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What changed in Owlet, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Owlet, Inc.'s 2024 and 2025 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 2025 report.

+611 added−689 removedSource: 10-K (2026-03-09) vs 10-K (2025-03-11)

Top changes in Owlet, Inc.'s 2025 10-K

611 paragraphs added · 689 removed · 383 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

81 edited+57 added−41 removed137 unchanged
Biggest change(“Benchmark”), pursuant to which Benchmark provides us certain manufacturing and related services for the production of Dream Sock, Smart Sock, BabySat, and Dream Duo offerings out of its facilities in Thailand, including procuring materials and assembling and testing finished products. 19 The initial term of the agreement was one year and automatically extends for additional one-year periods until either we or Benchmark provide notice of non-renewal at least 90 days prior to the end of the then-current term or extension.
Biggest changeManufacturing Services Agreement with Benchmark Electronics In October 2017, we entered into a manufacturing services agreement with Benchmark Electronics, Inc. (“Benchmark”), pursuant to which Benchmark provides us certain manufacturing and related services for the production of Dream Sock, BabySat, and Dream Duo offerings out of its facilities in Thailand, including procuring materials and assembling and testing finished products.
We believe that the primary competitive factors in our market are: • product quality and performance, including the size, quality, comfort, battery life, reliability, connectivity of the device to the application and/or monitor, and accuracy of our data provided to customers; • FDA marketing authorizations and similar foreign regulatory authorities marketing authorizations and notified bodies certifications; • customer purchasing experience; • pricing; • product support and service; • effective marketing and education; • brand recognition; • breadth and depth of offerings; • greater market penetration; • technological innovation, product enhancements and speed of innovation; and • sales and distribution capabilities.
We believe that the primary competitive factors in our market are: • product quality and performance, including the size, quality, comfort, battery life, reliability, connectivity of the device to the application and/or monitor, and accuracy of data provided to customers; • FDA marketing authorizations and similar foreign regulatory authorities marketing authorizations and notified bodies certifications; • customer purchasing experience; • pricing; • product support and service; • effective marketing and education; • brand recognition; • breadth and depth of offerings; • greater market penetration; • technological innovation, product enhancements and speed of innovation; and • sales and distribution capabilities.
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.
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, the FDA collects user fees for certain medical device submissions and annual fees and for medical device establishments.
Until EUDAMED is fully functional, the corresponding provisions of the EU Medical Devices Directive continue to apply. Manufacturers are required to take FSCAs, which are defined as any corrective action for technical or medical reasons to prevent or reduce a risk of a serious incident associated with the use of a medical device that is made available on the market.
Until EUDAMED is fully functional, the corresponding provisions of the EU Medical Devices Directive continue to apply. Manufacturers are required to take FSCAs, which are defined as any corrective action for technical or medical reasons to prevent or reduce the risk of a serious incident associated with the use of a medical device that is made available on the market.
The term “remuneration” has been broadly interpreted to include anything of value, and the government can establish a violation of the Anti-Kickback Statute without proving that a person or entity had actual knowledge of, or a specific intent to violate, the law; • the federal civil False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment of government funds; knowingly making, using, or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease, or conceal an obligation to pay money to the federal government.
The term “remuneration” has been broadly interpreted to include anything of value, and the government can establish a violation of the Anti-Kickback Statute without proving that a person or entity had actual knowledge of, or a specific intent to violate, the law; 15 • the federal civil False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment of government funds; knowingly making, using, or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease, or conceal an obligation to pay money to the federal government.
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”).
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 Federal Food, Drug, and Cosmetic Act (“FDCA”).
Anti-Bribery and Corruption Laws We may also be subject to similar anti-corruption legislation implemented in Europe through EU Member State laws and under the Organization for Economic Co-operation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Intellectual Property Since inception, we have been methodical around our intellectual property strategy.
Anti-Bribery and Corruption Laws We may also be subject to similar anti-corruption legislation implemented in Europe through EU Member State laws and under the Organization for Economic Co-operation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Intellectual Property 16 Since inception, we have been methodical around our intellectual property strategy.
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.
These include: • establishment registration and device listing with the FDA; • QMSR 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; 10 • 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.
As such, we are dedicated to supporting all parents from a rich tapestry of backgrounds and perspectives. 20 Corporate Information Owlet Baby Care Inc. was incorporated in Delaware on February 24, 2014 as a Delaware corporation. SBG was incorporated in Delaware on June 23, 2020. On July 15, 2021, SBG closed the Merger with Owlet Baby Care Inc.
As such, we are dedicated to supporting all parents from a rich tapestry of backgrounds and perspectives. Corporate Information Owlet Baby Care Inc. was incorporated in Delaware on February 24, 2014, as a Delaware corporation. SBG was incorporated in Delaware on June 23, 2020. On July 15, 2021, SBG closed the Merger with Owlet Baby Care Inc.
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.
We are building our data platform with the goal to be parents’ go-to wellness 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 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.
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.
Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence.
Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the 12 performance and safety of the device are supported by suitable evidence.
Penalties applicable to infringements of regulations remain mainly determined at national-level. Additional regulations may apply to our products and impose further requirements, including the possible Additional regulations may apply to our products and impose further requirements, including the possible application of EU Regulation No 1007/2011 on textile products, which imposes specific labeling and marking 13 requirements.
Penalties applicable to infringements of regulations remain mainly determined at national level. Additional regulations may apply to our products and impose further requirements, including the possible application of EU Regulation No 1007/2011 on textile products, which imposes specific labeling and marking requirements.
Regulation of General Consumer Products in the European Union In the European Union (“EU”), since December 13, 2024, consumer products must comply with the General Product Safety Regulation (EU) 2023/988 which repealed and replaced Directive 2001/95/EC.
Regulation of General Consumer Products in the European Union 11 In the European Union (“EU”), since December 13, 2024, consumer products must comply with the General Product Safety Regulation (EU) 2023/988 which repealed and replaced Directive 2001/95/EC.
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.
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 17 written notice to Aoni.
We believe that our pioneering achievement of obtaining the first de novo authorization for at-home monitoring without the need for a prescription underscores our trailblazing efforts and helps set a high regulatory bar for new entrants in the space. This distinction is critical as it denotes that any comparable product with medical applications will likely require similar regulatory endorsements.
We believe that our pioneering achievement of obtaining the first de novo authorization for at-home monitoring without the need for a prescription underscores our trailblazing efforts and helps set a high regulatory bar for new entrants in our industry. This distinction is critical as it denotes that any comparable product with medical applications will likely require similar regulatory endorsements.
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.
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 values, as well as Health Notifications, which will alert caregivers with lights and alarm sounds if their infant’s readings fall outside of preset ranges.
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.
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.
Failure to comply with regulatory requirements (as applicable) could require time and resources to respond to the regulatory authorities' observations and to implement corrective and preventive actions, as appropriate.
Failure to comply with regulatory 13 requirements (as applicable) could require time and resources to respond to the regulatory authorities' observations and to implement corrective and preventive actions, as appropriate.
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.
With the momentum we have gained from FDA marketing authorizations, the launch of Owlet360 subscription service, the introduction of insurance coverage and reimbursement for BabySat, increased credibility in medical communities, and an increased retail presence, we see Owlet as strategically positioned for substantial growth.
Manufacturing processes for medical devices are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
Manufacturing processes for medical devices are required to comply with the applicable portions of the QMSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
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.
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 Management System Regulation (“QMSR”), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
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.
With respect to Dream Sock and Dream Sight, 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.
The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. As a manufacturer, we are subject to periodic scheduled and unscheduled inspections by the FDA.
The QMSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. As a manufacturer, we are subject to periodic scheduled and unscheduled inspections by the FDA.
Benchmark has exclusive manufacturing rights through May 31, 2027 for Owlet Sock and Duo products, including all revisions and future generations of those products and/or product families.
Benchmark has exclusive manufacturing rights through May 31, 2027, for Dream Sock and Dream Duo products, including all revisions and future generations of those products and/or product families.
Failure to maintain compliance with the QSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of marketed products.
Failure to maintain compliance with the QMSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of marketed products.
This trend underscores a growing market resilience, notably within the baby care sector, which has remained robust against broader economic fluctuations affecting consumer spending. Since its inception, Owlet has been at the forefront of the consumer digital health monitoring space for infants and their families.
We believe this trend underscores a growing market resilience, notably within the baby care sector, which has remained robust against broader economic fluctuations affecting consumer spending. Since its inception, Owlet has been at the forefront of the consumer digital health monitoring space for children and their families.
Manufacturing Services Agreement with Aoni In June 2018, we entered into a manufacturing and supply agreement with Shenzhen Aoni Electronic Co., Ltd (“Aoni”), pursuant to which Aoni provides certain manufacturing and related services for the production of our Owlet Cam product, including procuring materials and assembling and packaging finished products.
Manufacturing Services Agreement with Aoni In June 2018, we entered into a manufacturing and supply agreement with Shenzhen Aoni Electronic Co., Ltd (“Aoni”), pursuant to which Aoni provides certain manufacturing and related services for the production of our Dream Sight product, including procuring materials and assembling and packaging finished products.
In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QSR.
In addition, the FDA will generally conduct 9 a pre-approval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QMSR.
