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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K /A
AMENDMENT NO. 1
TO
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: December 31, 1999
Commission File Number 000-23767
SYMPHONIX DEVICES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 77-0376250
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2331 Zanker Road,
San Jose, California 95131-1107
(Address of principal executive (zip code)
offices)
Registrant's telephone number, including area code:(408) 232-0710
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 (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-K 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-K or any
amendment to this Form 10-K. [X]
As of March 31, 2000, there were 13,368,373 shares of the Registrant's
Common Stock outstanding and the aggregate market value of such shares held by
non-affiliates of the Registrant (based upon the closing sale price of such
shares on the Nasdaq National Market on March 31, 2000) was approximately
$24,708,320. Shares of Common Stock held by each executive officer and
director and by each entity that owns 5% or more of the outstanding Common
Stock have been excluded in that such persons may be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive
determination for other purposes.
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EXPLANATORY NOTE
This Annual Report on Form 10-K/A ("Form 10-K/A") is being filed as
Amendment No. 1 to the Registrant's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on April 13, 2000 ("Form 10-K") for the
purpose of amending Items 10, 11, 12 and 13 of Part III of Symphonix's Form
10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Directors
<TABLE>
<CAPTION>
Name Age Position(s)
---- --- -----------
<S> <C> <C>
Geoffrey R. Ball...... 36 Director, Vice President and Chief Technical Officer
B.J. Cassin........... 66 Director
James M. Corbett...... 41 Director
Kirk B. Davis......... 42 Director, Chief Executive Officer and President
Hans Mehl............. 41 Director
Petri T. Vainio....... 40 Director
</TABLE>
Geoffrey R. Ball co-founded the Company and has served as Vice President and
Chief Technical Officer and a director since May 1994. From 1987 to March
1994, Mr. Ball was a biomedical engineer in the hearing research laboratory at
the Veterans Hospital in Palo Alto, California, affiliated with Stanford
University. Mr. Ball holds an M.S. degree from the University of Southern
California and a B.S. degree from the University of Oregon.
B.J. Cassin has served as a director of the Company since July 1994. Mr.
Cassin has been a private venture capital investor since 1979. Previously, he
co-founded Xidex Corporation, a manufacturer of data storage media, and served
as Vice President of Marketing. Mr. Cassin is a director of Cerus Corporation,
a medical device company (of which he is Chairman). Mr. Cassin holds an A.B.
degree from Holy Cross College.
James M. Corbett has served as a director of the Company since March 1999.
Mr. Corbett is currently the President and Chief Executive Officer of Home
Diagnostics, Inc., a medical device company. Previously, he held several
international sales and marketing management positions with Boston Scientific
Corporation, Scimed Life Systems, Inc. and Baxter Healthcare. Mr. Corbett
holds a B.S. degree from Kansas University.
Kirk B. Davis has been chief executive officer and president of Symphonix
Devices, Inc. since August, 1999. Mr. Davis was with Abbott Laboratories, Inc.
from 1987 and most recently, from March 1998, served as vice president and
general manager, critical care products. From 1996 to 1998, he served as
general manager of Abbott's UK operation and from 1994 to 1998 he served as
divisional vice president and regional director, Europe for Abbott. Mr. Davis
has a BS degree from Stanford University and an MBA degree from the
J.L. Kellogg Graduate School of Management at Northwestern University.
Hans Mehl has served on the Symphonix board of directors since January 2000.
He is currently the Co-Managing Director of Siemens Audiologische Technik
GmBH.
Petri T. Vainio has served as a director of the Company 1994 since July
1994. Dr. Vainio is a private venture capitalist. Previously, Dr. Vainio
served as a general partner of Sierra Ventures, a venture capital firm he was
with from 1988 to 1999. He currently serves as a director of Heartport, Inc.,
a medical device company. Dr. Vainio holds M.D. and Ph.D. degrees from the
University of Helsinki, Finland, and an M.B.A. degree from Stanford
University.
2
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Compensation of Directors
Members of the Company's Board of Directors do not receive cash compensation
for their services as directors but are eligible to receive grants of stock
options under the Company's 1994 Stock Option Plan. In March 1999, James
Corbett was granted a non-qualified option to purchase 50,000 shares of the
Company's common stock to vest over four years at an exercise price of $2.625.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of directors Cassin and Vainio. There
were no reportable transactions with any members of the Compensation Committee
in fiscal 1999.
