| Related Party Transactions | Related Party Transactions In connection with the Business Combination, the Company entered into a various number of agreements with H-D to govern a nd 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 from H-D 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 2023 Form 10-K for additional details on the agreements entered into by the Company as part of the Separation. Related Party Sales and Purchases in the Ordinary Course of Business Transactions Associated with Service Agreements with H-D Cost of goods sold - For the three and six months ended June 30, 2024 there are $4,363 thousand and $9,539 thousand, respectively, and for the three and six months ended June 30, 2023, there are $5,443 thousand and $7,491 thousand, respectively, of Cost of goods sold with H-D on the consolidated statements of operations and comprehensive loss. Of the Costs of goods sold with H-D for the three and six months ended June 30, 2024, $4,179 thousand and $9,441 thousand, respectively, and for the three and six months ended June 30, 2023, $1,723 thousand and $3,768 thousand, respectively, are related to purchases, primarily motorcycles, under the terms of the Contract Manufacturing Agreement. These purchases of electric motorcycles from H-D are sold to the Company’s customers resulting in Cost of goods sold. Also included in the total Cost of goods sold with H-D for the three and six months ended June 30, 2023 is a provision of $3,717 thousand related to a liability for excess inventory components held by H-D that the Company expects to be obligated to reimburse H-D under the terms of the Contract Manufacturing Agreement. Selling, administrative and engineering - During the three and six months ended June 30, 2024 there are $2,539 thousand and $5,487 thousand, respectively, and for the three and six months ended June 30, 2023 there were $3,957 thousand and $8,189 thousand, respectively, in expenses associated with services rendered in conjunction with the various service agreements with H-D, which are presented within Selling, administrative and engineering on the consolidated statements of operations and comprehensive loss. Accounts payable to related party - As of June 30, 2024 and December 31, 2023, there is $18,399 thousand and $20,371 thousand, respectively, due to H-D and presented as Accounts payable to related party on the Consolidated balance sheets. Of the amount outstanding to H-D as of June 30, 2024 and December 31, 2023, $8,592 thousand and $10,020 thousand, respectively, is associated with inventory purchased under the Contract Manufacturing Agreement and $3,429 thousand and $4,042 thousand, respectively, is associated with services under the various service agreements with H-D and $6,378 thousand and $6,309 thousand, respectively, is associated with the obligation to reimburse H-D for excess inventory components held by H-D that the Company expects to be obligated to reimburse H-D under the terms of the Contract Manufacturing Agreement. This amount represents the Company’s best estimate of the liability as of each of the balance sheet dates and is subject to adjustment based on final negotiations with H-D regarding amounts owed under the terms of the Contract Manufacturing Agreement. Convertible Delayed Draw Term Loan Agreement On February 14, 2024, the Company entered into a Convertible Delayed Draw Term Loan Agreement (the “Convertible Term Loan”) with H-D providing for term loans from H-D to the Company in one or more advances up to an aggregate principal amount of $100 million. The outstanding principal under the Convertible Term Loan bears interest at a floating rate per annum, as calculated by H-D as of the date of each advance and as of each June 1 and December 1 thereafter, equal to the sum of (i) the forward-looking term rate based on SOFR (i.e., the secured overnight financing rate published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate)) for a 6-month interest period, plus (ii) 4.00%. The Company may elect to pay up to 100% of the amount of any interest due by increasing the outstanding principal amount of the applicable advance. The Convertible Term Loan does not include affirmative covenants impacting the operations of the Company. The Convertible Term Loan includes negative covenants restricting the ability of the Company to incur indebtedness, create liens, sell assets, make investments, make fundamental changes, make dividends or other restricted payments and enter into affiliate transactions. The Convertible Term Loan has a maturity date of the earlier of (i) 24 months from the date of the first draw on the loan or (ii) October 31, 2026. In the event that the Convertible Term Loan cannot be settled in cash by the Company at maturity, unless otherwise agreed between the Company and H-D, the Convertible Term Loan will be converted to equity of Company at a conversion price per share of common stock of the Company equal to 90% of the volume weighted average price per share of Common Stock for the 30 trading days immediately preceding the conversion date. As of June 30, 2024 , there were no amounts outstanding under the Convertible Term Loan and the Company remained in compliance with all of the existing covenants. Other transactions Sales of electric motorcycles and related products to independent dealers and customers are primarily financed through Harley-Davidson Financial Services (“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 June 30, 2024 and December 31, 2023, there is $455 thousand and $3,351 thousand, respectively, due from HDFS and other related receivables due from H-D, which is presented as Accounts receivable from related party on the Consolidated balance sheets, respectively. During the three and six months ended June 30, 2024, the Company recorded $20 thousand and $40 thousand, respectively, in related party sales between the Company and H-D with $13 thousand and $28 thousand, respectively, in Cost of goods sold. During the three and six months ended June 30, 2023 the Company recorded $5 thousand and $10 thousand, respectively, in related party sales between the Company and H-D with $3 thousand and $6 thousand, respectively, in Cost of goods sold. All sales were for the STACYC segment which sells electric balance bikes to H-D. As of June 30, 2024 and December 31, 2023, there was $13 thousand and $51 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. Additionally, on August 28, 2023, the Company amended a lease agreement with H-D for office space to extend the term of the lease to a 12-month period expiring on September 26, 2024. These are classified as operating leases. As of June 30, 2024, the right of use assets included within Lease assets, short-term lease liabilities included within Current portion of lease liabilities, and long-term lease liabilities included within Long-term portion of lease liabilities in the Consolidated balance sheets were $192 thousand, $155 thousand, and $36 thousand, respectively. As of December 31, 2023, the right of use assets included within Lease assets, short-term lease liabilities included within Current portion of lease liabilities, and long-term lease liabilities included within Long-term portion of lease liabilities in the Consolidated balance sheets were $274 thousand, $162 thousand, and $112 thousand, respectively. In addition, the Company incurred $44 thousand and $88 thousand in rent expense during the three and six months ended June 30, 2024, respectively, and the Company recorded $44 thousand and $88 thousand, during the three and six months ended June 30, 2023, respectively, which is included within Selling, administrative and engineering expense on the consolidated statements of operations and comprehensive loss. |