The device sponsor must then fulfill more rigorous PMA requirements, or can request a risk-based classification determination for the device in accordance with the “ de novo ” process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.
The device sponsor must then fulfill more rigorous PMA requirements, or can request a risk-based classification determination for the device in accordance with the “de novo” process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.
As a result of the Merger, Owlet Baby Care, Inc. became a wholly-owned subsidiary of SBG, and SBG changed its name to Owlet, Inc. Available Information Our website address is www.owletcare.com. The contents of, or information accessible through, our website are not part of this Annual Report on Form 10-K.
As a result of the Merger, Owlet Baby Care, Inc. became a wholly-owned subsidiary of SBG, and SBG changed its name to Owlet, Inc. Available Information Our website address is www.owletcare.com. The contents of, or information accessible through, our website are not part of this Report.
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.
With our 510(k) clearance and de novo authorization, we believe competitors or new entrants 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.
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.
Human Capital Resources As of December 31, 2025, we had 108 full-time employees and 6 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.
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.
Our focus on engaging directly with our customers 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, Baby List, Best Buy.
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.
Go-to-Market Channels Owlet products are marketed and distributed in the United States and internationally through consumer and, more recently, through healthcare 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 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.
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.
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.
We expect 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 and to the extent we are able to bring this valued relationship with consumers into new medical communities, we believe that our platforms will continue to evolve and expand.
Global Reach & Distribution: Our international strategy is taking root and continuing to grow, with distribution partners in key global markets including Canada, Australia, the United Kingdom and throughout the rest of the European Union. We intend to continue expanding our global footprint and accessibility, underscoring our commitment to global health and well-being.
Target, and Walmart. 4 Global Reach & Distribution: Our international strategy continues to grow, with distribution partners in key global markets including Canada, Australia, the United Kingdom and throughout the rest of the European Union. We intend to continue expanding our global footprint and accessibility, underscoring our commitment to global health and well-being.
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.
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 27, 2026, we had 63 issued patents (with numerous others pending) and 61 registered trademarks.
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.
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; 14 • 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 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 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 European region (including the EU and the United Kingdom), Australia, Brazil, Canada, China, India, Mexico, South Africa, Thailand, and Vietnam.
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.
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.
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.
This product allows parents to see, hear, and be assured of their child's condition through our app, offering an unmatched value proposition. We believe that we are uniquely positioned to address our market opportunity as a result of our regulatory marketing authorizations, extensive distribution network, intellectual property including our proprietary data, and comprehensive feature set.
FDASIA streamlined the de novo classification pathway by permitting manufacturers to request de novo classification directly without first submitting a 510(k) premarket notification to the FDA and receiving a not substantially equivalent determination.
FDASIA streamlined the de novo classification pathway by permitting manufacturers to request de novo classification directly without first submitting a 510(k) premarket notification to the FDA and receiving a not substantially equivalent determination. The FDA's stated goal is to make a decision about a de novo classification request in 150 review days.
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.
In addition to spearheading the health monitoring category, Owlet competes within the broader realm of general video/audio baby monitors. We believe our strategic edge is encapsulated in Dream Duo, the combination product that includes Dream Sock and Dream Sight, which provides parents with a holistic view of their child's health and well-being.
The Smart Sock and Dream Sock are currently manufactured at ISO 13485 certified required to adhere to specific quality requirements in accordance with the International Medical Device Regulators Forum (IMDRF) and Medical Device Single Audit Program (MDSAP).
Dream Sock is currently manufactured at ISO 13485 certified standards and are required to adhere to specific quality requirements in accordance with the International Medical Device Regulators Forum (IMDRF) and Medical Device Single Audit Program (MDSAP). We received ISO 13485 and MDSAP certifications, as we work to implement and maintain the requirements applicable to medical device manufacturer quality management systems.
Violations of any of the above laws may result in significant administrative, civil and criminal penalties, including imprisonment, exclusion from participation in federal health care programs, such as Medicare and Medicaid, significant fines, monetary penalties and damages, the restructuring or curtailment of our operations, imposition of compliance obligations and monitoring, and reputational harm. 18 Data Privacy and Security Laws Numerous state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of personal information, including health-related information.
Violations of any of the above laws may result in significant administrative, civil and criminal penalties, including imprisonment, exclusion from participation in federal health care programs, such as Medicare and Medicaid, significant fines, monetary penalties and damages, the restructuring or curtailment of our operations, imposition of compliance obligations and monitoring, and reputational harm.
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.
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.
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.
Our current research and development activities are focused on enhancing the customer experience of our existing products, expanding subscription functionality, advancing new product development, and supporting the commercialization and regulatory pathways of our medical devices.
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.
Market Landscape and Competitive Dynamics Owlet has a clear and specific market in pediatrics serving the needs of parents and their children across key markets in the U.S., Europe, Australia, and Canada, with a product launch anticipated for India and other international markets throughout 2026.
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 over 33 million infants born annually in these regions, we see the potential for a steady demand for our products and refreshment of our Total Addressable Market ("TAM"). Despite declining birth rates in some regions, we believe the emphasis on infant care and the financial investment in the well-being of newborns have seen a consistent increases over the years.
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.
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. 6 Continuing technological advances and new product introductions within the home-use childcare electronics, medical monitoring and service industry place our products and services at risk of obsolescence.
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.
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.
While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device.
These special controls can include performance standards, post-market surveillance, patient registries and FDA guidance documents. 8 While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device.
Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries and FDA guidance documents.
Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device.
Dream Sock has been CE and UKCA marked, as defined below, under European Union (“EU”) and United Kingdom (“UK”) Medical Device Regulations. As our retail penetration increases and brand awareness grows outside of the United States, we intend to further leverage retail channels and locations to ensure efficient and strategic global customer acquisition in key markets in the future.
As our retail penetration increases and brand awareness grows outside of the United States, we intend to further leverage retail channels and locations to ensure efficient and strategic global customer acquisition in key markets in the future.
We expect the industry in which we operate will continue to evolve and may be significantly affected by new product introductions and other market activities of industry participants.
Owlet is the only company in the market to offer a baby monitor with FDA-clearance in addition to multiple international regulatory certifications. We expect the industry in which we operate will continue to evolve and may be significantly affected by new product introductions and other market activities of industry participants.
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.
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).
The reference to our website address does not constitute incorporation by reference of the information contained on or available through our website, and you should not consider such information to be a part of this Annual Report on Form 10-K.
In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address under the “Resources” menu on the Investors section of our website at https://investors.owletcare.com. 18 The reference to our website address does not constitute incorporation by reference of the information contained on or available through our website, and you should not consider such information to be a part of this Annual Report on Form 10-K.
If the device under evaluation does not present a significant risk to human health, then the device sponsor is not required to submit an IDE application to the FDA before initiating human clinical trials, but must still comply with abbreviated IDE requirements when conducting such trials. 11 A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject.
A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject.
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.
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 intend to leverage the differentiation and scale of Dream Sock to drive continued domestic adoption in the United States.
We believe that this combination not only differentiates us from our competitors but also solidifies our commitment to extending the benefits of our technology to every infant.
We believe that this combination not only differentiates us from our competitors but also solidifies our commitment to extending the benefits of our technology to every infant. Our competition spans from established players to emerging innovators in the space, including companies that sell non-FDA cleared sound and video monitors.
It is indicated 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 lbs., in the home environment. • Owlet Smart Sock – Smart Sock is Owlet’s first smart baby monitor to track an infant’s oxygen saturation, heart rate, and sleep trends.
It is indicated 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 lbs., in the home environment. Dream Sight: A smart audio and video monitor that enables parents to monitor their child from anywhere.
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.
Our strategy is not just about growth; it is about enriching the ecosystem of pediatric care with Owlet at its heart, fostering a healthier future for the next generation.
Regulatory authorities have broad compliance and enforcement powers and if such issues cannot be resolved to their satisfaction can take a variety of actions, including untitled or warning letters, fines, consent decrees, injunctions, or civil or criminal penalties. 15 Brexit and Regulation of Medical Devices in the United Kingdom Since the end of the Brexit transition period on January 1, 2021, Great Britain (England, Scotland and Wales) has not been directly subject to EU laws, however under the terms of the Protocol on Ireland/Northern Ireland, EU laws generally apply to Northern Ireland.
Brexit and Regulation of Medical Devices in the United Kingdom Since the end of the Brexit transition period on January 1, 2021, Great Britain (England, Scotland and Wales) has not been directly subject to EU laws, however under the terms of the Protocol on Ireland/Northern Ireland, EU laws generally apply to Northern Ireland.
We continually review our development efforts to assess the existence and patentability of new intellectual property. Our pending patent applications may not result in issued patents, and we cannot assure you that any current or subsequently issued patents will protect our intellectual property rights.
Our pending patent applications may not result in issued patents, and we cannot assure you that any current or subsequently issued patents will protect our intellectual property rights. Third parties may challenge certain patents issued to us as invalid, may independently develop similar or competing technologies or may design around any of our patents.
We will continue to develop our software and data in order to bring additional solutions into the home. Through leveraging our data, we believe we can help bridge the gap and better democratize access to individualized care.
We believe that data is an invaluable tool in bridging the current healthcare gap between hospital and home, and that through leveraging our data, our platform can improve access to individualized care. We plan on continuing to develop our software and data insights in order to bring additional solutions into the home.
