As discussed in Note 5 below, on June 28, 2022, Precision acquired all of the capital stock of Kinetic and certain Real Estate assets used in its operations. As of the date of execution of the Real Estate purchase, Precision sold the Real Estate, in exchange for which Precision entered into a 20-year lease, with two options to renew for an additional five years each, which the Company is reasonably certain to exercise. This transaction is being treated as a sales and leaseback arrangement for accounting purposes, as described in ASC 842 “Leases”.

As discussed in Note 5 below, on July 1, 2022, Marquis acquired certain assets and intellectual property related to the carpet-backing operations of Better Backers. In connection with the acquisition, Marquis entered into two 20-year building leases, with two options to renew for an additional five years each, which the Company is reasonably certain to exercise. These leases are being treated as finance leases for accounting purposes, as described in ASC 842 “Leases”.

The weighted average remaining lease term for operating leases is 11.2 years. The Company’s weighted average discount rate for operating leases is 6.15%. Total cash payments for operating leases for the year ended September 30, 2022 were approximately $9.9 million.

The weighted average remaining lease term for finance leases is 29.3 years. The Company’s weighted average discount rate for finance leases is 13.55%. Total cash payments for finance leases for the year ended September 30, 2022 were approximately $519,000.

During the year ended September 30, 2022, in connection with the winding down of ApplianceSmart's operations (see Note 17), the Company recorded a loss on write-off of an ROU of approximately $522,000 related to the decision to close the one remaining ApplianceSmart retail location in operation. There were no such transactions during the year ended September 30, 2021.