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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2019
 
OR 
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: 001-35706
APOLLO ENDOSURGERY, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of
incorporation or organization)
16-1630142
(I.R.S. Employer
Identification No.)
 
1120 S. Capital of Texas Highway, Building 1, Suite #300, Austin, Texas
(Address of principal executive offices)
78746
(Zip Code)
Registrant’s telephone number, including area code (512) 279-5100

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.001 per shareAPENThe Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
Accelerated filer  x
Non-accelerated filer o
Smaller reporting company 
Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No x

As of October 25, 2019, there were 20,944,284 shares of the issuer’s $0.001 par value common stock issued and outstanding.





APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
FOR THE QUARTER ENDED SEPTEMBER 30, 2019
TABLE OF CONTENTS
 
Page

i


PART I - FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except for share data)
September 30, 2019December 31, 2018
(unaudited)
Assets
Current assets:
Cash and cash equivalents$34,970  $23,996  
Accounts receivable, net of allowance for doubtful accounts of $698 and $559, respectively
8,902  11,391  
Inventory10,833  9,932  
Prepaid expenses and other current assets3,350  2,801  
Total current assets58,055  48,120  
Restricted cash1,006  1,011  
Property, equipment and right-of-use assets6,999  5,897  
Goodwill5,290  5,290  
Intangible assets, net of accumulated amortization of $11,029 and $9,455, respectively
8,340  9,859  
Other assets4,535  4,291  
Total assets$84,225  $74,468  
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$10,157  $15,292  
Accrued expenses10,107  9,156  
Total current liabilities20,264  24,448  
Long-term debt34,276  21,190  
Convertible debt18,527    
Long-term liabilities1,209    
Total liabilities74,276  45,638  
Commitments and contingencies
Stockholders' equity:
Common stock; $0.001 par value; 100,000,000 shares authorized; 20,934,969 and 21,899,522 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
21  22  
Additional paid-in capital250,186  249,115  
Accumulated other comprehensive income2,708  2,501  
Accumulated deficit(242,966) (222,808) 
Total stockholders' equity9,949  28,830  
Total liabilities and stockholders' equity$84,225  $74,468  

See accompanying notes to the condensed consolidated financial statements.
1


APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except for share data)
(unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
2019201820192018
Revenues$11,259  $14,141  $38,724  $45,672  
Cost of sales5,826  6,400  18,884  19,560  
Gross margin5,433  7,741  19,840  26,112  
Operating expenses:
Sales and marketing6,495  7,344  21,995  25,078  
General and administrative3,159  3,021  10,219  9,589  
Research and development2,128  3,671  8,245  9,281  
Amortization of intangible assets510  1,807  1,591  5,411  
Settlement gain    (5,609)   
Total operating expenses12,292  15,843  36,441  49,359  
Loss from operations(6,859) (8,102) (16,601) (23,247) 
Other expenses:
Interest expense, net1,221  1,001  2,849  2,980  
Other expense498  620  655  1,085  
Net loss before income taxes(8,578) (9,723) (20,105) (27,312) 
Income tax expense80  36  131  122  
Net loss$(8,658) $(9,759) $(20,236) $(27,434) 
Other comprehensive income (loss):
Foreign currency translation176  498  207  495  
Comprehensive loss$(8,482) $(9,261) $(20,029) $(26,939) 
Net loss per share, basic and diluted$(0.40) $(0.45) $(0.93) $(1.44) 
Shares used in computing net loss per share, basic and diluted21,401,044  21,885,158  21,743,218  19,080,400  
 
See accompanying notes to the condensed consolidated financial statements.
2


APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(In thousands, except for share data)
(unaudited) 

