Commitments and Contingencies |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies Purchase and Other Obligations The Company entered into a services and license agreement for cloud platform services in June 2024. The Company has a purchase obligation of $6,739 to be paid over a 48-month period beginning in June 2024 and $1,239 remains to be paid at June 30, 2026. Tariffs In February 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). As a result of this ruling, the Company was eligible for a refund of tariffs previously paid on imported goods. During the three months ended June 30, 2026, the Company received $3,960 in IEEPA tariff refunds. Of this amount, $3,526 was recorded as a reduction to cost of goods sold for inventory sold, $205 was recorded as a reduction in the carrying value of inventory, and $229 was recorded as a component of other income (expense), net on the unaudited condensed consolidated statement of operations and comprehensive income (loss). The Company will continue to monitor developments in this area and their potential impact on the results of operations. Litigation The Company is involved in legal proceedings from time to time arising in the normal course of business. While any outcome related to such legal proceedings cannot be predicted with certainty, other than the matters discussed below, the Company believes that the outcome of these proceedings will not have a material impact on the Company’s financial position, results of operations, or liquidity. In November 2021, two putative class action complaints were filed against the Company in the U.S. District Court for the Central District of California, captioned Butala v. Owlet, Inc., Case No. 2:21-cv-09016-FLA-SSC, and 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 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 Sandbridge Acquisition Corporation (“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”). On September 8, 2023, the Court ruled that while the Butala and Cherian cases were consolidated, there would be two distinct and separate classes to represent the Section 10(b) Claims and Section 14(a) Claims, respectively, and appointed lead plaintiffs and lead counsel for each class. Following motions to dismiss and reconsiderations rulings, the parties reached agreements in principle to settle both the Section 10(b) Claims and the Section 14(a) Claims. The Section 10(b) Claims were resolved for $3,500 and the Section 14(a) Claims were resolved for $1,750. In accordance with ASC 450, the Company recognized $5,250 of general and administrative expense on the consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2024. In October 2025, the Company caused $3,500 to be paid into escrow for the settlement of the Section 10(b) Claims and, with the directors' and officers' insurance provider, caused $1,750 to be paid into escrow for the settlement of the Section 14(a) Claims. On August 3, 2026, the Court entered final orders approving the settlement amounts and the plan of allocation for the settlements of the Section 10(b) Claims and the Section 14(a) Claims as well as final orders of dismissal for each, fully resolving both actions. Further, on August 26, 2024 and October 3, 2024, derivative complaints were filed in the U.S. District Court for the Central District of California, (Janet Vargas, Derivatively on Behalf of Nominal Defendant Owlet, Inc., Case No. 2:24 cv-07258-FLA-PVC), and Nathan Capleton, Derivatively on Behalf of Nominal Defendant Owlet, Inc., Case No. 2:24 cv-08536-JAK-MAA) asserting claims for violations of Section 14(a) of the Exchange Act, breach of fiduciary duty, unjust enrichment, and waste of corporate assets against certain current or former directors and officers. On December 13, 2024, the derivative actions were consolidated into a single action captioned Vargas v. Workman, et al., Case No. 2:24-cv-07258-FLA-PVC. The parties reached a settlement in the derivative action under which the Company agreed to adopt, implement, and maintain certain corporate governance, oversight, and internal controls reforms, and agreed not to oppose an application for $675 in attorneys’ fees and expenses. In accordance with ASC 450, the Company recorded $675 of general and administrative expense on the consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2025. On August 3, 2026, the Court entered an order granting final approval of the settlement, approving the $675 fee and expense amount, entering final judgment, and dismissing the action with prejudice. Indemnification In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such 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 some cases, the indemnification will continue 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 its directors and officers that may require the Company to indemnify 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 may reduce its exposure and enables the Company to recover a portion of any future amounts paid.
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