What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-06 · 408 added, 313 removed, 1061 unchanged (40% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net operating revenues:

6 unchanged sentences

Other golf and related operations

12,917  

Total golf and related operations

21,525  

14,548  

Total net operating revenues

9 unchanged sentences

Golf and related operations operating costs

13,356  

Depreciation and amortization expense

Selling, general and administrative expenses

Operating income (loss)

( 222 )  

( 119 )  

Operating income

Other income (expense):

6 unchanged sentences

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 )  

Less net loss attributable to non-controlling interest in subsidiaries

( 168 )  

2 unchanged sentences

$ 2,441  

$ 1,458  

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

13 unchanged sentences

(in thousands, except per share amounts)          

September 30,

Current Assets:

52 unchanged sentences

37,093  

Non-controlling interest in subsidiary

( 172 )  

Non-controlling interest in subsidiaries

39,556  

8 unchanged sentences

(in thousands, except for share data)

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2021

Non-controlling

Shareholders'

Balance at April 1, 2021

Balance at July 1, 2021

3,287,647  

6 unchanged sentences

Stock options - compensation costs

Investment in subsidiary from accredited investor

Net income (loss)

( 168 )  

Balance at June 30, 2021

3,287,647  

Balance at September 30, 2021

3,287,647  

4 unchanged sentences

$ 39,556  

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

Non-controlling

Shareholders'

Balance at April 1, 2020

Balance at July 1, 2020

3,263,647  

611,784  

$ 59,150  

$ ( 23,404 )  

$ 35,785  

$ ( 95 )  

$ 35,690  

Stock options - compensation costs

Balance at June 30, 2020

Net income (loss)

Balance at September 30, 2020

3,263,647  

611,784  

$ 59,151  

$ ( 22,623 )  

$ 36,567  

$ ( 103 )  

$ 36,464  

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

(in thousands, except for share data)

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Non-controlling

1 unchanged sentence

Balance at January 1, 2021

3,287,647  

611,784  

$ 59,196  

$ ( 22,142 )  

$ 37,093  

$ ( 126 )  

$ 36,967  

Stock options - compensation costs

Investment in subsidiary from accredited investors

Net income (loss)

Balance at June 30, 2021

For the Six Months Ended June 30, 2020

( 214 )  

Balance at September 30, 2021

3,287,647  

611,784  

$ 59,200  

$ ( 19,701 )  

$ 39,538  

$ 39,556  

For the Nine Months Ended September 30, 2020

Non-controlling

1 unchanged sentence

Balance at January 1, 2020

3,263,647  

611,784  

$ 59,147  

$ ( 22,156 )  

$ 37,030  

$ ( 66 )  

$ 36,964  

Stock options - compensation costs

Balance at June 30, 2020

( 467 )  

( 37 )  

Balance at September 30, 2020

3,263,647  

611,784  

$ 59,151  

$ ( 22,623 )  

$ 36,567  

$ ( 103 )  

$ 36,464  

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Net income (loss)

$ 2,227  

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

5 unchanged sentences

Gain on debt extinguishment

( 1,964 )  

Change in operating assets and liabilities:

Accounts receivable

( 1,210 )  

Unbilled membership dues receivable

( 254 )  

( 244 )  

Prepaid expenses

( 21 )  

Other assets, net

Accounts payable

( 418 )  

Accrued payroll and other compensation

1 unchanged sentence

Other accrued taxes

( 33 )  

Deferred membership dues revenue

Other liabilities and accrued expenses

( 79 )  

Net cash provided by operating activities

1 unchanged sentence

Capital expenditures

Proceeds from disposal of vehicle

( 3,249 )  

Proceeds from disposal of equipment

Net cash used in investing activities

( 3,246 )  

Cash flows from financing activities:

Proceeds from subsidiary private placement offering

Proceeds under Paycheck Protection Program loans

Principal payments on term loan facilities

( 828 )  

Principal payments on finance lease obligations

( 271 )  

Net cash provided by (used in) financing activities

( 741 )  

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

( 1,897 )  

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

$ 6,198  

$ 8,913  

Supplemental disclosure of cash flow information:

11 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2021

September 30, 2021

Description of Business

14 unchanged sentences

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 June 30, 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 September 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 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.

