10-Q

2019

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, 2019

[ ] 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 name of registrant as specified in its charter) 

Ohio	34-1863889
(State or other jurisdiction  of incorporation or organization)	(I.R.S. Employer Identification No.)
One American Way, Warren, Ohio	44484-5555
(Address of principal executive offices)	(Zip Code)

Registrant’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 file 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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,” “smaller reporting company” and “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 3,263,647 shares of its Class A Common Stock and 611,784 shares of its Class B Common Stock outstanding as of November 8, 2019.

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, 2019 and 2018 (Unaudited)	1
Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 (Unaudited)	2
Condensed Consolidated Statements of Shareholders’ Equity for the Three months ended September 30, 2019 and 2018 (Unaudited)	3
Condensed Consolidated Statement of Shareholders’ Equity for the Nine months ended September 30, 2019 and 2018 (Unaudited)	4
Condensed Consolidated Statements of Cash Flows for the Nine months ended September 30, 2019 and 2018 (Unaudited)	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.    Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.    Controls and Procedures	42
PART II. OTHER INFORMATION
Item 1.    Legal Proceedings	43
Item 2.    Changes in Securities and Use of Proceeds	43
Item 3.    Defaults upon Senior Securities	43
Item 4.    Mine Safety Disclosures	43
Item 5.    Other Information	43
Item 6.    Exhibits and Reports on Form 8-K	43
SIGNATURE	44

i

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net operating revenues:
Waste management services	$	11,572		$	12,557		$	35,908		$	32,525
Food, beverage and merchandise sales		2,587			2,285			6,027			5,531
Other golf and related operations		3,859			3,306			9,116			8,313
Total golf and related operations		6,446			5,591			15,143			13,844
Total net operating revenues		18,018			18,148			51,051			46,369
Costs and expenses:
Waste management services operating costs		9,229			9,863			28,773			25,615
Cost of food, beverage and merchandise		1,169			992			2,683			2,391
Golf and related operations operating costs		4,266			3,337			10,361			8,700
Depreciation and amortization expense		630			732			1,848			2,187
Selling, general and administrative expenses		2,379			2,297			6,990			6,737
Operating income		345			927			396			739
Other income (expense):
Interest expense		(222	)		(167	)		(600	)		(512	)
Other income, net		41			45			257			218
Income before income taxes		164			805			53			445
Provision for income taxes		38			52			135			112
Net income (loss)		126			753			(82	)		333
Less net loss attributable to non-controlling interest in subsidiary		(18	)		(96	)		(67	)		(340	)
Net income (loss) attributable to Avalon Holdings Corporation common shareholders	$	144		$	849		$	(15	)	$	673
Income (loss) per share attributable to Avalon Holdings Corporation common shareholders:
Basic net income (loss) per share	$	0.04		$	0.22		$	(0.00	)	$	0.18
Diluted net income (loss) per share	$	0.04		$	0.21		$	(0.00	)	$	0.17
Weighted average shares outstanding - basic		3,875			3,803			3,875			3,803
Weighted average shares outstanding - diluted		3,893			4,049			3,875			3,895

See accompanying notes to unaudited condensed consolidated financial statements.

1

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share amounts)

	September 30,			December 31,
	2019			2018
Assets
Current Assets:
Cash and cash equivalents	$	1,942		$	1,406
Accounts receivable, less allowance for doubtful accounts of $273 at September 30, 2019 and $255 at December 31, 2018		10,995			12,197
Unbilled membership dues receivable		853			554
Inventories		853			820
Prepaid expenses		766			622
Other current assets		26			31
Total current assets		15,435			15,630
Property and equipment, net		48,219			42,534
Property and equipment under finance leases, net		5,854			6,068
Operating lease right-of-use assets		1,505			-
Restricted cash		-			502
Noncurrent deferred tax asset		8			8
Other assets, net		38			27
Total assets	$	71,059		$	64,769
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	782		$	578
Current portion of obligations under finance leases		250			236
Current portion of obligations under operating leases		528			-
Accounts payable		10,530			10,454
Accrued payroll and other compensation		1,024			872
Accrued income taxes		106			84
Other accrued taxes		358			405
Deferred membership dues revenue		3,854			2,899
Other liabilities and accrued expenses		987			793
Total current liabilities		18,419			16,321
Long-term debt, net of current portion		13,058			10,167
Line of credit		575			-
Obligations under finance leases, net of current portion		515			688
Obligations under operating leases, net of current portion		977			-
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		59,145			59,141
Accumulated deficit		(21,716	)		(21,701	)
Total Avalon Holdings Corporation Shareholders' Equity		37,468			37,479
Non-controlling interest in subsidiary		(53	)		14
Total equity		37,415			37,493
Total liabilities and equity	$	71,059		$	64,769

See accompanying notes to unaudited condensed consolidated financial statements.

2

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

(in thousands, except for share data)

	For the Three Months Ended September 30, 2019
														Total
	Common Stock													Avalon		Non-controlling
	Shares				Amount				Paid-in		Accumulated			Shareholders'		Interest in
	Class A		Class B		Class A		Class B		Capital		Deficit			Equity		Subsidiary			Total
Balance at July 1, 2019		3,263,647		611,784	$	33	$	6	$	59,144	$	(21,860	)	$	37,323	$	(35	)	$	37,288
Stock options - compensation costs		-		-		-		-		1		-			1		-			1
Net income (loss)		-		-		-		-		-		144			144		(18	)		126
Balance at September 30, 2019		3,263,647		611,784	$	33	$	6	$	59,145	$	(21,716	)	$	37,468	$	(53	)	$	37,415

	For the Three Months Ended September 30, 2018
														Total
	Common Stock													Avalon		Non-controlling
	Shares				Amount				Paid-in		Accumulated			Shareholders'		Interest in
	Class A		Class B		Class A		Class B		Capital		Deficit			Equity		Subsidiary			Total
Balance at July 1, 2018		3,191,100		612,231	$	32	$	6	$	58,968	$	(20,733	)	$	38,273	$	1,882		$	40,155
Stock options - compensation costs		-		-		-		-		2		-			2		-			2
Net income (loss)		-		-		-		-		-		849			849		(96	)		753
Balance at September 30, 2018		3,191,100		612,231	$	32	$	6	$	58,970	$	(19,884	)	$	39,124	$	1,786		$	40,910

See accompanying notes to unaudited condensed consolidated financial statements.

3

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

(in thousands, except for share data)

	For the Nine Months Ended September 30, 2019
														Total
	Common Stock													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, 2019		3,263,647		611,784	$	33	$	6	$	59,141	$	(21,701	)	$	37,479		$	14		$	37,493
Stock options - compensation costs		-		-		-		-		4		-			4			-			4
Net loss		-		-		-		-		-		(15	)		(15	)		(67	)		(82	)
Balance at September 30, 2019		3,263,647		611,784	$	33	$	6	$	59,145	$	(21,716	)	$	37,468		$	(53	)	$	37,415

	For the Nine Months Ended September 30, 2018
														Total
	Common Stock													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, 2018		3,191,100		612,231	$	32	$	6	$	58,965	$	(20,557	)	$	38,446	$	2,126		$	40,572
Stock options - compensation costs		-		-		-		-		5		-			5		-			5
Net income (loss)		-		-		-		-		-		673			673		(340	)		333
Balance at September 30, 2018		3,191,100		612,231	$	32	$	6	$	58,970	$	(19,884	)	$	39,124	$	1,786		$	40,910

See accompanying notes to unaudited condensed consolidated financial statements.

4

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands) 

	Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income (loss)	$	(82	)	$	333
Reconciliation of net income (loss) to cash provided by operating activities:
Depreciation and amortization expense		1,848			2,187
Amortization of debt issuance costs		25			22
Compensation costs - stock options		4			5
Provision for losses on accounts receivable		27			34
Gain from disposal of vehicle		(45	)		(17	)
Change in operating assets and liabilities, net of effect of acquisition
Accounts receivable		1,175			(1,462	)
Unbilled membership dues receivable		(299	)		(194	)
Inventories		(33	)		(31	)
Prepaid expenses		(124	)		(49	)
Other assets		(6	)		(4	)
Accounts payable		(667	)		1,338
Accrued payroll and other compensation		152			281
Accrued income taxes		22			30
Other accrued taxes		(47	)		(45	)
Deferred membership dues revenue		955			613
Other liabilities and accrued expenses		194			103
Net cash provided by operating activities		3,099			3,144
Cash flows from investing activities:
Capital expenditures		(5,689	)		(2,012	)
Acquisition of Boardman Tennis Center property		-			(1,269	)
Payments related to acquisition of New Castle Country Club property		(90	)		-
Proceeds from disposal of vehicle		45			17
Net cash used in investing activities		(5,734	)		(3,264	)
Cash flows from financing activities:
Proceeds under term loan facility		3,000			-
Payments of debt issuance costs		(47	)		(5	)
Principal payments on term loan facilities		(533	)		(422	)
Borrowings under line of credit facility		575			-
Repayment under line of credit facility		(134	)		-
Principal payments on finance lease obligations		(192	)		(178	)
Net cash provided by (used in) financing activities		2,669			(605	)
Increase (decrease) in cash, cash equivalents and restricted cash		34			(725	)
Cash, cash equivalents and restricted cash at beginning of period		1,908			3,851
Cash, cash equivalents and restricted cash at end of period	$	1,942		$	3,126
Supplemental disclosure of cash flow information:
Significant non-cash operating and investing activities:
Capital expenditures included in accounts payable	$	743		$	585
Significant non-cash investing and financing activities:
Operating lease right-of-use assets in exchange for lease obligaitons	$	1,807		$	-
Finance lease obligations incurred	$	33		$	77
Acquisition of New Castle Country Club real property in exchange for the assumption of outstanding debt	$	787		$	-
Cash paid during the period for interest	$	556		$	490
Cash paid during the period for income taxes	$	113		$	82

See accompanying notes to unaudited condensed consolidated financial statements.

5

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2019

Note 1. Description of Business

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 Resorts and Clubs, Inc. (“ARCI”), which includes the operation and management of four golf courses and associated clubhouses, athletic and fitness centers, tennis courts, salon and spa services, dining and banquet facilities and a travel agency. ARCI also owns and operates a hotel and related resort amenities including dining, banquet and conference facilities, fitness center, indoor junior Olympic size swimming pool and tennis courts. In the third quarter of 2019, The Avalon Inn, which includes the hotel and related resort amenities was renamed The Grand Resort.

Note 2. Basis of Presentation

The unaudited condensed consolidated 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 2018 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, necessary for a fair presentation of the financial position of Avalon as of September 30, 2019, and the results of its operations and cash flows for the interim periods presented.

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

Note 3. Recent Accounting Pronouncements

Adopted Accounting Standards

In February 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASU 2016-02”). 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. 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. On January 1, 2019, the Company adopted ASU 2016-02 under the modified retrospective method with the available practical expedients. As a result of adoption, on January 1, 2019, the Company recorded a ROU asset and related lease liability of approximately $1.7 million for its golf carts, machinery and equipment for the landfill operations, furniture and fixtures for The Grand Resort and office copiers under operating leases (See Note 7).

6

In May 2014, the FASB issued 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. On January 1, 2018, the Company adopted ASU 2014-09 and ASU 2016-08, and all related amendments using the modified retrospective method. The adoption did not result in an impact to the way the Company records revenue and as such did not result in period reclassifications to or from revenue or its associated costs. As a result of the adoption, the Company separately disclosed contract assets, in our Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 and associated cash flows in our Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (See Note 5).

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. On January 1, 2018, the Company adopted ASU 2016-15. The adoption of this standard did not have an 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.  On January 1, 2018, the Company adopted ASU 2016-18. The adoption of ASU 2016-18 impacted the presentation of our Condensed Consolidated Statements of Cash Flows and resulted in additional disclosure in our Notes to Unaudited Condensed Consolidated Financial Statements for the restricted cash related to the loan proceeds deposited into our project fund account that have not yet been utilized to fund the additional renovation and expansion of The Grand Resort (See Note 4).

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). The purpose of ASU 2017-01 is to change the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The Company adopted ASU 2017-01 on January 1, 2018. The acquisition of the Boardman Tennis Center property, acquired in March 2018, and the acquisition of the New Castle Country Club property, acquired in May 2019, was accounted for in accordance with ASU 2017-01 (See Note 16).

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 ("ASU 2018-05"). ASU 2018-05 adds the SEC guidance released on December 22, 2017 regarding the Tax Cuts and Jobs Act (the “Tax Act”) to the FASB Accounting Standards Codification. ASU 2018-05 provides additional guidance allowing companies to use a one year measurement period to account for the impacts of the Tax Act in their financial statements. The Company adopted ASU 2018-05 in March 2018. The Company has accounted for the impacts of the Tax Act, including the use of reasonable estimates where necessary.

Accounting Standards Not Yet Adopted

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.

7

Note 4. Cash, Cash Equivalents and Restricted Cash

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 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 expansion of The Grand Resort in accordance with the provisions of the loan and security agreements (See Note 9).

