Debt and Other Financing Arrangements |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt and Other Financing Arrangements | Debt and Other Financing Arrangements The Company’s indebtedness consisted of the following:
The carrying value of the Company’s long-term debt, net approximate its fair value. Wells Fargo Line of Credit On June 26, 2026, Owlet, Inc., a Delaware corporation (the “Company”), and its wholly-owned subsidiary Owlet Baby Care, Inc., a Delaware corporation (“OBCI”), entered into a new debt financing arrangement and refinanced (i) OBCI’s existing line of credit with ABL OPCO LLC, a Delaware limited liability company, in its capacity as administrative agent for certain lenders (the “ABL Lenders”), and (ii) OBCI’s term loan agreement with WTI Fund X, Inc., a Maryland corporation, WTI Fund XI, Inc., a Maryland corporation (the “WTI Lenders”). On June 26, 2026, OBCI drew down under the Revolving Facility in the principal amount of $17,063, the proceeds of which were used in part to repay all outstanding borrowings under the term loan agreement with the WTI Lenders and terminated both the WTI Loan Facility and ABL Line of Credit, resulting in extinguishment of the associated debt and other debt-related balance sheet amounts. On June 26, 2026 (the “Effective Date”), the Company, as a guarantor (in such capacity, “Guarantor”), and OBCI, as borrower (in such capacity, the “Borrower”), entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”). The Credit Agreement provides for an asset-based revolving credit facility (the “Revolving Facility”) in a maximum principal amount of up to $25,000 (the “Revolving Commitment”). The Revolving Commitment may be expanded by agreement of the parties from up to $25,000 to up to $35,000 (in minimum increments of at least $5,000). Loans and other obligations of the Borrower bear interest at a rate per annum equal to the daily Secured Overnight Financing Rate plus a margin of 2.00% or 2.25% depending on the Borrower’s monthly average excess availability under the Revolving Facility. The weighted average interest rate on the outstanding borrowings under the Revolving Facility was 5.87% for the period from June 26, 2026 through June 30, 2026. The Revolving Facility matures in June 2029. On June 30, 2026, there were $17,063 of outstanding borrowings under the Revolving Facility, which are recorded as a current liability on the unaudited condensed consolidated balance sheet based on the Company's intent and ability to repay the outstanding borrowings in the near term. The outstanding borrowings as of June 30, 2026 were repaid to Wells Fargo in July 2026. The remaining borrowing base availability under the Revolving Facility was $7,531 as of June 30, 2026. The Credit Agreement requires the Borrower to observe certain financial covenants, including (i) a covenant to maintain at least $7,500 of liquidity at all times, and (ii) a covenant to achieve certain minimum EBITDA thresholds specified in the Credit Agreement. As of June 30, 2026, the Company was in compliance with all covenants under the Credit Agreement. The Borrower’s obligations under the Credit Agreement are: (i) fully and unconditionally guaranteed by the Company; and (ii) secured by a security interest in substantially all personal property assets of the Company and the Borrower, including a pledge of the outstanding capital stock of the Borrower given by the Company. Debt issuance costs related to the Credit Agreement of $280 were recorded as a loan commitment asset within other assets on the condensed consolidated balance sheet. Issuance costs are amortized straight-line over the term of the Revolving Facility and recorded within interest income (expense), net on the unaudited condensed consolidated statement of operations and comprehensive income (loss). WTI Loan Facility On September 11, 2024, (the "Effective Date"), OBCI, as the borrower, entered into a Loan Facility Agreement (the “Loan Facility Agreement”) with WTI Fund X, Inc. and WTI Fund XI, Inc. (collectively, “WTI”) for a term loan facility of up to $15,000 (the “WTI Loan Facility”). The Company initiated its first drawdown under the WTI Loan Facility of $7,500 (the “Initial Loan”) shortly after finalizing the Loan Facility Agreement in September 2024. On June 26, 2026, in connection with its entry into the Revolving Facility, the Company repaid all outstanding borrowings under the WTI Loan Facility using proceeds from borrowings under the Revolving Facility, and terminated the WTI Loan Facility. The Company recognized a loss on extinguishment of $1,605 in connection with the extinguishment on the unaudited condensed consolidated statement of operations and comprehensive income (loss), of which $1,098 was due to the write-off of non-cash unamortized debt financing costs previously capitalized on the unaudited condensed consolidated balance sheets. Interest on the outstanding principal amounts under the WTI Loan Facility accrued at a rate per annum equal to the sum of the prime rate plus 3.5%, with a floor of 12%. The interest rate on the outstanding principal amounts under the WTI Loan Facility was 12% for the period from April 1, 2026 through June 26, 2026. Loans under the WTI Loan Facility also accrued 2.5% in payment-in-kind interest ("PIK interest") compounded monthly. All outstanding principal, accrued coupon interest, and accrued PIK interest were repaid in full upon extinguishment on June 26, 2026. As