UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
Washington, D.C. 20549

FORM
10-Q
(MARK ONE)
☒
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 25, 2022
quarterly period ended: March 31, 2023
or
☐
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
 to

Commission file number: number 001-41511

LiveWire Logo.jpg
LIVEWIRE GROUP, INC.

LiveWire Group, Inc.
(Exact Namename of Registrantregistrant as Specifiedspecified in Its Charter)
its charter)

Delaware
87-4730333
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3700 West Juneau Avenue
Milwaukee, WI
53208
(650) 447-8424
Milwaukee, Wisconsin 53208
(Address of principal executive offices)
office)
(Zip Code)Issuer’s Telephone Number, including area code)
(650)
447-8424

(Issuer’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Trading
Symbol(s)
Name of each exchange
on which registered
Common stock,Stock, $0.0001 par value
per share		LVWR
LVWR
The New York Stock Exchange
Warrants to purchase common stock
LVWR WS
The New York Stock Exchange
CheckIndicate by check mark whether the issuerregistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§ (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerateda non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in
Rule 12b-2
of the Exchange Act.Act
Large accelerated filer☐Accelerated filer☐Emerging growth company☒
Non-accelerated filer☒Smaller reporting company☐
Non-accelerated
filer☒Smaller reporting company☐Emerging growth company☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act). Yes  ☐    No  ☒
AsNumber of November
9
, 2022, there were 202,402,888 shares of the registrant’s common stock $0.0001outstanding at May 5, 2023: 202,409,176 shares


LiveWire Group, Inc.
Form 10-Q
For The Quarter Ended March 31, 2023
Part I
5
Item 1.
5
Consolidated Statements of Operations and Comprehensive Loss
5
Consolidated Balance Sheets
6
Consolidated Statements of Cash Flows
7
Consolidated Statements of Shareholders’ Equity
8
Notes to Consolidated Financial Statements
9
1. Description of Business and Basis of Presentation
9
2. New Accounting Standards
10
3. Revenue
11
4. Income Taxes
12
5. Earnings Per Share
12
6. Additional Balance Sheet Information
13
7. Warrant Liabilities
13
8. Fair Value
13
9. Product Warranty and Recall Campaigns
14
10. Commitments and Contingencies
15
11. Related Party Transactions
15
12. Reportable Segments
17
Item 2.
18
Item 3.
25
Item 4.
26
Part II
28
Item 1.
28
Item 1A.
28
Item 2.
28
Item 3.
28
Item 4.
28
Item 5.
28
Item 6.
29
30


2

Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report include, but are not limited to statements regarding future results of operations and financial position, industry and business trends, equity compensation, business strategy, plans, market growth, plans and objectives relating to the Company’s climate commitment, the Company’s ability to remediate the material weakness in internal control over financial reporting, and the Company’s objectives for future operations.

The forward-looking statements in this Quarterly Report are only predictions. The Company has based these forward-looking statements largely on current expectations and projections about future events and financial trends that the Company believes may affect the Company’s business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the Company’s history of losses and expectation to incur significant expenses and continuing losses for the foreseeable future; the Company’ ability to execute its business model, including market acceptance of its planned electric vehicles; risks related to the Company’s limited operating history, the rollout of its business and the timing of expected business milestones, including the Company’s ability to develop and sell electric vehicles of sufficient quality and appeal to customers on schedule and on a large scale; the Company’s financial and business performance, including financial projections and business metrics and any underlying assumptions thereunder; changes in the Company’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; the Company’s ability to attract and retain a large number of customers; the Company’s future capital requirements and sources and uses of cash; the Company’s ability to obtain funding for its operations and manage costs; risks related to challenges the Company faces as a pioneer into the highly-competitive and rapidly-evolving electric vehicle industry; risks related to Harley Davidson, Inc. (“H-D”) making decisions for its overall benefit that could negatively impact the Company’s overall business; risks related to the Company’s s relationship with H-D and its impact on the Company’s other business relationships; the Company’s ability to leverage contract manufacturers, including H-D and Kwang Yang Motor Co., Ltd., KYMCO Capital Fund I Co., Ltd., SunBright Investment Co., Ltd., CycleLoop Co., Ltd. and Kwang Yang Holdings Limited (collectively, the “KYMCO Group”), to contract manufacture its electric vehicles; risks related to retail partners being unwilling to participate in the Company’s go-to-market business model or its inability to establish or maintain relationships with customers for the Company’ electric vehicles; risks related to potential delays in the design, manufacture, financing, regulatory approval, launch and delivery of the Company’s electric vehicles; risks related to building out the Company’s supply chain, including the Company’s dependency on its existing suppliers and the Company’s ability to source suppliers, in each case many of which are single-sourced or limited-source suppliers, for its critical components such as batteries and semiconductor chips; the Company’s ability to rely on third-party and public charging networks; the Company’s ability to attract and retain key personnel; the Company’s business, expansion plans and opportunities, including its ability to scale its operations and manage its future growth effectively; the effects on the Company’s future business of competition, the pace and depth of electric vehicle adoption generally and its ability to achieve planned competitive advantages with respect to its electric vehicles and products, including with respect to reliability, safety and efficiency; risks related to the Company’s business and H-D’s business overlapping and being perceived as competitors; the Company’s inability to maintain a strong relationship with H-D or to resolve favorably any disputes that may arise between the Company and H-D; the Company’s dependency on H-D for a number of services, including services relating to quality and safety testing, and if those service arrangements terminate, it may require significant investment for the Company to build its own safety and testing facilities, or the Company may be required to obtain such services from another third-party at increased costs; risks related to any decision by the Company to electrify H-D products, or the products of any other company; the Company’s expectations regarding its ability to obtain and maintain intellectual property protection and not infringe on the rights of others; potential harm caused by misappropriation of the Company’s data and compromises in cybersecurity; changes in laws, regulatory requirements, governmental incentives and fuel and energy prices; the impact of health epidemics on the Company’s business, the other risks it face and the actions it may take in response thereto; litigation, regulatory proceedings, complaints, product liability claims and/or adverse; the possibility that the Company may be adversely affected by other economic, business and/or competitive factor publicity; and; the other important factors discussed in Part II, “Item 1A. Risk Factors” in this Quarterly Report, as well as in Item “1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The forward-looking statements are made as of the date of the filing of this report (May 10, 2023), and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. The forward-looking statements in this Quarterly Report are based upon information
3

available to the Company as of the date of this Quarterly Report, and while the Company believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and the Company’s statements should not be read to indicate that the Company has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report and the documents that the Company references in this Quarterly Report and have filed as exhibits to this Quarterly Report with the understanding that actual future results, performance and achievements may be materially different from what the Company expects. The Company qualifies all of the forward-looking statements by these cautionary statements. The forward-looking statements in this report speak only as of the date of this Quarterly Report. Except as required by applicable law, the Company does not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of any new information, future events or otherwise.

As used in this Quarterly Report, unless otherwise stated or the context requires otherwise, references to “LiveWire,” the “Company,” “we,” “us,” and “our,” refer to LiveWire Group, Inc. and its consolidated subsidiaries.

4

PART I
Item 1. Financial Statements

LIVEWIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share amounts)
(Unaudited)
Three months ended
March 31,
2023		March 27,
2022
Revenue, net$7,762 $10,401 
Costs and expenses:
Cost of goods sold6,498 10,348 
Selling, administrative and engineering expense26,171 15,752 
Total costs and expenses32,669 26,100 
Operating loss(24,907)(15,699)
Other income, net— 69 
Interest expense related party— (277)
Interest income (expense)2,692 (4)
Change in fair value of warrant liabilities1,068 — 
Loss before income taxes(21,147)(15,911)
Income tax provision— 68 
Net loss(21,147)(15,979)
Other comprehensive loss:
Foreign currency translation adjustments— (100)
Comprehensive loss$(21,147)$(16,079)
Net loss per share, basic and diluted$(0.10)$(0.10)
The accompanying notes are integral to the Consolidated financial statements.
5

LIVEWIRE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value, issuedvalue)
(Unaudited)
March 31, 2023December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents$236,042 $265,240 
Accounts receivable, net930 2,325 
Accounts receivable from related party841 525 
Inventories, net31,102 29,215 
Other current assets3,895 4,625 
Total current assets272,810 301,930 
Property, plant and equipment, net33,220 31,567 
Goodwill8,327 8,327 
Lease assets2,878 3,128 
Intangible assets, net1,694 1,809 
Other long-term assets6,829 5,044 
Total assets$325,758 $351,805 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$4,759 $7,055 
Accounts payable to related party7,625 5,733 
Accrued liabilities15,302 20,343 
Current portion of lease liabilities1,392 1,312 
Total current liabilities29,078 34,443 
Long-term portion of lease liabilities1,580 1,913 
Deferred tax liabilities15 15 
Warrant liabilities7,320 8,388 
Other long-term liabilities288 246 
Total liabilities38,281 45,005 
Commitments and contingencies (Note 10)
Shareholders' equity:
Preferred Stock, $0.0001 par value; 20,000 shares authorized; no shares issued and outstanding as of both March 31, 2023 and December 31, 2022— — 
Common Stock, $0.0001 par value; 800,000 shares authorized; 202,409 and 202,403 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively20 20 
Additional paid-in-capital331,042 329,218 
Accumulated deficit(43,585)(22,438)
Total shareholders' equity287,477 306,800 
Total liabilities and shareholders' equity$325,758 $351,805 
The accompanying notes are integral to the Consolidated financial statements.
6

LIVEWIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended
March 31,
2023		March 27,
2022
Cash flows from operating activities:
Net loss$(21,147)$(15,979)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization667 1,456 
Change in fair value of warrant liabilities(1,068)— 
Stock compensation expense1,824 (171)
Provision (benefit) for doubtful accounts39 (1)
Deferred income taxes— (17)
Inventory write-downs673 299 
Cloud computing arrangements development costs(967)— 
Other, net(779)365 
Changes in current assets and liabilities:
Accounts receivable, net1,356 (1,748)
Accounts receivable from related party(317)(286)
Inventories(2,560)(1,845)
Other current assets731 557 
Accounts payable and accrued liabilities(4,894)(1,658)
Accounts payable to related party1,892 — 
Net cash used by operating activities(24,550)(19,028)
Cash flows from investing activities:
Capital expenditures(4,648)(2,492)
Net cash used by investing activities(4,648)(2,492)
Cash flows from financing activities:
Borrowings on notes payable to related party (Note 11)— 12,000 
Transfers from H-D (Note 11)— 18,723 
Net cash provided by financing activities— 30,723 
Net (decrease) increase in cash and cash equivalents$(29,198)$9,203 
Cash and cash equivalents:
Cash and cash equivalents—beginning of period$265,240 $2,668 
Net (decrease) increase in cash and cash equivalents(29,198)9,203 
Cash and cash equivalents—end of period$236,042 $11,871 
The accompanying notes are integral to the Consolidated financial statements.
7

LIVEWIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except share and outstanding.per share amounts)
(Unaudited)
 Common StockAdditional
paid-in
capital		Accumulated
Deficit		Accumulated
other
comprehensive
income (loss)		Net Parent company investmentTotal
 Issued
shares		Balance
Balance, December 31, 2022202,403 $20 $329,218 $(22,438)$— $— $306,800 
Net loss— — — (21,147)— — (21,147)
Share-based compensation expense6 — 1,824 — — — 1,824 
Balance, March 31, 2023202,409 $20 $331,042 $(43,585)$— $— $287,477 

 Common StockAdditional
paid-in
capital		Accumulated
Deficit		Accumulated
other
comprehensive
income (loss)		Net Parent company investmentTotal
 Issued
shares		Balance
Balance, December 31, 2021— $— $— $— $145 $19,780 $19,925 
Net loss prior to Business Combination— — — — — (15,979)(15,979)
Other comprehensive loss, net of tax— — — — (100)— (100)
Net contribution from H-D— — — — — 19,051 19,051 
Balance, March 27, 2022— $— $— $— $45 $22,852 $22,897 
The accompanying notes are integral to the Consolidated financial statements.

8

LIVEWIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Description of Business and Basis of Presentation


EXPLANATORY NOTE

LiveWire Group, Inc., a Delaware corporation, and its consolidated subsidiaries are referred to in these Consolidated financial statements and notes as the “we,” “our,” “us,” the “Company,” or “LiveWire.” The Company designs and sells electric motorcycles and electric balance bikes with related electric motorcycle parts, accessories, and apparel. The Company operates in two segments: Electric Motorcycles and STACYC.


On September 26, 2022, subsequent to the fiscal quarter ended September 25, 2022, the fiscal quarter to which this Quarterly Report on Form 10-Q (the “Quarterly Report”) relates, AEA-Bridges Impact Corp.,Company consummated a Delaware corporation that is our predecessor (“ABIC”), consummated the previously announced mergerbusiness combination pursuant to that certaina business combination agreement, dated as of December 12, 2021 (the “Business Combination Agreement”), by and among ABIC,AEA-Bridges Impact Corp (“ABIC”), LiveWire Group Inc., (formerly known as LW EV Holdings, Inc.), a Delaware corporation (“LiveWire”), LW EV Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Harley-Davidson, Inc., a Wisconsin corporation (“H-D”), and LiveWire EV, LLC (“Legacy LiveWire”). The, a wholly-owned subsidiary of H-D.

Pursuant to the terms of the Business Combination Agreement: (a) ABIC migrated to and domesticated as a Delaware corporation (“Domesticated ABIC”) (the “Domestication”), in connection with which all of the ABIC’s (i) outstanding ordinary shares were converted, on a one-for-one basis, into common stock, par value $0.0001 per share, of Domesticated ABIC, (ii) outstanding warrants were converted, on a one-for-one basis, into warrants to acquire one share each of common stock of Domesticated ABIC and (iii) outstanding units were canceled and instead entitle the holder thereof to, per unit, one share of common stock of Domesticated ABIC and one-half of one warrant of Domesticated ABIC; (b) H-D and Legacy LiveWire consummated the separation (the “Separation”) of the Legacy LiveWire business and the other transactions contemplated by the Business CombinationSeparation Agreement are referred to herein as(the “Separation Agreement”); (c) following the “Business Combination.” Prior toDomestication and immediately following the Business Combination, LiveWire was a subsidiary of ABIC and Merger Sub was a subsidiary of LiveWire. In connection with the Business Combination,Separation, Merger Sub merged with and into Domesticated ABIC, with Domesticated ABIC surviving the merger as a direct, wholly owned subsidiary of LiveWirethe Company (the “Merger”), and LiveWirethe Company continuing as the public company.

Unless stated otherwise,company in the Merger, with each share of common stock of Domesticated ABIC being converted into the right of the holder thereof to receive one share of common stock, par value $0.0001 (“Common Stock”); (d) immediately following the Merger, H-D caused all of the membership interests of Legacy LiveWire (“Legacy LiveWire Equity”) held by ElectricSoul, LLC (the “Legacy LiveWire Equityholder”), a Delaware limited liability company and a subsidiary of H-D, to be contributed to the Company in exchange for 161,000,000 shares of Common Stock and the right to receive up to an additional 12,500,000 shares of Common Stock in the future (the “Earn-Out Shares”, and the transactions contemplated by this Quarterly Report contains information aboutclause (d), collectively, the “Exchange”), and as a result of the Exchange, Legacy LiveWire became a direct, wholly owned subsidiary of the Company; (e) immediately following the consummation of the Exchange, the Company contributed 100% of the outstanding equity interests of Legacy LiveWire to Domesticated ABIC before(clauses (a) through (e) collectively, the “Business Combination”).


Pursuant to investment agreements entered into in connection with the Business Combination Agreement, the KYMCO Group agreed to subscribe for an aggregate of 10,000,000 newly-issued shares of Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of $100 million (the “KYMCO PIPE Investment”).

Pursuant to the Business Combination Agreement, and an investment agreement entered into prior to the Closing, the Legacy LiveWire Equityholder agreed to subscribe for an aggregate of 10,000,000 newly-issued shares of Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of $100 million (the “Legacy LiveWire Equityholder PIPE Investment” and, together with the KYMCO PIPE Investment, the “PIPE Investments”). At the Closing, the Company consummated the PIPE Investments.

Pursuant to the Business Combination Agreement, H-D caused the Legacy LiveWire Equityholder to pay and deliver to the Company an amount in cash equal to $100 million, which is the H-D Backstop Amount (as defined in the Business Combination Agreement) in exchange for 10,000,000 shares of Common Stock (the “H-D Backstop Shares”) at a purchase price of $10.00 per H-D Backstop Share. Additionally, H-D was reimbursed for $20.1 million of transaction costs and advisory fees incurred through a reduction of the proceeds provided.

In connection with the Business Combination, H-D has the right to receive up to an additional 12,500,000 shares of the Company's Common stock as Earn-Out Shares upon the occurrence of certain triggering events: (i) a one-time issuance of 6,250,000 Earn Out Shares if the volume-weighted average price (“VWAP”) of Common Stock is greater than or equal to $14.00 over any 20 trading days within any 30 consecutive trading day period; and (ii) a one-time issuance of 6,250,000 Earn Out Shares if the VWAP of Common Stock is greater than or equal to $18.00 over any 20 trading days within any 30
9

consecutive trading-day period ((i) and (ii) each, a “Triggering Event”), in each case, during a period beginning 18 months from the Closing Date and expiring five years thereafter (the “Earn Out Period”).

After giving effect to the PIPE Investments of $200 million, the H-D Backstop Amount of $100 million (less $20.1 million of transaction costs and advisory fees incurred by H-D through a reduction of the proceeds provided), and ABIC’s remaining cash held in trust account and operating cash in aggregate of $13.8 million (net of the special purpose acquisition company (“SPAC”) share redemption amount of $368.1 million and payment of transaction costs incurred by ABIC of $20.6 million), the Business Combination resulted in net proceeds of approximately $293.7 million. After giving effect to the Business Combination, the redemption of Initial Shares as described above, the issuance of the H-D Backstop Shares and the consummation of the PIPE Investments, there were 202,402,888 shares of Common Stock issued and outstanding. The Company also assumed the Public Warrants and Private Warrants upon consummation of the Business Combination. ReferencesSee further detail in Note 7, Warrant Liabilities.

The Business Combination was accounted for as a reverse recapitalization. Under this method of accounting, ABIC has been treated as the acquired company for financial reporting purposes. The net assets of ABIC were stated at carrying value, with no goodwill or other intangible assets recorded. Operations prior to the “Company,” “our,” “us” or “we” in this Quarterly ReportBusiness Combination are those of Legacy LiveWire.

Throughout the notes to the Consolidated financial statements, unless otherwise noted, the “Company” and similar terms refer to ABIC beforeLegacy LiveWire and its subsidiaries prior to the consummation of the Business Combination, orand LiveWire and its subsidiaries after the consummation of the Business Combination, asCombination. References to ABIC refer to the context suggests.

Except as otherwise expressly provided herein,SPAC entity prior to consummation of the information in this Quarterly Report does not reflectBusiness Combination. Operating results for the periods presented prior to the consummation of the Business Combination represent those of Legacy LiveWire.


Basis of Presentation

In the opinion of the Company’s management, the accompanying unaudited interim Consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Consolidated balance sheet as of March 31, 2023, and the Consolidated statements of operations and comprehensive loss, the Consolidated statements of cash flows, and the Consolidated statements of shareholders’ equity for the three months ended March 31, 2023 and March 27, 2022.

Certain information and disclosures normally included in complete financial statements have been condensed or omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting. These unaudited Consolidated financial statements should be read in conjunction with the audited Consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the Consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. All intercompany transactions within the Company have been eliminated in preparing the Consolidated financial statements.

On September 26, 2022, the Company consummated the Separation and Business Combination and became a standalone publicly traded company, and its financial statements are now presented on a Consolidated basis. Prior to the Separation and Business Combination on September 26, 2022, the Company's historical combined financial statements were prepared on a standalone carve-out basis and were derived from H-D's Consolidated financial statements and accounting records. The financial statements for all periods presented, including historical periods prior to September 26, 2022, are now referred to as “Consolidated financial statements”, and have been prepared in accordance with GAAP and pursuant to the rules and regulations of the SEC. For such periods prior to the Separation, certain corporate and shared costs were allocated to the Company based on a specific identification basis, or when specific identification was not practicable, a proportional cost allocation method.

