##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2009
 o
    
    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: 001-34256
 HEARTWARE INTERNATIONAL, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    26-3636023(State of Incorporation)
    
    (I.R.S. Employer Identification No.)
 205 Newbury Street, Suite 101
Framingham, Massachusetts 01701
+1 508 739 0950
 
 
 : þ o
  Large accelerated filer o
    
    Accelerated filer o
    

    Non-accelerated filer o
    
    Smaller reporting company þ
 Yes o No o
 o þ
  Class
    
    Shares Outstanding as of October 31, 2009Common Stock, $0.001 Par Value Per Share
    
    11,713,284




---



##### 



PART I. FINANCIAL INFORMATION
    
    
    4ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    
    
    4ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    21ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    31ITEM 4. CONTROLS AND PROCEDURES
    
    
    32PART II. OTHER INFORMATION
    
    
    33ITEM 1A. RISK FACTORS
    
    
    33ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    33ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    34ITEM 6. EXHIBITS
    
    
    34Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



References
  
    
    HeartWare, the Company, HeartWare Group, we, us and our refer to HeartWare
International, Inc. and its consolidated subsidiaries, HeartWare Pty. Limited and
HeartWare, Inc.
 
    
    HeartWare International, Inc. refers to HeartWare International, Inc., a Delaware
corporation incorporated on July 29, 2008.
 
    
    HeartWare Pty. Limited refers to HeartWare Pty. Limited, an Australian proprietary
corporation.
 
    
    HeartWare, Inc. refers to HeartWare, Inc., a Delaware corporation incorporated on
April 3, 2003. HeartWare, Inc. was acquired by HeartWare Pty. Limited on January 24, 2005.
 Dollars
  Trademarks
 ® TM TM
 
  3




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
 September 30,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    31,420,873
    
    
    $
    20,803,656Accounts receivable
    
    
    6,138,128
    
    
    
    244,198Inventories, net
    
    
    8,008,406
    
    
    
    3,508,065Prepaid expenses and other current assets
    
    
    1,140,007
    
    
    
    1,061,737Total current assets
    
    
    46,707,414
    
    
    
    25,617,656Property, plant and equipment, net
    
    
    3,913,828
    
    
    
    3,608,626Other intangible assets, net
    
    
    1,117,559
    
    
    
    823,495Deferred financing costs, net
    
    
    3,602,879
    
    
    
    Restricted cash
    
    
    288,429
    
    
    
    288,429Total assets
    
    $
    55,630,109
    
    
    $
    30,338,206LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,404,164
    
    
    $
    699,064Accrued expenses and other current liabilities
    
    
    2,495,804
    
    
    
    2,883,587Total current liabilities
    
    
    5,899,968
    
    
    
    3,582,651Long-term convertible debt
    
    
    4,000,000
    
    
    
    Derivative instrument
    
    
    6,114,868
    
    
    
    Commitments and contingenciesStockholders equity:Preferred stock  $.001 par value; 5,000,000
shares authorized; no shares issued and
outstanding at September 30, 2009 and December
31, 2008
    
    
    
    
    
    
    Common stock  $.001 par value; 25,000,000
shares authorized; 10,316,809 and 8,866,702
shares issued and outstanding at September 30,
2009 and December 31, 2008, respectively
    
    
    10,317
    
    
    
    8,867Additional paid-in capital
    
    
    143,446,590
    
    
    
    112,400,642Accumulated deficit
    
    
    (95,960,662
    )
    
    
    (76,962,787
    )Accumulated other comprehensive loss:Cumulative translation adjustments
    
    
    (7,880,972
    )
    
    
    (8,691,167
    )Total stockholders equity
    
    
    39,615,273
    
    
    
    26,755,555Total liabilities and stockholders equity
    
    $
    55,630,109
    
    
    $
    30,338,206
   4




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues, net
    
    $
    7,506,209
    
    
    $
    87,600
    
    
    $
    11,952,452
    
    
    $
    87,600Cost of revenues
    
    
    4,103,700
    
    
    
    
    
    
    
    6,401,429
    
    
    
    Gross profit
    
    
    3,402,509
    
    
    
    87,600
    
    
    
    5,551,023
    
    
    
    87,600Operating expenses:Selling, general and administrative
    
    
    3,148,897
    
    
    