Three Months Ended September 30, 2019 and 2018
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive IncomeAccumulated
Deficit
Total
SharesAmount
Balances at June 30, 201821,877,332  $22  $248,336  $1,792  $(194,696) $55,454  
Exercise of common stock options15,008  —  51  —  —  51  
Issuance of restricted stock units834  —  —  —  —  —  
Stock based compensation—  —  374  —  —  374  
Foreign currency translation—  —  —  498  —  498  
Net loss—  —  —  —  (9,759) (9,759) 
Balance at September 30, 201821,893,174  $22  $248,761  $2,290  $(204,455) $46,618  
Balances at June 30, 201921,933,102  $22  $249,791  $2,532  $(234,308) $18,037  
Exercise of common stock options1,867  —  4  —  —  4  
Exchange of common stock for warrants(1,000,000) (1) 1  —  —  —  
Stock based compensation—  —  390  —  —  390  
Foreign currency translation—  —  —  176  —  176  
Net loss—  —  —  —  (8,658) (8,658) 
Balances at September 30, 201920,934,969  $21  $250,186  $2,708  $(242,966) $9,949  

 See accompanying notes to the condensed consolidated financial statements.





3


APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Equity (continued)
(In thousands, except for share data)
(unaudited) 

Nine Months Ended September 30, 2019 and 2018
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive IncomeAccumulated
Deficit
Total
SharesAmount
Balances at December 31, 201717,291,209  $17  $225,122  $1,795  $(177,021) $49,913  
Exercise of common stock options275,805  —  738  —  —  738  
Issuance of restricted stock units17,070  —  —  —  —  —  
Stock based compensation—  —  1,049  —  —  1,049  
Issuance of common stock, net of issuance costs of $1,8434,309,090  5  21,852  —  —  21,857  
Foreign currency translation—  —  —  495  —  495  
Net loss—  —  —  —  (27,434) (27,434) 
Balances at September 30, 201821,893,174  $22  $248,761  $2,290  $(204,455) $46,618  
Balances at December 31, 201821,899,522  $22  $249,115  $2,501  $(222,730) $28,908  
Exercise of common stock options5,621  —  11  —  —  11  
Exchange of common stock for warrants(1,000,000) (1) 1  —  —  —  
Issuance of restricted stock units29,826  —  —  —  —  —  
Stock based compensation—  —  1,059  —  —  1,059  
Foreign currency translation—  —  —  207  —  207  
Net loss—  —  —  —  (20,236) (20,236) 
Balances at September 30, 201920,934,969  $21  $250,186  $2,708  $(242,966) $9,949  

 See accompanying notes to the condensed consolidated financial statements.
4


APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Nine Months Ended September 30,
20192018
Cash flows from operating activities:
Net loss$(20,236) $(27,434) 
Adjustments to reconcile net loss to net cash used in operating activities:
Settlement gain(5,609)   
Depreciation and amortization3,108  7,024  
Amortization of deferred financing costs470  269  
Non-cash interest 214  291  
Provision for doubtful accounts receivable209  174  
Inventory impairment80  367  
Stock based compensation1,059  1,049  
Unrealized foreign currency loss on short-term intercompany loans950  906  
Changes in operating assets and liabilities:
Accounts receivable2,074  1,088  
Inventory(1,042) 439  
Prepaid expenses and other assets(319) (84) 
Accounts payable and accrued expenses97  (3,007) 
Net cash used in operating activities(18,945) (18,918) 
Cash flows from investing activities:
Purchases of property and equipment(466) (1,965) 
Purchases of intangibles and other assets(181) (754) 
Proceeds from sale of equipment18    
Net cash used in investing activities(629) (2,719) 
Cash flows from financing activities:
Proceeds from exercise of stock options11  738  
Proceeds from long-term debt35,000    
Proceeds from convertible debt20,000    
Proceeds from issuance of common stock  21,857  
Payments of deferred financing costs(2,737) (353) 
Payment of long-term debt(21,668) (2,500) 
Net cash provided by financing activities30,606  19,742  
Effect of exchange rate changes on cash(63) (69) 
Net increase/(decrease) in cash, cash equivalents and restricted cash10,969  (1,964) 
Cash, cash equivalents and restricted cash at beginning of year25,007  31,418  
Cash, cash equivalents and restricted cash at end of period$35,976  $29,454  
Supplemental disclosure of cash flow information:
Cash paid for interest$2,634  $2,738  
Cash paid for income taxes132  36  
Right-of-use assets recognized in exchange for new lease obligations (non-cash)2,789    

See accompanying notes to the condensed consolidated financial statements.

