LiveWire Group, Inc. 10-K

Item 9A. Controls and Procedures Limitations on effectiveness of controls and procedures In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Evaluation of Disclosure Controls and Procedures Our management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes are in accordance with U.S. GAAP. Based on that evaluation, and as a result of the material weakness in our internal control over financial reporting as described below, the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, our disclosure controls and procedures were not effective. As a result of the identified material weakness described below, we performed additional analysis and other post-closing procedures intended to assess whether our consolidated financial statements, including restatements of previous unaudited interim periods, and the related notes thereto included in this Annual Report on Form 10-K fairly present, in all material aspects, the Company’s financial condition, results of operations and cash flows as of the dates presented, and for the periods ended in such dates, in conformity with GAAP. Material Weakness A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual and interim financial statements will not be detected or prevented on a timely basis. During finalization of the Company’s 2022 Consolidated financial statements, the Company discovered that it had prematurely recognized revenue related to deliveries to a customer of STACYC electric balance bikes without batteries, which were shipped separately a short time later. As a result, the Company had prematurely recognized revenue during financial reporting periods prior to the completion of the Business Combination on those semi-finished units at the time of delivery of the bikes in the first and second quarters of 2022, respectively, with a related understatement of revenue in the third quarter of 2022. The batteries were completely delivered by the end of the third quarter of 2022, which was required for the Company to be able to recognize revenue for the bikes as a finished unit. On February 22, 2023, the Audit Committee of the Company’s Board of Directors (the “Audit Committee”), in consultation with members of the Company’s management, concluded that the Company’s previously issued unaudited quarterly financial statements for the three months ended March 27, 2022, the three and six months ended June 26, 2022, and the three months ended September 25, 2022 should no longer be relied upon due to the premature revenue recognition error in those financial statements. For the nine months ended September 25, 2022, there was no impact to the Company’s reported revenue or cash flow, as a result of the premature recognition of revenue. The Company concluded it has a material weakness in its internal control over financial reporting, as the design of controls to correctly recognize revenue and the related cost of goods sold at the STACYC segment in accordance with GAAP were ineffective. The material weakness in the Company’s internal control over financial reporting, which remained unremediated as of the filing of this Annual Report on Form 10-K, resulted in material errors not being detected timely within the Company’s unaudited interim financial statements for the three months ended March 27, 2022, the three and six months ended June 26, 2022 and the three months ended September 25, 2022, all of which are being restated within this Annual Report on Form 10-K for the year ending December 31, 2022. See further detail in Note 18, Restatement of Unaudited Interim Financial Statements, for further details of the Restatement. 109 We are continuing to develop and implement our remediation plan to strengthen the effectiveness of the design and operation of our internal control environment as discussed in greater detail under the caption entitled “Remediation Efforts” below. Management believes that the financial statements included in this Annual Report on Form 10-K present fairly, in all material respects, our Consolidated balance sheets, Consolidated statements of operations and comprehensive loss, Consolidated statements of shareholders’ equity, and Consolidated statements of cash flows for the periods presented. Remediation Efforts The Company has identified and begun to implement several steps, as further described below, designed to remediate the foregoing material weakness and to enhance the Company’s overall control environment. The Company will not consider the material weakness remediated until its enhanced controls are operational for a sufficient period of time and tested, enabling management to conclude that the enhanced controls are operating effectively. To remediate this material weakness, the Company has begun requiring one shipment for all complete electric balance bikes to satisfy the performance obligation, with any exceptions requiring review by the Chief Accounting Officer and/or the Chief Financial Officer for appropriate accounting under GAAP. Additionally, the Company is enhancing its control structure over the STACYC