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.

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 nine months ended September 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.

4 unchanged sentences

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.

During the nine months ended September 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.

20 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 June 30, 2021 and December 31, 2020 ( in thousands):

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

September 30,

Cash and cash equivalents

$ 4,106  

$ 4,210  

Restricted cash

Cash, cash equivalents and restricted cash

$ 6,198  

$ 8,095  

Revenue Recognition

18 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 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.

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

For the three months ended September 30, 2021 and 2020, the net operating revenues related to waste management services represented approximately 54 % and 56 %, respectively, of Avalon’s total consolidated net operating revenues.

For the nine months ended September 30, 2021 and 2020, the net operating revenues related to waste management services represented approximately 59 % and 67 %, respectively, of Avalon’s total consolidated net operating revenues.

For the nine months ended September 30, 2021, one customer accounted for 12 % of the waste management services segment’s net operating revenues to external customers and 7 % of the consolidated net operating revenues.

For the nine months ended September 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.

26 unchanged sentences

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 the three months ended September 30, 2021 and 2020, the net operating revenues related to the golf and related operations represented approximately 46 % and 44 %, respectively, of Avalon’s total consolidated net operating revenues.

For the nine months ended September 30, 2021 and 2020, the net operating revenues related to the golf and related operations represented approximately 41 % and 33 %, respectively, of Avalon’s total consolidated net operating revenues.

For both the nine months ended September 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.

21 unchanged sentences

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 and six months ended June 30, 2021 and 2020 (in thousands).

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

Sales and other taxes are excluded from revenues.

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Waste management and brokerage services

7 unchanged sentences

31,279  

29,547  

Food, beverage and merchandise sales

6 unchanged sentences

21,525  

14,548  

Total net operating revenues

7 unchanged sentences

The amounts due are stated at their net realizable value.

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 September 30, 2021 and December 31, 2020, accounts receivable, net, related to our waste management services segment were approximately $ 8.5 million and $ 7.9 million, respectively.

At September 30, 2021, one customer accounted for approximately 21 % of the waste management services segment’s receivables and 18 % 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.

Accounts receivable, net, related to our golf and related operations segment were approximately $ 1.4 million and $ 0.8 million at September 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 September 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.

3 unchanged sentences

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 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

End of Period

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

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

Balance at Beginning of Period

Write-offs less

Balance at End of Period

Allowance for credit losses

Three months ended June 30, 2021

Three months ended September 30, 2021

$ ( 18 )  

Three months ended June 30, 2020

Three months ended September 30, 2020

$ ( 4 )  

Six months ended June 30, 2021

Nine months ended September 30, 2021

$ ( 33 )  

Six months ended June 30, 2020

Nine months ended September 30, 2020

$ ( 22 )  

3 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 $ 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

End of Period

Unbilled membership receivables in our Condensed Consolidated Balance Sheets were approximately $ 0.8 million at September 30, 2021 and $ 0.6 million at December 31, 2020.

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

Balance at Beginning of Period

Unbilled Membership

Balance at End of Period

Contract Assets:

Unbilled membership dues receivable

Three months ended June 30, 2021

$ ( 579 )  

$ 1,102  

Three months ended June 30, 2020

Three months ended September 30, 2021

$ 1,102  

$ ( 500 )  

Six months ended June 30, 2021

Three months ended September 30, 2020

$ 1,109  

$ ( 548 )  

Nine months ended September 30, 2021

$ 1,802  

Six months ended June 30, 2020

$ ( 1,548 )  

Nine months ended September 30, 2020

$ 1,950  

4 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 $ 5.4 million at June 30, 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 $ 4.4 million at September 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.

