UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.WASHINGTON, DC 20549

FORM 10-Q


(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20202023

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to

____
Commission File No.Number: 001-39516



SANDBRIDGE ACQUISITION CORPORATIONOWLET, INC.
(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Charter)



Owlet Logomark (JPG).jpg


Delaware85-1615012
Delaware85-1615012
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3300 North Ashton Boulevard, Suite 300
Lehi, Utah
84043
(Address of principal executive offices)(Zip Code)

1999 Avenue of the Stars, Suite 2088
Los Angeles, CA 90067
(Address of Principal Executive Offices, including zip code)
(424) 221-5743
(Registrant’s telephone number, including area code)code: (844) 334-5330

N/A
(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading
Symbol(s)
Name of each exchange
on which registered
Units, each consisting of one share of Class A common stock,Common Stock, $0.0001 par value and one-half of one redeemable warrantper shareSBG.UOWLTNew York Stock Exchange LLC
Shares of Class A common stock included as part of the unitsSBGNew York Stock Exchange LLC
Redeemable warrants included as part of the units, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50SBG WSNew York Stock Exchange LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyx
Emerging growth companyx

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
1



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):. Yes No

As of November 13, 2020, 23,000,00010, 2023, the registrant had 8,568,796 shares of Class A common stock, $0.0001 par value and 5,750,000 shares of Class B common stock, $0.0001 par value, were issued andper share, outstanding.



2
SANDBRIDGE ACQUISITION CORPORATION


Quarterly Report on Form 10-Q
TABLE OF CONTENTS

Table of Contents


Page
PART I.
PART 1 – FINANCIAL INFORMATIONItem 1.
Item 1.1
1
2
3
4
5
14
16
Item 4.16
PART II – OTHER INFORMATIONItem 4.
PART II.
17
17
17
17
17
17
Item 6.17
19

Exhibits
PART 1 – FINANCIAL INFORMATION

ITEM 1.
32CONDENSED FINANCIAL STATEMENTS

3
SANDBRIDGE ACQUISITION CORPORATION


CONDENSED BALANCE SHEETCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
SEPTEMBER 30, 2020This Quarterly Report on Form 10-Q (this “Report”) contains certain statements that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). All statements other than statements of historical facts contained in this Report, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
(Unaudited)In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Report and are subject to a number of risks, uncertainties and assumptions described under the sections in this Report and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "Form 10-K") entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Report and our Form 10-K. These forward-looking statements are subject to numerous risks, including, without limitation, the following:


ASSETS   
Current assets   
Cash 
$
1,438,624
 
Prepaid expenses  
302,955
 
Total Current Assets  
1,741,579
 
     
Cash and marketable securities held in trust account  
230,006,152
 
Total Assets $231,747,731 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities    
Accrued expenses 
$
16,667
 
Accrued offering costs  
35,025
 
Total Current Liabilities  
51,692
 
     
Deferred underwriting fee payable  
8,050,000
 
Total Liabilities  8,101,692 
     
Commitments and contingencies    
     
Class A common stock subject to possible redemption, 21,864,603 shares at $10.00 per share redemption value  
218,646,030
 
     
Stockholders’ Equity    
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding  
 
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 1,135,397 shares issued and outstanding (excluding 21,864,603 shares subject to possible redemption)  
114
 
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 5,750,000 shares issued and outstanding  
575
 
Additional paid-in capital  
5,029,475
 
Accumulated deficit  
(30,155
)
Total Stockholders’ Equity  5,000,009 
Total Liabilities and Stockholders’ Equity $231,747,731 

•    our limited operating history;
•    our history of net losses and our ability to achieve or maintain profitability;
our ability to implement processes, procedures and operations necessary to market and sell medical devices
our ability to grow and manage growth profitably, which may be affected by, among other things, our capital resources, inflation, recession, competition and the impact of discretionary consumer spending, retail sector and demographic trends, employee availability and other economic, business and regulatory conditions;
our ability to enhance future operating and financial results and continue as a going concern;
our ability to obtain additional financing in the future;
risks associated with our current loan and debt agreements, including compliance with debt covenants, restrictions on our access to capital, the impact of our overall debt levels and our ability to generate sufficient future cash flows from operations to meet our debt service obligations and operate our business;
our business strategies and plans and our ability to pursue and implement our strategic initiatives, reduce costs and grow revenues, as well as innovate existing products, continue developing new products, meet evolving customer demands and adapt to changes in consumer preferences and retail trends;
the regulatory pathway for our products and communications from regulators, including the FDA and similar regulators outside of the United States, as well as legal proceedings, regulatory disputes and governmental inquiries;
our ability to acquire, defend and protect our intellectual property and satisfy regulatory requirements, including but not limited to laws and requirements concerning privacy and data protection, privacy or data breaches, data loss and other risks associated with our digital platform and technologies;
any defects in new products or enhancements to existing products;
our ability to obtain and maintain regulatory approval or certification for our products, and any related restrictions and limitations of any approved or certified product;
expectations regarding developments with regulatory bodies, and the timeline for related submissions by us and decisions by the regulatory bodies and notified bodies (including UK approved bodies);
our ability to hire, retain, manage and motivate employees, including key personnel;
our ability to upgrade and maintain our information technology systems;
changes in and our compliance with laws and regulations applicable to our business;
our ability to maintain our listing on The New York Stock Exchange ("NYSE"); and
the impact and disruption to our business, financial condition, results of operations, supply chain constraints and logistics due to economic and other conditions beyond our control, such as health epidemics
1


or pandemics, macro-economic uncertainties, social unrest, hostilities, natural disasters or other catastrophic events.
These risks and other important factors, including those discussed in this Report, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and
uncertainties. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included elsewhere in this Report are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements included elsewhere in this Report. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements included elsewhere in this Report, they may not be predictive of results or developments in future periods.
Any forward-looking statement that we make in this Report speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Report. For all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act.

As used in this Report, unless otherwise stated or the context otherwise requires: “we,” “us,” “our,” “Owlet,” the “Company,” and similar references refer to Owlet, Inc. and its subsidiaries, “common stock” refers to our Class A common stock.

2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Owlet, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)

AssetsSeptember 30, 2023December 31, 2022
Current assets:
Cash and cash equivalents$15,165 $11,231 
Accounts receivable, net of allowance for doubtful accounts of $2,115 and $3,013, respectively9,418 15,958 
Inventory11,038 18,515 
Prepaid expenses and other current assets1,905 5,558 
Total current assets37,526 51,262 
Property and equipment, net496 1,108 
Right of use assets, net1,290 2,260 
Intangible assets, net2,219 2,279 
Other assets755 1,195 
Total assets$42,286 $58,104 
Liabilities, Convertible Preferred Stock, and Stockholders’ Deficit
Current liabilities:
Accounts payable$18,365 $30,432 
Accrued and other expenses10,132 19,984 
Current portion of deferred revenues908 1,148 
Line of credit4,9334,685 
Current portion of long-term debt6,76410,353 
Total current liabilities41,102 66,602 
Long-term debt, net500 — 
Noncurrent lease liabilities72 1,162 
Common stock warrant liabilities24,178 724 
Other long-term liabilities1,474 251 
Total liabilities67,326 68,739 
Commitments and contingencies (Note 5)
Series A convertible preferred stock, $0.0001 par value, 10,741,071 shares authorized as of September 30, 2023 and December 31, 2022; 30,000 and 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively (liquidation preference of $30,000)6,912 — 
Stockholders’ equity (deficit):
Common stock, $0.0001 par value, 107,142,857 shares authorized as of September 30, 2023 and December 31, 2022; 8,563,301 and 8,242,009 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.
Additional paid-in capital216,780 212,122 
Accumulated deficit(248,733)(222,758)
Total stockholders’ deficit(31,952)(10,635)
Total liabilities, convertible preferred stock, and stockholders’ deficit$42,286 $58,104 
The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.




SANDBRIDGE ACQUISITION CORPORATION


CONDENSED STATEMENTS OF OPERATIONSOwlet, Inc.
(Unaudited)Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)
  
Three Months
Ended
September 30,
  
For the Period
from June 23,
2020
(Inception)
Through
September 30,
 
  2020  2020 
General and administrative expenses 
$
36,307
  
$
36,307
 
Loss from operations  (36,307)  (36,307)
         
Other income:        
Interest earned on marketable securities held in trust account  
6,152
   
6,152
 
         
Loss before provision for income taxes  
(30,155
)
  
(30,155
)
Provision for income taxes  
   
 
Net loss $(30,155
)
 $(30,155)
         
Weighted average shares outstanding of Class A redeemable common stock  
23,000,000
   
23,000,000
 
Basic and diluted income per share, Class A 
$
  
$
 
         
Weighted average shares outstanding of Class B non-redeemable common stock  
5,750,000
   
5,750,000
 
Basic and diluted net loss per share, Class B $(0.01) $(0.01)

(unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenues$9,182 $17,359 $33,006 $57,246 
Cost of revenues5,853 12,746 20,291 37,254 
Gross profit3,329 4,613 12,715 19,992 
Operating expenses:
General and administrative5,448 9,673 20,438 29,442 
Sales and marketing3,335 9,695 9,766 31,049 
Research and development2,426 7,066 8,061 23,381 
Total operating expenses11,209 26,434 38,265 83,872 
Operating loss(7,880)(21,821)(25,550)(63,880)
Other (expense) income:
Interest expense, net(134)(419)(2,998)(847)
Common stock warrant liability adjustment2,395 2,867 2,679 4,802 
Other (expense) income, net(22)(101)115 
Total other (expense) income, net2,239 2,454 (420)4,070 
Loss before income tax provision(5,641)(19,367)(25,970)(59,810)
Income tax benefit (provision)— (5)(28)
Net loss and comprehensive loss(5,641)(19,362)(25,975)(59,838)
Accretion on Series A convertible preferred stock(1,319)— (3,298)— 
Net loss attributable to common stockholders$(6,960)$(19,362)$(29,273)$(59,838)
Net loss per share attributable to common stockholders, basic and diluted$(0.84)$(2.42)$(3.56)$(7.55)
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted8,310,965 7,983,948 8,212,268 7,928,263 
The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.


SANDBRIDGE ACQUISITION CORPORATION


CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITYOwlet, Inc.
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 ANDCondensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)
FOR THE PERIOD JUNE 23, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020(in thousands, except share and per share amounts)
(Unaudited)(unaudited)


  
Class A
Common Stock
  
Class B
Common Stock
  
Additional
Paid-in
  Accumulated  
Total
Stockholders’
 
  Shares  Amount  Shares  Amount  Capital  Deficit  Equity 
Balance – June 23, 2020 (Inception)  
  
$
   
  
$
  
$
  
$
  
$
 
                             
Net loss  
   
   
   
   
   
   
 
                             
Balance – June 30, 2020  
   
   
   
   
   
   
 
                             
Issuance of Class B common stock to Sponsor  
   
   
5,750,000
   
575
   
24,425
   
   
25,000
 
                             
Sale of 23,000,000 Units, net of underwriting discounts  
23,000,000
   
2,300
   
   
   
217,048,894
   
   
217,051,194
 
                             
Sale of 6,600,000 Private Placement Warrants  
   
   
   
   
6,600,000
   
   
6,600,000
 
                             
Common stock subject to possible redemption  
(21,864,603
)
  
(2,186
)
  
   
   
(218,643,844
)
  
   
(218,646,030
)
                             
Net loss  
   
   
   
   
   
(30,155
)
  
(30,155
)
                             
Balance – September 30, 2020  1,135,397  $114   5,750,000  $575  $5,029,475  $(30,155
)
 $5,000,009 


