What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-13 · 709 added, 368 removed, 665 unchanged (62% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Net operating revenues:

Waste management services

$ 8,685  

$ 9,088  

$ 19,835  

$ 20,221  

Food, beverage and merchandise sales

1 unchanged sentence

Total golf and related operations

11,668  

Total net operating revenues

16,390  

13,067  

31,503  

27,470  

Costs and expenses:

Waste management services operating costs

15,670  

16,080  

Cost of food, beverage and merchandise

2 unchanged sentences

Selling, general and administrative expenses

Operating loss

Operating income (loss)

( 222 )  

( 119 )  

Other income (expense):

Interest expense

( 291 )  

( 304 )  

( 588 )  

Gain on debt extinguishment

1 unchanged sentence

Income (loss) before income taxes

( 423 )  

Provision for income taxes

Net income (loss)

( 447 )  

Less net loss attributable to non-controlling interest in subsidiary

( 18 )  

( 12 )  

( 46 )  

Net income (loss) attributable to Avalon Holdings Corporation common shareholders

$ ( 435 )  

$ 1,458  

Income (loss) per share attributable to Avalon Holdings Corporation common shareholders:

Basic net income (loss) per share

$ 0.19  

$ ( 0.11 )  

$ 0.37  

Diluted net income (loss) per share

$ 0.19  

$ ( 0.11 )  

$ 0.37  

Weighted average shares outstanding - basic

3 unchanged sentences

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share amounts)

Current Assets:

Cash and cash equivalents

$ 4,451  

$ 4,210  

Accounts receivable, less allowance for credit losses

3 unchanged sentences

Total current assets

16,642  

15,259  

Property and equipment, net

51,856  

51,299  

Property and equipment under finance leases, net

3 unchanged sentences

Other assets, net

$ 78,720  

$ 77,950  

Liabilities and Equity

1 unchanged sentence

Current portion of long-term debt

$ 1,097  

$ 1,594  

Current portion of obligations under finance leases

7 unchanged sentences

Total current liabilities

18,754  

17,183  

Long-term debt, net of current portion

19,946  

21,941  

Obligations under finance leases, net of current portion

5 unchanged sentences

Paid-in capital

59,199  

59,196  

Accumulated deficit

( 20,684 )  

Total Avalon Holdings Corporation Shareholders' Equity

38,554  

37,093  

Non-controlling interest in subsidiary

( 172 )  

38,382  

36,967  

Total liabilities and equity

$ 78,720  

$ 77,950  

See accompanying notes to unaudited condensed consolidated financial statements.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders ’ Equity (Unaudited)

Condensed Consolidated Statement of Shareholders ’

Equity (Unaudited)

(in thousands, except for share data)

For the Three Months Ended March 31, 2021

For the Three Months Ended June 30, 2021

Non-controlling

Shareholders'

Balance at January 1, 2021

Balance at April 1, 2021

3,287,647  

611,784  

$ 59,197  

$ ( 21,426 )  

$ 37,810  

$ ( 154 )  

$ 37,656  

Stock options - compensation costs

Net income (loss)

Balance at March 31, 2021

For the Three Months Ended March 31, 2020

( 18 )  

Balance at June 30, 2021

3,287,647  

611,784  

$ 59,199  

$ ( 20,684 )  

$ 38,554  

$ ( 172 )  

$ 38,382  

For the Three Months Ended June 30, 2020

Non-controlling

Shareholders'

Balance at April 1, 2020

Stock options - compensation costs

Balance at June 30, 2020

See accompanying notes to unaudited condensed consolidated financial statements.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders ’

Equity (Unaudited)

(in thousands, except for share data)

For the Six Months Ended June 30, 2021

Non-controlling

Shareholders'

Balance at January 1, 2021

1 unchanged sentence

Net income (loss)

Balance at March 31, 2020

Balance at June 30, 2021

For the Six Months Ended June 30, 2020

Non-controlling

Shareholders'

Balance at January 1, 2020

Stock options - compensation costs

Balance at June 30, 2020

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net income (loss)

Reconciliation of net income (loss) to cash provided by (used in) operating activities:

Reconciliation of net income (loss) to cash provided by operating activities:

Depreciation and amortization expense

15 unchanged sentences

Other liabilities and accrued expenses

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

3 unchanged sentences

Cash flows from financing activities:

Proceeds under Paycheck Protection Program loans

Principal payments on term loan facilities

Principal payments on finance lease obligations

Net cash used in financing activities

Decrease in cash, cash equivalents and restricted cash

Net cash provided by (used in) financing activities

Increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

13 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

Description of Business

Avalon Holdings Corporation (“Avalon” or the “Company”) was formed on April 30, 1998 as a subsidiary of American Waste Services, Inc.

Avalon Holdings Corporation (“Avalon”

or the “Company”) was formed on April 30, 1998 as a subsidiary of American Waste Services, Inc.

(“AWS”).

On June 17, 1998, AWS distributed, as a special dividend, all of the outstanding shares of capital stock of Avalon to the holders of AWS common stock on a pro rata and corresponding basis.

2 unchanged sentences

In addition, Avalon owns Avalon Resorts and Clubs, Inc.

(“ARCI”), which includes the operation and management of four golf courses and associated clubhouses, athletic and fitness centers, tennis courts, salon and spa services, dining and banquet facilities and a travel agency.

ARCI also owns and operates a hotel and its related resort amenities including dining, banquet and conference facilities, salon and spa services, fitness center, outdoor resort pool, Roman Bath, indoor junior Olympic size swimming pool and tennis courts.

2 unchanged sentences

Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted consistent with such rules and regulations.

The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in Avalon’s 2020 Annual Report to Shareholders.

The unaudited condensed consolidated financial statements include the accounts of Avalon, its wholly owned subsidiaries and those companies in which Avalon has managerial control.

All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position of Avalon as of March 31, 2021, and the results of its operations and cash flows for the interim periods presented.

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position of Avalon as of June 30, 2021, and the results of its operations and cash flows for the interim periods presented.

The operating results for the interim periods are not necessarily indicative of the results to be expected for the full year.

The coronavirus/COVID-19 pandemic (collectively referred to herein as "COVID-19") adversely impacted our financial position, results of operations, and cash flows during both the three months ended March 31, 2021 and 2020.

The Condensed Consolidated Financial Statements presented herein reflect our current estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures as of the date of the financial statements and reported amounts of revenues and expenses during the reporting periods presented.

Due to the ongoing uncertainty, we cannot predict the future impact that COVID-19 may have on our financial condition, results of operations or cash flows.

The coronavirus/COVID- 19 pandemic (collectively referred to herein as "COVID- 19" ) adversely impacted our financial position, results of operations, and cash flows during the six months ended June 30, 2020.

As a result of the government mandates being subsequently lifted, the COVID- 19 pandemic had a limited impact on our results of operations during the six months ended June 30, 2021.

Due to the ongoing uncertainty of COVID- 19, we cannot predict the future impact that the pandemic may have on our financial condition, results of operations or cash flows.

COVID- 19 Coronavirus Pandemic

2 unchanged sentences

On March 11, 2020, the World Health Organization declared the COVID- 19 viral disease a pandemic.

As a result, the federal and state governmental bodies have taken unprecedented measures to try and control the spread of the virus including the issuance of temporary stay at home orders, the temporary closing of non-essential businesses and in-house dining and restrictions on gatherings and events.

The duration of the outbreak still remains unclear.

During both the three months ended March 31, 2021 and 2020, the various governmental orders issued to control the spread of COVID-19 adversely impacted our operations and related financial results.

Our restaurant operations have government mandated occupancy restrictions for in-house dining.

As a result, the federal and state governmental bodies began taking unprecedented measures to try and control the spread of the virus including the issuance of temporary stay at home orders, the temporary closing of non-essential businesses and in-house dining and restrictions on gatherings and events.

During the six months ended June 30, 2020, the various governmental orders that were issued to control the spread of COVID- 19 adversely impacted our operations and related financial results.

Our restaurants operated under government mandated occupancy restrictions for in-house dining.

Food and beverages sales related to banquets and conferences were significantly lower as a result of restrictions placed on gatherings and events.

In addition, in March 2020, the Company began experiencing a high level of room and event cancellations with some subsequent re-bookings for a future date.

We may continue to 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.

The Company engaged in efforts to reduce expenses, including reducing employee costs, through hiring freezes, headcount reductions and furloughs of employees.

The Company subsequently rehired employees and utilized the proceeds obtained from the Paycheck Protection Program Loans as the government restrictions on certain business operations were reduced or lifted.

Although the various government mandates impacting our business operations have currently been 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.

The full extent of the impact of the COVID- 19 pandemic on our operations and financial performance will depend on future developments, including the duration and spread of the pandemic and the impact of COVID- 19 variants, all of which are uncertain and cannot be predicted at this time.

Governmental bodies may continue to impose additional restrictions, which could include additional shutdowns, to stop the spread of infection.

1 unchanged sentence

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU 2020-04”) establishing Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform.

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU 2020 - 04”

) establishing Accounting Standards Codification (“ASC”) Topic 848,  

Reference Rate Reform.

ASU 2020 - 04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates.

The guidance in ASU 2020 - 04 is optional and may be elected over time as reference rate reform activities occur.

The Company is currently evaluating the impact of the guidance and our options related to the practical expedients.

The Company is currently evaluating the adoption of this pronouncement and does not expect the adoption to have an impact on the Company's financial position, results of operations or financial disclosures.

Cash, Cash Equivalents and Restricted Cash

6 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows.

Cash, cash equivalents and restricted cash consist of the following at March 31, 2021 and December 31, 2020 (in thousands):

Cash, cash equivalents and restricted cash consist of the following at June 30, 2021 and December 31, 2020 ( in thousands):

Cash and cash equivalents

10 unchanged sentences

Waste Management Services

Avalon’s waste management services provide hazardous and nonhazardous waste brokerage and management services, captive landfill management services and salt water injection well operations.

Waste management services are provided to industrial, commercial, municipal and governmental customers primarily in selected northeastern and midwestern United States markets.

Avalon’s waste brokerage and management business assists customers with managing and disposing of wastes at approved treatment and disposal sites based upon a customer’s needs.

Avalon provides a service to its customers whereby Avalon, arranges for, and accepts responsibility for the removal, transportation and disposal of waste on behalf of the customer.

Avalon’s landfill management business provides technical and operational services to customers owning captive disposal facilities.

A captive disposal facility only disposes of waste generated by the owner of such facility.

4 unchanged sentences

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 (See Note 16 ).

Due to the suspension of the salt water injection wells, there were no operating revenues for the three months ended March 31, 2021 and 2020.

For the three months ended March 31, 2021 and 2020, the net operating revenues related to waste management services represented approximately 74% and 77%, respectively, of Avalon’s total consolidated net operating revenues.

For the three months ended March 31, 2021, one customer accounted for 20% of the waste management services segment’s net operating revenues to external customers and 15% of the consolidated net operating revenues.

For the three months ended March 31, 2020, no one customer individually accounted for 10% or more of Avalon’s waste management services segment revenues.

Due to the suspension of the salt water injection wells, there were no operating revenues for both the three and six months ended June 30, 2021 and 2020.

For the three months ended June 30, 2021 and 2020, the net operating revenues related to waste management services represented approximately 53 % and 70 %, respectively, of Avalon’s total consolidated net operating revenues.

For the six months ended June 30, 2021 and 2020, the net operating revenues related to waste management services represented approximately 63 % and 74 %, respectively, of Avalon’s total consolidated net operating revenues.

For the six months ended June 30, 2021, one customer accounted for 11 % of the waste management services segment’s net operating revenues to external customers and 7 % of the consolidated net operating revenues.

For the six months ended June 30, 2020, no one customer individually accounted for 10% or more of Avalon’s waste management services segment revenues.

For our waste management services contracts, the customer contracts with us to provide a series of distinct waste management services over time which integrates a set of tasks (i.e.

removal, transportation and disposal of waste) into a single project.

Avalon provides substantially the same service over time and the same method is used to measure the Company’s progress toward complete satisfaction of the performance obligation to transfer each distinct service in the series to the customer.