Certain assets and liabilities, including Accounts receivables, Inventories, Other current assets, Deferred tax assets, Accounts payable, Accrued liabilities, Deferred tax liabilities, Long-term supplier liability, and Other long-term liabilities included on the combined Consolidated Balance Sheet prior to the Separation, were retained by H-D post-Separation and therefore were recorded through Net Parent company investment in the Company’s combined Consolidated Financial Statements at the time of the Separation. As part of the Separation, Net Parent company investment was reclassified to Additional paid-in-capital.



10

2. New Accounting Standards

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

3. Revenue

The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or service to a customer. Revenue is measured based on the consideration that the Company expects to be entitled to in exchange for the goods or services transferred. Taxes that are collected from a customer concurrent with revenue-producing activities are excluded from revenue.

Disaggregated revenue, net by major source was as follows (in thousands):
Three months ended
March 31,
2023		March 27,
2022
Electric Motorcycles
Electric motorcycles$1,411 $2,108 
Parts, accessories and apparel71 208 
$1,482 $2,316 
STACYC
Electric balance bikes$5,508 $7,322 
Parts, accessories and apparel772 763 
$6,280 $8,085 
Total Revenue, net$7,762 $10,401 

Revenue from the sale of electric motorcycles, electric balance bikes as well as parts and accessories and apparel are recorded when control is transferred to the customer, generally at the time of shipment to independent dealers and distributors or at the time of delivery to retail customers.

The Company offers sales incentive programs to independent dealers and retail customers designed to promote the sale of its products. The Company estimates its variable consideration related to its sales incentive programs using the expected value method. The Company accounts for consideration payable to a customer as part of its sales incentives as a reduction of revenue, which is accrued at the later of the date the related sale is recorded or the date the incentive program is both approved and communicated.

The Company offers the right to return eligible parts and accessories and apparel. When the Company offers a right to return, it estimates returns based on an analysis of historical trends and records revenue on the initial sale only in the amount that it expects to be entitled. The remaining consideration is deferred in a refund liability account. The refund liability is remeasured for changes in the estimate at each reporting date with a corresponding adjustment to revenue.

Variable consideration related to sales incentives and rights to return is adjusted at the earliest of when the amount of consideration the Company expects to receive changes, or the consideration becomes fixed. Adjustments for variable consideration related to previously recognized sales were not material during the three months ended March 31, 2023 and March 27, 2022.

Shipping and handling costs associated with freight after control of a product has transferred to a customer are accounted for as fulfillment costs. The Company accrues for the shipping and handling in the same period that the related revenue is recognized.

The Company offers standard, limited warranties on its electric motorcycles, electric balance bikes, and parts and accessories. These warranties provide assurance that the product will function as expected and are not separate performance obligations. The Company accounts for estimated warranty costs as a liability when control of the product transfers to the customer.

11

Contract Liabilities

The Company maintains certain contract liability balances related to payments received at contract inception in advance of the Company’s performance under the contract that generally relates to customer deposits for electric balance bikes and electric motorcycles. Contract liabilities are recognized as revenue once the Company performs under the contract. Contract liabilities of $177 thousand and $163 thousand were included in Accrued liabilities in the Company's Consolidated balance sheetsas of March 31, 2023 and December 31, 2022, respectively.

Previously recorded contract liabilities recognized as revenue in the three months ended March 31, 2023 and March 27, 2022 was $78 thousand and $1,290 thousand, respectively. The Company expects to recognize all $177 thousand of the remaining unearned revenue in 2023.

4. Income Taxes

TheCompany’s effective income tax rate for the three months ended March 31, 2023 was 0% compared to (0.4)% for the three months ended March 27, 2022.

The Company’s effective tax rate for each period differs from the U.S. statutory rate of 21% as the Company is not recognizing an income tax benefit related to the losses generated as there is not sufficient positive evidence regarding the ability to realize the benefit of these losses.

5. Earnings Per Share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding. Diluted EPS is computed using the weighted-average number of shares of common stock, plus the effect of potentially dilutive securities. The Company applies the treasury method to calculate the dilution impact of employee stock compensation awards. Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share as all of the potentially dilutive shares were anti-dilutive in those periods.

Computation of basic and diluted earnings per share was as follows (in thousands, except per share amounts):
Three months ended
March 31,
2023		March 27,
2022
Net loss$(21,147)$(15,979)
Basic weighted-average shares outstanding202,404 161,000 
Effect of dilutive securities – Warrants— — 
Effect of dilutive securities – employee stock compensation awards— — 
Diluted weighted-average shares outstanding202,404 161,000 
Earnings per share:
Basic$(0.10)$(0.10)
Diluted$(0.10)$(0.10)

Prior to the Business Combination date, the Company did not have any issued and outstanding common stock or any common share equivalents. Accordingly, for the three months ended March 27, 2022, the net loss per share was calculated based on the 161,000,000 shares of Common Stock distributed to H-D in exchange for the membership interests of Legacy LiveWire. At the time of the Business Combination, additional shares of Common Stock were issued, which are reflected in the weighted average number of shares of common stock outstanding as of March 31, 2023.

Diluted net loss per share is computed by giving effect to all potential shares of common stock, to the extent dilutive, including unvested restricted stock units (“RSUs”), unvested performance share units (“PSUs”), and Warrants (as defined in Note 7, Warrant Liabilities). Potential shares of common stock are excluded from the computation of diluted net loss per share if their effect would have been anti-dilutive for the periods presented or if the issuance of shares is contingent upon events that did not occur by the end of the period. For the three months ended March 31, 2023, employee stock compensation plan awards representing 274 thousand underlying common shares were excluded from the computation of diluted net loss per share because
12

the effect would have been anti-dilutive. For three months ended March 31, 2023, warrants representing 54,090 thousand underlying common shares were excluded from the computation of diluted net loss per share because the effect would have been anti-dilutive. There were no anti-dilutive employee stock compensation awards or warrants for three months ended March 27, 2022. Additionally, the Company has not included the impact of the Earn-Out Shares, discussed above, occurredin Note 1, Description of Business and Basis of Presentation, in the calculation of EPS as the triggering events have not occurred.

6. Additional Balance Sheet Information

Inventories are valued at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method for electric motorcycles and related products and average costing method for electric balance bikes. Inventories, net consisted of the following (in thousands):
March 31,
2023		December 31,
2022
Raw materials and work in process$1,530 $48 
Electric motorcycles and electric balance bikes26,18925,291
Parts and accessories and apparel3,3833,876
Inventories, net$31,102 $29,215 

Accrued liabilities primarily include accrued payroll and employee benefits of $3,455 thousand, accrued engineering costs of $2,804 thousand, and accrued capital expenditures of $5,305 thousand as of March 31, 2023. Accrued liabilities primarily include accrued payroll and employee benefits of $4,641 thousand, accrued engineering costs of $4,377 thousand, and accrued capital expenditures of $7,748 thousand as of December 31, 2022.

7. Warrant Liabilities

Upon consummation of the Business Combination, the Company assumed 30,499,990 Warrants to purchase the Company’s Common Stock, comprised of 19,999,990 public warrants, originally issued by ABIC as part of ABIC’s IPO of units (the “Public Warrants”) and 10,500,000 of outstanding warrants originally issued in a private placement in connection with the IPO of ABIC (the “Private Placement Warrants”, collectively with the Public Warrants, the “Warrants”). The Warrants expire five years from the completion of the Business Combination. There were 19,999,990 Public Warrants and 10,500,000 Private Warrants outstanding as of March 31, 2023 and December 31, 2022, respectively.

There were no exercises or redemptions of the Public or Private Warrants during the three months ended March 31, 2023.

The Company recognized income of $1,068 thousand as a change in fair value of warrant liabilities in the Consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023. The Company determined the Public Warrants and Private Placement Warrants do not meet the criteria to be classified in stockholders’ equity and the fair value of the warrants should be classified as a liability. The Company’s Warrant liability was $7,320 thousand and $8,388 thousand as of March 31, 2023 and December 31, 2022, respectively.

8. Fair Value

The Company assesses the inputs used to measure fair value using a three-tier hierarchy.

•Level 1 inputs include quoted prices for identical instruments and are the most observable.

•Level 2 inputs include quoted prices for similar assets and observable inputs.

•Level 3 inputs are not observable in the market and include the Company’s judgments about the assumptions market participants would use in pricing the asset or liability.

13

The Company’s assets and liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows (in thousands):
March 31, 2023
Level 1Level 2Level 3Total
Assets:
Money market funds$232,000 $— $— $232,000 
Liabilities:
Public Warrants$4,800 $— $— $4,800 
Private Placement Warrants— 2,520 — 2,520 
Share-based awards settled in cash576 — — 576 
$5,376 $2,520 $— $7,896 
December 31, 2022
Level 1Level 2Level 3Total
Assets:
Money market funds$257,000 $— $— $257,000 
Liabilities:
Public Warrants$5,500 $— $— $5,500 
Private Placement Warrants— 2,888 — 2,888 
Share-based awards settled in cash1,618 — — 1,618 
$7,118 $2,888 $— $10,006 

There were no significant assets or liabilities on the Company’s Consolidated balance sheets measured at fair value on a nonrecurring basis.

Recurring Fair Value Measurements

Warrant Liabilities

The Public Warrants are publicly traded under the symbol “LVWR WS”, and the fair value of the Public Warrants at a specific date is determined by the closing price of the Public Warrants as of that date. As such, the Public Warrants are classified within Level 1 of the fair value hierarchy. The fair value of the Private Placement Warrants was determined using the closing price of the Public Warrants as the Private Placement Warrants have terms and provisions that are economically similar to those of the Public Warrants. The Private Placement Warrants are classified as Level 2 of the fair value hierarchy due to the use of an observable market quote for a similar asset in an active market.

Other Fair Value Measurements

The fair value of financial instruments classified as Cash and cash equivalents, Accounts receivable, net, and Accounts payable on the Consolidated balance sheets approximate carrying value due to the short-term nature and the relative liquidity of the instruments.

9. Product Warranty and Recall Campaigns

The Company provides a limited warranty on new electric motorcycles for a period of two years, except for the battery which is covered for five years. The Company also provides limited warranties on parts and accessories and electric balance bikes. The warranty coverage for the retail customer generally begins when the product is sold to the retail customer. The Company accrues for future warranty claims at the time of sale using an estimated cost based primarily on historical Company claim information. In the case of both warranty and recall costs, as actual experience becomes available it is used to update the accruals.
14


Additionally, the Company may from time-to-time initiate certain voluntary recall campaigns. The Company records estimated recall costs when the liability is both probable and estimable. This generally occurs when the Company’s management approves and commits to a recall. The warranty and recall liability are included in Accrued liabilities and Other long-term liabilitieson the Consolidated balance sheets.

Changes in the Company’s warranty and recall liability were as follows (in thousands):
Three months ended
March 31,
2023		March 27,
2022
Balance, beginning of period$566 $1,095 
Warranties issued during the period69 31 
Settlements made during the period(32)(138)
Currency Translation Adjustments— (16)
Recalls and changes to pre-existing warranty liabilities(3)108 
Balance, end of period$600 $1,080 

There was no liability for recall campaigns as of March 31, 2023 and December 31, 2022, respectively. As of March 27, 2022, a liability for pre-transaction recall campaigns of $268 thousand related to certain H-D branded electric motorcycles was retained by H-D in connection with the Separation and Business Combination.

10. Commitments and Contingencies

Contingencies – The Company is subject to claims related to product and other commercial matters. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. The Company accrues for matters when losses are both probable and estimable. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter. Refer to Note 9, Product Warranty and Recall Campaigns, for a discussion of warranty and recall liabilities. The Company had no material product liability claims as of March 31, 2023 and December 31, 2022, respectively.

Litigation and Other Claims – The Company from time to time may be subject to lawsuits and other claims related to product, commercial, employee, environmental and other matters in the normal course of business. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. The Company accrues for matters when losses are both probable and estimable. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter. The Company, through H-D, also maintains insurance coverage for product liability exposures. The Company believes that its accruals and insurance coverage are adequate and there are no material exposures to loss in excess of amounts accrued and insured for losses related to these matters.

11. Related Party Transactions
In connection with the Business Combination, the Company entered into a number of agreements with H-D to govern the Separation and provide a framework for the relationship between the parties going forward pursuant to which the Company and/or H-D have continuing obligations to each other. All transactions with H-D subsequent to the period covered hereunder.

LIVEWIRE GROUP, INC.

(successorBusiness Combination are considered related party transactions. Agreements that the Company entered into in connection with the Separation that resulted in related party transactions include the Transition Services Agreement, Master Services Agreement, Contract Manufacturing Agreement, Joint Development Agreement, and Tax Matters Agreement. Refer to AEA-BridgesNote 16, Related Party Transactions, of the Consolidated financial statements in the Company’s 2022 Form 10-K for additional details on the agreements entered into by the Company as part of the Separation. Impact Corp.)

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 25, 2022

TABLE OF CONTENTS

Page

PART 1 – FINANCIAL INFORMATION

Item 1.

Financial Statements1
Condensed Consolidated Balance Sheets as of September 25, 2022 (Unaudited) and December 31, 20211
Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 25, 2022 and September 26, 20212
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity /Shareholders’ Deficit for the three and nine months ended September 25, 2022 and September 26, 20213
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 25, 2022 and September 26, 20214
Notes to Condensed Consolidated Financial Statements (Unaudited)5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations18

Item 3.

Quantitative and Qualitative Disclosures about Market Risk21

Item 4.

Control and Procedures21

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings23

Item 1A.

Risk Factors23

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds23

Item 3.

Defaults Upon Senior Securities23

Item 4.

Mine Safety Disclosures23

Item 5.

Other Information23

Item 6.

Exhibits24

SIGNATURES

25
Related Party Sales and Purchases in the Ordinary Course of Business

Transactions Associated with Service Agreements with H-D
PART I — FINANCIAL INFORMATION
During the three months ended March 31, 2023, there were $3,397 thousand in expenses associated with services rendered in conjunction with the various service agreements with H-D, which are presented within Selling, administrative and engineering
LIVEWIRE GROUP, INC.15

on the Consolidated statements of operations and comprehensive loss. As of March 31, 2023 and December 31, 2022, there was $7,625 thousand and $5,733 thousand due to H-D and presented as Accounts payable to related party on the Consolidated balance sheets, respectively. Of the amount outstanding to H-D as of March 31, 2023, $4,638 thousand is associated with inventory purchased under the Contract Manufacturing Agreement and $2,987 thousand is associated with services under the various service agreements with H-D. Of the amount outstanding to H-D as of December 31, 2022, $1,942 thousand is associated with inventory purchased under the Contract Manufacturing Agreement and $3,791 thousand is associated with services under the various service agreements with H-D.
During the three months ended March 31, 2023, the Company purchased $4,600 thousand of inventory from H-D as part of the Contract Manufacturing Agreement, all of which was payable as of March 31, 2023.
Other transactions
Sales of electric motorcycles and related products to independent dealers are primarily financed through HDFS, a wholly owned subsidiary of H-D; therefore, the Company’s accounts receivable related to these sales are recorded in Accounts receivable from related party on the Consolidated balance sheets. Amounts financed through HDFS, not yet remitted to the Company by HDFS are generally settled within 30 days. As of March 31, 2023 and December 31, 2022, there is $836 thousand and $388 thousand due from HDFS, which is presented as Accounts receivable from related party on the Consolidated balance sheets, respectively.
During the three months ended March 31, 2023, the Company recorded $5 thousand in related party sales between the Company and H-D with $3 thousand in cost of sales. All sales were for the STACYC segment who sells electric balance bikes to H-D dealers. As of March 31, 2023 and December 31, 2022, there was $5 thousand and $137 thousand due from H-D, which is presented as Accounts receivable from related party on the Consolidated balance sheets, respectively.
On September 26, 2022, the Company entered into a lease agreement with H-D to sublease a Product Development Center. This is classified as an operating lease. As of March 31, 2023, the right of use asset included within Lease assets, short-term lease liability included within Current portion of lease liabilities, and long-term lease liability included within Long-term portion of lease liabilities in the Consolidated balance sheets were $364 thousand, $141 thousand, and $222 thousand, respectively. As of December 31, 2022, the right of use asset included within Lease assets, short-term lease liability included within Current portion of lease liabilities, and long-term lease liability included within Long-term portion of lease liabilities in the Consolidated balance sheets were $398 thousand, $140 thousand, and $258 thousand, respectively. In addition, the Company incurred $44 thousand in rent expense during the three months ended March 31, 2023, which is included within Selling, administrative and engineering expense on the Consolidated statements of operations and comprehensive loss.
Prior to the Separation, the Company did not operate as a standalone business and the Consolidated financial statements were derived from the Consolidated financial statements and accounting records of H-D. The following disclosure summarizes activity between the Company and H-D prior to the Business Combination.
Allocation of Expenses and Related Party Activity Prior to the Separation
Prior to the Business Combination, certain costs were allocated to the Company and are reflected as expenses in the Consolidated statements of operations and comprehensive loss. The Company considers the allocation methodologies used to be reasonable, such that the allocations appropriately reflected H-D’s historical expenses attributable to the Company for purposes of the Consolidated financial statements. However, the expenses reflected in the Consolidated financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Company had historically operated as a stand-alone independent entity.
Manufacturing cost of sales
The Company’s electric motorcycles are produced in manufacturing facilities shared with H-D. Certain costs of goods sold for shared facilities and shared manufacturing of $863 thousand for the three months ended March 27, 2022 were specifically identified or allocated, mainly based on standard cost of production.
(successor16

Operating expense allocation
H-D provided technology support, marketing, engineering, shared assets, finance, and other corporate and administrative services such as treasury, human resources, and legal, to the Company. These expenses of $290 thousand for the three months ended March 27, 2022 have been allocated to the Company and are included in Selling, administrative and engineering expense in the Consolidated statements of operations and comprehensive loss, where direct assignment of costs incurred by H-D was not possible or practical. These costs were allocated using related drivers associated with the nature of the business, such as gross revenue and wholesale motorcycle shipments. As a result, the allocations of these costs fluctuated based on changes in these drivers. Other cost allocation metrics, such as headcount and square footage, were not deemed appropriate given the Company’s reliance on facilities and personnel that are shared with H-D.
AEA-BridgesCash management and financing
Impact Corp.)
Prior to the Business Combination, the Company’s treasury function maintained by H-D utilized a centralized approach to cash management and the financing of its operations. Under this centralized cash management approach, H-D provided funds to the Company.
During the three months ended March 27, 2022, the Company borrowed $12,000 thousand under lines of credit agreements with H-D prior to their final settlement on June 24, 2022 through Net Parent company investment.
Cash transfers from H-D related to services and funding for operations provided by H-D were $18,723 thousand for the three months ended March 27, 2022. Net contributions from H-D are included within Net Parent company investment in the Consolidated statements of shareholders' equity.

12. Reportable Segments

The Company operates in two segments: Electric Motorcycles and STACYC. The Company’s reportable segments are strategic business units that offer different products and services and are managed separately based on the fundamental differences in their operations.

The Electric Motorcycles segment consists of the business activities related to the design and sales of electric motorcycles. The Electric Motorcycles segment also sells electric motorcycle parts, accessories, and apparel. The Company’s products are sold at wholesale to a network of independent dealers and at retail through a Company-owned dealer and through online sales, primarily in the United States.

The STACYC segment consists of the business activities related to the design and sales of the STACYC brand of electric balance bikes for kids. The STACYC segment also sells electric balance bike parts, accessories and apparel. STACYC products are sold in the U.S., Canada, Australia and Europe. The STACYC segment products are sold through independent retail partners in the U.S., including powersports dealers, H-D dealers, bicycle retailers and direct to consumers online. In Australia and Europe, STACYC sells its products through independent distributors.

