<PAGE>   1
                                  United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                 FORM 10-QSB/A

                                Amendment No. 1

This amendment is being made to report preferred stock discount and accretion
on the Consolidated Balance Sheet consistent with December 31, 1998 statement
presentation. Additionally, Part II, Other Information, Item 5 has been added.

                                   (MARK ONE)

[x]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 For the Period Ended March 31, 1999.

[ ]      Transition Report Pursuant to 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 registrant as specified in its charter)

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

1850 Research Park Drive
Davis, CA                                                         95616-4884
(Address of principal executive offices)                          (Zip Code)

                                  530-792-2600
              (Registrant's telephone number, including area code)

                 829 West Stadium Lane, Sacramento, CA 95834
                               (former address)

                                 Not applicable
               (Former name, and former fiscal year, if changed
                               since last report)

     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 Act of 1934
     during the preceding 12 months (or for such shorter periods 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 ___

                Applicable Only to Issuers Involved in Bankruptcy
                   Proceedings During the Preceding Five Years

      Indicate by check mark whether the registrant has filed all documents and
      reports required to be filed by Sections 12, 13 or 15(d) of the Securities
      Exchange Act of 1934 subsequent to the distribution of securities under a
      plan confirmed by the court. Yes ___ No ___

                      Applicable Only to Corporate Issuers

      Indicate the number of shares outstanding of each of the issuer's classes
      of common stock, as of the latest practical date.

         Common Stock $.01 Par Value - 5,959,311 shares as of May 1, 1999.
<PAGE>   2
                        INTEGRATED SURGICAL SYSTEMS, INC.

                                      Index

<TABLE>
<S>    <C>
Part I.  Financial Information

Item 1.  Financial Statements (Unaudited)

         Consolidated Balance Sheet - March 31, 1999

         Consolidated Statements of Operations - Three months ended
         March 31, 1999 and 1998

         Consolidated Statements of Cash Flows - Three months ended
         March 31, 1999 and 1998

         Notes to Consolidated Financial Statements - March 31, 1999

Item 2.  Management's Discussion and Analysis or Plan of Operation

Part II. Other Information

Item 2.  Changes in Securities and Use of Proceeds
Item 5.  Other Information
Item 6.  Exhibits and Reports on Form 8-K

Signatures
</TABLE>



<PAGE>   3
PART I. FINANCIAL INFORMATION
          ITEM 1. FINANCIAL STATEMENTS

                       INTEGRATED SURGICAL SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEET
                                  (UNAUDITED)

<TABLE>
<CAPTION>
ASSETS                                                        March 31, 1999
Current Assets:                                                 (unaudited)
                                                              --------------
<S>                                                           <C>
     Cash and cash equivalents ............................     $    856,231
     Short-term investments................................        2,041,361
     Accounts receivable ..................................        1,699,846
     Inventory ............................................        3,712,700
     Other current assets .................................          447,647
                                                              --------------
Total current assets ......................................        8,757,785

Property and equipment, net ...............................        1,243,197
Leased equipment, net .....................................          733,261
Long-term net investment in sales type leases .............          628,607
Intangible assets, net ....................................        2,805,218
Other assets ..............................................          272,423
                                                              --------------
Total assets                                                    $ 14,440,491
                                                              ==============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Accounts payable .....................................     $  3,071,510
     Value-added taxes payable ............................          522,336
     Accrued payroll and related expenses .................          530,331
     Customer deposits ....................................        1,338,284
     Accrued product retrofit costs .......................          135,348
     Current portion of bank loans ........................        1,608,043
     Other current liabilities ............................          689,233
                                                              --------------
Total current liabilities .................................        7,895,085

Bank loans, long-term .....................................            1,740
Note payable ..............................................          131,840

Commitments and contingencies

Stockholders' equity:

     Convertible preferred stock, $0.01 par value
      1,000,000 shares authorized; 4,180 shares issued
      and outstanding ....................................               42
      ($4,180,000 aggregate liquidation value)
     Common stock, $0.01 par value, 15,000,000 shares
      authorized; 5,822,116 shares issued and outstanding .           58,271
     Additional paid-in capital ...........................       43,479,375
     Deferred stock compensation ..........................          (70,353)
     Preferred stock discount .............................         (171,569)
     Accumulated other comprehensive loss .................         (110,229)
     Accumulated deficit ..................................      (36,773,711)
                                                              --------------
Total stockholder's equity ................................        6,411,826
                                                              --------------
                                                                $ 14,440,491
                                                              ==============
</TABLE>