2 unchanged sentences

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

End of Period

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

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

Balance at Beginning of Period

Revenue Recognized

Balance at End of Period

Contract Liabilities:

Deferred membership dues revenue

Three months ended June 30, 2021

$ 4,122  

$ 2,915  

Three months ended September 30, 2021

$ 5,376  

$ ( 1,684 )  

Three months ended June 30, 2020

$ 4,422  

Three months ended September 30, 2020

$ 4,776  

1 unchanged sentence

$ 4,041  

Six months ended June 30, 2021

Nine months ended September 30, 2021

$ 3,196  

2 unchanged sentences

$ 4,422  

Six months ended June 30, 2020

Nine months ended September 30, 2020

$ 3,153  

3 unchanged sentences

Customer advance deposits

Three months ended June 30, 2021

Three months ended September 30, 2021

$ ( 688 )  

Three months ended June 30, 2020

Three months ended September 30, 2020

$ ( 301 )  

Six months ended June 30, 2021

Nine months ended September 30, 2021

$ 1,299  

Six months ended June 30, 2020

$ ( 1,289 )  

Nine months ended September 30, 2020

$ ( 597 )  

Property and Equipment

6 unchanged sentences

in our Condensed Consolidated Statements of Operations.

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

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

September 30,

Land and land improvements

14 unchanged sentences

$ 51,299  

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

At September 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 six months of 2021 and 2020, no triggering events were present.

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

Operating Leases

1 unchanged sentence

Our operating leases have remaining lease terms ranging from less than 1 year to 4.2 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 weighted average remaining lease term on operating leases was approximately 3.0 years at September 30, 2021.

During the first nine 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.

During the first nine 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 June 30, 2021 and December 31, 2020 consists of the following (in thousands):

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

September 30,

Operating lease right-of-use assets

6 unchanged sentences

$ 1,728  

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

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

Finance Leases

4 unchanged sentences

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

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

At September 30, 2021 there were approximately 32.0 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 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):

At September 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 3.7 years.

The weighted average remaining lease term on the vehicles and equipment leases was approximately 2.9 years at September 30, 2021.

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

September 30,

Leased property under finance leases

3 unchanged sentences

( 6,790 )  

Leased property under finace leases, net

Leased property under finance leases, net

$ 5,644  

3 unchanged sentences

Total obligations under finance leases

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):

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

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating lease cost:

4 unchanged sentences

Total finance lease cost

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

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

Total lease payments

Less imputed interest

imputed interest

current portion of obligations under leases

1 unchanged sentence

$ 1,258  

$ 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 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 .

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

For both the three and nine months ended September 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 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.

For the three months ended September 30, 2021, the diluted weighted average number of shares outstanding was 3,930,869 .

For the nine months ended September 30, 2021, the diluted weighted average number of shares outstanding was 3,934,838 .

For the three months ended September 30, 2020, the diluted per share amount reported 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 nine months ended September 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.

4 unchanged sentences

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 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.”

At September 30, 2021 and December 31, 2020, loan proceeds of $ 2.1 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.

9 unchanged sentences

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 June 30, 2021 and December 31, 2020.

Avalon was in compliance with the New Term Loan Agreement covenants at September 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.

5 unchanged sentences

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 June 30, 2021 and December 31, 2020.

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

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

At June 30, 2021, the interest rate on the Line of Credit Agreement was 3.50 %.

At September 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 June 30, 2021 and December 31, 2020.

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

Paycheck Protection Program Loan

16 unchanged sentences

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

During the three months ended September 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 5.00 % and 4.57 %, respectively.

During the nine months ended September 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.91 % and 4.74 %, respectively.

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

September 30, 2021

Debt Issuance Costs

25 unchanged sentences

$ 21,941  

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

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

$ 1,153  

1 unchanged sentence

$ 21,116  

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.

During the three months ended September 30, 2021 and 2020, net income attributable to Avalon Holdings Corporation shareholders was $ 1.0 million and $ 0.8 million, respectively.

During the nine months ended September 30, 2021, net income attributable to Avalon Holdings Corporation shareholders was $ 2.4 million compared to a net loss attributable to Avalon Holdings Corporation shareholders of $ 0.5 million during the nine months ended September 30, 2020.

Avalon recorded a state income tax provision in both the three and nine month periods ended September 30, 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.

