What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-11 · 307 added, 309 removed, 787 unchanged (44% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net operating revenues:

10 unchanged sentences

Selling, general and administrative expenses

Operating income (loss)

Operating income

Other income (expense):

6 unchanged sentences

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

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

Income per share attributable to Avalon Holdings Corporation common shareholders:

Basic net income (loss) per share

6 unchanged sentences

(in thousands, except per share amounts)          

September 30,

Current Assets:

41 unchanged sentences

(in thousands, except for share data)

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

Non-controlling

Shareholders'

Balance at April 1, 2023

Balance at June 30, 2023

For the Three Months Ended June 30, 2022

Balance at July 1, 2023

Net income (loss)

Balance at September 30, 2023

For the Three Months Ended September 30, 2022

Non-controlling

Shareholders'

Balance at April 1, 2022

Balance at July 1, 2022

Stock options - compensation costs

Net income (loss)

Balance at June 30, 2022

Balance at September 30, 2022

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

(in thousands, except for share data)

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

Non-controlling

2 unchanged sentences

Stock options - compensation costs

Balance at June 30, 2023

For the Six Months Ended June 30, 2023

Balance at September 30, 2023

For the Nine Months Ended September 30, 2022

Non-controlling

3 unchanged sentences

Investment in subsidiary from accredited investor

Balance at June 30, 2022

Net income (loss)

Balance at September 30, 2022

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

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

Net income (loss)

Reconciliation of net income to cash provided by operating activities:

Depreciation and amortization expense

19 unchanged sentences

Proceeds from subsidiary private placement offering

Borrowings under line of credit facility

Proceeds under New Term Loan facility

Principal payments on term loan facilities

Borrowings under line of credit facility

Payments of debt issuance costs

Principal payments on finance lease obligations

Net cash used in financing activities

Net cash provided by financing activities

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

12 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

September 30, 2023

Description of Business

6 unchanged sentences

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

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

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

5 unchanged sentences

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

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position of Avalon as of June 30, 2023, and the results of its operations and cash flows for the interim periods presented.

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position of Avalon as of September 30, 2023, 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.

1 unchanged sentence

Recent Accounting Pronouncements

As of June 30, 2023, there were several new accounting pronouncements issued by the FASB.

As of September 30, 2023, there were several new accounting pronouncements issued by the FASB.

Each of these pronouncements, as applicable, has been or will be adopted by the Company.

8 unchanged sentences

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

Cash, cash equivalents and restricted cash consist of the following at June 30, 2023 and December 31, 2022 (in thousands):

Cash, cash equivalents and restricted cash consist of the following at September 30, 2023 and December 31, 2022 (in thousands):

September 30,

Cash and cash equivalents

21 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 and six months ended June 30, 2023 and 2022.

For the three months ended June 30, 2023 and 2022, the net operating revenues related to waste management services represented approximately 50 % and 55 %, respectively, of Avalon’s total consolidated net operating revenues.

Net operating revenues related to waste management services represented approximately 59 % of Avalon’s total consolidated net operating revenues for the six months ended June 30, 2023 and 2022.

For the six months ended June 30, 2023, two customers accounted for 25 % of the waste management services segment’s net operating revenues to external customers and 14 % of the 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.

Due to the suspension of the salt water injection wells, there were no operating revenues for the three and nine months ended September 30, 2023 and 2022.

For the three months ended September 30, 2023 and 2022, the net operating revenues related to waste management services represented approximately 49 % and 58 %, respectively, of Avalon’s total consolidated net operating revenues.

For both the nine months ended September 30, 2023 and 2022, the net operating revenues related to waste management services represented approximately 55 % and 59 %, respectively, of Avalon’s total consolidated net operating revenues.

For the nine months ended September 30, 2023, one customer accounted for 15 % of the waste management services segment’s net operating revenues to external customers and 7 % of the consolidated net operating revenues.

For the nine months ended September 30, 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 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.

22 unchanged sentences

Golf and Related Operations

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

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

1 unchanged sentence

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 2023 and 2022.

For the three months ended June 30, 2023 and 2022, the net operating revenues related to the golf and related operations represented approximately 50 % and 45 %, respectively, of Avalon’s total consolidated net operating revenues.

For the six months ended June 30, 2023 and 2022, the net operating revenues related to the golf and related operations represented approximately 41 % for both periods of Avalon’s total consolidated net operating revenues.

For both the six months ended June 30, 2023 and 2022, no one customer individually accounted for 10% or more of Avalon’s golf and related operations segment revenues.

For the three months ended September 30, 2023 and 2022, the net operating revenues related to the golf and related operations represented approximately 51 % and 42 %, respectively, of Avalon’s total consolidated net operating revenues.

For both the nine months ended September 30, 2023 and 2022, the net operating revenues related to the golf and related operations represented approximately 45 % and 41 %, respectively, of Avalon’s total consolidated net operating revenues.

For the nine months ended September 30, 2023 and 2022, no one customer individually accounted for 10% or more of Avalon’s golf and related operations segment revenues.

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

21 unchanged sentences

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

The following table presents our net operating revenues disaggregated by revenue source for the three and six months ended June 30, 2023 and 2022 (in thousands).

The following table presents our net operating revenues disaggregated by revenue source for the three and nine months ended September 30, 2023 and 2022 (in thousands).

Sales and other taxes are excluded from revenues.

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Waste management and brokerage services

14 unchanged sentences

The amounts due are stated at their net realizable value.

At June 30, 2023 and December 31, 2022, accounts receivable, net, related to our waste management services segment were approximately $ 8.7 million and $ 10 million, respectively.

At June 30, 2023, two customers accounted for approximately 18 % of the waste management services segment’s receivables and 14 % of the consolidated receivables.

At September 30, 2023 and December 31, 2022, accounts receivable, net, related to our waste management services segment were approximately $ 9.3 million and $ 10.0 million, respectively.

At September 30, 2023, one customer accounted for approximately 16 % of the waste management services segment’s receivables and 12 % of the consolidated receivables.

At December 31, 2022, one customer accounted for approximately 18 % of the waste management services segment’s receivables and 16 % of the consolidated receivables.

Accounts receivable, net, related to our golf and related operations segment were approximately $ 2.3 million and $ 1.1 million at June 30, 2023 and December 31, 2022, 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, 2023 or December 31, 2022.

Accounts receivable, net, related to our golf and related operations segment were approximately $ 2.3 million and $ 1.1 million at September 30, 2023 and December 31, 2022, respectively.

No one customer of the golf and related operations segment accounted for 10% or more of Avalon’s golf and related operations segment or consolidated net receivables at September 30, 2023 or December 31, 2022.

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 June 30, 2023 and December 31, 2022.

The following table presents changes in our allowance for credit losses during the three and six months ended June 30, 2023 and 2022 (in thousands):

Allowance for credit losses was approximately $ 0.2 million at September 30, 2023 and $ 0.3 million at December 31, 2022.

The following table presents changes in our allowance for credit losses during the three and nine months ended September 30, 2023 and 2022 (in thousands):

Beginning of Period

1 unchanged sentence

Allowance for credit losses

Three months ended June 30, 2023

Three months ended June 30, 2022

Six months ended June 30, 2023

Six months ended June 30, 2022

Three months ended September 30, 2023

Three months ended September 30, 2022

Nine months ended September 30, 2023

Nine months ended September 30, 2022

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 $ 1.1 million at June 30, 2023 and $ 0.6 million at December 31, 2022.