Series A Convertible Preferred StockCommon Stock
SharesAmountSharesAmountAdditional Paid-in
Capital
Accumulated
Deficit
Total Stockholders'
 Equity (Deficit)
Balance as of December 31, 2021— $— 8,071,183 $$198,612 $(143,422)$55,191 
Issuance of common stock upon exercise of stock options— — 6,343 4848
Issuance of common stock for restricted stock units vesting— — 22,935 
Stock-based compensation— — — 3,3363,336
Net loss— — — — (28,758)(28,758)
Balance as of March 31, 2022— $— 8,100,461 $$201,996 $(172,180)$29,817 
Issuance of common stock upon exercise of stock options— — 29,866 — 166 — 166 
Issuance of common stock for restricted stock units vesting— — 16,454 — — — — 
Stock-based compensation— — — — 3,273 — 3,273 
Net loss— — — (11,718)(11,718)
Balance as of June 30, 2022— $— 8,146,781 $$205,435 $(183,898)$21,538 
Issuance of common stock upon exercise of stock options— — 21,786 — 41 — 41 
Issuance of common stock for restricted stock units vesting— — 17,328 — — — — 
Issuance of common stock for employee stock purchase plan— — 17,849��— 359 — 359 
Stock-based compensation— $— — $— $1,843 $— $1,843 
Net loss— $— — $— $(19,362)$(19,362)
Balance as of September 30, 2022— $— 8,203,744 $$207,678 $(203,260)$4,419 










5



Owlet, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Continued)
(in thousands, except share and per share amounts)
(unaudited)
Series A Convertible Preferred StockCommon Stock
SharesAmountSharesAmountAdditional Paid-in
Capital
Accumulated
Deficit
Total Stockholders'
 Equity (Deficit)
Balance as of December 31, 2022— — 8,242,009 212,122 (222,758)(10,635)
Issuance of Series A convertible preferred stock30,000 3,867 — — — — — 
Preferred stock issuance costs— (253)— — — — — 
Accretion on Series A convertible preferred stock— 653 — — (653)— (653)
Issuance of SVB Warrants (Note 4)— — — — 43 — 43 
Issuance of common stock upon exercise of stock options— — 18,054 — 55 — 55 
Issuance of common stock for restricted stock units vesting— — 115,257 — — — — 
Issuance of common stock for employee stock purchase plan— — 15,104 — 101 — 101 
Stock-based compensation— — — — 2,789 — 2,789 
Net loss— — — — — (11,867)(11,867)
Balance as of March 31, 202330,000 4,267 8,390,424 214,457 (234,625)(20,167)
Accretion on Series A convertible preferred stock— 1,326 — — (1,326)— (1,326)
Issuance of common stock for restricted stock units vesting— — 51,259 — — — — 
Stock-based compensation— — — — 2,644 — 2,644 
Net loss— — — — — (8,467)(8,467)
Balance as of June 30, 202330,000 5,593 8,441,683 215,775 $(243,092)$(27,316)
Accretion on Series A convertible preferred stock— 1,319 — — (1,319)$(1,319)
Issuance of common stock for restricted stock units vesting— — 93,525 — — $— $— 
Issuance of common stock for employee stock purchase plan— — 28,093 — 114 $— $114 
Stock-based compensation— — — — 2,210 $— $2,210 
Net loss— — — — — $(5,641)$(5,641)
Balance as of September 30, 202330,000 6,912 8,563,301 216,780 $(248,733)$(31,952)

The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.

SANDBRIDGE ACQUISITION CORPORATION


CONDENSED STATEMENT OF CASH FLOWSOwlet, Inc.
FOR THE PERIOD JUNE 23, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020Condensed Consolidated Statements of Cash Flows
(Unaudited)(in thousands)

(unaudited)
Cash Flows from Operating Activities:   
Net loss 
$
(30,155
)
Adjustments to reconcile net loss to net cash used in operating activities:    
Interest earned on marketable securities held in trust account  
(6,152
)
Changes in operating assets and liabilities:    
Prepaid expenses  
(302,955
)
Accrued expenses  
16,667
 
Net cash used in operating activities  (322,595)
     
Cash Flows from Investing Activities:    
Investment of cash into Trust Account  
(230,000,000
)
Net cash used in investing activities  (230,000,000
)
     
Cash Flows from Financing Activities:    
Proceeds from issuance of Class B common stock to Sponsor  
25,000
 
Proceeds from sale of Units, net of underwriting discounts paid  
225,796,000
 
Proceeds from sale of Private Placement Warrants  
6,600,000
 
Proceeds from promissory note—related party  
250,000
 
Repayment of promissory note – related party  
(250,000
)
Payment of offering costs  
(659,781
)
Net cash provided by financing activities  231,761,219 
     
Net Change in Cash  1,438,624 
Cash – Beginning of period  
 
Cash – End of period $1,438,624 
     
Non-Cash financing activities:    
Initial classification of common stock subject to possible redemption 
$
218,674,370
 
Change in value of common stock subject to possible redemption 
$
(28,340
)
Deferred underwriting fee payable 
$
8,050,000
 
Deferred offering costs included in accrued offering costs 
$
35,025
 

Nine Months Ended September 30,
20232022
Cash flows from operating activities
Net loss$(25,975)$(59,838)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization706 1,062 
Stock-based compensation7,643 8,415 
Common stock warrant liability adjustment(2,679)(4,802)
Amortization of right of use assets1,016 930 
Other adjustments, net(91)1,210 
Changes in assets and liabilities:
Accounts receivable6,705 (10,691)
Prepaid expenses and other assets4,093 6,068 
Inventory7,573 (6,161)
Accounts payable and accrued and other expenses(19,997)(6,901)
Other, net(945)(847)
Net cash used in operating activities(21,951)(71,555)
Cash flows from investing activities
Purchase of property and equipment(11)(480)
Purchase of intangible assets(19)(923)
Net cash used in investing activities(30)(1,403)
Cash flows from financing activities
Proceeds from issuance of preferred stock, net of $1,513 of paid transaction costs28,487 — 
Proceeds from short-term borrowings73,290 35,892 
Payments of short-term borrowings(74,631)(30,929)
Proceeds from long-term borrowings500 — 
Payments of long-term borrowings(2,000)(4,500)
Other, net269 615 
Net cash provided by (used in) financing activities25,915 1,078 
Net change in cash and cash equivalents3,934 (71,880)
Cash and cash equivalents at beginning of period11,231 95,054 
Cash and cash equivalents at end of period$15,165 $23,174 
The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements.



SANDBRIDGE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)


NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONSOwlet, Inc.

Notes to Condensed Consolidated Financial Statements
Sandbridge Acquisition Corporation (the “Company”) was incorporated (in Delaware on June 23, 2020. The Company was formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).

The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stagethousands, except share and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of September 30, 2020, the Company had not commenced any operations. All activity for the period from June 23, 2020 (inception) through September 30, 2020 related to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

The registration statement for the Company’s Initial Public Offering was declared effective on September 14, 2020. On September 17, 2020 the Company completed the Initial Public Offering of 23,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriters of their over-allotment option in the amount of 3,000,000 Units, at $10.00 per Unit, generating gross proceeds of $230,000,000, which is described in Note 3.

Simultaneously with the closing of the Initial Public Offering, the Company completed the sale of 6,600,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Sandbridge Acquisition Holdings LLC (the “Sponsor”), generating gross proceeds of $6,600,000, which is described in Note 4.

Transaction costs amounted to $12,948,806, consisting of $4,204,000 in cash underwriting fees, $8,050,000 of deferred underwriting fees and $694,806 of other offering costs. In addition, as of September 30, 2020, cash of $1,438,624 was held outside of the Trust Account (as defined below) and is available for working capital purposes.

Following the closing of the Initial Public Offering on September 17, 2020, an amount of $230,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) located in the United States. The funds in the Trust Account will be invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below.

 Substantially all of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants are intended to be applied generally toward consummating a Business Combination, and the Company’s management has broad discretion to identify targets for such a potential Business Combination and over the specific application of the funds held in the Trust Account if and when such funds are properly released from the Trust Account. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination with one or more operating businesses or assets that together have an aggregate fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the Company’s signing a definitive agreement in connection with its initial Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires an interest in the target business or assets sufficient for it not to be required to register as an investment company under the Investment Company Act.

The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

SANDBRIDGE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

The Company will only proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by applicable law or stock exchange rules and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange rules, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5), and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or do not vote at all.

Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.

The Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

The Company will have until September 17, 2022, or such later date as a result of a stockholder vote to amend the Amended and Restated Certificate of Incorporation, to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share valueamounts)
(unaudited)
8


Note 1. Basis of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).Presentation

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (1) $10.00 per Public Share and (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable. This liability will not apply with respect to claims by a third party who executed a waiver of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

SANDBRIDGE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation and Principles of Consolidation


The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to theapplicable rules and regulations of the SEC forU.S. Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Accordingly, they doThe condensed consolidated balance sheet as of December 31, 2022, included herein, was derived from the audited consolidated financial statements as of that date, but does not include all the informationdisclosures including certain notes required by U.S. GAAP on an annual reporting basis. All intercompany transactions and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows.balances have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements includereflect all adjustments, consisting of a normal recurring nature, which areadjustments necessary for athe fair presentationstatement of the Company’s financial position, operating results of operations, and cash flows for the interim periods presented. All dollar amounts, except per share amounts, in the notes are presented in thousands, unless otherwise specified.


The accompanying unaudited condensed financial statements should be read in conjunction withCertain prior year amounts have been reclassified to conform to the Company’s final prospectus for its Initial Public Offering ascurrent period presentation.

Reverse Stock Split

On July 7, 2023, the Company filed with the SEC on September 16, 2020, as well asSecretary of State of the State of Delaware a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation (the “Charter Amendment”) to effect a one-for-14 reverse stock split (the “Reverse Stock Split”) of the Company’s Current Reportcommon stock and a reduction in the number of authorized shares of common stock and authorized but unissued shares of the Company’s preferred stock. The number of authorized shares of Common Stock was reduced from 1,000,000,000 shares to 107,142,857 shares, which reflects a reduction to 1.5 times the then current number of authorized shares of Common Stock, divided by the Reverse Stock Split ratio. The Reverse Stock Split also reduced the number of authorized shares of preferred stock from 100,000,000 shares to 10,741,071 shares, which reflects a reduction to 1.5 times the then current number of authorized but unissued shares of preferred stock, divided by the Reverse Stock Split ratio. The Reverse Stock Split became effective on Form 8-K filedJuly 7, 2023.

There was no net effect on total stockholders' equity, and the par value per share of our common stock remains unchanged at $0.0001 per share after the Reverse Stock Split. All references made to share or per share amounts in the accompanying condensed consolidated financial statements and applicable disclosures have been retroactively adjusted for all periods presented to reflect the applicable effects of the Reverse Stock Split and the reduction in the number of authorized shares of common stock and preferred stock effected by the Charter Amendment.

Risks and Uncertainties

In accordance with ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the SECCompany has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

Since inception, the Company has experienced recurring operating losses and generated negative cash flows from operations, resulting in an accumulated deficit of $248,733 as of September 30, 2023. During the nine months ended September 30, 2023 and 2022, we had negative cash flows from operations of $21,951 and $71,555, respectively. As of September 30, 2023, we had $15,165 of cash on hand.

Year over year declines in revenue, the low, current cash balance, recurring operating losses, and negative cash flows from operations since inception raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the accompanying condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements have been prepared on a going concern basis and accordingly, do not include any adjustments relating to the recoverability and classification of asset carrying amounts, or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

As the Company continues to address these financial conditions, management has undertaken the following actions:

As described further in Note 7, on February 17, 2023 the Company consummated a sale of newly issued preferred stock and warrants to purchase its common stock for aggregate gross proceeds of $30,000.

As described in Note 4, in March 2023 the Company further amended its financing arrangement with SVB, under which the principal payments on the term note were deferred until September 18, 2020. The interim results2023. This amendment also revised the financial covenants for future periods. As of September 30, 2023, the Company was in violation of its minimum adjusted EBITDA requirement for the three months ended September 30, 20202023 under the LSA. On November 13, 2023, the Company entered into a waiver and third amendment to the November 2022 LSA with SVB to, among other things, waive this covenant violation and to revise the adjusted EBITDA requirements for future periods.
9



During the period from June 23, 2020 (inception) through September 30, 2020 are not necessarily indicative of the results to be expected for the period endingyear ended December 31, 2020 or for any2022, the Company undertook restructuring actions, which significantly reduced employee headcount and reduced operating spend. This included the reduction of consulting and outside services, the reduction of marketing programs, and the prioritization of and sequencing of research and development projects.