    3,180,541
    
    
    
    11,720,760
    
    
    
    7,993,264Research and development
    
    
    3,645,980
    
    
    
    5,478,392
    
    
    
    9,994,274
    
    
    
    14,801,319Total operating expenses
    
    
    6,794,877
    
    
    
    8,658,933
    
    
    
    21,715,034
    
    
    
    22,794,583Loss from operations
    
    
    (3,392,368
    )
    
    
    (8,571,333
    )
    
    
    (16,164,011
    )
    
    
    (22,706,983
    )Other income (expense):Foreign exchange gain (loss)
    
    
    107,609
    
    
    
    3,196,201
    
    
    
    (260,049
    )
    
    
    1,925,578Interest expense
    
    
    (350,696
    )
    
    
    (2,470
    )
    
    
    (350,696
    )
    
    
    (17,230
    )Interest income
    
    
    7,278
    
    
    
    475,321
    
    
    
    25,827
    
    
    
    1,052,855Change in fair value of derivative
instrument
    
    
    (2,223,759
    )
    
    
    
    
    
    
    (2,223,759
    )
    
    
    Other, net
    
    
    (22,500
    )
    
    
    
    
    
    
    (25,187
    )
    
    
    (92,112
    )Loss before income taxes
    
    
    (5,874,436
    )
    
    
    (4,902,281
    )
    
    
    (18,997,875
    )
    
    
    (19,837,892
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (5,874,436
    )
    
    $
    (4,902,281
    )
    
    $
    (18,997,875
    )
    
    $
    (19,837,892
    )Net loss per common share  basic
and diluted
    
    $
    (0.60
    )
    
    $
    (0.57
    )
    
    $
    (2.07
    )
    
    $
    (2.61
    )Weighted average shares
outstanding  basic and diluted
    
    
    9,715,577
    
    
    
    8,654,660
    
    
    
    9,156,074
    
    
    
    7,614,416
   5




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net loss
    
    $
    (5,874,436
    )
    
    $
    (4,902,281
    )
    
    $
    (18,997,875
    )
    
    $
    (19,837,892
    )Foreign currency
translation
adjustments
    
    
    55,836
    
    
    
    (6,796,767
    )
    
    
    810,195
    
    
    
    (4,958,052
    )Comprehensive loss
    
    $
    (5,818,600
    )
    
    $
    (11,699,048
    )
    
    $
    (18,187,680
    )
    
    $
    (24,795,944
    )
   6




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(unaudited)
 AccumulatedCommon Shares
    
    
    Additional
    
    
    
    
    
    
    OtherShares
    
    
    
    
    
    
    Paid-In
    
    
    Accumulated
    
    
    ComprehensiveIssued
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Loss
    
    
    TotalBalance, December 31, 2008
    
    
    8,866,702
    
    
    $
    8,867
    
    
    $
    112,400,642
    
    
    $
    (76,962,787
    )
    
    $
    (8,691,167
    )
    
    $
    26,755,555Issuance of common stock
pursuant to private
placement, net of offering
costs
    
    
    1,340,798
    
    
    
    1,341
    
    
    
    28,614,558
    
    
    
    
    
    
    
    
    
    
    
    28,615,899Issuance of common stock
pursuant to share-based
awards
    
    
    109,309
    
    
    
    109
    
    
    
    640,974
    
    
    
    
    
    
    
    
    
    
    
    641,083Share-based compensation
expense
    
    
    
    
    
    
    
    
    
    
    1,790,416
    
    
    
    
    
    
    
    
    
    
    
    1,790,416Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,997,875
    )
    
    
    
    
    
    
    (18,997,875
    )Accumulated other
comprehensive loss:Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    810,195
    
    
    
    810,195Balance, September 30, 2009
    
    
    10,316,809
    
    
    $
    10,317
    
    
    $
    143,446,590
    
    
    $
    (95,960,662
    )
    
    $
    (7,880,972
    )
    
    $
    39,615,273
   7




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Nine Months Ended September 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (18,997,875
    )
    
    $
    (19,837,892
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    
    672,254
    
    
    
    470,457Amortization
    
    
    54,641
    
    
    
    23,781Share-based compensation expense
    
    
    1,790,416
    
    
    
    781,421Loss on disposal of assets
    
    
    25,188
    
    
    