The following table presents changes in our contract assets during the three and six months ended June 30, 2023 and 2022 (in thousands):

Unbilled membership receivables in our Condensed Consolidated Balance Sheets were approximately $ 0.8 million at September 30, 2023 and $ 0.6 million at December 31, 2022.

The following table presents changes in our contract assets during the three and nine months ended September 30, 2023 and 2022 (in thousands):

Beginning of Period

2 unchanged sentences

Unbilled membership dues receivable

Three months ended June 30, 2023

Three months ended June 30, 2022

Six months ended June 30, 2023

Six months ended June 30, 2022

Three months ended September 30, 2023

Three months ended September 30, 2022

Nine months ended September 30, 2023

Nine months ended September 30, 2022

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 $ 5.7 million at June 30, 2023 and $ 3.6 million at December 31, 2022, respectively.

The unrecognized or deferred revenues related to membership dues in our Condensed Consolidated Balance Sheets were approximately $ 4.6 million at September 30, 2023 and $ 3.6 million at December 31, 2022, 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 $ 1.1 million at June 30, 2023 and $ 1.0 million at December 31, 2022.

The following table presents changes in our contract liabilities during the three and six months ended June 30, 2023 and 2022 (in thousands):

Customer advance deposits were approximately $ 1.1 million at September 30, 2023 and $ 1.0 million at December 31, 2022.

The following table presents changes in our contract liabilities during the three and nine months ended September 30, 2023 and 2022 (in thousands):

Beginning of Period

2 unchanged sentences

Deferred membership dues revenue

Three months ended June 30, 2023

Three months ended June 30, 2022

Six months ended June 30, 2023

Six months ended June 30, 2022

Three months ended September 30, 2023

Three months ended September 30, 2022

Nine months ended September 30, 2023

Nine months ended September 30, 2022

Customer advance deposits

Three months ended June 30, 2023

Three months ended June 30, 2022

Six months ended June 30, 2023

Six months ended June 30, 2022

Three months ended September 30, 2023

Three months ended September 30, 2022

Nine months ended September 30, 2023

Nine months ended September 30, 2022

Property and Equipment

4 unchanged sentences

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

Property and equipment at June 30, 2023 and December 31, 2022 consists of the following (in thousands):

Property and equipment at September 30, 2023 and December 31, 2022 consists of the following (in thousands):

September 30,

Land and land improvements

5 unchanged sentences

Property and equipment, net

At June 30, 2023, the Company did not have any significant fixed contractual commitments for construction projects.

At September 30, 2023, the Company did not have any significant fixed contractual commitments for construction projects.

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

3 unchanged sentences

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

During the first six months of 2023 and 2022, no triggering events were present.

During the first nine months of 2023 and 2022, no triggering events were present.

Operating Leases

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

Our operating leases have remaining lease terms ranging from less than 2.5 years to 5.0 years.

The weighted average remaining lease term on operating leases was approximately 3.4 years at June 30, 2023.

During the first six months of 2023 and 2022, the Company entered into a new operating lease agreement for golf carts and golf cart GPS equipment.

During the first six months of 2023 and 2022, the Company recorded operating lease right-of-use assets and corresponding obligations under the operating leases of approximately $ 64,000 and $ 31,000 , respectively.

Leased property and associated obligations under operating leases at June 30, 2023 and December 31, 2022 consists of the following (in thousands):

Our operating leases have remaining lease terms ranging from less than 1 year to 4.9 years.

The weighted average remaining lease term on operating leases was approximately 3.5 years at September 30, 2023.

During the first nine months of 2023 and 2022, the Company entered into a new operating lease agreement for golf carts, GPS equipment and office copiers.

During the first nine months of 2023 and 2022, the Company recorded operating lease right-of-use assets and corresponding obligations under the operating leases of approximately $ 323,000 and $ 31,000 , respectively.

Leased property and associated obligations under operating leases at September 30, 2023 and December 31, 2022 consists of the following (in thousands):

September 30,

Operating lease right-of-use assets

2 unchanged sentences

Total obligations under operating leases

The weighted average discount rate on operating leases was 5.12 % at June 30, 2023 and 5.0 % at December 31, 2022.

The weighted average discount rate on operating leases was 5.9 % at September 30, 2023 and 5.0 % at December 31, 2022.

Finance Leases

4 unchanged sentences

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

At June 30, 2023 there were approximately 30.3 years remaining on the golf course and related facilities finance lease.

At September 30, 2023 there were approximately 30.1 years remaining on the golf course and related facilities finance lease.

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

At June 30, 2023, 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, 2023.

Leased property and associated obligations under finance leases at June 30, 2023 and December 31, 2022 consists of the following (in thousands):

At September 30, 2023, the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from less than 1 year to 4.1 years.

The weighted average remaining lease term on the vehicles and equipment leases was approximately 2.9 years at September 30, 2023.

Leased property and associated obligations under finance leases at September 30, 2023 and December 31, 2022 consists of the following (in thousands):

September 30,

Leased property under finance leases

4 unchanged sentences

Total obligations under finance leases

The weighted average discount rate on finance leases was 5.6 % at June 30, 2023 and 5.2 % at December 31, 2022.

For the three and six months ended June 30, 2023 and 2022, components of lease expense were as follows (in thousands):

The weighted average discount rate on finance leases was 5.6 % at September 30, 2023 and 5.2 % at December 31, 2022.

For the three and nine months ended September 30, 2023 and 2022, components of lease expense were as follows (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating lease cost:

4 unchanged sentences

Total finance lease cost

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

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

Total lease payments

2 unchanged sentences

Long-term portion of obligations under leases

Basic and Diluted Net Income (Loss) per Share

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

For both the three and six months ended June 30, 2023 and 2022, the weighted average number of common shares outstanding was 3,899,431 .

Basic and Diluted Net Income per Share

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

For both the three and nine months ended September 30, 2023 and 2022, 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 June 30, 2023, the diluted weighted average number of shares outstanding was 3,904,604 .

For the six months ended June 30, 2023, 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.

The diluted per share for the six months ended June 30, 2022 was equal to the total basic per share amount.

Assuming dilution, the weighted average number of common shares outstanding for the six months ended June 30, 2023 was 3,902,003 .

For the three and six months ended June 30, 2022, the diluted weighted average number of shares outstanding was 3,921,656 and 3,923,213 , respectively.

For the three months ended September 30, 2023 there were no diluted weighted shares outstanding.

For the nine months ended September 30, 2023, the diluted per share amount reported is equal to the basic per share amount because Avalon was in a net loss position and as a result, such dilution would be considered anti-dilutive.

For the three and nine months ended September 30, 2022, the diluted weighted average number of shares outstanding was 3,918,512 and 3,921,628 , respectively.

Term Loans and Line of Credit Agreements

3 unchanged sentences

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.

At both June 30, 2023 and December 31, 2022, loan proceeds of $ 10.5 million are presented in the Condensed Consolidated Balance Sheets as “Restricted cash.”

At September 30, 2023 the balance of “Restricted Cash”

is $ 10.5 million and presented in the Condensed Consolidated Balance Sheet.

