Owlet, Inc. (Form: 8-K/A, Received: 08/16/2021 16:18:24)

Owlet, Inc.

Date: August 16, 2021

/s/ Kate Scolnick

Kate Scolnick

Chief Financial Officer

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 2)

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 15, 2021

Owlet, Inc.

(Exact name of registrant as specified in its charter)


Delaware	001-39516	85-1615012
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

2500 Executive Parkway, Ste. 500

Lehi, Utah

84043

(Address of principal executive offices)

(Zip Code)

(844) 334-5330

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value per share	OWLT	New York Stock Exchange
Warrants to purchase common stock	OWLT WS	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

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. ☐

INTRODUCTORY NOTE

This Amendment No. 2 on Form 8-K/A (this “Amendment No. 2”) amends Item 9.01 of the Current Report on Form 8-K filed by Owlet, Inc. (the “Company”) on July 21, 2021, as amended by the Amendment No. 1 on Form 8-K/A filed on July 21, 2021 (collectively, the “Original Report”), in which the Company reported, among other events, the completion of the Transactions. This Amendment No. 2 amends Items 9.01(a) and 9.01(b) in the Original Report to include (a) the unaudited condensed consolidated financial statements of Owlet Baby Care, Inc., a Delaware corporation formerly known as Owlet Baby Care Inc. (“Old Owlet”), as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020, and (b) the unaudited pro forma condensed combined financial information of SBG and Old Owlet as of and for the six months ended June 30, 2021 and for the year ended December 31, 2020. This Amendment No. 2 does not amend any other item of the Original Report or purport to provide an update or a discussion of any developments at the Company subsequent to the filing date of the Original Report.

Capitalized terms used but not defined herein have the meanings given in the Original Report.

Item 9.01.

Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

The (i) unaudited condensed consolidated financial statements of Old Owlet as of March 31, 2021 and for the periods ended March 31, 2021 and 2020 and (ii) audited consolidated financial statements of Old Owlet as of and for the years ended December 31, 2020 and 2019, and the related notes to the financial statements, are incorporated herein by reference from the Original Report. The unaudited condensed consolidated financial statements of Old Owlet as of June 30, 2021 and for the periods ended June 30, 2021 and 2020 are filed as Exhibit 99.3 and incorporated herein by reference.

Also included herewith as Exhibit 99.4 and incorporated herein by reference is the Management’s Discussion and Analysis of Financial Condition and Results of Operations for Old Owlet for the three and six months ended June 30, 2021.

(b) Pro forma financial information.

The unaudited pro forma condensed combined financial information of SBG and Old Owlet as of and for the three months ended March 31, 2021 and for the year ended December 31, 2020 is incorporated herein by reference from the Original Report. The unaudited pro forma condensed combined financial information of SBG and Old Owlet as of and for the six months ended June 30, 2021 and for the year ended December 31, 2020 is filed as Exhibit 99.5 and incorporated herein by reference.

(d) Exhibits.


Exhibit No.		Description

99.3		Unaudited condensed consolidated financial statements of Old Owlet as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020.

99.4		Management’s Discussion and Analysis of Financial Condition and Results of Operations for Old Owlet for the three and six months ended June 30, 2021.

99.5		Unaudited pro forma condensed combined financial information of the Company as of and for the six months ended June 30, 2021 and for the year ended December 31, 2020.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURE

Pursuant to 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 hereunto duly authorized.

Exhibit 99.3

Owlet Baby Care Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(unaudited)


Assets	June 30, 2021			December 31, 2020
Current assets:
Cash and cash equivalents	$	12,218		$	17,009
Accounts receivable, net of allowance for doubtful accounts of $622 and $201		17,394			10,525
Inventory		11,051			7,912
Capitalized transaction costs		4,019			522
Prepaid expenses and other current assets		1,327			1,646

Total current assets	$	46,009		$	37,614
Property and equipment, net		1,823			1,718
Intangible assets, net		609			605
Internally developed software		204			—
Other assets		183			181

Total assets	$	48,828		$	40,118

Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	19,434		$	16,379
Accrued and other expenses		12,449			10,592
Deferred revenues		1,663			1,643
Line of credit		16,287			9,700
Current portion of related party convertible notes payable		7,104			6,934
Current portion of long-term debt		4,000			2,024

Total current liabilities	$	60,937		$	47,272
Deferred rent, net of current portion		280			322
Long-term deferred revenues, net of current portion		168			159
Long-term debt, net		10,991			10,180
Preferred stock warrant liability		8,571			2,993
Other long-term liabilities		13			13

Total liabilities	$	80,960		$	60,939
Commitments and contingencies (Note 6)
Redeemable convertible Series A and Series A-1 preferred stock, $0.0001 par value, 23,030,285 shares authorized; 22,596,929 shares issued and outstanding (liquidation preference of $9,702 and $14,245 for Series A and Series A-1, respectively)		23,652			23,652
Redeemable convertible Series B and Series B-1 preferred stock, $0.0001 par value, 7,507,073 shares authorized; 7,507,071 shares issued and outstanding (liquidation preference of $19,000 and $3,745 for Series B and Series B-1, respectively)		23,536			23,536
Stockholders’ deficit:
Common stock, $0.0001 par value, 52,000,000 shares authorized; 10,982,416 and 10,772,774 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.		1			1
Additional paid-in capital		5,589			3,708
Accumulated deficit		(84,910	)		(71,718	)

Total stockholders’ deficit		(79,320	)		(68,009	)

Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit	$	48,828		$	40,118

See accompanying notes to these unaudited condensed consolidated financial statements.

Owlet Baby Care Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenues	$	24,938		$	18,365		$	46,849		$	33,236
Cost of revenues		11,420			9,521			20,648			17,352

Gross profit	$	13,518		$	8,844		$	26,201		$	15,884

Operating expenses:
General and administrative		7,285			2,748			13,266			5,420
Sales and marketing		7,568			4,248			13,687			8,060
Research and development		4,518			2,471			7,949			4,904

Total operating expenses	$	19,371		$	9,467		$	34,902		$	18,384

Operating loss	$	(5,853	)	$	(623	)	$	(8,701	)	$	(2,500	)

Other income (expense):
Gain on loan forgiveness		2,098			—			2,098			—
Interest expense, net		(484	)		(344	)		(901	)		(633	)
Preferred stock mark to market adjustment		(970	)		8			(5,578	)		8
Loss on extinguishment of debt		(182	)		(172	)		(182	)		(172	)
Other income, net		58			37			79			75

Total other income (expense), net	$	520		$	(471	)	$	(4,484	)	$	(722	)

Loss before income tax provision		(5,333	)		(1,094	)		(13,185	)		(3,222	)
Income tax provision		(2	)		—			(7	)		—

Net loss	$	(5,335	)	$	(1,094	)	$	(13,192	)	$	(3,222	)

Net loss per share attributable to common stockholders, basic and diluted	$	(0.49	)	$	(0.10	)	$	(1.21	)	$	(0.30	)

Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted		10,973,713			10,699,022			10,901,698			10,656,154

See accompanying notes to these unaudited condensed consolidated financial statements.

Owlet Baby Care Inc.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit

(In thousands, except share amounts)

(unaudited)


	Preferred Stock Series A				Preferred Stock Series A-1				Preferred Stock Series B				Preferred Stock Series B-1				Common Stock
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance as of December 31, 2019		12,740,004	$	9,569		9,856,925	$	14,083		6,022,954	$	18,854		1,484,117	$	4,682		10,569,235	$	1	$	2,294	$	(61,197	)	$	(58,902	)
Issuance of common stock upon exercise of stock options		—		—		—		—		—		—		—		—		117,594		—		50		—			50
Stock-based compensation		—		—		—		—		—		—		—		—		—		—		181		—			181
Net loss		—		—		—		—		—		—		—		—		—		—		—		(2,128	)		(2,128	)

Balance as of March 31, 2020		12,740,004	$	9,569		9,856,925	$	14,083		6,022,954	$	18,854		1,484,117	$	4,682		10,686,829	$	1	$	2,525	$	(63,325	)	$	(60,799	)

Issuance of common stock warrants in connection with debt amendment and new debt issuance		—		—		—		—		—		—		—		—		—		—		226		—			226
Issuance of common stock upon exercise of stock options		—		—		—		—		—		—		—		—		14,937		—		19		—			19
Stock-based compensation		—		—		—		—		—		—		—		—		—		—		273		—			273
Net loss		—		—		—		—		—		—		—		—		—		—		—		(1,094	)		(1,094	)

Balance as of June 30, 2020		12,740,004	$	9,569		9,856,925	$	14,083		6,022,954	$	18,854		1,484,117	$	4,682		10,701,766	$	1		3,043		(64,419	)		(61,375	)

Balance as of December 31, 2020		12,740,004	$	9,569		9,856,925	$	14,083		6,022,954	$	18,854		1,484,117	$	4,682		10,772,774	$	1	$	3,708	$	(71,718	)	$	(68,009	)
Issuance of common stock upon exercise of stock options		—		—		—		—		—		—		—		—		178,956		—		244		—			244
Stock-based compensation		—		—		—		—		—		—		—		—		—		—		828		—			828
Net loss		—		—		—		—		—		—		—		—		—		—		—		(7,857	)		(7,857	)

Balance as of March 31, 2021		12,740,004	$	9,569		9,856,925	$	14,083		6,022,954	$	18,854		1,484,117	$	4,682		10,951,730	$	1	$	4,780	$	(79,575	)	$	(74,794	)

Issuance of common stock upon exercise of stock options		—		—		—		—		—		—		—		—		30,686		—		24		—			24
Stock-based compensation		—		—		—		—		—		—		—		—		—		—		785		—			785
Net loss		—		—		—		—		—		—		—		—		—		—		—		(5,335	)		(5,335	)

Balance as of June 30, 2021		12,740,004	$	9,569		9,856,925	$	14,083		6,022,954	$	18,854		1,484,117	$	4,682		10,982,416	$	1	$	5,589	$	(84,910	)	$	(79,320	)

See accompanying notes to these unaudited condensed consolidated financial statements.

Owlet Baby Care Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	Six Months Ended June 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(13,192	)	$	(3,222	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		509			362
Amortization of debt issuance costs		—			18
Amortization of debt discount		19			75
Non-cash gain on forgiveness of debt		(2,098	)		—
Non-cash loss on extinguishment of debt		173			—
Loss (gain) on disposal of intangibles		7			(11	)
Stock-based compensation		1,613			454
Write-down of inventory to net realizable value		74			—
Provision for losses (recoveries) on accounts receivable		420			(25	)
Change in fair value of preferred stock warrant liability		5,578			(8	)
Changes in operating assets and liabilities:
Accounts receivable		(7,289	)		(1,712	)
Prepaid expenses and other assets		(3,181	)		217
Inventory		(3,213	)		1,685
Accounts payable		2,935			2,036
Accrued and other expenses		1,881			1,530
Deferred related party convertible notes payable interest		170			171
Deferred revenues		29			306
Deferred rent		(43	)		(18	)

Net cash (used in) provided by operating activities		(15,608	)		1,858

Cash flows from investing activities
Purchase of property and equipment		(475	)		(411	)
Purchase of intangible assets		(46	)		(8	)
Internally developed software		(188	)		—

Net cash used in investing activities		(709	)		(419	)

Cash flows from financing activities
Proceeds from line of credit		8,182			9,917
Payments on line of credit		(1,595	)		(11,021	)
Proceeds from issuance of long-term debt		5,000			1,000
Payments on financed insurance premium		(320	)		(110	)
Payments for extinguishment of debt		(9	)		—
Proceeds from Paycheck Protection Program loan		—			2,075
Proceeds from exercise of common stock options		268			69

Net cash provided by financing activities		11,526			1,930

Net change in cash and cash equivalents		(4,791	)		3,369
Cash and cash equivalents at beginning of period		17,009			11,736

Cash and cash equivalents at end of period	$	12,218		$	15,105

Supplemental disclosure of cash flow information:
Cash paid for interest	$	330		$	223
Supplemental disclosure of non-cash financing activities:
Issuance of common stock warrants in connection with debt amendment and new debt issuance		—		$	226
Unpaid purchases of property and equipment	$	68		$	432
Unpaid purchases of intangibles	$	52		$	25

See accompanying notes to these unaudited condensed consolidated financial statements.

Owlet Baby Care Inc.

Notes to Condensed Consolidated Financial Statements

(In thousands, except share and per share amounts)

(unaudited)

1. Description of Organization and Summary of Significant Accounting Policies

Organization

Owlet Baby Care Inc. (the “Company”) was incorporated on February 24, 2014 as a Delaware corporation. The Company’s ecosystem of digital parenting solutions, including its connected anchor product, the Owlet Smart Sock, is helping to transform modern parenting by providing parents data to track the sleep patterns, oxygen levels, and heart rates of their children. Its solutions are designed to provide actionable insights aimed at improving children’s sleep and parents’ confidence and comfort.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiary have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. All intercompany transactions and balances have been eliminated in consolidation. All dollar amounts, except per share amounts, in the notes are presented in thousands, unless otherwise specified. The condensed consolidated balance sheet as of December 31, 2020, included herein, was derived from the audited consolidated financial statements as of that date, but does not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in the registration statement on Form S-4 filed by Sandbridge Acquisition Corporation (“SBG”) on June 15, 2021. However, the Company believes that the disclosures provided herein are adequate to prevent the information presented from being misleading.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary for the fair statement of the Company’s financial position, results of operations, cash flows and the changes in equity for the interim periods presented. The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for any subsequent quarter, the fiscal year ending December 31, 2021, or any other period.

