =======
</TABLE>


                                       13
<PAGE>   14

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


    On May 30, 1996, the Company reduced the exercise price of Series B and
    Series C warrants to $3.50 per share through July 8, 1996. During fiscal
    1996, 15,341 and 12,015 shares of Series B and Series C warrants were
    exercised, netting proceeds of $53,694 and $42,053, respectively.
    Additionally, during the 1996 fiscal year, 10,009 shares of Series B
    warrants were exercised at an exercise price of $4.00 per share. All Series
    C warrants outstanding as of November 30, 1997 expired unexercised on
    December 31, 1997.

(6) STOCK OPTIONS

    In 1995, the shareholders approved a Stock Option/Stock Issuance Plan (the
    "Option Plan") that provides for the granting of options to officers,
    directors and key employees to purchase the Company's common stock. Under
    the Option Plan, as amended in 1997, 2,529,000 shares of common stock have
    been reserved for granting of options at 100% of the fair market value of
    the Company's common stock on the date of grant.

    The Option Plan also provides for monthly grants, at fair market value to
    each director of the Company, of options to purchase 1,000 shares of Company
    common stock as payment for directors fees for each full month of service.
    The options are exercisable immediately upon grant and expire upon the
    earlier of ten years from the date of grant or two years after the director
    terminates his position on the Board. During 1997 and 1996, 156,000 and
    103,000 options were granted to the Board of Directors.

    The Option Plan also provides for grants of options and issuances of stock
    in exchange for professional services. During 1997, the Company granted a
    total of 35,000 non-qualified stock options to four individuals in exchange
    for professional services. The options were granted at an exercise price
    equal to the fair market price on the grant date, vest over two years and
    expire ten years from the date of grant. Consultation fees of $18,642 were
    recognized in the accompanying statement of operations for the year ended
    November 30, 1997 as a result of these grants.

    At November 30, 1997, there were 1,055,000 shares available for grant under
    the Option Plan. The per share weighted-average fair value of stock options
    granted during 1997 and 1996 was $1.81 and $0.97 on the date of grant using
    the Black Scholes option-pricing model with the following weighted-average
    assumptions: 1997 - expected dividend yield 0%, risk-free interest rate of
    6.21%, expected volatility of 67% and an expected life of 4 years; 1996 -
    expected dividend yield 0%, risk-free interest rate of 6.26%, expected
    volatility of 67% and an expected life of 4 years.

    The Company applies APB Opinion No. 25 in accounting for its Option Plan
    and, accordingly, no compensation cost has been recognized in the financial
    statements for its stock options issued to officers, directors, and
    employees. Had the Company determined compensation cost based on the fair
    value at the grant date for its stock options under SFAS No. 123, the
    Company's net loss would have been increased to the pro forma amounts
    indicated below:

<TABLE>
<CAPTION>
                                            1997                1996
                                        -----------         -----------
   <S>                                  <C>                 <C>
   Net loss, as reported                $(4,278,088)        $(2,510,667)
   Pro forma net loss                   $(4,627,069)        $(2,662,271)
   Net loss per share, as reported      $      (.14)        $      (.11)
   Pro forma net loss per share         $      (.15)        $      (.12)
</TABLE>


                                       14
<PAGE>   15

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


    Pro forma net loss reflects only options granted since November 30, 1995.
    Therefore, the full impact of calculating compensation cost for stock
    options under SFAS No. 123 is not reflected in the pro forma net income
    amounts presented above because compensation cost is reflected over the
    options' vesting period of up to 10 years, and compensation cost for options
    granted prior to December 1, 1995 is not considered.

    Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
                                                        WEIGHTED-
                                                        AVERAGE
                                        NUMBER OF       EXERCISE
                                        SHARES           PRICE
                                      ---------         ---------
    <S>                               <C>               <C>
    Balance at November 30, 1995        186,000          $1.26
    Granted                             495,000           1.73
                                      ---------          -----

    Balance at November 30, 1996        681,000           1.60
    Granted                             829,000           3.23
    Exercised                           (30,000)          1.25
    Forfeited                           (28,000)          3.12
    Expired                              (8,000)          3.44
                                      ---------          -----

   Balance at November 30, 1997       1,444,000          $2.50
                                      =========          =====
</TABLE>

    At November 30, 1997, the range of exercise prices and weighted-average
    remaining contractual life of outstanding options was $.95 - $4.56 and 7.7
    years. At November 30, 1997 and 1996, the number of options exercisable was
    534,500 and 291,170, respectively, and the weighted-average exercise price
    of those options was $2.25 and $1.53, respectively. The following table sets
    forth information regarding options outstanding at November 30, 1997:

