−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations
+Added: Management’s Discussion and Analysis of
+Added: Financial Condition and Results of Operations
The following discussion provides information which management believes is relevant to an assessment and understanding of the operations and financial condition of Avalon Holdings Corporation and its subsidiaries.
3 unchanged sentences
Liquidity and Capital Resources
−Removed: For the three months ended March 31, 2020, Avalon utilized existing cash and cash provided by operations to meet operating needs, make required monthly payments on our term loan facility and to fund capital expenditures which included the continued renovation of The Grand Resort as further described below.
−Removed: Financial Impact of COVID-19
−Removed: The continued spread of COVID-19 and related governmental orders have adversely impacted our operations and related financial results.
−Removed: We expect our restaurant operations to generate significantly lower revenue as a result of the government mandated restrictions placed on in-house dining.
−Removed: In addition, the Company has seen high levels of room and event cancellations through the third quarter of 2020 with some tentative re-bookings in the fourth quarter and into 2021.
+Added: For the six months ended June 30, 2020, Avalon utilized existing cash and cash provided by operations to meet operating needs, make required monthly payments on our term loan facility and to fund capital expenditures which included the continued renovation of The Grand Resort as further described below.
+Added: Financial Impact of COVID-19 Pandemic
+Added: The continued spread of COVID-19 and related governmental orders adversely impacted our operations and related financial results.
+Added: Our restaurant operations generated significantly lower revenue as a result of the government mandated restrictions that were placed on in-house dining.
+Added: Food and beverages sales related to banquets and conferences were minimal during the second quarter of 2020 as a result of government mandated restrictions placed on gatherings and events.
+Added: In addition, the Company had high levels of room and event cancellations with some re-bookings in the third and fourth quarter of 2020 and into 2021.
Our fitness, athletics, salon and spa operations generated no revenue under the mandate.
−Removed: We cannot predict the duration of the mandate or any limitations the government may impose on our operations, which may include, among others, mask protection as well as other measures to enforce social distancing measures.
+Added: In addition, our waste management brokerage business has experienced a decline in both continuous and project work due to government restrictions placed on its customers and associated shutdowns.
As government restrictions are reduced or lifted, we may experience weakened demand in light of continued travel restrictions or warnings, consumer fears and reduced consumer discretionary spending and general economic uncertainty.
In light of the foregoing, we are unable to determine when our operations will return to pre-pandemic demand or pricing.
−Removed: During this time, the Company has engaged in aggressive efforts to reduce expenses, including reducing employee costs, through hiring freezes, headcount reductions and substantial furloughs of employees.
−Removed: Paycheck Protection Program
−Removed: In the second quarter of 2020, certain wholly-owned subsidiaries of Avalon entered into agreements to receive a total of approximately $2.8 million in loans under The Paycheck Protection Program contained in The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.
−Removed: The Paycheck Protection Program (the “Program”) provides for 100% federally guaranteed loans to small businesses to allow employers to keep workers employed and maintain payroll during the pandemic and economic downtown.
+Added: During the mandated shut-down, the Company engaged in aggressive efforts to reduce expenses, including reducing employee costs, through hiring freezes, headcount reductions and substantial furloughs of employees.
+Added: The Company began the process of rehiring employees in late May to meet business needs as the government restrictions on certain of our business operations were reduced or lifted.
+Added: Governmental bodies may impose additional restrictions, which could include additional shutdowns, to stop the spread of infection.
+Added: These additional restrictions would have a negative impact on our financial condition, results of operations and cash flows.
+Added: Paycheck Protection Program Loan
+Added: The Coronavirus Aid, Relief, and Economic Security Act, or (“CARES”) Act, was signed into law on March 27, 2020, and provides over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic.
+Added: The CARES Act authorized the Small Business Administration to temporarily guarantee loans under a new loan program called the Paycheck Protection Program (the “Program”).
+Added: The Program provides for 100% federally guaranteed loans to small businesses to allow employers to keep workers employed and maintain payroll during the pandemic and economic downturn.
Under the Program, qualified companies are eligible for a loan in an amount equal to the lesser of $10 million or 2.5x the business’s average monthly payroll.
Collateral or guarantor support is not required for the loan.
−Removed: Under the Program, the borrower is eligible for loan forgiveness up to the amount the borrower spends on certain eligible costs during the 8-week period beginning on the date of the origination of the loan.
+Added: Under the Program, the borrower is eligible for loan forgiveness up to the amount the borrower spends on certain eligible costs during the 8 week period beginning on the date the proceeds were received on the loan.
Eligible costs under the Program include payroll costs, interest on mortgage obligations incurred before the covered period, rent on leasing agreements and utility services.
The amount of loan forgiveness is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees.
−Removed: Under the Program, a reduction in employment or wages that occurred during the period beginning on February 15, 2020 and ending 30 days after enactment of the CARES Act do not reduce the amount of loan forgiveness if by June 30, 2020 the borrower eliminates the reduction in employees or reduction in wages.
−Removed: Under the Program, proceeds that are not forgiven convert to a loan bearing interest at a fixed rate of 1% payable in 18 equal installments commencing in November and December 2020.
−Removed: The Company anticipates that it will utilize the proceeds in accordance with the Program’s guidelines and repay amounts that are not forgiven or utilized.
+Added: Under the Program, proceeds that are not forgiven convert to a loan bearing interest at a fixed rate of 1% payable in 18 equal monthly installments commencing after the forgiveness period.
+Added: The Program was subsequently amended to allow the borrower to use an extended forgiveness period of 24 weeks beginning on the date the proceeds were received on the loan and to extend the repayment period to 54 months commencing after the 24 week forgiveness period.
+Added: In the second quarter of 2020, certain wholly-owned subsidiaries of Avalon entered into agreements and received a total of approximately $2.8 million in loans under the Program.
+Added: The Company is currently utilizing the loan proceeds under the 24 week loan forgiveness period in accordance with Program’s guidelines.
+Added: When the debt is forgiven in accordance with the Program, any amount that is forgiven will be recognized as a gain on debt extinguishment.
+Added: The Company will repay amounts that are not forgiven or utilized.
New Castle Country C lub Real Property A cquisition
3 unchanged sentences
The total amount of outstanding debt under the Agreements assumed by Havana Cigar Shop, Inc., at closing was approximately $0.8 million.
−Removed: The outstanding balance under the Commercial Demand Line of Credit was repaid in the third quarter of 2019 and in the fourth quarter of 2019 the Commercial Demand Line of Credit was terminated.
+Added: The outstanding balance under the Commercial Demand Line of Credit was repaid in the second quarter of 2019 and in the fourth quarter of 2019 the Commercial Demand Line of Credit was terminated.
The remaining outstanding balance under the Commercial Mortgage was refinanced and terminated in conjunction with the New Term Loan Agreement.
7 unchanged sentences
Capital Expenditures
−Removed: During the three months ended March 31, 2020, Avalon incurred capital expenditures of $1.3 million of which $1.0 million of such expenditures was paid to vendors in the first quarter of 2020.
+Added: During the six months ended June 30, 2020, Avalon incurred capital expenditures of $3.0 million of which $2.3 million of such expenditures was paid to vendors during the period.
