Owlet(US:OWLT)2021-11-15 22:07Financial Performance - As of September 30, 2021, the company had an accumulated deficit of $119.4 million, up from $71.7 million as of December 31, 2020[135]. - The company reported a net loss of $34.5 million for the three months ended September 30, 2021, compared to a net loss of $1.5 million for the same period in 2020[154]. - Adjusted EBITDA for the nine months ended September 30, 2021, was $(13.9) million, with an Adjusted EBITDA margin of (17.7)%[154]. - Revenues for the three months ended September 30, 2021, increased by $10.3 million, or 48.8%, to $31.5 million compared to $21.2 million for the same period in 2020, driven by a 54% increase in sales volume[168]. - Revenues for the nine months ended September 30, 2021, increased by $23.9 million, or 44.0%, to $78.4 million compared to $54.4 million for the same period in 2020, primarily due to a 47% increase in sales volume[170]. - Gross profit for the three months ended September 30, 2021, was $14.9 million, representing a 51.5% increase from $9.8 million for the same period in 2020[171]. - Gross margin for the three months ended September 30, 2021, improved to 47.2% from 46.4% for the same period in 2020[171]. Expenses - General and administrative expenses for the three months ended September 30, 2021, increased by $6.1 million, or 191.5%, to $9.3 million compared to $3.2 million for the same period in 2020[173]. - Sales and marketing expenses for the three months ended September 30, 2021, increased by $8.0 million, or 159.3%, to $13.1 million compared to $5.0 million for the same period in 2020[176]. - Research and development expenses are expected to increase significantly as the company invests in the development of its monitoring pipeline, including Smart Sock variants[162]. - Sales and Marketing expense increased by $13.7 million, or 104.3%, from $13.1 million for the nine months ended September 30, 2020 to $26.8 million for the nine months ended September 30, 2021, representing 34.2% of revenues[177]. - Research and Development expense increased by $3.6 million, or 131.5%, from $2.7 million for the three months ended September 30, 2020 to $6.3 million for the three months ended September 30, 2021, accounting for 20.1% of revenue[178]. - For the nine months ended September 30, 2021, Research and Development expenses increased by $6.6 million, or 86.9%, from $7.6 million in the same period of 2020, representing 18.2% of revenue[179]. Cash Flow and Financing - The company generated net cash used in operating activities of $34.7 million for the nine months ended September 30, 2021, primarily due to a net loss of $47.6 million[201]. - Net cash used in investing activities increased to $1.6 million for the nine months ended September 30, 2021, up from $0.9 million in the same period of 2020[203]. - For the nine months ended September 30, 2021, net cash provided by financing activities was $134.2 million, compared to $2.9 million for the same period in 2020[204][206]. - The financing activities in 2021 included gross draws of $8.2 million on the line of credit and the issuance of $5.0 million in additional long-term debt[204]. - As of September 30, 2021, the company had cash and cash equivalents of $114.9 million[187]. - The company had an amended loan and security agreement with Silicon Valley Bank, with a borrowing capacity under the SVB Revolver of $17.5 million as of September 30, 2021[191]. Regulatory and Market Expansion - The company suspended distribution of the Owlet Smart Sock in the U.S. as of October 2021 in response to a Warning Letter from the FDA, impacting sales and operations[140]. - The company plans to develop a new sleep monitoring sock, the Owlet Dream Sock, which is expected to avoid the regulatory concerns raised by the FDA regarding the Owlet Smart Sock[144]. - The company is developing two variations of the Owlet Smart Sock as medical devices, which will require FDA marketing authorization[145]. - The company aims to expand its market presence internationally, focusing on Europe, Asia, and Latin America, while investing in its supply chain to support this expansion[147]. - International revenues for the three months ended September 30, 2021, increased by $2.1 million, or 170.4%, to $3.3 million compared to $1.2 million for the same period in 2020[169]. Company Classification and Risks - The company qualifies as an emerging growth company (EGC) under the JOBS Act, allowing for an extended transition period to comply with new accounting standards[211]. - The company anticipates remaining an EGC until at least December 31, 2025, or until certain revenue thresholds are met[213]. - The company is classified as a "smaller reporting company," allowing for reduced disclosure obligations[214]. - The company is exposed to market risks primarily due to interest rate fluctuations and credit risk[215]. - The interest rate on the Term Note was the greater of the prime rate plus 3.5% or 6.5% as of September 30, 2021, with no material risk from interest rate fluctuations[217]. - Substantially all cash and cash equivalents are deposited in one financial institution, minimizing credit risk[218]. - The company has experienced significant credit losses primarily from a national retailer's bankruptcy in September 2017, but maintains an allowance for doubtful accounts[220].