Owlet Inc

Previous wording

General and Administrative. General and administrative expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for finance and accounting, legal, human resources and administrative executives and employees; third-party legal, accounting, and other professional services; corporate travel and entertainment; depreciation and amortization of property and equipment; and facilities rent.

Current wording

General and Administrative. General and administrative expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for finance and accounting, legal, human resources and administrative executives and employees; third-party legal, accounting, customer service, software, and other professional services; corporate travel and entertainment; depreciation and amortization of property and equipment; and facilities rent.

Previous wording

Revenues increased by $4.0 million, or 37.4%, from $10.7 million for the three months ended March 31, 2023 to $14.8 million for the three months ended March 31, 2024. The increase was primarily due to higher sales of Owlet Sock products, reflecting an increase in consumer demand and sell-through as compared to the same period in the prior year.

Current wording

Revenues increased by $7.6 million, or 58.2%, from $13.1 million for the three months ended June 30, 2023 to $20.7 million for the three months ended June 30, 2024. The increase was primarily due to higher sales of Owlet Sock products, reflecting an increase in consumer demand across all sales channels as compared to the same period in the prior year.

Previous wording

Cost of revenues increased by $1.6 million, or 24.6%, from $6.6 million for the three months ended March 31, 2023 to $8.2 million for the three months ended March 31, 2024. The increase was primarily due to the increase in product sales. Gross margin increased from 38.7% for the three months ended March 31, 2023 to 44.4% for the three months ended March 31, 2024 primarily due to higher revenue and lower direct product and fulfillment costs.

Current wording

Cost of revenues increased by $2.6 million, or 33.0%, from $7.9 million for the three months ended June 30, 2023 to $10.4 million for the three months ended June 30, 2024. The increase was primarily due to the increase in product sales. Gross margin increased from 40.0% for the three months ended June 30, 2023 to 49.5% for the three months ended June 30, 2024 primarily due to higher revenue and lower direct product and fulfillment costs.

Previous wording

General and administrative expense decreased by $2.8 million, or 31.8%, from $8.9 million for the three months ended March 31, 2023 to $6.1 million for the three months ended March 31, 2024. The decrease was driven primarily by lower spend on outside consulting services and lower cost of corporate insurance as compared to the same period in the prior year.

Current wording

General and administrative expense decreased by $2.7 million, or 17.7%, from $15.0 million for the six months ended June 30, 2023 to $12.3 million for the six months ended June 30, 2024. The decrease was driven primarily by lower spend on outside consulting services, including lower transactions costs, and lower cost of corporate insurance due to more favorable rates as compared to the same period in the prior year.

Previous wording

Sales and marketing expense increased by $0.5 million, or 16.2%, from $3.4 million for the three months ended March 31, 2023 to $3.9 million for the three months ended March 31, 2024. The increase was driven by higher compensation expense due to increased sales and marketing headcount and sales commissions as compared to the same period in the prior year.

Current wording

Sales and marketing expense increased by $0.8 million, or 25.1%, from $3.1 million for the three months ended June 30, 2023 to $3.9 million for the three months ended June 30, 2024. The increase was driven by higher spend on digital advertising and retail marketing, as well as higher compensation expense due to increased sales and marketing headcount and sales commissions as compared to the same period in the prior year.

Previous wording

Research and development expense decreased by $0.5 million, or 18.8%, from $2.9 million for the three months ended March 31, 2023 to $2.3 million for the three months ended March 31, 2024. The decrease was primarily driven by lower compensation expense from reduced research and development headcount.

Current wording

Research and development expense decreased by $0.4 million, or 14.2%, from $2.7 million for the three months ended June 30, 2023 to $2.4 million for the three months ended June 30, 2024. The decrease was primarily driven by lower compensation expense from reduced research and development headcount as a result of the restructuring actions initiated in 2022.

Previous wording

For the three months ended March 31, 2024, we recognized a gain of $9.2 million as compared to a gain of $1.9 million for the same period in the prior year resulting from a larger decrease in the fair value of common stock warrants outstanding. Additionally, the gain recognized for the three months ended March 31, 2024 included the decrease in fair value of the newly issued Series B Warrants, which were not outstanding during the same period in the prior year.

Current wording

For the three months ended June 30, 2024, we recognized a gain of $1.0 million as compared to a loss of $1.6 million for the same period in the prior year resulting from a decrease in the fair value of common stock warrants outstanding. Additionally, the gain recognized for the three months ended June 30, 2024 included the decrease in fair value of the newly issued Series B Warrants, which were not outstanding during the same period in the prior year.

Previous wording

Interest expense decreased by $2.7 million, from $2.8 million for the three months ended March 31, 2023 to $0.2 million for the three months ended March 31, 2024. As described in Note 5, Commitments and Contingencies, to the condensed consolidated financial statements included elsewhere in this Report, we entered an agreement with a significant vendor to pay $3.0 million of interest over 36 months with respect to past due payables. The present value of the future payments was expensed and included within interest expense, net on the condensed consolidated statements of operations for the three months ended March 31, 2023.

Current wording

Interest expense decreased by $2.7 million, from $2.9 million for the six months ended June 30, 2023 to $0.1 million for the six months ended June 30, 2024. As described in Note 5, Commitments and Contingencies, to the condensed consolidated financial statements included elsewhere in this Report, we entered into an agreement with a significant vendor to pay $3.0 million of interest over 36 months with respect to past due payables. The present value of the future payments was expensed and included within interest expense, net on the condensed consolidated statements of operations for the six months ended June 30, 2023.