The monies are earning nominal interest.

The 2019 Term Loan Agreement was terminated in conjunction with the 2022 Term Loan Agreement.

10 unchanged sentences

The 2022 Term Loan also contains other nonfinancial covenants, customary representations, warranties and events of default.

Avalon was in compliance with the 2022 Term Loan Agreement covenants at June 30, 2023 and December 31, 2022.

Avalon was in compliance with the 2022 Term Loan Agreement covenants at September 30, 2023.

The Company capitalized approximately $ 0.6 million of debt issuance costs in connection with the 2022 Term Loan Agreement in accordance with ASC Subtopic 470-50, Debt-Modifications and Extinguishments .

2 unchanged sentences

Line of Credit Agreement

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

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

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

On September 18, 2023, the Company amended the Line of Credit Agreement to extend the maturity date to July 31, 2025.

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.

At June 30, 2023 and December 31, 2022, approximately $ 2.2 million and $ 1.6 million, respectively, was outstanding under the Line of Credit Agreement.

At June 30, 2023 and December 31, 2022, approximately $ 2.8 million and $ 3.4 million, respectively was available under the Line of Credit Agreement.

At September 30, 2023 and December 31, 2022, approximately $ 2.2 million and $ 1.6 million, respectively, were outstanding under the Line of Credit Agreement.

At September 30, 2023 and December 31, 2022, approximately $ 2.8 million and $ 3.4 million, respectively was available under the Line of Credit Agreement.

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

At June 30, 2023, the interest rate on the Line of Credit Agreement was 8.50 %.

At September 30, 2023, the interest rate on the Line of Credit Agreement was 8.75 %.

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

1 unchanged sentence

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

Avalon was in compliance with the Line of Credit Agreements covenants at June 30, 2023 and December 31, 2022.

During the three months ended June 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.16 % and 5.00 %, respectively.

Obligations under the Company’s debt agreements at June 30, 2023 and December 31, 2022 consist of the following (in thousands):

June 30, 2023

Avalon was in compliance with the Line of Credit Agreements covenants at September 30, 2023 and December 31, 2022.

During the three months ended September 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.18 % and 5.69 %, respectively.

During the nine months ended September 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.15 % and 5.27 % respectively.

Obligations under the Company’s term loan agreements at September 30, 2023 and December 31, 2022 consist of the following (in thousands):

September 30, 2023

Debt Issuance Costs

7 unchanged sentences

Long-term debt

Obligations under the Company’s Line of Credit agreement at June 30, 2023 and December 31, 2022 were approximately $ 2.2 million and $ 1.6 million, respectively, which matures on July 31, 2024.

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

During the three months ended June 30, 2023, net loss attributable to Avalon Holdings Corporation shareholders was $ 0.2 million compared to net income attributable to Avalon Holdings Corporation shareholders of $ 0.5 million during the three months ending June 30, 2022.

During the six months ended June 30, 2023 and 2022, net loss attributable to Avalon Holdings Corporation shareholders was $ 1.8 million compared to a net loss attributable to Avalon Holdings Corporation shareholders of $ 0.8 million during the six months ended June 30, 2022.

Avalon recorded a state income tax provision in both the three and six month periods ended June 30, 2023 and 2022, 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 and state net deferred tax assets, the overall effective tax rate in both periods reflects taxes owed in certain U.S state jurisdictions.

Obligations under the Company’s Line of Credit agreement at September 30, 2023 and December 31, 2022 were approximately $ 2.2 million and $ 1.6 million, respectively, which matures on July 31, 2025.

For the twelve months ending September 30, 2023, future maturities of long-term debt are as follows (in thousands):

During the three months ended September 30, 2023 and 2022, net income attributable to Avalon Holdings Corporation shareholders was $ 0.9 million and $ 1.2 million, respectively.

During the nine months ended September 30, 2023 net loss attributable to Avalon Holdings Corporation shareholders was $ 0.9 million.

During the nine months ended September 30, 2022 net income attributable to Avalon Holdings Corporation shareholders was $ 0.4 million.

Avalon recorded a state income tax provision in both the three and nine month periods ended September 30, 2023 and 2022, which was related entirely to the waste management and brokerage operations.

Due to the recording of a full valuation allowance against the Company’s federal net deferred tax assets, the overall effective tax rate in both periods reflects taxes owed in certain U.S state jurisdictions.

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

2 unchanged sentences

Long-Term Incentive Plan

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

On April 25, 2019, at the Annual Meeting of Shareholders, the shareholders approved the Long-term Incentive Plan “The Plan.”

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

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

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

The Option Plan has 1,300,000 shares available for stock options, less any shares of stock issued pursuant to options exercised under the 2009 Plan.

The total number of shares under the Option Plan and the 2009 Plan will not exceed 1,300,000 .

The Plan has 1,300,000 shares of Class A Common Stock available for stock options to employees and non-employee directors.

Shares of stock covered by options granted pursuant to The Plan which terminate or expire prior to exercise or have been surrendered or canceled shall be available for further option grants under the Option Plan.

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

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

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

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

15 unchanged sentences

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

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

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

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

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

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

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

There were no expected dividends and the risk-free interest rate was based on yield data for U.

Treasury securities over a period consistent with the expected term.

In March 2023, options to purchase 36,000 shares previously granted under the 2009 Plan were cancelled as the options did not meet the predetermined stock price within the three years following the contractual vesting period.

Additionally, in May 2023, the remaining 18,000 shares previously granted under the 2009 Plan expired.

In March 2023, options to purchase 36,000 shares previously granted were cancelled as the options did not meet the predetermined stock price within the three years following the contractual vesting period.

Additionally, in May 2023, the remaining 18,000 shares previously granted expired.

The following table is a summary of the stock option activity during 2023:

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Options cancelled or forfeited

Outstanding at June 30, 2023

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

Outstanding at September 30, 2023

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

Contract Vesting Term:

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96 months after Grant Dates

For the three months ended June 30, 2023 there were no compensation costs.

For the three months ending June 30, 2022 compensation costs were $ 1,000 .

For the six months ended June 30, 2023 and 2022, compensation costs were approximately $ 1,000 and $ 2,000 , respectively.

As of June 30, 2023, there were no unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan.

Compensation costs were zero for the three month period ended September 30, 2023 and $ 1,000 for the three month period ended September 30, 2022.

For the nine months ended September 30, 2023 and 2022, compensation costs were approximately $ 1,000 and $ 3,000 , respectively.

At September 30, 2023, there were no unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan.

Legal Matters

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

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

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

Avalon does not have 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 2022 Annual Report to Shareholders.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net operating revenues from:

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Total net operating revenues

Three Months Ended

Six Months Ended

Income (loss) before income taxes:

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Income (loss) before income taxes

September 30,

Identifiable assets:

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Elimination of intersegment receivables

In comparing total assets at June 30, 2023 with those at December 31, 2022, the increase in the total assets of the waste management services segment of approximately $ 0.8 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 $ 2.6 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, partially offset by current year depreciation on property and equipment.

In comparing total assets at September 30, 2023 with those at December 31, 2022, the increase in the total assets of the waste management services segment of approximately $ 1.7 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 $ 1.5 million was primarily due to an increase in capital expenditures associated with The Grand Resort and Avalon Field Club at New Castle.