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

At September 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:

Number of Options

Weighted Average

Fair Value at

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Options cancelled or forfeited

Outstanding at June 30, 2021

Outstanding at September 30, 2021

54,000  

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$ 0.43  

Exercisable at June 30, 2021

Exercisable at September 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.

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$ 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.

Compensation costs were approximately $ 1,000 for both the three month periods ended September 30, 2021 and 2020, and $ 4,000 for both the nine month periods ended September 30, 2021 and 2020, based upon the estimated grant date fair value calculations.

As of September 30, 2021, there was approximately $ 8,000 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 2.67 years.

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

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

For the nine months ended September 30, 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.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net operating revenues from:

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31,279  

29,547  

Golf and related operations:

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21,525  

14,548  

Intersegment revenues

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21,557  

14,585  

Segment operating revenues

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( 15 )  

( 32 )  

Total net operating revenues

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Income (loss) before income taxes:

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Golf and related operations

( 186 )  

Segment income before income taxes

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$ 2,312  

$ 1,470  

Gain on debt extinguishment:

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$ 1,964  

September 30,

Identifiable assets:

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$ 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.

In comparing total assets at September 30, 2021 with those at December 31, 2020, the increase in the total assets of the waste management services segment of approximately $ 0.7 million was primarily a result of an increase in accounts receivable and, to a lesser extent, an increase in intersegment transactions, which are eliminated in consolidation.

The increase in total assets of the golf and related operations segment of $ 1.6 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 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.

The decrease in corporate total assets of approximately $ 2.6 million was 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.

Certain Relationships and Related Transactions

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

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

At September 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.

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in our Condensed Consolidated Statements of Operations.

During the three and nine months ended September 30, 2021, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $ 144,000 and $ 190,000 , respectively.

During the three and nine months ended September 30, 2020, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $ 8,000 and $ 37,000 , respectively.

Avalon Med Spa, LLC

In March 2021, Avalon created a new Ohio limited liability company, Avalon Med Spa, LLC.

Avalon Med Spa, LLC will provide elective appearance improving nonsurgical aesthetic services under the supervision of a licensed physician.

Avalon Med Spa, LLC provides elective appearance improving nonsurgical aesthetic services under the supervision of a licensed physician.

Avalon Med Spa, LLC, offers investment opportunities to accredited investors by selling membership units through private placement offerings.

The monies received from these offerings, along with internally contributed capital, will be used to purchase medical spa equipment and construct the facilities necessary for operation.

Avalon will manage all decisions regarding the medical spa operations for a percentage of the gross revenues.

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 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.

The monies received from these offerings, along with internally contributed capital, are used to purchase medical spa equipment and construct the facilities necessary for operation.

Avalon operates and manages all decisions regarding the medical spa operations for a percentage of the gross revenues.

In 2021, Avalon made a capital contributions totaling $ 359,000 , which included cash and certain equipment, in exchange for membership units of Avalon Med Spa, LLC.

Through a private placement offering for the purchase of membership units, Avalon Med Spa, LLC raised $ 358,000 from accredited investors in August 2021.

An outside director of Avalon, who qualified as an accredited investor, invested less than 10 % of the total investment in Avalon Med Spa, LLC.

Avalon is the majority owner of Avalon Med Spa, LLC owning 50.1 % of the company.

In accordance with ASC 810 - 10 and related amendment , Avalon Med Spa, LLC is a variable interest entity, and the financial statements of Avalon Med Spa, LLC 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.

During the three and nine months ended September 30, 2021, net loss attributable to the noncontrolling interest in Avalon Med Spa, LLC was $ 24,000 .

Injection Wells Suspension

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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.

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

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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.

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

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.

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 Ohio Department of Natural Resources (“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.

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The Supreme Court of Ohio reversed the decision of the 11 th Appellate District Court and remanded the case back to that court for a trial on the merits.

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

The trial occurred in September and October 2021.

The Company is currently awaiting judgment from the 11 th Appellate District Court.

On May 24, 2021, the Company received Chief’s Orders from the Division vacating the September 3, 2014 suspension orders for AWMS #2 and setting conditions for restart of that well.