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.
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. 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.
Our Strategy 2024 - Pivotal Year In 2024, we introduced FDA-cleared devices Dream Sock and BabySat to deliver improved comfort to parents wishing for better safety and monitoring for their children.
We have outlined strategic focus areas that we believe are most critical to driving growth: Drive Domestic Adoption: In 2024, we introduced FDA-cleared device Dream Sock to deliver improved comfort to parents wishing for better safety and monitoring for their children.
We received ISO 13485 and MDSAP certifications, as we work to implement and maintain the requirements applicable to medical device manufacturer quality management systems. We believe that third-party facilities are adequate to meet our current and anticipated manufacturing needs. We do not currently plan to manufacture our products or any related components ourselves.
We believe that third-party facilities are adequate to meet our current and anticipated manufacturing needs, and we utilize multiple sites in different geographies to diversify political and natural disaster risks. We do not currently plan to manufacture our products or any related components ourselves.
The BabySat pulse oximeter is indicated for use in measuring and displaying functional oxygen saturation of arterial hemoglobin (SpO2) and Pulse rate.
Supported by insurance reimbursement, eligible families may access vital monitoring at low or no cost. BabySat is FDA-cleared and available in the U.S. only. The BabySat pulse oximeter is indicated for use in measuring and displaying functional oxygen saturation values of arterial hemoglobin (SpO2) and Pulse rate.
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.
This agreement represents an important milestone for our healthcare opportunity as we look to replicate this business model with other hospitals and medical facilities. 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.
Dream Sock with Live Health Readings and Health Notifications has an FDA marketing authorization in the U.S., and is CE marked, as defined below, under EU Medical Devices Regulation in the European Union and UKCA marked in the United Kingdom.
Dream Sock with Live Health Readings and Health Notifications has received FDA marketing authorization in the United States, and has regulatory clearances in the European Union, United Kingdom, Australia, South Africa, India, and Israel.
A version of Dream Sock without Live Health Readings and Health Notifications is offered in Canada and tracks Sleep Quality Indicators, including heart rate, 10-minute historic average oxygen level, and more. 4 • BabySat – Designed for infants that could benefit from additional monitoring at home under the supervision of a physician, BabySat provides caregivers a prescription version of our wearable infant monitor that offers customizable alarm limits via the Owlet Care+ App.
A version of Dream Sock without Live 3 Health Readings and Health Notifications is available in Canada and tracks Sleep Quality Indicators, including heart rate and 10-minute historic average oxygen levels. Dream Sock is the next-generation monitor that replaced our legacy Smart Sock product.
Our issued patents with claims generally directed to an infant sock comprised of a sensing device in a sleeve in the sock and a strap are expected to expire in the U.S. and China in 2033.
Our issued patents with claims generally directed to wireless infant monitoring and related sock-based sensor features are expected to expire in the U.S. and certain international jurisdictions in 2033. Our issued patents with claims generally directed to additional sensing, monitoring, and related technologies have expiration dates extending into the late 2030s and early 2040s.
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.
Accessories: Enhancing the Owlet experience, offered accessories include fabric accessory socks in various colors and patterns, and the Owlet Sock Travel Case. Our Platform and Pipeline Since our inception, over 2.5 million Owlet devices have been sold worldwide, generating one of the largest proprietary data sets of infant health and sleep.
Dream Sock aims to provide more peace of mind for parents by providing real-time notifications to caregivers when a baby’s pulse rate and/or oxygen saturation fall outside preset ranges, all while offering tailored sleep insights in the Owlet Dream App.
Dream Sock: An award-winning wearable infant health monitor equipped with pulse oximetry technology that tracks vital signs, including pulse rate, oxygen level, activity, and sleep patterns. It delivers real-time notifications to caregivers when pulse rate and/or oxygen saturation values fall outside preset ranges and provides tailored sleep insights in the Owlet Dream App.
For additional information on Adjusted EBITDA and a reconciliation to the most directly comparable GAAP equivalent, see Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures.” We are committed to building a strong foundation for sustainable growth as we move forward and we believe that the FDA marketing authorizations of our BabySat and Dream Sock products will accelerate the adoption of our products and position us as the preferred pediatric data monitoring platform that bridges the gap between the hospital and the home.
For additional information on Adjusted EBITDA and a reconciliation to the most directly comparable GAAP equivalent, see Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures.” Our continued execution of our financial strategy, supported by a successful warrant exchange and follow-on equity offering in late 2025, has significantly strengthened our balance sheet, enabling us to invest more in our growth.
Throughout this journey, the Owlet team embodied our foundational values, undertaking substantial efforts to refine and advance our operations, setting the stage for growth and prosperity in 2025. Strategy Overview Driving Growth: Our vision is clear - we see health sensing technology becoming as ubiquitous as car seats and breast pumps for newborns.
We believe we are well-positioned as a sustainable, data-driven leader in the pediatric health space, with a goal to deliver long-term value to our shareholders and life-changing technology to families worldwide. Strategy Overview Driving Growth: Our vision is clear - we see health sensing technology for children becoming as ubiquitous as car seats and breast pumps for newborns.
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.
Owlet is focused on enlisting a wide variety of healthcare partners to increase the accessibility and affordability of our products while increasing our margin. Our Strategy 2025 - Year of Scale and Transformation In 2025, we made significant progress in our transition from a hardware-centric company to a comprehensive pediatric health platform.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Redemption Option may be exercised, with respect to any amount that is equal to or less than the entire balance of such shares, at any time during the period commencing on the first trading day following the fifth anniversary of September 11, 2024 and continuing through the date which is ten (10) years after September 11, 2024, subject to certain acceleration provisions set forth in the WTI Stock Issuance Agreement.
Biggest changeThe agreement under which these shares were issued provides for an embedded redemption option (the “Redemption Option”), such that WTI may elect to force us to repurchase all or a portion of these shares for a price of $8.40 per share, at any time during the period commencing on the first trading day following the fifth anniversary of September 11, 2024 and continuing through the date which is ten (10) years after September 11, 2024, subject to certain acceleration provisions set forth in the WTI Stock Issuance Agreement. 53 Our corporate documents and Delaware law contain provisions that could discourage or delay a change in control, prevent attempts to replace or remove current management and reduce the market price of our securities.
In addition, any failure, or perceived failure, by us, to comply with any federal, state, or foreign laws or regulations governing our marketing activities could adversely affect our reputation, brand, and business, and may result in claims, proceedings, or actions against us by governmental entities, consumers, suppliers or others or other liabilities or may require us to change our operations and/or cease using certain marketing strategies.
In addition, any failure, or perceived failure, by us, to comply with any federal, state, or foreign laws or regulations governing our marketing activities could adversely affect our reputation, brand, and business, and may result in claims, proceedings, or actions against us by governmental entities, consumers, suppliers or others or other liabilities, and may require us to change our operations and/or cease using certain marketing strategies.
Further, web and mobile browser developers, such as Apple, Microsoft or Google, have implemented and may continue to implement changes, including requiring additional user permissions, in their browser or device operating system that impair our ability to measure and improve the effectiveness of advertising of our products and services.
Further, web and mobile browser developers, such as Apple, Microsoft and Google, have implemented and may continue to implement changes, including requiring additional user permissions, in their browser or device operating system that impair our ability to measure and improve the effectiveness of advertising of our products and services.
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.
However, our IT systems and 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.
For example, the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act (collectively, the “CCPA”) requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
For example, the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”) requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
If we or our employees, independent contractors, consultants, commercial partners and vendors violate these laws, we may be subject to investigations, enforcement actions or significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
If we or our employees, independent contractors, consultants, commercial partners and vendors violate these laws, we may be subject to investigations, enforcement actions or significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
In the following circumstances holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the shares of common stock issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the terms of the warrant agreement; (ii) if we have so elected and the shares of common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act; and (iii) if we have so elected and we call the public warrants for redemption.
In the following circumstances holders of public warrants who seek to exercise their warrants will not be permitted to do so for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the shares of common stock issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the terms of the Warrant Agreement; (ii) if we have so elected and the shares of common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act; and (iii) if we have so elected and we call the public warrants for redemption.
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.
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.
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.
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; 31 • 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.
The healthcare laws and regulations that may affect our ability to operate include, but are not limited to: • the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, the purchasing, leasing, ordering or arranging for the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.
The healthcare laws and regulations that may affect our ability to operate include, but are not limited to: 43 • the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, the purchasing, leasing, ordering or arranging for the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.
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 values 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.
Any future growth initiatives will further intensify these demands: • manage our commercial operations effectively; • identify, recruit, retain, incentivize and integrate additional employees; • provide adequate training and supervision to maintain our high-quality standards and preserve our culture and values; • manage our internal development and operational efforts effectively while carrying out our contractual obligations to third parties; and • continue to improve our operational, financial and management controls, reports systems and procedures.
Any future growth initiatives will further intensify these demands: • manage our commercial operations effectively; • identify, recruit, retain, incentivize and integrate additional employees; • provide adequate training and supervision to maintain our high-quality standards and preserve our culture and values; 19 • manage our internal development and operational efforts effectively while carrying out our contractual obligations to third parties; and • continue to improve our operational, financial and management controls, reports systems and procedures.