5

APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Notes to Unaudited Interim Condensed Consolidated Financial Statements
(In thousands, except for share data)
(1) Organization and Business Description
Apollo Endosurgery, Inc. is a Delaware corporation with both domestic and foreign wholly-owned subsidiaries. Throughout these Notes "Apollo" and the "Company" refer to Apollo Endosurgery, Inc. and its consolidated subsidiaries.
Apollo is a medical technology company primarily focused on the design, development, and commercialization of innovative medical devices. The Company's products are used by gastroenterologists and surgeons in a variety of settings to provide interventional therapy to patients who suffer from various gastrointestinal conditions including obesity and the many co-morbidities associated with obesity.
The Company's core products include the OverStitch™ Endoscopic Suturing System ("ESS") and the Orbera® Intragastric Balloon System ("IGB"), which together comprise the Company's Endoscopy products.

We have offices in England, Australia, Italy, and Brazil that oversee commercial activities outside the U.S., a products manufacturing facility in Costa Rica and a device analysis lab in California. All other activities are managed and operated from facilities in Austin, Texas.

In December 2018, the Company sold its Surgical product line to ReShape Lifesciences, Inc. ("ReShape") for $10,000 in cash at closing and future cash consideration of $7,000. As additional consideration, the Company received substantially all of ReShape's assets exclusively related to ReShape's intragastric balloon product line. Effective December 31, 2018, the Company ceased sales of ReShape's intragastric balloon system.
(2) Significant Accounting Policies
(a) Basis of Presentation
The Company prepared its interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"). They do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements include the Company's accounts and the accounts of its wholly-owned subsidiaries. The Company has eliminated all intercompany balances and transactions.
The Company has made estimates and judgments affecting the amounts reported in its condensed consolidated financial statements and the accompanying notes. The actual results that the Company experiences may differ materially from the Company's estimates. The accounting estimates that require the Company's most significant, difficult and subjective judgments include revenue recognition, useful lives of intangible assets and long-lived assets, impairment of long-lived assets and goodwill, valuation of inventory, allowance for doubtful accounts, stock compensation, and deferred tax asset valuation.
(b) Unaudited Interim Results
In management's opinion, the unaudited financial information for the interim periods presented includes all adjustments necessary for a fair presentation of the results of operations, financial position, and cash flows. All adjustments are of a normal recurring nature unless otherwise disclosed. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. This interim information should be read in conjunction with the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
(c) Other Revenue
In connection with the December 2018 sale of the Surgical product line, the Company entered into a transition services agreement, supply agreement and distribution agreement pursuant to which the Company will provide specific transition services for designated periods of time for each service, manufacture Surgical products for up to two years, and serve as ReShape's distributor of Surgical product outside the U.S. for up to one year. Transition service revenue is recognized as the support is provided in accordance with the prices established in the transition services agreement. Supply agreement revenue is recognized when products are shipped at the net amount earned based upon the prices established in the supply agreement less the cost to produce the product. Transition service and supply agreement revenue are included in other revenue. Pursuant to the OUS distribution agreement, the Company will continue to sell products to customers and will continue to recognize OUS Surgical product sales at the amounts charged to customers and reflect the cost of these products in cost of sales.