Among these conditions was a limit placed on the seismicity within three miles of the well.

Under the Order, if a seismic event with a magnitude 2.1 or above occurs, the well must cease operations for an indefinite period of time until concurrence for subsequent restart is received from the Division.

The Company appealed the May 2021 Chief’s Order to the Ohio Oil and Gas Commission, seeking reasonable operating conditions that will allow the facility to operate profitably while protecting human health and property.

A hearing in this matter is expected in early 2022.

MANAGEMENT ’

S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

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Liquidity and Capital Resources

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.

For the nine months ended September 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.

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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.

During the nine months ended September 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.

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Capital Expenditures

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.

During the nine months ended September 30, 2021, Avalon incurred capital expenditures of $3.5 million of which $3.2 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 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.

During the nine months ended September 30, 2020, Avalon incurred capital expenditures of $3.7 million of which $3.2 million of such expenditures was paid to vendors during the period.

Expenditures primarily related to the continued renovation and expansion of The Grand Resort.

8 unchanged sentences

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

At September 30, 2021 and December 31, 2020, loan proceeds of $2.1 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 June 30, 2021 and December 31, 2020.

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

Line of Credit Agreement

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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 June 30, 2021 and December 31, 2020.

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

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

At June 30, 2021, the interest rate on the Line of Credit Agreement was 3.50%.

At September 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 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.

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

During the three months ended September 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 5.00% and 4.57%, respectively.

During the nine months ended September 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.91% and 4.74%, respectively.

Squaw Creek Country Club Lease Agreement

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Working Capital

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.

At September 30, 2021 and December 31, 2020, there was a working capital deficit of approximately $1.2 million and $1.9 million, respectively.

Working capital was positively impacted 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.

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

Accounts receivable increased to $9.9 million at September 30, 2021 compared with $8.7 million at December 31, 2020.

Accounts receivable related to the golf and related operations segment increased approximately $0.6 million at September 30, 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 $0.6 million at September 30, 2021 compared with December 31, 2020 as a result of the increase in net operating revenues in the third quarter of 2021 compared with the fourth quarter of 2020.

Accounts payable decreased to $9.0 million at September 30, 2021 compared to $9.1 million at December 31, 2020.

The decrease in accounts payable was attributable to our waste management segment due to the associated timing of 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.

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

Deferred revenue relating to membership dues was approximately $4.4 million at September 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 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 number of members at September 30, 2021 was 5,112 compared to 4,920 at December 31, 2020.

Accrued payroll and other compensation was approximately $1.2 million at September 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.

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As such, we intend to manage our internal growth as follows:

• 

Sales and Marketing Activities .

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We intend to hire additional qualified professional sales personnel to expand into different geographical areas.

• 

Development Activities .

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

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

Overall Performance

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 $6.1 million in the second quarter of 2021 compared to $3.4 million in the second quarter of 2020.

Net operating revenues increased to $21.3 million in the third quarter of 2021 compared with $16.6 million in the third quarter of 2020.

Net operating revenues of the waste management services segment were approximately $11.4 million in the third quarter of 2021 compared to $9.3 million in the third quarter of 2020.

Net operating revenues of the golf and related operations segment were approximately $9.9 million in the third quarter of 2021 compared to $7.3 million in the third quarter of 2020.

Total cost of operations related to the waste management services segment increased to $9.4 million in the third quarter of 2021 compared with $7.4 million in the third quarter of 2020.

The increase in the cost of operations between periods for the waste management segment is primarily due to the increased net operating revenues as these costs vary directly with the associated revenues.

Total cost of operations related to the golf and related operations segment increased to $7.3 million in the third quarter of 2021 compared to $5.4 million in the third 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.

Depreciation and amortization expense was approximately $0.8 million in the third quarter of 2021 compared to $0.7 million in the third 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 $2.5 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.

Consolidated selling, general and administrative expenses increased to approximately $2.7 million in the third quarter of 2021 compared to $2.1 million in the third quarter of 2020 due to higher employee related costs, which included employee incentives paid in the third quarter of 2021, and an increase in legal and professional costs incurred primarily related to the salt water injection wells mandamus process.