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows. Cash, cash equivalents and restricted cash consist of the following at September 30, 2019 and December 31, 2018 (in thousands):

	September 30,		December 31,
	2019		2018
Cash and cash equivalents	$	1,942	$	1,406
Restricted cash		-		502
Cash, cash equivalents and restricted cash	$	1,942	$	1,908

Note 5. Revenues

Adoption of ASC Topic 606, “Revenue from Contracts with Customers”

On January 1, 2018, Avalon adopted the new accounting standard FASB ASC 606, Revenue from Contracts with Customers (“ASC 606”), and all the related amendments using the modified retrospective method for all contracts. The Company's accounting policy has been updated to align with Topic 606, and no significant changes to revenue recognition have occurred as a result of the change. The adoption of ASC 606 did not result in an impact to the way the Company records revenue and as such did not result in period reclassifications to or from revenue or its associated costs. As a result of the adoption, the Company separately disclosed contract assets, further described below, in our Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 and associated cash flows in our Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018.

Revenue Recognition

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

Waste Management Services

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

8

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

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

Avalon is a minority owner with managerial control over two salt water injection wells and its associated facility. Operations of the salt water injection wells have been suspended in accordance with the Chief of the Division of Oil and Gas Resources Management order (See Note 15). Due to the suspension of the salt water injection wells, there were no operating revenues for the three and nine months ended September 30, 2019 and 2018.

For the three months ended September 30, 2019 and 2018, the net operating revenues related to waste management services represented approximately 64% and 69%, respectively, of Avalon’s total consolidated net operating revenues. For both the nine months ended September 30, 2019 and 2018, the net operating revenues related to waste management services represented approximately 70% of Avalon’s total consolidated net operating revenues. For both the nine months ended September 30, 2019 and 2018, no one customer individually accounted for 10% or more of Avalon’s waste management services segment revenues.

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

In addition, as the promise to provide services qualifies as a series accounted for as a single performance obligation, the Company applied the practical expedient guidance that allows an entity that is recognizing revenue over time by using an output method to recognize revenue equal to the amount that the entity has the right to invoice if the invoiced amount corresponds directly to the value transferred to the customer. The Company applied the standard's practical expedient that permits the omission of disclosures relating to unsatisfied performance obligations as most of the Company’s waste management service contracts (i) have an original expected length of one year or less and (ii) the Company recognizes revenue at the amount to which the Company has the right to invoice for services performed. For contracts with terms that extend beyond a year, variability will be resolved over the remaining term. The nature of the variability is based on a fixed rate for invoices processed and/or tonnages of waste transported and disposed.

Avalon evaluated whether we are the principal (i.e. report revenues on a gross basis) or agent (i.e. report revenues on a net basis). Avalon reports waste management services on a gross basis, that is, amounts billed to our customers are recorded as revenues, and amounts paid to vendors for providing those services are recorded as operating costs. As principal, Avalon is primarily responsible for fulfilling the promise to provide waste management services for the customer. Avalon accepts credit risk in the event of nonpayment by the customer and is obligated to pay vendors who provide the service regardless of whether the customer pays the Company. Avalon does have a level of discretion in establishing the pricing for its service.

Our payment terms vary by the type and location of our customer and the service offered. Avalon does not have any financing arrangements with its customers. The term between invoicing and when payment is due is not significant.

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The Company assesses each contract amendment individually. Typically, amendments made to our contracts do not materially change the terms of the agreement or performance obligation of the Company. The Company accounts for such contract amendments as if it were part of the existing contract as the material terms contained in the contract do not change. In cases where Avalon views there is a material change in the terms of the agreement, the Company will reevaluate and determine if the contract should be viewed as an entirely new contract, replacement contract or a continuation of the existing contract.

Consideration promised in our waste management contracts do not typically include material variable amounts such as discounts, rebates, refunds, credits, price concessions, incentives, penalties or other such items, and, as such, no estimate is made by the Company for such items.

Golf and Related Operations

Avalon’s golf and related operations include the operation and management of four golf courses and associated clubhouses, recreation and fitness centers, tennis courts, salon and spa services, dining and banquet facilities and a travel agency. The golf and related operations also include the operation of a hotel and its related amenities including dining, banquet and conference facilities, fitness center, indoor junior Olympic size swimming pool and tennis courts. Revenues for the golf and related operations consists primarily of food beverage and merchandise sales, membership dues, greens fees and associated cart rentals, room rentals, fitness activities, salon and spa services. Due to adverse weather conditions, net operating revenues relating to the golf courses, which are located in northeast Ohio and Pennsylvania, were minimal during the first three months of 2019 and 2018.

For the three months ended September 30, 2019 and 2018, the net operating revenues related to the golf and related operations represented approximately 36% and 31%, respectively, of Avalon’s total consolidated net operating revenues. For both the nine months ended September 30, 2019 and 2018, the net operating revenues related to the golf and related operations represented approximately 30% of Avalon’s total consolidated net operating revenues. For both the nine months ended September 30, 2019 and 2018, no one customer individually accounted for 10% or more of Avalon’s golf and related operations segment revenues.

For Avalon’s golf and related operations, the Avalon Golf and Country Club offers membership packages for use of the country club facilities and its related amenities. Membership agreements are a one year noncancellable commitment and pricing varies based on the membership type selected by the customer. Based on the terms and conditions of the membership contract, resignations received within the membership period do not relieve the member of their annual commitment. Memberships automatically renew on the member’s anniversary date unless the member resigns for the upcoming membership period prior to the renewal date.

Membership for the Avalon Golf and Country Club does not contain up-front initiation fees or require monthly minimum spending at the facilities. Annual membership dues do not cover the cost of food, beverage or any other ancillary paid services which are made available to the member nor do they typically provide for discounts on these goods or services. Members have no obligation to purchase or utilize any of these additional goods or services. Avalon is not required to provide such goods or services unless requested and paid for at the point of sale by the member.

Under the terms of the contract, Avalon will provide unlimited use and access to the country club facilities. Avalon’s performance obligation in the contract is the “stand ready obligation” to provide access to these facilities for the member for the entire membership term. Avalon providing the “stand ready obligation” for use of the facilities to the member over the entire term of the membership agreement represents a single performance obligation of which Avalon expects the member to receive and consume the benefits of its obligation throughout the membership term, and as such, the Company recognizes membership dues on a straight line basis over the term of the contract. The Company applied the standard's practical expedient that permits the omission of disclosures relating to unsatisfied performance obligations for contracts with an original expected length of one year or less as Avalon Golf and Country Club membership agreements are one year in length.

For our hotel operations, Avalon’s performance obligation is to provide lodging facilities. The separate components of providing these services (hotel room, toiletry items, housekeeping, and amenities) are not distinct within the context of the contract as they are all highly dependent and interrelated as part of the obligation to provide the lodging facility. Room sales are driven by a fixed fee charged to a hotel guest to stay at The Grand Resort for an agreed upon period. The Company agrees to provide a room to the hotel guest for a specified time period for that agreed-upon rate. Our hotel room reservations are performance obligations satisfied over time as the hotel guest simultaneously receives and consumes the benefits provided by the hotel. For performance obligations satisfied over time, our hotel operations measure the progress toward complete satisfaction of the performance obligation and recognize revenue proportionately over the course of the customer’s stay.

For food, beverage, and merchandise sales, greens fees and associated cart rental, fitness activities, salon and spa services and other ancillary services, the transaction price is the set price charged by the Company for those goods or services. Upon purchase of the good or service, the Company transfers control of the good or service to the customer and the customer immediately consumes the benefits of the Company’s performance and, as such, we recognize revenue at the point of sale. Amounts paid in advance, such as deposits on overnight lodging or for banquet or conferences facilities, are recorded as a liability until the goods or services are provided to the customer (see Contract Liabilities below).

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The following table presents our net operating revenues disaggregated by revenue source for the three and nine months ended September 30, 2019 and 2018 (in thousands). Sales and other taxes are excluded from revenues.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Waste management and brokerage services	$	10,867	$	12,009	$	33,853	$	30,779
Captive landfill management operations		705		548		2,055		1,746
Total waste management services revenues		11,572		12,557		35,908		32,525
Food, beverage and merchandise sales		2,587		2,285		6,027		5,531
Membership dues revenue		1,474		1,278		4,220		3,871
Room rental revenue		814		739		1,808		1,781
Greens fees and cart rental revenue		1,098		865		1,755		1,460
Other revenue		473		424		1,333		1,201
Total golf and related operations revenue		6,446		5,591		15,143		13,844
Total net operating revenues	$	18,018	$	18,148	$	51,051	$	46,369

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

Receivables, Net

Receivables, net, include amounts billed and currently due from customers. The amounts due are stated at their net realizable value. At September 30, 2019 and December 31, 2018, accounts receivable, net, related to our waste management services segment were approximately $9.7 million and $11.2 million, respectively. At September 30, 2019 one customer accounted for approximately 17% of the waste management services segment’s receivables and 15% of the consolidated receivables. At December 31, 2018 two customers accounted for approximately 25% of the waste management services segment’s receivables and 23% of the consolidated receivables. Accounts receivable, net, related to our golf and related operations segment were approximately $1.3 million at September 30, 2019 and $1.0 million at December 31, 2018. No one customer of the golf and related operations segment accounted for 10% or more of Avalon’s golf and related operations segment or consolidated net receivables at September 30, 2019 or December 31, 2018.

The Company maintains an allowance for doubtful accounts 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 doubtful accounts, or to income, as appropriate under the circumstances. Allowance for doubtful accounts was approximately $0.3 million at both September 30, 2019 and December 31, 2018.

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The following table presents changes in our allowance for doubtful accounts during the three and nine months ended at September 30, 2019 and 2018 (in thousands):

			Provision		Write-offs
	Balance at		for Doubtful		less			Balance at
	Beginning of Period		Accounts		Recoveries			End of Period
Three months ended September 30, 2019
Allowance for doubtful accounts	$	267	$	9	$	(3	)	$	273
Three months ended September 30, 2018
Allowance for doubtful accounts	$	263	$	11	$	(6	)	$	268
Nine months ended September 30, 2019
Allowance for doubtful accounts	$	255	$	27	$	(9	)	$	273
Nine months ended September 30, 2018
Allowance for doubtful accounts	$	237	$	34	$	(3	)	$	268

Contract Assets

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 $0.9 million at September 30, 2019 and $0.6 million at December 31, 2018.

The following table presents changes in our contract assets during the three and nine months ended September 30, 2019 and 2018 (in thousands):

			Unbilled
	Balance at		Membership					Balance at
	Beginning of Period		Dues		Billings			End of Period
Three months ended September 30, 2019
Contract Assets:
Unbilled membership dues receivable	$	1,101	$	284	$	(532	)	$	853
Three months ended September 30, 2018
Contract Assets:
Unbilled membership dues receivable	$	1,009	$	184	$	(419	)	$	774
Nine months ended September 30, 2019
Contract Assets:
Unbilled membership dues receivable	$	554	$	1,813	$	(1,514	)	$	853
Nine months ended September 30, 2018
Contract Assets:
Unbilled membership dues receivable	$	580	$	1,475	$	(1,281	)	$	774

Contract Liabilities

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 performance obligation. We classify deferred membership dues revenue as current based on the timing of when we expect to recognize revenue for the membership commitment based on the Company satisfying the stand ready performance obligation throughout the annual membership period. The unrecognized or deferred revenues related to membership dues in our Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018 were $3.9 million and $2.9 million, respectively. Customer advance deposits are recorded as a liability until the goods or services are provided to the customer. Generally, customer advances, and corresponding performance obligation are satisfied within 12 months of the date of receipt of advance payment. The unrecognized revenues related to customer advance deposits are recorded in “Other liabilities and accrued expenses” in our Condensed Consolidated Balance Sheets. Customer advance deposits were approximately $0.5 million at both September 30, 2019 and December 31, 2018.

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The following table presents changes in our contract liabilities during the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Balance at				Revenue			Balance at
	Beginning of Period		Billings		Recognized			End of Period
Three months ended September 30, 2019
Contract Liabilities:
Deferred membership dues revenue	$	4,497	$	831	$	(1,474	)	$	3,854
Customer advance deposits	$	556	$	438	$	(487	)	$	507
Three months ended September 30, 2018
Contract Liabilities:
Deferred membership dues revenue	$	4,034	$	595	$	(1,278	)	$	3,351
Customer advance deposits	$	491	$	514	$	(582	)	$	423
Nine months ended September 30, 2019
Contract Liabilities:
Deferred membership dues revenue	$	2,899	$	5,175	$	(4,220	)	$	3,854
Customer advance deposits	$	453	$	1,100	$	(1,046	)	$	507
Nine months ended September 30, 2018
Contract Liabilities:
Deferred membership dues revenue	$	2,718	$	4,504	$	(3,871	)	$	3,351
Customer advance deposits	$	430	$	1,186	$	(1,193	)	$	423

Note 6. Property and Equipment

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 furniture 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 of property and equipment are credited or charged to operations. Interest costs are capitalized on significant construction projects.

Property and equipment at September 30, 2019 and December 31, 2018 consists of the following (in thousands):

	September 30,			December 31,
	2019			2018
Land and land improvements	$	14,612		$	14,231
Buildings and improvements		42,413			36,185
Machinery and equipment		4,869			4,508
Office furniture and fixtures		6,964			6,458
Vehicles		499			455
Construction in progress		2,084			2,569
		71,441			64,406
Less accumulated depreciation and amortization		(23,222	)		(21,872	)
Property and equipment, net	$	48,219		$	42,534

At September 30, 2019, the Company did not have any significant fixed contractual commitments for construction projects.

