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What changed in Owlet, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Owlet, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+578 added−500 removedSource: 10-K (2025-03-11) vs 10-K (2024-03-08)

Top changes in Owlet, Inc.'s 2024 10-K

578 paragraphs added · 500 removed · 359 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

96 edited+34 added−34 removed129 unchanged
Biggest changeActions under the False Claims Act may be brought by the government or as a qui tam action by a private individual in the name of the government and to share in any monetary recovery. 16 There are also criminal penalties for making or presenting a false or fictitious or fraudulent claim to the federal government; • the federal Health Insurance Portability and Accountability Act of 1996, which imposes criminal and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program including private third-party payors, or knowingly and willfully falsifying, concealing, or covering up a material fact or making a materially false, fictitious, or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items, or services; • the federal Physician Payment Sunshine Act, implemented by the Centers for Medicare & Medicaid Services (“CMS”) as the Open Payments program, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the CMS, information related to payments and other “transfers of value” made to physicians (currently defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (including physician assistants and nurse practitioners), and teaching hospitals, and requires applicable manufacturers to report annually to CMS ownership and investment interests held by physicians and their immediate family members and payments or other “transfers of value” to such physician owners; • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers and patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state beneficiary inducement laws, and state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
Biggest changeThere are also criminal penalties for making or presenting a false or fictitious or fraudulent claim to the federal government; • the federal Health Insurance Portability and Accountability Act of 1996, which imposes criminal and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program including private third-party payors, or knowingly and willfully falsifying, concealing, or covering up a material fact or making a materially false, fictitious, or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items, or services; • the federal Civil Monetary Penalties law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • the federal Physician Payment Sunshine Act, implemented by the Centers for Medicare & Medicaid Services (“CMS”) as the Open Payments program, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the CMS, information related to payments and other “transfers of value” made to physicians (currently defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (including physician assistants and nurse practitioners), and teaching hospitals, and requires applicable manufacturers to report annually to CMS ownership and investment interests held by physicians and their immediate family members and payments or other “transfers of value” to such physician owners; • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers and patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state beneficiary inducement laws, and state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In November 2023, Owlet then received a first-of-its kind, de novo authorization from the FDA for the Dream Sock, enabling both displays of a baby’s live health readings, including pulse rate and oxygen saturation level, and as well as Health Notifications, which will alert caregivers with lights and alarm sounds if their infant’s readings fall outside of preset ranges.
In November 2023, Owlet then received a first-of-its kind, de novo authorization from the FDA for Dream Sock, enabling both displays of a baby’s live health readings, including pulse rate and oxygen saturation level, and as well as Health Notifications, which will alert caregivers with lights and alarm sounds if their infant’s readings fall outside of preset ranges.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling regulations and FDA prohibitions against the promotion of investigational products, or the promotion of “off-label” uses of cleared or approved products; • requirements related to promotional activities; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of certain modifications to PMA-approved devices; 10 • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling regulations and FDA prohibitions against the promotion of investigational products, or the promotion of “off-label” uses of cleared or approved products; • requirements related to promotional activities; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of certain modifications to PMA-approved devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
The device uses pulse oximetry 7 technology and is intended to be prescribed by physicians to assist with the in-home monitoring of babies under a physician’s care. The device is designed to provide alerts to parents when their baby’s heart rate or oxygen saturation level (or SpO2) does not fall within prescribed ranges.
The device uses pulse oximetry technology and is intended to be prescribed by physicians to assist with the in-home monitoring of babies under a physician’s care. The device is designed to provide alerts to parents when their baby’s heart rate or oxygen saturation level (or SpO2) does not fall within prescribed ranges.
We are building our data platform with the goal to be parents’ go-to brand in the areas of sleep, safety, health and well-being information. We will remain focused on commercializing our Dream Sock with Health Notifications and BabySat devices, which we believe will open the door to launch additional services to continue the expansion of our data platform.
We are building our data platform with the goal to be parents’ go-to brand in the areas of sleep, safety, health and well-being information. We will remain focused on commercializing our Dream Sock and BabySat devices, which we believe will open the door to launch additional services to continue the expansion of our data platform.
This integration allows parents to see, hear, and be assured of their baby's condition through our app, offering an unmatched value proposition. 5 We believe that we are uniquely positioned thanks to our regulatory marketing authorizations, extensive distribution network, intellectual property, and comprehensive feature set.
This integration allows parents to see, hear, and be assured of their baby's condition through our app, offering an unmatched value proposition. We believe that we are uniquely positioned thanks to our regulatory marketing authorizations, extensive distribution network, intellectual property, and comprehensive feature set.
These efforts may include pursuing development of expanded indications for our medical devices, such as expanded intended populations, that could include infants less than one month old, as well as developing new ways to deliver information that parents and caregivers value in their user experiences.
These efforts may include pursuing development of expanded indications 8 for our medical devices, such as expanded intended populations, that could include infants less than one month old, as well as developing new ways to deliver information that parents and caregivers value in their user experiences.
This procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA application.
This procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on 10 the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA application.
In addition to spearheading the health monitoring category, Owlet competes within the broader realm of general video/audio baby monitors. Our strategic edge is encapsulated in the Owlet Sock and Cam combo, providing parents with a holistic view of their baby's health and well-being.
In addition to spearheading the health monitoring category, Owlet competes within the broader realm of general video/audio baby monitors. Our strategic edge is encapsulated in the Dream Sock and Owlet Cam combo, providing parents with a holistic view of their baby's health and well-being.
We believe that we can use our data sets to continually enhance our product with additional valuable data insights as part of new subscription models and increasingly predictive technologies. We have developed deep and enduring relationships with our users and brand advocates around the world.
We believe that we can use our data sets to enhance our product with additional valuable data insights as part of new subscription models and increasingly predictive technologies. We believe we have developed deep and enduring relationships with our users and brand advocates around the world.
Our products and services face additional competition from companies developing products and services for use with third-party monitoring systems, as well as from companies that currently market similar products and services of their own, and may face further pressure from technology companies that have not historically operated in our industry.
Our products and services face additional competition from companies developing products and services for use with third-party monitoring systems, as well as from companies that currently market similar products and 7 services of their own and may face further pressure from technology companies that have not historically operated in our industry.
We also believe that every child deserves to live a long, happy, and healthy life, and we are working to develop products to help further that belief. Products and Services Our devices empower parents with the right information at the right time.
We also believe that every child deserves to live a long, happy, and healthy life, and we are working to develop products to help further that belief. Products and Services Our devices are intended to empower parents with the right information at the right time.
As a general rule, demonstration of conformity of medical devices and their manufacturers with the general safety and performance requirements must be based, among other things, on the evaluation of clinical data supporting the 12 safety and performance of the products during normal conditions of use.
As a general rule, demonstration of conformity of medical devices and their manufacturers with the general safety and performance requirements must be based, among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use.
Market Landscape and Competitive Dynamics Owlet has a clear and specific market in pediatrics serving the needs of parents with children aged 1-18 months across key markets in the U.S., Canada, and Europe.
Market Landscape and Competitive Dynamics Owlet has a clear and specific market in pediatrics serving the needs of parents with children aged 1-18 months across key markets in the U.S., Europe, Australia, and Canada.
With close to 10 million infants born annually in these regions, our Total Addressable Market ("TAM") is continuously replenished, providing the potential for a steady demand for our products. Despite a slight decline in birth rates, the emphasis on infant care and the financial investment in the well-being of newborns have seen a consistent uptick over the years.
With close to 10 million infants born annually in these regions, our Total Addressable Market (“TAM”) is continuously replenished, providing the potential for a steady demand for our products. Despite a slight decline in birth rates, the emphasis on infant care and the financial investment in the well-being of newborns have seen a consistent uptick over the years.
Healthcare Fraud and Abuse Federal and state governmental agencies and equivalent foreign authorities subject the healthcare industry to intense regulatory scrutiny, including heightened civil and criminal enforcement efforts.
Healthcare Fraud and Abuse 17 Federal and state governmental agencies and equivalent foreign authorities subject the healthcare industry to intense regulatory scrutiny, including heightened civil and criminal enforcement efforts.
One cornerstone of our approach lies in our belief that every baby deserves access to monitoring, regardless of their background or circumstances. Through Owlet Cares, our advocacy initiative, we are dedicated to making a positive impact in the lives of babies and parents. We recognize that parenthood is a journey marked by diverse experiences, challenges, and joys.
One cornerstone of our approach lies in our belief that every baby deserves access to monitoring, regardless of their background or circumstances. Through Owlet Cares, our advocacy initiative, we are dedicated to making a positive impact in the lives of babies and parents. We recognize that parenthood is a journey marked by a range of experiences, challenges, and joys.
Strategic Business Segments Owlet’s products are marketed and distributed in the United States and internationally through consumer and, more recently, through medical distribution channels. Direct to Consumer & Digital Engagement: Owlet's brand resonates deeply with over 1 million social media followers, hundreds of millions of views and engagements and millions of website visitors each year.
Strategic Business Segments Owlet products are marketed and distributed in the United States and internationally through consumer and, more recently, through medical distribution channels. Direct to Consumer & Digital Engagement: The Owlet brand resonates deeply with over 1 million social media followers, hundreds of millions of views and engagements and millions of website visitors each year.
The aforementioned EU rules are generally applicable in the European Economic Area (EEA) which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland. Regulation of Medical Devices in the European Union The EU has adopted specific directives and regulations regulating the design, manufacture, clinical investigations, conformity assessment, labeling and adverse event reporting for medical devices.
The aforementioned EU rules are generally applicable in the European Economic Area (“EEA”) which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland. Regulation of Medical Devices in the European Union The EU has adopted specific directives and regulations regulating the design, manufacture, clinical investigations, conformity assessment, labeling and adverse event reporting for medical devices.
This allows new rules to be introduced in the future by way of secondary legislation, which aims to allow flexibility in addressing regulatory gaps and future changes in the fields of human medicines, clinical trials and medical devices. The EU-UK Trade and Cooperation Agreement (TCA) came into effect on January 1, 2021.
This allows new rules to be introduced in the future by way of secondary legislation, which aims to allow flexibility in addressing regulatory gaps and future changes in the fields of human medicines, clinical trials and medical devices. The EU-UK Trade and Cooperation Agreement (“TCA”) came into effect on January 1, 2021.
The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards and cash-based performance bonus awards. We believe our innovation and operational excellence stems directly from the diversity in our community and our common commitment to equity, inclusion, and equal access to healthcare.
The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards and cash-based performance bonus awards. We believe our innovation and operational excellence stems directly from our community and our common commitment to inclusion and equal access to healthcare.
The regulation also requires that before placing a device, other than a custom-made device, on the market, manufacturers must assign a unique identifier to the device and provide it along with other core data to the unique device identifier (UDI) database. These new requirements aim at ensuring better identification and traceability of the devices.
The regulation also requires that before placing a device, other than a custom-made device, on the market, manufacturers must assign a unique identifier to the device and provide it along with other core data to the unique device identifier (“UDI”) database. These new requirements aim at ensuring better identification and traceability of the devices.
For medical devices that are locally manufactured but use components from other countries, the “rules of origin” criteria will need to be reviewed. Since January 1, 2021, the Medicines and Healthcare Products Regulatory Agency (MHRA) has become the sovereign regulatory authority responsible for Great Britain.
For medical devices that are locally manufactured but use components from other countries, the “rules of origin” criteria will need to be reviewed. Since January 1, 2021, the Medicines and Healthcare Products Regulatory Agency (“MHRA”) has become the sovereign regulatory authority responsible for Great Britain.
All manufacturers placing medical devices into the market in the EU must comply with the EU medical device vigilance system which has been reinforced by the EU Medical Devices Regulation. Under this system, serious incidents and Field Safety Corrective Actions (FSCAs) must be reported to the relevant authorities of the EU member states.
All manufacturers placing medical devices into the market in the EU must comply with the EU medical device vigilance system which has been reinforced by the EU Medical Devices Regulation. Under this system, serious incidents and Field Safety Corrective Actions (“FSCAs”) must be reported to the relevant authorities of the EU member states.
We want to forge a world where every infant, regardless of socioeconomic background, benefits from health monitoring technologies akin to Owlet's. Our mission is to arm parents with crucial information when they need it most, aiming to safeguard children's health, optimize their well-being, and ensure peaceful sleep. We're committed to improving overall health outcomes. Our values underscore our mission.
We want to forge a world where every infant, regardless of socioeconomic background, benefits from health monitoring technologies akin to Owlet's. Our mission is to arm parents with crucial information when they need it most, aiming to safeguard children's health, optimize their well-being, and help facilitate peaceful sleep. We're committed to improving overall health outcomes. Our values underscore our mission.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality System Regulation, or QSR, facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality System Regulation (“QSR”), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Our patents include utility patents covering technology ranging from placement of electrodes to the base of the baby monitor. We have foreign patents and patent applications pending in 17 the EU, Australia, Canada, China, and Thailand.
Our patents include utility patents covering technology ranging from placement of electrodes to the base of the baby monitor. We have foreign patents and patent applications pending in the EU, Australia, Brazil, Canada, China, and Thailand.
Our de novo classification of Dream Sock as an over-the-counter device was the first of its kind and the only monitor in our product category authorized by the FDA. We believe that this achievement is a testament to our unwavering dedication to enhancing accessibility and reinforcing confidence in our innovative solutions.
Our de novo classification of Dream Sock as an over-the-counter device was the first of its kind, and Dream Sock is currently the only monitor on the market in our product category authorized by the FDA. We believe that this achievement is a testament to our unwavering dedication to enhancing accessibility and reinforcing confidence in our innovative solutions.
This initiative aims to elevate home care to new standards, augmenting the value we believe Owlet delivers to families and increasing the lifetime value per customer. Our strategy is not just about growth; it is about enriching the ecosystem of infant care with Owlet at its heart, fostering a healthier future for the next generation.
Owlet360 aims to elevate home care to new standards, augmenting the value we believe Owlet delivers to families and increasing the lifetime value per customer. Our strategy is not just about growth; it is about enriching the ecosystem of infant care with Owlet at its heart, fostering a healthier future for the next generation.
Sales of any product that we may develop and for which we may obtain marketing authorization or certification from the FDA and/or comparable foreign regulatory authorities or notified bodies depend, in part, on the extent to which such product or services associated with such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product or services associated with such product by third-party payors.
Other Healthcare Laws and Regulations Coverage and Reimbursement Sales of any product that we may develop and for which we may obtain marketing authorization or certification from the FDA and/or comparable foreign regulatory authorities or notified bodies depend, in part, on the extent to which such product or services associated with such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement for such product or services associated with such product by third-party payors.
Either party may also terminate the agreement under certain other customary conditions, including for uncured breaches of the agreement or if the other party if the other party materials breaches the agreement or in the event of the other party’s insolvency.
Either party may also terminate the agreement under certain other customary conditions, including if the other party materially breaches the agreement, for uncured breaches of the agreement, or in the event of the other party’s insolvency.
We believe BabySat provides significant advantages to the large, wired hospital monitoring technologies on the market today with its wireless, wearable form factor and cloud connected data integration designed for home use. While our existing primary market is the United States, we intend to continue to expand into international and new geographic markets.
We believe BabySat provides significant advantages to the large, wired hospital monitoring technologies on the market today with its wireless, wearable form factor and cloud connected data integration designed for home use. While our existing primary market is the United States, we have continued to expand into international and new geographic markets.
Combining both the 510(k) clearance and de novo FDA authorization for our pulse-oximetry medical devices, and accompanying digital health offerings with our existing consumer brand well-known to over 2 million using families, we believe that we can become one of the most recognizable brand names in the digital parenting category.
Combining both the 510(k) clearance and de novo FDA authorization for our pulse-oximetry medical devices, and accompanying digital health offerings with our existing consumer brand well-known with over 2 million devices sold, we believe that we can become one of the most recognizable brand names in the digital parenting category.
Until May 25, 2021, medical devices were regulated by the Council Directive 93/42/EEC (the EU Medical Devices Directive), which has been repealed and replaced by Regulation (EU) No 2017/745 (the EU Medical Devices Regulation).
