LiveWire Group, Inc.

3. Acquisition

Asset Purchase Agreement with Dust Motorcycles, Inc.

On May 18, 2026 (“Acquisition Date”), LiveWire EV, LLC, a wholly owned subsidiary of the Company (“Purchaser”) and LiveWire Group, Inc. (“Purchaser Parent”) entered into and consummated the transactions contemplated by an Asset Purchase Agreement (“Purchase Agreement”) with Dust Motorcycles, Inc. (“Dust”) and the equity holders of Dust (“Selling Holders”). Pursuant to the Purchase Agreement, the Purchaser acquired substantially all of the assets and assumed certain specific liabilities of Dust related to the design, development, manufacture and distribution of electric dirt bikes and related powertrain technology (“Dust Acquisition”). The Company believes the Dust Acquisition will strengthen LiveWire’s strategy to grow beyond on‑road electric motorcycles and addresses the rapidly expanding electric off‑road market. The transaction was accounted for in accordance with ASC 805, Business Combinations, (“ASC 805”). The Company determined the operations of Dust will be included in the Electric Motorcycles segment. Acquisition-related costs of $49 thousand and $473 thousand were recorded within Selling, administrative and engineering costs on the consolidated statements of operations and comprehensive loss in the three and nine months ended September 30, 2026, respectively. There wasno revenue recorded and a net loss of $1,056 thousand and $1,330 thousand recorded for Dust operations for the three and nine months ended September 30, 2026, respectively, on the consolidated statements of operations and comprehensive loss.

Consideration transferred

Total consideration transferred includes (i) $375 thousand in cash, (ii) $500 thousand in shares of the Company’s common stock issued in connection with the closing (“Equity consideration”), (iii)three annual installment payments of $875 thousand each payable in shares of the Company’s common stock on each of the first three anniversaries of the closing date (“Deferred consideration”), and (iv) contingent earn-out payments of up to $11.25 million in the aggregate payable in shares of the Company’s common stock, in each case subject to the terms of the Purchase Agreement (“Contingent consideration”). In each case, the number of shares of the Company’s common stock to be issued will be determined based on a volume-weighted average per share of the Company’s common stock over the 30 trading days immediately prior to the determination date (“VWAP”). The Equity consideration issued upon closing consisted of 280,264 shares at a $1.78 VWAP.

The following table summarizes the preliminary fair value of the total consideration transferred on the Acquisition Date (in thousands):

Deferred consideration

The Company is obligated to issue additional shares of common stock inthree annual installment payments. The first installment payment includes a provision that reduces the payment by 44% iftwo employees of Dust, who became employees of the Company as a result of the Dust Acquisition, terminate employment or voluntarily resign withinone year of the Acquisition Date. The Company determined that this provision represents a service condition under ASC 805, and, accordingly,44% of the first installment payment payable in shares was accounted for as compensation and will be recognized as expense over the 12 months requisite service period, while the remaining portion is accounted for as consideration transferred at fair value in Accrued liabilities on the consolidated balance sheets as of the Acquisition Date. During the three and nine months ended September 30, 2026, the Company recognized $121 thousand and $144 thousand, respectively, in compensation expense related to the first installment payment on the consolidated statements of operations and comprehensive loss.

The Company is obligated to issue additional shares of common stock in the second and third annual installment payments. These payments are not contingent upon continued employment or post-acquisition services and are accounted for entirely as consideration transferred. The Deferred consideration was measured at fair value on the Acquisition Date, which reflected the net present value of the expected payments using a market participant discount rate incorporating the Company’s credit risk.

As the Deferred consideration represents an obligation to issue a variable number of shares based on a fixed monetary value, it is recorded as a liability pursuant to the guidance in ASC 480, Distinguishing Liabilities from Equity, (“ASC 480”). The Company recorded a Deferred consideration liability of $1,649 thousand as of the Acquisition Date with $424 thousand recorded in Accrued liabilities for the first installment payment due on the first anniversary and the remaining $1,225 thousand in Other long-term liabilities on the consolidated balance sheet. The Deferred consideration was initially recorded at its acquisition-date fair value and will be subsequently accreted to its contractual settlement amount over the deferral period using the effective interest method, with the accretion recognized in interest expense. For the three and nine months ended September 30, 2026, the Company recorded $39 thousand and $90 thousand, respectively, of expense related to the accretion of the Deferred consideration within interest income (expense), net, on the consolidated statements of operations and comprehensive loss.