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

During the third 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 September 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 5.00% and 4.57%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $1.0 million, or $0.25 per share, in the third quarter of 2021 compared with net income attributable to Avalon Holdings Corporation common shareholders of $0.8 million, or $0.20 per share, in the third 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 $8.7 million in the second quarter of 2021 compared to $9.1 million in the second quarter of 2020.

The net operating revenues of the waste management services segment were approximately $11.4 million in the third quarter of 2021 compared to $9.3 million in the third 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 $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 $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.

The net operating revenues of the waste disposal brokerage and management services business were approximately $10.8 million in the third quarter of 2021 compared to $8.8 million in the third quarter of 2020.

Event work related to multiple projects increased by approximately $1.7 million during the third quarter of 2021 compared to the third quarter of 2020.

Event work net operating revenues were approximately $5.4 million in the third quarter of 2021 compared to $3.7 million in the third quarter 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.

In addition, continuous work of the waste disposal brokerage business increased approximately $0.4 million between periods as a result of increased work from multiple customers.

Net operating revenues related to continuous work were approximately $5.4 million in the third quarter of 2021 compared with $5.0 million 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 $0.5 million in the second quarter of 2020.

Net operating revenues related to managerial, consulting and clerical services were approximately $0.1 million in the third quarter 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 $0.6 million in both the second quarter of 2021 and 2020.

The net operating revenues of the captive landfill management operations were approximately $0.6 million in the third quarter of 2021 compared to $0.5 million in the third quarter of 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 $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.

Costs of operations related to the waste management services segment increased to $9.4 million in the third quarter of 2021 compared with $7.4 million in the third quarter of 2020.

The overall gross margin percentage of the waste brokerage and management services business was approximately 18% in the third quarter of 2021 compared to 21% in the third quarter of 2020.

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

Income before income taxes for the waste management services segment were approximately $0.7 million in the third quarter of 2021 compared to $0.9 million in the third quarter of 2020.

Income before income taxes of the waste brokerage and management services business was approximately $0.9 million in the third quarter of 2021 compared to $0.8 million in the third quarter of 2020.

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

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

The salt water injection wells incurred a loss before income taxes of $0.3 million during the third quarter of 2021 compared to less than $0.1 million in the third quarter of 2020 due to legal and professional costs incurred relating to Avalon’s mandamus process.

Golf and Related Operations Segment

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.

Net operating revenues of the golf and related operations segment were approximately $9.9 million in the third quarter of 2021 compared to $7.3 million in the third 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 $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 to approximately $4.0 million in the third quarter of 2021 compared to $2.9 million in the third 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.

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

During the third quarter of 2021, food and beverage sales related to banquets and conferences increased as a result of the lifting of certain government mandates placed on gatherings and events.

Other net operating revenues related to the golf and related operations were approximately $5.9 million in the third quarter of 2021 compared to $4.4 million in the third quarter of 2020.

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

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

Net operating revenues related to room rental was approximately $1.8 million in the third quarter of 2021 compared to $1.1 million in the third 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.

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.

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.

During the third 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 $1.5 million in the third quarter of 2021 compared to $1.3 million in the third quarter of 2020.

The increase in greens fees and associated cart rental during the third quarter of 2021 compared to the third 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 $0.9 million in the third quarter of 2021 compared to $0.5 million in the third quarter of 2020.

The increase in other revenues was primarily attributable to an increase in salon and spa services between periods.

Total cost of operations for the golf and related operations segment were $7.3 million in the third quarter of 2021 compared with $5.4 million in the third quarter of 2020.

Cost of food, beverage and merchandise was approximately $1.6 million in the third quarter of 2021 compared to $1.1 million in the third quarter of 2020.

The increase in total food, beverage and merchandise costs between periods was due to both higher revenues from increased business operations and an increase in product costs.

The cost of food, beverage and merchandise sales was approximately 42% of associated revenue in the third quarter of 2021 compared to 38% in the third quarter of 2020.

