~~201~~72021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~[X]~~☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, ~~2017~~2021

~~[ ]~~☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from _______________ to ________________

Commission file number 1-14105

AVALON HOLDINGS CORPORATION

~~(Exact~~(Exact name of registrant as specified in its charter)


Ohio		34-1863889
~~Ohio~~		~~34-1863889~~
~~(State~~(State or other jurisdiction of incorporation or organization)		~~(I.R.S.~~(I.R.S. Employer Identification No.)

One American Way, Warren, Ohio		44484-5555
~~(Address~~(Address of principal executive offices)		~~(Zip~~(Zip Code)

~~Registrant~~’sRegistrant’s telephone number, including area code: (330) 856-8800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value	AWX	NYSE American

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to ~~fil~~efile such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X ☒ No __☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T ~~( 232.405~~(232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☑☒ No ☐

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☑☒ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑☒

The registrant had ~~3,191,100~~3,287,647 shares of its Class A Common Stock and ~~612,231~~611,784 shares of its Class B Common Stock outstanding as of November ~~3, 2017.~~5, 2021.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

INDEX

	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020 (Unaudited)	1

Condensed Consolidated Balance Sheets at September 30, ~~2017~~2021 and December 31, ~~2016~~2020 (Unaudited)	2

Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended September 30, 2021 and 2020 (Unaudited)	3

Condensed Consolidated ~~Statement o~~fStatements of Shareholders’ Equity for the Nine Months Ended September 30, ~~2017~~2021 and 2020 (Unaudited)	34

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020 (Unaudited)	4 5

Notes to Unaudited Condensed Consolidated Financial Statements ~~(Unaudited)~~	56

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1625

Item 3. Quantitative and Qualitative Disclosures about Market Risk	3039

Item 4. Controls and Procedures	3039


PART II. OTHER INFORMATION

Item 1. Legal Proceedings	40

~~PART II. OTHER~~ ~~INFORMATION~~

~~Item 1.~~ ~~Legal Proceedings~~	31

Item 2. Changes in Securities and Use of Proceeds	3140

Item 3. Defaults upon Senior Securities	3140

Item 4. Mine Safety Disclosures	3140

Item 5. Other Information	3140

Item 6. Exhibits and Reports on Form 8-K	3140

SIGNATURE	3241

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020

Net operating revenues:
Waste management services	$	11,444		$	9,326		$	31,279		$	29,547
Food, beverage and merchandise sales		3,984			2,851			8,608			5,247
Other golf and related operations		5,873			4,448			12,917			9,301
Total golf and related operations		9,857			7,299			21,525			14,548
Total net operating revenues		21,301			16,625			52,804			44,095

Costs and expenses:
Waste management services operating costs		9,385			7,393			25,055			23,473
Cost of food, beverage and merchandise		1,657			1,092			3,598			2,184
Golf and related operations operating costs		5,692			4,270			13,356			9,777
Depreciation and amortization expense		777			741			2,308			2,152
Selling, general and administrative expenses		2,743			2,110			7,559			6,269
Operating income		1,047			1,019			928			240

Other income (expense):
Interest expense		(290	)		(302	)		(878	)		(913	)
Gain on debt extinguishment		0			0			1,964			0
Other income, net		85			83			298			264
Income (loss) before income taxes		842			800			2,312			(409	)

Provision for income taxes		27			27			85			95
Net income (loss)		815			773			2,227			(504	)

Less net loss attributable to non-controlling interest in subsidiaries		(168	)		(8	)		(214	)		(37	)
Net income (loss) attributable to Avalon Holdings Corporation common shareholders	$	983		$	781		$	2,441		$	(467	)

Income (loss) per share attributable to Avalon Holdings Corporation common shareholders:
Basic net income (loss) per share	$	0.25		$	0.20		$	0.63		$	(0.12	)
Diluted net income (loss) per share	$	0.25		$	0.20		$	0.62		$	(0.12	)

Weighted average shares outstanding - basic		3,899			3,875			3,899			3,875
Weighted average shares outstanding - diluted		3,931			3,875			3,935			3,875

See accompanying notes to unaudited condensed consolidated financial statements.

	September 30,			December 31,
	2021			2020
Assets
Current Assets:
Cash and cash equivalents	$	4,106		$	4,210
Accounts receivable, less allowance for credit losses		9,919			8,744
Unbilled membership dues receivable		839			585
Inventories		1,154			910
Prepaid expenses		751			730
Other current assets		66			80
Total current assets		16,835			15,259

Property and equipment, net		52,625			51,299
Property and equipment under finance leases, net		5,644			5,735
Operating lease right-of-use assets		1,354			1,728
Restricted cash		2,092			3,885
Noncurrent deferred tax asset		8			8
Other assets, net		36			36
Total assets	$	78,594		$	77,950

Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	1,111		$	1,594
Current portion of obligations under finance leases		178			333
Current portion of obligations under operating leases		540			529
Accounts payable		8,973			9,097
Accrued payroll and other compensation		1,226			809
Accrued income taxes		97			43
Other accrued taxes		428			461
Deferred membership dues revenue		4,422			3,196
Other liabilities and accrued expenses		1,042			1,121
Total current liabilities		18,017			17,183

Long-term debt, net of current portion		19,663			21,941
Obligations under finance leases, net of current portion		444			560
Obligations under operating leases, net of current portion		814			1,199
Asset retirement obligation		100			100

Equity:
Avalon Holdings Corporation Shareholders' Equity:
Class A Common Stock, $.01 par value		33			33
Class B Common Stock, $.01 par value		6			6
Paid-in capital		59,200			59,196
Accumulated deficit		(19,701	)		(22,142	)
Total Avalon Holdings Corporation Shareholders' Equity		39,538			37,093
Non-controlling interest in subsidiaries		18			(126	)
Total equity		39,556			36,967
Total liabilities and equity	$	78,594		$	77,950

See accompanying notes to unaudited condensed consolidated financial statements.

	For the Three Months Ended September 30, 2021

	Common Stock													Total Avalon		Non-controlling
	Shares				Amount				Paid-in		Accumulated			Shareholders'		Interest in
	Class A		Class B		Class A		Class B		Capital		Deficit			Equity		Subsidiaries			Total

Balance at July 1, 2021		3,287,647		611,784	$	33	$	6	$	59,199	$	(20,684	)	$	38,554	$	(172	)	$	38,382

Stock options - compensation costs		-		-		0		0		1		0			1		0			1

Investment in subsidiary from accredited investor		-		-		0		0		0		0			0		358			358

Net income (loss)		-		-		0		0		0		983			983		(168	)		815

Balance at September 30, 2021		3,287,647		611,784	$	33	$	6	$	59,200	$	(19,701	)	$	39,538	$	18		$	39,556

	For the Three Months Ended September 30, 2020

	Common Stock													Total Avalon		Non-controlling
	Shares				Amount				Paid-in		Accumulated			Shareholders'		Interest in
	Class A		Class B		Class A		Class B		Capital		Deficit			Equity		Subsidiary			Total

Balance at July 1, 2020		3,263,647		611,784	$	33	$	6	$	59,150	$	(23,404	)	$	35,785	$	(95	)	$	35,690

Stock options - compensation costs		-		-		0		0		1		0			1		0			1

Net income (loss)		-		-		0		0		0		781			781		(8	)		773

Balance at September 30, 2020		3,263,647		611,784	$	33	$	6	$	59,151	$	(22,623	)	$	36,567	$	(103	)	$	36,464

See accompanying notes to unaudited condensed consolidated financial statements.

Condensed Consolidated ~~Statements~~Statement of ~~Operations~~Shareholders’ Equity (Unaudited)

	For the Nine Months Ended September 30, 2021

	Common Stock													Total Avalon		Non-controlling
	Shares				Amount				Paid-in		Accumulated			Shareholders'		Interest in
	Class A		Class B		Class A		Class B		Capital		Deficit			Equity		Subsidiaries			Total

Balance at January 1, 2021		3,287,647		611,784	$	33	$	6	$	59,196	$	(22,142	)	$	37,093	$	(126	)	$	36,967

Stock options - compensation costs		-		-		0		0		4		0			4		0			4

Investment in subsidiary from accredited investors		-		-		0		0		0		0			0		358			358

Net income (loss)		-		-		0		0		0		2,441			2,441		(214	)		2,227

Balance at September 30, 2021		3,287,647		611,784	$	33	$	6	$	59,200	$	(19,701	)	$	39,538	$	18		$	39,556

	For the Nine Months Ended September 30, 2020

	*Common Stock*													Total Avalon			*Non-controlling*
	*Shares*				*Amount*				*Paid-in*		*Accumulated*			*Shareholders'*			*Interest in*
	*Class A*		*Class B*		*Class A*		*Class B*		*Capital*		*Deficit*			*Equity*			*Subsidiary*			*Total*

Balance at January 1, 2020		3,263,647		611,784	$	33	$	6	$	59,147	$	(22,156	)	$	37,030		$	(66	)	$	36,964

Stock options - compensation costs		-		-		0		0		4		0			4			0			4

Net loss		-		-		0		0		0		(467	)		(467	)		(37	)		(504	)

Balance at September 30, 2020		3,263,647		611,784	$	33	$	6	$	59,151	$	(22,623	)	$	36,567		$	(103	)	$	36,464

See accompanying notes to unaudited condensed consolidated financial ~~statements~~statements..

	Nine Months Ended September 30,
	2021			2020

Cash flows from operating activities:
Net income (loss)	$	2,227		$	(504	)
Reconciliation of net income (loss) to cash provided by operating activities:
Depreciation and amortization expense		2,308			2,152
Amortization of debt issuance costs		31			31
Compensation costs - stock options		4			4
Provision for losses on accounts receivable		35			23
(Gain) loss from disposal of equipment		(3	)		3
Gain on debt extinguishment		(1,964	)		0
Change in operating assets and liabilities:
Accounts receivable		(1,210	)		3,307
Unbilled membership dues receivable		(254	)		(264	)
Inventories		(244	)		(221	)
Prepaid expenses		(21	)		(85	)
Other assets, net		14			3
Accounts payable		(418	)		(3,712	)
Accrued payroll and other compensation		417			(5	)
Accrued income taxes		54			(47	)
Other accrued taxes		(33	)		(72	)
Deferred membership dues revenue		1,226			888
Other liabilities and accrued expenses		(79	)		286
Net cash provided by operating activities		2,090			1,787

Cash flows from investing activities:
Capital expenditures		(3,249	)		(3,207	)
Proceeds from disposal of equipment		3			0
Net cash used in investing activities		(3,246	)		(3,207	)

Cash flows from financing activities:
Proceeds from subsidiary private placement offering		358			0
Proceeds under Paycheck Protection Program loans		0			2,765
Principal payments on term loan facilities		(828	)		(787	)
Principal payments on finance lease obligations		(271	)		(276	)
Net cash provided by (used in) financing activities		(741	)		1,702

Increase (decrease) in cash, cash equivalents and restricted cash		(1,897	)		282
Cash, cash equivalents and restricted cash at beginning of period		8,095			8,631
Cash, cash equivalents and restricted cash at end of period	$	6,198		$	8,913

Supplemental disclosure of cash flow information:

Significant non-cash operating and investing activities:
Capital expenditures included in accounts payable	$	294		$	87
Significant non-cash operating and financing activities:
Interest forgiven from Paycheck Protection Program loans	$	17		$	0
Significant non-cash investing and financing activities:
Operating lease right-of-use assets in exchange for lease obligations	$	67		$	266
Finance lease obligations incurred	$	0		$	391

Cash paid during the period for interest	$	851		$	873
Cash paid during the period for income taxes	$	31		$	142

See accompanying notes to unaudited condensed consolidated financial statements.

~~See accompanying notes to~~ ~~unaudited~~ ~~condensed consolidated financial statements.~~

~~Condensed~~ ~~Consolidated Statement of Shareholders’ Equity~~ ~~(Unaudited)~~

~~See accompanying notes to~~ ~~unaudited~~ ~~condensed consolidated financial statements.~~

Avalon Holdings Corporation (“Avalon” or the “Company”) was formed on April 30, 1998 as a subsidiary of American Waste Services, Inc. (“AWS”). On June 17, 1998, AWS distributed, as a special dividend, all of the outstanding shares of capital stock of Avalon to the holders of AWS common stock on a pro rata and corresponding basis.

Avalon provides waste management services to industrial, commercial, municipal and governmental customers in selected northeastern and midwestern U.S. markets, captive landfill management services and salt water injection well operations. In addition, Avalon owns Avalon ~~Clubs~~Resorts and ~~Resorts,~~Clubs, Inc. (“~~ACRI”~~ARCI”), which includes the operation and management of ~~three~~four golf courses and associated clubhouses, athletic and fitness centers, tennis courts, salon and spa services, dining and banquet facilities and a travel agency. ~~ACRI~~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.

The unaudited condensed consolidated ~~financial~~financial statements of Avalon and related notes included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted consistent with such rules and regulations. The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in Avalon’s ~~2016~~2020 Annual Report to Shareholders.

The unaudited condensed consolidated financial statements include the accounts of Avalon, its wholly owned subsidiaries and those companies in which Avalon has managerial control. All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, n~~ecessary~~necessary for a fair presentation of the financial position of Avalon as of September 30, ~~2017,~~ 2021, and the results of its operations and cash flows for the interim periods presented.

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

~~During~~The condensed consolidated financial statements presented herein reflect our current estimates and assumptions that affect the ~~quarter ended September 30, 2017, to comply with SEC Regulation S-X, Rule 5-03,~~reported amounts of assets and liabilities and related disclosures as of the ~~Company revised its presentation~~date of ~~net operating~~the financial statements and reported amounts of revenues and ~~associated operating~~ costs separately for all significant revenue types, consisting of our waste management services as well as food, beverage and merchandise sales and other golf operations, each within our golf and related operations segment in our unaudited Condensed Consolidated Statements of Operations. The Company determined that this revision is not material to any prior period and has reflected this revision inexpenses during the unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016. This presentation did not affect total revenue, total costs and expenses, operating income (loss), net income (loss) or net income (loss) attributable to Avalon Holdings Corporation common shareholders.reporting periods presented.

The coronavirus/COVID-19 pandemic (collectively referred to herein as "COVID-19") adversely impacted our financial position, results of operations, and cash flows during the nine months ended September 30, 2020. As a result of the government mandates being subsequently lifted, the COVID-19 pandemic had a limited impact on our results of operations during the nine months ended September 30, 2021. Due to the ongoing uncertainty of COVID-19, we cannot predict the future impact that the pandemic may have on our financial condition, results of operations or cash flows.

Note 3. ~~Recent Accounting Pronouncements~~ COVID-19 Coronavirus Pandemic

In ~~May 2014,~~ December 2019, a novel strain of coronavirus, COVID-19, emerged in Wuhan, Hubei Province, China. While initially concentrated in China, the outbreak spread to other countries and infections have been reported globally including in the United States. On March 11, 2020, the World Health Organization declared the COVID-19 viral disease a pandemic. As a result, the federal and state governmental bodies began taking unprecedented measures to try and control the spread of the virus including the issuance of temporary stay at home orders, the temporary closing of non-essential businesses and in-house dining and restrictions on gatherings and events.

During the nine months ended September 30, 2020, the various governmental orders that were issued to control the spread of COVID-19 adversely impacted our operations and related financial results. Our restaurants operated under government mandated occupancy restrictions for in-house dining. Food and beverages sales related to banquets and conferences were significantly lower as a result of restrictions placed on gatherings and events. In addition, in March 2020, the Company began experiencing a high level of room and event cancellations with some subsequent re-bookings for a future date.

Although the various government mandates impacting our business operations have currently been lifted, we may experience weakened demand in light of continued travel restrictions or warnings, consumer fears and reduced consumer discretionary spending and general economic uncertainty. The full extent of the impact of the COVID-19 pandemic on our operations and financial performance will depend on future developments, including the duration and spread of the pandemic and the impact of COVID-19 variants, all of which are uncertain and cannot be predicted at this time. Governmental bodies may continue to impose additional restrictions, which could include additional shutdowns, to stop the spread of infection. These additional restrictions would have a negative impact on our financial condition, results of operations and cash flows.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“~~ASU”~~ASU 2020-04”) ~~2014-09,~~establishing Accounting Standards Codification (“ASC”) Topic 848, ~~Revenue from Contracts with Customers~~Reference Rate Reform. (“ASU ~~2014-09”). ASU 2014-09 clarifies~~2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts to ease the ~~principles used to recognize revenue for all entities. ASU 2014-09 provides a unified five-step model to determine when and how revenue is recognized. The core principle is that a~~ company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The new standard replaces most of the existing revenue recognition standards in U.S. GAAP. In addition, in March 2016, the FASB issued ASU 2016-08, ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~~~, which clarifies how to apply revenue recognition guidance~~financial reporting burdens related to ~~whether an entity~~the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The guidance in ASU 2020-04 is ~~a principal or an agent.~~

~~The Company has~~ ~~reviewed the terms~~optional and ~~conditions contained its contracts with customers relating to our brokerage and management services and captive landfill management~~may be elected over time as reference rate reform activities for our waste management services segment. The Company is considering the terms and conditions of the contracts and the all-inclusive pricing for the service contained in those contracts in order to determine whether the waste management services provided to the customer meets the criteria to be accounted for under the series guidance. The Company also assessed whether the principal versus agent consideration would change how the Company presents revenue for these contracts. Under the contracts, the Company is primarily responsible for fulfilling the service and controls the service prior to transferring it to the customer. Based on our assessment, the Company is acting as the principal and primary obligor under the contracts, and should recognize revenue in the gross amount of consideration which it expects to be entitled in exchange for the service provided.