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Note 7. Leases

In February 2016, the FASB issued ASU 2016-02. The new standard establishes a 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. In accordance with ASU 2016-02, leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. On January 1, 2019, the Company adopted ASU 2016-02 under the modified retrospective method with the available practical expedients.

Operating Leases

Avalon leases golf carts, machinery and equipment for the landfill operations, furniture and fixtures for The Grand Resort, and office copiers under operating leases. On January 1, 2019, as a result of the adopted ASU 2016-02, the Company recorded a ROU asset and related lease liability of approximately $1.7 million. Our operating leases have remaining lease terms ranging from 1 to 5 years. The weighted average remaining lease term on operating leases was approximately 3.2 years at September 30, 2019.

In addition, in connection with the purchase of New Castle Country Club’s real property assets on May 13, 2019, the Company assumed the remaining term of New Castle Country Club’s golf cart operating lease. At acquisition, the Company recorded an operating lease right-of-use asset and corresponding obligation under operating leases of approximately $126,000. The golf cart operating lease had a remaining lease term of 3 years at the acquisition date (See Note 16).

Leased property and associated obligations under operating leases at September 30, 2019 consists of the following (in thousands):

	September 30,
	2019
Operating lease right-of-use assets	$	1,505
Current portion of obligations under operating leases	$	528
Long-term portion of obligations under operating leases		977
Total obligations under operating leases	$	1,505

The weighted average discount rate on operating leases was 5.01% at September 30, 2019.

Finance Leases

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 its remaining renewal options. At September 30, 2019 there were approximately 34.1 years remaining on the golf course and related facilities finance lease.

In addition, the golf and related operations also entered into lease agreements for vehicles, golf course maintenance and restaurant equipment and the captive landfill operations entered into a lease for a piece of equipment which were determined to be finance leases. At September 30, 2019, the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from 2 to 5 years at September 30, 2019.   The weighted average remaining lease term on the vehicles and equipment leases was approximately 2.3 years at September 30, 2019.

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Leased property and associated obligations under finance leases at September 30, 2019 and December 31, 2018 consists of the following (in thousands):

	September 30,			December 31,
	2019			2018
Leased property under finance leases	$	11,604		$	11,442
Less accumulated amortization		(5,750	)		(5,374	)
Leased property under finace leases, net	$	5,854		$	6,068
Current portion of obligations under finance leases	$	250		$	236
Long-term portion of obligations under finance leases		515			688
Total obligations under finance leases	$	765		$	924

The weighted average discount rate on finance leases was 4.8% at both September 30, 2019 and December 31, 2018.

For the three and nine months ended September 30, 2019 and 2018, components of lease expense were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Operating lease cost	$	298	$	195	$	586	$	446
Finance lease cost:
Depreciation on right-of-use assets	$	124	$	129	$	376	$	354
Interest on lease liabilities		11		13		33		38
Total finance lease cost	$	135	$	142	$	409	$	392

Future commitments under long-term, operating leases and finance leases at September 30, 2019 are as follows (in thousands):

	Finance		Operating		Total
2020	$	285	$	593	$	878
2021		251		496		747
2022		72		343		415
2023		33		175		208
2024		20		31		51
Thereafter		435		-		435
Total lease payments		1,096		1,638		2,734
Less imputed interest		331		133		464
Total		765		1,505		2,270
Less: current portion of obligations under leases		250		528		778
Long-term portion of obligations under leases	$	515	$	977	$	1,492

Note 8. Basic and Diluted Net Income (Loss) per Share

Basic net loss per share attributable to Avalon Holdings Corporation common shareholders is computed by dividing the net loss by the weighted average number of common shares outstanding. For the three and nine months ended September 30, 2019 and 2018, the weighted average number of common shares outstanding was 3,875,431 and 3,803,331, respectively.

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

For the three months ended September 30, 2019 and 2018, the diluted weighted average number of shares outstanding was 3,892,948 and 4,048,683, respectively. For the nine months ended September 30, 2019, 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 months ended September 30, 2019 was 3,909,706. For the nine months ended September 30, 2018, the diluted weighted average number of shares outstanding was 3,895,129.

Note 9. Term Loans and Line of Credit Agreements

2016 Term Loan Agreement

On December 20, 2016, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the “2016 Term Loan Agreement”) with Laurel Capital Corporation which provided for a $12.0 million term loan. At closing, $9.1 million of the proceeds were used to pay off amounts outstanding under the then existing line of credit agreement and associated accrued interest with Home Savings Bank, dated May 21, 2015, as amended, and pay related transaction costs associated with the 2016 Term Loan Agreement. The line of credit agreement with Home Savings Bank was terminated in conjunction with the repayment. Remaining proceeds of $2.9 million under the 2016 Term Loan Agreement were deposited in a project fund account to fund costs of renovating and expanding The Grand Resort. At September 30, 2019 the project fund proceeds related to the 2016 Term Loan Agreement were fully utilized. At December 31, 2018, the remaining project fund proceeds of approximately $0.5 million are presented in the Condensed Consolidated Balance Sheets as “Restricted cash.” On December 4, 2017 the 2016 Term Loan Agreement was amended to restate the definition of “Total Fixed Charges” utilized in the calculation of the “Fixed Charge Coverage Ratio.”

The $12.0 million term loan amount 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 2016 Term Loan Agreement matures on December 20, 2026 at which time the final balloon payment equal to the remaining outstanding principal, interest and fees are due. Borrowings under the 2016 Term Loan Agreement bear interest at a fixed rate of 5.35% 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% per annum or (b) the sum of the Index Rate on the date two (2) business days prior to the reset date plus 3.95%, provided that the applicable rate shall in no event exceed 7.50% per annum.

Avalon has the right to prepay the amount outstanding under the 2016 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 2016 Term Loan Agreement are secured by certain real property and related business assets as defined in the agreement. The 2016 Term Loan Agreement also contains certain financial and other covenants, customary representations, warranties and events of default. Avalon was in compliance with the 2016 Term Loan Agreement covenants at September 30, 2019 and December 31, 2018.

The Company incurred approximately $191,000 of debt issuance costs in connection with the 2016 Term Loan Agreement. These debt issuance costs were capitalized and will be amortized over the life of the 2016 Term Loan Agreement. In accordance with ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”), these costs are presented in the Condensed Consolidated Balance Sheets as a direct reduction from the carrying amount of the term loan liability.

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2019 Term Loan Agreement

On March 29, 2019, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the “2019 Term Loan Agreement”) with Laurel Capital Corporation which provided for a $3.0 million term loan. At closing, a portion of the proceeds were used to pay related transaction costs associated with the 2019 Term Loan Agreement with the remaining proceeds deposited into a project fund account to fund costs of renovating and expanding The Grand Resort. At September 30, 2019 the project fund proceeds related to the 2019 Term Loan Agreement were fully utilized.

The $3.0 million outstanding under the 2019 Term Loan Agreement is payable in 92 equal monthly installments of principal and interest, based on a fifteen (15) year maturity schedule which commenced on April 20, 2019 followed by one final balloon payment of all remaining principal, interest and fees due on the maturity date of December 20, 2026. Borrowings under the 2019 Term Loan Agreement bear interest at a fixed rate of 6.25% 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) 6.25% per annum or (b) the sum of the Index Rate on the date two (2) business days prior to the reset date plus 3.60%, provided that the applicable rate shall in no event exceed 8.50% per annum.

Avalon has the right to prepay the amount outstanding under the 2019 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 and two percent (2%) on any prepayment in the sixth, seventh or eighth year.

Borrowings under the 2019 Term Loan Agreement are secured by a second priority mortgage lien on the land, building and improvements on the property owned by The Grand Resort as defined in the agreement. The 2019 Term Loan Agreement also contains certain financial and other covenants, customary representations, warranties and events of default. Avalon was in compliance with the 2019 Term Loan Agreement covenants at September 30, 2019.

The Company incurred approximately $42,000 of debt issuance costs in connection with the 2019 Term Loan Agreement. These debt issuance costs were capitalized and will be amortized over the life of the 2019 Term Loan Agreement. In accordance with ASU 2015-03, these costs are presented in the Condensed Consolidated Balance Sheets as a direct reduction from the carrying amount of the term loan liability.

Commercial Mortgage

On May 13, 2019, Havana Cigar Shop, Inc., a wholly owned subsidiary of Avalon, entered into an asset Purchase and Sale Agreement with New Castle Country Club (the “Club”) for the purchase of the real property assets associated with the Club. Havana Cigar Shop, Inc. concurrently entered into an Assignment and Assumption and Commercial Loan Modification Agreement (the “Assumption Agreement”) with Mercer County State Bank for the outstanding debt under the Club’s Commercial Mortgage (the “Commercial Mortgage”) and Demand Line of Credit, as amended (the “Demand Line of Credit”), at closing as consideration for the purchase of the real property of the Club (See Note 16).

At closing the outstanding principal balance assumed under the Commercial Mortgage obligation was $653,000. The $653,000 outstanding under the $950,000 Commercial Mortgage is payable in 110 equal monthly installments of $7,573 consisting of principal and interest which commenced May 21, 2019 and matures on June 21, 2028. Borrowings under the Commercial Mortgage bear interest at a fixed rate of 5.50% until June 21, 2023 at which time the interest rate will be reset to a fixed rate equal to the greater of (a) 4.25% per annum or (b) the Prime Rate plus 0.50%.

Avalon has the right to prepay the amount outstanding under the Commercial Mortgage, 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, with no prepayment penalty.

Borrowings under the Commercial Mortgage are secured by a first lien mortgage and assignment of leases and rents on the land, building and improvements on the property and non-real estate assets owned by Havana Cigar Shop, Inc. The Commercial Mortgage also contains certain financial and other covenants, customary representations, warranties and events of default.

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Demand Line of Credit

Under the Assumption Agreement Havana Cigar Shop, Inc. also assumed the Club’s $150,000 Commercial Demand Line of Credit with Mercer County State Bank of which $134,000 was outstanding at closing. Monthly payments consist of interest only on the outstanding principal balance with principal due on demand in the event of default as defined in the Commercial Demand Line of Credit agreement. During the third quarter of 2019, the outstanding balance was paid in full. No additional funds were drawn under the Demand Line of Credit at September 30, 2019.

Outstanding borrowings under the Commercial Demand Line of Credit bear interest at Prime Rate plus 0.50%. At September 30, 2019, the interest rate on the Commercial Demand Line of Credit was 5.50%.

Borrowings under the Commercial Demand Line of Credit are secured by a second lien mortgage and assignment of leases and rents on the land, building and improvements on the property and non-real estate assets owned by Havana Cigar Shop, Inc. The Commercial Demand Line of Credit agreement also contains certain financial and other covenants, customary representations, warranties and events of default.

Line of Credit Agreement

On May 31, 2018, Avalon entered into a new business loan agreement with Home Savings Bank, (the “Line of Credit Agreement”) which provides for a line of credit of up to $5.0 million with an original maturity date of May 31, 2020. On June 17, 2019, the Company amended the Line of Credit Agreement to extend the maturity date to May 31, 2021. 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. The existing line of credit agreement with Home Savings Bank, dated December 20, 2016, as amended, which was entered into concurrently with the 2016 Term Loan Agreement, was terminated in conjunction with the new Line of Credit Agreement. No amounts were outstanding under the existing line of credit agreement at termination.

At September 30, 2019, $575,000 was outstanding under the Line of Credit Agreement. No amounts were drawn under the Line of Credit Agreement at December 31, 2018. Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .25%. At September 30, 2019, the interest rate on the Line of Credit Agreement was 5.25%.

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 also contains certain financial and other covenants, customary representations, warranties and events of default. Avalon was in compliance with the line of credit agreements covenants at September 30, 2019 and December 31, 2018.

During the three month periods ended September 30, 2019 and 2018, the weighted average interest rate on outstanding borrowings was 5.53% and 5.35%, respectively. During the nine month periods ended September 30, 2019 and 2018, the weighted average interest rate on outstanding borrowings was 5.48% and 5.35%, respectively.

