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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 20, 2005
CARDIODYNAMICS INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
California 0-11868 95-3533362
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6175 Nancy Ridge Drive, San Diego, California 92121
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (858)-535-0202
n/a
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instructions A.2 below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
In light of the new accounting regulations that are expected to take effect in
the Company's next fiscal year, on October 20, 2005, the Board of Directors of
CardioDynamics (the "Company") accelerated the vesting of all unvested,
out-of-the-money, employee explicit service period stock options granted under
the Company's Stock Option Plans. The Board took this action with the belief
that it is in the best interests of the Company's stockholders as it will reduce
the Company's reported compensation expense in future periods.
A stock option was considered "out-of-the-money" if the stock option exercise
price was $2.00 or higher (168% of the closing stock price on the acceleration
date). As a result of this action, stock options to purchase 1.4 million shares
of the Company's common stock became immediately exercisable, including 0.5
million stock options held Company executive officers. The weighted average
exercise price of all the accelerated stock options was $4.46.
The accelerated vesting will avoid future compensation expense that the Company
would otherwise recognize in its Statement of Operations with respect to these
accelerated stock options upon the adoption by the Company of Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 123
(Revised 2004, Share - Based Payment ("FAS 123R"). FAS 123R is expected to be
effective commencing with the first annual period that begins after June 15,
2005, and will require that compensation cost related to share-based payment
transactions, including stock options, be recognized in the Company's financial
statements. The Company believes that the future compensation expense that will
be avoided, based on the Company's implementation date for FAS 123R of December
1, 2006, will be approximately $0.8 million in fiscal 2006, $0.3 million in
2007, and approximately $0.1 million in fiscal 2008.
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.
CardioDynamics International Corporation
Date: October 20, 2005 /Stephen P. Loomis/
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Stephen P. Loomis
Chief Financial Officer