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 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 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.
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 22 regulatory requirements.
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.
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 authorization (classification) for 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.
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.
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.
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.
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.
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.
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.
Although we try to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other proprietary information, of these former employers, competitors or other third parties.
Although we try to ensure that our employees and 50 consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other proprietary information, of these former employers, competitors or other third parties.
Our Loan Facility Agreement with WTI Fund X, Inc. and WTI Fund XI, Inc., dated September 11, 2024 (the “Loan Facility Agreement”) and our Credit and Security Agreement with ABL OPCO LLC and the lenders thereto, dated September 11, 2024 (the “ABL Credit Agreement”), contain various affirmative and negative covenants and restrictions that limit our ability to engage in specific types of transactions, including: • incur certain liens; • incur or guarantee additional indebtedness or make payment on certain subordinated debt; • pay dividends and make other distributions on, or redeem or repurchase, capital stock; • make certain investments, including loans to other parties; • make certain capital expenditures; • enter into certain transactions with affiliates; 23 • enter into certain leases and other material business agreements; • merge, dissolve, liquidate or consolidate; • dispose of certain assets, entity control or business locations; • make certain amendments to our organizational documents; • change lines of business; • comply with governmental and regulatory authorities; and • transfer or sell assets.
Our Loan Facility Agreement with WTI Fund X, Inc. and WTI Fund XI, Inc., dated September 11, 2024 (the “Loan Facility Agreement”) and our Credit and Security Agreement with ABL OPCO LLC and the lenders thereto, dated September 11, 2024 (the “ABL Credit Agreement”), contain various affirmative and negative covenants and restrictions that limit our ability to engage in specific types of transactions, including: • incur certain liens; • incur or guarantee additional indebtedness or make payment on certain subordinated debt; • pay dividends and make other distributions on, or redeem or repurchase, capital stock; • make certain investments, including loans to other parties; • make certain capital expenditures; • enter into certain transactions with affiliates; 20 • enter into certain leases and other material business agreements; • merge, dissolve, liquidate or consolidate; • dispose of certain assets, entity control or business locations; • make certain amendments to our organizational documents; • change lines of business; • comply with governmental and regulatory authorities; and • transfer or sell assets.
While we may pursue FDA or foreign regulatory authorities marketing authorizations or notified bodies certifications for certain indications for any medical devices we seek to market, the FDA or foreign regulatory authorities or notified bodies may deny those requests, require additional expensive clinical data to support any additional indications or impose limitations on the intended use of any authorized or certified product as a condition of marketing authorization or certification.
While 40 we may pursue FDA or foreign regulatory authorities marketing authorizations or notified bodies certifications for certain indications for any medical devices we seek to market, the FDA or foreign regulatory authorities or notified bodies may deny those requests, require additional expensive clinical data to support any additional indications or impose limitations on the intended use of any authorized or certified product as a condition of marketing authorization or certification.
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 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.
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.
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.
Any claims of patent or other intellectual property infringement against us, even those without merit, could: • be expensive and time-consuming to defend and result in payment of significant damages to third parties; • force us to stop making or selling products and services that incorporate the intellectual property; • require us to redesign, reengineer or rebrand our products and services, product candidates and technologies; • require us to enter into royalty agreements that would increase the costs of our products and services; • require us to indemnify third parties pursuant to contracts in which we have agreed to provide indemnification for intellectual property infringement claims; • divert the attention of our management and other key employees; and • result in our customers or potential customers deferring or limiting their purchase or use of the affected products and services impacted by the claims until the claims are resolved; any of which could have a material adverse effect on our business, financial condition and results of operations.
Any claims of patent or other intellectual property infringement against us, even those without merit, could: • be expensive and time-consuming to defend and result in payment of significant damages to third parties; • force us to stop making or selling products and services that incorporate the intellectual property; • require us to redesign, reengineer or rebrand our products and services, product candidates and technologies; • require us to enter into royalty agreements that would increase the costs of our products and services; • require us to indemnify third parties pursuant to contracts in which we have agreed to provide indemnification for intellectual property infringement claims; • divert the attention of our management and other key employees; and • result in our customers or potential customers deferring or limiting their purchase or use of the affected products and services until the claims are resolved; any of which could have a material adverse effect on our business, financial condition and results of operations.
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.
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.
We may not be successful in securing additional patents on commercially desirable improvements, that such additional patents will adequately protect our innovations or offset the effect of expiring patents, or that competitors will not be able to design around our patents. In addition, third parties may challenge our issued patents through procedures such as Inter-Partes Review (“IPR”).
We may not be successful in securing additional patents on commercially desirable improvements, whether such additional patents will adequately protect our innovations or offset the effect of expiring patents, or that competitors will not be able to design around our patents. In addition, third parties may challenge our issued patents through procedures such as Inter-Partes Review (“IPR”).
We have not always been successful in detecting these attacks, and while we have not experienced any significant loss or material expense as a result of these cybersecurity attacks or other information security breaches, there can be no assurance that we will not suffer additional attacks or incur material financial consequences or expense in the future.
We have not always been successful in detecting these attacks, and while we have not experienced any significant loss or material expense as a result of these cybersecurity attacks or other information security breaches, there can be no assurance that we will not suffer additional attacks or incur material financial or legal consequences or expense in the future.
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.
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.
Other states, including Connecticut and Nevada, have also passed consumer health 47 data laws, and given the increased focus on the use of health data by entities that are not subject to HIPAA, additional states are expected to pass consumer health privacy laws. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.
Other states, including Connecticut and Nevada, have also passed consumer health data laws, and given the increased focus on the use of health data by entities that are not subject to HIPAA, additional states are expected to pass consumer health privacy laws. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.
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.
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.
In recent years, Congress, the Department of Justice, the Office of Inspector General of the Department of Health and Human Services, and the Department of Defense have issued subpoenas and other requests for information to medical device manufacturers, primarily related to financial arrangements with healthcare providers, regulatory compliance and marketing and product promotional practices.
In recent years, Congress, the Department of Justice, the Office of Inspector General of the Department of Health and Human Services, and the Department of Defense have issued subpoenas and other requests for information to medical 45 device manufacturers, primarily related to financial arrangements with healthcare providers, regulatory compliance and marketing and product promotional practices.
Any recalls of our products or enforcement actions would divert managerial and financial resources and could have an adverse effect on our financial condition and results of operations. In addition, given our dependence upon consumer perceptions, any negative publicity associated with any recalls could materially and adversely affect our business, financial condition, results of operations and growth prospects.
Any recalls of our products or enforcement actions would divert managerial and financial resources and could have an adverse effect on our financial condition and results of operations. In addition, given our dependence upon consumer perceptions, any negative 46 publicity associated with any recalls could materially and adversely affect our business, financial condition, results of operations and growth prospects.
Such changes include limiting the use of first-party and third-party cookies and related tracking technologies, such as mobile advertising identifiers, and other changes that limit our ability to collect information that allows us to attribute consumer actions on advertisers’ websites to the effectiveness of advertising campaigns run by us.
Such changes include limiting the use of first-party and third-party cookies and related tracking technologies, such as mobile advertising identifiers, and other changes that limit our ability to track consumer actions and collect information that allows us to attribute consumer actions on advertisers’ websites to the effectiveness of advertising campaigns run by us.
Search engine marketing includes both paid website visitor acquisition on a cost-per-click basis and visitor acquisition on an unpaid basis, often referred to as organic or algorithmic search. One method we employ to acquire visitors via organic search is commonly known as search engine optimization (“SEO”).
Search engine marketing includes both paid website visitor acquisition on a cost-per-click basis and visitor acquisition on an unpaid basis, often referred to as organic or algorithmic search. 29 One method we employ to acquire visitors via organic search is commonly known as search engine optimization (“SEO”).
If a security breach or other incident were to result in the unauthorized access to or unauthorized use, disclosure, release or other processing of personal information, it may be necessary to notify individuals, governmental authorities, supervisory bodies, the media and other parties pursuant to privacy and security laws.
If a security breach or other incident were to result in the unauthorized access to or unauthorized use, disclosure, release or other processing of personal information, it may be necessary to notify 32 individuals, governmental authorities, supervisory bodies, the media and other parties pursuant to privacy and security laws.
If the MHRA determines that we are not permitted to continue supporting previously-sold Owlet Smart Sock monitors notwithstanding the fact that we have ceased 41 marketing and sales of Owlet Smart Sock in the UK, we may have to cease support of the product in the UK and could be subject to enforcement action.
If the MHRA determines that we are not permitted to continue supporting previously-sold Owlet Smart Sock monitors notwithstanding the fact that we have ceased marketing and sales of Owlet Smart Sock in the UK, we may have to cease support of the product in the UK and could be subject to enforcement action.
For example, we rely on cloud services and bespoke software services provided by Ayla Networks for our Dream Sock and Smart Sock products to support the transfer of data to the cloud and back to us and the user. Additionally, we rely on the data transfer services of ThroughTek to enable video viewing access for the Owlet Cam.
For example, we rely on cloud services and bespoke software services provided by Ayla Networks for our Dream Sock and Smart Sock products to support the transfer of data to the cloud and back to us and the user. Additionally, we rely on the data transfer services of ThroughTek to enable video viewing access for Owlet Cam and Dream Sight.