Certain Relationships and Related Transactions

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

At June 30, 2023 and December 31, 2022, respectively, Avalon owns approximately 47 % of AWMS Holdings, LLC.

At September 30, 2023 and December 31, 2022, 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 June 30, 2023 and 2022, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $ 34,000 and $ 10,000 , respectively.

During the six months ended June 30, 2023 and 2022, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $ 103,000 and $ 72,000 , respectively.

During the three and nine months ended September 30, 2023, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $ 10,000 and $ 112,000 , respectively.

During the three and nine months ended September 30, 2022, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $ 13,000 and $ 85,000 , respectively.

Avalon Med Spa, LLC

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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 June 30, 2023 and December 31, 2022.

Avalon is the majority owner of Avalon Med Spa, LLC owning 50.1 % of the company at both September 30, 2023 and December 31, 2022.

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.

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in our Condensed Consolidated Statements of Operations.

During the three months ended June 30, 2023 and 2022, net loss attributable to the noncontrolling interest in Avalon Med Spa, LLC was approximately $ 18,000 and $ 70,000 , respectively.

During the six months ended June 30, 2023 and 2022, net loss attributable to the noncontrolling interest in Avalon Med Spa, LLC was approximately $ 71,000 and $ 146,000 , respectively.

During the three and nine months ended September 30, 2023, net loss attributable to the noncontrolling interest in Avalon Med Spa, LLC was approximately $ 47,000 and $ 119,000 , respectively.

For the three and nine months ended September 30, 2022, net loss attributable to the noncontrolling interest in Avalon Med Spa was approximately $ 83,000 and $ 229,000 , respectively.

Injection Wells Suspension

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The trial occurred in September and October 2021.

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

On December 19, 2022, the 11 th Appellate District Court denied the Company’s writ of mandamus action.

The Court determined that the Company failed to establish a cognizable property interest that would necessitate a just compensation/takings analysis and accordingly denied the Company’s petition for writ of mandamus.

The decision was appealed to the Supreme Court of Ohio on January 30, 2023.

Briefings to the Supreme Court were completed in May 2023 and the company is awaiting a decision.

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

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Liquidity and Capital Resources

For the six months ended June 30, 2023, 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 from the line of credit 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.

For the nine months ended September 30, 2023, 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 and borrowings under our line of credit were also 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.

Term Loan Agreement

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

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

The remaining proceeds of approximately $7.2 million were deposited into a project fund account for which those proceeds are required to fund future costs of renovating and expanding both The Grand Resort and Avalon Field Club at New Castle.

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.

The Term Loan Agreement is payable in 119 equal monthly installments of principal and interest , based on a fifteen (15) year maturity schedule which commenced January 20, 2020 followed by one final balloon payment of all remaining principal, interest and fees due on the maturity date of December 20, 2029.

Borrowings under the Term Loan Agreement bear interest at a fixed rate of 5.00% until the fifth anniversary date of the closing at which time the interest rate will be reset to a fixed rate equal to the greater of (a) 5.00% per annum or (b) the sum of the five year treasury rate on the date two (2) business days prior to the reset date plus 3.60%, provided that the applicable rate shall in no event exceed 7.35% per annum.

Avalon has the right to prepay the amount outstanding under the 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 five percent (5%) 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 Term Loan Agreement are secured by certain real property and related business assets as defined in the agreement.

The 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.

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 June 30, 2023 and December 31, 2022.

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.

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

Avalon was in compliance with the 2022 Term Loan Agreement covenants at September 30, 2023 and December 31, 2022.

Line of Credit Agreement

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

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

On September 19, 2023, the Company amended the Line of Credit Agreement to extend the maturity date to July 31, 2025.

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.

At June 30, 2023 and December 31, 2022 outstanding borrowings under the Line of Credit Agreement were approximately $2.2 million and $1.6 million respectively.

At June 30, 2023 and December 31, 2022, approximately $2.8 million and $3.4 million were available under the Line of Credit Agreement.

At September 30, 2023 and December 31, 2022 outstanding borrowings under the Line of Credit Agreement were approximately $2.2 million and $1.6 million respectively.

At September 30, 2023 and December 31, 2022, approximately $2.8 million and $3.4 million were available under the Line of Credit Agreement.

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

At June 30, 2023, the interest rate on the Line of Credit Agreement was 8.50%.

At September 30, 2023, the interest rate on the Line of Credit Agreement was 8.75%.

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

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

Avalon was in compliance with the Line of Credit Agreements covenants at June 30, 2023 and December 31, 2022.

During the three months ended June 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.16% and 4.92%, respectively.

During the six months ended June 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.13% and 4.86%, respectively.

Avalon was in compliance with the Line of Credit Agreements covenants at September 30, 2023 and December 31, 2022.

During the three months ended September 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.18% and 5.69%, respectively.

During the nine months ended September 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.15% and 5.27%, respectively.

Squaw Creek Country Club Lease Agreement

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Capital Expenditures

During the six months ended June 30, 2023, Avalon incurred capital expenditures of $2.4 million of which $ 2.2 million of such expenditures was paid to vendors during the period.

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.

For both the six months ended June 30, 2023 and 2022, expenditures primarily related to the continued renovation of The Grand Resort and the clubhouse at Avalon Field Club at New Castle.

During the nine months ended September 30, 2023, Avalon incurred capital expenditures of $3.5 million of which $3.2 million of such expenditures was paid to vendors during the period.

During the nine months ended September 30, 2022, Avalon incurred capital expenditures of $5.5 million of which $5.3 million of such expenditures was paid to vendors during the period.

For both the nine months ended September 30, 2023 and 2022, expenditures primarily related to the continued renovation of The Grand Resort and the clubhouse at Avalon Field Club at New Castle.

In 2023 and 2022, The Grand Resort was in operation but certain existing hotel rooms were in the process of being renovated.

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During the third quarter of 2022, the club house renovation was substantially completed.

Avalon’s aggregate capital expenditures in 2023 are expected to be in the range of $3.5 million to $4.5 million, funded with cash from our project fund account, proceeds from our line of credit, existing operating cash and cash generated from operations.

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

Avalon’s aggregate capital expenditures in 2023 are expected to be in the range of $4.0 million to $5.0 million, funded with cash from our project fund account, existing operating cash and cash generated from operations.

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 June 30, 2023 and December 31, 2022, there was a working capital deficit of approximately $4.8 million and $2.8 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 remained $11.1 million at both June 30, 2023 and December 31, 2022 .

Accounts receivable related to the golf and related operations segment increased approximately $1.7 million at June 30, 2023 compared to December 31, 2022 due to the associated timing of annual membership renewals.

The increase in accounts receivable related to our golf and related operations segment was 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 $1.5 million at June 30, 2023 compared with December 31, 2022 as a result of the decrease in net operating revenues in the second quarter of 2023 compared with the fourth quarter of 2022 and the timing of receipt on those associated receivables.

Unbilled membership dues receivable was approximately $1.1 million at June 30, 2023 compared to $0.6 million at December 31, 2022.

At September 30, 2023 and December 31, 2022, there was a working capital deficit of approximately $4.3 million and $2.8 million, respectively.

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

The negative impact was partially offset by an increase in accounts receivable and inventory.