segment and implementing a control to require all material changes to business operations and new or amended contracts to be reviewed by the Chief Accounting Officer and/or the Chief Financial Officer for accounting impacts in accordance with GAAP. The Company is also enhancing its controls related to the review of material, manual journal entries to ensure the review is being completed by the appropriate level of management for assessment of accounting impacts in accordance with GAAP. While the foregoing measures are intended to effectively remediate the material weakness described in this Item 9A, it is possible that additional or amended remediation steps will be necessary. As such, as the Company will continue to evaluate and implement its plan to remediate the material weakness, its management may decide to take additional measures to address the material weakness or modify the remediation steps described above. The material weakness cannot be considered fully remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Until this material weakness is remediated, the Company plans to continue to perform additional analyses and other procedures to help ensure that its consolidated financial statements are prepared in accordance with GAAP. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13(a)-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934 (the “Exchange Act”). This Annual Report on Form 10-K does not include a report of management’s assessment regarding our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) as allowed by the SEC for reverse acquisitions between an issuer and a private operating company when it is not possible to conduct an assessment of the private operating company’s internal control over financial reporting in the period between the consummation date of the reverse acquisition and the date of management’s assessment of internal control over financial reporting (pursuant to Section 215.02 of the SEC Division of Corporation Finance’s Regulation S-K Compliance & Disclosure Interpretations). Prior to the Business Combination, we were a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination involving one or more businesses. As a result, previously existing internal controls are no longer applicable or comprehensive enough as of the assessment date as our operations prior to the Business Combination were insignificant compared to those of the consolidated entity post-Business Combination, and our management was unable, without incurring unreasonable effort or expense, to complete an assessment of our internal control over financial reporting as of December 31, 2022. Attestation Report of Independent Registered Public Accounting Firm This Form 10-K does not include an attestation report of the effectiveness of the Company's internal control over financial reporting as of December 31, 2022 by the Company's registered public accounting firm due to a transition period established by rules of the U.S. Securities and Exchange Commission for new public companies. 110 Changes in Internal Control over Financial Reporting There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fourth quarter ended 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. We are in the process of implementing the remediation efforts noted above, which are being implemented subsequent to December 31, 2022. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. PART III Item 10. Directors, Executive Officers and Corporate Governance Our current directors and executive officers as of the date of this Annual Report are as follows: Name Age* Position Executive Officers: Jochen Zeitz 59 Chair, Chief Executive Officer and Director Ryan Morrissey 46 President Tralisa Maraj 47 Chief Financial Officer Amanda Parker 41 Chief Legal Officer Jon Carter 38 Chief Accounting Officer Non-Employee Directors: William Cornog 58 Director John Garcia 66 Director Gina Goetter 45 Director Kjell Gruner 55 Director Glen Koval 48 Director Edel O’Sullivan 43 Director *As of February 21, 2023. Executive Officers Jochen Zeitz is our Chief Executive Officer and Chairman of the Board. Mr. Zeitz has been a director of Harley-Davidson since 2007 and served as its Acting President and Chief Executive Officer from February 2020 until May 2020, when he was appointed as H-D’s President and Chief Executive Officer. Mr. Zeitz has served as H-D’s Chairman of the Board since February 2020. Mr. Zeitz served as Chairman and Chief Executive Officer of the sporting goods company PUMA AG from 1993 to 2011. He was also PUMA’s Chief Financial Officer from 1993 to 2005. Mr. Zeitz served as a director of luxury goods company Kering (formerly PPR) from 2012 to 2016. He was a member of Kering’s Executive Committee and Chief Executive Officer of its Sport & Lifestyle division from 2010 to 2012. Mr. Zeitz is an Advisor and Board Member of the Cranemere Group Limited and co-founded The B Team with Sir Richard Branson. He is also the Founder and Chairman of the ZEITZ foundation, Founder of Segera Conservancy and The Long Run, and Co-Founder of the Zeitz Museum of Contemporary Art Africa (Zeitz MOCAA) in Cape Town, which preserves and exhibits contemporary art from Africa and its diaspora. We believe Mr. Zeitz is qualified to serve as Chair and a Director due to his extensive experience restructuring and transforming companies, experience as a public director and leader in the motorcycle and lifestyle brand industries. 