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.
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.
Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on third parties does not relieve us of our regulatory responsibilities.
Nevertheless, we are responsible for ensuring that each of our studies is conducted in 38 accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on third parties does not relieve us of our regulatory responsibilities.
If we are unable to adequately protect our intellectual property rights or if they are challenged or otherwise prove ineffective, we may be required to undertake costly product redesign efforts or discontinue certain products, or our competitive position may be harmed.
If we are unable to adequately protect our intellectual property rights or if they are 47 challenged or otherwise prove ineffective, we may be required to undertake costly product redesign efforts or discontinue certain products, or our competitive position may be harmed.
We are subject to a number of risks related to the credit extended by our manufacturing providers. Our manufacturers extend credit to us and may revoke that credit. We use that credit to scale operations and increase production of our products.
We are subject to a number of risks related to the credit extended by our manufacturing providers. 33 Our manufacturers extend credit to us and may revoke that credit. We use that credit to scale operations and increase production of our products.
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 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.
If any of our retail customers were to file for bankruptcy, we could be 30 unable to collect amounts owed to us and could even be required to repay certain amounts paid to us prior to the bankruptcy filing.
If any of our retail customers were to file for bankruptcy, we could be unable to collect amounts owed to us and could even be required to repay certain amounts paid to us prior to the bankruptcy filing.
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.
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.
If the FDA changes its policy or concludes that the marketing of any of our products is not in accordance with current policies, regulations or statutory requirements, or if the FDA changes its applicable policies or if changes are introduced to applicable laws or regulations, we may be required to seek clearance or approval or other marketing authorization for these products through the 510(k), de novo classification or PMA processes, may not be permitted to continue marketing these products until marketing authorization is obtained, or may be the subject of regulatory enforcement actions or recalls.
If the FDA changes its policy or concludes that the marketing of any of our products is not in accordance with current policies, regulations or statutory requirements, or if the FDA changes its applicable policies or if changes are introduced to applicable laws or regulations, we may be required to seek clearance or other marketing authorization for these products through the 510(k) or de novo classification processes, may not be permitted to continue marketing these products until marketing authorization is obtained, or may be the subject of regulatory enforcement actions or recalls.
If either Apple or Google changes its standard terms and conditions for maintaining or approving mobile applications in a way that is detrimental to us or decide to remove our mobile applications from their stores, it will be much more difficult or may not be possible for users to install the mobile applications and receive updates to the mobile applications, and our current or future products may cease to function as intended.
If either Apple or Google changes its standard terms and conditions for maintaining or approving mobile applications in a way that is detrimental to us or decide to remove our mobile applications from their stores, it will be much more difficult or may not be possible for users to install the mobile applications and receive updates to the mobile applications, and our current or future products may cease to function as intended or at all.
In some circumstances, such adverse events could also cause delays in obtaining marketing authorizations of new products or the imposition of post-market requirements. 33 Our products must be manufactured, and services provided, in accordance with federal, state and foreign regulations, and we or any of our suppliers could be forced to recall products or terminate production or services if we fail to comply with these regulations.
In some circumstances, such adverse events could also cause delays in obtaining marketing authorizations of new products or the imposition of post-market requirements. 30 Our products must be manufactured, and services provided, in accordance with federal, state and foreign regulations, and we or any of our suppliers could be forced to recall products or terminate production or services if we fail to comply with these regulations.
We have implemented new distribution channels 39 for BabySat with durable medical equipment distributors, and continue to explore distribution options with healthcare institutions and other healthcare payor and provider channels.
We have implemented new distribution channels for BabySat with durable medical equipment distributors, and continue to explore distribution options with healthcare institutions and other healthcare payor and provider channels.
If we or any of our third party contractors fail to comply with applicable regulations, the data generated in our studies may be deemed unreliable and the FDA and other regulatory authorities or bodies may require us to perform additional nonclinical and clinical studies before issuing any marketing authorizations or other certifications for any medical device products we seek to market.
If we or any of our third party contractors fail to comply with applicable regulations, the data generated in our studies may be deemed unreliable and the FDA and other regulatory authorities or bodies may require us to perform additional non-clinical and clinical studies before issuing any marketing authorizations or other certifications for any medical device products we seek to market.
If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or other regulators, our products may not be able to be lawfully marketed. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel.
If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or other regulators, our products may not be able to be lawfully marketed. In addition, we have limited control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel.
Our relationships with customers, physicians and third-party payors may be subject, directly or indirectly, to federal, state and foreign healthcare fraud and abuse laws, false claims laws, and other healthcare laws and regulations. If we or our employees, independent contractors, consultants, commercial partners, or vendors violate these laws, we could face substantial penalties.
Our relationships with customers, physicians and third-party payors may be subject to federal, state and foreign healthcare fraud and abuse laws, false claims laws, and other healthcare laws and regulations. If we or our employees, independent contractors, consultants, commercial partners, or vendors violate these laws, we could face substantial penalties.
Any inability to meaningfully enforce our intellectual property rights could harm our ability to compete and reduce demand for our products and services.
Any inability to 49 meaningfully enforce our intellectual property rights could harm our ability to compete and reduce demand for our products and services.
We may not be able to adequately predict consumer trends and may be unable to adjust our production in a timely manner. We market our products directly to consumers in the U.S. and a select number of international countries. If demand increases, we will be required to increase production proportionally.
We may not be able to adequately predict consumer trends and may be unable to adjust our production in a timely manner. We market our products directly to consumers in the U.S. and a select number of international countries. If demand increases, we are required to increase production proportionally.
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.
With respect to Dream Sock, Dream Sight, Owlet Cam and Dream Duo, 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.
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.
This material weakness did not result in any adjustments to the consolidated financial statements. 26 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.
We and our third party contractors may be required to comply with Good Clinical Practice (“GCP”) requirements and Good Laboratory Practice requirements which are regulations and guidelines enforced by the FDA and other regulatory authorities for the conduct of certain clinical and nonclinical studies, respectively.
We and our third party contractors may be required to comply with Good Clinical Practice (“GCP”) requirements and Good Laboratory Practice requirements which are regulations and guidelines enforced by the FDA and other regulatory authorities for the conduct of certain clinical and non-clinical studies, respectively.
In addition, the government may assert that claim includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the false claims statute; • HIPAA, which created new federal civil and criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up by any trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of, or payment for, healthcare benefits, items or services.
In addition, the government may assert that claims for items or services that result from a violation of the federal Anti-Kickback Statute constitute a false or fraudulent claim for purposes of the false claims statute; • HIPAA, which created new federal civil and criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up by any trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of, or payment for, healthcare benefits, items or services.
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.
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 retail marketing, paid search, digital display advertising, email marketing, affiliate marketing, social media, and select print advertising.
In the U.S., unless an exemption applies, any medical device that we seek to market in the U.S. must first undergo the FDA’s premarket review pursuant to the FDCA, and must receive the FDA’s marketing authorization either via clearance of a 510(k) premarket notification, de novo classification, or approval of a PMA application, depending on the type of device.
In the U.S., unless an exemption applies, any medical device that we seek to market in the U.S. must first undergo the FDA’s premarket review pursuant to the FDCA, and must receive the FDA’s marketing authorization either via clearance of a 510(k) premarket notification or, de novo classification, depending on the type of device.
Development, maintenance, and use of artificial intelligence technologies may not be beneficial to our business, and may result in the poor performance of our products, services and business, as well as damage our reputation and the reputations of our customers, or cause us to incur liability resulting from the violation of laws or contracts to which we are a party.
Development, maintenance, and use of AI technologies may not be beneficial to our business, and may result in the poor performance of our products, services and business, as well as damage our reputation and the reputations of our customers, or cause us to incur liability resulting from the violation of laws or contracts to which we are a party.
Any real or perceived errors, failures, bugs or other vulnerabilities discovered in our products or services could result in 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, fines or regulatory actions, overpayments or underpayments, any of which could harm our enrollment rates.
Any real or perceived errors, failures, bugs or other vulnerabilities discovered in our products or services could result in 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, fines or regulatory actions, overpayments or underpayments, any of which could harm our business.
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.
We are heavily dependent on customers who use our products and services, in particular Dream Sock and Dream Sight, 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.
In addition, we may not be able to hire new employees quickly enough to meet our needs and fluctuations in the price of our common stock may make it more difficult or costly to use equity compensation to motivate, incentivize and retain our employees.
In addition, we may not be able to hire new employees quickly enough to meet our needs or effectively integrate new hires, and fluctuations in the price of our common stock may make it more difficult or costly to use equity compensation to motivate, incentivize and retain our employees.
Any litigation to which we are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal, or in payments of substantial monetary damages or fines, or we may decide to settle this or other lawsuits on similarly unfavorable terms, which could have a material adverse effect on our business, financial condition, results of operations or stock price.
Any litigation to which we are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal, or in payments of substantial monetary damages or fines, or we may decide to settle such lawsuits on unfavorable terms, which could have a material adverse effect on our business, financial condition, results of operations or stock price.
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 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.
Provisions in our certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition involving us that our stockholders may consider favorable. For example, our certificate of incorporation and bylaws authorize our Board to issue up to 100 million shares of preferred stock.
