What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-12 · 447 added, 198 removed, 1021 unchanged (39% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Net operating revenues:

2 unchanged sentences

$ 8,685  

$ 20,056  

$ 19,835  

Food, beverage and merchandise sales

1 unchanged sentence

Total golf and related operations

13,775  

11,668  

Total net operating revenues

1 unchanged sentence

16,390  

33,831  

31,503  

Costs and expenses:

Waste management services operating costs

16,070  

15,670  

Cost of food, beverage and merchandise

2 unchanged sentences

Selling, general and administrative expenses

Operating loss

Operating income (loss)

( 574 )  

2 unchanged sentences

( 274 )  

( 291 )  

( 552 )  

Gain on debt extinguishment

7 unchanged sentences

( 80 )  

( 18 )  

( 218 )  

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

$ ( 778 )  

$ 1,458  

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

2 unchanged sentences

$ 0.19  

$ ( 0.20 )  

$ 0.37  

Diluted net income (loss) per share

1 unchanged sentence

$ 0.19  

$ ( 0.20 )  

$ 0.37  

Weighted average shares outstanding - basic

73 unchanged sentences

(in thousands, except for share data)

For the Three Months Ended March 31, 2022

For the Three Months Ended June 30, 2022

Non-controlling

Shareholders'

Balance at April 1, 2022

3,287,647  

611,784  

$ 59,202  

$ ( 21,433 )  

$ 37,808  

$ ( 88 )  

$ 37,720  

Stock options - compensation costs

Net income (loss)

( 80 )  

Balance at June 30, 2022

3,287,647  

611,784  

$ 59,203  

$ ( 20,949 )  

$ 38,293  

$ ( 168 )  

$ 38,125  

For the Three Months Ended June 30, 2021

Non-controlling

Shareholders'

Balance at April 1, 2021

3,287,647  

611,784  

$ 59,197  

$ ( 21,426 )  

$ 37,810  

$ ( 154 )  

$ 37,656  

Stock options - compensation costs

Net income (loss)

( 18 )  

Balance at June 30, 2021

3,287,647  

611,784  

$ 59,199  

$ ( 20,684 )  

$ 38,554  

$ ( 172 )  

$ 38,382  

See accompanying notes to unaudited condensed consolidated financial statements.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders ’

Equity (Unaudited)

(in thousands, except for share data)

For the Six Months Ended June 30, 2022

Non-controlling

Shareholders'

Balance at January 1, 2022

11 unchanged sentences

( 218 )  

Balance at March 31, 2022

Balance at June 30, 2022

3,287,647  

5 unchanged sentences

$ 38,125  

For the Three Months Ended March 31, 2021

For the Six Months Ended June 30, 2021

Non-controlling

11 unchanged sentences

( 46 )  

Balance at March 31, 2021

Balance at June 30, 2021

3,287,647  

9 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

1 unchanged sentence

$ ( 996 )  

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

$ 1,412  

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

Depreciation and amortization expense

11 unchanged sentences

Prepaid expenses

( 184 )  

Other assets, net

7 unchanged sentences

Other liabilities and accrued expenses

Net cash provided by (used in) operating activities

( 402 )  

Net cash provided by operating activities

Cash flows from investing activities:

21 unchanged sentences

Capital expenditures included in accounts payable

$ 1,139  

Significant non-cash operating and financing activities:

7 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2022

June 30, 2022

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 March 31, 2022, and the results of its operations and cash flows for the interim periods presented.

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position of Avalon as of June 30, 2022, 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.

COVID- 19 Coronavirus Pandemic

In March 2020, both federal and state governmental bodies took unprecedented measures to try and control the spread of the COVID- 19 coronavirus 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.

Although the various government mandates impacting our business operations have currently been lifted, we may experience weakened demand in light of travel restrictions or warnings, consumer fears and reduced consumer discretionary spending and general economic uncertainty.

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

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

These restrictions would have a negative impact on our financial condition, results of operations and cash flows.

Recent Accounting Pronouncements

12 unchanged sentences

Restricted cash consists of loan proceeds deposited into a project fund account to fund costs associated with the renovation and expansion of The Grand Resort and Avalon Field Club at New Castle in accordance with the provisions of the loan and security agreement (See Note 9 ).

Restricted cash in the project fund account was fully utilized at June 30, 2022.

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

Cash, cash equivalents and restricted cash consist of the following at March 31, 2022 and December 31, 2021 ( in thousands):

Cash, cash equivalents and restricted cash consist of the following at June 30, 2022 and December 31, 2021 ( in thousands):

Cash and cash equivalents

25 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 15 ).

Due to the suspension of the salt water injection wells, there were no operating revenues for the three months ended March 31, 2022 and 2021.

For the three months ended March 31, 2022 and 2021, the net operating revenues related to waste management services represented approximately 65 % and 74 %, respectively, of Avalon’s total consolidated net operating revenues.

For the three months ended March 31, 2022, two customers accounted for 20 % of the waste management services segment’s net operating revenues to external customers and 13 % of the consolidated net operating revenues.

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

Due to the suspension of the salt water injection wells, there were no operating revenues for the three and six months ended June 30, 2022 and 2021.

For the three months ended June 30, 2022 and 2021, the net operating revenues related to waste management services represented approximately 55 % and 53 %, respectively, of Avalon’s total consolidated net operating revenues.

For the six months ended June 30, 2022 and 2021, the net operating revenues related to waste management services represented approximately 59 % and 63 %, respectively, of Avalon’s total consolidated net operating revenues.

For the six months ended June 30, 2022, one customer accounted for 10 % of the waste management services segment’s net operating revenues to external customers and 6 % of the 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 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 2022 and 2021.

For the three months ended March 31, 2022 and 2021, the net operating revenues related to the golf and related operations represented approximately 35 % and 26 %, respectively, of Avalon’s total consolidated net operating revenues.

For both the three months ended March 31, 2022 and 2021, no one customer individually accounted for 10% or more of Avalon’s golf and related operations segment revenues.

For the three months ended June 30, 2022 and 2021, the net operating revenues related to the golf and related operations represented approximately 45 % and 47 %, respectively, of Avalon’s total consolidated net operating revenues.

For the six months ended June 30, 2022 and 2021, the net operating revenues related to the golf and related operations represented approximately 41 % and 37 %, respectively, of Avalon’s total consolidated net operating revenues.

For both the six months ended June 30, 2022 and 2021, 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 months ended March 31, 2022 and 2021 (in thousands).

The following table presents our net operating revenues disaggregated by revenue source for the three and six months ended June 30, 2022 and 2021 (in thousands).

Sales and other taxes are excluded from revenues.

Three Months Ended

Six Months Ended

Waste management and brokerage services

1 unchanged sentence

$ 8,078  

$ 18,754  

$ 18,629  

Captive landfill management operations

1 unchanged sentence

10,717  

20,056  

19,835  

Food, beverage and merchandise sales

6 unchanged sentences

Total golf and related operations revenue

13,775  

11,668  

Total net operating revenues

1 unchanged sentence

$ 16,390  

$ 33,831  

$ 31,503  

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

2 unchanged sentences

The amounts due are stated at their net realizable value.

At March 31, 2022 and December 31, 2021, accounts receivable, net, related to our waste management services segment were approximately $ 7.9 million and $ 9.0 million, respectively.

At March 31, 2022, two customers accounted for approximately 22 % of the waste management services segment’s receivables and 16 % of the consolidated receivables.

At June 30, 2022 and December 31, 2021, accounts receivable, net, related to our waste management services segment were approximately $ 8.1 million and $ 9.0 million, respectively.