3
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ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
Summary Compensation Table
The following Summary Compensation Table sets forth certain information
regarding the compensation of the Chief Executive Officer of the Company, the
four next most highly compensated executive officers in the fiscal year ended
December 31, 1999 (collectively, the "Named Executive Officers") of the
Company for services rendered in all capacities to the Company for the fiscal
years indicated.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
------------------ ------------
Number of
Securities
Underlying
Fiscal Options
Name and Principal Position Year Salary($) Bonus($) (#)(1)
--------------------------- ------ --------- -------- ------------
<S> <C> <C> <C> <C>
Kirk B. Davis(2)......................... 1999 $100,482 $ 80,000 650,000
Chief Executive Office and President
R. Michael Crompton...................... 1999 157,337 40,246 75,000
Vice President of Regulatory Affairs 1998 155,253 38,390 10,000
And Quality Assurance 1997 122,627 33,865 29,069
Bob H. Katz.............................. 1999 173,583 41,140 75,000
Vice President of Research and 1998 153,678 31,539 --
Development 1997 121,706 32,533 43,603
Patrick J. Rimroth....................... 1999 161,353 41,085 75,000
Vice President of Operations 1998 149,128 37,037 10,000
1997 120,665 33,347 29,068
Alfred G. Merriweather(3)................ 1999 158,295 39,520 80,000
Vice President of Finance and 1998 158,011 39,000 10,000
Chief Financial Officer 1997 138,832 39,389 14,534
Harry Robbins(4)......................... 1999 272,660 100,000 --
Chief Executive Officer and President 1998 259,615 100,000 --
1997 224,327 105,750 --
</TABLE>
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(1) These shares are subject to exercise under stock options granted pursuant
to the Company's 1994 Stock Options Plan. See "--Option Grants in Last
Fiscal Year."
(2) Mr. Davis joined the Company in August, 1999.
(3) Mr. Merriweather resigned as Chief Financial Officer effective January 1,
2000 and is no longer involved with the company.
(4) Mr. Robbins resigned as Chief Executive Officer and President on August
16, 1999. Mr. Robbins resigned form the Board of Directors effective April
1, 2000 and is no longer involved with the company.
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Option Grants In Last Fiscal Year
The following table provides information relating to stock options awarded
to each of the Named Executive Officers during the fiscal year ended December
31, 1999. All such options were awarded under the Company's 1994 Stock Option
Plan.
<TABLE>
<CAPTION>
Potential
Individual Grants Realizable Value at
---------------------------------------------------- Assumed
Number of Percent of Rates of Stock
Securities Total Options Exercise Price Appreciation
Underlying Granted to Price Per for Options Term(1)
Options Employees in Share Expiration -------------------
Name Granted(#)(2) Fiscal 1999(%)(3) ($)(4)(5) Date 5% ($) 10% ($)
---- ------------- ----------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kirk B. Davis........... 650.000 51.6 $2.250 08/05/09 $919,760 $2,330,827
Alfred G. Merriweather.. 25,000 2.0 $2.563 07/15/09 40,297 102,118
Alfred G. Merriweather.. 55,000 4.4 $3.250 10/15/09 112,415 284,879
R. Michael Crompton..... 25,000 2.0 $2.563 07/15/09 40,297 102,118
R. Michael Crompton..... 50,000 4.0 $3.250 10/15/09 102,196 258,981
Patrick J. Rimroth...... 25,000 2.0 $2.563 07/15/09 40,297 102,118
Patrick J. Rimroth...... 50,000 4.0 $3.250 10/15/09 102,196 258,981
Bob H. Katz............. 25,000 2.0 $2.563 07/15/09 40,297 102,118
Bob H. Katz............. 50,000 4.0 $3.250 10/15/09 102,196 258,981
</TABLE>
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(1) Potential realizable value is based on the assumption that the Common
Stock of the Company appreciates at the annual rate shown (compounded
annually) from the date of grant until the expiration of the ten year
option term. These numbers are calculated based on the requirements
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future stock price growth.
