Organization and Business Description

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Business Description

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 to address a variety of closure needs in the gastrointestinal tract and used by gastroenterologists and bariatric surgeons to treat 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. The Company also offers Apollo Care, a digital and remotely delivered aftercare program. All devices are regulated by the U.S. Food and Drug Administration (the "FDA") or an equivalent regulatory body outside the U.S.

The Company has offices in the United Kingdom and Italy that oversee commercial activities outside the U.S. and a products manufacturing facility in Costa Rica. All other activities are managed and operated from facilities in Austin, Texas.

Liquidity and Capital Resources 

The Company has experienced operating losses since inception and expects its negative cash flows from operating activities to continue. To date, the Company has funded its operating losses through equity offerings and the issuance of debt instruments. The Company’s ability to fund operations and meet debt covenant requirements will depend on its level of future revenue and operating cash flow and its ability to access additional funding through either equity offerings, issuances of debt instruments or both. In addition, the reduction in sales due to the COVID-19 pandemic and uncertainty over how long the COVID-19 impact on the Company's business will last has placed additional demands on the Company's capital resources. As a result of these factors, at December 31, 2019 and March 31, 2020, substantial doubt existed about the Company's ability to continue as a going concern and the auditor's opinion on the Company's audited financial statements for the year ended December 31, 2019 includes an explanatory paragraph stating that losses and negative cash flows from operations and uncertainty in generating sufficient cash to meet operations raise substantial doubt about the Company's ability to continue as a going concern.

In July 2020, the Company issued shares of common stock and pre-funded warrants for aggregate gross proceeds of approximately $25,000 and entered into the Sixth Amendment to the loan and security agreement with Solar Capital, Ltd. that waives the minimum revenue covenant requirements for the remainder of 2020 and also decreased the minimum liquidity requirement from $20,000 to $12,500.

Management believes the Company's existing cash and cash equivalents, product revenues, and available debt and equity financing arrangements will be sufficient to meet covenant, liquidity and capital requirements for at least the next twelve months, although there can be no assurances that the Company will be able to do so or the degree or duration that the COVID-19 pandemic will negatively impact the Company's business and future operations. Management evaluates the Company's liquidity requirements, alternative uses of capital, capital needs and available resources. As a result of this process, the Company has in the past, and may in the future, explore alternatives to finance its business plan, including, but not limited to, sales of common stock, preferred stock, convertible securities or debt financings, reduction of planned expenditures, or other sources.