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Obligations under the Company’s term loan and mortgage agreements at September 30, 2019 and December 31, 2018 consist of the following (in thousands):

	September 30, 2019
	Gross Amount		Debt Issuance Costs			Net Amount
2016 Term loan agreement	$	10,454	$	(139	)	$	10,315
2019 Term loan agreement		2,934		(39	)		2,895
Commercial Mortgage		630		-			630
Total		14,018		(178	)		13,840
Less current portion		807		(25	)		782
Long-term debt	$	13,211	$	(153	)	$	13,058

	December 31, 2018
	Gross Amount		Debt Issuance Costs			Net Amount
2016 Term loan agreement	$	10,898	$	(153	)	$	10,745
Less current portion		597		(19	)		578
Long-term debt	$	10,301	$	(134	)	$	10,167

Future maturities under the Company term loan and mortgage agreements are as follows (in thousands):

For the Twelve Month Period Ending September 30,
2020	$	807
2021		853
2022		901
2023		951
2024		1,005
Thereafter		9,501
Total	$	14,018

Note 10. Income Taxes

During the three month periods ended September 30, 2019 and 2018, net income attributable to Avalon Holdings Corporation shareholders was $0.1 million and $0.8 million, respectively. During the nine month period ended September 30, 2019, net loss attributable to Avalon Holdings Corporation shareholders was less than $0.1 million compared to net income attributable to Avalon Holdings Corporation shareholders of $0.7 million for the nine month period ended September 30, 2018. Avalon recorded a state income tax provision in both the three and nine month periods ended September 30, 2019 and 2018, which was related entirely to the waste management and brokerage operations. Due to the recording of a full valuation allowance against the Company’s federal net deferred tax assets, the overall effective tax rate in both periods reflects taxes owed in certain U.S state jurisdictions. Avalon’s income tax on the income (loss) before taxes was offset by a change in the valuation allowance. 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 December 22, 2017, legislation commonly known as the Tax Act was signed into law. The Tax Act changes existing U.S. tax law and includes numerous provisions that will affect Avalon, including our income tax accounting, disclosure and tax compliance. The most impactful changes within the Tax Act are those that will reduce the U.S. corporate tax rates, business-related exclusions and deductions and credits. ASC 740, “Income Taxes,” requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but for which they are able to determine a reasonable estimate, the company must record a provisional amount in the financial statements. Consequently, as of the date of enactment, Avalon valued all deferred tax assets and liabilities at the newly enacted Corporate U.S income tax rate. Avalon has a full valuation allowance on its federal deferred tax assets. 

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Note 11. Long-Term Incentive Plan

On March 14, 2019, the Board of Directors of Avalon approved the renewal of the expired 2009 Long-term Incentive Plan (the “2009 Plan”), which is 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 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. At September 30, 2019, options to purchase 760,000 shares have been granted under the 2009 Plan. Of these, 72,000 shares have been exercised, and options for 688,000 shares remain outstanding.

NQSO’s may be granted with an exercise price which is not less than 100% of the fair market value of the Class A Common Stock on the date of grant. 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 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 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. In 2018, 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.

The grant-date fair values of 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) the exercise price of the option, 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) the current fair value of the underlying equity, 4) the expected volatility of the value of the underlying share for the expected term of the option, 5) the expected dividends on the underlying share for the expected term of the option and 6) the risk-free interest rate(s) for the expected term of the option.

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

The expected term, or time until the option is exercised, is typically based on historical exercising behavior of previous option holders of a company’s stock.  Due to the fact that the Company has had no historical exercising activity, prior to 2018, the simplified method was applied.  Because of the nature of the vesting described above, the options are separated into five blocks, with each block having its own vesting period and expected term. 

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

The following table is a summary of the stock option activity during 2019:                     

			Weighted		Weighted
	Number of		Average		Average
	Options		Exercise		Fair Value at
	Granted		Price		Grant Date
Outstanding at January 1, 2019		688,000		2.52		1.00
Options granted		-		-		-
Options exercised		-		-		-
Options cancelled or forfeited		-		-		-
Outstanding at September 30, 2019		688,000	$	2.52	$	1.00
Options Vested		652,000	$	2.56	$	1.03
Exercisable at September 30, 2019		634,000	$	2.58	$	1.05

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.

2) The Avalon common stock price traded on a public stock exchange (NYSE Amex) must reach the predetermined vesting price within three years after the options become vested under the contractual vesting term.

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

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

Compensation costs were approximately $1,000 and $2,000 for the three months ended September 30, 2019 and 2018, respectively, and $4,000 and $5,000 for the nine months ended September 30, 2019 and 2018, respectively, based upon the estimated grant date fair value calculations. As of September 30, 2019, there was approximately $19,000 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 4.67 years.

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Note 12. Legal Matters

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 15).

Note 13. Business Segment Information

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

Avalon’s golf and related operations segment consists of four golf courses and associated clubhouses which provide dining and banquet facilities, a hotel which provides lodging, dining, banquet and conference facilities, a 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, spa services and food and beverage sales.

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

For both the nine months ended September 30, 2019 and 2018, no one customer accounted for 10% of Avalon’s consolidated or reportable segment net operating revenues.

The accounting policies of the segments are consistent with those described for the consolidated financial statements in the summary of significant accounting policies included in Avalon’s 2018 Annual Report to Shareholders. Avalon measures segment profit for internal reporting purposes as income (loss) before taxes.

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net operating revenues from:
Waste management services:
External customer revenues	$	11,572		$	12,557		$	35,908		$	32,525
Intersegment revenues		-			-			-			-
Total waste management services		11,572			12,557			35,908			32,525
Golf and related operations:
External customer revenues		6,446			5,591			15,143			13,844
Intersegment revenues		10			15			45			57
Total golf and related operations		6,456			5,606			15,188			13,901
Segment operating revenues		18,028			18,163			51,096			46,426
Intersegment eliminations		(10	)		(15	)		(45	)		(57	)
Total net operating revenues	$	18,018		$	18,148		$	51,051		$	46,369
Income (loss) before income taxes:
Waste management services	$	1,074		$	1,244		$	3,295		$	2,768
Golf and related operations		100			455			(363	)		455
Segment income before income taxes		1,174			1,699			2,932			3,223
Corporate interest expense		(203	)		(154	)		(551	)		(474	)
Corporate other income, net		3			1			51			14
General corporate expenses		(810	)		(741	)		(2,379	)		(2,318	)
Income before income taxes	$	164		$	805		$	53		$	445

	September 30,			December 31,
	2019			2018
Identifiable assets:
Waste management services	$	29,107		$	27,383
Golf and related operations		55,297			48,074
Corporate		49,925			47,394
Subtotal		134,329			122,851
Elimination of intersegment receivables		(63,270	)		(58,082	)
Total	$	71,059		$	64,769

In comparing the total assets at September 30, 2019 with those at December 31, 2018, the increase in the total assets of the waste management services segment of $1.7 million is primarily a result of an increase in intersegment transactions, which are eliminated in consolidation, and to a lesser extent, the right-of-use assets relating to operating leases partially offset by a decrease in accounts receivable. The increase in total assets of the golf and related operations segment of $7.2 million was primarily due to capital expenditures related to the expansion of The Grand Resort, the real property acquired relating to New Castle Country Club, the right-of-use assets related to operating leases, and an increase in accounts receivable, partially offset by current year depreciation on property and equipment. The increase in corporate total assets of approximately $2.5 million is primarily due to an increase in intersegment transactions, which are eliminated in consolidation.

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Note 14. Certain Relationships and Related Transactions

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, 2019 and December 31, 2018, respectively, Avalon owns approximately 47% of AWMS Holdings, LLC. In accordance with ASC 810-10 and related amendment, due to the managerial control of American Water Solutions, LLC, AWMS Holdings, LLC is a variable interest entity, and the financial statements of AWMS Holdings, LLC and subsidiaries are included in Avalon’s consolidated financial statements. 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.

Note 15. Injection Wells Suspension

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 Avalon’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 that the saltwater injection wells pose a risk of increasing or creating seismic activity.

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 for the AWMS #2 injection well. To date, the Division has not responded to that plan despite Avalon’s request 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 temporary, and he expects that AWMS #2 will be allowed to resume operations 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 would allow the Chief more time to 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 to the Franklin County Court of Common Pleas (the “Court”), 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 over the 26 month period was arbitrary and not in accordance with reason.  Subsequent to the ruling, and in accordance with the Court’s Decision and Order, both Avalon and the Division submitted their proposed restart plans to the Court. Avalon’s plan sets forth both the initial volumes and pressures and increases in volume and pressure while continuously monitoring seismicity and addressing the concerns of public health and safety.

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

On September 14, 2017, an appeal hearing was held in the Ohio 10^th District Court of Appeals and on July 31, 2018 a decision was issued on the appeal. 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, Avalon, 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.  

Based on the Supreme Court of Ohio’s decision not to accept the Company’s appeal for review and the economically unfeasible conditions required by the Division of Oil & Gas Resources Management proposed restart plan, management of Avalon and its Board of Directors concluded that the injection wells would not resume operations in the near future and that the carrying value of the salt water injection wells was not recoverable. In the fourth quarter of 2018, the Company recorded an impairment charge of approximately $3.3 million, the full carrying value of the Company’s salt water injection wells.

On April 5, 2019, Avalon filed with the Oil and Gas Commission a motion to vacate its prior decisions in this matter. There can be no guarantee that the salt water injection wells will resume operations, but the Company will continue to pursue all available avenues to allow the restart of the Company’s salt water injection well under reasonable conditions. Currently, there is no implemented state-wide policy on induced seismicity and the Ohio Department of Natural Resources (“ODNR”) has refused to communicate with the Company regarding the status and requirements of any policymaking. The operations of Company’s injection wells will remain suspended until that time. The Oil and Gas Commission scheduled a hearing on this motion for August 13, 2019.  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, which is pending.

Concurrently with the filing of the appeal with the Franklin County Court of Common Pleas, the Company filed a writ of mandamus in the 10^th District Court of Appeals on August 30, 2019 to compel the chief of the Division to issue restart orders, or alternative orders that would allow the Company to either restart the AWMS #2 well, or appeal said orders to the Oil and Gas Commission in accordance with Ohio Law.

In addition, on August 26, 2016, Avalon filed a complaint in the 11^th Appellate District Court in Trumbull County, Ohio for a Peremptory Writ of Mandamus to compel the Director of the ODNR to initiate appropriations procedures to determine damages from the illegal regulatory taking of the Company’s property, or issue an alternative remedy at law. The Company believes that the actions, and lack of responsible actions, by the ODNR is a clear violation of the Company’s property rights and a violation of the Fifth and Fourteenth Amendments to the U.S. Constitution; Article I, Section 19 of the Ohio Constitution; and Ohio Revised Code Chapter 163. 

On March 18, 2019, Avalon, received notice that the 11^th Appellate District Court in Trumbull County, Ohio issued summary judgment in favor of the Ohio Department of Natural Resources in the writ of mandamus action that resulted from the suspension order of the Company’s salt water injection well. The decision was appealed to the Supreme Court of Ohio on April 5, 2019. To date, oral arguments in that case have not been scheduled.

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Note 16. Asset Acquisitions

Boardman Tennis Center property

On March 7, 2018, Avalon, through a newly created subsidiary, Avalon Mahoning Sports Center, Inc., completed the acquisition of the Boardman Tennis Center property in Boardman, Ohio for approximately $1.3 million in cash. In accordance with our Term Loan Agreement, the Company withdrew funds from the restricted cash account for reimbursement for capital expenditures incurred in 2017 related to The Grand Resort that were paid with operating cash to fund the acquisition of the Boardman Tennis Center property. Subsequent to the acquisition, the Boardman Tennis Center property was named the Avalon Athletic Club at Boardman. The primary assets of the Avalon Athletic Club at Boardman include the acquired real property consisting of the building and associated land.

In the third quarter of 2018, the Company began renovating the facility. The renovations include the conversion of the facility into a multipurpose recreation center including indoor tennis, basketball, volleyball and pickleball courts and a fitness area. The facilities interior renovations were completed in the first quarter of 2019.

The Avalon Athletic Club at Boardman is currently in operation. The operating results are included in the Company’s Condensed Consolidated Statements of Operations and within Avalon’s golf and related operations segment from the date of acquisition. The net operating revenues and results of operations related to the Avalon Athletic Club at Boardman from the period of acquisition are not significant and, accordingly, are not provided.

The acquisition of the facility and its associated subsequent renovation is consistent with the Company’s athletics and fitness business strategy. Members of the Avalon Golf and Country Club have access to the facility and all the athletic and fitness related activities offered by the Avalon Athletic Club at Boardman. In addition, hotel guests at The Grand Resort can utilize the facility during their stay. The Avalon Athletic Club at Boardman earns revenue through membership fees, athletic and fitness related activities.

The Company accounted for the acquisition of the Avalon Athletic Club at Boardman in accordance with ASU 2017-01. In accordance with ASU 2017-01, the Company evaluated whether to account for the transaction as either a business or asset acquisition. The Company determined that all of the fair value of the gross assets acquired was concentrated in the real property. In accordance with the guidance, assets that are attached to each other, such as land and a building residing on the land which cannot be physically removed and used separately from each other without incurring significant cost are considered to be a single identifiable asset. In accordance with ASU 2017-01, the Company accounted for the transaction as an asset acquisition as all of the value of the gross assets acquired resides in that single asset.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the transaction date (in thousands):

Assets acquired:
Building and land	$	1,302
Total assets acquired:		1,302
Liabilities assumed:
Accrued liabilities		33
Total liabilities assumed		33
Total consideration	$	1,269

New Castle Country Club property

On May 13, 2019, Havana Cigar Shop, Inc., a wholly owned subsidiary of Avalon, entered into an asset Purchase and Sale Agreement with New Castle Country Club (“the Club”) for the purchase of the real property assets associated with the Club. Havana Cigar Shop, Inc. concurrently entered into an Assignment and Assumption and Commercial Loan Modification Agreement with Mercer County State Bank for the outstanding debt under the Club’s Commercial Mortgage and Demand Line of Credit, as amended, (collectively the “Agreements”) at closing as consideration for the purchase of the real property of the Club. The total amount of outstanding debt under the Agreements assumed by Havana Cigar Shop, Inc., at closing was approximately $0.8 million (See Note 9).