Business Combination

On February 15, 2021, the Company entered into a Business Combination Agreement (“Business Combination”) with SBG and Project Olympus Merger Sub, Inc. (“Merger Sub”), whereby Merger Sub will merge with and into Owlet, with Owlet surviving the Merger. Owlet will become a wholly owned subsidiary of SBG and SBG will immediately be renamed “Owlet, Inc.”

On July 14, 2021 SBG held the Special Meeting of stockholders (the “Special Meeting”), at which the SBG stockholders considered and adopted, among other matters, a proposal to approve the Business Combination together with the other transactions contemplated by the Business Combination Agreement.

On July 15, 2021, the parties consummated the Business Combination. In connection with the Closing, SBG changed its name from Sandbridge Acquisition Corporation to Owlet, Inc. The Business Combination has been accounted for as a reverse recapitalization. See Note 11 for further information.

Liquidity

Since inception, the Company has experienced recurring losses from operations and generated negative cash flows from operations. The Company has an accumulated deficit as of June 30, 2021 of $84,910 and expects to incur additional

losses from operations in the future. On July 15, 2021, the Company completed the Business Combination and received approximately $135,000 in combined net proceeds from the Business Combination and the private investments (“PIPE Investment”). The Company estimates the available cash as of June 30, 2021, together with the proceeds received from the Business Combination and PIPE Investment, will be sufficient to meet its projected operating requirements for at least the next twelve months. Therefore, based on management’s updated evaluation of the Company’s ability to continue as a going concern, management has concluded the factors that previously raised substantial doubt about the Company’s ability to continue as a going concern no longer exist as of the issuance date of these unaudited condensed consolidated financial statements.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Key management estimates include those related to revenue recognition (including sales incentives, product returns and implied post contract support and service), allowances for doubtful accounts, write-downs for obsolete or slow-moving inventory, useful lives for property and equipment, impairment assessments for long-lived tangible and intangible assets, warranty obligations, valuation allowances for net deferred income tax assets, and valuation of warrants and stock-based compensation.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company utilizes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

•

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities,

•

Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument,

•

Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The carrying value of the Company’s accounts receivable, accounts payable, and accrued expenses approximate their fair value due to the short period of time to maturity or repayment. The Company has concluded that the preferred stock warrants issued meet the definition of a liability under ASC 480, Distinguishing Liabilities from Equity, and has classified the liability as a Level 3 fair value measurement.


	June 30, 2021
	Level 1		Level 2		Level 3		Balance
Assets:
Money market funds	$	12,040	$	—	$	—	$	12,040

Total assets	$	12,040	$	—	$	—	$	12,040

Liabilities:
Preferred stock warrant liability	$	—	$	—	$	8,571	$	8,571

Total liabilities	$	—	$	—	$	8,571	$	8,571


	December 31, 2020
	Level 1		Level 2		Level 3		Balance
Assets:
Money market funds	$	16,954	$	—	$	—	$	16,954

Total assets	$	16,954	$	—	$	—	$	16,954

Liabilities:
Preferred stock warrant liability	$	—	$	—	$	2,993	$	2,993

Total liabilities	$	—	$	—	$	2,993	$	2,993

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

The Company presented the fair value measurement of the preferred stock warrant liability as a Level 3 measurement, 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 and could have a material impact on future fair value measurements.

The Company has re-measured the preferred stock warrant liability to its estimated fair value as of June 30, 2021 and December 31, 2020, using the Black-Scholes option pricing model with the following assumptions:


	June 30, 2021			December 31, 2020
Series A preferred stock value per share	$	20.48		$	7.47
Exercise price of warrants	$	0.76		$	0.76
Term in years		5.25			5.75
Risk-free interest rate		0.91	%		2.97	%
Volatility		66.00	%		67.00	%
Dividend yield		0.00	%		0.00	%

The following table presents a reconciliation of the Company’s preferred stock warrant liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of:


	June 30, 2021
	Preferred Stock Warrant Liability
Balance as of December 31, 2020	$	2,993
Change in fair value upon re-measurement (1)		5,578

Balance as of June 30, 2021	$	8,571


	December 31, 2020
	Preferred Stock Warrant Liability
Balance as of December 31, 2019	$	1,041
Change in fair value upon re-measurement (2)		1,952

Balance as of December 31, 2020	$	2,993

(1)	The related preferred stock mark to market adjustment recorded in other income (expense) was ($970) and ($5,578) for the three and six months ended June 30, 2021, respectively.

(2)	The related preferred stock mark to market adjustment recorded in other income (expense) was $8 for the three and six months ended June 30, 2020.

There were no transfers between Level 1 and Level 2 in the period reported. There were no transfers into or out of Level 3 in the period reported.

Segments

The Company operates as a single operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for purposes of allocating resources, making operating decisions, and evaluating financial performance. Since the Company operates in one operating segment, all required financial segment information can be found in these unaudited interim condensed consolidated financial statements.

Revenue by geographic area is based on the delivery address of the customer and is summarized as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
United States	$	23,215	$	17,783	$	43,746	$	31,988
International		1,723		582		3,103		1,248

Total revenues	$	24,938	$	18,365	$	46,849	$	33,236

Other than the United States, no individual country exceeded 10% of total revenues for the three and six months ended June 30, 2021 and June 30, 2020.

The Company’s long-lived assets are composed of property and equipment, net, and are summarized by geographic area as follows as of (in thousands):


	June 30, 2021		December 31, 2020
United States	$	596	$	528
Thailand		710		1,104
Mexico		266		—
China		251		86

Total property and equipment, net	$	1,823	$	1,718

Significant Accounting Policies

Other than policies noted within Recent Accounting Pronouncements below, there have been no significant changes from the significant accounting policies disclosed in Note 1 of the “Notes to Consolidated Financial Statements” included in the Proxy Statement/Prospectus.

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40). ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. The effective date of this update is for fiscal years beginning after December 15, 2020 and interim periods therein. The Company adopted the new guidance as of January 1, 2021. Adoption did not have a material impact on the Company’s unaudited interim condensed consolidated financial statements.

2. Certain Balance Sheet Accounts

Inventory

Inventory consisted of the following as of:


	June 30, 2021		December 31, 2020
Finished goods	$	10,504	$	7,331
Raw materials		547		581

Total inventory	$	11,051	$	7,912

Capitalized Transaction Costs

Capitalized transaction costs were the following as of:


	June 30, 2021		December 31, 2020
Capitalized transaction costs	$	4,019	$	522

The Company capitalized transaction costs for accounting and legal services related to the Business Combination with Sandbridge.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following as of:


	June 30, 2021		December 31, 2020
Prepaid hosting	$	418	$	369
Prepaid expenses		377		163
Right of return asset		199		146
Point of purchase (“POP”) displays		195		376
Prepaid insurance		125		499
Other current assets		13		93

Total prepaid expenses and other current assets	$	1,327	$	1,646

Property and Equipment, net

Property and equipment consisted of the following as of:


	June 30, 2021			December 31, 2020
Tooling and manufacturing equipment	$	1,817		$	1,731
Furniture and fixtures		569			569
Computer equipment		406			214
Construction in progress		265			—
Software		213			213
Leasehold improvements		9			9

Total property and equipment		3,279			2,736
Less accumulated depreciation and amortization		(1,456	)		(1,018	)

Property and equipment, net	$	1,823		$	1,718

Depreciation and amortization expense on property and equipment was $223 and $174 for the three months ended June 30, 2021 and 2020, respectively. For the three months ended June 30, 2021 and 2020, the Company allocated $147 and $93, respectively, of depreciation and amortization expense related to tooling and manufacturing equipment and software to cost of revenues.

Depreciation and amortization expense on property and equipment was $438 and $317 for the six months ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021 and 2020, the Company allocated $297 and $156, respectively, of depreciation and amortization expense related to tooling and manufacturing equipment and software to cost of revenues.

Intangible Assets

Intangible assets consisted of the following as of:


	June 30, 2021
	Gross		Accumulated Amortization			Net
Patents and trademarks	$	585	$	(140	)	$	445
Film production costs		278		(114	)		164

Total intangible assets	$	863	$	(254	)	$	609


	December 31, 2020
	Gross		Accumulated Amortization			Net
Patents and trademarks	$	511	$	(119	)	$	392
Film production costs		278		(65	)		213

Total intangible assets	$	789	$	(184	)	$	605

Amortization expense resulting from intangible assets was $36 and $25 for the three months ended June 30, 2021 and 2020, respectively. For the three months ended June 30, 2021 and 2020, the Company allocated $25 and $9, respectively, of amortization expense related to film production costs to cost of revenues.

Amortization expense resulting from intangible assets was $71 and $45 for the six months ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021 and 2020, the Company allocated $50 and $23, respectively, of amortization expense related to film production costs to cost of revenues.

The future aggregate amounts of amortization expense to be recognized related to finite-lived intangible assets as of June 30, 2021 is as follows for the:


Years Ending December 31:	Amount
Remainder of 2021	$	75
2022		152
2023		46
2024		44
2025		43
Thereafter		103

	$	463

As of June 30, 2021, the Company has $146 of legal costs associated with pending patents and trademarks.

Internally Developed Software

Internally developed software was the following as of:


	June 30, 2021		December 31, 2020
Internally developed software	$	204	$	—

As of June 30, 2021, the Company’s internally developed software is still in the development phase. As such, the Company has not recognized any amortization for the three and six months ended June 30, 2021.

Accrued and Other Expenses

Accrued and other expenses consisted of the following as of:


	June 30, 2021		December 31, 2020
Accrued and other expenses:
Accrued sales returns	$	2,838	$	2,844
Discounts and allowances		2,242		1,747
Payroll liabilities		1,909		1,768
Sales tax payable		1,824		1,886
Accrued warranty		992		924
Other accrued expenses		2,644		1,423

Total accrued expenses	$	12,449	$	10,592

Changes in accrued warranty were as follows:


	For the Three Months Ended June 30,
	2021			2020
Accrued warranty, beginning of period	$	922		$	798
Provision for warranties issued during the period		262			349
Settlements of warranty claims during the period		(192	)		(255	)

Accrued warranty, end of period	$	992		$	892


	For the Six Months Ended June 30,
	2021			2020
Accrued warranty, beginning of period	$	924		$	378
Provision for warranties issued during the period		504			1,093
Settlements of warranty claims during the period		(436	)		(579	)

Accrued warranty, end of period	$	992		$	892

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.

Changes in the total deferred revenues balance were as follows:


	For the Three Months Ended June 30,
	2021			2020
Beginning balance	$	1,725		$	958
Deferral of revenues		1,199			661
Recognition of deferred revenues		(1,093	)		(468	)

Ending balance	$	1,831		$	1,151


	For the Six Months Ended June 30,
	2021			2020
Beginning balance	$	1,802		$	845
Deferral of revenues		2,017			1,177
Recognition of deferred revenues		(1,988	)		(871	)

Ending balance	$	1,831		$	1,151

4. Debt

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


	June 30, 2021			December 31, 2020
Term note payable to SVB, maturing on April 1, 2024	$	15,000		$	10,000
Financed insurance premium		—			320
Small Business Administration Paycheck Protection Program note payable, maturing on April 22, 2022		—			2,075

Total debt		15,000			12,395
Less current portion		(4,000	)		(2,024	)
Less debt discount		—			(187	)
Less debt issuance costs		(9	)		(4	)

Total long-term debt, net	$	10,991		$	10,180

Term Note

On April 22, 2020, the Company amended its term note (the “Term Note”) with Silicon Valley Bank (“SVB”), which allowed the Company to borrow an additional $1,000 at closing, extended the interest-only period through April 30, 2021, and modified the interest rate to be the greater of the bank’s prime rate plus 4.50%, or 7.50%. As a result of this amendment, the Company recorded a loss on extinguishment of debt of $172 in the unaudited condensed consolidated financial statements of operations for the three and six months ended June 30, 2020. The amendment also included a provision to further extend the interest-only period through October 31, 2021 and allow the Company to borrow an additional $2,000 if it achieved a specified gross profit milestone for the year ended December 31, 2020. On September 22, 2020, the Company further amended the Term Note to change the repayment term from 36 consecutive equal monthly payments of principal to 30 consecutive equal monthly payments of principal beginning on November 1, 2021 and modified the interest rate to the greater of the bank’s prime rate plus 3.50%, or 6.50%. The Company achieved its gross profit milestone and borrowed $2,000 in December 2020. The Term Note matures on April 1, 2024 and is cross defaulted with the financial covenants in the original loan and security agreement (“Original LSA”) and the related amended and restated loan and security agreement (“the A&R LSA”). On May 25, 2021, the Company further amended the A&R LSA to, among other things, borrow an additional $5,000 under the Term Note. As a result of this amendment, the Company recorded a loss on extinguishment of debt of $182 in the unaudited condensed consolidated financial statements of operations for the three and six months ended June 30, 2021. The Term Note had an aggregate principal balance of $15,000 and $10,000 as of June 30, 2021 and December 31, 2020, respectively.

The Company believes that the fair value of the Term Note approximates the recorded amount as of June 30, 2021, 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).