                See notes to consolidated financial statements.
<PAGE>   4
                        INTEGRATED SURGICAL SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED
                                                     MARCH 31,
                                               ------------------------
                                                   1999        1998
                                               -----------   ----------
<S>                                            <C>           <C>
Net Sales ...................................  $ 2,286,723   $ 1,383,360
Cost of Sales ...............................    1,105,379       622,773
                                               -----------   -----------
                                                 1,181,344       760,587
Operating expenses:
   Selling, general and administrative ......    1,576,615     1,377,641
   Research and development .................    1,629,706     1,490,284
   Stock compensation .......................       15,285        18,000
                                               -----------   -----------
                                                 3,221,606     2,885,925
Other income (expense):
   Interest income ..........................       37,128       100,108
   Other ....................................     (288,187)      (10,320)
                                               -----------   -----------

Loss before provision for income taxes ......   (2,291,321)   (2,035,550)
Provision for income taxes ..................       14,694         9,051
                                               -----------   -----------
Net loss ....................................   (2,306,015)   (2,044,601)

Preferred stock accretion ...................     (244,638)       --
                                               -----------   -----------
Net loss applicable to common stockholders...  $(2,550,653)  $(2,044,601)
                                               ===========   ===========

Basic net loss per common share .............      $ (0.45)      $ (0.37)

Shares used in computing basic net loss
  per-share .................................    5,675,744     5,526,642
</TABLE>

See notes to consolidated financial statements
<PAGE>   5
n                      INTEGRATED SURGICAL SYSTEMS, INC.
                    Consolidated Statements of Cash Flows
               Increase (Decrease) in Cash and Cash Equivalents
                                 (Unaudited)

<TABLE>
<CAPTION>

                                                                                   THREE MONTHS ENDED MARCH 31
                                                                                   1999                    1998
                                                                                ----------              ----------
<S>                                                                         <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net loss .............................................................      $    (2,306,015)      $    (2,044,601)

Adjustment to reconcile net loss to net cash used in
    operating activities:
        Depreciation .................................................              231,347                75,461
        Amortization of intangible assets ............................              209,760               209,760
        Unrealized gain on securities ................................               14,683                   -
        Stock compensation ...........................................               15,285                18,000
        Issuance of stock options to consultants .....................               30,905                11,010
        Changes in operating assets and liabilities...................
             Accounts Receivable .....................................              205,292               (71,163)
             Inventory ...............................................             (707,042)             (697,719)
             Other current assets ....................................               16,774              (149,093)
             Accounts payable ........................................            1,595,756               332,644
             Value added taxes payable ...............................              174,752                84,297
             Accrued payroll and related expenses ....................               59,053               (23,753)
             Customer deposits .......................................              442,008               339,896
             Payable to subcontractors ...............................                 -                  (38,656)
             Other current liabilities ...............................              (43,361)               49,086
             Note Payable ............................................              (11,360)               (4,058)
                                                                            ----------------      ----------------
Net cash used in operating activities ................................              (72,163)           (1,908,889)
                                                                            ----------------      ----------------
CASH FLOWS FROM INVESTING ACTIVITIES

Investment in marketable securities...................................              (17,083)                 -
Net investments in sales type leases..................................             (366,273)               27,092
Purchases of property and equipment...................................             (215,555)             (202,047)
(Increase) decrease in other assets...................................                  109               (51,934)
                                                                            ----------------      ----------------
Net cash used in investing activities ................................             (598,802)             (226,889)
                                                                            ----------------      ----------------
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds (payments) bank loans .......................................              705,257               (29,008)
Payment of expenses on Series A Preferred Stock offering..............              (17,399)                 -
Proceeds from issuance of preferred stock.............................              946,500                  -
Proceeds from sale of warrants........................................                 -                    6,930
Proceeds from exercise of stock options...............................                1,385                 7,101
                                                                            ----------------       ---------------
Net cash provided by (used in) financing activities ..................            1,635,743               (14,977)

Effect of exchange rate changes on cash
   and cash equivalents...............................................             (332,128)               56,914
                                                                            ----------------       ---------------
Net increase (decrease) in cash and cash equivalents .................              632,650            (2,093,841)

Cash and cash equivalents at beginning of period .....................              223,581             9,091,788
                                                                            ----------------       ---------------

Cash and cash equivalents at end of period ...........................      $       856,231        $    6,997,947
                                                                            ================       ===============

See notes to consolidated financial statements.