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Subsequent to the asset Purchase and Sale Agreement, Havana Cigar Shop, Inc. was named The Avalon Field Club at New Castle. The Avalon Field Club at New Castle is currently in operation. The operating results are included in the Company’s Condensed Consolidated Statements of Operations and within Avalon’s golf and related operations segment from the date of acquisition. The net operating revenues and results of operations related to The Avalon Field Club at New Castle from the period of acquisition are not significant and, accordingly, are not provided.   

The acquisition is consistent with the Company’s golf operations business strategy as members of the Avalon Golf and Country Club have access to all the golf and related country club activities offered by The Avalon Field Club at New Castle. In addition, hotel guests at The Grand Resort can utilize the facility during their stay. The Avalon Field Club at New Castle earns revenue through membership dues, food, beverage and merchandise sales, greens fees and associated cart rentals.

The Company accounted for the acquisition of The Avalon Field Club at New Castle in accordance with ASU 2017-01. In accordance with ASU 2017-01, the Company evaluated whether to account for the transaction as either a business or asset acquisition. The Company determined that all of the fair value of the gross assets acquired was concentrated in the real property. In accordance with the guidance, assets that are attached to each other, such as land and a building residing on the land which cannot be physically removed and used separately from each other without incurring significant cost are considered to be a single identifiable asset. In accordance with ASU 2017-01, the Company accounted for the transaction as an asset acquisition as all of the value of the gross assets acquired resides in that single asset.

In accordance with ASU 2017-01, the Company capitalized approximately $67,000 of transaction costs as a component of the cost of the real property assets acquired.

The Avalon Field Club also assumed the remaining term of the Club’s golf cart operating lease. At acquisition the Company recorded an operating lease right-of-use asset and corresponding obligation under operating leases of approximately $126,000. The golf cart operating lease had a remaining lease term of 3 years at the acquisition date.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the transaction date (in thousands):

Assets acquired:
Building and land	$	854
Operating lease right-of-use assets		126
Prepaid real estate taxes		23
Total assets acquired:		1,003
Liabilities assumed:
Commercial mortgage		653
Demand line of credit		134
Obligations under operating leases		126
Total liabilities assumed		913
Total consideration	$	90

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Item 2. 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 condition of Avalon Holdings Corporation and its subsidiaries. As used in this report, the term “Avalon” or the “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 operations, taken as a whole, unless the context indicates otherwise.

Statements included in Management’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 looking statements”. Avalon cautions readers that forward looking statements, including, without limitation, those relating to 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 reports filed with the Securities and Exchange Commission.

Liquidity and Capital Resources

For the nine months ended September 30, 2019, Avalon utilized existing cash and cash provided by operations to meet operating needs, make required monthly payments on our term loan facilities and to fund capital expenditures which included the renovation of the Avalon Athletic Club at Boardman and the continued renovation and expansion of The Grand Resort (formerly The Avalon Inn) as further described below. In the third quarter of 2019, The Avalon Inn, which includes the hotel and related resort amenities was renamed The Grand Resort.

On May 13, 2019, Havana Cigar Shop, Inc., a wholly owned subsidiary of Avalon, entered into an asset Purchase and Sale Agreement with New Castle Country Club (the “Club”) for the purchase of the real property assets associated with the Club. Havana Cigar Shop, Inc. concurrently entered into an Assignment and Assumption and Commercial Loan Modification Agreement with Mercer County State Bank for the outstanding debt under the Club’s Commercial Mortgage and Demand Line of Credit, as amended, (collectively the “Agreements”) at closing as consideration for the purchase of the real property of the Club. The total amount of outstanding debt under the Agreements assumed by Havana Cigar Shop, Inc., at closing was approximately $0.8 million.

Subsequent to the asset Purchase and Sale Agreement, Havana Cigar Shop, Inc. was named The Avalon Field Club at New Castle. The Avalon Field Club at New Castle is currently in operation. The operating results are included in the Company’s Condensed Consolidated Statements of Operations and within Avalon’s golf and related operations segment from the date of acquisition.

The acquisition is consistent with the Company’s golf operations business strategy as members of the Avalon Golf and Country Club have access to all the golf and related country club activities offered by The Avalon Field Club at New Castle. In addition, hotel guests at The Grand Resort can utilize the facility during their stay. The Avalon Field Club at New Castle earns revenue through membership dues, food, beverage and merchandise sales, greens fees and associated cart rentals.

On March 7, 2018, Avalon, through a newly created subsidiary, Avalon Mahoning Sports Center, Inc., completed the acquisition of the Boardman Tennis Center property in Boardman, Ohio for approximately $1.3 million in cash. In accordance with our Term Loan Agreement, the Company withdrew funds from the restricted cash account for reimbursement for capital expenditures incurred in 2017 related to The Grand Resort that were paid with operating cash to fund the acquisition of the Boardman Tennis Center property. Subsequent to the acquisition, the Boardman Tennis Center property was named the Avalon Athletic Club at Boardman. The primary assets of the Avalon Athletic Club at Boardman include the acquired real property consisting of the building and associated land.

In the third quarter of 2018, the Company began renovating the facility. The renovations include the conversion of the facility into a multipurpose recreation center including indoor tennis, basketball, volleyball and pickleball courts and a fitness area. The facilities interior renovations were completed in the first quarter of 2019.

The Avalon Athletic Club at Boardman is currently in operation. The operating results are included in the Company’s Condensed Consolidated Statements of Operations and within Avalon’s golf and related operations segment from the date of acquisition.

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The acquisition of the facility and its associated subsequent renovation is consistent with the Company’s athletics and fitness business strategy. Members of the Avalon Golf and Country Club have access to the facility and all the athletic and fitness related activities offered by the Avalon Athletic Club at Boardman. In addition, hotel guests at The Grand Resort can utilize the facility during their stay. The Avalon Athletic Club at Boardman earns revenue through membership fees, athletic and fitness related activities.

During the nine months ended September 30, 2019, Avalon incurred capital expenditures of $6.4 million of which $5.7 million of such expenditures was paid to vendors during the nine month period ended September 30, 2019. Such expenditures primarily related to the continued renovation and expansion of The Grand Resort and, to a lesser extent, renovation of the Avalon Athletic Club at Boardman facility. During the nine months ended September 30, 2018, Avalon incurred capital expenditures of $2.6 million of which $2.0 million of such expenditures was paid to vendors and primarily related to the continued renovation and expansion of The Grand Resort and approximately $0.1 million of such expenditures related to a vehicle acquired under a new finance lease agreement. In 2019 and 2018, The Grand Resort was in operation but still in the process of being renovated and expanded. The renovations and expansion include the renovation of existing hotel rooms and recreation center and the addition of a new restaurant, bars, salon and spa, outdoor resort pool and Roman Bath. Avalon’s aggregate capital expenditures in 2019 are expected to be in the range of $7.5 million to $8.5 million, funded with cash from our project fund account, line of credit, operating cash and cash generated from operations. Capital expenditures principally relate to the continued renovation and expansion of The Grand Resort, renovation of the Avalon Athletic Club at Boardman facility, renovation of The Avalon Field Club at New Castle facility, building improvements and equipment purchases.

2016 Term Loan Agreement

On December 20, 2016, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the “2016 Term Loan Agreement”) with Laurel Capital Corporation which provided for a $12.0 million term loan. At closing, $9.1 million of the proceeds were used to pay off amounts outstanding under the then existing line of credit agreement and associated accrued interest with Home Savings Bank, dated May 21, 2015, as amended, and pay related transaction costs associated with the 2016 Term Loan Agreement. The line of credit agreement with Home Savings Bank was terminated in conjunction with the repayment. Remaining proceeds of $2.9 million under the 2016 Term Loan Agreement were deposited in a project fund account to fund costs of renovating and expanding The Grand Resort. At September 30, 2019 the project fund proceeds related to the 2016 Term Loan Agreement were fully utilized. At December 31, 2018, the remaining project fund proceeds of approximately $0.5 million are presented in the Condensed Consolidated Balance Sheets as “Restricted cash.” On December 4, 2017 the 2016 Term Loan Agreement was amended to restate the definition of “Total Fixed Charges” utilized in the calculation of the “Fixed Charge Coverage Ratio.”

The $12.0 million term loan amount 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 2016 Term Loan Agreement matures on December 20, 2026 at which time the final balloon payment equal to the remaining outstanding principal, interest and fees are due. Borrowings under the 2016 Term Loan Agreement bear interest at a fixed rate of 5.35% 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% per annum or (b) the sum of the Index Rate on the date two (2) business days prior to the reset date plus 3.95%, provided that the applicable rate shall in no event exceed 7.50% per annum.

Avalon has the right to prepay the amount outstanding under the 2016 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 2016 Term Loan Agreement are secured by certain real property and related business assets as defined in the agreement. The 2016 Term Loan Agreement also contains certain financial and other covenants, customary representations, warranties and events of default. Avalon was in compliance with the 2016 Term Loan Agreement covenants at September 30, 2019 and December 31, 2018.

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2019 Term Loan Agreement

On March 29, 2019, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the “2019 Term Loan Agreement”) with Laurel Capital Corporation which provided for a $3.0 million term loan. At closing, a portion of the proceeds were used to pay related transaction costs associated with the 2019 Term Loan Agreement with the remaining proceeds deposited into a project fund account to fund costs of renovating and expanding The Grand Resort. At September 30, 2019 the project fund proceeds related to the 2019 Term Loan Agreement were fully utilized.

The $3.0 million outstanding under the 2019 Term Loan Agreement is payable in 92 equal monthly installments of principal and interest, based on a fifteen (15) year maturity schedule which commenced on April 20, 2019 followed by one final balloon payment of all remaining principal, interest and fees due on the maturity date of December 20, 2026. Borrowings under the 2019 Term Loan Agreement bear interest at a fixed rate of 6.25% 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) 6.25% per annum or (b) the sum of the Index Rate on the date two (2) business days prior to the reset date plus 3.60%, provided that the applicable rate shall in no event exceed 8.50% per annum.

Avalon has the right to prepay the amount outstanding under the 2019 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 and two percent (2%) on any prepayment in the sixth, seventh or eighth year.

Borrowings under the 2019 Term Loan Agreement are secured by a second priority mortgage lien on the land, building and improvements on the property owned by The Grand Resort as defined in the agreement. The 2019 Term Loan Agreement also contains certain financial and other covenants, customary representations, warranties and events of default. Avalon was in compliance with the 2019 Term Loan Agreement covenants at September 30, 2019.

Commercial Mortgage

On May 13, 2019, Havana Cigar Shop, Inc., a wholly owned subsidiary of Avalon, entered into an asset Purchase and Sale Agreement with New Castle Country Club (the “Club”) for the purchase of the real property assets associated with the Club. Havana Cigar Shop, Inc. concurrently entered into an Assignment and Assumption and Commercial Loan Modification Agreement (the “Assumption Agreement”) with Mercer County State Bank for the outstanding debt under the Club’s Commercial Mortgage (the “Commercial Mortgage”) and Demand Line of Credit, as amended (the “Demand Line of Credit”), at closing as consideration for the purchase of the real property of the Club.

At closing the outstanding principal balance assumed under the Commercial Mortgage obligation was $653,000. The $653,000 outstanding under the $950,000 Commercial Mortgage is payable in 110 equal monthly installments of $7,573 consisting of principal and interest which commenced May 21, 2019 and matures on June 21, 2028. Borrowings under the Commercial Mortgage bear interest at a fixed rate of 5.50% until June 21, 2023 at which time the interest rate will be reset to a fixed rate equal to the greater of (a) 4.25% per annum or (b) the Prime Rate plus 0.50%.

Avalon has the right to prepay the amount outstanding under the Commercial Mortgage, 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, with no prepayment penalty.

Borrowings under the Commercial Mortgage are secured by a first lien mortgage and assignment of leases and rents on the land, building and improvements on the property and non-real estate assets owned by Havana Cigar Shop, Inc. The Commercial Mortgage also contains certain financial and other covenants, customary representations, warranties and events of default.

Demand Line of Credit

Under the Assumption Agreement Havana Cigar Shop, Inc. also assumed the Club’s $150,000 Commercial Demand Line of Credit with Mercer County State Bank of which $134,000 was outstanding at closing. Monthly payments consist of interest only on the outstanding principal balance with principal due on demand in the event of default as defined in the Commercial Demand Line of Credit agreement. During the third quarter of 2019, the outstanding balance was paid in full. No additional funds were drawn under the Demand Line of Credit at September 30, 2019.

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Outstanding borrowings under the Commercial Demand Line of Credit bear interest at Prime Rate plus 0.50%. At September 30, 2019, the interest rate on the Commercial Demand Line of Credit was 5.50%.

Borrowings under the Commercial Demand Line of Credit are secured by a second lien mortgage and assignment of leases and rents on the land, building and improvements on the property and non-real estate assets owned by Havana Cigar Shop, Inc. The Commercial Demand Line of Credit agreement also contains certain financial and other covenants, customary representations, warranties and events of default.

