What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-21 compared with 2024-02-23 · 92 added, 76 removed, 213 unchanged (44% of the section changed)

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Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this Form 10-K, particularly in “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” discussions.

Business Combination

On December 12, 2021, H-D entered into the Business Combination Agreement with ABIC, to effect the separation of its electric vehicle business.

On September 16, 2022, the Business Combination was approved in an ABIC shareholder vote, and it closed on September 26, 2022.

The Business Combination was accounted for as a reverse recapitalization.

Under this method of accounting, ABIC was treated as the “acquired” company for financial reporting purposes.

Accordingly, the Business Combination was treated as the equivalent of LiveWire issuing stock for the net assets of ABIC, accompanied by a recapitalization.

The net assets of ABIC were stated at historical cost, with no goodwill or other intangible assets recorded.

Operations prior to the Business Combination are those of Legacy LiveWire.

Upon closing of the Business Combination and PIPE Investments, the most significant change in the Company’s future reported financial position and results was an increase in cash due to net proceeds received of approximately $293.7 million, including a $100 million investment from the Legacy LiveWire Equityholder and a $100 million investment from certain members of the KYMCO Group, through a PIPE.

Additionally, the increase in cash reflects the amount of cash released from ABIC’s trust account of $13.6 million (net of the SPAC share redemption amount) and the $100 million equity backstop (the “H-D Backstop Amount”) provided by H-D in exchange for 10,000,000 shares of Common Stock for a purchase price of $10.00 per share pursuant to the terms of the Business Combination Agreement.

See Note 4, Business Combination, in the Consolidated financial statements for further detail related to the Business Combination.

Overview and 2024 Highlights

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LiveWire’s Electric Motorcycles segment sells electric motorcycles, related parts and accessories and apparel in the United States and certain international markets, while the STACYC segment sells electric balance bikes for kids, related parts and accessories and apparel in the United States and certain international markets.

H-D introduced its first electric motorcycle in late 2019 as the “Harley-Davidson LiveWire.” In 2021, building on early success and the continued growth in the global market demand for electric vehicles, H-D launched LiveWire as a standalone electric vehicle division, with the first LiveWire-branded product, the LiveWire ONE, debuting in July 2021, followed by a special launch edition of S2 Del Mars in May 2022 with full production and sales beginning in the third quarter of 2023.

H-D introduced its first electric motorcycle in late 2019 as the “Harley-Davidson LiveWire.” In 2021, building on early success and the continued growth in the global market demand for electric vehicles, H-D launched LiveWire as a standalone electric vehicle division, with the first LiveWire-branded product, the LiveWire ONE, debuting in July 2021, followed by a special launch edition of S2 Del Mar® in May 2022 with full production and sales beginning in the third quarter of 2023.

During 2024, the Company began production and selling of additional models off the S2 platform, including Mulholland™ and Alpinista™.

In 2019, H-D acquired STACYC Inc.

and began selling electric balance bikes for kids.

Electric motorcycles are sold at wholesale to a network of Independent Retail Partners, at retail through a Company-owned dealership and through online sales, and direct to customers through select international partners primarily in Europe.

Electric motorcycles are sold at wholesale to a network of Independent Retail Partners, and at retail through a Company-owned dealership and through online sales.

Prior to November 5, 2024, the Company’s products were sold at retail through select international partners primarily in Europe.

Electric balance bikes are sold at wholesale to independent dealers and independent distributors, as well as direct to consumers online.

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LiveWire’s vision is to create the next generation of electric motorcycles with products and experiences that merge the power and technology of electric with the unique soulful connection that comes from an analog machine.

As discussed below, on September 26, 2022 as part of the

Business Combination, LiveWire, which included LiveWire branded electric motorcycles and STACYC, became a separate, publicly traded company.

As discussed below, on September 26, 2022 as part of the Business Combination, LiveWire, which included LiveWire branded electric motorcycles and STACYC, became a separate, publicly traded company.

LiveWire’s net loss for the year ended December 31, 2024 was $93,925 thousand compared to $109,550 thousand for the year ended December 31, 2023.

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The Electric Motorcycles segment operating loss for the year ended December 31, 2024 was $105,500 thousand, compared to an operating loss of $116,611 thousand for the year ended December 31, 2023.

The increased operating loss was driven by a provision for excess inventory components held by H-D that the Company expects to be obligated to reimburse H-D under the terms of Contract Manufacturing Agreement, increased selling, administrative and engineering expense for product development costs relating to the S2 platform, delivery of Del Mar, and the cost of standing up a new organization, including growing headcount and back-office support.

Refer to the Electric Motorcycles segment analysis below for further discussion.

The STACYC segment operating income for the year ended December 31, 2023 was $622 thousand, as compared to $4,150 thousand for the year ended December 31, 2022.

The decrease in operating income was driven by lower volumes from our independent distributors and independent dealers and increased selling, administrative and engineering expense related to personnel costs and increased marketing initiatives.

The STACYC segment operating loss for the year ended December 31, 2024 was $4,856 thousand, as compared to operating income of $622 thousand for the year ended December 31, 2023.

Refer to the STACYC segment analysis below for further discussion.

For 2024, LiveWire's focus continues to be on our investment into product development and product innovation, including additional models on the S2 platform, market expansion and continued cost improvements.

LiveWire plans to continue to expand globally in 2024 with the introduction of the S2 platform to the European market.

Recent Developments

On April 24, 2024, the Company announced a plan to both relocate the operations of LiveWire Labs, the Company’s west coast product development facility, from Mountain View, California to Milwaukee, Wisconsin and streamline headcount at the Company.

The Company believes this plan will enable synergies and optimize efficiencies in product development and simplify the Company’s overall path to future profitability.

Under this plan, the Company recorded $3,752 thousand of expense related to employee termination benefits and other costs, of which $3,448 thousand was paid in cash during the year ended December 31, 2024.

The remaining amount will be paid in 2025 and there are no other amounts expected to be incurred under this plan.

In September 2024, continuing its focus on the Company’s path to profitability and furthering its strategy, the Company executed a reorganization of its Sales and Marketing function and Product Development and Design function, including consolidating each of these functions under singular leadership and other headcount reductions.

In conjunction with this reorganization, the Company recorded $1,271 thousand of employee termination benefits, primarily severance, during the year ended December 31, 2024, of which $900 thousand was paid as of December 31, 2024.

The remaining amount will be paid in 2025 and there are no other amounts expected to be incurred under this reorganization.

The Company also recognized a noncash reduction in stock compensation expense of $3,753 thousand during the year ended December 31, 2024 resulting from forfeitures of awards related to employees who terminated during 2024 as a result of the above actions.

The Company also recorded $863 thousand of accelerated depreciation related to LiveWire Labs leasehold improvements resulting from the move from Mountain View, California to Milwaukee, Wisconsin during the year ended December 31, 2024.

Effective November 5, 2024, the Company’s go-to-market strategy in Europe changed from selling direct to customers through international partners to selling at wholesale to independent dealers.

Management believes this change will allow the Company to leverage the business practices and expertise of the dealer network in each region to further grow the business and increase unit sales in Europe.

This change also aligns the business model in Europe to the business model in the United States.

On November 5, 2024, the Company announced a non-binding Memorandum of Understanding with KYMCO to collaborate on a new electric maxi-scooter project.

Business Combination

On December 12, 2021, H-D entered into the Business Combination Agreement with ABIC, to effect the separation of its electric vehicle business.

On September 16, 2022, the Business Combination was approved in an ABIC shareholder vote, and it closed on September 26, 2022.

The Business Combination was accounted for as a reverse recapitalization.

Under this method of accounting, ABIC was treated as the “acquired” company for financial reporting purposes.

Accordingly, the Business Combination was treated as the equivalent of LiveWire issuing stock for the net assets of ABIC, accompanied by a recapitalization.

The net assets of ABIC were stated at historical cost, with no goodwill or other intangible assets recorded resulting from the Business Combination.

Operations prior to the Business Combination are those of Legacy LiveWire.

See Note 4, Business Combination, in the consolidated financial statements for further detail related to the Business Combination.

For 2025, LiveWire's focus continues to be on cost improvements, product innovation and development, and market growth.

Basis of Presentation

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• Company Retail Motorcycle Unit Sales – LiveWire defines Company Retail Motorcycle Unit Sales as the number of new electric motorcycles sold at retail by LiveWire through its Company-owned dealership, through online sales or direct to customers through select international partners for which LiveWire recognized revenue during the period.

LiveWire began selling electric motorcycles direct to retail consumers in the third quarter of 2021.

• Independent Retail Motorcycle Unit Sales – LiveWire defines Independent Retail Motorcycle Unit Sales as the number of new electric motorcycles sold at retail by Independent Retail Partners.

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• Company-owned dealership – Dealership owned and operated by LiveWire to sell electric motorcycles, related products, and services.

• Independent Retail Partners (Electric Motorcycles) – Retail Partners owned and operated by independent entities under contract with LiveWire to sell LiveWire electric motorcycles, related products and services.

• Independent Retail Partners (Electric Motorcycles) – Independent Retail Partners as used with Electric Motorcycles are dealers owned and operated by independent entities under contract with LiveWire to sell LiveWire electric motorcycles, related products and services.

• Electric Balance Bike Unit Sales (STACYC) – LiveWire defines Electric Balance Bike Unit Sales as the number of electric balance bikes sold by LiveWire for which LiveWire recognized revenue during the period.

• Independent Retail Partners (STACYC) – Retail Partners owned and operated by independent entities under contract with STACYC to sell electric balance bikes, related products and services.

• Independent Retail Partners (STACYC) – Independent Retail Partners as used with STACYC are independent entities under contract with STACYC to sell electric balance bikes, related products and services.

The following table details the key business metric amounts for the periods indicated:

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18,549 32,113

(1) International Wholesale Motorcycle Unit Sales represent sales of H-D branded LiveWire motorcycles prior to the Business Combination for the year ended December 31, 2022.

(1) Effective November 5, 2024, the Company’s go-to-market strategy in Europe changed from selling direct to customers through international partners to selling at wholesale to independent dealers.

International unit sales prior to November 5, 2024 are reflected as Company Retail Motorcycle Unit Sales, while unit sales November 5, 2024 and beyond are reflected as Wholesale Motorcycle Unit Sales.

(2) Data source for Company Retail Motorcycle Unit Sales figures shown above is LiveWire’s records.

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The Electric Motorcycles retail partners shown above include those that have been contracted by LiveWire to sell LiveWire motorcycles.

As of December 31, 2023 and 2022, this total includes 4 and 13 partners, respectively, that were actively working to complete the licensing required to sell LiveWire motorcycles as of the end of the period.

As of December 31, 2024 and 2023, there were zero and 4 partners, respectively, that were actively working to complete the licensing required to sell LiveWire motorcycles as of the end of the period.

LiveWire intends to grow this network as it expands its distribution capabilities.

After the Business Combination, any remaining inventory of H-D branded LiveWire motorcycles is owned by H-D, and any related sales are recognized by H-D.

LiveWire believes these key business metrics provide useful information to help investors understand and evaluate LiveWire’s business performance.

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The following table presents consolidated results of operations for the years ended December 31, 2024 and 2023 (in thousands):

Year Ended December 31,

2024 2023 $ Change % Change

Operating loss from Electric Motorcycles $ (105,500) $ (116,611) $ 11,111 9.5 %

Operating income from STACYC 622 4,150 (3,528) (85.0) %

Operating (loss) income from STACYC (4,856) 622 (5,478) (880.7) %

Total operating loss (110,356) (115,989) 5,633 4.9 %

Other income, net — 235 (235) (100.0) %

Interest expense related party — (475) 475 (100.0) %

Interest income 10,537 1,191 9,346 nm

Interest income 5,704 10,537 (4,833) (45.9) %

Change in fair value of warrant liabilities 10,770 (4,020) 14,790 367.9 %

Loss before income taxes (93,882) (109,472) 15,590 (14.2) %

Income tax (benefit) provision 78 (33) 111 (336.4) %

Income tax provision 43 78 (35) (44.9) %

Net loss (93,925) (109,550) 15,625 14.3 %

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Net loss per share, basic and diluted $ (0.46) $ (0.54) $ (0.08) 14.8 %

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Operating Income (Loss)

The Company reported an operating loss of $110,356 thousand for the year ended December 31, 2024 compared to an operating loss of $115,989 thousand for the year ended December 31, 2023.

The Electric Motorcycles segment reported an operating loss of $116,611 thousand for the year ended December 31, 2023, as compared to an operating loss of $89,105 thousand for the year ended December 31, 2022.

Operating income from the STACYC segment was $622 thousand for the year ended December 31, 2023, compared to operating income of $4,150 thousand for the year ended December 31, 2022.

The Electric Motorcycles segment reported an operating loss of $105,500 thousand for the year ended December 31, 2024, as compared to an operating loss of $116,611 thousand for the

year ended December 31, 2023.

Operating loss from the STACYC segment was $4,856 thousand for the year ended December 31, 2024, compared to operating income of $622 thousand for the year ended December 31, 2023.

Refer to the Electric Motorcycles and STACYC Segment discussions for a more detailed analysis of the factors affecting operating results.

Other Income, Net

Other income, net for the year ended December 31, 2023 was zero compared to $235 thousand for the year ended December 31, 2022.

The change was driven by net periodic benefit plan income as subsequent to the Business Combination the Company did not have similar allocations of net periodic benefit plan income from H-D and the Company does not sponsor a qualified pension plan or postretirement healthcare plan.

Interest Expense Related Party

Interest expense related party for the year ended December 31, 2023 was zero compared to $475 thousand for the year ended December 31, 2022.

The change was driven by settlement of the related party notes payable on June 24, 2022.

Interest Income

Interest income for the year ended December 31, 2024 was $5,704 thousand compared to $10,537 thousand for the year ended December 31, 2023.

The change was primarily driven by interest income earned on money market fund investments entered into using funds from the Business Combination.

The Company had an investment of $161,000 thousand in money market funds as of December 31, 2023.

The change was primarily driven by the decrease in the Company’s investment in money market funds from $161,000 thousand at December 31, 2023 to $52,000 thousand at December 31, 2024.

Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities for the year ended December 31, 2023 was a loss of $4,020 thousand compared to income of $5,033 thousand for the year ended December 31, 2022.

The loss recognized of $4,020 thousand for the year ended December 31, 2023 was due to the increase in the estimated fair value of the warrants related to fluctuations in the market price of the warrants.

The income recognized of $5,033 thousand was due to the decrease in the estimated fair value of the warrants between September 26, 2022, the closing date of the Business Combination, and December 31, 2022, related to fluctuations in the market price of the warrants.

The warrant liabilities were recorded as part of the Business Combination and therefore did not exist prior to September 26, 2022.

Change in fair value of warrant liabilities for the year ended December 31, 2024 was income of $10,770 thousand compared to a loss of $4,020 thousand for the year ended December 31, 2023.

The income recognized of $10,770 thousand for the year ended December 31, 2024 was due to the decrease in the estimated fair value of the warrants from December 31, 2023 related to fluctuations in the market price of the warrants.

The loss recognized of $4,020 thousand for the year ended December 31, 2023 was due to the increase in the estimated fair value of the warrants from December 31, 2022 related to fluctuations in the market price of the warrants.