Selected segment information is set forth below (in thousands):
Three months ended
March 31,
2023		March 27,
2022
Electric Motorcycles
Revenue, net$1,482 $2,316 
Cost of goods sold2,4405,073
Selling, administrative and engineering expense23,81113,926
Operating loss(24,769)(16,683)
STACYC
Revenue, net6,2808,085
Cost of goods sold4,0585,275
Selling, administrative and engineering expense2,3601,826
Operating income (loss)(138)984
Operating loss$(24,907)$(15,699)
CONDENSED CONSOLIDATED BALANCE SHEETS
ITEM 1 — FINANCIAL STATEMENTS
   
September 25,

2022
  
December 31,

2021
 
   
(Unaudited)
    
ASSETS
         
Cash
  $240,329  $1,027,517 
Cash — restricted   402,367,209   —   
Prepaid expenses
   22,917   249,167 
Investments held in Trust Account
   —     400,249,491 
   
 
 
  
 
 
 
TOTAL ASSETS
  
$
402,630,455
 
 
$
401,526,175
 
   
 
 
  
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY /SHAREHOLDERS’ DEFICIT
         
Accounts payable and
a
ccrued liabilities
  $11,244,872  $6,850,353 
Derivative warrant liabilities   13,420,000   34,617,500 
Mandatorily redeemable Class A ordinary shares   368,136,945   —   
Deferred underwriting fee payable   9,376,639   13,125,000 
   
 
 
  
 
 
 
Total Liabilities
  
 
402,178,456
 
 
 
54,592,853
 
   
 
 
  
 
 
 
Commitments and Contingencies
     
Class A ordinary shares subject to possible redemption, $0.0001 par value, zero as of September 25, 2022 and
40,000,000 shares issued and outstanding at $10.00 per share redemption value December 31, 2021
   —     400,000,000 
Stockholders’ Equity (Deficit)/Shareholders’ Deficit

         
Preference shares, $0.0001 par value; 5,000,000 shares authorized; no shares issued or outstanding
 
as of December 31, 2021
   —   —   
Class A ordinary shares
, $0.0001 par value; 500,000,000 shares authorized; zero shares issued and
 
outstanding as of
December 31, 2021 (excluding 40,000,000 shares subject to
 
possible redemption as of December 31, 2021)
   —   —   
Class B ordinary shares
, $0.0001 par value; 50,000,000 shares authorized; 10,000,000 shares issued and outstanding as
of December 31, 2021
   —     1,000 
Preferred Stock, $0.0001 par value; 20,000,000 shares authorized; no shares issued or outstanding
 
as of September 25, 2022
   —     —   
Common Stock, $0.0001 par value; 800,000,000 shares authorized; 11,402,888 shares issues and outstanding as of September 25, 2022   1,140   —   
Additional
paid-in
capital
   30,906,382   —   
Accumulated deficit
   (30,455,523)   (53,067,678) 
   
 
 
  
 
 
 
Total Stockholders’ Equity /Shareholders’ Deficit
  
 
451,999
 
 
 
(53,066,678
) 
   
 
 
  
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY /SHAREHOLDERS’ DEFICIT
  
$
402,630,455
 
 
$
401,526,175
 
   
 
 
  
 
 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
17
Table

Item 2. Management's Discussion and Analysis of Contents
Financial Condition and Results of Operations
LIVEWIRE GROUP, INC.

(successorThe following discussion and analysis is intended to
AEA-Bridges
Impact Corp.)
help the reader understand the Company, the Company’s financial condition and results of operations, and the Company’s present business environment. The following discussion and analysis should be read together with the accompanying unaudited Consolidated financial statements and related notes included elsewhere in this Quarterly Report and the audited Consolidated financial statements and related notes in the 2022 Annual Report on Form 10-K.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
   
Three Months Ended
  
Nine Months Ended
 
   
September 25,
2022
  
September 26,
2021
  
September 25,
2022
  
September 26,
2021
 
Formation and operating costs
  $3,367,356  $3,117,068  $5,632,797  $3,838,489 
   
 
 
  
 
 
  
 
 
  
 
 
 
Loss from operations
  
 
(3,367,356
) 
 
 
(3,117,068
) 
 
 
(5,632,797
) 
 
 
(3,838,489
) 
Other income:
                 
Interest earned on investments held in Trust Account
   1,792,628   28,889   2,117,718   129,415 
Forgiveness of deferred underwriting fee payable   3,748,361   —     3,748,361   —   
Interest on mandatorily redeemable Class A
ordinary shares
   3,323,742   —     3,323,742   —   
Change in fair value of derivative warrant liabilities
   (1,830,000)   8,540,000   21,197,500   26,230,000 
Other income and expense, net
   224,840   —     224,840   —   
   
 
 
  
 
 
  
 
 
  
 
 
 
Total other income, net
   7,259,571   8,568,889   30,612,161   26,359,415 
Net income
  
$
3,892,215
 
 
$
5,451,821
 
 
$
24,979,364
 
 
$
22,520,926
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Weighted average shares outstanding of Class A
ordinary shares
   —     40,000,000   —     40,000,000 
   
 
 
  
 
 
  
 
 
  
 
 
 
Basic and diluted net income per share, Class A ordinary shares  
$
—  
 
 
$
0.11
 
 
$
—  
 
 
$
0.45
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Weighted average shares outstanding of Class B ordinary shares   —     10,000,000   —     10,000,000 
   
 
 
  
 
 
  
 
 
  
 
 
 
Basic and diluted net income per share, Class B ordinary shares  
$
—  
 
 
$
0.11
 
 
$
—  
 
 
$
0.45
 
   
 
 
  
 
 
  
 
 
  
 
 
 
Weighted average shares outstanding of common stock (see Note 2)   45,912,405   —     48,612,048   —   
   
 
 
  
 
 
  
 
 
  
 
 
 
Basic and diluted net income per share, common stock  $0.01  $—    $0.45  $—   
   
 
 
  
 
   
 
 
  
 
 
 
Overview

LiveWire is an industry-leading all-electric vehicle brand with a mission to pioneer the rapidly growing two-wheel electric motorcycle space. The Company operates in two segments: Electric Motorcycles and STACYC.

The accompanying notesElectric 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, related parts and accessories and apparel in the United States and certain international markets.

Electric motorcycles are an integralsold at wholesale to a network of independent retail partners, at retail through a Company-owned dealership, and through online sales. Electric balance bikes are sold at wholesale to independent dealers and independent distributors, as well as direct to consumers online. As discussed below, on September 26, 2022 as part of these unaudited condensed consolidated financial statements.
the Business Combination, the Company, which included LiveWire branded electric motorcycles and STACYC, became a separate, publicly traded company.

2
Table of Contents
LIVEWIRE GROUP, INC.
(successor to
AEA-Bridges
Impact Corp.)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY/SHAREHOLDERS’ DEFICIT
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 25, 2022
  
Common Stock
  
Class A
Ordinary Shares
  
Class B
Ordinary Shares
  
Additional
Paid in
Capital
  
Accumulated
Deficit
  
Total
Stockholders’
Equity/
Shareholders’
Deficit
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
  
Shares
  
Amount
  
Shares
  
Amount
  
Shares
  
Amount
       
Balance — December 31, 2021
 
 
—  
 
 $
—  
 
 
 
 
—
 
 
$
 
—
 
 
 
10,000,000
 
 
$
1,000
 
 
$
—
  
 
 
$
(53,067,678
) 
 
$
(53,066,678
) 
Net income

 —
  
   —
  
 
 
 
—
 
 
 
 
 
 
—
 
 
 
  —
  
   —
  
   —
  
   8,997,219   8,997,219 
  
 
 
  
 
 
          
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Balance — March 31, 2022
 
 
—  
 
  
—  
 
 
 
 
—
 
 
 
 
—
 
 
 
10,000,000
 
  
1,000
 
  
—
  
 
  
(44,070,459
) 
  
(44,069,459
) 
Accretion for Class A ordinary shares to redemption amount  —     — 
 
 
 
—
 
 
 
 
—
 
  —     —     —     (574,581)   (574,581) 
Net income
  —     —   
 
 
 
—
 
 
 
 
—
 
  —     —     —     12,089,930   12,089,930 
  
 
 
  
 
 
          
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Balance — June 30, 2022
 
 
—  
 
  
—  
 
 
 
 
—
 
 
 
 
—
 
 
 
10,000,000
 
  
1,000
 
  
—
  
 
  
(32,555,110
) 
  
(32,554,110
) 
Accretion for Class A ordinary shares to redemption amount  —     —   
 
 
 
—
 
 
 
 
—
 
  —     —     —     (1,792,628)   (1,792,628) 
Class A ordinary shares no longer redeemable  —   — 
 
 
3,402,888
 
 
 
340
 
  —     —     30,906,182   —     30,906,522 
Net income  —     —   
 
 
 
—
 
 
 
 
—
 
  —     —     —     3,892,215   3,892,215 
Adjustment to capital structure due to domestication (see Note 1)  11,402,888   1,140   (3,402,888)   (340)  (10,000,000)   (1,000)   200   —     —   
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
Balance — September 25, 2022
 
 
11,402,888
 
 
$
1,140
 
 
 
—  

 
 
$
—  

 
 
 
—
  
 
 
$
—
  
 
 
$
30,906,382
 
 
$
(30,455,523
) 
 
$
451,999
 
  
 
 
  
 
 
          
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 26, 2021

   
Class A

Ordinary Shares
   
Class B

Ordinary Shares
   
Additional

Paid in

Capital
   
Accumulated

Deficit
  
Total

Shareholders’

Deficit
 
   
Shares
   
Amount
   
Shares
   
Amount
            
Balance — December 31, 2020
  
 
—  
 
  
$
—  
 
  
 
10,000,000
 
  
$
1,000
 
  
$
—  
 
  
$
(57,889,751
) 
 
$
(57,888,751
) 
Net income
   —      —      —      —      —      19,314,054   19,314,054 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Balance — March 31, 2021
  
 
—  
 
   
—  
 
  
 
10,000,000
 
   
1,000
 
   
—  
 
   
(38,575,697
) 
  
(38,574,697
) 
Net loss
   —      —      —      —      —      (2,244,949)   (2,244,949) 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Balance — June 30, 2021
  
 
—  
 
   
—  
 
  
 
10,000,000
 
   
1,000
 
   
—  
 
   
(40,820,646
) 
  
(40,819,646
) 
Net income
   —      —      —      —      —      5,451,821   5,451,821 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Balance — September 26, 2021
  
 
—  
 
  
$
—  
 
  
 
10,000,000
 
  
$
1,000
 
  
$
—  
 
  
$
(35,368,825
) 
 
$
(35,367,825
) 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Table of Contents
LIVEWIRE GROUP, INC.
(successor to
AEA-Bridges
Impact Corp.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
   
For the Nine

Months Ended

September 25,
  
For the Nine

Months Ended

September 26,
 
   
2022
  
2021
 
Cash Flows from Operating Activities:
   
Net income  $24,979,364  $22,520,926 
Adjustments to reconcile net income to net cash used in operating activities:         
Interest earned on investments held in Trust Account   (2,117,718)   (129,415) 
Interest on mandatorily redeemable Class A ordinary shares   (3,323,742)   —   
Change in fair value of derivative warrant liabilities   (21,197,500)   (26,230,000) 
Forgiveness of deferred underwriting fee payable   (3,748,361)   —   
Changes in operating assets and liabilities:         
Prepaid expenses   226,250   237,163 
Accounts payable and accrued expenses   4,394,519   3,031,028 
          
Net cash used in operating activities
  
 
(787,188
) 
 
 
(570,298
) 
          
Cash Flows from Investi
n
g Activities:
         
Withdrawal of funds from Trust Account   402,367,209   —   
          
Net restricted cash provided by investing activities
  
 
402,367,209
 
 
 
—  
 
          
   
Cash and restricted cash         
Cash and restricted cash, beginning of period   1,027,517   1,661,085 
Net change in cash and restricted cash   401,580,021   (570,298) 
          
Cash and restricted cash, end of period
  
$
402,607,538
 
 
$
1,090,787
 
          
   
Reconciliation of cash and restricted cash on the Condensed Consolidated Balance Sheet to the Condensed Consolidated Statement of Cash Flows         
Cash  $240,329  $1,090,787 
Restricted cash   402,367,209   —   
          
Cash and restricted cash per the Condensed Consolidated Statement of Cash Flows
  
$
402,607,538
 
 
$
1,090,787
 
          
Non-cash
investing and financing activities:
         
Mandatorily redeemable Class A ordinary shares  $368,136,345  $—   
          
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
AEA-Bridges
Impact Corp. (the “Company”) was incorporated as a Cayman Islands exempted company on July 29, 2020. The Company was incorporatedCompany’s net loss for the purposethree months ended March 31, 2023 was $21,147 thousand compared to $15,979 thousand for the three months ended March 27, 2022. The Company’s net losses reflect the start-up nature of effectingthe Company’s business including investments in product development as the Company continues to focus on technological innovation that will support future products and growth, and investments in talent and capabilities to support the new company.

The Electric Motorcycles segment operating loss for the three months ended March 31, 2023 was $24,769 thousand, compared to an operating loss of $16,683 thousand for the three months ended March 27, 2022. The operating loss was driven by the cost of standing up a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities.new organization, including growing headcount and back-office support, increased costs to advance the Company’s electric vehicle systems, and to deliver the S2 platform. Refer to the Electric Motorcycles segment analysis below for further discussion.

The STACYC segment operating loss for the three months ended March 31, 2023 was $138 thousand, as compared to operating income of $984 thousand for the three months ended March 27, 2022. The operating loss for the three months ended March 31, 2023 was driven by lower volumes from third party distributors. Refer to the STACYC segment analysis below for further discussion.

Business CombinationBasis of Presentation

In the opinion of the Company’s management, the accompanying unaudited interim Consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Consolidated balance sheet as of March 31, 2023, and the Consolidated statements of operations and comprehensive loss, the Consolidated statements of cash flows, and the Consolidated statements of shareholders’ equity for the three months ended March 31, 2023 and March 27, 2022.

Certain information and disclosures normally included in complete financial statements have been condensed or omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting. These unaudited Consolidated financial statements should be read in conjunction with the audited Consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the Consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. All intercompany transactions within the Company have been eliminated in preparing the Consolidated financial statements.

On September 26, 2022, the Company consummated the previously announced mergerSeparation and Business Combination and became a standalone publicly traded company, and its financial statements are now presented on a Consolidated basis. Prior to the Separation and Business Combination on September 26, 2022, the Company's historical combined financial statements were prepared on a standalone carve-out basis and were derived from H-D's Consolidated financial statements and accounting records. The financial statements for all periods presented, including historical periods prior to September 26, 2022, are now referred to as “Consolidated financial statements”, and have been prepared in accordance with GAAP and pursuant to the rules and regulations of the SEC. For such periods prior to the Separation, certain corporate and shared costs were allocated to the Company based on a specific identification basis, or when specific identification was not practicable, a proportional cost allocation method.

Certain assets and liabilities, including Accounts receivables, Inventories, Other current assets, Deferred tax assets, Accounts payable, Accrued liabilities, Deferred tax liabilities, Long-term supplier liability, and Other long-term liabilities included on the combined Consolidated Balance Sheet prior to the Separation, were retained by H-D post-Separation and therefore were recorded through Net Parent company investment in the Company’s combined Consolidated Financial Statements at the time of the Separation. As part of the Separation, Net Parent company investment was reclassified to Additional paid-in-capital.



10

2. New Accounting Standards

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

3. Revenue

The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or service to a customer. Revenue is measured based on the consideration that the Company expects to be entitled to in exchange for the goods or services transferred. Taxes that are collected from a customer concurrent with revenue-producing activities are excluded from revenue.

Disaggregated revenue, net by major source was as follows (in thousands):
Three months ended
March 31,
2023		March 27,
2022
Electric Motorcycles
Electric motorcycles$1,411 $2,108 
Parts, accessories and apparel71 208 
$1,482 $2,316 
STACYC
Electric balance bikes$5,508 $7,322 
Parts, accessories and apparel772 763 
$6,280 $8,085 
Total Revenue, net$7,762 $10,401 

Revenue from the sale of electric motorcycles, electric balance bikes as well as parts and accessories and apparel are recorded when control is transferred to the customer, generally at the time of shipment to independent dealers and distributors or at the time of delivery to retail customers.

The Company offers sales incentive programs to independent dealers and retail customers designed to promote the sale of its products. The Company estimates its variable consideration related to its sales incentive programs using the expected value method. The Company accounts for consideration payable to a customer as part of its sales incentives as a reduction of revenue, which is accrued at the later of the date the related sale is recorded or the date the incentive program is both approved and communicated.

The Company offers the right to return eligible parts and accessories and apparel. When the Company offers a right to return, it estimates returns based on an analysis of historical trends and records revenue on the initial sale only in the amount that it expects to be entitled. The remaining consideration is deferred in a refund liability account. The refund liability is remeasured for changes in the estimate at each reporting date with a corresponding adjustment to revenue.

Variable consideration related to sales incentives and rights to return is adjusted at the earliest of when the amount of consideration the Company expects to receive changes, or the consideration becomes fixed. Adjustments for variable consideration related to previously recognized sales were not material during the three months ended March 31, 2023 and March 27, 2022.

Shipping and handling costs associated with freight after control of a product has transferred to a customer are accounted for as fulfillment costs. The Company accrues for the shipping and handling in the same period that the related revenue is recognized.

The Company offers standard, limited warranties on its electric motorcycles, electric balance bikes, and parts and accessories. These warranties provide assurance that the product will function as expected and are not separate performance obligations. The Company accounts for estimated warranty costs as a liability when control of the product transfers to the customer.

11

Contract Liabilities

The Company maintains certain business combination agreement, dated contract liability balances related to payments received at contract inception in advance of the Company’s performance under the contract that generally relates to customer deposits for electric balance bikes and electric motorcycles. Contract liabilities are recognized as revenue once the Company performs under the contract. Contract liabilities of $177 thousand and $163 thousand were included in Accrued liabilities in the Company's Consolidated balance sheetsas of March 31, 2023 and December 12, 2021 (the “Business Combination Agreement”), by31, 2022, respectively.

Previously recorded contract liabilities recognized as revenue in the three months ended March 31, 2023 and amongMarch 27, 2022 was $78 thousand and $1,290 thousand, respectively. The Company expects to recognize all $177 thousand of the remaining unearned revenue in 2023.

4. Income Taxes

TheCompany’s effective income tax rate for the three months ended March 31, 2023 was 0% compared to (0.4)% for the three months ended March 27, 2022.

The Company’s effective tax rate for each period differs from the U.S. statutory rate of 21% as the Company LiveWire Group, Inc. (formerly knownis not recognizing an income tax benefit related to the losses generated as LW EV Holdings, Inc.), a Delaware corporation (“LiveWire”), LW EV Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Harley-Davidson, Inc., a Wisconsin corporation
(H-D),
and LiveWire EV, LLC (“Legacy LiveWire”).there is not sufficient positive evidence regarding the ability to realize the benefit of these losses.

On September 16, 2022,5. Earnings Per Share

The Company computes earnings per share (“EPS”) in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding. Diluted EPS is computed using the weighted-average number of shares of common stock, plus the effect of potentially dilutive securities. The Company applies the treasury method to calculate the dilution impact of employee stock compensation awards. Because the Company heldhas reported a special meetingnet loss for all periods presented, diluted net loss per share is the same as basic net loss per share as all of shareholders, at which the shareholders consideredpotentially dilutive shares were anti-dilutive in those periods.