Paycheck Protection Program Loan

In April 2020, the Company received proceeds from the Small Business Administration Paycheck Protection Program (‘‘PPP’’) in the amount of $2,075, with SVB as lender for the loan (the ‘‘PPP Loan’’), under the Federal Coronavirus Aid, Relief, and Economic Security Act (the ‘‘CARES Act’’).

Under the terms of the PPP Loan, interest accrued on the outstanding principal at a rate of 1.0% per annum. The term of the PPP Loan was two years, unless payment was required in connection with an event of default under the PPP Loan.

On June 15, 2021, the Company received forgiveness for the PPP Loan for the full amount of $2,075 of principal and $24 in interest. As a result of the PPP Loan being forgiven, the Company recognized a $2,098 gain.

Future Aggregate Maturities

As of June 30, 2021, future aggregate maturities of notes payable were as follows:


Years Ending December 31,
Remainder of 2021	$	1,000
2022		6,000
2023		6,000
2024		2,000

Total	$	15,000

Line of Credit

As of June 30, 2021, the Company’s line of credit (the “SVB Revolver”) had a borrowing capacity of $17,500 and a maturity date of April 22, 2024. As of June 30, 2021, the SVB Revolver bore interest at an annual rate equal to (i) the greater of the bank’s prime rate plus 0.75% or 5.50% when the streamline period is in effect and (ii) the greater of the bank’s prime rate plus 1.25% or 6.00% at all other times. Each streamline period commences the first day of the month following a written report of the Company’s liquidity and ends the first day after the Company fails to maintain a required cash and cash availability streamline threshold, provided no event of default has occurred and is continuing. If an event of default has occurred and is continuing, SVB may maintain the Company’s streamline status at its discretion. The required cash and cash availability streamline threshold was $8,000 as of June 30, 2021 and $7,000 as of December 31, 2020, and the Company was within a streamline period as of both June 30, 2021 and December 31, 2020. Draws against the line of credit were $16,287 and $9,700 as of June 30, 2021 and December 31, 2020, respectively. The Company was not in compliance with its financial covenant as of December 31, 2020. On March 10, 2021, the Company amended the A&R LSA to waive the existing default and waive any rights and remedies against the Company with respect to the existing default for the 12 months ended December 31, 2020. The amendment also set forth three new financial covenants, including a requirement to maintain cash and cash availability of at least $6,000 as of the last day of each month beginning on March 31, 2021, a requirement to complete a qualifying liquidity event with aggregate new net proceeds of at least $50,000 in cash on or before May 31, 2021 (“Liquidity Event”), and a requirement to agree to terms with SVB on a 2021 EBITDA covenant no later than July 15, 2021. On May 14, 2021 the Company further amended the A&R LSA to, among other things, reduce the minimum cash and cash availability threshold to $5,000 and change the timing of the required Liquidity Event from May 31, 2021 to July 31, 2021. On May 25, 2021, the Company further amended the A&R LSA to, among other things, increase the SVB Revolver borrowing capacity from $12,500 to $17,500, extend the SVB Revolver maturity date from April 22, 2022 to April 22, 2024, increase the required cash and cash availability streamline threshold from $7,000 to $8,000, and change the deadline of the requirement to agree to terms with SVB on a 2021 EBITDA covenant from July 15, 2021 to August 15, 2021. On August 12, 2021, the Company further amended the A&R LSA to change the deadline of the requirement to agree to terms with SVB on a 2021 EBITDA covenant from August 15, 2021 to September 30, 2021. As of June 30, 2021, the Company was in compliance with all applicable debt covenants. Additionally, the Company completed a Liquidity Event on July 15, 2021 upon the consummation of the Business Combination.

5. Related Party Transactions

Convertible Promissory Notes

As of June 30, 2021 and December 31, 2020 the Company had $6,500 in related party convertible promissory notes outstanding, which were issued during the year ended December 31, 2019. The convertible promissory notes bore interest at 5.00% per annum and all outstanding principal and accrued interest was due on the earlier of the two-year anniversary of the initial closing date (August 9, 2021) or upon the closing of a change of control, as defined in the convertible note agreements. As of June 30, 2021 and December 31, 2020, the accrued interest on the convertible promissory notes was $608 and $447, respectively, and the unamortized debt issuance costs were $4 and $13, respectively.

Per the convertible note agreements, the convertible promissory notes could not be prepaid without the consent of the majority holders and would automatically convert to shares of our convertible preferred stock at 80% of the convertible preferred stock price per share upon a qualified preferred stock equity financing round of at least $15,000, excluding the conversion value of the notes. The convertible promissory notes were amended in February 2021 to allow the notes to either: (i) automatically convert into shares of our convertible preferred stock immediately prior to the consummation of the Business Combination at a conversion price equal to the price per share applicable to the Company’s most recent equity financing at the conversion date (which was $3.1546 as of the issuance date of these financial statements) and, in turn, convert into shares of the Company’s common stock as part of the Business Combination or (ii) at a holder’s election, trigger the repayment in cash of the outstanding principal and accrued interest at the consummation of the Business Combination. On July 15, 2021, the Company completed the Business Combination. As such, all but one of the convertible notes were converted into shares of the Company’s common stock. The unconverted note had a balance of $2 and was paid in full.

The convertible promissory notes were subordinated to the SVB Revolver and the Term Note (See Notes 8 and 9 in the annual consolidated financial statements).

6. Commitments and Contingencies

Underwriting Agreements

Certain of the underwriters of the Business Combination, as described in Note 1, were entitled to deferred fees of $7,150 as of June 30, 2021. Subject to the terms of the underwriting agreements, the deferred fees were contingent upon the Company completing the Business Combination, which closed on July 15, 2021. As such, the deferred underwriting commissions of $7,150 were paid to the underwriters upon the closing of the Business Combination.

Purchase Obligation

The Company entered into a services and license agreement for cloud platform services in June 2021. The Company has a purchase obligation of $5,000 to be paid over a 36-month period beginning in June 2021.

The Company entered into a purchase agreement in August 2021 for components to be used in the manufacturing of a future product. The Company has a purchase obligation of $1,600 to be paid over a 12-month period beginning in August 2021.

Litigation

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

Operating Leases

The Company leases office space and certain equipment under non-cancelable operating leases. As of June 30, 2021, future minimum lease payments under non-cancelable operating leases with terms of one year or more are as follows:


Years Ending December 31:	Amount
Remainder of 2021	$	723
2022		1,541
2023		1,587
2024		953

Total	$	4,804

Rental expense under operating leases was approximately $368 and $740 for the three and six months ended June 30, 2021, respectively, and $219 and $447 for the three and six months ended June 30, 2020, respectively.

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 intends to enter 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 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.

7. Redeemable Convertible Preferred Stock

As of June 30, 2021 and December 31, 2020, the Company was authorized to issue 30,537,358 shares and had 30,104,000 issued and outstanding shares of redeemable convertible preferred stock issued in various individual series. Share information, liquidation preference, and conversion rates by each series of convertible preferred stock class as of June 30, 2021 and December 31, 2020 were as follows (in thousands, except share and per share amounts):


	Issue Price		Shares Authorized		Shares Issued and Outstanding		Liquidation Preference
Series A	$	0.7615		13,173,360		12,740,004	$	9,702
Series A-1	$	1.4452		9,856,925		9,856,925		14,245
Series B	$	3.1546		6,022,956		6,022,954		19,000
Series B-1	$	2.5237		1,484,117		1,484,117		3,745

				30,537,358		30,104,000	$	46,692

Upon the consummation of the Business Combination, all of these shares were converted into common stock. See Note 11 for further information.

Liquidation

In the event of any liquidation event, either voluntarily or involuntary, the holders of the convertible preferred stock shall be entitled to receive, out of the assets of the Company, the applicable liquidation preference specified for each series of preferred stock then held by them before any payment shall be made or any assets distributed to the holders of common stock. Liquidation preference is $0.7615 for Series A, $1.4452 for Series A-1, $3.1546 for Series B and $2.5237 for Series B-1, each adjusted for any stock splits, combinations, and reorganizations, plus all declared and unpaid dividends on each such share.

If upon the liquidation event, the assets distributed among the holders of the convertible preferred stock are insufficient to permit the payment to such holders of the full liquidation preference for their shares, then the holders of shares of

the Series Preferred stock shall share ratably in any distribution of the assets available for distribution in proportion to their respective amounts, which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid the full preferential amount.

After the payment to the holders of the convertible preferred stock of the full preferential amount specified above, any remaining assets of the Company would be distributed pro rata among the holders of the Common Stock.

Optional Conversion

Each share of convertible preferred stock was convertible at each stockholder’s option, at any time after the date of issuance of such share, into common stock as determined by dividing the original issue price for each series by the applicable conversion price for such series in effect at the date of conversion. The conversion ratio was subject to appropriate adjustments for anti-dilution provisions, including stock splits, stock dividends, subdivisions, combinations, recapitalization events or similar events.

Automatic Conversion

Each share of preferred stock was convertible into common stock at initial conversion rates as shown in the previous table, subject to adjustments based on certain antidilution provisions, including stock splits, stock dividends, subdivision, combinations, recapitalization or similar events, as provided by the Company’s certificate of incorporation. Further, all shares of preferred stock would automatically convert into common stock upon the vote or written consent of the holders of a majority of the shares of preferred stock (including holders of at least 59% of the shares of Series B and B-1 preferred stock, voting together as a single class) or upon the closing of a firm-commitment underwritten public offering of the Company’s common stock with gross aggregate proceeds to the Company of at least $30,000 and $4.3356 per share of common stock.

Dividends

The holders of shares of Series A, Series A-1, Series B, and Series B-1 convertible preferred stock were entitled to receive dividends of $0.7615, $1.4452, $3.1546, and $2.5237, respectively, per annum on each share of Series A, Series A-1, Series B, and Series B-1 convertible preferred stock. The dividends were payable in cash, out of the assets at the time legally available thereof, when, as and if declared by the Board of Directors, on an equal basis according to the number of shares of convertible preferred stock held by such holders, prior and in preference to the common stock and were non-cumulative.

Down Round Anti-dilution Protection

The Company’s certificate of incorporation provided that if the Company sold common stock at a price that was lower than any of current conversion prices of the convertible preferred stock, then the conversion price would have been reduced to a price based upon a broad-based weighted average formula in the Company’s certificate of incorporation. This feature is frequently referred to as ‘‘down-round protection.’’ The Company determined that this embedded conversion option was more akin to equity and did not record a liability for the instrument as of June 30, 2021 and December 31, 2020.

Redemption

Under certain circumstances, subsequent to the occurrence of a deemed liquidation event as defined in the Company’s certificate of incorporation, a majority of the holders of the then outstanding convertible preferred stock were able to require the Company to redeem their shares at a price per share equal to the liquidation amount, to the extent that sufficient funds were available.

Voting

The holders of the Company’s convertible preferred stock were entitled to the number of votes equal to the number of shares of common stock into which the convertible preferred stock could be converted. The Series A and Series A-1 preferred stockholders, voting as a single class (on an as-converted basis), could elect one member of the Board of

Directors. The Series B and Series B-1 preferred stockholders, voting as a single class (on an as-converted basis), could elect one member of the Board of Directors. The stockholders of a majority of the common stock, voting separately as a class, could elect two members of the Board of Directors. Any remaining directors, of which there were one and five as of December 31, 2020 and June 30, 2021, respectively, were elected by the holders of the common stock and any other class or series of voting stock, as a single class.

Stockholder Rights

The holders of the Company’s convertible preferred stock had protective provisions that require preferred stockholders representing a majority of the then outstanding convertible preferred stock, voting as a single class (on an as-converted basis), to consent to specific actions including the following: changes in the corporation’s certificate of incorporation or bylaws that would affect, alter or change the preference or rights of the preferred stock, changes in the authorized number of shares, declaration or payment of dividends, repurchase of shares, changes in the size of the Board of Directors, creation of a new class or series of stock, or taking any action that would cause a liquidation event.

Classification of Convertible Preferred Stock

The redemption provisions of the Series A, Series A-1, Series B, and Series B-1 convertible preferred stock were considered contingent redemption provisions that were not solely within the Company’s control. Also, in the event of a deemed liquidation event, the liquidation preference of the Series A, Series A-1, Series B, and Series B-1 convertible preferred stock was considered contingent redemption provisions that were not solely within the Company’s control. Accordingly, the Company’s convertible preferred stock has been presented outside of permanent equity in the mezzanine section of the unaudited condensed consolidated balance sheets.

8. Stock Options

Stock Options

The Company’s 2014 equity incentive plan, adopted by the Board of Directors on June 30, 2014 (the “Plan”), provides for the grants of equity awards, including incentive stock options, non-statutory stock options, and restricted stock unit awards. As of June 30, 2021 there were 859,818 shares available for grant under the Plan.

The following table sets forth the outstanding common stock options and related activity for the six months ended June 30, 2021:


	Number of Options			Weighted Average Exercise Prices		Weighted Average Remaining Contractual Terms (years)		Aggregate Intrinsic Values
Balance as of December 31, 2020		4,981,916		$	0.92		7.29	$	54,135
Granted		846,209			14.63
Exercised		(209,642	)		1.29				3,253
Canceled		(311,339	)		1.92
Expired		(3,682	)		0.24

Balance as of June 30, 2021		5,303,462		$	3.03		7.08	$	91,103

Options vested and exercisable as of June 30, 2021		3,420,598		$	0.92		6.08	$	65,981

Stock-based compensation was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
General and administrative	$	349	$	51	$	747	$	99
Sales and marketing		168		132		362		201
Research and development		268		90		504		154

Total stock-based compensation	$	785	$	273	$	1,613	$	454

As of June 30, 2021, the Company had $7,947 of unrecognized stock-based compensation costs related to non-vested awards that will be recognized over a weighted-average period of 3.13 years.

