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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-K/A
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NO. 000-22755
---------------------------
COMPUTER MOTION, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 77-0458805
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
130-B CREMONA DRIVE
GOLETA, CA 93117
(Address of principal executive offices)
(805) 968-9600
(Registrant's telephone number, including area code)
----------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.001 PAR VALUE
(Title of Class)
----------------
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; 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-K is not contained herein, or will not be contained, to
the best of the Registrant's knowledge, in definitive proxy information
statement incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant was approximately $65.9 million at March 30, 2000, when the
closing sale price of such stock as reported on the NASDAQ National Market was
$9.50 per share.
The number of shares outstanding of the Registrant's Common Stock,
$.001 par value, as of March 30, 2000 was 8,823,638 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None
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AMENDMENT NO. 2
TO THE ANNUAL REPORT ON FORM 10-K FILED BY
COMPUTER MOTION, INC. ON APRIL 14, 2000
The following Items comprising Part III were omitted from the Annual
Report on Form 10-K filed by Computer Motion, Inc. on April 14, 2000 (the "Form
10-K"), as permitted by rules and regulations promulgated by the Securities and
Exchange Commission. Part III of that Form 10-K is hereby amended and restated
to insert those Items as set forth herein. All capitalized terms used herein but
not defined shall have the meanings ascribed to them in the Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Summary Information Concerning Directors, Executive Officers and Certain
Significant Employees
The following table sets forth certain information regarding the
Company's directors and executive officers and certain significant employees,
and their ages as of April 14, 2000.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION SINCE
------------ -------------------- --------
<S> <C> <C>
Daniel R. Doiron (49) Founder (Retired) 1996
Miravant Medical Technologies, Inc.
Santa Barbara, CA
(Pharmaceuticals)
Robert W. Duggan (55) Chairman and Chief Executive Officer of the Company 1990
M. Jacqueline Eastwood (53) President and Chief Executive Officer 1998
TissueLink Medical, Inc.
Dover, NH
(Medical devices)
W. Peter Geis (58) Director 1996
Minimally Invasive Surgical Training Institute
Baltimore, MD
(Endoscopic training institute)
Yulun Wang (39) Chief Technical Officer, Executive Vice President and 1990
Founder of the Company
</TABLE>
OTHER INFORMATION REGARDING THE BOARD AND NOMINEES
BUSINESS EXPERIENCE.
Daniel R. Doiron, Ph.D., was a founder and director of Miravant Medical
Technologies, Inc. (formerly PDT, Inc.), a pharmaceutical company specializing
in photodynamic therapy for certain cancers and other diseases, where he served
in various capacities, including Vice President of Technology and Chief
Scientist and President of its subsidiary, PDT Systems, Inc., from 1989 to 1997.
Dr. Doiron holds B.S. and M.S. degrees in Nuclear Engineering and a Ph.D. in
Chemical Engineering from the University of California at Santa Barbara.
Robert W. Duggan, has been Chairman of the Board of Directors of the
Company since 1990 and Chief Executive Officer since October 1997. Mr. Duggan
has been a private venture investor for more than 25 years, and has participated
as a director of, investor in and advisor to numerous small and large businesses
in the medical equipment, computer local and wide area networks, PC hardware and
software distribution, digital encryption, consumer retail goods and outdoor
media communications industries. He has also assisted in corporate planning,
capital formation and management for his various investments. He is a member of
the University of California at Santa Barbara Foundation Board of Trustees, as
well as the University's Engineering Steering Committee.
M. Jacqueline Eastwood, has been President and Chief Executive Officer
of TissueLink Medical, Inc., a medical device company, since August 1999. Ms.
Eastwood previously served as Vice President, Corporate Ventures of Medtronic,
Inc., a medical device company, from 1997 to 1998. Ms. Eastwood's positions with
Medtronic Inc. have also included Vice President of Minimally Invasive Cardiac
Surgery from December 1995, and Vice President and General Manager of
Bio-Medicus from 1992.