Accounts receivable increased to $11.6 million at September 30, 2023 compared with $11.1 million at December 31, 2022.

Accounts receivable related to our waste management services segment decreased approximately $0.8 million at September 30, 2023 compared with December 31, 2022 as a result of a decrease in net operating revenues in the third quarter of 2023 compared with the fourth quarter of 2022 and the timing of receipt on those associated receivables.

Accounts receivable related to the golf and related operations segment increased approximately $1.3 million at September 30, 2023 compared to December 31, 2022 due to the associated timing of annual membership renewals.

Unbilled membership dues receivable was approximately $0.8 million at September 30, 2023 compared to $0.6 million at December 31, 2022.

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 $1.8 million at June 30, 2023 compared to $1.5 million at December 31, 2022.

Inventory was approximately $1.7 million at September 30, 2023 compared to $1.5 million at December 31, 2022.

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 $11.6 million at June 30, 2023 compared to $11.0 million at December 31, 2022.

Accounts payable related to the golf and related operations increased as a result of unpaid construction bills at June 30, 2023 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 2023 compared to the fourth quarter of 2022 and the associated timing of those vendor payments in the ordinary course of business.

Deferred revenue relating to membership dues was approximately $5.7 million at June 30, 2023 compared to $3.6 million at December 31, 2022.

Accounts payable was approximately $10.8 million at September 30, 2023 compared to $11.0 million at December 31, 2022.

The decrease in accounts payable between periods was primarily due to the waste management 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 third quarter of 2023 compared to the fourth quarter of 2022 and the associated timing of those vendor payments in the ordinary course of business.

Deferred revenue relating to membership dues was approximately $4.6 million at September 30, 2023 compared to $3.6 million at December 31, 2022.

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 2023.

Accrued payroll and other compensation was approximately $1.2 million at June 30, 2023 compared to $1.0 million at December 31, 2022.

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.

Accrued payroll and other compensation was approximately $1.3 million at September 30, 2023 compared to $1.0 million at December 31, 2022.

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 and the timing of payment of certain earned employee incentives.

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.

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

•  

Sales and Marketing Activities .

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

 •   

Development Activities .

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

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

Performance in the second quarter of 2023 compared with the second quarter of 2022

Performance in the third quarter of 2023 compared with the third quarter of 2022

Overall Performance

Net operating revenues increased to $20.6 million in the second quarter of 2023 compared with $19.5 million in the second quarter of 2022.

Net operating revenues of the waste management services segment were approximately $10.3 million in the second quarter of 2023 compared to $10.7 million in the second quarter of 2022.

The decrease in net operating revenues of the waste management services segment was a result of decreases in both continuous and event work projects during the second quarter of 2023 compared to the second quarter of 2022.

Net operating revenues of the golf and related operations segment were approximately $10.3 million in the second quarter of 2023 compared to $8.8 million in the second quarter of 2022.

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 2023 compared to the second quarter of 2022.

Total cost of operations related to the waste management services segment decreased to $8.2 million in the second quarter of 2023 compared with $8.5 million in the second quarter of 2022.

The decrease in the cost of operations between periods for the waste management services segment is primarily due to the decrease in 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 $8.8 million in the second quarter of 2023 compared to $7.3 million in the second quarter of 2022.

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 $1.0 million and $0.8 million in the second quarter of 2023 and 2022, respectively.

Consolidated selling, general and administrative expenses were approximately $2.5 million in the second quarter of 2023 compared to $2.3 million in the second quarter of 2022.

Interest expense was approximately $0.5 million and $0.3 million in the second quarter of 2023 and 2022, respectively.

During the second quarter of 2023, the increase in interest expense was due to both the higher average debt outstanding and the increased weighted average interest rate on the associated borrowings.

During the three months ended June 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.16% and 5.00%, respectively.

Net loss attributable to Avalon Holdings Corporation common shareholders was $0.2 million, or $0.04 per share, in the second quarter of 2023 compared with net income attributable to Avalon Holdings Corporation common shareholders of $0.5 million, or $0.12 per share, in the second quarter of 2022.

Avalon recorded a state income tax provision in both the second quarters of 2023 and 2022, 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 benefit on the loss before taxes was offset by a change in the valuation allowance.

A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized.

Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.

Net operating revenues decreased to $23.9 million in the third quarter of 2023 compared with $25.7 million in the third quarter of 2022.

Net operating revenues of the waste management services segment were approximately $11.7 million in the third quarter of 2023 compared to $15.0 million in the third quarter of 2022.

The decrease in net operating revenues of the waste management services segment was a result of a decrease in event work projects during the third quarter of 2023 compared to the third quarter of 2022.

Net operating revenues of the golf and related operations segment were approximately $12.2 million in the third quarter of 2023 compared to $10.7 million in the third quarter of 2022.

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 third quarter of 2023 compared to the third quarter of 2022.

Total cost of operations related to the waste management services segment decreased to $9.3 million in the third quarter of 2023 compared with $12.2 million in the third quarter of 2022.

The decrease in the cost of operations between periods for the waste management services segment is primarily due to a decrease in 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 $9.5 million in the third quarter of 2023 compared to $8.2 million in the third quarter of 2022.

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

Depreciation and amortization expense was approximately $1.0 million in the third quarter of 2023 compared to $0.9 million in the third quarter of 2022.

The increase is due to a higher depreciable asset base primarily related to the renovation of The Avalon Field Club at New Castle and The Grand Resort.

Consolidated selling, general and administrative expenses were approximately $2.8 million in the third quarter of 2023 compared to $2.9 million in the third quarter of 2022.

The slight decrease was due to lower wages compared to the prior year.

Interest expense was approximately $0.5 million in the third quarter of 2023 compared to $0.4 million in the third quarter of 2022.

During the third quarter of 2023, the increase in interest expense was due to both the higher average debt outstanding and the increased weighted average interest rate on the associated borrowings.

During the three months ended September 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.18% and 5.69%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $0.9 million, or $0.23 per share, in the third quarter of 2023 compared with net income attributable to Avalon Holdings Corporation common shareholders of $1.2 million, or $0.30 per share, in the third quarter of 2022.

Segment Performance

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Waste Management Services Segment

The net operating revenues of the waste management services were approximately $10.3 million in the second quarter of 2023 compared with $10.7 million in the second quarter of 2022.

The net operating revenues of the waste management services segment decreased to $11.7 million in the third quarter of 2023 compared with $15.0 million in the third quarter of 2022.

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 $9.4 million in the second quarter of 2023 compared to $10.0 million in the second quarter of 2022.

Continuous work in the waste disposal brokerage business decreased by approximately $0.8 million between periods.

Net operating revenues related to continuous work were approximately $5.7 million in the second quarter of 2023 compared with $6.5 million in the second quarter of 2022.

In addition, event work net operating revenues related to multiple projects increased by approximately $0.2 million during second quarter of 2023 when compared to second quarter of 2022.

The net operating revenues of the waste disposal brokerage and management services business were approximately $11.2 million in the third quarter of 2023 compared to $14.3 million in the third quarter of 2022.

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

Net operating revenues related to continuous work were approximately $7.3 million in the third quarter of 2023 compared with $6.4 million in the third quarter of 2022.