9. Income Taxes

In order to determine the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates. To the extent that application of the estimated annual effective tax rate is not representative of the quarterly portion of actual tax expense expected to be recorded for the year, the Company determines the quarterly provision for income taxes based on actual year-to-date income. Certain significant or unusual items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

Income tax expense for the three and six months ended June 30, 2021 was $2 and $7, or approximately 0.04% and 0.05% of pre-tax income, respectively, and for the three and six months ended June 30, 2020 was $0.

Significant judgment is required in determining the Company’s provision for income taxes, recording valuation allowances against deferred tax assets, and evaluating the Company’s uncertain tax positions. In evaluating the ability to realize its deferred tax assets, in full or in part, the Company considers all available positive and negative evidence, including past operating results, forecasted future earnings, and prudent and feasible tax planning strategies. Due to historical net losses incurred and the uncertainty of realizing the deferred tax assets, for all the periods presented, the Company has maintained a domestic valuation allowance against the deferred tax assets that remain after being offset by domestic deferred tax liabilities.

The Company files U.S. and state income tax returns in jurisdictions with various statutes of limitations. The Company’s federal and state tax returns are not currently under examination.

10. Net Loss Attributable to Common Stockholders

The 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 June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Numerator:
Net loss attributable to common stockholders	$	(5,335	)	$	(1,094	)	$	(13,192	)	$	(3,222	)
Denominator:
Weighted-average common shares used in computed net loss per share attributable to common stockholders basic and diluted		10,973,713			10,699,022			10,901,698			10,656,154

Net loss per share attributable to common stockholders basic and diluted	$	(0.49	)	$	(0.10	)	$	(1.21	)	$	(0.30	)

The following outstanding potentially dilutive common stock equivalents have been excluded from the computation of diluted net loss per share attributable to common stockholders due to their anti-dilutive effect:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Convertible notes		2,816,452		2,687,672		2,816,452		2,687,672
Preferred stock		30,104,000		30,104,000		30,104,000		30,104,000
Common stock warrants		459,100		459,100		459,100		459,100
Preferred stock warrants		433,356		433,356		433,356		433,356

Total		33,812,908		33,684,128		33,812,908		33,684,128

In addition to the above securities, the Company’s outstanding stock options shown in Note 8 of the unaudited condensed consolidated financials were excluded from the computation of diluted net loss per share attributable to common stockholders due to their anti-dilutive effect for the three and six months ended June 30, 2021 and June 30, 2020.

11. Subsequent Events

For its unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2021, the Company evaluated subsequent events through August 16 2021, the date the unaudited condensed consolidated financial statements were available for issuance, and has determined that subsequent events requiring additional disclosure in the unaudited condensed consolidated financial statements are disclosed below and throughout the Notes to the unaudited condensed consolidated financial statements.

Business Combination

On July 15, 2021, the Company consummated the Business Combination (“the Closing”). In connection with the Closing, SBG changed its name from Sandbridge Acquisition Corporation to Owlet, Inc (“Owlet”). Holders of 19,758,773 shares of Sandbridge Class A common stock sold in its initial public offering (the “Initial Shares”) properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from SBG’s initial public offering, calculated as of two business days prior to the consummation of the Business Combination, which was $10.00 per share, or $197,588 in the aggregate.

As a result of the Business Combination, each share of the Company’s preferred stock and common stock prior to the Business Combination was converted into the right to receive approximately 2.053 shares of Owlet’s common stock, par value $0.0001 per share (“Common Stock”). Additionally, the shares of SBG’s Class B common stock automatically converted to 5,750,000 shares of Common Stock, of which 2,807,500 shares are subject to vesting under certain conditions.

Pursuant to subscription agreements entered into in connection with the Business Combination Agreement (collectively, the “Subscription Agreements”), certain investors purchased an aggregate of 12,968,000 newly-issued shares of Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of $129,680. An aggregate of 496,717 vested options to purchase shares of the Company’s common stock, par value $0.0001 per share, at a value of approximately $20.53 per share for an aggregate value of $9,890, net of exercise price, (“Cash Election Consideration”) were tendered by certain of the Company’s option holders for the Cash Election Consideration in connection with the Closing.

Exhibit 99.4

Item 2.

Management’s Discussion and Analysis of Financial Results and Operations

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included on Exhibit 99.3. This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statement’s regarding our plans, objectives, expectations and intentions. Our results may differ materially from those currently described in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements disclosed in our Registration Statement on Form S-1 (File No. 333-258506), filed with the SEC on August 5, 2021. Throughout this Exhibit 99.4, unless otherwise noted, “we”, “us”, “our” and the “Company” refer to Owlet Baby Care Inc. and its consolidated subsidiaries before the business combination transaction with Sandbridge Acquisition Corporation and to Owlet, Inc. and its consolidated subsidiaries after the business combination transactions with Sandbridge Acquisition Corporation.

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. Our diversified and connected portfolio of products currently includes the award-winning Owlet Smart Sock, the first baby monitor to track an infant’s oxygen levels, heart rate, and sleep trends; the Owlet Cam, which turns any smartphone into a baby monitor with high-definition clarity; the Owlet Monitor Duo, which offers the intelligence of the Owlet Smart Sock paired with the Owlet Cam; and Owlet Dream Lab, an interactive online program designed to be a parent’s guide to building healthy sleep habits for their infants.

Since our inception, we have been engaged in developing and marketing our products and content. We have incurred net operating losses and have generated negative cash flows from operations in every year since our inception. As of June 30, 2021 and December 31, 2020, we had an accumulated deficit of $84.9 million and $71.7 million, respectively. Since our inception, we have funded our operations primarily with proceeds from the issuances of convertible preferred stock, borrowings under our loan facilities, issuances of related party convertible notes, and sales of our products and services.

Business Combination and Public Company Costs

On July 14, 2021, Sandbridge Acquisition Corporation (“SBG”) held the Special Meeting of Stockholders (the “Special Meeting”), at which the SBG stockholders considered and adopted, among other matters, a proposal to approve the Business Combination Agreement (“Business Combination”) and related transactions. On July 15, 2021, the parties consummated the Business Combination. In connection with the Closing, SBG changed its name from Sandbridge Acquisition Corporation to Owlet, Inc. (“Owlet”). Following the consummation of the Business Combination, Owlet became an SEC-registrant and commenced trading on the New York Stock Exchange (‘‘NYSE’’) under the symbols “OWLT” and “OWLT WS”.

As a result of the Business Combination, each share of our preferred stock and common stock was converted into the right to receive approximately 2.053 shares of Owlet’s common stock, par value $0.0001 per share (“Common Stock”). Additionally, the shares of Sandbridge Class B common stock held by Sandbridge Acquisition Holdings LLC and related parties automatically converted to 5,750,000 shares of Common Stock (of which 2,807,500 shares are subject to vesting under certain conditions). An aggregate of $197.6 million was paid from SBG’s trust account to holders that properly exercised their right to have initial shares redeemed.

As a result of becoming an NYSE-listed company, we will need to hire additional staff and implement processes and procedures to address public company regulatory requirements and customary practices. We expect to incur additional annual expenses for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources and fees.

Key Factors Affecting Our Performance

We believe that the growth and future success of our business depends on many factors. While we believe that each of these factors present significant opportunities for our business, each factor also poses risks and challenges that we must successfully address in order to sustain our growth and continue to improve our results of operations.

Penetration with Existing Products

Our growth will depend, in large part, on our continued ability to attract new customers with our existing products, including our anchor product, the Owlet Smart Sock. While we see ample room for additional market penetration for our existing products, if we are unable to acquire new customers in a cost-effective and efficient manner, our financial performance may be impacted. We plan to bring existing Owlet products to more families and further improve our market position by growing distribution with existing and new retailers and by leveraging our brand and marketing efforts. However, changes in consumer taste, sentiment for our brand, or the regulatory environment in jurisdictions in which we sell our products could impact our ability to attract new customers.

Expanding the Digital Parenting Ecosystem

Our growth will also be reliant upon our ability to introduce new and innovative products that will drive organic growth. We plan to continue adding connected products and content that drive our mission of empowering parents with the right information at the right time. We expect that the expansion of our connected ecosystem of offerings will allow us to deepen our relationships with existing customers through increased lifetime value and create additional efficiencies for our customer acquisition efforts. We expect that these future offerings, and especially future software solutions, will be an important component of our ability to continue to improve our gross profit as a percentage of revenues in the future. Should we be unable to expand our suite of hardware and software solutions, our financial performance and customer lifetime value may be negatively impacted.

Medical Devices & Telehealth Opportunities

We are developing two variations of the Owlet Smart Sock, the Owlet BabySat and the Owlet OTC Smart Sock, as medical devices that would require marketing authorization from the U.S. Food and Drug Administration (“FDA”) before they could be sold in the United States, as well as the Owlet Band, a pregnancy band with certain features that may require marketing authorization from the FDA. If we are able to obtain FDA marketing authorization for our Owlet BabySat, Owlet OTC Smart Sock and Owlet Band products, we believe that these products will allow us to directly engage medical professionals to share infant sleep and health data, and provide an end-to-end digital healthcare solution for our customers. We have made and continue to make substantial investments in clinical research and in seeking FDA marketing authorization to potentially allow for third-party payor coverage and reimbursement and telehealth opportunities. Our potential future medical device offerings are being designed to build credibility and deepen market penetration. Our future telehealth offerings would be designed to make home care easier for parents and physicians alike. While we believe the combination of these two initiatives, if successful, would further strengthen our position in our industry, the success of these initiatives is largely predicated upon receiving FDA marketing authorization.

International Expansion

While the United States is currently our primary market, we plan to leverage our connected ecosystem of offerings to acquire market share globally, with a heightened focus on Europe, Asia, and Latin America. We intend to continue to invest in our supply chain to support our international expansion efforts; however, should we underestimate or overestimate demand in new geographical markets, we may experience inefficiencies in our supply chain or other areas of our business, which could result in financial losses. Additionally, expanded global reach may expose us to additional foreign currency risk, international taxes and tariffs, legal obligations, additional operational costs and other challenges.

Impact of COVID-19

There continues to be worldwide impact from the novel coronavirus (“COVID-19”) pandemic. The impact of COVID-19 includes changes in consumer and business behavior, pandemic fears, market downturns, and restrictions on business and individual activities, which have created significant volatility in the global economy that has led to reduced economic activity. The full extent to which the COVID-19 pandemic will directly or indirectly impact our cash flow, business, financial condition, results of operations and prospects will depend on future developments that are uncertain.

As a result of the COVID-19 pandemic, we temporarily limited access to our headquarters and encouraged our employees and contractors to work remotely, where possible, in accordance with local public health recommendations, each of which represented a significant change in how we operate our business. In light of the pandemic, we expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interest of our employees.

We have experienced relatively minor impacts on our inventory availability and delivery capacity since the outbreak, neither of which has materially impacted our ability to service our customers. During the three and six month periods ended June 30, 2021, we observed improved logistics and other supply chain-related costs which had previously increased during the year ended December 31, 2020 as a result of the COVID-19 pandemic. We continue to work with our existing manufacturing, logistics and other supply chain partners to build key processes to ensure that our ability to service our customers is not significantly disrupted. Ongoing actions to bolster key aspects of the supply chain to support our continued growth include geographically diversifying manufacturing operations to ensure adequate manufacturing capacity and to shorten transit times, implementing alternative order fulfillment options to reduce warehousing costs, developing contingency plans for unexpected third-party manufacturing disruptions, and increasing headcount dedicated to managing and optimizing supply chain processes.

Non-GAAP Measures

We prepare and present our unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (‘‘U.S. GAAP’’). However, management uses earnings before interest, tax, depreciation, and amortization (‘‘EBITDA’’) as a key measure to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. Management also uses EBITDA plus stock based compensation, preferred stock mark to market adjustment, loan abandonment costs, and transaction costs (“Adjusted EBITDA”) as another key measure to understand and evaluate core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. Additionally, management uses net loss as a percent of revenue (“Net loss margin”) and Adjusted EBITDA as percent of revenue (“Adjusted EBITDA margin”) as other key measures to understand and evaluate core operating performance and trends. Accordingly, we believe that EBITDA, Adjusted EBITDA, Net loss margin, and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

EBITDA and Adjusted EBITDA are not prepared in accordance with U.S. GAAP, and should not be considered in isolation from, or as alternatives to, measures prepared in accordance with U.S. GAAP. In addition, EBITDA and Adjusted EBITDA are not based on any comprehensive set of accounting rules or principles. As non-U.S. GAAP financial measures, EBITDA and Adjusted EBITDA have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. Some of these limitations are:

•

EBITDA and Adjusted EBITDA do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

•

EBITDA and Adjusted EBITDA do not reflect the amounts we paid in taxes or other components of our tax expense;

•

EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

•

EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and

•

other companies may use Adjusted EBITDA, or measures labeled similarly to EBITDA, which may be calculated differently and limit its usefulness as a comparative measure.