Golf and related operations operating costs increased to approximately $5.7 million in the third quarter of 2021 compared with $4.3 million in the third quarter of 2020.

The increase in operating costs between periods, primarily employee related costs, was directly attributable to the increased business operations during the third quarter of 2021 compared to the third quarter of 2020.

The golf and related operations recorded income before income taxes of $1.4 million in the third quarter of 2021 compared with income before income taxes of $1.0 million in the third quarter of 2020.

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.

General corporate expenses were $1.0 million in the third quarter of 2021 compared to $0.8 million in the third quarter of 2020.

The increase was attributable to both higher employee related costs, which included employee incentives paid in the third quarter of 2021, and an increase in legal and professional fees.

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.

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

During the third 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 September 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 5.00% and 4.57%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $1.0 million in the third quarter of 2021 compared to net income attributable to Avalon Holdings Corporation common shareholders of $0.8 million in the third quarter of 2020.

Avalon recorded a state income tax provision in both the third 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.

Avalon’s income tax provision on the income 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

Performance in the first nine months of 2021 compared with the first nine 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.

Net operating revenues increased to $52.8 million in the first nine months of 2021 compared with $44.1 million in the first nine months of 2020.

Net operating revenues of the waste management services segment were approximately $31.3 million in the first nine months of 2021 compared to $29.5 million in the first nine months of 2020.

Net operating revenues of the golf and related operations segment were approximately $21.5 million in the first nine months of 2021 compared to $14.6 million in the first nine months of 2020.

Total cost of operations related to the waste management services segment increased to $25.1 million in the first nine months of 2021 compared with $23.5 million in the first nine months of 2020.

Total cost of operations related to the golf and related operations segment increased to $17.0 million in the first nine months of 2021 compared to $12.0 million in the first nine 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.

Depreciation and amortization expense was approximately $2.3 million in the first nine months of 2021 compared to $2.2 million in the first nine 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.

Consolidated selling, general and administrative expenses increased to approximately $7.6 million in the first nine months of 2021 compared to $6.3 million in the first nine months of 2020 primarily due to higher employee related costs, which included employee incentives paid in 2021, and an increase in legal and professional costs incurred, primarily related to the salt water injection wells mandamus process.

Gain on debt extinguishment was approximately $2.0 million in the first nine 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 $0.9 million in both the first nine months of 2021 and 2020.

During the first nine 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 nine months ended September 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.91% and 4.74%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $2.4 million, or $0.63 per share, in the first nine months of 2021 compared with a net loss attributable to Avalon Holdings Corporation common shareholders of $0.5 million, or $0.12 per share, in the first nine months of 2020.

Segment Performance

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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.

The net operating revenues of the waste management services segment were approximately $31.3 million in the first nine months of 2021 compared to $29.5 million in the first nine months of 2020.

The net operating revenues of the waste disposal brokerage and management services business were approximately $29.5 million in the first nine months of 2021 compared to $27.8 million in the first nine months of 2020.

Continuous work of the waste disposal brokerage business increased approximately $1.4 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.

Net operating revenues related to continuous work were approximately $17.2 million in the first nine months of 2021 compared with $15.8 million in the first nine months of 2020.

In addition, event work net operating revenues related to multiple projects increased by approximately $1.2 million during the first nine months of 2021 when compared to the first nine 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.

Event work net operating revenues were approximately $12.3 million in the first nine months of 2021 compared with $11.1 million in the first nine 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.

Net operating revenues related to managerial, consulting and clerical services were approximately $0.9 million in the first nine 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 management operations were approximately $1.8 million in the first nine months of 2021 compared to $1.7 million in the first nine months of 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.

Costs of operations related to the waste management services segment increased to $25.1 million in the first nine months of 2021 compared with $23.5 million in the first nine months of 2020.

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

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

Income before income taxes for the waste management services segment were approximately $2.5 million in the first nine months of 2021 compared to $2.7 million in the first nine months of 2020.

Income before income taxes of the waste brokerage and management services business were approximately $2.6 million in both the first nine months of 2021 and 2020.

Income before income taxes of the captive landfill operations were approximately $0.2 million in both the first nine months of 2021 and 2020.