Until May 25, 2021, medical devices were regulated by the Council Directive 93/42/EEC (the “EU Medical Devices Directive”), which has been repealed and replaced by Regulation (EU) No 2017/745 (the “EU Medical Devices Regulation”).
These relationships continue to grow and develop as a result of our novel product and software additions to our connected ecosystem, feature enhancements, omni-channel distribution, and marketing efforts. As we bring this valued relationship with consumer users into new medical communities, we believe that our platforms will continue to evolve and expand.
These relationships continue to grow and develop in tandem with our novel product and software additions to our connected ecosystem, feature enhancements, omni-channel distribution, and marketing efforts. As we bring this valued relationship with consumer users into new medical communities, we believe that our platforms will continue to evolve and expand.
The UK government has passed a new Medicines and Medical Devices Act 2021, which introduces delegated powers in favor of the Secretary of State or an ‘appropriate authority’ to amend or supplement existing regulations in the area of medicinal products and medical devices.
The UK government has passed the Medicines and Medical Devices Act 2021, which introduced delegated powers in favor of the Secretary of State or an ‘appropriate authority’ to amend or supplement existing regulations in the area of medicinal products and medical devices.
The notifications and associated data are intended to be used to supplement the decision by caregivers to seek additional guidance for medical care of the infant, but not to replace traditional methods of monitoring, diagnosis or treatment. • Dream Sock – A wearable infant health monitor equipped with pulse oximetry technology that tracks vital signs such as pulse rate, oxygen, activity and sleep patterns.
The notifications and associated data are intended to be used to supplement the decision by caregivers to seek additional guidance for medical care of the infant, but not to replace traditional methods of monitoring, diagnosis or treatment. • Sock Monitor Offerings • Dream Sock – An award-winning, wearable, smart infant health monitor equipped with pulse oximetry technology that tracks vital signs such as pulse rate, oxygen level, activity, and sleep patterns.
The majority of these challenges unfold within the security of the home. The persistence of unexpected infant fatalities remains unchanged for over a quarter-century, compounded by a recent increase in Respiratory Syncytial Virus (RSV) and pneumonia among children. The staggering number of healthcare visits underscores a dire need for change, starting with the home. Our belief is steadfast.
We believe the majority of these challenges unfold within the security of the home. The persistence of unexpected infant fatalities remains unchanged for over a quarter-century, compounded by a recent increase in Respiratory Syncytial Virus (RSV) and pneumonia among children. The staggering number of healthcare visits underscores what we believe is a dire need for change, starting with the home.
We believe that parenting should come with empowerment, the kind that's informed, data-driven, and supported every step of the way. Owlet stands as a beacon for this empowerment, equipping families with the tools intended for their little ones' safety, health, and joy. Our vision is ambitious yet clear.
Our belief is steadfast. We believe that parenting should come with empowerment, the kind that's informed, data-driven, and supported every step of the way. Owlet stands as a beacon for this empowerment, aimed to equip families with the tools intended for their little ones' safety, health, and joy. Our vision is ambitious yet clear.
After Owlet received 510(k) clearance for its prescription-required pulse oximeter device, BabySat, which is indicated for spot-checking and/or continuous monitoring of certain well-perfused infants in the home environment, Owlet has been preparing for the United States launch of this FDA-cleared pulse-oximetry technology incorporating our advanced, wire-free and consumer-adopted sock design.
After Owlet received 510(k) clearance for its prescription-required pulse oximeter device, BabySat, which is indicated for spot-checking and/or continuous monitoring of certain well-perfused infants in the home environment, Owlet launched in the United States in January 2024 this FDA-cleared pulse-oximetry technology incorporating our advanced, wire-free and consumer-adopted sock design.
Our research and development organization includes individuals with expertise in fields including engineering, product design, clinical science, consumer electronics, healthcare technologies and embedded software design. Our technical capabilities and commitment to innovation have allowed us to deliver significant product enhancements on a rapid development timeline.
Our research and development organization includes individuals with expertise in fields including engineering, product design, clinical science, consumer electronics, healthcare technologies and embedded software design. Our technical capabilities and commitment to innovation have allowed us to deliver significant product enhancements on a rapid development timeline. In 2024, we developed our subscription offering, Owlet360.
Regulation The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising, promotion, marketing and distribution, and import and export of medical devices to ensure that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements of the FDCA.
Regulation The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising, promotion, marketing and distribution, and import and export of medical devices to ensure 9 that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements of the Federal Food, Drug, and Cosmetic Act (“FDCA”).
Healthcare Distribution & Insurance Reimbursement: The FDA clearance of BabySat marks a significant expansion into healthcare distribution, opening potential new channels for insurance reimbursement and professional recommendations. We believe that this development not only broadens access but also cements Owlet's role in the healthcare ecosystem.
Healthcare Distribution & Insurance Reimbursement: The FDA clearance and subsequent launch of BabySat marks a significant opportunity to expand into healthcare distribution, opening potential new channels for insurance reimbursement and professional recommendations. We believe that this development not only broadens access, but also cements Owlet's role in the healthcare ecosystem.
Human Capital Resources As of December 31, 2023, we had 76 full-time employees. None of our employees is represented by a labor union, and we consider our employee relations to be good. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees.
Human Capital Resources As of December 31, 2024, we had 80 full-time employees and 5 part-time employees. None of our employees is represented by a labor union, and we consider our employee relations to be good. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees.
We are providing parents data-driven insights into their children’s well-being in the comfort of their own home. Our digital parenting platform aims to give parents real-time data and insights to help parents feel calmer and more confident and well rested.
We believe our ecosystem of digital parenting solutions can help transform modern parenting. We are providing parents data-driven insights into their children’s well-being in the comfort of their own home. Our digital parenting platform aims to give parents real-time data and insights to help parents feel calmer and more confident and well rested.
The discovery of previously unknown problems with any marketed products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or approval, or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.
The discovery of previously unknown problems with any marketed products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or approval, or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls. 12 The FDA has broad regulatory compliance and enforcement powers.
FDA Premarket Clearance and Approval Requirements Unless an exemption applies, each medical device commercially distributed in the U.S. requires either FDA clearance of a premarket notification submitted under Section 510(k) of the Federal Food, Drug, and Cosmetic Act (“FDCA”), or approval of a premarket approval application, or PMA.
FDA Premarket Clearance and Approval Requirements Unless an exemption applies, each medical device commercially distributed in the U.S. requires either FDA clearance of a premarket notification submitted under Section 510(k) of the FDCA or approval of a premarket approval application, or PMA.
We advocate for parental leadership in healthcare, backed by technological advancements. We prioritize our collective mission above individual egos, innovate to address genuine needs, and foster a culture of teamwork and mutual support. Our products empower parents with the right information at the right time. Our ecosystem of digital parenting solutions is transforming modern parenting.
We advocate for parental leadership in healthcare, backed by technological advancements. We prioritize our collective mission above individual egos, innovate to address genuine needs, and foster a culture of teamwork and mutual support. Our products are intended to empower parents with the right information at the right time.
We rely on a combination of patent, copyright, trademark and trade secret laws and confidentiality and invention assignment agreements to protect our intellectual property rights. As of February 1, 2024, we had 58 issued patents (with numerous others pending) and 44 registered trademarks.
We rely on a combination of patent, copyright, trademark and trade secret laws and confidentiality and invention assignment agreements to protect our intellectual property rights. As of February 15, 2025, we had 60 issued patents (with numerous others pending) and 49 registered trademarks.
Other Foreign Regulations Similarly, we are subject to regulations and product registration requirements in many foreign countries in which we may sell our products, including in the areas of: • design, development, manufacturing, and testing; • product standards; • product safety; • product safety reporting; • marketing, sales, and distribution; • packaging and storage requirements; • labeling requirements; • content and language of instructions for use; • record keeping procedures; • advertising and promotion; • recalls and field corrective actions; • import and export restrictions; and • tariff regulations, duties, and tax requirements; We may also become subject to the following additional requirements in many foreign countries in which we may sell future medical devices, including in the areas of: • clinical testing; • post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; • registration for reimbursement; and • necessity of testing performed in country by distributors for licensees.
Alternatively, if a UK approved body conducts such assessment, a ‘UKNI’ mark and a CE mark are applied and the device may only be placed on the market in Northern Ireland and not the EU. 16 Other Foreign Regulations Similarly, we are subject to regulations and product registration requirements in many foreign countries in which we may sell our products, including in the areas of: • design, development, manufacturing, and testing; • product standards; • product safety; • product safety reporting; • marketing, sales, and distribution; • packaging and storage requirements; • labeling requirements; • content and language of instructions for use; • record keeping procedures; • advertising and promotion; • recalls and field corrective actions; • import and export restrictions; and • tariff regulations, duties, and tax requirements; We may also become subject to the following additional requirements in many foreign countries in which we may sell future medical devices, including in the areas of: • clinical testing; • post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; • registration for reimbursement; and • necessity of testing performed in country by distributors for licensees.
Our new partnership with AdaptHealth as a medical equipment reseller may facilitate access to insurance reimbursement and distribution through hospitals. Owlet is focused on enlisting a wide variety of healthcare partners in 2024 to increase the accessibility and affordability of our products while increasing our margin.
Our partnership with AdaptHealth and other Durable Medical Equipment suppliers (“DMEs”) may facilitate access to insurance reimbursement and distribution through hospitals. Owlet is focused on enlisting a wide variety of healthcare partners to increase the accessibility and affordability of our products while increasing our margin.
With the momentum we have gained from recent FDA marketing authorizations, the introduction of potential insurance coverage and reimbursement for BabySat, expanded distribution channels, increased credibility in medical communities, and an increased retail presence, we see Owlet as strategically positioned for substantial growth.
With the momentum we have gained from FDA marketing authorizations, the introduction of potential insurance coverage and reimbursement for BabySat, the launch of Owlet360 subscription 6 service, increased credibility in medical communities, and an increased retail presence, we see Owlet as strategically positioned for substantial growth.
Our current research and development efforts are focused on enhancing the customer experience of our existing products, while supporting commercialization of our medical devices.
Our current research and development efforts are focused on enhancing the customer experience of our existing products, enhancing the feature set of our subscription offering, and new product development, while supporting commercialization of our medical devices.
Coverage and Reimbursement With respect to our current products, including the Dream Sock and Owlet Cam, we utilize a direct-to-consumer model where consumers purchase our products directly from us or one of our retailers. Currently, these products are not covered or reimbursed by any third-party payor.
With respect to Dream Sock and Owlet Cam, we utilize a direct-to-consumer model where consumers purchase our products directly from us or one of our retailers. Currently, these products are not covered or reimbursed by any third-party payor. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis.
Manufacturers are also notably responsible for entering the necessary data on EUDAMED, which includes the UDI database, and for keeping it up to date. The obligations for registration in EUDAMED will become applicable at a later date (as EUDAMED is not yet fully functional).
Manufacturers are also notably responsible for entering the necessary data on EUDAMED, which includes the UDI database, and for keeping it up to date. Certain obligations for registration in EUDAMED are expected to become applicable in the first quarter of 2026 (as EUDAMED is not yet fully functional).
Our Platform and Pipeline Over 2 million parents worldwide have used Owlet contributing to one of the largest data sets of infant health and sleep. We believe that data will be an invaluable tool in bridging the current healthcare gap between hospital and home.
Our Platform and Pipeline Since our inception, over 2 million Owlet devices have been sold worldwide, which has contributed to one of the largest data sets of infant health and sleep. We believe that data will be an invaluable tool in bridging the current healthcare gap between hospital and home.
Yet, the infancy period remains fraught with complexities; in the United States alone, a family will lose over 44 nights of sleep in the first year, and families of young children will see, annually, over 14 million sick visits and 3.4 million emergency room visits, and tragically, more than 3,500 infants are lost unexpectedly in their homes every year.
In the United States alone, a family will lose over 44 nights of sleep in the first year, and families of young children will see, annually, nearly 13 million sick visits and 3.4 million emergency room visits, and tragically, more than 3,700 infants are lost unexpectedly in their homes every year.
Expanding Lifetime Value (LTV): We view Owlet's brand as synonymous with engagement and loyalty in our industry, supported by a rich dataset that underpins our market understanding. Moving forward, we believe we are well-positioned to innovate and pilot new value-added services that can forge deeper connections among parents, their infants, and healthcare providers.
Expanding Lifetime Value (LTV): We view Owlet's brand as synonymous with engagement and loyalty in our industry, supported by a rich dataset that underpins our market understanding. With the introduction of our new subscription service, Owlet360, we believe we are well-positioned to forge deeper connections among parents, their infants, and healthcare providers.
The BabySat device, which requires a physician’s or providers prescription, allows Owlet to enter the medical and healthcare markets and compete with traditional hospital dispensed medical devices. BabySat is designed to be able to be utilized by various telehealth platforms and is designed specifically for babies with diagnosed illnesses and health conditions.
BabySat, which requires a prescription from a physician or other authorized, licensed healthcare provider, has allowed Owlet to enter the medical and healthcare markets and compete with traditional hospital dispensed medical devices. BabySat is designed to be able to be utilized by various telehealth platforms and is designed specifically for babies with diagnosed illnesses and health conditions.
The EU Medical Devices Regulation requires that before placing a device, other than a custom-made device, on the market, manufacturers (as well as other economic operators such as authorized representatives and importers) must register by submitting identification information to the European Database for Medical Devices ("EUDAMED"), unless they have already registered.
In particular, there will be a new audit by the notified body before it will renew the relevant certificate(s). 14 The EU Medical Devices Regulation requires that before placing a device, other than a custom-made device, on the market, manufacturers (as well as other economic operators such as authorized representatives and importers) must register by submitting identification information to the European Database for Medical Devices (“EUDAMED”), unless they have already registered.
In 2023, we developed software enhancements for our FDA authorized medical devices, BabySat and Dream Sock with Health Notifications. From designing innovative and groundbreaking products to employing sophisticated software with proprietary algorithms and backend support, we believe we have built a strong competitive moat and early-mover advantage over potential competition in the connected nursery field.
From designing innovative and groundbreaking products to employing sophisticated software with proprietary algorithms and backend support, we believe we have built a strong competitive moat and early-mover advantage over potential competition in the connected nursery field.
Such assessment may be conducted by an EU notified body, in which case a CE mark is required before placing the device on the market in Northern Ireland. Alternatively, if a UK approved body conducts such assessment, a 'UKNI' mark is applied and the device may only be placed on the market in Northern Ireland and not the EU.
Such assessment may be conducted by an EU notified body, in which case a CE mark is required before placing the device on the market in Northern Ireland.
The FDA’s 510(k) clearance process usually takes from three to twelve months but may take longer. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence.
The FDA’s 510(k) clearance process usually takes from three to twelve months but may take longer. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence. In addition, FDA collects user fees for certain medical device submissions and annual fees and for medical device establishments.
In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients.
In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients. Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval.
Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval. 9 Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement.
Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement.
In 2023, Owlet reached an important inflection point from a pioneer in the consumer-facing, in-home, digital health smart baby monitoring industry to a company that received two innovative regulatory authorizations from the FDA for its products.
Since the Warning Letter, we have cooperated with and have worked diligently to seek marketing authorizations for our products with medical device functionality. In 2023, Owlet reached an important inflection point from a pioneer in the consumer-facing, in-home, digital health smart baby monitoring industry to a company that received two innovative regulatory authorizations from the FDA for its products.
Following the expiration of the initial term of the agreement in June 2019, we extended the agreement through June 2022. In April 2022, we further extended the agreement through June 2024. We have the right to terminate the agreement, without cause, upon six months’ prior written notice to Aoni.
We have extended the term of the agreement several times following the expiration of the initial term of the agreement, and most recently extended the term through June 2026. We have the right to terminate the agreement, without cause, upon six months’ prior written notice to Aoni.
Regulatory Interactions In October 2021, we received a Warning Letter from the FDA regarding the health notifications then provided with our Smart Sock that led Owlet to cease the distribution of the Smart Sock in the U.S. Since our Warning Letter, we have cooperated with and have worked diligently to seek marketing authorizations for our products with medical device functionality.