    92,112Amortization of deferred financing costs
    
    
    288,230
    
    
    
    Change in fair value of derivative instrument
    
    
    2,223,759
    
    
    
    Accrued interest on convertible note
    
    
    
    
    
    
    (81,632
    )Change in operating assets and liabilities:Accounts receivable
    
    
    (5,893,930
    )
    
    
    (87,600
    )Inventories, net
    
    
    (4,500,341
    )
    
    
    (580,642
    )Prepaid expenses and other current assets
    
    
    (108,259
    )
    
    
    (91,117
    )Accounts payable
    
    
    2,710,372
    
    
    
    231,558Accrued expenses and other current liabilities
    
    
    (675,832
    )
    
    
    844,831Net cash used in operating activities
    
    
    (22,411,377
    )
    
    
    (18,234,723
    )CASH FLOWS FROM INVESTING ACTIVITIESAdditions to property, plant and equipment
    
    
    (1,002,848
    )
    
    
    (1,320,789
    )Additions to patents
    
    
    (348,705
    )
    
    
    (252,521
    )Cash paid for security deposits
    
    
    
    
    
    
    (288,429
    )Proceeds from dispositions of assets
    
    
    1,936
    
    
    
    Net cash used in investing activities
    
    
    (1,349,617
    )
    
    
    (1,861,739
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from private placements of common stock
    
    
    29,497,556
    
    
    
    30,239,246Payment of offering costs
    
    
    (508,561
    )
    
    
    (840,620
    )Proceeds from convertible debt
    
    
    4,000,000
    
    
    
    Repayment of convertible note
    
    
    
    
    
    
    (1,360,928
    )Proceeds from exercise of stock options
    
    
    621,384
    
    
    
    Net cash provided by financing activities
    
    
    33,610,379
    
    
    
    28,037,698Effect of exchange rate changes on cash and cash equivalents
    
    
    767,832
    
    
    
    (4,814,945
    )INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    10,617,217
    
    
    
    3,126,291CASH AND CASH EQUIVALENTS  BEGINNING OF PERIOD
    
    
    20,803,656
    
    
    
    28,276,388CASH AND CASH EQUIVALENTS  END OF PERIOD
    
    $
    31,420,873
    
    
    $
    31,402,679Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    62,466
    
    
    $
    88,870Supplemental disclosure of non-cash financing activities:Recognition of fair value of derivative instrument
    
    $
    3,891,109
    
    
    $
    
  
  8




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 1. Basis of Presentation
 Interim Financial Statements
    Development Stage Entities,
 2. Liquidity
    9




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##### Table of Contents



3. Significant Accounting Policies
 Principles of Consolidation
  Accounting Estimates
  Cash and Cash Equivalents
  Receivables
   10




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##### Table of Contents



Vendor Concentration
  New Accounting Standards
   4. Inventories, Net
   September 30,
    
    
    December 31,2009
    
    
    2008Raw material
    
    $
    2,078,227
    
    
    $
    813,276Work-in-process
    
    
    2,095,764
    
    
    
    1,690,852Finished goods
    
    
    3,834,415
    
    
    
    1,003,937$
    8,008,406
    
    
    $
    3,508,065
 5. Property, Plant and Equipment, Net
  September 30,
    
    
    December 31,Property, Plant and Equipment
    
    Useful Lives
    
    2009
    
    
    2008Machinery and equipment
    
    5 to 7 years
    
    $
    5,305,992
    
    
    $
    4,428,452Leasehold improvements
    
    3 to 7 years
    
    
    210,570
    
    
    
    212,891Office equipment, furniture and fixtures
    
    5 to 7 years
    
    
    239,716
    
    
    
    271,275Software
    
    5 to 7 years
    
    
    487,388
    
    
    
    406,9836,243,666
    
    
    
    5,319,601Less: accumulated depreciation
    
    
    
    
    (2,329,838
    )
    
    
    (1,710,975
    )$
    3,913,828
    
    
    $
    3,608,626
  11




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##### Table of Contents



6. Other Intangible Assets
  September 30, 2009
    
    
    December 31, 2008Life
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmortizable Intangible Assets
    
    (Years)
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationPatents
    
    
    15
    
    
    $
    1,261,056
    
    
    $
    (143,497
    )
    