Expenditures primarily related to the continued renovation and expansion of The Grand Resort.
−Removed: During the three months ended March 31, 2019, Avalon incurred capital expenditures of $1.3 million of which $0.4 million of such expenditures was paid in the first quarter of 2019.
+Added: In addition, approximately $0.4 million of such expenditures related to golf course maintenance equipment acquired under new capital lease agreements.
+Added: During the six months ended June 30, 2019, Avalon incurred capital expenditures of $4.5 million of which $2.9 million of such expenditures was paid to vendors during the period.
Expenditures primarily related to the continued renovation and expansion of The Grand Resort and, to a lesser extent, the renovation of the Avalon Athletic Club at Boardman.
7 unchanged sentences
The remaining proceeds were deposited into a project fund account for which those proceeds are required to fund future costs of renovating and expanding both The Grand Resort and Avalon Field Club at New Castle.
−Removed: At closing, $10.3 million of the proceeds were used to pay off and refinance amounts outstanding under our term loan agreement with Laurel Capital Corporation, dated December 20, 2016 (“2016 Term Loan Agreement”), $2.9 million of the proceeds were used to pay off and refinance amounts outstanding under our term loan agreement with Laurel Capital Corporation, dated March 29, 2019 (“2019 Term Loan Agreement”), $1.7 million of the proceeds were used to pay down the outstanding balance and associated interest on our existing line of credit agreement with Home Savings Bank, dated May 31, 2018, as amended, $0.6 million of the proceeds were used to pay off amounts outstanding under our commercial mortgage agreement with Mercer County State Bank, dated May 13, 2019 (“Commercial Mortgage”) and $0.3 million of the proceeds were utilized to pay transaction costs.
+Added: At closing, $10.3 million of the proceeds were used to pay off and refinance amounts outstanding under our term loan agreement with Laurel Capital Corporation, dated December 20, 2016 (“2016 Term Loan Agreement”), $2.9 million of the proceeds were used to pay off and refinance amounts outstanding under our term loan agreement with Laurel Capital Corporation, dated March 29, 2019 (“2019 Term Loan Agreement”), $1.7 million of the proceeds were used to pay down the outstanding balance and associated interest on our existing line of credit agreement with Premier Bank (formerly Home Savings Bank), dated May 31, 2018, as amended, $0.6 million of the proceeds were used to pay off amounts outstanding under our commercial mortgage agreement with Mercer County State Bank, dated May 13, 2019 (“Commercial Mortgage”) and $0.3 million of the proceeds were utilized to pay transaction costs.
The remaining proceeds of approximately $7.2 million were deposited into a project fund account.
−Removed: At March 31, 2020 and December 31, 2019, loan proceeds of $5.5 and $7.2 million, respectively, are presented in the Condensed Consolidated Balance Sheets as “Restricted cash.”
+Added: At June 30, 2020 and December 31, 2019, loan proceeds of $4.9 and $7.2 million, respectively, are presented in the Condensed Consolidated Balance Sheets as “Restricted cash.”
The 2016 Term Loan Agreement, 2019 Term Loan Agreement and the Commercial Mortgage Agreement were terminated in conjunction with the New Term Loan Agreement.
7 unchanged sentences
Borrowings under the New Term Loan Agreement are secured by certain real property and related business assets as defined in the agreement.
−Removed: The New Term Loan Agreement also contains certain financial and other covenants, customary representations, warranties and events of default.
−Removed: Avalon was in compliance with the New Term Loan Agreement covenants at March 31, 2020 and December 31, 2019.
+Added: The New Term Loan Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year commencing December 31, 2020.
+Added: The New Term Loan also contains other nonfinancial covenants, customary representations, warranties and events of default.
+Added: Avalon was in compliance with the New Term Loan Agreement covenants at June 30, 2020 and December 31, 2019.
Line of Credit Agreement
−Removed: On May 31, 2018, Avalon entered into a new business loan agreement with Home Savings Bank, (the “Line of Credit Agreement”) which provides for a line of credit of up to $5.0 million with an original maturity date of May 31, 2020.
−Removed: On June 17, 2019, the Company amended the Line of Credit Agreement to extend the maturity date to May 31, 2021.
+Added: On May 31, 2018, Avalon entered into a business loan agreement with Premier Bank (formerly Home Savings Bank), (the “Line of Credit Agreement”) which provides for a line of credit of up to $5.0 million.
+Added: On August 5, 2020, the Company amended the Line of Credit Agreement to extend the maturity date to July 31, 2022.
Under the Line of Credit Agreement, borrowings in excess of $1.0 million are subject to a borrowing base which is calculated based off a specific level of eligible accounts receivable of the waste management business as defined in the agreement.
−Removed: The existing line of credit agreement with Home Savings Bank, dated December 20, 2016, as amended, which was entered into concurrently with the 2016 Term Loan Agreement, was terminated in conjunction with the new Line of Credit Agreement.
−Removed: No amounts were outstanding under the existing line of credit agreement at termination.
−Removed: The Company anticipates amending the Line of Credit Agreement to extend the maturity date in the second quarter of 2020.
At December 20, 2019, the outstanding balance of $1.7 million under the Line of Credit Agreement was paid down with a portion of the proceeds from the New Term Loan Agreement.
−Removed: No amounts were drawn under the Line of Credit Agreement at March 31, 2020 and December 31, 2019.
+Added: No amounts were drawn under the Line of Credit Agreement at June 30, 2020 and December 31, 2019.
Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .25%.
−Removed: At March 31, 2020, the interest rate on the Line of Credit Agreement was 3.50%.
+Added: At June 30, 2020, the interest rate on the Line of Credit Agreement was 3.50%.
Borrowings under the Line of Credit Agreement are secured by certain business assets of the Company including accounts receivable, inventory and equipment.
−Removed: The Line of Credit Agreement also contains certain financial and other covenants, customary representations, warranties and events of default.
−Removed: Avalon was in compliance with the line of credit agreements covenants at March 31, 2020 and December 31, 2019.
−Removed: During the three months ended March 31, 2020 and 2019, the weighted average interest rate on outstanding borrowings was 5.00% and 5.36%, respectively.
+Added: The Line of Credit Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year.
+Added: The Line of Credit Agreement also contains other nonfinancial covenants, customary representations, warranties and events of default.
+Added: Avalon was in compliance with the Line of Credit Agreements covenants at June 30, 2020 and December 31, 2019.
+Added: During the three months ended June 30, 2020 and 2019, the weighted average interest rate on outstanding borrowings was 4.67% and 5.53%, respectively.
+Added: During the six months ended June 30, 2020 and 2019, the weighted average interest rate on outstanding borrowings was 4.82% and 5.45%, respectively.
Squaw Creek Country Club Lease Agreement
5 unchanged sentences
Working Capital
−Removed: At March 31, 2020 and December 31, 2019, there was a working capital deficit of approximately $3.5 million and $3.4 million, respectively.
−Removed: Working capital was primarily negatively impacted by a decrease in accounts receivable and an increase in deferred membership dues revenue offset an increase in inventory and prepaid expenses and a decrease in accounts payable.