Regulatory Interactions In October 2021, we received a Warning Letter from the FDA regarding the health notifications then provided with our Smart Sock that led Owlet to cease the distribution of Smart Sock in the U.S. (the “Warning Letter”).
With our recent 510(k) clearance and de novo authorization, competitors will also have the benefit of using our devices as predicate devices in their own regulatory clearance pursuits.
With our 510(k) clearance and de novo authorization, competitors will also have the benefit of using our devices as predicate devices in their own regulatory clearance pursuits. Increased competition in the future could adversely affect our revenue, revenue growth rate, margins and market share.
Item 1. Business We are Owlet Globally, we are bringing over 140 million new lives into the world every year.
Item 1. Business We are Owlet Globally, over 140 million new lives are brought into the world every year. Yet, the infancy period remains fraught with complexities.
Increased competition in the future could adversely affect our revenue, revenue growth rate, margins and market share. 6 We believe that Owlet's pioneering spirit and commitment to innovation have not only established us as a leader in infant health monitoring but also as a trusted partner for parents worldwide, aiming to enhance the safety and well-being of every baby.
We believe that Owlet's pioneering spirit and commitment to innovation have advanced our recognition as a leader in infant health monitoring but also as a trusted partner for parents worldwide, aiming to enhance the safety and well-being of every baby.
Our focus on engaging directly with our customer is driving significant sales through direct channels and increases demand through our retail partnerships. Our digital presence is a cornerstone of our strategy, enhancing customer lifetime value and fostering brand loyalty.
Our focus on 5 engaging directly with our customer is driving significant sales through direct channels and increases demand through our retail partnerships. Our digital presence is a cornerstone of our strategy, enhancing customer lifetime value and fostering brand loyalty. Retail Partnerships: Our products are widely available across major U.S. retailers, including Amazon, Target, Walmart, Best Buy and BabyList.
EU member states’ laws related to the advertising and promotion of medical devices, which vary between jurisdictions, may limit or restrict the advertising and promotion of products to the general public and may impose limitations on promotional activities with healthcare professionals. 13 Many EU member states have adopted specific anti-gift statutes that further limit commercial practices for medical devices, in particular vis-à-vis healthcare professionals and organizations.
EU member states’ laws related to the advertising and promotion of medical devices, which vary between jurisdictions, may limit or restrict the advertising and promotion of products to the general public and may impose limitations on promotional activities with healthcare professionals.
Our competition spans from established players to emerging innovators in the space, including: • VTech: Known for its extensive range of sound and video monitors, VTech is a significant player in the baby monitor market. • Nanit: Offers a unique proposition with its video monitor and integrated breathing wrap wearable. • Masimo: Primarily focused on patient monitoring solutions for hospital and clinical settings, Masimo has ventured into consumer health with technologies adaptable for home use. • Hubble: Delivers a variety of sound and video monitors, including options with wearable health monitoring capabilities, expanding the choices available to parents.
Our competition spans from established players to emerging innovators in the space, including: • VTech: Sells an extensive range of low-cost sound and video monitors. • Nanit: Offers a line of video monitors and non-FDA cleared integrated breathing wrap wearable. • Masimo: Primarily focused on patient monitoring solutions for hospital and clinical settings. • Hubble: Delivers a variety of low-cost sound and video monitors, including options with non-FDA cleared wearable health monitoring capabilities.
This Directive covers all products intended for consumers or likely to be used by consumers, placed onto the EU market, unless a specific product safety regulation applies. The General Product Safety Directive provides safety and conformity requirements as well as post-market surveillance obligations for manufacturers and importers.
The Regulation covers all products intended for consumers (and products designed exclusively for professional use but which subsequently reach the consumer market), placed onto the EU market, unless a specific product safety regulation applies. The General Product Safety Regulation strengthened the safety and conformity requirements as well as post-market surveillance obligations for manufacturers and importers.
For example, the FDA identifies sleep management – such as a product intended to track sleep trends – as an intended use of a product that falls within a general wellness use, provided that the product claims do not make reference to any diseases or conditions.
For example, the FDA identifies sleep management – such as a product intended to track sleep trends – as an intended use of a product that falls within a general wellness use, provided that the product claims do not make reference to any diseases or conditions As such, if a medical device includes features that fall within the definition of a “low risk general wellness product,” those features may not be subject to enforcement of medical device requirements under the FDA’s compliance policy for such products and/or features.
Foreign Government Regulation In addition to U.S. regulations, we are subject to a variety of foreign government regulations applicable to general consumer products and medical devices. Regulation of General Consumer Products in the European Union 11 In the European Union ("EU"), consumer products must comply with the General Product Safety Directive No 2001/95/EC.
Foreign Government Regulation In addition to U.S. regulations, we are subject to a variety of foreign government regulations applicable to general consumer products and medical devices.
If the FDA determines that the device is “not substantially equivalent” to a previously cleared device, the device is automatically designated as a Class III device.
If the FDA agrees that the device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device. If the FDA determines that the device is “not substantially equivalent” to a previously cleared device, the device is automatically designated as a Class III device.
Through diligent management of operating expenses, enhanced sell-through rates, and improved profit margins, we came close to achieving positive adjusted EBITDA in the fourth quarter of 2023 and made significant progress towards meeting this target. These accomplishments have furnished Owlet with operational leverage and we believe has the potential to drive profitability and cash flow.
Through volume growth, gross margin expansion, and diligent management of operating expenses, we achieved positive adjusted EBITDA in the final three quarters of 2024 and made significant progress towards meeting this target. These accomplishments have furnished Owlet with operational leverage and we believe have the potential to drive profitability and cash flow in the future.
Throughout the term of the certificate of conformity, the manufacturer will be subject to periodic surveillance audits to verify continued compliance with the applicable requirements. In particular, there will be a new audit by the notified body before it will renew the relevant certificate(s).
Throughout the term of the certificate of conformity, the manufacturer will be subject to periodic surveillance audits to verify continued compliance with the applicable requirements.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSimilar to the federal Anti-Kickback Statute, a person or entity does not have to have actual knowledge of this statute or specific intent to violate it to have committed a violation; • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (nurse practitioners, certified nurse anesthetists, physician assistants, clinical nurse specialists, anesthesiology assistants and certified nurse midwives), and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and • state and foreign equivalents of each of the healthcare laws described above, some of which may be broader in scope.
Biggest changeSimilar to the federal Anti-Kickback Statute, a person or entity does not have to have actual knowledge of this statute or specific intent to violate it to have committed a violation; • the federal Civil Monetary Penalties law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (nurse practitioners, certified nurse anesthetists, physician assistants, clinical nurse specialists, anesthesiology assistants and certified nurse midwives), and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and • state and foreign equivalents of each of the healthcare laws described above, some of which may be broader in scope. 49 Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that some of our business activities, or any arrangements with physicians, could be subject to challenge under one or more of such laws.
Our future capital requirements will depend on many factors, including: • the timing, receipt and amount of sales from our current and future products and services; • the cost of manufacturing, either ourselves or through third party manufacturers, our products and services; • the cost and timing of expanding our sales, marketing and distribution capabilities; • the terms and timing of any other partnership, licensing and other arrangements that we may establish; • the costs and timing of securing regulatory approvals or certifications; • any product liability or other lawsuits related to our current or future products and services; • the expenses needed to attract, hire and retain skilled personnel; • the costs associated with being a public company; • costs associated with any adverse market conditions or other macroeconomic factors; • the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our intellectual property portfolio; and • the extent to which we acquire or invest in businesses, products or technologies.
Our future capital requirements will depend on many factors, including: • the timing, receipt and amount of sales from our current and future products and services; • the cost and timing of manufacturing, either ourselves or through third party manufacturers, our products and services; • the cost and timing of expanding our sales, marketing and distribution capabilities; • the terms and timing of any other partnership, licensing and other arrangements that we may establish; • the costs and timing of securing regulatory approvals or certifications; • any product liability or other lawsuits related to our current or future products and services; • the expenses needed to attract, hire and retain skilled personnel; • the costs associated with being a public company; • costs associated with any adverse market conditions or other macroeconomic factors; • the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our intellectual property portfolio; and • the extent to which we acquire or invest in businesses, products or technologies.
In the second half of 2022, we responded with our position that the Dream Sock is not a medical device, and Health Canada has not affirmatively concluded that it agrees or disagrees with our position.
In the second half of 2022, we responded with our position that Dream Sock is not a medical device, and Health Canada has not affirmatively concluded that it agrees or disagrees with our position.
In June 2023, we received 510(k) clearance from the FDA for BabySat, a prescription use-only pulse oximeter indicated for use in measuring and displaying functional oxygen saturation of arterial hemoglobin and pulse rate and for spot-checking and/or continuous monitoring of well-perfused patients, greater than one month old up to 18 months old and weighing between 6 and 30 pounds, in the home environment.
In June 2023, we received 510(k) clearance from the FDA for BabySat, a prescription use-only pulse oximeter indicated for use in measuring and displaying functional oxygen saturation of arterial hemoglobin and pulse rate and for spot-checking and/or continuous monitoring of well-perfused patients, greater than one month old up to 18 months old and weighing between 6 and 30 pounds, in the home environment.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities or notified bodies, which may include any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, administrative detention, or seizure of our products; • customer notifications or repair, replacement or refunds; • operating restrictions or partial suspension or total shutdown of production; • delays in or refusal to grant our requests for future clearances, certifications or approvals (including foreign regulatory approvals) of new products, new intended uses, or modifications to existing products; • withdrawals or suspensions of our current marketing authorizations, resulting in prohibitions on sales of our products; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities or notified bodies, which may include any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, administrative detention, or seizure of our products; • customer notifications or repair, replacement or refunds; • operating restrictions or partial suspension or total shutdown of production; • delays in or refusal to grant our requests for future clearances, certifications or approvals (including foreign regulatory approvals) of new products, new intended uses, or modifications to existing products; 46 • withdrawals or suspensions of our current marketing authorizations, resulting in prohibitions on sales of our products; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • criminal prosecution.
However, our IT systems and those of our those of our users, customers, partners, suppliers and third-party service providers are vulnerable to numerous and evolving 31 cybersecurity risks that threaten the confidentiality, integrity and availability of our IT systems and data, including from computer viruses and malware (e.g. ransomware), malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, employee theft or misuse, human or technological error, fraud, denial or degradation of service attacks, as a result of bugs, misconfigurations or exploited vulnerabilities in software or hardware, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization.
However, our IT systems and those of our those of our users, customers, partners, suppliers and third-party service providers are vulnerable to numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT systems and data, including from computer viruses and malware (e.g. ransomware), malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, employee theft or misuse, human or technological error, fraud, denial or degradation of service attacks, as a result of bugs, misconfigurations or exploited vulnerabilities in software or hardware, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization.
At any time from and after February 17, 2028, the holders of at least a majority of our then outstanding shares of Series A Convertible Preferred Stock and, at any time from and after March 1, 2029, the holders of at least a majority of our then outstanding shares of Series B Convertible Preferred Stock may specify a date and time or the occurrence of an event by vote or written consent that all, and not less than all, of such outstanding shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, as applicable, will automatically be: (i) converted into shares of common stock at the conversion rate then in effect, (ii) subject to certain exceptions and limitations, redeemed for an amount per share of such applicable shares of Series A Preferred Stock or Series B 57 Preferred Stock equal to the liquidation preference of $1,000 per share plus all accrued or declared but unpaid dividends as of the redemption date and time or (iii) a combination of the foregoing.
At any time from and after February 17, 2028, the holders of at least a majority of our then outstanding shares of Series A Convertible Preferred Stock and, at any time from and after March 1, 2029, the holders of at least a majority of our then outstanding shares of Series B Convertible Preferred Stock may specify a date and time or the occurrence of an event by vote or written consent that all, and not less than all, of such outstanding shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, as applicable, will automatically be: (i) converted into shares of common stock at the conversion rate then in effect, (ii) subject to certain exceptions and limitations, redeemed for an amount per share of such applicable shares of Series A Preferred Stock or Series B Preferred Stock equal to the liquidation preference of $1,000 per share plus all accrued or declared but unpaid dividends as of the redemption date and time or (iii) a combination of the foregoing.
A person or entity does not have to have actual knowledge of this statute or specific intent to violate it to have committed a violation; • federal civil and criminal false claims laws, including the federal civil False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or 44 causing to be presented, claims for payment or approval from Medicare, Medicaid, or other federal government programs that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government, including federal healthcare programs.
A person or entity does not have to have actual knowledge of this statute or specific intent to violate it to have committed a violation; • federal civil and criminal false claims laws, including the federal civil False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other federal government programs that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government, including federal healthcare programs.
If the FDA or foreign regulatory authorities determine that 41 our products authorized or certified for marketing as medical devices were promoted for off-label use, or that false, misleading or inadequately substantiated promotional claims have been made by us or our commercial partners, it could request that we or our commercial partners modify those promotional materials or take regulatory or enforcement actions, including the issuance of an untitled letter or warning letter, injunction, seizure, civil fine and criminal penalties.
If the FDA or foreign regulatory authorities determine that our products authorized or certified for marketing as medical devices were promoted for off-label use, or that false, misleading or inadequately substantiated promotional claims have been made by us or our commercial partners, it could request that we or our commercial partners modify those promotional materials or take regulatory or enforcement actions, including the issuance of an untitled letter or warning letter, injunction, seizure, civil fine and criminal penalties.
If the FDA or other regulatory body makes public any determination that any of our products is not in compliance with applicable requirements, such as occurred in the FDA’s October 1, 2021 Warning Letter with respect to the Smart Sock, or takes some other public action such as issuing a public enforcement action or recommending or mandating a recall, customers may react negatively and stop purchasing or recommending our products or services, or may demand refunds.
If the FDA or other regulatory body makes public any determination that any of our products is not in compliance with applicable requirements, such as occurred in the FDA’s October 1, 2021 Warning Letter with respect to Owlet Smart Sock, or takes some other public action such as issuing a public enforcement action or recommending or mandating a recall, customers may react negatively and stop purchasing or recommending our products or services, or may demand refunds.
Our bylaws provide that the state or federal courts located within the State of Delaware are the sole and exclusive forum for: (i) any derivative action, suit or proceeding brought on our behalf, (ii) any action, suit or proceeding asserting a claim of breach of fiduciary duty owed by any of our directors, officers or stockholders to our stockholders, (iii) any action, suit or proceeding asserting a claim against us arising pursuant to any provision of the DGCL, our bylaws, or (iv) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine.
Our bylaws provide that the state or federal courts located within the State of Delaware are the sole and exclusive forum for: (i) any derivative action, suit or proceeding brought on our behalf, (ii) any action, suit or proceeding asserting a claim of breach of fiduciary duty owed by any of our directors, officers or stockholders to our stockholders, (iii) any action, suit or proceeding asserting a claim against us arising pursuant to any provision of the 62 DGCL, our bylaws, or (iv) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine.
Our products require 25 significant expertise to manufacture, and our contract manufacturers may encounter difficulties in scaling up production of our products, including problems with quality control and assurance, component supply shortages, increased costs, shortages of qualified personnel, the long lead time required to develop additional facilities for purposes of testing our products or difficulties associated with compliance with local, state, federal and foreign regulatory requirements.
Our products require significant expertise to manufacture, and our contract manufacturers may encounter difficulties in scaling up production of our products, including problems with quality control and assurance, component supply shortages, increased costs, shortages of qualified personnel, the long lead time required to develop additional facilities for purposes of testing our products or difficulties associated with compliance with local, state, federal and foreign regulatory requirements.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we would not be able to market the affected products and may lose any marketing authorizations or certifications that we may have obtained, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we would not be able to market the affected products and may lose any 45 marketing authorizations or certifications that we may have obtained, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, regulatory investigations or enforcement actions, litigation (including class actions), damage our reputation, and adversely affect our business and results of operations.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security 48 concerns, even if unfounded, could result in additional cost and liability to us, regulatory investigations or enforcement actions, litigation (including class actions), damage our reputation, and adversely affect our business and results of operations.
The risk factors described below should be read together with the other information set forth in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes, as well as in other documents that we file with the Securities and Exchange Commission ("SEC"). 19 Risks Related to Our Business and Operations We have a limited operating history.