Because of these limitations, EBITDA and Adjusted EBITDA should be considered alongside, and not in lieu of, our other financial performance measures, including our financial results presented in accordance with U.S. GAAP.

The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net loss	$	(5,335	)	$	(1,094	)	$	(13,192	)	$	(3,222	)
Income tax provision		2			—			7			—
Interest expense		485			348			903			668
Interest income		(1	)		(4	)		(2	)		(35	)
Depreciation and amortization		259			199			509			362

EBITDA	$	(4,590	)	$	(551	)	$	(11,775	)	$	(2,227	)
Preferred stock mark to market adjustment		970			(8	)		5,578			(8	)
Stock based compensation		785			273			1,613			454
Transaction costs		2,152			—			4,027			—
Loss on extinguishment of debt		182			172			182			172
Gain on loan forgiveness		(2,098	)		—			(2,098	)		—

Adjusted EBITDA	$	(2,599	)	$	(114	)	$	(2,473	)	$	(1,609	)

Net loss margin		(21.4	)%		(6.0	)%		(28.2	)%		(9.7	)%
Adjusted EBITDA margin		(10.4	)%		(0.6	)%		(5.3	)%		(4.8	)%

Components of Operating Results

Revenues

We recognize revenue from the following sources: (1) products, (2) mobile applications, and (3) content. 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. Approximately 96% of our revenues for the three and six months ended June 30, 2021, and 97% of our revenues for the three and six months ended June 30, 2020, respectively, 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 excess 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.

We expect that our general and administrative expenses will increase in future periods compared to periods prior to the Business Combination as a result of additional costs related to being a public company, including Exchange Act reporting expenses; expenses associated with Sarbanes-Oxley compliance; incremental independent auditor fees; incremental legal fees; investor relations expenses; registrar and transfer agent fees; incremental director and officer liability insurance costs; and director compensation.

Sales and Marketing. Sales and marketing expenses consist primarily of salaries, commissions, benefits, stock-based compensation, commissions, 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.

We expect sales and marketing expense to continue to increase in future periods as we drive sales growth through new and existing marketing initiatives and expand into additional international markets.

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.

We anticipate making significant investments in the development of our monitoring pipeline, including Smart Sock variants, in future periods and expect our research and development expenses to increase.

Other Income (Expense)

Gain on Loan Forgiveness. Gain on loan forgiveness consists of the gain recognized subsequent to the forgiveness of the Small Business Administration Paycheck Protection Program loan.

Interest Expense. Interest expense consists primarily of interest incurred on our outstanding borrowings and amortization of the associated deferred financing costs.

Interest Income. Interest income consists of interest earned on our money market account.

Preferred Stock Mark to Market Adjustment. Preferred stock mark to market adjustment consists of adjustments made to mark to market the preferred stock warrant liability.

Loss on Extinguishment of Debt. Loss on extinguishment of debt consists of losses recognized due to additional amendments to our long-term debt.

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

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.

Results of Operations

The following table sets forth our results of operations for the periods indicated (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenues	$	24,938		$	18,365		$	46,849		$	33,236
Cost of revenues		11,420			9,521			20,648			17,352

Gross profit		13,518			8,844			26,201			15,884

Operating expenses:
General and administrative		7,285			2,748			13,266			5,420
Sales and marketing		7,568			4,248			13,687			8,060
Research and development		4,518			2,471			7,949			4,904

Total operating expenses		19,371			9,467			34,902			18,384

Operating loss		(5,853	)		(623	)		(8,701	)		(2,500	)

Other income (expense):
Gain on loan forgiveness		2,098			—			2,098			—
Interest expense, net		(484	)		(344	)		(901	)		(633	)
Preferred stock mark to market adjustment		(970	)		8			(5,578	)		8
Loss on extinguishment of debt		(182	)		(172	)		(182	)		(172	)
Other income, net		58			37			79			75

Total other income (expense), net		520			(471	)		(4,484	)		(722	)

Loss before income tax provision		(5,333	)		(1,094	)		(13,185	)		(3,222	)
Income tax provision		(2	)		—			(7	)		—

Net loss	$	(5,335	)	$	(1,094	)	$	(13,192	)	$	(3,222	)

Comparison of the three and six months ended June 30, 2021 and June 30, 2020

Revenues


	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
(dollars in thousands)	2021		2020		$		%			2021		2020		$		%
Revenues	$	24,938	$	18,365	$	6,573		35.8	%	$	46,849	$	33,236	$	13,613		41.0	%

Revenues increased by $6.6 million, or 35.8%, from $18.4 million for the three months ended June 30, 2020 to $24.9 million for the three months ended June 30, 2021. The increase was primarily due to a 42% increase in sales volume. Sales for the Owlet Smart Sock, the primary driver of our higher revenue, increased 54% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020. Sales for the Owlet Monitor Duo also contributed to our higher revenue, increasing 23% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

Revenues increased by $13.6 million, or 41.0%, from $33.2 million for the six months ended June 30, 2020 to $46.8 million for the six months ended June 30, 2021. The increase was primarily due to a 42% increase in sales volume. Sales for the Owlet Smart Sock, the primary driver of our higher revenue growth, increased 52% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. Sales for the Owlet Monitor Duo also contributed to our higher revenue, increasing 31% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Cost of Revenues and Gross Profit


	Three Months Ended June 30,						Change					Six Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$		%			2021			2020			$		%
Cost of revenues	$	11,420		$	9,521		$	1,899		19.9	%	$	20,648		$	17,352		$	3,296		19.0	%
Gross profit	$	13,518		$	8,844		$	4,674		52.8	%	$	26,201		$	15,884		$	10,317		65.0	%
Gross margin		54.2	%		48.2	%							55.9	%		47.8	%

Cost of revenues increased by $1.9 million, or 19.9%, from $9.5 million for the three months ended June 30, 2020 to $11.4 million for the three months ended June 30, 2021. The increase was primarily due to an increase in sales volume of 42%. Gross margin increased from 48.2% for the three months ended June 30, 2020 to 54.2% for the three months ended June 30, 2021. This increase in gross margin was primarily due to lower manufacturing costs associated with the third generation of the Owlet Smart Sock, which launched in July 2020, and decreases in freight and fulfillment costs due to improved supply chain logistics.

Cost of revenues increased by $3.3 million, or 19.0%, from $17.4 million for the six months ended June 30, 2020 to $20.6 million for the six months ended June 30, 2021. The increase was primarily due to an increase in sales volume of 42%. Gross margin increased from 47.8% for the six months ended June 30, 2020 to 55.9% for the six months ended June 30, 2021. This increase in gross margin was primarily due to lower manufacturing costs associated with the third generation of the Owlet Smart Sock, which launched in July 2020, and decreases in freight and fulfillment costs due to improved supply chain logistics.

General and Administrative


	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
(dollars in thousands)	2021		2020		$		%			2021		2020		$		%
General and administrative	$	7,285	$	2,748	$	4,537		165.1	%	$	13,266	$	5,420	$	7,846		144.8	%

General and administrative expense increased by $4.5 million, or 165.1%, from $2.7 million for the three months ended June 30, 2020 to $7.3 million for the three months ended June 30, 2021. The increase was driven primarily by an increase in payroll-related expenses from additional general and administrative headcount, stock-based compensation primarily from an increase in the valuation of our common stock and volume of awards granted, as well as an increase in legal, accounting, and consulting costs related to the Business Combination.

General and administrative expense increased by $7.8 million, or 144.8%, from $5.4 million for the six months ended June 30, 2020 to $13.3 million during the six months ended June 30, 2021. The increase was driven primarily by an increase in payroll-related expenses from additional general and administrative headcount, stock-based compensation primarily from an increase in the valuation of our common stock and volume of awards granted, as well as an increase in legal, accounting, and consulting costs related to the Business Combination.

Sales and Marketing


	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
(dollars in thousands)	2021		2020		$		%			2021		2020		$		%
Sales and marketing	$	7,568	$	4,248	$	3,320		78.2	%	$	13,687	$	8,060	$	5,627		69.8	%

Sales and marketing expense increased by $3.3 million, or 78.2%, from $4.2 million for the three months ended June 30, 2020 to $7.6 million for the three months ended June 30, 2021. The increase was primarily driven by increases in digital advertising spend, payroll-related expenses from additional sales and marketing headcount, stock-based compensation primarily from an increase in the valuation of our common stock and volume of awards granted, and in-store advertising expenses. Sales and marketing expense as a percentage of revenues increased from 23.1% for the three months ended June 30, 2020 to 30.3% for the three months ended June 30, 2021. The increase was primarily due to an increase in spend on marketing initiatives to drive sales growth.

Sales and Marketing expense increased by $5.7 million, or 69.8%, from $8.1 million for the six months ended June 30, 2020 to $13.7 million for the six months ended June 30, 2021. The increase was primarily driven by increases in digital advertising spend, payroll-related expenses from additional sales and marketing headcount, stock-based compensation primarily from an increase in the valuation of our common stock and volume of awards granted, and in-store advertising expenses. Sales and marketing expense as a percentage of revenues increased from 24.3% for the six months ended June 30, 2020 to 29.2% for the six months ended June 30, 2021. The increase was primarily due to an increase in spend on marketing initiatives to drive sales growth.

Research and Development


	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
(dollars in thousands)	2021		2020		$		%			2021		2020		$		%
Research and development	$	4,518	$	2,471	$	2,047		82.8	%	$	7,949	$	4,904	$	3,045		62.1	%

Research and development expense increased by $2.0 million, or 82.8%, from $2.5 million for the three months ended June 30, 2020 to $4.5 million for the three months ended June 30, 2021. Research and development expense as a percentage of revenue increased from 13.5% for the three months ended June 30, 2020 to 18.1% for the three months ended June 30, 2021. These increases were primarily driven by an increase in payroll-related expenses from additional research and development headcount, stock-based compensation primarily from an increase in the valuation of our common stock and volume of awards granted, and an increase in consulting expenses.

Research and development expenses increased by $3.0 million, or 62.1%, from $4.9 million for the six months ended June 30, 2020 to $7.9 million for the six months ended June 30, 2021. Research and development expense as a percentage of revenue increased from 14.8% for the six months ended June 30, 2020 to 17.0% for the six months ended June 30, 2021. These increases were primarily driven by an increase in payroll-related expenses from additional research and development headcount, stock-based compensation primarily from an increase in the valuation of our common stock and volume of awards granted, and an increase in consulting expenses.

Other Income (Expense)


	Three Months Ended June 30,						Change						Six Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$			%			2021			2020			$			%
Gain on loan forgiveness	$	2,098		$	—		$	2,098			100.0	%	$	2,098		$	—		$	2,098			100.0	%
Interest expense, net	$	(484	)	$	(344	)	$	(140	)		40.7	%	$	(901	)	$	(633	)	$	(268	)		42.3	%
Preferred stock mark to market adjustment	$	(970	)	$	8		$	(978	)		NM		$	(5,578	)	$	8		$	(5,586	)		NM
Loss on extinguishment of debt	$	(182	)	$	(172	)	$	(10	)		5.8	%	$	(182	)	$	(172	)	$	(10	)		5.8	%
Other income, net	$	58		$	37		$	21			56.8	%	$	79		$	75		$	4			5.3	%

NM - Not meaningful

Interest expense, net increased by $0.1 million, or 40.7%, from $0.3 million for the three months ended June 30, 2020 to $0.5 million for the three months ended June 30, 2021. Interest expense, net increased by $0.3 million, or 42.3%, from $0.6 million for the six months ended June 30, 2020 to $0.9 million for the six months ended June 30, 2021. The increase was primarily due to a higher average balance on our line of credit and an increase in the interest rate on our term note payable.

The preferred stock mark to market adjustment related to our preferred stock warrant liability increased by $1.0 million from $0.1 million for the three months ended June 30, 2020 to $1.0 million for the three months ended June 30, 2021. The preferred stock mark to market adjustment related to our preferred stock warrant liability increased by $5.6 million from $0.1 million for the six months ended June 30, 2020 to $5.6 million for the six months ended June 30, 2021. The increase in the preferred stock warrant liability was primarily due to a higher fair market value of our preferred stock, which principally resulted from the signed Business Combination Agreement with Sandbridge Acquisition Corporation.

Loss on extinguishment of debt remained relatively constant at $0.2 million for the three and six months ended June 30, 2021 and 2020.

Other income, net remained relatively constant at $0.1 million for the three and six months ended June 30, 2021 and 2020.

For the three and six months ended June 30, 2021, we recognized a gain of $2.1 million on the forgiveness of our Small Business Administration Paycheck Protection Program loan.

Income Tax Provision


	Three Months Ended June 30,						Change						Six Months Ended June 30,						Change
(dollars in thousands)	2021			2020			$			%			2021			2020			$			%
Income tax provision	$	(2	)	$	—		$	(2	)		(100.0	)%	$	(7	)	$	—		$	(7	)		(100.0	)%
Effective tax rate		(0.04	)%		0.0	%								(0.05	)%		0.0	%
Valuation allowance	$	(15,818	)	$	(13,839	)	$	(1,979	)		14.3	%	$	(15,818	)	$	(13,839	)	$	(1,979	)		14.3	%

Income tax provision remained relatively constant for three and six months ended June 30, 2021 and June 30, 2020. Our effective tax rate was approximately (0.04)% and (0.05)% for the three and six months ended June 30, 2021, respectively, due to a full valuation allowance recorded to offset our deferred tax assets.