<TABLE>
<CAPTION>
                                   OPTIONS OUTSTANDING               OPTIONS EXERCISABLE
                           -------------------------------------   -----------------------
                                          WEIGHTED-
                                           AVERAGE     WEIGHTED-                 WEIGHTED-
              RANGE OF                    REMAINING    AVERAGE                    AVERAGE
              EXERCISE       NUMBER      CONTRACTUAL   EXERCISE      NUMBER      EXERCISE
               PRICES      OUTSTANDING       LIFE       PRICE      EXERCISABLE     PRICE
            ------------   -----------  ------------  ----------   -----------   ---------
            <S>             <C>              <C>         <C>         <C>          <C>
            0.95 - 1.31       485,000        5.9         1.08        265,000      $1.16
            2.16 - 3.19       608,000        8.9         3.03        124,000       2.89
            3.25 - 4.56       351,000        8.1         3.55        145,500       3.69
                            ---------                                -------
                            1,444,000        7.7         2.50        534,500      $2.25
                            =========                                -------
</TABLE>

    During June 1995, the Company entered into an employment agreement with its
    Chief Executive Officer ("CEO"). Under the terms of the agreement, the CEO
    was granted 500,000 non-transferable stock options (not under the Option
    Plan) at an exercise price of $0.50 per share. The options vest if the
    quoted market price of the Company's stock attains specified levels. Upon
    the attainment of the specified levels, the Company will record compensation
    cost. During 1997, the CEO voluntarily agreed to reduce the number of
    options to 250,000. At November 30, 1997, none of the options are vested.
    The options expire June 15, 2005.


                                       15
<PAGE>   16

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


(7) REVENUE RECOGNITION AND DISTRIBUTOR AGREEMENTS

    During fiscal 1997, the Company established exclusive distribution
    agreements with seventeen regional specialty distributors to represent the
    Company in the U.S. hospital market. Together these distributors covered 44
    states and employed over 100 sales representatives. During the third quarter
    of fiscal 1997, the Company terminated three of these distributor agreements
    and established a reserve for returns of $168,920 for anticipated returns of
    demonstration and stocking units from these underperforming distributors. By
    the end of fiscal 1997, it was apparent that there was a need to broaden the
    sales channel. The Company opted to add a direct sales force targeted at
    both the hospital and outpatient markets in the majority of the U.S. The
    Company believes that in many situations, a direct sales force can more
    effectively leverage the cost and safety advantages of the BioZ over
    traditional invasive techniques by marketing to and educating health care
    professionals and third-party payers, including HMOs, as to the positive
    cost advantages and positive clinical outcome profiles of the BioZ.

    Despite the significant benefits of the BioZ Systems and their numerous
    applications, it is a "concept sale" that requires physicians to change old
    habits (some of which are reimbursed at a higher rate than the BioZ System).
    In addition, the hospital buying cycle can be long and difficult,
    particularly for a product that is unbudgeted. Consequently, the amount of
    time and effort required to penetrate these markets is often greater than
    the time and effort many of the distributor sales representatives were and
    are willing to invest.

    Subsequent to the fiscal year-end, the Company has hired five direct sales
    representatives, and its four existing Territory Sales Managers have assumed
    their new responsibilities as direct sales representatives. Key major
    metropolitan areas have been targeted for placing additional direct sales
    representatives. The Company has developed an aggressive hiring plan that
    calls for as many as 30 direct sales representatives to be in place by
    September 1998. The remaining distributors will be supported in the field by
    CDIc's Clinical Application Specialists, and by the direct sales
    representatives.

    As the Company begins to expand its direct sales force in targeted
    metropolitan areas, it recognizes that it may not be able to maintain
    satisfactory relationships with its current regional specialty distributors.
    Under the terms of the distribution agreements, distributors have the right,
    under certain circumstances (including the Company placing a direct sales
    representative in the distributor's territory), to terminate the
    distribution agreement and return demonstration and stocking inventory
    purchased from the Company. Because the Company may be required to take back
    BioZ Systems and unused supplies, and refund amounts paid by distributors
    (net of contracted depreciation and restocking charges), the Company
    established a $776,540 reserve for distributor returns which represents 100%
    of sales to domestic distributors which had not, as of November 30, 1997
    been resold to end users. During 1997, a $161,680 reserve for returns was
    applied against distributor accounts receivable as an allowance for returns
    with the $614,860 balance classified as a current reserve for inventory
    returns on the accompanying balance sheet. Included in inventory is $367,367
    of equipment at distributors, which may be returned. Subsequent to November
    30, 1997, the Company terminated five distributor agreements and agreed to
    take back $286,460 of equipment, which had been fully reserved.


                                       16
<PAGE>   17

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


(8) INCOME TAXES

    Income taxes in the accompanying statements of operations are comprised of
    the following:

<TABLE>
<CAPTION>
                                       1997      1996
                                       ----      ----
                          <S>          <C>       <C> 
                          Federal      $ --      $ --
                          State         800       800
                                       ----      ----

                                       $800      $800
                                       ====      ====
</TABLE>

    At November 30, 1997, the Company had federal net operating loss
    carryforwards of approximately $14,500,000. This amount may be subject to
    significant limitations under IRC Section 382.