The risk factors described below should be read together with the other information set forth in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes, as well as in other documents that we file with the Securities and Exchange Commission ("SEC"). Risks Related to Our Business and Operations We have a limited operating history.
If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations due to a loss of our trade secrets and confidential information, negative publicity and damage to our reputation, loss of customers, loss of or delay in market acceptance of our products and services, loss of competitive position, loss of revenue or liability for damages or other similar disruptions.
If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations due to a loss of our trade secrets and confidential information, 35 negative publicity and damage to our reputation, loss of customers, loss of or delay in market acceptance of our products and services, loss of competitive position, loss of revenue or liability for damages or other similar disruptions.
In a given period, if these distributors and retailers are unable to sell an adequate amount of their Owlet product inventories, or if they decide to decrease or become unwilling to manage or sell their Owlet product inventories for 24 any reason, our sales to and through these third parties could decline, which could result in lower sales volume or increased sales returns, excess inventory or inventory write-offs.
In a given period, if these distributors and retailers are unable to sell an adequate amount of their Owlet product inventories, or if they decide to decrease or become unwilling to manage or sell their Owlet product inventories for any reason, our sales to and through these third parties could decline, which could result in lower sales volume or increased sales returns, excess inventory or inventory write-offs.
Some of these persons or entities may have interests 55 that are different from yours. For example, these stockholders may support proposals and actions with which you may disagree or which are not in your best interests. For as long as Eclipse holds a significant amount of our voting equity, it will be able to exert significant control over us.
Some of these persons or entities may have interests that are different from yours. For example, these stockholders may support proposals and actions with which you may disagree or which are not in your best interests. For as long as Eclipse holds a significant amount of our voting equity, it will be able to exert significant control over us.
In response to inquiries from the FDA and regulatory authorities in other jurisdictions regarding the marketing of the Smart Sock and Dream Sock (in the case of the FDA, prior to ceasing distribution of the Smart Sock and prior to our recent marketing authorization for the Dream Sock Health Notifications features), we have communicated our beliefs that such products are not medical devices that require medical device or similar marketing authorization or certification from such other regulatory authorities or notified bodies.
In response to inquiries from the FDA and regulatory authorities in other jurisdictions regarding the marketing of Owlet Smart Sock and Dream Sock (in the case of the FDA, prior to ceasing distribution of Owlet Smart Sock and prior to our recent marketing authorization for Dream Sock Health Notifications features), we have communicated our beliefs that such products are not medical devices that require medical device or similar marketing authorization or certification from such other regulatory authorities or notified bodies.
It is unclear how healthcare reform measures, if any, will impact our business. Any medical devices we market and related business activities would be subject to rigorous regulation by the FDA and other federal, state and international governmental authorities. These authorities and members of Congress have been increasing their scrutiny over the medical device industry.
It is unclear how new healthcare reform measures, if any, will impact our business. Any medical devices we market and related business activities would be subject to rigorous regulation by the FDA and other federal, state and international governmental authorities. These authorities and members of Congress have been increasing their scrutiny over the medical device industry.
The FDA, CPSC and similar foreign regulatory authorities have the authority to require the recall of our commercialized products under certain circumstances and depending on the type of product. For example, the FDA must find that there is a reasonable probability that a medical device would cause serious adverse health consequences or death in order to require a recall.
The FDA, CPSC and similar foreign regulatory authorities have the authority to require the recall of our commercialized products under certain circumstances and depending on the type of product. For 51 example, the FDA must find that there is a reasonable probability that a medical device would cause serious adverse health consequences or death in order to require a recall.
The regulation of the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new consumers on cost-effective terms and consequently, materially and adversely affect our business, financial condition and results of operations.
The regulation of the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new consumers on cost-effective terms and 53 consequently, materially and adversely affect our business, financial condition and results of operations.
If our defense to those claims fails, in addition to paying monetary damages or a settlement payment, a court could prohibit us from using technologies, features or other intellectual property that are essential to our products and services, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers.
If our defense to those claims fails, in addition to paying monetary damages or a settlement payment, a court could prohibit us from using technologies, features or other intellectual property that are 57 essential to our products and services, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers.
Under these provisions, if anyone becomes an “interested stockholder,” we may not enter into a “business combination” with that person for three years without special approval, which could discourage a third-party from making a takeover offer and could delay or prevent a change in control of us.
Under these provisions, if anyone becomes an “interested stockholder,” we may not enter into a “business combination” with that 61 person for three years without special approval, which could discourage a third-party from making a takeover offer and could delay or prevent a change in control of us.
Although our ability to 59 amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or shares, shorten the exercise period or decrease the number of shares of common stock purchasable upon exercise of a warrant.
Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or shares, shorten the exercise period or decrease the number of shares of common stock purchasable upon exercise of a warrant.
We will need to raise additional capital in the future in order to execute our strategic plan, which may not be available on terms acceptable to us, or at all. We have experienced recurring losses from operations and negative cash flows from operations, and we expect to continue operating at a loss for the foreseeable future.
We will likely need to raise additional capital in the future in order to execute our strategic plan, which may not be available on terms acceptable to us, or at all. We have experienced recurring losses from operations and negative cash flows from operations, and we expect to continue operating at a loss for the foreseeable future.
In addition, as we expand our business internationally, the application and implementation of existing, new or future international laws regarding indirect taxes (such as a Value Added Tax) could materially and adversely affect our business, financial condition and results of operations. 34 The applicability of sales, use and other tax laws or regulations on our business is uncertain.
In addition, as we expand our business internationally, the application and implementation of existing, new or future international laws regarding indirect taxes (such as a Value Added Tax) could materially and adversely affect our business, financial condition and results of operations. The applicability of sales, use and other tax laws or regulations on our business is uncertain.
We will still need additional funding to fund our operations, but additional funds may not be available to us on acceptable terms on a timely basis, if at all. We may seek funds through borrowings or additional rounds of financing, including private or public equity or debt offerings, or by other means.
We will likely still need additional funding to fund our operations, but additional funds may not be available to us on acceptable terms on a timely basis, if at all. We may seek funds through borrowings or additional rounds of financing, including private or public equity or debt offerings, or by other means.
Specifically, we did not maintain a sufficient complement of personnel with an appropriate degree of internal controls and accounting knowledge, experience, and training commensurate with our accounting and financial reporting requirements. This material weakness contributed to the following additional material weaknesses: • We did not design and maintain effective controls over the segregation of duties related to journal entries.
Specifically, we did not maintain a sufficient complement of personnel with an appropriate degree of internal controls and accounting knowledge, experience, and training commensurate with our accounting and financial reporting requirements. This material weakness contributed to the following material weaknesses: • We did not design and maintain effective controls over the segregation of duties related to journal entries.
In addition, even if FDA marketing authorization is obtained, if safety or effectiveness problems are later identified with any medical device products, we may need to initiate a product recall. To support any submissions to the FDA seeking marketing authorizations, we may be required to conduct clinical testing of our product candidates.
In addition, even if FDA marketing authorization is obtained, if safety or effectiveness problems are later identified with any medical device products, we may need to initiate a product recall. 40 To support any submissions to the FDA seeking marketing authorizations, we may be required to conduct clinical testing of our product candidates.
Except for low risk medical devices (Class I), where the manufacturer can self-assess the conformity of its products with the general safety and performance requirements (except for any parts which relate to sterility, metrology or reuse aspects), a conformity assessment procedure requires the intervention of a notified body.
Except for low risk medical devices (Class I), where the manufacturer can self-assess the conformity of its products with the general safety and performance requirements (except for any parts which relate to sterility, metrology or reuse aspects), a conformity assessment 42 procedure requires the intervention of a notified body.
For more information, see “—Regulatory reforms may impact our ability to develop and commercialize our products and services and technologies.” 42 Changes in and actual or perceived failures to comply with U.S. and foreign privacy and data protection laws, regulations and standards may adversely affect our business, operations and financial performance.
For more information, see “—Regulatory reforms may impact our ability to develop and commercialize our products and services and technologies.” Changes in and actual or perceived failures to comply with U.S. and foreign privacy and data protection laws, regulations and standards may adversely affect our business, operations and financial performance.
Any increases in our credit and debit card fees could harm our results of operations, particularly if we elect not to raise our rates for our products and services to offset the increase. The termination of our ability to process payments on any major credit or debit card would significantly impair our ability to operate our business.
Any increases in our credit and debit card fees 38 could harm our results of operations, particularly if we elect not to raise our rates for our products and services to offset the increase. The termination of our ability to process payments on any major credit or debit card would significantly impair our ability to operate our business.
Unauthorized parties may also 51 attempt to copy or reverse engineer certain aspects of our products and services that we consider proprietary and a trade secret. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable.
Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products and services that we consider proprietary and a trade secret. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable.
In addition, stockholder litigation surrounding executive compensation and disclosure of executive compensation has increased with the passage of the Dodd-Frank Act. Furthermore, our stockholders may not continue to approve our advisory vote on named executive officer compensation that is required to be voted on by our stockholders 48 annually pursuant to the Dodd-Frank Act.
In addition, stockholder litigation surrounding executive compensation and disclosure of executive compensation has increased with the passage of the Dodd-Frank Act. Furthermore, our stockholders may not continue to approve our advisory vote on named executive officer compensation that is required to be voted on by our stockholders annually pursuant to the Dodd-Frank Act.
For instance, the introduction or announcement of new or advanced products and services may shorten the life cycle of our existing products or reduce demand, thereby reducing any benefits of 26 successful product or service introductions and potentially leading to challenges in managing write-downs or write-offs of inventory of existing products and services.
For instance, the introduction or announcement of new or advanced products and services may shorten the life cycle of our existing products or reduce demand, thereby reducing any benefits of successful product or service introductions and potentially leading to challenges in managing write-downs or write-offs of inventory of existing products and services.
The terms and policies 23 for maintenance of existing applications and the approval process of new applications are very broad and subject to interpretation and frequent changes, and Apple and Google have complete control over the approval or removal of each mobile application submitted to or offered on their respective platforms.
The terms and policies for maintenance of existing applications and the approval process of new applications are very broad and subject to interpretation and frequent changes, and Apple and Google have complete control over the approval or removal of each mobile application submitted to or offered on their respective platforms.
District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of the warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with us.
District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that 63 may be initiated by holders of the warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with us.
SEO involves developing our website in a way that enables the website to rank high for search queries for which our website’s content may be relevant. We also rely heavily on favorable recommendations from our existing customers to help drive traffic to our website.
SEO involves developing our website in a way that enables the website to rank high for search queries for 32 which our website’s content may be relevant. We also rely heavily on favorable recommendations from our existing customers to help drive traffic to our website.
We are 33 subject to the Payment Card Industry Data Security Standard (“PCI DSS”) issued by the PCI Council, which includes guidelines with regard to the security policies and practices we should adopt regarding the physical and electronic storage, processing and transmission of cardholder data.
We are subject to the Payment Card Industry Data Security Standard (“PCI DSS”) issued by the PCI Council, which includes guidelines with regard to the security policies and practices we should adopt regarding the physical and electronic storage, processing and transmission of cardholder data.
Such clinical testing must be conducted in compliance with FDA requirements 37 pertaining to research with human subjects. Among other requirements, we must obtain informed consent from study subjects and approval by institutional review boards (“IRB”) before such studies may begin.
Such clinical testing must be conducted in compliance with FDA requirements pertaining to research with human subjects. Among other requirements, we must obtain informed consent from study subjects and approval by institutional review boards (“IRB”) before such studies may begin.
In addition to fines, a breach of the 43 GDPR may result in regulatory investigations, reputational damage, orders to cease or change our data processing activities, enforcement notices, assessment notices (for a compulsory audit) and/ or civil claims (including class actions).
In addition to fines, a breach of the GDPR may result in regulatory investigations, reputational damage, orders to cease or change our data processing activities, enforcement notices, assessment notices (for a compulsory audit) and/ or civil claims (including class actions).
On July 10, 2023, the European Commission adopted its Adequacy Decision in relation to the new EU-US Data Privacy Framework ("DPF"), rendering the DPF effective as a GDPR transfer mechanism to U.S. entities self-certified under the DPF.
On July 10, 2023, the European Commission adopted its Adequacy Decision in relation to the new EU-US Data Privacy Framework (“DPF”), rendering the DPF effective as a GDPR transfer mechanism to U.S. entities self-certified under the DPF.
Any such product liability claims may include allegations 47 of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranty. Claims could also be asserted under state consumer protection acts.
Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranty. Claims could also be asserted under state consumer protection acts.
Contracts with retailers may typically be terminated or renegotiated before their term expires for various reasons, subject to certain conditions. For example, after a specified period, certain of our contracts are terminable for convenience by such retailers, subject to a notice period.
Contracts with retailers may typically be terminated or renegotiated before their term expires for various reasons, subject to certain 24 conditions. For example, after a specified period, certain of our contracts are terminable for convenience by such retailers, subject to a notice period.
In addition, some of our products are regulated by the FDA and foreign regulatory agencies as medical devices and require marketing authorization from the FDA and similar marketing authorization or certification from other applicable regulatory authorities or notified bodies prior to commercialization.
In addition, some of our products are regulated by the FDA and 27 foreign regulatory agencies as medical devices and require marketing authorization from the FDA and similar marketing authorization or certification from other applicable regulatory authorities or notified bodies prior to commercialization.
A loss of key personnel or their work product could hamper or prevent our ability to 53 commercialize our products and services, which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.
A loss of key personnel or their work product could hamper or prevent our ability to commercialize our products and services, which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.
We may not be able to identify and engage alternative contract manufacturers on similar terms or without delay. Furthermore, our contract manufacturers could require us to move to a different production facility.
We may not be able to identify and engage alternative contract manufacturers on similar terms or without 25 delay. Furthermore, our contract manufacturers could require us to move to a different production facility.
We also utilize unpatented proprietary technology and know-how and often rely on confidentiality agreements and intellectual property assignment agreements with our employees, independent distributors and consultants to protect and transfer to us such unpatented proprietary technology and know-how.
We also utilize unpatented proprietary technology and know-how and often rely on confidentiality agreements and intellectual property assignment agreements with our employees, independent distributors and consultants to protect 54 and transfer to us such unpatented proprietary technology and know-how.
Moreover, failure by us or one of our manufacturers or suppliers to comply with applicable statutes and regulations administered by the FDA or comparable regulatory bodies could result in, among other things, any of the following: • warning letters or untitled letters issued by the FDA or Federal Trade Commission ("FTC") and their counterparts in international jurisdictions; • litigation, fines, civil penalties, in rem forfeiture proceedings, injunctions, consent decrees and criminal prosecution; • import alerts and holds; • unanticipated expenditures to address or defend such actions; • delays in clearing, approving, authorizing, or certifying, or refusal to clear, approve, authorize, or certify, our products, where applicable; • withdrawals or suspensions of clearance, approval, authorization or certification of our products or those of our third-party suppliers by the FDA or other regulatory authorities or notified bodies, where applicable; • product recalls or seizures; 40 • adverse publicity; • orders for device repair, replacement or refund; • interruptions of production or inability to export to certain foreign countries; and • operating restrictions.
Moreover, failure by us or one of our manufacturers or suppliers to comply with applicable statutes and regulations administered by the FDA or comparable regulatory bodies could result in, among other things, any of the following: • warning letters or untitled letters issued by the FDA or Federal Trade Commission (“FTC”) and their counterparts in international jurisdictions; 44 • litigation, fines, civil penalties, in rem forfeiture proceedings, injunctions, consent decrees and criminal prosecution; • import alerts and holds; • unanticipated expenditures to address or defend such actions; • delays in clearing, approving, authorizing, or certifying, or refusal to clear, approve, authorize, or certify, our products, where applicable; • withdrawals or suspensions of clearance, approval, authorization or certification of our products or those of our third-party suppliers by the FDA or other regulatory authorities or notified bodies, where applicable; • product recalls or seizures; • adverse publicity; • orders for device repair, replacement or refund; • interruptions of production or inability to export to certain foreign countries; and • operating restrictions.