W. Peter Geis, M.D., is Director of the Minimally Invasive Surgical
Training Institute ("MISTI"), an endoscopic training institution in Baltimore,
Maryland. Dr. Geis was an Associate Professor of Surgery at the University of
Illinois. Dr. Geis has been Clinical Professor of Surgery for the University of
Chicago since 1991. Dr. Geis is a member of the American College of Surgeons and
the Society of American Gastrointestinal Endoscopic Surgeons. Dr. Geis also sits
on the advisory faculty of Johnson & Johnson's Ethicon Endo-Surgery business.
Dr. Geis received his M.D. from Loyola University in Chicago.
Yulun Wang, Ph.D., founded Computer Motion in 1989 and served as
President until January 1996, at which time he became Chief Technical Officer
and Executive Vice President. He had been a Director of the company since its
inception. Dr. Wang is the principal architect of the company's product
strategy, and inventor of many of the technologies that are used to
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create the company's products. Dr. Wang has over 40 publications and holds over
two dozen patents and patents-pending. He frequently gives presentations at
major medical meetings on the future of robotics and computers in the field of
surgery. Prior to founding the company, Dr. Wang taught at the University of
California, Santa Barbara. He has also been the recipient of many research
grants from the National Aeronautics and Space Administration (NASA), National
Institute of Health and Defense Advanced Research Projects Agency (DARPA). Dr.
Wang earned B.S., M.S. and Ph.D. degrees in electrical engineering from the
University of California at Santa Barbara.
BOARD COMPENSATION. Directors do not receive any cash compensation for
their services as members of the Board of Directors, but are reimbursed for
expenses in connection with attendance at Board of Directors and Committee
meetings. Non-employee directors are eligible for discretionary stock option
grants under the Company's stock plans. There were no stock option grants to
non-employee directors in 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 (the "1934
Act") requires the Company's directors and executive officers to file with the
Securities and Exchange Commission reports of ownership and changes in ownership
of the Company's common stock, and the Company is required to identify any of
those persons who fail to file such reports on a timely basis. Based solely upon
its review of the copies of Forms 3, 4 and 5 furnished to the Company, and
written representations from certain persons that no annual Form 5 reports were
required, the Company believes that all filing requirements under Section 16(a)
of the 1934 Act were satisfied on a timely basis.
Information on executive officers is set forth in Part I, Item 4A of
the Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION. The following table
shows the cash compensation and certain other compensation paid or accrued by
the Company to each of the executive officers of the Company whose total cash
compensation exceeded $100,000 (collectively the "Named Executive Officers")
during fiscal years 1999, 1998, and 1997 in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
--------------------------- ---- -------- ------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Robert Duggan (2) 1999 $160,447 $ 3,280 20,000 $ --
Chairman 1998 108,750 16,312 20,000 --
Chief Executive Officer 1997 -- -- 25,933 --
Yulun Wang 1999 160,447 12,300 20,000 --
Chief Technical Officer 1998 143,750 21,562 20,000 --
Founder 1997 120,000 7,020 15,000 --
Stephen L. Wilson (3) 1999 156,990 -- 35,000 --
Former Executive Vice 1998 151,250 22,688 20,000 --
President and Chief Financial 1997 87,500 75,000 116,701 39,956
Officer
David A. Stuart 1999 129,125 10,050 20,000 --
Vice President 1998 117,500 10,576 20,000 30,000
Operations 1997 110,000 18,262 18,153 --
</TABLE>
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<TABLE>
<CAPTION>
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
--------------------------- ---- --------- ------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Richard J. DeRisio (4) 1999 $ 7,796 $ -- 50,000 $40,458
Vice President, Clinical, 1998 -- -- -- --
Regulatory and Quality Affairs 1997 -- -- -- --
Gregory J. Ruehle (5) 1999 77,213 -- 160,000 --
Vice President 1998 -- -- -- --
Global Sales 1997 -- -- -- --
John M. Greathouse (6) 1999 89,330 7,000 20,000 --
Former Vice President 1998 126,400 10,652 20,000 --
Business Development 1997 100,302 17,396 23,339 --
Kermit R. Pope, Jr. (7) 1999 -- -- -- 64,825
Former Vice President 1998 132,914 -- 20,000 --
Sales and Marketing 1997 93,269 27,392 127,800 --
</TABLE>
(1) Does not include the value of other compensation which in the aggregate
did not exceed the lesser of $50,000 or 10% of the executive officer's
salary and bonus.