(2) Certain of the options are immediately exercisable, conditioned upon the
optionee entering into a restricted stock purchase agreement with the
Company with respect to any invested shares. The options vest or are
released from the repurchase option of the Company at the rate of one
forth-eighth (1/48) of the total number of shares subject to each option
at the end of each full month beginning on the grant date for each option.
Certain other of the options vest upon the company receiving pre-market
approval for its product from the FDA.
(3) Based on an aggregate of 1,259,000 options granted by the Company in the
year ended December 31, 1999 to employees of and consultants to the
Company, including the Named Executive Officers.
(4) Options were granted at an exercise price equal to the fair market value
of the Company Common Stock on the of grant.
(5) Exercise price may be paid in cash, check, promissory note, be delivery of
already-owned shares of the Company's Common Stock subject to certain
conditions, delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the Company
amount of sale or loan proceeds required to pay the exercise price, a
reduction in the amount of any Company liability to an optionee, or any
combination of the forgoing methods of payment or such other consideration
or method of payment to the extent permitted under applicable law.
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Aggregate Option Exercises In Last Fiscal Year
And Fiscal Year-End Option Values
The following table sets forth certain information regarding the exercise of
stock options by the Named Executive Officers during the fiscal year ended
December 31, 1999 and the value of stock options held as of December 31, 1999
by the Named Executive Officers.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at December 31, In-The-Money Options at
1999 (#) December 31, 1999 ($)(2)
------------------------- -------------------------
Value
Shares Acquired Realized
Name on Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kirk B. Davis........... 100,000 $225,000 550,000 -- $618,750 --
R. Michael Crompton..... -- -- 104,474 75,000 209,653 26,550
Bob H. Katz............. -- -- -- 75,000 -- 26,550
Patrick J. Rimroth...... -- -- 10,000 75,000 2,500 26,550
Harry S. Robbins........ -- -- -- -- -- --
Alfred G. Merriweather.. -- -- 22,500 67,500 12,650 17,025
</TABLE>
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(1) Fair market value of the Company's Common Stock on the date of exercise
minus the exercise price.
(2) Fair market value of the Company's Common Stock at fiscal year-end ($3.375
based on the last reported sale price of the Company's Common Stock on
December 31, 1999) minus the exercise price.
Employment Contracts and Change-in-Control Arrangements
Option Vesting Agreements
The Company has entered into an option vesting agreement with each of its
officers with whom it has entered into a stock option agreement, to provide
for accelerated vesting of all shares subject to such option (i) 12 months
after a change in control or (ii) in the event such officer is involuntarily
terminated within the 12 month period following a change in control. For
purposes of the option vesting agreement, "change in control" is defined as
(i) the closing of a merger, reorganization, sale of shares or sale of
substantially all of the assets of the Company in which the stockholders of
the Company immediately prior to the closing of the transaction own less than
50% of the voting power of the surviving or controlling entity (or its parent)
immediately after the transaction, or (ii) the date of the approval by the
stockholders of the Company of a plan of complete liquidation of the Company.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Stockholders
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of March 31, 2000 as to (i) each
person or entity who is known by the Company to own beneficially more than 5%
of the outstanding shares of Common Stock, (ii) each director of the Company,
(iii) each of the Named Executive Officers (as defined on page 4 under
"Executive Compensation--Executive Compensation--Summary Compensation Table")
and (iv) all directors and executive officers of the Company as a group.
Except as otherwise noted, the stockholders named in the table have sole
voting and investment power with respect to all shares of Common Stock shown
as beneficially owned by them, subject to applicable community property laws.
