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<SEC-DOCUMENT>0001000096-07-000153.txt : 20070413
<SEC-HEADER>0001000096-07-000153.hdr.sgml : 20070413
<ACCEPTANCE-DATETIME>20070413164640
ACCESSION NUMBER:		0001000096-07-000153
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20060630
FILED AS OF DATE:		20070413
DATE AS OF CHANGE:		20070413

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INTEGRATED SURGICAL SYSTEMS INC
		CENTRAL INDEX KEY:			0000894871
		STANDARD INDUSTRIAL CLASSIFICATION:	SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
		IRS NUMBER:				680232575
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-12471
		FILM NUMBER:		07766338

	BUSINESS ADDRESS:	
		STREET 1:		1433 N. MARKET BLVD.
		STREET 2:		SUITE 1
		CITY:			SACRAMENTO
		STATE:			CA
		ZIP:			95834
		BUSINESS PHONE:		916-285-9943

	MAIL ADDRESS:	
		STREET 1:		1433 N. MARKET BLVD.
		STREET 2:		SUITE 1
		CITY:			SACRAMENTO
		STATE:			CA
		ZIP:			95834
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>iss6302006.txt
<DESCRIPTION>FORM 10-QSB  (6-30-2006)
<TEXT>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-QSB

[X]    Quarterly Report under Section 13 or 15(d) of the Securities Exchange
       Act of 1934

                  For the quarterly period ended June 30, 2006

[ ]    Transition Report under Section 13 or 15(d) of the Securities Exchange
       Act of 1934

               For the transition period from _______ to ________

                         Commission file number: 1-12471

                        INTEGRATED SURGICAL SYSTEMS, INC.
                        ---------------------------------
        (Exact name of small business issuer as specified in its charter)

         Delaware                                                68-0232575
         --------                                                ----------
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

                  1433 N. Market Blvd. #1, Sacramento, CA 95834
                  ---------------------------------------------
                    (Address of principal executive offices)

                                 (916) 285-9943
                                 --------------
                           (Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 [  ] No [ X ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the exchange Act). Yes [ ] No [ X ]

The number of shares of common stock, $0.01, par value, outstanding on April 12,
2007 was 45,784,089. Transitional Small Business Disclosure format (check one).
Yes [ ] No [ X ]


<PAGE>


                        Integrated Surgical Systems, Inc.
                                   Form 10-QSB
                       for the quarter ended June 30, 2006
                                Table of Contents


                                                                           Page
Part I.     Financial Information

            Item 1.    Financial Statements                                 2

                       Balance Sheet (unaudited) at June 30, 2006           2

                       Statements of Operations (unaudited) for the         3
                       three months ended June 30, 2006 and 2005

                       Statements of Operations (unaudited) for the         4
                       six months ended June 30, 2006 and 2005

                       Statements of Cash Flows (unaudited) for the         5
                       six months ended June 30, 2006 and 2005

                       Notes to Financial Statements (unaudited)            6

            Item 2.    Management's Discussion and Analysis                 7

            Item 3.    Controls and Procedures                             10

Part II.    Other Information

            Item 6.    Exhibits                                            11

Signature

Certifications



<PAGE>


Part I.    Financial Information

           Item 1.  Financial Statements (unaudited)


                        Integrated Surgical Systems, Inc.
                                  Balance Sheet
                                  June 30, 2006
                                   (Unaudited)

Assets
Current assets:
     Cash                                                          $    107,301
     Accounts receivable                                                 16,666
     Inventory                                                          182,885
     Other current assets                                               149,864
                                                                   ------------
Total current assets                                                    456,716

     Other assets                                                        15,000
                                                                   ------------
Total assets                                                       $    471,716


Liabilities and stockholders' deficit
Current liabilities:
     Accounts payable                                              $  1,810,433
     Accrued liabilities                                                  1,239
     Unearned income                                                  1,153,583
                                                                   ------------
Total current liabilities                                             2,965,255

Convertible preferred stock, $0.01 par value,
     1,000,000 shares authorized;
     168 shares issued and outstanding
     ($168,496 aggregate liquidation value)                             168,496
                                                                   ------------
Total liabilities                                                     3,133,751
                                                                   ------------

Stockholders' deficit:
     Common stock, $0.01 par value, 100,000,000
         shares authorized;
         45,084,089 shares issued and outstanding                       450,841
     Additional paid-in capital                                      61,924,486
     Accumulated deficit                                            (65,037,362)
                                                                   ------------
Total stockholders' deficit                                          (2,662,035)
                                                                   ------------
                                                                   $    471,716
                                                                   ============
See accompanying notes to financial statements.