We have not generated sufficient cash flows from operations to satisfy our capital requirements. There can be no assurance that the Company will generate sufficient future annual or interim periods.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptionscash flows from various reporting requirements that are applicableoperations due to other public companies that are not emerging growth companiespotential factors, including but not limited to not beinginflation, recession, or reduced demand for the Company’s products. If revenues further decrease from current levels, the Company 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. Failure to secure additional funding may require us to modify, delay or abandon some of our planned future development, or to otherwise enact further operating cost reductions, which could have a material adverse effect on our business, operating results, financial condition and ability to achieve our intended business objectives.

If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, financial condition and results of operations could be materially adversely affected. We also could be required to complyseek funds through arrangements with the independent registered public accounting firm attestation requirementspartners or others that may require us to relinquish rights or jointly own some aspects of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory voteour technologies, products or services that we would otherwise pursue on executive compensation and stockholder approval of any golden parachute payments not previously approved.our own.


Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt outmaintains its cash in bank deposit accounts which, at times, exceed federally insured limits. As of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparisonSeptember 30, 2023, substantially all of the Company’s cash was held with Silicon Valley Bank and Citibank, and exceeded federally insured limits. On March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. On March 12, 2023, the Secretary of the Treasury, the chair of the Federal Reserve Board and the chairman of the FDIC released a joint statement related to the FDIC’s resolution of the Silicon Valley Bank receivership, which provided that all depositors would have access to all their money starting March 13, 2023. As of the issuance date of these financial statements, all cash deposited by the Company with another public company which is neither an emerging growth company nor an emerging growth company whichSilicon Valley Bank, now a division of First Citizens Bank and Trust Company, has opted out of usingbeen accessible by the extended transition period difficult or impossible becauseCompany.
Note 2. Certain Balance Sheet Accounts

Inventory

Substantially all of the potential differences in accounting standards used.

UseCompany’s inventory consisted of Estimates

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future events. Accordingly, the actual results could differ significantly from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalentsfinished goods as of September 30, 2020.2023 and December 31, 2022.


7Property and Equipment, net


SANDBRIDGE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

Class A Common Stock Subject to Possible Redemption

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption is classified as a liability instrumentProperty and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the controlequipment consisted of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classifiedfollowing as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s controlof:

September 30, 2023December 31, 2022
Tooling and manufacturing equipment$2,632 $2,731 
Furniture and fixtures639 639 
Computer equipment348 660 
Software106 106 
Leasehold improvements35 29 
Total property and equipment3,760 4,165 
Less accumulated depreciation and amortization(3,264)(3,057)
Property and equipment, net$496 $1,108 

Depreciation and subject to occurrence of uncertain future events. Accordingly, at September 30, 2020, Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheet.

Offering Costs

Offering costs consist of underwriting, legal, accountingamortization expense on property and other costs incurred through the Initial Public Offering that are directly related to the Initial Public Offering. Offering costs amounting to $12,948,806 were charged to stockholders’ equity upon the completion of the Initial Public Offering.

Income Taxes

The Company follows the assetequipment was $146 and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of September 30, 2020, the Company had a deferred tax asset of approximately $7,600, which had a full valuation allowance recorded against it of approximately $7,600.

The Company’s currently taxable income primarily consists of interest income on the Trust Account. The Company’s general and administrative costs are generally considered start-up costs and are not currently deductible. During the three months ended September 30, 2020 and for the period from June 23, 2020 (inception) through September 30, 2020, the Company recorded no income tax expense. The Company’s effective tax rate for three months ended September 30, 2020 and for the period from June 23, 2020 (inception) through September 30, 2020 was approximately 0%.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

Net Income (Loss) per Common Share

Net income (loss) per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. The Company has not considered the effect of warrants sold in the Initial Public Offering and private placement to purchase 18,100,000 shares of Class A common stock in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.

The Company’s condensed statement of operations includes a presentation of income per share for common shares subject to possible redemption in a manner similar to the two-class method of income per share. Net income per common share, basic and diluted, for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account of $6,152$332 for the three months ended September 30, 2023 and September 30, 2022, respectively. For the three months ended September 30, 2023 and September 30, 2022, the Company allocated $58 and $210, respectively, of depreciation and amortization expense related to tooling and manufacturing equipment and software to cost of revenues.

10


Depreciation and amortization expense on property and equipment was $645 and $966 for the nine months ended September 30, 2023 and September 30, 2022, respectively. For the nine months ended September 30, 2023 and September 30, 2022, the Company allocated $388 and $608, respectively, of depreciation and amortization expense related to tooling and manufacturing equipment and software to cost of revenues.

Intangible Assets Subject to Amortization

Intangible assets were $2,219, net of accumulated amortization of $265 as of September 30, 2023 and $2,279, net of accumulated amortization of $206, as of December 31, 2022.

Capitalized software development costs were $1,873 on September 30, 2023 and December 31, 2022. The Company’s internally developed software capitalized within intangible assets on the balance sheet is still in development and not ready for general release. As such, the Company has not recognized any amortization for the three or nine months ended September 30, 2023 or 2022.

The Company did not recognize any impairment charges for intangible assets during the three or nine months ended September 30, 2023 or 2022.

Accrued and Other Expenses

On October 1, 2021, the Company received a Warning Letter, later corrected in an amendment to the letter dated October 5, 2021 (the “Warning Letter”), from the U.S. Food and Drug Administration (the “FDA”) regarding the Owlet Smart Sock. During the fourth quarter of 2021, the Company agreed with certain customers and retailers to accept returns of the Owlet Smart Sock and Owlet Monitor Duo.

Accrued and other expenses, among other things, included accrued sales returns of $1,224 and $6,756 as of September 30, 2023 and December 31, 2022, respectively. Accrued sales returns included $36 and $4,958 as of September 30, 2023 and December 31, 2022, respectively, for product returns related to the Warning Letter.


Changes in accrued warranty were as follows:
For the Three Months Ended
September 30,
20232022
Accrued warranty, beginning of period$591 $775 
Provision for warranties issued during the period47 157 
Settlements of warranty claims during the period(135)(118)
Accrued warranty, end of period$503 $814 

For the Nine Months Ended
September 30,
20232022
Accrued warranty, beginning of period$712 $661 
Provision for warranties issued during the period163 550 
Settlements of warranty claims during the period(372)(397)
Accrued warranty, end of period$503 $814 

Note 3. Deferred Revenues

Deferred revenues relate to performance obligations for which payments are received from customers prior to the satisfaction of the Company’s obligations to its customers. Deferred revenues primarily consist of amounts allocated to the mobile application, unspecified upgrade rights, and content, and are recognized over the service period of the performance obligations, which range from 5 to 27 months.

11


Changes in the total deferred revenues balance were as follows:

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Beginning balance$1,223 $1,379 $1,386 $1,235 
Deferral of revenues326 702 1,146 2,132 
Recognition of deferred revenues(533)(557)(1,516)(1,843)
Ending balance$1,016 $1,524 $1,016 $1,524 

The Company recognized $493 and $451 of revenue during the three months ended September 30, 2023 and 2022, respectively, that was included in the deferred revenue balance at the beginning of the respective period. The Company recognized $1,061 and $982 of revenue during the nine months ended September 30, 2023 and 2022, respectively, that was included in the deferred revenue balance at the beginning of the respective period.


Note 4. Long-Term Debt and Other Financing Arrangements

The following is a summary of the Company’s long-term indebtedness as of:

September 30, 2023December 31, 2022
Term note payable to SVB, maturing on October 1, 2024$6,500 $8,000 
Financed insurance premium7642,353
Total debt7,264 10,353 
Less: current portion(6,764)(10,353)
Total long-term debt, net$500 $— 

Third Amended and Restated Loan and Security Agreement

On November 23, 2022, the Company entered into the Third Amended and Restated Loan and Security Agreement (the “November 2022 LSA”) with Silicon Valley Bank, now a division of First Citizens Bank and Trust Company (“SVB”). The November 2022 LSA amended, restated and replaced in its entirety the prior Second Amended and Restated Loan and Security Agreement, dated April 22, 2020, and all prior amendments. On March 27, 2023, the Company entered into the first amendment to the November 2022 LSA with SVB (the “March 2023 Amendment”), which, among other revisions, (i) deferred certain payments of principal by the Company until September 1, 2023, (ii) had SVB waive certain stated events of default, (iii) expanded the eligibility of inventory and accounts that the Company can borrow against, and (iv) modified certain financial covenants required of the Company.

In connection with the March 2023 Amendment, the Company granted SVB a warrant to purchase 10,714 shares of the Company's common stock at a price of $5.32 per share, expiring on March 27, 2035 (the "SVB Warrants"). The warrant was valued at $43 and is classified as equity and included within additional paid-in capital on the condensed consolidated balance sheet. See Note 7, Convertible Preferred Stock and Common Stock Warrantsfor a summary of all common stock warrants currently outstanding.

On August 10, 2023, the period from June 23, 2020 (inception) throughCompany entered into the second amendment to the November 2022 LSA with SVB (the “August 2023 Amendment”) that clarified the calculation of the financial covenants under the agreement.

As of September 30, 2020 (net2023, the Company was in violation of applicable franchise and income taxes, limited to interest income, of approximately $6,000its minimum adjusted EBITDA requirement for the three months ended September 30, 20202023 under the LSA. On November 13, 2023, the Company entered into a waiver and third amendment to the November 2022 LSA (the "November 2023 Amendment" and together with the November 2022 LSA, the March 2023 Amendment, and the August 2023 Amendment, the "LSA") with SVB to, among other things, waive this covenant violation and to revise the adjusted EBITDA requirements for future periods.

Line of Credit

The LSA provides for a $10,000 revolving line of credit (the “SVB Revolver”) as of September 30, 2023. 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 $10,000 line of credit. As of September 30, 2023, borrowing base availability was $5,059.
12



The SVB Revolver facility matures and terminates on April 22, 2024. As of September 30, 2023, the SVB Revolver bore interest on the outstanding principal amount at a floating rate per annum equal to the greater of (i) 5.00% and (ii) the prime rate plus the prime rate margin, which is 2.25% for advances on the SVB Revolver, as defined by the LSA. As of September 30, 2023 there was $4,933 of outstanding borrowings under the SVB Revolver.

Term Loan

The LSA also provided for an $8,500 term loan (the “Term Loan”), replacing the term loans made under the previous agreement, of which $6,500 was outstanding as of September 30, 2023. The Term Loan amortizes with equal monthly installments of $500 and matures on October 1, 2024 (the "Term Loan Maturity Date").

The Term Loan accrues interest on the outstanding principal amount at a floating rate per annum equal to the greater of (i) five and three-quarters percent (5.75%) and (ii) the prime rate plus the prime rate margin, which is 3.50% for the period from June 23, 2020 (inception) through September 30, 2020), by the weighted average number of Class A redeemable common stock since original issuance. Net loss per common share, basic and diluted, for Class B non-redeemable common stock is calculated by dividing the net income, less income attributable to Class A redeemable common stock, by the weighted average number of Class B non-redeemable common stock outstanding for the period. Class B non-redeemable common stock includes the Founder Shares as these shares do not have any redemption features and do not participateTerm Loan (as defined in the income earnedLSA), and such interest is payable (a) monthly in arrears, (b) on each prepayment date and (c) on the Trust Account.Term Loan Maturity Date. All outstanding principal and accrued and unpaid interest and all other Term Loan-related outstanding obligations shall become due and payable in full on the Term Loan Maturity Date.


SANDBRIDGE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes that the Company is not exposed to significant risks on such account.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,”Term Loan approximates the carrying amounts represented inrecorded amount as of September 30, 2023 and December 31, 2022, as the accompanying condensed balance sheet, primarily due to their short-term nature.

Recent Accounting Standards

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effectinterest rates on the Company’s condensed financial statements.

NOTE 3. INITIAL PUBLIC OFFERING

Pursuant to the Initial Public Offering, the Company sold 23,000,000 Units, which includes the full exercise by the underwriters of their over-allotment option in the amount of 3,000,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).

NOTE 4. PRIVATE PLACEMENT

Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 6,600,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $6,600,000. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment (see Note 7). A portion of the proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law),long-term debt are variable and the Private Placement Warrants will expire worthless.rates are based on market interest rates (bank’s prime rate) after consideration of default and credit risk (using Level 2 inputs).