</TABLE>
<PAGE>   6
                        INTEGRATED SURGICAL SYSTEMS, INC.

Notes to Consolidated Financial Statements (unaudited)

March 31, 1999

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three-month period ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1999. For further information, refer to the consolidated financial statements
and footnotes thereto included in Integrated Surgical Systems, Inc.'s annual
report on Form 10-KSB for the year ended December 31, 1998.

NOTE B - INVENTORIES

The components of inventory consist of the following:

<TABLE>
<CAPTION>
                                      March 31, 1999
                                    ------------------
<S>                                <C>
             Raw Materials              $1,515,500
             Work in process               717,286
             Finished goods              1,479,914
                                        ----------
                                        $3,712,700
                                        ==========

</TABLE>

<PAGE>   7
NOTE C - CONVERTIBLE PREFERRED STOCK

In March 1999, the Company received net proceeds of $946,500 from the sale of
1,000 shares of Series B Convertible Preferred Stock ("Series B Preferred
Stock") and warrants ("Warrants") to purchase 12,500 shares of common stock
("Common Stock"), par value $.01 per share.

The Series B Preferred Stock is convertible (the "Beneficial Conversion
Feature") into shares of Common Stock, at the option of the holder, commencing
June 24, 1999, subject to certain limitations, discussed below. The number of
shares of Common Stock issuable upon conversion of the Series B Preferred Stock
is equal to the quotient of (x) the product of $1,000 (the stated value of each
share of Series B Preferred Stock) and the number of shares of Series B
Preferred Stock to be converted and (y) 85% of the lowest sale price of the
Common Stock on the Nasdaq SmallCap Market during the five trading days
preceding the date of conversion (the "Market Price"), but in no event more than
$3.37 (the "Conversion Price").

Holders of Series B Preferred Stock may convert 25% of their shares commencing
June 24, 1999, 50% of their shares commencing July 24, 1999, 75% of their shares
Commencing August 23, 1999 and 100% of their shares commencing September 22,
1999. The Company may require holders to convert all (but not less than all) of
the Series B Preferred Stock at any time after March 26, 2002, or buy out all
outstanding shares, at the then Conversion Price.

The value assigned to the Beneficial Conversion Feature, as determined using the
quoted market price of the Company's common stock on the date the Series B
Preferred Stock was sold, amounted to $176,000, which represents a discount to
the value of the Series B Preferred Stock (the "Discount".) The Discount is
being accreted using the straight-line method through September 22, 1999.
Approximately $5,000 of the Discount was accreted during the three month period
ended March 31, 1999.

Holders of Series B Preferred Stock are not entitled to dividends and have no
voting rights, unless required by law or with respect to certain matters
relating to the Series B Preferred Stock.

The Company may redeem the Series B Preferred Stock upon written notice to the
holders of the Series B Preferred Stock at any time after the earlier of
September 26, 1999 and the closing of a registered firm underwritten secondary
offering of equity securities, at a redemption price equal to the greater of
$1,500 per share and the Market Price of the Shares of Common Stock into which
such Series B Preferred Stock could  have been converted on the date of the
notice of redemption.

The Warrants are exercisable at any time during the period commencing September
26, 1999 and ending September 25, 2003, at an exercise price of $2.56, subject
to adjustment. The Conversion Price and the number of shares of Common Stock
issuable upon conversion are subject to adjustment based upon certain future
events.

NOTE D - NET LOSS PER SHARE

In 1997, the Financial Accounting Standards Board ("FASB") issued Statement No.
128, Earnings Per Share.  Statement 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities.  Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share.  All net loss per share amounts have been presented on the
basis set forth in Statement 128.