−Removed: Accounts receivable decreased to $11.0 million at March 31, 2020 compared with $12.0 million at December 31, 2019.
−Removed: The decrease was primarily the result of decreased sales related to the waste management services segment in the first quarter of 2020 compared with the fourth quarter of 2019 and the timing of receipt on those associated receivables.
−Removed: Net operating revenues related to the waste management segment were $11.1 million in the first quarter of 2020 compared with $12.8 million in the fourth quarter of 2019.
+Added: At June 30, 2020 and December 31, 2019, there was a working capital deficit of approximately $2.6 million and $3.4 million, respectively.
+Added: Working capital was primarily positively impacted by an increase in both cash and cash equivalents and unbilled membership dues receivable and a decrease in accounts payable.
+Added: This increase was partially offset by a decrease in accounts receivable and an increase in deferred membership dues revenue and the current portion of the Payroll Protection Program loan.
+Added: Accounts receivable decreased to $7.8 million at June 30, 2020 compared with $12.0 million at December 31, 2019.
+Added: The decrease was primarily the result of decreased sales related to the waste management services segment in the second quarter of 2020 compared with the fourth quarter of 2019 and the timing of receipt on those associated receivables.
+Added: Net operating revenues related to the waste management segment were $9.1 million in the second quarter of 2020 compared with $12.8 million in the fourth quarter of 2019.
This decrease was partially offset by an increase in accounts receivable related to the golf and related operations segment due to the timing of annual membership renewals.
−Removed: Accounts payable was $10.4 million at March 31, 2020 compared to $11.7 million at December 31, 2019.
−Removed: The decrease in accounts payable was primarily due to a decrease in amounts due to disposal facilities and transportation carriers of the waste management services associated with the decrease in the net operating revenues in the first quarter of 2020 compared to the fourth quarter of 2019 and the associated timing of those vendor payments in the ordinary course of business.
−Removed: Deferred revenue relating to membership dues was approximately $4.0 million at March 31, 2020 compared to $3.2 million at December 31, 2019.
−Removed: The increase in deferred revenues was primarily due to the associated timing of annual membership renewals, and to a lesser extent, an increase in members during 2020.
−Removed: The number of members at March 31, 2020 was 5,133 compared to 5,051 at December 31, 2019.
+Added: Accounts payable was $8.7 million at June 30, 2020 compared to $11.7 million at December 31, 2019.
+Added: The decrease in accounts payable was primarily due to a decrease in amounts due to disposal facilities and transportation carriers of the waste management services associated with the decrease in the net operating revenues in the second quarter of 2020 compared to the fourth quarter of 2019 and the associated timing of those vendor payments in the ordinary course of business.
+Added: Deferred revenue relating to membership dues was approximately $4.8 million at June 30, 2020 compared to $3.2 million at December 31, 2019.
+Added: The increase in deferred revenues was primarily due to the associated timing of annual membership renewals partially offset by a slight decrease in members at June 30, 2020.
+Added: The number of members at June 30, 2020 was 5,010 compared to 5,051 at December 31, 2019.
Management believes that anticipated cash provided from future operations and proceeds from the Paycheck Protection Program will be sufficient to meet operating requirements and make required monthly payments under our term loan facility.
35 unchanged sentences
The golf and related operations segment includes the operation and management of four golf courses and related country clubs and facilities, a hotel and its associated resort amenities, a multipurpose recreation center and a travel agency.
−Removed: Performance in the first quarter of 2020 compared with the first quarter of 2019
+Added: Performance in the second quarter of 2020 compared with the second quarter of 2019
Overall Performance
−Removed: Net operating revenues decreased to $14.4 million in the first quarter of 2020 compared with $14.6 million in the first quarter of 2019.
+Added: Net operating revenues decreased to $13.1 million in the second quarter of 2020 compared with $18.4 million in the second quarter of 2019.
This decrease was primarily due to a decrease in net operating revenues of the waste management services segment.
−Removed: Net operating revenues of the waste management services segment were $11.1 million in the first quarter of 2020 compared with $11.4 million in the first quarter of 2019.
−Removed: The decrease in net operating revenues of the waste management services segment were partially offset by an increase in the net operating revenues of the golf and related operations segment.
−Removed: Net operating revenues of the golf and related operations segment were approximately $3.3 million in the first quarter of 2020 compared to $3.2 million in the first quarter of 2019.
−Removed: Costs of operations related to the waste management segment decreased to $8.9 million in the first quarter of 2020 compared with $9.2 million in the first quarter of 2019.
−Removed: The decrease in the cost of operations between years for the waste management segment is primarily due to the decreased net operating revenues as these costs vary directly with the associated revenues.
−Removed: Cost of operations related to the golf and related operations segment increased to $3.2 million in the first quarter of 2020 compared to $3.0 million in the first quarter of 2019.
−Removed: The increase was a result of higher employee related costs and food product costs in the first quarter of 2020 when compared to the first quarter of 2019.
−Removed: Depreciation and amortization expense was approximately $0.7 million in the first quarter of 2020 compared to $0.6 million in the first quarter of 2019.
+Added: Net operating revenues of the waste management services segment were $9.1 million in the second quarter of 2020 compared with $12.9 million in the second quarter of 2019.
+Added: In addition, net operating revenues of the golf and related operations segment decreased in the second quarter of 2020 compared to the second quarter of 2019.
+Added: Net operating revenues of the golf and related operations segment were approximately $4.0 million in the second quarter of 2020 compared to $5.5 million in the second quarter of 2019.
+Added: Costs of operations related to the waste management segment decreased to $7.2 million in the second quarter of 2020 compared with $10.3 million in the second quarter of 2019.
+Added: The decrease in the cost of operations between periods for the waste management segment is primarily due to the decreased net operating revenues as these costs vary directly with the associated revenues.
+Added: Cost of operations related to the golf and related operations segment decreased to $3.4 million in the second quarter of 2020 compared to $4.6 million in the second quarter of 2019.
+Added: The decrease was a result of lower employee related costs and food product costs in the second quarter of 2020 when compared to the second quarter of 2019 due to the decrease in net operating revenues as a result of the government mandated shut down.
+Added: Depreciation and amortization expense was approximately $0.7 million in the second quarter of 2020 compared to $0.6 million in the second quarter of 2019.
The increase is due to the higher depreciable asset base primarily due to the renovation and expansion of The Grand Resort.
−Removed: Consolidated selling, general and administrative expenses were approximately $2.2 million in both the first quarter of 2020 and 2019.
−Removed: Interest expense was approximately $0.3 million in the first quarter of 2020 compared to $0.2 million in the first quarter of 2019.
−Removed: The increase in interest expense is due to the higher average outstanding debt during the first quarter of 2020 compared to the prior period.
+Added: Consolidated selling, general and administrative expenses were approximately $1.9 million in the second quarter of 2020 compared to $2.4 million in the second quarter of 2019.
+Added: The decrease was attributable to lower employee related costs and, to a lesser extent, a decrease in advertising costs.
+Added: Interest expense was approximately $0.3 million in the second quarter of 2020 compared to $0.2 million in the second quarter of 2019.