                                       2
<PAGE>

<TABLE>
<CAPTION>
                                        Integrated Surgical Systems, Inc.
                                             Statements of Operations
                                                    (Unaudited)



                                                                        Three months ended June 30,
                                                                   --------------------------------------
                                                                      2006                       2005
                                                                   ------------              ------------
<S>                                                                <C>                       <C>
Net revenue                                                        $    199,284              $  1,388,744
Cost of revenue                                                          11,551                   247,752
                                                                   ------------              ------------
                                                                        187,733                 1,140,992
                                                                   ------------              ------------
Operating expenses:
     Selling, general and administrative                                 58,453                    77,581
     Research and development                                             3,176                   140,795
     Gain on forgiveness of debt                                        (83,431)                 (362,881)
                                                                   ------------              ------------
                                                                        (21,802)                 (144,505)
                                                                   ------------              ------------
Operating income                                                        209,535                 1,285,497

Other income net                                                         63,370                      --
Amortization of discount                                                   --                     (31,379)
Derivative liability income                                                --                     271,646
Interest (expense) net                                                     --                      (3,344)
                                                                   ------------              ------------
Net income                                                         $    272,905              $  1,522,420
                                                                   ============              ============


Basic net income per common share                                  $       0.01              $       0.03
                                                                   ============              ============
Diluted net income per common share                                $         *               $       0.02
                                                                   ============              ============

Shares used in computing basic net income per share                  45,084,089                45,084,089
                                                                   ============              ============
Shares used in computing diluted net income per share                86,382,128                61,464,188
                                                                   ============              ============

* Less than $.01, per share

See accompanying notes to financial statements.


                                                           3

<PAGE>


                                          Integrated Surgical Systems, Inc.
                                             Statements of Operations
                                                    (Unaudited)



                                                                        Six months ended June 30,
                                                                --------------------------------------
                                                                    2006                      2005
                                                                ------------              ------------

Net revenue                                                     $  2,455,334              $  3,091,295
Cost of revenue                                                      413,606                   462,628
                                                                ------------              ------------
                                                                   2,041,728                 2,628,667
                                                                ------------              ------------
Operating expenses:
     Selling, general and administrative                             786,626                   550,693
     Research and development                                        161,515                   275,349
     Gain on forgiveness of debt                                     (83,431)                 (362,881)
                                                                ------------              ------------
                                                                     864,710                   463,161
                                                                ------------              ------------
Operating income                                                   1,177,018                 2,165,506

Other income net                                                      68,395                      --
Amortization of discount                                                --                     (31,379)
Derivative liability income                                             --                      31,379
Interest income (expense) net                                           --                      (6,760)
                                                                ------------              ------------
Net income                                                      $  1,245,413              $  2,158,746
                                                                ============              ============


Basic net income per common share                               $       0.03              $       0.05
                                                                ============              ============
Diluted net income per common share                             $       0.01              $       0.04
                                                                ============              ============

Shares used in computing basic net income per share               45,084,089                45,084,089
                                                                ============              ============
Shares used in computing diluted net income per share             94,742,271                61,075,039
                                                                ============              ============


See accompanying notes to financial statements.


                                                       4
<PAGE>


                                          Integrated Surgical Systems, Inc.
                                               Statements Cash Flows
                                                    (Unaudited)


                                                                                 Six months ended June 30,
                                                                             ---------------------------------
                                                                                2006                  2005
                                                                             -----------           -----------
Cash flows from operating activities:
Net income                                                                   $ 1,245,413           $ 2,158,746
Adjustments to reconcile net income to net cash provided by (used in)
  operating activities:
     Depreciation                                                                   --                   5,414
     Inventory reserve                                                              --                 100,000
     Amortization of discount                                                       --                  31,379
     Gain on forgiveness of debt                                                 (83,431)             (362,881)
     Derivative liability income                                                    --                 (31,379)
     Gain on property and equipment                                               (5,000)                 --
     Changes in operating assets and liabilities:
        Accounts receivable                                                       21,289                (4,387)
        Inventory                                                                119,590                86,776
        Other current assets                                                    (113,397)              (23,081)
        Accounts payable                                                          44,743              (149,997)
        Accrued payroll and related expenses                                    (816,429)             (111,300)
        Accrued liabilities                                                     (105,336)             (163,376)
        Unearned income                                                         (221,930)           (2,859,896)
                                                                             -----------           -----------
Net cash provided by (used in) operating activities                               85,512            (1,323,982)
                                                                             -----------           -----------