The salt water injection wells incurred a loss before income taxes of $0.3 million during the first nine month of 2021 compared to $0.1 million in the first nine months of 2020 due to legal and professional costs incurred relating to Avalon’s mandamus process.

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.

Net operating revenues of the golf and related operations segment were approximately $21.5 million in the first nine months of 2021 compared to $14.6 million in the first nine months of 2020.

Food, beverage and merchandise sales increased to approximately $8.6 million in the first nine months of 2021 compared to $5.3 million in the first nine 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.

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

During the nine months ended September 2021, food and beverage sales related to banquets and conferences increased as a result of the lifting of certain government mandates placed on gatherings and events.

Other net operating revenues related to the golf and related operations were approximately $12.9 million in the first nine months of 2021 compared to $9.3 million in the first nine months of 2020.

Membership dues revenue was approximately $5.0 million in the first nine months of 2021 compared to $4.6 million in the first nine months of 2020.

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

Net operating revenues related to room rental was approximately $3.4 million in the first nine months of 2021 compared to $1.7 million in the first nine 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.

During the first nine 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 $2.0 million in the first nine months of 2021 compared to $1.0 million in the first nine 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.

Greens fees and associated cart rentals were approximately $2.5 million in the first nine months of 2021 compared to $2.0 million in the first nine months of 2020.

The increase in greens fees and associated cart rental during the first nine months of 2021 compared to the first nine 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 $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 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.

Total cost of operations for the golf and related operations segment were $17.0 million in the first nine months of 2021 compared with $12.0 million in the first nine months of 2020.

Cost of food, beverage and merchandise was approximately $3.6 million in the first nine months of 2021 compared to $2.2 million in the first nine months of 2020.

The increase in total 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 42% of associated revenue in the first nine months of 2021 and 2020.

Golf and related operations operating costs increased to approximately $13.4 million in the first nine months of 2021 compared with $9.8 million in the first nine 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 nine months of 2021 compared to the first nine 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 $3.2 million in the first nine months of 2021 compared with net income before income taxes of $0.1 million in the first nine 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.

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General Corporate Expenses

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.

General corporate expenses were $3.1 million in the first nine months of 2021 compared to $2.4 million in the first nine months of 2020.

The increase was primarily attributable to higher employee related costs, which included employee incentives paid in 2021, and an increase in legal and professional fees.

Interest Expense

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.

Interest expense was approximately $0.9 million in both the first nine months of 2021 and 2020.

During the first nine 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 nine months ended September 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 4.91% and 4.74%, respectively.

Net Income (Loss)

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.

Net income attributable to Avalon Holdings Corporation common shareholders was $2.4 million in the first nine months of 2021 compared to a net loss attributable to Avalon Holdings Corporation common shareholders of $0.5 million in the first nine months of 2020.

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

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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.

During the nine months ended September 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.

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

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

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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.

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.

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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.

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

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

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

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 Ohio Department of Natural Resources (“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.

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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. 

The Supreme Court of Ohio reversed the decision of the 11 th Appellate District Court and remanded the case back to that court for a trial on the merits.

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

The trial occurred in September and October 2021.

The Company is currently awaiting judgment from the 11 th Appellate District Court.

On May 24, 2021, the Company received Chief’s Orders from the Division vacating the September 3, 2014 suspension orders for AWMS #2 and setting conditions for restart of that well.

Among these conditions was a limit placed on the seismicity within three miles of the well.

A hearing in this matter is expected in early 2022.

Golf memberships and liquor licenses

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Avalon believes that the combination of its golf facilities and The Grand Resort will result in additional memberships in the Avalon Golf and Country Club.

Although Avalon was able to increase the number of members of the Avalon Golf and Country Club as of June 30, 2021, the ability to retain current members and attract new members has been an ongoing challenge.

Although Avalon was able to increase the number of members of the Avalon Golf and Country Club as of September 30, 2021, the ability to retain current members and attract new members has been an ongoing challenge.

Avalon is continually using different marketing strategies to attract new members, such as local television advertising and various membership promotions.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements