~~201~~7

2022

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~~March 31, 2022

~~[ ]~~☐ 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.~~May 6, 2022.

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~~March 31, 2022 and ~~2016~~2021 (Unaudited)	1

		Condensed Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 (Unaudited)	2

		Condensed Consolidated ~~Statement o~~fStatements of Shareholders’ Equity for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2022 and 2021 (Unaudited)	3

		Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 (Unaudited)	4

		Notes to Unaudited Condensed Consolidated Financial Statements ~~(Unaudited)~~	5

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16 23

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30 34

	Item 4.	Controls and Procedures	30 34


PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	31 35

	Item 2.	Changes in Securities and Use of Proceeds	31 35

	Item 3.	Defaults upon Senior Securities	31 35

	Item 4.	Mine Safety Disclosures	31 35

	Item 5.	Other Information	31 35

	Item 6.	Exhibits and Reports on Form 8-K	31 35

~~SIGNATURE~~	32 SIGNATURE		36

See accompanying notes to unaudited condensed consolidated financial statements.

	March 31, 2022			December 31, 2021
Assets
Current Assets:
Cash and cash equivalents	$	2,430		$	3,254
Accounts receivable, less allowance for credit losses		10,737			9,933
Unbilled membership dues receivable		760			578
Inventories		1,358			1,105
Prepaid expenses		1,180			996
Other current assets		44			105
Total current assets		16,509			15,971

Property and equipment, net		54,496			53,338
Property and equipment under finance leases, net		5,301			5,390
Operating lease right-of-use assets		1,588			1,598
Restricted cash		676			1,696
Noncurrent deferred tax asset		8			8
Other assets, net		35			36
Total assets	$	78,613		$	78,037

Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	1,140		$	1,126
Current portion of obligations under finance leases		157			167
Current portion of obligations under operating leases		519			534
Accounts payable		10,196			10,164
Accrued payroll and other compensation		1,261			797
Accrued income taxes		74			67
Other accrued taxes		474			541
Deferred membership dues revenue		4,943			3,363
Other liabilities and accrued expenses		1,381			1,265
Total current liabilities		20,145			18,024

Long-term debt, net of current portion		19,086			19,376
Obligations under finance leases, net of current portion		493			496
Obligations under operating leases, net of current portion		1,069			1,064
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		59,202			59,201
Accumulated deficit		(21,433	)		(20,171	)
Total Avalon Holdings Corporation Shareholders' Equity		37,808			39,069
Non-controlling interest in subsidiaries		(88	)		(92	)
Total equity		37,720			38,977
Total liabilities and equity	$	78,613		$	78,037

See accompanying notes to unaudited condensed consolidated financial statements.

	For the Three Months Ended March 31, 2022

	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, 2022		3,287,647		611,784	$	33	$	6	$	59,201	$	(20,171	)	$	39,069		$	(92	)	$	38,977

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

Investment in subsidiary from accredited investor		-		-		0		0		0		0			0			142			142

Net loss		-		-		0		0		0		(1,262	)		(1,262	)		(138	)		(1,400	)

Balance at March 31, 2022		3,287,647		611,784	$	33	$	6	$	59,202	$	(21,433	)	$	37,808		$	(88	)	$	37,720

	For the Three Months Ended March 31, 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		Subsidiary			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		-		-		-		-		1		-			1		-			1

Net income (loss)		-		-		-		-		-		716			716		(28	)		688

Balance at March 31, 2021		3,287,647		611,784	$	33	$	6	$	59,197	$	(21,426	)	$	37,810	$	(154	)	$	37,656

See accompanying notes to unaudited condensed consolidated financial statements.

	Three Months Ended March 31,
	2022			2021

Cash flows from operating activities:
Net income (loss)	$	(1,400	)	$	688
Reconciliation of net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization expense		829			764
Amortization of debt issuance costs		11			11
Compensation costs - stock options		1			1
Provision for losses on accounts receivable		2			(5	)
Gain from disposal of equipment		0			(3	)
Gain on debt extinguishment		0			(1,087	)
Change in operating assets and liabilities:
Accounts receivable		(806	)		(1,939	)
Unbilled membership dues receivable		(182	)		(116	)
Inventories		(253	)		(228	)
Prepaid expenses		(184	)		(163	)
Other assets, net		62			30
Accounts payable		(582	)		1,155
Accrued payroll and other compensation		464			293
Accrued income taxes		7			24
Other accrued taxes		(67	)		(39	)
Deferred membership dues revenue		1,580			926
Other liabilities and accrued expenses		116			(49	)
Net cash provided by (used in) operating activities		(402	)		263

Cash flows from investing activities:
Capital expenditures		(1,284	)		(668	)
Proceeds from disposal of equipment		0			3
Net cash used in investing activities		(1,284	)		(665	)

Cash flows from financing activities:
Proceeds from subsidiary private placement offering		142			0
Principal payments on term loan facilities		(287	)		(273	)
Principal payments on finance lease obligations		(13	)		(14	)
Net cash used in financing activities		(158	)		(287	)

Decrease in cash, cash equivalents and restricted cash		(1,844	)		(689	)
Cash, cash equivalents and restricted cash at beginning of period		4,950			8,095
Cash, cash equivalents and restricted cash at end of period	$	3,106		$	7,406

Supplemental disclosure of cash flow information:

Significant non-cash operating and investing activities:
Capital expenditures included in accounts payable	$	614		$	192
Significant non-cash operating and financing activities:
Interest forgiven from Paycheck Protection Program loans	$	0		$	8
Significant non-cash investing and financing activities:
Operating lease right-of-use assets in exchange for lease obligations	$	31		$	37

Cash paid during the period for interest	$	264		$	296
Cash paid during the period for income taxes	$	13		$	19

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~~2021 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,~~ March 31, 2022, and the results of its operations and cash flows for the interim periods presented.

The operating results for the interim periods are not necessarily ~~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.

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

In ~~May 2014,~~ March 2020, both federal and state governmental bodies took unprecedented measures to try and control the spread of the COVID-19 coronavirus including the issuance of temporary stay at home orders, the temporary closing of non-essential businesses and in-house dining and restrictions on gatherings and events. Although the various government mandates impacting our business operations have currently been lifted, we may experience weakened demand in light of travel restrictions or warnings, consumer fears and reduced consumer discretionary spending and general economic uncertainty. The full extent of the impact of the COVID-19 pandemic on our operations and financial performance will depend on future developments, including the duration and spread of the pandemic and the impact of COVID-19 variants, all of which are uncertain and cannot be predicted at this time. Governmental bodies may impose restrictions, which could include additional shutdowns, to stop the spread of infection. These restrictions would have a negative impact on our financial condition, results of operations and cash flows.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“~~ASU”~~ASU 2020-04”), establishing Accounting Standards Codification (“ASC”) ~~2014-09,~~Topic 848, ~~Revenue~~Reference Rate Reform. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts to ease the financial reporting burdens related to the expected market transition from ~~Contracts with Customers~~ (“the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. ASU ~~2014-09”). ASU 2014-09 clarifies~~2020-04 was effective beginning on March 12, 2020, and the ~~principles used~~Company may elect to ~~recognize revenue for all entities. ASU 2014-09 provides a unified five-step model~~apply the amendments prospectively through December 31, 2022. The Company has not applied any optional expedients and exceptions to ~~determine when~~date, and ~~how revenue is recognized. The core principle is that a~~ ~~company should recognize revenue~~will continue to ~~depict~~evaluate 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 mostimpact of the ~~existing revenue recognition standards in U.S. GAAP. In addition, in March 2016,~~guidance and whether it will apply 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.~~optional expedients and exceptions.

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents for purposes of the Condensed Consolidated Balance Sheets. Avalon maintains its cash balances in various financial institutions. These balances may, at times, exceed federal insured limits. Avalon has ~~reviewed~~not experienced any losses in such accounts and believes it is not exposed to any significant credit risk relating to its cash and cash 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 Condensed Consolidated Balance Sheets. Restricted cash consists of loan proceeds deposited into a project fund account to fund costs associated with the renovation and ~~conditions contained its~~expansion of The Grand Resort and Avalon Field Club at New Castle in accordance with the provisions of the loan and security agreement (See Note 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 March 31, 2022 and December 31, 2021 (in thousands):

Receivables, net, include amounts billed and currently due from customers. The amounts due are stated at their net realizable value. At March 31, 2022 and December 31, 2021, accounts receivable, net, related to ~~determine whether~~our waste management services segment were approximately $7.9 million and $9.0 million, respectively. At March 31, 2022, two customers accounted for approximately 22% of the waste management services ~~provided to~~segment’s receivables and 16% of the consolidated receivables. At December 31, 2021, onecustomer ~~meets the criteria to be~~ accounted for ~~under~~approximately 19% of the ~~series guidance. The Company also assessed whether~~waste management services segment’s receivables and 17% of 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 priorconsolidated receivables. Accounts receivable, net, related 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 were approximately $2.8 million and $0.9 million at March 31, 2022 and December 31, 2021, respectively. Noone customer of the golf and related operations segment accounted for 10% or more of Avalon’s golf and related operations segment or consolidated net receivables at March 31, 2022 or December 31, 2021.

The Company maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be collected. Customer accounts that are outstanding longer than the contractual payment terms are considered past due. Avalon determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, Avalon’s previous accounts receivable loss history, the customer’s current ability to pay its obligation to Avalon and the condition of the general economy and the industry as a whole. Avalon writes off accounts receivable when they become uncollectible. Payments subsequently received on such receivables are credited to the allowance for credit losses, or to income, as appropriate under the circumstances. Allowance for credit losses was approximately $0.3 million at both March 31, 2022 and December 31, 2021.

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

Contract assets include unbilled membership dues receivables related to the Avalon Golf and Country Club for the customers membership commitment which are billed on a monthly basis over the course of the annual agreement. Such amounts are stated at their net realizable value. Contract assets related to unbilled membership dues are classified as current as revenue related to such agreements is recognized within the annual membership period. Unbilled membership receivables in our Condensed Consolidated Balance Sheets were approximately $0.8 million at March 31, 2022 and $0.6 million at December 31, 2021.

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

Contract liabilities include unrecognized or deferred revenues relating to membership dues and customer advance deposits. We record deferred revenue when cash payments are received in advance of satisfying our ~~annual~~performance obligation. We classify deferred membership ~~contracts. Based~~dues revenue as current based on ~~review~~the timing of ~~the contract~~s,when we expect to recognize revenue for the membership commitment based on the Company satisfying the stand ready performance obligation throughout the annual membership period. The unrecognized or deferred revenues related to membership dues ~~over~~in our Condensed Consolidated Balance Sheets were approximately $4.9 million at March 31, 2022 and $3.4 million at December 31, 2021, respectively. Customer advance deposits are recorded as a liability until the ~~membership term. As a practical expedient, the Company applied this guidance~~goods or services are provided to the ~~whole portfolio~~customer. Generally, customer advances, and corresponding performance obligation are satisfied within 12 months of ~~annual membership contracts as all contracts have similar characteristics.~~the date of receipt of advance payment. The ~~Company reasonably expects that the effect on the financial statements of applying this guidance~~unrecognized revenues related to ~~the portfolio of all membership contracts does not differ from applying this guidance to each individual contract.~~customer advance deposits are recorded in “Other liabilities and accrued expenses” in our Condensed Consolidated Balance Sheets. Customer advance deposits were approximately $0.9 million at March 31, 2022 and $0.8 million at December 31, 2021.

The ~~Company will adopt~~following table presents changes in our contract liabilities during 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~~ three months ended March 31, 2022 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.2021 (in thousands):

~~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 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 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.

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the asset which varies from 10 to 30 years for land improvements; 5 to 50 years in the case of buildings and improvements; and from 3 to 10 years for machinery and equipment, vehicles and office ~~furnitur~~efurniture and equipment.

Major additions and improvements are charged to the property and equipment accounts while replacements, maintenance and repairs, which do not improve or extend the life of the respective asset, are expensed as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation is eliminated from the accounts in the year of disposal. Gains or losses resulting from ~~disposals~~the disposal of property and equipment are ~~credited or charged to operations. Interest costs are capitalized on significant construction projects.~~recorded in “Other income, net” in our Condensed Consolidated Statements of Operations.

Property and equipment at ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016~~ 2021 consists of the following (in thousands):

At ~~September 30, 2017,~~ March 31, 2022, the Company did not have any significant fixed contractual commitments for construction projects.

Avalon reviews the carrying value of its long-lived assets whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If indicators of impairment exist, Avalon would determine whether the estimated undiscounted sum of the future cash flows of such assets and their eventual disposition is less than its carrying amount. If less, an impairment loss would be recognized if, and to the extent that the carrying amount of such assets exceeds their respective fair value. Avalon would determine the fair value by using quoted market prices, if available, for such assets; or if quoted market prices are not available, Avalon would discount the expected estimated future cash flows. During the firstthree months of 2022 and 2021,no triggering events were present.

Avalon leases golf carts, machinery and equipment for the landfill operations, furniture and fixtures for The Grand Resort and office copiers under operating leases. Our operating leases have remaining lease terms ranging from less than 1 year to 5.0 years. The weighted average remaining lease term on operating leases was approximately 3.5 years at March 31, 2022.

During the firstthree months of 2022, the Company entered into a new operating lease agreement for golf cart GPS equipment. The Company recorded an operating lease right-of-use asset and corresponding obligation under the operating lease of approximately $31,000. During the firstthree months of 2021, the Company entered into a new operating lease agreement for golf cart GPS equipment. The Company recorded an operating lease right-of-use asset and corresponding obligation under the operating lease of approximately $37,000.

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

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

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

~~During 2016 and 2017, t~~heIn addition, the golf and related operations also entered into ~~leases~~lease agreements for ~~a vehicle and~~vehicles, golf course maintenance and restaurant equipment ~~that~~and the captive landfill operations entered into lease agreements for equipment which were determined to be ~~capital~~finance leases. At March 31, 2022, the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from less than 1 year to 4.6 years. The ~~amounts capitalized in~~weighted average remaining lease term on the ~~Condensed Consolidated Balance Sheets under the caption “Leased property under capital~~vehicles and equipment leases ~~net” relating to these assets were~~was approximately ~~$0.8 million~~3.2 years at ~~September 30, 2017 and $0.3 million at December~~March 31, ~~2016.~~2022.

Leased property and associated obligations under ~~capital~~finance leases at ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016~~ 2021 consists of the following (in thousands):

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

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

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

Note 6. 9.Basic and Diluted Net Income (~~Loss~~)per(Loss) per Share

Basic net income (loss) per share attributable to Avalon Holdings Corporation common shareholders is computed by dividing the net income (loss) by the weighted average number of common shares outstanding. For both the three months ended March 31, 2022 and 2021, the weighted average number of common shares outstanding ~~which were 3,803,331 for each period.~~was 3,899,431.

Diluted net income (loss) per share attributable to Avalon Holdings Corporation common shareholders is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus any weighted common equivalent shares determined to be outstanding during the period using the treasury method. The weighted common equivalent shares included in the calculation are related to stock options granted by Avalon where the weighted average market price of ~~Avalon~~’sAvalon’s common stock for the period presented is greater than the option exercise price of the stock option.

For the three months ended ~~September 30, 2017 and 2016, the diluted weighted average number of shares outstanding was 3,816,726 and 3,892,799, respectively.~~

~~For the nine~~ ~~months ended September 30, 2017,~~ March 31, 2022, the diluted per share amount reported is equal to the basic per share amount because Avalon was in a net loss position and as a result, such dilution would be considered anti-dilutive. Assuming dilution, the weighted average number of common shares outstanding for the ~~nine~~three months ended ~~September 30, 2017~~ March 31, 2022 was ~~3,844,639.~~3,924,788. For the ~~nine~~three months ended ~~September 30, 2016,~~ March 31, 2021, the diluted weighted average number of ~~common~~ shares outstanding was ~~3,836,048.~~3,944,825.

On December 20, ~~2016,~~ 2019, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the “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~~ March 31, 2022 and December 31, ~~2016, the remaining~~2021, loan proceeds of ~~$2.8~~$0.7 million and ~~$2.9~~$1.7 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 Term Loan Agreement.

The ~~$12.0 million term loan amount~~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 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 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 Term Loan Agreement are secured by certain real property and related business assets as defined in the ~~Term Loan Agreement.~~agreement. The Term Loan Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year. The Term Loan also contains ~~certain financial and~~ other nonfinancial covenants, customary representations, warranties and events of default. Avalon was in compliance with the Term Loan Agreement covenants at ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016.~~2021.

The Company ~~incurred~~capitalized approximately ~~$189,000~~$0.4 million of debt issuance costs in connection with the Term Loan Agreement. ~~These debt issuance~~The Company is amortizing these costs ~~were capitalized and will be amortized~~ over the life of the 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~~ March 31, 2022 and December 31, ~~2016.~~

2021. Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .25%. At ~~September 30, 2017,~~ March 31, 2022, the interest rate on the Line of Credit Agreement was ~~4.50%~~3.75%.

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~~ March 31, 2022 and December 31, ~~2016.~~2021.

The Coronavirus Aid, Relief, and Economic Security Act, or (“CARES”) Act, which was signed into law in March 2020, authorized the Small Business Administration to temporarily guarantee loans under a 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, the borrower is eligible for loan forgiveness up to the amount the borrower spends on certain eligible costs during the 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. Collateral or guarantor support is not required for the loan.

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 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 months ended March 31, 2021, approximately $1.1 million of the loans and $8,000 of associated interest were forgiven by the Small Business Administration. As of March 31, 2022, all loan proceeds received under the Program and related interest has been forgiven by the Small Business Administration.

During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2022 and 2021, the weighted average interest rate on outstanding borrowings was ~~5.35%. During the three~~5.00% and ~~nine months ended September 30, 2016, the weighted average interest rate on outstanding borrowings was 3.75%.~~4.80%, respectively.

Obligations under thethe Company’s debt agreements at ~~September 30, 2017~~ March 31, 2022 and December 31, ~~2016~~ 2021 consist of the following (in thousands):

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

During the three ~~month periods~~ months ended ~~September 30, 2017 and 2016, net income attributable to Avalon Holdings Corporation shareholders was $0.5 million and $0.8 million, respectively. During the nine month period ended September 30, 2017,~~ March 31, 2022, net loss attributable to Avalon Holdings Corporation shareholders was ~~$0.3~~$1.3 million compared ~~with~~to net income attributable to Avalon Holdings Corporation shareholders of ~~$0.3~~$0.7 million during the ~~nine month period~~three months ended ~~September 30, 2016.~~ March 31, 2021. Avalon recorded a state income tax provision in both the three ~~and nine~~ month periods ended ~~September 30, 2017~~ March 31, 2022 and ~~2016,~~2021, 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. The adoption of the Appropriations Act did not 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.

No option shall be exercisable prior to one year after its grant, unless otherwise provided by the Option Committee of the Board of Directors (but in no event before 6 months after its grant), and thereafter options shall become exercisable in installments, if any, as provided by the Option Committee. Options must be exercised for full shares ~~have been reserved~~of common stock. To the extent that options are not exercised when they become initially exercisable, they shall be carried forward and be exercisable until the expiration of the term of such options. No option may be exercised by an optionee after his or her termination of employment for any reason with Avalon or an affiliate, except in certain situations provided by the ~~issuance of stock options of which 760,000 options were outstanding at September 30, 2017.~~ Option Plan.

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 no 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 2022, the Board of Directors extended the period of time for certain vested options that were not exercisable due to those options not meeting the predetermined stock price within the three years following the contractual vesting period. At March 31, 2022, options to purchase 90,000 shares have been granted under the 2009 Plan. 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 2022:

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~~ $1,000 for both the three month periods ended March 31, 2022 and $6,000 for the three months ended September 30, 2017 and 2016, respectively, and $10,000 and $22,000 for the nine months ended September 30, 2017 and 2016, respectively, based upon the estimated grant date fair value calculations.2021. As of ~~September 30, 2017,~~ March 31, 2022, there was approximately ~~$32,000~~$6,000 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~~2.17 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).~~operations.

In August 2018, Avalon filed a complaint in the United States District Court for the Southern District of New York against Guy Gentile and MintBroker International, Ltd (collectively “MintBroker”). The complaint seeks to recover from MintBroker all short-swing trading profits realized through its purchases and subsequent sales of the Avalon Class A Common Stock during the six month period ending on or about August 1, 2018, in accordance with Section 16(b) of the Securities Exchange Act of 1934, as amended, based on MintBroker’s Schedule 13(d), Form 3 and Form 4 filings made with the Securities and Exchange Commission.

In April 2022, the United States District Court for the Southern District of New York determined that MintBroker was liable under Section 16(b) of the Securities Exchange Act of 1934, as amended. The case was referred to a magistrate judge for a determination of damages. There can be no assurance that any damages determined by the court are collectible.

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~~three months ended ~~September 30, 2017, one customer~~March 31, 2022, two customers accounted for ~~10%~~20% of the waste management services segment’s net operating revenues to external customers and 7%13% of the consolidated net operating revenues. For the ~~nine~~three months ended ~~September 30, 2016, no~~ March 31, 2021, one customer accounted for ~~10%~~20% of ~~Avalon’s consolidated or reportable segment~~the waste management services segment’s net operating revenues to external customers and 15% of the consolidated 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~~2021 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~~(loss) to consolidated income (loss) before taxes is as follows (in thousands):

In comparing ~~the~~ total assets at ~~September 30, 2017~~ March 31, 2022 with those at December 31, ~~2016,~~ 2021, the increase in the total assets of the waste management services segment of ~~$0.9~~approximately $0.4 million iswas primarily a result of 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.~~receivable. The increase in total assets of the golf and related operations segment of ~~$1.3~~$3.6 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 ~~related~~and capital expenditures associated with The Grand Resort and Avalon Field Club at New Castle and, to ~~membership dues~~a lesser extent, an increase in inventory and prepaid expenses, partially offset by current year depreciation on property and equipment. The decrease in corporate total assets of ~~$2.0~~approximately $1.5 million iswas primarily due to a decrease in operating and restricted cash utilized for the renovation of The Grand Resort and Avalon Field Club at New Castle, partially offset by an increase in intersegment transactions, which are eliminated in ~~consolidation, 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~~ March 31, 2022 and December 31, ~~2016,~~ 2021, 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,~~VIE, 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 months ended March 31, 2022 and 2021, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $62,000 and $28,000, respectively.

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. In March 2022, Avalon and accredited investors made additional capital contributions of $143,000 and $142,000, respectively. An outside director of Avalon, who qualified as an accredited investor, invested less than 10% of the total investment in Avalon Med Spa, LLC. Avalon is the majority owner of Avalon Med Spa, LLC owning 50.1% of the company at both March 31, 2022 and December 31, 2021.

In accordance with ASC 810-10 and related amendment, Avalon Med Spa, LLC is a VIE, and the financial statements of Avalon Med Spa, LLC are included in Avalon’s consolidated financial statements. 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 months ended March 31, 2022, net loss attributable to the noncontrolling interest in Avalon Med Spa, LLC was approximately $76,000.

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.

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 expected to arise as a direct result of the wells once the temporary suspension~~property. A hearing in this matter occurred in February 2022. The Company 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.~~currently awaiting judgment.

~~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~~three months ended ~~September 30, 2017,~~March 31, 2022, 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,~~March 2020, both federal and state governmental bodies took unprecedented measures to try and control the ~~Company formed Avalon Resorts~~spread of the COVID-19 coronavirus including the issuance of temporary stay at home orders, the temporary closing of non-essential businesses and ~~Clubs, Inc.~~in-house dining and restrictions on gatherings and events. Although the various government mandates impacting our business operations have currently been lifted, we may experience weakened demand in light of travel restrictions or warnings, consumer fears and reduced consumer discretionary spending and general economic uncertainty. The full extent of the impact of the COVID-19 pandemic on our operations and financial performance will depend on future developments, including the duration and spread of the pandemic and the impact of COVID-19 variants, all of which are uncertain and cannot be predicted at this time. Governmental bodies may impose restrictions, which could include additional shutdowns, to stop the spread of infection. These restrictions would have a negative impact on our financial condition, results of operations and cash flows.

The Coronavirus Aid, Relief, and Economic Security Act, or (“~~ARCI”~~CARES”), Act, which was signed into law in March 2020, authorized the Small Business Administration to temporarily guarantee loans under a ~~wholly owned subsidiary~~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, the borrower is eligible for loan forgiveness up to the amount the borrower spends on certain eligible costs during the 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. Collateral or guarantor support is not required for the loan.

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 ~~purpose of which is to hold~~Program. The Company utilized 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~~entire balance of the ~~Avalon Golf~~loan proceeds in accordance with the Program’s guidelines and ~~Country Club, while Avalon Resorts, Inc. holds~~subsequently applied for forgiveness with the ~~operations of The Avalon Inn. ACRI, Avalon Clubs, Inc. and Avalon Resorts, Inc. are included within Avalon’s golf and related operations segment.~~Small Business Administration.

During the ~~nine~~three months ended ~~September 30, 2017, Avalon incurred capital expenditures of $2.2~~March 31, 2021, approximately $1.1 million of ~~which $1.5 million~~the loans and $8,000 of ~~such expenditures was paid to vendors~~associated interest were forgiven by the Small Business Administration. As of March 31, 2022, all loan proceeds received under the Program and ~~primarily~~ related tointerest has been forgiven by the ~~continued renovation and expansion of The Avalon Inn and $0.6 million of such expenditures related to golf course maintenance equipment acquired under new capital lease agreements. During~~Small Business Administration. Debt forgiven in accordance with the nine months ended September 30, 2016, Avalon incurred capital expenditures of $2.5 million and paid vendors $2.4 million for such expenditures which principally related to the renovation and expansion of The Avalon Inn. In 2017 and 2016, The Avalon Inn was in operation but stillProgram is recognized in the ~~process~~Condensed Consolidated Statements of ~~being renovated and expanded. The renovations and expansion include~~Operations as a complete renovation of the existing facility and the addition of new restaurants, bars, extensive banquet and conference facilities. Avalon’s aggregate capital expenditures in 2017 are expected to be in the range of $2.5 million to $3.0 million, which will principally relate to the continued renovation and expansion of The Avalon Inn, building improvements and equipment purchases.gain on debt extinguishment.

On December 20, ~~2016,~~2019, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the “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 March 31, 2022 and December 31, 2021, loan proceeds of $0.7 million and $1.7 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 Term Loan Agreement.

The Term Loan Agreement is payable in 119 equal monthly installments of principal and interest, based on a fifteen (15) year maturity schedule which commenced 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 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 Term Loan Agreement, in whole or in part, at any time upon payment of the principal amount of the loan to be prepaid plus accrued unpaid interest thereon to the prepayment date, plus an applicable prepayment penalty. The prepayment penalty, expressed as a percentage of the principal of the loan being prepaid, is five percent (5%) on any prepayment in the first five years; four percent (4%) on any prepayment in the sixth and seventh year; three percent (3%) on any prepayment in the eighth and ninth year; and two percent (2%) on any prepayment in the tenth year.

Borrowings under the Term Loan Agreement are secured by certain real property and related business assets as defined in the ~~Term Loan Agreement.~~agreement. The Term Loan Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year. The Term Loan also contains ~~certain financial and~~ other nonfinancial covenants, customary representations, warranties and events of default. Avalon was in compliance with the Term Loan Agreement covenants at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016.~~2021.

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~~March 31, 2022 and December 31, ~~2016.~~

2021. Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .25%. At ~~September 30, 2017,~~March 31, 2022, the interest rate on the Line of Credit Agreement was ~~4.50%~~3.75%.

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~~March 31, 2022 and December 31, ~~2016.~~2021.

During the three ~~and~~ ~~nine~~ months ended ~~September 30, 2017,~~March 31, 2022 and 2021, the weighted average interest rate on outstanding borrowings was ~~5.35%. During the three~~5.00% and ~~nine months ended September 30, 2016, the weighted average interest rate on outstanding borrowings was 3.75%.~~4.80%, 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.

During the three months ended March 31, 2022, Avalon incurred capital expenditures of $1.9 million of which $1.3 million of such expenditures was paid to vendors during the period. During the three months ended March 31, 2021, Avalon incurred capital expenditures of $0.9 million of which $0.7 million of such expenditures was paid to vendors during the period. For both the three months ended March 31, 2022 and 2021, expenditures primarily related to the continued renovation of The Grand Resort and the clubhouse at Avalon Field Club at New Castle.

In 2022 and 2021, The Grand Resort was in operation but certain existing hotel rooms were in the process of being renovated. In addition, in 2022 and 2021, the Avalon Field Club at New Castle was in operation but the club house was in the process of being renovated. Avalon’s aggregate capital expenditures in 2022 are expected to be in the range of $3.5 million to $4.5 million, funded with cash from our project fund account, existing operating cash and cash generated from operations. Capital expenditures principally relate to the continued hotel room renovations at The Grand Resort, the clubhouse at Avalon Field Club at New Castle, building improvements and equipment purchases.

At ~~September 30, 2017,~~March 31, 2022 and December 31, 2021, there was a working capital deficit of ~~$0.3~~approximately $3.6 million ~~compared with working capital of $0.2~~and $2.1 million, ~~at December 31, 2016.~~respectively. Working capital was negatively impacted ~~primarily~~ by an increase in deferred membership dues revenue and accrued payroll and 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 decreased to $10.8 million at September 30, 2017 compared with $11.3 million at December 31, 2016.~~equivalents. 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 abovenegative impact was partially offset by an increase in accounts receivable, unbilled membership dues receivable, inventory and prepaid expenses.

Accounts receivable increased to $10.7 million at March 31, 2022 compared with $9.9 million at December 31, 2021. Accounts receivable related to ~~The Avalon Golf~~the golf and ~~Country Club attributable~~related operations segment increased approximately $1.9 million at March 31, 2022 compared to December 31, 2021 due to the associated timing of annual membership ~~renewals and an~~renewals. The increase in ~~membership rates.~~accounts receivable related to our golf and related operations segment was partially offset by a decrease in accounts receivable related to our waste management services segment. Accounts receivable related to our waste management services segment decreased approximately $1.1 million at March 31, 2022 compared with December 31, 2021 as a result of the decrease in net operating revenues in the first quarter of 2022 compared with the fourth quarter of 2021.

Accounts payable ~~decreased to $8.2~~was approximately $10.2 million at ~~September 30, 2017 compared with $9.4 million at~~both March 31, 2022 and December 31, ~~2016. The decrease in accounts~~2021. Accounts payable ~~is primarily due~~related to our waste management segment decreased as a result of a decrease in ~~the~~ amounts due to disposal facilities and transportation carriers ~~of the waste brokerage and management services business associated with the decrease in net operating revenues~~ in the ~~third~~first quarter of ~~2017~~2022 compared ~~with~~to the fourth quarter of ~~2016~~2021 and the associated timing of those vendor payments in the ordinary course of business. The decrease in accounts payable related to our waste management services segment was offset by an increase in accounts payable related to our golf and related operations segment. Accounts payable related to the golf and related operations increased as a result of unpaid construction bills at March 31, 2022 related to The Grand Resort and Avalon Field Club at New Castle.

~~Accrued payroll~~ ~~and other compensation increased~~Deferred revenue relating to ~~$1.0~~membership dues was approximately $4.9 million at ~~September 30, 2017~~March 31, 2022 compared ~~with $0.7~~to $3.4 million at December 31, ~~2016.~~2021. 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 of 2016, annual~~renewals, and to a lesser extent, an increase in members and membership dues rates ~~were increased. Revenues related~~during 2022. The number of members at March 31, 2022 was 5,259 compared to ~~annual membership dues are recognized proportionately over the membership term. Deferred revenues related to membership dues increased to $3.3~~5,120 at December 31, 2021.

Accrued payroll and other compensation was approximately $1.3 million at ~~September 30, 2017~~March 31, 2022 compared ~~with $2.7~~to $0.8 million at December 31, ~~2016.~~2021. The increase is due to the associated timing of certain employee incentive payments related to our waste management services segment.

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. If business conditions warrant additional monies 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 first quarter of 2022 compared with the first quarter of 2021

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

NetNet operating revenues decreased to ~~approximately $16.3~~$14.3 million in the ~~third~~first quarter of ~~2017~~2022 compared with ~~$19.1~~$15.1 million in the ~~third~~first quarter of ~~2016. This decrease was due~~2021. Net operating revenues of the waste management services segment were approximately $9.3 million in the first quarter of 2022 compared to a$11.1 million in the first quarter of 2021. The decrease in net operating revenues of the waste management services ~~segment. Net operating revenues~~segment was a result of a decrease in both continuous and event work projects during the ~~waste management services segment were $10.8 million in the third~~first quarter of ~~2017~~2022 compared ~~with $13.6 million in~~to the ~~third~~first quarter of ~~2016.~~2021. Net operating revenues of the golf and related operations segment were approximately ~~$5.5~~$5.0 million in ~~both~~ the ~~third~~first quarter of ~~2017~~2022 compared to $4.0 million in the first quarter of 2021. The increase in net operating revenues of the golf and ~~2016.~~related operations was a result of increased business operations related to both The Grand Resort and the country clubs during the first quarter of 2022 compared to the first quarter of 2021.

~~Costs~~Total cost of operations related to the waste management services segment decreased to ~~$8.8~~$7.6 million in the ~~third~~first quarter of ~~2017~~2022 compared with ~~$11.3~~$8.7 million in the ~~third~~first quarter of ~~2016.~~2021. The decrease in the cost of operations between periods for the waste management services segment is primarily due to the decreased net operating revenues ~~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~~$4.8 million in the ~~third~~first quarter of ~~2017~~2022 compared ~~with $4.2~~to $3.5 million in the ~~third~~first quarter of ~~2017.~~2021. The ~~decrease~~increase between periods was primarily a result of ~~lower~~higher product costs and employee related ~~costs.~~costs associated with an increase in business operations and wage increases during the period.

Depreciation and amortization expense was approximately ~~$0.7~~$0.8 million in both the ~~third~~first quarter of ~~2017~~2022 and ~~2016.~~2021.

Consolidated selling, general and administrative expenses were ~~$2.2~~approximately $2.3 million in both the first quarter of 2022 and 2021.

Gain on debt extinguishment was approximately $1.1 million in the ~~third~~first quarter of ~~2017 compared with $2.1 million in~~2021 representing the third quarter of 2016. The increase in selling, general and administrative costs was primarily due to increased legal costs incurred relating to Avalon’s appeal and mandamus processes associated withPaycheck Protection Program loans that were forgiven by the ~~Company’s salt water injection wells further described below.~~Small Business Administration received under the CARES Act.

Interest expense was ~~$0.2~~approximately $0.3 million in both the ~~third~~first quarter of ~~2017 compared with $0.1 million in~~2022 and 2021. During the ~~third~~first quarter of ~~2016. The increase~~2022, 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 March 31, 2022 and 2021, the weighted average interest rate on outstanding borrowings was 5.00% and 4.80%, respectively.

Net ~~income~~ loss attributable to Avalon Holdings Corporation common shareholders was ~~$0.5~~$1.3 million, or ~~$0.14~~$0.32 per share, in the ~~third~~first quarter of ~~2017~~2022 compared with net income attributable to Avalon Holdings Corporation common shareholders of ~~$0.8~~$0.7 million, or ~~$0.21~~$0.18 per share, in the ~~third~~first quarter of ~~2016.~~2021.

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 ~~approximately 20%~~ to ~~$10.8~~$9.3 million in the ~~third~~first quarter of ~~2017~~2022 compared with ~~$13.6~~$11.1 million in the ~~third~~first quarter of ~~2016.~~2021. The waste management services segment includes waste disposal brokerage and management services, captive landfill management operations and salt water injection well operations.

The net operating revenues of the waste disposal brokerage and management services business ~~decreased to $10.2~~were approximately $8.7 million in the ~~third~~first quarter of ~~2017 from $13.1~~2022 compared to $10.5 million in the ~~third~~first quarter of ~~2016. This decrease was primarily due~~2021. Continuous work of the waste disposal brokerage business decreased approximately $1.3 million between periods as a result of decreased work from multiple customers. Net operating revenues related to ~~a decrease~~continuous work were approximately $5.6 million in the first quarter of ~~$3.3~~2022 compared with $6.9 million ~~or a 42% decrease,~~ in the first quarter of 2021. In addition, event work net operating revenues ~~attributable to event work relating~~related to multiple ~~projects.~~projects decreased by approximately $0.5 million during first quarter of 2022 when compared to first quarter of 2021. Event work is defined as bid projects under contract that occurs on a one-time basis over a short period of time. Such work can fluctuate significantly from year to year. ~~Net operating revenues related to event~~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 to continuous work of~~were approximately $3.1 million in the waste disposal brokerage business. Continuous work of the waste disposal brokerage business increased approximately $0.2 million, or a 4% increase between periods. Net operating revenues related to continuous work were $5.0 million during the thirdfirst quarter of ~~2017~~2022 compared with ~~$4.8~~$3.6 million ~~during~~in the ~~third~~first 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. Net operating revenue relating to managerial, consulting and clerical services, which is performed for one customer, is entirely dependent on that customer’s needs.2021.

The net operating revenues of the captive landfill management operations were approximately ~~$0.6~~$0.6 million in both the ~~third~~first quarter of ~~2017 compared with $0.5 million in the third quarter of 2016.~~2022 and 2021. The net operating revenues of the captive landfill operations are almost entirely dependent upon the volume of waste generated by the owner of the landfill for whom Avalon manages the facility.

~~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%,~~decreased to ~~$8.8~~$7.6 million in the ~~third~~first quarter of ~~2017~~2022 compared with ~~$11.3~~$8.7 million in the ~~third~~first quarter of ~~2016.~~2021. The decrease in the cost of operations between periods for the waste management segment is primarily due to the decreased 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%~~19% in the ~~third~~first quarter of ~~2017~~2022 compared ~~with 16%~~to 22% in the ~~third~~first quarter of ~~2016.~~2021. The decrease in the overall gross margin percentage was primarily attributable to the lower gross profit generated from both continuous and event work projects during first quarter of 2022.

Income before income taxes for the waste management services segment were approximately $0.7 million in the first quarter of 2022 compared to $1.1 million in the first quarter of 2021. Income before income taxes of the waste brokerage and management services business was approximately $0.7 million in the first quarter of 2022 compared to $1.1 million in the first quarter of 2021. The decreased income before income taxes was primarily attributable to the decreased net operating revenues and associated lower gross profit during the first quarter of 2022 compared to the first quarter of 2021. Income before income taxes of the captive landfill operations ~~was~~were approximately $0.1 million in both the ~~third~~first quarter of ~~2017~~2022 and ~~2016.~~2021. During both the ~~third~~first quarter of ~~2017~~2022 and ~~2016,~~2021, the salt water injection wells incurred a loss before income taxes of approximately ~~$0.3 million and~~ $0.1 million ~~respectively. The increased loss in the third quarter of 2017 compared with the third quarter of 2016 was~~primarily due to ~~higher~~ legal and professional costs incurred relating to Avalon’s ~~appeal and~~ mandamus ~~processes described above.~~processes.

Net operating revenues of the golf andand related operations segment were ~~$5.5~~approximately $5.0 million in ~~both~~ the ~~third~~first quarter of ~~2017 and 2016.~~2022 compared to $4.0 million in the first quarter of 2021. 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 approximately $2.3 million in both the third quarter of 2017 and 2016. Other n~~et operating revenues related to the golf and relations 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 million in the third quarter of 2016 due to an increase in annual membership dues partially offset by a decrease in the average number of members between periods. The average number of members during the third quarter of 2017 was 4,412 compared with 4,741 in the comparable prior period. During the third quarter of 2016, annual membership dues rates were increased. The increased rates become effective for existing members on the member’s renewal date.

~~Cost of operations for the golf and related operations segment~~ decreased to $4.1 million in the third quarter of 2017 compared with $4.2 million in the third quarter of 2016. Cost of food, beverage and merchandise was approximately $1.0 million in both the third quarter of 2017 and 2016. Cost of operations related to the golf and related operations decreased approximately $0.1 million between periods to $3.1 million in the third quarter of 2017 compared with $3.2 million in 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 average outstanding borrowings at a higher weighted average interest rate during the third quarter of 2017 compared with the third quarter of the prior year. During the third quarter of 2017 and 2016, the weighted average interest rate on outstanding borrowings was 5.35% and 3.75%, respectively.

~~Net income~~ attributable to Avalon Holdings Corporation common shareholders was $0.5 million in the third quarter of 2017 compared with $0.8 million in the third quarter of 2016. Avalon recorded a state income tax provision in both the third quarter of 2017 and 2016, 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 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~~~~7 compared with the first~~ ~~nine months~~ ~~of 2016~~

~~Net operating revenues decreased to~~ $41.6 million in the first nine months of 2017 compared with $45.8 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. Net operating revenues of the waste management services segment were $27.9 million in the first nine months of 2017 compared with $32.6 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. Net operating revenues of the golf and related operations segment were approximately $13.7 million in the first nine months of 2017 compared with $13.2 million in the first nine months of 2016.

~~Costs of operations related to the waste ma~~nagement segment decreased to $22.2 million in the first nine months of 2017 compared with $26.9 million in the first nine months of 2016. The decrease in the cost of operations between periods for the waste management segment is primarily due to the decreased net operating revenues between periods as these costs vary directly with the associated net operating revenues. Cost of operations for the golf and related operations segment increased to $11.1 million in the first nine months of 2017 compared with $10.7 million in the first nine months of 2016. The increase was primarily a result of higher employee related costs.

~~Depreciation and amortization expense was approximately~~ ~~$2.3 million in first nine months of 2017 compared with $2.1 million in the first nine months of 2016. The increase is primarily the result of depreciation expense associated with The Avalon Inn.~~

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

~~Interest expense was $0.5~~ million during the first nine months of 2017 compared with $0.3 million in the first nine months of 2016. The increase in interest expense was due to higher average outstanding borrowings at a higher weighted average interest rate during the first nine months of 2017 compared with the first nine months of 2016.

~~Net loss attributable to Avalon Holdings Corpor~~ation common shareholders was $0.3 million, or $0.07 per share, in the first nine months of 2017 compared with net income attributable to Avalon Holdings Corporation common shareholders of $0.3 million, or $0.08 per share, in the first nine months of 2016.

~~Segment performance should be~~ ~~read in conjunction with Note 11 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 million in the first nine months of 2017 from $31.1 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 net operating revenues attributable to event work relating to multiple projects. 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 $9.9 million during the first nine months of 2017 compared with $15.8 million during 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. Net operating revenue relating to managerial, consulting and clerical services, which is performed for one customer, is 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 were $15.3 million during the first nine months of 2017 compared with $13.9 million during the first nine months of 2016.

~~The net operating revenues of the captive landfill management operations were approximately~~ $1.6 million in the first nine months of 2017 compared with $1.5 million during the first nine months of 2016. 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 segment de~~creased $4.7 million, or 17%, to $22.2 million in the first nine months of 2017 compared with $26.9 million in the first nine months of 2016. The decrease in the cost of operations between periods for the waste management segment is primarily due to the decreased 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 compared with 17% in the first nine months of 2016. Income before income taxes of the captive landfill operations was approximately $0.3 million in 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 salt water injection wells incurred a loss before income taxes of approximately $0.7 million compared with a loss before income taxes of $0.5 million in the first nine months of 2016. The increased loss between periods was due to legal costs incurred relating to Avalon’s appeal and mandamus processes described above.

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

Food, beverage and merchandise sales increased to ~~$5.7 million during the first nine months of 2017 compared with $5.6~~approximately $1.7 million in the first ~~nine months~~quarter of ~~2016. The~~2022 compared to $1.4 million in the first quarter of 2021. Food, beverage and merchandise sales increased between periods as a result of an increase in ~~food~~business activity at both The Grand Resort and ~~beverage revenue related to The Avalon Inn between periods was slightly offset by a decrease in food and beverage revenue at~~ the ~~clubs during the first nine months of 2017 compared to the first nine months of 2016.~~country clubs.

Other netnet operating revenues related to the golf and related operations ~~was $8.0~~were approximately $3.3 million in the first ~~nine months~~quarter of ~~2017~~2022 compared ~~with $7.6~~to $2.6 million in the first ~~nine months~~quarter of ~~2016. This~~2021. Membership dues revenue was approximately $1.7 million in the first quarter of 2022 compared to $1.6 million in the first quarter of 2021. The increase in membership dues revenue was ~~primarily~~ attributable to both an increase in ~~net operating revenues related to room rental at The Avalon Inn~~membership dues 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~~$0.7 million in the first ~~nine months~~quarter of ~~2017~~2022 compared ~~with $1.4~~to $0.5 million in the first ~~nine months~~quarter of ~~2016.~~2021. 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~~Other revenues ~~from membership dues increased to $3.9 million during the first nine months~~consisting of ~~2017 compared with $3.5~~athletic, fitness, travel agency, salon and spa related activities were approximately $0.8 million in the first ~~nine months~~quarter of ~~2016~~2022 compared to $0.4 million in the first quarter of 2021. The increase between periods was primarily due to an increase in ~~annual membership dues~~salon and ~~an increase in the average number of members between periods.~~spa revenue associated with The average number of members during the first nine months of 2017 was 4,604 compared with 4,588 in the comparable prior period. During the third quarter 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 greensGrand Resort. Greens fees and associated cart rentals were approximately $0.1 million both the first quarter of 2022 and ~~fitness related revenue.~~2021. 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~~first quarter of 2022 and ~~2016.~~first quarter of 2021.

~~Cost~~Total cost of operations for the golf and related operations segment ~~increased to $11.1~~were $4.8 million in the first ~~nine months~~quarter of ~~2017~~2022 compared with ~~$10.7~~$3.5 million in the first ~~nine months~~quarter of ~~2016.~~2021. Cost of food, beverage and merchandise was approximately ~~$2.5~~$0.7 million in ~~both~~ the first ~~nine months~~quarter of ~~2017~~2022 compared to $0.6 million in the first quarter of 2021. The increase in total food, beverage and ~~2016. Cost~~merchandise costs between periods is primarily due to higher revenues from increased business operations, and to a lesser extent, higher product costs. The cost of food, beverage and merchandise sales was approximately 45% of associated revenue in the first quarter of 2022 compared to 44% in the first quarter of 2021. Golf and related operations operating costs increased to approximately $4.1 million in the first quarter of 2022 compared with $2.9 million in the first quarter of 2021. The increase in operating costs between periods, primarily employee related costs, was directly attributable to both an increase in business operations and higher employee wages paid per hour during the first quarter of 2022 compared to the first quarter of 2021.

The golf and related operations ~~increased approximately $0.4 million between periods from $8.6~~recorded a loss before income taxes of $0.8 million in the first ~~nine months~~quarter of ~~2017~~2022 compared with ~~$8.2~~income before income taxes of $0.2 million in the first ~~nine months~~quarter of ~~2016.~~2021. The ~~increase~~change between periods was primarily a result of higher employee related costs in the first quarter of 2022 and, ~~increased use~~in the first quarter of ~~lawn care maintenance products for~~2021, the ~~golf courses.~~

~~Income before income taxes for the~~ golf and related operations recorded a gain on debt extinguishment of approximately $0.6 million representing the Paycheck Protection Program loan that was ~~$0.3 million in~~forgiven by the ~~first nine months of 2017 compared with $0.5 million in~~Small Business Administration received under the first nine months of 2016. 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 and associated room rates attributable to The Avalon Inn and an increase in membership dues revenue noted above.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~~$0.9 million in the first ~~nine months~~quarter of ~~2017~~2022 compared ~~with $2.1~~to $0.8 million in the first ~~nine months~~quarter of ~~2016.~~2021. The increase ~~in general corporate expenses is~~was primarily ~~due~~attributable to higher employee related costs.

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

Interest expense was ~~$0.5 million in the first nine months of 2017 compared with~~approximately $0.3 million in both first quarter of 2022 and 2021. During first quarter of 2022, the ~~first nine months of 2016. The increase~~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 nine months of 2017 compared with the first nine months of the prior year.~~outstanding borrowings. During the ~~first nine~~three months ~~of 2017~~ended March 31, 2022 and ~~2016,~~2021, the weighted average interest rate on outstanding borrowings was ~~5.35%~~5.00% and ~~3.75%~~4.80%, respectively.

Net loss attributable to Avalon Holdings ~~Corporation~~Corporation common shareholders was ~~$0.3~~$1.3 million in the first ~~nine months~~quarter of ~~2017~~2022 compared ~~with~~to net income attributable to Avalon Holdings Corporation common shareholders of ~~$0.3~~$0.7 million in the first ~~nine months~~quarter of ~~2016.~~2021. Avalon recorded a state income tax provision in both the first ~~nine months~~quarter of ~~2017~~2022 and ~~2016,~~2021, 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~~reflect 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.

In March 2020, both federal and state governmental bodies took unprecedented measures to try and control the spread of the COVID-19 coronavirus including the issuance of temporary stay at home orders, the temporary closing of non-essential businesses and in-house dining and restrictions on gatherings and events. Although the various government mandates impacting our business operations have currently been lifted, we may experience weakened demand in light of travel restrictions or warnings, consumer fears and reduced consumer discretionary spending and general economic uncertainty. The full extent of the impact of the COVID-19 pandemic on our operations and financial performance will depend on future developments, including the duration and spread of the pandemic and the impact of COVID-19 variants, all of which are uncertain and cannot be predicted at this time. Governmental bodies may impose restrictions, which could include additional shutdowns, to stop the spread of infection. These restrictions would have a negative impact on our financial condition, results of operations and cash flows.

The Coronavirus Aid, Relief, and Economic Security Act, or (“CARES”) Act, which was signed into law in March 2020, authorized the Small Business Administration to temporarily guarantee loans under a 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, the borrower is eligible for loan forgiveness up to the amount the borrower spends on certain eligible costs during the 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. Collateral or guarantor support is not required for the loan.

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 and subsequently applied for forgiveness with the Small Business Administration.

During the three months ended March 31, 2021, approximately $1.1 million of the loans and $8,000 of associated interest were forgiven by the Small Business Administration. As of March 31, 2022, all loan proceeds received under the Program and related interest has been forgiven by the Small Business Administration. Debt forgiven in accordance with the Program is recognized in the Condensed Consolidated Statements of Operations as a gain on debt extinguishment.

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. The adoption of the Appropriations Act did not 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~~collections

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 ~~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 couldnot controllable by management. Significant customer payment defaults would have a ~~negative effect on Avalon.~~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.

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

Our operations are substantially affected by economic conditions, including inflationary pressures, which can impact consumer disposable income levels and spending habits. Economic conditions can also be impacted by a variety of factors including epidemics, pandemics and actions taken by governments to manage economic matters, whether through initiatives intended to control wages, unemployment, inflation, taxation and other economic drivers. Adverse economic conditions could pressure Avalon’s business and operating performance and financial results may suffer.

Challenges with respect to labor, including availability and cost, could impact our business and results of operations

Avalon’s success depends in part on our ability to recruit, motivate and retain qualified individuals to work in an intensely competitive labor market. We have experienced, and may continue to experience, challenges in adequately staffing, which can negatively impact operations. Our ability to meet labor needs is generally subject to external factors, including the availability of sufficient workforce, unemployment levels and prevailing wages in the markets in which we operate. Increased costs and competition associated with recruiting, motivating and retaining qualified employees could have a negative impact on Avalon’s operating margins and profitability.

Changes in commodity and other operating costs could adversely affect our results of operations

The profitability of our golf and related operations segment depends on our ability to anticipate and react to changes in commodity costs, including food, supplies, fuel, utilities and other operating costs, including labor. Volatility in certain commodity prices and fluctuations in labor costs have adversely affected, and in the future, could adversely affect Avalon’s operating results. An increase in commodity costs could have an adverse impact on our profitability.

Effective succession planning is important to our long-term success. Failure to effectively identify, develop and retain key personnel, recruit high-quality candidates and ensure smooth management and personnel transitions could disrupt our business and adversely affect our results.

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 expected to arise as a direct result of the wells once the temporary suspension~~property. A hearing in this matter occurred in February 2022. The Company 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.~~currently awaiting judgment.

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,~~March 31, 2022, Avalon 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.~~attained. 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 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. The Company is currently evaluating those additional disclosures required as a result of the adoption of this guidance.

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 ~~September 30, 2017, if market~~Prime Rate plus .25%. At March 31, 2022, the interest ~~rates increased one percent, Avalon’s interest expense would increase approximately $0.1 million annually.~~ rate on the Line of Credit Agreement was 3.75%. No amounts were outstanding under the Line of Credit Agreement at March 31, 2022.

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.~~March 31, 2022. 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,~~March 31, 2022, 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~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2022			2021

Net operating revenues:
Waste management services	$	10,831		$	13,593		$	27,934		$	32,625		$	9,339		$	11,150

Food, beverage and merchandise sales		2,326			2,354			5,702			5,605			1,665			1,341
Other golf and related operations		3,207			3,186			8,007			7,544			3,305			2,622
Total golf and related operations		5,533			5,540			13,709			13,149			4,970			3,963

Total net operating revenues		16,364			19,133			41,643			45,774			14,309			15,113

Costs and expenses:
Waste management services operating costs		8,792			11,295			22,219			26,901			7,578			8,701
Cost of food, beverage and merchandise		970			997			2,484			2,456			748			593
Golf and related operations operating costs		3,090			3,204			8,646			8,250			4,055			2,921
Depreciation and amortization expense		747			714			2,256			2,093			829			764
Selling, general and administrative expenses		2,240			2,108			6,305			5,865			2,265			2,280
Operating income (loss)		525			815			(267	)		209
Operating loss														(1,166	)		(146	)

Other income (expense):
Interest expense		(176	)		(94	)		(528	)		(273	)		(278	)		(297	)
Gain on debt extinguishment														0			1,087
Other income, net		50			57			236			218			64			87
Income (loss) before income taxes		399			778			(559	)		154			(1,380	)		731

Provision for income taxes		29			43			81			79			20			43
Net income (loss)		370			735			(640	)		75			(1,400	)		688

Less net loss attributable to non-controlling interest in subsidiary		(177	)		(71	)		(382	)		(244	)
Less net loss attributable to non-controlling interest in subsidiaries														(138	)		(28	)
Net income (loss) attributable to Avalon Holdings Corporation common shareholders	$	547		$	806		$	(258	)	$	319		$	(1,262	)	$	716

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		$	(0.32	)	$	0.18
Diluted net income (loss) per share	$	0.14		$	0.21		$	(0.07	)	$	0.08		$	(0.32	)	$	0.18

Weighted average shares outstanding - basic		3,803			3,803			3,803			3,803			3,899			3,899
Weighted average shares outstanding - diluted		3,817			3,893			3,803			3,836			3,899			3,945

	September 30,			December 31,
	2017			2016
Assets
Current Assets:
Cash and cash equivalents	$	1,615		$	2,299
Accounts receivable, less allowance for doubtful accounts of $238 in 2017 and $235 in 2016		10,839			11,349
Inventories		925			773
Prepaid expenses		576			462
Other current assets		39			35
Total current assets		13,994			14,918

Property and equipment, net		43,575			43,971
Leased property under capital leases, net		6,370			6,035
Restricted cash		2,826			2,905
Noncurrent deferred tax asset		8			8
Other assets, net		65			61
Total assets	$	66,838		$	67,898

Liabilities and Equity
Current liabilities:
Current portion of obligations under capital leases	$	186		$	112
Current portion of long-term debt		539			517
Accounts payable		8,215			9,387
Accrued payroll and other compensation		984			684
Accrued income taxes		7			48
Other accrued taxes		296			448
Deferred revenues		3,262			2,716
Other liabilities and accrued expenses		801			764
Total current liabilities		14,290			14,676

Long-term debt, net of current portion		10,887			11,294
Obligations under capital leases, net of current portion		815			452
Asset retirement obligation		100			100

Equity:
Avalon Holdings Corporation Shareholders' Equity:
Class A Common Stock, $.01 par value		32			32
Class B Common Stock, $.01 par value		6			6
Paid-in capital		58,963			58,953
Accumulated deficit		(20,508	)		(20,250	)
Total Avalon Holdings Corporation Shareholders' Equity		38,493			38,741
Non-controlling interest in subsidiary		2,253			2,635
Total equity		40,746			41,376
Total liabilities and equity	$	66,838		$	67,898

	Nine Months Ended September 30,
	2017			2016

Operating activities:
Net income (loss)	$	(640	)	$	75
Reconciliation of net income (loss) to cash provided by operating activities:
Depreciation and amortization expense		2,256			2,093
Amortization of debt issuance costs		16			10
Compensation costs - stock options		10			22
Deferred rental income		(50	)		(66	)
Provision for losses on accounts receivable		17			30
Change in operating assets and liabilities:
Accounts receivable		493			(4,188	)
Inventories		(152	)		(33	)
Prepaid expenses		(114	)		(91	)
Refundable income taxes		-			33
Other assets		(4	)		6
Accounts payable		(1,237	)		2,091
Accrued payroll and other compensation		300			127
Accrued income taxes		(41	)		21
Other accrued taxes		(152	)		(4	)
Deferred revenues		546			872
Other liabilities and accrued expenses		87			228
Net cash provided by operating activities		1,335			1,226

Investing activities:
Capital expenditures		(1,464	)		(2,408	)
Cash released from restriction		79			-
Net cash used in investing activities		(1,385	)		(2,408	)

Financing activities:
Borrowings under line of credit facilities		-			1,025
Payments of debt issuance costs		(42	)		(5	)
Principal payments on term loan facility		(399	)		-
Principal payments on capital lease obligations		(193	)		(48	)
Net cash provided by (used in) financing activities		(634	)		972

Decrease in cash and cash equivalents		(684	)		(210	)
Cash and cash equivalents at beginning of period		2,299			1,814
Cash and cash equivalents at end of period	$	1,615		$	1,604

Supplemental disclosure of cash flow information:

Significant non-cash operating and investing activities:
Capital expenditures included in accounts payable	$	97		$	95
Significant non-cash investing and financing activities:
Capital lease obligations incurred	$	630		$	68

Cash paid during the period for interest	$	512		$	263
Cash paid during the period for income taxes	$	122		$	25

	Three Months Ended March 31,
	2022		2021
Waste management and brokerage services	$	8,726	$	10,551
Captive landfill management operations		613		599
Total waste management services revenues		9,339		11,150
Food, beverage and merchandise sales		1,665		1,341
Membership dues revenue		1,714		1,607
Room rental revenue		735		488
Greens fees and cart rental revenue		55		86
Salon and spa services		408		167
Fitness and tennis lesson revenue		138		145
Other revenue		255		129
Total golf and related operations revenue		4,970		3,963
Total net operating revenues	$	14,309	$	15,113

	Balance at Beginning of Period		Provision for Credit Losses			Write-offs less Recoveries			Balance at End of Period
Allowance for credit losses
Three months ended March 31, 2022	$	265	$	2		$	(12	)	$	255
Three months ended March 31, 2021	$	265	$	(5	)	$	0		$	260

	For the Nine Months Ended September 30, 2017

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

Balance at January 1, 2017		3,191		612	$	32	$	6	$	58,953	$	(20,250	)	$	38,741		$	2,635		$	41,376

Stock options - compensation costs		-		-		-		-		10		-			10			-			10

Net loss		-		-		-		-		-		(258	)		(258	)		(382	)		(640	)

Balance at September 30, 2017		3,191		612	$	32	$	6	$	58,963	$	(20,508	)	$	38,493		$	2,253		$	40,746

	Balance at Beginning of Period		Unbilled Membership Dues		Billings			Balance at End of Period
Contract Assets:
Unbilled membership dues receivable
Three months ended March 31, 2022	$	578	$	640	$	(458	)	$	760
Three months ended March 31, 2021	$	585	$	585	$	(469	)	$	701

	Balance at Beginning of Period		Billings		Revenue Recognized			Balance at End of Period
Contract Liabilities:
Deferred membership dues revenue
Three months ended March 31, 2022	$	3,363	$	3,294	$	(1,714	)	$	4,943
Three months ended March 31, 2021	$	3,196	$	2,533	$	(1,607	)	$	4,122

Customer advance deposits
Three months ended March 31, 2022	$	795	$	388	$	(263	)	$	920
Three months ended March 31, 2021	$	674	$	232	$	(154	)	$	752

	March 31, 2022			December 31, 2021
Leased property under finance leases	$	12,016		$	11,978
Less accumulated amortization		(6,715	)		(6,588	)
Leased property under finace leases, net	$	5,301		$	5,390

Current portion of obligations under finance leases	$	157		$	167
Long-term portion of obligations under finance leases		493			496
Total obligations under finance leases	$	650		$	663

	Finance		Operating		Total
2023	$	186	$	577	$	763
2024		135		495		630
2025		127		304		431
2026		64		255		319
2027		38		84		122
Thereafter		390		0		390
Total lease payments		940		1,715		2,655
Less: imputed interest		290		127		417
Total		650		1,588		2,238
Less: current portion of obligations under leases		157		519		676
Long-term portion of obligations under leases	$	493	$	1,069	$	1,562

	September 30, 2017									March 31, 2022
	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										$	20,546	$	(320	)	$	20,226
Less current portion		(558	)		19			(539	)		1,182		(42	)		1,140
Long-term debt	$	11,043		$	(156	)	$	10,887		$	19,364	$	(278	)	$	19,086

	December 31, 2021
	Gross Amount		Debt Issuance Costs			Net Amount
Term Loan Agreement	$	20,833	$	(331	)	$	20,502
Less current portion		1,168		(42	)		1,126
Long-term debt	$	19,665	$	(289	)	$	19,376

	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, 2022								54,000		1.83		0.43
Options granted		-		-		-		-		-		-
Options exercised		-		-		-		0		0		0
Options expired								0		0		0
Options cancelled or forfeited		-		-		-		-		-		-
Outstanding at September 30, 2017		760,000	$	2.51	$	1.00
Outstanding at March 31, 2022								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 March 31, 2022								-	$	-	$	-

	September 30,			December 31,
	2017			2016			March 31, 2022			December 31, 2021
Land and land improvements	$	14,179		$	14,118		$	15,591		$	15,588
Buildings and improvements		34,234			33,533			48,843			48,603
Machinery and equipment		9,126			9,015			7,441			7,122
Office furniture and fixtures								8,888			8,773
Vehicles		445			445			791			791
Office furniture and fixtures		6,309			5,963
Construction in progress		720			479			2,631			1,448
		65,013			63,553			84,185			82,325
Less accumulated depreciation and amortization		(21,438	)		(19,582	)		(29,689	)		(28,987	)
Property and equipment, net	$	43,575		$	43,971		$	54,496		$	53,338

	March 31, 2022			December 31, 2021
Identifiable assets:
Waste management services	$	34,650		$	34,203
Golf and related operations		63,273			59,700
Corporate		53,526			55,027
Subtotal		151,449			148,930
Elimination of intersegment receivables		(72,836	)		(70,893	)
Total	$	78,613		$	78,037

Item 1.		Legal Proceedings
		Reference is made to “Item 3. Legal Proceedings” in Avalon’s Annual Report on Form 10-K for the year ended December 31, 2021 for a description of legal proceedings.

Item 2.		Changes in Securities and Use of Proceeds
		None

Item 3.		Defaults upon Senior Securities
		None

Item 4.		Mine Safety Disclosures
		None

Item 5.		Other Information
		None

Item 6.		Exhibits and Reports on Form 8-K

	(a)	Exhibits

		Exhibit 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

		Exhibit 31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

		Exhibit 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

		Exhibit 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

		Exhibit 101.INS^*Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) (1)

		Exhibit 101.SCH^* Inline XBRL Taxonomy Extension Schema Document (1)

		Exhibit 101.CAL^* Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)

		Exhibit 101.DEF^* Inline XBRL Taxonomy Extension Definition Linkbase Document (1)

		Exhibit 101.LAB^* Inline XBRL Taxonomy Extension ~~Labels~~Label Linkbase Document (1)

		Exhibit 101.PRE^* Inline XBRL Taxonomy Extension Presentation Linkbase Document (1)

			Exhibit 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

			~~XBRL information is furnished and~~(1) These interactive data files shall not be deemed filed ~~or a part of a registration statement or prospectus~~ for purposes of ~~sections~~Section 11 or 12 of the Securities Act of 1933, as amended, ~~is deemed not filed for purposes~~ ~~of section~~or Section 18 of the Securities Exchange Act, ~~of 1934,~~ as amended, ~~and~~or otherwise ~~is not~~ subject to liability under ~~these~~those sections.

	(b)	Reports on Form 8-K

		~~None~~On April 28, 2022, Avalon reported the voting results from the Annual Meeting held on April 28, 2022.

		AVALON HOLDINGS CORPORATION
		(Registrant)


Date:~~November 9, 201~~7	May 12, 2022	By:	/s/ Bryan P. Saksa
		Bryan P. Saksa,, Chief Financial Officer and
		Treasurer (Principal Financial and Accounting
		Officer and Duly Authorized Officer)