Previous wording

We have historically funded 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. As of March 31, 2024, we had cash and cash equivalents of $18.4 million.

Current wording

We have historically funded 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. As of June 30, 2024, we had cash and cash equivalents of $15.4 million.

Previous wording

Since inception, we have experienced recurring operating losses and generated negative cash flows from operations, resulting in an accumulated deficit of $252.4 million as of March 31, 2024. During the three months ended March 31, 2024 and 2023, we had negative cash flows from operations of $3.3 million and $9.4 million, respectively. As of March 31, 2024, we had $18.4 million of cash on hand.

Current wording

Since inception, we have experienced recurring operating losses and generated negative cash flows from operations, resulting in an accumulated deficit of $253.5 million as of June 30, 2024. During the six months ended June 30, 2024 and 2023, we had negative cash flows from operations of $6.7 million and $16.8 million, respectively. As of June 30, 2024, we had $15.4 million of cash on hand.

Previous wording

As of March 31, 2024, we were in violation of the adjusted EBITDA covenant for the three months ended December 31, 2023 under the LSA. On May 10, 2024, we entered into a waiver agreement with SVB to waive this covenant violation.

Current wording

On May 10, 2024, the Company entered into a waiver agreement with SVB to waive a covenant violation of the adjusted EBITDA covenant for the three months ended December 31, 2023.

Previous wording

The LSA provides for a $10.0 million revolving line of credit (the “SVB Revolver”) as of March 31, 2024. The SVB Revolver is an asset-based lending facility subject to borrowing base availability, which is limited by specified percentages of eligible accounts receivable and eligible inventory. Borrowing base availability can be impacted based upon the period's eligible accounts receivable and eligible inventory, and may be significantly lower than the full $10.0 million line of credit. As of March 31, 2024 the borrowing base availability was $7.3 million.

Current wording

The LSA provides for a $10.0 million revolving line of credit (the “SVB Revolver”) as of June 30, 2024. The SVB Revolver is an asset-based lending facility subject to borrowing base availability, which is limited by specified percentages of eligible accounts receivable and eligible inventory. Borrowing base availability can be impacted based upon the period's eligible accounts receivable and eligible inventory, and may be significantly lower than the full $10.0 million line of credit. As of June 30, 2024 the borrowing base availability was $9.7 million.

Previous wording

The LSA also provided for an $8.5 million term loan (the “Term Loan”), replacing the term loans made under the previous agreement, of which $3.5 million was outstanding as of March 31, 2024. The Term Loan amortizes with equal monthly installments of $0.5 million and matures on October 1, 2024 (the "Term Loan Maturity Date").

Current wording

The LSA also provided for an $8.5 million term loan (the “Term Loan”), replacing the term loans made under the previous agreement, of which $2.0 million was outstanding as of June 30, 2024. The Term Loan amortizes with equal monthly installments of $0.5 million and matures on October 1, 2024 (the "Term Loan Maturity Date").

Previous wording

In July 2023, we renewed our corporate directors & officers and employment liability policies and entered into a new short-term commercial premium finance agreement with First Insurance Funding totaling $1.4 million to be paid in eleven equal monthly payments, accruing interest at a rate of 9.03%. As of March 31, 2024, the remaining principal balance on the combined financed insurance premiums was $0.5 million.

Current wording

In July 2023, we renewed our corporate directors & officers and employment liability policies and entered into a new short-term commercial premium finance agreement with First Insurance Funding totaling $1.4 million to be paid in eleven equal monthly payments, accruing interest at a rate of 9.0%. As of June 30, 2024, the remaining principal balance on the combined financed insurance premiums was $0.1 million.

Previous wording

For the three months ended March 31, 2024, net cash used in operating activities was $3.3 million as compared to net cash used in operating activities of $9.4 million in the prior year. The change in operating cash flows was primarily driven by a lower operating loss, which was $5.7 million for the three months ended March 31, 2024 as compared to an operating loss of $11.0 million for the same period in the prior year.

Current wording

For the six months ended June 30, 2024, net cash used in operating activities was $6.7 million as compared to net cash used in operating activities of $16.8 million in the prior year. The change in operating cash flows was primarily driven by a lower operating loss, which was $8.0 million for the six months ended June 30, 2024 as compared to an operating loss of $17.7 million for the same period in the prior year.

Previous wording

For the three months ended March 31, 2024 and 2023, we used substantially no cash for investing activities, due to the prioritization of research and development projects in correlation with the restructuring actions taken during the fiscal year 2022.

Current wording

For the six months ended June 30, 2024 and 2023, we used substantially no cash for investing activities, due to the prioritization of research and development projects in correlation with the restructuring actions taken during the fiscal year 2022.

Previous wording

For the three months ended March 31, 2024 and 2023, net cash provided by financing activities was $5.2 million and $22.9 million, respectively. The decrease is primarily driven by the higher amount proceeds raised by the Series A preferred stock offering in February 2023 as compared to the proceeds raised by the Series B preferred stock offering in February 2024.

Current wording

For the six months ended June 30, 2024 and 2023, net cash provided by financing activities was $5.6 million and $30.3 million, respectively. The decrease is primarily driven by the higher amount proceeds raised by the Series A preferred stock offering in February 2023 as compared to the proceeds raised by the Series B preferred stock offering in February 2024. Additionally, the Company made payments on the Term Loan totaling $3.0 million during the six months ended June 30, 2024, compared to payments totaling $1.5 million during the six months ended June 30, 2023.