+Added: The increase in interest expense is due to the higher average outstanding debt during the second quarter of 2020 compared to the prior period.
This increase was partially offset by a lower weighted average interest rate on the outstanding borrowings.
−Removed: During the three month periods ended March 31, 2020 and 2019, the weighted average interest rate on outstanding borrowings was 5.00% and 5.36%, respectively.
−Removed: Net loss attributable to Avalon Holdings Corporation common shareholders was $0.8 million, or $0.21 per share, in the first quarter of 2020 compared with a net loss attributable to Avalon Holdings Corporation common shareholders of approximately $0.6 million, or $0.16 per share, in the first quarter of 2019.
+Added: During the three month periods ended June 30, 2020 and 2019, the weighted average interest rate on outstanding borrowings was 4.67% and 5.53%, respectively.
+Added: Net loss attributable to Avalon Holdings Corporation common shareholders was $0.4 million, or $0.11 per share, in the second quarter of 2020 compared with net income attributable to Avalon Holdings Corporation common shareholders of approximately $0.5 million, or $0.12 per share, in the second quarter of 2019.
Segment Performance
1 unchanged sentence
Waste Management Services Segment
−Removed: The net operating revenues of the waste management services segment decreased to $11.1 million in the first quarter of 2020 compared with $11.4 million in the first quarter of 2019.
+Added: The net operating revenues of the waste management services segment decreased to $9.1 million in the second quarter of 2020 compared with $12.9 million in the second quarter of 2019.
The waste management services segment includes waste disposal brokerage and management services, captive landfill management operations and salt water injection well operations.
−Removed: The net operating revenues of the waste disposal brokerage and management services business decreased to $10.5 million in the first quarter of 2020 from $10.8 million in the first quarter of 2019.
−Removed: This decrease was partially a result of a decrease in net operating revenues relating to event work related to multiple projects.
+Added: During the second quarter of 2020, our waste disposal brokerage business experienced a decline in both continuous and project work due to government restrictions placed on its customers and related shutdowns as a result of the COVID-19 pandemic.
+Added: The net operating revenues of the waste disposal brokerage and management services business decreased to $8.5 million in the second quarter of 2020 from $12.2 million in the second quarter of 2019.
+Added: Net operating revenues relating to event work related to multiple projects decreased by approximately $2.1 million during the second quarter of 2020 when compared to the second quarter of 2019.
Event work is defined as bid projects under contract that occurs on a one-time basis over a short period of time.
Such work can fluctuate significantly from year to year.
−Removed: Net operating revenues related to event work were approximately $4.2 million in the first quarter of 2020 compared with $4.4 million in the first quarter of 2019.
+Added: Net operating revenues related to event work were approximately $3.3 million in the second quarter of 2020 compared with $5.4 million in the second quarter of 2019.
In addition, continuous work of the waste disposal brokerage business decreased approximately $1.7 million between periods as a result of decreased work from multiple customers.
−Removed: Net operating revenues related to continuous work were approximately $6.1 million in the first quarter of 2020 compared with $6.3 million in the first quarter of 2019.
−Removed: Net operating revenues related to managerial, consulting and clerical services were approximately $0.2 million in the first quarter of 2020 compared to $0.1 million in the first quarter of 2019.
+Added: Net operating revenues related to continuous work were approximately $4.7 million in the second quarter of 2020 compared with $6.4 million in the second quarter of 2019.
+Added: Net operating revenues related to managerial, consulting and clerical services were approximately $0.5 million in the second quarter of 2020 compared to $0.4 million in the second quarter of 2019.
Net operating revenue relating to managerial, consulting and clerical services, which is performed for one customer, is entirely dependent on that customer’s needs.
−Removed: The net operating revenues of the captive landfill management operations were approximately $0.6 million in both the first quarter of 2020 and 2019.
+Added: The net operating revenues of the captive landfill management operations were approximately $0.6 million in the second quarter of 2020 compared to $0.7 million in the second quarter of 2019.
The net operating revenues of the captive landfill operations are almost entirely dependent upon the volume of waste generated by the owner of the landfill for whom Avalon manages the facility.
Operations of the salt water injection wells have been suspended in accordance with the Chief of the Division of Oil and Gas Resources Management order.
−Removed: Due to the suspension of the salt water injections wells, there were no operating revenues during the first quarter of 2020 and 2019.
−Removed: Costs of operations related to the waste management segment decreased to $8.9 million in the first quarter of 2020 compared with $9.2 million in the first quarter of 2019.
+Added: Due to the suspension of the salt water injections wells, there were no operating revenues during the second quarter of 2020 and 2019.
+Added: Costs of operations related to the waste management segment decreased to $7.2 million in the second quarter of 2020 compared with $10.3 million in the second quarter of 2019.
The decrease in the cost of operations between periods for the waste management segment is primarily due to the decreased net operating revenues as these costs vary directly with the associated revenues.
−Removed: The overall gross margin percentage of the waste brokerage and management services business was approximately 20% in the first quarter of 2020 compared to 19% in the first quarter of 2019.
−Removed: The increase in the overall gross margin percentage was attributable to the higher gross profit generated from both the continuous and event work projects during the first quarter of 2020.
−Removed: Income before income taxes for the waste management services segment was approximately $1.0 million in both the first quarter of 2020 and 2019.
−Removed: Income before income taxes of the waste brokerage and management services business was approximately $1.0 million in the first quarter of 2020 compared to $0.9 million in the first quarter of 2019.
−Removed: The increased income before taxes was primarily attributable to the increased gross margin related to both continuous and event work during the first quarter of 2020 compared to the first quarter of 2019.
−Removed: Income before income taxes of the captive landfill operations was approximately $0.1 million in both the first quarter of 2020 and 2019.
−Removed: During both the first quarter of 2020 and 2019 the salt water injection wells incurred a loss before income taxes of less than $0.1 million primarily due to legal and professional costs incurred relating to Avalon’s mandamus processes.
+Added: The overall gross margin percentage of the waste brokerage and management services business was approximately 21% in the second quarter of 2020 compared to 20% in the second quarter of 2019.
+Added: The increase in the overall gross margin percentage was attributable to the higher gross profit generated from both the continuous and event work projects during the second quarter of 2020.
+Added: Income before income taxes for the waste management services segment was approximately $0.8 million in the second quarter of 2020 compared to $1.2 million in the second quarter of 2019.
+Added: Income before income taxes of the waste brokerage and management services business was approximately $0.7 million in the second quarter of 2020 compared to $1.2 million in the second quarter of 2019.
+Added: The decreased income before income taxes was primarily attributable to lower revenues and associated decreased gross margin related to both continuous and event work during the second quarter of 2020 compared to the second quarter of 2019.
+Added: Income before income taxes of the captive landfill operations was approximately $0.1 million in both the second quarter of 2020 and 2019.
+Added: During both the second quarter of 2020 and 2019 the salt water injection wells incurred a loss before income taxes of less than $0.1 million primarily due to legal and professional costs incurred relating to Avalon’s mandamus processes.
Golf and Related Operations Segment
−Removed: Net operating revenues of the golf and related operations segment were approximately $3.3 million in the first quarter of 2020 compared to $3.2 million in the first quarter of 2019.