Cash flows from investing activities:
Proceeds on sale of property and equipment                                         5,000                  --
                                                                             -----------           -----------
Net cash provided by investing activities                                          5,000                  --
                                                                             -----------           -----------

Cash flows from financing activities:
Payments of note payable                                                        (142,000)                 --
                                                                             -----------           -----------
Net cash used in financing activities                                           (142,000)                 --

                                                                             -----------           -----------
Net decrease in cash                                                             (51,488)           (1,323,982)
Cash at beginning of period                                                      158,789             1,324,403
                                                                             -----------           -----------
Cash at end of period                                                        $   107,301           $       421
                                                                             ===========           ===========

See accompanying notes to financial statements.


                                                      5
</TABLE>

<PAGE>


                        Integrated Surgical Systems, Inc.
                    Notes to Financial Statements (unaudited)

1. Organization and Operations

Integrated Surgical Systems, Inc. (Company) was incorporated in Delaware in 1990
to design, manufacture, sell and service image-directed, computer-controlled
robotic software and hardware products for use in orthopedic surgical
procedures. The Company's products are sold through international distributors
to hospitals and clinics in European Union member countries and Australia,
Canada, India, Israel, Japan, Korea, New Zealand, Switzerland and South Africa.
Subsequent to March 31, 2005 the Company ceased operations, three of its four
directors resigned, and all employees were terminated. The officers of the
Company were evaluating the options available to the Company.

2. Significant Accounting Policies

Basis of presentation

The accompanying unaudited financial statements and related notes have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial statements and with the rules and
regulations of the Securities and Exchange Commission for Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
the financial position, results of operations and cash flows for the interim
periods have been included. These financial statements should be read in
conjunction with the financial statements of the Company together with the
Company's management discussion and analysis in the Company's Form 10-KSB for
the year ended December 31, 2005. Interim results are not necessarily indicative
of the results for a full year.

Certain amounts for prior years have been reclassified to conform to 2006
financial statement presentations.

The financial statements include all the accounts of the Company.

Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual results
could differ from those estimates.

New Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.

3. Going Concern

The accompanying unaudited financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As of June 30, 2006, the
Company had an accumulated deficit of $65,037,362 and negative working capital
of $2,508,539. The report of the independent registered public accounting firm
on the Company's December 31, 2005 financial statements includes an explanatory
paragraph indicating there is substantial doubt about the Company's ability to
continue as a going concern.

The Company believes that it has a current plan to address these issues in order
to enable the Company to continue operations. This plan includes obtaining
additional equity or debt financing, increasing product sales in existing
markets, increasing sales of system upgrades, and further reductions in
operating expenses as necessary. Although the Company believes that the plan

                                       6

<PAGE>


will be realized, there is no assurance that these events will occur. In the
event that the Company is unsuccessful in realizing the benefits of such plan,
it is possible that the Company will seek bankruptcy protection. These financial
statements do not include any adjustments to reflect the uncertainties related
to the recoverability and classification of assets or the amounts and
classification of liabilities that may result from an inability of the Company
to continue as a going concern.

     Item 2.  Management's Discussion and Analysis

Forward-Looking Statements

The discussion in this Quarterly Report on Form 10-QSB contains forward-looking
statements that have been made pursuant to the provisions of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
based on current expectations, estimates and projections about the software
industry and certain assumptions made by the Company's management. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates,"
"could," "would," "may" and variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements are not
guarantees of future performance and are subject to certain risks, uncertainties
and assumptions that are difficult to predict; therefore, actual results may
differ materially from those expressed or forecasted in any such forward-looking
statements. Unless required by law, the Company undertakes no obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. However, readers should carefully
review the risk factors set forth in other reports or documents the Company
files from time to time with the SEC, particularly the Company's Annual Report
on Form 10-KSB, Quarterly Reports on Form 10-QSB and any Current Reports on Form
8-K.

The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto in Part I, Item 1 of this Quarterly
Report on Form 10-QSB and with the audited Financial Statements and Notes
thereto, together with Management's Discussion and Analysis of Financial
Condition and Results of Operations, which are included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2005 as filed with
the SEC.