~~The Company also reviewed ASU 2014-09 for our golf and related operations segment relating to our annual membership contracts. Based on review of the contract~~s, we expect to recognize membership dues over the membership term. As a practical expedient, the Company applied this guidance to the whole portfolio of annual membership contracts as all contracts have similar characteristics. The Company reasonably expects that the effect on the financial statements of applying this guidance to the portfolio of all membership contracts does not differ from applying this guidance to each individual contract.

~~The Company will adopt the new revenue standard in its first quarter of 2018.~~ The Company expects to finalize our analysis in the fourth quarter. The Company plans to use the modified retrospective approach adoption method and, based on our analysis to date, does not believe there will be a material impact to the Company’s consolidated revenues upon adoption. However, the Company will present expanded disclosure in accordance with the requirements of the standard.occur. The Company is currently evaluating ~~those additional disclosures required as a result of~~ the adoption of this ~~guidance.~~

~~In November 2015,~~pronouncement and does not expect the ~~FASB issued ASU 2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes~~ ~~(“ASU 2015-17”), which simplifies the presentation of deferred income taxes by eliminating the need for entities~~adoption to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. This amendment is effective for annual periods beginning after December 15, 2016. During the first quarter of 2017, the Company adopted ASU 2015-17. The adoption of this standard did not have an impact on ~~Avalon’s~~the Company's financial position, results of operations or financial ~~statement~~ disclosures.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~. The ~~new standard establishes~~Company considers all highly liquid investments with a ~~right-of-use (“ROU”) model that requires a lessee~~maturity of three months or less when purchased to ~~record a ROU asset and a lease liability on the balance sheet~~be cash equivalents for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginningpurposes of the ~~earliest comparative period presented~~Condensed Consolidated Balance Sheets. Avalon maintains its cash balances in ~~the~~various financial ~~statements, with certain practical expedients available.~~institutions. These balances may, at times, exceed federal insured limits. Avalon has not experienced any losses in such accounts and believes it is ~~currently reviewing~~not exposed to any significant credit risk relating to its agreements for its golf carts, machinery and equipment for the landfill operations, furniture and fixtures for The Avalon Inn and office copiers under operating leases and evaluating the impact the adoption of this guidance will have on its financial position, results of operations, cash flows and related disclosures. Upon adoption, the Company expects that the ROU asset and the lease liability will be recognized in the balance sheets in amounts that will be material.

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting~~ (“ASU 2016-09”), which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of related amounts within the statement of cash flows. During the first quarter of 2017, the Company adopted ASU 2016-09. The adoption of this standard did not have a material impact on Avalon’s financial position, results of operations or financial statement disclosures.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments~~ (“ASU 2016-13”), which significantly changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life. ASU 2016-13 is effective January 1, 2020, with early adoption permitted January 1, 2019. The adoption of this standard is not expected to have a material impact on Avalon’s financial position, results of operations or financial statement disclosures.

~~In August 2016, the FASB issued ASU 2016-15,~~~~Classification of Certain Cash Receipts and Cash Payments~~ (“ASU 2016-15”), which is intended to reduce diversity in practice in how certain cash receipts and payments are presented and classified in the statement of cash flows. The standard provides guidance in a number of situations including, among others, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and distributions received from equity method investees. ASU 2016-15 also provides guidance for classifying cash receipts and payments that have aspects of more than one class of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The standard requires application using a retrospective transition method. The adoption of this standard is not expected to have a material impact on Avalon’s financial position, results of operations or financial statement disclosures.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows: Restricted Cash~~ ~~(“ASU 2016-18”), which requires entities to include restricted cash and restricted cash equivalent balances with~~ cash and cash ~~equivalent balances~~equivalents.

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in restricted cash on the ~~statement~~Condensed Consolidated Balance Sheets. Restricted cash consists of ~~cash flows. ASU 2016-18 will be effective January 1, 2018 and will impact the presentation of our statement of cash flows for the remaining~~ loan proceeds deposited into ~~our~~a project fund account ~~that are not utilized in 2017~~ to fund costs associated with the renovation and expansion of The Grand Resort and Avalon ~~Inn.~~Field Club at New Castle in accordance with the provisions of the loan and security agreement (See Note 10).

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

The Company identifies a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when obligations under the terms of the contract with our customer are satisfied; generally this occurs with the transfer of control of the good or service to the customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. The Company does not incur incremental costs to obtain contracts or costs to fulfill contracts that meet the criteria for capitalization. In addition, the Company does not have material significant payment terms as payment is received at or shortly after the point of sale.

Avalon’s waste management services provide hazardous and nonhazardous waste brokerage and management services, captive landfill management services and salt water injection well operations. Waste management services are provided to industrial, commercial, municipal and governmental customers primarily in selected northeastern and midwestern United States markets.

Avalon’s waste brokerage and management business assists customers with managing and disposing of wastes at approved treatment and disposal sites based upon a customer’s needs. Avalon provides a service to its customers whereby Avalon, arranges for, and accepts responsibility for the removal, transportation and disposal of waste on behalf of the customer.

Avalon’s landfill management business provides technical and operational services to customers owning captive disposal facilities. A captive disposal facility only disposes of waste generated by the owner of such facility. The Company provides turnkey services, including daily operations, facilities management and management reporting for its customers. Currently, Avalon manages one captive disposal facility located in Ohio. 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.

Avalon is a minority owner with managerial control over two salt water injection wells and its associated facility. Operations of the salt water injection wells have been suspended in accordance with the Chief of the Division of Oil and Gas Resources Management order (See Note 416). Due to the suspension of the salt water injection wells, there were 0 operating revenues for both the three and nine months ended September 30, 2021 and 2020.

For the three months ended September 30, 2021 and 2020, the net operating revenues related to waste management services represented approximately 54% and 56%, respectively, of Avalon’s total consolidated net operating revenues. For the nine months ended September 30, 2021 and 2020, the net operating revenues related to waste management services represented approximately 59% and 67%, respectively, of Avalon’s total consolidated net operating revenues. For the nine months ended September 30, 2021, one customer accounted for 12% of the waste management services segment’s net operating revenues to external customers and 7% of the consolidated net operating revenues. For the nine months ended September 30, 2020, 0one customer individually accounted for 10% or more of Avalon’s waste management services segment revenues.

For our waste management services contracts, the customer contracts with us to provide a series of distinct waste management services over time which integrates a set of tasks (i.e. removal, transportation and disposal of waste) into a single project. Avalon provides substantially the same service over time and the same method is used to measure the Company’s progress toward complete satisfaction of the performance obligation to transfer each distinct service in the series to the customer. The series of distinct waste management services, which are the same over time, meets the series provision criteria, and as such, the Company treats that series as a single performance obligation. The Company allocates the transaction price to the single performance obligation and recognizes revenue by applying a single measure of progress to that performance obligation. Avalon transfers control of the service over time and, therefore, satisfies the performance obligation and recognizes the revenue over time as the customer simultaneously receives and consumes the benefits provided by Avalon’s performance as we perform.

On December 20, ~~2016,~~ 2019, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the ~~“Term~~“New Term Loan Agreement”) with Laurel Ca~~pital~~Capital Corporation which ~~provides~~provided for a ~~$12.0~~$23.0 million term loan. At closing, ~~$9.1~~$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 ~~associated accrued interest with Home Savings Bank (formerly The Home Savings and Loan Company~~$0.3 million of ~~Youngstown, Ohio), dated May 21, 2015, as amended, and~~the proceeds were utilized to pay related transaction ~~costs associated with the Term Loan Agreement.~~costs. The ~~line of credit agreement with Home Savings Bank was terminated in conjunction with the repayment. Remaining~~remaining proceeds of ~~$2.9~~approximately $7.2 million ~~under the Term Loan Agreement~~ were deposited ininto a project fund account for which those proceeds are required to fund future costs of renovating and expanding both The Grand Resort and Avalon ~~Inn.~~Field Club at New Castle. At September 30, ~~2017~~ 2021 and December 31, ~~2016, the remaining~~2020, loan proceeds of ~~$2.8~~$2.1 million and ~~$2.9~~$3.9 million, respectively, are presented in the Condensed Consolidated Balance Sheets as “Restricted cash.” The then existing term loan and commercial mortgage agreements were terminated in conjunction with the New Term Loan Agreement.

The ~~$12.0 million term loan amount~~New Term Loan Agreement is payable in 119 equal monthly installments of principal and interest, based on a fifteen (15) year maturity schedule which commenced on January 20, ~~2017. The Term Loan Agreement matures on December 20, 2026 at which time the~~2020 followed by one final balloon payment ~~equal to the~~of all remaining ~~outstanding~~ principal, interest and fees ~~are due.~~ due on the maturity date of December 20, 2029. Borrowings under the New Term Loan Agreement bear interest at a fixed rate of ~~5.35%~~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) ~~5.35%~~5.00% per annum or (b) the sum of the ~~Index Rate~~five year treasury rate on the date two ~~(2)~~ (2) business days prior to the reset date ~~and 3.95%~~plus 3.60%, provided that the applicable rate shall in no event exceed ~~7.50%~~7.35% per annum.

Avalon has the right to prepay the amount outstanding under the New Term Loan Agreement, in whole or in part, at any time upon payment of the principal amount of the loan to be prepaid plus accrued unpaid interest thereon to the prepayment date, plus an applicable prepayment penalty. The prepayment penalty, expressed as a percentage of the principal of the loan being prepaid, is five percent (5%) on any prepayment in the firstfive years; four percent (4%) on any prepayment in the sixth and seventh year; three percent (3%) on any prepayment in the eighth and ninth year; and two percent (2%) on any prepayment in the tenth year.

Borrowings under the New Term Loan Agreement are secured by certain real property and related business assets as defined in the ~~Term Loan Agreement.~~agreement. The New Term Loan Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year. The New Term Loan also contains ~~certain financial and~~ other nonfinancial covenants, customary representations, warranties and events of default. Avalon was in compliance with the New Term Loan Agreement covenants at September 30, ~~2017~~ 2021 and December 31, ~~2016.~~2020.

The Company ~~incurred~~capitalized approximately ~~$189,000~~$0.4 million of debt issuance costs in connection with the New Term Loan Agreement. ~~These debt issuance~~The Company is amortizing these costs ~~were capitalized and will be amortized~~ over the life of the New Term Loan Agreement. In accordance with ASU ~~2015-03,~~2015-03, Simplifying the Presentation of Debt Issuance Costs, these costs are presented in the Condensed Consolidated Balance Sheets as a direct reduction from the carrying amount of the term loan liability.

On May 31, 2018, Avalon entered into a ~~new~~ business loan agreement with Premier Bank (formerly Home Savings ~~Bank~~Bank), (the “Line of C~~redit~~Credit Agreement”) which provides for a line of credit of up to ~~$4.0 million with an original maturity date of May 31, 2017.~~$5.0 million. On ~~April 25, 2017,~~August 17, 2021, the Company amended the Line of Credit Agreement ~~was amended~~ to ~~increase the available line of credit from $4.0 million to $5.0 million and~~ extend the maturity date to ~~May~~July 31, ~~2019. The amendment also has the option to request a one year extension of maturity in 2018 based on certain terms and conditions.~~ 2023. Under the Line of Credit Agreement, borrowings in excess of $1.0 million are subject to a borrowing base which is calculated based off a specific level of eligible accounts receivable of the waste management business as defined in the agreement. No

NaN amounts were drawn under the Line of Credit Agreement at September 30, ~~2017~~ 2021 and December 31, ~~2016.~~

2020. Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .25%. At September 30, ~~2017,~~ 2021, the interest rate on the Line of Credit Agreement was ~~4.50%~~3.50%.

Borrowings under the Line of Credit Agreement are secured by certain business assets of the Company including accounts receivable, inventory and equipment. The Line of Credit Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year. The Line of Credit Agreement also contains ~~certain~~other nonfinancial covenants, customary representations, warranties and events of default. Avalon was in compliance with the Line of Credit ~~Agreement~~Agreements covenants at September 30, ~~2017~~ 2021 and December 31, ~~2016.~~2020.

The Coronavirus Aid, Relief, and Economic Security Act, or (“CARES”) Act, was signed into law on March 27, 2020, and provides over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration to temporarily guarantee loans under a new loan program called the Paycheck Protection Program (the “Program”). The Program provides for 100% federally guaranteed loans to small businesses to allow employers to keep workers employed and maintain payroll during the pandemic and economic downturn. Under the Program, qualified companies are eligible for a loan in an amount equal to the lesser of $10 million or 2.5 times the business’s average monthly payroll. Collateral or guarantor support is not required for the loan.

Under the Program, the borrower is eligible for loan forgiveness up to the amount the borrower spends on certain eligible costs during, at the borrowers election, either an 8 or 24 week covered period beginning on the date the proceeds were received on the loan. Eligible costs under the Program include payroll costs, interest on mortgage obligations incurred before the covered period, rent on leasing agreements and utility services. The amount of loan forgiveness is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. Under the Program, proceeds that are not forgiven convert to a loan bearing interest at a fixed rate of 1% payable, at the borrowers election, in either 18 or 54 equal monthly installments commencing 10 months after the end of their covered period.

In the second quarter of 2020, certain wholly-owned subsidiaries of Avalon entered into agreements and received a total of approximately $2.8 million in loans under the Program. The Company utilized the entire balance of the loan proceeds in accordance with the Program’s guidelines using the 24 week loan forgiveness period and subsequently applied for forgiveness with the Small Business Administration.

The Company accounted for the loans in accordance with ASC 470 – Debt. Under ASC 470, the debt will be derecognized when the debt is extinguished in accordance with the guidance in ASC 405-20,Liabilities: Extinguishments of Liabilities. Debt forgiven in accordance with the Program is recognized in the Condensed Consolidated Statements of Operations as a gain on debt extinguishment.

During the ~~three~~fourth quarter of 2020, approximately $0.8 million of the loans and ~~nine~~$4,000 of associated interest were forgiven by the Small Business Administration. During the first quarter of 2021, approximately $1.1 million of the loans and $8,000 of associated interest were forgiven by the Small Business Administration and, during the second quarter of 2021, the remaining $0.9 million of the loans and $9,000 of associated interest were forgiven by the Small Business Administration.

During the three months ended September 30, ~~2017,~~2021 and 2020, the weighted average interest rate on outstanding borrowings was ~~5.35%.~~5.00% and 4.57%, respectively. During the ~~three and~~ nine months ended September 30, ~~2016,~~2021 and 2020, the weighted average interest rate on outstanding borrowings was ~~3.75%.~~4.91% and 4.74%, respectively.

Obligations under thethe Company’s debt agreements at September 30, ~~2017~~ 2021 and December 31, ~~2016~~ 2020 consist of the following (in thousands):

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

During the three ~~month periods~~ months ended September 30, ~~2017~~ 2021 and ~~2016,~~2020, net income attributable to Avalon Holdings Corporation shareholders was ~~$0.5~~$1.0 million and $0.8 million, respectively. During the nine ~~month period~~ months ended September 30, ~~2017,~~2021, net income attributable to Avalon Holdings Corporation shareholders was $2.4 million compared to a net loss attributable to Avalon Holdings Corporation shareholders ~~was $0.3 million compared with net income attributable to Avalon Holdings Corporation shareholders~~ of ~~$0.3~~$0.5 million during the nine ~~month period~~ months ended September 30, ~~2016.~~ 2020. Avalon recorded a state income tax provision in both the three and nine month periods ended September 30, ~~2017~~ 2021 and ~~2016,~~2020, which was related entirely to the waste management and brokerage operations. ~~The effective state tax rate related to the waste management and brokerage operations was approximately 7% in both the three and nine month periods ended September 30, 2017 and 2016.~~ 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. 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.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss carryforwards generated in taxable years beginning after December 31, 2017, to offset 100% of taxable income for taxable years beginning before January 1, 2021, and 80% of taxable income in taxable years beginning after December 31, 2020. In addition, the CARES Act allows net operating losses incurred in taxable years beginning after December 31, 2017, and before January 1, 2021, to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The adoption of these provisions did not have a material impact on the Company’s financial position or results of operations.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the “Appropriations Act”) was enacted in response to the COVID-19 pandemic. The Appropriations Act, among other things, temporarily extends through December 31, 2025, certain expiring tax provisions, including look-through treatment of payments of dividends, interest, rents, and royalties received or accrued from related controlled foreign corporations. Additionally, the Appropriations Act enacts new provisions and extends certain provisions originated within the CARES Act, including an extension of time for repayment of the deferred portion of employees’ payroll tax through December 31, 2021, and a temporary allowance for full deduction of certain business meals. Avalon has elected not to defer the employees’ portion of payroll tax. Management is currently evaluating the other provisions of the Appropriations Act, but at present time does not expect that the other provisions of the Appropriations Act would result in a material tax or cash benefit.

On March 14, 2019, the Board of Directors of Avalon approved the renewal of the expired 2009 Long-term Incentive Plan (the “2009 Plan”), which was set to expire in October of 2019. The 2009 Plan provides for the granting of options which are intended to be non-qualified stock options (“NQSO’s”) for federal income tax purposes except for those options designated as incentive stock options (“ISO’s”) which qualify under Section 422 of the Internal Revenue Code.

The name of the plan was changed to the 2019 Long-term Incentive Plan (“the Option Plan”) to reflect the year of approval. 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. Shares of stock covered by options granted pursuant to the 2009 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 ~~2009~~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. ~~Under~~

NQSO’s may be granted with an exercise price which is not less than 100% of the ~~Plan, 1,300,000~~fair market value of the Class A Common Stock on the date of grant. Options designated as ISO’s shall not be less than 110% of fair market value for employees who are ten percent shareholders and not less than 100% of fair market value for other employees. The Board of Directors may, from time to time in its discretion, grant options to one or more outside directors, subject to such terms and conditions as the Board of Directors may determine, provided that such terms and conditions are not inconsistent with other applicable provisions of the Option Plan. Options shall have a term of no longer than ten years from the date of grant; except that for an option designated as an ISO which is granted to a ten percent shareholder, the option shall have a term no longer than five years.

The stock options, vest ratably over a five year period and have a contractual term of ten years from the date of grant. At the end of each contractual vesting period, the share price of the Avalon common stock, traded on a public stock exchange (NYSE Amex), must reach a predetermined price within three years following such contractual vesting period before the stock options are exercisable (See table below). If the Avalon common stock price does not reach the predetermined price, the stock options will either be cancelled or the period will be extended at the discretion of the Board of Directors.

The grant-date fair values of ~~these~~the stock option awards were estimated using the Monte Carlo Simulation. The Monte Carlo Simulation was selected to determine the fair value because it incorporates six minimum considerations; 1)1) the exercise price of the option, 2)2) the expected term of the option, taking into account both the contractual term of the option, the effects of employees’ expected exercise and post-vesting employment termination behavior, as well as the possibility of change in control events during the contractual term of the option agreements, 3)3) the current fair value of the underlying equity, 4)4) the expected volatility of the value of the underlying share for the expected term of the option, 5)5) the expected dividends on the underlying share for the expected term of the option and 6)6) the risk-free interest rate(s) for the expected term of the option.

The grant date fair value of the underlying equity was determined to be equal to ~~Avalon~~’sAvalon’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~~’scompany’s stock. Due to the fact that the Company has had no historical exercising activity, prior to 2018,the simplified method iswas applied. Because of the nature of the vesting described above, the options are separated into five blocks, with each block having its own vesting period and expected term.

TheFor stock option awards, the expected volatility was based on the observed historical volatility of Avalon common ~~stock for a period prior to the grant date.~~stock. There were no0 expected dividends and the risk-free interest rate was based on yield data for U. S. Treasury securities over a period consistent with the expected term.

In March 2021, unexercised options to purchase 190,000 shares previously granted under the 2009 Plan expired as the options were not exercised within ten years after the grant date. At September 30, 2021, options to purchase 90,000 shares have been granted under the 2009 Plan. Of these, 36,000 shares have been exercised, and options for 54,000 shares remain outstanding.

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

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

1) Contract Vesting Term: The stock options vest ratably over a five year period.

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

Compensation costs werewere approximately ~~$3,000 and $6,000~~$1,000 for both the three ~~months~~ month periods ended September 30, ~~2017~~ 2021 and ~~2016, respectively,~~2020, and ~~$10,000 and $22,000~~$4,000 for both the nine ~~months~~ month periods ended September 30, ~~2017~~ 2021 and ~~2016, respectively,~~2020, based upon the estimated grant date fair value calculations. As of September 30, ~~2017,~~ 2021, there was approximately ~~$32,000~~$8,000 of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of ~~7.08~~2.67 years.

In the ordinary course of conducting its business, Avalon becomes involved in lawsuits, administrative proceedings and governmental investigations, including those related to environmental matters. Some of these proceedings may result in fines, penalties or judgments being assessed against Avalon which, from time to time, may have an impact on its business and financial condition. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty, Avalon does not believe that any uninsured ultimate liabilities, fines or penalties resulting from such pending proceedings, individually or in the aggregate, will have a material adverse effect on its liquidity, financial position or results of operations (See Note ~~13)~~16).

In determining the segment information, Avalon considered its operating and management structure and the types of information subject to regular review by its “chief operating decision maker.” Using the criteria of FASB ~~Accounting Standard Codification (“ASC”)~~ ASC 280 Segment Reporting, Avalon’s reportable segments include waste management services and golf and related operations. Avalon accounts for intersegment net operating revenues as if the transactions were to third parties. The segment disclosures are presented on this basis for all periods presented.

~~Avalon~~’sAvalon’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~~’sAvalon’s golf and related operations segment consists of ~~three~~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. Revenue related to annual membership dues are recognized proportionately over the membership period. The unrecognized or deferred revenues relating to membership dues at September 30, 2017 and December 31, 2016 were $3.3 million and $2.7 million, respectively.

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

For the nine months ended September 30, ~~2017,~~ 2021, one customer accounted for ~~10%~~12% of the waste management services segment’s net operating revenues to external customers and 7% of the consolidated net operating revenues. For the nine months ended September 30, ~~2016, no~~ 2020, 0 one customer accounted for 10% of Avalon’s consolidated or reportable segment net operating revenues.

The accounting policies of the segments are consistent with those described for the consolidated financial statements in the summary of significant accounting policies included in Avalon’s ~~2016~~2020 Annual Report to Shareholders. Avalon measures segment profit for internal reporting purposes as income (loss) before income taxes.

Business segment information including the reconciliation of segment income before taxes to income (loss) before taxes is as follows (in thousands):

In comparing ~~the~~ total assets at September 30, ~~2017~~ 2021 with those at December 31, ~~2016,~~ 2020, the increase in the total assets of the waste management services segment of ~~$0.9~~approximately $0.7 million iswas primarily a result of an increase in accounts receivable and, to a lesser extent, an increase in intersegment transactions, which are eliminated in consolidation, partially offset by a decrease in accounts receivable and to a lesser extent a lower net book value of property and equipment as a result of current year depreciation on the salt water injection wells.consolidation. The increase in total assets of the golf and related operations segment of ~~$1.3~~$1.6 million iswas primarily due to ~~golf course maintenance equipment acquired under capital lease agreements, capital expenditures related to the continued renovation and expansion of The Avalon Inn and~~ an increase in accounts receivable and capital expenditures related to ~~membership dues~~The Grand Resort and Avalon Field Club at New Castle partially offset by current year depreciation on property and equipment. The decrease in corporate total assets of ~~$2.0~~approximately $2.6 million iswas primarily due to a decrease in restricted cash utilized for the expansion of The Grand Resort and Avalon Field Club at New Castle and intersegment transactions, which are eliminated in ~~consolidation, and to a lesser extent a decrease in cash and cash equivalents utilized for the renovation and expansion of The Avalon Inn and required monthly payments made on the term loan facility.~~consolidation.

In August 2013, Avalon created a new Ohio limited liability company, AWMS Holdings, LLC, to act as a holding company to form and own a series of wholly owned subsidiaries that will own and operate Class II salt water injection wells and facilities (together the “facilities”). AWMS Holdings, LLC, offers investment opportunities to accredited investors by selling membership units of AWMS Holdings, LLC through private placement offerings. The monies received from these offerings, along with internally contributed capital, are used to construct the facilities necessary for the operation of salt water injection wells. AWMS Water Solutions, LLC, a wholly owned subsidiary of Avalon, manages all the salt water injection well operations, including the marketing and sales function and all decisions regarding the well operations for a percentage of the gross revenues.

In 2014 and 2013, Avalon, through a wholly owned subsidiary made capital contributions totaling approximately $3.4 million, which included cash and certain well assets, including the permits, in exchange for membership units of AWMS Holdings, LLC. Through a private placement offering for the purchase of membership units, AWMS Holdings, LLC raised approximately $3.8 million from accredited investors in 2014 and 2013. Management and outside directors of Avalon, who qualified as accredited investors, invested approximately $1.0 million in AWMS Holdings, LLC.

As a result of a private placement offering, Avalon is not the majority owner of AWMS Holdings, LLC. At September 30, ~~2017~~ 2021 and December 31, ~~2016,~~ 2020, respectively, Avalon owns approximately 47% of AWMS Holdings, LLC. In accordance with ASC ~~810-10~~810-10 and related amendment, due to the managerial control of American Water ~~Management Services,~~Solutions, LLC, AWMS Holdings, LLC is a variable interest entity, and the financial statements of AWMS Holdings, LLC and subsidiaries are included in Avalon’s consolidated financial statements. ASC ~~810-10~~810-10 requires noncontrolling interests to be reported as a separate component of equity. The amount of net loss attributable to the noncontrolling interest is recorded in “net loss attributable to noncontrolling interest” in our Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2021, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $144,000 and $190,000, respectively. During the three and nine months ended September 30, 2020, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $8,000 and $37,000, respectively.

In March 2021, Avalon created a new Ohio limited liability company, Avalon Med Spa, LLC. Avalon Med Spa, LLC provides elective appearance improving nonsurgical aesthetic services under the supervision of a licensed physician. Avalon Med Spa, LLC, offers investment opportunities to accredited investors by selling membership units through private placement offerings. The monies received from these offerings, along with internally contributed capital, are used to purchase medical spa equipment and construct the facilities necessary for operation. Avalon operates and manages all decisions regarding the medical spa operations for a percentage of the gross revenues.

In 2021, Avalon made a capital contributions totaling $359,000, which included cash and certain equipment, in exchange for membership units of Avalon Med Spa, LLC. Through a private placement offering for the purchase of membership units, Avalon Med Spa, LLC raised $358,000 from accredited investors in August 2021. An outside director of Avalon, who qualified as an accredited investor, invested less than 10% of the total investment in Avalon Med Spa, LLC. Avalon is the majority owner of Avalon Med Spa, LLC owning 50.1% of the company.

In accordance with ASC 810-10 and related amendment, Avalon Med Spa, LLC is a variable interest entity, and the financial statements of Avalon Med Spa, LLC are included in Avalon’s consolidated financial statements. ASC 810-10 requires noncontrolling interests to be reported as a separate component of equity. The amount of net loss attributable to the noncontrolling interest is recorded in “net loss attributable to noncontrolling interest” in our Condensed Consolidated Statements of Operations. During the three and nine months ended September 30, 2021, net loss attributable to the noncontrolling interest in Avalon Med Spa, LLC was $24,000.

As a result of a seismic event with a magnitude of 2.1 occurring on August 31, 2014, the Chief of the Division of Oil and Gas Resources Management (“Chief” or “Division”) issued Orders on September 3, 2014 to immediately suspend all operations of ~~both of Avalon~~’sAvalon’s two saltwater injection wells until the Division could further evaluate the wells. The Orders were based on the findings that the two saltwater injection wells were located in close proximity to an area of known seismic activity and ~~also~~ that the saltwater injection wells pose a risk of increasing or creating seismic activity. The two saltwater injection wells are located approximately 112 feet apart. Based on these findings, the Chief ordered the immediate suspension of all operations of the two saltwater injection wells, until the Division could further evaluate the wells.

On September 5, 2014, Avalon submitted the information required by the ~~Chief~~’sChief’s Order in regards to its AWMS #1 injection well, and the Chief lifted the suspension for that well on September 18, 2014. On September 19, 2014, Avalon submitted information and a written plan required by the Chief’s Order proposing the establishment of certain operations and management controls on injections atfor the AWMS #2 injection well. To date, the Division has not responded to that plan despite Avalon’s requests for feedback.

On October 2, 2014, Avalon filed an appeal with the Ohio Oil and Gas Commission (the “Commission”) disputing the basis for suspending operations of AWMS #2 and also the authority of the Chief to immediately suspend such operations. On March 11, 2015, an appeal hearing was held. The Chief stated during the hearing that the suspension order is ~~only~~ temporary, and ~~that~~ he expects that AWMS #2 will be allowed to ~~inject~~resume operations once the ~~state~~’sstate’s final policymaking is complete.

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

Avalon appealed that decision ~~in September 2015 to the Franklin County Court of Common Pleas, but that appeal was dismissed on a filing technicality. Avalon appealed the dismissal to the Ohio 10~~^th ~~Circuit Court of Appeals, which found the Commission erred in its filing of their decision. Following the Commission’s proper notice, Avalon appealed again~~ to the Franklin County Court of Common Pleas (the “Court”).

On , and on November 1, 2016 an appeal hearing was held in that Court. On December 23, 2016, the Court issued its Decision and Order in Avalon’s favor, and vacated the Commission’s decision. The Court found that the Division’s suspension and refusal to work with the Company ~~for~~ over the 26 ~~months~~ month period was arbitrary and not in accordance with reason. Subsequent to the ruling, and in accordance with the Court’s Decision and Order, both Avalon and the Division submitted their proposed restart plans to the Court. Avalon’s plan sets forth both the initial volumes and pressures and increases in volume and pressure while continuously monitoring seismicity and addressing the concerns of public health and safety.

On February 21, 2017, the Court issued its Final Decision and Order. The Court’s Final Decision and Order ~~sets~~set forth conditions for restarting the ~~restarting of~~ AWMS #2 salt water injection well in accordance with the proposed restart plans filed by Avalon with minor revisions. ~~While the Company was making preparations for restarting the well and opening the facility,~~ On February 22, 2017, the Division appealed the Final Decision and Order and filed a Motion to Stay the Court ~~Order on February 22, 2017.~~Order. The Motion to Stay was granted by the Ohio 10^th ~~Circuit~~District Court of Appeals on March 21, 2017.

On September 14, 2017, an appeal hearing was ~~held.~~held in the Ohio 10^th District Court of Appeals and on July 31, 2018 a decision was issued on the appeal. The decision reinstated the previous Ohio Oil and Gas Commission decision in this matter.

On September 12, 2018, the Company appealed the Ohio 10^th District Court of Appeals decision to the Supreme Court of Ohio. On November 21, 2018, the Company received notice from the Supreme Court of Ohio that the court would not accept for review the Company’s appeal of the Ohio 10^th District Court of Appeals decision on the Division of Oil and Gas Resources Management’s appeal of the Franklin County Court of Common Pleas February 21, 2017 entry allowing restart of the Company’s AWMS Water Solutions, LLC #2 salt water injection well.

On April 5, 2019, Avalon filed with the Oil and Gas Commission a motion to vacate its prior decisions in this matter. The Oil and Gas Commission scheduled a hearing on this motion for August 13, 2019. Before the hearing began, and in response to the Division’s motion to dismiss the Company’s motion to vacate, the Commission dismissed the matter. The Company appealed that decision to the Franklin County Court of Common Pleas. In April 2020, the Division’s motion to dismiss and the Company’s opposition were reviewed by the Court. The Company is currently awaiting judgment from the ~~court. In~~Court.

Concurrently with the ~~event~~filing of the ~~suspension order is lifted, Avalon will make preparations for restarting~~appeal with the Franklin County Court of Common Pleas, the Company filed a writ of mandamus in the 10^th District Court of Appeals on August 30, 2019 to compel the chief of the Division to issue restart orders, or alternative orders that would allow the Company to either restart the AWMS #2well, or appeal said orders to the Oil and ~~opening the facility~~Gas Commission in accordance with Ohio Law. On October 6, 2020 and in response to a motion from the ~~restart plans. In~~Division, the ~~event that the temporary suspension is not lifted by the Ohio 10~~^th ~~Circuit~~ Court dismissed this complaint for writ of ~~Appeals, Avalon will continue to appeal until a favorable ruling lifting the temporary suspension is received.~~mandamus.

In addition, on August 26, 2016, Avalon filed a complaint in the 11^th Appellate District Court in Trumbull County, Ohio for a Peremptory Writ of Mandamus to compel the Director of the Ohio Department of Natural Resources (“ODNR”) to initiate appropriations procedures to determine damages from the illegal regulatory taking of the Company’s property, or issue an alternative remedy at law. ~~There is currently no implemented state-wide policy on induced seismicity and The ODNR has refused to communicate with the Company regarding the status and requirements of any policymaking.~~ The Company believes that the actions, and lack of responsible actions, by ~~ODNR, which were triggered by a seismic event that presented no hazard or risk to any individual or to~~ the ~~environment,~~ODNR is a clear violation of the Company’s property rights and a violation of the Fifth and Fourteenth Amendments to the U.S. Constitution; Article I, Section 19 of the Ohio Constitution; and Ohio Revised Code Chapter 163.

On ~~September 26, 2016,~~March 18, 2019, Avalon received notice that the ~~ODNR filed a motion~~11^th Appellate District Court in Trumbull County, Ohio issued summary judgment in favor of the Ohio Department of Natural Resources in the writ of mandamus action that resulted from the suspension order of the Company’s salt water injection well. The decision was appealed to ~~dismiss Avalon’s Writ~~the Supreme Court of ~~Mandamus complaint. The Company intends to vigorously pursue the Complaint and obtain due process and fair compensation. Discovery has been initiated~~Ohio on April 5, 2019. Oral arguments in the case ~~but no hearing date has been set.~~occurred on April 7, 2020. On September 23, 2020, the Supreme Court of Ohio ruled in favor of the Company. The Supreme Court of Ohio reversed the decision of the 11^th Appellate District Court and remanded the case back to that court for a trial on the merits. The trial occurred in September and October 2021. The Company is currently awaiting judgment from the 11^th Appellate District Court.

~~At December 31, 2016,~~ ~~in accordance with FASB ASC 360-10-35,~~ ~~Property, Plant~~On May 24, 2021, the Company received Chief’s Orders from the Division vacating the September 3, 2014 suspension orders for AWMS #2 and ~~Equipment – Overall – Subsequent Measurement~~ ~~(“ASC 360-10-35”), Avalon assessed~~setting conditions for restart of that well. Among these conditions was a limit placed on the ~~recoverability~~seismicity within three miles of the ~~carrying values~~well. Under the Order, if a seismic event with a magnitude 2.1 or above occurs, the well must cease operations for an indefinite period of time until concurrence for subsequent restart is received from the ~~salt water injection wells based on~~Division. The Company appealed the ~~Chief of~~May 2021 Chief’s Order to the ~~Division of~~Ohio Oil and Gas ~~Resources Management’s decision~~Commission, seeking reasonable operating conditions that will allow the facility to ~~temporarily suspend operations of the wells. Avalon estimated future cash flows directly associated with~~operate profitably while protecting human health and ~~which are~~property. A hearing in this matter is expected ~~to arise as a direct result of the wells once the temporary suspension is lifted. The assumptions used by management~~ in developing the estimates of future cash flows were based on current market conditions and comparable prior periods while in operation. Based on the estimated undiscounted sum of the future cash flows, the net book value of the property, plant and equipment relating to the wells of approximately $4.3 million at December 31, 2016 was recoverable in less than the estimated remaining useful life of those assets. There were no changes to this assessment at September 30, 2017.

Management continues to consider whether indicators of impairment are present and tests for recoverability, as necessary, in accordance with ASC 360-10-15. There can be no guarantee that the salt water injection wells will resume operations. If management concludes that the suspension is other than temporary and the carrying amount of the salt water injection wells are not recoverable, Avalon may reco~~rd an impairment charge up to $3.8 million, the carrying value of the salt water injection wells at September 30, 2017.~~early 2022.

~~Item~~ITEM 2. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information which management believes is relevant to an assessment and understanding of the operations and financial ~~conditio~~ncondition of Avalon Holdings Corporation and its subsidiaries. As used in this report, the term ~~“Avalon”~~“Avalon” or the ~~“Company”~~ “Company”means Avalon Holdings Corporation, its wholly owned subsidiaries and variable interest entities when it has been determined that Avalon is the primary beneficiary of those ~~company’s~~company’s operations, taken as a whole, unless the context indicates otherwise.

Statements included in Management’s’s Discussion and Analysis of Financial Condition and Results of Operations which are not historical in nature are intended to be, and are hereby identified as, ~~“forward~~“forward looking ststatements~~atements”~~”. Avalon cautions readers that forward looking statements, including, without limitation, those relating to ~~Avalon’s~~Avalon’s future business prospects, revenues, working capital, liquidity, capital needs, interest costs, and income, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward looking statements, due to risks and factors identified herein and from time to time in ~~Avalon’s~~Avalon’s reports filed with the Securities and Exchange Commission.

For the nine months ended September 30, ~~2017,~~2021, Avalon utilized existing cash and cash provided by operations to meet operating needs and make required monthly payments on ~~the~~our term loan ~~facility and~~facility. Cash in our project fund account was utilized to fund capital expenditures which included the continued renovation ~~and expansion~~ of The Grand Resort and Avalon ~~Inn~~Field Club at New Castle as further described below.

In ~~July 2016,~~December 2019, a novel strain of coronavirus, COVID-19, emerged in Wuhan, Hubei Province, China. While initially concentrated in China, the ~~Company formed Avalon Resorts~~outbreak spread to other countries and ~~Clubs, Inc. (“ARCI”),~~infections have been reported globally including in the United States. On March 11, 2020, the World Health Organization declared the COVID-19 viral disease a ~~wholly owned subsidiary of Avalon,~~pandemic. As a result, the ~~purpose of which is~~federal and state governmental bodies began taking unprecedented measures to ~~hold~~try and control the ~~corporate activity of Avalon Clubs, Inc. and Avalon Resorts, Inc., both formed concurrently with ARCI.~~ ~~Avalon Clubs, Inc. was formed to hold the wholly owned subsidiaries~~spread of the ~~Avalon Golf~~virus including the issuance of temporary stay at home orders, the temporary closing of non-essential businesses and ~~Country Club, while Avalon Resorts, Inc. holds the operations of The Avalon Inn. ACRI, Avalon Clubs, Inc.~~in-house dining and ~~Avalon Resorts, Inc. are included within Avalon’s golf~~restrictions on gatherings and ~~related operations segment.~~events.

During the nine months ended September 30, ~~2017,~~2020, the various governmental orders that were issued to control the spread of COVID-19 adversely impacted our operations and related financial results. Our restaurants operated under government mandated occupancy restrictions for in-house dining. Food and beverages sales related to banquets and conferences were significantly lower as a result of restrictions placed on gatherings and events. In addition, in March 2020, the Company began experiencing a high level of room and event cancellations with some subsequent re-bookings for a future date.

Although the various government mandates impacting our business operations have currently been lifted, we may experience weakened demand in light of continued travel restrictions or warnings, consumer fears and reduced consumer discretionary spending and general economic uncertainty. The full extent of the impact of the COVID-19 pandemic on our operations and financial performance will depend on future developments, including the duration and spread of the pandemic and the impact of COVID-19 variants, all of which are uncertain and cannot be predicted at this time. Governmental bodies may continue to impose additional restrictions, which could include additional shutdowns, to stop the spread of infection. These additional restrictions would have a negative impact on our financial condition, results of operations and cash flows.

The Coronavirus Aid, Relief, and Economic Security Act, or (“CARES”) Act, was signed into law on March 27, 2020, and provides over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration to temporarily guarantee loans under a new loan program called the Paycheck Protection Program (the “Program”). The Program provides for 100% federally guaranteed loans to small businesses to allow employers to keep workers employed and maintain payroll during the pandemic and economic downturn. Under the Program, qualified companies are eligible for a loan in an amount equal to the lesser of $10 million or 2.5 times the business’s average monthly payroll. Collateral or guarantor support is not required for the loan.

Under the Program, the borrower is eligible for loan forgiveness up to the amount the borrower spends on certain eligible costs during, at the borrowers election, either an 8 or 24 week covered period beginning on the date the proceeds were received on the loan. Eligible costs under the Program include payroll costs, interest on mortgage obligations incurred before the covered period, rent on leasing agreements and utility services. The amount of loan forgiveness is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. Under the Program, proceeds that are not forgiven convert to a loan bearing interest at a fixed rate of 1% payable, at the borrowers election, in either 18 or 54 equal monthly installments commencing 10 months after the end of their covered period.

In the second quarter of 2020, certain wholly-owned subsidiaries of Avalon entered into agreements and received a total of approximately $2.8 million in loans under the Program. The Company utilized the entire balance of the loan proceeds in accordance with the Program’s guidelines using the 24 week loan forgiveness period and subsequently applied for forgiveness with the Small Business Administration.

During the fourth quarter of 2020, approximately $0.8 million of the loans and $4,000 of associated interest were forgiven by the Small Business Administration. During the first quarter of 2021, approximately $1.1 million of the loans and $8,000 of associated interest were forgiven by the Small Business Administration and, during the second quarter of 2021, the remaining $0.9 million of the loans and $9,000 of associated interest were forgiven by the Small Business Administration. Debt forgiven in accordance with the Program is recognized in the Condensed Consolidated Statements of Operations as a gain on debt extinguishment.

During the nine months ended September 30, 2021, Avalon incurred capital expenditures of ~~$2.2~~$3.5 million of which ~~$1.5~~$3.2 million of such expenditures was paid to vendors ~~and~~during the period. Expenditures primarily related to the continued renovation and expansion of The Grand Resort and the clubhouse at Avalon ~~Inn~~Field Club at New Castle. During the nine months ended September 30, 2020, Avalon incurred capital expenditures of $3.7 million of which $3.2 million of such expenditures was paid to vendors during the period. Expenditures primarily related to the continued renovation and ~~$0.6~~expansion of The Grand Resort. In addition, approximately $0.4 million of such expenditures related to golf course maintenance equipment acquired under new ~~capital~~finance lease agreements. ~~During the nine months ended September 30, 2016, Avalon incurred capital expenditures of $2.5 million~~

In 2021 and ~~paid vendors $2.4 million for such expenditures which principally related to the renovation and expansion of~~2020, The ~~Avalon Inn. In 2017 and 2016, The Avalon Inn~~Grand Resort was in operation but still in the process of being renovated and expanded. The renovations and expansion include ~~a complete~~the renovation of ~~the~~ existing ~~facility~~hotel rooms and the addition of a new ~~restaurants,~~restaurant, bars, ~~extensive banquet~~cigar lounge, salon and ~~conference facilities.~~spa. Avalon’s aggregate capital expenditures in ~~2017~~2021 are expected to be in the range of ~~$2.5~~$4.0 million to ~~$3.0~~$4.5 million, ~~which will~~funded with cash from our project fund account. Capital expenditures principally relate to the continued renovation and expansion of The Grand Resort, the clubhouse at Avalon ~~Inn,~~Field Club at New Castle, building improvements and equipment purchases.

On December 20, ~~2016,~~2019, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the ~~“Term~~“New Term Loan Agreement”) with Laurel Ca~~pital~~Capital Corporation which ~~provides~~provided for a ~~$12.0~~$23.0 million term loan. At closing, ~~$9.1~~$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 ~~associated accrued interest with Home Savings Bank (formerly The Home Savings and Loan Company~~$0.3 million of ~~Youngstown, Ohio), dated May 21, 2015, as amended, and~~the proceeds were utilized to pay related transaction ~~costs associated with the Term Loan Agreement.~~costs. The ~~line of credit agreement with Home Savings Bank was terminated in conjunction with the repayment. Remaining~~remaining proceeds of ~~$2.9~~approximately $7.2 million ~~under the Term Loan Agreement~~ were deposited ininto a project fund account for which those proceeds are required to fund future costs of renovating and expanding both The Grand Resort and Avalon ~~Inn.~~Field Club at New Castle. At September 30, 2021 and December 31, 2020, loan proceeds of $2.1 million and $3.9 million, respectively, remained in the project fund account.

The ~~$12.0 million~~then existing term loan ~~amount~~and commercial mortgage agreements were terminated in conjunction with the New Term Loan Agreement.

The New Term Loan Agreement is payable in 119 equal monthly installments of principal and interest, based on a fifteen (15) year maturity schedule which commenced on January 20, ~~2017. The Term Loan Agreement matures on December 20, 2026 at which time the~~2020 followed by one final balloon payment ~~equal to the~~of all remaining ~~outstanding~~ principal, interest and fees ~~are due.~~due on the maturity date of December 20, 2029. Borrowings under the New Term Loan Agreement bear interest at a fixed rate of ~~5.35%~~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) ~~5.35%~~5.00% per annum or (b) the sum of the ~~Index Rate~~five year treasury rate on the date two (2) business days prior to the reset date ~~and 3.95%~~plus 3.60%, provided that the applicable rate shall in no event exceed ~~7.50%~~7.35% per annum.

Avalon has the right to prepay the amount outstanding under the New Term Loan Agreement, in whole or in part, at any time upon payment of the principal amount of the loan to be prepaid plus accrued unpaid interest thereon to the prepayment date, plus an applicable prepayment penalty. The prepayment penalty, expressed as a percentage of the principal of the loan being prepaid, is 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 New Term Loan Agreement are secured by certain real property and related business assets as defined in the ~~Term Loan Agreement.~~agreement. The New Term Loan Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year. The New Term Loan also contains ~~certain financial and~~ other nonfinancial covenants, customary representations, warranties and events of default. Avalon was in compliance with the New Term Loan Agreement covenants at September 30, ~~2017~~2021 and December 31, ~~2016.~~2020.

On May 31, 2018, Avalon entered into a ~~new~~ business loan agreement with Premier Bank (formerly Home Savings ~~Bank~~Bank), (the “Line of C~~redit~~Credit Agreement”) which provides for a line of credit of up to ~~$4.0 million with an original maturity date of May 31, 2017.~~$5.0 million. On ~~April 25, 2017,~~August 17, 2021, the Company amended the Line of Credit Agreement ~~was amended~~ to ~~increase the available line of credit from $4.0 million to $5.0 million and~~ extend the maturity date to ~~May~~July 31, ~~2019. The amendment also has the option to request a one year extension of maturity in 2018 based on certain terms and conditions.~~2023. Under the Line of Credit Agreement, borrowings in excess of $1.0 million are subject to a borrowing base which is calculated based off a specific level of eligible accounts receivable of the waste management business as defined in the agreement.

No amounts were drawn under the Line of Credit Agreement at September 30, ~~2017~~2021 and December 31, ~~2016.~~

2020. Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .25%. At September 30, ~~2017,~~2021, the interest rate on the Line of Credit Agreement was ~~4.50%~~3.50%.

Borrowings under the Line of Credit Agreement are secured by certain business assets of the Company including accounts receivable, inventory and equipment. The Line of Credit Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year. The Line of Credit Agreement also contains ~~certain~~other nonfinancial covenants, customary representations, warranties and events of default. Avalon was in compliance with the Line of Credit ~~Agreement~~Agreements covenants at September 30, ~~2017~~2021 and December 31, ~~2016.~~2020.

During the three ~~and~~ ~~nine~~ months ended September 30, ~~2017,~~2021 and 2020, the weighted average interest rate on outstanding borrowings was ~~5.35%.~~5.00% and 4.57%, respectively. During the ~~three and~~ nine months ended September 30, ~~2016,~~2021 and 2020, the weighted average interest rate on outstanding borrowings was ~~3.75%.~~4.91% and 4.74%, respectively.

In November 2003, Avalon entered into a long-term agreement with Squaw Creek Country Club to lease and operate its golf course and related facilities. The lease has an initial term of ten (10) years with four (4) consecutive ten (10) year renewal term options unilaterally exercisable by Avalon. Under the lease, Avalon is obligated to pay $15,000 in annual rent and make leasehold improvements of $150,000 per year. Amounts expended by Avalon for leasehold improvements during a given year in excess of $150,000 will be carried forward and applied to future leasehold improvement obligations. Based upon the amount of leasehold improvements already made, Avalon expects to exercise all of its remaining renewal options.

At September 30, ~~2017,~~2021 and December 31, 2020, there was a working capital deficit of ~~$0.3~~approximately $1.2 million ~~compared with working capital of $0.2~~and $1.9 million, ~~at December 31, 2016.~~respectively. Working capital was ~~negatively~~positively impacted primarily by a decrease in cash and cash equivalents and accounts receivable and an increase in deferred revenues related to membership dues. This decrease in working capital was partially offset by a decrease in accounts payable.

~~Accounts receivable de~~creased to $10.8 million at September 30, 2017 compared with $11.3 million at December 31, 2016. The decrease was primarily the result of decreased sales related to the waste management services segment in the third quarter of 2017 compared with the fourth quarter of 2016 and the timing of receipt on those associated receivables. Net operating revenues related to the waste management segment were $10.8 million in the third quarter of 2017 compared with $11.7 million in the fourth quarter of 2016. The decrease in accounts receivable noted above was partially offset by an increase in accounts receivable, unbilled membership dues, inventory and a decrease in accounts payable and the current portion of the Paycheck Protection Program loans that were forgiven by the Small Business Administration. Working capital was negatively impacted by an increase in accrued payroll and other compensation and deferred membership dues revenue. Accounts receivable increased to $9.9 million at September 30, 2021 compared with $8.7 million at December 31, 2020. Accounts receivable related to ~~The Avalon Golf~~the golf and ~~Country Club attributable~~related operations segment increased approximately $0.6 million at September 30, 2021 compared to December 31, 2020 due to the associated timing of annual membership ~~renewals and an increase in membership rates.~~

~~Accounts payable decreased~~renewals. In addition, accounts receivable related to ~~$8.2~~our waste management services segment increased approximately $0.6 million at September 30, ~~2017~~2021 compared with ~~$9.4 million at~~ December 31, ~~2016. The decrease in accounts payable is primarily due to~~2020 as a ~~decrease in the amounts due to disposal facilities and transportation carriers~~result of the ~~waste brokerage and management services business associated with the decrease~~increase in net operating revenues in the third quarter of ~~2017~~2021 compared with the fourth quarter of ~~2016 and~~2020.

Accounts payable decreased to $9.0 million at September 30, 2021 compared to $9.1 million at December 31, 2020. The decrease in accounts payable was attributable to our waste management segment due to the associated timing of ~~those~~ vendor payments in the ordinary course of business. The decrease in accounts payable related to our waste management services segment was partially offset by an increase in accounts payable related to our golf and related operations segment. Accounts payable related to the golf and related operations increased as a result of increased business operations during the third quarter of 2021 compared to the fourth quarter of 2020.

~~Accrued payroll~~ ~~and other compensation increased~~Deferred revenue relating to ~~$1.0~~membership dues was approximately $4.4 million at September 30, ~~2017~~2021 compared ~~with $0.7~~to $3.2 million at December 31, ~~2016.~~2020. The increase ~~of $0.3 million was primarily the result of the timing of payment of certain accrued bonuses.~~

~~The increase~~ in deferred revenues ~~at September 30, 2017 compared with December 31, 2016 is a result of an increase in membership dues rates and~~was primarily due to the associated timing of annual membership ~~renewals. During the third quarter~~renewals, and to a lesser extent, an increase in members during 2021. The number of ~~2016, annual membership dues rates were increased. Revenues related~~members at September 30, 2021 was 5,112 compared to ~~annual membership dues are recognized proportionately over the membership term. Deferred revenues related to membership dues increased to $3.3~~4,920 at December 31, 2020.

Accrued payroll and other compensation was approximately $1.2 million at September 30, ~~2017~~2021 compared ~~with $2.7~~to $0.8 million at December 31, ~~2016.~~2020. The increase is due to the associated timing and accrual of employee payroll payments in the ordinary course of business.

Management believes that anticipated cash provided from future operations will be ~~for the foreseeable future,~~ sufficient to meet operating requirements and make required monthly payments under our term loan facility. IfDepending on the continued duration the COVID-19 pandemic may have on our business, ~~conditions warrant additional monies~~if needed, ~~to fund capital expenditure programs,~~ Avalon will take all available actions ~~such as refinancing or restructuring~~to fund operating requirements including borrowing from our ~~current debt agreements, incurring additional indebtedness, issuance~~existing line of ~~common stock or issuance of a security with characteristics of both debt and equity.~~credit.

Our growth strategy for the waste management services segment focuses on increasing revenue, gaining market share and enhancing shareholder value through internal growth. Although we are a waste management services company, we do not own any landfills or provide waste collection services. However, because of our many relationships with various disposal facilities and transporters, we are able to be more flexible and provide alternative solutions to a ~~customer~~’scustomer’s waste disposal or recycling needs. We intend to capitalize on our management and sales staff which has extensive experience in all aspects of the waste business. As such, we intend to manage our internal growth as follows:

• Sales and Marketing Activities. We will focus on retaining existing customers and obtaining new business through our well-managed sales and marketing activities. We seek to manage our sales and marketing activities to enable us to capitalize on our position in many of the markets in which we operate. We provide a tailored program to all of our customers in response to their particular needs. We accomplish this by centralizing services to effectively manage their needs, such as minimizing their procurement costs.

We currently have a number of professional sales and marketing employees in the field who are compensated using a commission structure that is focused on generating high levels of quality revenue. For the most part, these employees directly solicit business from existing and prospective customers. We emphasize our rate and cost structures when we train new and existing sales personnel. We intend to hire additional qualified professional sales personnel to expand into different geographical areas.

•Development Activities. We will seek to identify opportunities to further position us as an integrated service provider in markets where we provide services. In addition, we will continue to utilize the extensive experience of our management and sales staff to bid on significant one-time projects and those that require special expertise. Where appropriate, we may seek to obtain permits that would provide vertically integrated waste services or expand the service offerings or leverage our existing volumes with current vendors to provide for long term, cost competitive strategic positioning within our existing markets.

In August 2014, the Company acquired The ~~Avalon Inn~~Grand Resort which was integrated into the golf and related operations segment. The acquisition is consistent with the Company's business strategy in that The ~~Avalon Inn~~Grand Resort provides guests with a self-contained vacation experience, offering hotel guests golf packages to all of the golf courses of the Avalon Golf and Country Club and allows its guests to utilize the facilities at each of the clubhouses. Members of the Avalon Golf and Country Club also have access to all of the amenities offered by The ~~Avalon Inn.~~Grand Resort. The ~~Avalon Inn~~Grand Resort is open year-round and provides a consistent, comfortable environment where our guests can enjoy our various amenities and activities. Avalon believes that the combination of its ~~three~~four golf facilities and The ~~Avalon Inn~~Grand Resort will result in additional memberships in the Avalon Golf and Country Club.

In addition, several private country clubs in the northeast Ohio area are experiencing economic difficulties. Avalon believes some of these clubs may represent an attractive investment opportunity. While Avalon has not entered into any pending agreements for acquisitions, it may do so at any time and will continue to consider acquisitions that make economic sense.

~~Avalon~~’sAvalon’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 ~~three~~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 third quarter of 2021 compared with the third quarter of 2020

Overall Performance ~~in the~~ ~~third quarter~~ ~~of 201~~7 ~~compared with the~~ ~~third quarter~~ ~~of 2016~~

NetNet operating revenues ~~decreased~~increased to ~~approximately $16.3~~$21.3 million in the third quarter of ~~2017~~2021 compared with ~~$19.1~~$16.6 million in the third quarter of ~~2016. This decrease was due to a decrease in net operating revenues of the waste management services segment.~~2020. Net operating revenues of the waste management services segment were ~~$10.8~~approximately $11.4 million in the third quarter of ~~2017~~2021 compared ~~with $13.6~~to $9.3 million in the third quarter of ~~2016.~~2020. Net operating revenues of the golf and related operations segment were approximately ~~$5.5 million in both the third quarter of 2017 and 2016.~~

~~Costs of operations~~ ~~related to the waste management segment decreased to $8.8~~$9.9 million in the third quarter of ~~2017~~2021 compared ~~with $11.3~~to $7.3 million in the third quarter of ~~2016.~~2020.

Total cost of operations related to the waste management services segment increased to $9.4 million in the third quarter of 2021 compared with $7.4 million in the third quarter of 2020. The ~~decrease~~increase in the cost of operations between periods for the waste management segment is primarily due to the ~~decreased~~increased net operating revenues ~~between periods~~ as these costs vary directly with the associated ~~net operating~~ revenues. ~~Cost~~

Total cost of operations ~~for~~related to the golf and related operations segment ~~decreased~~increased to ~~$4.1~~$7.3 million in the third quarter of ~~2017~~2021 compared ~~with $4.2~~to $5.4 million in the third quarter of ~~2017.~~2020. The ~~decrease~~increase between periods was primarily a result of ~~lower~~higher employee related ~~costs.~~costs and product costs associated with the increased business operations as certain restrictions and mandated shut downs associated with the COVID-19 pandemic were reduced and subsequently lifted.

Depreciation and amortization expense was approximately ~~$0.7~~$0.8 million in ~~both~~ the third quarter of ~~2017~~2021 compared to $0.7 million in the third quarter of 2020. The increase is due to the higher depreciable asset base primarily due to the renovation and ~~2016.~~expansion of The Grand Resort.

Consolidated selling, general and administrative expenses ~~were~~ ~~$2.2~~increased to approximately $2.7 million in the third quarter of ~~2017~~2021 compared ~~with~~to $2.1 million in the third quarter of ~~2016. The~~2020 due to higher employee related costs, which included employee incentives paid in the third quarter of 2021, and an increase in ~~selling, general~~legal and ~~administrative costs was primarily due to increased legal~~professional costs incurred ~~relating~~primarily related to ~~Avalon’s appeal and mandamus processes associated with~~ the ~~Company’s~~ salt water injection wells ~~further described below.~~mandamus process.

Interest expense was ~~$0.2~~approximately $0.3 million in both the third quarter of ~~2017 compared with $0.1 million in~~2021 and 2020. During the third quarter of ~~2016. The increase~~2021, the decrease in interest expense ~~was~~ due to ~~higher~~the lower average outstanding ~~borrowings at~~debt was offset by a higher weighted average interest rate ~~during~~on the ~~third quarter of 2017 compared with~~outstanding borrowings. During the ~~third quarter of 2016.~~three months ended September 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings was 5.00% and 4.57%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was ~~$0.5~~$1.0 million, or ~~$0.14~~$0.25 per share, in the third quarter of ~~2017~~2021 compared with net income attributable to Avalon Holdings Corporation common shareholders of $0.8 million, or ~~$0.21~~$0.20 per share, in the third quarter of ~~2016.~~2020.

Segment performance should be read in conjunction with Note 1114 to the Condensed Consolidated Financial Statements.

The net operating revenues of the ~~wast~~ewaste management services segment ~~decreased~~were approximately ~~20% to $10.8~~$11.4 million in the third quarter of ~~2017~~2021 compared ~~with $13.6~~to $9.3 million in the third quarter of ~~2016.~~2020. The waste management services segment includes waste disposal brokerage and management services, captive landfill management operations and salt water injection well operations.

The net operating revenues of the waste disposal brokerage and management services business ~~decreased to $10.2~~were approximately $10.8 million in the third quarter of ~~2017 from $13.1~~2021 compared to $8.8 million in the third quarter of ~~2016. This decrease was primarily due~~2020. Event work related to ~~a decrease~~multiple projects increased by approximately $1.7 million during the third quarter of ~~$3.3 million, or a 42% decrease, in~~2021 compared to the third quarter of 2020. Event work net operating revenues ~~attributable~~were approximately $5.4 million in the third quarter of 2021 compared to ~~event work relating to multiple projects.~~$3.7 million in the third quarter of 2020. Event work is defined as bid projects under contract that occurs on a one-time basis over a short period of time. Such work can fluctuate significantly from year to year. Net operating revenues related to event work were $4.6 million during the third quarter of 2017 compared with $7.9 million during the third quarter of 2016. The decrease noted above was partially offset by an increase in net operating revenues relating toIn addition, continuous ~~work of the waste disposal brokerage business. Continuous~~ work of the waste disposal brokerage business increased approximately ~~$0.2~~$0.4 million orbetween periods as a ~~4% increase between periods.~~result of increased work from multiple customers. Net operating revenues related to continuous work were ~~$5.0~~approximately $5.4 million ~~during~~in the third quarter of ~~2017~~2021 compared with ~~$4.8~~$5.0 million ~~during~~in the third quarter of 2016. In addition, net operating revenues related to managerial, consulting and clerical services increased to $0.6 million during the third quarter of 2017 compared with $0.4 million during the third quarter of 2016.2020. Net operating revenue relating to managerial, consulting and clerical services, which iswas performed for one customer, iswas entirely dependent on that customer’s needs. Net operating revenues related to managerial, consulting and clerical services were approximately $0.1 million in the third quarter of 2020. The managerial, consulting and clerical contract expired in the third quarter of 2020.

The net operating revenues of the captive landfill management operations were approximately ~~$0.6~~$0.6 million in the third quarter of ~~2017~~2021 compared ~~with~~to $0.5 million in the third quarter of ~~2016.~~2020. The net operating revenues of the captive landfill operations are almost entirely dependent upon the volume of waste generated by the owner of the landfill for whom Avalon manages the facility.

~~Due to the~~ temporary suspension of the salt water injections wells there were no operating revenues during the third quarter of 2017 and 2016. As a result of a seismic event with a magnitude of 2.1 occurring on August 31, 2014, the Chief of the Division of Oil and Gas Resources Management (“Chief” or “Division”) issued Orders on September 3, 2014, to immediately suspend all operations of both of Avalon’s saltwater injection wells. The Orders were based on the findings that the two saltwater injection wells were located in close proximity to an area of known seismic activity and also that the saltwater injection wells pose a risk of increasing or creating seismic activity. The two saltwater injection wells are located approximately 112 feet apart. Based on these findings, the Chief ordered the immediate suspension of all operations of the two saltwater injection wells, until the Division could further evaluate the wells.

~~On September 5, 2014, Avalon submitted the information required by the Chief~~’s Order in regards to its AWMS #1 injection well, and the Chief lifted the suspension for that well on September 18, 2014. On September 19, 2014, Avalon submitted information and a written plan required by the Chief’s Order proposing the establishment of certain operations and management controls on injections at the AWMS #2 injection well. To date, the Division has not responded to that plan despite Avalon’s requests for feedback.

On October 2, 2014, Avalon filed an appeal with the Ohio Oil and Gas Commission (the “Commission”) disputing the basis for suspending operations of AWMS #2 and also the authority of the Chief to immediately suspend such operations. On March 11, 2015, an appeal hearing was held. The Chief stated during the hearing that the suspension is only temporary, and that he expects that AWMS #2 will be allowed to inject once the state~~’s final policymaking is complete.~~

On August 12, 2015, the Commission upheld the temporary suspension of injection operations of AWMS #2 stating that the temporary suspension will allow the Chief to more fully evaluate the facts in anticipation of the Division’s implementation of a comprehensive regulatory plan that will specifically address injection-induced seismicity. Avalon appealed that decision in September 2015 to the Franklin County Court of Common Pleas, but that appeal was dismissed on a filing technicality. Avalon appealed the dismissal to the Ohio 10^th Circuit Court of Appeals, which found the Commission erred in its filing of their decision. Following the Commission’s proper notice, Avalon appealed again to the Franklin County Court of Common Pleas (the “Court”).

~~On November 1, 2016 an appeal hearing was held in that Court.~~ On December 23, 2016, the Court issued its Decision and Order in Avalon’s favor, and vacated the Commission’s decision. The Court found that the Division’s suspension and refusal to work with the Company for over 26 months was arbitrary and not in accordance with reason. Subsequent to the ruling, and in accordance with the Court’s Decision and Order, both Avalon and the Division submitted their proposed restart plans to the Court. Avalon’s plan sets forth both the initial volumes and pressures and increases in volume and pressure while continuously monitoring seismicity and addressing the concerns of public health and safety.

~~On February 21, 2017, the Court issued its Final Decision and Order. The Court~~’s Final Decision and Order sets conditions for the restarting of AWMS #2 in accordance with the proposed restart plans filed by Avalon with minor revisions. While the Company was making preparations for restarting the well and opening the facility, the Division appealed the Final Decision and Order and filed a Motion to Stay the Court Order on February 22, 2017. The Motion to Stay was granted by the Ohio 10^th Circuit Court of Appeals on March 21, 2017. On September 14, 2017, an appeal hearing was held. The Company is currently awaiting judgment from the court. In the event the suspension order is lifted, Avalon will make preparations for restarting the well and opening the facility in accordance with the restart plans. In the event that the temporary suspension is not lifted by the Ohio 10^th ~~Circuit Court of Appeals, Avalon will continue to appeal until a favorable ruling lifting the temporary suspension is received.~~

~~In addition, on August 26, 2016, Avalon filed a complaint in the 11~~^th Appellate District Court in Trumbull County, Ohio for a Peremptory Writ of Mandamus to compel the Director of the Ohio Department of Natural Resources (“ODNR”) to initiate appropriations procedures to determine damages from the illegal regulatory taking of the Company’s property, or issue an alternative remedy at law. There is currently no implemented state-wide policy on induced seismicity and The ODNR has refused to communicate with the Company regarding the status and requirements of any policymaking. The Company believes that the actions, and lack of responsible actions, by ODNR, which were triggered by a seismic event that presented no hazard or risk to any individual or to the environment, is a clear violation of the Company’s property rights and a violation of the Fifth and Fourteenth Amendments to the U.S. Constitution; Article I, Section 19 of the Ohio Constitution; and Ohio Revised Code Chapter 163. On September 26, 2016, the ODNR filed a motion to dismiss Avalon’s Writ of Mandamus complaint. The Company intends to vigorously pursue the Complaint and obtain due process and fair compensation. Discovery has been initiated in the case but no hearing date has been set.

Costs of operations related to the waste management services segment de~~creased $2.5 million, or 22%,~~increased to ~~$8.8~~$9.4 million in the third quarter of ~~2017~~2021 compared with ~~$11.3~~$7.4 million in the third quarter of ~~2016.~~2020. The ~~decrease~~increase in the cost of operations between periods for the waste management segment is primarily due to the ~~decreased~~increased net operating revenues ~~between periods~~ as these costs vary directly with the associated ~~net operating~~ revenues.

~~Income before income taxes for the waste management services segme~~nt decreased to $0.6 million in the third quarter of 2017 compared with $1.0 million in the third quarter of 2016. Income before income taxes of the waste brokerage and management services business was approximately $0.8 million in the third quarter of 2017 compared with $1.0 million in the third quarter of 2016. The gross margins associated with continuous work are typically higher than gross margins from event work and managerial, consulting and clerical services, and although total net operating revenues for the waste brokerage and management services business decreased $2.9 million between periods, the higher gross profit generated on the net operating revenues related to continuous work between periods partially offset the lower gross profit generated from the decreased event work net operating revenues between periods. The overall gross margin percentage of the waste brokerage and management services business was approximately 18% in the third quarter of ~~2017~~2021 compared ~~with 16%~~to 21% in the third quarter of ~~2016.~~2020. The decrease was due to lower gross profit continuous and event work projects during the third quarter of 2021.

Income before income taxes for the waste management services segment were approximately $0.7 million in the third quarter of 2021 compared to $0.9 million in the third quarter of 2020. Income before income taxes of the waste brokerage and management services business was approximately $0.9 million in the third quarter of 2021 compared to $0.8 million in the third quarter of 2020. The increased income before taxes was primarily attributable to the increased net operating revenues and associated gross margin related to both continuous and event work projects during the third quarter of 2021 compared to the third quarter of 2020. Income before income taxes of the captive landfill operations ~~was~~were approximately $0.1 million in both the third quarter of ~~2017~~2021 and ~~2016. During the third quarter of 2017 and 2016, the~~2020. The salt water injection wells incurred a loss before income taxes of ~~approximately~~ $0.3 million ~~and~~during the third quarter of 2021 compared to less than $0.1 million ~~respectively. The increased loss~~ in the third quarter of ~~2017 compared with the third quarter of 2016 was~~2020 due to ~~higher~~ legal and professional costs incurred relating to Avalon’s ~~appeal and~~ mandamus ~~processes described above.~~process.

Net operating revenues of the golf andand related operations segment were ~~$5.5~~approximately $9.9 million in ~~both~~ the third quarter of ~~2017 and 2016.~~2021 compared to $7.3 million in the third quarter of 2020. Avalon’s golf and related operations segment consists of the operation and management of ~~three~~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 ~~were~~increased to approximately ~~$2.3~~$4.0 million in ~~both~~ the third quarter of ~~2017~~2021 compared to $2.9 million in the third quarter of 2020. Food, beverage and ~~2016.~~ merchandise sales increased between periods as a result of an increase in business activity. The government restrictions issued in response to control the COVID-19 pandemic, which included decreased occupancy for restaurants and limits placed on mass gatherings and large community events, significantly impacted our operations during the third quarter of 2020. Food and beverages sales related to banquets and conferences were not significant during the third quarter of 2020 as a result of the government mandated restrictions on gatherings and events. During the third quarter of 2021, food and beverage sales related to banquets and conferences increased as a result of the lifting of certain government mandates placed on gatherings and events.

Other netnet operating revenues related to the golf and ~~relations~~related operations were ~~$3.2 million in both the third quarter of 2017 and 2016. The net operating revenues from membership dues increased slightly to $1.3 million during the third quarter of 2017 compared with $1.2~~approximately $5.9 million in the third quarter of ~~2016 due~~2021 compared to $4.4 million in the third quarter of 2020. Membership dues revenue was approximately $1.7 million in the third quarter of 2021 compared to $1.5 million in the third quarter of 2020. The increase in membership dues revenue was attributable to an increase in ~~annual~~both membership ~~dues partially offset by a decrease in~~rates and the average number of members between periods. ~~The average number of members during~~Net operating revenues related to room rental was approximately $1.8 million in the third quarter of ~~2017 was 4,412~~2021 compared ~~with 4,741~~to $1.1 million in the ~~comparable~~third quarter of 2020. The increase in room revenue was a result of both higher occupancy and an increase in average room rates when compared to the prior period. During the third quarter of ~~2016, annual membership dues rates~~2020, the Company experienced significant cancellations of overnight room accommodations due to the COVID-19 pandemic. Greens fees and associated cart rentals were ~~increased.~~approximately $1.5 million in the third quarter of 2021 compared to $1.3 million in the third quarter of 2020. The ~~increased rates become effective for existing members on~~increase in greens fees and associated cart rental during the ~~member’s renewal date.~~third quarter of 2021 compared to the third quarter of 2020 was due to an increase in the number of golf rounds played. Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $0.9 million in the third quarter of 2021 compared to $0.5 million in the third quarter of 2020. The increase in other revenues was primarily attributable to an increase in salon and spa services between periods.

~~Cost~~Total cost of operations for the golf and related operations segment ~~decreased to $4.1~~ were $7.3 million in the third quarter of ~~2017~~2021 compared with ~~$4.2~~$5.4 million in the third quarter of ~~2016.~~2020. Cost of food, beverage and merchandise was approximately $1.6 million in the third quarter of 2021 compared to $1.1 million in the third quarter of 2020. The increase in total food, beverage and merchandise costs between periods was due to both higher revenues from increased business operations and an increase in product costs. The cost of food, beverage and merchandise sales was approximately 42% of associated revenue in the third quarter of 2021 compared to 38% in the third quarter of 2020. Golf and related operations operating costs increased to approximately $5.7 million in the third quarter of 2021 compared with $4.3 million in the third quarter of 2020. The increase in operating costs between periods, primarily employee related costs, was directly attributable to the increased business operations during the third quarter of 2021 compared to the third quarter of 2020.

The golf and related operations recorded income before income taxes of $1.4 million in the third quarter of 2021 compared with income before income taxes of $1.0 million in the third quarter of 2020. The change between periods was a result of higher net operating revenues and associated gross profit related to room rentals, greens fees and related cart rental, food, beverage and merchandise sales.

General corporate expenses were $1.0 million in the third quarter of 2021 compared to $0.8 million in the third quarter of 2020. The increase was attributable to both higher employee related costs, which included employee incentives paid in the third quarter of 2021, and an increase in legal and professional fees.

Interest expense was approximately $0.3 million in both the third quarter of ~~2017~~2021 and ~~2016. Cost of operations related to the golf and related operations decreased approximately $0.1 million between periods to $3.1 million in~~2020. During the third quarter of ~~2017 compared with $3.2 million in~~2021, the ~~third quarter of 2016. The~~ decrease ~~was primarily a result of lower employee related costs.~~

~~Income before income taxes~~ for the golf and related operations was approximately $0.7 million in the third quarter of 2017 compared with $0.6 million in the third quarter of 2016. The change between periods was primarily due to a decrease in employee related costs partially offset by increased depreciation expense.

Ge~~neral corporate expenses were $0.7 million in both the third quarter of 2017 and 2016.~~

~~Interest expense was~~ ~~$0.2 million in the third quarter of 2017 compared with $0.1 million in the third quarter of 2016. The increase~~ in interest expense ~~was~~ due to ~~higher~~the lower average outstanding ~~borrowings at~~debt was offset by a higher weighted average interest rate ~~during~~on the ~~third quarter of 2017 compared with the third quarter of the prior year.~~outstanding borrowings. During the ~~third quarter of 2017~~three months ended September 30, 2021 and ~~2016,~~2020, the weighted average interest rate on outstanding borrowings was ~~5.35%~~5.00% and ~~3.75%~~4.57%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was ~~$0.5~~$1.0 million in the third quarter of ~~2017~~2021 compared ~~with~~to net income attributable to Avalon Holdings Corporation common shareholders of $0.8 million in the third quarter of ~~2016.~~2020. Avalon recorded a state income tax provision in both the third quarter of ~~2017~~2021 and ~~2016,~~2020, which was related entirely to the waste management and brokerage operations. ~~The effective state tax rate related to the waste management and brokerage operations was approximately 7% for both the third quarter of 2017 and 2016.~~ 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 provision on the income before taxes was offset by a change in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.

Performance in the first nine months of ~~201~~72021 compared with the first nine months of ~~2016~~2020

Net operating revenues ~~decreased~~increased to ~~$41.6~~$52.8 million in the first nine months of ~~2017~~2021 compared with ~~$45.8~~$44.1 million in the first nine months of ~~2016. This decrease was due to a decrease in net operating revenues of the waste management services segment.~~2020. Net operating revenues of the waste management services segment were ~~$27.9~~approximately $31.3 million in the first nine months of ~~2017~~2021 compared ~~with $32.6~~to $29.5 million in the first nine months of 2016. The decrease in net operating revenues attributable to the waste management services segment during the first nine months of 2017 compared to the first nine months of 2016 was slightly offset by an increase in revenue attributable to the golf and related operations segment.2020. Net operating revenues of the golf and related operations segment were approximately ~~$13.7~~$21.5 million in the first nine months of ~~2017~~2021 compared ~~with $13.2~~to $14.6 million in the first nine months of ~~2016.~~2020.

~~Costs~~Total cost of operations related to the waste ma~~nagement~~management services segment ~~decreased~~increased to ~~$22.2~~$25.1 million in the first nine months of ~~2017~~2021 compared with ~~$26.9~~$23.5 million in the first nine months of ~~2016.~~2020. The ~~decrease~~increase in the cost of operations between periods for the waste management segment is primarily due to the ~~decreased~~increased net operating revenues ~~between periods~~ as these costs vary directly with the associated ~~net operating~~ revenues. ~~Cost~~

Total cost of operations ~~for~~related to the golf and related operations segment increased to ~~$11.1~~$17.0 million in the first nine months of ~~2017~~2021 compared ~~with $10.7~~to $12.0 million in the first nine months of ~~2016.~~2020. The increase between periods was primarily a result of higher employee related ~~costs.~~costs and product costs associated with the increased business operations as certain restrictions and mandated shut downs associated with the COVID-19 pandemic were reduced and subsequently lifted.

Depreciation and amortization expense was approximately ~~$2.3 million in first nine months of 2017 compared with $2.1~~$2.3 million in the first nine months of ~~2016.~~2021 compared to $2.2 million in the first nine months of 2020. The increase is due to the higher depreciable asset base primarily due to the ~~result~~renovation and expansion of ~~depreciation expense associated with~~ The ~~Avalon Inn.~~Grand Resort.

Consolidated selling, general and administrative expenses ~~were~~ ~~$6.3~~increased to approximately $7.6 million in the first nine months of ~~2017~~2021 compared ~~with $5.9~~to $6.3 million in the first nine months of ~~2016. The increase in selling, general and administrative costs was~~2020 primarily due to ~~increased~~higher employee related costs, which included employee incentives paid in 2021, and an increase in legal and professional costs incurred, ~~relating~~primarily related to ~~Avalon’s appeal and mandamus processes associated with~~ the ~~Company’s~~ salt water injection wells ~~and increased employee related costs.~~mandamus process.

~~Interest expense~~Gain on debt extinguishment was ~~$0.5~~ ~~million during the first nine months of 2017 compared with $0.3~~approximately $2.0 million in the first nine months of ~~2016. The increase~~2021 representing the Paycheck Protection Program loans that were forgiven by the Small Business Administration received under the CARES Act.

Interest expense was approximately $0.9 million in both the first nine months of 2021 and 2020. During the first nine months of 2021, the decrease in interest expense ~~was~~ due to ~~higher~~the lower average outstanding ~~borrowings at~~debt was offset by a higher weighted average interest rate ~~during~~on the ~~first~~outstanding borrowings. During the nine months ~~of 2017 compared with~~ended September 30, 2021 and 2020, the ~~first nine months of 2016.~~weighted average interest rate on outstanding borrowings was 4.91% and 4.74%, respectively.

Net ~~loss~~income attributable to Avalon Holdings ~~Corporation~~Corporation common shareholders was ~~$0.3~~$2.4 million, or ~~$0.07~~$0.63 per share, in the first nine months of ~~2017~~2021 compared with a net ~~income~~loss attributable to Avalon Holdings Corporation common shareholders of ~~$0.3~~$0.5 million, or ~~$0.08~~$0.12 per share, in the first nine months of ~~2016.~~2020.

Segment performance should be read in conjunction with Note 1114 to the Condensed Consolidated Financial Statements.

~~The net operating revenues of the waste management services segment decreased approximately 14% to $27.9 million in the first nine months of 2017 compared with $32.6 million in the first nine months of 2016.~~

The net operating revenues of the waste ~~brokerage and~~management services ~~business decreased to $26.3~~segment were approximately $31.3 million in the first nine months of ~~2017 from $31.1~~2021 compared to $29.5 million in the first nine months of ~~2016. This decrease was primarily due to a decrease of $5.9 million, or a 37% decrease, in~~2020.

The net operating revenues ~~attributable~~of the waste disposal brokerage and management services business were approximately $29.5 million in the first nine months of 2021 compared to $27.8 million in the first nine months of 2020. Continuous work of the waste disposal brokerage business increased approximately $1.4 million between periods as a result of increased work from multiple customers. Net operating revenues related to continuous work were approximately $17.2 million in the first nine months of 2021 compared with $15.8 million in the first nine months of 2020. In addition, event work ~~relating~~net operating revenues related to multiple ~~projects.~~projects increased by approximately $1.2 million during the first nine months of 2021 when compared to the first nine months of 2020. Event work is defined as bid projects under contract that occurs on a one-time basis over a short period of time. Such work can fluctuate significantly from year to year. ~~Net~~Event work net operating revenues ~~related to event work~~ were ~~$9.9~~approximately $12.3 million ~~during~~in the first nine months of ~~2017~~2021 compared with ~~$15.8~~$11.1 million ~~during~~in the first nine months of 2016. In addition, net operating revenues related to managerial, consulting and clerical services decreased to $1.1 million during the first nine months of 2017 compared with $1.4 million during the first nine months of 2016.2020. Net operating revenue relating to managerial, consulting and clerical services, which iswas performed for one customer, iswas entirely dependent on that customer’s needs. The decreases noted above were partially offset by an increase in net operating revenues relating to continuous work of the waste disposal brokerage business. Continuous work of the waste disposal brokerage business increased approximately $1.4 million, or a 10% increase between periods related to increased work from multiple customers. Net operating revenues related to ~~continuous work~~managerial, consulting and clerical services were ~~$15.3~~approximately $0.9 million ~~during~~in the first nine months of ~~2017 compared with $13.9 million during~~2020. The managerial, consulting and clerical contract expired in the ~~first nine months~~third quarter of ~~2016.~~2020.

The net operating revenues of the captive landfill management operations were approximately ~~$1.6~~$1.8 million in the first nine months of ~~2017~~2021 compared ~~with $1.5~~to $1.7 million ~~during~~in the first nine months of ~~2016.~~2020. The net operating revenues of the captive landfill operations are almost entirely dependent upon the volume of waste generated by the owner of the landfill for whom Avalon manages the facility.

~~Due to the temporary suspension of the salt water injections wells~~ ~~noted above, there were no operating revenues during the first nine months of 2017 and 2016.~~

Costs of operations related to the waste management services segment de~~creased $4.7 million, or 17%,~~increased to ~~$22.2~~$25.1 million in the first nine months of ~~2017~~2021 compared with ~~$26.9~~$23.5 million in the first nine months of ~~2016.~~2020. The ~~decrease~~increase in the cost of operations between periods for the waste management segment is primarily due to the ~~decreased~~increased net operating revenues ~~between periods~~ as these costs vary directly with the associated ~~net operating~~ revenues.

~~Income before income taxes for the waste management services segme~~nt decreased to approximately $1.9 million in the first nine months of 2017 compared with $2.0 million in the first nine months of 2016. Income before income taxes of the waste brokerage and management services business was approximately $2.3 million in both the first nine months of 2017 and 2016. The gross margins associated with continuous work are typically higher than gross margins from event work and managerial, consulting and clerical services, and although total net operating revenues for the waste management brokerage and services business decreased $4.8 million between periods, the higher gross profit generated on the increased net operating revenues related to continuous work between periods offset the lower gross profit generated from the decreased event work net operating revenues between periods. The overall gross margin percentage of the waste brokerage and management services business was approximately 20% in the first nine months of ~~2017~~2021 compared ~~with 17%~~to 21% in the first nine months of ~~2016.~~2020. The decrease was due to lower gross profit continuous and event work projects during the third quarter of 2021.

Income before income taxes for the waste management services segment were approximately $2.5 million in the first nine months of 2021 compared to $2.7 million in the first nine months of 2020. Income before income taxes of the waste brokerage and management services business were approximately $2.6 million in both the first nine months of 2021 and 2020. Income before income taxes of the captive landfill operations ~~was~~were approximately ~~$0.3~~$0.2 million in both the first nine months of ~~2017 compared with $0.2 million in the first nine months of 2016. During the first nine months of 2017, the~~2021 and 2020. The salt water injection wells incurred a loss before income taxes of ~~approximately $0.7~~$0.3 million during the first nine month of 2021 compared ~~with a loss before income taxes of $0.5~~to $0.1 million in the first nine months of ~~2016. The increased loss between periods was~~2020 due to legal and professional costs incurred relating to Avalon’s ~~appeal and~~ mandamus ~~processes described above.~~process.

Net operating revenues of the golf and related operations segment ~~increased~~were approximately ~~4% to $13.7~~$21.5 million in the first nine months of ~~2017~~2021 compared ~~with $13.2~~to $14.6 million in the first nine months of ~~2016.~~2020.

Food, beverage and merchandise sales increased to ~~$5.7 million during the first nine months of 2017 compared with $5.6~~approximately $8.6 million in the first nine months of ~~2016. The~~2021 compared to $5.3 million in the first nine months of 2020. Food, beverage and merchandise sales increased between periods as a result of an increase in ~~food~~business activity. The government restrictions issued in response to control the COVID-19 pandemic, which included decreased occupancy for restaurants and ~~beverage revenue related to The Avalon Inn between periods was slightly offset by a decrease in food~~limits placed on mass gatherings and ~~beverage revenue at the clubs~~large community events, significantly impacted on our operations during the first nine months of ~~2017 compared~~2020. Food and beverages sales related to banquets and conferences were not significant during the first nine months of ~~2016.~~2020 as a result of the government mandated restrictions on gatherings and events. During the nine months ended September 2021, food and beverage sales related to banquets and conferences increased as a result of the lifting of certain government mandates placed on gatherings and events.

Other netnet operating revenues related to the golf and related operations ~~was $8.0~~were approximately $12.9 million in the first nine months of ~~2017~~2021 compared ~~with $7.6~~to $9.3 million in the first nine months of ~~2016. This~~2020. Membership dues revenue was approximately $5.0 million in the first nine months of 2021 compared to $4.6 million in the first nine months of 2020. The increase in membership dues revenue was ~~primarily~~ attributable to an increase in ~~net operating revenues related to room rental at The Avalon Inn~~both membership rates and ~~an increase in annual membership dues.~~the average number of members between periods. Net operating revenues related to room rental was approximately ~~$1.6~~$3.4 million in the first nine months of ~~2017~~2021 compared ~~with $1.4~~to $1.7 million in the first nine months of ~~2016.~~2020. The increase in ~~net operating revenues related to~~ room ~~rental~~revenue was ~~due to~~a result of both higher occupancy and ~~associated~~an increase in average room rates ~~during 2017~~when compared ~~with~~to the prior period. ~~The net operating revenues from membership dues increased to $3.9 million during~~During the first nine months of ~~2017 compared with $3.5~~2020, the Company experienced cancellations of overnight room accommodations due to the COVID-19 pandemic. Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $2.0 million in the first nine months of ~~2016 due~~2021 compared to an$1.0 million in the first nine months of 2020. In March of 2020, government orders were issued in response to controlling the COVID-19 pandemic which required all nonessential business activities, including athletic, fitness, salon and spa activities to temporarily cease operations. These business activities were allowed to resume operating late in the second quarter of 2020. Greens fees and associated cart rentals were approximately $2.5 million in the first nine months of 2021 compared to $2.0 million in the first nine months of 2020. The increase in ~~annual membership dues~~greens fees and ~~an increase in the average number of members between periods. The average number of members~~associated cart rental during the first nine months of ~~2017~~2021 compared to the first nine months of 2020 was ~~4,604 compared with 4,588~~due to an increase in the ~~comparable prior period. During the third quarter~~number of 2016, annual membership dues rates were increased. The increased rates become effective for existing members on the member’s renewal date. The increases noted above were slightly offset by a decrease of approximately $0.2 million in greens fees and associated cart rentals and fitness related revenue.golf rounds played. 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 ~~2017~~2021 and ~~2016.~~2020.

~~Cost~~Total cost of operations for the golf and related operations segment ~~increased to $11.1~~were $17.0 million in the first nine months of ~~2017~~2021 compared with ~~$10.7~~$12.0 million in the first nine months of ~~2016.~~2020. Cost of food, beverage and merchandise was approximately ~~$2.5 million in both the first nine months of 2017 and 2016. Cost of operations related to the golf and related operations increased approximately $0.4 million between periods from $8.6~~$3.6 million in the first nine months of ~~2017~~2021 compared ~~with $8.2~~to $2.2 million in the first nine months of ~~2016.~~2020. The increase in total food, beverage and merchandise costs between periods is primarily due to higher revenues from increased business operations. The cost of food, beverage and merchandise sales was ~~primarily a result~~approximately 42% of ~~higher employee related costs~~associated revenue in the first nine months of 2021 and ~~increased use of lawn care maintenance products for the golf courses.~~

~~Income before income taxes for the~~ ~~golf~~2020. Golf and related operations ~~was $0.3~~operating costs increased to approximately $13.4 million in the first nine months of ~~2017~~2021 compared with ~~$0.5~~$9.8 million in the first nine months of ~~2016.~~2020. The increase in operating costs between periods, primarily employee related costs, was directly attributable to the increased business operations during the first nine months of 2021 compared to the first nine months of 2020 as certain government mandates regarding restaurant operations were reduced and subsequently lifted.

The golf and related operations recorded income before income taxes of $3.2 million in the first nine months of 2021 compared with net income before income taxes of $0.1 million in the first nine months of 2020. The change between periods was ~~primarily due to an increase in salaries and other employee related costs as~~ a result of ~~an increase in the number of employees, increased use of lawn care maintenance products for the golf courses and increased depreciation expense. These increased expenses were partially offset by~~ higher ~~occupancy~~net operating revenues and associated gross profit related to room ~~rates attributable to The Avalon Inn~~rentals, greens fees and ~~an increase in membership dues revenue noted above.~~related cart rental, food, beverage and merchandise sales and the gain on debt extinguishment of approximately $1.5 million representing the Paycheck Protection Program loan that was forgiven by the Small Business Administration received under the CARES Act.

The ability to attract new members and retain members is very important to the success of the golf and related operations segment. Avalon is continually using different marketing strategies to attract and retain members, such as local television advertising and/or various membership promotions. A significant decline in members could adversely impact the financial results of the golf and related operations segment.

Ge~~neral~~General corporate expenses were ~~$2.2~~$3.1 million in the first nine months of ~~2017~~2021 compared ~~with $2.1~~to $2.4 million in the first nine months of ~~2016.~~2020. The increase ~~in general corporate expenses is~~was primarily ~~due~~attributable to higher employee related ~~costs.~~costs, which included employee incentives paid in 2021, and an increase in legal and professional fees.

Interest expense was ~~$0.5~~approximately $0.9 million in both the first nine months of ~~2017 compared with $0.3 million in~~2021 and 2020. During the first nine months of ~~2016. The increase~~2021, the decrease in interest expense ~~was~~ due to ~~higher~~the lower average outstanding ~~borrowings at~~debt was offset by a higher weighted average interest rate ~~during~~on the ~~first~~outstanding borrowings. During the nine months ~~of 2017 compared with the first nine months of the prior year. During the first nine months of 2017~~ended September 30, 2021 and ~~2016,~~2020, the weighted average interest rate on outstanding borrowings was ~~5.35%~~4.91% and ~~3.75%~~4.74%, respectively.

Net ~~loss attributable to Avalon Holdings Corporation common shareholders was $0.3 million in the first nine months of 2017 compared with net~~ income attributable to Avalon Holdings Corporation common shareholders ~~of $0.3~~was $2.4 million in the first nine months of ~~2016.~~2021 compared to a net loss attributable to Avalon Holdings Corporation common shareholders of $0.5 million in the first nine months of 2020. Avalon recorded a state income tax provision in both the first nine months of ~~2017~~2021 and ~~2016,~~2020, which was related entirely to the waste management and brokerage operations. ~~The effective state tax rate related to the waste management and brokerage operations was approximately 7% for both the first nine months of 2017 and 2016.~~ 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 provision (benefit) on the income (loss) before taxes was offset by a change in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.

In December 2019, a novel strain of coronavirus, COVID-19, emerged in Wuhan, Hubei Province, China. While initially concentrated in China, the outbreak spread to other countries and infections have been reported globally including in the United States. On March 11, 2020, the World Health Organization declared the COVID-19 viral disease a pandemic. As a result, the federal and state governmental bodies began taking unprecedented measures to try and control the spread of the virus including the issuance of temporary stay at home orders, the temporary closing of non-essential businesses and in-house dining and restrictions on gatherings and events. During the nine months ended September 30, 2020, the various governmental orders that were issued to control the spread of COVID-19 adversely impacted our operations and related financial results. Our restaurants operated under government mandated occupancy restrictions for in-house dining. Food and beverages sales related to banquets and conferences were significantly lower as a result of restrictions placed on gatherings and events. In addition, in March 2020, the Company began experiencing a high level of room and event cancellations with some subsequent re-bookings for a future date.

Under the Program, the borrower is eligible for loan forgiveness up to the amount the borrower spends on certain eligible costs during, at the borrowers election, either an 8 or 24 week covered period beginning on the date the proceeds were received on the loan. Eligible costs under the Program include payroll costs, interest on mortgage obligations incurred before the covered period, rent on leasing agreements and utility services. The amount of loan forgiveness is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. Under the Program, proceeds that are not forgiven convert to a loan bearing interest at a fixed rate of 1% payable, at the borrowers election, in either 18 or 54 equal monthly installments commencing 10 months after the end of their covered period.

A portion of Avalon’s waste brokerage and management services revenues is derived from the disposal and/or transportation of out-of-state waste. Any law or regulation restricting or impeding the transportation of waste or the acceptance of out-of-state waste for disposal could have a negative effect on Avalon.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss carryforwards generated in taxable years beginning after December 31, 2017, to offset 100% of taxable income for taxable years beginning before January 1, 2021, and 80% of taxable income in taxable years beginning after December 31, 2020. In addition, the CARES Act allows net operating losses incurred in taxable years beginning after December 31, 2017, and before January 1, 2021, to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The adoption of these provisions did not have a material impact on the Company’s financial position or results of operations.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the “Appropriations Act”) was enacted in response to the COVID-19 pandemic. The Appropriations Act, among other things, temporarily extends through December 31, 2025, certain expiring tax provisions, including look-through treatment of payments of dividends, interest, rents, and royalties received or accrued from related controlled foreign corporations. Additionally, the Appropriations Act enacts new provisions and extends certain provisions originated within the CARES Act, including an extension of time for repayment of the deferred portion of employees’ payroll tax through December 31, 2021, and a temporary allowance for full deduction of certain business meals. Avalon has elected not to defer the employees’ portion of payroll tax. Management is currently evaluating the other provisions of the Appropriations Act, but at present time does not expect that the other provisions of the Appropriations Act would result in a material tax or cash benefit.

In the ordinary course of conducting its business, Avalon becomes involved in lawsuits, administrative proceedings and governmental investigations, including those relating to environmental matters. Some of these proceedings may result in fines, penalties or judgments being assessed against Avalon which, from time to time, may have an impact on its business and financial condition. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty, management assesses the probability of loss and accrues a liability as appropriate. Avalon does not believe that any uninsured ultimate liabilities, fines or penalties resulting from such pending proceedings, individually or in the aggregate, will have a material adverse effect on its liquidity, financial position or results of operations.

~~The federal government~~Credit and ~~numerous state and local governmental bodies are continuing to consider legislation or regulations to either restrict or impede the disposal and/or transportation of waste. A portion of Avalon~~’s waste brokerage and management services revenues is derived from the disposal and/or transportation of out-of-state waste. Any law or regulation restricting or impeding the transportation of waste or the acceptance of out-of-state waste for disposal could have a negative effect on Avalon.collections

Economic challenges throughout the industries served by Avalon’s may result in payment defaults by customers. While Avalon continuously endeavors to limit customer credit risks, customer-specific financial downturns are not controllable by management. Significant customer payment defaults would have a material adverse impact upon Avalon’s future financial performance.

Avalon’s waste brokerage and management services business obtains and retains customers by providing services and identifying cost-efficient disposal options unique to a customer’s needs. Consolidation within the solid waste industry has resulted in reducing the number of disposal options available to waste generators and may cause disposal pricing to increase. Avalon’s waste brokerage and management services business may not be able to pass these price increases onto some of its customers, which, in turn, may adversely impact Avalon’s future financial performance.

A majority of Avalon’s business is not subject to long-term contracts

A significant portion of ~~Avalon~~’sAvalon’s business is generated from waste brokerage and management services provided to customers that are not subject to long-term contracts. In light of current economic, regulatory and competitive conditions, there can be no assurance that Avalon’s current customers will continue to transact business with Avalon at historical levels. Failure by Avalon to retain its current customers or to replace lost business could adversely impact the future financial performance of Avalon.

~~Avalon~~’sAvalon’s captive landfill management business is dependent upon a single customer as its sole source of revenue. If the captive landfill management business is unable to retain this customer, Avalon’s future financial performance could be adversely impacted.

A significant source of the golf and related operations revenues is derived from the members of the Avalon Golf and Country Club. Members are obligated to pay dues for a one year period. As such, the golf and related operations is primarily dependent on the sale and renewal of memberships in the Avalon Golf and Country Club, on a year to year basis.

Avalon's loan and security agreement may obligate it to repay debt before its maturity

The Company’s loan and security agreement contains certain covenants and events of default. Should Avalon be unable to meet one or more of these covenants, its lender may require it to repay any outstanding balance prior to the expiration date of the agreement. Our ability to comply with the financial and other covenants in our loan and security agreement may be affected by worsening economic or business conditions, or other events that may be beyond our control. We cannot provide assurance that our business will generate sufficient cash flow from operating activities in amounts sufficient to enable us to service debt and meet these covenants. We may need to refinance all or a portion of our indebtedness, on or before maturity. The Company cannot assure that additional sources of financing would be available to pay off any long-term borrowings under the loan and security agreement, so as to avoid default.

Saltwater disposal wells are regulated by the Ohio Department of Natural Resources (“ODNR”), with portions of the disposal facilities regulated by the Ohio EPA. As exploitation of the Marcellus and Utica shale formations by the hydrofracturing process develops, regulatory and public awareness of the environmental risks of saltwater brine and its disposal in saltwater disposal wells is growing and consequently, it is expected that regulation governing the construction and operation of saltwater disposal wells will increase in scope and complexity. Increased regulation may result in increased construction and/or operating costs, which could adversely affect the financial results of Avalon.

There is a continuing risk during the saltwater disposal ~~well~~’swell’s operation of an environmental event causing contamination to the water tables in the surrounding area, or seismic events. The occurrence of a spill or contamination at a disposal well site could result in remedial expenses and/or result in the operations at the well site being suspended and/or terminated by the Ohio EPA or the ODNR. Incurring remedial expenses and /or a suspension or termination of Avalon’s right to operate one or more saltwater disposal wells at the well site could have an adverse effect on Avalon’s financial results.

As a result of a seismic event with a magnitude of 2.1 occurring on August 31, 2014, the Chief of the Division of Oil and Gas Resources Management (“Chief” or “Division”) issued Orders on September 3, 2014 to immediately suspend all operations of ~~both of Avalon~~’sAvalon’s two saltwater injection wells until the Division could further evaluate the wells. The Orders were based on the findings that the two saltwater injection wells were located in close proximity to an area of known seismic activity and ~~also~~ that the saltwater injection wells pose a risk of increasing or creating seismic activity. The two saltwater injection wells are located approximately 112 feet apart. Based on these findings, the Chief ordered the immediate suspension of all operations of the two saltwater injection wells, until the Division could further evaluate the wells.

On September 5, 2014, Avalon submitted the information required by the ~~Chief~~’sChief’s Order in regards to its AWMS #1 injection well, and the Chief lifted the suspension for that well on September 18, 2014. On September 19, 2014, Avalon submitted information and a written plan required by the Chief’s Order proposing the establishment of certain operations and management controls on injections atfor the AWMS #2 injection well. To date, the Division has not responded to that plan despite Avalon’s requests for feedback.

On October 2, 2014, Avalon filed an appeal with the Ohio Oil and Gas Commission (the “Commission”) disputing the basis for suspending operations of AWMS #2 and also the authority of the Chief to immediately suspend such operations. On March 11, 2015, an appeal hearing was held. The Chief stated during the hearing that the suspension order is ~~only~~ temporary, and ~~that~~ he expects that AWMS #2 will be allowed to ~~inject~~resume operations once the ~~state~~’sstate’s final policymaking is complete.

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

On, and on November 1, 2016 an appeal hearing was held in that Court. On December 23, 2016, the Court issued its Decision and Order in Avalon’s favor, and vacated the Commission’s decision. The Court found that the Division’s suspension and refusal to work with the Company ~~for~~ over the 26 ~~months~~month period was arbitrary and not in accordance with reason. Subsequent to the ruling, and in accordance with the Court’s Decision and Order, both Avalon and the Division submitted their proposed restart plans to the Court. Avalon’s plan sets forth both the initial volumes and pressures and increases in volume and pressure while continuously monitoring seismicity and addressing the concerns of public health and safety.

On February 21, 2017, the Court issued its Final Decision and Order. The ~~Court~~’sCourt’s Final Decision and Order ~~sets~~set forth conditions for ~~the~~ restarting ofthe AWMS #2 salt water injection well in accordance with the proposed restart plans filed by Avalon with minor revisions. ~~While the Company was making preparations for restarting the well and opening the facility,~~On February 22, 2017, the Division appealed the Final Decision and Order and filed a Motion to Stay the Court ~~Order on February 22, 2017.~~Order. The Motion to Stay was granted by the Ohio 10^th ~~Circuit~~District Court of Appeals on March 21, 2017.

On September 14, 2017, an appeal hearing was ~~held.~~held in the Ohio 10^th District Court of Appeals and on July 31, 2018 a decision was issued on the appeal. The decision reinstated the previous Ohio Oil and Gas Commission decision in this matter.

On September 12, 2018, the Company appealed the Ohio 10^th District Court of Appeals decision to the Supreme Court of Ohio. On November 21, 2018, the Company received notice from the Supreme Court of Ohio that the court would not accept for review the Company’s appeal of the Ohio 10^th District Court of Appeals decision on the Division of Oil and Gas Resources Management’s appeal of the Franklin County Court of Common Pleas February 21, 2017 entry allowing restart of the Company’s AWMS Water Solutions, LLC #2 salt water injection well.

On April 5, 2019, Avalon filed with the Oil and Gas Commission a motion to vacate its prior decisions in this matter. The Oil and Gas Commission scheduled a hearing on this motion for August 13, 2019. Before the hearing began, and in response to the Division’s motion to dismiss the Company’s motion to vacate, the Commission dismissed the matter. The Company appealed that decision to the Franklin County Court of Common Pleas. In April 2020, the Division’s motion to dismiss and the Company’s opposition were reviewed by the Court. The Company is currently awaiting judgment from the ~~court. In~~Court.

Concurrently with the ~~event~~filing of the ~~suspension order is lifted, Avalon will make preparations for restarting~~appeal with the Franklin County Court of Common Pleas, the Company filed a writ of mandamus in the 10^th District Court of Appeals on August 30, 2019 to compel the chief of the Division to issue restart orders, or alternative orders that would allow the Company to either restart the AWMS #2 well, or appeal said orders to the Oil and ~~opening the facility~~Gas Commission in accordance with Ohio Law. On October 6, 2020 and in response to a motion from the ~~restart plans. In~~Division, the ~~event that the temporary suspension is not lifted by the Ohio 10~~^th ~~Circuit~~ Court dismissed this complaint for writ of ~~Appeals, Avalon will continue to appeal until a favorable ruling lifting the temporary suspension is received.~~mandamus.

In addition, on August 26, 2016, Avalon filed a complaint in the 11^th Appellate District Court in Trumbull County, Ohio for a Peremptory Writ of Mandamus to compel the Director of the ~~ODNR~~Ohio Department of Natural Resources (“ODNR”) to initiate appropriations procedures to determine damages from the illegal regulatory taking of the Company’s property, or issue an alternative remedy at law. ~~There is currently no implemented state-wide policy on induced seismicity and The ODNR has refused to communicate with the Company regarding the status and requirements of any policymaking.~~ The Company believes that the actions, and lack of responsible actions, by ~~ODNR, which were triggered by a seismic event that presented no hazard or risk to any individual or to~~ the ~~environment,~~ODNR is a clear violation of the Company’s property rights and a violation of the Fifth and Fourteenth Amendments to the U.S. Constitution; Article I, Section 19 of the Ohio Constitution; and Ohio Revised Code Chapter 163.

On ~~September 26, 2016,~~March 18, 2019, Avalon received notice that the ~~ODNR filed a motion~~11^th Appellate District Court in Trumbull County, Ohio issued summary judgment in favor of the Ohio Department of Natural Resources in the writ of mandamus action that resulted from the suspension order of the Company’s salt water injection well. The decision was appealed to ~~dismiss Avalon’s Writ~~the Supreme Court of ~~Mandamus complaint. The Company intends to vigorously pursue the Complaint and obtain due process and fair compensation. Discovery has been initiated~~Ohio on April 5, 2019. Oral arguments in the case ~~but no hearing date has been set.~~occurred on April 7, 2020. On September 23, 2020, the Supreme Court of Ohio ruled in favor of the Company. The Supreme Court of Ohio reversed the decision of the 11^th Appellate District Court and remanded the case back to that court for a trial on the merits. The trial occurred in September and October 2021. The Company is currently awaiting judgment from the 11^th Appellate District Court.

~~At December 31, 2016,~~ ~~in accordance with~~On May 24, 2021, the ~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10-35,~~ ~~Property, Plant~~Company received Chief’s Orders from the Division vacating the September 3, 2014 suspension orders for AWMS #2 and ~~Equipment – Overall – Subsequent Measurement~~ ~~(“ASC 360-10-35”), Avalon assessed~~setting conditions for restart of that well. Among these conditions was a limit placed on the ~~recoverability~~seismicity within three miles of the ~~carrying values~~well. Under the Order, if a seismic event with a magnitude 2.1 or above occurs, the well must cease operations for an indefinite period of time until concurrence for subsequent restart is received from the ~~salt water injection wells based on~~Division. The Company appealed the ~~Chief of~~May 2021 Chief’s Order to the ~~Division of~~Ohio Oil and Gas ~~Resources Management’s decision~~Commission, seeking reasonable operating conditions that will allow the facility to ~~temporarily suspend operations of the wells. Avalon estimated future cash flows directly associated with~~operate profitably while protecting human health and ~~which are~~property. A hearing in this matter is expected ~~to arise as a direct result of the wells once the temporary suspension is lifted. The assumptions used by management~~ in developing the estimates of future cash flows were based on current market conditions and comparable prior periods while in operation. Based on the estimated undiscounted sum of the future cash flows, the net book value of the property, plant and equipment relating to the wells of approximately $4.3 million at December 31, 2016 was recoverable in less than the estimated remaining useful life of those assets. There were no changes to this assessment at September 30, 2017.

Economic challenges throughout the industries served by Avalon may result in payment defaults by customers. While Avalon continuously endeavors to limit customer credit risks, customer-specific financial downturns are not controllable by management. Significant customer payment defaults would have a material adverse impact upon Avalon~~’s future financial performance.~~early 2022.

The Avalon Golf and Country Club operates four golf courses and related ~~clubhouses at each of its three facilities.~~country clubs and a multipurpose recreation center. The Avalon Golf and Country Club facilities also offer swimming pools, fitness centers, tennis courts, dining and banquet facilities, salon and spa services. In addition, The ~~Avalon Inn~~Grand Resort provides guests with a self-contained vacation experience, offering hotel guests golf packages to all of the golf courses of the Avalon Golf and Country Club and allows its guests to utilize the facilities at each of the clubhouses. Members of the Avalon Golf and Country Club also have access to all of the amenities offered by The ~~Avalon Inn.~~Grand Resort. The Avalon Golf and Country Club competes with many public courses and country clubs in the area. Although the golf courses continue to be available to the general public, the primary source of revenues is derived from the members of the Avalon Golf and Country Club. Avalon believes that the combination of its ~~three~~golf facilities and The ~~Avalon Inn~~Grand Resort will result in additional memberships in the Avalon Golf and Country Club. ~~The ability to retain current members and attract new members has been an ongoing challenge.~~ Although Avalon was able to increase the number of members of the Avalon Golf and Country Club as of September 30, ~~2017, Avalon~~2021, the ability to retain current members and attract new members has ~~not attained its membership goals. There can be no assurance as to when such goals will be attained and when the golf and related operations will ultimately become profitable.~~been an ongoing challenge. Avalon is continually using different marketing strategies to attract new members, such as local television advertising and various membership promotions. A significant decline in members could adversely affect the future financial performance of Avalon.

~~All three of Avalon~~’sAvalon’s golf course operations, The Grand Resort and ~~The Avalon Inn~~multipurpose recreation center currently hold liquor licenses for their respective facilities. If, for some reason, any one of these facilities were to lose their liquor license, the financial performance of the golf and related operations would be adversely affected.

Avalon’s operations are somewhat seasonal in nature since a significant portion of those operations are primarily conducted in selected northeastern and midwestern states. Additionally, Avalon’s golf courses are located in northeast Ohio and western Pennsylvania and are significantly dependent upon weather conditions during the golf season. As a result, Avalon’s financial performance is adversely affected by adverse weather conditions.

~~In May 2014, the Financial Accounting Standards Board (“FASB”)~~ ~~issued Accounting Standards Update (“ASU”) 2014-09,~~ ~~Revenue from Contracts with Customers~~ (“ASU 2014-09”). ASU 2014-09 clarifies the principles used to recognize revenue for all entities. ASU 2014-09 provides a unified five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The new standard replaces most of the existing revenue recognition standards in U.S. GAAP. In addition, in March 2016, the FASB issued ASU 2016-08, ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~~~, which clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent.~~

~~The Company has~~ reviewed the terms and conditions contained its contracts with customers relating to our brokerage and management services and captive landfill management activities for our waste management services segment. The Company is considering the terms and conditions of the contracts and the all-inclusive pricing for the service contained in those contracts in order to determine whether the waste management services provided to the customer meets the criteria to be accounted for under the series guidance. The Company also assessed whether the principal versus agent consideration would change how the Company presents revenue for these contracts. Under the contracts, the Company is primarily responsible for fulfilling the service and controls the service prior to transferring it to the customer. Based on our assessment, the Company is acting as the principal and primary obligor under the contracts, and should recognize revenue in the gross amount of consideration which it expects to be entitled in exchange for the service provided.

~~The Company will adopt the new revenue standard in its first quarter of 2018.~~ The Company expects to finalize our analysis in the fourth quarter. The Company plans to use the modified retrospective approach adoption method and, based on our analysis to date, does not believe there will be a material impact to the Company’s consolidated revenues upon adoption. However, the Company will present expanded disclosure in accordance with the requirements of the standard. The Company is currently evaluating those additional disclosures required as a result of the adoption of this guidance.

~~In November 2015, the FASB issued ASU 2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes~~ (“ASU 2015-17”), which simplifies the presentation of deferred income taxes by eliminating the need for entities to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. This amendment is effective for annual periods beginning after December 15, 2016. During the first quarter of 2017, the Company adopted ASU 2015-17. The adoption of this standard did not have an impact on Avalon’s financial position, results of operations or financial statement disclosures.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Avalon is currently reviewing its agreements for its golf carts, machinery and equipment for the landfill operations, furniture and fixtures for The Avalon Inn and office copiers under operating leases and evaluating the impact the adoption of this guidance will have on its financial position, results of operations, cash flows and related disclosures. Upon adoption, the Company expects that the ROU asset and the lease liability will be recognized in the balance sheets in amounts that will be material.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows: Restricted Cash~~ (“ASU 2016-18”), which requires entities to include restricted cash and restricted cash equivalent balances with cash and cash equivalent balances in the statement of cash flows. ASU 2016-18 will be effective January 1, 2018 and will impact the presentation of our statement of cash flows for the remaining loan proceeds deposited into our project fund account that are not utilized in 2017 to fund the renovation and expansion of The Avalon Inn.

Avalon does not have significant exposure to changing interest rates. ~~Based~~

Borrowings under our 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 ~~current debt level~~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.

Outstanding borrowings under our Line of Credit Agreement bear interest at Prime Rate plus .25%. At September 30, 2021, the interest rate on the Line of Credit Agreement was 3.50%. No amounts were outstanding under the Line of Credit Agreement at September 30, ~~2017, if market interest rates increased one percent, Avalon’s interest expense would increase approximately $0.1 million annually.~~ 2021.

Avalon does not undertake any specific actions to cover its exposure to interest rate risk and Avalon is not a party to any interest rate risk management transactions. Avalon does not purchase or hold any derivative financial instruments.

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “~~Exchange~~“Exchange Act”), Avalon’s management conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, ~~2017.~~2021. For purposes of the foregoing, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Avalon’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as outlined above. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that they believe that, as of September 30, ~~2017,~~2021, our disclosure controls and procedures were effective at a reasonable assurance level.

There were no changes in our ~~internal~~internal controls over financial reporting during the fiscal quarter ended September 30, ~~2017~~2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Reference is made to “~~Item~~“Item 3. Legal Proceedings” in Avalon’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 for a description of legal proceedings.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016

Net operating revenues:
Waste management services	$	10,831		$	13,593		$	27,934		$	32,625

Food, beverage and merchandise sales		2,326			2,354			5,702			5,605
Other golf and related operations		3,207			3,186			8,007			7,544
Total golf and related operations		5,533			5,540			13,709			13,149

Total net operating revenues		16,364			19,133			41,643			45,774

Costs and expenses:
Waste management services operating costs		8,792			11,295			22,219			26,901
Cost of food, beverage and merchandise		970			997			2,484			2,456
Golf and related operations operating costs		3,090			3,204			8,646			8,250
Depreciation and amortization expense		747			714			2,256			2,093
Selling, general and administrative expenses		2,240			2,108			6,305			5,865
Operating income (loss)		525			815			(267	)		209

Other income (expense):
Interest expense		(176	)		(94	)		(528	)		(273	)
Other income, net		50			57			236			218
Income (loss) before income taxes		399			778			(559	)		154

Provision for income taxes		29			43			81			79
Net income (loss)		370			735			(640	)		75

Less net loss attributable to non-controlling interest in subsidiary		(177	)		(71	)		(382	)		(244	)
Net income (loss) attributable to Avalon Holdings Corporation common shareholders	$	547		$	806		$	(258	)	$	319

Income (loss) per share attributable to Avalon Holdings Corporation common shareholders:
Basic net income (loss) per share	$	0.14		$	0.21		$	(0.07	)	$	0.08
Diluted net income (loss) per share	$	0.14		$	0.21		$	(0.07	)	$	0.08

Weighted average shares outstanding - basic		3,803			3,803			3,803			3,803
Weighted average shares outstanding - diluted		3,817			3,893			3,803			3,836

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Waste management and brokerage services	$	10,841	$	8,792	$	29,470	$	27,818
Captive landfill management operations		603		534		1,809		1,729
Total waste management services revenues		11,444		9,326		31,279		29,547
Food, beverage and merchandise sales		3,984		2,851		8,608		5,247
Membership dues revenue		1,684		1,522		4,952		4,540
Room rental revenue		1,824		1,132		3,438		1,725
Greens fees and cart rental revenue		1,467		1,332		2,470		1,998
Tennis lesson revenue		79		72		303		213
Other revenue		819		390		1,754		825
Total golf and related operations revenue		9,857		7,299		21,525		14,548
Total net operating revenues	$	21,301	$	16,625	$	52,804	$	44,095

	Balance at Beginning of Period		Losses		Write-offs less Recoveries			Balance at End of Period
Allowance for credit losses
Three months ended September 30, 2021	$	250	$	35	$	(18	)	$	267
Three months ended September 30, 2020	$	271	$	9	$	(4	)	$	276

Nine months ended September 30, 2021	$	265	$	35	$	(33	)	$	267
Nine months ended September 30, 2020	$	275	$	23	$	(22	)	$	276

	Balance at Beginning of Period		Unbilled Membership Dues		Billings			Balance at End of Period
Contract Assets:
Unbilled membership dues receivable
Three months ended September 30, 2021	$	1,102	$	237	$	(500	)	$	839
Three months ended September 30, 2020	$	1,109	$	305	$	(548	)	$	866

Nine months ended September 30, 2021	$	585	$	1,802	$	(1,548	)	$	839
Nine months ended September 30, 2020	$	602	$	1,950	$	(1,686	)	$	866

	Balance at Beginning of Period		Billings		Revenue Recognized			Balance at End of Period
Contract Liabilities:
Deferred membership dues revenue
Three months ended September 30, 2021	$	5,376	$	730	$	(1,684	)	$	4,422
Three months ended September 30, 2020	$	4,776	$	787	$	(1,522	)	$	4,041

Nine months ended September 30, 2021	$	3,196	$	6,178	$	(4,952	)	$	4,422
Nine months ended September 30, 2020	$	3,153	$	5,428	$	(4,540	)	$	4,041

Customer advance deposits
Three months ended September 30, 2021	$	784	$	588	$	(688	)	$	684
Three months ended September 30, 2020	$	652	$	261	$	(301	)	$	612

Nine months ended September 30, 2021	$	674	$	1,299	$	(1,289	)	$	684
Nine months ended September 30, 2020	$	553	$	656	$	(597	)	$	612

	Finance		Operating		Total
2022	$	206	$	591	$	797
2023		132		427		559
2024		107		254		361
2025		55		159		214
2026		15		26		41
Thereafter		405		0		405
Total lease payments		920		1,457		2,377
Less: imputed interest		298		103		401
Total		622		1,354		1,976
Less: current portion of obligations under leases		178		540		718
Long-term portion of obligations under leases	$	444	$	814	$	1,258

	September 30, 2017									September 30, 2021
	Gross Amount			Debt Issuance Costs			Net Amount			Gross Amount		Debt Issuance Costs			Net Amount
Term loan agreement	$	11,601		$	(175	)	$	11,426
Term Loan Agreement										$	21,116	$	(342	)	$	20,774
Less current portion		(558	)		19			(539	)		1,153		(42	)		1,111
Long-term debt	$	11,043		$	(156	)	$	10,887		$	19,963	$	(300	)	$	19,663

	December 31, 2020
	Gross Amount		Debt Issuance Costs			Net Amount
Term Loan Agreement	$	21,944	$	(373	)	$	21,571
Paycheck Protection Program Loans		1,964		0			1,964
Total		23,908		(373	)		23,535
Less current portion		1,636		(42	)		1,594
Long-term debt	$	22,272	$	(331	)	$	21,941

	December 31, 2016
	Gross Amount			Debt Issuance Costs			Net Amount
Term loan agreement	$	12,000		$	(189	)	$	11,811
Less current portion		(536	)		19			(517	)
Long-term debt	$	11,464		$	(170	)	$	11,294

For the Twelve Month Period Ending September 30,
2018	$	558
2019		589
2020		621
2021		655
2022		691
Thereafter		8,487
Total	$	11,601

			Weighted		Weighted		Number of Options Granted			Weighted Average Exercise Price		Weighted Average Fair Value at Grant Date
	Number of		Average		Average
	Options		Exercise		Fair Value at
	Granted		Price		Grant Date
Outstanding at January 1, 2017		760,000		2.51		1.00
Outstanding at January 1, 2021								244,000			2.66		1.03
Options granted		-		-		-		0			0		-
Options exercised		-		-		-		0			-		-
Options expired								(190,000	)		2.89		1.20
Options cancelled or forfeited		-		-		-		0			0		-
Outstanding at September 30, 2017		760,000	$	2.51	$	1.00
Outstanding at September 30, 2021								54,000		$	1.83	$	0.43
Options Vested		688,000						54,000		$	1.83	$	0.43
Exercisable at September 30, 2017		268,000
Exercisable at September 30, 2021								0		$	0	$	-

	Begins	Ends	Predetermined
	Vesting	Vesting	Vesting Price
Block 1	12 months after Grant Dates	48 months after Grant Dates	$	3.43
Block 2	24 months after Grant Dates	60 months after Grant Dates	$	4.69
Block 3	36 months after Grant Dates	72 months after Grant Dates	$	6.43
Block 4	48 months after Grant Dates	84 months after Grant Dates	$	8.81
Block 5	60 months after Grant Dates	96 months after Grant Dates	$	12.07

Gain on debt extinguishment:
Waste management services	$	0	$	0	$	0	$	0
Golf and related operations		0		0		1,462		0
Corporate		0		0		502		0
Total gain on debt extinguishment	$	0	$	0	$	1,964	$	0

	September 30,			December 31,			September 30,			December 31,
	2017			2016			2021			2020
Land and land improvements	$	14,179		$	14,118		$	15,312		$	15,150
Buildings and improvements		34,234			33,533			47,997			47,026
Machinery and equipment		9,126			9,015			5,708			5,469
Office furniture and fixtures								8,521			8,000
Vehicles		445			445			661			677
Office furniture and fixtures		6,309			5,963
Construction in progress		720			479			2,408			1,086
		65,013			63,553			80,607			77,408
Less accumulated depreciation and amortization		(21,438	)		(19,582	)		(27,982	)		(26,109	)
Property and equipment, net	$	43,575		$	43,971		$	52,625		$	51,299

	September 30,			December 31,
	2017			2016
Identifiable assets:
Waste management services	$	25,890		$	25,015
Golf and related operations		46,023			44,728
Corporate		49,972			51,937
Subtotal		121,885			121,680
Elimination of intersegment receivables		(55,047	)		(53,782	)
Total	$	66,838		$	67,898