NOTE 5. RELATED PARTY TRANSACTIONS

Future Aggregate Maturities
Founder Shares

On July 3, 2020, the Sponsor purchased 5,750,000 shares of the Company’s Class B common stock (the “Founder Shares”) for an aggregate purchase price of $25,000. In August 2020, the Sponsor transferred 40,000 Founder Shares to independent director Mr. De Sole, 25,000 Founder Shares to independent director Mr. Toubassy and 30,000 Founder Shares to advisor Mr. Hilfiger at their original per share purchase price. The Founder Shares included an aggregate of up to 750,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the number of Founder Shares would collectively represent approximately 20% of the Company’s issued and outstanding shares after the Initial Public Offering. As a result of the underwriters’ election to fully exercise their over-allotment option, 750,000 Founder Shares are no longer subject to forfeiture.

The Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier of (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property.

SANDBRIDGE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

Administrative Support Agreement

The Company entered into an agreement, commencing on September 14, 2020, to pay an affiliate of the Sponsor up to $10,000 per month for office space, utilities and secretarial and administrative services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees. For the three months ended September 30, 2020 and for the period from June 23, 2020 (inception) through September 30, 2020, the Company incurred and paid $10,000 in fees for these services.

Promissory Note – Related Party

On July 3, 2020, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal amount of $250,000. The Promissory Note was non-interest bearing and payable on the earlier of March 31, 2021 and the consummation of the Initial Public Offering. The outstanding balance under the Promissory Note of $250,000 was repaid at the closing of the Initial Public Offering on September 17, 2020.

Related Party Loans

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be converted into warrants, at a price of $1.00 per warrant, of the post Business Combination entity. The warrants would be identical to the Private Placement Warrants. As of September 30, 2020, no Working Capital Loans2023, future aggregate maturities of the Term Note and Financed Insurance Premium payables were outstanding.as follows:

Years Ending December 31,Amount
2023 (excluding the nine months ended September 30, 2023)$1,749 
20245,515 
Total$7,264 

Financed Insurance Premium

In July 2023, the Company renewed its corporate directors & officers and employment liability policies and entered into a new short-term commercial premium finance agreement with First Insurance Funding totaling $927 to be paid in eleven equal monthly payments, accruing interest at a rate of 8.29%. As of September 30, 2023, the remaining principal balance on the combined financed insurance premiums was $764.

NOTE 6. COMMITMENTS AND CONTINGENCIESNote 5. Commitments and Contingencies


Risks and Uncertainties

Management continuesDuring February 2023, the Company entered into an agreement with a significant vendor to evaluate the impactpay $3,000 of interest over 36 months with respect to past due payables. The present value of the COVID-19 pandemicfuture payments was expensed and included within interest expense, net on the industry and has concluded that while itcondensed consolidated statements of operations for the nine months ended September 30, 2023.

Litigation

The Company is reasonably possibleinvolved in legal proceedings from time to time arising in the normal course of business. Management, after consultation with legal counsel, believes that the virus couldoutcome of these proceedings will not have a negative effectmaterial impact on the Company’s financial position, results of operations, or liquidity.

In November 2021, two putative class action complaints were filed against us in the U.S. District Court for the Central District of California, the first captioned Butala v. Owlet, Inc., Case No. 2:21-cv-09016, and the second captioned Cherian v. Owlet, Inc., Case No. 2:21-cv-09293.Both complaints alleged violations of the Securities Exchange Act of 1934 (“Exchange Act”) against the Company and certain of its operations and/officers and directors on behalf of a putative class of investors who: (a) purchased the Company’s common stock between March 31, 2021 and October 4, 2021 (“Section 10(b) Claims”); or search for a target company, the specific impact is not readily determinable(b) held common stock in SBG as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Registration Rights

PursuantJune 1, 2021, and were eligible to a registration and stockholder rights agreement entered intovote at SBG's special meeting held on SeptemberJuly 14, 2020, holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights, requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common stock)2021 (“Section 14(a) Claims”). Any holder of at least 20% of the outstanding registrable securities owned by these holders will be entitled to make up to two demands, excluding short form demands,Both complaints allege, among other things, that the Company registerand certain of its officers and directors made false and/or misleading statements and failed to disclose certain information regarding the FDA’s likely classification of the Owlet Smart Sock as a medical device requiring marketing authorization.
13



On September 8, 2023, the Court ruled that while the Butala and Cherian cases were consolidated, there would be two distinct and separate classes to represent the Section 10(b) Claims and Section 14(a) Claims, respectively, and appointed lead plaintiffs and lead counsel. An amended complaint is expected to be filed on or before November 21, 2023. The Company intends to vigorously defend itself against these claims, including by filing on or before January 26, 2024 motions to dismiss the cases on behalf of itself and the named officers and directors.

Indemnification

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such securities.agreements, the Company may indemnify, hold harmless, and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third party actions. In addition,some cases, the holdersindemnification will have certain “piggy-back” registration rightscontinue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has entered into indemnification agreements with respect to registration statements filed subsequent to the completion of a Business Combinationits directors and rights toofficers that may require the Company to register for resale such securitiesindemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance coverage that reduces its exposure and enables the Company to recover a portion of any future amounts paid. The Company believes the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is immaterial.

Note 6. Stock-based Compensation

The Company has various stock compensation plans, which are more fully described in Part II, Item 8 "Financial Statements and Supplementary Data - Note 10 to the Consolidated Financial Statements - Share-based Compensation" in the 2022 Annual Report on Form 10-K. Under the 2021 Incentive Award Plan, the Company has the ability to grant options, stock appreciation rights, restricted stock, restricted stock units (“RSU”), performance stock units (“PRSU”), dividend equivalents, or other stock or cash-based awards to employees, directors, or consultants.

Option awards are generally granted with an exercise price equal to the fair value of the Company’s common stock at the date of grant. Options, RSU, and PRSU awards generally vest over a period of four years. During the 9 months ended September, 30, 2023, the Company granted 1,216,879 RSUs, most of which will vest one year from the grant date.

Stock-based Compensation Expense

Total stock-based compensation was recognized as follows (in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
General and administrative$1,196 $880 $4,093 $4289 
Sales and marketing394 2381,362 1,650
Research and development620 7222,188 2,476
Total stock-based compensation$2,210 $1,840 $7,643 $8,415 

During the three and nine months ended September 30, 2022, the Company capitalized $3 and $36, respectively, of stock-based compensation attributable to internally developed software. There was no stock-based compensation capitalized during the three or nine months ended September 30, 2023.

As of September 30, 2023, the Company had $1,359    of unrecognized stock-based compensation costs related to non-vested options that will be recognized over a weighted-average period of 1.2 years, $11,170 of unrecognized stock-based compensation costs related to unvested RSUs that will be recognized over a weighted-average period of 2.0 years, and $597 of unrecognized stock-based compensation costs related to unvested PRSUs that will be recognized over a weighted-average period of 1.7 years.


Note 7.    Convertible Preferred Stock and Common Stock Warrants

February 2023 Offering

14


On February 17, 2023 the Company entered into private placement investment agreements with certain investors, pursuant to Rule 415 underwhich the Securities Act. However,Company issued and sold to the registrationinvestors (i) an aggregate of 30,000 shares of the Company’s Series A convertible preferred stock, par value $0.0001 per share and stockholder(ii) warrants to purchase an aggregate of 7,871,712 shares of the Company’s common stock, par value $0.0001 per share, (“February 2023 Warrants”) for an aggregate purchase price of $30,000.

The Series A convertible preferred stock is convertible into common stock at the option of the holder at any time after February 17, 2023 and ranks, with respect to dividend rights, agreement providesrights of redemption and rights upon a liquidation event, (i) senior to the common stock and all other classes or series of equity securities of the Company established after February 17, 2023, unless such shares or equity securities expressly provide that they rank in parity with or senior to the Series A convertible preferred stock with respect to dividend rights, rights of redemption or rights upon a liquidation event, (ii) on parity with each class or series of equity securities of the Company established after the February 17, 2023, the terms of which expressly provide that it ranks on parity with the Series A convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event and (iii) junior to each class or series of equity securities of the Company established after February 17, 2023, the terms of which expressly provide that it ranks senior to the Series A convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event. Except as otherwise provided in the certificate of designation relating to the Series A convertible preferred stock or as required by law, holders of shares of Series A convertible preferred stock are entitled to vote with the holders of shares of common stock (and any other class or series that may similarly be entitled to vote with the holders of common stock) on an as-converted to common stock basis at any annual or special meeting of stockholders of the Company, and not as a separate class.

At any time from and after February 17, 2028, the holders of at least a majority of the then outstanding shares of Series A convertible preferred stock may specify a date and time or the occurrence of an event by vote or written consent that all, and not less than all, of the outstanding shares of Series A preferred stock will automatically be: (i) converted into shares of common stock at a conversion rate of 145.7726 per share (the "Conversion Rate"), (ii) subject to certain exceptions and limitations, redeemed for an amount per share of Series A preferred stock equal to the liquidation preference of one thousand dollars per share, plus all accrued or declared but unpaid dividends as of the redemption date and time or (iii) a combination of the foregoing.

Subject to certain exceptions, upon the occurrence of a fundamental change, voluntary or involuntary liquidation, dissolution or winding-up of the Company, the Company will not permit any registration statement filed underbe required to pay an amount per share of Series A Preferred Stock equal to the Securities Act. greater of (i) one thousand dollars per share or (ii) the consideration per share of Series A Preferred Stock as would have been payable had all such shares been converted to common stock immediately prior to the liquidation event, plus, in each case, the aggregate amount of all declared but unpaid dividends thereon to the date of final distribution to the holders of Series A Preferred Stock.

Each of the February 2023 Warrants sold in the private placement offering is exercisable for one share of common stock at an exercise price of $4.66 per share, is immediately exercisable, and will expire on February 17, 2028. None of the warrants have been exercised as of September 30, 2023. As the February 2023 Warrants could require cash settlement in certain scenarios, the warrants were classified as liabilities upon issuance and were initially recorded at an aggregate estimated fair value of $26,133. The total proceeds from the offering were first allocated to the liability classified warrants, based on their fair values, with the residual $3,867 allocated to the Series A convertible preferred stock. The Series A convertible stock will accrete to its redemption value, starting from the issuance date to the date at which the shares become redeemable on February 17, 2028. Accretion will be recorded as a deemed dividend.

The Company will bear certain expenses incurred in$1,963 of issuance costs related to the offering, of which $1,513 were paid as of September 30, 2023. Issuance costs allocated to the preferred stock of $253 were recorded as a reduction to the Series A preferred stock. Issuance costs allocated to the liability classified warrants of $1,710 were recorded as an expense within general and administrative expenses. In connection with the filingissuance of any such registration statements.these interim statements we have updated the classification of the preferred stock issuance costs incurred during the three months ended March 31, 2023 from a reduction of APIC to a reduction of the preferred stock carrying amount.


In addition, pursuantSBG Common Stock Warrants

As a result of the merger completed with SBG on July 15, 2021 (the “Merger”), the Company continues to record liabilities for warrants issued by SBG prior to the registration and stockholder rights agreement, upon consummation of a Business Combination, the Sponsor and the future holders of Founder Shares (or securities into which the Founder Shares convert) held by the Sponsor will be entitled to designate three individuals for nomination for electionMerger.

Pursuant to the Company’s boardSBG initial public offering, SBG sold warrants to purchase an aggregate of directors for so long as they continue to hold, collectively, at least 50%821,428 shares of the Founder Shares (orCompany’s common stock at a price of $161.00 per share (“SBG Public Warrants”). Following the securities into which such Founder Shares convert) held by such persons on the date of this prospectus. Thereafter, such initial stockholders will be entitled to designate (i) two individuals for nomination for election to the Company’s board of directors for so long they continue to hold, collectively, at least 30% of the Founder Shares (or the securities into which such Founder Shares convert) held by such persons on the date of this prospectus and (ii) one individual for nomination for election to the Company’s board of directors for so long they continue to hold, collectively, at least 20% of the Founder Shares (or the securities into which such Founder Shares convert) held by such persons on the date of this prospectus.

SANDBRIDGE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

Underwriting Agreement

Certain of the underwritersclosing of the Initial Public Offering are entitled to a deferred fee of $0.35 per Unit, or $8,050,000 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event thaton September 17, 2020, the Company completes a Business Combination, subjectcompleted the sale of warrants to the termspurchase an aggregate of 471,428  shares of the underwriting agreement. The underwriters did not receive any upfront underwriting discount or commissions on the 1,980,000 Units purchased by the PIMCO private funds or their respective affiliates but will receive deferred underwriting commissions with respect to such Units.