+Added: Net operating revenues of the golf and related operations segment were approximately $4.0 million in the second quarter of 2020 compared to $5.5 million in the second quarter of 2019.
Avalon’s golf and related operations segment consists of the operation and management of four golf courses and related country clubs which provide dining and banquet facilities, a hotel that provides lodging, dining, banquet and conference facilities and other resort related amenities, a multipurpose recreation center and a travel agency.
−Removed: Food, beverage and merchandise sales were approximately $1.0 million in the first quarter of 2020 compared to $1.1 million in the first quarter of 2019.
−Removed: In March 2020, in response to the COVID-19 pandemic, The Ohio Department of Health and The Pennsylvania Department of Health both issued Director's Order temporarily closing all bars and restaurants to in-house patron (collectively the “Orders”).
−Removed: In accordance with the Orders, the Company continued to provide take-out, but revenues related to these services were not significant during that period.
−Removed: Other net operating revenues related to the golf and related operations were approximately $2.3 million in the first quarter of 2020 compared to $2.1 million in the first quarter of 2019.
−Removed: Net operating revenues related to room rental was approximately $0.3 million in both the first quarter of 2020 and 2019.
−Removed: During March 2020, the Company had significantly lower occupancy compared to March 2019 due to customer cancellations of overnight stays in response to the COVID-19 pandemic.
−Removed: Membership dues revenue was approximately $1.5 million in the first quarter of 2020 compared to $1.3 million in the first quarter of 2019.
−Removed: The increase in membership dues revenue is primarily attributable to the increase in members between periods.
−Removed: The average number of members during the first quarter of 2020 was 5,120 compared to 4,649 in the prior period.
−Removed: Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $0.4 million in both the first quarter of 2020 and 2019.
−Removed: In March 2020, in response to the COVID-19 pandemic, all nonessential business activities, including athletic, fitness, salon and spa activities, were required to temporarily cease operations.
+Added: Food, beverage and merchandise sales decreased to approximately $1.4 million in the second quarter of 2020 compared to $2.3 million in the second quarter of 2019.
+Added: Our restaurant operations generated significantly lower revenue as a result of the government mandated restrictions placed on in-house dining as a result of The Ohio Department of Health and The Pennsylvania Department of Health Director's Orders which temporarily closed all bars and restaurants to in-house patrons (collectively the “Orders”) in March 2020 as a result of the COVID-19 pandemic.
+Added: In accordance with the Orders, the Company continued to provide take-out, but revenues related to these services were not significant.
+Added: The Order also placed a limit on mass gatherings and large community events.
+Added: Food and beverages sales related to banquets and conferences were minimal during the second quarter of 2020 as a result of these government mandated restrictions.
+Added: In late May and June 2020, the states of Ohio and Pennsylvania allowed for both the reopening of dining rooms and limited gatherings under mandated restrictions.
+Added: Other net operating revenues related to the golf and related operations were approximately $2.6 million in the second quarter of 2020 compared to $3.2 million in the second quarter of 2019.
+Added: Membership dues revenue was approximately $1.5 million in the second quarter of 2020 compared to $1.4 million in the second quarter of 2019.
+Added: The increase in membership dues revenue is primarily attributable to the increase in the average number of members between periods.
+Added: The average number of members during the second quarter of 2020 was 5,002 compared to 4,870 in the second quarter of 2019.
+Added: Greens fees and associated cart rentals were approximately $0.6 million in both the second quarter of 2020 and 2019.
+Added: Net operating revenues related to room rental was approximately $0.3 million in the second quarter of 2020 compared to $0.7 million in the second quarter of 2019.
+Added: During the second quarter of 2020, the Company had significantly lower occupancy compared to the second quarter of 2019 due to customer cancellations of overnight stays in response to the COVID-19 pandemic.
+Added: Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities decreased to approximately $0.2 million in the second quarter of 2020 compared to $0.5 million in the second quarter of 2019 due to the March 2020 Orders requiring all nonessential business activities, including athletic, fitness, salon and spa activities to temporarily cease operations.
+Added: These business activities were allowed to resume operating in late May and early June 2020.
+Added: Cost of operations for the golf and related operations segment was $3.4 million in the second quarter of 2020 compared with $4.6 million in the second quarter of 2019.
+Added: Cost of food, beverage and merchandise was approximately $0.6 million in the second quarter of 2020 compared to $1.0 million in the second quarter of 2019.
+Added: The decrease in food, beverage and merchandise costs between periods is primarily attributable to the lower revenues.
+Added: The cost of food, beverage and merchandise sales was approximately 41% of associated revenue in the second quarter of 2020 compared to 42% in the second quarter of 2019.
+Added: Golf and related operations operating costs decreased to approximately $2.8 million in the second quarter of 2020 compared with $3.6 million in the second quarter of 2019.
+Added: The decrease in operating costs between periods was directly attributable to the decreased business operations under the Orders.
+Added: The golf and related operations recorded a loss before income taxes of $0.2 million in the second quarter of 2020 compared with income before income taxes of $0.2 million in the second quarter of 2019.
+Added: The change between periods was primarily a result of lower net operating revenues and associated gross profit generated in the second quarter of 2020 to cover the operation’s fixed costs.
+Added: General Corporate Expenses
+Added: General corporate expenses were $0.8 million in both the second quarter of 2020 and 2019.
+Added: Interest Expense
+Added: Interest expense was approximately $0.3 million in the second quarter of 2020 compared to $0.2 million in the second quarter of 2019.
+Added: The increase in interest expense is due to the higher average outstanding debt during the second quarter of 2020 compared to the prior period.
+Added: This increase was partially offset by a lower weighted average interest rate on the outstanding borrowings.
+Added: During the three month periods ended June 30, 2020 and 2019, the weighted average interest rate on outstanding borrowings was 4.67% and 5.53%, respectively.
+Added: Net Income ( Loss )
+Added: During the three months ended June 30, 2020 net loss attributable to Avalon Holdings Corporation common shareholders was $0.4 million compared to net income attributable to Avalon Holdings Corporation common shareholders of $0.5 million for the three months ended June 30, 2019.
+Added: Avalon recorded a state income tax provision in both the second quarter of 2020 and 2019, which was related entirely to the waste management and brokerage operations.
+Added: Due to the recording of a full valuation allowance against the Company’s federal net deferred tax assets, the overall effective tax rate in both periods reflects taxes owed in certain U.S state jurisdictions.
+Added: Avalon’s income tax on the income (loss) before taxes was offset by a change in the valuation allowance.
+Added: A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized.
+Added: Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.
+Added: P erformance in the first six month of 2020 compared with the first six months of 2019
+Added: Overall Performance
+Added: Net operating revenues decreased to $27.5 million in the first six months of 2020 compared with $33.0 million in the first six months of 2019.
+Added: This decrease was primarily due to a decrease in net operating revenues of the waste management services segment.
+Added: Net operating revenues of the waste management services segment were $20.2 million in the first six months of 2020 compared with $24.3 million in the first six months of 2019.
+Added: In addition, net operating revenues of the golf and related operations segment decreased in the first six months of 2020 compared to the first six months of 2019.