111 Ryan Morrissey is our President. Prior to joining LiveWire, Mr. Morrissey was Chief Electric Vehicle Officer of H-D from early 2020 to March 2022, leading the establishment of the EV division and the launch of the LiveWire brand. Prior to H-D, Mr. Morrissey served as a Senior Partner and Head of the Americas Automotive & Mobility practice at Bain & Company. In fifteen years with the management consulting firm’s strategy, industrials and technology practices, he advised corporate clients and financial investors on growth, M&A and technology transformations. He served leading original equipment manufacturers in the automotive, agriculture, aerospace and powersports industries on electrification, connected vehicles, autonomous driving, and services strategy. He also led Bain’s collaboration with the World Economic Forum on digital business models. His expertise in sustainable technologies dates back to the early years of his career, working on the product and commercial teams at Lutron Electronics to develop and market smart building technologies and energy management systems. Mr. Morrissey holds a Bachelor of Science degree from Lafayette College where he studied Mechanical Engineering and Finance and an MBA from MIT. Tralisa Maraj is our Chief Financial Officer. Ms. Maraj has served as Chief Financial Officer of LiveWire since summer 2022. Prior to joining LiveWire, Ms. Maraj was Chief Financial Officer of CGX Energy Inc. from January 2012 to November 2021. Before joining CGX Energy Inc., Ms. Maraj held the role of Corporate Controller at Remora Energy from October 2009 to October 2011. Prior to this, Ms. Maraj spent a total of 14 years at PricewaterhouseCoopers from September 1995 to October 2009 with her last position being that of Senior Manager. Ms. Maraj is a Charted Accountant under the Association of Chartered Certified Accountants in the UK and CPA licensed in the State of Texas. Amanda Parker is our Chief Legal Officer. Ms. Parker has served as Chief Legal Officer of LiveWire since late summer 2022. Prior to joining LiveWire, Ms. Parker was General Counsel and Corporate Secretary of Loram Maintenance of Way, Inc. Before joining Loram Maintenance of Way, Inc., Ms. Parker was General Counsel, Chief Development Officer and Corporate Secretary of Regis Inc. from 2018 to 2021. Before joining Regis Inc., Ms. Parker served as Assistant General Counsel and Senior Attorney at Polaris Industries, Inc. from 2014 to 2017. Before joining Polaris Industries, Inc. Ms. Parker served as Commercial Director at Cargill, Incorporated from 2013 to 2014 and Attorney at Cargill, Incorporated from 2008 to 2013. Ms. Parker began her law practice at Briggs & Morgan, PA in Minneapolis. Ms. Parker holds a JD from the University of Minnesota Law School, an MBA in Finance from the Carlson School of Business at the University of Minnesota, and a BA in Criminal Justice from American University in Washington, DC. Jon Carter is our Chief Accounting Officer. Mr. Carter has served as Chief Accounting of LiveWire since May 2022. Prior to joining LiveWire, Mr. Carter held several positions at US Foods from July 2018 to April 2022, including Vice President and Assistant Corporate Controller. Before joining US Foods, Mr. Carter held several positions at Cenveo, Inc. from November 2013 to June 2018, including Assistant Corporate Controller. Mr. Carter began his career at KPMG, LLP and holds a Bachelors Degree in Accounting from Simpson College. Mr. Carter is a CPA licensed in the State of Iowa. Non-Employee Directors William L. Cornog has served on the Board since September 2022 and is the former head of KKR Capstone (2002-2022), the portfolio operations team of KKR & Co. In addition to leading Capstone, Mr. Cornog chaired KKR’s Portfolio Management Committees for the Americas, Europe, Asia, Infrastructure, Impact & Technology Growth and was a member of the Investment & Distribution and Valuation Committees. Prior to joining KKR, Mr. Cornog was with Williams Communications Group as the Senior Vice President and General Manager of Network Services. Prior to that, Mr. Cornog was a partner at The Boston Consulting Group and also worked at Age Wave Communications and SmithKline Beckman Corporation (GSK). Mr. Cornog currently is a board member at Channel Control Merchants, which is a KKR portfolio company, and Brightview Holdings, Inc. (NYSE: BV), a publicly traded company controlled by KKR. Mr. Cornog is Chairman of the Board at Channel Control Merchants and is Chairman of the audit committee and the conflicts committee of LiveWire. Private company and philanthropic boards include Griffin Highline, Blue Crow Sports Group, and The Knight Campus at the