Computation of basic and adopted, among other matters, a proposaldiluted earnings per share was as follows (in thousands, except per share amounts):
Three months ended
March 31,
2023		March 27,
2022
Net loss$(21,147)$(15,979)
Basic weighted-average shares outstanding202,404 161,000 
Effect of dilutive securities – Warrants— — 
Effect of dilutive securities – employee stock compensation awards— — 
Diluted weighted-average shares outstanding202,404 161,000 
Earnings per share:
Basic$(0.10)$(0.10)
Diluted$(0.10)$(0.10)

Prior to approve the Business Combination Agreementdate, the Company did not have any issued and outstanding common stock or any common share equivalents. Accordingly, for the transactions contemplated thereby.
The Company provided the holders of the public shares (the “Public
S
hareholders”) with the opportunity to redeem all or a portion of their public shares upon the completion of the Business Combination (the “Business Combination”), and
36,597,112
of the Class A ordinary shareholders elected to redeem. There are no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
Pursuant to the terms of the Business Combination Agreement: (a) on September 23,three months ended March 27, 2022, the Company migrated to and domesticated as a Delaware corporation (“Domesticated ABIC”) (the “Domestication”), in connection with which all of the Company’s (i) outstanding
ordinary shares
were converted, on a
one-for-one
basis, into common stock, par value $0.0001net loss per share was calculated based on the 161,000,000 shares of Domesticated ABIC, (ii) outstanding warrants were converted, on a
one-for-one
basis, into warrantsCommon Stock distributed to acquire one share each of common stock of Domesticated ABIC and (iii) outstanding units were canceled and instead entitle the holder thereof to, per unit, one share of common stock of Domesticated ABIC and
one-half
of one warrant of Domesticated ABIC; (b) on September 26, 2022,
H-D
and Legacy LiveWire consummated the separation of the Legacy LiveWire business and the other transactions contemplated by the Separation Agreement (the “Separation Agreement”), by and between
H-D
and Legacy LiveWire, dated as of September 26, 2022 (the “Separation”); (c) following the Domestication and immediately following the Separation, Merger Sub merged with and into Domesticated ABIC, with Domesticated ABIC surviving as a direct, wholly owned subsidiary of LiveWire (the “Merger”), and LiveWire continuing as the public company in the Merger, with each share of common stock of Domesticated ABIC being converted into the right of the holder thereof to receive one share of LiveWire common stock, par value $0.0001 (“LiveWire Common Stock”); (d) immediately following the Merger,
H-D
caused all ofexchange for the membership interests of Legacy LiveWire (“Legacy LiveWire Equity”) held by ElectricSoul, LLC (the “Legacy LiveWire Equityholder”), a Delaware limited liability company and a subsidiary of
H-D,
to be contributed to LiveWire in exchange for 161,000,000 shares of LiveWire Common Stock andLiveWire. At the right to receive up to an additional 12,500,000 shares of LiveWire Common Stock in the future (the
“Earn-Out
Shares”, and the transactions contemplated by this clause (d), collectively, the “Exchange”), and, as a result of the Exchange, Legacy LiveWire became a direct, wholly owned subsidiary of LiveWire; (e) immediately following the consummation of the Exchange, LiveWire contributed 100% of the outstanding equity interests of Legacy Livewire to Domesticated ABIC.
Holders of 36,597,112 Class 
A ordinary shares
 sold in its initial public offering (the “Initial Shares”) properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from the Company’s initial public offering, calculated as of two business days prior to the consummationtime of the Business Combination, additional shares of Common Stock were issued, which was approximately $are reflected in the weighted average number of shares of common stock outstanding as of March 31, 2023.
10.06

Diluted net loss per share is computed by giving effect to all potential shares of common stock, to the extent dilutive, including unvested restricted stock units (“RSUs”), unvested performance share units (“PSUs”), and Warrants (as defined in Note 7, Warrant Liabilities). Potential shares of common stock are excluded from the computation of diluted net loss per share if their effect would have been anti-dilutive for the periods presented or approximately $if the issuance of shares is contingent upon events that did not occur by the end of the period. For the three months ended March 31, 2023, employee stock compensation plan awards representing 274 thousand underlying common shares were excluded from the computation of diluted net loss per share because
368,136,945
12

the effect would have been anti-dilutive. For three months ended March 31, 2023, warrants representing 54,090 thousand underlying common shares were excluded from the computation of diluted net loss per share because the effect would have been anti-dilutive. There were no anti-dilutive employee stock compensation awards or warrants for three months ended March 27, 2022. Additionally, the Company has not included the impact of the Earn-Out Shares, discussed in Note 1, Description of Business and Basis of Presentation, in the aggregate.
calculation of EPS as the triggering events have not occurred.

On September 26, 2022, an aggregate6. Additional Balance Sheet Information

Inventories are valued at the lower of $
368,136,945 was paid fromcost or net realizable value using the Company’s trust account to holders who properly exercised their right to have their Initial Shares redeemed,first-in, first-out (“FIFO”) method for electric motorcycles and the remainingrelated products and average costing method for electric balance immediately prior to the closingbikes. Inventories, net consisted of the Business Combinationfollowing (in thousands):
March 31,
2023		December 31,
2022
Raw materials and work in process$1,530 $48 
Electric motorcycles and electric balance bikes26,18925,291
Parts and accessories and apparel3,3833,876
Inventories, net$31,102 $29,215 

Accrued liabilities primarily include accrued payroll and employee benefits of approximately $34 
million was used to fund the Business Combination.
As a result$3,455 thousand, accrued engineering costs of the Exchange, on September 26, 2022, LiveWire issued
161,000,000 shares$2,804 thousand, and accrued capital expenditures of LiveWire Common Stock to the Legacy LiveWire Equityholder, valued at a price per share$5,305 thousand as of $10.00, in exchange for 100%March 31, 2023. Accrued liabilities primarily include accrued payroll and employee benefits of the Legacy LiveWire Equity.
In connection with the Business Combination, on September 23, 2022, AEA-Bridges Impact Sponsor, LLC (the “Sponsor”) forfeited an aggregate$4,641 thousand, accrued engineering costs of
2,000,000
Class B ordinary shares in accordance with the Investor Support Agreement, dated$4,377 thousand, and accrued capital expenditures of $7,748 thousand as of December 12, 2021 (the “Investor Support Agreement”), by and among the Sponsor, LiveWire, ABIC, John Garcia, John Replogle and George Serafeim. The remaining Class B ordinary shares held by Sponsor automatically converted
31, 2022.
to
7,950,000
shares of LiveWire Common Stock at the closing of the Business Combination.
7. Warrant Liabilities

5
Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
Pursuant to investment agreements entered into in connection with the Business Combination Agreement, Kwang Yang Motor Co., Ltd., KYMCO Capital Fund I Co., Ltd., SunBright Investment Co., Ltd., CycleLoop Co., Ltd. and Kwang Yang Holdings Limited (collectively, “KYMCO Group”) agreed to subscribe for an aggregate of 10,000,000 newly-issued shares of LiveWire Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of $100,000,000 (the “KYMCO PIPE Investment”).
Pursuant to the Business Combination Agreement, and an investment agreement entered into prior to the Closing, the Legacy LiveWire Equityholder agreed to subscribe for an aggregate of 10,000,000 newly-issued shares of LiveWire Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of $100,000,000 (the “Legacy LiveWire Equityholder PIPE Investment” and, together with the KYMCO PIPE Investment, the “PIPE Investments”). At the closing of the Business Combination, LiveWire consummated the PIPE Investments.
Pursuant to the Business Combination Agreement,
H-D
caused the Legacy LiveWire Equityholder to pay and deliver to LiveWire an amount in cash equal $100,000,000, which is the HD Backstop Amount (as defined in the Business Combination Agreement) in exchange for 10,000,000 shares of LiveWire Common Stock (the
“H-D
Backstop Shares”) at a purchase price of $10.00 per
H-D
Backstop Share.
After giving effect to the Business Combination, the redemption of Initial Shares as described above, the issuance of the
H-D
Backstop Shares and the consummation of the PIPE Investments, there are currently 202,402,888 shares of LiveWire Common Stock issued and outstanding.
Business Prior to the Business Combination
As of September 25, 2022, the Company had not commenced any operations. All activity for the period from July 29, 2020 (inception) through September 25, 2022 relates to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described below, and identifying a target company for a business combination. The Company did not generate any operating revenues prior to the completion of the Business Combination, which closed on September 26, 2022. The Company, prior to the closing of the Business Combination, generated
non-operating
income in the form of interest income from the investments held in the Trust Account (as defined below).
The registration statement for the Company’s Initial Public Offering was declared effective on October 1, 2020. On October 5, 2020 the Company consummated the Initial Public Offering of 40,000,000
units (the “Units” and, with respect to the
Class A ordinary shares included
in the Units sold, the “Public Shares”), generating gross proceeds of $
400,000,000 which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 10,500,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $10,500,000, which is described in Note 4.
Transaction costs amounted to $21,292,016, consisting of $7,275,000 of underwriting fees (net of expenses reimbursed by the underwriter of $225,000), $13,125,000 of deferred underwriting fees and $892,016 of other offering costs.
Following the closing of the Initial Public Offering on October 5, 2020, an amount of $400,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 
days or less, or in any open-ended investment company that holds itself out as a money market fund investing solely in U.S. Treasuries and meeting certain conditions under
Rule 2a-7
of the Investment Company Act of 1940, as amended (the “Investment Company Act”), as determined by the Company, until the earliest of: (i) the completion of a business combination and (ii) the distribution of the funds in the Trust Account to the Company’s
shareholders
, as described below.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a business combination.
6
Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
Liquidity
At September 25, 2022, the Company had $240,329
in its operating bank
account.
At September 25, 2022, the Company has
$
402,367,209 
in restricted cash which is to only be used to pay stockholders as a result of redemptions from the Business Combination, to pay the deferred underwriting fee payable, and the remainder is to fund the Business Combination.
Until theUpon consummation of the Business Combination, the Company usedassumed 30,499,990 Warrants to purchase the funds not heldCompany’s Common Stock, comprised of 19,999,990 public warrants, originally issued by ABIC as part of ABIC’s IPO of units (the “Public Warrants”) and 10,500,000 of outstanding warrants originally issued in a private placement in connection with the IPO of ABIC (the “Private Placement Warrants”, collectively with the Public Warrants, the “Warrants”). The Warrants expire five years from the completion of the Business Combination. There were 19,999,990 Public Warrants and 10,500,000 Private Warrants outstanding as of March 31, 2023 and December 31, 2022, respectively.

There were no exercises or redemptions of the Public or Private Warrants during the three months ended March 31, 2023.

The Company recognized income of $1,068 thousand as a change in fair value of warrant liabilities in the Trust AccountConsolidated statements of operations and comprehensive loss for identifyingthe three months ended March 31, 2023. The Company determined the Public Warrants and evaluating prospective acquisition candidates, performingPrivate Placement Warrants do not meet the criteria to be classified in stockholders’ equity and the fair value of the warrants should be classified as a liability. The Company’s Warrant liability was $7,320 thousand and $8,388 thousand as of March 31, 2023 and December 31, 2022, respectively.

8. Fair Value

The Company assesses the inputs used to measure fair value using a three-tier hierarchy.

•Level 1 inputs include quoted prices for identical instruments and are the most observable.

•Level 2 inputs include quoted prices for similar assets and observable inputs.

•Level 3 inputs are not observable in the market and include the Company’s judgments about the assumptions market participants would use in pricing the asset or liability.

13

The Company’s assets and liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall, were as follows (in thousands):
March 31, 2023
Level 1Level 2Level 3Total
Assets:
Money market funds$232,000 $— $— $232,000 
Liabilities:
Public Warrants$4,800 $— $— $4,800 
Private Placement Warrants— 2,520 — 2,520 
Share-based awards settled in cash576 — — 576 
$5,376 $2,520 $— $7,896 
December 31, 2022
Level 1Level 2Level 3Total
Assets:
Money market funds$257,000 $— $— $257,000 
Liabilities:
Public Warrants$5,500 $— $— $5,500 
Private Placement Warrants— 2,888 — 2,888 
Share-based awards settled in cash1,618 — — 1,618 
$7,118 $2,888 $— $10,006 

There were no significant assets or liabilities on the Company’s Consolidated balance sheets measured at fair value on a nonrecurring basis.

Recurring Fair Value Measurements

Warrant Liabilities

The Public Warrants are publicly traded under the symbol “LVWR WS”, and the fair value of the Public Warrants at a specific date is determined by the closing price of the Public Warrants as of that date. As such, the Public Warrants are classified within Level 1 of the fair value hierarchy. The fair value of the Private Placement Warrants was determined using the closing price of the Public Warrants as the Private Placement Warrants have terms and provisions that are economically similar to those of the Public Warrants. The Private Placement Warrants are classified as Level 2 of the fair value hierarchy due diligenceto the use of an observable market quote for a similar asset in an active market.

Other Fair Value Measurements

The fair value of financial instruments classified as Cash and cash equivalents, Accounts receivable, net, and Accounts payable on prospective target businesses, payingthe Consolidated balance sheets approximate carrying value due to the short-term nature and the relative liquidity of the instruments.

9. Product Warranty and Recall Campaigns

The Company provides a limited warranty on new electric motorcycles for travel expenditures, selectinga period of two years, except for the target businessbattery which is covered for five years. The Company also provides limited warranties on parts and accessories and electric balance bikes. The warranty coverage for the retail customer generally begins when the product is sold to mergethe retail customer. The Company accrues for future warranty claims at the time of sale using an estimated cost based primarily on historical Company claim information. In the case of both warranty and recall costs, as actual experience becomes available it is used to update the accruals.
14


Additionally, the Company may from time-to-time initiate certain voluntary recall campaigns. The Company records estimated recall costs when the liability is both probable and estimable. This generally occurs when the Company’s management approves and commits to a recall. The warranty and recall liability are included in Accrued liabilities and Other long-term liabilitieson the Consolidated balance sheets.

Changes in the Company’s warranty and recall liability were as follows (in thousands):
Three months ended
March 31,
2023		March 27,
2022
Balance, beginning of period$566 $1,095 
Warranties issued during the period69 31 
Settlements made during the period(32)(138)
Currency Translation Adjustments— (16)
Recalls and changes to pre-existing warranty liabilities(3)108 
Balance, end of period$600 $1,080 

There was no liability for recall campaigns as of March 31, 2023 and December 31, 2022, respectively. As of March 27, 2022, a liability for pre-transaction recall campaigns of $268 thousand related to certain H-D branded electric motorcycles was retained by H-D in connection with or acquire,the Separation and structuring, negotiating and consummating the Business Combination.

10. Commitments and Contingencies

Contingencies – The Company is subject to claims related to product and other commercial matters. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. The Company accrues for matters when losses are both probable and estimable. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter. Refer to Note 9, Product Warranty and Recall Campaigns, for a discussion of warranty and recall liabilities. The Company had no material product liability claims as of March 31, 2023 and December 31, 2022, respectively.

Litigation and Other Claims – The Company from time to time may be subject to lawsuits and other claims related to product, commercial, employee, environmental and other matters in the normal course of business. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. The Company accrues for matters when losses are both probable and estimable. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter. The Company, through H-D, also maintains insurance coverage for product liability exposures. The Company believes that its accruals and insurance coverage are adequate and there are no material exposures to loss in excess of amounts accrued and insured for losses related to these matters.

11. Related Party Transactions
In connection with the Business Combination, the Company entered into a number of agreements with H-D to govern the Separation and provide a framework for the relationship between the parties going forward pursuant to which the Company and/or H-D have continuing obligations to each other. All transactions with H-D subsequent to the Business Combination are considered related party transactions. Agreements that the Company entered into in connection with the Separation that resulted in related party transactions include the Transition Services Agreement, Master Services Agreement, Contract Manufacturing Agreement, Joint Development Agreement, and Tax Matters Agreement. Refer to Note 16, Related Party Transactions, of the Consolidated financial statements in the Company’s assessment2022 Form 10-K for additional details on the agreements entered into by the Company as part of going concern considerationsthe Separation.
Related Party Sales and Purchases in accordancethe Ordinary Course of Business
Transactions Associated with Financial Accounting Standards Board’s (“FASB”) Accounting Standards UpdateService Agreements with H-D
(“ASU”) 2014-15,During the three months ended March 31, 2023, there were $3,397 thousand in expenses associated with services rendered in conjunction with the various service agreements with H-D, which are presented within Selling, administrative and engineering
“Disclosures
15

on the Consolidated statements of Uncertainties aboutoperations and comprehensive loss. As of March 31, 2023 and December 31, 2022, there was $7,625 thousand and $5,733 thousand due to H-D and presented as Accounts payable to related party on the Consolidated balance sheets, respectively. Of the amount outstanding to H-D as of March 31, 2023, $4,638 thousand is associated with inventory purchased under the Contract Manufacturing Agreement and $2,987 thousand is associated with services under the various service agreements with H-D. Of the amount outstanding to H-D as of December 31, 2022, $1,942 thousand is associated with inventory purchased under the Contract Manufacturing Agreement and $3,791 thousand is associated with services under the various service agreements with H-D.
During the three months ended March 31, 2023, the Company purchased $4,600 thousand of inventory from H-D as part of the Contract Manufacturing Agreement, all of which was payable as of March 31, 2023.
Other transactions
Sales of electric motorcycles and related products to independent dealers are primarily financed through HDFS, a wholly owned subsidiary of H-D; therefore, the Company’s accounts receivable related to these sales are recorded in Accounts receivable from related party on the Consolidated balance sheets. Amounts financed through HDFS, not yet remitted to the Company by HDFS are generally settled within 30 days. As of March 31, 2023 and December 31, 2022, there is $836 thousand and $388 thousand due from HDFS, which is presented as Accounts receivable from related party on the Consolidated balance sheets, respectively.
During the three months ended March 31, 2023, the Company recorded $5 thousand in related party sales between the Company and H-D with $3 thousand in cost of sales. All sales were for the STACYC segment who sells electric balance bikes to H-D dealers. As of March 31, 2023 and December 31, 2022, there was $5 thousand and $137 thousand due from H-D, which is presented as Accounts receivable from related party on the Consolidated balance sheets, respectively.
On September 26, 2022, the Company entered into a lease agreement with H-D to sublease a Product Development Center. This is classified as an Entity’s Abilityoperating lease. As of March 31, 2023, the right of use asset included within Lease assets, short-term lease liability included within Current portion of lease liabilities, and long-term lease liability included within Long-term portion of lease liabilities in the Consolidated balance sheets were $364 thousand, $141 thousand, and $222 thousand, respectively. As of December 31, 2022, the right of use asset included within Lease assets, short-term lease liability included within Current portion of lease liabilities, and long-term lease liability included within Long-term portion of lease liabilities in the Consolidated balance sheets were $398 thousand, $140 thousand, and $258 thousand, respectively. In addition, the Company incurred $44 thousand in rent expense during the three months ended March 31, 2023, which is included within Selling, administrative and engineering expense on the Consolidated statements of operations and comprehensive loss.
Prior to Continuethe Separation, the Company did not operate as a Going Concern,” management has determinedstandalone business and the Consolidated financial statements were derived from the Consolidated financial statements and accounting records of H-D. The following disclosure summarizes activity between the Company and H-D prior to the Business Combination.
Allocation of Expenses and Related Party Activity Prior to the Separation
Prior to the Business Combination, certain costs were allocated to the Company and are reflected as expenses in the Consolidated statements of operations and comprehensive loss. The Company considers the allocation methodologies used to be reasonable, such that the allocations appropriately reflected H-D’s historical expenses attributable to the Company for purposes of the Consolidated financial statements. However, the expenses reflected in the Consolidated financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Company is unablehad historically operated as a stand-alone independent entity.
Manufacturing cost of sales
The Company’s electric motorcycles are produced in manufacturing facilities shared with H-D. Certain costs of goods sold for shared facilities and shared manufacturing of $863 thousand for the three months ended March 27, 2022 were specifically identified or allocated, mainly based on standard cost of production.
16

Operating expense allocation
H-D provided technology support, marketing, engineering, shared assets, finance, and other corporate and administrative services such as treasury, human resources, and legal, to complete a business combination by October 5,the Company. These expenses of $290 thousand for the three months ended March 27, 2022 thenhave been allocated to the Company would cease alland are included in Selling, administrative and engineering expense in the Consolidated statements of operations except forand comprehensive loss, where direct assignment of costs incurred by H-D was not possible or practical. These costs were allocated using related drivers associated with the purposenature of liquidating.the business, such as gross revenue and wholesale motorcycle shipments. As a result, the allocations of these costs fluctuated based on changes in these drivers. Other cost allocation metrics, such as headcount and square footage, were not deemed appropriate given the Company’s reliance on facilities and personnel that are shared with H-D.
Cash management and financing
Prior to the Business Combination, the Company’s treasury function maintained by H-D utilized a centralized approach to cash management and the financing of its operations. Under this centralized cash management approach, H-D provided funds to the Company.
During the three months ended March 27, 2022, the Company borrowed $12,000 thousand under lines of credit agreements with H-D prior to their final settlement on June 24, 2022 through Net Parent company investment.
Cash transfers from H-D related to services and funding for operations provided by H-D were $18,723 thousand for the three months ended March 27, 2022. Net contributions from H-D are included within Net Parent company investment in the Consolidated statements of shareholders' equity.

12. Reportable Segments

The Company operates in two segments: Electric Motorcycles and STACYC. The Company’s reportable segments are strategic business units that offer different products and services and are managed separately based on the fundamental differences in their operations.

The Electric Motorcycles segment consists of the consummationbusiness activities related to the design and sales of electric motorcycles. The Electric Motorcycles segment also sells electric motorcycle parts, accessories, and apparel. The Company’s products are sold at wholesale to a network of independent dealers and at retail through a Company-owned dealer and through online sales, primarily in the United States.

The STACYC segment consists of the business activities related to the design and sales of the STACYC brand of electric balance bikes for kids. The STACYC segment also sells electric balance bike parts, accessories and apparel. STACYC products are sold in the U.S., Canada, Australia and Europe. The STACYC segment products are sold through independent retail partners in the U.S., including powersports dealers, H-D dealers, bicycle retailers and direct to consumers online. In Australia and Europe, STACYC sells its products through independent distributors.