The valuation allowance increased $2.0 million, or 14.3%, from $13.8 million for the three and six months ended June 30, 2020 to $15.8 million for the three and six months ended June 30, 2021. The change in our valuation allowance for the three and six months ended June 30, 2021 was primarily due to an increase in interest expense limitations and an increase in net operating loss carryforwards.

Liquidity and Capital Resources

Leading up to the proposed Business Combination, we have funded our operations primarily with proceeds from issuances of our convertible preferred stock, borrowings under our loan facilities, issuances of convertible promissory notes, and sales of our products and services. As of June 30, 2021 and December 31, 2020, we had cash and cash equivalents of $12.2 million and $17.0 million, respectively.

Funding Requirements

Since inception, we have generated recurring losses which have resulted in an accumulated deficit of $84.9 million and $71.7 million as of June 30, 2021 and December 31, 2020, respectively, and we expect to incur additional losses in the future. On July 15, 2021, we consummated the Business Combination and received approximately $135.0 million in net proceeds from the Business Combination and PIPE Investment. We anticipate the cash received from the Business Combination and PIPE Investment, together with cash we expect to generate from future operations, will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date the unaudited condensed consolidated financial statements were available for issuance. However, we are still in the growth stage of our business and expect to continue to make substantial investments in our business, including in the expansion of our product portfolio and in our research and development, sales and marketing teams, in addition to

incurring additional costs as a result of being a public company. There can be no assurance that we will be able to obtain additional debt or equity financing on terms acceptable to us, if at all, or that we will generate sufficient future revenues. Failure to secure additional funding may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on our business, operating results, financial condition, and ability to achieve our intended business objectives.

Loan and Security Agreement with Silicon Valley Bank

As of June 30, 2021 we had an amended and restated loan and security agreement (the “A&R LSA”) with Silicon Valley Bank (‘‘SVB’’) which we entered into on April 22, 2020, and which replaced the loan and security agreement that was previously in place (the ‘‘Original LSA’’). These agreements provided us with both a line of credit (the ‘‘SVB Revolver’’) and a term loan (the ‘‘Term Note’’).

Our borrowing capacity under the SVB Revolver was $17.5 million and $10.0 million as of June 30, 2021 and December 31, 2020, respectively. As of June 30, 2021 and December 31, 2020, the SVB Revolver bore interest at an annual rate equal to (i) the greater of the bank’s prime rate plus 0.75%, or 5.5% when a streamline period is in effect and (ii) the greater of the bank’s prime rate plus 1.25%, or 6.0% at all other times. Each streamline period commences the first day of the month following a written report of our liquidity and ends the first day after we fail to maintain a required cash and cash availability streamline threshold, provided no event of default has occurred and is continuing. If an event of default has occurred and is continuing, SVB may maintain our streamline status at its discretion. The required cash and cash availability streamline threshold was $8.0 million and $7.0 million as of June 30, 2021 and December 31, 2020, respectively, and we were within a streamline period at both dates. The actual interest rate on the SVB Revolver was 5.5% as of June 30, 2021 and December 31, 2020. The SVB Revolver is subject to renewal and is scheduled to mature on April 22, 2024.

Our Term Note had an aggregate principal balance of $15.0 million and $10.0 million as of June 30, 2021 and December 31, 2020, respectively. As of June 30, 2021 and December 31, 2020, the Term Note bore interest at a rate equal to the greater of the bank’s prime rate plus 3.50%, or 6.50, and required 30 consecutive equal monthly payments of principal beginning on November 1, 2021. The Term Note matures on April 1, 2024.

Prior to the April 22, 2020 amendment, the Term Note had an aggregate principal balance of $7.0 million and bore interest at a rate equal to the greater of the prime rate plus 1.00%, or 6.00% under the Original LSA. The Term Note required interest-only payments through April 30, 2020, followed by 30 equal payments of principal beginning on May 1, 2020. On April 22, 2020, we amended and restated the Original LSA (as amended and restated, the “A&R LSA”), which allowed us to borrow an additional $1.0 million on the Term Note at closing, extended the interest-only period through April 30, 2021, and modified the interest rate to be the greater of the bank’s prime rate plus 4.50%, or 7.50%. The A&R LSA also included a provision to further extend the interest-only period through October 31, 2021 and allow us to borrow an additional $2.0 million if we achieved a specified gross profit milestone for the year ended December 31, 2020. On September 22, 2020, we amended the A&R LSA to change the repayment term on the Term Note from 36 consecutive equal monthly payments of principal to 30 consecutive equal monthly payments of principal beginning on November 1, 2021 and modified the interest rate to the greater of the bank’s prime rate plus 3.50%, or 6.50%. We achieved our gross profit milestone and borrowed $2.0 million in December 2020.

The Original LSA and the A&R LSA both required that we meet certain financial covenants. Under the Original LSA, in effect prior to the April 22, 2020 amendment and restatement, the financial covenants included the satisfaction of both a maximum cumulative trailing 3-month loss threshold (based on a calculation of EBITDA, plus stock-based compensation expense) and a minimum cash and cash availability requirement. Under the A&R LSA, in effect as of December 31, 2020, the financial covenant required the satisfaction of a maximum year-to-date loss threshold (based on a calculation of EBITDA, plus stock-based compensation expense and loss on extinguishment of debt). We were not in compliance with this financial covenant as of December 31, 2020. On March 10, 2021, we further amended the A&R LSA to, among other things, waive the existing default and waive any rights and remedies against the Company with respect to the existing default, which includes the financial covenant noncompliance, consent to the merger (see Note 18 in our annual financial statements), and amend other provisions of the loan agreement. The amendment also set forth new financial covenants, including a requirement to maintain cash and cash availability of at least $6.0 million as of the last day of each month beginning on March 31, 2021, a requirement to complete a qualifying liquidity event with aggregate new net proceeds of at least $50.0 million in cash on or before May 31, 2021, and a requirement to agree to terms with SVB on a 2021 EBITDA covenant no later than July 15, 2021.

On May 14, 2021, we further amended the A&R LSA to, among other things, reduce the minimum cash and cash availability requirement from $6.0 million to $5.0 million and move the qualifying liquidity event date from on or before May 31, 2021 to on or before July 31, 2021. On May 25, 2021, we further amended the A&R LSA to, among other things, provide for an additional $5.0 million advance under the Term Note, increase the SVB Revolver borrowing capacity from $12.5 million to $17.5 million, extend the SVB Revolver maturity date from April 22, 2022 to April 22, 2024, increase the required cash and cash availability streamline threshold from $7.0 million to $8.0 million, and change the deadline of the requirement to agree to terms with SVB on a 2021 EBITDA covenant from July 15, 2021 to August 15, 2021. On August 12, 2021, we further amended the A&R LSA to change the deadline of the requirement to agree to terms with SVB on a 2021 EBITDA covenant from August 15, 2021 to September 30, 2021.

Our borrowings under the A&R LSA and its subsequent amendments are secured by substantially all of our current and future assets.

Paycheck Protection Program Loan

In April 2020, we applied for and received proceeds from the U.S. Small Business Administration (‘‘SBA’’) Paycheck Protection Program (‘‘PPP’’) in the amount of $2.1 million, with SVB as lender for the loan (the ‘‘PPP Loan’’), under the Federal Coronavirus Aid, Relief, and Economic Security Act (the ‘‘CARES Act’’). The PPP Loan was considered necessary to support our ongoing operations due to economic uncertainty at the time resulting from the COVID-19 pandemic and reduced access to alternative sources of liquidity.

Under the terms of the PPP Loan, interest accrued on the outstanding principal at a rate of 1.0% per annum. The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed. Under the PPP, we applied for forgiveness for all of the PPP Loan. On June 15, 2021, we received forgiveness for the PPP Loan for the full amount of $2.1 million of principal and approximately $24,000 in interest. As a result of the PPP Loan being forgiven, we recognized a $2.1 million gain for the three and six months ended June 30, 2021.

As of June 30, 2021, $15.0 million and $16.3 million in aggregate principal amount was outstanding under the Term Note and the SVB Revolver, respectively.

As of December 31, 2020, $10.0 million, $9.7 million, and $2.1 million in aggregate principal amount was outstanding under the Term Note, the SVB Revolver, and the PPP Loan, respectively.

Related Party Convertible Notes

As of June 30, 2021 and December 31, 2020 we had $6.5 million in related party convertible promissory notes outstanding, which were issued during the year ended December 31, 2019. The convertible promissory notes bore interest at 5.00% per annum and all outstanding principal and accrued interest was due on the earlier of August 9, 2021 or upon the closing of a change of control, as defined in the convertible note agreements.

at a holder’s election, trigger the repayment in cash of the outstanding principal and accrued interest at the consummation of the Business Combination. On July 15, 2021, we completed the Business Combination. As such, all but one of the convertible notes were converted into shares of Common Stock. The one remaining convertible note had a balance of approximately $2,000 and was paid in full.

The convertible promissory notes were subordinated to the SVB Revolver and the Term Note.

Cash Flows

The following table summarizes our cash flow (in thousands):


	Six Months Ended June 30,
	2021			2020
Net cash used in operating activities	$	(15,608	)	$	1,858
Net cash used in investing activities		(709	)		(419	)
Net cash provided by financing activities		11,526			1,930

Net change in cash and cash equivalents	$	(4,791	)	$	3,369

Operating Activities

Our cash flows from operating activities are significantly affected by the growth of our business. Our operating cash flows are also affected by our working capital needs to support growth in personnel-related expenditures and fluctuations in accounts payable and other current assets and liabilities.

For the six months ended June 30, 2021, net cash used in operating activities was $15.6 million, primarily driven by our net loss of $13.2 million and changes in working capital of $8.7 million, partially offset by non-cash charges of $6.3 million.

For the six months ended June 30, 2020, net cash provided by operating activities was $1.9 million, primarily driven by changes in working capital of $4.2 million and non-cash charges of $0.9 million, partially offset by our net loss of $3.2 million.

Investing Activities

We continue to experience negative cash flows from investing activities as we expand our business and build our infrastructure. Cash flows from investing activities primarily relate to capital expenditures to support our growth. Net cash used in investing activities is expected to continue to increase substantially as we expand our business through new products and new geographic markets.

For the six months ended June 30, 2021, net cash used in investing activities increased to $0.7 million from $0.4 million for the six months ended June 30, 2020. We expect our capital expenditures to continue to grow in future periods, primarily driven by investments to expand our production capabilities to additional factories in other geographical locations, as well as investments in tooling and equipment to manufacture new products.

Financing Activities

For the six months ended June 30, 2021, net cash provided by financing activities was $11.5 million, primarily driven by gross draws of $8.2 million on our line of credit, the issuance of $5.0 million in additional long-term debt, and the issuance of an additional $0.3 million in common stock resulting from stock option exercises, partially offset by gross payments of $1.6 million on our line of credit.

For the six months ended June 30, 2020, net cash provided by financing activities was $1.9 million, primarily driven by gross draws of $9.9 million on our line of credit, the issuance of $3.1 million in additional long-term debt (including the $2.1 million SBA PPP loan), and the issuance of an additional $0.1 million in common stock resulting from stock options exercises, offset by gross payments of $11.0 million on our line of credit

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2021 and December 31, 2020.

Indemnification

In the ordinary course of business, we enter into agreements that may include indemnification provisions. Pursuant to such agreements, we 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 we could be required to make under these provisions is not determinable. We have never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.

In connection with the consummation of the Business Combination, we intend to enter into indemnification agreements with our directors and officers that may require us to indemnify our 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. We currently have directors’ and officers’ insurance coverage that reduces our exposure and enables us to recover a portion of any future amounts paid. We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is immaterial.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of interest rate fluctuations and credit risk.

Interest Rate Risk

As discussed above, the Term Note, as amended on September 22, 2020, had an interest rate of the greater of either the prime rate plus 3.5%, or 6.5% as of June 30, 2021. During the three and six months ended June 30, 2021, the prime rate did not exceed 5.0%. We have not been exposed to material risk due to fluctuations in interest rates. A hypothetical 10% change in interest rates would not result in a material impact on our consolidated financial statements.

Credit Risk

Financial instruments that potentially subject us to concentration of credit risk consist of cash and cash equivalents and accounts receivable. Substantially all of our cash and cash equivalents are deposited in accounts at one financial institution, and account balances may at times exceed federally insured limits. We believe that we are not exposed to significant credit risk due to the financial strength of the depository institution in which the cash is held.

Our accounts receivable is derived from customers located primarily in the United States. We routinely assess the creditworthiness of our customers and have only experienced significant credit losses related to receivables from individual customers when a national retailer filed for bankruptcy in September 2017. We continuously monitor customer payments and maintain an allowance for doubtful accounts based on our assessment of various factors including age of the receivable balances, historical experience and any other conditions that may affect customers’ ability to pay.

Emerging Growth Company Status

Following the Business Combination, we qualify as an emerging growth company (‘‘EGC’’) as defined in the Jumpstart our Business Startups (‘‘JOBS’’) Act. The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. We intend to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an EGC or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an EGC, we intend to rely on such exemptions following the Business Combination, we will not be required to, among other things: (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (ii) provide all of the compensation disclosures that may be required of non-EGCs under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (iii) comply with the requirements of the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on the consolidated financial statements (auditor discussion and analysis); and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

Following the Business Combination, we will remain an EGC under the JOBS Act until the earliest of (i) December 31, 2025, (ii) the last date of our fiscal year in which we have total annual gross revenues of at least $1.07 billion, (iii) the date on which we are deemed to be a ‘‘large accelerated filer’’ under the rules of the SEC, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.