Provisions in our certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition involving us that our stockholders may consider favorable. For example, our certificate of incorporation and bylaws authorize our Board to issue up to 10.7 million shares of preferred stock.
We may also fail to recognize that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of the implant system.
We may also fail to recognize that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of the product.
We could encounter delays if a clinical trial is suspended or terminated due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
We could encounter delays if a clinical trial is suspended or terminated due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.
Obtaining FDA or foreign regulatory authorities marketing authorization or notified bodies certification would permit us to promote the subject medical device only for the specific use(s) cleared, approved, certified or otherwise authorized by the FDA, foreign regulatory authorities or notified bodies. Use of a medical device outside its authorized or certified indications is known as “off-label” use.
Obtaining FDA or foreign regulatory authorities marketing authorization or notified bodies certification generally permits us to promote the subject medical device only for the specific use(s) cleared, approved, certified or otherwise authorized by the FDA, foreign regulatory authorities or notified bodies. Use of a medical device outside its authorized or certified indications is known as “off-label” use.
If we are unable to successfully address these risks and challenges as we encounter them, our business, results of operations, and financial condition would be adversely affected. Our failure to achieve or maintain profitability could negatively impact the value of our common stock and warrants.
If we are unable to successfully address these risks and challenges as we encounter them, our business, results of operations, and financial condition would be adversely affected. Our failure to achieve or maintain profitability could negatively impact the value of our securities.
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.
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; 39 • product recalls or seizures; • adverse publicity; • orders for device repair, replacement or refund; • interruptions of production, including as a result of manufacturing holds or other regulatory action; and • operating restrictions.
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.
The market price of our common stock and warrants has been and may continue to be volatile and subject to wide fluctuations due to a variety of factors, including: • market conditions in our industry or the broader stock market; • actual or anticipated fluctuations in our operating results or future prospects; 51 • 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 us; • 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, to the extent applicable, the 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; • 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; and • other factors listed under this "Risk Factors" section.
In addition, our contractors are not our employees, and except for remedies available to us under our agreements with them, we cannot control whether or not they devote sufficient time and resources to our development programs.
In addition, our contractors are not our employees, and except for remedies available to us under our agreements with them, we have limited ability to control whether or not they devote sufficient time and resources to our development programs.
Similar 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.
Similar 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.
For example, in the U.S., using our marketing authorizations for BabySat and/or Dream Sock, our competitors may develop products that the FDA determines are substantially equivalent to our products and may use our products as predicate devices to obtain 510(k) clearances for their competing products.
For example, in the U.S., using our marketing authorizations for BabySat and/or Dream Sock, our competitors may develop products that the FDA determines are substantially equivalent to our products and may use our products as predicate devices to obtain 510(k) clearances for their competing products or otherwise obtain authorizations that facilitate entry into the market.
Item 1A. Risk Factors. Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. If any such risks and uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely affected.
Item 1A. Risk Factors. Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business, some of which are described below. If any such risks and uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely affected.
Each of these material weaknesses resulted in immaterial adjustments within the year ended December 31, 2022 and the accrued liabilities material weakness resulted in immaterial adjustments within the year ended December 31, 2024. • We did not design and maintain effective controls over the accounting for debt and equity arrangements, including convertible preferred stock, warrant arrangements, and stock-based compensation modifications.
Each of these material weaknesses resulted in immaterial adjustments within the year ended December 31, 2022, and the accrued liabilities material weakness resulted in immaterial adjustments within the year ended December 31, 2024, and in the interim periods ended March 31, 2025 and June 30, 2025. • We did not design and maintain effective controls over the accounting for debt and equity arrangements, including convertible preferred stock, warrant arrangements, and stock-based compensation modifications.
As of December 31, 2024, $7.5 million in aggregate principal amount was outstanding in term loans under the Loan Facility Agreement and $6.3 million in aggregate principal amount was outstanding under the asset-based revolving credit facility under the ABL Credit Agreement. See Part II. Item 8. "Financial Statements and Supplementary Data - Note 7," included in this Report.
As of December 31, 2025, $7.0 million in aggregate principal amount was outstanding in term loans under the Loan Facility Agreement and $6.9 million in aggregate principal amount was outstanding under the asset-based revolving credit facility under the ABL Credit Agreement. See Part II. Item 8. "Financial Statements and Supplementary Data - Note 7," included in this Report.
Additionally, any patents issued to us may be challenged, narrowed, invalidated, held unenforceable or circumvented, or may not be sufficiently broad to prevent third parties from producing competing products and services similar in design to our products and services. In recent years, the U.S.
Additionally, any patents issued to us may be challenged, narrowed, invalidated, held unenforceable or circumvented, or may not be sufficiently broad to prevent third parties from producing competing products and services similar in design to our products and services.
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.
In November 2023, we received de novo authorization from the FDA for Dream Sock. The BabySat clearance was the first medical device marketing authorization we have received.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeKey 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.
Biggest changeKey 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. 55 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.
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.
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 information, see Part I.
Removed
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.

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 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.
Biggest changeItem 2. Properties. Our corporate headquarters are located at a leased site in Lehi, Utah. 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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor 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
Biggest changeFor 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. 56 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 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.
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 Forms 8-K and 8-K/A filed with the SEC on August 7, 2025, and August 13, 2025, there were no unregistered sales of equity securities for the year ended December 31, 2025.
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.
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 2, 2026, there were 64 holders of record.
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
Purchases of Equity Securities We did not repurchase shares of our common stock during the three months ended December 31, 2025. Item 6. [Reserved] 57

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. 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.
Biggest changeIncome tax provision consists primarily of U.S. federal and state income taxes related to the tax jurisdictions in which we conduct business. 59 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, 2025 2024 Revenues $ 105,708 $ 78,056 Cost of revenues 52,175 38,748 Gross profit 53,533 39,308 Operating expenses: General and administrative 29,245 33,967 Sales and marketing 18,473 15,760 Research and development 14,076 9,801 Total operating expenses 61,794 59,528 Operating loss (8,261) (20,220) Other income (expense): Interest expense, net (3,418) (1,630) Common stock warrant liability adjustment (26,571) 9,293 Other income (expense), net (1,400) 75 Total other income (expense), net (31,389) 7,738 Loss before income tax provision (39,650) (12,482) Income tax provision (28) (54) Net loss and comprehensive loss $ (39,678) $ (12,536) Accretion on convertible preferred stock (3,392) (4,926) Accretion on redeemable common stock (84) (25) Allocation of net loss attributable to redeemable common stockholders 1,299 270 Net loss attributable to redeemable common stockholders $ (1,215) $ (245) Net loss attributable to common stockholders $ (41,855) $ (17,217) Net loss per share attributable to redeemable common stockholders Basic and diluted $ (2.16) $ (1.42) Weighted-average number of shares outstanding used to compute net loss per share attributable to redeemable common stockholders Basic and diluted 562,500 172,131 Net loss per share attributable to common stockholders Basic and diluted $ (2.31) $ (1.57) Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders Basic and diluted 18,093,925 10,951,270 60 Revenues Year Ended December 31, Change (dollars in thousands) 2025 2024 $ % Revenues $ 105,708 $ 78,056 $ 27,652 35.4 % The increase was primarily due to higher sales of Dream Sock and Dream Duo products, reflecting an increase in consumer demand as compared to the prior year.
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.
Sales and Marketing. 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.
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.
Funding Requirements 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 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.
The accompanying consolidated financial statements have been prepared on a going concern basis and 64 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.
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.
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 consolidated balance sheets. Estimated discounts that have been earned but not yet honored or paid out are included as a reduction to accounts receivable, net.
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.
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.
Revenues are reduced in the accompanying consolidated statements of operations and comprehensive loss for anticipated sales returns, discounts, and allowances, based on our analysis of historical sales returns and contractual discounts and allowances.
Revenues are reduced in the accompanying consolidated statements of operations and comprehensive income (loss) for anticipated sales returns, discounts, and allowances, based on our analysis of historical sales returns and contractual discounts and allowances.
Redeemable Shares In connection with the Loan Facility Agreement with WTI, we issued redeemable common shares to WTI. The shares issued to WTI contain an embedded redemption option (the “Redemption Option”) such that WTI may elect to force the Company to redeem the shares that are no longer subject to forfeiture for a price of $8.40 per share.
Redeemable Shares In connection with the Loan Facility Agreement with WTI, we issued redeemable common shares to WTI. The shares issued to WTI contain an embedded redemption option (the “Redemption Option”) such that WTI may elect to force us to redeem the shares that are no longer subject to forfeiture for a price of $8.40 per share.
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.
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, platforms and services, including quality and clinical testing. Other Income (Expense) Interest Income (Expense), Net.
The redeemable common shares were initially recorded at their fair value determined using a combination of the value of the Company's stock on the date of issuance and the theoretic value of a stand-alone put option valued using 79 a Black-Scholes put option model discounted by a present value factor that considers the credit spread between an estimated Company specific discount rate and the risk-free rate of return.
The redeemable common shares were initially recorded at their fair value determined using a combination of the value of the our stock on the date of issuance and the theoretic value of a stand-alone put option valued using a Black-Scholes put option model discounted by a present value factor that considers the credit spread between an estimated company specific discount rate and the risk-free rate of return.