Similarly, under the CPSC consumer product reporting requirements, we are required to report to the CPSC any incident in which a CPSC-regulated product of ours creates an unreasonable risk of serious injury or death, contains a defect which could create a substantial product hazard, fails to comply with an applicable consumer product safety rule, or fails to comply with any other rule, regulation, standard or ban enforced by the CPSC.
Similarly, under the Consumer Product Safety Commission (“CPSC”) reporting requirements, we are required to report to the CPSC any incident in which a CPSC-regulated product of ours creates an unreasonable risk of serious injury or death, contains a defect which could create a substantial product hazard, fails to comply with an applicable consumer product safety rule, or fails to comply with any other rule, regulation, standard or ban enforced by the CPSC.
Changing laws, regulations and standards relating to corporate governance and public disclosure and new regulations issued by the SEC and the New York Stock Exchange ("NYSE") have and will create additional compliance requirements for us. For example, the Dodd-Frank Act includes provisions regarding, among other things, advisory votes on named executive officer compensation and “conflict minerals” reporting.
Changing laws, regulations and standards relating to corporate governance and public disclosure and new regulations issued by the SEC and the New York Stock Exchange (“NYSE”) have and will create additional compliance requirements for us. For example, the Dodd-Frank Act includes provisions regarding, among other things, advisory votes on named executive officer compensation and “conflict minerals” reporting.
A staggered Board will make it more difficult for a third-party to obtain control of our Board through a proxy contest, which may be a necessary step in an acquisition of us that is not favored by our Board. We are also subject to anti-takeover provisions under the Delaware General Corporation Law ("DGCL").
A staggered Board will make it more difficult for a third-party to obtain control of our Board through a proxy contest, which may be a necessary step in an acquisition of us that is not favored by our Board. We are also subject to anti-takeover provisions under the Delaware General Corporation Law (“DGCL”).
We spend significant amounts on advertising and other marketing campaigns to acquire new customers, which may not be successful or cost effective. We market our products and services through a mix of digital and traditional marketing channels. These include paid search, digital display advertising, email marketing, affiliate marketing, and select print advertising.
We spend significant amounts on advertising and other marketing campaigns to acquire new customers, which may not be successful or cost effective. 31 We market our products and services through a mix of digital and traditional marketing channels. These include retail marketing, paid search, digital display advertising, email marketing, affiliate marketing, and select print advertising.
Delisting from the NYSE could also result in negative publicity and could also make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as currency or the value accorded by other parties.
Delisting from the NYSE could also result in negative publicity and could also make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as consideration or the value accorded by other parties.
In November 2023, we obtained de novo classification for the Dream Sock with Health Notifications. As such, both of these products are regulated as medical devices by the FDA, and we must continue to maintain compliance with medical device requirements with respect to the manufacture, sale, marketing, and distribution of these products.
In November 2023, we obtained de novo classification for Dream Sock. As such, both of these products are regulated as medical devices by the FDA, and we must continue to maintain compliance with medical device requirements with respect to the manufacture, sale, marketing, and distribution of these products.
Risks Related to Regulation of Our Industry and Products Despite having received 510(k) clearance from the FDA for our prescription-required, BabySat pediatric monitor, and having received de novo classification for our Dream Sock with Health Notifications, such marketing authorizations do not ensure commercial success of these products, which will require us to implement processes, procedures and operations necessary to market and sell medical devices.
Risks Related to Regulation of Our Industry and Products Despite having received 510(k) clearance from the FDA for our prescription-required, BabySat pediatric monitor, and having received de novo classification for our Dream Sock, such marketing authorizations do not ensure commercial success of these products, which will require us to implement processes, procedures and operations necessary to market and sell medical devices.
For example, the General Data Protection Regulation ("GDPR") went into effect in May 2018 and imposes strict requirements for processing the personal data of individuals within the EEA, including in relation to use, collection, analysis, and transfer (including cross-border transfer) of such personal data.
For example, the General Data Protection Regulation (“GDPR”) went into effect in May 2018 and imposes strict requirements for processing the personal data of individuals within the EEA, including in relation to use, collection, analysis, and transfer (including cross-border transfer) of such personal data.
These identified material weaknesses in our internal control over financial reporting continued to exist as of December 31, 2023. We did not design and maintain an effective control environment commensurate with our financial reporting requirements.
These identified material weaknesses in our internal control over financial reporting continued to exist as of December 31, 2024. We did not design and maintain an effective control environment commensurate with our financial reporting requirements.
For example, in 2016, the 21st Century Cures Act was enacted to, among other things, amend the FDCA to remove certain software functions from the definition of a “device.” The FDA also issued guidance in 2016, which was updated in 2019, establishing a policy of enforcement discretion for certain low risk general wellness products, including certain such products with software functions.
For example, in 2016, the 21 st Century Cures Act was enacted to, among other things, amend the FDCA to remove certain software functions from the definition of a “device.” The FDA also issued guidance in 2016, which was updated in 2019, establishing a policy of enforcement discretion for certain low risk general wellness products, including certain such products with software functions.
The price of our common stock and warrants may fluctuate due to a variety of factors, including: • actual or anticipated fluctuations in our operating results or future prospects; • our announcements or our competitors’ announcements of new products and services; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • strategic actions by us or our competitors, such as acquisitions or restructurings; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • regulatory or other governmental actions, and actions taken in response to those actions; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in our growth rates or our competitors’ growth rates; • developments regarding our patents or proprietary rights or those of our competitors; • ongoing legal proceedings; • commencement of, or involvement in, litigation involving the combined company; • our ability to raise additional capital as needed; • changes in our capital structure, such as future issuances of securities or the incurrence of new or additional debt; • the volume of shares of common stock available for public sale and the size of our public float; • conversion of our outstanding Series A Convertible Preferred Stock and Series B Convertible Preferred Stock (collectively, “Convertible Preferred Stock”) and exercise of our outstanding warrants, and the resale of such shares into the market; • additions and departures of key personnel; • concerns or allegations as to the safety or efficacy of our products and services; 54 • sales of stock by us or members of our management team, our board of directors (the “Board”) or certain significant stockholders; • changes in stock market analyst recommendations or earnings estimates regarding our stock, other comparable companies or our industry generally; and • changes in financial markets or general economic conditions, including the effects of recession or slow economic growth in the U.S. and abroad, interest rates, fuel prices, international currency fluctuations, corruption, political instability, acts of war, such as the ongoing wars between Russia and Ukraine and Israel and Hamas, acts of terrorism, and the COVID-19 pandemic or other public health crises.
The price of our common stock and warrants may fluctuate due to a variety of factors, including: • actual or anticipated fluctuations in our operating results or future prospects; • our announcements or our competitors’ announcements of new products and services; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • strategic actions by us or our competitors, such as acquisitions or restructurings; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • regulatory or other governmental actions, and actions taken in response to those actions; • changes in accounting standards, policies, guidance, interpretations or principles; 58 • changes in our growth rates or our competitors’ growth rates; • developments regarding our patents or proprietary rights or those of our competitors; • ongoing legal proceedings; • commencement of, or involvement in, litigation involving the combined company; • our ability to raise additional capital as needed; • changes in our capital structure, such as future issuances of securities or the incurrence of new or additional debt; • the volume of shares of common stock available for public sale and the size of our public float; • conversion of our outstanding Series A Convertible Preferred Stock and Series B Convertible Preferred Stock (collectively, “Convertible Preferred Stock”) and exercise of our outstanding warrants, and the resale of such shares into the market; • additions and departures of key personnel; • concerns or allegations as to the safety or efficacy of our products and services; • sales of stock by us or members of our management team, our board of directors (the “Board”) or certain significant stockholders; • changes in stock market analyst recommendations or earnings estimates regarding our stock, other comparable companies or our industry generally; and • changes in financial markets or general economic conditions, including the effects of recession or slow economic growth in the U.S. and abroad, interest rates, tariffs, fuel prices, international currency fluctuations, corruption, political instability, acts of war, acts of terrorism, and public health crises.
U.S. federal NOLs generally may not be carried back to prior taxable years except that, under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), U.S. federal NOLs generated in 2018, 2019 and 2020 may be carried back to each of the five taxable years preceding the taxable year in which the loss arises.
U.S. federal NOLs generally may not be carried back to prior taxable years except that, under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), U.S. federal NOLs generated in 2018, 2019 and 2020 may be carried back to each of the five taxable years preceding the taxable year in which the loss arises.
Our success is dependent in large part upon our ability to maintain and enhance our reputation and brand. Brand value can be severely damaged even by isolated incidents, particularly if the incidents receive considerable negative publicity or result in litigation.
Our success depends substantially on our reputation and brand. Our success is dependent in large part upon our ability to maintain and enhance our reputation and brand. Brand value can be severely damaged even by isolated incidents, particularly if the incidents receive considerable negative publicity or result in litigation.
Our warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company (the "Warrant Agreement"), as warrant agent, and us.
Our warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company (the “Warrant Agreement”), as warrant agent, and us.
Year over year declines in revenue, our low, current cash balance, recurring operating losses, and negative cash flows from operations since inception raise substantial doubt about our ability to continue as a going concern within one year after the date that the accompanying consolidated financial statements are issued.
Our low, current cash balance, recurring operating losses, and negative cash flows from operations since inception raise substantial doubt about our ability to continue as a going concern within one year after the date that the accompanying consolidated financial statements are issued.
With respect to our current products, including the Dream Sock, Smart Sock and Owlet Cam, we utilize a direct-to-consumer model where consumers purchase our products directly from us or one of our retailers. Currently, these products are not covered or reimbursed by any third-party payor.
With respect to Dream Sock and Owlet Cam, we utilize a direct-to-consumer model where consumers purchase our products directly from us or one of our retailers. Currently, these products are not covered or reimbursed by any third-party payor.
If there is insufficient UK approved body capacity, there is a risk that our product certification could be delayed which might impact our ability to market products in Great Britain after the respective transition periods. We have relied and expect to continue to rely on third parties to conduct our nonclinical and clinical studies and perform other tasks for us.
If there is insufficient UK approved body capacity, there is a risk that our product certification could be delayed which might impact our ability to market products in Great Britain. We have relied and expect to continue to rely on third parties to conduct our nonclinical and clinical studies and perform other tasks for us.
We are heavily dependent on customers who use our products and services, in particular our Smart Sock, to provide good reviews and word-of-mouth recommendations to contribute to the growth of our brand and reputation. Customers who are dissatisfied with their experiences with our products and services or services may post negative reviews.
We are heavily dependent on customers who use our products and services, in particular Dream Sock and Owlet Cam, to provide good reviews and word-of-mouth recommendations to contribute to the growth of our brand and reputation. Customers who are dissatisfied with their experiences with our products and services or services may post negative reviews.
This material weakness did not result in any adjustments to the consolidated financial statements. Additionally, each of the material weaknesses described above could result in a misstatement of one or more account balances or disclosures that would result in a material misstatement to the interim or annual consolidated financial statements that would not be prevented or detected. See Part II.
This material weakness did not result in any adjustments to the consolidated financial statements. 29 Additionally, each of the material weaknesses described above could result in a misstatement of one or more account balances or disclosures that would result in a material misstatement to the interim or annual consolidated financial statements that would not be prevented or detected.
These risks include: 29 • the imposition of additional U.S. and foreign governmental controls or regulations; • the imposition of costly and lengthy new export licensing requirements; • the imposition of requirements to maintain data and the processing of that data on servers located within the U.S. or in foreign countries; • a shortage of high-quality employees, sales people and distributors; • the loss of any key personnel that possess proprietary knowledge, or who are otherwise important to our success in certain international markets; • changes in duties and tariffs, license obligations and other non-tariff barriers to trade; • the imposition of new trade restrictions; • the imposition of restrictions on the activities of foreign agents, representatives and distributors; • compliance with or changes in foreign tax laws, regulations and requirements and economic and trade sanctions programs including, for example, the U.S., UK and EU sanctions relating to the Russian Federation, Ukraine and the Republic of Belarus initially implemented in February 2022; • evolution in regulatory landscapes, such as on account of the UK leaving the EU, and uncertainties that arise from such evolution; • pricing pressure; • changes in foreign currency exchange rates; • laws and business practices favoring local companies; • political instability and actual or anticipated military or political conflicts; • financial and civil unrest worldwide; • outbreaks of illnesses, pandemics or other local or global health issues; • natural or man-made disasters; • the inability to collect amounts paid by foreign government customers to our appointed foreign agents; • longer payment cycles, increased credit risk and different collection remedies with respect to receivables; and • difficulties in enforcing or defending intellectual property rights.
These risks include: • the imposition of additional U.S. and foreign governmental controls or regulations; • the imposition of costly and lengthy new export licensing requirements; • the imposition of requirements to maintain data and the processing of that data on servers located within the U.S. or in foreign countries; • a shortage of high-quality employees, sales people and distributors; • the loss of any key personnel that possess proprietary knowledge, or who are otherwise important to our success in certain international markets; • changes in duties and tariffs, license obligations and other non-tariff barriers to trade; • the imposition of new trade restrictions; • the imposition of restrictions on the activities of foreign agents, representatives and distributors; • compliance with or changes in foreign tax laws, regulations and requirements and economic and trade sanctions programs; • evolution in regulatory landscapes, such as on account of the UK leaving the EU, and uncertainties that arise from such evolution; • pricing pressure; • increased marketing costs; • changes in foreign currency exchange rates; • laws and business practices favoring local companies; 34 • political instability and actual or anticipated military or political conflicts; • financial and civil unrest worldwide; • outbreaks of illnesses, pandemics or other local or global health issues; • natural or man-made disasters; • the inability to collect amounts paid by foreign government customers to our appointed foreign agents; • longer payment cycles, increased credit risk and different collection remedies with respect to receivables; and • difficulties in enforcing or defending intellectual property rights.
Our consolidated financial statements included in this Report do not include any adjustments to reflect the possible inability to continue as a going concern within one year after the date of the filing of this Report. If we are unable to continue as a going concern, you could lose all or part of your investment.
Our consolidated financial statements included in this Report do not include any adjustments to reflect the possible inability to continue as a going concern within one year after the date of the filing of this Annual Report on Form 10-K. If we are unable to continue as a going concern, you could lose all or part of your investment.
As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. The redemption of our outstanding Convertible Preferred Stock may require us to make a significant cash payment.
As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. The redemption of our outstanding Convertible Preferred Stock or exercise of the WTI Redemption Option may require us to make a significant cash payment.
We are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock and warrants less attractive to investors. We are an “emerging growth company,” as defined in the JOBS Act.
We are an “emerging growth company” and a “smaller reporting company" and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common stock and warrants less attractive to investors. We are an “emerging growth company,” as defined in the JOBS Act.
We were organized in 2014 and began selling our Smart Sock in 2015, our Owlet Cam in 2018, and launched our Dream Sock in January 2022. Accordingly, we have a limited operating history, which makes an evaluation of our future prospects difficult.
We were organized in 2014 and began selling Owlet Smart Sock in 2015, Owlet Cam in 2018, launched Dream Sock in January 2022 and launched BabySat and Dream Sock with Health Notifications in 2024. Accordingly, we have a limited operating history, which makes an evaluation of our future prospects difficult.
Climate change may increase the frequency and/or intensity of such events. Climate change may also contribute to various chronic changes in the physical environment, such as changes in water levels or changes in ambient temperature or precipitation patterns, which may also impact our or our suppliers’ operations.
Climate change, as well as other environmental and social pressures, may increase the frequency and/or intensity of such events and may also contribute to various chronic changes in the physical environment, such as changes in water levels or changes in ambient temperature or precipitation patterns, which may also impact our or our suppliers’ operations.
In November 2023, we received de novo classification, another form of marketing authorization, from the FDA for our Dream Sock with Health Notifications. The BabySat clearance was the first medical device marketing authorization we have received.
In November 2023, we received de novo classification, another form of marketing authorization, from the FDA for Dream Sock. The BabySat clearance was the first medical device marketing authorization we have received.
If we are unable to successfully develop and effectively manage the introduction of new products and services, our business may be adversely affected. We must successfully manage introductions of new or advanced products, such as BabySat and Dream Sock with Health Notifications, and services, such as the development of our software platform.