+Added: Net operating revenues of the golf and related operations segment were approximately $7.3 million in the first six months of 2020 compared to $8.7 million in the first six months of 2019.
+Added: Costs of operations related to the waste management segment decreased to $16.1 million in the first six months of 2020 compared with $19.5 million in the first six months of 2019.
+Added: The decrease in the cost of operations between periods for the waste management segment is primarily due to the decreased net operating revenues as these costs vary directly with the associated revenues.
+Added: Cost of operations related to the golf and related operations segment decreased to $6.6 million in the first six months of 2020 compared to $7.6 million in the first six months of 2019.
+Added: The decrease was a result of lower employee related costs and food product costs during the first six months of 2020 when compared to the first six months of 2019 due to the decrease in net operating revenues as a result of the government mandated shut down.
+Added: Depreciation and amortization expense was approximately $1.4 million in the first six months of 2020 compared to $1.2 million in the first six months of 2019.
+Added: The increase is due to the higher depreciable asset base primarily due to the renovation and expansion of The Grand Resort.
+Added: Consolidated selling, general and administrative expenses were approximately $4.2 million in the first six months of 2020 compared to $4.6 million in the first six months of 2019.
+Added: The decrease was attributable to lower employee related costs, legal and professional costs and advertising costs.
+Added: Interest expense was approximately $0.6 million in the first six months of 2020 compared to $0.4 million in the first six months of 2019.
+Added: The increase in interest expense is due to the higher average outstanding debt during the first six months of 2020 compared to the prior period.
+Added: This increase was partially offset by a lower weighted average interest rate on the outstanding borrowings.
+Added: During the six month periods ended June 30, 2020 and 2019, the weighted average interest rate on outstanding borrowings was 4.82% and 5.45%, respectively.
+Added: Net loss attributable to Avalon Holdings Corporation common shareholders was $1.2 million, or $0.32 per share, in the first six months of 2020 compared with a net loss attributable to Avalon Holdings Corporation common shareholders of approximately $0.2 million, or $0.04 per share, in the first six months of 2019.
+Added: Segment Performance
+Added: Segment performance should be read in conjunction with Note 13 to the Condensed Consolidated Financial Statements.
+Added: Waste Management Services Segment
+Added: The net operating revenues of the waste management services segment decreased to $20.2 million in the first six months of 2020 compared with $24.3 million in the first six months of 2019.
+Added: During the first six months of 2020, our waste disposal brokerage business experienced a decline in both continuous and project work due to government restrictions placed on its customers and related shutdowns as a result of the COVID-19 pandemic.
+Added: The net operating revenues of the waste disposal brokerage and management services business decreased to $19.0 million in the first six months of 2020 from $23.0 million in the first six months of 2019.
+Added: Net operating revenues relating to event work related to multiple projects decreased by approximately $2.3 million during the first six months of 2020 when compared to the first six months of 2019.
+Added: Event work is defined as bid projects under contract that occurs on a one-time basis over a short period of time.
+Added: Such work can fluctuate significantly from year to year.
+Added: Net operating revenues related to event work were approximately $7.4 million in the first six months of 2020 compared with $9.7 million in the first six months of 2019.
+Added: In addition, continuous work of the waste disposal brokerage business decreased approximately $1.9 million between periods as a result of decreased work from multiple customers.
+Added: Net operating revenues related to continuous work were approximately $10.8 million in the first six months of 2020 compared with $12.7 million in the first six months of 2019.
+Added: Net operating revenues related to managerial, consulting and clerical services were approximately $0.8 million in the first six months of 2020 compared to $0.6 million in the first six months of 2019.
+Added: Net operating revenue relating to managerial, consulting and clerical services, which is performed for one customer, is entirely dependent on that customer’s needs.
+Added: The net operating revenues of the captive landfill management operations were approximately $1.2 million in the first six months of 2020 compared to $1.3 million in the first six months of 2019.
+Added: The net operating revenues of the captive landfill operations are almost entirely dependent upon the volume of waste generated by the owner of the landfill for whom Avalon manages the facility.
+Added: Operations of the salt water injection wells have been suspended in accordance with the Chief of the Division of Oil and Gas Resources Management order.
+Added: Due to the suspension of the salt water injections wells, there were no operating revenues during the first six months of 2020 and 2019.
+Added: Costs of operations related to the waste management segment decreased to $16.1 million in the first six months of 2020 compared with $19.5 million in the first six months of 2019.
+Added: The decrease in the cost of operations between periods for the waste management segment is primarily due to the decreased net operating revenues as these costs vary directly with the associated revenues.
+Added: The overall gross margin percentage of the waste brokerage and management services business was approximately 20% in both the first six months of 2020 and 2019.
+Added: Income before income taxes for the waste management services segment was approximately $1.9 million in the first six months of 2020 compared to $2.2 million in the first six months of 2019.
+Added: Income before income taxes of the waste brokerage and management services business was approximately $1.8 million in the first six months of 2020 compared to $2.1 million in the first six months of 2019.
+Added: The decreased income before income taxes was primarily attributable to lower revenues and associated decreased gross margin related to both continuous and event work during the first six months of 2020 compared to the first six months of 2019.
+Added: Income before income taxes of the captive landfill operations was approximately $0.1 million in the first six months of 2020 compared to $0.2 million in the first six months of 2019.
+Added: During both the first six months of 2020 and 2019 the salt water injection wells incurred a loss before income taxes of less than $0.1 million primarily due to legal and professional costs incurred relating to Avalon’s mandamus processes.
+Added: Golf and Related Operations Segment
+Added: Net operating revenues of the golf and related operations segment were approximately $7.3 million in the first six months of 2020 compared to $8.7 million in the first six months of 2019.
+Added: Food, beverage and merchandise sales decreased to approximately $2.4 million in the first six months of 2020 compared to $3.4 million in the first six months of 2019.
+Added: Our restaurant operations generated significantly lower revenue as a result of the government mandated restrictions placed on in-house dining as a result of The Ohio Department of Health and The Pennsylvania Department of Health Director's Orders which temporarily closed all bars and restaurants to in-house patrons in March 2020 as a result of the COVID-19 pandemic.
+Added: In accordance with the Orders, the Company continued to provide take-out, but revenues related to these services were not significant.
+Added: The Order also placed a limit on mass gatherings and large community events.
+Added: Food and beverages sales related to banquets and conferences were significantly lower during the first six months of 2020 compared to the first six months of 2019 as a result of these government mandated restrictions.
+Added: In late May and June 2020, the states of Ohio and Pennsylvania allowed for both the reopening of dining rooms and limited gatherings under mandated restrictions.
+Added: Other net operating revenues related to the golf and related operations were approximately $4.9 million in the first six months of 2020 compared to $5.3 million in the first six months of 2019.
+Added: Membership dues revenue was approximately $3.0 million in the first six months of 2020 compared to $2.7 million in the first six months of 2019.
+Added: The increase in membership dues revenue is primarily attributable to the increase in the average number of members between periods.
+Added: The average number of members during the first six months of 2020 was 5,061 compared to 4,760 in the first six months of 2019.