Deferred revenues represent advance payments received from customers prior to performance by the Company. Sales taxes collected from customers which are remitted to governmental authorities are not included in revenue and are reflected as a liability in the accompanying consolidated balance sheets. Inventory Inventory includes material and third-party assembly costs.
Deferred revenues represent advance payments received from customers prior to performance by us. Sales taxes collected from customers which are remitted to governmental authorities are not included in revenue and are reflected as a liability in the accompanying consolidated balance sheets. 66 Inventory Inventory includes material and third-party assembly costs.
Our non-GAAP financial measures should not be considered as an alternative to net loss as a measure of financial performance or any other performance measure derived in accordance with GAAP, and should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
Adjusted EBITDA should not be considered as an alternative to net loss as a measure of financial performance or any other performance measure derived in accordance with GAAP and should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
The usage period is estimated based on historical user activity and ranges from 10 to 27 months. The Company records revenues net of sales tax and variable consideration such as discounts and customer returns. Payment terms are short-term in nature and, as a result, do not have any significant financing components.
The usage period is estimated based on historical user activity and ranges from 10 to 27 months. We record revenues net of sales tax and variable consideration such as discounts and customer returns. Payment terms are short-term in nature and, as a result, do not have any significant financing components.
We use such non-GAAP financial measures as internal measures of business operating performance and as performance measures for benchmarking against our peers and competitors. We believe our presentation of adjusted EBITDA provides a meaningful perspective of the underlying operating performance of our current business and enables investors to better understand and evaluate our historical and prospective operating performance.
We use this non-GAAP financial measure as an internal measure of business operating performance and as performance measures for benchmarking against our peers and competitors. We believe our presentation of adjusted EBITDA provides a meaningful perspective of the underlying operating performance of our current business and enables investors to better understand and evaluate our historical and prospective operating performance.
The Company records estimated reductions to revenue in the form of variable consideration for customer sales programs, returns, and incentive offerings including rebates, markdowns, promotions, and volume-based incentives. Consideration payable to a customer, such as cooperative advertising and pricing promotions to retailers and distributors, is recorded as a reduction to revenue.
We record estimated reductions to revenue in the form of variable consideration for customer sales programs, returns, and incentive offerings including rebates, markdowns, promotions, and volume-based incentives. Consideration payable to a customer, such as cooperative advertising and pricing promotions to retailers and distributors, is recorded as a reduction to revenue.
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.
Mark to market adjustment to recognize the change in fair value of common stock warrant liabilities. 58 Other Income (Expense), Net. Other income (expense), net includes our net gain (loss) on foreign exchange transactions and transaction costs. Income Tax Provision.
Substantially all of our inventory consisted of finished goods as of December 31, 2024 and 2023.
Substantially all of our inventory consisted of finished goods as of December 31, 2025 and 2024.
Changes in the estimated fair value of the warrants are recognized as a non-operating gain or loss in the consolidated statements of operations and comprehensive loss. See Part II. Item 8. “ Financial Statements and Supplementary Data - Note 10 ” included in this Report for further discussion on fair value considerations.
Changes in the estimated fair value of the warrants are recognized as a non-operating gain or loss in the consolidated statements of operations and comprehensive income (loss). See Part II. Item 8. “Financial Statements and Supplementary Data - Note 10” included in this Report for further discussion on fair value considerations.
Similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosure and have certain other reduced disclosure obligations.
Smaller reporting companies are able to provide simplified executive compensation disclosure and have certain other reduced disclosure obligations.
Adjusted EBITDA is not a recognized terms under GAAP, and our presentation of this non-GAAP measures does not replace the presentation of our financial results in accordance with GAAP.
Adjusted EBITDA is not a recognized term under GAAP, and our presentation of this non-GAAP measure does not replace the presentation of our financial results in accordance with GAAP.
Arrangements with Multiple Performance Obligations The Company enters into contracts that have multiple performance obligations. Product sales include three performance obligations. The first performance obligation is the delivery of hardware and embedded firmware essential to the functionality of the hardware. Embedded firmware allows the hardware to recognize inputs to the hardware and provide appropriate outputs.
Arrangements with Multiple Performance Obligations We enter into contracts that have multiple performance obligations. Product sales include two performance obligations. The first performance obligation is the delivery of hardware and embedded firmware essential to the functionality of the hardware. Embedded firmware allows the hardware to recognize inputs to the hardware and provide appropriate outputs.
Adjusted EBITDA is defined as net loss adjusted for income tax provision, interest expense, net, depreciation and amortization, impairment of intangible assets related to internally developed software, common stock warrant liability adjustments, stock-based compensation, transaction costs, charges related to certain legal matters, and restructuring costs.
Adjusted EBITDA is defined as net loss adjusted for income tax provision, interest expense, net, depreciation and amortization, impairment of intangible assets, common stock warrant liability adjustment, stock-based compensation, transaction costs, charges related to certain legal matters, net of insurance loss recovery related to certain legal matters, and restructuring costs.
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.
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, litigation settlement costs, insurance loss recovery, and facilities rent.
Revenues allocated to the implied right to access the mobile application and the implied right to receive, on a when-and-if-available basis, future unspecified application upgrades, added features, and bug fixes, are recognized on a straight-line basis over the estimated usage period of the underlying hardware product.
This generally occurs upon delivery of the product to a third-party carrier. Revenues allocated to the implied right to access the mobile application and the implied right to receive, on a when-and-if-available basis, future unspecified application upgrades, added features, and bug fixes, are recognized on a straight-line basis over the estimated usage period of the underlying hardware product.
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.
Cash Flows The following table summarizes our cash flow (in thousands): Year Ended December 31, 2025 2024 Net cash used in operating activities $ (10,792) $ (11,209) Net cash used in investing activities (943) (761) Net cash provided by financing activities 32,115 16,044 Net change in cash, cash equivalents, and restricted cash $ 20,380 $ 4,074 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.
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.
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. Components of Operating Results Revenues We recognize revenue primarily from products and the associated mobile applications.
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 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.
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.
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.
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.
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. Overview Owlet is a leading pediatric health platform and the only company globally to offer U.S.
Revenues allocated to the delivery of the hardware and embedded firmware essential to the functionality of the hardware represent substantially all of the arrangements consideration and reflect the Company’s best estimate of the selling price if it was sold regularly on a stand-alone basis.
Revenues allocated to the delivery of the hardware and embedded firmware essential to the functionality of the hardware represent substantially all of the arrangements consideration and reflect the our best estimate of the selling price if it was sold regularly on a stand-alone basis. SSP for the mobile application is estimated based on relevant market and consumer data.
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.
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 platform costs, and reserves for excess and obsolete inventory. Cost of revenues associated with Owlet360 mainly consist of app store distribution fees.
See the reconciliation tables below for additional information regarding the non-GAAP financial measure included herein (in thousands): 71 Year Ended December 31, Reconciliation of GAAP to Non-GAAP Measures 2024 2023 GAAP net Loss $ (12,536) $ (32,901) Income tax provision (54) (10) Interest expense, net 1,630 3,191 Depreciation and amortization 452 842 Impairment of intangible assets related to internally developed software 1,873 — Common stock warrant liability adjustment (9,293) 924 Stock-based compensation 8,633 9,933 Transaction costs 394 1,710 Charges related to certain legal matters 6,169 — Restructuring costs 764 — Non-GAAP Adjusted EBITDA $ (1,968) $ (16,311) Liquidity and Capital Resources We fund our operations primarily with proceeds from issuances of our convertible preferred stock, issuances of our common stock, borrowings under our loan facilities, issuances of convertible promissory notes, and sales of our products and services.
See the reconciliation table below for additional information regarding the non-GAAP financial measure included herein (in thousands): 62 Year Ended December 31, (dollars in thousands) 2025 2024 GAAP net loss $ (39,678) $ (12,536) Income tax provision 28 54 Interest expense, net 3,418 1,630 Depreciation and amortization 521 452 Impairment of intangible assets 46 1,897 Common stock warrant liability adjustment 26,571 (9,293) Stock-based compensation 9,348 8,633 Transaction costs 1,432 394 Charges related to certain legal matters, net of insurance loss recovery related to certain legal matters 282 6,169 Restructuring costs — 764 Non-GAAP Adjusted EBITDA $ 1,968 $ (1,836) Liquidity and Capital Resources We fund our operations primarily with proceeds from issuances of our equity securities, borrowings under our loan facilities, and sales of our products and services.
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.
Actual results may differ from these estimates under different assumptions or conditions. 65 Sales Returns, Rebates, Discounts, and Allowances Our 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.
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.
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.
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.
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, with a growing minority portion of revenues being generated from subscriptions to our Owlet360 service.
The Company allocates the transaction price to each performance obligation based on a relative standalone selling price (“SSP”). The Company’s process for determining its SSP considers multiple factors, including an adjusted 78 market assessment and consumer behaviors, and varies depending on the facts and circumstances of each performance obligation.
Our process for determining our SSP considers multiple factors, including an adjusted market assessment and consumer behaviors, and varies depending on the facts and circumstances of each performance obligation.
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.
Financed Insurance Premiums In 2025, we renewed a number of its insurance policies and entered into several new short-term commercial premium finance agreements with premium finance companies totaling $886 to be paid within one year, accruing interest at a weighted average rate of 8.4%.
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.
