Leases

12 Months Ended

Dec. 31, 2023

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 assets and lease liabilities for leases with an initial term of 12 months or less from the balance sheet date, 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 primarily consist of leases for corporate offices and have remaining lease terms of approximately 1 year, 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. There were no finance leases as of adoption or during the year ended December 31, 2023.

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 following table summarizes the Company's right-of-use assets, liabilities, and other information about our leases:

	December 31, 2023		December 31, 2022
Right of use assets, net	$	937	$	2,260
Accrued and other expenses	$	1,169	$	2,105
Noncurrent lease liabilities	22		1,162
Total lease liabilities, net	$	1,191	$	3,267
Weighted average remaining lease term	0.7 years		1.7 years
Weighted average discount rate	6.3%		6.3%

Operating lease costs are recognized on a straight-line basis over the lease term. Total operating lease costs were $1,537 and $1,492 for the year ended December 31, 2023 and 2022, respectively, which included immaterial amounts related to short-term and variable lease costs.

Supplemental cash flow information related to leases was as follows:

	Year Ended December 31, 2023		Year Ended December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities	$	2,257	$	1,231
Right of use assets obtained in exchange for new operating lease liabilities	$	45	$	530

The following table shows the future maturities of lease liabilities for leases in effect as of December 31, 2023:

Years Ending December 31,	Lease Liabilities
2024	1,197
2025	22
Total lease payments	1,219
Less: imputed interest	(28)
Total	$	1,191

As of December 31, 2023, the Company had three sublease arrangements which are noncancellable and have remaining lease terms of less than 1 year. These subleases do not contain any options to renew or terminate the sublease agreement. Expected future sublease receipts as of December 31, 2023 were $726, all of which is expected to be received in 2024. The Company recognized sublease income of $1,292 and $975 for the years ended December 31, 2023 and 2022, 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 assets and lease liabilities for leases with an initial term of 12 months or less from the balance sheet date, 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 primarily consist of leases for corporate offices and have remaining lease terms of approximately 1 year, 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. There were no finance leases as of adoption or during the year ended December 31, 2023.

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 following table summarizes the Company's right-of-use assets, liabilities, and other information about our leases:

	December 31, 2023		December 31, 2022
Right of use assets, net	$	937	$	2,260
Accrued and other expenses	$	1,169	$	2,105
Noncurrent lease liabilities	22		1,162
Total lease liabilities, net	$	1,191	$	3,267
Weighted average remaining lease term	0.7 years		1.7 years
Weighted average discount rate	6.3%		6.3%

Operating lease costs are recognized on a straight-line basis over the lease term. Total operating lease costs were $1,537 and $1,492 for the year ended December 31, 2023 and 2022, respectively, which included immaterial amounts related to short-term and variable lease costs.

Supplemental cash flow information related to leases was as follows:

	Year Ended December 31, 2023		Year Ended December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities	$	2,257	$	1,231
Right of use assets obtained in exchange for new operating lease liabilities	$	45	$	530

The following table shows the future maturities of lease liabilities for leases in effect as of December 31, 2023:

Years Ending December 31,	Lease Liabilities
2024	1,197
2025	22
Total lease payments	1,219
Less: imputed interest	(28)
Total	$	1,191

As of December 31, 2023, the Company had three sublease arrangements which are noncancellable and have remaining lease terms of less than 1 year. These subleases do not contain any options to renew or terminate the sublease agreement. Expected future sublease receipts as of December 31, 2023 were $726, all of which is expected to be received in 2024. The Company recognized sublease income of $1,292 and $975 for the years ended December 31, 2023 and 2022, respectively.