At June 30, 2022, two customers accounted for approximately 24 % of the waste management services segment’s receivables and 19 % of the consolidated receivables.

At December 31, 2021, one customer accounted for approximately 19 % of the waste management services segment’s receivables and 17 % of the consolidated receivables.

Accounts receivable, net, related to our golf and related operations segment were approximately $ 2.8 million and $ 0.9 million at March 31, 2022 and December 31, 2021, respectively.

No one customer of the golf and related operations segment accounted for 10% or more of Avalon’s golf and related operations segment or consolidated net receivables at March 31, 2022 or December 31, 2021.

Accounts receivable, net, related to our golf and related operations segment were approximately $ 2.4 million and $ 0.9 million at June 30, 2022 and December 31, 2021, 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, 2022 or December 31, 2021.

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 both March 31, 2022 and December 31, 2021.

The following table presents changes in our allowance for credit losses during the three months ended March 31, 2022 and 2021 (in thousands):

Allowance for credit losses was approximately $ 0.3 million at both June 30, 2022 and December 31, 2021.

The following table presents changes in our allowance for credit losses during the three and six months ended June 30, 2022 and 2021 (in thousands):

Beginning of Period

1 unchanged sentence

Allowance for credit losses

Three months ended March 31, 2022

Three months ended June 30, 2022

$ ( 4 )  

Three months ended March 31, 2021

Three months ended June 30, 2021

$ ( 16 )  

Six months ended June 30, 2022

$ ( 15 )  

Six months ended June 30, 2021

$ ( 15 )  

Contract Assets

2 unchanged sentences

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

Unbilled membership receivables in our Condensed Consolidated Balance Sheets were approximately $ 0.8 million at March 31, 2022 and $ 0.6 million at December 31, 2021.

The following table presents changes in our contract assets during the three months ended March 31, 2022 and 2021 (in thousands):

Unbilled membership receivables in our Condensed Consolidated Balance Sheets were approximately $ 1.1 million at June 30, 2022 and $ 0.6 million at December 31, 2021.

The following table presents changes in our contract assets during the three and six months ended June 30, 2022 and 2021 (in thousands):

Beginning of Period

Balance at End of Period

End of Period

Contract Assets:

Unbilled membership dues receivable

Three months ended March 31, 2022

Three months ended June 30, 2022

$ ( 580 )  

Three months ended March 31, 2021

$ 1,145  

Three months ended June 30, 2021

$ ( 579 )  

$ 1,102  

Six months ended June 30, 2022

$ 1,605  

$ ( 1,038 )  

$ 1,145  

Six months ended June 30, 2021

$ 1,565  

$ ( 1,048 )  

$ 1,102  

Contract Liabilities

2 unchanged sentences

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

The unrecognized or deferred revenues related to membership dues in our Condensed Consolidated Balance Sheets were approximately $ 4.9 million at March 31, 2022 and $ 3.4 million at December 31, 2021, respectively.

The unrecognized or deferred revenues related to membership dues in our Condensed Consolidated Balance Sheets were approximately $ 5.8 million at June 30, 2022 and $ 3.4 million at December 31, 2021, 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 $ 0.9 million at March 31, 2022 and $ 0.8 million at December 31, 2021.

The following table presents changes in our contract liabilities during the three months ended March 31, 2022 and 2021 (in thousands):

Customer advance deposits were approximately $ 1.0 million at June 30, 2022 and $ 0.8 million at December 31, 2021.

The following table presents changes in our contract liabilities during the three and six months ended June 30, 2022 and 2021 (in thousands):

Beginning of Period

2 unchanged sentences

Deferred membership dues revenue

Three months ended March 31, 2022

Three months ended June 30, 2022

$ 4,943  

2 unchanged sentences

$ 5,782  

Three months ended March 31, 2021

Three months ended June 30, 2021

$ 4,122  

2 unchanged sentences

$ 5,376  

Six months ended June 30, 2022

$ 3,363  

$ 5,927  

$ ( 3,508 )  

$ 5,782  

Six months ended June 30, 2021

$ 3,196  

$ 5,448  

$ ( 3,268 )  

$ 5,376  

Customer advance deposits

Three months ended March 31, 2022

Three months ended June 30, 2022

$ ( 843 )  

Three months ended March 31, 2021

Three months ended June 30, 2021

$ ( 447 )  

Six months ended June 30, 2022

$ 1,303  

$ ( 1,106 )  

Six months ended June 30, 2021

$ ( 601 )  

Property and Equipment

6 unchanged sentences

in our Condensed Consolidated Statements of Operations.

Property and equipment at March 31, 2022 and December 31, 2021 consists of the following (in thousands):

Property and equipment at June 30, 2022 and December 31, 2021 consists of the following (in thousands):

Land and land improvements

14 unchanged sentences

$ 53,338  

At March 31, 2022, the Company did not have any significant fixed contractual commitments for construction projects.

At June 30, 2022, the Company did not have any significant fixed contractual commitments for construction projects.

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

3 unchanged sentences

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

During the first three months of 2022 and 2021, no triggering events were present.

During the first six months of 2022 and 2021, no triggering events were present.

Operating Leases

1 unchanged sentence

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

The weighted average remaining lease term on operating leases was approximately 3.5 years at March 31, 2022.

During the first three months of 2022, the Company entered into a new operating lease agreement for golf cart GPS equipment.

The Company recorded an operating lease right-of-use asset and corresponding obligation under the operating lease of approximately $ 31,000 .

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

The weighted average remaining lease term on operating leases was approximately 3.3 years at June 30, 2022.

During the first six months of 2022, the Company entered into a new operating lease agreement for golf cart GPS equipment.

The Company recorded an operating lease right-of-use asset and corresponding obligation under the operating lease of approximately $ 31,000 .

Leased property and associated obligations under operating leases at March 31, 2022 and December 31, 2021 consists of the following (in thousands):

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

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

Leased property and associated obligations under operating leases at June 30, 2022 and December 31, 2021 consists of the following (in thousands):

Operating lease right-of-use assets

6 unchanged sentences

$ 1,598  

The weighted average discount rate on operating leases was 4.6 % at March 31, 2022 and December 31, 2021.

The weighted average discount rate on operating leases was 4.7 % at June 30, 2022 and 4.6 % at December 31, 2021.

Finance Leases

4 unchanged sentences

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

At March 31, 2022 there were approximately 31.6 years remaining on the golf course and related facilities finance lease.

At June 30, 2022 there were approximately 31.3 years remaining on the golf course and related facilities finance lease.

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

At March 31, 2022, the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from less than 1 year to 4.6 years.

The weighted average remaining lease term on the vehicles and equipment leases was approximately 3.2 years at March 31, 2022.

Leased property and associated obligations under finance leases at March 31, 2022 and December 31, 2021 consists of the following (in thousands):

At June 30, 2022, the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from less than 1 year to 4.3 years.

The weighted average remaining lease term on the vehicles and equipment leases was approximately 3.0 years at June 30, 2022.

Leased property and associated obligations under finance leases at June 30, 2022 and December 31, 2021 consists of the following (in thousands):

Leased property under finance leases

9 unchanged sentences

Total obligations under finance leases

The weighted average discount rate on finance leases was 5.1 % at March 31, 2022 and December 31, 2021.

For the three months ended March 31, 2022 and 2021, components of lease expense were as follows (in thousands):

The weighted average discount rate on finance leases was 5.1 % at June 30, 2022 and December 31, 2021.

