12. Capital Stock

Preferred Stock

The Company’s Board of Directors has the authority to issue up to 2.0 million shares of preferred stock and to determine the price privileges and other terms of the shares. The Board of Directors may exercise this authority without any further approval of stockholders. As of December 31, 2014, the Company had no preferred stock issued or outstanding. On February, 18, 2015 the Company issued 695,857 shares of its Series B Convertible Preferred Stock in a registered public offering, see footnote 14 Subsequent Events for additional details.

Common Stock

At the Company’s incorporation in May of 2012, the Company issued 100 shares of common stock which was wholly-owned by Harvard Bioscience. In March of 2013, the Company performed an 80,000-for-1 stock split to achieve a desired 8 million shares outstanding. Immediately prior to the Distribution on October 31, 2013 HART affected a reverse stock split so that shares outstanding became 7.7 million to facilitate the 1-for-4 ratio for the Distribution. The distribution of the 7.7 million HART common shares to the shareholders of Harvard Bioscience is reflected as an issuance of common stock in the consolidated statements of stockholders’ equity.

The Company has adopted a Shareholder Rights Plan and declared a dividend distribution of one preferred stock purchase right for each outstanding share of the Company’s common stock. Initially, these rights will not be exercisable and will trade with the shares of the Company’s common stock. Under the Shareholder Rights Plan, the rights generally will become exercisable if a person becomes an “acquiring person” by acquiring 20% or more of the common stock of the Company or if a person commences a tender offer that could result in that person owning 20% or more of the common stock of the Company. If a person becomes an acquiring person, each holder of a right (other than the acquiring person) would be entitled to purchase, at the then-current exercise price, such number of shares of preferred stock which are equivalent to shares of the Company’s common stock having a value of twice the exercise price of the right. If the Company is acquired in a merger or other business combination transaction after any such event, each holder of a right would then be entitled to purchase, at the then-current exercise price, shares of the acquiring company’s common stock having a value of twice the exercise price of the right.

On February, 18, 2015, in the registered public offering of the Series B Convertible Preferred Stock described above, the Company also issued 2,070,000 shares of its Common Stock. See footnote 14 Subsequent Events for additional details.

Employee Stock Purchase Plan

In 2013, the Company approved an employee stock purchase plan. Under this plan, participating employees can authorize the Company to withhold a portion of their base pay during consecutive six-month payment periods for the purchase of shares of the Company’s common stock. At the conclusion of the period, participating employees can purchase shares of the Company’s common stock at 85% of the lower of the fair market value of the Company’s common stock at the beginning or end of the period. Shares are issued under the plan for the six-month periods ending June 30 and December 31. The initial six month participation period for the plan began on January 1, 2014. Under this plan, 150,000 shares of common stock are authorized for issuance of which 17,042 shares related to 2014 withholdings were issued on January 2, 2015.