As of March 31, 1999, outstanding options to purchase 1,353,164 shares of Common
Stock (with exercise prices ranging from $0.07 to $8.63) and outstanding
warrants to purchase 4,564,316 shares of Common Stock (with exercise prices
ranging from $0.01 to $8.26) could potentially dilute basic earnings per share
in the future and have not been included in the computation of diluted net loss
per share because to do so would have been antidilutive for the periods
presented.

<PAGE>   8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Results of Operations

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998

     Net Sales. Net sales for the three months ended March 31, 1999 (the "1999
Interim Period") were approximately $2,287,000, largely attributable to the sale
of three ROBODOC Systems compared to the three months ended March 31, 1998 (the
"1998 Interim Period") of approximately $1,383,000, which included the sale of
two ROBODOC systems.

     Cost of Sales. Cost of sales for the 1999 Interim Period was approximately
$1,105,000 (48% of net sales) as compared to the 1998 Interim Period of
approximately $622,000 (45% of net sales). The higher cost as a percent of sales
in the 1999 Interim Period is a result of lower unit selling prices attributable
to two customers purchasing more than one ROBODOC systems.

     Selling, General and Administrative. Selling, general and administrative
expenses for the 1999 Interim Period (approximately $1,577,000) increased by
approximately $119,000, or 13% as compared to the 1998 Interim Period
(approximately $1,378,000). Marketing costs increased approximately $107,000
with the addition of five employees in sales and increased participation in
medical conferences and travel to potential customer sites. General and
administrative costs increased approximately $92,000 to support increased
growth as well as investor relations.

     Research and Development. Research and development expenses for the 1999
Interim Period (approximately $1,630,000) increased by approximately $140,000,
or approximately 9%, as compared to the 1998 Interim Period (approximately
$1,490,000), due to additional engineering staff required to support new
applications of existing products and new product development projects.

     Stock Compensation. Stock compensation expense during the 1999 Interim
Period was $15,000, $3,000 lower than the 1998 Interim Period ($18,000). The
Company charged to operations in 1996 deferred stock compensation relating to
stock options granted during 1996 with exercise prices less than the estimated
fair value of the Company's Common Stock, as determined by an independent
valuation analysis, on the date of grant. Deferred compensation for the
non-vested portion is being amortized into expense over the vesting period of
the stock options, which generally range from three to five years. Stock
compensation expense in the 1999 and 1998 Interim Periods represents the
additional vesting which occurred in the first three months of 1999 and 1998.

     Interest Income. Interest income for the 1999 Interim Period (approximately
$37,000) decreased by approximately $63,000, or 63%, as compared to the 1998
Interim Period (approximately $100,000), primarily due to lower average cash
balances during the 1999 Interim Period as a result of the Company's 1998
operating loss.

     Other Income and Expense. Other expense for the 1999 Interim Period was
approximately $288,000 compared to expense of approximately $10,000 in the 1998
Interim Period. The increase in expense ($278,000) is primarily attributable to
an exchange rate loss associated with a weaker Dutch Guilder against the U.S.
dollar in the 1999 Interim Period.

     Net Loss. The net loss for the 1999 Interim Period (approximately
$2,306,000) increased by approximately $261,000, or approximately 128%, as
compared to the net loss for the 1998 Interim Period (approximately $2,045,000).

<PAGE>   9
Liquidity and Capital Resources

     Since inception, the Company's expenses have exceeded net sales. Operations
have been funded primarily from the issuance of debt and the sale of equity
securities aggregating approximately $36.9 million. In addition, the Company was
the beneficiary of proceeds from a $3 million key-man life insurance policy in
1993 upon the death of one of its executives.

     The Company's use of cash in operating activities of approximately $72,000
in the 1999 Interim Period decreased by approximately $1,837,000 as compared to
cash usage due to operating activities in the 1998 Interim Period of
approximately $1,909,000. The reduced operating cash usage in the 1999 Interim
Period was primarily a result of an increase in accounts payable of
approximately $1,596,000, an increase in customer deposits of $442,000, a
reduction in accounts receivable of approximately $206,000 and an increase in
inventories of approximately $707,000.

     The Company's use of cash in investing activities of approximately
$599,000 in the 1999 Interim Period increased by approximately $372,000 as
compared to cash usage due to investing activities in the 1998 Interim Period
of approximately $227,000. The investment cash usage in the 1999 Interim Period
was primarily due to investments in customer sales-type and operating leases.

