Related Party Transactions |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions In connection with the Business Combination, the Company entered into a number of agreements with H-D to govern 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 from H-D that resulted in related party transactions include the Transition Services Agreement (effective through December 31, 2024), the Master Services Agreement (effective through December 31, 2024), the new Master Services Agreement (dated December 23, 2024, effective January 1, 2025), the Contract Manufacturing Agreement, the Joint Development Agreement, and the Tax Matters Agreement. Refer to Note 15, Related Party Transactions, of the consolidated financial statements in the Company’s 2025 Form 10-K for additional details on the agreements entered into with H-D as part of, or subsequent to, the separation from H-D. 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 months ended March 31, 2026 and 2025, there are $2,129 thousand and $1,160 thousand, respectively, of Cost of goods sold with H-D on the consolidated statements of operations and comprehensive loss. Of the Cost of goods sold with H-D, for the three months ended March 31, 2026 and 2025, $2,126 thousand and $1,150 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. Selling, administrative and engineering - During the three months ended March 31, 2026 and 2025, there were $1,153 thousand and $1,404 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 March 31, 2026 and December 31, 2025, there is $7,617 thousand and $6,716 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 March 31, 2026 and December 31, 2025, $1,204 thousand and $275 thousand, respectively, is associated with inventory purchased under the Contract Manufacturing Agreement, $333 thousand and $361 thousand, respectively, is associated with services under the various service agreements with H-D, and $6,080 thousand is associated with the obligation to reimburse H-D for excess inventory components held by 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. Amended and Restated Delayed Draw Term Loan On February 14, 2024, the Company entered into a Convertible Delayed Draw Term Loan Agreement 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 Convertible Term Loan had 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. The Convertible Term Loan contained a provision that provided for H-D to convert amounts outstanding to equity at the Maturity Date if, on the Maturity Date, H-D determined, acting reasonably and in good faith, that the Company does not have the financial wherewithal to repay all amounts outstanding. The Company did not draw any amounts under the Convertible Term Loan. On November 9, 2025, the Company entered into an Amended and Restated Delayed Draw Term Loan Agreement (the “Term Loan”) with H-D, which amended the Convertible Delayed Draw Term Loan. The Term Loan provided the Company with access of up to $75.0 million to be drawn by the Company between November 17, 2025 and December 15, 2025. The maturity date of the amount outstanding under the Term Loan, including interest, is December 15, 2027 (“Term Loan Maturity Date”). The Term Loan requires mandatory prepayment of the principal amount of the Term Loan from the first $10.0 million of net ATM proceeds (defined as gross ATM proceeds less offering costs) from the funding of the Term Loan through the Term Loan Maturity Date. No other scheduled principal payments are required to be made on the Term Loan and the remaining principal balance must be paid in full on the Term Loan Maturity Date. The amount outstanding under the Term Loan bears interest at a floating rate per annum, as calculated by H-D as of the date of funding of the Term Loan 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%. Interest is compounded on a semi-annual basis on May 31 and November 30 and is required to be paid in full on the Term Loan Maturity Date. The 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. All of the obligations under the Term Loan are collateralized by a security interest in substantially all of the assets of the Company. On December 15, 2025, the Company borrowed $75.0 million under the Term Loan. The Company paid $800 thousand in the three months ended March 31, 2026 for the mandatory prepayment related to net ATM proceeds received from shares sold in the three months ended December 31, 2025. As of March 31, 2026 and December 31, 2025, there was zero and $800 thousand, respectively, presented as Current portion of term loan - related party, net, and $74.2 million presented as Long-term portion of term loan - related party, net, on the consolidated balance sheet. During the three months ended March 31, 2026, the Company recorded $1,417 thousand in interest expense, which is presented in Interest expense, related party on the consolidated statements of operations and comprehensive loss. The amount due to H-D for interest as of March 31, 2026 and December 31, 2025 was $1,672 thousand and $255 thousand, respectively, and is presented in Other long-term liabilities on the consolidated balance sheet. The effective interest rate was 7.64% as of March 31, 2026 and December 31, 2025. The Company remained in compliance with all of the existing covenants as of March 31, 2026. Other Transactions Sales of electric motorcycles and related products to independent dealers in the U.S. and Canada 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 March 31, 2026 and December 31, 2025, there is zero and $564 thousand, respectively, due from HDFS and other related receivables due from H-D, which is presented within Accounts receivable from related party on the consolidated balance sheets. During the three months ended March 31, 2026 and 2025, the Company recorded $5 thousand and $12 thousand, respectively, in related party sales between the Company and H-D with $3 thousand and $9 thousand, respectively, in Cost of goods sold. All sales were for the STACYC segment which sells electric balance bikes and electric bikes to H-D. As of March 31, 2026 and December 31, 2025, there was $1 thousand and $21 thousand, respectively, due from H-D, which is presented as Accounts receivable from related party on the consolidated balance sheet. On September 26, 2022, the Company entered into a lease agreement with H-D to sublease a Product Development Center. The lease was terminated effective February 28, 2025. 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, which expired on September 26, 2024 and was then renewed on a month-to-month basis and terminated effective January 31, 2025. On September 4, 2024, the Company entered into a lease agreement with H-D to sublease office space in California, which expires on October 31, 2027. These are classified as operating leases. In conjunction with the relocation of LiveWire Labs from California, announced in 2024, the Company moved its equipment from LiveWire Labs to an H-D location in Milwaukee, Wisconsin in September 2024. During the fourth quarter of 2024, the Company began occupying a portion of the space in the H-D location, including operating certain of its equipment, and using a portion for office space. The Company and H-D finalized negotiations and executed a lease agreement related to this space on January 30, 2025. The Company recorded an ROU asset and ROU liability of $488 thousand and $456 thousand, respectively, in the first quarter of 2025, which were reduced for a $500 thousand lease incentive to be provided from H-D for tenant improvements. The initial term of the agreement is 60 months with a renewal option for another 60 months. As of the current date, the Company does not believe it is reasonably certain of exercising the renewal option and, therefore, the lease term is 60 months. This lease was amended effective September 26, 2025 to move the location of the office space and extend the timing of the lease incentive from 2025 to 2026 resulting in an increase to the current lease liability of $203 thousand and a decrease to long-term lease liability of $184 thousand. These leases are classified as operating leases. As of March 31, 2026, 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 $462 thousand, $19 thousand, and $322 thousand, respectively. As of December 31, 2025, 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 $437 thousand, $206 thousand, and $131 thousand, respectively. In addition, the Company incurred $55 thousand and $99 thousand in rent expense during the three months ended March 31, 2026 and 2025, respectively, which is included within Selling, administrative and engineering expense on the consolidated statements of operations and comprehensive loss.
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