University of Oregon. Mr. Cornog earned a B.A. from Stanford University and an M.B.A. from Harvard Business School. Dr. John Garcia has served on the Board since September 2022 and is the Executive Chairman of AEA Investors LP. Dr. Garcia joined AEA in 1999 as a Partner and Head of AEA Investors LP’s then newly formed European operations based in London. In 2002, Dr. Garcia became President of AEA Investors LP while continuing to head European operations and lead AEA Investors LP’s global Value-Added Industrial Products and Specialty Chemicals teams. In 2006, Dr. Garcia also became Chief Executive Officer of AEA Investors LP, during which time he was responsible for all operational aspects of AEA including fundraising, investment review process, growth and strategy and operations. Dr. Garcia was also named Chairman of AEA Investors LP in 2012 and in 2019, in connection with relinquishing the title of Chief Executive Officer, he became the Executive Chairman. As Executive Chairman, Dr. Garcia remains responsible for AEA’s investment review process. Since 1999, under his leadership, AEA has made over 90 private equity investments totaling over $11 billion of invested capital. Dr. 112 Garcia was also instrumental in the creation of the AEA Private Debt Funds in 2005 and the AEA Small Business Funds in 2004. Dr. Garcia has served on the board of numerous AEA portfolio companies in addition to various other companies. Dr. Garcia serves as the chairman or member of the investment committee for the various private equity and private debt funds. Dr. Garcia has a long history of working together with family owned and entrepreneur-led businesses and investors to help them maximize their potential and meet their long term needs. Dr. Garcia earned a B.Sc. from the University of Kent, an M.A. and Ph.D. in Organic Chemistry from Princeton University, and an MBA from Wharton School of the University of Pennsylvania. We believe Dr. Garcia is qualified to serve as a director due to his significant management and business experiences. Gina Goetter has served on the Board since September 2022. Ms. Goetter has been the Chief Financial Officer of H-D since September 2020. Ms. Goetter served as Senior Vice President Finance of the Prepared Foods Segment of multinational food company Tyson Foods, Inc. from 2019 to September 2020. From 2008 to 2018, Ms. Goetter held several leadership positions at multinational consumer foods manufacturer and marketer General Mills, Inc., including serving as Vice President, Financial Operations of the Meals & Baking Operating Unit from 2017 to 2019, Senior Finance Director of the Baking Operating Unit from 2015 to 2016, and CFO of the General Mills Canada segment from 2011 to 2015. Ms. Goetter holds a Bachelors of Applied Science from the University of Wisconsin-La Crosse and an MBA from Boston College. We believe Ms. Goetter is qualified to serve as a director due to her qualifications in business, finance and accounting, as well as to her extensive experience and leadership in a wide range of public companies. Dr. Kjell Gruner has served on the Board since September 2022. Dr. Gruner has been the President and Chief Executive Officer of Porsche Cars North America since November 2020. Dr. Gruner served as the global Chief Marketing Officer of Porsche from September 2010 to October 2020. Dr. Gruner served as Director of Strategy Mercedes-Benz Cars during his tenure at Daimler AG from 2004 to 2010. Prior to that time he worked for Porsche and for the Boston Consulting Group (BCG). Dr. Gruner earned a Masters Degree from Karlsruhe Institute of Technology and a PhD scl in Marketing from WHU–Otto Beisheim School of Management. We believe Dr. Gruner is qualified to serve as a director due to his extensive automotive and brand strategy experience. Glen Koval has served on the Board since September 2022. Mr. Koval has held several leadership positions at H-D since August 2001, including serving as Vice President of Engineering since January 2021, General Manager of Engineering from May 2020 to December 2020, Chief Engineer of EV Platform from January 2019 to April 2020 and Chief Engineer of Current Products from January 2017 to January 2019. Mr. Koval holds a Bachelor of Engineering from Marquette University and an MBA from Concordia University-Wisconsin. We believe Mr. Koval is qualified to serve as a director due to his decades of experience at H-D, his motorcycle product and engineering expertise, and his extensive knowledge of the motorcycle industry. Edel O’Sullivan has served on the Board since September 2022. Ms. O’Sullivan has been the Chief Commercial Officer of H-D since March 2021. From 2007 to March 2021 Ms. O’Sullivan held several positions at Bain & Company, including serving as partner from 2016 to 2021. Ms. O’Sullivan served in the Financial Planning and Analysis of Procter & Gamble from 2002 to 2005. Ms. O’Sullivan holds a Bachelor’s degree in Chemical Engineering from the Universidad Simon Bolivar and an MBA from Harvard Business School. We believe Ms. O’Sullivan is qualified