Line of Credit Agreement

On May 31, 2018, Avalon entered into a new business loan agreement with Home Savings Bank, (the “Line of Credit Agreement”) which provides for a line of credit of up to $5.0 million with an original maturity date of May 31, 2020. On June 17, 2019, the Company amended the Line of Credit Agreement to extend the maturity date to May 31, 2021. 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. The existing line of credit agreement with Home Savings Bank, dated December 20, 2016, as amended, which was entered into concurrently with the 2016 Term Loan Agreement, was terminated in conjunction with the new Line of Credit Agreement. No amounts were outstanding under the existing line of credit agreement at termination.

At September 30, 2019, $575,000 was outstanding under the Line of Credit Agreement. No amounts were drawn under the Line of Credit Agreement at December 31, 2018. Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .25%. At September 30, 2019, the interest rate on the Line of Credit Agreement was 5.25%.

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 also contains certain financial and other covenants, customary representations, warranties and events of default. Avalon was in compliance with the line of credit agreements covenants at September 30, 2019 and December 31, 2018.

During the three month periods ended September 30, 2019 and 2018, the weighted average interest rate on outstanding borrowings was 5.53% and 5.35%, respectively. During the nine month periods ended September 30, 2019 and 2018, the weighted average interest rate on outstanding borrowings was 5.48% and 5.35%, respectively.

Squaw Creek Country Club Lease Agreement

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.

Working Capital

At September 30, 2019 and December 31, 2018, there was a working capital deficit of approximately $3.0 million and $0.7 million, respectively. Working capital was primarily negatively impacted by an increase in deferred membership dues revenue, an increase in the current portion of obligations under operating leases and long-term debt obligations and a decrease in accounts receivable.

Accounts receivable decreased to $11.0 million at September 30, 2019 compared with $12.2 million at December 31, 2018. This decrease was due to a decrease in accounts receivable related to the waste management services segment as a result of the timing of receipt of receivables and, to a lesser extent, a decrease in sales in the third quarter of 2019 compared with the fourth quarter of 2018. This decrease was partially offset by an increase in accounts receivable related to the golf and related operations segment as a result of the timing of annual membership renewals.

Accounts payable was $10.5 million at both September 30, 2019 and December 31, 2018. The increase in accounts payable related to the golf and related operations due to unpaid construction bills associated with the expansion of The Grand Resort was offset by a decrease in amounts due to disposal facilities and transportation carriers of the waste management services associated with the decrease in the net operating revenues in the third quarter of 2019 compared to the fourth quarter of 2018 and the associated timing of those vendor payments in the ordinary course of business.

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Deferred revenue relating to membership dues was approximately $3.9 million at September 30, 2019 compared to $2.9 million at December 31, 2018. The increase in deferred revenues was primarily due to the associated timing of annual membership renewals and, to a lesser extent, an increase in members during 2019. The number of members at September 30, 2019 was 4,979 compared to 4,606 at December 31, 2018.

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 and commercial mortgage facilities. If business conditions warrant additional monies needed to fund capital expenditure programs, Avalon will take actions such as refinancing or restructuring our current debt agreements, incurring additional indebtedness, issuance of common stock or issuance of a security with characteristics of both debt and equity.

Growth Strategy

Waste Management Segment

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’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.

Golf and Related Operations Segment

In August 2014, the Company acquired The Grand Resort (formerly The Avalon Inn) which was integrated into the golf and related operations segment. The acquisition is consistent with the Company's business strategy in that The 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 Grand Resort. The 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 four golf facilities and The Grand Resort will result in additional memberships in the Avalon Golf and Country Club.

On March 7, 2018, Avalon acquired the Avalon Athletic Club at Boardman which was integrated into the golf and related operations segment. The acquisition and subsequent renovation is consistent with the Company’s athletics and fitness business strategy. Members of the Avalon Golf and Country Clubs have access to the facility and all the tennis, athletic and fitness related activities offered by the Avalon Athletic Club at Boardman. In addition, hotel guests of The Grand Resort can utilize the facility during their stay.

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On May 13, 2019, Avalon acquired The Avalon Field Club at New Castle which was integrated into the golf and related operations segment. The acquisition is consistent with the Company’s golf operations business strategy as members of the Avalon Golf and Country Club have access to all the golf and related country club activities offered by The Avalon Field Club at New Castle. In addition, hotel guests of The Grand Resort can utilize the facility during their stay.

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.

Results of Operations

Avalon’s primary business segment, the waste management services segment, provides hazardous and nonhazardous waste brokerage and management services, captive landfill management services and salt water injection well operations. The golf and related operations segment includes the operation and management of four golf courses and related country clubs and facilities, a hotel and its associated resort amenities, a multipurpose recreation center and a travel agency.

Performance in third quarter of 2019 compared with the third quarter of 2018

Overall Performance

Net operating revenues decreased to $18.0 million in the third quarter of 2019 compared with $18.1 million in the third quarter of 2018. This decrease was primarily due to a decrease in net operating revenues of the waste management services segment. Net operating revenues of the waste management services segment were $11.6 million in the third quarter of 2019 compared with $12.5 million in the third quarter of 2018. This decrease was partially offset by an increase in the net operating revenues associated with the golf and related operations segment. Net operating revenues of the golf and related operations segment were approximately $6.4 million in the third quarter of 2019 compared to $5.6 million in the third quarter of 2018.

Costs of operations related to the waste management segment decreased to $9.2 million in the third quarter of 2019 compared with $9.9 million in the third quarter of 2018. The decrease in the cost of operations between periods for the waste management segment was primarily due to the decreased net operating revenues as these costs vary directly with the associated revenues. Cost of operations related to the golf and related operations segment increased to $5.4 million in the third quarter of 2019 compared to $4.3 million in the third quarter of 2018. The increase was a result of operating costs associated with The Avalon Field Club at New Castle, which was acquired on May 13, 2019, higher employee related costs, and to a lesser extent, an increase in golf course maintenance and repair costs and food costs due to the associated increase in food revenue and overall increase in the product cost.

Depreciation and amortization expense was approximately $0.6 million in the third quarter of 2019 compared to $0.7 million in the third quarter of 2018. The decrease is due to the lower depreciable asset base mainly due to the impairment of the property and equipment in the fourth quarter of 2018 related to the Company’s salt water injection wells.

Consolidated selling, general and administrative expenses were approximately $2.4 million in the third quarter of 2019 compared to $2.3 million in the third quarter of 2018. The increase was due to increased employee related costs and the accumulated net increase in various corporate administrative expenses.

Interest expense was approximately $0.2 million in both the third quarter of 2019 and 2018. During the three month periods ended September 30, 2019 and 2018, the weighted average interest rate on outstanding borrowings was 5.53% and 5.35%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $0.1 million, or $0.04 per share, in the third quarter of 2019 compared with net income attributable to Avalon Holdings Corporation common shareholders of $0.8 million, or $0.22 per share, in the third quarter of 2018.

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Segment Performance

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

Waste Management Services Segment

The net operating revenues of the waste management services segment decreased to $11.6 million in the third quarter of 2019 compared with $12.5 million in the third quarter of 2018. 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 $10.9 million in the third quarter of 2019 from $12.0 million in the third quarter of 2018. This decrease was primarily due to decreased net operating revenues relating to event work related 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 approximately $4.5 million in the third quarter of 2019 compared with $5.3 million in the third quarter of 2018. In addition, continuous work of the waste disposal brokerage business decreased approximately $0.3 million between periods as a result of decreased work from multiple customers. Net operating revenues related to continuous work were approximately $6.3 million in the third quarter of 2019 compared with $6.6 million in the third quarter of 2018. Net operating revenues related to managerial, consulting and clerical services were approximately $0.1 million in both the third quarter of 2019 and 2018. 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 net operating revenues of the captive landfill management operations were approximately $0.7 million in the third quarter of 2019 compared to $0.5 million in the third quarter of 2018. 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.

Operations of the salt water injection wells have been suspended in accordance with the Chief of the Division of Oil and Gas Resources Management order. Due to the suspension of the salt water injections wells described below, there were no operating revenues during the third quarter of 2019 and 2018.

Costs of operations related to the waste management segment decreased to $9.2 million in the third quarter of 2019 compared with $9.9 million in the third quarter of 2018. The decrease in the cost of operations between periods for the waste management segment was primarily due to the decreased net operating revenues as these costs vary directly with the associated revenues. The overall gross margin percentage of the waste brokerage and management services business was approximately 20% in the third quarter of 2019 compared to 21% in the third quarter of 2018. The decrease in the overall gross margin percentage was attributable to the lower gross profit generated from both continuous and event work projects during the third quarter of 2019.

Income before income taxes for the waste management services segment was approximately $1.1 million in the third quarter of 2019 compared to $1.2 million in the third quarter of 2018. Income before income taxes of the waste brokerage and management services business was approximately $1.0 million in the third quarter of 2019 compared to $1.3 million in the third quarter of 2018. The decreased income before taxes was primarily attributable to the decreased gross margin from the lower net operating revenues related to both continuous and event work during the third quarter of 2019 compared to the third quarter of 2018. Income before income taxes of the captive landfill operations was approximately $0.1 million in both the third quarter of 2019 and 2018. During the third quarter of 2019 the salt water injection wells incurred a loss before income taxes of less than $0.1 million primarily due to legal and professional costs incurred relating to Avalon’s writ of mandamus complaints for the illegal regulatory taking of the Company’s property. During the third quarter of 2018, the salt water injection wells incurred a loss before income taxes of approximately $0.2 million primarily due to depreciation expense recorded on the facility and legal and professional costs incurred relating to Avalon’s appeal of the salt water injection well suspension order and mandamus process.

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $6.4 million in the third quarter of 2019 compared to $5.6 million in the third quarter of 2018. Avalon’s golf and related operations segment consists of the operation and management of four golf courses and related country clubs which provide dining and banquet facilities, a hotel which provides lodging and other resort related amenities including dining, banquet and conference facilities, a multipurpose recreation center and a travel agency.

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Food, beverage and merchandise sales were approximately $2.6 million in the third quarter of 2019 compared to $2.3 million in the third quarter of 2018. The increase was primarily due to food and beverage revenue related The Avalon Field Club at New Castle which was acquired on May 13, 2019.

Other net operating revenues related to the golf and related operations were $3.8 million in the third quarter of 2019 compared to $3.3 million in the third quarter of 2018. Net operating revenues related to room rental was approximately $0.8 million in the third quarter of 2019 compared to $0.7 million in the third quarter of 2018. The increase in net operating revenues related to room rental was due to higher occupancy and associated average room rates during the third quarter of 2019 compared to the third quarter of 2018. Membership dues revenue was approximately $1.5 million in the third quarter of 2019 compared to $1.3 million in the third quarter of 2018. The increase in membership dues revenue is attributable to the increase in members between periods. The average number of members during the third quarter of 2019 was 4,999 compared to 4,446 in the third quarter of 2018. Greens fees and associated cart rentals were $1.1 million in the third quarter of 2019 compared to $0.9 million in the third quarter of 2018. The increase in greens fees and associated cart rentals was primarily attributable to Avalon Field Club at New Castle. Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $0.4 million in both the third quarter of 2019 and 2018.

Cost of operations for the golf and related operations segment was $5.4 million in the third quarter of 2019 compared with $4.3 million in the third quarter of 2018. Cost of food, beverage and merchandise was approximately $1.2 million in the third quarter of 2019 compared to $1.0 million in the third quarter of 2018. The increase in costs between periods is attributable to an increase in the associated food revenue primarily related to The Avalon Field Club at New Castle and overall increase in product cost. The cost of food, beverage and merchandise sales was approximately 45% in the third quarter of 2019 compared to 43% in the third quarter of 2018. Golf and related operations operating costs increased to approximately $4.2 million in the third quarter of 2019 compared with $3.3 million in the third quarter of 2018. The increase was primarily a result of operating costs associated with The Avalon Field Club at New Castle, which was acquired on May 13, 2019, higher employee related costs and, to a lesser extent, golf course maintenance and repair costs.

Income before income taxes for the golf and related operations was approximately $0.1 million in the third quarter of 2019 compared with $0.5 million in the third quarter of 2018. The change between periods was primarily due to higher employee related costs, and to a lesser extent, an increase in golf course maintenance and repair costs and food costs due to the associated increase in food revenue and overall increase in the product cost.

General Corporate Expenses

General corporate expenses were $0.8 million in the third quarter of 2019 compared to $0.7 million in the third quarter of 2018. The increase in general corporate expenses were due to higher employee related costs and the accumulated net increase in various corporate administrative expenses.

Interest Expense

Interest expense was approximately $0.2 million in both the third quarter of 2019 and 2018. During the three month periods ended September 30, 2019 and 2018, the weighted average interest rate on outstanding borrowings was 5.53% and 5.35%, respectively.

Net Income

During the three months ended September 30, 2019 and 2018, net income attributable to Avalon Holdings Corporation common shareholders was $0.1 million and $0.8 million, respectively. Avalon recorded a state income tax provision in both the third quarter of 2019 and 2018, which was related entirely to the waste management and brokerage operations. Due to the recording of a full valuation allowance against the Company’s federal net deferred tax assets, the overall effective tax rate in both periods reflects taxes owed in certain U.S state jurisdictions. Avalon’s income tax on the income 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.