If we are unable to successfully develop and effectively manage the introduction of new products and services, our business may be adversely affected. We must successfully manage introductions of new or advanced products, such as BabySat and Dream Sock, and services, such as the development of our software platform and our subscription offering, Owlet360.
We currently host our products and services, serve our customers and support our operations in the U.S. primarily from third-party data and call centers and other cloud-based services.
We currently host our products and services, serve our customers and support our operations primarily from third-party data and call centers and other cloud-based services.
Additionally, in the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. In November 2021, two putative class action complaints were filed against us in the U.S. District Court for the Central District of California.
Additionally, in the past, securities class action and derivative litigation has often been brought against a company following a decline in the market price of its securities. For example, in November 2021, two putative class action complaints were filed against us in the U.S. District Court for the Central District of California, the first captioned Butala v.
Substantially all of our revenues in 2022 were derived from product sales, and we recognize revenue when control of goods and services is transferred to customers, such as upon product shipment to our distributors and retailers.
Substantially all of our revenues have historically been derived from product sales, and we recognize revenue when control of goods and services is transferred to customers, such as upon product shipment to our distributors and retailers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CTO regularly updates the full Board of Directors on information security matters and risk, including cybersecurity, as requested by the Committee. In addition, management updates the Committee, as necessary, regarding any significant cybersecurity incidents.
Biggest changeOur CTO has over 10 years of experience overseeing cybersecurity functions within technology-driven organizations and our COO has over 5 years of experience overseeing cybersecurity and IT functions. The CTO regularly updates the full Board of Directors on information security matters and risk, including cybersecurity, as requested by the Committee.
Key elements of our cybersecurity risk management program include, but are not limited to the following: • a framework for identifying, mitigating and responding to cybersecurity threats and vulnerabilities; • cybersecurity management and support, including team members responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls, including benchmarking against NIST and FDA standards, and support customer data transfer; • cybersecurity awareness training for employees; • security tools in our system to monitor and detect cybersecurity threats; • cyber liability insurance • a cybersecurity incident response plan that includes how to respond to cybersecurity incidents; and 60 • a third-party risk management process, including contractual obligations, for service providers, suppliers and vendors who have access to our critical systems and information.
Key elements of our cybersecurity risk management program include, but are not limited to the following: • a framework for identifying, mitigating and responding to cybersecurity threats and vulnerabilities; • cybersecurity management and support, including team members responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls, including benchmarking against NIST and FDA standards, and support customer data transfer; • cybersecurity awareness training for employees; • security tools in our system to monitor and detect cybersecurity threats; • cyber liability insurance; • a cybersecurity incident response plan that includes how to respond to cybersecurity incidents; and • a third-party risk management process, including contractual obligations, for service providers, suppliers and vendors who have access to our critical systems and information.
Our cybersecurity risk management program is designed and assessed to align with practices recommended by the National Institute of Standards and Technology (NIST) and the FDA, to help us identify, assess and manage cybersecurity risks relevant to our business.
Our cybersecurity risk management program is designed and assessed to align with practices recommended by the National Institute of Standards and Technology (“NIST”) and the FDA, to help us identify, assess and manage cybersecurity risks relevant to our business.
Our management team stays informed about and monitors efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.
Our management team takes steps to stay informed about and monitors efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.
Item 1A "Risk Factors— Risks Related to Our Business and Operations— Our business and operations may suffer in the event of IT system failures, cyberattacks or deficiencies in our cybersecurity.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (the "Committee") oversight of cybersecurity and other IT risks.
Item 1A "Risk Factors— Risks Related to Our Business and Operations— Our business and operations may suffer in the event of IT system failures, cyberattacks or deficiencies in our cybersecurity.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (the "Committee") oversight of cybersecurity risks, including oversight of management’s implementation of our cybersecurity risk management program.
The Committee oversees management’s implementation of our cybersecurity risk management program. Our Chief Technology Officer (CTO) and Chief Operating Officer are responsible for assessing and managing our material risks from cybersecurity threats, and provide the Audit Committee of the Board of Directors with quarterly updates on the performance of our program.
Our Chief Technology Officer (“CTO”) and Chief Operating Officer (“COO”) are primarily responsible for assessing and managing our material risks from cybersecurity threats, and provide the Audit Committee of the Board of Directors with quarterly updates on the performance of our program.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. For more information, see Part I.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.
Added
We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. For more 64 information, see Part I.
Added
In addition, management updates the Committee, where it deems appropriate, regarding any significant cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our corporate headquarters are located in Lehi, Utah, where we lease approximately 56,000 square feet of office space. We use this leased space primarily for management, marketing, finance, legal, regulatory compliance, human resources and general administrative teams , research and development, engineering and laboratory space .
Biggest changeItem 2. Properties. Our corporate headquarters are located in Lehi, Utah, where we lease approximately 3,100 square feet of office space. We use this leased space primarily for business meetings, research and development, engineering, quality and laboratory space . This lease is set to expire on April 30, 2027, subject to our option to extend the term.
Removed
This lease is set to expire on July 31, 2024, subject to our option to extend the term through July 31, 2034.
Removed
As a result of a transition to a primarily remote working environment during 2021, we entered into agreements to sub-lease its office space through July 31, 2024, but maintains the ability to re-occupy the space subsequent to the expiration of the sub-lease. We entered into an office lease in 2022 with approximately 7,600 square feet, suitable for our current needs.
Removed
This newly leased space is utilized primarily for business meetings, research and development, engineering, quality and laboratory space .

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIf this were to happen, the payment of any such awards could have a material adverse effect on our business, financial condition and results of operations. Additionally, any such claims, whether or not successful, could damage our reputation and business. In November 2021, two putative class action complaints were filed against us in the U.S.
Biggest changeIf this were to happen, the payment of any such awards could have a material adverse effect on our business, financial condition and results of operations. Additionally, any such claims, whether or not successful, could damage our reputation and business.
Removed
District Court for the Central District of California, the first captioned Butala v. Owlet, Inc., Case No. 2:21-cv-09016, and the second captioned Cherian v. Owlet, Inc., Case No. 2:21-cv-09293.
Added
For a description of our legal proceedings, see Note 7, “Commitments and Contingencies,” to our audited consolidated financial statements included elsewhere in this Report, which is incorporated herein by reference. Item 4. Mine Safety Disclosures. Not applicable. 65 PART II
Removed
Both complaints alleged violations of the Securities Exchange Act of 1934 (“Exchange Act”) against the Company and certain of its officers and directors on behalf of a putative class of investors who: (a) purchased the Company’s common stock between March 31, 2021 and October 4, 2021 (“Section 10(b) Claims”); or (b) held common stock in SBG as of June 1, 2021, and were eligible to vote at SBG's special meeting held on July 14, 2021 (“Section 14(a) Claims”).
Removed
Both complaints allege, among other things, that the Company and certain of its officers and directors made false and/or misleading statements and failed to disclose certain information regarding the FDA’s likely classification of the Owlet Smart Sock as a medical device requiring marketing authorization. 61 On September 8, 2023, the Court ruled that while the Butala and Cherian cases were consolidated, there would be two distinct and separate classes to represent the Section 10(b) Claims and Section 14(a) Claims, respectively, and appointed lead plaintiffs and lead counsel for each class.
Removed
Amended complaints were filed for each class on November 21, 2023, and then further amended in consolidated filings on December 22, 2023.
Removed
The Company intends to vigorously defend itself against these claims and filed in response to each complaint, on February 9, 2024, its motions to dismiss the cases in response to these complaints, on behalf of itself and the named officers and directors. Item 4. Mine Safety Disclosures. Not applicable. 62 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser Sales of Unregistered Equity Securities Except as previously disclosed in our Current Report on Form 8-K filed with the SEC on February 21, 2023, there were no unregistered sales of equity securities for the year ended December 31, 2023.
Biggest changeRecent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser Sales of Unregistered Equity Securities Except as previously disclosed in our Current Reports on Form 8-K filed with the SEC on February 26, 2024 and September 11, 2024, there were no unregistered sales of equity securities for the year ended December 31, 2024.
Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors, subject to compliance with contractual restrictions and covenants in the agreements governing our current and future indebtedness, including our current loan and security agreement.
Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors, subject to compliance with contractual restrictions and covenants in the agreements governing our current and future indebtedness, including our ABL Credit Agreement and Loan Facility Agreement.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market information for Common Stock Our common stock is listed on the NYSE under the symbol “OWLT.” Holders of Record As of March 4, 2024, there were 86 holders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market information for Common Stock Our common stock is listed on the NYSE under the symbol “OWLT.” Holders of Record As of March 7, 2025, there were 84 holders of record.
Purchases of Equity Securities We did not repurchase shares of our common stock during the three months ended December 31, 2023. Item 6. [Reserved] 63
Purchases of Equity Securities We did not repurchase shares of our common stock during the three months ended December 31, 2024. Item 6. [Reserved] 66

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIncome tax provision consists primarily of U.S. federal and state income taxes related to the tax jurisdictions in which we conduct business. 65 Results of Operations The following table sets forth our results of operations for the periods indicated in millions (note that amounts within this Item 7 shown in millions may not sum due to rounding): For the Years Ended December 31, 2023 2022 Revenues $ 54.0 $ 69.2 Cost of revenues 31.4 45.9 Gross profit 22.6 23.3 Operating expenses: General and administrative 27.3 41.5 Sales and marketing 13.5 38.5 Research and development 10.3 27.9 Total operating expenses 51.2 107.9 Operating loss (28.6) (84.6) Other income (expense): Interest expense, net (3.2) (1.1) Common stock warrant liability adjustment (0.9) 6.3 Other income (expense), net (0.1) 0.1 Total other income (expense), net (4.3) 5.3 Loss before income tax provision (32.9) (79.3) Income tax provision 0.0 0.0 Net loss and comprehensive loss $ (32.9) $ (79.3) Revenues For the Years Ended December 31, Change (dollars in millions) 2023 2022 $ % Revenues $ 54.0 $ 69.2 $ (15.2) (22.0 %) Revenues decreased by $15.2 million, or 22.0%, from $69.2 million for the year ended December 31, 2022 to $54.0 million for the year ended December 31, 2023.
Biggest changeIncome tax provision consists primarily of U.S. federal and state income taxes related to the tax jurisdictions in which we conduct business. 68 Results of Operations The following table sets forth our results of operations for the periods presented (dollars in thousands, except per share amounts): Year Ended December 31, 2024 2023 Revenues $ 78,056 $ 54,010 Cost of revenues 38,748 31,423 Gross profit 39,308 22,587 Operating expenses: General and administrative 33,967 27,343 Sales and marketing 15,760 13,527 Research and development 9,801 10,349 Total operating expenses 59,528 51,219 Operating loss (20,220) (28,632) Other income (expense): Interest expense, net (1,630) (3,191) Common stock warrant liability adjustment 9,293 (924) Other income (expense), net 75 (144) Total other income (expense), net 7,738 (4,259) Loss before income tax provision (12,482) (32,891) Income tax provision (54) (10) Net loss and comprehensive loss (12,536) (32,901) Accretion on convertible preferred stock (4,926) (4,591) Accretion on redeemable common stock (25) — Allocation of net loss attributable to redeemable common stockholders 270 — Net loss attributable to redeemable common stockholders (245) — Net loss attributable to common stockholders $ (17,217) $ (37,492) Net loss per share attributable to common stockholders, basic and diluted $ (1.57) $ (4.53) Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted 10,951,270 8,276,481 Net loss per share attributable to redeemable common stockholders, basic and diluted $ (1.42) $ — Weighted-average number of shares outstanding used to compute net loss per share attributable to redeemable common stockholders, basic and diluted 172,131 — 69 Revenues Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % Revenues $ 78,056 $ 54,010 $ 24,046 44.5 % Revenues increased by $24,046, or 44.5%, from $54,010 for the year ended December 31, 2023 to $78,056 for the year ended December 31, 2024.
If revenues further decrease from current levels, we may be unable to further reduce costs, or such reductions may limit our ability to pursue strategic initiatives and grow revenues in the future. There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, if at all.
If revenues decrease from current levels, we may be unable to further reduce costs, or such reductions may limit our ability to pursue strategic initiatives and grow revenues in the future. There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, if at all.
This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. Our results may differ materially from those currently described in the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" disclosed in this Report.
This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. Our results may differ materially from those currently described in the sections entitled “ Risk Factors ” and "Cautionary Note Regarding Forward-Looking Statements" disclosed in this Report.
Each of the February 2023 Warrants sold in the private placement offering is exercisable for one share of common stock at an exercise price of $4.66 per share, is immediately exercisable, and will expire on February 17, 2028. None of the warrants have been exercised as of December 31, 2023.
Each of the February 2023 Warrants sold in the private placement offering is exercisable for one share of common stock at an exercise price of $4.66 per share, is immediately exercisable, and will expire on February 17, 2028. None of the warrants have been exercised as of December 31, 2024 .
Subject to certain exceptions, upon the occurrence of a fundamental change, voluntary or involuntary liquidation, dissolution or winding-up of the Company, we will be required to pay an amount per share of Series A Preferred 68 Stock equal to the greater of (i) one thousand dollars per share or (ii) the consideration per share of Series A Preferred Stock as would have been payable had all such shares been converted to common stock immediately prior to the liquidation event, plus, in each case, the aggregate amount of all declared but unpaid dividends thereon to the date of final distribution to the holders of Series A Preferred Stock.
Subject to certain exceptions, upon the occurrence of a fundamental change, voluntary or involuntary liquidation, dissolution or winding-up of the Company, we will be required to pay an amount per share of Series A Preferred Stock equal to the greater of (i) one thousand dollars per share or (ii) the consideration per share of Series A Preferred Stock as would have been payable had all such shares been converted to common stock immediately prior 72 to the liquidation event, plus, in each case, the aggregate amount of all declared but unpaid dividends thereon to the date of final distribution to the holders of Series A Preferred Stock.
Sales and marketing expenses consist primarily of salaries, commissions, benefits, stock-based compensation, commissions, and bonuses for sales and marketing employees and contractors; third-party marketing expenses such as social media and search engine marketing; email marketing and print marketing. Research and Development.
Sales and marketing expenses consist primarily of salaries, commissions, benefits, stock-based compensation, and bonuses for sales and marketing employees and contractors; third-party marketing expenses such as social media and search engine marketing, retail marketing, email marketing, and print marketing. Research and Development.
The Series A convertible preferred stock is convertible into common stock at the option of the holder at any time after February 17, 2023 and ranks, with respect to dividend rights, rights of redemption and rights upon a liquidation event, (i) senior to the common stock and all other classes or series of equity securities of the Company established after February 17, 2023, unless such shares or equity securities expressly provide that they rank in parity with or senior to the Series A convertible preferred stock with respect to dividend rights, rights of redemption or rights upon a liquidation event, (ii) on parity with each class or series of equity securities of the Company established after the February 17, 2023, the terms of which expressly provide that it ranks on parity with the Series A convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event and (iii) junior to each class or series of equity securities of the Company established after February 17, 2023, the terms of which expressly provide that it ranks senior to the Series A convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event.
The Series A convertible preferred stock is convertible into common stock at the option of the holder at any time after February 17, 2023 and ranks, with respect to dividend rights, rights of redemption and rights upon a liquidation event, (i) senior to the common stock and all other classes or series of our equity securities established after February 17, 2023, unless such shares or equity securities expressly provide that they rank in parity with or senior to the Series A convertible preferred stock with respect to dividend rights, rights of redemption or rights upon a liquidation event, (ii) on parity with each class or series of our equity securities established after February 17, 2023, the terms of which expressly provide that it ranks on parity with the Series A convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event and (iii) junior to each class or series of our equity securities established after February 17, 2023, the terms of which expressly provide that it ranks senior to the Series A convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event.
On February 25, 2024 we entered into a private placement investment agreement with certain investors, pursuant to which we issued and sold to the investors (i) an aggregate of 9,250 shares of the Company’s Series B convertible preferred stock, par value $0.0001 per share and (ii) warrants to purchase an aggregate of 1,799,021 shares of our common stock, par value $0.0001 per share (the “February 2024 Warrants”), for an aggregate purchase price of $9.25 million.