(2) Mr. Duggan was appointed Chief Executive Officer in October 1997, but
did not begin drawing a salary until March 1998.
(3) Mr. Wilson resigned in November 1999.
(4) Mr. DeRisio began employment with the Company in December 1999, at an
annual salary of $147,000.
(5) Mr. Ruehle began employment with the Company in July 1999, at an annual
salary of $150,000.
(6) Mr. Greathouse resigned in August 1999.
(7) Mr. Pope resigned in November 1998. Under the terms of a separation
agreement, Mr. Pope received $8,333 per month for nine months.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grants of
stock options made during the last fiscal year to each of the Named Executive
Officers. In addition, in accordance with the rules and regulations of the
Securities and Exchange Commission, the following table sets forth hypothetical
gains or "option spreads" that would exist for the options. Such gains are based
on assumed rates of annual compound stock appreciation of 5% and 10% from the
date on which the options were granted, over the full term of the options. The
rates do not represent the Company's estimate or projection of future common
stock prices and no assurance can be given that the rates of annual compound
stock appreciation assumed for the purposes of the following table will be
achieved.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS POTENTIAL REALIZABLE
UNDERLYING GRANTED TO VALUE(3)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME GRANTED (1) 1999 PRICE/SHARE (2) DATE 5% 10%
---- ----------- ------------ --------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Duggan 20,000 2.3% $9.00 3/21/09 $113,201 $286,874
</TABLE>
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<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO POTENTIAL REALIZABLE
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION VALUE (3)
NAME GRANTED (1) 1999 PRICE/SHARE (2) DATE 5% 10%
---- ----------- ------------ --------------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Yulun Wang 20,000 2.3 9.00 3/21/09 113,201 286,874
Stephen L. Wilson 35,000 4.1 9.00 3/21/09 198,102 502,029
David A. Stuart 20,000 2.3 9.00 3/21/09 113,201 286,874
Richard J. DeRisio 50,000 5.8 10.625 12/12/09 334,100 846,676
Gregory J. Ruehle 150,000 17.4 11.00 6/30/09 1,037,676 2,629,675
Gregory J. Ruehle 10,000 1.2 10.063 12/28/09 63,286 160,378
John M. Greathouse 20,000 2.3 9.00 3/21/09 113,201 286,874
</TABLE>
(1) Stock options vest in four equal and annual installments.
(2) The exercise price per share was equal to the fair market value of the
common stock on the date of grant.
(3) The potential realizable value is calculated assuming that the fair
market value of the Company's common stock on the date of grant
appreciates at the indicated annual rate compounded annually for the
entire term of the stock option (ten years) and that the stock option
is exercised and sold on the last day of its term for the appreciated
stock price. The 5% and 10% assumed annual rates of stock price
appreciation are mandated by the rules of the Securities and Exchange
Commission. Actual gain, if any, on stock option exercises are
dependent on the future performance of the common stock.
The following table sets forth information concerning the exercise of
stock options during the last fiscal year and unexercised stock options held as
of the end of the fiscal year for the Named Executive Officers. In addition, the
table includes the number of shares covered by both exercisable and
unexercisable stock options as of December 31, 1999. Also reported are the
values for "in the money" options , which represent the positive spread between
the exercise prices of any such existing stock options and the fiscal year end
price of the Company's stock.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME EXERCISE REALIZED (1) OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (2)
NON- NON-
EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Duggan -- $ -- 21,856 44,077 $112,776 $111,499
Yulun Wang -- -- 49,779 53,197 226,856 116,965
David A. Stuart -- -- 70,093 58,080 422,988 201,552
Gregory Ruehle -- -- 20,000 140,000 -- 9,370
Richard DeRisio -- -- -- 50,000 -- 18,750
Stephen L. Wilson 50,862 349,371 46,526 -- 271,429 --
</TABLE>
(1) Represents market value of underlying securities at date of exercise
less option exercise price.
(2) Values were calculated using a price of $11.00 per share, the closing
sale price of the Company's common stock as reported by the NASDAQ on
December 31, 1999 minus the option exercise price.