Smaller Reporting Company

Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our Common Stock held by non-affiliates exceeds $250 million as of the prior June 30, or (ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our Common Stock held by non-affiliates exceeds $700 million as of the prior June 30.

Exhibit 99.5

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Capitalized terms used but not defined in this Exhibit 99.5 shall have the meanings ascribed to them in the Current Report on Form 8-K filed July 21, 2021.

The following unaudited pro forma condensed combined financial information presents the combination of the financial information of Sandbridge and Owlet Baby Care Inc. (‘‘Old Owlet’’) adjusted to give effect to the Business Combination and related transactions. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by the final rule, Release No. 33-10786 ‘Amendments to Financial Disclosure about Acquired and Disposed Businesses.’

The historical financial information of Sandbridge was derived from the restated audited historical financial statements of Sandbridge for the period from June 23, 2020 (inception) to December 31, 2020, and from the unaudited historical condensed financial statements as of and for the three and six months ended June 30, 2021, respectively. The historical consolidated financial information of Old Owlet was derived from the unaudited condensed consolidated financial statements of Old Owlet as of and for the six months ended June 30, 2021 and from the audited consolidated financial statements for the full year ended December 31, 2020. This information should be read together with Sandbridge’s and Old Owlet’s financial statements and related notes, the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Sandbridge,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Owlet,” and other financial information included elsewhere in the Proxy Statement/Prospectus.

The Business Combination is accounted for as a reverse recapitalization, in accordance with accounting principles generally accepted in the United States (‘‘U.S. GAAP’’). Under the guidance in ASC 805, Sandbridge is treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination is treated as the equivalent of Old Owlet issuing stock for the net assets of Sandbridge, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations following the Business Combination will be those of Old Owlet.

Old Owlet is the accounting acquirer based on evaluation of the following facts and circumstances:

•

Old Owlet stockholders have the largest voting interest in the post-combination company;

•

the board of directors of the post-combination company has up to nine members, and Old Owlet has the ability to nominate the majority of the members of the board of directors;

•

Old Owlet management will continue to hold executive management roles for the post-combination company and be responsible for the day-to-day operations;

•

the post-combination company has assumed the Old Owlet name;

•

the post-combination company will maintain Old Owlet’s headquarters; and

•

the intended strategy of the post-combination entity will continue Old Owlet’s strategy of product development and market penetration.

The unaudited pro forma condensed combined balance sheet as of June 30, 2021 combines the unaudited historical condensed balance sheet of Sandbridge and the historical consolidated unaudited balance sheet of Owlet on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on June 30, 2021. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 combines the historical audited statement of operations of Sandbridge for the period from its inception on June 23, 2020 to December 31, 2020 and the historical consolidated audited statement of operations of Owlet for the year ended December 31, 2020 on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on January 1, 2020, the beginning of the earliest period presented. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2021 combines the unaudited statement of operations of Sandbridge for the six months ended June 30, 2021 and the unaudited condensed consolidated statement of operations of Owlet for the six months ended June 30, 2021 on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on January 1, 2020, the beginning of the earliest period presented.

The unaudited pro forma condensed combined financial information is for informational purposes only. It does not purport to indicate the results that would have been obtained had the Business Combination and related transactions actually been completed on the assumed date or for the periods presented, or which may be realized in the future. The transaction accounting adjustments are based on the information currently available and the assumptions and estimates underlying the transaction accounting adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information. Old Owlet will incur additional costs after the Business Combination in order to satisfy its obligations as an SEC reporting public company.

Description of the Business Combination

On February 15, 2021, Old Owlet entered into the Business Combination Agreement with Sandbridge and Project Olympus Merger Sub, Inc. (‘‘Merger Sub’’). Pursuant to the Business Combination Agreement, Merger Sub merged into Old Owlet, with Old Owlet surviving the Merger. Old Owlet became a wholly owned subsidiary of Sandbridge and Sandbridge was immediately renamed ‘‘Owlet, Inc.’’ Upon the consummation of the Business Combination, Old Owlet’s equityholders received or have the right to receive shares of Owlet common stock at a deemed value of $10.00 per share after giving effect to the exchange ratio based on the terms of the Business Combination Agreement (“the Exchange Ratio”). Accordingly, 90,791,573 shares of Owlet common stock immediately issued and outstanding at the Closing and 9,789,024 shares were reserved for the potential future issuance of Owlet common stock upon the exercise of Old Owlet stock options based on the following transactions contemplated by the Business Combination Agreement:

•

the cancellation of each issued and outstanding share of Old Owlet common stock (including shares of Old Owlet common stock resulting from the deemed conversion of Old Owlet redeemable convertible preferred stock and outstanding unvested restricted shares of Old Owlet common stock) and the conversion into the right to receive a number of shares of Owlet common stock shares equal to the Exchange Ratio;

•

the net share settlement of all outstanding Old Owlet warrants in accordance with their respective terms into the right to receive a number of shares of Owlet common stock equal to the Exchange Ratio; and

•

the conversion of all outstanding Old Owlet options into options exercisable for shares of Owlet common stock with the same terms except for the number of shares exercisable and the exercise price, each of which were adjusted using the Exchange Ratio.

Other Related Events in Connection with the Business Combination

Other related events in connection with the Business Combination are summarized below:

•

The issuance and sale of 12,968,000 shares of Sandbridge common stock at a purchase price of $10.00 per share for an aggregate purchase price of $129.7 million pursuant to the PIPE Investment.

•

Of the shares of Owlet common stock beneficially owned by Sandbridge Acquisition Holdings LLC (the “Sponsor”) as of the Closing, 1,403,750 shares will vest at such time as a $12.50 stock price level is achieved and 1,403,750 will vest at such time as a $15.00 stock price level is achieved, in each case, on or before the fifth anniversary of the Closing of the Business Combination. The ‘‘stock price level’’ will be considered achieved only (a) when the closing price of a share of Owlet common stock on the NYSE is greater than or equal to the applicable price for any 20 trading days within a 30 trading day period or (b) the price per share of Owlet common stock paid in certain change of control transactions following the Closing is greater than or equal to the applicable price. Founder shares subject to vesting pursuant to the above terms that do not vest in accordance with such terms shall be forfeited. As the vesting event has not yet been achieved, these shares of Owlet common stock, which are issued and outstanding, are treated as contingently recallable in the pro forma financial information.

•

The accounting treatment of the shares of Owlet common stock beneficially owned by the Sponsor but subject to vesting have been classified as equity. The private placement warrants and the public warrants have been accounted for as liabilities and will be remeasured to fair value at each balance sheet date in future reporting periods with changes in fair value recorded in the Owlet consolidated statement of operations.

•

The 2,807,500 shares of Owlet common stock represent shares of Owlet Common stock that the Sponsor received upon conversion of the Sandbridge Class B common stock outstanding prior to the Closing. These shares were previously included in Sandbridge’s equity as they are included in the 5,750,000 shares given to the Sponsor and related parties.

•

The 9,789,024 shares of Owlet common stock represent underlying outstanding Owlet option awards. These shares were previously included in Owlet’s equity and a portion of them were subject to cash settlement contingent on the

successful completion of the Business Combination. The remaining amounts are vested and unvested options. The unaudited pro forma condensed combined financial information present that holders of options to purchase Old Owlet common stock elected to have 496,717 options cashed out in accordance with the Business Combination Agreement, rather than assumed by Owlet. These shares were settled with cash, and the underlying option awards have been recognized as liabilities at fair value with changes in fair value recorded in the Owlet consolidated statement of operations in the pro forma financials.

The following summarizes the pro forma shares of New Owlet common stock issued and outstanding immediately after the Business Combination:


		%
Owlet equityholders ⁽¹⁾	90,791,573		80.5	%
Sandbridge’s public stockholders	3,241,227		2.9	%
Sponsor & related parties ⁽²⁾	5,750,000		5.1	%
PIPE investors	12,968,000		11.5	%

Pro Forma Owlet Common Stock at Closing	112,750,800		100.0	%

(1)	Excludes 9,789,024 shares of Owlet common stock underlying outstanding Owlet option awards.

(2)

Represents the shares of Owlet common stock the Sponsor and the independent directors and an advisor of Sandbridge hold upon conversion of the Sandbridge Class B common stock at Closing. Of such shares, 2,807,500 shares of Owlet common stock are outstanding following the Closing but remain subject to price-based performance vesting terms as described above under “Other Related Events in Connection with the Business Combination”

Unaudited Pro Forma Condensed Combined Balance Sheet

As of June 30, 2021

(In thousands)


	Sandbridge (historical)		Owlet Baby Care Inc. (historical)		Pro Forma Adjustments				Pro Forma Combined
Assets
Current assets:
Cash	$	470	$	12,218	$	230,096		(1)
						129,680		(2)
						(27,602	)	(3)
						(197,588	)	(13)
						(9,900	)	(14)
										137,374
Receivables		—		17,394		—				17,394
Inventory		—		11,051		—				11,051
Capitalized transaction costs		—		4,019		(4,019	)	(12)		—
Prepaids and other current assets		233		1,327		—				1,560

Total current assets	$	703	$	46,009	$	120,667			$	167,379

Cash and marketable securities held in trust account	$	230,096	$	—	$	(230,096	)	(1)	$	—
Property and equipment, net		—		1,823		—				1,823
Intangibles, net		—		609		—				609
Internally developed software		—		204		—				204
Other noncurrent assets		—		183		—				183

Total assets	$	230,799	$	48,828	$	(109,429	)		$	170,198

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	—	$	19,434	$	—			$	19,434
Accrued expenses		4,768		12,449		—				17,217
Deferred revenue, current		—		1,663		—				1,663
Line of credit, net		—		16,287		—				16,287
Current portion of related party convertible notes payable		—		7,104		(7,104	)	(7)		—
Current portion of long-term debt		—		4,000		—				4,000

Total current liabilities	$	4,768	$	60,937	$	(7,104	)		$	58,601

Deferred rent, net of current portion	$	—	$	280	$	—			$	280
Long-term deferred revenue		—		168		—				168
Long-term debt, net		—		10,991		—				10,991
Preferred stock warrant liability		—		8,571		(8,571	)	(8)		—
Warrant liability		25,340		—		—				25,340
Other long-term liabilities		—		13		—				13
Deferred underwriting fee payable		8,050		—		(8,050	)	(3)		—

Total liabilities	$	38,158	$	80,960	$	(23,725	)		$	95,393

Commitments and contingencies
Redeemable convertible series A and series A-1 preferred stock	$	—	$	23,652	$	(23,652	)	(9)	$	—
Redeemable convertible series B and series B-1 preferred stock	$	—	$	23,536	$	(23,536	)	(9)	$	—
Class A common stock subject to redemption	$	187,641	$	—	$	(187,641	)	(4)	$	—


Stockholders’ equity (deficit)
Class A common stock		—			1			1		(2)
								2		(4)
								10		(5)
								1		(11)
								(9	)	(10)
								(2	)	(13)		4
Class B common stock		1			—			(1	)	(11)		—
Additional paid-in capital		20,324			5,589			129,679		(2)
								(11,237	)	(3)
								187,639		(4)
								(10	)	(5)
								(15,325	)	(6)
								7,104		(7)
								8,571		(8)
								1,000,000		(10)
								(999,991	)	(10)
								47,188		(9)
								(4,019	)	(12)
								(197,586	)	(13)
								(1,059	)	(14)		176,867
Accumulated deficit		(15,325	)		(84,910	)		15,325		(6)
								(8,315	)	(3)
								(8,841	)	(14)		(102,066	)

Total stockholders’ equity (deficit)	$	5,000		$	(79,320	)	$	149,125			$	74,805

Total liabilities and stockholders’ equity (deficit)	$	230,799		$	48,828		$	(109,429	)		$	170,198

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Six Months Ended June 30, 2021

(In thousands, except per share amounts)


	For the Six Months Ended June 30, 2021			For the Six Months Ended June 30, 2021			For the Six Months Ended June 30, 2021
	Sandbridge (historical)			Owlet Baby Care Inc. (historical)			Transaction Accounting Adjustments				Pro Forma Combined
Revenues				$	46,849						$	46,849
Cost of revenues					20,648							20,648

Gross profit					26,201							26,201
Operating expenses:
General and administrative		5,313			13,266							18,579
Sales and marketing					13,687							13,687
Research and development					7,949							7,949

Total operating expenses		5,313			34,902							40,215

Other income (expense):
Gain on loan forgiveness		—			2,098							2,098
Interest expense, net		—			(901	)		604		(2A)		(297	)
Preferred stock warrant liability mark to market		—			(5,578	)		5,578		(3A)		—
Warrant liability mark to market		(1,810	)									(1,810	)
Loss on extinguishment of debt		—			(182	)						(182	)
Other income (expenses), net		45			79			(45	)	(1A)		79
Stock option cash out liability mark to market expense		—			—			(8,841	)	(5A)		(8,841	)
Total other income (expense), net		(1,765	)		(4,484	)						(8,953	)
Loss before income tax provision		(7,078	)		(13,185	)		(2,704	)			(22,967	)
Income tax provision		—			(7	)				(4A)		(7	)