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Performance in the first nine months of 2019 compared with the first nine months of 2018

Overall Performance

Net operating revenues increased to $51.0 million in the first nine months of 2019 compared with $46.4 million in the first nine months of 2018. This increase was primarily due to an increase in net operating revenues of the waste management services segment. Net operating revenues of the waste management services segment were $35.9 million in the first nine months of 2019 compared with $32.5 million in the first nine months of 2018. Net operating revenues of the golf and related operations segment were approximately $15.1 million in the first nine months of 2019 compared to $13.9 million in the first nine months of 2018.

Costs of operations related to the waste management segment increased to $28.8 million in the first nine months of 2019 compared with $25.6 million in the first nine months of 2018. The increase in the cost of operations between years for the waste management segment is primarily due to the increased net operating revenues as these costs vary directly with the associated revenues. Cost of operations related to the golf and related operations segment increased to $13.0 million in the first nine months of 2019 compared to $11.1 million in the first nine months of 2018. The increase was a result of operating costs associated with The Avalon Field Club at New Castle, which was acquired on May 13, 2019, higher employee related costs, and to a lesser extent, an increase in golf course maintenance and repair costs and food costs due to the associated increase in food revenue and overall increase in the product cost.

Depreciation and amortization expense was approximately $1.8 million in the first nine months of 2019 compared to $2.2 million in the first nine months of 2018. The decrease is due to the lower depreciable asset base mainly due to the impairment of the property and equipment in the fourth quarter of 2018 related to the Company’s salt water injection wells.

Consolidated selling, general and administrative expenses were approximately $7.0 million in the first nine months of 2019 compared to $6.7 million in the first nine months of 2018. The increase was attributable to higher employee related costs partially offset by lower legal and professional costs.

Interest expense was approximately $0.6 million in the first nine months of 2019 compared to $0.5 million in the first nine months of 2018. The increase in interest expense is due to the higher outstanding average debt, and to a lesser extent, an increase in the weighted average interest rate during the first nine months of 2019 compared to the prior period. During the nine month periods ended September 30, 2019 and 2018, the weighted average interest rate on outstanding borrowings was 5.48% and 5.35%, respectively.

Net loss attributable to Avalon Holdings Corporation common shareholders was less than $0.1 million, or $0.00 per share, in the first nine months of 2019 compared with net income attributable to Avalon Holdings Corporation common shareholders of approximately $0.7 million, or $0.18 per share, in the first nine months of 2018.

Segment Performance

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

Waste Management Services Segment

The net operating revenues of the waste management services segment increased to $35.9 million in the first nine months of 2019 compared with $32.5 million in the first nine months of 2018.

The net operating revenues of the waste disposal brokerage and management services business increased to $33.9 million in the first nine months of 2019 from $30.8 million in the first nine months of 2018. This increase was primarily due to an increase in net operating revenues relating to event work related 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 approximately $14.2 million in the first nine months of 2019 compared with $11.5 million in the first nine months of 2018. In addition, continuous work of the waste disposal brokerage business increased approximately $0.6 million between periods as a result of increased work from multiple customers. Net operating revenues related to continuous work were approximately $19.0 million in the first nine months of 2019 compared with $18.4 million in the first nine months of 2018. Net operating revenues related to managerial, consulting and clerical services decreased to approximately $0.7 million in the first nine months of 2019 compared to $0.9 million in the first nine months of 2018. Net operating revenue relating to managerial, consulting and clerical services, which is performed for one customer, is entirely dependent on that customer’s needs.

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The net operating revenues of the captive landfill management operations were approximately $2.0 million in the first nine months of 2019 compared to $1.7 million in the first nine months of 2018. 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.

Operations of the salt water injection wells have been suspended in accordance with the Chief of the Division of Oil and Gas Resources Management order. Due to the suspension of the salt water injections wells, there were no operating revenues during the first nine months of 2019 and 2018.

Costs of operations related to the waste management segment increased to $28.8 million in the first nine months of 2019 compared with $25.6 million in the first nine months of 2018. The increase in the cost of operations between periods for the waste management segment is primarily due to the increased net operating revenues as these costs vary directly with the associated revenues. The overall gross margin percentage of the waste brokerage and management services business was approximately 20% in the first nine months of 2019 compared to 21% in the first nine months of 2018. The decrease in the overall gross margin percentage was attributable to the lower gross profit generated from both the continuous and event work projects during the first nine months of 2019.

Income before income taxes for the waste management services segment was approximately $3.3 million in the first nine months of 2019 compared to $2.8 million in the first nine months of 2018. Income before income taxes of the waste brokerage and management services business was approximately $3.1 million in both the first nine months of 2019 and 2018. Although net operating revenues related to waste disposal brokerage and management services increased $3.1 million between periods, the gross margin associated with the continuous and event work projects were lower when compared to the prior period. Income before income taxes of the captive landfill operations was approximately $0.3 million in both the first nine months of 2019 and 2018. During the first nine months of 2019 the salt water injection wells incurred a loss before income taxes of approximately $0.1 million primarily due to legal and professional costs incurred relating to Avalon’s mandamus processes. During the first nine months of 2018, the salt water injection wells incurred a loss before income taxes of approximately $0.6 million primarily due to depreciation expense recorded on the facility and legal and professional costs incurred relating to Avalon’s appeal and mandamus processes.

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $15.1 million in the first nine months of 2019 compared to $13.9 million in the first nine months of 2018.

Food, beverage and merchandise sales were approximately $6.0 million in the first nine months of 2019 compared to $5.5 million in the first nine months of 2018. The increase was primarily due to food and beverage revenue related to Avalon Field Club at New Castle, which was acquired on May 13, 2019, and, to a lesser extent, an overall increase in food and beverage revenue related to both The Grand Resort and the other clubs between periods.

Other net operating revenues related to the golf and related operations were $9.1 million in the first nine months of 2019 compared to $8.4 million in the first nine months of 2018. Net operating revenues related to room rental was approximately $1.8 million in both the first nine months of 2019 and 2018. Membership dues revenue was approximately $4.2 million in the first nine months of 2019 compared to $3.9 million in the first nine months of 2018. The increase in membership dues revenue is attributable to the increase in members between periods. The average number of members during the first nine months of 2019 was 4,839 compared to 4,443 in the prior period. Greens fees and associated cart rentals were $1.8 million in the first nine months of 2019 compared to $1.5 million in the first nine months of 2018. The increase in greens fees and associated cart rentals was primarily attributable to Avalon Field Club at New Castle. Other revenues consisting of athletic, fitness, travel agency, salon and spa related activities were approximately $1.3 million in the first nine months of 2019 compared to $1.2 million in the first nine months of 2018. The increase was primarily due to tennis lessons and court rental fees related to the Avalon Athletic Club at Boardman. 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 2019 and 2018.

Cost of operations for the golf and related operations segment was $13.0 million in the first nine months of 2019 compared with $11.1 million in the first nine months of 2018. Cost of food, beverage and merchandise was approximately $2.7 million in the first nine months of 2019 compared to $2.4 million in the first nine months of 2018. The increase in food, beverage and merchandise costs between periods is attributable to an increase in food revenue, primarily related to The Avalon Field Club at New Castle, and overall increase in the product cost. The cost of food, beverage and merchandise sales was approximately 45% in the first nine months of 2019 compared to 43% in the first nine months of 2018. Golf and related operations operating costs increased to approximately $10.3 million in the first nine months of 2019 compared with $8.7 million in the first nine months of 2018. The increase was primarily a result of operating costs associated with The Avalon Field Club at New Castle, which was acquired on May 13, 2019, higher employee related costs and, to a lesser extent, golf course maintenance and repair costs.

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The golf and related operations recorded a loss before income taxes of $0.4 million in the first nine months of 2019 compared with income before income taxes of $0.5 million in the first nine months of 2018. The change between periods was primarily due to higher employee related costs, and to a lesser extent, an increase in golf course maintenance and repair costs and food costs due to the associated increase in food revenue and overall increase in the product cost.

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.

General Corporate Expenses

General corporate expenses were $2.4 million in the first nine months of 2019 compared to $2.3 million in the first nine months of 2018. The increase was attributable to higher employee related costs partially offset by lower legal and professional costs.

Interest Expense

Interest expense was approximately $0.6 million in the first nine months of 2019 compared to $0.5 million in the first nine months of 2018. The increase in interest expense is due to the higher outstanding average debt, and to a lesser extent, an increase in the weighted average interest rate during the first nine months of 2019 compared to the prior period. During the nine month periods ended September 30, 2019 and 2018, the weighted average interest rate on outstanding borrowings was 5.48% and 5.35%, respectively.

Net Income (Loss)

Net loss attributable to Avalon Holdings Corporation common shareholders was less than $0.1 million in the first nine months of 2019 compared to net income attributable to Avalon Holdings Corporation common shareholders of $0.7 million in the first nine months of 2018. Avalon recorded a state income tax provision in both the third quarter of 2019 and 2018, which was related entirely to the waste management and brokerage operations. Due to the recording of a full valuation allowance against the Company’s federal net deferred tax assets, the overall effective tax rate in both periods reflects taxes owed in certain U.S state jurisdictions. Avalon’s income tax on the income (loss) before taxes was offset by a change in the valuation allowance. 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.

Trends and Uncertainties

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.

On December 22, 2017, legislation commonly known as the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law. The Tax Act changes existing U.S. tax law and includes numerous provisions that will affect Avalon, including our income tax accounting, disclosure and tax compliance. The most impactful changes within the Tax Act are those that will reduce the U.S. corporate tax rates, business-related exclusions and deductions and credits. Accounting Standards Codification Topic 740, “Income Taxes,” requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but for which they are able to determine a reasonable estimate, the company must record a provisional amount in the financial statements. Consequently, as of the date of enactment, and during 2018, Avalon valued all deferred tax assets and liabilities at the newly enacted Corporate U.S income tax rate. Avalon has a full valuation allowance on its federal deferred tax assets. 

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

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

A significant portion of Avalon’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’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.

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’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 Avalon’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 that the saltwater injection wells pose a risk of increasing or creating seismic activity.

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 for the AWMS #2 injection well. To date, the Division has not responded to that plan despite Avalon’s request 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 temporary, and he expects that AWMS #2 will be allowed to resume operations 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 would allow the Chief more time to fully evaluate the facts in anticipation of the Division’s implementation of a comprehensive regulatory plan that will specifically address injection-induced seismicity.

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Avalon appealed that decision to the Franklin County Court of Common Pleas (the “Court”), 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 over the 26 month period was arbitrary and not in accordance with reason.  Subsequent to the ruling, and in accordance with the Court’s Decision and Order, both Avalon and the Division submitted their proposed restart plans to the Court. Avalon’s plan sets forth both the initial volumes and pressures and increases in volume and pressure while continuously monitoring seismicity and addressing the concerns of public health and safety.

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

On September 14, 2017, an appeal hearing was held in the Ohio 10^th District Court of Appeals and on July 31, 2018 a decision was issued on the appeal. 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, Avalon, 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.  

Based on the Supreme Court of Ohio’s decision not to accept the Company’s appeal for review and the economically unfeasible conditions required by the Division of Oil & Gas Resources Management proposed restart plan, management of Avalon and its Board of Directors concluded that the injection wells would not resume operations in the near future and that the carrying value of the salt water injection wells was not recoverable. In the fourth quarter of 2018, the Company recorded an impairment charge of approximately $3.3 million, the full carrying value of the Company’s salt water injection wells.

On April 5, 2019, Avalon filed with the Oil and Gas Commission a motion to vacate its prior decisions in this matter. There can be no guarantee that the salt water injection wells will resume operations, but the Company will continue to pursue all available avenues to allow the restart of the Company’s salt water injection well under reasonable conditions. Currently, there is no implemented state-wide policy on induced seismicity and the Ohio Department of Natural Resources (“ODNR”) has refused to communicate with the Company regarding the status and requirements of any policymaking. The operations of Company’s injection wells will remain suspended until that time. The Oil and Gas Commission scheduled a hearing on this motion for August 13, 2019.  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, which is pending.

Concurrently with the filing of the appeal with the Franklin County Court of Common Pleas, the Company filed a writ of mandamus in the 10^th District Court of Appeals on August 30, 2019 to compel the chief of the Division to issue restart orders, or alternative orders that would allow the Company to either restart the AWMS #2 well, or appeal said orders to the Oil and Gas Commission in accordance with Ohio Law.

In addition, on August 26, 2016, Avalon filed a complaint in the 11^th Appellate District Court in Trumbull County, Ohio for a Peremptory Writ of Mandamus to compel the Director of the ODNR to initiate appropriations procedures to determine damages from the illegal regulatory taking of the Company’s property, or issue an alternative remedy at law. The Company believes that the actions, and lack of responsible actions, by the ODNR is a clear violation of the Company’s property rights and a violation of the Fifth and Fourteenth Amendments to the U.S. Constitution; Article I, Section 19 of the Ohio Constitution; and Ohio Revised Code Chapter 163. 