For the three and six months ended June 30, 2022 and 2021, components of lease expense were as follows (in thousands):

Three Months Ended

Six Months Ended

Operating lease cost:

4 unchanged sentences

Total finance lease cost

For the twelve months ending March 31, future commitments under long-term, operating and finance leases are as follows (in thousands):

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

Total lease payments

3 unchanged sentences

$ 1,377  

$ 1,562  

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 months ended March 31, 2022 and 2021, the weighted average number of common shares outstanding was 3,899,431 .

For both the three and six months ended June 30, 2022 and 2021, the weighted average number of common shares outstanding was 3,899,431 .

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

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

For the three months ended March 31, 2022, 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 weighted average number of common shares outstanding for the three months ended March 31, 2022 was 3,924,788 .

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

For the three months ended June 30, 2022, the diluted weighted average number of shares outstanding was 3,921,656 .

For the six months ended June 30, 2022, 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 weighted average number of common shares outstanding for the six months ended June 30, 2022 was 3,923,213 .

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.

Term Loans and Line of Credit Agreements

3 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 March 31, 2022 and December 31, 2021, loan proceeds of $ 0.7 million and $ 1.7 million, respectively, are presented in the Condensed Consolidated Balance Sheets as “Restricted cash.”

Restricted cash in the project fund account was fully utilized at June 30, 2022.

At December 31, 2021, loan proceeds of $ 1.7 million 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 Term Loan Agreement.

9 unchanged sentences

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

Avalon was in compliance with the Term Loan Agreement covenants at March 31, 2022 and December 31, 2021.

Avalon was in compliance with the Term Loan Agreement covenants at June 30, 2022 and December 31, 2021.

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

3 unchanged sentences

On May 31, 2018, Avalon entered into a business loan agreement with Premier Bank (formerly Home Savings Bank), (the “Line of Credit Agreement”) which provides for a line of credit of up to $ 5.0 million.

On August 17, 2021, the Company amended the Line of Credit Agreement to extend the maturity date to July 31, 2023.

On July 22, 2022, the Company amended the Line of Credit Agreement to extend the maturity date to July 31, 2024.

Under the Line of Credit Agreement, borrowings in excess of $ 1.0 million are subject to a borrowing base which is calculated based off a specific level of eligible accounts receivable of the waste management business as defined in the agreement.

No amounts were drawn under the Line of Credit Agreement at March 31, 2022 and December 31, 2021.

No amounts were drawn under the Line of Credit Agreement at June 30, 2022 and December 31, 2021.

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

At March 31, 2022, the interest rate on the Line of Credit Agreement was 3.75 %.

At June 30, 2022, the interest rate on the Line of Credit Agreement was 5.00 %.

Borrowings under the Line of Credit Agreement are secured by certain business assets of the Company including accounts receivable, inventory and equipment.

1 unchanged sentence

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

Avalon was in compliance with the Line of Credit Agreements covenants at March 31, 2022 and December 31, 2021.

Avalon was in compliance with the Line of Credit Agreements covenants at June 30, 2022 and December 31, 2021.

Paycheck Protection Program Loan

10 unchanged sentences

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

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

As of March 31, 2022, all loan proceeds received under the Program and related interest has been forgiven by the Small Business Administration.

During the three months ended March 31, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00 % and 4.80 %, respectively.

Obligations under the Company’s debt agreements at March 31, 2022 and December 31, 2021 consist of the following (in thousands):

March 31, 2022

During the three months ended June 30, 2021, approximately $ 0.9 million of the loans and $ 9,000 of associated interest were forgiven by the Small Business Administration.

During the six months ended June 30, 2021, approximately $ 2.0 million of the loans and $ 17,000 of associated interest were forgiven by the Small Business Administration.

As of June 30, 2021, all loan proceeds received under the Program and related interest were forgiven by the Small Business Administration.

During the three months ended June 30, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00 % and 4.92 %, respectively.

During the six months ended June 30, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00 % and 4.86 %, respectively.

Obligations under the Company’s debt agreements at June 30, 2022 and December 31, 2021 consist of the following (in thousands):

June 30, 2022

Debt Issuance Costs

21 unchanged sentences

$ 19,376  

For the twelve months ending March 31, future maturities of long-term debt are as follows (in thousands):

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

$ 1,197  

1 unchanged sentence

$ 20,256  

During the three months ended March 31, 2022, net loss attributable to Avalon Holdings Corporation shareholders was $ 1.3 million compared to net income attributable to Avalon Holdings Corporation shareholders of $ 0.7 million during the three months ended March 31, 2021.

Avalon recorded a state income tax provision in both the three month periods ended March 31, 2022 and 2021, which was related entirely to the waste management and brokerage operations.

During the three months ended June 30, 2022 and 2021, net income attributable to Avalon Holdings Corporation shareholders was $ 0.5 million and $ 0.7 million, respectively.

During the six months ended June 30, 2022, net loss attributable to Avalon Holdings Corporation shareholders was $ 0.8 million compared to net income attributable to Avalon Holdings Corporation shareholders of $ 1.5 million during the six months ended June 30, 2021.

Avalon recorded a state income tax provision in both the three and six month periods ended June 30, 2022 and 2021, 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 2022, the Board of Directors extended the period of time for certain vested options that were not exercisable due to those options not meeting the predetermined stock price within the three years following the contractual vesting period.

At March 31, 2022, options to purchase 90,000 shares have been granted under the 2009 Plan.

At June 30, 2022, 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 2022:

Fair Value at

5 unchanged sentences

Options cancelled or forfeited

Outstanding at March 31, 2022

Outstanding at June 30, 2022

54,000  

5 unchanged sentences

$ 0.43  

Exercisable at March 31, 2022

Exercisable at June 30, 2022

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

Contract Vesting Term:

1 )    Contract Vesting Term:

The stock options vest ratably over a five year period.

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.

16 unchanged sentences

$ 12.07  

Compensation costs were approximately $ 1,000 for both the three month periods ended March 31, 2022 and 2021.

As of March 31, 2022, there was approximately $ 6,000 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan.

For the three months ended June 30, 2022 and 2021, compensation costs were approximately $ 1,000 and $ 2,000 , respectively.

For the six months ended June 30, 2022 and 2021, compensation costs were approximately $ 2,000 and $ 3,000 , respectively.

As of June 30, 2022, there was approximately $ 5,000 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 1.92 years.

17 unchanged sentences

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

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 2021 Annual Report to Shareholders.

2 unchanged sentences

Three Months Ended

Six Months Ended

Net operating revenues from:

3 unchanged sentences

$ 8,685  

$ 20,056  

$ 19,835  

Intersegment revenues

1 unchanged sentence

10,717  

20,056  

19,835  

Golf and related operations:

External customer revenues

13,775  

11,668  

Intersegment revenues

Total golf and related operations

13,806  

11,685  

Segment operating revenues

1 unchanged sentence

16,399  

33,862  

31,520  

Intersegment eliminations

( 30 )  

( 31 )  

Total net operating revenues

1 unchanged sentence

$ 16,390  

$ 33,831  

$ 31,503  

Three Months Ended

Six Months Ended

Income (loss) before income taxes:

1 unchanged sentence

$ 1,035  

$ 1,689  

$ 1,819  

Golf and related operations

1 unchanged sentence

Segment income before income taxes

( 182 )  

Corporate interest expense

( 266 )  

( 280 )  

( 535 )  

Corporate gain on debt extinguishment

2 unchanged sentences

( 921 )  

( 1,290 )  

( 1,851 )  

Income (loss) before income taxes

$ ( 943 )  

$ 1,470  

Gain on debt extinguishment:

18 unchanged sentences

$ 78,037  

In comparing total assets at March 31, 2022 with those at December 31, 2021, the increase in the total assets of the waste management services segment of approximately $ 0.4 million was primarily a result of an increase in intersegment transactions, which are eliminated in consolidation, partially offset by a decrease in accounts receivable.