In addition, event work net operating revenues related to multiple projects decreased by approximately $4.0 million during third quarter of 2023 when compared to third quarter of 2022.

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 period to period.

Event work net operating revenues were approximately $3.7 million in the second quarter of 2023 compared with $3.5 million in the second quarter of 2022.

The net operating revenues of the captive landfill management operations were approximately $0.9 million in the second quarter of 2023 compared to $0.7 million in the second quarter of 2022.

Event work net operating revenues were approximately $3.9 million in the third quarter of 2023 compared with $7.9 million in the third quarter of 2022.

The net operating revenues of the captive landfill management operations were approximately $0.7 million in the third quarter of both 2023 and 2022, respectively.

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 were approximately $8.2 million in the second quarter of 2023 compared with $8.5 million in the second quarter of 2022.

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 20% in the second quarter of 2023 compared to 21% in the second quarter of 2022.

The slight decrease 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 was approximately $0.8 million in the second quarter of 2023 compared to $1.0 million in the second quarter of 2022.

Income before income taxes of the waste brokerage and management services business was approximately $0.7 million in the second quarter of 2023 compared to $1.0 million in the second quarter of 2022.

The decreased income before income taxes was primarily attributable to the decreased net operating revenues and associated lower gross profit during the second quarter of 2023 compared to the second quarter of 2022.

Income before income taxes of the captive landfill operations were approximately $0.1 million in both the second quarter of 2023 and 2022.

During both the second quarter of 2023 and 2022, the salt water injection wells incurred a loss before income taxes of less than $0.1 million primarily due to legal and professional costs incurred relating to Avalon’s appeal and mandamus processes.

Costs of operations related to the waste management services segment decreased to $9.3 million in the third quarter of 2023 compared with $12.2 million in the third quarter of 2022.

The decrease in the cost of operations between periods for the waste management segment is primarily due to the decrease in 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 20% in the third quarter of 2023 and 19% in the third quarter of 2022.

Overall gross margin percentage tends to vary based upon the revenues generated between continuous and event work.

Income before income taxes for the waste management services segment were approximately $1.2 million in the third quarter of 2023 compared to $1.5 million in the third quarter of 2022.

Income before income taxes of the waste brokerage and management services business was approximately $1.2 million in the third quarter of 2023 compared to $1.4 million in the third quarter of 2022.

The decrease in income before income taxes was primarily attributable to a decrease in event work during the third quarter of 2023 compared to the third quarter of 2022.

Income before income taxes of the captive landfill operations were approximately $0.1 million in both the third quarter of 2023 and 2022.

The salt water injection wells incurred a loss before income taxes of less than $0.1 million in the third quarter of 2023 and 2022, respectively, primarily due to legal and professional costs incurred relating to Avalon’s appeal and mandamus processes.

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $10.3 million in the second quarter of 2023 compared to $8.8 million in the second quarter of 2022.

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 $4.0 million in the second quarter of 2023 compared to $3.6 million in the second quarter of 2022.

Net operating revenues of the golf and related operations segment were approximately $12.2 million in the third quarter of 2023 compared to $10.7 million in the third quarter of 2022.

Food, beverage and merchandise sales increased to approximately $4.6 million in the third quarter of 2023 compared to $4.1 million in the third quarter of 2022.

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 golf and related operation revenues were approximately $6.3 million in the second quarter of 2023 compared to $5.2 million in the second quarter of 2022.

Membership dues revenue was approximately $1.8 million in both the second quarter of 2023 and 2022.

Net operating revenues related to room rental was approximately $1.8 million in the second quarter of 2023 compared to $1.5 million in the second quarter of 2022.

Other net operating revenues related to the golf and related operations were approximately $7.6 million in the third quarter of 2023 compared to $6.6 million in the third quarter of 2022.

Membership dues revenue was approximately $1.8 million in both the third quarter of 2023 and 2022, respectively.

Net operating revenues related to room rental was approximately $2.5 million in the third quarter of 2023 compared to $2.2 million in the third quarter of 2022.

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 $1.2 million in the second quarter of 2023 compared to $0.9 million in the second quarter of 2022.

The increase is green fees and associated cart rentals were a result of both increased bookings and higher green fees compared to the prior period.

Other revenues consisting of athletic, fitness, salon and spa related activities were approximately $1.5 million in the second quarter of 2023 compared to $1.0 million in the second quarter of 2022.

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 $8.8 million in the second quarter of 2023 compared with $7.3 million in the second quarter of 2022.

Cost of food, beverage and merchandise was approximately $1.8 million in the second quarter of 2023 compared to $1.5 million in the second quarter of 2022.

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 45% of associated revenue in the second quarter of 2023 compared to 43% in the second quarter of 2022.

Golf and related operations operating costs increased to approximately $7.0 million in the second quarter of 2023 compared with $5.7 million in the second quarter of 2022.

The increase in operating costs between periods is primarily related to an increase in business operations along with higher employee wages paid per hour during the second quarter of 2023 compared to the second quarter of 2022.

The golf and related operations recorded income before income taxes of $0.4 million in the second quarter of 2023 compared with income before income taxes of $0.6 million in the second quarter of 2022.

The change between periods was primarily a result of higher employee related costs in the second quarter of 2023 and, in the second quarter of 2022.

Greens fees and associated cart rentals were approximately $1.8 million in the third quarter of 2023 compared to $1.6 million in the third quarter of 2022.

The increase was primarily due to an increase in cart rental rates during the period.

Other revenues consisting of athletic, fitness, salon and spa related activities were approximately $1.5 million in the third quarter of 2023 compared to $1.0 million in the third quarter of 2022.

The increase between periods was primarily due to an increase in salon and spa revenue.

Total cost of operations for the golf and related operations segment were $9.5 million in the third quarter of 2023 compared with $8.2 million in the third quarter of 2022.

Cost of food, beverage and merchandise was approximately $2.0 million in the third quarter of 2023 compared to $1.7 million in the third quarter of 2022.

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

The cost of food, beverage and merchandise sales was approximately 43% of associated revenue in the third quarter 2023 compared to 42% of associated revenue in both the third quarter of 2022.

Golf and related operations operating costs increased to approximately $7.5 million in the third quarter of 2023 compared with $6.5 million in the third quarter of 2022.

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 third quarter of 2023 compared to the third quarter of 2022.

The golf and related operations recorded income before income taxes of $1.2 million in both the third quarter of 2023 and 2022.

General Corporate Expenses

General corporate expenses were $0.9 million in both the second quarter of 2023 and 2022.

General corporate expenses were $1.0 million in the third quarter of 2023 compared to $1.1 million in the third quarter of 2022.

The decrease was attributable to lower legal and professional fees.

Interest Expense

Interest expense was approximately $0.5 million in both second quarter of 2023 compared to $0.3 million in the first quarter of 2022.

During the second quarter of 2023, the increase in interest expense was due to both the higher average debt outstanding and the increased weighted average interest rate on the associated borrowings.

During the three months ended June 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.16% and 5.00%, respectively.

Net Income (Loss)

Net loss attributable to Avalon Holdings Corporation common shareholders was $0.2 million in the second quarter of 2023 compared to net income attributable to Avalon Holdings Corporation common shareholders of $0.5 million in the second quarter of 2022.

Avalon recorded a state income tax provision in both the second quarter of 2023 and 2022, which was related entirely to the waste management and brokerage operations.