NOTE 7. STOCKHOLDERS’ EQUITY

Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2020, there were no shares of preferred stock issued or outstanding.

Class A Common Stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At September 30, 2020, there were 1,135,397 shares of Class A common stock issued and outstanding, excluding 21,864,603 shares of Class A common stock subject to possible redemption.

Class B Common Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. At September 30, 2020, there were 5,750,000 shares of Class B common stock issued and outstanding. Holders of Class B common stock are entitled to one vote for each share. Prior to the Business Combination, only holders of shares of Class B common stock have the right to vote on the election of directors.

Holders of Class A common stock and Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders except as required by law.

The shares of Class B common stock will automatically convert into shares of Class A common stock at the timea price of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller$161.00 per share in a Business Combination, and any private placement-equivalent warrants issuedplacement to Sandbridge Acquisition Holdings LLC (the “SBG Private Placement Warrants”). Together, the Sponsor or its affiliates upon conversion of loans made to the Company).

Warrants —SBG Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation ofand SBG Private Placement Warrants are referred to as the Units and only whole warrants will trade.“SBG Common Stock Warrants.” The SBG Public Warrants will becomebecame exercisable on the later of (a) 12 months from the closing of the Initial Public Offering and (b) 30 days after the completion of a Business Combination.Offering. The PublicSBG Common Stock Warrants will expire five years after the completion of a Business Combinationthe Merger or earlier upon redemption or liquidation.


See Part II, Item 8 “Financial Statements and Supplementary Data - Note 3 to the Consolidated Financial Statements - Merger” in the 2022 Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”) for more information.

15


The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue any shares of Class A common stock upon exercise of a warrant unless Class A common stockfollowing table summarizes issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants, to cause such registration statement to become effective within 60 business days after the closing of the Business Combination and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if shares of the Class ACompany’s common stock are at the time of any exercise of a publicbased on warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but it will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.

SANDBRIDGE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

Redemption of warrants when the price per Class A common stock equals or exceeds $18.00. Once the Public Warrants become exercisable, the Company may redeem the Public Warrants:

in whole and not in part;
at a price of $0.01 per warrant;
upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and
if, and only if, the closing price of the Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders.

If and when the Public Warrants become redeemable by the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

Redemption of warrants when the price per Class A common stock equals or exceeds $10.00. Once the Public Warrants become exercisable, the Company may redeem the Public Warrants:

in whole and not in part;
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Class A common stock;
if, and only if, the closing price of the Class A common stock equals or exceeds $10.00 per share for any 20 trading days within the 30-trading day period ending three trading days before the Company send the notice of redemption to the warrant holders; and
if the closing price of the Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share, the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.

The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.

In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per Class A common (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsors or its affiliates, without taking into account any Founder Shares held by the Sponsors or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, availableactivity for the funding of a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger prices will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.nine months ended September 30, 2023:


12
As of
December 31, 2022
Shares Issuable by New WarrantsShares Purchased by Exercise  As of
September 30, 2023
SBG Public Warrants821,428821,428
SBG Private Placement Warrants471,428471,428
February 2023 Warrants7,871,7127,871,712
SVB Warrants (Note 4)10,71410,714
Total1,292,8567,882,4269,175,282


SANDBRIDGE ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)

The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the shares of Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

NOTENote 8.  FAIR VALUE MEASUREMENTSFair Value Measurements


The following table presents information about the Company’s assets and liabilities measured and reported in the financial statements at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

September 30, 2023
Level 1Level 2Level 3Balance
Assets:
Money market funds$15,016$$$15,016
Total assets$15,016$$$15,016
Liabilities:
SBG Public Warrants$— $— $93 $93 
SBG Private Placement Warrants— — 53 53 
February 2023 Warrants24,03224,032
Total liabilities$$$24,178$24,178
December 31, 2022
Level 1Level 2Level 3Balance
Assets:
Money market funds$11,070 $— $— $11,070 
Total assets$11,070$$$11,070
Liabilities:
SBG Public Warrants$460 $— $— $460 
SBG Private Placement Warrants264264
Total liabilities$460$264$$724

Money market funds are included within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

The SBG Public Warrants and SBG Private Placement Warrants as of September 30, 2023 are presented in Level 3 of the fair value hierarchy. On June 15, 2023, the Company received notice from the New York Stock Exchange (the “NYSE”) that the NYSE had halted trading in the SBG Public Warrants due to the low trading price of those warrants. On June 16, 2023, the NYSE provided written notice to the Company and publicly announced that NYSE Regulation had determined to commence proceedings to delist the SBG Public Warrants and that such warrants were no longer suitable for listing based on “abnormally low” price levels, pursuant to Section 802.01D of the NYSE Listed Company Manual. As such, these instruments are no longer valued using quoted market prices and correspondingly, the SBG Private Placement Warrants can no longer be valued based on a quoted market price of the SBG Public Warrants. The Company measured the fair value of both the SBG Public Warrants and the SBG Private Placement Warrants as of September 30, 2023, using the Black-Scholes option pricing model with the following assumptions:

16


SBG Common Stock Warrants - Black-Scholes InputsSeptember 30, 2023
OWLT stock price$4.48 
Exercise price of warrants$161.00 
Term in years2.79
Risk-free interest rate4.85 %
Volatility90.00 %

The February 2023 Warrants are presented as Level 3 measurements, relying on unobservable inputs reflecting the Company’s own assumptions. Level 3 measurements, which are not based on quoted prices in active markets, introduce a higher degree of subjectivity and may be more sensitive to fluctuations in stock price, volatility rates, and U.S. Treasury Bond rates.

The Company classifies its U.S. Treasurymeasured the fair value of the February 2023 Warrants at issuance and equivalentagain as of September 30, 2023, using the Black-Scholes option pricing model with the following assumptions:

February 2023 Warrants - Black-Scholes InputsFebruary 17, 2023September 30, 2023
OWLT stock price$4.78 $4.48 
Exercise price of warrants$4.66 $4.66 
Term in years5.004.38
Risk-free interest rate4.10 %4.66 %
Volatility85.00 %90.00 %

The following table presents a reconciliation of the Company’s SBG Public Warrants, SBG Private Placement Warrants, and February 2023 Warrants (together, the “Level 3 Warrants”) measured at fair value on a recurring basis as of September 30, 2023:

Level 3 Warrants
Balance as of December 31, 2022$724 
Issuance of February 2023 Warrants26,133 
Change in fair value included within common stock warrant liability adjustment(2,679)
Balance as of September 30, 2023$24,178 

There were no transfers between Level 1 and Level 2 in the periods reported. The SBG Public Warrants and SBG Private Placement Warrants were transferred into Level 3 in the period reported, as discussed above.

The Company measured the fair value of the SVB Warrants (see Note 4) at issuance as of March 27, 2023, using the Black-Scholes option pricing model with the following assumptions:

SVB Warrants - Black-Scholes InputsMarch 27, 2023
OWLT stock price$4.62 
Exercise price of warrants$5.32 
Term in years12.00
Risk-free interest rate3.60 %
Volatility85.00 %


17


Note 9.  Net Loss Per Share Attributable to Common Stockholders

Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Under the two-class method, net loss is attributed to common stockholders and participating securities as held-to-maturityaccording to dividends declared or accumulated and participation rights in accordance with ASC 320 “Investments—Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intentundistributed earnings. The two-class method requires income available to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying condensed balance sheet and adjustedcommon stockholders for the amortization or accretionperiod to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

The Company considers its convertible preferred stock to be participating securities. Under the two-class method, the net loss attributable to common stockholders is not allocated to the convertible preferred stock as the holders of premiums or discounts.the Company’s convertible preferred stock do not have a contractual obligation to share in the Company’s losses.


AtThe following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts):


Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Numerator:
Net loss and comprehensive loss$(5,641)$(19,362)$(25,975)$(59,838)
Accretion on Series A convertible preferred stock(1,319)— (3,298)— 
Net loss attributable to common stockholders (1)
$(6,960)$(19,362)$(29,273)$(59,838)
Denominator:
Weighted-average common shares used in computed net loss per share attributable to common stockholders basic and diluted8,310,9657,983,9488,212,2687,928,263
Net loss per share attributable to common stockholders basic and diluted$(0.84)$(2.42)$(3.56)$(7.55)

(1) For the three and nine months ended September 30, 2020, assets held in the Trust Account were comprised of $138 in cash and $230,006,014 in U.S. Treasury Bills. During the period from June 23, 2020 (inception) through September 30, 2020,2023, the Company did not withdraw any interest incomeallocate its net loss to participating convertible preferred stock as those shares are not obligated to share in the losses of the Company. There were no shares of convertible preferred stock outstanding during the three or nine months ended September 30, 2022.


The following table summarizes the common stock equivalents of potentially dilutive outstanding securities excluded from the trust accountcomputation of diluted net loss per share due to pay its franchise taxes.their anti-dilutive effect:


As of September 30,As of September 30,
20232022
Stock options470,500 578,415 
RSUs1,396,201 560,187 
PRSUs71,428 87,323 
ESPP shares committed27,533 8,529 
Common stock warrants9,175,282 1,292,857 
Convertible preferred stock4,373,178 — 
Total15,514,122 2,527,311 

The gross holding lossesCompany’s 200,536 unvested earnout shares, described in Part II, Item 8 "Financial Statements and fair valueSupplementary Data - Note 11 to the Consolidated Financial Statements - Common Stock Warrants and Earnout Shares" in the 2022 Form 10-K, were excluded from the calculation of held-to-maturity securities atbasic and diluted per share calculations as the vesting conditions have not yet been met as of September 30, 2020 are as follows:2023.



 Held-To-Maturity 
Amortized
Cost
  
Gross
Holding
Losses
  Fair Value 
September 30, 2020U.S. Treasury Securities (Mature on 12/17/2020) 
$
230,006,014
  
$
(6,023
)
 
$
229,999,991
 


Note 10.  Segments
18



The fair value ofCompany operates as a single operating segment. The Company’s chief operating decision maker manages the Company’s operations on a consolidated basis for purposes of allocating resources, making operating decisions, and evaluating financial assets and liabilities reflects management’s estimate of amounts thatperformance. Since the Company would have receivedoperates in connection with the sale of the assets or paidone operating segment, all required financial segment information can be found in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchythese consolidated financial statements.

Revenue by geographic area is used to classify assets and liabilities based on the observable inputsdelivery address of the customer and unobservable inputs used in order to valueis summarized as follows (in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
United States$7,347 $15,248 $28,724 $49,837 
International1,8352,1114,2827,409
Total revenues$9,182 $17,359 $33,006 $57,246 


Other than the assetsUnited States, no individual country exceeded 10% of total revenues for the three or nine months ended September 30, 2023 and liabilities:September 30, 2022.

Level 1:Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

NOTE 9. SUBSEQUENT EVENTS


The Company’s long-lived assets are composed of property and equipment and right of use assets, net, and are summarized by geographic area as follows as of (in thousands):
September 30, 2023December 31, 2022
United States$1,406 $2,615 
International380 753 
Total long-lived assets, net$1,786 $3,368 

Note 11. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2016, the Financing Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and has since released various amendments including ASU No. 2019-04 and ASU No. 2022-02. The guidance modifies the measurement of expected credit losses on certain financial instruments. The Company evaluated subsequent events and transactions that occurred afteradopted ASU 2016-13 for the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.nine months ended September 30, 2023. The impact of adoption was immaterial.





ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Sandbridge Acquisition Corporation.  References to our “management” or our “management team” refer to our officers and directors, references to the “Sponsor” refer to Sandbridge Acquisition Holdings LLC.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto containedincluded elsewhere in this Quarterly Report. Certain information containedReport and in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s“Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” regardingof our Form 10-K. Certain statements we make under this Item 2 constitute “forward-looking statements” under the Company’s financial position, business strategy and the plans and objectivesReform Act. See “Cautionary Note Regarding Forward-Looking Statements” before Part I of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Suchthis Report. You should consider our forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A numberin light of factors could cause actual events, performance or results to differ materially from the events, performance and resultsrisks discussed in the forward-looking statements. Forour unaudited condensed consolidated financial statements, related notes and other financial information identifying important factors that could cause actual results to differ materially from those anticipatedappearing elsewhere in the forward-looking statements, please refer tothis Report, the “Risk Factors” section of our Form 10–K and this Report, and our other filings with the SEC.
Overview

Our mission is to empower parents with the right information at the right time, to give them more peace of mind and help them find more joy in the journey of parenting. Our digital parenting platform aims to give parents real-time data and insights to help parents feel calmer and more confident. We 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. Revenues are recognized when control of goods and services is transferred to customers in an amount that reflects the consideration expected to be received by us in exchange for those goods and services. Substantially all of the Company’s final prospectusrevenues were derived from product sales.

