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Leases
 9 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Leases Leases
The new lease standard was adopted on January 1, 2022 using the modified retrospective transition method. Prior periods were not retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance and did not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company also elected the practical expedients to exclude right-of-use ("ROU") assets and lease liabilities for leases with an initial term of 12 months or less from the balance sheet, and to combine lease and non-lease components for property leases, which primarily relate to ancillary expenses such as common area maintenance charges and management fees.

Leases are determined at inception by assessing whether the arrangement conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Owlet's leases consist of leases for corporate offices and office equipment, and have remaining lease terms of 2 to 5 years, with options for renewal. Renewal and termination options have not been included in the lease terms, as it is not reasonably certain that such options will be exercised. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Leases typically contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. Certain leases require the Company to pay taxes, insurance, maintenance and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the ROU assets and lease liabilities to the extent they are variable in nature. These variable lease costs are recognized as a variable lease expense when incurred.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Owlet uses its incremental borrowing rate, based on the information available at the lease commencement date, to determine the present value of lease payments. Upon adoption, Owlet recorded lease assets and lease liabilities of approximately $3,003 and $3,764, respectively, which did not have a net impact on the condensed consolidated statements of cash flows. The lease assets were adjusted for deferred rent, lease incentives, and prepaid rent, which were recorded as a decrease to accrued and other expenses and other long-term liabilities for the amounts of $234 and $527, respectively. There were no finance leases as of adoption or during the nine months ended September 30, 2022.

Income from subleased properties is recognized on a straight-line basis and presented as a reduction of costs, allocated among operating expense line items in the Company’s Consolidated Statements of Operations and
Comprehensive Loss. In addition to sublease rent, variable non-lease costs such as common area maintenance and utilities are charged to subtenants over the duration of the lease for their proportionate share of these costs. These variable non-lease income receipts are recognized in operating expenses as a reduction to costs incurred by the Company in relation to the head lease.

The impact of the new lease standard on the September 30, 2022 consolidated balance sheet was as follows:

September 30, 2022
Right of use assets, net$2,583
Accrued and other expenses$1,629
Noncurrent lease liabilities1,589
Total lease liabilities, net$3,218
Weighted average remaining lease term1.9 years
Weighted average discount rate6.3%
Operating lease costs are recognized on a straight-line basis over the lease term. Total operating lease costs were $390 for the three months ended September 30, 2022, which included an immaterial offset related to short-term and variable lease costs. Total operating lease costs were $1,089 for the nine months ended September 30, 2022, which included an immaterial offset related to short-term and variable lease costs.

Supplemental cash flow information related to leases was as follows:
Three Months Ended September 30, 2022
Nine Months Ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities$437$1,231
Right-of-use assets obtained in exchange for new operating lease liabilities$—$530

The following table shows the future maturities of lease liabilities for leases in effect as of September 30, 2022:

Years Ending December 31,Lease Liabilities
2022 (excluding the nine months ended September 30, 2022)$437
20231,798
20241,170
202518
Total lease payments3,423
Less: imputed interest(205)
Total$3,218
As of September 30, 2022, the Company had three sublease arrangements which are noncancellable and have remaining lease terms of 1.7 to 1.8 years. These subleases do not contain any options to renew or terminate the sublease agreement. The following table shows the expected future sublease receipts as of September 30, 2022:

Years Ending December 31,Sublease Receipts
2022 (excluding the nine months ended September 30, 2022)$288
20231,178
2024679
Total expected sublease receipts$2,145

The Company recognized sublease income of $287 and $62 for the three months ended September 30, 2022 and September 30, 2021, respectively. The Company recognized sublease income of $687 and $85 for the nine months ended September 30, 2022 and September 30, 2021, respectively.