    $
    912,351
    
    
    $
    (88,856
    )
  Remainder of 2009
    
    $
    21,0002010
    
    
    84,1002011
    
    
    84,1002012
    
    
    84,1002013
    
    
    84,1002014
    
    
    84,100
 7. Accrued Expenses and Other Current Liabilities
  September 30,
    
    
    December 31,Accrued expenses and other current liabilities
    
    2009
    
    
    2008Accrued payroll and other employee costs
    
    $
    864,378
    
    
    $
    1,721,506Accrued material purchases
    
    
    206,086
    
    
    
    417,344Accrued research and development expenses
    
    
    77,665
    
    
    
    494,997Accrued professional fees
    
    
    1,017,165
    
    
    
    149,146Other accrued expenses
    
    
    330,510
    
    
    
    100,594$
    2,495,804
    
    
    $
    2,883,587
 8. Borrowings and Credit Facilities
   12




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9. Fair Value Measurements
 Fair Value Measurements and Disclosures
      13




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##### Table of Contents



.
     Three and Nine Months EndedSeptember 30,2009
    
    
    2008Beginning Balance
    
    $
    
    
    
    $
    Issuance of derivative instrument
    
    
    3,891,109Unrealized loss on derivative
instrument included in earnings
    
    
    2,223,759
    
    
    
    Ending Balance
    
    $
    6,114,868
    
    
    $
    
 10. Stockholders Equity
    14




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11. Share-Based Compensation
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Cost of revenues
    
    $
    291
    
    
    $
    
    
    
    $
    371
    
    
    $
    Selling, general and administrative
    
    
    632
    
    
    
    239
    
    
    
    853
    
    
    
    904Research and development
    
    
    367
    
    
    
    173
    
    
    
    566
    
    
    
    (122
    )$
    1,290
    
    
    $
    412
    
    
    $
    1,790
    
    
    $
    782
  Equity Plans
     15




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HeartWare International, Inc. 2008 Stock Incentive Plan
  HeartWare International, Inc. Employee Stock Option Plan (formerly HeartWare Limited
Employee Share Option Plan)
  HeartWare International, Inc. Restricted Stock Unit Plan (formerly HeartWare Limited
Performance Rights Plan)
  Non-Plan Options
  Stock Options
    16




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    60.50
    %
    
    
    58.78
    %
    
    
    60.50
    %
    
    
    58.78
    %Risk-free interest rate
    
    
    2.80
    %
    
    
    5.88
    %
    
    
    2.80
    %
    
    
    5.55
    %Estimated holding period (years)
    
    
    6.25
    
    
    
    6.25
    
    
    
    6.25
    
    
    
    6.25
  WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual Life
    
    
    AggregateShares
    
    
    Price
    
    
    (Years)
    
    
    Intrinsic ValueOutstanding at December 31, 2008
    
    
    698,374
    
    
    $
    18.56
    
    
    
    5.98
    
    
    $
    Granted
    
    
    49,850
    
    
    
    28.00Exercised
    
    
    (89,670
    )
    
    
    7.72Forfeited
    
    
    (18,322
    )
    
    
    20.36Expired
    
    
    (20,798
    )
    
    
    33.48Outstanding at September 30, 2009
    
    
    619,434
    
    
    $
    25.99
    
    
    
    6.33
    
    
    $
    2,476,983Exercisable at September 30, 2009
    
    
    373,632
    
    
    $
    26.37
    
    
    
    4.97
    
    
    $
    1,352,222
 th
    Restricted Stock Units
   17




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##### Table of Contents



WeightedAverageRemainingContractualNumber of
    
    
    Life
    
    
    AggregateUnits
    
    
    (Years)
    
    
    Intrinsic ValueOutstanding at December 31, 2008
    
    
    142,846
    
    
    
    9.32
    
    
    $
    2,078,238Granted
    
    
    295,285Exercised
    
    
    (19,639
    )Forfeited
    
    
    (5,357
    )Expired
    
    
    Outstanding at September 30, 2009
    
    
    413,135
    
    
    
    9.50
    
    
    $
    12,389,919Exercisable at September 30, 2009
    
    
    
    
    
    
    
    
    
    $
    
 th
    12. Net Loss Per Common Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Common shares issuable upon:Exercise of share-based awards
    