6

APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Notes to Unaudited Interim Condensed Consolidated Financial Statements (continued)
(In thousands, except for share data)
(d) Leases

On January 1, 2019, the Company adopted the provisions of ASU 2016-02, Leases ("ASU 2016-02") under the modified retrospective approach, chose not to adjust comparative periods, and elected the package of practical expedients permitted under the transition guidance, which among other things, allowed us to carry forward the historical lease classification. The cumulative-effect adjustment made to the opening balance of retained earnings as of January 1, 2019 was $78. All significant lease arrangements are generally recognized at lease commitment. Operating lease right-of-use assets and liabilities are recognized at commencement, except for leases with an initial term of 12 months or less, for which lease expense is recognized as incurred over the lease term. Right-of-use assets represent the Company’s right to use an underlying asset during the reasonably certain lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease terms may include options to extend or terminate the lease when its reasonably certain that the Company will exercise that option. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company primarily uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Operating lease right-of-use assets include any lease payments related to initial direct costs and prepayments and excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.
(e) Recent Accounting Pronouncements
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment (“ASU 2017-04”) to simplify the accounting for goodwill impairment. The guidance removes step two of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. ASU 2017-04 will be effective for the Company for annual and interim reporting in fiscal years beginning after December 15, 2019 and is not expected to be material.
(3) Concentrations
Consolidated financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash and cash equivalents and accounts receivable. At September 30, 2019, the Company's cash, cash equivalents and restricted cash are held in deposit accounts at six different banks totaling $35,976. The Company has not experienced any losses in such accounts, and management does not believe the Company is exposed to any significant credit risk. Management further believes that the concentration of credit risk in the Company's accounts receivable is substantially mitigated by the Company's evaluation process, relatively short collection terms, and the high level of creditworthiness of its customers. The Company continually evaluates the status of each of its customers, but generally requires no collateral.

(4) Inventory
Inventory consists of the following as of:
September 30, 2019December 31, 2018
(unaudited)
Raw materials$3,085  $3,806  
Work in progress539  352  
Finished goods7,209  5,774  
Total inventory$10,833  $9,932  

The Company recorded inventory impairment charges of $40 and $80 for the three and nine months ended September 30, 2019 and $106 and $367 for the three and nine months ended September 30, 2018, respectively. Finished goods includes $200 of consigned inventory at September 30, 2019.
7

APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Notes to Unaudited Interim Condensed Consolidated Financial Statements (continued)
(In thousands, except for share data)
(5) Property, Equipment and Right-of-Use Assets
Property, equipment and right-of-use assets consists of the following:
Depreciable LivesSeptember 30, 2019December 31, 2018
(unaudited) 
Equipment
5 years
$7,486  $7,510  
Right-of-use assets
1-5 years
2,762    
Furniture, fixtures and tooling
4-8 years
2,230  2,223  
Computer hardware
3-5 years
1,334  1,326  
Leasehold improvements
3-5 years
1,400  1,400  
Construction in process497  130  
15,709  12,589  
Less accumulated depreciation(8,710) (6,692) 
Property and equipment, net$6,999  $5,897  

The Company has operating leases for office space in the United States, the United Kingdom, Australia, Italy, and Brazil, and for a manufacturing facility located in Costa Rica. The Company also has various lease agreements for equipment and vehicles.

As of September 30, 2019, the maturities of the Company's operating lease liabilities are as follows:
2019$306  
20201,015  
2021815  
2022137  
202391  
Thereafter28  
Total lease payments2,392  
Less imputed interest(298) 
Total operating lease liabilities$2,094  

Operating lease liabilities of $885 and $1,209 are included in accrued expenses and long-term liabilities, respectively, as of September 30, 2019. Operating lease expense and cash paid within operating cash flows for operating leases was $306 and $958 for the three and nine months ended September 30, 2019, respectively. The weighted average remaining lease term was 2.31 years and the weighted average discount rate used to estimate the value of the operating lease liabilities was 10.0%.
(6) Other Assets
Included in other assets as of September 30, 2019 and December 31, 2018 is $4,238 and $3,907 for the non-current portion of the receivable due from ReShape, respectively.
8

APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Notes to Unaudited Interim Condensed Consolidated Financial Statements (continued)
(In thousands, except for share data)
(7) Accrued Expenses
Accrued expenses consists of the following as of:
September 30, 2019December 31, 2018
(unaudited)
Accrued employee compensation and expenses$3,116  $3,804  
Accrued professional service fees2,430  2,983  
Settlement liability1,625    
Lease liability885    
Accrued insurance and taxes276  625  
Accrued returns and rebates222  331  
Other1,553  1,413  
Total accrued expenses$10,107  $9,156  

(8) Long-Term Debt
Long-term debt consists of the following as of:
September 30, 2019December 31, 2018
(unaudited)
Term loan facililty$35,000  $  
Senior secured credit facility  19,500  
Payment-in-kind interest347  2,142  
Discount on long-term debt  (175) 
Deferred financing costs(1,071) (277) 
Long-term debt$34,276  $21,190  

Future minimum principal payments of long-term debt by year are as follows:

2019$  
2020  
202111,667  
202214,000  
20239,333  
Thereafter  
$35,000  

In March 2019, the Company entered into a Term Loan Facility (the "Credit Agreement") with Solar Capital Ltd. ("Solar") to borrow $35,000. The Credit Agreement matures on September 1, 2023, with principal payments beginning in March 2021, and bears interest at LIBOR plus 7.5%. Interest only is payable in arrears until March 1, 2021 (or September 1, 2021 if certain revenue milestones are achieved). An additional 4.75% of the outstanding amount will be due at end of the loan term and an additional 4.5% fee of the Term Loan funded amount will be due at the earlier of an Exit Event (as defined in the Credit Agreement) or if the Company achieves trailing twelve-month revenue of $100,000 before March 15, 2029. The Company is accruing for these additional fees as payment-in-kind interest which is included in long-term debt. The Credit Agreement provides that an additional $15,000 may be drawn upon the Company's request subject to further credit approval. The Credit Agreement includes customary affirmative covenants, negative covenants and financial covenants, including a minimum liquidity requirement and minimum product revenue requirement. The Company used $22,372 of the proceeds of the Credit Agreement to repay its previous senior secured credit facility in full including interest. Unamortized deferred financing costs and discount of $388 were written off in March 2019 in connection with the repayment.
In June 2019, the Company entered into the First Amendment to the Credit Agreement which adjusted the trailing six-month
9

APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Notes to Unaudited Interim Condensed Consolidated Financial Statements (continued)
(In thousands, except for share data)
Endoscopy revenue requirements for the periods ending June 30, July 31, and August 31, 2019 and increased the minimum liquidity covenant to $12,500.
In August 2019, the Company entered into the Second Amendment to the Credit Agreement to allow for the issuance of $20,000 aggregate principal amount of the Company's 6.0% unsecured convertible debentures due 2024 (the "Convertible Debt").
In October 2019, the Company entered into the Third Amendment to the Credit Agreement that adjusted the trailing six-month Endoscopy revenue requirements for the periods ending August 31, 2019 through December 31, 2019, as the Company was not in compliance with the minimum product revenue requirement. As of September 30, 2019, after considering the adjustments made pursuant to the Third Amendment to the Credit Agreement, the Company was in compliance with the financial covenants.
Interest expense on the Company's long term debt was $1,284 and $3,504 for the three and nine months ended September 30, 2019 and $1,152 and $3,279 for the three and nine months ended September 30, 2018, respectively.
(9) Convertible Debt
Convertible debt consists of the following as of:
September 30, 2019December 31, 2018
(unaudited)
Convertible debt$20,000  $  
Deferred financing costs(1,473)   
Total convertible debt$18,527  $  