Net loss	$	(7,078	)	$	(13,192	)	$	(2,704	)		$	(22,974	)

Net loss per share attributable to common stockholders, Class A redeemable common stock, basic and diluted .	$	—		$	(1.21	)	$	—			$	(0.21	)
Net income per share attributable to common stockholders, Class B non-redeemable common stock, basic and diluted	$	(1.23	)	$	—		$	—			$	—
Weighted-average number of shares outstanding of Class A redeemable common stock used to compute net loss per share attributable to common stockholders, basic and diluted		23,000,000			10,901,698			70,291,602		5(A)		109,943,300

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2020

(In thousands, except per share amounts)


	June 23, 2020 (inception to December 31, 2020			For the Year Ended December 31, 2020			For the Year Ended December 31, 2020
	Restated Sandbridge (historical)			Owlet Baby Care Inc. (historical)			Transaction Accounting Adjustments					Pro Forma Combined
Revenues				$	75,403							$	75,403
Cost of revenues					39,526								39,526

Gross profit					35,877								35,877
Operating expenses:
General and administrative		480			13,140								13,620
Sales and marketing					19,263								19,263
Research and development					10,465								10,465

Total operating expenses		480			42,868								43,348

Other income (expense):
Interest expense					(1,420	)		434		(2A	)		(986	)
Interest income					38								38
Preferred stock warrant liability mark to market					(1,952	)		1,952		(3A	)		—
Warrant liability mark to market		(7,240	)										(7,240	)
Other income (expenses), net		(527	)		(176	)		(53	)	(1A	)		(756	)
Total other income (expense), net		(7,767	)		(3,510	)		2,333					(8,944	)
Loss before income tax provision		(8,247	)		(10,501	)		2,333					(16,415	)
Income tax provision					(20	)				(4A	)		(20	)

Net loss	$	(8,247	)	$	(10,521	)	$	2,333				$	(16,435	)

Net loss per share attributable to common stockholders, Class A redeemable common stock, basic and diluted .	$	—		$	(0.98	)	$	—				$	(0.15	)
Net loss per share attributable to common stockholders, Class B non-redeemable common stock, basic and diluted	$	(1.51	)	$	—		$	—				$	—
Weighted-average number of shares outstanding of Class A redeemable common stock used to compute net loss per share attributable to common stockholders, basic and diluted		23,000,000			10,693,984			70,814,233		5(A	)		109,943,300
Weighted-average number of shares outstanding of Class A and Class B non-redeemable common stock used to compute net loss per share attributable to common stockholders, basic and diluted.		5,435,083

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

1. Basis of Presentation

The Business Combination was accounted as a reverse recapitalization in accordance with U.S. GAAP. Under the guidance in ASC 805, Sandbridge was treated as the ‘‘acquired’’ company for financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of Old Owlet issuing stock for the net assets of Sandbridge, accompanied by a recapitalization whereby no goodwill or other intangible assets were recorded. Operations prior to the Business Combination are those of Old Owlet.

The unaudited pro forma condensed combined balance sheet as of June 30, 2021 assumes that the Business Combination and related transactions occurred on June 30, 2021. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and for the six months ended June 30, 2021 reflects pro forma effect of the Business Combination and related transactions as if they had been completed on January 1, 2020. These periods are presented on the basis of Old Owlet as the accounting acquirer.

The unaudited pro forma condensed combined balance sheet as of June 30, 2021 has been prepared using, and should be read in conjunction with, the following:

•

Sandbridge’s unaudited Condensed Balance Sheet as of June 30, 2021 and the related notes for the period ended June 30, 2021, included in Owlet’s Quarterly Report on Form 10-Q filed on August 16, 2021; and

•

Old Owlet’s unaudited Condensed Consolidated Balance Sheet as of June 30, 2021 and the related notes for the quarter ended June 30, 2021, incorporated into the Current Report on Form 8-K to which this Exhibit 99.5 is attached.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 has been prepared using, and should be read in conjunction, with the following:

•

Sandbridge’s audited Statement of Operations restated for the period from June 23, 2020 (inception) through December 31, 2020 included in Sandbridge’s amended Annual Report on Form 10-K/A filed on May 26, 2021; and

•

Old Owlet’s audited Consolidated Statement of Operations for the year ended December 31, 2020 and the related notes, incorporated into the Current Report on Form 8-K to which this Exhibit 99.5 is attached from the Proxy Statement/Prospectus.

The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2021 has been prepared using, and should be read in conjunction, with the following:

•

Sandbridge’s unaudited Condensed Statement of Operations for the six months ended June 30, 2021, and the related notes, included in Owlet’s Quarterly Report on Form 10-Q filed on August 16, 2021; and

•

Old Owlet’s unaudited Condensed Consolidated Statement of Operations for the six months ended June 30, 2021 and the related notes for the six months ended June 30, 2021, incorporated into the Current Report on Form 8-K to which this Exhibit 99.5 is attached.

Management has made significant estimates and assumptions in its determination of the pro forma adjustments (“Transaction Accounting Adjustments”). As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the actual amounts recorded may differ materially from the information presented.

The related transaction accounting adjustments are based on currently available information and assumptions management believes are, under the circumstances and given the information available at this time, reasonable, and reflective of adjustments necessary to report Owlet’s financial condition and results of operations upon the closing of the Business Combination. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. Owlet believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination and related transactions contemplated based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

One-time direct and incremental transaction costs incurred prior to, or concurrent with, the Closing are reflected in the unaudited pro forma condensed combined balance sheet as a direct reduction to Owlet’s additional capital. The final accounting of the Business Combination, including transaction costs, will be finalized by Owlet and reported in the first reporting period following the Closing.

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Business Combination.

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the post-combination company. They should be read in conjunction with the historical financial statements and notes thereto of Sandbridge and Owlet.

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 ‘‘Amendments to Financial Disclosures about Acquired and Disposed Businesses.’’ Release No. 33-10786 replaces the existing transaction accounting adjustment criteria with simplified requirements to depict the accounting for the transaction (‘‘Transaction Accounting Adjustments’’), operations and financial position of the registrant as an autonomous entity (“Autonomous Entity Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (‘‘Management’s Adjustments’’). Owlet has elected not to present Management’s Adjustments in the unaudited pro forma condensed combined financial information. Sandbridge and Owlet did not have any historical relationship prior to the Business Combination. Accordingly, no transaction accounting adjustments were required to eliminate activities between the companies.

2. Accounting Policies

On July 15, 2021, the Business Combination was consummated, as such, management of Owlet, Inc. has begun performing a comprehensive review of the two entities’ accounting policies, including the accounting for the warrants initially issued as part of Sandbridge’s initial public offering and as part of a concurrent private placement. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the post-combination company.

The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the post-combination company filed consolidated income tax returns during the periods presented.

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statement of operations are based upon the number of Old Owlet’s shares outstanding, assuming the Business Combination and related transactions occurred on January 1, 2020.

3. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and related transactions and has been prepared for informational purposes only.

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statement of operations are based upon the number of the post-Business Combination company’s shares outstanding, assuming the Business Combination occurred on January 1, 2020.

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2021

The adjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2021 are as follows:

(1) Reflects the release of $230.1 million of cash held in Sandbridge’s Trust Account to cash and cash equivalents.

(2) Reflects cash proceeds from the concurrent Private Placement in the amount of $129.7 million, consisting of 12,968,000 shares of New Owlet common stock with a par value of $0.0001, and corresponding offset to additional-paid-in-capital.

(3) Reflects an adjustment of $27.6 million to reduce cash for transaction costs expected to be incurred by Sandbridge and Owlet in relation to the Business Combination and PIPE Investment, including advisory, banking, printing, legal and accounting services. $8.3 million was recorded to accumulated deficit as part of the Business Combination, $8.1 million was deferred related to underwriting commissions, and the remaining $11.2 million was determined to be equity issuance costs and offset to additional-paid-in-capital.

(4) Reflects the reclassification of Sandbridge’s Class A common stock subject to possible redemption into permanent equity when stockholders did not exercise their redemption rights in connection with the Business Combination.

(5) Reflects the recapitalization of Old Owlet through issuance of common stock based on an Exchange Ratio of approximately 2.053 shares of Owlet common stock per share of Old Owlet common stock.

(6) Reflects the elimination of Sandbridge’s historical accumulated deficit and a reduction to Sandbridge’s additional-paid-in-capital related to the excess of the merger consideration over the net monetary assets of Sandbridge.

(7) Reflects the conversion of all of Owlet’s convertible promissory notes outstanding in the aggregate amount of $7.1 million, consisting of $6.5 million in principal and $0.6 million in accrued interest, to common stock and additional paid in capital.

(8) Reflects the derecognition of Owlet’s preferred stock warrant liability, as well as a corresponding increase to additional-paid-in-capital to reflect the conversion of all outstanding warrants to purchase shares of Owlet’s redeemable convertible preferred stock becoming warrants to purchase shares of New Owlet common stock.

(9) Reflects the derecognition of Owlet’s redeemable convertible preferred stock, as well as a corresponding increase to additional-paid-in-capital to reflect the conversion of all outstanding preferred stock to Owlet common stock.

(10) Reflects merger consideration of $1.0 billion paid via the issuance of shares of common stock of Sandbridge valued at $10.00 per share issued to consummate the Business Combination, in exchange for outstanding shares of Owlet common stock.

(11) Reflects the reclassification of Class B Sandbridge Common Stock to Class A Common Stock of New Owlet.

(12) Reflects an elimination of transaction costs that were capitalized related to the business combination agreement

(13) Reflects the actual redemptions of 19,758,773 public shares for aggregate redemption payments of $197.6 million allocated to Class A common stock and additional paid-in capital using par value $0.0001 per share and at a redemption price of $10 per share.

(14) To reflect the election by holders of certain options to purchase Old Owlet common stock to have 496,717 options cashed out, rather than assumed by Owlet, and the mark to market adjustment related to reclassification of amount from equity to liability and the additional expense related to the difference between the equity value and the liability value of the options.

Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations for the six months Ended June 30, 2021

The unaudited pro forma condensed combined statement of operations include Transaction Accounting Adjustments. Sandbridge and Owlet did not have any historical relationship prior to the Business Combination. Accordingly, no Transaction Accounting Adjustments were required to eliminate activities between the companies.

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statement of operations and comprehensive loss are based upon the number of shares outstanding at the closing of the Business Combination, assuming the Business Combination occurred on January 1, 2020.

The Transaction Accounting Adjustments included in the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2021 and are as follows:

(1A) Elimination of interest income on the trust account.

(2A) Reflects the elimination of interest expense and debt discount amortization on Owlet’s convertible debt.

(3A) Elimination of the change in the fair value of Owlet’s warrants.

(4A) Reflects the net impact on income taxes resulting from an income tax provision attributable to application of the blended statutory tax rate 0.03% for the six months ended June 30, 2021 to the adjustment related to reduction of interest expense incurred on Owlet debt, offset by the impact on the pro forma valuation allowance.

(5A) Reflects the mark to mark adjustment related to the election by holders of certain options to purchase Old Owlet common stock to have 496,717 options cashed out, rather than assumed by Owlet, and the reclassification of those options from equity to liability.

Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2020

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statement of operations are based upon the number of shares outstanding at the closing of the Business Combination, assuming the Business Combination occurred on January 1, 2020.

The Transaction Accounting Adjustments included in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 are as follows:

(1A) Elimination of interest income on the trust account.

(2A) Reflects the elimination of interest expense and debt discount amortization on Owlet’s convertible debt.

(3A) Elimination of the change in the fair value of warrants for Owlet

(4A) Reflects the net impact on income taxes resulting from an income tax provision attributable to application of the blended statutory tax rate of 0.12% to the adjustment related to reduction of interest expense incurred on Owlet debt, offset by the impact on the pro forma valuation allowance.

4. Loss per Share

Represents the net earnings per share calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2020. As the Business Combination, including related equity purchases, is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net income (loss) per share assumes that the shares issued in connection with the Business Combination were outstanding for the entire period presented.

Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. The 2,807,500 shares of Owlet common stock beneficially owned by the Sponsor following the Business Combination but subject to vesting are participating securities that contractually entitle the holders of such shares to participate in nonforfeitable dividends but does not contractually obligate the holders of such shares to participate in losses. The unaudited pro forma condensed combined statements of operations reflects a net loss for the period presented and, accordingly, no loss amounts have been allocated to such shares. These shares have also been excluded from basic and diluted pro forma net loss per share attributable to common stockholders as such shares of Owlet common stock are contingently recallable until the vesting events have occurred.


	Six Months Ended June 30, 2021			Twelve Months Ended December 31, 2020
Pro Forma Basic and Diluted Loss Per Share
Pro Forma net loss attributable to stockholders	$	(22,974	)	$	(16,435	)
Weighted average shares outstanding, basic and diluted		109,943			109,943
Basic and diluted net loss per share	$	(0.21	)	$	(0.15	)

Pro Forma Weighted Average Shares - Basic and Diluted
Shares Issued to PIPE Investors		12,968,000			12,968,000
Shares Issued to Pre-Business Combination Owlet Stockholders		90,791,573			90,791,573
Sponsor & related parties		2,942,500			2,942,500
Public stockholders (after redemption of 19,758,773 shares)		3,241,227			3,241,227