On February 25, 2024 we entered into a private placement investment agreement with certain investors, pursuant to which we issued and sold to the investors (i) an aggregate of 9,250 shares of our Series B convertible preferred stock, par value $0.0001 per share and (ii) warrants to purchase an aggregate of 1,799,021 shares of our common stock, par value $0.0001 per share (the “February 2024 Warrants”), for an aggregate purchase price of $9,250.
On February 17, 2023 we entered into private placement investment agreements with certain investors, pursuant to which we issued and sold to the investors (i) an aggregate of 30,000 shares of the Company’s Series A convertible preferred stock, par value $0.0001 per share and (ii) warrants to purchase an aggregate of 7,871,712 shares of our common stock, par value $0.0001 per share (“February 2023 Warrants”) for an aggregate purchase price of $30.0 million.
On February 17, 2023 we entered into private placement investment agreements with certain investors, pursuant to which we issued and sold to the investors (i) an aggregate of 30,000 shares of our Series A convertible preferred stock, par value $0.0001 per share and (ii) warrants to purchase an aggregate of 7,871,712 shares of our common stock, par value $0.0001 per share (“February 2023 Warrants”) for an aggregate purchase price of $30,000.
Except as otherwise provided in the certificate of designation relating to the Series B convertible preferred stock or as required by law, holders of shares of Series B convertible preferred stock are entitled to vote with the holders of shares of common stock (and any other class or series that may similarly be entitled to vote with the holders of common stock) on an as-converted to common stock basis at any annual or special meeting of stockholders of the Company, and not as a separate class.
Except as otherwise provided in the certificate of designation relating to the Series B convertible preferred stock or as required by law, holders of shares of Series B convertible preferred stock are entitled to vote with the holders of shares of common stock (and any other class or series that may similarly be entitled to vote with the holders of common stock) on an as-converted to common stock basis at any annual or special meeting of our stockholders, and not as a separate class.
Except as otherwise provided in the certificate of designation relating to the Series A convertible preferred stock or as required by law, holders of shares of Series A convertible preferred stock are entitled to vote with the holders of shares of common stock (and any other class or series that may similarly be entitled to vote with the holders of common stock) on an as-converted to common stock basis at any annual or special meeting of stockholders of the Company, and not as a separate class.
Except as otherwise provided in the certificate of designation relating to the Series A convertible preferred stock or as required by law, holders of shares of Series A convertible preferred stock are entitled to vote with the holders of shares of common stock (and any other class or series that may similarly be entitled to vote with the holders of common stock) on an as-converted to common stock basis at any annual or special meeting of our stockholders, and not as a separate class.
The accounting policies and estimates described below are those we consider most critical in preparing its consolidated financial statements because they require management to make subjective and complex judgments about matters that are inherently uncertain. Actual results may differ from these estimates under different assumptions or conditions.
The accounting policies and estimates described below are those we consider most critical in preparing our consolidated financial statements because they require management to make subjective and complex judgments about matters that are inherently uncertain. Actual results may differ from these estimates under different assumptions or conditions.
The Series B convertible preferred stock is convertible into common stock at the option of the holder at any time after February 29, 2024 and ranks, with respect to dividend rights, rights of redemption and rights upon a liquidation event, (i) equal to the Company’s Series A convertible preferred stock, (ii) senior to the common stock and all other classes or series of equity securities of the Company established after February 29, 2024, unless such shares or equity securities expressly provide that they rank in parity with or senior to the Series B convertible preferred stock with respect to dividend rights, rights of redemption or rights upon a liquidation event, (iii) on parity with each class or series of equity securities of the Company established after the February 29, 2024, the terms of which expressly provide that it ranks on parity with the Series B convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event and (iv) junior to each class or series of equity securities of the Company established after February 29, 2024, the terms of which expressly provide that it ranks senior to the Series B convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event.
The Series B convertible preferred stock is convertible into common stock at the option of the holder at any time after February 29, 2024 and ranks, with respect to dividend rights, rights of redemption and rights upon a liquidation event, (i) equal to our Series A convertible preferred stock, (ii) senior to the common stock and all other classes or series of our equity securities established after February 29, 2024, unless such shares or equity securities expressly provide that they rank in parity with or senior to the Series B convertible preferred stock with respect to dividend rights, rights of redemption or rights upon a liquidation event, (iii) on parity with each class or series of our equity securities established after February 29, 2024, the terms of which expressly provide that it ranks on parity with the Series B convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event and (iv) junior to each class or series of our equity securities established after February 29, 2024, the terms of which expressly provide that it ranks senior to the Series B convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event.
The accompanying consolidated financial statements have been prepared on a going concern basis and accordingly, do not include any adjustments relating to the recoverability and classification of asset carrying amounts, or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
The accompanying consolidated financial statements have been prepared on a going concern basis and accordingly, do not include any adjustments relating to the recoverability and classification of asset carrying amounts, or the amount and classification of liabilities that might result should we be unable to continue as a going concern.
Cost of Revenues Cost of revenues consists of product costs, including contract manufacturing, shipping and handling, depreciation and amortization relating to tooling and manufacturing equipment and software, warranty replacement, fulfillment costs, warehousing, hosting, and reserves for excess and obsolete inventory. Operating Expenses General and Administrative.
Cost of Revenues 67 Cost of revenues consists of product costs, including contract manufacturing, shipping and handling, depreciation and amortization relating to tooling and manufacturing equipment and software, warranty replacement, fulfillment costs, warehousing, hosting and platform costs, and reserves for excess and obsolete inventory. Operating Expenses General and Administrative.
Research and development expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for employees and contractors engaged in the design, development, maintenance and testing of our products and platforms. Other Income (Expense) Interest Expense, Net.
Research and development expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for employees and contractors engaged in the design, development, maintenance, and testing of our products and platforms, including clinical testing. Other Income (Expense) Interest Income (Expense), Net.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview The following discussion and analysis should be read in conjunction with the audited consolidated financial statements and notes thereto included elsewhere in this Annual Report (this "Report").
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis should be read in conjunction with the audited consolidated financial statements and notes thereto included elsewhere in this Annual Report (this “ Report ” ).
NYSE Notification In April 2023, we were notified by NYSE that we were not in compliance with Section 802.01B of the NYSE Listed Company Manual as the average global market capitalization of our common stock over a consecutive 30 trading-day period and, at the same time, our last reported stockholders’ equity were each less than $50 million (the "NYSE Notification").
NYSE Notification In April 2023, we were notified by NYSE that we were not in compliance with Section 802.01B of the NYSE Listed Company Manual as the average global market capitalization of our common stock over a consecutive 30 trading-day period and, at the same time, our last reported stockholders’ equity were each less than $50,000 (the “NYSE Notification”).
As the February 2023 Warrants could require cash settlement in certain scenarios, the warrants were classified as liabilities upon issuance and were initially recorded at an aggregate estimated fair value of $26.1 million.
As the February 2023 Warrants could require cash settlement in certain scenarios, the warrants were classified as liabilities upon issuance and were initially recorded at an aggregate estimated fair value of $26,133.
The historical rate of return is used as a basis for estimating future returns based on current sales. The sales return estimate can be affected by the release of new products and changes 72 to sales channels.
We review the actual returns as a percentage of sales to determine the historical rate of return. The historical rate of return is used as a basis for estimating future returns based on current sales. The sales return estimate can be affected by the release of new products and changes to sales channels.
Sales Returns, Rebates, Discounts, and Allowances Our contract liabilities include promises to provide customers rights of return as well as promises to issue discounts and provide rebates or allowances to certain retail channel customers if specified conditions are met.
Sales Returns, Rebates, Discounts, and Allowances The Company’s contracts include promises to provide rights of return to customers as well as promises to issue discounts and provide rebates or allowances to certain retail channel customers if specified conditions are met.
General and administrative expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for finance and accounting, legal, human resources and administrative executives and employees; third-party legal, accounting, and other professional services; corporate travel and entertainment; depreciation and amortization of property and equipment; and facilities rent. Sales and Marketing.
General and administrative expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for finance and accounting, legal, human resources, operations, quality and administrative executives and employees; third-party legal, accounting, customer service, software, and other professional services; corporate travel and entertainment; depreciation and amortization of property and equipment, asset impairment charges, legal settlements, and facilities rent. Sales and Marketing.
Year over year declines in revenue, recurring operating losses, negative cash flows from operations since inception, and a low cash balance relative to current debt obligations raise substantial doubt about our ability to continue as a going concern within one year after the date that the accompanying consolidated financial statements are issued.
Notwithstanding the above actions, we have experienced recurring operating losses, negative cash flows from operations since inception, and a low cash balance relative to current obligations which raise substantial doubt about our ability to continue as a going concern within one year after the date that the accompanying consolidated financial statements are issued.
Loan and Security Agreement with Silicon Valley Bank 70 On November 23, 2022, we entered into the Third Amended and Restated Loan and Security Agreement (the “November 2022 LSA”) with Silicon Valley Bank, now a division of First Citizens Bank and Trust Company (“SVB”).
SVB Revolver and Term Loan On November 23, 2022, we entered into the Third Amended and Restated Loan and Security Agreement (as amended, the “LSA”) with Silicon Valley Bank, a division of First Citizens Bank and Trust Company (“SVB”).
There can be no assurance that we will generate sufficient future cash flows from operations due to potential factors, including but not limited to inflation, recession, or reduced demand for our products.
We have not generated sufficient cash flows from operations to satisfy our capital requirements for the next twelve months. There can be no assurance that we will generate sufficient future cash flows from operations to fund our ongoing operations due to potential factors, including but not limited to inflation, recession, or reduced demand for our products.
Each of the February 2024 Warrants sold in the private placement offering is exercisable for one share of common stock at an exercise price of $7.7125 per share, is immediately exercisable, and will expire on March 1, 2029.
Each of the February 2024 Warrants sold in the private placement offering is exercisable for one share of common stock at an exercise price of $7.7125 per share, is immediately exercisable, and will expire on March 1, 2029. None of the warrants have been exercised as of the filing of this Annual Report on Form 10-K.
Revenues are recognized when control of goods and services is transferred to customers in an amount that reflects the consideration expected to be received by us in exchange for those goods and services. Substantially all of the Company's revenues were derived from product sales.
Components of Operating Results Revenues We recognize revenue primarily from products and the associated mobile applications. Revenues are recognized when control of goods and services is transferred to customers in an amount that reflects the consideration expected to be received by us in exchange for those goods and services. Substantially all of our revenues were derived from product sales.
Dream Sock De Novo Device Classification Our Dream Sock received a de novo device classification from United States Food and Drug Administration (“FDA”) for a first-of-its kind, over-the-counter device for use in the home environment that provides a notification to the caregiver when an infant’s pulse rate and/or oxygen saturation moves outside of preset ranges (“Health Notifications”), displays the infant’s live pulse rate and oxygen saturation values and trends (“Live Health Readings”), and is intended for use in infants who are 1 to 18 months of age and between 6 and 30 pounds. 2023 Private Placement Financing On February 17, 2023, the Company consummated a sale of newly issued Series A Convertible Preferred Stock ("Series A Preferred Stock") and warrants to purchase its common stock ("2023 Private Placement Warrants") involving participation from new and existing investors, for aggregate gross proceeds of $30.0 million.
Dream Sock De Novo Device Classification Our Dream Sock has received a de novo device classification from United States Food and Drug Administration (“FDA”) for a first-of-its kind, over-the-counter device for use in the home environment that provides a notification to the caregiver when an infant’s pulse rate and/or oxygen saturation moves outside of preset ranges (“Health Notifications”), displays the infant’s live pulse rate and oxygen saturation values and trends (“Live Health Readings”), and is intended for use in infants who are 1 to 18 months of age and between 6 and 30 pounds.
Discounts and allowances are estimable based on existing and expected promotional programs and contractual terms in place at the time of sale.
Discounts and allowances are estimable based on existing and expected promotional programs and contractual terms in place at the time of sale. New promotional programs or changes to existing promotional programs could impact the estimated sales rebates, discounts, and allowances.
None of the warrants have been exercised as of the filing of this Annual Report on Form 10-K. 69 Funding Requirements and Going Concern In accordance with Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
Funding Requirements and Going Concern In accordance with ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies.
Emerging Growth Company Status We qualify as an emerging growth company (‘‘EGC’’) as defined in the Jumpstart our Business Startups (‘‘JOBS’’) Act. The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies.
Since inception, we have experienced recurring operating losses and generated negative cash flows from operations, resulting in an accumulated deficit of $255.7 million as of December 31, 2023. During the years ended December 31, 2023 and 2022, we had negative cash flows from operations of $23.5 million and $81.4 million, respectively.
Since inception, we have experienced recurring operating losses and generated negative cash flows from operations, resulting in an accumulated deficit of $268,195 as of December 31, 2024. During the years ended December 31, 2024 and 2023, we had neg ative cash flows from operations of $11,209 and $23,527, respectively.
We also believe that every child deserves to live a long, happy, and healthy life, and we are working to develop products to help facilitate that belief.
We believe that every parent deserves peace of mind and the opportunity to feel their well-rested best. We also believe that every child deserves to live a long, happy, and healthy life, and we are working to develop products to help facilitate that belief.
Issuance costs allocated to the preferred stock of $0.3 million were recorded as a reduction to the Series A preferred stock. Issuance costs allocated to the liability classified warrants of $1.7 million were recorded as an expense within general and administrative expenses.
Issuance costs allocated to the liability classified warrants of $1,710 were recorded as an expense within general and administrative expenses.
Research and Development For the Years Ended December 31, Change (dollars in millions) 2023 2022 $ % Research and development $ 10.3 $ 27.9 $ (17.5) (62.9 %) Research and development expense decreased by $17.5 million, or 62.9%, from $27.9 million for the year ended December 31, 2022 to $10.3 million for the year ended December 31, 2023.
Research and Development Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % Research and development $ 9,801 $ 10,349 $ (548) (5.3 %) 70 Research and development expense decreased by $548, or 5.3%, from $10,349 for the year ended December 31, 2023 to $9,801 for the year ended December 31, 2024.
The decrease was primarily due to the decrease in product sales. Gross margin increased from 33.7% for the year ended December 31, 2022 to 41.8% for the year ended December 31, 2023 primarily due to lower product returns and lower direct product costs.
The increase was primarily due to the increase in product sales. Gross margin increased from 41.8% for the year ended December 31, 2023 to 50.4% for the year ended December 31, 2024 primarily due to higher revenue, favorable product mix, lower returns, improved fixed cost absorption, and lower direct product and fulfillment costs.
Financing Activities For the year ended December 31, 2023, net cash provided by financing activities was $28.9 million as compared to cash used in financing activities of $0.9 million for the year ended December 31, 2022, primarily driven by the private placement offering of shares of preferred stock in February 2023, partially offset by debt payments.
The increase in cash used for investing activities is primarily related to the capitalization of internal-use software development costs for the year ended December 31, 2024. 77 Financing Activities For the year ended December 31, 2024, net cash provided by financing activities was $16,044 as compared to cash used in financing activities of $28,912 for the year ended December 31, 2023, primarily driven by the private placement offering of shares of preferred stock in February 2023 and higher debt payments, partially offset by the private placement offering of shares of preferred stock in February 2024, and the September 2024 issuance of common stock.
Interest expense consists of interest incurred on our outstanding borrowings and amortization of the associated deferred financing costs net of interest income earned on our money market account. Common Stock Warrant Liability Adjustment. Mark to market adjustment to recognize the change in fair value of the common stock warrant liability in other income (expense). Other Income (Expense), Net.
Interest income (expense), net consists of interest incurred on our outstanding borrowings, debt extinguishment costs, gain on interest for forgiveness of interest accrued related to an arrangement with a significant vendor, and amortization of the associated deferred financing costs. Interest income consists of interest earned on our money market account. Common Stock Warrant Liability Adjustment.
The total proceeds from the offering were first allocated to the liability classified warrants, based on their fair values, with the residual $3.9 million allocated to the Series A convertible preferred stock.