    
    1,032,569
    
    
    
    844,184
    
    
    
    1,032,569
    
    
    
    844,184Conversion
of convertible debt (see Note 8)
    
    
    129,855
    
    
    
    
    
    
    
    129,855
    
    
    
    Conversion of escrow balance (see Note 8)
    
    
    519,421
    
    
    
    
    
    
    
    519,421
    
    
    
    
  18




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13. Business Segment, Geographic Areas and Major Customers
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Domestic
    
    $
    2,763
    
    
    $
    88
    
    
    $
    5,691
    
    
    $
    88International
    
    
    4,743
    
    
    
    
    
    
    
    6,261
    
    
    
    $
    7,506
    
    
    $
    88
    
    
    $
    11,952
    
    
    $
    
  14. Commitments and Contingencies
  
 
    19




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15. Subsequent Events
   20




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ITEM 2:
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Forward-Looking Statements
 This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These statements can be identified by the words expects, projects,
hopes, believes, intends, should, estimate, will, would, may, anticipates,
plans, could and other similar words. All statements that address operating performance,
events or developments that we expect or anticipate will occur in the future are forward-looking
statements, including without limitation our expectations with respect to the progress of
clinical trials or the commercial success of our products. We may not actually achieve the plans,
projections or expectations disclosed in forward-looking statements, and actual results,
developments or events could differ materially from those disclosed in the forward-looking
statements. Management believes that these forward-looking statements are reasonable as and when
made. However, you should not place undue reliance on forward-looking statements because they
speak only as of the date when made. We do not assume any obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future events or
otherwise. Forward-looking statements are subject to a number of risks and uncertainties,
including without limitation those described in Item 1A. Risk Factors in our Annual Report on
Form 10-K filed with the Securities Exchange Commission (the SEC) on February 26, 2009 and as
amended by Amendment No. 1 on Form 10-K/A filed with the SEC on April 29, 2009, and those
described in other reports filed from time to time with the SEC.
 The following discussion and analysis of our financial condition and results of operations
should be read together with our unaudited interim condensed consolidated financial statements
and related notes appearing elsewhere in this Quarterly Report on Form 10-Q .
 Overview
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Critical Accounting Policies and Estimates
  Revenue Recognition
 Revenue
Recognition
 Inventories
   22




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Share-Based Compensation
    Fair Value Measurements
 Fair Value Measurements and Disclosures
   23




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.
   Concentration of Credit Risk
  Income Taxes
  Income Taxes - Income Taxes
  24




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Translation of Foreign Currency
    Results of Operations
 Three and nine months ended September 30, 2009 and 2008
 Revenues
     25




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Gross Profit
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Gross profit (in thousands)
    
    $
    3,402
    
    
    $
    88
    
    
    $
    5,551
    
    
    $
    88Gross margin %
    
    
    45
    %
    
    
    100
    %
    
    
    46
    %
    
    
    100
    %
  Selling, General and Administrative
    Research and Development
   26




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Foreign Exchange
   Interest Expense
   27




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Interest Income
  Change in Fair Value of Derivative Instrument
  Other, net
  Income Taxes
   Liquidity and Capital Resources
   28




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29




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30




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
   Foreign Currency Rate Fluctuations
     31




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ITEM 4.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
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PART II. OTHER INFORMATION
 
 ITEM 1A.
    
    RISK FACTORS
   If we fail to obtain an adequate level of reimbursement for our products by third party
payers, there may be no commercially viable markets for our product candidates or the markets may
be much smaller than expected.
     
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 6.
    
    EXHIBITS
 31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13A-14(a) or Rule 15d-14(a) of
the Securities Exchange Act31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13A-14(a) or Rule 15d-14(a) of
the Securities Exchange Act32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  34




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Signatures
  HEARTWARE INTERNATIONAL, INC.Date: November 4, 2009
    
    /s/ Douglas Godshall

Douglas GodshallChief Executive OfficerDate: November 4, 2009
    
    /s/ David McIntyreDavid McIntyreChief Financial Officer and Chief Operating Officer
  35




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EXHIBIT INDEX
 31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13A-14(a) or Rule 15d-14(a) of the
Securities Exchange Act31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13A-14(a) or Rule 15d-14(a) of the
Securities Exchange Act32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  36