Interest expense was approximately $0.5 million in the third quarter of 2023 compared to $0.4 million in the third quarter of 2022.

During the third quarter of 2023, the increase in interest expense was due to both the higher average debt outstanding and the increased weighted average interest rate on the associated borrowings.

During the three months ended September 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.18% and 5.69%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $0.9 million in the third quarter of 2023 compared to net income attributable to Avalon Holdings Corporation common shareholders of $1.2 million in the third quarter of 2022.

Avalon recorded a state income tax provision in both the third quarter of 2023 and 2022, which was related entirely to the waste management and brokerage operations.

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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 2023 compared with the first six months of 2022

Performance in the first nine months of 2023 compared with the first nine months of 2022

Overall Performance

Net operating revenues increased to $39.0 million in the first six months of 2023 compared with $33.8 million in the first six months of 2022.

Net operating revenues of the waste management services segment were approximately $22.9 million in the first six months of 2023 compared to $20.0 million in the first six months of 2022.

The increase in net operating revenues of the waste management services segment was a result of an increase in event work projects partially offset by a decrease in continuous work during the first six months of 2023 compared to the first six months of 2022.

Net operating revenues of the golf and related operations segment were approximately $16.1 million in the first six months of 2023 compared to $13.8 million in the first six months of 2022.

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 2023 compared to the first six months of 2022.

Total cost of operations related to the waste management services segment increased to $18.6 million in the first six months of 2023 compared with $16.1 million in the first six months of 2022.

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 $14.7 million in the first six months of 2023 compared to $12.1 million in the first six months of 2022.

The increase in total golf and related operations costs between periods is primarily due to higher revenues from increased business operations and higher product costs.

Depreciation and amortization expense was approximately $1.9 million in the first six months of 2023 compared to $1.7 million in the first six months of 2022.

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 $5.0 million in the first six months of 2023 compared to $4.6 million in the first six months of 2022.

Increase is mainly attributed to increased incentive compensation for salesman of waste management services segment.

Interest expense was approximately $1.0 million in the first six months of 2023 compared to $0.6 million in the first six months of 2022 as a result of the higher average outstanding debt along with a higher weighted average interest rate on the outstanding borrowings.

During the six months ended June 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.13% and 5.00%, respectively.

Net loss attributable to Avalon Holdings Corporation common shareholders was $1.8 million, or $0.47 per share, in the first six months of 2023 compared with net income attributable to Avalon Holdings Corporation common shareholders of $.8 million, or $0.20 per share, in the first six months of 2022.

Net operating revenues increased to $62.9 million in the first nine months of 2023 compared with $59.5 million in the first nine months of 2022.

Net operating revenues of the waste management services segment were approximately $34.7 million in the first nine months of 2023 compared to $35.1 million in the first nine months of 2022.

The decrease in net operating revenues of the waste management services segment was a result of a decrease in event work projects during the first nine months of 2023 compared to the first nine months of 2022.

Net operating revenues of the golf and related operations segment were approximately $28.2 million in the first nine months of 2023 compared to $24.4 million in the first nine months of 2022.

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 nine months of 2023 compared to the first nine months of 2022.

Total cost of operations related to the waste management services segment increased to $27.9 million in the first nine months of 2023 compared with $28.2 million in the first nine months of 2022.

The decrease in the cost of operations between periods for the waste management services segment is primarily due to 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 $24.2 million in the first nine months of 2023 compared to $20.3 million in the first nine months of 2022.

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 $2.9 million in the first nine months of 2023 compared to $2.6 million in the first nine months of 2022.

The increase is due to a higher depreciable asset base primarily related to the renovation of The Avalon Field Club at New Castle and The Grand Resort.

Consolidated selling, general and administrative expenses were approximately $7.8 million in the first nine months of 2023 compared to $7.5 million in the first nine months of 2022.

The increase was primarily attributable to higher wages and discretionary employee bonuses paid during the period.

Interest expense was approximately $1.6 million in the first nine months of 2023 compared to $1.0 million in the first nine months of 2022.

During the first nine months of 2023, the increase in interest expense was due to both the higher average debt outstanding and the increased weighted average interest rate on the associated borrowings.

During the nine months ended September 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.15% and 5.27%, respectively.

Net loss attributable to Avalon Holdings Corporation common shareholders was $0.9 million, or $0.24 per share, in the first nine months of 2023 compared with net income attributable to Avalon Holdings Corporation common shareholders of $0.4 million, or $0.10 per share, in the first nine months of 2022.

Segment Performance

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Waste Management Services Segment

The net operating revenues of the waste management services segment increased to $23.0 million in the first six months of 2023 compared with $20.0 million in the first six months of 2022.

The net operating revenues of the waste disposal brokerage and management services business were approximately $21.3 million in the first six months of 2023 compared to $18.7 million in the first six months of 2022.

Continuous work of the waste disposal brokerage business decreased by approximately $0.4 million between periods.

Net operating revenues related to continuous work were approximately $11.7 million in the first six months of 2023 compared with $12.1 million in the first six months of 2022.

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

Event work net operating revenues related to multiple projects increased by approximately $3.0 million during first six months of 2023 when compared to first six months of 2022.

The net operating revenues of the waste management services segment decreased to $34.7 million in the first nine months of 2023 compared with $35.1 million in the first nine months of 2022.

The net operating revenues of the waste disposal brokerage and management services business were approximately $32.4 million in the first nine months of 2023 compared to $33.1 million in the first nine months of 2022.

Continuous work of the waste disposal brokerage business increased approximately $0.3 million between periods as a result of increased work from multiple customers.

Net operating revenues related to continuous work were approximately $18.9 million in the first nine months of 2023 compared with $18.6 million in the first nine months of 2022.

In addition, event work net operating revenues related to multiple projects decreased by approximately $1.0 million during first nine months of 2023 when compared to first nine months of 2022.

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 $9.6 million in the first six months of 2023 compared with $6.6 million in the first six months of 2022.

The net operating revenues of the captive landfill management operations were approximately $1.7 million in the first six months of 2023 compared to $1.3 million in the first six months of 2022.

Event work net operating revenues were approximately $13.5 million in the first nine months of 2023 compared with $14.5 million in the first nine months of 2022.

The net operating revenues of the captive landfill management operations were approximately $2.3 million in the first nine months of 2023 compared to $2.0 million in the first nine months of 2022.

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 $18.6 million in the first six months of 2023 compared with $16.1 million in the first six months of 2022.

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 19% in the first six months of 2023 compared to 20% in the first six months of 2022.

The decrease in the overall gross margin percentage was primarily attributable to the lower gross profit generated from event work projects during first six months of 2023.

Income before income taxes for the waste management services segment were approximately $1.8 million in the first six months of 2023 compared to $1.7 million in the first six months of 2022.

Income before income taxes of the waste brokerage and management services business was approximately $1.6 million in the first six months of 2023 compared to $1.7 million in the first six months of 2022.

The increased income before income taxes was primarily attributable to increased event work projects during the first six months of 2023 compared to the first six months of 2022.

Income before income taxes of the captive landfill operations were approximately $0.2 million for the first six months of 2023 and $0.1 million for the first six months of 2022.

