11. Commitments and Contingencies

Repurchase Obligations

Under certain conditions, the Company is obligated to repurchase new inventory repossessed from dealerships by financial institutions that provide credit to the Company’s dealers. The maximum obligation of the Company under such floor plan agreements totaled approximately $10,215,000 or 54 units, and $10,693,000 or 67 units, as of June 30, 2023, and December 31, 2022, respectively. The Company incurred no impact from repurchase events during the six months ended June 30, 2023 and year ended December 31, 2022.

Short-term lease

In August of 2022, Forza signed a six-month lease for a duplex, to be used by its employees to minimize travel expenses as it started construction on its new manufacturing facility, for $2,200 per month, on a property in Black Mountain, North Carolina. During the six months ended June 30, 2023 and 2022, the lease expense was $11,000 and $0, respectively.

Litigation

The Company is currently involved in various civil litigation in the normal course of business none of which is considered material.

Irrevocable line of credit

As of June 30, 2023, the Company had $200,000 of restricted cash included in cash, cash equivalents and restricted cash. This amount represents a deposit to secure an irrevocable letter of credit for a supplier contract with Yamaha. These deposits are held in an interest-bearing account.