+Added: Net operating revenues related to room rental was approximately $0.6 million in the first six months of 2020 compared to $1.0 million in the first six months of 2019.
+Added: During the first six months of 2020, the Company had significantly lower occupancy compared to the first six months of 2019 due to customer cancellations of overnight stays in response to the COVID-19 pandemic.
+Added: Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities decreased to approximately $0.6 million in the first six months of 2020 compared to $0.9 million in the first six months of 2019 due to the March 2020 Orders requiring all nonessential business activities, including athletic, fitness, salon and spa activities to temporarily cease operations.
+Added: These business activities were allowed to resume operating in late May and early June 2020.
+Added: Greens fees and associated cart rentals were approximately $0.7 million in both the first six months of 2020 and 2019.
Due to adverse weather conditions, net operating revenues relating to the golf courses, which are located in northeast Ohio and western Pennsylvania, were minimal during the first three months of 2020 and 2019.
−Removed: Greens fees and associated cart rentals were less than $0.1 million in both the first quarter of 2020 and 2019.
−Removed: Cost of operations for the golf and related operations segment was $3.2 million in the first quarter of 2020 compared with $3.0 million in the first quarter of 2019.
−Removed: Cost of food, beverage and merchandise was approximately $0.6 million in the first quarter of 2020 compared to $0.5 million in the first quarter of 2019.
−Removed: The cost of food, beverage and merchandise sales was approximately 51% of associated revenue in the first quarter of 2020 compared to 48% in the first quarter of 2019.
−Removed: The increase in food, beverage and merchandise costs between periods is attributable to higher food product cost.
−Removed: Golf and related operations operating costs increased to approximately $2.6 million in the first quarter of 2020 compared with $2.5 million in the first quarter of 2019.
−Removed: The increase was primarily a result of higher employee related costs when compared to the prior year.
−Removed: The golf and related operations recorded a loss before income taxes of $0.7 million in the first quarter of 2020 compared with a loss before income taxes of $0.6 million in the first quarter of 2019.
−Removed: The change between periods was primarily a result of higher employee related costs and food product costs in the first quarter of 2020 when compared to the first quarter of 2019.
+Added: Cost of operations for the golf and related operations segment was $6.6 million in the first six months of 2020 compared with $7.6 million in the first six months of 2019.
+Added: Cost of food, beverage and merchandise was approximately $1.1 million in the first six months of 2020 compared to $1.5 million in the first six months of 2019.
+Added: The decrease in food, beverage and merchandise costs between periods is attributable to the lower revenues partially offset by higher food product cost.
+Added: The cost of food, beverage and merchandise sales was approximately 46% of associated revenue in the first six months of 2020 compared to 44% in the first six months of 2019.
+Added: Golf and related operations operating costs decreased to approximately $5.5 million in the first six months of 2020 compared with $6.1 million in the first six months of 2019.
+Added: The decrease in operating costs between periods was directly attributable to the decreased business operations under the Orders.
+Added: The golf and related operations recorded a loss before income taxes of $0.9 million in the first six months of 2020 compared with a loss before income taxes of $0.5 million in the first six months of 2019.
+Added: The change between periods was primarily a result of lower net operating revenues and associated gross profit generated in the first six months of 2020 to cover the operations fixed costs.
The ability to attract new members and retain members is very important to the success of the golf and related operations segment.
2 unchanged sentences
General Corporate Expenses
−Removed: General corporate expenses were $0.8 million in both first quarter of 2020 and 2019.
+Added: General corporate expenses were $1.6 million in both the first six months of 2020 and 2019.
Interest Expense
−Removed: Interest expense was approximately $0.3 million in the first quarter of 2020 compared to $0.2 million in the first quarter of 2019.
−Removed: The increase in interest expense is due to the higher average outstanding debt during the first quarter of 2020 compared to the prior period.
+Added: Interest expense was approximately $0.6 million in the first six months of 2020 compared to $0.4 million in the first six months of 2019.
+Added: The increase in interest expense is due to the higher average outstanding debt during the first six months of 2020 compared to the prior period.
This increase was partially offset by a lower weighted average interest rate on the outstanding borrowings.
−Removed: During the three month periods ended March 31, 2020 and 2019, the weighted average interest rate on outstanding borrowings was 5.00% and 5.36%, respectively.
−Removed: During the three months ended March 31, 2020 and 2019, net loss attributable to Avalon Holdings Corporation common shareholders was $0.8 million and $0.6 million, respectively.
−Removed: Avalon recorded a state income tax provision in both the first quarter of 2020 and 2019, which was related entirely to the waste management and brokerage operations.
+Added: During the six month periods ended June 30, 2020 and 2019, the weighted average interest rate on outstanding borrowings was 4.82% and 5.45%, respectively.
+Added: During the six months ended June 30, 2020 net loss attributable to Avalon Holdings Corporation common shareholders was $1.2 million compared to a net loss attributable to Avalon Holdings Corporation common shareholders of $0.2 million for the six months ended June 30, 2019.
+Added: Avalon recorded a state income tax provision in both the first six months of 2020 and 2019, which was related entirely to the waste management and brokerage operations.
Due to the recording of a full valuation allowance against the Company’s federal net deferred tax assets, the overall effective tax rate in both periods reflects taxes owed in certain U.S state jurisdictions.
3 unchanged sentences
Trends and Uncertainties
−Removed: Government regulations
+Added: Financial i mpact of COVID-19 p andemic
In December 2019, a novel strain of coronavirus, COVID-19, emerged in Wuhan, Hubei Province, China.
1 unchanged sentence
On March 11, 2020, the World Health Organization declared the COVID-19 viral disease a pandemic.
−Removed: The duration of the outbreak and new information which emerges concerning the severity of the illness and its treatment still remains unclear.
+Added: The duration of the outbreak and new information which continually emerges concerning the severity of the illness and its treatment still remains unclear.
As a result, the federal and state governmental bodies have taken unprecedented measures to try and control the spread of the virus.
7 unchanged sentences
The Stay at Home Order required all non-essential businesses to cease operations.
−Removed: On March 2020 the Governor of the state of Pennsylvania issued a similar Stay at Home order.
+Added: In March 2020 the Governor of the state of Pennsylvania issued a similar Stay at Home order.
Under the order, all non-essential businesses were required to cease operations.
−Removed: In accordance with the “Essential Critical Infrastructure Workforce” guidance issued by the U.S Department of Homeland Security, Cybersecurity & Infrastructure Agency (“CISA”) on March 19, 2020, the Company’s waste management services, restaurant carry-out, overnight lodging and outdoor golf courses have remained in operation.
−Removed: In May 2020, the state of Ohio began the gradual phased process of reopening certain businesses that were temporarily closed under the Order.
−Removed: In Ohio, the Company’s dining rooms, salon and spa services can reopen under certain mandatory restrictions.
−Removed: Fitness and athletic operations are temporarily closed in accordance with the Order.
−Removed: In Pennsylvania, the Company’s in-house dining, fitness, athletics, salon and spa operations are temporarily closed in accordance with the Order.
−Removed: The continued spread of COVID-19 and related governmental orders have adversely impacted our operations and related financial results.