In August 2019, the Company issued $20,000 aggregate principal amount of Convertible Debt, primarily to existing stockholders and officers of the Company. Interest on the Convertible Debt will be payable semi-annually in shares of the Company's common stock on January 1 and July 1 of each year, beginning on January 1, 2020, at a rate of 6.0% per year. The number of shares of common stock required to settle the amount of interest payable will be based on the average volume-weighted average price ("VWAP") of the Company's common stock for the 10 consecutive trading days immediately preceding the applicable interest payment date. The Convertible Debt will mature on August 12, 2024 unless earlier converted or repurchased in accordance with its terms.
The Convertible Debt converts, at the option of the holders, into shares of the Company's common stock at an initial conversion price of $3.25 per share, subject to adjustment. If the VWAP of the Company's common stock has been at least $9.75 (subject to adjustment) for at least 20 trading days during any 30 consecutive trading day period, the Company may force the conversion of all or any part of the outstanding principal amount of the Convertible Debt, accrued and unpaid interest and any other amounts then owing, subject to certain conditions.
Interest expense on the Convertible Debt was $208 for the three and nine months ended September 30, 2019.
(10) Stock Based Compensation
In June 2017, the 2017 Equity Incentive Plan (the "2017 Plan") was approved by the Company's stockholders and replaced the Company's 2016 Equity Incentive Plan (the "2016 Plan"), which was the successor to the 2006 Stock Option Plan (the "2006 Plan")(collectively with the 2016 Plan, the "Prior Plans"). Grants will no longer be made under the Prior Plans, but the awards that remain outstanding will continue to be governed by the terms of the applicable Prior Plan and the applicable award agreement.
A summary of the stock option activity under the Company's 2017 Plan and Prior Plans (collectively, the "Equity Plans") as of September 30, 2019 is presented below.
OptionsWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
Options outstanding, December 31, 20181,502,756  $5.63  7.7 years$217
Options granted781,705  $3.47  
Options exercised(5,621) $1.81  
Options forfeited(228,346) $4.45  
Options outstanding, vested and expected to vest, September 30, 20192,050,494  $4.95  7.7 years$145
Options exercisable978,853  $5.15  6.2 years$130

10

APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Notes to Unaudited Interim Condensed Consolidated Financial Statements (continued)
(In thousands, except for share data)
Shares subject to awards granted under the 2017 Plan which expire, are repurchased, or are canceled or forfeited will again become available for issuance under the 2017 Plan. The shares available will not be reduced by awards settled in cash or by shares withheld to satisfy tax withholding obligations. Only the net number of shares issued upon the exercise of options by means of a net exercise will be deducted from the shares available under the 2017 Plan.

The fair value of stock option grants has been estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

Nine Months Ended September 30, 2019Nine Months Ended September 30, 2018
Risk free interest rate2.2 %2.7 %
Expected dividend yield % %
Estimated volatility64.6 %63.3 %
Expected life5.8 years5.8 years

Additional information regarding options is as follows:

Nine Months Ended September 30, 2019Nine Months Ended September 30, 2018
Weighted-average grant date fair value of options granted during the period$2.04  $3.95  
Aggregate intrinsic value of options exercised during the period$10  $923  
The aggregate intrinsic value in the table above represents the total pre-tax value of the options shown, calculated as the difference between the Company’s closing stock price on September 30, 2019 and the exercise prices of the options shown, multiplied by the number of in-the money options. This is the aggregate amount that would have been received by the option holders if they had all exercised their options on September 30, 2019 and sold the shares thereby received at the closing price of the Company’s stock on that date. This amount changes based on the closing price of the Company’s stock.
The total compensation cost recognized for stock-based awards was $390 and $1,059 for the three and nine months ended September 30, 2019 and $374 and $1,049 for the three and nine months ended September 30, 2018.
The Company has options outstanding to purchase 136,197 common shares that vest upon the achievement of certain revenue targets for calendar year 2019. Achievement of the performance targets deemed probable are included in total stock compensation expense.
Unrecognized compensation expense related to unvested options was approximately $2,836 at September 30, 2019, with a remaining amortization period of 2.7 years.
A summary of the restricted stock unit activity under the Company's Equity Plans as of September 30, 2019 is presented below.
UnitsWeighted Average Grant Date Fair ValueAggregate Intrinsic Value
Unvested units, December 31, 201894,940