to serve as a director due to her significant management and business experiences. Family Relationships There are no family relationships between any of LiveWire’s executive officers and directors. Independence of Directors We adhere to the rules of the NYSE in determining whether a director is independent. The Board consults with its counsel to ensure that the Board’s determinations are consistent with those rules and all relevant securities and other laws and regulations regarding the independence of directors. The NYSE listing standards generally define an “independent director” as a person that, in the opinion of the issuer’s board of directors, has no material relationship with the listed company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the company). The parties have determined that William Cornog, John Garcia and Kjell Gruner are considered our independent directors. Our independent directors will have regularly scheduled meetings at which only independent directors are present. Board Leadership Structure and Role in Risk Oversight The Board oversees the risk management activities designed and implemented by our management. The Board does not anticipate having a standing risk management committee, but rather executes its oversight responsibility both directly and through its standing committees. The Board also considers specific risk topics, including risks associated with our strategic 113 initiatives, business plans and capital structure. Our management, including our executive officers, are primarily responsible for managing the risks associated with operation and business of the company and provide appropriate updates to the Board and the Audit and Finance Committee. The Board delegates to the Audit and Finance Committee oversight of its risk management process, and our other Board committees also consider risks as they perform their respective committee responsibilities. All board committees report to the Board as appropriate, including, but not limited to, when a matter rises to the level of a material or enterprise risk. Board Committees The Board has an Audit and Finance Committee, a Conflicts Committee, a Nominating and Corporate Governance Committee, a Human Resources Committee and a Brand and Sustainability Committee, each of which has the composition and responsibilities described below. Audit and Finance Committee Information Our Audit and Finance Committee is responsible for, among other things: • appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm; • discussing with our independent registered public accounting firm their independence from management; • reviewing, with our independent registered public accounting firm, the scope and results of their audit; • approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; • overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the quarterly and annual financial statements that we file with the SEC; • overseeing our financial and accounting controls and compliance with legal and regulatory requirements; • reviewing our policies on risk assessment and risk management; • reviewing related person transactions; and • establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters. Our Audit and Finance Committee consists of William Cornog, John Garcia and Kjell Gruner with William Cornog serving as chair. Rule 10A-3 of the Exchange Act and the NYSE rules require that our Audit and Finance Committee be composed entirely of independent members. The Board has affirmatively determined that William Cornog, John Garcia and Kjell Gruner each meet the definition of “independent director” for purposes of serving on the audit committee under Rule 10A-3 of the Exchange Act and the NYSE rules. Each member of our Audit and Finance Committee also meets the financial literacy requirements of NYSE listing standards. In addition, the Board has determined that William Cornog qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Board has adopted a written charter for the Audit and Finance Committee, which is available on our corporate website. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K. Conflicts Committee Our Conflicts Committee is responsible for, among other things, reviewing and approving: • new material arrangements and transactions between H-D and us; • changes to our organizational documents that involve conflicts between H-D and us; • resolution of material disputes related to agreements between H-D and its affiliates on the one hand and us and our affiliates on another, including any material amendment, waiver, or enforcement action relating to any such agreements (including the Intellectual Property Licensing Agreement, Contract Manufacturing Agreement, Joint Development Agreement and the Master Services Agreement) and any other material operational matters between H-D and us; • any amendment to the charter of the Conflicts Committee; and • any sales of shares of Common Stock by H-D that are subject to an early price-based release under the Registration Rights Agreement. Our Conflicts Committee is composed of William Cornog, John Garcia and Kjell Gruner, with William Cornog serving as chair. The Conflicts Committee is composed entirely of independent directors that the Board determined meet the independence requirements of the NYSE. The Board has adopted a written charter for the Conflicts Committee, which is available on our 114 corporate website. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K. Nominating and Corporate Governance Committee Information Our Nominating and Corporate Governance Committee is responsible for, among other things: • identifying individuals qualified to become members of the Board, consistent with criteria approved by the Board as set forth in our corporate governance guidelines; • annually reviewing the committee structure of the Board and recommending to the Board the directors to serve as members of each committee; and • developing and recommending to the Board a set of corporate governance guidelines. Our Nominating and Corporate Governance Committee consists of William Cornog, Kjell Gruner and Edel O’Sullivan with Edel O’Sullivan serving as chair. William Cornog and Kjell Gruner each qualify as “independent directors” under the NYSE rules. The Board has adopted a written charter for the Nominating and Corporate Governance Committee, which is available on our corporate website. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K. Human Resources Committee Our Human Resources Committee is responsible for, among other things: • reviewing and approving, or recommending that the Board approve, the compensation of our Chief Executive Officer and other executive officers; • making recommendations to the Board regarding director compensation; and • reviewing and approving incentive compensation and equity-based plans and arrangements and making grants of cash-based and equity-based awards under such plans. Our Human Resources Committee consists of William Cornog, John Garcia, and Gina Goetter with John Garcia serving as chair. John Garcia and William Cornog each qualify as “independent directors” under the NYSE rules. The Board has adopted a written charter for the Human Resources Committee, which is available on our corporate website. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K. Brand and Sustainability Committee Our Brand and Sustainability Committee is responsible for, among other things: • monitoring consumer, market, industry, and macroeconomic trends, issues and concerns that could affect our brand relevance and its retail and go-to-market models, processes, resources, activities, strategies and other capabilities, and make recommendations to the Board and management regarding how we should respond to such trends, issues and concerns; • monitoring the social, political, environmental, public policy, legislative and regulatory trends, issues and concerns that could affect our brand and sustainability models, processes, resources, activities, strategies and other capabilities, and make recommendations to the Board and management regarding how we should respond to social and environmental trends, issues and concerns to more effectively achieve its brand and sustainability goals; • considering and advising management on high-leverage aspects of our brand and our go-to-market strategies to rapidly improve its brand relevance, retail prowess and new customer creation in the near term, while building strong leadership and company capabilities in these areas for the long term; • assisting management in setting strategy, establishing goals and integrating brand, social and environmental shared value creation and inclusion into daily business activities across our business, consistent with sustainable growth; • reviewing new technologies and other innovations that will permit us to achieve sustainable growth without growing our environmental impact; and • considering the impact that our sustainability policies, practices and strategies have on employees, customers, dealers, suppliers, the environment and the communities in which we operates. Our Brand and Sustainability Committee is composed of Kjell Gruner, Glen Koval and Edel O’Sullivan, with Kjell Gruner serving as chair. The Board has adopted a written charter for the Brand and Sustainability Committee, which is available on our 115 corporate website. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K. Guidelines for Selecting Director Nominees The Nominating and Corporate Governance Committee considers persons identified by its members, management, stockholders, investment bankers and others. The guidelines for selecting nominees, which are specified in the Nominating and Corporate Governance Committee charter, generally provide that persons to be nominated: • should have demonstrated notable or significant achievements in business, education or public service; • should possess the requisite intelligence, education and experience to make a significant contribution to the Board and bring a range of skills, diverse perspectives and backgrounds to our deliberations; and • should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders. The Nominating and Corporate Governance Committee considers a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the Board. The Nominating and Corporate Governance Committee may require certain skills or attributes, such as financial or accounting experience, to meet specific Board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The Nominating and Corporate Governance Committee does not distinguish among nominees recommended by stockholders and other persons. Code of Ethics We have adopted a written code of business conduct and ethics, which applies to all of our directors, officers and employees, including our principal executive officer, our principal financial officer, our principal accounting officer, and other persons performing similar finance functions. Our Code of Business Conduct and Ethics is available on our website www.livewire.com in the “Governance & Leadership” section under “Governance Documents.” In addition, we intend to post on our website all disclosures that are required by law or listing rules of the New York Stock Exchange concerning any amendments to, or waivers from, any provision of our Code of Business Conduct and Ethics. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K. Human Resources Committee Interlocks and Insider Participation None of our executive officers currently serves, and in the past year has served, as a member of the compensation committee of any entity that has one or more executive officers serving on the Board. Stockholder and Interested Party Communications Our management may establish a process for stockholder and interested party communications in the future. Item 11. Executive Compensation The information required by this Item will be included in the Proxy Statement under the captions Executive Compensation and Human Resources Committee Report on Executive Compensation and is incorporated by reference herein. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item will be included in the Proxy Statement under the caption Common Stock Ownership of Certain Beneficial Owners and Management and is incorporated by reference herein. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item will be included in the Company's Proxy Statement under the captions Certain Transactions and Board Matters and Corporate Governance – Independence of Directors and are incorporated by reference herein. 116 Item 14. Principal Accountant Fees and Services The information required by this Item will be included in the Company's Proxy Statement under the caption Proposal 2: Ratification of the Selection of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2022 and is incorporated by reference herein. 117 PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as part of this Form 10-K: (1) Financial Statements under Item 8. Consolidated Financial Statements and Supplementary Data Reports of Independent Registered Public Accounting Firm 73 Consolidated statements of operations and comprehensive loss for the years ended December 31, 2022, 2021, and 2020 74 Consolidated balance sheets at December 31, 2022 and 2021 75 Consolidated statements of cash flows for the years ended December 31, 2022, 2021, and 2020 76 Consolidated statements of shareholders’ equity for the years ended December 31, 2022, 2021, and 2020 77 Notes to Consolidated financial statements 78 (2) Financial Statement Schedule Schedule II – Valuation and qualifying accounts 119 (3) Exhibits 120 Reference is made to the separate Index to Exhibits contained on pages 120 through 121 filed herewith. All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedules. 118 LIVEWIRE GROUP, INC. SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS (In thousands) Years Ended 2022 2021 2020 Accounts receivable - Allowance for doubtful accounts Balance, beginning of period $ 66 $ 11 $ 7 Provision charged to expense 169 55 4 Reserve adjustments ( 16 ) — — Write-offs, net of recoveries ( 8 ) — — Balance, end of period $ 211 $ 66 $ 11 Inventories - Allowance for obsolescence Balance, beginning of period $ 7,021 $ 5,200 $ 2,181 Provision charged to expense 1,074 2,456 3,019 Reserve adjustments (1) ( 6,691 ) — — Write-offs, net of recoveries ( 84 ) ( 635 ) — Balance, end of period $ 1,320 $ 7,021 $ 5,200 Deferred tax assets - Valuation allowance Balance, beginning of period $ 915 $ 594 $ 16 Adjustments 7,397 321 578 Balance, end of period $ 8,312 $ 915 $ 594 (1) In connection with the Business Combination, the reserve adjustments represent the inventory reserves retained by H-D related to H-D branded electric motorcycles and related products. See Note 4, Business Combination, for further details. 119 INDEX TO EXHIBITS Items 15(a)(3) and 15(c) Exhibit No. Description Form File No. Filing Date Exhibit Number Filed/Furnished herewith 2.1† Business Combination Agreement, dated as of December 12, 2021, by and among Harley-Davidson, Inc., AEA-Bridges Impact Corp., LW EV Holdings, Inc., LW EV Merger Sub, Inc. and LiveWire EV, LLC 8-K 001-39584 12/15/2021 2.1 3.1 Amended and Restated Certificate of Incorporation of LiveWire Group, Inc. 8-K 001-41511 9/30/2022 3.1 3.2 Amended and Restated Bylaws of LiveWire Group, Inc. 8-K 001-41511 9/30/2022 3.2 4.1 Warrant Agreement, dated as of October 1, 2022, by and between the Company and Continental Stock Transfer & Trust Company, as Warrant Agent 8-K 001-39584 10/7/2020 4.4 4.2 Specimen Warrant Certificate S-1 333-248785 9/14/2020 4.3 4.3 Description of our Securities * 10.1 Form of Indemnification Agreement 8-K 001-41511 9/30/2022 10.1 10.2 Form of Investment Agreement S-4 333-262573 2/7/2022 10.3 10.3 Registration Rights Agreement, dated as of September 26, 2022, by and among LiveWire EV, LLC and the holders party thereto 8-K 001-41511 9/30/2022 10.3 10.4+ LiveWire Group, Inc. 2022 Incentive Award Plan 8-K 001-41511 9/30/2022 10.4 10.5# Separation Agreement, dated as of September 26, 2022, by and among LiveWire EV, LLC and Harley-Davidson, Inc. 8-K 001-41511 9/30/2022 10.5 10.6 Tax Matters Agreement, dated September 26, 2022, by and among LiveWire Group, Inc. and Harley-Davidson, Inc. 8-K 001-41511 9/30/2022 10.6 10.7# Contract Manufacturing Agreement, dated as of September 26, 2022, by and among LiveWire EV, LLC and Harley-Davidson Motor Company Group, LLC 8-K 001-41511 9/30/2022 10.7 10.8# Transition Services Agreement, dated as of September 26, 2022, by and among LiveWire EV, LLC and Harley-Davidson, Inc. 8-K 001-41511 9/30/2022 10.8 10.9# Master Services Agreement, dated as of September 26, 2022, by and among LiveWire EV, LLC and Harley-Davidson, Inc. 8-K 001-41511 9/30/2022 10.9 10.10# Intellectual Property Agreement, dated as of September 26, 2022, by and among LiveWire EV, LLC and Harley-Davidson, Inc. 8-K 001-41511 9/30/2022 10.10 10.11# Trademark License Agreement, dated as of September 26, 2022, by and among LiveWire EV, LLC and Harley-Davidson, Inc. 8-K 001-41511 9/30/2022 10.1 10.12# Joint Development Agreement, dated as of September 26, 2022, by and among LiveWire EV, LLC and Harley-Davidson, Inc. 8-K 001-41511 9/30/2022 10.12 10.13+ Employee Matters Agreement, dated as of September 26, 2022, by and among LiveWire EV, LLC and Harley-Davidson, Inc. 8-K 001-41511 9/30/2022 10.13 10.14# KYMCO Contract Manufacturing Agreement, dated as of September 26, 2022, by and among LiveWire EV, LLC and Kwang Yang Motor Co., Ltd 8-K 001-41511 9/30/2022 10.14 120 INDEX TO EXHIBITS Items 15(a)(3) and 15(c) Exhibit No. Description Form File No. Filing Date Exhibit Number Filed/Furnished herewith 10.15 Investor Support Agreement, dated as of December 12, 2021, by and among AEA-Bridges Sponsor LLC, LiveWire EV, LLC, LiveWire Group, Inc. (formerly known as LW EV Holdings, Inc.), Harley-Davidson, Inc., John Garcia, John Replogle, and George Serafeim S-4 333-262573 5/20/2022 10.16 10.16# Long Term Collaboration Agreement, dated as of December 12, 2021, by and between LiveWire EV, LLC and Kwang Yang Motor Co., Ltd. S-4 333-262573 2/7/2022 10.7 10.17+ Director Compensation Policy * 10.18+ Form of Restricted Stock Unit Award Agreement * 10.19+ Form of Performance Stock Unit Award Agreement * 21 . 1 Listing of LiveWire Group, Inc. Subsidiaries * 23 . 1 Consent of Independent Registered Public Accounting Firm * 31.1 Chief Executive Officer Certification pursuant to Rule 13a-14(a) * 31.2 Chief Financial Officer Certification pursuant to Rule 13a-14(a) * 32 . 1 Written Statement of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. §1350 ** 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document * 101.SCH XBRL Taxonomy Extension Schema Document * 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document * 101.DEF XBRL Taxonomy Extension Definition Linkbase Document * 101.LAB XBRL Taxonomy Extension Label Linkbase Document * 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document * 104 Cover Page Interactive Data File - formatted in Inline XBRL and contained in Exhibit 101 * † The annexes, schedules and certain exhibits to this Exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant hereby agrees to furnish supplementally a copy of any omitted annex, scheduled or exhibit to the SEC upon request. # Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Regulation S-K, item 601(b)(10). * Filed herewith. ** Furnished herewith. + Indicates a management contract or compensatory plan, contract or arrangement. 121 Item 16. Form 10-K Summary Not applicable. 122 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 6, 2023. LiveWire Group, Inc. By: /s/ Jochen Zeitz Jochen Zeitz Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 6, 2023. Name Title /s/ Jochen Zeitz Chief Executive Officer and Director Jochen Zeitz (Principal Executive Officer) /s/ Tralisa Maraj Chief Financial Officer Tralisa Maraj (Principal Financial Officer) /s/ Jon Carter Chief Accounting Officer Jon Carter (Principal Accounting Officer) /s/ William Cornog Director William Cornog /s/ Gina Goetter Director Gina Goetter /s/ John Garcia Director John Garcia /s/ Kjell Gruner Director Kjell Gruner /s/ Glen Koval Director Glen Koval /s/ Edel O’Sullivan Director Edel O’Sullivan 123