−Removed: We expect our restaurant operations to generate significantly lower revenue as a result of the government mandated restrictions placed on in-house dining.
−Removed: In addition, the Company has seen high levels of room and event cancellations through the third quarter of 2020 with some tentative re-bookings in the fourth quarter and into 2021.
+Added: In accordance with the “Essential Critical Infrastructure Workforce” guidance issued by the U.S Department of Homeland Security, Cybersecurity & Infrastructure Agency (“CISA”) on March 19, 2020, the Company’s waste management services, restaurant carry-out, overnight lodging and outdoor golf courses remained in operation during the Order.
+Added: In late May and June 2020, the states of Ohio and Pennsylvania allowed the reopening of certain business operations that were temporarily closed under the Order.
+Added: The Company’s dining rooms, fitness, athletic, pool, salon and spa services reopened under certain mandatory restrictions including mask protection for employees, decrease in occupancy and other measures to enforce social distancing.
+Added: The continued spread of COVID-19 and related governmental orders adversely impacted our operations and related financial results.
+Added: Our restaurant operations generated significantly lower revenue as a result of the government mandated restrictions that were placed on in-house dining.
+Added: Food and beverages sales related to banquets and conferences were minimal during the second quarter of 2020 as a result of government mandated restrictions placed on gatherings and events.
+Added: In addition, the Company had high levels of room and event cancellations with some re-bookings in the third and fourth quarter of 2020 and into 2021.
Our fitness, athletics, salon and spa operations generated no revenue under the mandate.
−Removed: We cannot predict the duration of the mandate or any limitations the government may impose on our operations, which may include, among others, mask protection as well as other measures to enforce social distancing measures.
+Added: In addition, our waste management brokerage business has experienced a decline in both continuous and project work due to government restrictions placed on its customers and associated shutdowns.
As government restrictions are reduced or lifted, we may experience weakened demand in light of continued travel restrictions or warnings, consumer fears and reduced consumer discretionary spending and general economic uncertainty.
In light of the foregoing, we are unable to determine when our operations will return to pre-pandemic demand or pricing.
−Removed: During this time, the Company has engaged in aggressive efforts to reduce expenses, including reducing employee costs, through hiring freezes, headcount reductions and substantial furloughs of employees.
+Added: During the mandated shut-down, the Company engaged in aggressive efforts to reduce expenses, including reducing employee costs, through hiring freezes, headcount reductions and substantial furloughs of employees.
+Added: The Company began the process of rehiring employees in late May to meet business needs as the government restrictions on certain of our business operations were reduced or lifted.
+Added: Governmental bodies may impose additional restrictions, which could include additional shutdowns, to stop the spread of infection.
+Added: These additional restrictions would have a negative impact on our financial condition, results of operations and cash flows.
+Added: Paycheck Protection Program Loan
+Added: The Coronavirus Aid, Relief, and Economic Security Act, or (“CARES”) Act, was signed into law on March 27, 2020, and provides over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic.
+Added: The CARES Act authorized the Small Business Administration to temporarily guarantee loans under a new loan program called the Paycheck Protection Program (the “Program”).
+Added: The Program provides for 100% federally guaranteed loans to small businesses to allow employers to keep workers employed and maintain payroll during the pandemic and economic downturn.
+Added: Under the Program, qualified companies are eligible for a loan in an amount equal to the lesser of $10 million or 2.5x the business’s average monthly payroll.
+Added: Collateral or guarantor support is not required for the loan.
+Added: Under the Program, the borrower is eligible for loan forgiveness up to the amount the borrower spends on certain eligible costs during the 8 week period beginning on the date the proceeds were received on the loan.
+Added: Eligible costs under the Program include payroll costs, interest on mortgage obligations incurred before the covered period, rent on leasing agreements and utility services.
+Added: The amount of loan forgiveness is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees.
+Added: Under the Program, proceeds that are not forgiven convert to a loan bearing interest at a fixed rate of 1% payable in 18 equal monthly installments commencing after the forgiveness period.
+Added: The Program was subsequently amended to allow the borrower to use an extended forgiveness period of 24 weeks beginning on the date the proceeds were received on the loan and to extend the repayment period to 54 months commencing after the 24 week forgiveness period.
+Added: In the second quarter of 2020, certain wholly-owned subsidiaries of Avalon entered into agreements and received a total of approximately $2.8 million in loans under the Program.
+Added: The Company is currently utilizing the loan proceeds under the 24 week loan forgiveness period in accordance with Program’s guidelines.
+Added: When the debt is forgiven in accordance with the Program, any amount that is forgiven will be recognized as a gain on debt extinguishment.
+Added: The Company will repay amounts that are not forgiven or utilized.
+Added: Government r egulations
The federal government and numerous state and local governmental bodies are continuing to consider legislation or regulations to either restrict or impede the disposal and/or transportation of waste.
2 unchanged sentences
Avalon’s waste brokerage and management services may also be affected by the trend toward laws requiring the development of waste reduction and recycling or other programs.
−Removed: On December 22, 2017, legislation commonly known as the Tax Act was signed into law.
−Removed: The Tax Act changes existing U.S.
−Removed: tax law and includes numerous provisions that will affect Avalon, including our income tax accounting, disclosure and tax compliance.
−Removed: The most impactful changes within the Tax Act are those that will reduce the U.S.
−Removed: corporate tax rates, business-related exclusions and deductions and credits.
−Removed: Consequently, as of the date of enactment, Avalon valued all deferred tax assets and liabilities at the newly enacted Corporate U.S income tax rate.
−Removed: Avalon has a full valuation allowance on its federal deferred tax assets.
+Added: On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic.
+Added: The CARES Act, among other things, permits NOL carryforwards generated in taxable years beginning after December 31, 2017, to offset 100% of taxable income for taxable years beginning before January 1, 2021, and 80% of taxable income in taxable years beginning after December 31, 2020.
+Added: In addition, the CARES Act allows net operating losses incurred in taxable years beginning after December 31, 2017, and before January 1, 2021, to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.
+Added: The Company is currently evaluating the full impact of these provisions and recent IRS guidance, and we expect that it will not have a material impact on the Company’s financial position or results of operations.
Legal matters
84 unchanged sentences
The ability to retain current members and attract new members has been an ongoing challenge.
−Removed: Although Avalon was able to increase the number of members of the Avalon Golf and Country Club, as of March 31, 2020, Avalon has not attained its membership goals.
+Added: Although Avalon was able to increase the number of members of the Avalon Golf and Country Club, as of June 30, 2020, Avalon has not attained its membership goals.
There can be no assurance as to when such goals will be attained and when the golf and related operations will ultimately become profitable.
1 unchanged sentence
A significant decline in members could adversely affect the future financial performance of Avalon.
−Removed: Avalon’s golf course operations and The Grand Resort currently hold liquor licenses for their respective facilities.
+Added: Avalon’s golf course operations, The Grand Resort and multipurpose recreation center currently hold liquor licenses for their respective facilities.
If, for some reason, any one of these facilities were to lose their liquor license, the financial performance of the golf and related operations would be adversely affected.
3 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.