The increase in total assets of the golf and related operations segment of $ 3.6 million was primarily due to an increase in accounts receivable and capital expenditures associated with The Grand Resort and Avalon Field Club at New Castle and, to a lesser extent, an increase in inventory and prepaid expenses, partially offset by current year depreciation on property and equipment.

The decrease in corporate total assets of approximately $ 1.5 million was primarily due to a decrease in operating and restricted cash utilized for the renovation of The Grand Resort and Avalon Field Club at New Castle, partially offset by an increase in intersegment transactions, which are eliminated in consolidation.

In comparing total assets at June 30, 2022 with those at December 31, 2021, the increase in the total assets of the waste management services segment of approximately $ 0.6 million was primarily a result of an increase in intersegment transactions, which are eliminated in consolidation, partially offset by a decrease in accounts receivable.

The increase in total assets of the golf and related operations segment of $ 5.1 million was primarily due to an increase in accounts receivable and capital expenditures associated with The Grand Resort and Avalon Field Club at New Castle and, to a lesser extent, an increase in inventory, partially offset by current year depreciation on property and equipment.

The decrease in corporate total assets of approximately $ 1.1 million was primarily due to a decrease in restricted cash utilized for the renovation of The Grand Resort and Avalon Field Club at New Castle, partially offset by an increase in 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 March 31, 2022 and December 31, 2021, respectively, Avalon owns approximately 47 % of AWMS Holdings, LLC.

At June 30, 2022 and December 31, 2021, 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 VIE, 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 months ended March 31, 2022 and 2021, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $ 62,000 and $ 28,000 , respectively.

During the three months ended June 30, 2022 and 2021, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $ 10,000 and $ 18,000 , respectively.

During the six months ended June 30, 2022 and 2021, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $ 72,000 and $ 46,000 , respectively.

Avalon Med Spa, LLC

4 unchanged sentences

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.

In 2021, Avalon made a capital contribution 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.

1 unchanged sentence

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 at both March 31, 2022 and December 31, 2021.

Avalon is the majority owner of Avalon Med Spa, LLC owning 50.1 % of the company at both June 30, 2022 and December 31, 2021.

In accordance with ASC 810 - 10 and related amendment , Avalon Med Spa, LLC is a VIE, and the financial statements of Avalon Med Spa, LLC are included in Avalon’s consolidated financial statements.

2 unchanged sentences

in our Condensed Consolidated Statements of Operations.

During the three months ended March 31, 2022, net loss attributable to the noncontrolling interest in Avalon Med Spa, LLC was approximately $ 76,000 .

During the three and six months ended June 30, 2022, net loss attributable to the noncontrolling interest in Avalon Med Spa, LLC was approximately $ 70,000 and $ 146,000 , respectively.

Injection Wells Suspension

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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.

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. Following the restart orders received on May 24, 2021, and discussed below, the Court dismissed the complaint.

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.

16 unchanged sentences

A hearing in this matter occurred in February 2022.

The Company is currently awaiting judgment.

On June 30, 2022, the Oil and Gas Commission rendered their decision for the Division in this matter, once again deferring to the Division in their decision.

The Company appealed the decision to the Franklin County Ohio Court of Common Pleas on August 3, 2022.

Subsequent Event

New Term Loan Agreement

On August 5, 2022, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the “New Term Loan Agreement”) with Laurel Capital Corporation which provided for a $ 31.0 million term loan.

At closing, $ 20.2 million of the proceeds were used to pay off and refinance amounts outstanding and associated interest under our existing term loan agreement with Laurel Capital Corporation and $ 0.4 million of the proceeds were utilized to pay transaction costs.

The remaining proceeds of approximately $ 10.4 million were deposited into a project fund account for which those proceeds are to fund future costs of renovating and expanding both The Grand Resort and Avalon Field Club at New Castle.

The existing term loan was terminated in conjunction with the New Term Loan Agreement.

The New Term Loan Agreement is payable in 119 equal monthly installments of principal and interest , based on a twenty-five ( 25 ) year maturity schedule commencing September 5, 2022 followed by one final balloon payment of all remaining principal, interest and fees due on the maturity date of August 5, 2032.

Upon request by Avalon, project fund proceeds can be utilized to pay debt service.

Borrowings under the New Term Loan Agreement bear interest at a fixed rate of 6.00 % until the seventh anniversary date of the closing at which time the interest rate will be reset to a fixed rate equal to the greater of (a) 6.00% per annum or (b) the sum of the three year treasury rate on the date two ( 2 ) business days prior to the reset date plus 3.40%, provided that the applicable rate shall in no event exceed 8.50% per annum.

Avalon has the right to prepay the amount outstanding under the New Term Loan Agreement, in whole or in part, at any time upon payment of the principal amount of the loan to be prepaid plus accrued unpaid interest thereon to the prepayment date, plus an applicable prepayment penalty.

The prepayment penalty, expressed as a percentage of the principal of the loan being prepaid, is six percent ( 6 %) on any prepayment in the first five years;

four percent ( 4 %) on any prepayment in the sixth and seventh year;

three percent ( 3 %) on any prepayment in the eighth and ninth year;

and two percent ( 2 %) on any prepayment in the tenth year.

Borrowings under the New Term Loan Agreement are secured by certain real property and related business assets as defined in the agreement.

The New Term Loan Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year, commencing December 31, 2023.

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

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.

12 unchanged sentences

Liquidity and Capital Resources

For the three months ended March 31, 2022, Avalon utilized existing cash and cash provided by operations to meet operating needs and make required monthly payments on our term loan facility.

For the six months ended June 30, 2022, Avalon utilized existing cash and cash provided by operations to meet operating needs, fund capital expenditures and make required monthly payments on our term loan facility.

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

Financial Impact of COVID-19 Pandemic

In March 2020, both federal and state governmental bodies took unprecedented measures to try and control the spread of the COVID-19 coronavirus including the issuance of temporary stay at home orders, the temporary closing of non-essential businesses and in-house dining and restrictions on gatherings and events.

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

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

These restrictions would have a negative impact on our financial condition, results of operations and cash flows.

Paycheck Protection Program Loan

6 unchanged sentences

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

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

As of March 31, 2022, all loan proceeds received under the Program and related interest has been forgiven by the Small Business Administration.

During the three months ended June 30, 2021, approximately $0.9 million of the loans and $9,000 of associated interest were forgiven by the Small Business Administration.

During the six months ended June 30, 2021, approximately $2.0 million of the loans and $17,000 of associated interest were forgiven by the Small Business Administration.

As of June 30, 2021, all loan proceeds received under the Program and related interest were forgiven by the Small Business Administration.

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

3 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 March 31, 2022 and December 31, 2021, loan proceeds of $0.7 million and $1.7 million, respectively, remained in the project fund account.

Restricted cash in the project fund account was fully utilized at June 30, 2022.

At December 31, 2021, loan proceeds of $1.7 million remained in the project fund account.

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

9 unchanged sentences

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

Avalon was in compliance with the Term Loan Agreement covenants at March 31, 2022 and December 31, 2021.

Avalon was in compliance with the Term Loan Agreement covenants at June 30, 2022 and December 31, 2021.

New Term Loan Agreement

At closing, $20.2 million of the proceeds were used to pay off and refinance amounts outstanding and associated interest under our existing term loan agreement with Laurel Capital Corporation and $0.4 million of the proceeds were utilized to pay transaction costs.