Cost of Revenues

Cost of revenues consists of product costs, including contract manufacturing, shipping and handling, depreciation and amortization relating to tooling and manufacturing equipment and software, warranty replacement, fulfillment costs, warehousing, hosting, and reserves for its initial public offering filedexcess and obsolete inventory.

Operating Expenses

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.

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; email marketing and print marketing.

Research and Development. Research and development expenses consist primarily of salaries, benefits, stock-based compensation, and bonuses for employees and contractors engaged in the design, development, maintenance and testing of our products and platforms.

Other Income (Expense)

Interest Expense, Net.Interest expense consists of interest incurred on our outstanding borrowings, including interest incurred on past due payables with one of our vendors as described in Note 5, Commitments and Contingencies, to the condensed consolidated financial statements included elsewhere in this Report, and amortization of deferred financing costs. Interest expense is presented net of interest income earned on our money market account.

Common Stock Warrant Liability Adjustment.Mark to market adjustment to recognize the change in fair value of common stock warrant liabilities in other income (expense).

Other Income (Expense), Net.Other income (expense), net includes our net gain (loss) on foreign exchange transactions.

Income Tax Provision. Income tax provision consists primarily of U.S. federal and state income taxes related to the tax jurisdictions in which we conduct business.
20




Results of Operations

The following table sets forth our results of operations for the periods indicated in millions (note that amounts within this Item 2 shown in millions may not sum due to rounding):

For the Three Months Ended September 30,For the Nine Months Ended September 30,
2023202220232022
Revenues$9.2 $17.4 $33.0 $57.2 
Cost of revenues5.9 12.7 20.3 37.3 
Gross profit3.3 4.6 12.7 20.0 
Operating expenses:
General and administrative5.4 9.7 20.4 29.4 
Sales and marketing3.3 9.7 9.8 31.0 
Research and development2.4 7.1 8.1 23.4 
Total operating expenses11.2 26.4 38.3 83.9 
Operating loss(7.9)(21.8)(25.6)(63.9)
Other income (expense):
Interest expense, net(0.1)(0.4)(3.0)(0.8)
Common stock warrant liability adjustment2.4 2.9 2.7 4.8 
Other income (expense), net— — (0.1)0.1 
Total other income (expense), net2.2 2.5 (0.4)4.1 
Loss before income tax provision(5.6)(19.4)(26.0)(59.8)
Income tax provision0.0 0.0 0.0 0.0 
Net loss and comprehensive loss$(5.6)$(19.4)$(26.0)$(59.8)


Revenues
For the Three Months Ended September 30,ChangeFor the Nine Months Ended September 30,Change
(dollars in millions)20232022$%20232022$%
Revenues$9.2 $17.4 $(8.2)(47.1 %)$33.0 $57.2 $(24.2)(42.3 %)

Revenues decreased by $8.2 million, or 47.1%, from $17.4 million for the three months ended September 30, 2022 to $9.2 million for the three months ended September 30, 2023. The decrease was primarily due to the timing of our Amazon distributor transition, which was resolved in October, partially offset by lower product returns. During the three months ended September 30, 2023, we entered into an arrangement to start selling our products directly to Amazon.com, Inc. (Amazon”) under a first-party seller relationship (Amazon 1P”). Upon entering the Amazon 1P relationship, we terminated our relationship with the U.S. Securities and Exchange Commissiontwo current customers selling our products as third parties on Amazon's e-commerce platform (the “SEC”Amazon Retailers”). The Company’s filings pursuanttransition from the Amazon Retailers to Amazon 1P caused a decrease in revenue, as no revenue was recognized related to the Securities Act andAmazon Retailers or Amazon 1P for the Exchange Act can be accessed onthree months ended September 30, 2023. Revenue related to the EDGAR sectionAmazon Retailers represented a significant amount of revenue for the three months ended September 30, 2022. Shipments under the Amazon 1P arrangement began in October 2023.

Revenues decreased by $24.2 million, or 42.3%, from $57.2 million for the nine months ended September 30, 2022 to $33.0 million for the nine months ended September 30, 2023. The decrease was primarily due to lower sales of Owlet Sock products, impacted by retailers targeting lower inventory levels, reflecting macroeconomic conditions. The nine months ended September 30, 2022 included the initial launch of the SEC’s website at www.sec.gov. Except as expressly requiredDream Sock product and included significant sell-in sales of the Dream Sock across all channel partners, which did not occur in the corresponding period in 2023. Additionally, the transition from Amazon Retailers to Amazon 1P discussed above caused a decrease in revenue for the nine months ended September 30, 2023.

Cost of Revenues and Gross Profit

21


For the Three Months Ended September 30,ChangeFor the Nine Months Ended September 30,Change
(dollars in millions)20232022$%20232022$%
Cost of revenues$5.9 $12.7 $(6.9)(54.1 %)$20.3 $37.3 $(17.0)(45.5 %)
Gross profit$3.3 $4.6 $(1.3)(27.8 %)$12.7 $20.0 $(7.3)(36.4 %)
Gross margin36.3 %26.6 %38.5 %34.9 %

Cost of revenues decreased by applicable securities law,$6.9 million, or 54.1%, from $12.7 million for the Company disclaims any intentionthree months ended September 30, 2022 to $5.9 million for the three months ended September 30, 2023. The decrease was primarily due to the decrease in product sales. Gross margin increased from 26.6% for the three months ended September 30, 2022 to 36.3% for the three months ended September 30, 2023 primarily due to lower product returns and lower direct product costs.

Cost of revenues decreased by $17.0 million, or obligation45.5%, from $37.3 million for the nine months ended September 30, 2022 to update$20.3 million for the nine months ended September 30, 2023. The decrease was primarily due to the decrease in product sales. Gross margin increased from 34.9% for the nine months ended September 30, 2022 to 38.5% for the nine months ended September 30, 2023 primarily due to lower product returns and lower direct product costs.


General and Administrative

For the Three Months Ended September 30,ChangeFor the Nine Months Ended September 30,Change
(dollars in millions)20232022$%20232022$%
General and administrative$5.4 $9.7 $(4.2)(43.7 %)$20.4 $29.4 $(9.0)(30.6 %)

General and administrative expense decreased by $4.2 million, or revise any forward-looking statements whether43.7%, from $9.7 million for the three months ended September 30, 2022 to $5.4 million for the three months ended September 30, 2023. The decrease was driven primarily by lower compensation expense, including stock-based compensation, from reduced general and administrative headcount as a result of new information, future eventsthe restructuring actions taken during the fiscal year 2022. Additionally, we took cost saving measures to reduce spend on consulting services during the fiscal year 2022.

General and administrative expense decreased by $9.0 million, or otherwise.

Overview

We are a blank check company formed under the laws of the State of Delaware on June 23, 202030.6%, from $29.4 million for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses (the “Business Combination”). We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants (as defined below), our capital stock, debt or a combination of cash, stock and debt.

We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from June 23, 2020 (inception) throughnine months ended September 30, 2020 were organizational activities, those necessary2022 to prepare$20.4 million for our initial public offering (the “Initial Public Offering”), described below,the nine months ended September 30, 2023. The decrease was driven primarily by lower compensation expense, including stock-based compensation, from reduced general and the search for a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account (as defined below). We incur expensesadministrative headcount as a result of being a public company (for legal, financial reporting, accountingthe restructuring actions taken during the fiscal year 2022. Additionally, we took cost saving measures to reduce spend on consulting services, which were offset by incurred transaction costs relating to the February 2023 preferred stock offering.


Sales and auditing compliance)Marketing

For the Three Months Ended September 30,ChangeFor the Nine Months Ended September 30,Change
(dollars in millions)20232022$%20232022$%
Sales and marketing$3.3 $9.7 $(6.4)(65.6 %)$9.8 $31.0 $(21.3)(68.5 %)

Sales and marketing expense decreased by $6.4 million, or 65.6%, from $9.7 million for the three months ended September 30, 2022 to $3.3 million for the three months ended September 30, 2023. The decrease was driven by lower spend on digital advertising and retail channel marketing, as well as lower compensation expense associated with reduced headcount.

Sales and marketing expense decreased by $21.3 million, or 68.5%, from $31.0 million for the nine months ended September 30, 2022 to $9.8 million for the nine months ended September 30, 2023. The decrease was driven by a decrease in all sales and marketing spend, including lower compensation expense from reduced sales and marketing headcount. Additionally, we reduced spend on digital advertising and retail channel marketing spend.

Research and Development

22


For the Three Months Ended September 30,ChangeFor the Nine Months Ended September 30,Change
(dollars in millions)20232022$%20232022$%
Research and development$2.4 $7.1 $(4.6)(65.7 %)$8.1 $23.4 $(15.3)(65.5 %)

Research and development expense decreased by $4.6 million, or 65.7%, from $7.1 million for the three months ended September 30, 2022 to $2.4 million for the three months ended September 30, 2023. These decreases were primarily driven by lower compensation expense from reduced research and development headcount. Additionally, the Company took cost saving measures to reduce spend on consulting services.

Research and development expense decreased by $15.3 million, or 65.5%, from $23.4 million for the nine months ended September 30, 2022 to $8.1 million for the nine months ended September 30, 2023. These decreases were primarily driven by lower compensation expense from reduced research and development headcount. Additionally, the Company took cost saving measures to reduce spend on consulting services.

Other Income (Expense)

For the Three Months Ended September 30,ChangeFor the Nine Months Ended September 30,Change
(dollars in millions)20232022$%20232022$%
Interest expense, net$(0.1)$(0.4)$(0.3)68.0 %$(3.0)$(0.8)$(2.2)254.0 %
Common stock warrant liability adjustment$2.4 $2.9 $(0.5)(16.5 %)$2.7 $4.8 $(2.1)(44.2 %)
Other income, net$— $— $— (466.7 %)$(0.1)$0.1 $(0.2)(187.8 %)

Interest expense decreased by $0.3 million, from $0.4 million for the three months ended September 30, 2022 to $0.1 million for the three months ended September 30, 2023 primarily due diligence expenses.to a lower balance on the Term Loan.


For the three months ended September 30, 2020 and2023, we recognized a gain of $2.4 million as compared to a gain of $2.9 million for the same period in the prior year resulting from June 23, 2020 (inception) througha decrease in the fair value of common stock warrants outstanding.

Interest expense increased by $2.2 million, from $0.8 million for the nine months ended September 30, 2020,2022 to $3.0 million for the nine months ended September 30, 2023. As described in Note 5, Commitments and Contingencies, to the condensed consolidated financial statements included elsewhere in this Report, we hadentered 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 losson the condensed consolidated statements of $30,155, which consistsoperations for the nine months ended September 30, 2023.

For the nine months ended September 30, 2023, we recognized a gain of operating costs$2.7 million as compared to a gain of $36,307, offset by interest income on marketable securities held$4.8 million for the same period in the Trust Accountprior year resulting from a decrease in the fair value of $6,152.common stock warrants outstanding.



Liquidity and Capital Resources


UntilWe 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. In connection with the consummationmerger completed with Sandbridge Acquisition Corporation ("SBG") on July 15, 2021 (the "Merger"), we raised $133.9 million net proceeds, which combined with the sale of products and services funded our operations from the date of the Initial Public Offering,Merger through the year ended December 31, 2022. As of December 31, 2022, we had cash and cash equivalents of $11.2 million.

On February 17, 2023, we entered into private placement investment agreements with certain investors, pursuant to which we issued and sold to the investors (i) an aggregate of 30,000 shares of our only sourceSeries A convertible preferred stock, par value $0.0001 per share and (ii) warrants to purchase an aggregate of liquidity was7,871,712 shares of our common stock, par value $0.0001 per share, (“February 2023 Warrants”) for an initialaggregate purchase price of $30.0 million.