     Cash provided by financing activities in the 1999 Interim Period was
approximately $1,636,000 and increased by approximately $1,651,000 as compared
to the financing activities during the 1998 Interim Period. In March 1999 the
Company received net proceeds of approximately $947,000 from the sale of Series
B Preferred Stock and Warrants (see Note C to the financial statements and Part
II, Item 2. Changes in Securities and Use of Proceeds).

     The Company's available cash resources, together with anticipated cash
flows from operations, may not be sufficient to continue operations without
additional financing. The Company has been able to raise capital from the
investment community under terms that have been satisfactory. The Company
continues to seek additional financing, such financing may not be available on
terms acceptable to the Company. The Company is attempting to reduce operating
expense to a point where funds generated internally will mitigate the
possibility of having to look to the investment community for capital.

Year 2000 Compliance

     The Company has a wide variety of computers and computer software used in
the normal course of business. In predominant use throughout the Company are
commercially available hardware and software products that are year 2000
compliant.

     The Company has potential exposure to the year 2000 computer bug in two
areas. First, the Company's accounting and manufacturing system, which is not
year 2000 compliant, could cause disruption of business, if it could not be
upgraded or replaced by the end of 1999. Secondly, products are computer
controlled, and might not function if affected by the year 2000 bug. Company
products are not highly date sensitive, which minimizes the impact of any year
2000 issues identified.

     Potential exposure in other areas is minimal. Any year 2000 problems with
the Company's network or software used for research and development and
engineering could adversely affect research and development and engineering
costs, but would not immediately affect the ability to continue operations.
Such issues could also be resolved in short order with commercially available
products. Many of our major product components have relatively long lead times.
Temporary interruptions in our supplies caused by any year 2000 issues would
not significantly impact our manufacturing schedule, or our ability to service
customers. In general, the company has determined that there is a minimal
exposure to year 2000 problems through third parties.

     The Company is in the process of selecting a solution for its accounting
and manufacturing computer system. We plan to complete the replacement or
upgrade by the beginning of the fourth quarter of 1999. The Company has
completed initial investigations of its products and concluded that there is
minimal risk of system failure due to the year 2000 problem.

     It is estimated that the Company will need to spend less than $100,000 to
become year 2000 compliant. The majority of this cost relates to upgrading or
replacing the Company's accounting and manufacturing system. Expenses include
the testing conducted by the Quality Department, Engineering Department
involvement in testing and de-bugging, and the Service Department upgrades to
customer equipment if any such service is required.

     In the worst case scenarios, the Company believes that it would have
minimal business interruption due to any foreseeable year 2000 problems.
Management believes alternate vendors, and off the shelf solutions will be
available to solve any of the Company's undetected problems. In addition, the
Company is small enough to allow it to function with minimal operating
procedures for short periods of time.

     Year 2000 project cost is based on management's best estimate and actual
results could differ from those anticipated. If the Company or its vendors are
unable to resolve the year 2000 issue in a timely manner, or if there are
significant undetected year 2000 issues, such matters could have a material
impact on the Company's results of operations. However, the Company believes
the necessary modifications and replacement of computer systems will be
completed in 1999 and, as a result, the year 2000 issue is not expected to pose
significant operational or financial problems for the Company.
<PAGE>   10
PART II. OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds

(c)  On March 26, 1999, the Company issued and sold 1,000 shares of Series B
Convertible Preferred Stock ("Series B Preferred Stock") and warrants to
purchase 12,500 shares of common stock, par value $.01 per share ("Common
Stock"), to  institutional accredited investors for a total purchase price of
$1,000,000, pursuant to a Preferred Stock Purchase Agreement dated as of March
26, 1999 (the "Purchase Agreement"). In addition, the Company issued 1,429
shares of Common Stock to a registered broker-dealer in connection with the
preferred stock financing. The Series B Preferred Stock, warrants and shares of
Common Stock were issued pursuant to the exemption from the registration
requirements of the Securities Act of 1933 (the "Securities Act") provided by
Section 4(2) of the Securities Act and Rule 5.06 of Regulation D promulgated by
the Commission under that Section.