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EMPLOYMENT AGREEMENTS
EMPLOYMENT AGREEMENTS. The Company does not currently have employment
agreements with any of its employees.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information provided to the Company as to
the beneficial ownership of the Company's common stock as of March 30, 2000 by
(i) persons holding 5% or more of such stock, (ii) Company directors and
executive officers individually, and (iii) all Company directors and executive
officers as a group.
Percentage of outstanding shares is based upon 8,823,638 shares of common stock
outstanding at March 30, 2000. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission. Shares of common stock
subject to options or warrants currently exercisable or exercisable within 60
days of March 30, 2000 are deemed outstanding for computing the shares and
percentage ownership of the person holding such options or warrants, but are not
deemed outstanding for computing the percentage ownership of any other person.
Except as otherwise indicated and except for the effect of community property
laws, as applicable, the persons listed below have sole voting and investment
power with respect to all shares shown as beneficially owned by them.
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<TABLE>
<CAPTION>
COMMON STOCK PERCENT OF
BENEFICIALLY OUTSTANDING
BENEFICIAL OWNERS OWNED SHARES
----------------- ------------ -----------
<S> <C> <C>
Directors and Executive Officers:
Robert W. Duggan 1,244,310 (1) 13.6
Yulun Wang 999,711 (2) 11.3
Daniel R. Doiron 92,403 (3) 1.0
David A. Stuart 81,425 (3) *
W. Peter Geis 21,641 (3) *
Gregory Ruehle 21,000 (3) *
M. Jacqueline Eastwood 5,000 (3) *
Directors and Executive Officers 2,465,490 (4) 26.3
As a Group (7 persons)
Scudder Kemper Investments, Inc. 675,400 (5) 7.7
345 Park Avenue
New York, NY 10154
Capital Research and Management Co. 434,900 (6) 4.9
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
* Less than 1.0%
(1) Includes 144,699 shares owned by Mr. Duggan's spouse of which he disclaims
beneficial ownership and 299,770 stock options and warrants which may be
exercised within sixty days from March 30, 2000.
(2) Includes 24,912 shares owned by Dr. Wang's minor children of which he
disclaims beneficial ownership and 58,709 stock options and warrants which
may be exercised within sixty days from March 30, 2000.
(3) Includes 79,501, 78,140, 20,000, 18,606 and 5,000 stock options and
warrants which may be exercised by Mr. Stuart, Dr. Doiron, Mr.,
Ruehle, Dr. Geis and Ms. Eastwood, respectively within sixty days from
March 30, 2000.
(4) Includes 559,726 stock options and warrants which may be exercised
within sixty days from March 30, 2000.
(5) As of December 31, 1999, Scudder Kemper Investments, Inc. reported that it
beneficially owned 675,400 shares of the Company's common stock of which it
held sole power to vote or direct the vote of 395,800 shares, shared power
to vote or direct the vote of 10,000 shares and no power to vote or direct
the vote of 269,600 shares.
(6) Beneficial ownership as reported as of December 31, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INDEMNIFICATION AGREEMENTS. The Company indemnifies its directors and
officers against certain costs which could be incurred if they were made, or
threatened to be made, a party to a legal proceeding because of their official
status as a director or officer. The indemnification agreements, together with
the Company's bylaws provide for indemnification to the fullest extent permitted
by Delaware law.
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SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
COMPUTER MOTION, INC.
June 23, 2000 /s/ Robert W. Duggan
------------- ------------------------------------
Date Robert W. Duggan
Chairman and Chief Executive Officer
(Principal Executive Officer)
June 23, 2000 /s/ Gordon L. Rogers
------------- ------------------------------------
Date Gordon L. Rogers
Vice President, Chief Financial Officer
and Secretary
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
/s/ Daniel R. Doiron Director June 23, 2000
----------------------------------
Daniel R. Doiron
/s/ Robert W. Duggan Director June 23, 2000
----------------------------------
Robert W. Duggan
/s/ W. Peter Geis Director June 23, 2000
----------------------------------
W. Peter Geis
/s/ M. Jacqueline Eastwood Director June 23, 2000
----------------------------------
M. Jacqueline Eastwood
/s/ Yulun Wang Director June 23, 2000
----------------------------------
Yulun Wang
</TABLE>