The Series A convertible preferred stock is convertible into common stock at the option of the holder at any time after February 17, 2023 and ranks, with respect to dividend rights, rights of redemption and rights upon a liquidation event, (i) senior to the common stock and all other classes or series of equity securities of the Company established after February 17, 2023, unless such shares or equity securities expressly provide that they rank in parity with or senior to the Series A convertible preferred stock with respect to dividend rights, rights of redemption or rights upon a liquidation event, (ii) on parity with each class or series of equity securities of the Company established after the February 17, 2023, the terms of which expressly provide that it ranks on parity with the Series A
23


convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event and (iii) junior to each class or series of equity securities of the Company established after February 17, 2023, the terms of which expressly provide that it ranks senior to the Series A convertible preferred stock with respect to dividend rights, rights of redemption and rights upon a liquidation event. Except as otherwise provided in the certificate of designation relating to the Series A convertible preferred stock or as required by law, holders of shares of our Class BSeries A convertible preferred stock are entitled to vote with the holders of shares of common stock (and any other class or series that may similarly be entitled to vote with the holders of common stock) on an as-converted to common stock basis at any annual or special meeting of our stockholders, and not as a separate class.

At any time from and after February 17, 2028, the holders of at least a majority of the then outstanding shares of Series A convertible preferred stock may specify a date and time or the occurrence of an event by vote or written consent that all, and not less than all, of the Sponsor and loans from our Sponsor.

On September 17, 2020, we completed the Initial Public Offeringoutstanding shares of 23,000,000 UnitsSeries A preferred stock will automatically be: (i) converted into shares of common stock at a conversion rate of 145.7726 per share (the “Conversion Rate”), (ii) subject to certain exceptions and limitations, redeemed for an amount per share of Series A preferred stock equal to the liquidation preference of one thousand dollars per share, plus all accrued or declared but unpaid dividends as of the redemption date and time or (iii) a combination of the foregoing.

Subject to certain exceptions, upon the occurrence of a fundamental change, voluntary or involuntary liquidation, dissolution or winding-up of the Company, the Company will be required to pay an amount per share of Series A Preferred Stock equal to the greater of (i) one thousand dollars per share or (ii) the consideration per share of Series A Preferred Stock as would have been payable had all such shares been converted to common stock immediately prior to the liquidation event, plus, in each case, the aggregate amount of all declared but unpaid dividends thereon to the date of final distribution to the holders of Series A Preferred Stock.

Each of the February 2023 Warrants sold in the private placement offering is exercisable for one share of common stock at an exercise price of $10.00$4.66 per Unit, which includes the full exercise by the underwritersshare, is immediately exercisable, and will expire on February 17, 2028. None of the over-allotment optionwarrants have been exercised as of September 30, 2023. As the February 2023 Warrants could require cash settlement in certain scenarios, the warrants were classified as liabilities upon issuance and were initially recorded at an aggregate estimated fair value of $26.1 million. The total proceeds from the offering were first allocated to purchase an additional 3,000,000, generating gross proceeds of $230,000,000. Simultaneouslythe liability classified warrants, based on their fair values, with the closingresidual $3.9 million allocated to the Series A convertible preferred stock. The Series A convertible stock will accrete to its redemption value, starting from the issuance date to the date at which the shares become redeemable on February 17, 2028. Accretion will be recorded as a deemed dividend.

We incurred $2.0 million of the Initial Public Offering, we completed the sale of 6,600,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to our Sponsor, generating gross proceeds of $6,600,000.

Following the Initial Public Offering, including the full exercise of the over-allotment option by the underwriters’ and the sale of the Private Placement Warrants, a total of $230,000,000 was placed in a trust account (the “Trust Account”) and we had $1,977,519 of cash held outside of the Trust Account, after payment of certainissuance costs related to the Initial Public Offering,offering, of which $1.5 million were paid as of September 30, 2023. Issuance costs allocated to the preferred stock of $0.3 million were recorded as a reduction to paid-in capital. Issuance costs allocated to the liability classified warrants of $1.7 million were recorded as an expense within general and availableadministrative expenses.

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 accompanying consolidated financial statements included elsewhere in this Report are issued.

Since inception, we have experienced recurring operating losses and generated negative cash flows from operations, resulting in an accumulated deficit of $248.7 million as of September 30, 2023. During the nine months ended September 30, 2023 and 2022, we had negative cash flows from operations of $22.0 million and $71.6 million, respectively. As of September 30, 2023, we had $15.2 million of cash on hand.

Year over year declines in revenue, the low, current cash balance, recurring operating losses, and negative cash flows from operations since inception raise substantial doubt about our ability to continue as a going concern within one year after the date that the accompanying condensed consolidated financial statements included elsewhere in this Report are issued. The condensed consolidated financial statements included elsewhere in this Report 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.

As we continue to address these financial conditions, management have undertaken the following actions:

As described above, on February 17, 2023 we consummated a sale of newly issued preferred stock and warrants to purchase our common stock for workingaggregate gross proceeds of $30.0 million.

As described in Note 4, Long-Term Debt and Other Financing Arrangements, to the condensed consolidated financial statements included elsewhere in this Report, in March 2023 we further amended our financing arrangement with Silicon Valley Bank, now a division of First Citizens Bank and Trust Company ("SVB"), under which the principal payments on the term note were deferred until September 2023. This amendment also revised the financial covenants for future periods.

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During the year ended December 31, 2022, we undertook restructuring actions, which significantly reduced employee headcount and reduced operating spend. This included the reduction of consulting and outside services, the reduction of marketing programs, and the prioritization of and sequencing of research and development projects.

We have not generated sufficient cash flows from operations to satisfy our capital purposes.requirements. 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. If revenues further decrease from current levels, we may be unable to further reduce costs, or such reductions may limit our ability to pursue strategic initiatives and grow revenues in the future.

There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, if at all. Failure to secure additional funding may require us to modify, delay or abandon some of our planned future development, or to otherwise enact further operating cost reductions, which could have a material adverse effect on our business, operating results, financial condition and ability to achieve our intended business objectives.

If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, financial condition and results of operations could be materially adversely affected. We incurred $12,948,806also could be required to seek funds through arrangements with partners or others that may require us to relinquish rights or jointly own some aspects of our technologies, products or services that we would otherwise pursue on our own.

Loan and Security Agreement with Silicon Valley Bank

On November 23, 2022, we entered into the Third Amended and Restated Loan and Security Agreement (the “November 2022 LSA”) with SVB. The November 2022 LSA amended, restated and replaced in transaction costs, including $4,204,000its entirety the prior Second Amended and Restated Loan and Security Agreement, dated April 22, 2020, and all prior amendments. On March 27, 2023, we entered into the first amendment to the November 2022 LSA with SVB (the “March 2023 Amendment”), which, among certain other revisions, (i) deferred certain payments of underwriting fees, $8,050,000principal by us until September 1, 2023, (ii) had SVB waive certain stated events of deferred underwriting feesdefault, (iii) expanded the eligibility of inventory and $694,806accounts that we can borrow against, and (iv) modified certain financial covenants required of us.

On August 10, 2023, we entered into the second amendment to the November 2022 LSA with SVB (the “August 2023 SVB Amendment” and together with the November 2022 LSA and March 2023 Amendment, the “LSA”) that clarified the calculation of the financial covenants under the agreement.

As of September 30, 2023, we were in violation of its minimum adjusted EBITDA requirement for the three months ended September 30, 2023 under the LSA. On November 13, 2023, we entered into a waiver and third amendment to the November 2022 LSA (the "November 2023 Amendment" and together with the November 2022 LSA, the March 2023 Amendment, and the August 2023 Amendment, the "LSA") with SVB to, among other offering costs.things, waive this covenant violation and to revise the adjusted EBITDA requirements for future periods.

Line of Credit

The LSA provides for a $10.0 million revolving line of credit (the “SVB Revolver”) as of September 30, 2023. 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 September 30, 2023, borrowing base availability was $5.1 million.

The SVB Revolver facility matures and terminates on April 22, 2024. As of September 30, 2023, the SVB Revolver bore interest on the outstanding principal amount at a floating rate per annum equal to the greater of (i) 5.00% and (ii) the prime rate plus the prime rate margin, which is 2.25% for advances on the SVB Revolver, as defined by the LSA.

Term Loan

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 $6.5 million was outstanding as of September 30, 2023. The Term Loan amortizes with equal monthly installments of $0.5 million and matures on October 1, 2024 (the "Term Loan Maturity Date").

The Term Loan accrues interest on the outstanding principal amount at a floating rate per annum equal to the greater of (i) five and three-quarters percent (5.75%) and (ii) the prime rate plus the prime rate margin, which is 3.50% for the Term Loan (as defined in the LSA), and such interest is payable (a) monthly in arrears, (b) on each prepayment date and (c) on the Term Loan Maturity Date. All outstanding principal and accrued and unpaid interest and all other Term Loan-related outstanding obligations shall become due and payable in full on the Term Loan Maturity Date.
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We believe that the fair value of the Term Loan approximates the recorded amount as of September 30, 2023 and December 31, 2022, as the interest rates on the long-term debt are variable and the rates are based on market interest rates (bank's prime rate) after consideration of default and credit risk (using Level 2 inputs).

Financed Insurance Premium

In July 2023, we renewed our corporate directors & officers and employment liability policies and entered into a new short-term commercial premium finance agreement with First Insurance Funding totaling $0.9 million to be paid in eleven equal monthly payments, accruing interest at a rate of 8.29%. As of September 30, 2023, the remaining principal balance on the combined financed insurance premiums was $0.8 million.

Cash Flows

The following table summarizes our cash flow (in millions):
Nine Months Ended September 30,
20232022
Net cash used in operating activities$(22.0)$(71.6)
Net cash used in investing activities— (1.4)
Net cash provided by financing activities25.9 1.1 
Net change in cash and cash equivalents$3.9 $(71.9)

Operating Activities

For the period from June 23, 2020 (inception) throughnine months ended September 30, 2020,2023, net cash used in operating activities was $322,595. Net loss$22.0 million as compared to net cash used in operating activities of $30,155 was affected by interest earned on marketable securities held$71.6 million in the Trust Account of $6,152 and changesprior year. The change in operating assetscash flows was primarily driven by a lower net loss and liabilities, which used $286,288 of cash from operating activities.

As of September 30, 2020, we had cashlower working capital usage. Lower working capital usage was driven by decreases in accounts receivable and marketable securities heldinventory levels, as compared to increases in the Trust Account of $230,006,152. We intendprior year. These were partially offset by a larger decrease in accounts payable and accrued and other expenses as compared to use substantially all of the funds held inprior year.

Investing Activities

For the Trust Account, including any amounts representing interest earned on the Trust Account, to complete our Business Combination. We may withdraw interest to pay franchise and income taxes. During the periodnine months ended September 30, 2020,2023, we did not withdraw any interest earned onused substantially no cash for investing activities, as compared to $1.4 million for the Trust Account. Tonine months ended September 30, 2022. The decrease in cash used for investing activities is primarily related to the extent that our capital stock or debt isprioritization of research and development projects in correlation with the restructuring actions taken during the fiscal year 2022.

Financing Activities

For the nine months ended September 30, 2023, net cash provided by financing activities was $25.9 million as compared to cash used in whole or in part, as consideration to complete our Business Combination,financing activities of $1.1 million for the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

As ofnine months ended September 30, 2020, we had cash of $1,438,624 outside of the Trust Account. We intend to use the funds held outside the Trust Account2022, primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. The loans would be repaid upon consummation of a Business Combination, without interest.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. If we are unable to complete our Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, 2020.

Contractual obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative support to the Company. We began incurring these fees on September 14, 2020 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and the Company’s liquidation.

Certain of the underwriters of the Initial Public Offering are entitled to a deferred fee of $0.35 per Unit, or $8,050,000 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement. The underwriters did not receive any upfront underwriting discount or commissions on the 1,980,000 Units purchaseddriven by the membersprivate placement offering of our Sponsor that are affiliated with Pacific Investment Management Company LLC, but will receive deferred underwriting commissions with respect to such Units.preferred shares in February 2023, partially offset by debt payments.


