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Subsequent Events
9 Months Ended
Sep. 30, 2021
Subsequent Events [Abstract]  
Subsequent Events

13. Subsequent Events

 

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.

 

Food and Drug Administration Letter

 

On October 1, 2021, the Company received a Warning Letter, dated October 1, 2021 (the “Warning Letter”), from the United States Food and Drug Administration (“FDA”) regarding the Owlet Smart Sock. The Warning Letter asserts that the Company’s marketing of its Owlet Smart Sock product (the “Smart Sock”) in the United States renders the Owlet Smart Sock a medical device requiring premarket clearance or approval from the FDA, and that the Company has not obtained such clearance or approval in violation of the Federal, Food, Drug, and Cosmetic Act. The Warning Letter is focused solely on the regulatory classification of the product in the United States as a result of the heart rate and oxygen notifications and related claims. Pursuant to the Warning Letter and in response to the request by the FDA to cease distribution of the Owlet Smart Sock in the U.S., the Company suspended distribution of the Owlet Smart Sock in the United States as of October, 2021. The suspension is specific to shipments by the Company to customers and retailers in the United States. Operations in other countries remain unaffected. In response to the Warning Letter, several national retailers have suspended U.S. sales of the Owlet Smart Sock and Owlet Duo.

The Company also announced that it is developing a new sleep monitoring sock ("Owlet Dream Sock") that it plans to sell as a consumer wellness product, which the Company believes does not present the same concerns that FDA has raised regarding the Owlet Smart Sock, based on differences in the functionality of and marketing claims for the new product. The Company also plans to submit an application to FDA seeking marketing authorization for the features of the Owlet Smart Sock that FDA believes make the product a medical device. We are in active discussions with our ecosystem partners regarding sale of the Owlet Dream Sock during pendency of ongoing communications with the FDA.

The Company cannot give any assurances that FDA will accept the Company’s application seeking marketing authorization for the Owlet Smart Sock as a medical device or that, even if such application is accepted for review, that FDA will grant marketing authorization for the Owlet Smart Sock. The Company also cannot give any assurances that FDA will not raise similar concerns regarding the regulatory status of the new planned consumer wellness product. The Company also cannot give any assurances as to the timing of the resolution of such matters.

 

In response to the October 1, 2021 Warning Letter, the Owlet Care App will no longer be available for download in Apple's App Store to new users in the United States and internationally as of November 17, 2021. Removal of the Owlet Care App from the App Store will not prevent customers who currently use the Owlet Care App from continuing to use it at this time. However, it will prevent new users from downloading the Owlet Care App.

 

Due to the ongoing nature and circumstances surrounding the FDA Warning Letter, the Company is unable to estimate any potential impact on future periods. The impacts, if any, could be material to the condensed consolidated financial statements of future periods.