The remaining proceeds of approximately $10.4 million were deposited into a project fund account for which those proceeds are to fund future costs of renovating and expanding both The Grand Resort and Avalon Field Club at New Castle.

The existing term loan was terminated in conjunction with the New Term Loan Agreement.

The New Term Loan Agreement is payable in 119 equal monthly installments of principal and interest , based on a twenty-five (25) year maturity schedule commencing September 5, 2022 followed by one final balloon payment of all remaining principal, interest and fees due on the maturity date of August 5, 2032.

Upon request by Avalon, project fund proceeds can be utilized to pay debt service.

Borrowings under the New Term Loan Agreement bear interest at a fixed rate of 6.00% until the seventh anniversary date of the closing at which time the interest rate will be reset to a fixed rate equal to the greater of (a) 6.00% per annum or (b) the sum of the three year treasury rate on the date two (2) business days prior to the reset date plus 3.40%, provided that the applicable rate shall in no event exceed 8.50% per annum.

The prepayment penalty, expressed as a percentage of the principal of the loan being prepaid, is six percent (6%) on any prepayment in the first five years;

four percent (4%) on any prepayment in the sixth and seventh year;

three percent (3%) on any prepayment in the eighth and ninth year;

and two percent (2%) on any prepayment in the tenth year.

Borrowings under the New Term Loan Agreement are secured by certain real property and related business assets as defined in the agreement.

The New Term Loan Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year, commencing December 31, 2023.

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

Line of Credit Agreement

On August 17, 2021, the Company amended the Line of Credit Agreement to extend the maturity date to July 31, 2023.

On July 22, 2022, the Company amended the Line of Credit Agreement to extend the maturity date to July 31, 2024.

Under the Line of Credit Agreement, borrowings in excess of $1.0 million are subject to a borrowing base which is calculated based off a specific level of eligible accounts receivable of the waste management business as defined in the agreement.

No amounts were drawn under the Line of Credit Agreement at March 31, 2022 and December 31, 2021.

No amounts were drawn under the Line of Credit Agreement at June 30, 2022 and December 31, 2021.

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

At March 31, 2022, the interest rate on the Line of Credit Agreement was 3.75%.

At June 30, 2022, the interest rate on the Line of Credit Agreement was 5.00%.

Borrowings under the Line of Credit Agreement are secured by certain business assets of the Company including accounts receivable, inventory and equipment.

1 unchanged sentence

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

Avalon was in compliance with the Line of Credit Agreements covenants at March 31, 2022 and December 31, 2021.

During the three months ended March 31, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00% and 4.80%, respectively.

Avalon was in compliance with the Line of Credit Agreements covenants at June 30, 2022 and December 31, 2021.

During the three months ended June 30, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00% and 4.92%, respectively.

During the six months ended June 30, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00% and 4.86%, respectively.

Squaw Creek Country Club Lease Agreement

5 unchanged sentences

Capital Expenditures

During the three months ended March 31, 2022, Avalon incurred capital expenditures of $1.9 million of which $1.3 million of such expenditures was paid to vendors during the period.

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

For both the three months ended March 31, 2022 and 2021, expenditures primarily related to the continued renovation of The Grand Resort and the clubhouse at Avalon Field Club at New Castle.

During the six months ended June 30, 2022, Avalon incurred capital expenditures of $4.4 million of which $3.3 million of such expenditures was paid to vendors during the period.

During the six months ended June 30, 2021, Avalon incurred capital expenditures of $2.1 million of which $1.8 million of such expenditures was paid to vendors during the period.

For both the six months ended June 30, 2022 and 2021, expenditures primarily related to the continued renovation of The Grand Resort and the clubhouse at Avalon Field Club at New Castle.

In 2022 and 2021, The Grand Resort was in operation but certain existing hotel rooms were in the process of being renovated.

1 unchanged sentence

Avalon’s aggregate capital expenditures in 2022 are expected to be in the range of $6.0 million to $7.5 million, funded with cash from our project fund account, existing operating cash and cash generated from operations.

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

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

Working Capital

At March 31, 2022 and December 31, 2021, there was a working capital deficit of approximately $3.6 million and $2.1 million, respectively.

Working capital was negatively impacted by an increase in deferred membership dues revenue and accrued payroll and a decrease in cash and cash equivalents.

The negative impact was partially offset by an increase in accounts receivable, unbilled membership dues receivable, inventory and prepaid expenses.

Accounts receivable increased to $10.7 million at March 31, 2022 compared with $9.9 million at December 31, 2021.

Accounts receivable related to the golf and related operations segment increased approximately $1.9 million at March 31, 2022 compared to December 31, 2021 due to the associated timing of annual membership renewals.

At June 30, 2022 and December 31, 2021, there was a working capital deficit of approximately $4.6 million and $2.1 million, respectively.

Working capital was negatively impacted by an increase in deferred membership dues revenue, accounts payable and accrued payroll.

The negative impact was partially offset by an increase in accounts receivable, unbilled membership dues receivable and inventory.

Accounts receivable increased to $10.5 million at June 30, 2022 compared with $9.9 million at December 31, 2021.

Accounts receivable related to the golf and related operations segment increased approximately $1.5 million at June 30, 2022 compared to December 31, 2021 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 $1.1 million at March 31, 2022 compared with December 31, 2021 as a result of the decrease in net operating revenues in the first quarter of 2022 compared with the fourth quarter of 2021.

Accounts payable was approximately $10.2 million at both March 31, 2022 and December 31, 2021.

Accounts payable related to our waste management segment decreased as a result of a decrease in amounts due to disposal facilities and transportation carriers in the first quarter of 2022 compared to the fourth quarter of 2021 and the associated timing of those vendor payments in the ordinary course of business.

The decrease in accounts payable related to our waste management services segment was 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 unpaid construction bills at March 31, 2022 related to The Grand Resort and Avalon Field Club at New Castle.

Deferred revenue relating to membership dues was approximately $4.9 million at March 31, 2022 compared to $3.4 million at December 31, 2021.

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 and membership dues rates during 2022.

The number of members at March 31, 2022 was 5,259 compared to 5,120 at December 31, 2021.

Accrued payroll and other compensation was approximately $1.3 million at March 31, 2022 compared to $0.8 million at December 31, 2021.

The increase is due to the associated timing of certain employee incentive payments related to our waste management services segment.

Accounts receivable related to our waste management services segment decreased approximately $0.9 million at June 30, 2022 compared with December 31, 2021 as a result of the decrease in net operating revenues in the second quarter of 2022 compared with the fourth quarter of 2021 and the timing of receipt on those associated receivables.

Unbilled membership dues receivable was approximately $1.1 million at June 30, 2022 compared to $0.6 million at December 31, 2021.

The increase was primarily due to the timing of annual membership renewals related to the Avalon Golf and Country Club and associated monthly billing over the course of the annual agreement.

Inventory was approximately $1.5 million at June 30, 2022 compared to $1.1 million at December 31, 2021.

The increase is related to merchandise, food and beverage inventory as a result of the increase in business operations for our golf and related operations segment.

Accounts payable was approximately $11.0 million at June 30, 2022 compared to $10.2 million at December 31, 2021.

Accounts payable related to the golf and related operations increased as a result of unpaid construction bills at June 30, 2022 related to The Grand Resort and Avalon Field Club at New Castle.

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

Accounts payable related to our waste management segment decreased as a result of a decrease in amounts due to disposal facilities and transportation carriers in the second quarter of 2022 compared to the fourth quarter of 2021 and the associated timing of those vendor payments in the ordinary course of business.