Critical Accounting Policies and Estimates


The preparation of condensed financial statementsThere have been no material changes from the critical accounting policies and related disclosuresestimates disclosed in conformity with accounting principles generally acceptedour Form 10-K, other than policies disclosed in the United States of America requires management to make estimatesthis Report.

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Item 3. Quantitative and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dateQualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the financial statements,Exchange Act and incomeare not required to provide the information otherwise required under this Item.
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Item 4. Controls and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Procedures.

Limitations on Effectiveness of Controls and Procedures
Class A Common Stock Subject to Possible Redemption

We account forIn designing and evaluating our shares of Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified as a liability instrumentdisclosure controls and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, the Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of our unaudited condensed balance sheet.

Net Loss per Common Share

We apply the two-class method in calculating earnings per share. Net income per common share, basic and diluted for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, net of applicable taxes, by the weighted average number of shares of Class A redeemable common stock outstanding for the periods. Net income per common share, basic and diluted for and Class B non-redeemable common stock is calculated by dividing net income less income attributable to Class A redeemable common stock, by the weighted average number of shares of Class B non-redeemable common stock outstanding for the periods presented.

Recent Accounting Standards

Management does not believeprocedures, management recognizes that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.

Item 3.
Quantitative and Qualitative Disclosures About Market Risk

Ascontrols and procedures, no matter how well designed and operated, can provide only reasonable assurance of September 30, 2020, we were not subjectachieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to any market or interest rate risk. Followingapply judgment in evaluating the consummationbenefits of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Duepossible controls and procedures relative to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

Item 4.
Controls and Procedures

their costs.
Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensureprovide reasonable assurance that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.


Under the supervision andOur management, with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluationevaluated, as of September 30, 2023, the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2020, as such(as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.Act). Based on thisthat evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective at a reasonable assurance levelas of September 30, 2023 due to the material weaknesses in our internal control over financial reporting described below.

Material Weaknesses in Internal Control over Financial Reporting

Our management is responsible for establishing and accordingly, provided reasonable assurance that the information required to be disclosed by usmaintaining adequate internal control over financial reporting, as such term is defined in reports filedRules 13(a)-15(f) and 15(d)-15(f) under the Exchange ActAct.

A material weakness is recorded, processed, summarizeda deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses in our internal control over financial reporting exist as of September 30, 2023.

We did not design and reportedmaintain an effective control environment commensurate with our financial reporting requirements. Specifically, we did not maintain a sufficient complement of personnel with an appropriate degree of internal controls and accounting knowledge, experience, and training commensurate with our accounting and financial reporting requirements. This material weakness contributed to the following additional material weaknesses:

We did not design and maintain effective controls over the segregation of duties related to journal entries. Specifically, certain personnel have the ability to both create and post journal entries within the time periods specifiedCompany’s general ledger system. This material weakness did not result in any adjustments to the consolidated financial statements.

We did not design and maintain effective controls over the accounting for the accuracy and existence of inventory, nor controls which verified the completeness and accuracy of accrued liabilities. Each of these material weaknesses resulted in immaterial adjustments that were recorded as out-of-period adjustments within the year ended December 31, 2022.

We did not design and maintain effective controls over the accounting for convertible preferred stock and warrant arrangements. Further, we did not design and maintain effective controls to verify the completeness and accuracy of sales returns and accrued sales tax. Each of these material weaknesses resulted in material adjustments to several account balances and disclosures in the SEC’s rulesconsolidated financial statements as of and forms.for the year ended December 31, 2019. The sales returns material weakness also resulted in immaterial adjustments to revenue and accrued and other expenses as of and for the year ended December 31, 2022.


We did not design and maintain effective controls over IT general controls for information systems that are relevant to the preparation of our consolidated financial statements. Specifically, we did not design and maintain (i) program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized
28


and implemented appropriately, (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate Company personnel, (iii) computer operations controls to ensure that critical batch jobs are monitored, and data backups are authorized and monitored, and (iv) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements. This material weakness did not result in any adjustments to the consolidated financial statements.

Additionally, each of the material weaknesses described above could result in a misstatement of one or more account balances or disclosures that would result in a material misstatement to the interim or annual consolidated financial statements that would not be prevented or detected.

Remediation Plan

We have initiated a plan to remediate these material weaknesses. The remediation measures will be ongoing, and although not all inclusive, remediation measures include hiring additional accounting and financial reporting personnel and implementing additional policies, procedures and controls, all of which will result in future costs for the Company.

We have taken actions to improve our IT general controls, segregation of duties over journal entries controls, inventory controls, accrued liabilities, convertible preferred stock, warrant arrangements, sales returns and accrued sales tax controls. However, the material weaknesses will not be considered remediated until our remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively.

Notwithstanding the above, our management believes that the consolidated financial statements included in this Report on Form 10-Q state fairly in all material respects our financial position, results of operations and cash flows for the periods presented.
Changes in Internal Control over Financial Reporting

There wasOther than the remediation efforts described above, there have been no changechanges in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter of 2020 covered by this Quarterly Report on Form 10-Qthree months ended September 30, 2023 that hashave materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



16
29

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.
Item 1.
Legal Proceedings.


None.

Item 1A.
Risk Factors.

The informationFrom time to time, we may become involved in various legal proceedings that arise in the ordinary course of business.We evaluate any claims and lawsuits with respect to their potential merits, our potential defenses and counterclaims, and the expected effect on us of defending the claims and a potential adverse result. However, the results of any litigation, investigations or other legal proceedings are inherently unpredictable and expensive. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, damage to our reputation, and divert significant resources.If any legal proceedings were to be reported under this Item is not requireddetermined adversely to us, or we were to enter into a settlement agreement, we could be exposed to monetary damages or limits on our ability to operate our business, which could have an adverse effect on our business, financial condition and operating results.

In November 2021, two putative class action complaints were filed against us in the U.S. District Court for smaller reporting companies.

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.

the Central District of California, the first captioned Butala v. Owlet, Inc., Case No. 2:21-cv-09016, and the second captioned Cherian v. Owlet, Inc., Case No. 2:21-cv-09293.Both complaints alleged violations of the Exchange Act against the Company and certain of its officers and directors on behalf of a putative class of investors who: (a) purchased the Company’s common stock between March 31, 2021 and October 4, 2021 (“Section 10(b) Claims”); or (b) held common stock in SBG as of June 1, 2021, and were eligible to vote at SBG's special meeting held on July 14, 2021 (“Section 14(a) Claims”).Both complaints allege, among other things, that the Company and certain of its officers and directors made false and/or misleading statements and failed to disclose certain information regarding the FDA’s likely classification of the Owlet Smart Sock as a medical device requiring marketing authorization.On September 17, 2020, we consummated8, 2023, the Initial Public OfferingCourt ruled that while the Butala and Cherian cases were consolidated, there would be two distinct and separate classes to represent the Section 10(b) Claims and Section 14(a) Claims, respectively, and appointed lead plaintiffs and lead counsel. An amended complaint is expected to be filed on or before November 21, 2023. The Company intends to vigorously defend itself against these claims, including by filing on or before January 26, 2024 motions to dismiss the cases on behalf of 23,000,000 Units, which includeditself and the full exercise by the underwriters of the over-allotment option to purchase an additional 3,000,000 Units. The Units sold in the Initial Public Offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $230,000,000. Citigroup Global Markets Inc.named officers and UBS Securities LLC acted as joint book-running managers. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-248320). The SEC declared the registration statement effective on September 14, 2020.directors.

Simultaneously with the consummation of the Initial Public Offering, including the closing of the over-allotment option, we consummated the private placement of an aggregate of 6,600,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating total proceed of $6,600,000. The issuance was made pursuantItem 1A. Risk Factors.

In addition to the exemption from registrationinformation contained in Section 4(a)(2) ofthis Report, you should carefully consider the Securities Act.

The Private Placement Warrants are identical to the warrants underlying the Units soldrisk factors disclosed in the Initial Public Offering, except that the Private Placement Warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.

Of the gross proceeds received from the Initial Public Offering, including the closing of the over-allotment option,our Form 10-K and the Private Placement Warrants, $230,000,000 was placed in the Trust Account.


Item 3.
Defaults Upon Senior Securities.


Item 4.
Mine Safety Disclosures.


Item 5.
Other Information.


Item 6.
Exhibits

The following exhibits are filed as part of, or incorporated by reference into, thisour Quarterly Report on Form 10-Q.10-Q for the quarterly period ended June 30, 2023, which risk factors are incorporated herein by reference, which could materially affect our business, financial condition or results.

No.Description of Exhibit
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
(a)    We are reporting the following information in lieu of reporting on a Current Report on Form 8-K under Item 1.01 - Entry into a Material Definitive Agreement.

On November 13, 2023, we entered into a waiver and third amendment (the “Amendment”) to the Third Amended and Restated Loan and Security Agreement (the “November 2022 LSA” and, together with the Amendment, the “LSA���) with Silicon Valley Bank, now a division of First Citizens Bank and Trust Company (“SVB”), to, among other things, waive our violation of our minimum adjusted EBITDA requirement for the three months ended September 30, 2023 and revise the adjusted EBITDA requirements for future periods, beginning with the three months ending December 31, 2023.
30



The foregoing description of the November 2023 Amendment does not purport to be complete and is subject to and qualified in its entirety by reference to the November 2023 Amendment, which is attached hereto as Exhibit 10.5 to this Report and is incorporated herein by reference.

(b)    None.
(c)    Not applicable.

31



Item 6. Exhibits


Exhibit
Number
DescriptionFormFile No.ExhibitFiling Date
2.1†8-K001-395162.12/16/2021
3.1S-4333-2548883.33/31/2021
3.28-K001-395163.12/21/2023
3.38-K001-395163.17/7/2023
3.4S-4333-2548883.43/31/2021
4.18-K001-395164.19/18/2020
4.2S-1333-248324.49/1/2020
4.38-K001-395164.12/21/2023
10.1*
10.2*+
10.3*#
10.410-Q001-3951610.58/14/2023
10.5*#
31.1*
31.2*
32.1**
101.INS*Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*Inline XBRL Taxonomy Extension Schema Document.
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*Filed herewith
**Furnished herewith.
†The annexes, schedules, and certain exhibits to this Exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant hereby agrees to furnish supplementally a copy of any omitted annex, schedule or exhibit to the SEC upon request.
+Indicates management contract or compensatory plan.
#Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Regulation S-K, Item 601(b)(10).


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SIGNATURES
Underwriting Agreement, dated September 14, 2020, between the Company and Citigroup Global Markets Inc. and UBS Securities LLC, as representatives of the several underwriters (1)
Amended and Restated Certificate of Incorporation (1)
Warrant Agreement, dated September 14, 2020, between Continental Stock Transfer & Trust Company and the Company (1)
Warrant Purchase Agreement, dated September 14, 2020, between the Company and Sandbridge Acquisition Holdings LLC (1)
Investment Management Trust Account Agreement, dated September 14, 2020, between Continental Stock Transfer & Trust Company and the Company (1)
Registration and Stockholder Rights Agreement, dated September 14, 2020, among the Company, the Sponsor and the other Holders (as defined therein) signatory thereto (1)
Letter Agreement, dated September 14, 2020, among the Company, the Sponsor, certain investors in the Sponsor and each of the initial stockholders, directors and officers of the Company (1)
Administrative Services Agreement, dated September 14, 2020, between the Company and Sandbridge Capital, LLC (1)
Form of Indemnification Agreement, dated September 14, 2020, between the Company and each of the officers and directors of the Company (1)
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*XBRL Instance Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document

*Filed herewith.
**Furnished herewith.
(1)Previously filed as an exhibit to our Current Report on Form 8-K filed on September 18, 2020 and incorporated by reference herein.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SANDBRIDGE ACQUISITION CORPORATION
Company Name
Date: November 14, 2023By:/s/ Kurt Workman
Name:Kurt Workman
Title:Chief Executive Officer
  
Date: November 13, 2020By:/s/ Ken Suslow
Name:Ken Suslow
Title:Chief Executive Officer
(Principal Executive Officer)
Date: November 13, 202014, 2023By:/s/ Richard HenryKathryn R. Scolnick
Name:Richard HenryKathryn R. Scolnick
Title:Chief Financial Officer
(Principal Financial Officer and Principal Accounting and Financial Officer)



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