Overview

We were incorporated in Delaware in 1990 to design, manufacture, sell and
service image-directed, computer-controlled robotic software and hardware
products for use in orthopedic surgical procedures. Although we have not
received clearance to market the ROBODOC(R) System (ROBODOC) in the U.S., we are
permitted to export the system provided certain requirements are met. Products
approved for use by European Union member countries and Australia, Canada,
India, Israel, Japan, Korea, New Zealand, Switzerland and South Africa, do not
require U.S. FDA export approval. We sell our robotic systems to international
distributors, who in turn resell the product in their territories. Our
international distributors are KTEC in Japan, ROCOM Frontier in Korea and
Paramount Impex in India.

In November 2005, we received an advance for a Robodoc system from our Korean
distributor and this system was shipped in January 2006. In February 2006, we
received an advance for another Robodoc system from our Korean distributor and
this system was shipped in March 2006.

On August 8, 2006, we filed Form 8-K with the SEC disclosing that we had entered
into a $4 million asset purchase agreement to sell substantially all of our
assets to Novatrix Biomedical, Inc. in consideration of $4 million as well as a
loan agreement with Novatrix pursuant to which Novatrix would loan us an
aggregate of $6 million in two tranches of $2.7 million upon the execution of
the agreement, and an additional $3.3 million in two tranches upon certain
milestones with Novatrix. As required by the loan agreement, we have reached a
settlement with over 80% of our outstanding creditors in exchange for 17.6 cents
for each dollar owed. The loan agreement further provides that in the event that
approval by our stockholders of the asset sale does not occur by June 30, 2007,
we will be required to grant an exclusive license in the Asian markets of our
ROBODOC Surgical System software to Novatrix in exchange for a one-time royalty
payment of $100,000.

                                       7


<PAGE>


Product revenue consists of sales of our principal orthopedic product, the
ROBODOC(R) Surgical Assistant System ("ROBODOC"), which integrates the
ORTHODOC(R) Presurgical Planner ("ORTHODOC") with a computer-controlled robot
for use in joint replacement surgeries. We develop specialized operating
software for several implant manufacturing companies. These implant
manufacturers' contract with us for the development of software for particular
lines of new prosthesis to be used with the ROBODOC system.

We currently have warranty reserves of $173,000 on products delivered in Q1 of
2006.

Results of operations

We generated net income for the second quarter of 2006 of $273,000 or $0.01 per
basic share and less than one cent per dilutive share, compared to net income of
$1,522,000 or $0.03 per basic share and $0.02 per dilutive share for the second
quarter of 2005.

We generated net income for the first half of 2006 of $1,245,000 or $0.03 per
basic share and $0.01 per dilutive share compared to net income for the first
half of 2005 of $2,159,000 or $0.05 per basic and $0.04 per dilutive share.

Net revenue

Net revenue of $199,000 in Q2 2006 decreased 86% when compared to $1,389,000 in
the second quarter of 2005, primarily resulting from the lack of development
revenue in the second quarter of 2006 compared to $1,232,000 in the second
quarter of 2005.

Net revenue of $2,455,000 in the first half of 2006 decreased 21% when compared
to $3,091,000 in the first half of 2005. ROBODOC Systems sales during the first
half of 2006 accounted for 84% of the revenue for that six month period,
compared to no system sales and development revenue which equals 90% of the
total revenue during the first six months of 2005.

Cost of revenue

Cost of revenue of $12,000 in Q2 2006 decreased 95% when compared to $248,000 in
the second quarter of 2005 and was 6% of revenue compared to 18% of revenue in
the second quarter of 2005 and is directly related to the limited revenue in Q2
2006.

Cost of revenue of $414,000 in the first half of 2006 decreased 11% when
compared to $463,000 in the first half of 2005 and was 17% of revenue compared
to 15% of revenue in the first half of 2005, as the gross sales price of the two
ROBODOC Systems sold in the current year were at a higher price as they were
sold directly to the hospitals and a sales commission was paid to our
distributor and charged to selling, general and administrative expense. These
ROBODOC Systems sales differed from our normal process of selling systems
directly to our distributor at a lower price without commission being paid. The
costs of development revenue on a percentage basis are generally less than that
of other sales.

Gross margin

Gross margin of $188,000 decreased 84% during Q2 of 2006 when compared to
$1,141,000 in the second quarter of 2005 and were 94% of revenue compared to 82%
of revenue in the second quarter of 2005 as 89% of the revenues in Q2 2005 were
from higher margins on development revenues compared to other sales in Q2 2006.

Gross margin of $2,042,000 decreased 22% during the first half of 2006 when
compared to $2,629,000 in the first half of 2005 and were 83% of revenue
compared to 85% of revenue in the first half of 2005. The gross price of the
ROBODOC Systems sold in the current year were at a higher price, as they were
sold directly to the hospital and a sales commission was paid to our distributor
and charged to selling, general and administrative expenses, while 90% of the
revenues in the first half of 2005 were from higher margins on development
revenues.