We intend to use the net proceeds of this offering to support continued commercialization and research and development, and for general corporate purposes. • 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 $10,590 and in February 2024, we consummated a sale of preferred stock and warrants to purchase our common stock for a gross purchase price of $9,250. • 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.
As of December 31, 2024, we had $20,245 of cash on hand.
As of December 31, 2025, we had $35,461 of cash on hand.
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 have historically experienced recurring operating losses, with the exception of the third quarter of 2025, and have generated negative cash flows from operations, resulting in an accumulated deficit of $307,873 as of December 31, 2025, and during the year ended December 31, 2025 and 2024, we had negative cash flows from operations of $10,792 and $11,209, respectively.
The second performance obligation is the implied right to connect the downloadable mobile application, provided free of charge, to the hardware, which enables users to view and access real-time data outputs. The third performance obligation is the implied right to receive, on a when-and-if-available basis, future unspecified application upgrades, added features, and bug fixes relating to the product’s essential firmware.
The second performance obligation is the implied right to connect the downloadable mobile application, provided free of charge, to the hardware, which enables users to view and access real-time data outputs.
(collectively “WTI” or “Lenders”) for a term loan facility of up to $15,000 (the “WTI Loan Facility”) and on September 11, 2024, we entered into an asset-based revolving credit facility (the “ABL Line of Credit”) with ABL OPCO LLC, as the lender, with a maximum revolving commitment amount of up to $15,000, with an additional $5,000 revolving commitment available on September 11, 2025.
On September 11, 2024, we entered into a credit and security agreement (the “Credit Agreement”) for an asset-based revolving credit facility (the “ABL Line of Credit”) with the financial institutions party thereto from time to time as lenders (collectively, the “Lenders”) and ABL OPCO LLC, a Delaware limited liability company, in its capacity as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), with a maximum revolving commitment amount of up to $15,000, with an additional $5,000 revolving commitment available on September 11, 2025.
Revenues allocated to the hardware and embedded firmware are recognized at the time of product delivery, provided the other conditions for revenue recognition have been met. This generally occurs upon delivery of the product to a third-party carrier.
Revenues are recognized at the time the related performance obligation is satisfied by transferring control of the promised good or service to a customer. Revenues allocated to the hardware and embedded firmware are recognized at the time of product delivery, provided the other conditions for revenue recognition have been met.
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.
Interest income (expense), net consists of interest incurred on our outstanding borrowings and amortization of debt financing costs. Interest income consists of interest earned on our money market funds and other cash and cash equivalents. Common Stock Warrant Liability Adjustment.
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.
The increase in gross margin was primarily due to higher revenue, favorable product mix, improved fixed cost absorption, and lower direct product and fulfillment costs. To a lesser extent, the increase in gross margin was also attributed to the growth in revenue from subscriptions to our Owlet360 service.
Smaller Reporting Company We also qualify as a “smaller reporting company” as defined under the Exchange Act and may continue to be a smaller reporting company even after we are no longer an emerging growth company.
Smaller Reporting Company We qualify as a “smaller reporting company” as defined under the Exchange Act.
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.
Operating Activities For the year ended December 31, 2025, net cash used in operating activities was $10,792 as compared to net cash used in operating activities of $11,209 in the prior year.
The Credit Agreement provides for an asset-based revolving credit facility (the “ABL Line of Credit”) in a maximum principal amount of up to $15,000, which amount shall increase to $20,000 on September 11, 2025 (the “Revolving Commitment”). The ABL Line of Credit is collateralized by substantially all of our assets.
As of December 31, 2025, we were in compliance with all covenants under the WTI Loan Facility. ABL Line of Credit We, as guarantor, and our wholly-owned subsidiary, OBCI, as borrower, maintain an asset-based revolving credit facility (the “ABL Line of Credit”) with a maximum principal amount of up to $20,000 (the “Revolving Commitment”).
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.
Cost of Revenues and Gross Profit Year Ended December 31, Change (dollars in thousands) 2025 2024 $ % Cost of revenues $ 52,175 $ 38,748 $ 13,427 34.7 % Gross margin 50.6 % 50.4 % The increase in cost of revenues was primarily due to the increase in product sales.
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 August 7, 2025, we entered into a privately negotiated Exchange Agreement with certain Holders of our Series A Warrants and Series B Warrants, in which the Holders agreed to exchange with us their Series A Warrants relating to an aggregate of 7,215,737 shares of common stock and, if applicable, their Series B Warrants relating to an aggregate of 1,799,021 shares of common stock, for an aggregate of 5,426,429 of newly issued shares of common stock.
On December 31, 2024 , there was $6,263 of outstanding borrowings, which is recorded as a current liability on the consolidated balance sheets based on our intent and ability to repay the outstanding borrowings in the near term. The remaining borrowing base availability under the Credit Agreement was $79 as of December 31, 2024.
The ABL Line of Credit is collateralized by substantially all of our assets. As of December 31, 2025, there was $6,932 of outstanding borrowings under the ABL Line of Credit, and the remaining borrowing base availability was $9,897 as of December 31, 2025. As of December 31, 2025, we were in compliance with all covenants under the Credit Agreement.
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.
Sales and Marketing Year Ended December 31, Change (dollars in thousands) 2025 2024 $ % Sales and marketing $ 18,473 $ 15,760 $ 2,713 17.2 % The increase was driven primarily by higher marketing expenses and increases in headcount related expenses, including salaries, commissions, bonus, and benefits.
Removed
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.
Added
FDA-cleared and internationally medically-certified wearable pediatric monitors for home use. By delivering hospital-grade technology through a consumer-friendly interface, we bridge the critical gap between clinical care and the home.
Removed
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”).
Added
To a lesser extent, growth in revenue generated from subscriptions to our Owlet360 service, which launched in January 2025, also contributed to the increase.
Removed
In May 2023, we submitted a business plan advising the NYSE of the definitive actions we had taken as of the date of that submission and were planning on taking in order to bring us into compliance with NYSE continued listing standards within 18 months of receipt of the NYSE Notification.
Added
These contributions to gross margin expansion were partially offset by the impact of tariffs, which was more pronounced during the second half of 2025.
Removed
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.
Added
General and Administrative Year Ended December 31, Change (dollars in thousands) 2025 2024 $ % General and administrative $ 29,245 $ 33,967 $ (4,722) (13.9 %) The decrease was driven primarily by the absence of significant litigation settlement costs and impairment charges recognized in 2024, which did not recur in the current period, and lower severance expenses.
Removed
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”).
Added
The decrease was partially offset by increases in headcount related expenses, including salaries, bonus, and benefits, as well as increased stock-based compensation, driven by a notable increase in our common stock price during 2025.
Removed
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.
Added
Research and Development Year Ended December 31, Change (dollars in thousands) 2025 2024 $ % Research and development $ 14,076 $ 9,801 $ 4,275 43.6 % The increase was driven primarily by increased investment in research and development, particularly with product development, quality, and clinical testing, and increases in headcount related expenses, including salaries, bonus, and benefits. 61 Other Income (Expense), Net Year Ended December 31, Change (dollars in thousands) 2025 2024 $ % Interest expense, net $ (3,418) $ (1,630) $ (1,788) 109.7 % Common stock warrant liability adjustment $ (26,571) $ 9,293 $ (35,864) (385.9 %) Other income (expense), net $ (1,400) $ 75 $ (1,475) (1966.7 %) The increase in interest expense was driven primarily by interest and amortization of debt financing costs related to our current term loan facility and asset-based revolving credit facility, which were entered into in September 2024, as well as the absence of a gain on interest for forgiveness of interest accrued related to an arrangement with a significant vendor that was fully settled in September 2024, partially offset by the absence of termination fees related to the SVB term loan that was terminated in September 2024.
Removed
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.
Added
Fluctuations in our common stock warrant liability adjustment resulted from an increase in our common stock price, and the related increase in the fair value of liability-classified common stock warrants. As described further in Note 9, most of these common stock warrants were exchanged for common shares in October 2025.
Removed
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.
Added
Changes in other income (expense) were driven primarily by transaction costs related to the Warrant Exchange as discussed in Note 9. Common Stock Issuance, Redeemable Common Stock, Common Stock Warrants, and Convertible Preferred Stock, within the Notes to Consolidated Financial Statements included elsewhere in this Report.
Removed
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.
Added
Non-GAAP Adjusted EBITDA We have included a certain non-GAAP financial measure in this Annual Report, adjusted EBITDA.
Removed
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.
Added
As of December 31, 2025, we had cash and cash equivalents of $35,461, and additional availability of $9,897 on our line of credit. We believe our existing cash and cash equivalent balances, cash flows from operations, and committed credit lines will be sufficient to meet our long-term working capital and capital expenditure needs for at least the next 12 months.
Removed
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.
Added
Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, our planned sales and marketing activities, the timing of new product introductions, market acceptance of our products, and overall economic conditions.
Removed
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.
Added
To the extent that current and anticipated sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in increased dilution to our stockholders.
Removed
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.
Added
If we were to incur additional debt financing, it would result in increased debt service obligations and the instruments governing such debt could require additional operating and financing covenants that would restrict our operations.
Removed
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.
Added
Tariffs announced in 2025 have adversely impacted our cost of goods sold and gross margins and may continue to affect cash flows if elevated tariff rates persist.

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