The series of distinct waste management services, which are the same over time, meets the series provision criteria, and as such, the Company treats that series as a single performance obligation.

The Company allocates the transaction price to the single performance obligation and recognizes revenue by applying a single measure of progress to that performance obligation.

Avalon transfers control of the service over time and, therefore, satisfies the performance obligation and recognizes the revenue over time as the customer simultaneously receives and consumes the benefits provided by Avalon’s performance as we perform.

In addition, as the promise to provide services qualifies as a series accounted for as a single performance obligation, the Company applied the practical expedient guidance that allows an entity that is recognizing revenue over time by using an output method to recognize revenue equal to the amount that the entity has the right to invoice if the invoiced amount corresponds directly to the value transferred to the customer.

The Company applied the standard's practical expedient that permits the omission of disclosures relating to unsatisfied performance obligations as most of the Company’s waste management service contracts (i) have an original expected length of one year or less and (ii) the Company recognizes revenue at the amount to which the Company has the right to invoice for services performed.

Avalon evaluated whether we are the principal (i.e.

14 unchanged sentences

Golf and Related Operations

Avalon’s golf and related operations include the operation and management of four golf courses and associated clubhouses, recreation and fitness centers, tennis courts, salon and spa services, dining and banquet facilities and a travel agency.

The golf and related operations also include the operation of a hotel and its related amenities including dining, banquet and conference facilities, fitness center, indoor junior Olympic size swimming pool and tennis courts.

Revenues for the golf and related operations consists primarily of food, beverage and merchandise sales, membership dues, greens fees and associated cart rentals, room rentals, fitness activities, salon and spa services.

Due to adverse weather conditions, net operating revenues relating to the golf courses, which are located in northeast Ohio and Pennsylvania, were minimal during the first three months of 2021 and 2020.

For the three months ended March 31, 2021 and 2020, the net operating revenues related to the golf and related operations represented approximately 26% and 23%, respectively, of Avalon’s total consolidated net operating revenues.

For both the three months ended March 31, 2021 and 2020, no one customer individually accounted for 10% or more of Avalon’s golf and related operations segment revenues.

For Avalon’s golf and related operations, the Avalon Golf and Country Club offers membership packages for use of the country club facilities and its related amenities.

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 2021 and 2020.

For the three months ended June 30, 2021 and 2020, the net operating revenues related to the golf and related operations represented approximately 47 % and 30 %, respectively, of Avalon’s total consolidated net operating revenues.

For the six months ended June 30, 2021 and 2020, the net operating revenues related to the golf and related operations represented approximately 37 % and 26 %, respectively, of Avalon’s total consolidated net operating revenues.

For both the six months ended June 30, 2021 and 2020, no one customer individually accounted for 10% or more of Avalon’s golf and related operations segment revenues.

For Avalon’s golf and related operations, the Avalon Golf and Country Club offers membership packages for use of the country club facilities and its related amenities.

Membership agreements are a one year noncancellable commitment and pricing varies based on the membership type selected by the customer.

Based on the terms and conditions of the membership contract, resignations received within the membership period do not relieve the member of their annual commitment.

Memberships automatically renew on the member’s anniversary date unless the member resigns for the upcoming membership period prior to the renewal date.

Membership for the Avalon Golf and Country Club does not contain up-front initiation fees or require monthly minimum spending at the facilities.

3 unchanged sentences

Under the terms of the contract, Avalon will provide unlimited use and access to the country club facilities.

Avalon’s performance obligation in the contract is the “stand ready obligation” to provide access to these facilities for the member for the entire membership term.

Avalon providing the “stand ready obligation” for use of the facilities to the member over the entire term of the membership agreement represents a single performance obligation of which Avalon expects the member to receive and consume the benefits of its obligation throughout the membership term, and as such, the Company recognizes membership dues on a straight line basis over the term of the contract.

Avalon’s performance obligation in the contract is the “stand ready obligation”

to provide access to these facilities for the member for the entire membership term.

Avalon providing the “stand ready obligation”

for use of the facilities to the member over the entire term of the membership agreement represents a single performance obligation of which Avalon expects the member to receive and consume the benefits of its obligation throughout the membership term, and as such, the Company recognizes membership dues on a straight line basis over the term of the contract.

The Company applied the standard's practical expedient that permits the omission of disclosures relating to unsatisfied performance obligations for contracts with an original expected length of one year or less as Avalon Golf and Country Club membership agreements are one year in length.

For our hotel operations, Avalon’s performance obligation is to provide lodging facilities.

The separate components of providing these services (hotel room, toiletry items, housekeeping, and amenities) are not distinct within the context of the contract as they are all highly dependent and interrelated as part of the obligation to provide the lodging facility.

2 unchanged sentences

Our hotel room reservations are performance obligations satisfied over time as the hotel guest simultaneously receives and consumes the benefits provided by the hotel.

For performance obligations satisfied over time, our hotel operations measure the progress toward complete satisfaction of the performance obligation and recognize revenue proportionately over the course of the customer’s stay.

For food, beverage, and merchandise sales, greens fees and associated cart rental, fitness activities, salon and spa services and other ancillary services, the transaction price is the set price charged by the Company for those goods or services.

Upon purchase of the good or service, the Company transfers control of the good or service to the customer and the customer immediately consumes the benefits of the Company’s performance and, as such, we recognize revenue at the point of sale.

Amounts paid in advance, such as deposits on overnight lodging or for banquet or conferences facilities, are recorded as a liability until the goods or services are provided to the customer (see Contract Liabilities below).

The following table presents our net operating revenues disaggregated by revenue source for the three months ended March 31, 2021 and 2020 (in thousands).

The following table presents our net operating revenues disaggregated by revenue source for the three and six months ended June 30, 2021 and 2020 (in thousands).

Sales and other taxes are excluded from revenues.

Three Months Ended

Six Months Ended

Waste management and brokerage services

$ 8,078  

$ 8,501  

$ 18,629  

$ 19,026  

Captive landfill management operations

Total waste management services revenues

19,835  

20,221  

Food, beverage and merchandise sales

5 unchanged sentences

Total golf and related operations revenue

11,668  

Total net operating revenues

$ 16,390  

$ 13,067  

$ 31,503  

$ 27,470  

Avalon does not have operations located outside the United States and, accordingly, geographical revenue information is not presented.

2 unchanged sentences

The amounts due are stated at their net realizable value.

At March 31, 2021 and December 31, 2020, accounts receivable, net, related to our waste management services segment were approximately $8.8 million and $7.9 million, respectively.

At March 31, 2021, one customer accounted for approximately 25% of the waste management services segment’s receivables and 20% of the consolidated receivables.

At December 31, 2020 no one customer accounted for 10% or more of Avalon’s waste management services segment or consolidated net receivables.

Accounts receivable, net, related to our golf and related operations segment were approximately $1.9 million and $0.8 million at March 31, 2021 and December 31, 2020, respectively.

No one customer of the golf and related operations segment accounted for 10% or more of Avalon’s golf and related operations segment or consolidated net receivables at March 31, 2021 or December 31, 2020.

At June 30, 2021 and December 31, 2020, accounts receivable, net, related to our waste management services segment were approximately $ 7.1 million and $ 7.9 million, respectively.

At June 30, 2021, one customer accounted for approximately 19 % of the waste management services segment’s receivables and 15 % of the consolidated receivables.

At December 31, 2020 no one customer accounted for 10% or more of Avalon’s waste management services segment or consolidated net receivables.

Accounts receivable, net, related to our golf and related operations segment were approximately $ 1.9 million and $ 0.8 million at June 30, 2021 and December 31, 2020, respectively.

No one customer of the golf and related operations segment accounted for 10% or more of Avalon’s golf and related operations segment or consolidated net receivables at June 30, 2021 or December 31, 2020.

The Company maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be collected.

Customer accounts that are outstanding longer than the contractual payment terms are considered past due.

Avalon determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, Avalon’s previous accounts receivable loss history, the customer’s current ability to pay its obligation to Avalon and the condition of the general economy and the industry as a whole.

Avalon writes off accounts receivable when they become uncollectible.

Payments subsequently received on such receivables are credited to the allowance for credit losses, or to income, as appropriate under the circumstances.

Allowance for credit losses was approximately $0.3 million at March 31, 2021 and December 31, 2020.

The following table presents changes in our allowance for credit losses during the three months ended March 31, 2021 and 2020 (in thousands):

Allowance for credit losses was approximately $ 0.3 million at June 30, 2021 and December 31, 2020.

The following table presents changes in our allowance for credit losses during the three and six months ended June 30, 2021 and 2020 (in thousands):

Beginning of Period

1 unchanged sentence

Allowance for credit losses

Three months ended March 31, 2021

Three months ended March 31, 2020

Three months ended June 30, 2021

$ ( 16 )  

Three months ended June 30, 2020

$ ( 15 )  

Six months ended June 30, 2021

$ ( 15 )  

Six months ended June 30, 2020

$ ( 18 )  

Contract Assets

2 unchanged sentences

Contract assets related to unbilled membership dues are classified as current as revenue related to such agreements is recognized within the annual membership period.

Unbilled membership receivables in our Condensed Consolidated Balance Sheets were approximately $0.7 million at March 31, 2021 and $0.6 million at December 31, 2020.

The following table presents changes in our contract assets during the three months ended March 31, 2021 and 2020 (in thousands):

Unbilled membership receivables in our Condensed Consolidated Balance Sheets were approximately $ 1.1 million at June 30, 2021 and $ 0.6 million at December 31, 2020.

The following table presents changes in our contract assets during the three and six months ended June 30, 2021 and 2020 (in thousands):

Beginning of Period

2 unchanged sentences

Unbilled membership dues receivable

Three months ended March 31, 2021

Three months ended March 31, 2020

Three months ended June 30, 2021

$ ( 579 )  

$ 1,102  

Three months ended June 30, 2020

$ ( 664 )  

$ 1,109  

Six months ended June 30, 2021

$ 1,565  

$ ( 1,048 )  

$ 1,102  

Six months ended June 30, 2020

$ 1,645  

$ ( 1,138 )  

$ 1,109  

Contract Liabilities

2 unchanged sentences

We classify deferred membership dues revenue as current based on the timing of when we expect to recognize revenue for the membership commitment based on the Company satisfying the stand ready performance obligation throughout the annual membership period.

The unrecognized or deferred revenues related to membership dues in our Condensed Consolidated Balance Sheets were approximately $4.1 million at March 31, 2021 and $3.2 million at December 31, 2020, respectively.

The unrecognized or deferred revenues related to membership dues in our Condensed Consolidated Balance Sheets were approximately $ 5.4 million at June 30, 2021 and $ 3.2 million at December 31, 2020, respectively.

Customer advance deposits are recorded as a liability until the goods or services are provided to the customer.

Generally, customer advances, and corresponding performance obligation are satisfied within 12 months of the date of receipt of advance payment.

The unrecognized revenues related to customer advance deposits are recorded in “Other liabilities and accrued expenses” in our Condensed Consolidated Balance Sheets.

Customer advance deposits were approximately $0.8 million at March 31, 2021 and $0.7 million at December 31, 2020.

The following table presents changes in our contract liabilities during the three months ended March 31, 2021 and 2020 (in thousands):

The unrecognized revenues related to customer advance deposits are recorded in “Other liabilities and accrued expenses”

in our Condensed Consolidated Balance Sheets.

Customer advance deposits were approximately $ 0.8 million at June 30, 2021 and $ 0.7 million at December 31, 2020.

The following table presents changes in our contract liabilities during the three and six months ended June 30, 2021 and 2020 (in thousands):

Beginning of Period

2 unchanged sentences

Deferred membership dues revenue

Three months ended March 31, 2021

Three months ended March 31, 2020

Three months ended June 30, 2021

$ 4,122  

$ 2,915  

$ ( 1,661 )  

$ 5,376  

Three months ended June 30, 2020

$ 4,018  

$ 2,254  

$ ( 1,496 )  

$ 4,776  

Six months ended June 30, 2021

$ 3,196  

$ 5,448  

$ ( 3,268 )  

$ 5,376  

Six months ended June 30, 2020

$ 3,153  

$ 4,641  

$ ( 3,018 )  

$ 4,776  

Customer advance deposits

Three months ended March 31, 2021

Three months ended March 31, 2020

Three months ended June 30, 2021

$ ( 447 )  

Three months ended June 30, 2020

$ ( 118 )  

Six months ended June 30, 2021

$ ( 601 )  

Six months ended June 30, 2020

$ ( 296 )  

Property and Equipment

4 unchanged sentences

The cost of assets retired or otherwise disposed of and the related accumulated depreciation is eliminated from the accounts in the year of disposal.

Gains or losses resulting from the disposal of property and equipment are recorded in “Other income, net” in our Condensed Consolidated Statements of Operations.

Property and equipment at March 31, 2021 and December 31, 2020 consists of the following (in thousands):

Gains or losses resulting from the disposal of property and equipment are recorded in “Other income, net”

in our Condensed Consolidated Statements of Operations.

Property and equipment at June 30, 2021 and December 31, 2020 consists of the following (in thousands):

Land and land improvements

$ 15,256  

$ 15,150  

Buildings and improvements

47,899  

47,026  

Machinery and equipment

1 unchanged sentence

Construction in progress

79,193  

77,408  

Less accumulated depreciation and amortization

( 27,337 )  

Property and equipment, net

At March 31, 2021, the Company did not have any significant fixed contractual commitments for construction projects.

$ 51,856  

$ 51,299  

At June 30, 2021, the Company did not have any significant fixed contractual commitments for construction projects.

Avalon reviews the carrying value of its long-lived assets whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

3 unchanged sentences

or if quoted market prices are not available, Avalon would discount the expected estimated future cash flows.

During the first three months of 2021 and 2020, no triggering events were present.

During the first six months of 2021 and 2020, no triggering events were present.

Operating Leases

Avalon leases golf carts, machinery and equipment for the landfill operations, furniture and fixtures for The Grand Resort and office copiers under operating leases.

Our operating leases have remaining lease terms ranging from 1 to 5 years.

The weighted average remaining lease term on operating leases was approximately 3.7 years at March 31, 2021.

During the first three months of 2021, the Company entered into a new operating lease agreement for golf cart GPS equipment.

Our operating leases have remaining lease terms ranging from less than 1 year to 4.7 years.

The weighted average remaining lease term on operating leases was approximately 3.4 years at June 30, 2021.

During the six months of 2021, the Company entered into new operating lease agreements for a facility and golf cart GPS equipment.

The Company recorded operating lease right-of-use assets and corresponding obligations under the operating leases of approximately $67,000 .

During the first six months of 2020, the Company entered into a new operating lease agreement for hotel furniture.

The Company recorded an operating lease right-of-use asset and corresponding obligation under the operating lease of approximately $ 266,000 .

Leased property and associated obligations under operating leases at March 31, 2021 and December 31, 2020 consists of the following (in thousands):

Leased property and associated obligations under operating leases at June 30, 2021 and December 31, 2020 consists of the following (in thousands):

Operating lease right-of-use assets

$ 1,588  

$ 1,728  

Current portion of obligations under operating leases

1 unchanged sentence

Total obligations under operating leases

The weighted average discount rate on operating leases was 4.7% at March 31, 2021 and December 31, 2020.

$ 1,588  

$ 1,728  

The weighted average discount rate on operating leases was 4.7 % at June 30, 2021 and December 31, 2020.

Finance Leases

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Based upon the amount of leasehold improvements already made, Avalon expects to exercise all its remaining renewal options.

At March 31, 2021 there were approximately 32.6 years remaining on the golf course and related facilities finance lease.

At June 30, 2021 there were approximately 32.3 years remaining on the golf course and related facilities finance lease.

In addition, the golf and related operations also entered into lease agreements for vehicles, golf course maintenance and restaurant equipment and the captive landfill operations entered into lease agreements for equipment which were determined to be finance leases.

At March 31, 2021, the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from 1 to 4.3 years.

The weighted average remaining lease term on the vehicles and equipment leases was approximately 2.8 years at March 31, 2021.

Leased property and associated obligations under finance leases at March 31, 2021 and December 31, 2020 consists of the following (in thousands):

At June 30, 2021, the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from less than 1 year to 3.9 years.

The weighted average remaining lease term on the vehicles and equipment leases was approximately 2.7 years at June 30, 2021.

Leased property and associated obligations under finance leases at June 30, 2021 and December 31, 2020 consists of the following (in thousands):

Leased property under finance leases

$ 12,391  

$ 12,112  

Less accumulated amortization

( 6,657 )  

Leased property under finace leases, net

$ 5,734  

$ 5,735  

Current portion of obligations under finance leases

1 unchanged sentence

Total obligations under finance leases

The weighted average discount rate on finance leases was 4.7% at March 31, 2021 and 4.5% at December 31, 2020.

For the three months ended March 31, 2021 and 2020, components of lease expense were as follows (in thousands):

The weighted average discount rate on finance leases was 4.8 % at June 30, 2021 and 4.5 % at December 31, 2020.

For the three and six months ended June 30, 2021 and 2020, components of lease expense were as follows (in thousands):

Three Months Ended

Six Months Ended

Operating lease cost:

4 unchanged sentences

Total finance lease cost

Future commitments under long-term, operating and finance leases at March 31, 2021 are as follows (in thousands):

For the twelve months ending June 30, future commitments under long-term, operating and finance leases are as follows (in thousands):

Total lease payments

2 unchanged sentences

Long-term portion of obligations under leases

$ 1,036  

$ 1,538  

Basic and Diluted Net Income (Loss) per Share

Basic net income (loss) per share attributable to Avalon Holdings Corporation common shareholders is computed by dividing the net income (loss) by the weighted average number of common shares outstanding.

For the three months ended March 31, 2021 and 2020, the weighted average number of common shares outstanding was 3,899,431 and 3,875,431, respectively.

For both the three and six months ended June 30, 2021, the weighted average number of common shares outstanding was 3,899,431 .

For both the three and six months ended June 30, 2020, the weighted average number of common shares outstanding was 3,875,431 .

Diluted net income (loss) per share attributable to Avalon Holdings Corporation common shareholders is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus any weighted common equivalent shares determined to be outstanding during the period using the treasury method.

The weighted common equivalent shares included in the calculation are related to stock options granted by Avalon where the weighted average market price of Avalon’s common stock for the period presented is greater than the option exercise price of the stock option.

For the three months ended March 31, 2021, the diluted weighted average number of shares outstanding was 3,944,825.

For the three months ended March 31, 2020, the diluted per share amount is equal to the basic per share amount because the average market price of Avalon’s common shares during the period was less than the exercise price of the stock options outstanding.

For the three and six months ended June 30, 2021, the diluted weighted average number of shares outstanding was 3,928,971 and 3,936,854 , respectively.

For both the three and six months ended June 30, 2020, the diluted per share amount reported is equal to the basic per share amount because Avalon was in a net loss position and as a result, such dilution would be considered anti-dilutive.

Assuming dilution, the diluted per share amount is equal to the basic per share amount because the average market price of Avalon’s common shares during the period was less than the exercise price of the stock options outstanding.

Term Loans and Line of Credit Agreements

New Term Loan Agreement

On December 20, 2019, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the “New Term Loan Agreement”) with Laurel Capital Corporation which provided for a $23.0 million term loan.

At closing, $ 13.8 million of the proceeds were used to pay off and refinance amounts outstanding under our then existing term loan and commercial mortgage agreements, $ 1.7 million of the proceeds were used to pay down the outstanding balance and associated interest on our existing line of credit agreement and $ 0.3 million of the proceeds were utilized to pay related transaction costs.

The remaining proceeds of approximately $ 7.2 million 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.

At March 31, 2021 and December 31, 2020, loan proceeds of $3.4 million and $3.9 million, respectively, are presented in the Condensed Consolidated Balance Sheets as “Restricted cash.”

At June 30, 2021 and December 31, 2020, loan proceeds of $ 2.9 million and $ 3.9 million, respectively, are presented in the Condensed Consolidated Balance Sheets as “Restricted cash.”

The then existing term loan and commercial mortgage agreements were terminated in conjunction with the New Term Loan Agreement.

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The New Term Loan also contains other nonfinancial covenants, customary representations, warranties and events of default.

Avalon was in compliance with the New Term Loan Agreement covenants at March 31, 2021 and December 31, 2020.

Avalon was in compliance with the New Term Loan Agreement covenants at June 30, 2021 and December 31, 2020.

The Company capitalized approximately $ 0.4 million of debt issuance costs in connection with the New Term Loan Agreement.

2 unchanged sentences

Line of Credit Agreement

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.

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.

No amounts were drawn under the Line of Credit Agreement at March 31, 2021 and December 31, 2020.

No amounts were drawn under the Line of Credit Agreement at June 30, 2021 and December 31, 2020.

Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .

At March 31, 2021, the interest rate on the Line of Credit Agreement was 3.50%.

At June 30, 2021, 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.

1 unchanged sentence

The Line of Credit Agreement also contains other nonfinancial covenants, customary representations, warranties and events of default.

Avalon was in compliance with the Line of Credit Agreements covenants at March 31, 2021 and December 31, 2020.

Avalon was in compliance with the Line of Credit Agreements covenants at June 30, 2021 and December 31, 2020.

Paycheck Protection Program Loan

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.

The CARES Act authorized the Small Business Administration to temporarily guarantee loans under a new loan program called the Paycheck Protection Program (the “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 downturn.

Under the Program, qualified companies are eligible for a loan in an amount equal to the lesser of $10 million or 2.5 times the business’s average monthly payroll.

Collateral or guarantor support is not required for the loan.

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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.

The Company utilized the entire balance of the loan proceeds in accordance with the Program’s guidelines using the 24 week loan forgiveness period and subsequently applied for forgiveness with the Small Business Administration.

The Company is accounting for the loans in accordance with ASC 470 – Debt .

The Company accounted for the loans in accordance with ASC 470 –

Under ASC 470, the debt will be derecognized when the debt is extinguished in accordance with the guidance in ASC 405 - 20, Liabilities:

2 unchanged sentences

During the fourth quarter of 2020, approximately $ 0.8 million of the loans and $ 4,000 of associated interest were forgiven by the Small Business Administration.

During the three months ended March 31, 2021, approximately $1.1 million of the loans and $8,000 of associated interest were forgiven by the Small Business Administration.

The Company anticipates the remaining loans, and associated interest, will be forgiven in the second or third quarter of 2021.

In the event that the Small Business Administration does not forgive any or a portion of the loan, the Company will repay amounts that are not forgiven using an 18 month repayment schedule with payments scheduled to commence in the third quarter of 2021.

During the three months ended March 31, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.80% and 5.00%, respectively.

Obligations under the Company’s debt agreements at March 31, 2021 and December 31, 2020 consist of the following (in thousands):

March 31, 2021

During the first quarter of 2021, approximately $ 1.1 million of the loans and $ 8,000 of associated interest were forgiven by the Small Business Administration and, during the second quarter of 2021, the remaining $ 0.9 million of the loans and $ 9,000 of associated interest were forgiven by the Small Business Administration.

During the three months ended June 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.92 % and 4.67 %, respectively.

During the six months ended June 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.86 % and 4.82 %, respectively.

Obligations under the Company’s debt agreements at June 30, 2021 and December 31, 2020 consist of the following (in thousands):

June 30, 2021

Debt Issuance Costs

Term Loan Agreement

Paycheck Protection Program Loans

$ 21,395  

$ ( 352 )  

$ 21,043  

Less current portion

( 42 )  

Long-term debt

$ 20,256  

$ ( 310 )  

$ 19,946  

December 31, 2020

1 unchanged sentence

Term Loan Agreement

$ 21,944  

$ ( 373 )  

$ 21,571  

Paycheck Protection Program Loans

23,908  

( 373 )  

23,535  

Less current portion

( 42 )  

Long-term debt

At March 31, 2021, future maturities of long-term debt are as follows (in thousands):

During the three months ended March 31, 2021, net income attributable to Avalon Holdings Corporation shareholders was $0.7 million.

During the three months ended March 31, 2020, net loss attributable to Avalon Holdings Corporation shareholders was $0.8 million.

Avalon recorded a state income tax provision in the three month periods ended March 31, 2021 and 2020, 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.

Avalon’s income tax on the income (loss) before taxes was offset by a change in the valuation allowance.

$ 22,272  

$ ( 331 )  

$ 21,941  

For the twelve months ending June 30, future maturities of long-term debt are as follows (in thousands):

$ 1,139  

15,088  

$ 21,395  

During the three months ended June 30, 2021, net income attributable to Avalon Holdings Corporation shareholders was $ 0.7 million compared to a net loss attributable to Avalon Holdings Corporation shareholders of $ 0.4 million during the three months ended June 30, 2020.

During the six months ended June 30, 2021, net income attributable to Avalon Holdings Corporation shareholders was $ 1.5 million compared to a net loss attributable to Avalon Holdings Corporation shareholders of $ 1.2 million during the six months ended June 30, 2020.

Avalon recorded a state income tax provision in both the three and six month periods ended June 30, 2021 and 2020, which was related entirely to the waste management and brokerage operations.

Avalon’s income tax on the income (loss) before taxes was offset by a change in the valuation allowance.

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.

3 unchanged sentences

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.

The adoption of these provisions did not have a material impact on the Company’s financial position or results of operations.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the “Appropriations Act”) was enacted in response to the COVID-19 pandemic.

The adoption of these provisions did not have a material impact on the Company’s financial position or results of operations.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the “Appropriations Act”) was enacted in response to the COVID- 19 pandemic.

The Appropriations Act, among other things, temporarily extends through December 31, 2025, certain expiring tax provisions, including look-through treatment of payments of dividends, interest, rents, and royalties received or accrued from related controlled foreign corporations.

Additionally, the Appropriations Act enacts new provisions and extends certain provisions originated within the CARES Act, including an extension of time for repayment of the deferred portion of employees’ payroll tax through December 31, 2021, and a temporary allowance for full deduction of certain business meals.

Avalon has elected not to defer the employees’ portion of payroll tax.

payroll tax through December 31, 2021, and a temporary allowance for full deduction of certain business meals.

Avalon has elected not to defer the employees’

portion of payroll tax.

Management is currently evaluating the other provisions of the Appropriations Act, but at present time does not expect that the other provisions of the Appropriations Act would result in a material tax or cash benefit.

Long-Term Incentive Plan

On March 14, 2019, the Board of Directors of Avalon approved the renewal of the expired 2009 Long-term Incentive Plan (the “2009 Plan”), which was set to expire in October of 2019.

The 2009 Plan provides for the granting of options which are intended to be non-qualified stock options (“NQSO’s”) for federal income tax purposes except for those options designated as incentive stock options (“ISO’s”) which qualify under Section 422 of the Internal Revenue Code.

The name of the plan was changed to the 2019 Long-term Incentive Plan (“the Option Plan”) to reflect the year of approval.

On March 14, 2019, the Board of Directors of Avalon approved the renewal of the expired 2009 Long-term Incentive Plan (the “2009 Plan”), which was set to expire in October of 2019.

The name of the plan was changed to the 2019 Long-term Incentive Plan (“the Option Plan”) to reflect the year of approval.

The Option Plan represents the renewal of the 2009 Plan which had 1,300,000 shares of Class A Common Stock available for stock options to employees and non-employee directors.

3 unchanged sentences

On April 25, 2019, at the Annual Meeting of Shareholders, the shareholders approved the Option Plan.

The purpose of the Avalon Holdings Corporation 2019 Long-term Incentive Plan (the “Plan”) is (a) to improve individual employee performance by providing long-term incentives and rewards to employees of Avalon, (b) to assist Avalon in attracting, retaining and motivating employees and non-employee directors with experience and ability, and (c) to associate the interests of such employees and directors with those of the Avalon shareholders.

NQSO’s may be granted with an exercise price which is not less than 100% of the fair market value of the Class A Common Stock on the date of grant.

Options designated as ISO’s shall not be less than 110% of fair market value for employees who are ten percent shareholders and not less than 100% of fair market value for other employees.

NQSO’s may be granted with an exercise price which is not less than 100 % of the fair market value of the Class A Common Stock on the date of grant.

Options designated as ISO’s shall not be less than 110 % of fair market value for employees who are ten percent shareholders and not less than 100 % of fair market value for other employees.

The Board of Directors may, from time to time in its discretion, grant options to one or more outside directors, subject to such terms and conditions as the Board of Directors may determine, provided that such terms and conditions are not inconsistent with other applicable provisions of the Option Plan.

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The Monte Carlo Simulation was selected to determine the fair value because it incorporates six minimum considerations;

1) the exercise price of the option, 2) the expected term of the option, taking into account both the contractual term of the option, the effects of employees’ expected exercise and post-vesting employment termination behavior, as well as the possibility of change in control events during the contractual term of the option agreements, 3) the current fair value of the underlying equity, 4) the expected volatility of the value of the underlying share for the expected term of the option, 5) the expected dividends on the underlying share for the expected term of the option and 6) the risk-free interest rate(s) for the expected term of the option.

The grant date fair value of the underlying equity was determined to be equal to Avalon’s publicly traded stock price as of the grant dates times the sum of the Class A and Class B common shares outstanding.

The expected term, or time until the option is exercised, is typically based on historical exercising behavior of previous option holders of a company’s stock.

Due to the fact that the Company has had no historical exercising activity, prior to 2018, the simplified method was applied.

Because of the nature of the vesting described above, the options are separated into five blocks, with each block having its own vesting period and expected term.

1 ) the exercise price of the option, 2 ) the expected term of the option, taking into account both the contractual term of the option, the effects of employees’

expected exercise and post-vesting employment termination behavior, as well as the possibility of change in control events during the contractual term of the option agreements, 3 ) the current fair value of the underlying equity, 4 ) the expected volatility of the value of the underlying share for the expected term of the option, 5 ) the expected dividends on the underlying share for the expected term of the option and 6 ) the risk-free interest rate(s) for the expected term of the option.

The expected term, or time until the option is exercised, is typically based on historical exercising behavior of previous option holders of a company’s stock. Due to the fact that the Company has had no historical exercising activity, prior to 2018, the simplified method was applied. 

Because of the nature of the vesting described above, the options are separated into five blocks, with each block having its own vesting period and expected term. 

For stock option awards, the expected volatility was based on the observed historical volatility of Avalon common stock.

2 unchanged sentences

In March 2021, unexercised options to purchase 190,000 shares previously granted under the 2009 Plan expired as the options were not exercised within ten years after the grant date.

At March 31, 2021, options to purchase 90,000 shares have been granted under the 2009 Plan.

At June 30, 2021, options to purchase 90,000 shares have been granted under the 2009 Plan.

Of these, 36,000 shares have been exercised, and options for 54,000 shares remain outstanding.

The following table is a summary of the stock option activity during 2021:

Fair Value at

Outstanding at January 1, 2021

244,000  

Options granted

1 unchanged sentence

Options expired

( 190,000 )  

Options cancelled or forfeited

Outstanding at March 31, 2021

Outstanding at June 30, 2021

54,000  

$ 1.83  

$ 0.43  

Options Vested

Exercisable at March 31, 2021

54,000  

$ 1.83  

$ 0.43  

Exercisable at June 30, 2021

The stock options vest and become exercisable based upon achieving two critical metrics as follows:

1) Contract Vesting Term:

1 )    Contract Vesting Term:

The stock options vest ratably over a five year period.

2) The Avalon common stock price traded on a public stock exchange (NYSE Amex) must reach the predetermined vesting price within three years after the options become vested under the contractual vesting term.

2 )    The Avalon common stock price traded on a public stock exchange (NYSE Amex) must reach the predetermined vesting price within three years after the options become vested under the contractual vesting term.

The table below represents the period and predetermined stock price needed for vesting.

3 unchanged sentences

48 months after Grant Dates

$ 3.43  

24 months after Grant Dates

60 months after Grant Dates

$ 4.69  

36 months after Grant Dates

72 months after Grant Dates

$ 6.43  

48 months after Grant Dates

84 months after Grant Dates

$ 8.81  

60 months after Grant Dates

96 months after Grant Dates

Compensation costs were approximately $1,000 for both the three months ended March 31, 2021 and 2020 based upon the estimated grant date fair value calculations.

As of March 31, 2021, there was approximately $12,000 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan.

$ 12.07  

Compensation costs were approximately $ 2,000 for both the three month periods ended June 30, 2021 and 2020, and $ 3,000 for both the six month periods ended June 30, 2021 and 2020, based upon the estimated grant date fair value calculations.

As of June 30, 2021, there was approximately $ 10,000 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan.

That cost is expected to be recognized over a weighted-average period of 2.92 years.

4 unchanged sentences

Business Segment Information

In determining the segment information, Avalon considered its operating and management structure and the types of information subject to regular review by its “chief operating decision maker.” Using the criteria of FASB ASC 280 Segment Reporting , Avalon’s reportable segments include waste management services and golf and related operations.

In determining the segment information, Avalon considered its operating and management structure and the types of information subject to regular review by its “chief operating decision maker.”

Using the criteria of FASB ASC 280 Segment Reporting , Avalon’s reportable segments include waste management services and golf and related operations.

Avalon accounts for intersegment net operating revenues as if the transactions were to third parties.

The segment disclosures are presented on this basis for all periods presented.

Avalon’s primary business segment, the waste management services segment, provides hazardous and nonhazardous brokerage and management services to industrial, commercial, municipal and governmental customers, captive landfill management for an industrial customer and salt water injection well operations.

Avalon’s golf and related operations segment consists of four golf courses and associated clubhouses which provide dining and banquet facilities, a hotel which provides lodging and resort related amenities including dining, banquet and conference facilities, a multipurpose recreation center and a travel agency.

Revenue for the golf and related operations segment consists primarily of membership dues, greens fees, cart rentals, room rentals, merchandise sales, tennis and fitness activities, salon and spa services and food and beverage sales.

Avalon does not have significant operations located outside the United States and, accordingly, geographical segment information is not presented.

For the three months ended March 31, 2020, no one customer accounted for 10% of Avalon’s consolidated or reportable segment net operating revenues.

The accounting policies of the segments are consistent with those described for the consolidated financial statements in the summary of significant accounting policies included in Avalon’s 2020 Annual Report to Shareholders.

For the six months ended June 30, 2020, no one customer accounted for 10% of Avalon’s consolidated or reportable segment net operating revenues.

Avalon measures segment profit for internal reporting purposes as income (loss) before income taxes.

1 unchanged sentence

Three Months Ended

Six Months Ended

Net operating revenues from:

1 unchanged sentence

External customer revenues

$ 8,685  

$ 9,088  

$ 19,835  

$ 20,221  

Intersegment revenues

Total waste management services

19,835  

20,221  

Golf and related operations:

External customer revenues

11,668  

Intersegment revenues

Total golf and related operations

11,685  

Segment operating revenues

16,399  

13,069  

31,520  

27,500  

Intersegment eliminations

( 17 )  

Total net operating revenues

$ 16,390  

$ 13,067  

$ 31,503  

$ 27,470  

Three Months Ended

Six Months Ended

Income (loss) before income taxes:

Waste management services

$ 1,819  

$ 1,855  

Golf and related operations

( 186 )  

Segment income before income taxes

Corporate interest expense

( 280 )  

( 293 )  

( 563 )  

Corporate gain on debt extinguishment

1 unchanged sentence

General corporate expenses

( 1,290 )  

( 762 )  

( 2,122 )  

Income (loss) before income taxes

$ ( 423 )  

$ 1,470  

Gain on debt extinguishment:

2 unchanged sentences

Total gain on debt extinguishment

$ 1,964  

Identifiable assets:

Waste management services

$ 31,862  

$ 31,875  

Golf and related operations

59,768  

57,863  

58,423  

59,425  

150,053  

149,163  

Elimination of intersegment receivables

In comparing the total assets at March 31, 2021 with those at December 31, 2020, the increase in the total assets of the waste management services segment of $1.5 million is primarily a result of an increase in accounts receivable and intersegment transactions, which are eliminated in consolidation.

( 71,333 )  

$ 78,720  

$ 77,950  

Total assets of the waste management services segment were approximately $ 31.9 million at both June 30, 2021 and December 31, 2020.

The decrease in waste management services accounts receivable were offset by an increase in intersegment transactions, which are eliminated in consolidation.

The increase in total assets of the golf and related operations segment of $ 1.9 million was primarily due to an increase in accounts receivable and capital expenditures related to The Grand Resort and Avalon Field Club at New Castle partially offset by current year depreciation on property and equipment.

The decrease in corporate total assets of approximately $1.0 million is due to a decrease in operating cash and cash equivalents, restricted cash utilized for the expansion of The Grand Resort and Avalon Field Club at New Castle and intersegment transactions, which are eliminated in consolidation.

The decrease in corporate total assets of approximately $ 1.0 million is primarily due to a decrease in restricted cash utilized for the expansion of The Grand Resort and Avalon Field Club at New Castle and intersegment transactions, which are eliminated in consolidation partially offset by an increase in operating cash and cash equivalents.

Certain Relationships and Related Transactions

AWMS Holdings, LLC

In August 2013, Avalon created a new Ohio limited liability company, AWMS Holdings, LLC, to act as a holding company to form and own a series of wholly owned subsidiaries that will own and operate Class II salt water injection wells and facilities (together the “facilities”).

AWMS Holdings, LLC, offers investment opportunities to accredited investors by selling membership units of AWMS Holdings, LLC through private placement offerings.

5 unchanged sentences

As a result of a private placement offering, Avalon is not the majority owner of AWMS Holdings, LLC.

At March 31, 2021 and December 31, 2020, respectively, Avalon owns approximately 47% of AWMS Holdings, LLC.

In accordance with ASC 810-10 and related amendment , due to the managerial control of American Water Solutions, LLC, AWMS Holdings, LLC is a variable interest entity, and the financial statements of AWMS Holdings, LLC and subsidiaries are included in Avalon’s consolidated financial statements.

At June 30, 2021 and December 31, 2020, respectively, Avalon owns approximately 47 % of AWMS Holdings, LLC.

In accordance with ASC 810 - 10 and related amendment , due to the managerial control of American Water Solutions, LLC, AWMS Holdings, LLC is a variable interest entity, and the financial statements of AWMS Holdings, LLC and subsidiaries are included in Avalon’s consolidated financial statements.

ASC 810 - 10 requires noncontrolling interests to be reported as a separate component of equity.

The amount of net loss attributable to the noncontrolling interest is recorded in “net loss attributable to noncontrolling interest” in our Condensed Consolidated Statements of Operations.

The amount of net loss attributable to the noncontrolling interest is recorded in “net loss attributable to noncontrolling interest”

in our Condensed Consolidated Statements of Operations.

Avalon Med Spa, LLC

5 unchanged sentences

In March 2021, Avalon made a capital contribution of approximately $ 0.3 million, which included cash and certain equipment, in exchange for membership units of Avalon Med Spa, LLC.

At March 31, 2021, Avalon owns 100% of Avalon Med Spa, LLC.

Avalon Med Spa, LLC was not in operation at March 31, 2021.

The operating results will be included in Avalon’s golf and related operations segment.

At June 30, 2021, Avalon owns 100 % of Avalon Med Spa, LLC.

Avalon Med Spa, LLC has not provided services as of June 30, 2021 but incurred operating costs of less than $ 0.1 million.

The operating results are included in Avalon’s golf and related operations segment.

Injection Wells Suspension

As a result of a seismic event with a magnitude of 2.1 occurring on August 31, 2014, the Chief of the Division of Oil and Gas Resources Management (“Chief” or “Division”) issued Orders on September 3, 2014 to immediately suspend all operations of Avalon’s two saltwater injection wells until the Division could further evaluate the wells.

As a result of a seismic event with a magnitude of 2.1 occurring on August 31, 2014, the Chief of the Division of Oil and Gas Resources Management (“Chief”

or “Division”) issued Orders on September 3, 2014 to immediately suspend all operations of Avalon’s two saltwater injection wells until the Division could further evaluate the wells. 

The Orders were based on the findings that the two saltwater injection wells were located in close proximity to an area of known seismic activity and that the saltwater injection wells pose a risk of increasing or creating seismic activity.

On September 5, 2014, Avalon submitted the information required by the Chief’s Order in regards to its AWMS #1 injection well, and the Chief lifted the suspension for that well on September 18, 2014.

On September 19, 2014, Avalon submitted information and a written plan required by the Chief’s Order proposing the establishment of certain operations and management controls on injections for the AWMS #2 injection well.

To date, the Division has not responded to that plan despite Avalon’s request for feedback.

On October 2, 2014, Avalon filed an appeal with the Ohio Oil and Gas Commission (the “Commission”) disputing the basis for suspending operations of AWMS #2 and also the authority of the Chief to immediately suspend such operations.

To date, the Division has not responded to that plan despite Avalon’s request for feedback.

On March 11, 2015, an appeal hearing was held.

The Chief stated during the hearing that the suspension order is temporary, and he expects that AWMS #2 will be allowed to resume operations once the state’s final policymaking is complete.

On August 12, 2015, the Commission upheld the temporary suspension of injection operations of AWMS #2 stating that the temporary suspension would allow the Chief more time to fully evaluate the facts in anticipation of the Division’s implementation of a comprehensive regulatory plan that will specifically address injection-induced seismicity.

Avalon appealed that decision to the Franklin County Court of Common Pleas (the “Court”), and on November 1, 2016 an appeal hearing was held in that Court.

On December 23, 2016, the Court issued its Decision and Order in Avalon’s favor, and vacated the Commission’s decision.

The Court found that the Division’s suspension and refusal to work with the Company over the 26 month period was arbitrary and not in accordance with reason.

Subsequent to the ruling, and in accordance with the Court’s Decision and Order, both Avalon and the Division submitted their proposed restart plans to the Court.

Avalon’s plan sets forth both the initial volumes and pressures and increases in volume and pressure while continuously monitoring seismicity and addressing the concerns of public health and safety.

On February 21, 2017, the Court issued its Final Decision and Order.

The Court’s Final Decision and Order set forth conditions for restarting the AWMS #2 salt water injection well in accordance with the proposed restart plans filed by Avalon with minor revisions.

On February 22, 2017, the Division appealed the Final Decision and Order and filed a Motion to Stay the Court Order.

The Motion to Stay was granted by the Ohio 10 th District Court of Appeals on March 21, 2017.

The Chief stated during the hearing that the suspension order is temporary, and he expects that AWMS #2 will be allowed to resume operations once the state’s final policymaking is complete. 

Avalon appealed that decision to the Franklin County Court of Common Pleas (the “Court”), and on November 1, 2016 an appeal hearing was held in that Court. 

On December 23, 2016, the Court issued its Decision and Order in Avalon’s favor, and vacated the Commission’s decision. 

The Court found that the Division’s suspension and refusal to work with the Company over the 26 month period was arbitrary and not in accordance with reason. 

Subsequent to the ruling, and in accordance with the Court’s Decision and Order, both Avalon and the Division submitted their proposed restart plans to the Court. Avalon’s plan sets forth both the initial volumes and pressures and increases in volume and pressure while continuously monitoring seismicity and addressing the concerns of public health and safety. 

On February 21, 2017, the Court issued its Final Decision and Order. The Court’s Final Decision and Order set forth conditions for restarting the AWMS #2 salt water injection well in accordance with the proposed restart plans filed by Avalon with minor revisions. 

On February 22, 2017, the Division appealed the Final Decision and Order and filed a Motion to Stay the Court Order. The Motion to Stay was granted by the Ohio 10 th District Court of Appeals on March 21, 2017.

On September 14, 2017, an appeal hearing was held in the Ohio 10 th District Court of Appeals and on July 31, 2018 a decision was issued on the appeal.

The decision reinstated the previous Ohio Oil and Gas Commission decision in this matter.

On September 12, 2018, the Company appealed the Ohio 10 th District Court of Appeals decision to the Supreme Court of Ohio.

On November 21, 2018, the Company received notice from the Supreme Court of Ohio that the court would not accept for review the Company’s appeal of the Ohio 10 th District Court of Appeals decision on the Division of Oil and Gas Resources Management’s appeal of the Franklin County Court of Common Pleas February 21, 2017 entry allowing restart of the Company’s AWMS Water Solutions, LLC #2 salt water injection well.

On April 5, 2019, Avalon filed with the Oil and Gas Commission a motion to vacate its prior decisions in this matter.

There can be no guarantee that the salt water injection wells will resume operations, but the Company will continue to pursue all available avenues to allow the restart of the Company’s salt water injection well under reasonable conditions.

Currently, there is no implemented state-wide policy on induced seismicity and the Ohio Department of Natural Resources (“ODNR”) has refused to communicate with the Company regarding the status and requirements of any policymaking.

The operations of Company’s injection wells will remain suspended until that time.

The Oil and Gas Commission scheduled a hearing on this motion for August 13, 2019.

Before the hearing began, and in response to the Division’s motion to dismiss the Company’s motion to vacate, the Commission dismissed the matter.

The Company appealed that decision to the Franklin County Court of Common Pleas.

In April 2020, the Division’s motion to dismiss and the Company’s opposition were reviewed by the Court.

The Company is currently awaiting judgment from the Court.

Concurrently with the filing of the appeal with the Franklin County Court of Common Pleas, the Company filed a writ of mandamus in the 10 th District Court of Appeals on August 30, 2019 to compel the chief of the Division to issue restart orders, or alternative orders that would allow the Company to either restart the AWMS #2 well, or appeal said orders to the Oil and Gas Commission in accordance with Ohio Law.

On October 6, 2020 and in response to a motion from the Division, the Court dismissed this complaint for writ of mandamus.

In addition, on August 26, 2016, Avalon filed a complaint in the 11 th Appellate District Court in Trumbull County, Ohio for a Peremptory Writ of Mandamus to compel the Director of the ODNR to initiate appropriations procedures to determine damages from the illegal regulatory taking of the Company’s property, or issue an alternative remedy at law.

The Company believes that the actions, and lack of responsible actions, by the ODNR is a clear violation of the Company’s property rights and a violation of the Fifth and Fourteenth Amendments to the U.S.

On April 5, 2019, Avalon filed with the Oil and Gas Commission a motion to vacate its prior decisions in this matter. 

The operations of Company’s injection wells will remain suspended until that time. The Oil and Gas Commission scheduled a hearing on this motion for August 13, 2019.

Before the hearing began, and in response to the Division’s motion to dismiss the Company’s motion to vacate, the Commission dismissed the matter. The Company appealed that decision to the Franklin County Court of Common Pleas. In April 2020, the Division’s motion to dismiss and the Company’s opposition were reviewed by the Court. The Company is currently awaiting judgment from the Court.

Constitution;

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and Ohio Revised Code Chapter 163.

On March 18, 2019, Avalon received notice that the 11 th Appellate District Court in Trumbull County, Ohio issued summary judgment in favor of the Ohio Department of Natural Resources in the writ of mandamus action that resulted from the suspension order of the Company’s salt water injection well.

The decision was appealed to the Supreme Court of Ohio on April 5, 2019.

Oral arguments in the case occurred on April 7, 2020.

On September 23, 2020, the Supreme Court of Ohio ruled in favor of the Company.

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The Company is currently preparing for trial which is scheduled to occur in September and October 2021.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF

MANAGEMENT ’

S DISCUSSION AND ANALYSIS OF

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.

As used in this report, the term “ Avalon ” or the “ Company ” means Avalon Holdings Corporation, its wholly owned subsidiaries and variable interest entities when it has been determined that Avalon is the primary beneficiary of those company ’ s operations, taken as a whole, unless the context indicates otherwise.

Statements included in Management ’ s Discussion and Analysis of Financial Condition and Results of Operations which are not historical in nature are intended to be, and are hereby identified as, “ forward looking statements ” .

Avalon cautions readers that forward looking statements, including, without limitation, those relating to Avalon ’ s future business prospects, revenues, working capital, liquidity, capital needs, interest costs, and income, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward looking statements, due to risks and factors identified herein and from time to time in Avalon ’ s reports filed with the Securities and Exchange Commission.

As used in this report, the term “

Avalon ”

or the “

Company ”

means Avalon Holdings Corporation, its wholly owned subsidiaries and variable interest entities when it has been determined that Avalon is the primary beneficiary of those company ’

s operations, taken as a whole, unless the context indicates otherwise.

Statements included in Management ’

s Discussion and Analysis of Financial Condition and Results of Operations which are not historical in nature are intended to be, and are hereby identified as, “

forward looking statements ”

Avalon cautions readers that forward looking statements, including, without limitation, those relating to Avalon ’

s future business prospects, revenues, working capital, liquidity, capital needs, interest costs, and income, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward looking statements, due to risks and factors identified herein and from time to time in Avalon ’

s reports filed with the Securities and Exchange Commission.

Liquidity and Capital Resources

For the three months ended March 31, 2021, Avalon utilized existing cash and cash provided by operations to meet operating needs and make required monthly payments on our term loan facility.

For the six months ended June 30, 2021, Avalon utilized existing cash and cash provided by operations to meet operating needs and make required monthly payments on our term loan facility.

Cash in our project fund account was utilized to fund capital expenditures which included the continued renovation of The Grand Resort and Avalon Field Club at New Castle as further described below.

Financial Impact of COVID-19 Pandemic

During both the three months ended March 31, 2021 and 2020, the various governmental orders issued to control the spread of COVID-19 adversely impacted our operations and related financial results.

Our restaurant operations have government mandated occupancy restrictions for in-house dining.

In December 2019, a novel strain of coronavirus, COVID-19, emerged in Wuhan, Hubei Province, China.

While initially concentrated in China, the outbreak spread to other countries and infections have been reported globally including in the United States.

On March 11, 2020, the World Health Organization declared the COVID-19 viral disease a pandemic.

During the six months ended June 30, 2020, the various governmental orders that were issued to control the spread of COVID-19 adversely impacted our operations and related financial results.

Our restaurants operated under government mandated occupancy restrictions for in-house dining.

Food and beverages sales related to banquets and conferences were significantly lower as a result of restrictions placed on gatherings and events.

In addition, in March 2020, the Company began experiencing a high level of room and event cancellations with some subsequent re-bookings for a future date.

We may continue to 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.

The Company engaged in efforts to reduce expenses, including reducing employee costs, through hiring freezes, headcount reductions and furloughs of employees.

The full extent of the impact of the COVID-19 pandemic on our operations and financial performance will depend on future developments, including the duration and spread of the pandemic and the impact of COVID-19 variants, all of which are uncertain and cannot be predicted at this time.

Governmental bodies may continue to impose additional restrictions, which could include additional shutdowns, to stop the spread of infection.

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Paycheck Protection Program Loan

The CARES Act authorized the Small Business Administration to temporarily guarantee loans under a new loan program called the Paycheck Protection Program (the “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 downturn.

Under the Program, qualified companies are eligible for a loan in an amount equal to the lesser of $10 million or 2.5 times the business’s average monthly payroll.

Collateral or guarantor support is not required for the loan.

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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.

During the fourth quarter of 2020, approximately $0.8 million of the loans and $4,000 of associated interest were forgiven by the Small Business Administration.

During the three months ended March 31, 2021, approximately $1.1 million of the loans and $8,000 of associated interest were forgiven by the Small Business Administration.

During the first quarter of 2021, approximately $1.1 million of the loans and $8,000 of associated interest were forgiven by the Small Business Administration and, during the second quarter of 2021, the remaining $0.9 million of the loans and $9,000 of associated interest were forgiven by the Small Business Administration.

Debt forgiven in accordance with the Program is recognized in the Condensed Consolidated Statements of Operations as a gain on debt extinguishment.

The Company anticipates the remaining loans, and associated interest, will be forgiven in the second or third quarter of 2021.

Capital Expenditures

During the three months ended March 31, 2021, Avalon incurred capital expenditures of $0.9 million of which $0.7 million of such expenditures was paid to vendors during the period.

During the six months ended June 30, 2021, Avalon incurred capital expenditures of $2.1 million of which $1.8 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 the clubhouse at Avalon Field Club at New Castle.

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 during the period.

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.

In addition, approximately $0.4 million of such expenditures related to golf course maintenance equipment acquired under new finance lease agreements.

In 2021 and 2020, The Grand Resort was in operation but still in the process of being renovated and expanded.

The renovations and expansion include the renovation of existing hotel rooms and the addition of a new restaurant, bars, cigar lounge, salon and spa.

Avalon’s aggregate capital expenditures in 2021 are expected to be in the range of $3.0 million to $4.0 million, funded with cash from our project fund account.

Capital expenditures principally relate to the continued renovation and expansion of The Grand Resort, the clubhouse at Avalon Field Club at New Castle, building improvements and equipment purchases.

New Term Loan Agreement

At closing, $13.8 million of the proceeds were used to pay off and refinance amounts outstanding under our then existing term loan and commercial mortgage agreements, $1.7 million of the proceeds were used to pay down the outstanding balance and associated interest on our existing line of credit agreement and $0.3 million of the proceeds were utilized to pay related transaction costs.

The remaining proceeds of approximately $7.2 million 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.

At March 31, 2021 and December 31, 2020, loan proceeds of $3.4 million and $3.9 million, respectively, remained in the project fund account.

At June 30, 2021 and December 31, 2020, loan proceeds of $2.9 million and $3.9 million, respectively, remained in the project fund account.

The then existing term loan and commercial mortgage agreements were terminated in conjunction with the New Term Loan Agreement.

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The New Term Loan also contains other nonfinancial covenants, customary representations, warranties and events of default.

Avalon was in compliance with the New Term Loan Agreement covenants at March 31, 2021 and December 31, 2020.

Avalon was in compliance with the New Term Loan Agreement covenants at June 30, 2021 and December 31, 2020.

Line of Credit Agreement

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.

No amounts were drawn under the Line of Credit Agreement at March 31, 2021 and December 31, 2020.

No amounts were drawn under the Line of Credit Agreement at June 30, 2021 and December 31, 2020.

Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .25%.

At March 31, 2021, the interest rate on the Line of Credit Agreement was 3.50%.

At June 30, 2021, 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.

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The Line of Credit Agreement also contains other nonfinancial covenants, customary representations, warranties and events of default.

Avalon was in compliance with the Line of Credit Agreements covenants at March 31, 2021 and December 31, 2020.

During the three months ended March 31, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.80% and 5.00%, respectively.

Avalon was in compliance with the Line of Credit Agreements covenants at June 30, 2021 and December 31, 2020.

During the three months ended June 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.92% and 4.67%, respectively.

During the six months ended June 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.86% and 4.82%, respectively.

Squaw Creek Country Club Lease Agreement

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Working Capital

At March 31, 2021 and December 31, 2020, there was a working capital deficit of approximately $2.1 million and $1.9 million, respectively.

Working capital was negatively impacted primarily by an increase in accounts payable, deferred membership dues and accrued compensation partially offset by an increase in accounts receivable and inventory.

Accounts receivable increased to $10.7 million at March 31, 2021 compared with $8.7 million at December 31, 2020.

Accounts receivable related to the golf and related operations segment increased approximately $1.1 million at March 31, 2021 compared to December 31, 2020 due to the associated timing of annual membership renewals.

In addition, accounts receivable related to our waste management services segment increased approximately $0.9 million at March 31, 2021 compared with December 31, 2020 due to the timing of receipt on receivables in the ordinary course of business.

Accounts payable increased to $10.4 million at March 31, 2021 compared to $9.1 million at December 31, 2020.

The increase in accounts payable was due to an increase in amounts due to disposal facilities and transportation carriers of the waste management services in the first quarter of 2021 compared to the fourth quarter of 2020 and the associated timing of those vendor payments in the ordinary course of business.

Accounts payable related to the golf and related operations also increased as a result of increased business operations during the first quarter of 2021 compared to the fourth quarter of 2020.

Deferred revenue relating to membership dues was approximately $4.1 million at March 31, 2021 compared to $3.2 million at December 31, 2020.

At June 30, 2021 and December 31, 2020, there was a working capital deficit of approximately $2.1 million and $1.9 million, respectively.

Working capital was negatively impacted primarily by an increase in deferred membership dues and accrued compensation.

The negative impact was partially offset by an increase in accounts receivable, unbilled membership dues, inventory and a decrease in accounts payable and the current portion of the Paycheck Protection Program loans that were forgiven by the Small Business Administration.

Accounts receivable increased to $9.0 million at June 30, 2021 compared with $8.7 million at December 31, 2020.

Accounts receivable related to the golf and related operations segment increased approximately $1.1 million at June 30, 2021 compared to December 31, 2020 due to the associated timing of annual membership renewals.

The increase in accounts receivable related to our golf and related operations segment was partially offset by a decrease in accounts receivable related to our waste management services segment.

Accounts receivable related to our waste management services segment decreased approximately $0.8 million at June 30, 2021 compared with December 31, 2020 as a result of the decline in net operating revenues in the second quarter of 2021 compared with the fourth quarter of 2020.

Accounts payable decreased to $8.6 million at June 30, 2021 compared to $9.1 million at December 31, 2020.

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 net operating revenues in the second quarter of 2021 compared to the fourth quarter of 2020 and the associated timing of those vendor payments in the ordinary course of business.

The decrease in accounts payable related to our waste management services segment was partially offset by an increase in accounts payable related to our golf and related operations segment.

Accounts payable related to the golf and related operations increased as a result of increased business operations during the second quarter of 2021 compared to the fourth quarter of 2020.

Deferred revenue relating to membership dues was approximately $5.4 million at June 30, 2021 compared to $3.2 million at December 31, 2020.

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 2021.

The number of members at March 31, 2021 was 5,130 compared to 4,920 at December 31, 2020.

Accrued payroll and other compensation was approximately $1.1 million at March 31, 2021 compared to $0.8 million at December 31, 2020.

The number of members at June 30, 2021 was 5,238 compared to 4,920 at December 31, 2020.

Accrued payroll and other compensation was approximately $1.3 million at June 30, 2021 compared to $0.8 million at December 31, 2020.

The increase is due to the associated timing and accrual of employee payroll payments in the ordinary course of business.

Management believes that anticipated cash provided from future operations will be sufficient to meet operating requirements and make required monthly payments under our term loan facility.

Depending on the continued duration the COVID-19 pandemic may have on our business, Avalon will take all available actions to fund operating requirements including borrowing from our existing line of credit.

Depending on the continued duration the COVID-19 pandemic may have on our business, if needed, Avalon will take all available actions to fund operating requirements including borrowing from our existing line of credit.

Growth Strategy

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Although we are a waste management services company, we do not own any landfills or provide waste collection services.

However, because of our many relationships with various disposal facilities and transporters, we are able to be more flexible and provide alternative solutions to a customer’s waste disposal or recycling needs.

We intend to capitalize on our management and sales staff which has extensive experience in all aspects of the waste business.

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Results of Operations

Avalon’s primary business segment, the waste management services segment, provides hazardous and nonhazardous waste brokerage and management services, captive landfill management services and salt water injection well operations.

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.

Performance in first quarter of 2021 compared with the first quarter of 2020

Performance in the second quarter of 2021 compared with the second quarter of 2020

Overall Performance

Net operating revenues increased to $15.1 million in the first quarter of 2021 compared with $14.4 million in the first quarter of 2020.

Net operating revenues of the waste management services segment were approximately $11.1 million in both the first quarter of 2021 and 2020.

Net operating revenues of the golf and related operations segment increased to $4.0 million in the first quarter of 2021 compared to $3.3 million in the first quarter of 2020.

Although net operating revenues increased between periods, the government restrictions placed in response to the COVID-19 pandemic continued to have an impact on our golf and related operations segment, as further described below.

Total cost of operations related to the waste management services segment decreased to $8.7 million in the first quarter of 2021 compared with $8.9 million in the first quarter of 2020.

Net operating revenues increased to $16.4 million in the second quarter of 2021 compared with $13.1 million in the second quarter of 2020.

Net operating revenues of the waste management services segment decreased to approximately $8.7 million in the second quarter of 2021 compared to $9.1 million in the second quarter of 2020.

Net operating revenues of the golf and related operations segment increased to approximately $7.7 million in the second quarter of 2021 compared to $4.0 million in the second quarter of 2020.

Total cost of operations related to the waste management services segment decreased to $7.0 million in the second quarter of 2021 compared with $7.2 million in the second quarter of 2020.

The expiration of the managerial, consulting and clerical services contract in the third quarter of 2020, and associated operating costs under that contract, accounted for the primary decrease in the cost of operations for the waste management services segment.

Total cost of operations related to the golf and related operations segment increased to $3.5 million in the first quarter of 2021 compared to $3.2 million in the first quarter of 2020.

The increase between periods was primarily a result of higher employee related costs from increased business operations as certain restrictions and mandated shut downs associated with the COVID-19 pandemic were reduced or lifted.

Depreciation and amortization expense was approximately $0.8 million in the first quarter of 2021 compared to $0.7 million in the first quarter of 2020.

Total cost of operations related to the golf and related operations segment increased to $6.1 million in the second quarter of 2021 compared to $3.4 million in the second quarter of 2020.

The increase between periods was primarily a result of higher employee related costs and product costs associated with the increased business operations as certain restrictions and mandated shut downs associated with the COVID-19 pandemic were reduced and subsequently lifted.

Depreciation and amortization expense was approximately $0.8 million in the second quarter of 2021 compared to $0.7 million in the second quarter of 2020.

The increase is due to the higher depreciable asset base primarily due to the renovation and expansion of The Grand Resort.

Consolidated selling, general and administrative expenses increased to approximately $2.3 million in the first quarter of 2021 compared to $2.2 million in the first quarter of 2020 primarily due to higher employee related costs.

Gain on debt extinguishment was approximately $1.1 million in the first quarter of 2021 representing the Paycheck Protection Program loans that were forgiven by the Small Business Administration received under the CARES Act.

Interest expense was approximately $0.3 million in both the first quarter of 2021 and 2020.

During the first quarter of 2021, an increase in interest expense due to the higher average outstanding debt was offset by a lower weighted average interest rate on the outstanding borrowings.

During the three months ended March 31, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.80% and 5.00%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $0.7 million, or $0.18 per share, in the first quarter of 2021 compared with a net loss attributable to Avalon Holdings Corporation common shareholders of $0.8 million, or $0.21 per share, in the first quarter of 2020.

Consolidated selling, general and administrative expenses increased to approximately $2.5 million in the second quarter of 2021 compared to $1.9 million in the second quarter of 2020 primarily due to higher employee related costs which included employee incentives paid in the second quarter of 2021.

Gain on debt extinguishment was approximately $0.9 million in the second quarter of 2021 representing the Paycheck Protection Program loans that were forgiven by the Small Business Administration received under the CARES Act.

Interest expense was approximately $0.3 million in both the second quarter of 2021 and 2020.

During the second quarter of 2021, the decrease in interest expense due to the lower average outstanding debt was offset by a higher weighted average interest rate on the outstanding borrowings.

During the three months ended June 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.92% and 4.67%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $0.7 million, or $0.19 per share, in the second quarter of 2021 compared with a net loss attributable to Avalon Holdings Corporation common shareholders of $0.4 million, or $0.11 per share, in the second quarter of 2020.

Segment Performance

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Waste Management Services Segment

The net operating revenues of the waste management services segment were approximately $11.1 million in both the first quarter of 2021 and 2020.

The net operating revenues of the waste management services segment were approximately $8.7 million in the second quarter of 2021 compared to $9.1 million in the second quarter of 2020.

The waste management services segment includes waste disposal brokerage and management services, captive landfill management operations and salt water injection well operations.

The net operating revenues of the waste disposal brokerage and management services business were approximately $10.5 million in both the first quarter of 2021 and 2020.

The net operating revenues of the waste disposal brokerage and management services business were approximately $8.1 million in the second quarter of 2021 compared to $8.5 million in the second quarter of 2020.

Continuous work of the waste disposal brokerage business increased approximately $0.1 million between periods as a result of increased work from multiple customers.

Net operating revenues related to continuous work were approximately $6.9 million in the first quarter of 2021 compared with $6.1 million in the first quarter of 2020.

Event work net operating revenues related to multiple projects decreased by approximately $0.6 million during the first quarter of 2021 when compared to the first quarter of 2020.

Net operating revenues related to continuous work were approximately $4.8 million in the second quarter of 2021 compared with $4.7 million in the second quarter of 2020.

Event work net operating revenues were approximately $3.3 million in both the second quarter of 2021 and 2020.

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.

Event work net operating revenues were approximately $3.6 million in the first quarter of 2021 compared with $4.2 million in the first quarter of 2020.

Net operating revenue relating to managerial, consulting and clerical services, which was performed for one customer, was entirely dependent on that customer’s needs.

Net operating revenues related to managerial, consulting and clerical services were approximately $0.5 million in the second quarter of 2020.

The managerial, consulting and clerical contract expired in the third quarter of 2020.

Net operating revenue relating to managerial, consulting and clerical services, which was performed for one customer, was entirely dependent on that customer’s needs.

Net operating revenues related to managerial, consulting and clerical services were approximately $0.2 million in the first quarter of 2020.

The net operating revenues of the captive landfill management operations were approximately $0.6 million in both the first quarter of 2021 and 2020.

The net operating revenues of the captive landfill management operations were approximately $0.6 million in both the second quarter of 2021 and 2020.

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.

Costs of operations related to the waste management services segment decreased to $8.7 million in the first quarter of 2021 compared with $8.9 million in the first quarter of 2020.

The overall gross margin percentage of the waste brokerage and management services business was approximately 22% in the first quarter of 2021 compared to 20% in the first quarter of 2020.

The increase was due to higher gross profit continuous and event work projects during the first quarter of 2021.

Income before income taxes for the waste management services segment were approximately $1.1 million in the first quarter of 2021 compared to $1.0 million in the first quarter of 2020.

Income before income taxes of the waste brokerage and management services business was approximately $1.1 million in the first quarter of 2021 compared to $1.0 million in the first quarter of 2020.

The increased income before taxes was primarily attributable to the increased gross margin related to continuous work during the first quarter of 2021 compared to the first quarter of 2020.

Income before income taxes of the captive landfill operations were approximately $0.1 million in both the first quarter of 2021 and 2020.

During both the first quarter of 2021 and 2020 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 appeal and mandamus processes.

Costs of operations related to the waste management services segment decreased to $7.0 million in the second quarter of 2021 compared with $7.2 million in the second quarter of 2020.

The primary decrease in the cost of operations between periods for the waste management services segment is due to the expiration of the managerial, consulting and clerical services contract and the associated operating costs under that contract.

The overall gross margin percentage of the waste brokerage and management services business was approximately 20% in the second quarter of 2021 compared to 21% in the second quarter of 2020.

The decrease was due to lower gross profit from both continuous and event work projects during the second quarter of 2021.

The decrease in the overall gross margin percentage was partially offset by the expiration of the managerial, consulting and clerical services contract which generated a low gross margin percentage.

Income before income taxes for the waste management services segment were approximately $0.7 million in the second quarter of 2021 compared to $0.8 million in the second quarter of 2020.

Income before income taxes of the waste brokerage and management services business was approximately $0.6 million in the second quarter of 2021 compared to $0.7 million in the second quarter of 2020.

The decreased income before taxes was primarily attributable to the decreased net operating revenues and associated gross margin related to both continuous and event work projects during the second quarter of 2021 compared to the second quarter of 2020.

Income before income taxes of the captive landfill operations were approximately $0.1 million in both the second quarter of 2021 and 2020.

During both the second quarter of 2021 and 2020 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 appeal and mandamus processes.

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $4.0 million in the first quarter of 2021 compared to $3.3 million in the first quarter of 2020.

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 which provides lodging, dining, banquet and conference facilities and other resort related amenities, a multipurpose recreation center and a travel agency.

Food, beverage and merchandise sales increased to approximately $1.4 million in the first quarter of 2021 compared to $1.0 million in the first quarter of 2020.

Food, beverage and merchandise sales increased between periods as a result of an increase in business activity coupled with increased menu pricing.

Although food, beverage and merchandise sales increased between periods, the government restrictions issued in response to control the COVID-19 pandemic, which included decreased occupancy for restaurants and limits placed on mass gatherings and large community events, continued to have an impact on our operations.

Food and beverages sales related to banquets and conferences were not significant during the first quarter of 2021 as a result of the government mandated restrictions on gatherings and events.

Other net operating revenues related to the golf and related operations were approximately $2.6 million in the first quarter of 2021 compared to $2.3 million in the first quarter of 2020.

Membership dues revenue was approximately $1.6 million in the first quarter of 2021 compared to $1.5 million in the first quarter of 2020.

The increase in membership dues revenue was attributable to an increase in the number of members between periods.

Net operating revenues related to room rental was approximately $0.5 million in the first quarter of 2021 compared to $0.3 million in the first quarter of 2020.

Net operating revenues of the golf and related operations segment were approximately $7.7 million in the second quarter of 2021 compared to $4.0 million in the second quarter of 2020.

Food, beverage and merchandise sales increased to approximately $3.3 million in the second quarter of 2021 compared to $1.4 million in the second quarter of 2020.

Food, beverage and merchandise sales increased between periods as a result of an increase in business activity.

The government restrictions issued in response to control the COVID-19 pandemic, which included decreased occupancy for restaurants and limits placed on mass gatherings and large community events, significantly impacted on our operations during the second quarter of 2020.

Food and beverages sales related to banquets and conferences were not significant during the second quarter of 2020 as a result of the government mandated restrictions on gatherings and events.

Other net operating revenues related to the golf and related operations were approximately $4.4 million in the second quarter of 2021 compared to $2.6 million in the second quarter of 2020.

Membership dues revenue was approximately $1.7 million in the second quarter of 2021 compared to $1.5 million in the second quarter of 2020.

The increase in membership dues revenue was attributable to an increase in the average number of members between periods.

Net operating revenues related to room rental was approximately $1.1 million in the second quarter of 2021 compared to $0.3 million in the second quarter of 2020.

The increase in room revenue was a result of both higher occupancy and an increase in average room rates when compared to the prior period.

In March 2020, the Company began experiencing cancellations of overnight room accommodations due to the COVID-19 pandemic.

Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $0.4 million in both the first quarter of 2021 and 2020.

During the second quarter of 2020, the Company experienced significant cancellations of overnight room accommodations due to the COVID-19 pandemic.

Greens fees and associated cart rentals were approximately $0.9 million in the second quarter of 2021 compared to $0.6 million in the second quarter of 2020.

The increase in greens fees and associated cart rental during the second quarter of 2021 compared to the second quarter of 2020 was due to an increase in the number of golf rounds played.

Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $0.7 million in the second quarter of 2021 compared to $0.2 million in the second quarter of 2020.

In March of 2020, government orders were issued in response to controlling the COVID-19 pandemic which required all nonessential business activities, including athletic, fitness, salon and spa activities to temporarily cease operations.

These business activities were allowed to resume operating late in the second quarter of 2020.

Greens fees and associated cart rentals were approximately $0.1 million in both the first quarter of 2021 and 2020.

Total cost of operations for the golf and related operations segment were $6.1 million in the second quarter of 2021 compared with $3.4 million in the second quarter of 2020.

Cost of food, beverage and merchandise was approximately $1.3 million in the second quarter of 2021 compared to $0.6 million in the second quarter of 2020.

The increase in food, beverage and merchandise costs between periods is primarily due to higher revenues from increased business operations.

The cost of food, beverage and merchandise sales was approximately 41% of associated revenue in both the second quarter of 2021 and 2020.

Golf and related operations operating costs increased to approximately $4.7 million in the second quarter of 2021 compared with $2.8 million in the second quarter of 2020.

The increase in operating costs between periods, primarily employee related costs, was directly attributable to the increased business operations during the second quarter of 2021 compared to the second quarter of 2020 as certain government mandates regarding restaurant operations were reduced and subsequently lifted.

The golf and related operations recorded income before income taxes of $1.6 million in the second quarter of 2021 compared with a loss before income taxes of $0.2 million in the second quarter of 2020.

The change between periods was a result of higher net operating revenues and associated gross profit related to room rentals, greens fees and related cart rental, food, beverage and merchandise sales and the gain on debt extinguishment of approximately $0.9 million representing the Paycheck Protection Program loan that was forgiven by the Small Business Administration received under the CARES Act.

General Corporate Expenses

General corporate expenses were $1.3 million in the second quarter of 2021 compared to $0.8 million in the second quarter of 2020.

The increase was primarily attributable to higher employee related costs which included employee incentives paid in the second quarter of 2021.

Interest Expense

Interest expense was approximately $0.3 million in both the second quarter of 2021 and 2020.

During the second quarter of 2021, the decrease in interest expense due to the lower average outstanding debt was offset by a higher weighted average interest rate on the outstanding borrowings.

During the three months ended June 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.92% and 4.67%, respectively.

Net Income (Loss)

Net income attributable to Avalon Holdings Corporation common shareholders was $0.7 million in the second quarter of 2021 compared to a net loss attributable to Avalon Holdings Corporation common shareholders of $0.4 million in the second quarter of 2020.

Avalon recorded a state income tax provision in both the second quarter of 2021 and 2020, which was related entirely to the waste management and brokerage operations.

Avalon’s income tax provision (benefit) on the income (loss) before taxes was offset by a change in the valuation allowance.

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.

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.

Performance in the first six months of 2021 compared with the first six months of 2020

Overall Performance

Net operating revenues increased to $31.5 million in the first six months of 2021 compared with $27.5 million in the first six months of 2020.

Net operating revenues of the waste management services segment decreased to approximately $19.8 million in the first six months of 2021 compared to $20.2 million in the first six months of 2020.

Net operating revenues of the golf and related operations segment increased to approximately $11.7 million in the first six months of 2021 compared to $7.3 million in the first six months of 2020.

Total cost of operations related to the waste management services segment decreased to $15.7 million in the first six months of 2021 compared with $16.1 million in the first six months of 2020.

Total cost of operations related to the golf and related operations segment increased to $9.6 million in the first six months of 2021 compared to $6.6 million in the first six months of 2020.

Depreciation and amortization expense was approximately $1.5 million in the first six months of 2021 compared to $1.4 million in the first six months of 2020.

The increase is due to the higher depreciable asset base primarily due to the renovation and expansion of The Grand Resort.

Consolidated selling, general and administrative expenses increased to approximately $4.8 million in the first six months of 2021 compared to $4.2 million in the first six months of 2020 primarily due to higher employee related costs which included employee incentives paid in the second quarter of 2021.

Gain on debt extinguishment was approximately $2.0 million in the first six months of 2021 representing the Paycheck Protection Program loans that were forgiven by the Small Business Administration received under the CARES Act.

Interest expense was approximately $0.6 million in both the first six months of 2021 and 2020.

During the first six months of 2021, the decrease in interest expense due to the lower average outstanding debt was offset by a higher weighted average interest rate on the outstanding borrowings.

During the six months ended June 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.86% and 4.82%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $1.5 million, or $0.37 per share, in the first six months of 2021 compared with a net loss attributable to Avalon Holdings Corporation common shareholders of $1.2 million, or $0.32 per share, in the first six months of 2020.

Segment Performance

Segment performance should be read in conjunction with Note 14 to the Condensed Consolidated Financial Statements.

Waste Management Services Segment

The net operating revenues of the waste management services segment were approximately $19.8 million in the first six months of 2021 compared to $20.2 million in the first six months of 2020.

The net operating revenues of the waste disposal brokerage and management services business were approximately $18.6 million in the first six months of 2021 compared to $19.0 million in the first six months of 2020.

Continuous work of the waste disposal brokerage business increased approximately $0.9 million between periods as a result of increased work from multiple customers.

Net operating revenues related to continuous work were approximately $11.7 million in the first six months of 2021 compared with $10.8 million in the first six months of 2020.

Event work net operating revenues related to multiple projects decreased by approximately $0.5 million during the first six months of 2021 when compared to the first six months of 2020.

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.

Event work net operating revenues were approximately $6.9 million in the first six months of 2021 compared with $7.4 million in the first six months of 2020.

Net operating revenue relating to managerial, consulting and clerical services, which was performed for one customer, was entirely dependent on that customer’s needs.

Net operating revenues related to managerial, consulting and clerical services were approximately $0.8 million in the first six months of 2020.

The managerial, consulting and clerical contract expired in the third quarter of 2020.

The net operating revenues of the captive landfill management operations were approximately $1.2 million in both the first six months of 2021 and 2020.

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.

Costs of operations related to the waste management services segment decreased to $15.7 million in the first six months of 2021 compared with $16.1 million in the first six months of 2020.

The overall gross margin percentage of the waste brokerage and management services business was approximately 21% in the first six months of 2021 compared to 20% in the first six months of 2020.

The increase in the overall gross margin percentage was due to higher gross profit continuous work during the first six months of 2021 and the expiration of the managerial, consulting and clerical services contract which generated a low gross margin percentage.

Income before income taxes for the waste management services segment were approximately $1.8 million in the first six months of 2021 compared to $1.9 million in the first six months of 2020.

Income before income taxes of the waste brokerage and management services business was approximately $1.8 million in both the first six months of 2021 and 2020.

Income before income taxes of the captive landfill operations were approximately $0.1 million in both the first six months of 2021 and 2020.

During both the first six months of 2021 and 2020 the salt water injection wells incurred a loss before income taxes of approximately $0.1 million primarily due to legal and professional costs incurred relating to Avalon’s appeal and mandamus processes.

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $11.7 million in the first six months of 2021 compared to $7.3 million in the first six months of 2020.

Food, beverage and merchandise sales increased to approximately $4.6 million in the first six months of 2021 compared to $2.4 million in the first six months of 2020.

Food, beverage and merchandise sales increased between periods as a result of an increase in business activity.

Food and beverages sales related to banquets and conferences were not significant during the first six months of 2020 as a result of the government mandated restrictions on gatherings and events.

Other net operating revenues related to the golf and related operations were approximately $7.1 million in the first six months of 2021 compared to $4.9 million in the first six months of 2020.

Membership dues revenue was approximately $3.3 million in the first six months of 2021 compared to $3.0 million in the first six months of 2020.

The increase in membership dues revenue was attributable to an increase in the average number of members between periods.

Net operating revenues related to room rental was approximately $1.6 million in the first six months of 2021 compared to $0.6 million in the first six months of 2020.

The increase in room revenue was a result of both higher occupancy and an increase in average room rates when compared to the prior period.

During the first six months of 2020, the Company experienced cancellations of overnight room accommodations due to the COVID-19 pandemic.

Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $1.2 million in the first six months of 2021 compared to $0.6 million in the first six months of 2020.

These business activities were allowed to resume operating late in the second quarter of 2020.

Greens fees and associated cart rentals were approximately $1.0 million in the first six months of 2021 compared to $0.7 million in the first six months of 2020.

The increase in greens fees and associated cart rental during the first six months of 2021 compared to the first six months of 2020 was due to an increase in the number of golf rounds played.

Total cost of operations for the golf and related operations segment were $3.5 million in the first quarter of 2021 compared with $3.2 million in the first quarter of 2020.

Cost of food, beverage and merchandise was approximately $0.6 million in the both the first quarter of 2021 and 2020.

Total cost of operations for the golf and related operations segment were $9.6 million in the first six months of 2021 compared with $6.6 million in the first six months of 2020.

Cost of food, beverage and merchandise was approximately $1.9 million in the first six months of 2021 compared to $1.1 million in the first six months of 2020.

The increase in food, beverage and merchandise costs between periods is primarily due to higher revenues from increased business operations.

The decrease in food, beverage and merchandise costs as a percentage of the associated net operating revenues between periods is attributable to increased menu pricing.

The cost of food, beverage and merchandise sales were approximately 44% of associated revenue in the first quarter of 2021 compared to 51% in the first quarter of 2020.

Golf and related operations operating costs increased to approximately $2.9 million in the first quarter of 2021 compared with $2.6 million in the first quarter of 2020.

The increase in operating costs between periods, primarily employee related costs, was directly attributable to the increased business operations during the first quarter of 2021 compared to the first quarter of 2020 as certain government mandates regarding restaurant operations were reduced or lifted.

The golf and related operations recorded income before income taxes of $0.2 million in the first quarter of 2021 compared with a loss before income taxes of $0.7 million in the first quarter of 2020.

The change between periods was a result of higher net operating revenues and associated gross profit related to room rentals, food, beverage and merchandise sales and the gain on debt extinguishment of approximately $0.6 million representing the Paycheck Protection Program loan that was forgiven by the Small Business Administration received under the CARES Act.

The cost of food, beverage and merchandise sales were approximately 42% of associated revenue in the first six months of 2021 compared to 46% in the first six months of 2020.

Golf and related operations operating costs increased to approximately $7.7 million in the first six months of 2021 compared with $5.5 million in the first six months of 2020.

The increase in operating costs between periods, primarily employee related costs, was directly attributable to the increased business operations during the first six months of 2021 compared to the first six months of 2020 as certain government mandates regarding restaurant operations were reduced and subsequently lifted.

The golf and related operations recorded income before income taxes of $1.8 million in the first six months of 2021 compared with a loss before income taxes of $0.9 million in the first six months of 2020.

The change between periods was a result of higher net operating revenues and associated gross profit related to room rentals, greens fees and related cart rental, food, beverage and merchandise sales and the gain on debt extinguishment of approximately $1.5 million representing the Paycheck Protection Program loan that was forgiven by the Small Business Administration received under the CARES Act.

The ability to attract new members and retain members is very important to the success of the golf and related operations segment.

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General Corporate Expenses

General corporate expenses were $0.8 million in both the first quarter of 2021 and 2020.

General corporate expenses were $2.1 million in the first six months of 2021 compared to $1.6 million in the first six months of 2020.

The increase was primarily attributable to higher employee related costs which included employee incentives paid in the second quarter of 2021.

Interest Expense

Interest expense was approximately $0.3 million in both the first quarter of 2021 and 2020.

During the first quarter of 2021, an increase in interest expense due to the higher average outstanding debt was offset by a lower weighted average interest rate on the outstanding borrowings.

During the three months ended March 31, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.80% and 5.00%, respectively.

Interest expense was approximately $0.6 million in both the first six months of 2021 and 2020.

During the first six months of 2021, the decrease in interest expense due to the lower average outstanding debt was offset by a higher weighted average interest rate on the outstanding borrowings.

During the six months ended June 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.86% and 4.82%, respectively.

Net Income (Loss)

Net income attributable to Avalon Holdings Corporation common shareholders was $0.7 million in the first quarter of 2021 compared to a net loss attributable to Avalon Holdings Corporation common shareholders of $0.8 million in the first quarter of 2020.

Avalon recorded a state income tax provision in both the first quarter of 2021 and 2020, which was related entirely to the waste management and brokerage operations.

Avalon’s income tax provision (benefit) on the income (loss) before taxes was offset by a change in the valuation allowance.

Net income attributable to Avalon Holdings Corporation common shareholders was $1.5 million in the first six months of 2021 compared to a net loss attributable to Avalon Holdings Corporation common shareholders of $1.2 million in the first six months of 2020.

Avalon recorded a state income tax provision in both the first six months of 2021 and 2020, which was related entirely to the waste management and brokerage operations.