Contingent consideration

As part of the Dust Acquisition, the Company may be required to make contingent payments to the Selling Holders based on post-acquisition performance metrics, specifically 50% of the positive gross margin as defined in the Purchase Agreement generated over athree-year earn-out period. The aggregate Contingent consideration payments are capped at $11.25 million. The Contingent consideration is payable in shares of the Company’s common stock; however, the Purchase Agreement includes a stock issuance limitation that may require settlement in cash if shareholder approval is not obtained. As the Contingent consideration represents an obligation to issue a variable number of shares based on a fixed monetary value, it is recorded as a liability pursuant to the guidance in ASC 480. The Company recorded a Contingent consideration liability of $1,107 thousand as of the Acquisition Date in Other long-term liabilities in the consolidated balance sheets representing the estimated fair value of the obligation. The fair value of the contingent consideration was estimated using a Monte Carlo Simulation, which factors in the risks associated with the underlying positive gross margin metric, the payment structure and cap on the payment of $11.25 million, the counterparty credit risk, and the time value of money associated with expected payments occurring over thethree-year earn-out period. The Contingent consideration liability is remeasured to fair value at each reporting date, with changes in fair value recognized in earnings. The fair value measurement is based on significant unobservable inputs and therefore is classified within Level 3 of the fair value hierarchy. In each reporting period after the Dust Acquisition, the Company will reassess the value of the Contingent consideration liability and may recognize an increase or decrease in the fair value in its consolidated statements of operations and comprehensive loss after the measurement period. Changes in fair value may result from changes in actual results and projected forecasts. The inputs and assumptions may not be observable in the market, but reflect the assumptions the Company believes would be made by a market participant. There wereno changes in the fair value of the Contingent consideration liability at the Acquisition Date through September 30, 2026 and the estimated payment of $1,107 thousand remained recorded as a Contingent consideration liability in Other long-term liabilities in the Company’s consolidated balance sheets as of September 30, 2026.

Purchase price allocation

The Company recorded adjustments to the acquired assets and liabilities to reflect their estimated fair values as of the Acquisition Date. In addition, the Company recognized identifiable intangible assets and Deferred consideration and Contingent consideration liabilities as part of the purchase price in accordance with ASC 805.

During the three months ended September 30, 2026, the Company recorded a measurement period adjustment to the preliminary purchase price allocation recorded at the Acquisition Date. During the measurement period, the Company obtained additional information regarding the tax basis of certain acquired assets and liabilities that existed as of the Acquisition Date. Based on this additional information, the Company recognized deferred tax liabilities of $871 thousand associated with acquisition-date book and tax basis differences. The corresponding adjustment increased goodwill by $871 thousand. This adjustment represents refinement of the preliminary purchase price allocation and was recorded in accordance with the measurement period guidance in ASC 805.

The following table summarizes our preliminary purchase price allocation, including resulting goodwill, recorded at the Acquisition Date (in thousands):

Developed technologies represents acquired technology associated with Dust's electric motorcycle platform and related intellectual property. The trade name intangible asset represents the value of the Dust brand. The developed technologies and trade name intangible assets will be amortized over the estimated useful lives offive years andten years, respectively.

The valuation of intangible assets was determined using an income approach methodology. The fair values of the developed technologies and trade name intangible assets were estimated utilizing the relief from royalty method, which calculates the cost savings associated with owning rather than licensing the assets. Assumed royalty rates are applied to projected revenue for the remaining useful lives of the assets to estimate the royalty savings. Assumptions used in the determination of the fair value of the developed technology included revenue growth rates, royalty rates, obsolescence factors and discount rates. Assumptions used in the determination of the fair value of the trade name included the revenue growth rates, the royalty rate and discount rate.

Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired and primarily reflects expected synergies, future growth opportunities, and the acquired workforce that do not qualify for separate recognition. There isno goodwill deductible for tax purposes.

The purchase price allocation is preliminary and subject to adjustment as additional information becomes available during the measurement period, which is one year from the Acquisition Date, and may result in changes to the estimated fair values of the assets acquired and liabilities assumed, including, but not limited to, identifiable intangible assets, Contingent consideration, deferred tax assets and liabilities, and certain working capital balances. Any subsequent changes to estimates that do not qualify as measurement period adjustments will be recognized in the consolidated statements of operations and comprehensive loss.