<TABLE>
<CAPTION>
Approximate
Common Stock Percentage
Beneficial Owner Beneficially Owned Owned(1)
---------------- ------------------ -----------
<S> <C> <C>
Entities Affiliated with Sierra Ventures (2)... 1,925,007 14.4%
3000 Sand Hill Road
Building 4, Suite 210
Menlo Park, CA 94025
Entities Affiliated with Mayfield (3) ......... 1,682,649 12.6%
2800 Sand Hill Road, 2nd Floor
Menlo Park, CA 94025
Harry S. Robbins (4)........................... 1,276,184 9.6%
1 Loggerhead Lane
Manalapan, FL 33462
Coral Partners IV, Limited Partnership......... 1,099,964 8.2%
60 South Sixth Street, Suite 3510
Minneapolis, MN 55402
Siemens Audiologische Technik GmBH............. 1,000,000 7.5%
c/o Siemens Corporation
1301 Avenue of the Americas
New York, NY 10014
Hans Mehl (5).................................. 1,000,000 7.5%
Kirk Davis (6)................................. 650,000 4.7%
Geoffrey R. Ball............................... 602,239 4.5%
B. J. Cassin (7)............................... 325,587 2.4%
Bob H. Katz (8)................................ 162,792 1.2%
Alfred Merriweather (9)........................ 137,976 1.0%
R. Michael Crompton (9)........................ 120,975 *
Patrick J. Rimroth (11)........................ 120,310 *
James M. Corbett (12).......................... 60,000 *
Petri T. Vainio (13)........................... 32,703 *
All directors and executive officers as a group
(13 persons).................................. 4,893,766 34.6%
</TABLE>
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* Less than 1%
(1) Applicable percentage ownership is based on 13,368,373 shares of Common
Stock outstanding as of March 31, 2000 together with applicable options
or warrants for such stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission,
based on factors
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including voting and investment power with respect to shares subject to the
applicable community property laws. Shares of Common Stock subject to
options or warrants currently exercisable or exercisable within 60 days
after March 31, 1999 are deemed outstanding for computing the percentage
ownership of the person holding such options, but are not deemed
outstanding for computing the percentage of any other person.
(2) Consists of 1,850,892 shares held by Sierra Ventures IV, 74,116 shares
held by Sierra Ventures IV International.
(3) Consists of 1,567,446 shares held by Mayfield VII, 82,499 shares held by
Mayfield Associates Fund II and 32,704 shares held by Mayfield VII
Management Partners.
(4) All such shares are held in the name of the Robbins Family Trust. Mr.
Robbins holds voting and dispositive power over all such shares.
(5) Consists of 1,000,000 shares held by Siemens Audiologische Technik GmBH.
Mr. Mehl, a director of the Company, is Co-Managing Director of Siemens
Audiologische GmBH and disclaims beneficial ownership over these shares.
(6) Includes an option to purchase 550,000 shares exercisable within 60 days
after March 31, 2000.
(7) Consists of 230,200 shares held in the name of the Cassin Family Trust,
over which Mr. Cassin holds voting and dispositive power, (ii) 95,387
shares held by Cassin Family Partners, a California Limited Partnership,
over which Mr. Cassin holds voting and dispositive power.
(8) Consists of 162,792 shares held in the name of the Bob Katz Trust, over
which Mr. Katz holds voting and dispositive power.
(9) Includes options to purchase up to 22,500 shares exercisable within 60
days after March 31, 2000. 115,476 shares are held in the name of the
Merriweather Family Trust. Mr. Merriweather holds voting and dispositive
power over all such shares.
(10) Includes options to purchase up to 104,474 shares exercisable within 60
days after March 31, 2000.
(11) Includes an option to purchase up to 10,000 shares exercisable within 60
days after March 31, 2000. 110,310 shares are held in the name of the
Rimroth Family Trust. Mr. Rimroth holds voting and dispositive power over
all such shares.
(12) Includes an option to purchase up to 50,000 shares exercisable within 60
days after March 31, 2000.
(13) Consists of an option to purchase 32,703 shares exercisable within 60 days
after March 31, 2000.
ITEM 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
Certain Transactions
On November 2, 1999, the Company entered into a Marketing and Distribution
Agreement with Siemens Audiologische Technik GmbH ("Siemens"). Additionally, on
December 1, 1999, the Company issued and sold 1,000,000 shares of its Common
Stock for a purchase price of $5.00 per share to Siemens in a private placement
(the "Private Placement"). In connection with the Private Placement, Siemens
agreed to purchase additional shares of the Company's Common Stock upon
satisfaction of certain terms and conditions specified in the Common Stock
Purchase Agreement. Hans Mehl, a director, is the Co-Managing Director of
Siemens.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 on
Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 27th day of April 2000.
Symphonix Devices, INC.
By: /s/ Kirk B. Davis
__________________________________
Kirk B. Davis
Chief Executive Officer and
President
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