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SEC Filings

10-Q
HEARTWARE INTERNATIONAL, INC. filed this Form 10-Q on 11/02/2015
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Table of Contents

On January 30, 2014, we filed a shelf registration statement with the SEC on Form S-3. This shelf registration statement allows us to offer and sell from time to time, in one or more series or issuances and on terms that we will determine at the time of the offering any combination and amount of the securities described in the prospectus contained in the registration statement or in the prospectus supplement filed with respect to a particular offering. An aggregate of 530,816 shares of our common stock were registered for issuance pursuant to various prospectus filings on January 30, 2014 in connection with our acquisition of CircuLite. As of September 30, 2015, there remained 248,872 shares of our common stock reserved for potential issuance in connection with future contingent milestone payments under the terms of the CircuLite merger agreement.

Following satisfaction of a pre-specified milestone in the fourth quarter of 2014, we were obligated to pay $2.0 million under a certain patent assignment and license agreement. The $2.0 million, which was payable in cash or shares of our common stock, was accrued at December 31, 2014 in other long term liabilities on our condensed consolidated balance sheets. We issued an aggregate of 26,042 shares of our common stock in the second quarter of 2015 to settle this liability.

Following satisfaction of a pre-specified milestone in December 2013, we were obligated to pay an additional $5.0 million under a certain patent assignment and license agreement. The $5.0 million, which was payable in cash or shares of our common stock, was settled through the issuance of 50,330 shares of our common stock in the first quarter of 2014.

In the nine months ended September 30, 2015, we issued an aggregate of 2,866 shares of our common stock upon the exercise of stock options and an aggregate of 129,896 shares of our common stock upon the vesting of restricted stock units.

In the nine months ended September 30, 2014, we issued an aggregate of 28,250 shares of our common stock upon the exercise of stock options and an aggregate of 58,000 shares of our common stock upon the vesting of restricted stock units.

Note 9. Share-Based Compensation

We allocate share-based compensation expense to cost of revenue, selling, general and administrative expense and research and development expense based on the award holder’s employment function. For the three and nine months ended September 30, 2015 and 2014, we recorded share-based compensation expense as follows:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2015      2014      2015      2014  
     (In thousands)  

Cost of revenues

   $ 514       $ 611       $ 1,499       $ 1,720   

Selling, general and administrative

     3,426         3,561         10,558         9,958   

Research and development

     2,138         2,205         6,742         5,613   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 6,078       $ 6,377       $ 18,799       $ 17,291   
  

 

 

    

 

 

    

 

 

    

 

 

 

Deferred tax benefits attributed to our share-based compensation expense are not recognized in the accompanying condensed consolidated financial statements because we are in a net operating loss position and a full valuation allowance is maintained for all net deferred tax assets. We receive a tax deduction for certain stock option exercises during the period the options are exercised, and for the vesting of restricted stock units during the period the restricted stock units vest. For stock options, the amount of the tax deduction is generally for the excess of the fair market value of our shares of common stock over the exercise price of the stock options at the date of exercise. For restricted stock units, the amount of the tax deduction is generally for the fair market value of our shares of common stock at the vesting date. Excess tax benefits are not included in the accompanying condensed consolidated financial statements because we are in a net operating loss position and a full valuation allowance is maintained for all net deferred tax assets.

Equity Plans

We have issued share-based awards to employees, non-executive directors and outside consultants through various approved plans and outside of any formal plan. New shares are issued upon the exercise of share-based awards.

 

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