As previously disclosed in our 2021 Annual Report on Form 10-K and under the previous lease standard (Topic ASC 840), future minimum lease payments under non-cancelable operating leases at December 31, 2021 were as follows:

Years Ending December 31,Amount
2022$1,541 
20231,587 
2024953 
Total$4,081 

Rental expense under operating leases was approximately $371 and $1,111 for the three and nine months ended September 30, 2021, respectively.
Leases Leases
The new lease standard was adopted on January 1, 2022 using the modified retrospective transition method. Prior periods were not retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance and did not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company also elected the practical expedients to exclude right-of-use ("ROU") assets and lease liabilities for leases with an initial term of 12 months or less from the balance sheet, and to combine lease and non-lease components for property leases, which primarily relate to ancillary expenses such as common area maintenance charges and management fees.

Leases are determined at inception by assessing whether the arrangement conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Owlet's leases consist of leases for corporate offices and office equipment, and have remaining lease terms of 2 to 5 years, with options for renewal. Renewal and termination options have not been included in the lease terms, as it is not reasonably certain that such options will be exercised. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Leases typically contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. Certain leases require the Company to pay taxes, insurance, maintenance and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the ROU assets and lease liabilities to the extent they are variable in nature. These variable lease costs are recognized as a variable lease expense when incurred.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Owlet uses its incremental borrowing rate, based on the information available at the lease commencement date, to determine the present value of lease payments. Upon adoption, Owlet recorded lease assets and lease liabilities of approximately $3,003 and $3,764, respectively, which did not have a net impact on the condensed consolidated statements of cash flows. The lease assets were adjusted for deferred rent, lease incentives, and prepaid rent, which were recorded as a decrease to accrued and other expenses and other long-term liabilities for the amounts of $234 and $527, respectively. There were no finance leases as of adoption or during the nine months ended September 30, 2022.

Income from subleased properties is recognized on a straight-line basis and presented as a reduction of costs, allocated among operating expense line items in the Company’s Consolidated Statements of Operations and
Comprehensive Loss. In addition to sublease rent, variable non-lease costs such as common area maintenance and utilities are charged to subtenants over the duration of the lease for their proportionate share of these costs. These variable non-lease income receipts are recognized in operating expenses as a reduction to costs incurred by the Company in relation to the head lease.

The impact of the new lease standard on the September 30, 2022 consolidated balance sheet was as follows:

September 30, 2022
Right of use assets, net$2,583
Accrued and other expenses$1,629
Noncurrent lease liabilities1,589
Total lease liabilities, net$3,218
Weighted average remaining lease term1.9 years
Weighted average discount rate6.3%
Operating lease costs are recognized on a straight-line basis over the lease term. Total operating lease costs were $390 for the three months ended September 30, 2022, which included an immaterial offset related to short-term and variable lease costs. Total operating lease costs were $1,089 for the nine months ended September 30, 2022, which included an immaterial offset related to short-term and variable lease costs.

Supplemental cash flow information related to leases was as follows:
Three Months Ended September 30, 2022
Nine Months Ended September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities$437$1,231
Right-of-use assets obtained in exchange for new operating lease liabilities$—$530

The following table shows the future maturities of lease liabilities for leases in effect as of September 30, 2022:

Years Ending December 31,Lease Liabilities
2022 (excluding the nine months ended September 30, 2022)$437
20231,798
20241,170
202518
Total lease payments3,423
Less: imputed interest(205)
Total$3,218
As of September 30, 2022, the Company had three sublease arrangements which are noncancellable and have remaining lease terms of 1.7 to 1.8 years. These subleases do not contain any options to renew or terminate the sublease agreement. The following table shows the expected future sublease receipts as of September 30, 2022:

Years Ending December 31,Sublease Receipts
2022 (excluding the nine months ended September 30, 2022)$288
20231,178
2024679
Total expected sublease receipts$2,145

The Company recognized sublease income of $287 and $62 for the three months ended September 30, 2022 and September 30, 2021, respectively. The Company recognized sublease income of $687 and $85 for the nine months ended September 30, 2022 and September 30, 2021, respectively.

As previously disclosed in our 2021 Annual Report on Form 10-K and under the previous lease standard (Topic ASC 840), future minimum lease payments under non-cancelable operating leases at December 31, 2021 were as follows:

Years Ending December 31,Amount
2022$1,541 
20231,587 
2024953 
Total$4,081 

Rental expense under operating leases was approximately $371 and $1,111 for the three and nine months ended September 30, 2021, respectively.