Owlet Announces $9 Million Private Placement Financing

Rhea-AI Summary

Owlet, Inc. (NYSE: OWLT) announces a private placement of Series B preferred stock and warrants to raise $9 million after recent FDA clearances and strong Q4 results. The transaction offers a 25% premium to the market closing price. The company plans to issue 1.2 million common stock shares and warrants to investors, supporting its momentum in infant monitoring devices.

Positive

• Owlet secures $9 million in a private placement of Series B preferred stock and warrants.
• The transaction includes a 25% premium to the recent market closing price.
• Investors will receive shares convertible into 1.2 million common stock shares and warrants.
• The CEO highlights the importance of the capital in supporting the company's momentum.
• Owlet ended the year with over $16 million in cash and cash equivalents.
• The company plans to globally commercialize its new medical devices with the capital raised.

Negative

• None.

Insights

Financial Analyst

The private placement of Series B convertible preferred stock and warrants by Owlet, Inc. represents a strategic move to raise capital, likely aimed at bolstering the company's cash position and funding its operational activities. The fact that this transaction is taking place at a 25% premium to the recent market closing price indicates investor confidence in Owlet's prospects, particularly following FDA clearances which may signal an upcoming period of growth and product commercialization.

The issuance of warrants exercisable at $7.7125, representing a 150% overage on the conversion of the preferred stock, suggests a potential for future cash inflow if the company's stock price appreciates and warrant holders choose to exercise their options. However, the dilutive effect of the conversion of preferred stock and exercise of warrants must be considered, as it could potentially depress the stock price in the short term due to the increase in outstanding shares.

Investors should monitor Owlet's use of the capital raised and any updates on the commercialization of the newly FDA-approved medical devices. Success in these areas could be a driver for future revenue growth and profitability, which would be essential for long-term shareholder value creation.

Market Research Analyst

Owlet's focus on smart infant monitoring and the recent FDA clearances suggest a strengthening of its competitive position within the pediatric health technology market. The capital raised through this private placement could enable the company to expand its distribution channels and invest in marketing initiatives that resonate with its target consumer base—parents concerned about their child's health.

Furthermore, the company's end-of-year cash position, coupled with this new funding, indicates a strategic cushion that could support aggressive investment in research and development or facilitate strategic partnerships. These actions could accelerate market penetration and adoption of Owlet's medical devices globally.

The company's commitment to achieving profitability, as highlighted by the CEO, will be an essential metric for investors to follow. Operational efficiency and effective cost management will be critical as Owlet transitions from a phase of product development and regulatory approval to one of commercial scale-up and market expansion.

Legal Expert

The mention of filing a Form 8-K with the SEC and the commitment to file a registration statement for the resale of shares indicates Owlet's adherence to regulatory requirements for securities offerings. The stipulation that the securities may not be resold absent registration or exemption underscores the legal complexities associated with private placements and the need for compliance with the Securities Act of 1933.

Investors should be aware that Owlet's compliance with these regulations is crucial to avoid legal pitfalls that could result in penalties or adverse effects on the company's reputation. It also provides transparency to the market, allowing investors to make informed decisions based on disclosed financials and the terms of the securities offering.

It is also noteworthy that the securities have not been registered under state securities laws, which implies that the offering is relying on federal exemptions from registration. This is a common practice in private placements, but it does limit the potential pool of investors to those who meet certain accreditation standards.

LEHI, Utah--(BUSINESS WIRE)-- Owlet, Inc. (NYSE: OWLT) (“Owlet” or the “Company”) announced today, following recent FDA clearances and strong preliminary fourth quarter results, that it has entered into definitive documentation relating to a sale of shares of its newly issued Series B convertible preferred stock (“Series B preferred stock”) and warrants to purchase its Class A common stock (“common stock”) in a private placement with certain institutional and other accredited investors for gross proceeds to Owlet of approximately $9 million, before deducting offering expenses. The conversion ratio for the Series B preferred stock and exercise price for the warrants reflects a 25% premium to the most recent market closing price on February 23, 2024. The transaction, which involves participation from existing investors, is expected to close on February 28, 2024, subject to customary closing conditions.