Deferred revenue relating to membership dues was approximately $5.8 million at June 30, 2022 compared to $3.4 million at December 31, 2021.

The increase in deferred revenues was primarily due to the associated timing of annual membership renewals and, to a lesser extent, an increase in membership dues rates during 2022.

Accrued payroll and other compensation was approximately $1.7 million at June 30, 2022 compared to $0.8 million at December 31, 2021.

The increase is primarily due to the associated timing of employee payroll payments in the ordinary course of business related to our golf and related operations.

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

32 unchanged sentences

The golf and related operations segment includes the operation and management of four golf courses and related country clubs and facilities, a hotel and its associated resort amenities, a multipurpose recreation center and a travel agency.

Performance in the first quarter of 2022 compared with the first quarter of 2021

Performance in the second quarter of 2022 compared with the second quarter of 2021

Overall Performance

Net operating revenues decreased to $14.3 million in the first quarter of 2022 compared with $15.1 million in the first quarter of 2021.

Net operating revenues of the waste management services segment were approximately $9.3 million in the first quarter of 2022 compared to $11.1 million in the first quarter of 2021.

The decrease in net operating revenues of the waste management services segment was a result of a decrease in both continuous and event work projects during the first quarter of 2022 compared to the first quarter of 2021.

Net operating revenues of the golf and related operations segment were approximately $5.0 million in the first quarter of 2022 compared to $4.0 million in the first quarter of 2021.

The increase in net operating revenues of the golf and related operations was a result of increased business operations related to both The Grand Resort and the country clubs during the first quarter of 2022 compared to the first quarter of 2021.

Total cost of operations related to the waste management services segment decreased to $7.6 million in the first quarter of 2022 compared with $8.7 million in the first quarter of 2021.

The decrease in the cost of operations between periods for the waste management services segment is primarily due to the decreased 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 $4.8 million in the first quarter of 2022 compared to $3.5 million in the first quarter of 2021.

Net operating revenues increased to $19.5 million in the second quarter of 2022 compared with $16.4 million in the second quarter of 2021.

Net operating revenues of the waste management services segment were approximately $10.7 million in the second quarter of 2022 compared to $8.7 million in the second quarter of 2021.

The increase in net operating revenues of the waste management services segment was a result of an increase in both continuous and event work projects during the second quarter of 2022 compared to the second quarter of 2021.

Net operating revenues of the golf and related operations segment were approximately $8.8 million in the second quarter of 2022 compared to $7.7 million in the second quarter of 2021.

The increase in net operating revenues of the golf and related operations was a result of increased business operations related to both The Grand Resort and the country clubs during the second quarter of 2022 compared to the second quarter of 2021.

Total cost of operations related to the waste management services segment increased to $8.5 million in the second quarter of 2022 compared with $7.0 million in the second quarter of 2021.

The increase in the cost of operations between periods for the waste management services 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 second quarter of 2022 compared to $6.1 million in the second quarter of 2021.

The increase between periods was primarily a result of higher product costs and employee related costs associated with an increase in business operations and wage increases during the period.

Depreciation and amortization expense was approximately $0.8 million in both the first quarter of 2022 and 2021.

Consolidated selling, general and administrative expenses were approximately $2.3 million in both the first quarter of 2022 and 2021.

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

Interest expense was approximately $0.3 million in both the first quarter of 2022 and 2021.

During the first quarter of 2022, 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 March 31, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00% and 4.80%, respectively.

Net loss attributable to Avalon Holdings Corporation common shareholders was $1.3 million, or $0.32 per share, in the first quarter of 2022 compared with net income attributable to Avalon Holdings Corporation common shareholders of $0.7 million, or $0.18 per share, in the first quarter of 2021.

Depreciation and amortization expense was approximately $0.8 million in both the second quarter of 2022 and 2021.

Consolidated selling, general and administrative expenses were approximately $2.3 million in the second quarter of 2022 compared to $2.5 million in the second quarter of 2021.

In the second quarter of 2021, certain discretionary employee bonuses were paid by the Company.

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 2022 and 2021.

During the second quarter of 2022, 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, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00% and 4.92%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $0.5 million, or $0.12 per share, in the second quarter of 2022 compared with net income attributable to Avalon Holdings Corporation common shareholders of $0.7 million, or $0.19 per share, in the second quarter of 2021.

Segment Performance

1 unchanged sentence

Waste Management Services Segment

The net operating revenues of the waste management services segment decreased to $9.3 million in the first quarter of 2022 compared with $11.1 million in the first quarter of 2021.

The net operating revenues of the waste management services segment increased to $10.7 million in the second quarter of 2022 compared with $8.7 million in the second quarter of 2021.

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 $8.7 million in the first quarter of 2022 compared to $10.5 million in the first quarter of 2021.

Continuous work of the waste disposal brokerage business decreased approximately $1.3 million between periods as a result of decreased work from multiple customers.

Net operating revenues related to continuous work were approximately $5.6 million in the first quarter of 2022 compared with $6.9 million in the first quarter of 2021.

In addition, event work net operating revenues related to multiple projects decreased by approximately $0.5 million during first quarter of 2022 when compared to first quarter of 2021.

The net operating revenues of the waste disposal brokerage and management services business were approximately $10.0 million in the second quarter of 2022 compared to $8.1 million in the second quarter of 2021.

Continuous work of the waste disposal brokerage business increased approximately $1.7 million between periods as a result of increased work from multiple customers.

Net operating revenues related to continuous work were approximately $6.5 million in the second quarter of 2022 compared with $4.8 million in the second quarter of 2021.

In addition, event work net operating revenues related to multiple projects increased by approximately $0.2 million during second quarter of 2022 when compared to second quarter of 2021.

Event work is defined as bid projects under contract that occurs on a one-time basis over a short period of time.

Such work can fluctuate significantly from year to year.

Event work net operating revenues were approximately $3.1 million in the first quarter of 2022 compared with $3.6 million in the first quarter of 2021.

The net operating revenues of the captive landfill management operations were approximately $0.6 million in both the first quarter of 2022 and 2021.

Such work can fluctuate significantly from period to period.

Event work net operating revenues were approximately $3.5 million in the second quarter of 2022 compared with $3.3 million in the second quarter of 2021.

The net operating revenues of the captive landfill management operations were approximately $0.7 million in the second quarter of 2022 compared to $0.6 million in the second quarter of 2021.

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 $7.6 million in the first quarter of 2022 compared with $8.7 million in the first quarter of 2021.

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

The overall gross margin percentage of the waste brokerage and management services business was approximately 19% in the first quarter of 2022 compared to 22% in the first quarter of 2021.

The decrease in the overall gross margin percentage was primarily attributable to the lower gross profit generated from both continuous and event work projects during first quarter of 2022.

Income before income taxes for the waste management services segment were approximately $0.7 million in the first quarter of 2022 compared to $1.1 million in the first quarter of 2021.

Income before income taxes of the waste brokerage and management services business was approximately $0.7 million in the first quarter of 2022 compared to $1.1 million in the first quarter of 2021.

The decreased income before income taxes was primarily attributable to the decreased net operating revenues and associated lower gross profit during the first quarter of 2022 compared to the first quarter of 2021.

Income before income taxes of the captive landfill operations were approximately $0.1 million in both the first quarter of 2022 and 2021.

During both the first quarter of 2022 and 2021, 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 mandamus processes.

Costs of operations related to the waste management services segment increased to $8.5 million in the second quarter of 2022 compared with $7.0 million in the second quarter of 2021.

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.

The overall gross margin percentage of the waste brokerage and management services business was approximately 21% in the second quarter of 2022 compared to 20% in the second quarter of 2021.