The total proceeds from the offering were first allocated to the liability classified warrants, based on their fair values, with the residual $3,867 allocated to the Series A convertible preferred stock. The Series A convertible stock will accrete to their redemption value, starting from the issuance date to the date at which the shares become redeemable on February 17, 2028.
As of December 31, 2023, we had $16.6 million of cash on hand.
As of December 31, 2024, we had $20,245 of cash on hand.
Expected returns, as well as estimated discounts and allowances that have been earned but not yet honored or paid out, are included in accrued and other expenses in the accompanying balance sheets. Actual returns may vary from estimates if we experience a change in actual sales returns or exchange patterns due to unanticipated changes in products or competitive pressures.
Expected returns and estimated rebates and allowances that have been earned but not yet honored or paid out are included in accrued and other expenses in the accompanying balance sheets. Estimated discounts that have been earned but not yet honored or paid out are included as a reduction to accounts receivable, net.
For the year ended December 31, 2023, we recognized a loss of $0.9 as compared to a gain of $6.3 million for the same period in the prior year resulting from an increase in the fair value of common stock warrants outstanding.
For the year ended December 31, 2024, we recognized a gain of $9,293 as compared to a loss of $924 for the same period in the prior year resulting from a decrease in the fair value of common stock warrants outstanding. Non-GAAP Adjusted EBITDA We have included a certain non-GAAP financial measure in this Annual Report, adjusted EBITDA.
We anticipate that we will remain an EGC under the JOBS Act until the earliest of (i) December 31, 2025, (ii) the last date of our fiscal year in which we have total annual gross revenues of at least $1.235 billion, (iii) the date on which we are deemed to be a ‘‘large accelerated filer’’ under the rules of the SEC, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.
We anticipate that we will remain an EGC under the JOBS Act until the earlier of December 31, 2025 or the date on which we have issued more than $1,000,000 in non-convertible debt securities during the previous three years.
The change in operating cash flows was primarily driven by a lower net loss and lower working capital usage. Lower working capital usage was driven by decreases in accounts receivable and inventory levels, as compared to increases in the prior year.
Operating Activities For the year ended December 31, 2024, net cash used in operating activities was $11,209 as compared to net cash used in operating activities of $23,527 in the prior year. The change in operating cash flows was primarily driven by a lower net loss and partially offset by higher working capital usage.
General and Administrative For the Years Ended December 31, Change (dollars in millions) 2023 2022 $ % General and administrative $ 27.3 $ 41.5 $ (14.2) (34.2 %) General and administrative expense decreased by $14.2 million, or 34.2%, from $41.5 million for the year ended December 31, 2022 to $27.3 million for the year ended December 31, 2023.
General and Administrative Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % General and administrative $ 33,967 $ 27,343 $ 6,624 24.2 % General and administrative expense increased by $6,624, or 24.2%, from $27,343 for the year ended December 31, 2023 to $33,967 for the year ended December 31, 2024.
Sales and Marketing For the Years Ended December 31, Change (dollars in millions) 2023 2022 $ % Sales and marketing $ 13.5 $ 38.5 $ (25.0) (64.9 %) Sales and marketing expense decreased by $25.0 million, or 64.9%, from $38.5 million for the year ended December 31, 2022 to $13.5 million for the year ended December 31, 2023.
Sales and Marketing Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % Sales and marketing $ 15,760 $ 13,527 $ 2,233 16.5 % Sales and marketing expense increased by $2,233, or 16.5%, from $13,527 for the year ended December 31, 2023 to $15,760 for the year ended December 31, 2024.
Throughout this Item 7, unless otherwise noted, "we", "us", "our" and the "Company" refer to Owlet, Inc. and its consolidated subsidiaries. Overview Our mission is to empower parents with the right information at the right time, to give them more peace of mind and help them find more joy in the journey of parenting.
Overview Our mission is to empower parents with the right information at the right time, to give them more peace of mind and help them find more joy in the journey of parenting. Our digital parenting platform aims to give parents real-time data and insights to help parents feel calmer and more confident.
We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30, or (ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our Common Stock held by non-affiliates exceeds $700 million as of the prior June 30.
We will remain a smaller reporting company until (1) as of the last business day of our most recent second fiscal quarter, our prior year’s annual revenues are at least $100,000 and our voting and non-voting common stock held by non-affiliates as of such second fiscal quarter end is at least $250,000 or (2) our voting and non-voting common stock held by non-affiliates is at least $700,000 measured on the last business day of our most recent second fiscal quarter.
Sales return rates, excluding the impact of regulatory actions, have been sufficiently predictable to allow us to estimate expected future returns. We review the actual returns in our direct to consumer channels as a percentage of sales to determine the historical rate of return.
Actual returns may vary from estimates if we experience a change in actual sales returns or exchange patterns due to unanticipated changes in products or competitive pressures. Sales return rates, excluding the impact of regulatory actions, have been sufficiently predictable to allow us to estimate expected future returns.
The present value of the future payments was expensed and included within interest expense, net on the consolidated statements of operations for the year ended December 31, 2023.
During the year ended December 31, 2023, we entered into an agreement with a significant vendor to pay $3,000 of interest over 36 months with respect to past due payables. The present value of the future payments was expensed and included within interest expense, net on the consolidated statements of operations in that period.
The Series A convertible stock will accrete to its redemption value, starting from the issuance date to the date at which the shares become redeemable on February 17, 2028. Accretion will be recorded as a deemed dividend. We incurred $2.0 million of issuance costs related to the offering, of which $1.5 million were paid as of December 31, 2023.
Accretion will be recorded as a deemed dividend. We incurred $1,963 of issuance costs related to the offering, of which $1,513 were paid as of December 31, 2023. The remaining $450 were paid as of December 31, 2024. Issuance costs allocated to the preferred stock of $253 were recorded as a reduction to the Series A preferred stock.
Other income (expense), net includes our net gain (loss) on foreign exchange transactions and loss on extinguishment of debt. Income Tax Provision.
Mark to market adjustment to recognize the change in fair value of common stock warrant liabilities. Other Income (Expense), Net. Other income (expense), net includes our net gain (loss) on foreign exchange transactions. Income Tax Provision.
As we continue to address these financial conditions, management has undertaken the following actions: • As described further in Note 9, on February 17, 2023, we consummated a sale of preferred stock and warrants to purchase our common stock for aggregate gross proceeds of $30.0 million.
A s we continue to address these financial conditions, management has undertaken the following actions: • As described further in Note 9, Common Stock Issuance, Redeemable Common Stock, Common Stock Warrants, and Convertible Preferred Stock , in September 2024, we issued 3,135,136 shares of our common stock and received net proceeds of $10,003 and in February 2024, the Company consummated a sale of preferred stock and warrants to purchase our common stock for aggregate net proceeds of $8,855. • As described in Note 6, Debt and Other Financing Arrangements , in September 2024, we entered into a loan facility agreement with WTI Fund X, Inc. and WTI Fund XI, Inc.
Financed Insurance Premium In July 2023, we renewed our corporate directors & officers and employment liability policies and entered into a new short-term commercial premium finance agreement with First Insurance Funding totaling $0.9 million to be paid in eleven equal monthly payments, accruing interest at a rate of 8.29% (the "Financed Insurance Premium").
Financed Insurance Premiums In 2024, we renewed a number of our insurance policies and entered into several new short-term commercial premium finance agreements with First Insurance Funding totaling $941 to be paid within one year, accruing interest at a weighted average rate of 8.7% As of December 31, 2024 , the remaining principal balance on the combined financed insurance premiums was $615.
Additionally, the Company took cost saving measures to reduce spend on consulting services. 67 Other Income (Expense) For the Years Ended December 31, Change (dollars in millions) 2023 2022 $ % Interest expense, net $ (3.2) $ (1.1) $ (2.1) 189.0 % Common stock warrant liability adjustment $ (0.9) $ 6.3 $ (7.3) (114.6 %) Other income (expense), net $ (0.1) $ 0.1 $ (0.2) (282.3 %) Interest expense increased by $2.1 million, from $1.1 million for the year ended December 31, 2022 to $3.2 million for the year ended December 31, 2023.
Other Income (Expense), Net Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % Interest expense, net $ (1,630) $ (3,191) $ 1,561 (48.9 %) Common stock warrant liability adjustment $ 9,293 $ (924) $ 10,217 (1105.7 %) Other income (expense), net $ 75 $ (144) $ 219 (152.1 %) Interest expense decreased by $1,561, from $3,191 for the year ended December 31, 2023 to $1,630 for the year ended December 31, 2024.
Cash Flows The following table summarizes our cash flow (in millions): 71 Year Ended December 31, 2023 2022 Net cash used in operating activities $ (23.5) $ (81.4) Net cash used in investing activities (0.1) (1.6) Net cash provided by financing activities 28.9 (0.9) Net change in cash and cash equivalents $ 5.3 $ (83.8) Operating Activities For the year ended December 31, 2023, net cash used in operating activities was $23.5 million as compared to net cash used in operating activities of $81.4 million in the prior year.
Cash Flows The following table summarizes our cash flow (in thousands): Year Ended December 31, 2024 2023 Net cash used in operating activities $ (11,209) $ (23,527) Net cash used in investing activities (761) (59) Net cash provided by financing activities 16,044 28,912 Net change in cash and cash equivalents $ 4,074 $ 5,326 Subsequent to the release of our preliminary earnings results on March 4, 2025, we identified and corrected a $524 classification error between cash flows from operating activities and financing activities in the Consolidated Statement of Cash Flows for the year ended December 31, 2024.
The plan was accepted by the NYSE in July 2023. See Part I, Item 1A. “Risk Factors—Our failure to meet the NYSE’s continued listing requirements could result in a delisting of our common stock” in this Report. 64 Components of Operating Results Revenues We recognize revenue primarily from products and the associated mobile applications.
There can be no assurance that we will be able to maintain compliance with these or any other NYSE listing requirements during or after the 12-month follow-up period. See Part I, Item 1A. “Risk Factors—Our failure to meet the NYSE’s continued listing requirements could result in a delisting of our common stock” in this Report.
The year ended December 31, 2022 included the initial launch of the Dream Sock product and included significant sell-in sales of the Dream Sock across all channel partners, which did not occur in 2023. 66 Cost of Revenues and Gross Profit For the Years Ended December 31, Change (dollars in millions) 2023 2022 $ % Cost of revenues $ 31.4 $ 45.9 $ (14.5) (31.5 %) Gross profit $ 22.6 $ 23.3 $ (0.7) (3.1 %) Gross margin 41.8 % 33.7 % Cost of revenues decreased by $14.5 million, or 31.5%, from $45.9 million for the year ended December 31, 2022 to $31.4 million for the year ended December 31, 2023.
Cost of Revenues and Gross Profit Year Ended December 31, Change (dollars in thousands) 2024 2023 $ % Cost of revenues $ 38,748 $ 31,423 $ 7,325 23.3 % Gross profit $ 39,308 $ 22,587 $ 16,721 74.0 % Gross margin 50.4 % 41.8 % Cost of revenues increased by $7,325, or 23.3%, from $31,423 for the year ended December 31, 2023 to $38,748 for the year ended December 31, 2024.
The decrease in accounts receivable and inventory levels resulted from our focus on improving our cash conversion cycle for the year ended December 31, 2023.
Higher working capital usage was driven by higher inventory balances due to the build up of inventory levels to support current demand, partially offset by lower accounts receivable due to a focus on improving our cash conversion cycle for the year ended December 31, 2024.
Investing Activities For the year ended December 31, 2023, net cash used in investing activities decreased to $0.1 million from $1.6 million for the year ended December 31, 2022. The decrease in cash used for investing activities is primarily related to the prioritization of research and development projects in correlation with the restructuring actions taken during the fiscal year 2022.
Investing Activities For the year ended December 31, 2024, net cash used in investing activities increased to $761 from $59 for the year ended December 31, 2023.
Removed
Our digital parenting platform aims to give parents real-time data and insights to help parents feel calmer and more confident. We believe that every parent deserves peace of mind and the opportunity to feel their well-rested best.
Added
Throughout this Item 7, unless otherwise noted, “ we ” , “ us ” , “ our ” and the “ Company ” refer to Owlet, Inc. and its consolidated subsidiaries. Except as otherwise stated, dollars are shown in thousands, except per share amounts.
Removed
Pursuant to the terms of the definitive agreements, Owlet issued shares of Series A Preferred Stock that are convertible into approximately 4.4 million shares of common stock. Each purchaser also received a warrant to purchase 180% of the number of shares of common stock into which their Series A preferred stock is convertible.
Added
The plan was accepted by the NYSE in July 2023. On October 10, 2024, we received formal notice from the NYSE that we had regained compliance with the NYSE’s continued listing standards.
Removed
The 2023 Private Placement Warrants have a per share exercise price of $4.66 and are exercisable by the holder at any time on or before February 17, 2028. 2024 Private Placement Financing On February 29, 2024, the Company consummated a sale of newly issued Series B Convertible Preferred Stock ("Series B Preferred Stock") and warrants to purchase its common stock ("2024 Private Placement Warrants"), involving participation from existing investors, for aggregate gross proceeds of $9.3 million.
Added
As a result of our achievement of compliance with the NYSE’s minimum market capitalization requirement for the requisite period of time, the NYSE has advised us that we are no longer considered out of compliance with these continued listing standards, and the below compliance “BC” indicator has been removed from our Class A common stock (“common stock”).
Removed
Pursuant to the terms of the definitive agreement, Owlet issued shares of Series B Preferred Stock that are convertible into approximately 1,199,351 shares of common stock. Each purchaser also received a warrant to purchase 150% of the number of shares of common stock into which their Series B Preferred Stock is convertible.
Added
Additionally, we are no longer noted as being below continued listing standards on the NYSE’s website (www.nyse.com). In accordance with the NYSE’s Listed Company Manual, we will be subject to a 12-month follow-up period within which we will be reviewed to confirm that we do not once again fall below any of the NYSE’s continued listing standards.
Removed
The 2024 Private Placement Warrants have a per share exercise price of $7.7125 and are exercisable by the holder at any time on or before March 1, 2029.
Added
The increase was primarily due to higher sales of Dream Sock products, reflecting an increase in consumer demand across all sales channels as compared to the prior year.
Removed
The decrease was primarily due to lower sales of Owlet Sock products, impacted by retailers targeting lower inventory levels, reflecting macroeconomic conditions.
Added
The increase was driven primarily by litigation settlements, impairment charges related to intangible assets, and higher compensation expense, including accrued bonuses and severance-related expenses. These increases were partially offset by reduced insurance premiums, less bad debt expense, and lower consulting and outside services spend related to transaction costs as compared to the prior year.
Removed
The decrease was driven primarily by lower compensation expense, including stock-based compensation, from reduced general and administrative headcount as a result of the restructuring actions taken during the fiscal year 2022. Additionally, we took cost saving measures to reduce spend on consulting services.
Added
The increase was driven primarily by higher compensation expense due to additional employees, higher commissions from higher sales, and accrued bonuses, along with higher spend on social media marketing and public relations as compared to the prior year.
Removed
The decrease was driven by a decrease in all sales and marketing spend, including lower compensation expense from reduced sales and marketing headcount. Additionally, we reduced spend on digital advertising and retail channel marketing spend.
Added
The decrease was driven primarily by lower stock-based compensation expense and higher costs capitalized related to internal-use software, partially offset by accrued bonuses as compared to the prior year.
Removed
These decreases were primarily driven by lower compensation expense from reduced research and development headcount.
Added
In January 2024, the agreement was amended and the schedule of interest payments was modified from 36 months to 28 months, but the amount of interest payable was unchanged. In September 2024, the agreement was amended again, allowing us to terminate the agreement with a final interest payment of $623, which was then fully settled in September 2024.
Removed
As described in Note 7, Commitments and Contingencies to the consolidated financial statements included elsewhere in this Report, we entered into an agreement with a significant vendor to pay $3.0 million of interest over 36 months with respect to past due payables.
Added
The reduction in the total cumulative interest payments to $2,206 resulted in us recording a reduction of interest expense at termination of $508. The decrease in interest expense for the year ended December 31, 2024 was partially offset by interest related to the Company's term loan facility and asset-based revolving credit facility, which were entered into in September 2024.

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