Pursuant to the terms of the definitive agreements and the closing of the private placement, Owlet will issue shares of Series B preferred stock that are convertible into approximately 1.2 million shares of common stock. Each purchaser will also receive a warrant to purchase 150% of the number of shares of common stock into which their Series B preferred stock is convertible. The warrants will have a per share exercise price of $7.7125 and will be exercisable by the holder at any time on or after the issuance date for a period of five years.

“As a pioneer of smart infant monitoring, Owlet has built momentum on the back of our two new FDA clearances. This capital is important in supporting that momentum,” said Kurt Workman, Co-founder and CEO. “The Company now has a strong foundation with our new medical devices, expanded distribution and a brand that resonates with parents. I’m grateful for the investors who share our vision and passion for improving pediatric health.”

Workman continued, “I’m proud of the team’s commitment to operating towards achieving a profitable business. We ended the year with over $16 million in cash and cash equivalents and this well-timed capital supports the opportunities ahead for our business as we globally commercialize our two new medical devices.”

Additional details regarding the private placement will be included in a Form 8-K to be filed by Owlet with the Securities and Exchange Commission (“SEC”).

The securities to be issued in the private placement and the underlying shares of common stock issuable upon conversion or exercise of the Series B preferred stock or warrants have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or securities laws of any state or other jurisdiction, and may not be resold absent registration under, or exemption from registration under, the Securities Act. Owlet has agreed to file a registration statement with the SEC registering the resale of the shares of common stock underlying the Series B preferred stock and warrants.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

Cautionary Note Regarding Forward-Looking Statements

This press release contains certain statements that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”), including statements regarding the Company’s estimated financial results for the fourth quarter ended December 31, 2023, the closing of the private placement, use of proceeds from the private placement and Owlet’s potential for long-term growth. Generally, forward-looking statements include the words “estimate,” “may,” “believes,” “plans,” “expects,” “anticipates,” “intends,” “goal,” “potential,” “upcoming,” “outlook,” “guidance,” the negation thereof, or similar expressions, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on the Company’s expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. For all such forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act. The Company’s actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by our forward-looking statements. Many important factors could affect the Company’s future results and cause those results to differ materially from those expressed in or implied by the Company’s forward-looking statements. Such factors include, but are not limited to, risks and uncertainties related to financial results, including risks related to the private placement and the expected timing of closing reported herein, reflect information available to the Company only as of the date of this press release, as well as those set forth in the Company’s other releases, public statements and/or filings with the U.S. Securities and Exchange Commission, including those identified in the “Risk Factors” sections of the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. All future written and oral forward-looking statements attributable to the Company or any person acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. Moreover, Owlet operates in an evolving environment. In addition to the factors described above, new risk factors and uncertainties may emerge from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict such events or how they may affect us. Except as required by federal securities laws, the Company assumes no obligation to update any forward-looking statements after the date of this release as a result of new information, future events or otherwise, although we may do so from time to time. The Company does not endorse any projections regarding future performance, results or events that may be made by third parties.

About Owlet, Inc.

Owlet was founded by a team of parents in 2012. Owlet’s 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. Owlet’s digital parenting platform aims to give parents real-time data and insights to help parents feel calmer and more confident. Owlet believes that every parent deserves peace of mind and the opportunity to feel their well-rested best. Owlet also believes that every child deserves to live a long, happy, and healthy life, and is working to develop products to help further that belief. To learn more, visit www.owletcare.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240226945926/en/

Investor Contacts:

Mike Cavanaugh

ICR Westwicke

Phone: +1.617.877.9641

mike.cavanaugh@westwicke.com

Media Contacts:

pr@owletcare.com

owlet@diffusionpr.com

Source: Owlet, Inc.

FAQ

What is the purpose of Owlet's private placement of Series B preferred stock and warrants?

Owlet aims to raise $9 million to support its momentum in infant monitoring devices.

What is the premium offered in the private placement transaction?

The transaction offers a 25% premium to the most recent market closing price.

How many common stock shares will be issued as part of the private placement?

Owlet plans to issue shares convertible into approximately 1.2 million common stock shares.

What is the CEO's opinion on the importance of the capital raised?

The CEO, Kurt Workman, emphasizes the capital's significance in supporting the company's momentum.

How much cash and cash equivalents did Owlet end the year with?

Owlet ended the year with over $16 million in cash and cash equivalents.

What are Owlet's plans for the capital raised through the private placement?

Owlet intends to use the capital to globally commercialize its new medical devices.