    The tax effects of temporary differences that give rise to significant
    portions of the deferred tax assets as of November 30, 1997 are as follows:

<TABLE>
        <S>                                                <C>
        Deferred tax assets:
           Net operating loss carryforwards                 $ 5,208,800
           Inventory principally due to the reserve             346,207
           Other                                                164,193
                                                            -----------
                       Total gross deferred tax assets        5,719,200
        Valuation allowance                                  (5,719,200)
                                                            -----------
                       Net deferred tax assets              $        --
                                                            ===========
</TABLE>


    A 100% valuation allowance has been applied to these net deferred tax
    assets. Accordingly, no tax benefit has been recorded for the years ended
    November 30, 1997 and 1996.

(9) LEASES

    In June 1997, the Company entered into a five-year operating lease for a
    19,000 square-foot manufacturing facility which also houses the Company's
    research, development, marketing, sales and administrative activities. The
    Company also has several noncancelable operating leases, primarily for
    computer equipment, that expire over the next three to five years. Rental
    expense for operating leases was $114,102 and $53,620 during 1997 and 1996,
    respectively.


                                       17
<PAGE>   18

                    CARDIODYNAMICS INTERNATIONAL CORPORATION

                    NOTES TO FINANCIAL STATEMENTS (Continued)


     Future minimum lease payments under noncancelable operating leases (with
     initial or remaining lease terms in excess of one year) as of November 30,
     1997 are:

<TABLE>
<CAPTION>
           YEAR ENDING NOVEMBER 30,
           ------------------------

           <S>                               <C>
                    1998                       $261,970
                    1999                        256,932
                    2000                        245,069
                    2001                        212,772
                    2002                        165,293
                                             ----------
           Total minimum lease payments      $1,142,036
                                             ==========
</TABLE>

(10) SUBSEQUENT EVENTS

     In February 1998, the Company obtained a secured revolving credit line with
     a bank. The credit line provides for borrowing of up to $2,000,000 at the
     bank's prime rate plus 0.25%. Under the terms of the agreement, the Company
     is required to meet certain loan covenants, including maintenance of
     minimum; debt to net worth ratio, tangible net worth, liquidity ratio,
     quick ratio and maximum quarterly losses. The credit line is collateralized
     by the accounts receivable and inventory of the Company.

     On March 11, 1998, the Board of Directors approved a line of credit from
     two of the Company's shareholders under which the shareholders will provide
     for maximum borrowings to the Company of $3 million. Interest on
     outstanding amounts accrue at an annual rate of 10% and interest-only
     payments are due in monthly installments. The maturity date of the line of
     credit is September 30, 1999, upon which outstanding principal amounts,
     including accrued interest, are due. The Company shall prepay this line of
     credit from the net proceeds of any future arranged debt or equity
     financing.


                                       18
<PAGE>   19

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBIT INDEX

        The following exhibits are attached to this Report and are incorporated
herein by reference:

<TABLE>
<CAPTION>
EXHIBIT  TITLE
-------  -----
 <S>     <C>

 23.1    Consent of Independent Auditors, KPMG Peat Marwick, LLP

 23.2    Consent of Independent Auditors, Peterson & Co.


 (b)     REPORTS ON FORM 8-K:

         None.
</TABLE>


                                   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 in the city of San Diego, State of California, on the
24th day of November, 1998.

                                    CARDIODYNAMICS  INTERNATIONAL  CORPORATION

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

                                POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Michael K.
Perry, as attorney-in-fact, with the power of substitution, for him in any and
all capacities, to sign any amendment to this Registration Statement and to file
the same, with exhibits thereto and other documents in connection therewith,
with the SEC, granting to said attorney-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

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            November 24, 1998
----------------------------      Chief Executive Officer
      Michael K. Perry         (Principal Executive Officer)

/s/ STEPHEN P. LOOMIS          Vice President, Finance and     November 24, 1998
----------------------------     Chief Financial Officer
      Stephen P. Loomis         (Principal Financial Officer
                                            and
                               Principal Accounting Officer)

/s/ STEPHENSON M. DECHANT*                Director             November 24, 1998
----------------------------
    Stephenson M. Dechant
</TABLE>


                                       19
<PAGE>   20

<TABLE>
<CAPTION>
          Signature                        Title                    Date
          ---------                        -----                    ----
<S>                                      <C>                   <C>
/s/ NICHOLAS V. DIACO, M.D.*             Director              November 24, 1998
----------------------------
    Nicholas V. Diaco, M.D.

/s/ LOUIS P. FERRERO*                    Director              November 24, 1998
----------------------------
       Louis P. Ferrero

/s/ CAM L. GARNER*                       Director              November 24, 1998
----------------------------
        Cam L. Garner

/s/ JAMES C. GILSTRAP*                   Director              November 24, 1998
----------------------------
      James C. Gilstrap

/s/ RICHARD O. MARTIN*                   Director              November 24, 1998
----------------------------
      Richard O. Martin

/s/ RICHARD E. OTTO*                     Director              November 24, 1998
----------------------------
       Richard E. Otto

/s/ MICHAEL D. PADILLA*                  Director              November 24, 1998
----------------------------
     Michael D. Padilla

/s/ ALLEN E. PAULSON*                    Director              November 24, 1998
----------------------------
      Allen E. Paulson
</TABLE>

*By Michael K. Perry, as attorney-in-fact


                                       20