The increase in the overall gross margin percentage was primarily attributable to the higher gross profit generated from event work projects during second quarter of 2022.

Income before income taxes for the waste management services segment were approximately $1.0 million in the second quarter of 2022 compared to $0.7 million in the second quarter of 2021.

Income before income taxes of the waste brokerage and management services business was approximately $1.0 million in the second quarter of 2022 compared to $0.6 million in the second quarter of 2021.

The increased income before income taxes was primarily attributable to the increased net operating revenues and associated higher gross profit during the second quarter of 2022 compared to the second quarter of 2021.

Income before income taxes of the captive landfill operations were approximately $0.1 million in both the second quarter of 2022 and 2021.

During both the second quarter of 2022 and 2021, the salt water injection wells incurred a loss before income taxes of less than $0.1 million primarily due to legal and professional costs incurred relating to Avalon’s mandamus processes.

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $5.0 million in the first quarter of 2022 compared to $4.0 million in the first quarter of 2021.

Net operating revenues of the golf and related operations segment were approximately $8.8 million in the second quarter of 2022 compared to $7.7 million in the second quarter of 2021.

Avalon’s golf and related operations segment consists of the operation and management of four golf courses and related country clubs which provide dining and banquet facilities, a hotel which provides lodging, dining, banquet and conference facilities and other resort related amenities, a multipurpose recreation center and a travel agency.

Food, beverage and merchandise sales increased to approximately $1.7 million in the first quarter of 2022 compared to $1.4 million in the first quarter of 2021.

Food, beverage and merchandise sales increased to approximately $3.6 million in the second quarter of 2022 compared to $3.3 million in the second quarter of 2021.

Food, beverage and merchandise sales increased between periods as a result of an increase in business activity at both The Grand Resort and the country clubs.

Other net operating revenues related to the golf and related operations were approximately $3.3 million in the first quarter of 2022 compared to $2.6 million in the first quarter of 2021.

Membership dues revenue was approximately $1.7 million in the first quarter of 2022 compared to $1.6 million in the first quarter of 2021.

Other net operating revenues related to the golf and related operations were approximately $5.2 million in the second quarter of 2022 compared to $4.4 million in the second quarter of 2021.

Membership dues revenue was approximately $1.8 million in the second quarter of 2022 compared to $1.7 million in the second quarter of 2021.

The increase in membership dues revenue was attributable to an increase in membership dues rates.

Net operating revenues related to room rental was approximately $1.5 million in the second quarter of 2022 compared to $1.1 million in the second quarter of 2021.

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.

Greens fees and associated cart rentals were approximately $0.9 million in both the second quarter of 2022 and 2021.

Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $1.0 million in the second quarter of 2022 compared to $0.7 million in the second quarter of 2021.

The increase between periods was primarily due to an increase in salon and spa revenue associated with The Grand Resort.

Total cost of operations for the golf and related operations segment were $7.3 million in the second quarter of 2022 compared with $6.1 million in the second quarter of 2021.

Cost of food, beverage and merchandise was approximately $1.5 million in the second quarter of 2022 compared to $1.3 million in the second quarter of 2021.

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

The cost of food, beverage and merchandise sales was approximately 43% of associated revenue in the second quarter of 2022 compared to 41% in the second quarter of 2021.

Golf and related operations operating costs increased to approximately $5.7 million in the second quarter of 2022 compared with $4.7 million in the second quarter of 2021.

The increase in operating costs between periods, primarily employee related costs, was directly attributable to both an increase in business operations and higher employee wages paid per hour during the second quarter of 2022 compared to the second quarter of 2021.

The golf and related operations recorded income before income taxes of $0.6 million in the second quarter of 2022 compared with income before income taxes of $1.6 million in the second quarter of 2021.

The change between periods was primarily a result of higher employee related costs in the second quarter of 2022 and, in the second quarter of 2021, the golf and related operations recorded a gain on debt extinguishment of approximately $0.9 million representing the Paycheck Protection Program loan that was forgiven by the Small Business Administration received under the CARES Act.

General Corporate Expenses

General corporate expenses were $0.9 million in the second quarter of 2022 compared to $1.3 million in the second quarter of 2021.

In the second quarter of 2021, certain discretionary employee bonuses were paid by the Company.

Gain on Debt Extinguishment

Interest Expense

Interest expense was approximately $0.3 million in both second quarter of 2022 and 2021.

During second quarter of 2022, 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, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00% and 4.92%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $0.5 million in the second quarter of 2022 compared to net income attributable to Avalon Holdings Corporation common shareholders of $0.7 million in the second quarter of 2021.

Avalon recorded a state income tax provision in both the second quarter of 2022 and 2021, 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 reflect taxes owed in certain U.S state jurisdictions.

Avalon’s income tax 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 2022 compared with the first six months of 2021

Overall Performance

Net operating revenues increased to $33.8 million in the first six months of 2022 compared with $31.5 million in the first six months of 2021.

Net operating revenues of the waste management services segment were approximately $20.0 million in the first six months of 2022 compared to $19.8 million in the first six months of 2021.

The increase in net operating revenues of the waste management services segment was a result of an increase in continuous work partially offset by a decrease in event work projects during the first six months of 2022 compared to the first six months of 2021.

Net operating revenues of the golf and related operations segment were approximately $13.8 million in the first six months of 2022 compared to $11.7 million in the first six months of 2021.

The increase in net operating revenues of the golf and related operations was a result of increased business operations related to both The Grand Resort and the country clubs during the first six months of 2022 compared to the first six months of 2021.

Total cost of operations related to the waste management services segment increased to $16.1 million in the first six months of 2022 compared with $15.7 million in the first six months of 2021.

The increase in the cost of operations between periods for the waste management services segment is primarily due to higher waste disposal transportation expense.

Total cost of operations related to the golf and related operations segment increased to $12.1 million in the first six months of 2022 compared to $9.6 million in the first six months of 2021.

The increase between periods was primarily a result of higher product costs and employee related costs associated with an increase in business operations and wage increases during the period.

Depreciation and amortization expense was approximately $1.7 million in the first six months of 2022 compared to $1.5 million in the first six months of 2021.

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 were approximately $4.6 million in the first six months of 2022 compared to $4.8 million in the first six months of 2021.

In the first six months of 2021, certain discretionary employee bonuses were paid by the Company.

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 2022 and 2021.

During the first six months of 2022, 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, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00% and 4.86%, respectively.

Net loss attributable to Avalon Holdings Corporation common shareholders was $0.8 million, or $0.20 per share, in the first six months of 2022 compared with net income attributable to Avalon Holdings Corporation common shareholders of $1.5 million, or $0.37 per share, in the first six months of 2021.

Segment Performance

Segment performance should be read in conjunction with Note 13 to the Condensed Consolidated Financial Statements.

Waste Management Services Segment

The net operating revenues of the waste management services segment increased to $20.0 million in the first six months of 2022 compared with $19.8 million in the first six months of 2021.

The net operating revenues of the waste disposal brokerage and management services business were approximately $18.7 million in the first six months of 2022 compared to $18.6 million in the first six months of 2021.

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 $12.1 million in the first six months of 2022 compared with $11.7 million in the first six months of 2021.

The increase in net operating revenues from continuous work was partially offset by a decrease in event work projects.

Event work net operating revenues related to multiple projects decreased by approximately $0.3 million during first six months of 2022 when compared to first six months of 2021.

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 $6.6 million in the first six months of 2022 compared with $6.9 million in the first six months of 2021.