Selected segment information is set forth below (in thousands):
Three months ended
March 31,
2023		March 27,
2022
Electric Motorcycles
Revenue, net$1,482 $2,316 
Cost of goods sold2,4405,073
Selling, administrative and engineering expense23,81113,926
Operating loss(24,769)(16,683)
STACYC
Revenue, net6,2808,085
Cost of goods sold4,0585,275
Selling, administrative and engineering expense2,3601,826
Operating income (loss)(138)984
Operating loss$(24,907)$(15,699)
17

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to help the reader understand the Company, the Company’s financial condition and results of operations, and the Company’s present business environment. The following discussion and analysis should be read together with the accompanying unaudited Consolidated financial statements and related notes included elsewhere in this Quarterly Report and the audited Consolidated financial statements and related notes in the 2022 Annual Report on Form 10-K.

Overview

LiveWire is an industry-leading all-electric vehicle brand with a mission to pioneer the rapidly growing two-wheel electric motorcycle space. The Company operates in two segments: Electric Motorcycles and STACYC.

The 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, related parts and accessories and apparel in the United States and certain international markets.

Electric motorcycles are sold at wholesale to a network of independent retail partners, at retail through a Company-owned dealership, and through online sales. Electric balance bikes are sold at wholesale to independent dealers and independent distributors, as well as direct to consumers online. As discussed below, on September 26, 2022 as part of the Business Combination, on September 26, 2022,the Company, which included LiveWire branded electric motorcycles and STACYC, became a separate, publicly traded company.

The Company’s net loss for the three months ended March 31, 2023 was $21,147 thousand compared to $15,979 thousand for the three months ended March 27, 2022. The Company’s net losses reflect the start-up nature of the Company’s existing going concern consideration has been alleviated.
business including investments in product development as the Company continues to focus on technological innovation that will support future products and growth, and investments in talent and capabilities to support the new company.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION

The Electric Motorcycles segment operating loss for the three months ended March 31, 2023 was $24,769 thousand, compared to an operating loss of $16,683 thousand for the three months ended March 27, 2022. The operating loss was driven by the cost of standing up a new organization, including growing headcount and back-office support, increased costs to advance the Company’s electric vehicle systems, and to deliver the S2 platform. Refer to the Electric Motorcycles segment analysis below for further discussion.

The STACYC segment operating loss for the three months ended March 31, 2023 was $138 thousand, as compared to operating income of $984 thousand for the three months ended March 27, 2022. The operating loss for the three months ended March 31, 2023 was driven by lower volumes from third party distributors. Refer to the STACYC segment analysis below for further discussion.

Basis of Presentation

TheIn the opinion of the Company’s management, the accompanying unaudited condensed consolidatedinterim Consolidated financial statements have been prepared in accordance with accounting principles generally accepted incontain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the United StatesConsolidated balance sheet as of America (“U.S. GAAP”)March 31, 2023, and the Consolidated statements of operations and comprehensive loss, the Consolidated statements of cash flows, and the Consolidated statements of shareholders’ equity for interim financial informationthe three months ended March 31, 2023 and in accordance with the instructions to FormMarch 27, 2022.
10-Q
and Article 8 of Regulation
S-X
of the Securities and Exchange Commission (“SEC”). Certain information or footnoteand disclosures normally included in complete financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SECUnited States Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanyingThese unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidatedConsolidated financial statements should be read in conjunction with the audited Consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form
10-K
for the periodyear ended December 31, 2021, as filed with the SEC on March 25, 2022. The interim results for the three and nine months ended September 25, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods.
The Company operates on a calendar year with each year ending on December 31 of each respective year. Prior to the third quarter of 2022, the Company’s interim fiscal quarters ended on the calendar quarter. To align with the fiscal calendar of the Legacy LiveWire as part of the Business Combination, the Company revised its third quarter to end on September 25, 2022 and retrospectively adjusted the prior year for third quarter of 2021 to end on September 26, 2021. The March 31 and June 30 periods presented herein have not been adjusted. For presentation purposes, these unaudited condensed consolidated financial statements present periods referred to as the three and nine months ended September 25, 2022 and September 26, 2021, although they do not reflect a true calendar three month or calendar nine months by a few days. Given the nature of the Company’s business, this presentation does not have any material impact to the Company’s financial position, operating results and cash flows for all periods presented.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.
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Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported amounts of assets and liabilities and disclosure of contingent assets and liabilities atin the date of theConsolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actualaccompanying notes. Actual results could differ significantly from those estimates.

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Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
Investments Held in Trust Account
The Company’s portfolio of investments held in trust
wa
s substantially comprised of U.S. government securities, All intercompany transactions within the meaning set forthCompany have been eliminated in Section 2(a)(16)preparing the Consolidated financial statements.

On September 26, 2022, the Company consummated the Separation and Business Combination and became a standalone publicly traded company, and its financial statements are now presented on a Consolidated basis. Prior to the Separation and Business Combination on September 26, 2022, the Company's historical combined financial statements were prepared on a standalone carve-out basis and were derived from H-D's Consolidated financial statements and accounting records. The financial statements for all periods presented, including historical periods prior to September 26, 2022, are now referred to as “Consolidated financial statements”, and have been prepared in accordance with GAAP and pursuant to the rules and regulations of the Investment Company Act, with a maturity of 185
days or less, or investments in money market funds that invest in U.S. government securities, or a combination thereof, which are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these investments are included in income earned on investments in Trust Account in the accompanying unaudited condensed consolidated statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Restricted Cash
At September 25, 2022 restricted cash consists of funds restricted for the payment of redemptions, payment of deferred underwriting fees, and the remainder is only to be used to fund the Business Combination.
Offering Costs
Offering costs consisted of legal, accounting, and other expenses incurred through the balance sheets date that are directly relatedSEC. For such periods prior to the Initial Public Offering. OfferingSeparation, certain corporate and shared costs were allocated to the separable financial instruments issued in the Initial Public OfferingCompany based on a relative fair valuespecific identification basis, compared to total proceeds received. Offering costs associated with warrantor when specific identification was not practicable, a proportional cost allocation method.

Certain assets and liabilities, were expensed as incurred inincluding Accounts receivables, Inventories, Other current assets, Deferred tax assets, Accounts payable, Accrued liabilities, Deferred tax liabilities, Long-term supplier liability, and Other long-term liabilities included on the unaudited condensed consolidated statements of operations. Offering costs associated with the Class A
ordinary share
s
 issued were initially charged to temporary equity and then accreted to permanent equity upon the completion of the Initial Public Offering. Offering costs amounted to $
21,292,016, of which $20,292,642 were charged to temporary equity upon the completion of the Initial Public Offering on October 5, 2020, and $999,374 was expensed in the unaudited condensed consolidated statements of operations.
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuantcombined Consolidated Balance Sheet prior to the FASB Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”)Separation, were retained by H-D post-Separation and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The Company accounts for the Public Warrants and Private Placement Warrants (together with the Public Warrants, the “Warrants”) in accordance with the guidance contained in ASC 815 under which the Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Warrants as liabilities at their fair value and adjusts the Warrants to fair value at each reporting period. This liability is subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is recognized in the statements of operations. The Private Placement Warrants and the Public Warrants for periods where no observable traded price was available were valued using a binomial lattice model. For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.
Equity Instruments Subject to Possible Redemption
The Company accounts for its equity instruments (ordinary shares or common stock subsequent to the Domestication) subject to possible redemption in accordance with the guidance in ASC 480. Equity instruments subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable equity instruments (including equity instruments that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, equity instruments are classified as stockholders’ or shareholders’ equity. The Company’s equity instruments feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at December 31, 2021
,
40,000,000
Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of the Company’s condensed consolidated balance sheet. As noted in Note 1, on September 16, 2022, Holders of
36,597,112
Class A ordinary shares properly exercised their right to have such shares redeemed andtherefore were recorded as a mandatorily redeemable ordinary shares liabilitythrough Net Parent company investment in the Company’s condensed consolidated balance sheet. The remaindercombined Consolidated Financial Statements at the time of the Class A ordinary shares are no longer redeemable and were recorded in the shareholders’ equity sectionSeparation. As part of the Company’s condensed consolidated balance sheet.Separation, Net Parent company investment was reclassified to Additional paid-in-capital.


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Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable equity instruments to equal the redemption value at the end of each reporting period. As of December 31, 2021, t
here was
no
change to the redemption value of the
Class A ordinary shares.
At September 25, 2022, and December 31, 2021, the common stock and Class A ordinary shares,
respectively
,
reflected
in the condensed consolidated balance sheets are reconciled in the following table:
Gross proceeds
  $400,000,000 
Less:
     
Proceeds allocated to Public Warrants
   (18,400,000) 
Class A ordinary shares issuance costs
   (20,292,642) 
Plus:
     
Accretion of carrying value to redemption value
   38,692,642 
   
 
 
 
Class A ordinary shares subject to possible redemption (December 31, 2021)
  
$
400,000,000
 
Plus:
     
Accretion of carrying value to redemption value
   2,367,209 
Less:
     
Redemptions
   (368,136,945) 
Class A ordinary shares no longer redeemable
   (34,230,264) 
   
 
 
 
Common stock subject to possible redemption (September 25, 2022)
  
$
—  
 
   
 
 
 
Income Taxes
For the period from July 29, 2020 (inception) to September 22, 2022, the Company was considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and was not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period from July 29, 2020 (inception) to September 22, 2022. Pursuant to the terms of the Business Combination Agreement, on September 23, 2022, the Company migrated to and domesticated as a Delaware corporation. The Company determined that the amount of income tax for the period from September 23, 2022 to September 25, 2022 was considered to be immaterial.
ASC Topic 740, “Income Taxes,” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of September 25, 2022 there were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 25, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
Net Income (Loss) Per Common Share and Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income (loss) per common share or ordinary share is computed by dividing net income (loss) by the weighted average number of common stock or ordinary shares outstanding for the periods presented. Accretion associated with the redeemable common stock or Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
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Table of Contents
LIVEWIRE GROUP, INC.

(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
The calculation of diluted income (loss) per common share or ordinary share does not consider the effect of the
Warrants
issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the Warrants is contingent upon the occurrence of future events. The Warrants are exercisable to purchase
30,500,000
common stock or Class A ordinary shares in the aggregate. As of September 25, 2022 and September 26, 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock or Class A ordinary shares and then share in the earnings of the Company. As a result, diluted net income (loss) per common stock or ordinary share is the same as basic net income (loss) per common share or ordinary share for the periods presented.
The following table reflects the calculation of basic and diluted net income (loss) per common stock or ordinary share (in dollars, except share amounts):
  
Three Months Ended
  
Nine Months Ended
 
       
  
September 25, 2022
  
September 26, 2021
  
September 25, 2022
  
September 26, 2021
 
             
  
Common Stock
  
Class A
Ordinary
Shares
  
Class B
Ordinary
Shares
  
Common Stock
  
Class A
Ordinary
Shares
  
Class B
Ordinary
Shares
 
Basic and diluted net income per common share or ordinary share
                                
Numerator:
                                
Allocation of net income
(1)
  568,473      $4,361,457  $1,090,364   21,655,622      $18,016,741  $4,504,185 
Denominator:
                                
Basic and diluted weighted average shares
outstanding
(2)
  45,912,405       40,000,000   10,000,000   48,612,048       40,000,000   10,000,000 
Basic and diluted net income per common share $0.01      $0.11  $0.11  $0.45      $0.45  $0.45 
(1)
Net income of $3,892,215 and $24,979,364 for the three and nine months ended September 25, 2022, respectively, was reduced by the interest on mandatorily redeemable Class A ordinary shares of $3,323,742 for both periods for earnings per share purposes.
(2)
For the three and nine months ended September 25, 2022, the weighted average shares outstanding includes the period of time previous to the Domestication when the Company had Class A and Class B ordinary shares outstanding.
As of September 25, 2022 and September 26, 2021, basic and diluted shares are the same as there are no
non-redeemable
securities that are dilutive to the Company’s stockholders or shareholders.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, excluding the warrant liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the Company’s condensed consolidated balance sheets, primarily due to their short-term nature. As of September 25, 2022 and December 31, 2021, the carrying values of cash, accounts payable and accrued expenses approximate their fair values due to the short-term nature of the instruments. The Company’s portfolio of investments held in the Trust Account as of December 31, 2021 was comprised of investments in money market funds that invested in U.S. Treasury securities with an original maturity
of
185
days or less. The fair value for trading securities is determined using quoted market prices in active markets. The Private Placement Warrants and the Public Warrants for periods where no observable traded price was available are valued using a binomial lattice model. For periods subsequent to the detachment of the Public Warrants from the Units, the Public Warrant quoted market price was used as the fair value as of each relevant date.
11
Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
Recent2. New Accounting Standards

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements.

3. Revenue

The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or service to a customer. Revenue is measured based on the consideration that the Company expects to be entitled to in exchange for the goods or services transferred. Taxes that are collected from a customer concurrent with revenue-producing activities are excluded from revenue.

Disaggregated revenue, net by major source was as follows (in thousands):
Three months ended
March 31,
2023		March 27,
2022
Electric Motorcycles
Electric motorcycles$1,411 $2,108 
Parts, accessories and apparel71 208 
$1,482 $2,316 
STACYC
Electric balance bikes$5,508 $7,322 
Parts, accessories and apparel772 763 
$6,280 $8,085 
Total Revenue, net$7,762 $10,401 

Revenue from the sale of electric motorcycles, electric balance bikes as well as parts and accessories and apparel are recorded when control is transferred to the customer, generally at the time of shipment to independent dealers and distributors or at the time of delivery to retail customers.

The Company offers sales incentive programs to independent dealers and retail customers designed to promote the sale of its products. The Company estimates its variable consideration related to its sales incentive programs using the expected value method. The Company accounts for consideration payable to a customer as part of its sales incentives as a reduction of revenue, which is accrued at the later of the date the related sale is recorded or the date the incentive program is both approved and communicated.

The Company offers the right to return eligible parts and accessories and apparel. When the Company offers a right to return, it estimates returns based on an analysis of historical trends and records revenue on the initial sale only in the amount that it expects to be entitled. The remaining consideration is deferred in a refund liability account. The refund liability is remeasured for changes in the estimate at each reporting date with a corresponding adjustment to revenue.

Variable consideration related to sales incentives and rights to return is adjusted at the earliest of when the amount of consideration the Company expects to receive changes, or the consideration becomes fixed. Adjustments for variable consideration related to previously recognized sales were not material during the three months ended March 31, 2023 and March 27, 2022.

Shipping and handling costs associated with freight after control of a product has transferred to a customer are accounted for as fulfillment costs. The Company accrues for the shipping and handling in the same period that the related revenue is recognized.

The Company offers standard, limited warranties on its electric motorcycles, electric balance bikes, and parts and accessories. These warranties provide assurance that the product will function as expected and are not separate performance obligations. The Company accounts for estimated warranty costs as a liability when control of the product transfers to the customer.

NOTE 3 — INITIAL PUBLIC OFFERING11
On October 5, 2020, pursuant

Contract Liabilities

The Company maintains certain contract liability balances related to the Initial Public Offering, the Company sold 40,000,000 Unitspayments received at a purchase price of $10.00 per Unit. Each Unit consists of one Class A
ordinary
share and
one-half
of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one Class A
ordinary
share at an exercise price of $11.50 per whole share (see Note 8).
NOTE 4 — PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 10,500,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $10,500,000. Each Private Placement Warrant is exercisable to purchase one Class A
ordinary
share at a price of $11.50 per share, subject to adjustment (see Note 8). A portion of the proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering heldcontract inception in the Trust Account.
NOTE 5 — RELATED PARTY TRANSACTIONS FOUNDER SHARES
Founder Shares
On July 29, 2020, the Sponsor paid $25,000 to cover certain offering and formation costs of the Company in consideration for 11,500,000 Class B
ordinary
shares (the “Founder Shares”). On August 4, 2020, the Company effected a share dividend resulting in 14,375,000 Class B
ordinary
shares being issued and outstanding. On September 14, 2020, the Sponsor irrevocably surrendered to the Company for cancellation and for nil consideration 2,875,000 Class B
o
rdinary
 shares resulting in the Sponsor holding 11,500,000 Class B
common
shares. All share and
per-share
amounts have been retroactively restated to reflect the share transactions. The Founder Shares include an aggregate of up to 1,500,000 shares that are subject to forfeiture depending on the extent to which the underwriters’ over-allotment option is exercised, so that the number of Founder Shares will equal, on an
as-converted
basis, approximately 20%advance of the Company’s issuedperformance under the contract that generally relates to customer deposits for electric balance bikes and outstanding
ordi
nary
 shares afterelectric motorcycles. Contract liabilities are recognized as revenue once the Initial Public Offering. On November 16, 2020,Company performs under the underwriters’ election to exercise their over-allotment option expired unexercised, resultingcontract. Contract liabilities of $177 thousand and $163 thousand were included in Accrued liabilities in the forfeitureCompany's Consolidated balance sheetsas of 1,500,000March 31, 2023 and December 31, 2022, respectively.

shares. Accordingly, previousPreviously recorded contract liabilities recognized as revenue in the three months ended March 31, 2023 and March 27, 2022 was $78 thousand and $1,290 thousand, respectively. The Company expects to recognize all $177 thousand of the remaining unearned revenue in 2023.

4. Income Taxes

TheCompany’s effective income tax rate for the three months ended March 31, 2023 was 0% compared to (0.4)% for the three months ended March 27, 2022.

The Company’s effective tax rate for each period differs from the U.S. statutory rate of 21% as the Company is not recognizing an income tax benefit related to the Domestication,losses generated as there w
e
re 10,000,000
Founder Shares issued and outstanding.
is not sufficient positive evidence regarding the ability to realize the benefit of these losses.
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earliest of: (A) one year after the completion of a business combination and (B) subsequent to a business combination, (x) if the closing price of the Class A ordinary share equals or exceed
s $
12.00
5. Earnings Per Share

The Company computes earnings per share (as adjusted for share
sub-divisions,
share dividends, rights issuances, reorganizations, recapitalizations and(“EPS”) in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing net income (loss) available to common shareholders by the like) for any 20 trading days within any
30-trading
day period commencing at least 150 days after a business combination, or (y)weighted-average number of shares of common stock outstanding. Diluted EPS is computed using the date on whichweighted-average number of shares of common stock, plus the effect of potentially dilutive securities. The Company applies the treasury method to calculate the dilution impact of employee stock compensation awards. Because the Company completeshas reported a liquidation, merger,net loss for all periods presented, diluted net loss per share exchange or other similar transaction that results inis the same as basic net loss per share as all of the Public Shareholders having the rightpotentially dilutive shares were anti-dilutive in those periods.

Computation of basic and diluted earnings per share was as follows (in thousands, except per share amounts):
Three months ended
March 31,
2023		March 27,
2022
Net loss$(21,147)$(15,979)
Basic weighted-average shares outstanding202,404 161,000 
Effect of dilutive securities – Warrants— — 
Effect of dilutive securities – employee stock compensation awards— — 
Diluted weighted-average shares outstanding202,404 161,000 
Earnings per share:
Basic$(0.10)$(0.10)
Diluted$(0.10)$(0.10)

Prior to exchange their Class A ordinary share for cash, securities or other property.
In connection with the Business Combination
,
on September 2
3
, date, the Company did not have any issued and outstanding common stock or any common share equivalents. Accordingly, for the three months ended March 27, 2022, the Sponsor forfeited an aggregatenet loss per share was calculated based on the 161,000,000 shares of 2,000,000 FounderCommon Stock distributed to H-D in exchange for the membership interests of Legacy LiveWire. At the time of the Business Combination, additional shares of Common Stock were issued, which are reflected in the weighted average number of shares of common stock outstanding as of March 31, 2023.

Diluted net loss per share is computed by giving effect to all potential shares of common stock, to the extent dilutive, including unvested restricted stock units (“RSUs”), unvested performance share units (“PSUs”), and Warrants (as defined in Note 7, Warrant Liabilities). Potential shares of common stock are excluded from the computation of diluted net loss per share if their effect would have been anti-dilutive for the periods presented or if the issuance of shares is contingent upon events that did not occur by the end of the period. For the three months ended March 31, 2023, employee stock compensation plan awards representing 274 thousand underlying common shares were excluded from the computation of diluted net loss per share because
12

the effect would have been anti-dilutive. For three months ended March 31, 2023, warrants representing 54,090 thousand underlying common shares were excluded from the computation of diluted net loss per share because the effect would have been anti-dilutive. There were no anti-dilutive employee stock compensation awards or warrants for three months ended March 27, 2022. Additionally, the Company has not included the impact of the Earn-Out Shares, discussed in accordance withNote 1, Description of Business and Basis of Presentation, in the Investor Support Agreement. calculation of EPS as the triggering events have not occurred.

6. Additional Balance Sheet Information

Inventories are valued at the lower of cost or net realizable value using the first-in, first-out (“FIFO”) method for electric motorcycles and related products and average costing method for electric balance bikes. Inventories, net consisted of the following (in thousands):
March 31,
2023		December 31,
2022
Raw materials and work in process$1,530 $48 
Electric motorcycles and electric balance bikes26,18925,291
Parts and accessories and apparel3,3833,876
Inventories, net$31,102 $29,215 

Accrued liabilities primarily include accrued payroll and employee benefits of $3,455 thousand, accrued engineering costs of $2,804 thousand, and accrued capital expenditures of $5,305 thousand as of March 31, 2023. Accrued liabilities primarily include accrued payroll and employee benefits of $4,641 thousand, accrued engineering costs of $4,377 thousand, and accrued capital expenditures of $7,748 thousand as of December 31, 2022.

7. Warrant Liabilities

Upon the closingconsummation of the Business Combination, the remaining 8,000,000
Founder Shares (now shares of common stock of Domesticated ABIC) were converted on a
one-for-one
basis into shares of LiveWire Common Stock.
12
Table of Contents
LIVEWIRE GROUP, INC.
(successorCompany assumed 30,499,990 Warrants to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
Administrative Services Agreement
The Company entered into an agreement, commencing on October 5, 2020, to pay an affiliate of the Sponsor up to an amount not to exceed $10,000 per month for office space, secretarial and administrative support services. Upon completion of a business combination or its liquidation, the Company will cease paying these monthly fees. For the three and nine months ended September 25, 2022, the Company incurred $30,000 and $90,000 in fees for these services, respectively. For the three and nine months ended September 26, 2021, the Company incurred $30,000 and $90,000 in fees for these services, respectively.
As of September 25, 2022
,
the Sponsor has agreed to forgive the entirety of the accrued administrative services fee which totaled $
230,000.
The forgiveness of this obligation is reflected in the other income section of the statement of operations.
Related Party Loans
In order to finance transaction costs in connection with a business combination, the Sponsor or an affiliate of the Sponsor, or certain ofpurchase the Company’s officersCommon Stock, comprised of 19,999,990 public warrants, originally issued by ABIC as part of ABIC’s IPO of units (the “Public Warrants”) and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion10,500,000 of outstanding warrants originally issued in a business combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon completion of a business combination into warrants at a price of $1.00 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that a business combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of September 25, 2022 and December 31, 2021, the Company had no outstanding borrowings under the Working Capital Loans.
NOTE 6 — COMMITMENTS AND CONTINGENCIES RISKS AND UNCERTAINTIES
Risks and Uncertainties
Management continues to evaluate the impact of the
COVID-19
global pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration and Shareholders Rights
Pursuant to a registration rights agreement entered into on October 5, 2020, the holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans) will be entitled to registration rights. The holders of these securities well be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. However, the registration and Shareholder rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurredprivate placement in connection with the filingIPO of any such registration statements.
13
Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
Underwriting Agreement
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $13,125,000 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a business combination, subject to the terms of the underwriting agreement. An affiliate of the Sponsor has purchased 2,500,000
Public Units atABIC (the “Private Placement Warrants”, collectively with the Public Offering Price. In connection withWarrants, the closing of the Business Combination, the underwriters have agreed to reduce the amount of their deferred fees by $3,748,361, which is shown in the condensed consolidated statement of operation
s
as forgiveness of deferred underwriting fee payable. As a result of the reduction, the outstanding deferred underwriting fee payable was reduced to
$9,376,638.
NOTE 7 — STOCKHOLDERS’ EQUITY (DEFICIT)/SHAREHOLDERS’ DEFICIT
Preference Shares
—“Warrants”). The Company was authorized to
issue
5,000,000
preference shares with a par value of $
0.0001
per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
At December 31, 2021, there
were
no
preference shares issued or outstanding.
Class
 A Ordinary Shares
—The Company
wa
s authorized to issue 500,000,000 Class A
ordinary shares
, with a par value of $0.0001 per share. Holders of Class A
common stock
are entitled to one vote for each share. Accordingly, at December 31, 2021, 40,000,000 Class A
ordinary shares
subject to possible redemption, respectively, are presented at redemption value as temporary equity, outside of the
shareholders’
deficit section of the Company’s condensed consolidated balance sheet. As noted in Note 1, Holders of 36,597,112
Class A
ordinary shares
properly exercised their right to have such shares redeemed and were recorded as a Mandatorily redeemable Class A
ordinary shares
liability in the Company’s condensed consolidated balance sheet. The remainder of the Class A
ordinary shares
are no longer redeemable and were recorded in the
shareholders’
 equity
section of the Company’s condensed consolidated balance sheet.
Class
 B Ordinary Shares
—The Company
wa
s authorized to issue
50,000,000 Class B
ordinary shares
, with a par value of $0.0001
per share. Holders of the Class B
ordinary shares
are entitled to
one vote
for each share. At December 31, 2021, there were
10,000,000
Class B
ordinary shares
issued and outstanding.
Only holders of the Class B
ordinary shares
will have the right to vote on the election of directors prior to a business combination. Holders of Class A
ordinary shares
and Class B
ordinary shares
will vote together as a single class on all other matters submitted to a vote of
shareholders
, except as required by law.
The Class B ordinary shares will automatically
convert into Class A
ordinary shares
at the time of a business combination or earlier at the option of the holders thereof at a ratio such that the number of Class A
ordinary shares
issuable upon conversion of all Founder Shares will equal, in the aggregate, on an
as-converted
basis,
20
% of the sum of (i) the total number of
ordinary shares
issued and outstanding upon completion of Initial Public Offering, plus (ii) the total number of Class A
ordinary shares
issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a business combination, excluding any Class A
ordinary shares
or equity-linked securities exercisable for or convertible into Class A
ordinary shares
issued, deemed issued, or to be issued, to any seller in a business combination and any Private Placement Warrants issued to the Sponsor, its affiliates or any member of the Company’s management team upon conversion of Working Capital Loans. In no event will the Class B
ordinary shares
convert into Class A
ordinary shares
at a rate of less than
one-to-one.
Preferred Stock
—The Company is authorized to issue 20,000,000 preferred shares with a par value of $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At September 25, 2022, there was no preferred stock issued or outstanding.
Common Stock
—The Company is authorized to issue 800,000,000 shares of common stock, with a par value of $0.0001 per share. Holders of the common stock are entitled to one vote for each share. At September 25, 2022 there were 11,402,888 shares of common stock issued and outstanding.
NOTE 8 — DERIVATIVE WARRANT LIABILITIES
At September 25, 2022 and December 31, 2021, there were 20,000,000 Public Warrants outstanding. Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a business combination and (b) one year from the closing of the Initial Public Offering. The Public Warrants will expire five years from the completion of a business combinationthe Business Combination. There were 19,999,990 Public Warrants and 10,500,000 Private Warrants outstanding as of March 31, 2023 and December 31, 2022, respectively.

There were no exercises or earlier upon redemptionredemptions of the Public or liquidation.
Private Warrants during the three months ended March 31, 2023.

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Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
The Company will not be obligated to deliver any Class A ordinary shares pursuant torecognized income of $1,068 thousand as a change in fair value of warrant liabilities in the exerciseConsolidated statements of a warrantoperations and will have no obligation to settle such warrant exercise unless a registration statement undercomprehensive loss for the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable, and the Company will not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary shares issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
three months ended March 31, 2023. The Company has agreed that as soon as practicable, but in no event later than 20 business days, afterdetermined the closing of a business combination, it will use its commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a business combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if the Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will use its commercially reasonable efforts to register or qualify the stock under applicable blue sky laws to the extent an exemption is not available. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of a business combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption, but the Company will use its commercially reasonable efforts to register or qualify the stock under applicable blue sky laws to the extent an exemption is not available.
Redemption of warrants when the price per Class
 A
ordinary shares
equals or exceeds $
18.00.
Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described with respect to the Private Placement Warrants):
in whole and not in part;
at a price of $
0.01
per warrant;
upon not less than 30 days’ prior written notice of redemption; and
if, and only if, the reported last sales price of the Company’s Class A
ordinary shares
equals or exceeds $18.00 per share for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
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Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
Redemption of warrants when the price per Class
 A
ordinary shares
equals or exceeds $
10.00
. Once the warrants become exercisable, the Company may redeem the outstanding warrants:
in whole and not in part;
at a price equal to a number of Class A
ordinary shares
to be determined, based on the redemption date and the fair market value of the Company’s Class A
ordinary shares
;
upon a minimum of 30 days’ prior written notice of redemption;
if, and only if, the last reported sale price of the Company’s Class A
ordinary shares
equals or exceeds $10.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders;
if, and only if, the Private Placement Warrants are also concurrently exchanged atdo not meet the same price (equal to a number of Class A
ordinary shares
) as the outstanding Public Warrants; and
if, and only if, there is an effective registration statement covering the Class A
ordinary shares
issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the
30-day
period after written notice of redemption is given. 
If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a business combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the Company issues additional Class A
ordinary shares
or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $
9.20
per Class A
ordinary shares
with such issue price or effective issue pricecriteria to be determinedclassified in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than
60
% of the totalstockholders’ equity proceeds, and interest thereon, available for the funding of a business combination on the date of the consummation of a business combination (net of redemptions), and (z) the volume weighted average trading price of its Class A
ordinary shares
during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to
115
% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to
180%
of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
16
Table of Contents
LIVEWIRE GROUP, INC.
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)
At September 25, 2022 and December 31, 2021, there were 10,500,000
Private Placement Warrants outstanding. The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A 
ordinary shares
issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a business combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be
non-redeemable,
except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 9 — FAIR VALUE MEASUREMENTS
The fair value of the warrants should be classified as a liability. The Company’s financialWarrant liability was $7,320 thousand and $8,388 thousand as of March 31, 2023 and December 31, 2022, respectively.

8. Fair Value

The Company assesses the inputs used to measure fair value using a three-tier hierarchy.

•Level 1 inputs include quoted prices for identical instruments and are the most observable.

•Level 2 inputs include quoted prices for similar assets and liabilities reflects management’s estimate of amounts thatobservable inputs.

•Level 3 inputs are not observable in the Company would have received in connection withmarket and include the sale ofCompany’s judgments about the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based onuse in pricing the observable inputs and unobservable inputs used in order to value the assets and liabilities:
asset or liability.
Level 1:
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:
Unobservable inputs based on an assessment of the assumptions that market participants would use in pricing the asset or liability.
The Company classifies its U.S. Treasury and equivalent securities as
held-to-maturity
in accordance with ASC Topic 320 “Investments—Debt and Equity Securities.”
Held-to-maturity
securities are those securities which the Company has the ability and intent to hold until maturity.
Held-to-maturity
treasury securities are recorded at amortized cost on the accompanying balance sheets and adjusted for the amortization or accretion of premiums or discounts.
At December 31, 2021, assets held in the Trust Account were comprised of $549 in cash and $400,248,942 in U.S. Treasury securities, respectively. Following the maturity date of April 14, 2022, the Company subsequently reinvested its holdings in the Trust Account into money market funds. During the period ended September 25, 2022 and December 31, 2021, the Company did not withdraw any interest income from the Trust Account.
17
Table of Contents
LIVEWIRE GROUP, INC.13
(successor to AEA-Bridges Impact Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 25, 2022
(UNAUDITED)

The following table presents information about the gross holding gains and fair value of
held-to-maturity
securities at December 31, 2021 as follows:
   
Held-To-Maturity
  
Amortized Cost
   
Gross

Holding

Gain
   
Fair

Value
 
December 31, 2021
  U.S. Treasury Securities (Matured on January 13, 2022)  $400,248,942   $3,389   $400,252,331 
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis, at September 25, 2022 and December 31, 2021, and indicatesaggregated by the level in the fair value hierarchy ofwithin which those measurements fall, were as follows (in thousands):
March 31, 2023
Level 1Level 2Level 3Total
Assets:
Money market funds$232,000 $— $— $232,000 
Liabilities:
Public Warrants$4,800 $— $— $4,800 
Private Placement Warrants— 2,520 — 2,520 
Share-based awards settled in cash576 — — 576 
$5,376 $2,520 $— $7,896 
December 31, 2022
Level 1Level 2Level 3Total
Assets:
Money market funds$257,000 $— $— $257,000 
Liabilities:
Public Warrants$5,500 $— $— $5,500 
Private Placement Warrants— 2,888 — 2,888 
Share-based awards settled in cash1,618 — — 1,618 
$7,118 $2,888 $— $10,006 

There were no significant assets or liabilities on the valuation inputs the Company utilized to determine such fair value:
Description
  
Level
   
September 25,

2022
   
December 31,

2021
 
Liabilities:
      
Warrant Liabilities– Public Warrants
   1   $8,800,000   $22,700,000 
Warrant Liabilities– Private Placement Warrants
   2   $4,620,000   $11,917,500 
The Warrants were accounted for as liabilities in accordance with ASC 815 and are presented within derivative warrant liabilities in the accompanying condensed consolidatedCompany’s Consolidated balance sheets. The derivative warrant liabilities aresheets measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of derivative warrant liabilities innonrecurring basis.

Recurring Fair Value Measurements

Warrant Liabilities

The Public Warrants are publicly traded under the condensed consolidated statements of operations.
The Warrants were valued as of at initial measurement using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary unobservable input utilized in determiningsymbol “LVWR WS”, and the fair value of the Public Warrants at a specific date is determined by the expected volatility of the common stock. The expected volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. For periods subsequent to the detachmentclosing price of the Public Warrants from the Units, the close priceas of that date. As such, the Public Warrant price was used asWarrants are classified within Level 1 of the fair value for the Warrants as of each relevant date.hierarchy. The subsequent measurements of the Public Warrants after the detachment of the Public Warrants from the Units are classified as Level 1 due to the use of an observable market quote in an active market. The subsequent measurementsfair value of the Private Placement Warrants afterwas determined using the detachmentclosing price of the Public Warrants fromas the Units isPrivate Placement Warrants have terms and provisions that are economically similar to those of the Public Warrants. The Private Placement Warrants are classified as Level 2 of the fair value hierarchy due to the use of an observable market quote for a similar asset in an active market.

Other Fair Value Measurements

The fair value of financial instruments classified as Cash and cash equivalents, Accounts receivable, net, and Accounts payable on the Consolidated balance sheets approximate carrying value due to the short-term nature and the relative liquidity of the instruments.

NOTE 10 — SUBSEQUENT EVENTS
9. Product Warranty and Recall Campaigns

The Company evaluated subsequent eventsprovides a limited warranty on new electric motorcycles for a period of two years, except for the battery which is covered for five years. The Company also provides limited warranties on parts and transactions that occurred afteraccessories and electric balance bikes. The warranty coverage for the unaudited condensed consolidated balance sheet date upretail customer generally begins when the product is sold to the dateretail customer. The Company accrues for future warranty claims at the time of sale using an estimated cost based primarily on historical Company claim information. In the case of both warranty and recall costs, as actual experience becomes available it is used to update the accruals.
14


Additionally, the Company may from time-to-time initiate certain voluntary recall campaigns. The Company records estimated recall costs when the liability is both probable and estimable. This generally occurs when the Company’s management approves and commits to a recall. The warranty and recall liability are included in Accrued liabilities and Other long-term liabilitieson the Consolidated balance sheets.

Changes in the Company’s warranty and recall liability were as follows (in thousands):
Three months ended
March 31,
2023		March 27,
2022
Balance, beginning of period$566 $1,095 
Warranties issued during the period69 31 
Settlements made during the period(32)(138)
Currency Translation Adjustments— (16)
Recalls and changes to pre-existing warranty liabilities(3)108 
Balance, end of period$600 $1,080 

There was no liability for recall campaigns as of March 31, 2023 and December 31, 2022, respectively. As of March 27, 2022, a liability for pre-transaction recall campaigns of $268 thousand related to certain H-D branded electric motorcycles was retained by H-D in connection with the Separation and Business Combination.

10. Commitments and Contingencies

Contingencies – The Company is subject to claims related to product and other commercial matters. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. The Company accrues for matters when losses are both probable and estimable. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter. Refer to Note 9, Product Warranty and Recall Campaigns, for a discussion of warranty and recall liabilities. The Company had no material product liability claims as of March 31, 2023 and December 31, 2022, respectively.

Litigation and Other Claims – The Company from time to time may be subject to lawsuits and other claims related to product, commercial, employee, environmental and other matters in the normal course of business. In determining costs to accrue related to these items, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss. The Company accrues for matters when losses are both probable and estimable. Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomes available for each matter. The Company, through H-D, also maintains insurance coverage for product liability exposures. The Company believes that its accruals and insurance coverage are adequate and there are no material exposures to loss in excess of amounts accrued and insured for losses related to these matters.

11. Related Party Transactions
In connection with the Business Combination, the Company entered into a number of agreements with H-D to govern the Separation and provide a framework for the relationship between the parties going forward pursuant to which the Company and/or H-D have continuing obligations to each other. All transactions with H-D subsequent to the Business Combination are considered related party transactions. Agreements that the unaudited condensed consolidatedCompany entered into in connection with the Separation that resulted in related party transactions include the Transition Services Agreement, Master Services Agreement, Contract Manufacturing Agreement, Joint Development Agreement, and Tax Matters Agreement. Refer to Note 16, Related Party Transactions, of the Consolidated financial statements were issued. Based upon this review, other than as described below,in the Company’s 2022 Form 10-K for additional details on the agreements entered into by the Company did not identify any subsequent events that would have required adjustment or disclosureas part of the Separation.
Related Party Sales and Purchases in the unaudited condensed consolidated financial statements.Ordinary Course of Business
Transactions Associated with Service Agreements with H-D
During the three months ended March 31, 2023, there were $3,397 thousand in expenses associated with services rendered in conjunction with the various service agreements with H-D, which are presented within Selling, administrative and engineering
15

on the Consolidated statements of operations and comprehensive loss. As of March 31, 2023 and December 31, 2022, there was $7,625 thousand and $5,733 thousand due to H-D and presented as Accounts payable to related party on the Consolidated balance sheets, respectively. Of the amount outstanding to H-D as of March 31, 2023, $4,638 thousand is associated with inventory purchased under the Contract Manufacturing Agreement and $2,987 thousand is associated with services under the various service agreements with H-D. Of the amount outstanding to H-D as of December 31, 2022, $1,942 thousand is associated with inventory purchased under the Contract Manufacturing Agreement and $3,791 thousand is associated with services under the various service agreements with H-D.
During the three months ended March 31, 2023, the Company purchased $4,600 thousand of inventory from H-D as part of the Contract Manufacturing Agreement, all of which was payable as of March 31, 2023.
Other transactions
Sales of electric motorcycles and related products to independent dealers are primarily financed through HDFS, a wholly owned subsidiary of H-D; therefore, the Company’s accounts receivable related to these sales are recorded in Accounts receivable from related party on the Consolidated balance sheets. Amounts financed through HDFS, not yet remitted to the Company by HDFS are generally settled within 30 days. As of March 31, 2023 and December 31, 2022, there is $836 thousand and $388 thousand due from HDFS, which is presented as Accounts receivable from related party on the Consolidated balance sheets, respectively.
During the three months ended March 31, 2023, the Company recorded $5 thousand in related party sales between the Company and H-D with $3 thousand in cost of sales. All sales were for the STACYC segment who sells electric balance bikes to H-D dealers. As of March 31, 2023 and December 31, 2022, there was $5 thousand and $137 thousand due from H-D, which is presented as Accounts receivable from related party on the Consolidated balance sheets, respectively.
On September 26, 2022, the partiesCompany entered into a lease agreement with H-D to sublease a Product Development Center. This is classified as an operating lease. As of March 31, 2023, the right of use asset included within Lease assets, short-term lease liability included within Current portion of lease liabilities, and long-term lease liability included within Long-term portion of lease liabilities in the Consolidated balance sheets were $364 thousand, $141 thousand, and $222 thousand, respectively. As of December 31, 2022, the right of use asset included within Lease assets, short-term lease liability included within Current portion of lease liabilities, and long-term lease liability included within Long-term portion of lease liabilities in the Consolidated balance sheets were $398 thousand, $140 thousand, and $258 thousand, respectively. In addition, the Company incurred $44 thousand in rent expense during the three months ended March 31, 2023, which is included within Selling, administrative and engineering expense on the Consolidated statements of operations and comprehensive loss.
Prior to the Separation, the Company did not operate as a standalone business and the Consolidated financial statements were derived from the Consolidated financial statements and accounting records of H-D. The following disclosure summarizes activity between the Company and H-D prior to the Business Combination.
Allocation of Expenses and Related Party Activity Prior to the Separation
Prior to the Business Combination, Agreement completedcertain costs were allocated to the Company and are reflected as expenses in the Consolidated statements of operations and comprehensive loss. The Company considers the allocation methodologies used to be reasonable, such that the allocations appropriately reflected H-D’s historical expenses attributable to the Company for purposes of the Consolidated financial statements. However, the expenses reflected in the Consolidated financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Company had historically operated as a stand-alone independent entity.
Manufacturing cost of sales
The Company’s electric motorcycles are produced in manufacturing facilities shared with H-D. Certain costs of goods sold for shared facilities and shared manufacturing of $863 thousand for the three months ended March 27, 2022 were specifically identified or allocated, mainly based on standard cost of production.
16

Operating expense allocation
H-D provided technology support, marketing, engineering, shared assets, finance, and other corporate and administrative services such as treasury, human resources, and legal, to the Company. These expenses of $290 thousand for the three months ended March 27, 2022 have been allocated to the Company and are included in Selling, administrative and engineering expense in the Consolidated statements of operations and comprehensive loss, where direct assignment of costs incurred by H-D was not possible or practical. These costs were allocated using related drivers associated with the nature of the business, such as gross revenue and wholesale motorcycle shipments. As a result, the allocations of these costs fluctuated based on changes in these drivers. Other cost allocation metrics, such as headcount and square footage, were not deemed appropriate given the Company’s reliance on facilities and personnel that are shared with H-D.
Cash management and financing
Prior to the Business Combination, (see Note 1).
18

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References inthe Company’s treasury function maintained by H-D utilized a centralized approach to cash management and the financing of its operations. Under this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to AEA-Bridges Impact Corp. References to our “management” or our “management team” refer to our officers and directors, and referencescentralized cash management approach, H-D provided funds to the “Sponsor” referCompany.

During the three months ended March 27, 2022, the Company borrowed $12,000 thousand under lines of credit agreements with H-D prior to their final settlement on June 24, 2022 through Net Parent company investment.
Cash transfers from H-D related to services and funding for operations provided by H-D were $18,723 thousand for the three months ended March 27, 2022. Net contributions from H-D are included within Net Parent company investment in the Consolidated statements of shareholders' equity.
AEA-Bridges
 Impact Sponsor LLC.
12. Reportable Segments

The following discussionCompany operates in two segments: Electric Motorcycles and analysisSTACYC. The Company’s reportable segments are strategic business units that offer different products and services and are managed separately based on the fundamental differences in their operations.

The Electric Motorcycles segment consists of the business activities related to the design and sales of electric motorcycles. The Electric Motorcycles segment also sells electric motorcycle parts, accessories, and apparel. The Company’s financial conditionproducts are sold at wholesale to a network of independent dealers and results of operations should be read in conjunction with the financial statementsat retail through a Company-owned dealer and the notes thereto contained elsewhere in this Quarterly Report. Certain information containedthrough online sales, primarily in the discussionUnited States.

The STACYC segment consists of the business activities related to the design and analysissales of the STACYC brand of electric balance bikes for kids. The STACYC segment also sells electric balance bike parts, accessories and apparel. STACYC products are sold in the U.S., Canada, Australia and Europe. The STACYC segment products are sold through independent retail partners in the U.S., including powersports dealers, H-D dealers, bicycle retailers and direct to consumers online. In Australia and Europe, STACYC sells its products through independent distributors.

Selected segment information is set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this (in thousands):
Three months ended
March 31,
2023		March 27,
2022
Electric Motorcycles
Revenue, net$1,482 $2,316 
Cost of goods sold2,4405,073
Selling, administrative and engineering expense23,81113,926
Operating loss(24,769)(16,683)
STACYC
Revenue, net6,2808,085
Cost of goods sold4,0585,275
Selling, administrative and engineering expense2,3601,826
Operating income (loss)(138)984
Operating loss$(24,907)$(15,699)

17
Form 10-Q
 including, without limitation, statements in this “Management’s
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations” regardingOperations

The following discussion and analysis is intended to help the reader understand the Company, the Company’s financial position, business strategycondition and results of operations, and the plansCompany’s present business environment. The following discussion and objectives of management for future operations, are forward-looking statements. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would”analysis should be read together with the accompanying unaudited Consolidated financial statements and variations thereofrelated notes included elsewhere in this Quarterly Report and similar wordsthe audited Consolidated financial statements and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussedrelated notes in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s2022 Annual Report on Form 10-K.
10-K
 filed
Overview

LiveWire is an industry-leading all-electric vehicle brand with a mission to pioneer the SECrapidly growing two-wheel electric motorcycle space. The Company operates in two segments: Electric Motorcycles and STACYC.

The 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, related parts and accessories and apparel in the United States and certain international markets.

Electric motorcycles are sold at wholesale to a network of independent retail partners, at retail through a Company-owned dealership, and through online sales. Electric balance bikes are sold at wholesale to independent dealers and independent distributors, as well as direct to consumers online. As discussed below, on September 26, 2022 as part of the Business Combination, the Company, which included LiveWire branded electric motorcycles and STACYC, became a separate, publicly traded company.

The Company’s net loss for the three months ended March 25,31, 2023 was $21,147 thousand compared to $15,979 thousand for the three months ended March 27, 2022. The Company’s securities filings can be accessed onnet losses reflect the EDGAR sectionstart-up nature of the SEC’s website at www.sec.gov. ExceptCompany’s business including investments in product development as expressly required by applicable securities law, the Company disclaims any intention or obligationcontinues to update or revise any forward-looking statements whether as a result offocus on technological innovation that will support future products and growth, and investments in talent and capabilities to support the new information, future events or otherwise.

Overview

We are a former blank check company incorporated in the Cayman Islands on July 29, 2020 formedcompany.


The Electric Motorcycles segment operating loss for the purposethree months ended March 31, 2023 was $24,769 thousand, compared to an operating loss of effecting$16,683 thousand for the three months ended March 27, 2022. The operating loss was driven by the cost of standing up a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses.

On September 16, 2022, we held a special meetingnew organization, including growing headcount and back-office support, increased costs to advance the Company’s electric vehicle systems, and to deliver the S2 platform. Refer to the Electric Motorcycles segment analysis below for further discussion.


The STACYC segment operating loss for the three months ended March 31, 2023 was $138 thousand, as compared to operating income of stockholders, at which$984 thousand for the stockholders considered and adopted, among other matters, a proposalthree months ended March 27, 2022. The operating loss for the three months ended March 31, 2023 was driven by lower volumes from third party distributors. Refer to approve the STACYC segment analysis below for further discussion.

Business Combination Agreement and the transactions contemplated thereby, including the Business Combination.

On September 26, 2022, the partiesCompany consummated the Business Combination.

Holders of 36,597,112 Class A ordinary shares sold in its initial public offering (the “Initial Shares”) properly exercised their righta previously announced business combination pursuant to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from the Company’s initial public offering, calculated as of two business days prior to the consummation of the Business Combination, which was approximately $10.06 per share, or $368,136,945 in the aggregate.

On September 26, 2022, an aggregate of $368,136,945 was paid from the trust account to holders who properly exercised their right to have their Initial Shares redeemed, and the remaining balance immediately prior to the Closing of approximately $34 million was used to fund the Business Combination.

In connection with the Business Combination, on September 23, 2022, the Sponsor forfeited an aggregate of 2,000,000 Class B ordinary shares in accordance with the Investor Support Agreement,combination agreement, dated as of December 12, 2021 (the “Business Combination Agreement”), by and among the Sponsor,AEA-Bridges Impact Corp (“ABIC”), LiveWire ABIC, John Garcia, John Replogle and George Serafeim. The remaining Class B ordinary shares held by Sponsor automatically converted to 7,950,000 shares of LiveWire Common Stock.

Recent Developments/Subsequent Events

On December 12, 2021, the Company, LiveWire,EV Holdings, Inc., a Delaware corporation (now known as “LiveWire Group, Inc.”), LW EV Merger Sub, Legacy LiveWire andInc., a Delaware corporation (“Merger Sub”), Harley-Davidson, Inc. entered into, a Wisconsin corporation (“H-D”), and LiveWire EV, LLC (“Legacy LiveWire”), a wholly-owned subsidiary of H-D.


Pursuant to the terms of the Business Combination Agreement, (each(a) ABIC migrated to and domesticated as defineda Delaware corporation (“Domesticated ABIC”) (the “Domestication”), in Note 1connection with which all of the ABIC’s (i) outstanding ordinary shares were converted, on a one-for-one basis, into common stock, par value $0.0001 per share, of Domesticated ABIC, (ii) outstanding warrants were converted, on a one-for-one basis, into warrants to acquire one share each of common stock of Domesticated ABIC and (iii) outstanding units were canceled and instead entitle the holder thereof to, per unit, one share of common stock of Domesticated ABIC and one-half of one warrant of Domesticated ABIC; (b) H-D and Legacy LiveWire consummated the separation (the “Separation”) of the Legacy LiveWire business and the other transactions contemplated by the Separation Agreement (the “Separation Agreement”); (c) following the Domestication and immediately following the Separation, Merger Sub merged with and into Domesticated ABIC, with Domesticated ABIC surviving as a direct, wholly-owned subsidiary of the Company (the “Merger”), and the Company continuing as the public company in the Merger, with each share of common stock of Domesticated ABIC being converted into the right of the holder thereof to receive one share of common stock, par value $0.0001 (“Common Stock”); (d) immediately following the Merger, H-D caused all of the membership interests of Legacy LiveWire (“Legacy LiveWire Equity”) held by ElectricSoul, LLC (the “Legacy LiveWire
18

Equityholder”), a Delaware limited liability company and a subsidiary of H-D, to be contributed to the unaudited financial statements included herein). On September 26, 2022,Company in exchange for 161,000,000 shares of Common Stock and the parties consummatedright to receive up to an additional 12,500,000 shares of Common Stock in the future (the “Earn-Out Shares”, and the transactions contemplated by this clause (d), collectively, the Business Combination Agreement. See Note 1 to the unaudited consolidated financial statements included herein for more information.

Results of Operations

We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through September 25, 2022 were organizational activities“Exchange”), and those necessary to prepare for the Initial Public Offering, described below, and identifying a target company for an initial business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We incur expenses as a result of beingthe Exchange, Legacy LiveWire became a publicdirect, wholly owned subsidiary of the Company; (e) immediately following the consummation of the Exchange, the Company contributed 100% of the outstanding equity interests of Legacy LiveWire to Domesticated ABIC (clauses (a) through (e) collectively, the “Business Combination”).


The Business Combination was accounted for as a reverse recapitalization. Under this method of accounting, ABIC was treated as the “acquired” company (for legal,for financial reporting accountingpurposes. Accordingly, the Business Combination was treated as the equivalent of the Company 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.

See Note 1, Description of Business and auditing compliance),Basis of Presentation, in the Consolidated financial statements for a discussion of the underlying basis used to prepare the Consolidated financial statements and further detail related to the Business Combination.

2023 Outlook

For 2023, the Company’s focus continues to be on investment into product development, including advancing the technologies, platforms and products that will further the Company’s position as wellpioneers of the industry. The Company plans to continue to expand the LiveWire brand globally in 2023 with the introduction of the LiveWire ONE electric motorcycle to the European market and the launch of the S2 platform.

Key Business Metrics

To analyze the Company’s business performance, determine financial forecasts and help develop long-term strategic plans, management reviews the following key business metrics, which are important measures that represent the growth of the business:

•Wholesale motorcycle unit sales – The Company defines wholesale motorcycle unit sales as the number of electric motorcycles sold by the Company to independent dealers for due diligence expenseswhich the Company recognized revenue during the period.    

•Company retail motorcycle unit sales – The Company defines Company retail motorcycle unit sales as the number of new electric motorcycles sold at retail by the Company through its Company-owned dealer or through online sales for which the Company recognized revenue during the period. The Company began selling electric motorcycles direct to retail consumers in connectionthe third quarter of 2021.
•Independent retail motorcycle unit sales – The Company defines independent retail motorcycle unit sales as the number of new electric motorcycles sold at retail by independent retail partners. These unit sales do not generate revenues for the Company but generate revenues for individual retail partners. The data source for electric motorcycle retail sales figures is new sales warranty and registration information provided by independent retail partners and compiled by the Company. The Company must rely on information that its independent retail partners supply concerning new retail sales, and the Company does not regularly verify the information that its independent retail partners supply. This information is subject to revision.

•Retail motorcycle unit sales – The Company defines retail motorcycle unit sales as the sum of Company retail motorcycle unit sales and independent retail motorcycle unit sales.

•Company-owned dealer – Dealer owned and operated by the Company to sell electric motorcycles, related products, and services.

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

•Electric balance bike unit sales (STACYC) – The Company defines electric balance bike unit sales as the number of electric balance bikes sold by the Company for and completing, a business combination.

18

which the Company recognized revenue during the period.

19

For

•Independent retail partners (STACYC) – Retail partners owned and operated by independent entities under contract with the Company to sell STACYC electric balance bikes, related products and services.
The following table details the key business metric amounts for the periods indicated:
Three months ended
March 31,
2023		March 27,
2022
Wholesale motorcycle unit sales45 82 
Company retail motorcycle unit sales18 15 
Total LiveWire motorcycle unit sales (1)
63 97 
Retail motorcycle unit sales:
Company retail motorcycle unit sales (2)
18 15 
Independent retail partners (3)
34 142 
Total retail motorcycle unit sales52 157 
Electric balance bike unit sales:
US7,261 6,075 
International967 9,377 
Total electric balance bike unit sales8,228 15,452 
(1) During the three months ended SeptemberMarch 27, 2022, the Company sold 25 units of H-D branded LiveWire motorcycles.
(2) Data source for Company retail motorcycle unit sales figures shown above is the Company’s records.
(3) Data source for independent retail motorcycle unit sales figures shown above is new sales warranty and registration information provided by retail partners and compiled by the Company. The Company must rely on information that its independent retail partners supply concerning new retail sales, and the Company does not regularly verify the information that its independent retail partners supply. This information is subject to revision.

The following table details the number of retail partners:
As ofAs of
March 31, 2023December 31, 2022
Electric Motorcycles
Company-owned dealer1 1 
Independent retail partners113 75 
Total Electric Motorcycles Retail Partners114 76 
STACYC
Independent retail partners:
U.S.1,967 1,979 
International129 127 
Total STACYC Independent Retail Partners2,096 2,106 
The Electric Motorcycles independent retail partners shown above include those that have been contracted by the Company to sell LiveWire motorcycles. As of March 31, 2023 and December 31, 2022, we had net incomethis total includes 11 and 13 partners, respectively, that were actively working to complete the licensing required to sell LiveWire motorcycles as of $3,892,215, which consistedthe end of interest earned on investments held in the Trust Accountperiod. The Company intends to grow this network as it expands its distribution capabilities. After the Business Combination, the remaining inventory of $1,792,628, change in deferred underwriting feesH-D branded LiveWire motorcycles was owned by H-D, and any related sales are recognized by H-D. The H-D branded LiveWire motorcycles were retailed through the H-D dealership network until the remaining inventory is depleted.
The Company believes these key business metrics provide useful information to help investors understand and evaluate the Company’s business performance. Wholesale motorcycle unit shipments and Company retail motorcycle unit sales are key drivers of $3,748,361, other incomerevenue and expense (net)profit for the Electric Motorcycles segment. Retail motorcycle unit sales made through both the Company-owned dealer and independent retail partners are a key measure of $224,480,consumer demand and interest on mandatorily redeemable Class A ordinary sharesmarket share for the Company’s electric motorcycles. Total electric balance bike unit sales is a key driver of $3,323,742, partially offset by operating expensesrevenue and profit for STACYC.
20


Results of $3,367,356 and change in fair valueOperations

The following table presents consolidated results of derivative warrant liabilities of $1,830,000.

For the nine months ended September 25, 2022, we had a net income of $24,979,364, which consisted of interest earned on investments held in the Trust Account of $2,117,718, change in deferred underwriting fees of $3,748,361, other income and expense (net) of $224,480, interest on mandatorily redeemable Class A ordinary shares of $3,323,742, and change in fair value of derivative warrant liabilities of $21,197,500, partially offset by operating expenses of $5,632,797.

Foroperations for the three months ended September 26, 2021, we had a netMarch 31, 2023 and March 27, 2022 (in thousands):

Three months ended
March 31,
2023		March 27,
2022		$ Change% Change
Operating loss from Electric Motorcycles$(24,769)$(16,683)$(8,086)48.5 %
Operating (loss) income from STACYC(138)984 (1,122)(114.0)%
Operating loss(24,907)(15,699)(9,208)58.7 %
Other income, net— 69 (69)(100.0)%
Interest expense related party— (277)277 (100.0)%
Interest income (expense)2,692 (4)2,696 nm
Change in fair value of warrant liabilities1,068 — 1,068 nm
Loss before income taxes(21,147)(15,911)(5,236)32.9 %
Income tax provision— 68 (68)(100.0)%
Net loss(21,147)(15,979)$(5,168)32.3 %
Other comprehensive loss:
Foreign currency translation adjustments— (100)100 (100.0)%
Comprehensive loss$(21,147)$(16,079)$(5,068)31.5 %
Net loss per share, basic and diluted$(0.10)$(0.10)$— — %
*nm - not meaningful

Operating Income (Loss)

The Company reported an operating loss of $24,907 thousand for the three months ended March 31, 2023 compared to an operating loss of $15,699 thousand for the three months ended March 27, 2022. The Electric Motorcycles segment reported an operating loss of $24,769 thousand for the three months ended March 31, 2023, as compared to an operating loss of $16,683 thousand for the three months ended March 27, 2022. The STACYC segment reported an operating loss of $138 thousand for the three months ended March 31, 2023, compared to operating income of $5,451,821, which consisted$984 thousand for the three months ended March 27, 2022. 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 three months ended March 27, 2022 was $69 thousand related to the Company’s allocation of non-service components of net periodic benefit plan benefits from H-D. H-D sponsors a qualified pension plan and a postretirement healthcare plan which covers eligible Company employees and retirees. Prior to the Business Combination, a portion of the related net periodic benefit plan income was allocated to the Company for the three months ended March 27, 2022 based on an estimated amount per plan participant and allocations of corporate and other shared functional personnel. Subsequent to the Business Combination, the Company did not have similar allocations of net periodic benefit plan income from H-D for the three months ended March 31, 2023, and the Company does not sponsor a qualified pension plan or postretirement healthcare plan.

Interest Expense Related Party

Interest expense related party for the three months ended March 27, 2022 was $277 thousand related to outstanding related party notes prior to their settlement on June 24, 2022. The Company did not have similar related party notes for the three months ended March 31, 2023.

Interest Income (Expense)

Interest income for the three months ended March 31, 2023 was $2,692 thousand compared to interest expense of $4 thousand for the three months ended March 27, 2022. The change was primarily driven by interest income earned on money market fund
21

investments entered into using funds from the Business Combination. The Company had an investment of $232,000 thousand in money market funds as of March 31, 2023.

Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities for the three months ended March 31, 2023 was $1,068 thousand. The warrant liabilities were recorded as part of $8,540,000the Business Combination and interest earned on marketable securities heldtherefore did not exist in the Trust Account of $28,889, offset by formation and operational costs of $3,117,068.

Forprior year results for the nine months ended September 26, 2021, we had a netCompany. The income of $22,520,926, which consisted ofrecognized was due to the changedecrease in the estimated fair value of warrant liabilities of $26,230,000 and interest earned on marketable securities heldthe warrants during the three months ended March 31, 2023, due to fluctuations in the Trust Accountmarket price of $129,415,the warrants. See Note 7, Warrant Liabilities, in the Consolidated financial statements for further discussion.


Income Tax Provision

The income tax provision for the three months ended March 31, 2023 was nil, as compared to income tax expense of $68 thousand for the three months ended March 27, 2022. The Company believes there is not sufficient positive evidence for the tax benefit generated by the current period operating loss to be benefited in future periods.

Segment Results

Electric Motorcycles

The following table presents consolidated results of operations for the Electric Motorcycles segment for the three months ended March 31, 2023 and three months ended March 27, 2022 (in thousands):
Three months ended
March 31,
2023		March 27,
2022		$ Change% Change
Revenue:
Electric motorcycles$1,411 $2,108 $(697)(33.1)%
Parts, accessories and apparel71 208 (137)(65.9)%
Revenue, net1,482 2,316 (834)(36.0)%
Cost of goods sold2,440 5,073 (2,633)(51.9)%
Gross profit(958)(2,757)1,799 (65.3)%
Operating expenses:
Selling, administrative and engineering expense23,811 13,926 9,885 71.0 %
Operating loss$(24,769)$(16,683)$(8,086)48.5 %

Revenue

Revenue for the three months ended March 31, 2023 decreased by $834 thousand, or 36.0%, to $1,482 thousand from $2,316 thousand for the three months ended March 27, 2022. The decrease was primarily due to lower revenue from electric motorcycles of $697 thousand. The 33.1% decrease in revenues from electric motorcycles was primarily driven by lower unit sales of LiveWire ONE units and the inclusion of 25 H-D branded LiveWire units during the three months ended March 27, 2022, prior to the accounting carve-out.

Cost of Goods Sold

Cost of goods sold for the three months ended March 31, 2023 decreased by $2,633 thousand, or 51.9%, to $2,440 thousand from $5,073 thousand for the three months ended March 27, 2022. The decrease was primarily due to lower volumes as discussed above and $1,427 thousand of H-D cost of goods sold expense allocated as part of the carve-out stand alone financial statements during the three months ended March 27, 2022 which did not repeat subsequent to the Business Combination.

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Selling, Administrative and Engineering Expense

Selling, administrative and engineering expense for the three months ended March 31, 2023 increased by $9,885 thousand, or 71.0%, to $23,811 thousand from $13,926 thousand for the three months ended March 27, 2022. The increase was primarily due to costs to advance the Company’s electric vehicle systems, and to deliver the S2 platform, and increases in personnel costs primarily related to higher headcount to support the stand-up of the new LiveWire organization.

STACYC

The following table presents consolidated results of operations for the STACYC segment for the three months ended March 31, 2023 and three months ended March 27, 2022 (in thousands):
Three months ended
March 31,
2023		March 27,
2022		$ Change%
Change
Revenue:
Electric balance bikes$5,508 $7,322 $(1,814)(24.8)%
Parts, accessories and apparel772 763 9 1.2 %
Revenue, net6,280 8,085 (1,805)(22.3)%
Cost of goods sold4,058 5,275 (1,217)(23.1)%
Gross profit2,222 2,810 (588)(20.9)%
Operating expenses:
Selling, administrative and engineering expense2,360 1,826 534 29.2 %
Operating (loss) income$(138)$984 $(1,122)(114.0)%

Revenue

Revenue for the three months ended March 31, 2023 decreased by $1,805 thousand, or 22.3%, to $6,280 thousand from $8,085 thousand for the three months ended March 27, 2022. The decrease was primarily due to lower revenue from electric balance bikes of $1,814 thousand. The decrease in revenue from electric balance bikes was driven by lower volumes of $3,438 thousand driven by lower volumes from third party distributors, which was partially offset by formationa shift in product mix from the launch of new 18- and operational20-inch electric balance bikes in mid-2022 of $1,624 thousand.

Cost of Goods Sold

Cost of goods sold for the three months ended March 31, 2023 decreased by $1,217 thousand, or 23.1%, to $4,058 thousand from $5,275 thousand for the three months ended March 27, 2022. The decrease was primarily due to lower volumes, in alignment with the decreased revenue described above.

Selling, Administrative and Engineering Expense

Selling, administrative and engineering expense for the three months ended March 31, 2023 increased by $534 thousand, or 29.2%, to $2,360 thousand from $1,826 thousand for the three months ended March 27, 2022. The increase was primarily due to an increase in advertising costs to support the growth of $3,838,489.

the business.


Other Matters

Commitments and Contingencies

The Company enters into purchase orders with vendors and other parties in the ordinary course of business. During the three months ended March 31, 2023, the Company entered into a long term commitment with a vendor to provide certain inventory components. As of March 31, 2023, the Company’s estimated payments are $1,898 thousand, $2,397 thousand, $2,397 thousand, and $501 thousand for fiscal years 2023, 2024, 2025, and 2026, respectively. Otherwise, there have been no material changes in the Company’s cash obligations and commitments since the end of fiscal year 2022. Refer to Item 7 of our 2022 Annual Report for additional information regarding the Company’s cash obligations and commitments as of the end of fiscal year 2022.

23

Liquidity and Capital Resources


As of March 31, 2023 and December 31, 2022, the Company’s cash and cash equivalents were $236,042 thousand and $265,240 thousand, respectively.

The Company historically managed liquidity risk by effectively managing its working capital, capital expenditures and cash flows. As an early growth company, the Company does not expect to generate positive cash flow from operations over the next twelve months. Prior to the Business Combination, H-D supported the Company’s operating, investing and financing activities. Following the Business Combination, the Company received net proceeds of approximately $293.7 million as more fully described below.

On October 5, 2020, weSeptember 26, 2022, the Company consummated the Initial Public OfferingMerger with ABIC resulting in net proceeds of 40,000,000 units, atapproximately $293.7 million, including a $100 million investment from H-D and a $100 million investment from KYMCO. Additionally the Company 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 (as defined in the Business Combination Agreement) in exchange for 10,000,000 shares of Common Stock for a purchase price of $10.00 per unit, generating gross proceeds of $400,000,000. Simultaneously withshare pursuant to the closingterms of the Initial Public Offering, we consummatedBusiness Combination Agreement.

In the saleevent of 10,500,000 Private Placementthe exercise of any of Warrants tofor cash, the Sponsor at a priceCompany will receive the proceeds from such exercise. Assuming the exercise in full of $1.00 per private placement warrant generating grossall of Warrants for cash, the Company would receive an aggregate of approximately $350.8 million, but would not receive any proceeds of $10,500,000.

Following the Initial Public Offering andfrom the sale of the Private Placementshares of Common Stock issuable upon such exercise. To the extent any of the Warrants are exercised on a total“cashless basis,” the Company will not receive any proceeds upon such exercise. The Company expects to use any proceeds it receives from Warrant exercises for general corporate and working capital purposes, which would increase its liquidity. The Company believes the likelihood that warrant holders will exercise their Warrants, and therefore the amount of $400,000,000cash proceeds the Company would receive, is dependent upon the trading price of its Common Stock. As of March 31, 2023, the reported sales price of Common Stock was placed$6.45 per share. If the trading price of Common Stock is less than the $11.50 exercise price per share of the Warrants, the Company expects that warrant holders will not exercise their Warrants. There is no guarantee the Warrants will be in the Trust Account. We incurred $21,292,016money following the time they become exercisable and prior to their expiration, and as such, the Warrants may expire worthless and the Company may receive no proceeds from the exercise of Warrants. As a result, the Company does not expect to rely on the cash exercise of Warrants to fund its operations and the Company does not believe that it needs such proceeds to support working capital and capital expenditure requirements for the next twelve months. The Company will continue to evaluate the probability of Warrant exercises and the merit of including potential cash proceeds from the exercise of the Warrants in transaction costs,its future liquidity projections. The Company instead currently expects to rely on the sources of funding described below, if available on reasonable terms or at all.


Management believes that cash on hand, including $7,275,000 of underwriting fees (net of expenses reimbursed by the underwriter of $225,000), $13,125,000 of deferred underwriting feesproceeds received from the Business Combination, will provide sufficient liquidity to meet the Company’s projected obligations, including those related to existing contractual obligations, for at least the next twelve months. The Company plans to use its current cash on hand to support its core business operations and $892,016 of other offering costs.strategic plan, invest in new product development, and enhance its global manufacturing and distribution capabilities. The Company 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.

The Company’s material contractual operating cash commitments at March 31, 2023 relate to leases. In connection with the closingaddition, as a result of the Business Combination completed on September 26, 2022, the deferred underwriting fee was reducedCompany may be subject to $9,376,638.

Forcertain payments in the nineevent minimum purchase commitments under the Contract Manufacturing Agreement with H-D are not met beginning in the year 2024.


24

Cash Flow Activity

The following table presents condensed highlights from the Company’s Consolidated statements of cash flows for the three months ended September 25,March 31, 2023 and March 27, 2022 net(in thousands):

Three months ended
March 31,
2023		March 27,
2022
Net cash used by operating activities$(24,550)$(19,028)
Net cash used by investing activities(4,648)(2,492)
Net cash provided by financing activities— 30,723 
Net change in cash, cash equivalents and restricted cash$(29,198)$9,203 

The overall decrease in cash during the three months ended March 31, 2023 was due primarily to cash used for operating activities, as described below.
Operating Activities

The Company had negative cash flow from operating activities during the three months ended March 31, 2023 and March 27, 2022. Net cash used in operating activities increased by $5,522 thousand to $24,550 thousand for the three months ended March 31, 2023 compared to $19,028 thousand for the three months ended March 27, 2022. The increase in negative cash flow from operating activities was $787,188. Net incomeprimarily driven by the increase in net loss of $24,979,364 was impacted by interest earned on investments held$5,168 thousand, which resulted from lower electric balance bike volumes, increases in product development costs and costs to advance the Trust AccountCompany’s electric vehicle systems, and increases in personnel costs primarily related to higher headcount to support the stand-up of $2,117,718, changethe new organization. The overall growth of the business also resulted in deferred underwriting fees of $3,748,261, interest on mandatorily redeemable Class A ordinary shares of $3,323,742increases in net operating assets, primarily inventory, and change in fair value of derivative warrant liabilities of $21,197,500. Changesdecreases in operating assetsliabilities, primarily payables and liabilities provided $4,620,769accrued expenses due to timing of cash from operating activities.

For the nine months ended September 26, 2021, netpayments. These unfavorable changes in working capital were partially offset by favorable changes in accounts receivable.


Investing Activities

Net cash used in operatinginvesting activities increased by $2,156 thousand to $4,648 thousand for the three months ended March 31, 2023 compared to $2,492 thousand for the three months ended March 27, 2022. The increase was $570,298. Net income of $22,520,926 was affected bydue to higher capital expenditures related to investments to support future products.

The Company expects to fund future cash flows used in investing activities with the change in fair value of warrant liabilities of $26,230,000, interest earned on marketable securities held in the Trust Account of $129,415 and changes in operating assets and liabilities which provided $3,268,191 of cash from operating activities.

At September 25, 2022, we had cash of $402,607,538 held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination.

Recent Developments

On December 12, 2021, the Company, LiveWire, Merger Sub, Legacy LiveWire and Harley-Davidson, Inc. entered intofinancing raised through the Business Combination Agreement (each as definedand PIPE Financing. The Company estimates capital expenditures to be between $20 million and $25 million in Note 12023.


Financing Activities

Net cash provided by financing activities decreased by $30,723 thousand to zero for the three months ended March 31, 2023 compared to $30,723 thousand for the three months ended March 27, 2022. The Company did not enter into any financing transactions or arrangements during the three months ended March 31, 2023. During the three months ended March 27, 2022, the Company received cash transfers from H-D of $18,723 thousand, and borrowed $12,000 thousand from H-D.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of March 31, 2023, the Company’s cash and cash equivalents amounted to $236,042 thousand. The Company manages its liquidity risk by effectively managing its working capital, capital expenditures and cash flows.

Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of accounts receivable. The Company limits its credit risk with respect to accounts receivable by performing credit evaluations and requiring collateral to secure amounts owed to the unauditedCompany by its customers, each when deemed necessary.

Inflationary factors, such as cost increases for logistics, manufacturing, raw materials and purchased components, may adversely affect the Company’s operating results. Although the Company does not believe inflation has had a material impact on its financial statements included herein). On September 26, 2022,condition given its lower production volumes, a high rate of inflation in the parties consummatedfuture may have an adverse effect
25

on the transactions contemplated byCompany’s ability to maintain and increase its gross margin or decrease its operating expenses as a percentage of its revenues if the Business Combination Agreement. See Note 1 to the unaudited consolidated financial statements included herein for more information.

19

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements asselling prices of September 25, 2022. Weits products do not participateincrease as much or more than its increase in transactions that create relationships with unconsolidated entitiescosts.


The Company is also exposed to possible disruption of supply or financial partnerships, often referredshortage of materials, in particular for lithium-ion and other alternative battery cells and key semiconductor chip components necessary for electric vehicles, and any inability to as variable interest entities, which would have been established forpurchase raw materials and components could negatively impact the purpose of facilitating Company’s operations.
off-balance
 sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement

The Company sells electric balance bikes and intends to pay an affiliate of our Sponsor a monthly fee of up to $10,000 for office space, secretarialsell its electric motorcycles and administrative support services provided to the company. We began incurring these fees on October 5, 2020related products internationally, and will continue to incur these fees monthly until the earlier of the completion of a business combination or the company’s liquidation.

The underwritersin most markets, those sales are entitled to a deferred fee of $0.35 per Unit, or $13,125,000made in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a business combination, subject to the terms of the underwriting agreement. An affiliate of the Sponsor has purchased 2,500,000 Public Units at the Public Offering Price. In connection with the closing of the Business Combination, the underwriters have agreed to reduce the amount of their deferred fees by $3,748,361, which is shown in the condensed consolidated statement of operations as forgiveness of deferred underwriting fee payable.foreign country’s local currency. As a result, the Company’s operating results are affected by fluctuations in the values of the reduction,U.S. dollar relative to foreign currencies, however, the outstanding deferred underwriting fee was reducedimpact of such fluctuations on the Company’s operations to $9,376,638.

Critical Accounting Policies

The preparationdate are not material given the majority of unaudited condensed consolidated financial statements and related disclosures in conformity with accounting principles generally acceptedthe Company’s sales are currently in the United StatesU.S. The Company plans to expand its business and operations internationally and expects its exposure to currency rate risk to increase as it grows its international presence.


Item 4. Controls and Procedures

Limitations on Effectiveness of America requires management to make estimatesDisclosure Controls and assumptions that affectProcedures

In designing and evaluating the reported amounts of assets and liabilities,Company’s disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:

Derivative Warrant Liabilities

We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). We account for the warrants in accordance with the guidance contained in ASC 815 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheets date until exercised, and any change in fair value is recognized in our statements of operations.

20

Equity Instruments Subject to Possible Redemption

We account for our common stock subject to possible redemption in accordance with the guidance in ASC 480. Equity instruments subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable Equity instruments (including Equity instruments that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, Equity instruments is classified as stockholders’ or shareholders’ equity. Our Equity instruments feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Equity instruments subject to possible redemption are presented as temporary equity, outside of the stockholders’/shareholders’ deficit section of our balance sheets.

Net Income (Loss) per Common Stock or Ordinary Share

Net income (loss) per common stock or ordinary share is computed by dividing net income (loss) by the weighted average number of common stock or ordinary shares outstanding for the period. Accretion associated with the redeemable common stock or Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined in Item 10 of Regulation S-K and are not required to provide the information otherwise required by this item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures, are controls and other proceduresmanagement recognizes 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. Disclosureany controls and procedures, include, without limitation,no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of the disclosure controls and procedures designed to ensuremust reflect the fact that informationthere are resource constraints and that management is required to be disclosedapply judgment in our reports filed or submitted underevaluating the Exchange Act is accumulatedbenefits of possible controls and communicatedprocedures relative to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

21

their costs.

Evaluation of Disclosure Controls and Procedures


As required

The Company’s management, with the participation of the Company’s principal executive officer and principal financial officer, evaluated, as of the end of the period covered by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officers and Chief Financial Officer carried out an evaluation ofthis Quarterly Report on Form 10-Q, the effectiveness of the design and operation of our disclosure controls and procedures as of September 25, 2022. Based upon their evaluation, our Chief Executive Officers and Chief Financial Officer concluded that ourCompany’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, the Company’s principal executive officer and principal financial officer have concluded that, as of March 31, 2023, the Company’s disclosure controls and procedures were effective.

not effective at the reasonable assurance level.

Changes
Material Weakness

A material weakness is a deficiency, or combination of deficiencies, in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting, (as such termthat there is defined in Rules 13a-15(f)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.

15d-15(f)
During the 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. The Company concluded it had 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 remained unremediated as of March 31, 2023.

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
26

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.

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.

The applicable remedial controls as described above have been implemented as of March 31, 2023. During the first quarter of 2023, the Company has started the design testing of the remedial controls to validate the control design. We are not yet able to declare the applicable remedial controls as effective, as they have not yet operated for a sufficient period of time as of March 31, 2023. As such, the Company has concluded that the material weakness identified has not yet been remediated.

Changes in Internal Control over Financial Reporting

As a result of the on-going remediation efforts described above, new or revised review controls over the Company’s financial reporting are being implemented and tested. These changes to the Company’s processes and controls have been subject to the Company’s program for evaluating the design and operating effectiveness of internal control over financial reporting. There were no other changes in the Company’s internal control over financial reporting, as identified in connection with the evaluation required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act)Act, that occurred during the most recent fiscal quarterthree months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, ourthe Company’s internal control over financial reporting.

22

27


PART II—II – OTHER INFORMATION

ITEM


Item 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

Factors that could cause our actual results to differ materially from thoseLegal Proceedings


The information required under this Item 1 of Part II is contained in Item 1 of Part I of this Quarterly Report include the risk factors described in our Annual Report on Form 10-K filed with the SEC on March 25, 2022 (“Form 10-K”) and in our Quarterly Report on Form 10-Q filed with in Note 10, Commitments and Contingencies, to the SEC on May 12, 2022 (“2022 Q1 Form 10-Q”)Notes to Consolidated financial statements, and such information is incorporated herein by reference in our definitive proxy statement/prospectus filed with the SEC on July 28, 2022 (“Proxy”). Asthis Item 1 of the date of this report, therePart II.

Item 1A. Risk Factors

There have been no material changes to the risk factorsprincipal risks that the Company believes are material to the Company’s business, results of operations, and financial condition from those disclosed in our Form 10-K,Part I, “Item 1A. Risk Factors” of the 2022 Q1 Form 10-Q, and Proxy. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

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ITEM 6. EXHIBITS

The following exhibits are filed as part of, or incorporated by reference into, this QuarterlyAnnual Report on Form 10-Q.10-K for the year ended December 31, 2022.


No.

Description of Exhibit

31.1*Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*Inline XBRL Instance Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

*   Filed herewith

**   Furnished herewith

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of equity securities for the three months ended March 31, 2023.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.
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Item 6. Exhibits

LiveWire Group, Inc.
Exhibit Index to Form 10-Q
Exhibit No.DescriptionFormFile No.Filing DateExhibit NumberFiled/Furnished herewith
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, LLC8-K001-3958412/15/20212.1
Amended and Restated Certificate of Incorporation of LiveWire Group, Inc.8-K001-415119/30/20223.1
Amended and Restated Bylaws of LiveWire Group, Inc.8-K001-415119/30/20223.2
Warrant Agreement, dated as of October 1, 2022, by and between the Company and Continental Stock Transfer & Trust Company, as Warrant Agent8-K001-3958410/7/20204.4
Specimen Warrant CertificateS-1333-2487859/14/20204.3
Description of our Securities10-K001-415113/6/20224.3
Chief Executive Officer Certification pursuant to Rule 13a-14(a)*
Chief Financial Officer Certification pursuant to Rule 13a-14(a)*
Written Statement of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. §1350**
101.INSXBRL 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.SCHXBRL Taxonomy Extension Schema Document*
101.CALXBRL Taxonomy Extension Calculation Linkbase Document*
101.DEFXBRL Taxonomy Extension Definition Linkbase Document*
101.LABXBRL Taxonomy Extension Label Linkbase Document*
101.PREXBRL Taxonomy Extension Presentation Linkbase Document*
104Cover Page Interactive Data File - formatted in Inline XBRL and contained in Exhibit 101*
* Filed herewith.
** Furnished herewith.
† 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, schedule or exhibit to the SEC upon request.
29

SIGNATURES

Pursuant to the requirements 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.

LIVEWIRE GROUP, INC.LiveWire Group, Inc.
Date: November 9, 2022
Date:May 10, 2023

/s/ Jochen Zeitz

Name:Jochen Zeitz
Title:Chairman, Chief Executive Officer/s/ Tralisa Maraj
Date: November 9, 2022

/s/ Tralisa Maraj

Name:Tralisa MarajChief Financial Officer
Title:(Principal Financial Officer)
Date:May 10, 2023/s/ Jon Carter
Jon Carter
Chief FinancialAccounting Officer
(Principal Accounting Officer)

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