See Note 10, Warrant Liabilities, in the consolidated financial statements for further discussion.

Income Tax (Benefit) Provision

The income tax provision for the year ended December 31, 2023 was $78 thousand, as compared to an income tax benefit of $33 thousand for the year ended December 31, 2022.

The income tax provision in 2023 was driven by the change in deferred tax liability associated with the amortization of the taxable temporary difference related to indefinite lived intangibles that are not amortized for book purposes.

The 2022 taxable income benefit was driven by the reduction of the net deferred tax liability as a result of the requirement to capitalize research and experimental expenditures starting in tax years beginning after December 31, 2021.

Income Tax Provision

The income tax provision for the year ended December 31, 2024 was $43 thousand, as compared to an income tax provision of $78 thousand for the year ended December 31, 2023.

The income tax provision in 2024 and 2023 was driven by the change in deferred tax liability associated with the amortization of the taxable temporary difference related to indefinite lived intangibles that are not amortized for book purposes.

Segment Results

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Revenue for the year ended December 31, 2024 decreased by $3,167 thousand, or 27.4%, to $8,381 thousand from $11,548 thousand for the year ended December 31, 2023.

Unit sales increased 11% to 660 in 2023 from 597 in 2022 driven by increased unit sales from Del Mar which was launched in the third quarter of 2023.

The increase in unit sales was offset by product mix as the Del Mar selling price is lower than the LiveWire ONE selling price resulting in a decrease of overall revenue of $2,451 thousand in 2023 compared to 2022.

Unit sales decreased 7% to 612 in 2024 from 660 in 2023 resulting in a decrease in revenue of $806 thousand.

Additionally, revenue decreased by $1,226 thousand from product mix primarily related to reduced selling prices on a one-time large volume sale of units previously used as company owned vehicles for demonstration purposes, and $1,058 thousand from additional incentives introduced in 2024 as compared to 2023.

Cost of Goods Sold

Cost of goods sold for the year December 31, 2023 increased by $4,029 thousand, or 17.3%, to $27,297 thousand from $23,268 thousand for the year ended December 31, 2022.

The increase was primarily due to a provision for excess inventory components held by H-D that the Company is obligated to reimburse H-D under the terms of Contract Manufacturing Agreement and related costs of approximately $6,715 thousand offset by a decrease in Cost of Goods Sold related to product mix.

Cost of goods sold for the year December 31, 2024 decreased by $279 thousand, or 1.0%, to $27,018 thousand from $27,297 thousand for the year ended December 31, 2023.

The decrease was due to the decrease in unit sales discussed above, the non -recurrence of the provision for a liability for excess inventory components held by H-D under the terms of the Contract Manufacturing Agreement recorded in the year ended December 31, 2023 resulting in a decrease of $6,126 thousand , offset by higher net realizable value and other reserve adjustments on increased inventory on hand of $3,941 thousand , increased depreciation expense of $1,463 thousand , and the impact of an unfavorable arbitration ruling related to a supplier claim of $1,370 thousand .

Selling, Administrative and Engineering Expense

Selling, administrative and engineering expense for the year ended December 31, 2023 increased by $21,026 thousand, or 26.3%, to $100,862 thousand from $79,836 thousand for the year ended December 31, 2022.

The increase was primarily due to product development costs relating to the S2 platform, costs incurred related to the delivery of Del Mar, and increases in personnel costs primarily related to higher headcount to support the stand-up of the new LiveWire organization.

Selling, administrative and engineering expense for the year ended December 31, 2024 decreased by $13,999 thousand, or 13.9%, to $86,863 thousand from $100,862 thousand for the year ended December 31, 2023.

The decrease was due to a decrease in product development expense of $9,933 thousand in the current year as 2023 included increased expenses related to the initial development of the S2 platform.

Additionally, the Company continues to focus on cost reduction activities in 2024, including decreases of $5,097 thousand in personnel costs in the year ended December 31, 2024 primarily from headcount reductions in 2024, and $1,011 thousand from reductions in insurance premiums compared to the year ended December 31, 2023.

These decreases were offset by an increase in depreciation expense of $2,796 thousand, including $863 thousand related to accelerated depreciation on leasehold improvements related to LiveWire Labs resulting from the move from Mountain View, California to Milwaukee, Wisconsin.

As discussed above, related to the move of LiveWire Labs as well as the Company’s plan to streamline headcount, the Company recorded $5,023 thousand of expense in the year ended December 31, 2024 related to employee termination benefits and other costs.

The Company also recognized a noncash reduction in stock compensation expense of $3,753 thousand in the year ended December 31, 2024 resulting from forfeitures of awards related to employees who terminated in the year ended December 31, 2024 resulting from these actions.

The following table presents consolidated results of operations for the STACYC segment for the years ended December 31, 2024 and 2023 (in thousands):

2023 2022 Increase

2024 2023 $ Change %

Electric balance bikes $ 14,043 $ 22,865 $ (8,822) (38.6) %

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Selling, administrative and engineering expense 10,710 9,355 1,355 14.5 %

Operating income $ 622 $ 4,150 $ (3,528) (85.0) %

Operating (loss) income $ (4,856) $ 622 $ (5,478) (880.7) %

Revenue for the year ended December 31, 2024 decreased by $8,223 thousand, or 31.1%, to $18,252 thousand from $26,475 thousand for the year ended December 31, 2023.

The decrease was primarily due to lower revenue from electric balance bikes of $8,822 thousand.

The decrease in revenue from electric balance bikes was driven by lower shipment volumes of $6,229 primarily to our independent distributors and independent dealers, along with a decrease of $575 thousand due to product mix and promotions for the year ended December 31, 2023.

The decrease in revenue from electric balance bikes was driven by lower shipment volumes of $6,144 thousand primarily to our independent distributors, along with a decrease of $2,678 thousand due to pricing and promotions for the year ended December 31, 2024.

Cost of Goods Sold

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Selling, administrative and engineering expense for the year ended December 31, 2024 increased by $1,355 thousand, or 14.5%, to $10,710 thousand from $9,355 thousand for the year ended December 31, 2023.

The increase was primarily due to increases in personnel costs and increases in marketing spend to promote domestic brand and initiatives to support growth of the business.

The increase was primarily due to increased research and development costs related to new product development of $955 thousand, increased people costs of $388 thousand, and an increase in the provision for doubtful accounts of $147 thousand, offset by $175 thousand of decreased depreciation and amortization and decreased marketing expense of $138 thousand.

Results of Operations 2023 Compared to 2022

Refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations” within our Annual Report on Form 10-K for the year ended December 31, 2022 filed on March 6, 2023 with the SEC for a detailed discussion of the results of operations for 2022 compared to 2021.

Refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations” within our Annual Report on Form 10-K for the year ended December 31, 2023 filed on February 23, 2024 with the SEC for a detailed discussion of the results of operations for 2023 compared to 2022.

Liquidity and Capital Resources

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On September 26, 2022, LiveWire consummated the Business Combination with ABIC resulting in net proceeds of approximately $293.7 million, including a $100 million investment from H-D and a $100 million investment from KYMCO through a PIPE.

Additionally, LiveWire received ABIC’s cash held in trust account of $13.6 million and the $100 million equity backstop provided by the H-D Backstop Amount in exchange for 10,000,000 shares of Common Stock for a purchase price of $10.00 per share pursuant to the terms of the Business Combination Agreement.

Additionally, LiveWire received ABIC’s cash held in trust account of $13.6 million and the $100 million

equity backstop provided by the H-D Backstop Amount in exchange for 10,000,000 shares of Common Stock for a purchase price of $10.00 per share pursuant to the terms of the Business Combination Agreement.

In the event of the exercise of any of Warrants for cash, LiveWire will receive the proceeds from such exercise.

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On February 14, 2024, the Company entered into a Convertible Delayed Draw Term Loan Agreement (the “Convertible Term Loan”) with H-D providing for term loans from H-D to the Company in one or more advances up to an aggregate principal amount of $100 million.

The outstanding principal under the Convertible Term Loan bears interest at a floating rate per annum, as calculated by H-D as of the date of each advance and as of each June 1 and December 1 thereafter, equal to the sum of (i) the forward-looking term rate based on SOFR (i.e., the secured overnight financing rate published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate)) for a six-month interest period, plus (ii) 4.00%.

The Company may elect to pay up to 100% of the amount of any interest due by increasing the outstanding principal amount of the applicable advance.

The Convertible Term Loan does not include affirmative covenants impacting the operations of the Company.

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In the event that the Convertible Term Loan cannot be settled in cash by the Company at maturity, unless otherwise agreed between the Company and H-D, the Convertible Term Loan will be converted to equity of Company at a conversion price per share of common stock of the Company equal to 90% of the volume weighted average price per share of Common Stock for the 30 trading days immediately preceding the conversion date.

As of December 31, 2024 , there were no amounts outstanding under the Convertible Term Loan and the Company remained in compliance with all of the existing covenants.

Management believes that cash on hand, including the proceeds received from the Business Combination, and the Convertible Term Loan, will provide sufficient liquidity to meet LiveWire’s projected obligations, including those related to existing contractual obligations, for at least the next twelve months.

LiveWire plans to use its current cash on hand, including the financing raised through the Business Combination and PIPE Financing, and available funds under the Convertible Term Loan to support its core business operations and strategic plan, invest in new product development, and enhance its global manufacturing and distribution capabilities.

LiveWire expects its capital expenditures and working capital requirements to increase substantially in the near future, as it grows the business, develops its customer support and marketing infrastructure and expands its research and product development efforts.

LiveWire plans to use its current cash on hand and available funds under the Convertible Term Loan to support its core business operations and strategic plan, invest in new product development, and enhance its global manufacturing and distribution capabilities.

LiveWire had $8,468 thousand of purchase order commitments related to capital expenditures and other spending to support its business operations and strategic plan as of December 31, 2024 related to fiscal year 2025.

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During the year ended December 31, 2023, the Company entered into a long-term commitment with a vendor to provide certain inventory components.

As of December 31, 2023, the Company’s estimated payments are $2,836 thousand, $2,431 thousand, and $506 thousand for fiscal years 2024, 2025, and 2026, respectively, and no estimated payments thereafter.

During the year ended December 31, 2023, the Company recorded a liability of $6,309 thousand for excess inventory components held by H-D that the Company expects to be obligated to reimburse H-D under the terms of the Contract Manufacturing Agreement.

As of December 31, 2024, the Company’s estimated payments are $605 thousand and $410 thousand for fiscal years 2025 and 2026, respectively, and no estimated payments thereafter.

The Company also has a liability of $6,156 thousand as of December 31, 2024 thousand for excess inventory components held by H-D that the Company expects to be obligated to reimburse H-D under the terms of the Contract Manufacturing Agreement.

Refer to Note 16, Related Party Transactions, for discussion of commitments with H-D.

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Net cash used by investing activities (8,068) (13,462)

Net cash (used) provided by financing activities (412) 366,334

Net increase in cash and cash equivalents $ (97,336) $ 262,572

Net cash used by financing activities (1,444) (412)

Effect of exchange rate changes on cash and cash equivalents (96) —

Net decrease in cash and cash equivalents $ (103,467) $ (97,336)

The overall decrease in cash during the year ended December 31, 2024 was due primarily to an increase in net cash used by operating activities.

The overall decrease in cash during the year ended December 31, 2023 was due primarily to a decrease in net cash provided by financing activities.

There was an increase in cash in the year ended December 31, 2022 as a result of the Business Combination.