The net operating revenues of the captive landfill management operations were approximately $1.3 million in the first six months of 2022 compared to $1.2 million in the first six months of 2021.

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 increased to $16.1 million in the first six months of 2022 compared with $15.7 million in the first six months of 2021.

The increase in the cost of operations between periods for the waste management services segment is primarily due to higher waste disposal transportation expense.

The overall gross margin percentage of the waste brokerage and management services business was approximately 20% in the first six months of 2022 compared to 21% in the first six months of 2021.

The decrease in the overall gross margin percentage was primarily attributable to the lower gross profit generated from both continuous and event work projects during first six months of 2022.

Income before income taxes for the waste management services segment were approximately $1.7 million in the first six months of 2022 compared to $1.8 million in the first six months of 2021.

Income before income taxes of the waste brokerage and management services business was approximately $1.7 million in the first six months of 2022 compared to $1.8 million in the first six months of 2021.

The decreased income before income taxes was primarily attributable to the lower gross profit during the first six months of 2022 compared to the first six months of 2021.

Income before income taxes of the captive landfill operations were approximately $0.1 million in both the first six months of 2022 and 2021.

During both the first six months of 2022 and 2021, 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 mandamus processes.

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $13.8 million in the first six months of 2022 compared to $11.7 million in the first six months of 2021.

Food, beverage and merchandise sales increased to approximately $5.2 million in the first six months of 2022 compared to $4.6 million in the first six months of 2021.

Food, beverage and merchandise sales increased between periods as a result of an increase in business activity at both The Grand Resort and the country clubs.

Other net operating revenues related to the golf and related operations were approximately $8.6 million in the first six months of 2022 compared to $7.1 million in the first six months of 2021.

Membership dues revenue was approximately $3.5 million in the first six months of 2022 compared to $3.3 million in the first six months of 2021.

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

Net operating revenues related to room rental was approximately $0.7 million in the first quarter of 2022 compared to $0.5 million in the first quarter of 2021.

Net operating revenues related to room rental was approximately $2.2 million in the first six months of 2022 compared to $1.6 million in the first six months of 2021.

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.

Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $0.8 million in the first quarter of 2022 compared to $0.4 million in the first quarter of 2021.

Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $1.9 million in the first six months of 2022 compared to $1.2 million in the first six months of 2021.

The increase between periods was primarily due to an increase in salon and spa revenue associated with The Grand Resort.

Greens fees and associated cart rentals were approximately $0.1 million both the first quarter of 2022 and 2021.

Total cost of operations for the golf and related operations segment were $4.8 million in the first quarter of 2022 compared with $3.5 million in the first quarter of 2021.

Cost of food, beverage and merchandise was approximately $0.7 million in the first quarter of 2022 compared to $0.6 million in the first quarter of 2021.

Greens fees and associated cart rentals were approximately $1.0 million in both the first six months of 2022 and 2021.

Total cost of operations for the golf and related operations segment were $12.1 million in the first six months of 2022 compared with $9.6 million in the first six months of 2021.

Cost of food, beverage and merchandise was approximately $2.3 million in the first six months of 2022 compared to $1.9 million in the first six months of 2021.

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

The cost of food, beverage and merchandise sales was approximately 45% of associated revenue in the first quarter of 2022 compared to 44% in the first quarter of 2021.

Golf and related operations operating costs increased to approximately $4.1 million in the first quarter of 2022 compared with $2.9 million in the first quarter of 2021.

The increase in operating costs between periods, primarily employee related costs, was directly attributable to both an increase in business operations and higher employee wages paid per hour during the first quarter of 2022 compared to the first quarter of 2021.

The golf and related operations recorded a loss before income taxes of $0.8 million in the first quarter of 2022 compared with income before income taxes of $0.2 million in the first quarter of 2021.

The change between periods was primarily a result of higher employee related costs in the first quarter of 2022 and, in the first quarter of 2021, the golf and related operations recorded a gain on debt extinguishment of approximately $0.6 million representing the Paycheck Protection Program loan that was forgiven by the Small Business Administration received under the CARES Act.

The cost of food, beverage and merchandise sales was approximately 43% of associated revenue in the first six months of 2022 compared to 42% in the first six months of 2021.

Golf and related operations operating costs increased to approximately $9.8 million in the first six months of 2022 compared with $7.7 million in the first six months of 2021.

The increase in operating costs between periods, primarily employee related costs, was directly attributable to both an increase in business operations and higher employee wages paid per hour during the first six months of 2022 compared to the first six months of 2021.

The golf and related operations recorded a loss before income taxes of $0.2 million in the first six months of 2022 compared with income before income taxes of $1.8 million in the first six months of 2021.

The change between periods was primarily a result of higher employee related costs in the first six months of 2022 and, in the first six months of 2021, the golf and related operations recorded a gain on debt extinguishment of approximately $1.5 million representing the Paycheck Protection Program loan that was forgiven by the Small Business Administration received under the CARES Act.

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

2 unchanged sentences

General Corporate Expenses

General corporate expenses were $0.9 million in the first quarter of 2022 compared to $0.8 million in the first quarter of 2021.

The increase was primarily attributable to higher employee related costs.

General corporate expenses were $1.9 million in the first six months of 2022 compared to $2.1 million in the first six months of 2021.

In the first six months of 2021, certain discretionary employee bonuses were paid by the Company.

Gain on Debt Extinguishment

Interest Expense

Interest expense was approximately $0.3 million in both first quarter of 2022 and 2021.

During first quarter of 2022, 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 March 31, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00% and 4.80%, respectively.

Interest expense was approximately $0.6 million in both first six months of 2022 and 2021.

During first six months of 2022, 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, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00% and 4.86%, respectively.

Net Income (Loss)

Net loss attributable to Avalon Holdings Corporation common shareholders was $1.3 million in the first quarter of 2022 compared to net income attributable to Avalon Holdings Corporation common shareholders of $0.7 million in the first quarter of 2021.

Avalon recorded a state income tax provision in both the first quarter of 2022 and 2021, which was related entirely to the waste management and brokerage operations.

Net loss attributable to Avalon Holdings Corporation common shareholders was $0.8 million in the first six months of 2022 compared to net income attributable to Avalon Holdings Corporation common shareholders of $1.5 million in the first six months of 2021.

Avalon recorded a state income tax provision in both the first six months of 2022 and 2021, which was related entirely to the waste management and brokerage operations.

17 unchanged sentences

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

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

As of March 31, 2022, all loan proceeds received under the Program and related interest has been forgiven by the Small Business Administration.

During the three months ended June 30, 2021, approximately $0.9 million of the loans and $9,000 of associated interest were forgiven by the Small Business Administration.

During the six months ended June 30, 2021, approximately $2.0 million of the loans and $17,000 of associated interest were forgiven by the Small Business Administration.

As of June 30, 2021, all loan proceeds received under the Program and related interest were forgiven by the Small Business Administration.

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

87 unchanged sentences

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. Following the restart orders received on May 24, 2021, and discussed below, the Court dismissed the complaint.

15 unchanged sentences

A hearing in this matter occurred in February 2022.

The Company is currently awaiting judgment.

On June 30, 2022, the Oil and Gas Commission rendered their decision for the Division in this matter, once again deferring to the Division in their decision.

The Company appealed the decision to the Franklin County Ohio Court of Common Pleas on August 3, 2022.

Golf memberships and liquor licenses

7 unchanged sentences

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 March 31, 2022, Avalon has not attained its membership goals.

Although Avalon was able to increase the number of members of the Avalon Golf and Country Club, as of June 30, 2022, Avalon has not attained its membership goals.

There can be no assurance as to when such goals will be attained.

7 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