partial consideration for the availability and funding of the WTI Loan Facility, the Company and WTI Fund X, LLC (“Fund X”) and WTI Fund XI, LLC (“Fund XI”, and together with Fund X, the “WTI Funds”) entered into a Stock Issuance Agreement (the “WTI Stock Issuance Agreement”), dated as of the Effective Date. Pursuant to the WTI Stock Issuance Agreement, the Company issued to the WTI Funds an aggregate of 750,000 shares of redeemable common stock on the Effective Date, of which 187,500 shares of the redeemable common stock have been forfeited and 310,000 shares of redeemable common stock were sold by WTI to an unrelated third-party. As redemption rights are not transferable, $2,439 of the mezzanine equity balance was reclassified to permanent equity upon transfer of the common shares outside of the WTI funds during the three months ended March 31, 2026. There were 252,500 redeemable common shares remaining pursuant to the Redemption Option at June 30, 2026. The shares issued to WTI pursuant to the WTI Stock Issuance Agreement contain an embedded redemption option (the “Redemption Option”) such that WTI may elect to force the Company to redeem the shares that are no longer subject to forfeiture for a price of $8.40 per share. The Redemption Option may be exercised in whole or in part, at any time, from time to time, during the period commencing on the first trading day following the fifth anniversary of the Effective Date and continuing through the date which is 10 years after the Effective Date, subject to certain acceleration provisions set forth in the WTI Stock Issuance Agreement. Because the shares are redeemable at the option of the WTI Funds, the shares are recorded in mezzanine equity on the unaudited condensed consolidated balance sheets. The redeemable common shares were initially recorded at their fair value of $7.66 per share, which was an aggregate value of $4,308. Because the shares are required to be redeemed at the option of WTI, based solely on the passage of time, and provided WTI did not elect to otherwise sell or transfer the shares beforehand, the carrying value of the shares will accrete to their redemption value of $8.40 per share from the issuance date through September 11, 2029, the date the Redemption Option first becomes exercisable. Notwithstanding the extinguishment of the WTI Loan Facility on June 26, 2026, the Company's obligation with respect to the Redemption Option under the WTI Stock Issuance Agreement remains outstanding as a separate, unsecured obligation of the Company. The Company recognized $261 and $258 of interest expense related to the amortization of debt financing costs of the WTI Loan Facility and $0 and $282 of interest expense related to the amortization of the loan commitment assets during the three months ended June 30, 2026 and 2025, respectively. The Company recognized $555 and $480 of interest expense related to the amortization of debt financing costs of the WTI Loan Facility and $0 and $667 of interest expense related to the amortization of the loan commitment assets during the six months ended June 30, 2026 and 2025, respectively. ABL Line of Credit On September 11, 2024, the Company, as guarantor, and its wholly-owned subsidiary, Owlet Baby Care, Inc. ("OBCI"), as borrower, entered into a credit and security agreement (the "ABL Credit Agreement") with the financial institutions party thereto from time to time as lenders (collectively the “Lenders”) and ABL OPCO LLC, a Delaware limited liability company, in its capacity as administrative agent for the Lenders (in such capacity, the “Administrative Agent”). The ABL Credit Agreement provided for an asset-based revolving credit line (the "ABL Line of Credit") with a maximum principal amount of up to $20,000. The ABL Line of Credit was collateralized by substantially all of the Company's assets. Loans and other obligations under the ABL Credit Agreement bore interest at a rate per annum equal to the 1-month Secured Overnight Financing Rate (subject to a floor of 3.5%) plus a margin, which varied between 7.5% and 8.5% depending on the Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”), provided that the interest rate shall not exceed the maximum rate permitted under applicable law. On June 26, 2026, in connection with its entry into the Revolving Facility, the Company terminated the ABL Line of Credit. The Company recognized a loss on extinguishment of $604 in connection with the extinguishment on the unaudited condensed consolidated statement of operations and comprehensive income (loss), of which $374 was due to the write-off of unamortized loan commitment assets previously capitalized on the unaudited condensed consolidated balance sheets. The Company recognized $74 and $59 of interest expense related to the amortization of the loan commitment assets during the three months ended June 30, 2026 and 2025, respectively. The Company recognized $151 and $112 of interest expense related to the amortization of the loan commitment assets during the six months ended June 30, 2026 and 2025, respectively. Financed Insurance Premiums In 2025, the Company renewed a number of its insurance policies and entered into several new short-term commercial premium finance agreements with premium finance companies to be paid within one year. As of June 30, 2026, there was no remaining balance outstanding related to these agreements.
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