The Series B Preferred Stock is convertible into shares of Common Stock, at the
option of the holder thereof, commencing June 24, 1999, subject to certain
limitations, discussed below. The number of shares of Common Stock issuable upon
conversion of the Series B Preferred Stock is equal to the quotient of (x) the
product of $1,000 (the stated value of each share of Series B Preferred Stock)
and the number of shares of Series B Preferred Stock to be converted and (y) 85%
of the lowest sale price of the Common Stock on the Nasdaq SmallCap Market
during the five trading days preceding the date of conversion (the "Market
Price"), but in no event more than $3.37 (the "Conversion Price").

Holders of Series B Preferred Stock may convert 25% of their shares commencing
June 24, 1999, 50% of their shares commencing July 24, 1999, 75% of their shares
commencing August 23, 1999 and 100% of their shares commencing September 22,
1999. No holder may convert the Series B Preferred Stock to the extent such
conversion would result in the holders in the aggregate acquiring more than
1,137,624 shares of Common Stock (the "Maximum Shares"), representing 19.9% of
the number of shares of Common Stock outstanding on March 26, 1999 (the date
upon which the Series B Preferred Stock and the warrants were issued), unless
and until the Company's stockholders approve the issuance of more than the
Maximum Shares. The Company's stockholders approved the issuance upon
conversion of the Series B Preferred Stock of more than the Maximum Shares at
the Annual Meeting of Shareholders on April 27, 1999. The Company may require
holders to convert all (but not less than all) of the Series B Preferred Stock
at any time after March 26, 2002, or buy out all outstanding shares, at the
then Conversion Price.

Holders of Series B Preferred Stock are not entitled to dividends and have no
voting rights, unless required by law or with respect to certain matters
relating to the Series B Preferred Stock.

The Company may redeem the Series B Preferred Stock upon written notice to the
holders of the Series B Preferred Stock at any time after the earlier of
September 26, 1999 and the closing of a registered firm commitment underwritten
secondary offering of the Company's equity securities, at a redemption price
equal to the greater of $1,500 per share and the Market Price of the shares of
Common Stock into which such shares of Series B Preferred Stock could have been
converted on the date of the notice of redemption.

The Conversion Price and the number of shares of Common Stock issuable upon
conversion are subject to adjustment in the event of a stock split, stock
dividend, reorganization, reclassification or issuances of shares of Common
Stock (or securities convertible into or exercisable or exchangeable for Common
Stock) prior to the first anniversary of the effective date of the registration
statement referred to below, at less than the then Conversion Price in
transactions exempt from the registration requirements of the Securities Act if
the Company grants the purchasers of such shares (or other securities) the right
to demand registration of such shares.

The warrants are exercisable at any time during the period commencing September
26, 1999 and ending September 25, 2003, at an exercise price of $2.56, subject
to adjustment in the event of a stock split, stock dividend, reclassification,
recapitalization, merger, consolidation or certain dispositions of assets.

<PAGE>   11

Item 5. Other Information
On May 25, 1999, the company entered into a letter of intent with the
foreign investor to provide the Company with $4 million for 2,922,392 shares
($1.36874 per share) of common stock, plus warrants to purchase additional
shares of common stock that would entitle the investors to acquire 40% of the
Company's fully diluted equity. The warrants would have a term of three years
and an initial exercise price of $1.02656 per share, but may not be exercised
prior to twelve months after their issuance. In addition, the investors would
enter into a distribution agreement that would give them the exclusive right to
distribute the Company's products in Europe, the Middle East and Africa. The
investors would pay the Company a monthly royalty of $400,000, offset by the
purchase price of products that they purchase.

The investor group would have the right to designate a majority of the members
of the Company Board of Directors. In furtherance of the proposed transactions,
Ramesh C. Trivedi who resigned his position with the Company on April 26, 1999
has rejoined the Company as Chief Executive Officer and President.

The proposed financing is subject to the negotiation and execution of
definitive agreements and approval of the Company's stockholders.



<PAGE>   12

Signatures

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

                                  INTEGRATED SURGICAL SYSTEMS, INC.


Date: June 3, 1999           by:   /s/ Mark W. Winn
                                  ------------------------------------------
                                  Mark W. Winn, Chief Financial Officer