Operating Activities

The Company had negative cash flow from operating activities during the years ended December 31, 2024 and 2023.

Net cash used in operating activities decreased by $6,219 thousand to $83,462 thousand for the year ended December 31, 2023 compared to $89,681 thousand for the year ended December 31, 2022.

The decrease in negative cash flow from operating activities was primarily driven by favorable changes in inventories, accounts payable to related party, and other current assets offset by unfavorable changes in other working capital amounts, including accounts receivable, accounts receivable from related party, and accounts payable and accrued liabilities and the increase in net loss of $30,612 thousand.

Net cash used in operating activities increased by $10,397 thousand to $93,859 thousand for the year ended December 31, 2024 compared to $83,462 thousand for the year ended December 31, 2023.

The increase in negative cash flow from operating activities in 2024 was primarily driven by unfavorable changes in accounts payable to related party, accounts payable and accrued liabilities, and other current assets offset by a reduction in net loss adjusted for non-cash items, and favorable changes in accounts receivable, net, accounts receivable from related parties, and inventories compared to 2023.

Investing Activities

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The decrease was due to lower capital expenditures in 2024.

LiveWire expects to fund future cash flows used in investing activities with the financing raised through the Business Combination, PIPE Financing and the Convertible Term Loan.

LiveWire expects to fund future cash flows used in investing activities with cash on hand and available funds under the Convertible Term Loan.

LiveWire estimates capital expenditures to be between $8 million and $12 million in 2025.

Financing Activities

Net cash provided by financing activities decreased by $366,746 thousand to $412 thousand net cash used by financing activities for the year ended December 31, 2023 compared to $366,334 thousand net cash provided by financing activities for the year ended December 31, 2022.

The decrease was primarily due to cash received in the prior year from the Business Combination of $293,717 thousand, proceeds from borrowing on notes payable to related party of $15,333 thousand, and cash transfers from H-D related to services and funding for operations of $59,051 thousand.

Net cash used by financing activities increased by $1,032 thousand to $1,444 thousand net cash used by financing activities for the year ended December 31, 2024 compared to $412 thousand net cash used by financing activities for the year ended December 31, 2023.

The increase was primarily due to cash received in 2023 for the exercise of warrants of $1,557 thousand.

Commitments and Contingencies

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The Company allocates the transaction price among the performance obligations in proportion to the standalone selling price of the Company’s performance obligations.

Goodwill - Goodwill represents the excess of acquisition cost over the fair value of the net assets purchased.

Goodwill is tested for impairment, based on financial data related to the reporting unit to which it has been assigned, at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is recognized for the amount by which the carrying amount exceeds the fair value, limited to the total goodwill allocated to the reporting unit.

For goodwill, the reporting units used in assessing impairment is the same as the Company’s two operating segments and reportable segments as described in Note 17, Reportable Segments and Geographic Information.

The Company’s assessment for impairment of goodwill utilized a discounted cash flow analysis and a guideline public company market approach to determine the fair value of the reporting unit for comparison to the corresponding carrying value, and a reconciliation of the Company’s concluded values for each reporting unit to the Company’s market capitalization.

The income approach is based on discounted future cash flows and requires significant assumptions, including estimates regarding future revenue, profitability, capital requirements and discount rates.

Because the projections are estimated over a significant future period of time, those estimates and assumptions are subject to uncertainty.

The market approach is based on market multiples and requires an estimate of appropriate multiples based on market data for comparable companies.

The market valuation models, and other financial ratios used by the Company require certain assumptions and estimates regarding the applicability of those models to the Company’s facts and circumstances.

During 2024 and 2023, the Company tested its goodwill balances for impairment and no impairment charges were recorded to goodwill as a result of those impairment tests.

Product Warranty and Recalls - LiveWire provides a limited warranty on the new electric motorcycles for a period of two years, except for the battery which is covered for five years.

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What changed 10-K

Item 7. Management’s Discussion and Analysis