During both the first six months of 2023 and 2022, 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 decreased to $27.9 million in the first nine months of 2023 compared with $28.2 million in the first nine months of 2022.

The overall gross margin percentage of the waste brokerage and management services business was approximately 20% in both the first nine months of 2023 and 2022.

Income before income taxes for the waste management services segment were approximately $3.0 million in the first nine months of 2023 compared to $3.1 million in the first nine months of 2022.

Income before income taxes of the waste brokerage and management services business was approximately $2.9 million in the first nine months of 2023 compared to $3.1 million in the first nine months of 2022.

The decreased income before income taxes was primarily attributable to the decrease in net operating revenues during the first nine months of 2023 compared to the first nine months of 2022.

Income before income taxes of the captive landfill operations were approximately $0.2 million in the first nine months of 2023 compared to $0.1 million in the first nine months of 2022.

During both the first nine months of 2023 and 2022, the salt water injection wells incurred a loss before income taxes of approximately $0.1, primarily due to legal and professional costs incurred relating to Avalon’s appeal and mandamus processes.

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $16.1 million in the first six months of 2023 compared to $13.8 million in the first six months of 2022.

Food, beverage and merchandise sales increased to approximately $6.0 million in the first six months of 2023 compared to $5.2 million in the first six months of 2022.

Net operating revenues of the golf and related operations segment were approximately $28.2 million in the first nine months of 2023 compared to $24.4 million in the first nine months of 2022.

Food, beverage and merchandise sales increased to approximately $10.6 million in the first nine months of 2023 compared to $9.3 million in the first nine months of 2022.

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 $10.0 million in the first six months of 2023 compared to $8.6 million in the first six months of 2022.

Membership dues revenue was approximately $3.7 million in the first six months of 2023 compared to $3.5 million in the first six months of 2022.

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 $2.6 million in the first six months of 2023 compared to $2.2 million in the first six months of 2022.

Other net operating revenues related to the golf and related operations were approximately $17.6 million in the first nine months of 2023 compared to $15.1 million in the first nine months of 2022.

Membership dues revenue was approximately $5.5 million in the first nine months of 2023 compared to $5.3 million in the first nine months of 2022.

The increase in membership dues revenue was attributable to an increase in membership dues rates partially offset by a slight decrease in the average number of members during the period.

Net operating revenues related to room rental was approximately $5.1 million in the first nine months of 2023 compared to $4.3 million in the first nine months of 2022.

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 $2.5 million in the first six months of 2023 compared to $1.9 million in the first six months of 2022.

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 $1.2 million in the first six months of 2023 and $1.0 million in the first six months of 2022.

Other revenues consisting of athletic, fitness, salon and spa related activities were approximately $4.0 million in the first nine months of 2023 compared to $2.9 million in the first nine months of 2022.

The increase between periods was primarily due to an increase in salon and spa revenue.

Greens fees and associated cart rentals were approximately $3.0 million in the first nine months of 2023 compared to $2.6 million in the first nine months of 2022.

The increase was primarily due to an increase in cart rental rates during the period.

Total cost of operations for the golf and related operations segment were $14.7 million in the first six months of 2023 compared with $12.1 million in the first six months of 2022.

Cost of food, beverage and merchandise was approximately $2.8 million in the first six months of 2023 compared to $2.3 million in the first six months of 2022.

Total cost of operations for the golf and related operations segment were $24.2 million in the first nine months of 2023 compared with $20.3 million in the first nine months of 2022.

Cost of food, beverage and merchandise was approximately $4.8 million in the first nine months of 2023 compared to $4.0 million in the first nine months of 2022.

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 47% of associated revenue in the first six months of 2023 compared to 43% in the first six months of 2022.

Golf and related operations operating costs increased to approximately $11.9 million in the first six months of 2023 compared with $9.8 million in the first six months of 2022.

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 2023 compared to the first six months of 2022.

The golf and related operations recorded a loss before income taxes of $0.9 million in the first six months of 2023 compared with income before income taxes of $.2 million in the first six months of 2022.

The change between periods was primarily a result of increased operational and employee related costs in the first six months of 2023 and, in the first six months of 2022.

The cost of food, beverage and merchandise sales was approximately 46% of associated revenue in the first nine months of 2023 compared to 43% in the first nine months of 2022.

Golf and related operations operating costs increased to approximately $19.3 million in the first nine months of 2023 compared with $16.3 million in the first nine months of 2022.

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 nine months of 2023 compared to the first nine months of 2022.

The golf and related operations recorded income before income taxes of $0.3 million in the first nine months of 2023 compared with income before income taxes of $1.0 million in the first nine months of 2022.

The change between periods was primarily a result of higher product and employee related costs in the first nine months of 2023 compared to the first nine months of 2022.

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

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General Corporate Expenses

General corporate expenses were $1.8 million in the first six months of 2023 compared to $1.9 million in the first six months of 2022.

In the first six months of 2022, certain discretionary employee bonuses were paid by the Company.

General corporate expenses were $2.8 million in the first nine months of 2023 compared to $3.0 million in the first nine months of 2022.

The decrease was attributable to lower legal and professional fees.

Interest Expense

Interest expense was approximately $1.0 million for the first six months in 2023 and $0.6 million in the first six months of 2022.

During first six months of 2023, the increase in interest expense due to the higher average outstanding debt and a higher weighted average interest rate on the outstanding borrowings.

During the six months ended June 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.13% and 5.00%, respectively.

Net loss attributable to Avalon Holdings Corporation common shareholders was $1.8 million in the first six months of 2023 compared to a net loss attributable to Avalon Holdings Corporation common shareholders of $0.8 million in the first six months of 2022.

Avalon recorded a state income tax provision in both the first six months of 2023 and 2022, which was related entirely to the waste management and brokerage operations.

Interest expense was approximately $1.6 million in the first nine months of 2023 compared to $1.0 million in the first nine months of 2022.

During the nine months ended September 30, 2023 and 2022, the weighted average interest rate on outstanding borrowings was 6.15% and 5.27%, respectively.

Net Income (loss)

Net loss attributable to Avalon Holdings Corporation common shareholders was $0.9 million in the first nine months of 2023 compared to net income attributable to Avalon Holdings Corporation common shareholders of $0.4 million in the first nine months of 2022.

Avalon recorded a state income tax provision in both the first nine months of 2023 and 2022, which was related entirely to the waste management and brokerage operations.

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

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.

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Unfavorable general economic conditions could adversely affect our business and financial results

Our operations are substantially affected by economic conditions, including inflationary pressures, which can impact consumer disposable income levels and spending habits.

Our operations are substantially affected by economic conditions, including inflation, which can impact consumer disposable income levels and spending habits.

Economic conditions can also be impacted by a variety of factors including epidemics, pandemics and actions taken by governments to manage economic matters, whether through initiatives intended to control wages, unemployment, inflation, taxation and other economic drivers.

78 unchanged sentences

The trial occurred in September and October 2021.

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

On December 19, 2022, the 11 th Appellate District Court denied the Company’s writ of mandamus action.

The decision was appealed to the Supreme Court of Ohio on January 30, 2023.

Briefings to the Supreme Court were completed in May 2023 and the company is awaiting a decision.

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

14 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 June 30, 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 September 30, 2023, Avalon has not attained its membership goals.

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

13 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