                                       8

<PAGE>


Operating expenses

Selling, general and administrative expenses of $58,000 decreased 26% during the
second quarter of 2006 when compared to $78,000 in the second quarter of 2005
and were 29% of revenue compared to 6% of revenue in the second quarter of 2005.

Selling, general and administrative expenses of $787,000 increased 43% during
the first half of 2006 when compared to $551,000 in the first half of 2005 and
were 32% of revenue compared to 18% of revenue in the first half of 2005.
Selling, general and administrative expense in the first half 2006 included
$600,000 to our distributor as commission expense. Without this commission,
selling, general and administrative expense would only have been $187,000, or 8%
of revenue for the first half of 2006 due to our limited head count.

Research and development of $3,000 decreased 98% during the second quarter of
2006 when compared to $141,000 in the second quarter of 2005 due to our lack of
cash required to maintain our level of research and development.

Research and development of $162,000 decreased 41% during the first half of 2006
when compared to $275,000 in the first half of 2005 and were 7% of revenue
compared to 9% of revenue in the first half of 2005, as the first half of 2005
reported 5 months of operations and the first half of 2006 reported
limited activity.

Liquidity and Capital Resources

Our cash position is inadequate, and although we have identified potential
sources of cash for future operations, there cannot be any assurance that we
will receive these cash amounts, or that these cash amounts will be sufficient
to assure continuing operations. The report of independent auditors on our
December 31, 2005 financial statements included an explanatory paragraph
indicating there is substantial doubt about our ability to continue as a going
concern. We believe that we have a current plan to address these issues and
enable us to continue operations. This plan includes obtaining additional equity
or debt financing, increasing product sales in existing markets, increasing
sales of system upgrades, and further reductions in operating expenses as
necessary. Although we believe that the plan will be realized, there is no
assurance that these events will occur. In the event that we are unsuccessful in
realizing the benefits of such plan, it is possible that we will seek bankruptcy
protection. The June 30, 2006 unaudited financial statements do not include any
adjustments to reflect the uncertainties related to the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from our inability to continue as a going concern.

At June 30, 2006, our "quick ratio" (cash and accounts receivable divided by
current liabilities), a conservative liquidity measure designed to predict our
ability to pay bills, was only 0.04. It has been difficult for us to meet
obligations, including payroll, as they come due, and we expect this situation
to continue through 2006.

Net cash provided by operating activities was $86,000 for the six months ended
June 30, 2006, resulted primarily from net income of $1,245,000 and a decrease
in inventory of $120,000, offset in part by decreases in accounts payable and
related expenses of $816,000, unearned revenue of $222,000, an increase in other
current assets of $114,000 and the gain on forgiveness of debt of $83,000.

The increase in other current assets was primarily due to advance payment to
vendors required as a result of our history of slow vendor payments. The
decrease in accrued payroll and other related expenses was primarily from
payments made for past due payrolls from prior years and related accrued
benefits. The decrease in unearned income primarily is from the recognition of
revenue on development projects and the recognition of income on servicing
contracts.

We expect to derive most of the cash required to support our operations in 2006
through sales of the ROBODOC Systems and collection of accounts receivable, as
well as through additional financing. It is critical for us to maintain
operations as a going concern in 2006. There can be no assurance that we can
continue to convert inventory, collect receivables or raise additional funds on
acceptable terms, if at all.

                                       9

<PAGE>


At June 30, 2005, we have amounts due to our executive officers of approximately
$21,000 in the aggregate, deferred salaries and unreimbursed travel expenses.
Approximately $19,000 is included in accounts payable, and is due to Ramesh C.
Trivedi, our president and chief executive officer. Approximately $2,000 is
included in expense, and accounts payable, due to Leland Witherspoon, our vice
president of research and development.

We anticipate that we will incur operating losses in the next twelve months.

We do not have any material commitments for capital expenditures.

There are no seasonal aspects to our business.

We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, liquidity or capital resources that
are material to our investors.

Critical Accounting Policies and Estimates

The preparation of our unaudited financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenue and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate the estimates, including those
related to bad debts, inventories, warranties, contingencies and litigation. We
base these estimates on historical experience and on other assumptions believed
to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. We have discussed our critical
accounting policies with our independent accountants. Actual results may differ
from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our financial
statements:

       We recognize revenue from sales of our products upon the completion of
       equipment installation and training at the end-user's site, except when
       the sales contract requires formal customer acceptance. Equipment sales
       with contractual customer acceptance provisions are recognized as revenue
       upon written notification of customer acceptance, which generally occurs
       after the completion of installation and training. Furthermore, due to
       business customs in Japan and the interpretation of Japanese law, all
       equipment sales to Japan are recognized after customer acceptance, which
       generally occurs after the completion of installation and training.
       Revenue related to maintenance and service contracts is recognized
       ratably over the duration of the contracts.

       We periodically evaluate the need for allowances for doubtful accounts
       for estimated losses resulting from the inability of our customers to
       make required payments. If the financial condition of our customers were
       to deteriorate, resulting in an impairment of our ability to make
       payments, additional allowances may be required.

Item 3.   Controls and Procedures

(a) Under the supervision and with the participation of management, including
our President and Chief Executive Officer and Chief Financial Officer, an
evaluation was made of the effectiveness of our disclosure controls and
procedures, as such term is defined under Rule 13a-15(e) promulgated under the
Securities Exchange Act of 1934, as amended. Based upon that evaluation, our
President and Chief Executive Officer and our Chief Financial Officer concluded
that our disclosure controls and procedures were effective as of the end of the
period covered by this quarterly report.


                                       10
<PAGE>


(b) There has been no significant changes in our internal control over financial
reporting during the quarter ended June 30, 2006 that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.


Part II. Other Information

Item 6.   Exhibits

(a)Exhibits

31.1 Certification Pursuant to Exchange Act Rule 13a-14(a) of Ramesh Trivedi
31.2 Certification Pursuant to Exchange Act Rule 13a-14(a) of David Adams
32.1 Certification Pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 of
     Ramesh Trivedi
32.2 Certification Pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 of
     David Adams


                                       11

<PAGE>


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                   INTEGRATED SURGICAL SYSTEMS, INC.


                                    By: /s/ DAVID H. ADAMS
                                        ----------------------------------------
                                         David H. Adams, Chief Financial Officer


April 13, 2007


                                       12
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>iss6302006exh311.txt
<DESCRIPTION>RULE 13A-14(A)/15D-14(A) CERTIFICATIONS
<TEXT>

                                                                   Exhibit 31.1


                                  CERTIFICATION


I, Ramesh C. Trivedi, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of Integrated Surgical
     Systems, Inc. (the "registrant");

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of and for the periods presented in this report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f)) for the registrant and have:

     a)   Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant is made known to us by others within those entities,
          particularly during the period in which this report is being prepared;

     b)   Designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors:

     a)   All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.


/s/ Ramesh C. Trivedi
- ------------------------------------------

Ramesh C. Trivedi, Chief Executive Officer

April 13, 2007



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>iss6302006exh312.txt
<DESCRIPTION>RULE 13A-14(A)/15D-14(A) CERTIFICATIONS
<TEXT>

                                                                    Exhibit 31.2


                                  CERTIFICATION


I, David H. Adams, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of Integrated Surgical
     Systems, Inc. (the "registrant");

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of and for the periods presented in this report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f)) for the registrant and have:

     a)   Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant is made known to us by others within those entities,
          particularly during the period in which this report is being prepared;

     b)   Designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     c)   Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors:

     a)   All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.


/s/ David H. Adams
- ---------------------------------------

David H. Adams, Chief Financial Officer

April 13, 2007


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>iss6302006exh321.txt
<DESCRIPTION>SECTION 1350 CERTIFICATIONS
<TEXT>

                                                                   Exhibit 32.1


                                  CERTIFICATION


In connection with the Quarterly Report on Form 10-QSB of Integrated Surgical
Systems, Inc. (the "Company") for the period ended June 30, 2006, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Ramesh C. Trivedi, Chief Executive Officer of the Company, certify, pursuant to
18 U.S.C. 1350, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.


/s/ Ramesh C. Trivedi
- ------------------------------------------

Ramesh C. Trivedi, Chief Executive Officer

April 13, 2007

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>iss6302006exh322.txt
<DESCRIPTION>SECTION 1350 CERTIFICATIONS
<TEXT>


                                                                   Exhibit 32.2


                                  CERTIFICATION


In connection with the Quarterly Report on Form 10-QSB of Integrated Surgical
Systems, Inc. (the "Company") for the period ended June 30, 2006, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
David H. Adams, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. 1350, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.


/s/ David H. Adams
- ---------------------------------------

David H. Adams, Chief Financial Officer

April 13, 2007
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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