On March 18, 2019, Avalon, received notice that the 11^th Appellate District Court in Trumbull County, Ohio issued summary judgment in favor of the Ohio Department of Natural Resources in the writ of mandamus action that resulted from the suspension order of the Company’s salt water injection well. The decision was appealed to the Supreme Court of Ohio on April 5, 2019. To date, oral arguments in that case have not been scheduled.

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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.

The Avalon Golf and Country Club operates four golf courses and related 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 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 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 facilities and The 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, 2019, 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. 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.

Avalon’s golf course operations and The Grand Resort 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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Avalon does not have significant exposure to changing interest rates.

Borrowings under our 2016 Term Loan Agreement bear interest at a fixed rate of 5.35% 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% per annum or (b) the sum of the Index Rate on the date two (2) business days prior to the reset date plus 3.95%, provided that the applicable rate shall in no event exceed 7.50% per annum.

Borrowings under the 2019 Term Loan Agreement bear interest at a fixed rate of 6.25% 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) 6.25% per annum or (b) the sum of the Index Rate on the date two (2) business days prior to the reset date plus 3.60%, provided that the applicable rate shall in no event exceed 8.50% per annum.

Borrowings under the Commercial Mortgage bear interest at a fixed rate of 5.50% until June 21, 2023 at which time the interest rate will be reset to a fixed rate equal to the greater of (a) 4.25% per annum or (b) the Prime Rate plus 0.50%.

Outstanding borrowings under our Line of Credit Agreement bear interest at Prime Rate plus .25%. At September 30, 2019, the interest rate on the Line of Credit Agreement was 5.25%. At September 30, 2019, approximately $0.6 million was outstanding under the Line of Credit Agreement.

Outstanding borrowings under the Demand Line of Credit bear interest at Prime Rate plus 0.50%. The interest rate on the Demand Line of Credit was 5.50% at September 30, 2019. No amounts were outstanding under the Demand Line of Credit at September 30, 2019.

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.

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Item 4. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “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, 2019. 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, 2019, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Controls over Financial Reporting.

There were no changes in our internal controls over financial reporting during the fiscal quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We implemented internal controls to ensure we adequately evaluated our lease contracts and properly assessed the impact of the new accounting standard on our financial statements to facilitate adoption on January 1, 2019. There were no significant changes to our internal control over financial reporting due to the adoption of the new standard.

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PART II. OTHER INFORMATION

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, 2018 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 XBRL Instance
	Exhibit 101.SCH XBRL Taxonomy Extension Schema
	Exhibit 101.CAL XBRL Taxonomy Extension Calculation
	Exhibit 101.DEF XBRL Taxonomy Extension Definition
	Exhibit 101.LAB XBRL Taxonomy Extension Labels
	Exhibit 101.PRE XBRL Taxonomy Extension Presentation
(b)	Reports on Form 8-K
	None

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SIGNATURE

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.

		AVALON HOLDINGS CORPORATION
		(Registrant)
Date:	November 13, 2019	By:	/s/ Bryan P. Saksa
		Bryan P. Saksa, Chief Financial Officer and
		Treasurer (Principal Financial and Accounting
		Officer and Duly Authorized Officer)

44

EX-31.1

AVALON HOLDINGS CORPORATION  Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Ronald E. Klingle, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Avalon Holdings Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e )and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 13, 2019

/s/ Ronald E. Klingle

Ronald E. Klingle

Chief Executive Officer

EX-31.2

AVALON HOLDINGS CORPORATION  Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Bryan P. Saksa, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Avalon Holdings Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 13, 2019

/s/ Bryan P. Saksa

Bryan P. Saksa

Chief Financial Officer

EX-32.1

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

In connection with the Quarterly Report of Avalon Holdings Corporation on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald E. Klingle, Chief Executive Officer of Avalon Holdings Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Avalon Holdings Corporation.

/s/ Ronald E. Klingle

Ronald E. Klingle

Chief Executive Officer

November 13, 2019

EX-32.2

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

In connection with the Quarterly Report of Avalon Holdings Corporation on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bryan P. Saksa, Chief Financial Officer of Avalon Holdings Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Avalon Holdings Corporation.

/s/ Bryan P. Saksa

Bryan P. Saksa

Chief Financial Officer

November 13, 2019

XML

Note 13 - Business Segment Information (Details Textual) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018
Waste Management Services [Member]
Increase (Decrease) in Total Assets	$ 1.7
Golf and Related Operations [Member]
Increase (Decrease) in Total Assets	7.2
Corporate Segment [Member]
Increase (Decrease) in Total Assets	$ 2.5
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers	0	0
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Waste Management Services [Member]
Number of Major Customers	0	0
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Golf and Related Operations [Member]
Number of Major Customers	0	0

XML

Note 10 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net Income (Loss) Attributable to Parent, Total	$ 144	$ 849	$ (15)	$ 673

XML

Note 16 - Asset Acquisitions (Details Textual) - USD ($)	May 13, 2019	Mar. 07, 2018	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Operating Lease, Right-of-Use Asset			$ 1,505,000
Operating Lease, Liability, Total			$ 1,505,000
Boardman Tennis Center [Member]
Payments to Acquire Buildings		$ 1,300,000
New Castle Country Club [Member]
Long-term Debt, Total	$ 800,000
Asset Acquisition, Transaction Costs Capitalized	67,000
Operating Lease, Right-of-Use Asset	126,000
Operating Lease, Liability, Total	$ 126,000			$ 1,700,000
New Castle Country Club [Member] | Vehicles [Member]
Lessee, Operating Lease, Remaining Term Of Contract	3 years

XML

Note 6 - Property and Equipment (Details Textual)	9 Months Ended
	Sep. 30, 2019
Land Improvements [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life	10 years
Land Improvements [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	30 years
Building and Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life	5 years
Building and Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	50 years
Vehicles [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life	3 years
Vehicles [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	10 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life	3 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	10 years
Furniture and Fixtures [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life	3 years
Furniture and Fixtures [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	10 years

XML

Note 16 - Asset Acquisitions (Tables)

9 Months Ended

Sep. 30, 2019

New Castle Country Club [Member]

Notes Tables

Asset Acquisition [Table Text Block]

Assets acquired:
Building and land	$	854
Operating lease right-of-use assets		126
Prepaid real estate taxes		23
Total assets acquired:		1,003
Liabilities assumed:
Commercial mortgage		653
Demand line of credit		134
Obligations under operating leases		126
Total liabilities assumed		913
Total consideration	$	90

Boardman Tennis Center [Member]

Notes Tables

Asset Acquisition [Table Text Block]

Assets acquired:
Building and land	$	1,302
Total assets acquired:		1,302
Liabilities assumed:
Accrued liabilities		33
Total liabilities assumed		33
Total consideration	$	1,269

XML

Note 5 - Revenues (Details Textual) $ in Thousands	3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 03, 2014
Number of Suspended Saltwater Injection Wells	2			2					2
Revenue from Contract with Customer, Excluding Assessed Tax, Total	$ 18,018	$ 18,148		$ 51,051	$ 46,369
Membership Agreement, Term				1 year
Accounts Receivable, Allowance for Credit Loss, Ending Balance	300			$ 300		$ 300
Contract with Customer, Asset, after Allowance for Credit Loss, Total	853	774	$ 1,101	853	$ 774	554	$ 1,009	$ 580
Contract with Customer, Liability, Total	3,900			$ 3,900		$ 2,900
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers				0	0
Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk, Percentage				15.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Two Customers [Member]
Concentration Risk, Percentage						23.00%
Waste Management Services [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	$ 11,572	$ 12,557		$ 35,908	$ 32,525
Revenue from Contract with Customer, Excluding Assessed Tax, Percentage	64.00%	69.00%		70.00%	70.00%
Accounts Receivable, after Allowance for Credit Loss, Total	$ 9,700			$ 9,700		$ 11,200
Waste Management Services [Member] | Maximum [Member]
Contract Term				1 year
Waste Management Services [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers				0	0
Waste Management Services [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]
Number of Major Customers				1		2
Concentration Risk, Percentage				17.00%
Waste Management Services [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member] | Two Customers [Member]
Concentration Risk, Percentage						25.00%
Golf and Related Operations [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	$ 6,446	$ 5,591		$ 15,143	$ 13,844
Revenue from Contract with Customer, Excluding Assessed Tax, Percentage	36.00%	31.00%		30.00%	30.00%
Number of Golf Courses				4
Accounts Receivable, after Allowance for Credit Loss, Total	$ 1,300			$ 1,300		$ 1,000
Golf and Related Operations [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers				0	0
Golf and Related Operations [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]
Number of Major Customers			0			0
Salt Water Injection Operations [Member] | Waste Management Services [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total				$ 0
Customer Advance Deposits [Member]
Contract with Customer, Liability, Total	$ 507	$ 423	$ 556	$ 507	$ 423	$ 453	$ 491	$ 430

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 08, 2019
Document Information [Line Items]
Entity Registrant Name	AVALON HOLDINGS CORP
Entity Central Index Key	0001061069
Trading Symbol	awx
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Title of 12(b) Security	Class A Common Stock, $0.01 par value
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		611,784
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		3,263,647

XML

Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member] Common Class A [Member]	Common Stock [Member] Common Class B [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance (in shares) at Dec. 31, 2017	3,191,100	612,231
Balance at Dec. 31, 2017	$ 32	$ 6	$ 58,965	$ (20,557)	$ 38,446	$ 2,126	$ 40,572
Stock options - compensation costs			5		5		5
Net income (loss)				673	673	(340)	333
Balance (in shares) at Sep. 30, 2018	3,191,100	612,231
Balance at Sep. 30, 2018	$ 32	$ 6	58,970	(19,884)	39,124	1,786	40,910
Balance (in shares) at Jun. 30, 2018	3,191,100	612,231
Balance at Jun. 30, 2018	$ 32	$ 6	58,968	(20,733)	38,273	1,882	40,155
Stock options - compensation costs			2		2		2
Net income (loss)				849	849	(96)	753
Balance (in shares) at Sep. 30, 2018	3,191,100	612,231
Balance at Sep. 30, 2018	$ 32	$ 6	58,970	(19,884)	39,124	1,786	40,910
Balance (in shares) at Dec. 31, 2018	3,263,647	611,784
Balance at Dec. 31, 2018	$ 33	$ 6	59,141	(21,701)	37,479	14	37,493
Stock options - compensation costs			4		4		4
Net income (loss)				(15)	(15)	(67)	(82)
Balance (in shares) at Sep. 30, 2019	3,263,647	611,784
Balance at Sep. 30, 2019	$ 33	$ 6	59,145	(21,716)	37,468	(53)	37,415
Balance (in shares) at Jun. 30, 2019	3,263,647	611,784
Balance at Jun. 30, 2019	$ 33	$ 6	59,144	(21,860)	37,323	(35)	37,288
Stock options - compensation costs			1		1		1
Net income (loss)				144	144	(18)	126
Balance (in shares) at Sep. 30, 2019	3,263,647	611,784
Balance at Sep. 30, 2019	$ 33	$ 6	$ 59,145	$ (21,716)	$ 37,468	$ (53)	$ 37,415

XML

Note 10 - Income Taxes

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

10

. Income Taxes

During the

three

month periods ended

September 30, 2019

and

2018,

net income attributable to Avalon Holdings Corporation shareholders was

$0.1

million and

$0.8

million, respectively. During the

nine

month period ended

September 30, 2019,

net loss attributable to Avalon Holdings Corporation shareholders was less than

$0.1

million compared to net income attributable to Avalon Holdings Corporation shareholders of

$0.7

million for the

nine

month period ended

September 30, 2018.

Avalon recorded a state income tax provision in both the

three

and

nine

month periods ended

September 30, 2019

and

2018,

which was related entirely to the waste management and brokerage operations. Due to the recording of a full valuation allowance against the Company’s federal net deferred tax assets, the overall effective tax rate in both periods reflects taxes owed in certain U.S state jurisdictions. Avalon’s income tax on the income (loss) before taxes was offset by a change in the valuation allowance. 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

December 22, 2017,

legislation commonly known as the Tax Act was signed into law. The Tax Act changes existing U.S. tax law and includes numerous provisions that will affect Avalon, including our income tax accounting, disclosure and tax compliance. The most impactful changes within the Tax Act are those that will reduce the U.S. corporate tax rates, business-related exclusions and deductions and credits. ASC

740,

“Income Taxes

,” requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but for which they are able to determine a reasonable estimate, the company must record a provisional amount in the financial statements. Consequently, as of the date of enactment, Avalon valued all deferred tax assets and liabilities at the newly enacted Corporate U.S income tax rate. Avalon has a full valuation allowance on its federal deferred tax assets. 

XML

Note 6 - Property and Equipment

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

Note

6.

Property and Equipment

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 furniture 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 of property and equipment are credited or charged to operations. Interest costs are capitalized on significant construction projects.

Property and equipment at

September 30, 2019

and

December 31, 2018

consists of the following (in thousands):

	September 30,			December 31,
	2019			2018
Land and land improvements	$	14,612		$	14,231
Buildings and improvements		42,413			36,185
Machinery and equipment		4,869			4,508
Office furniture and fixtures		6,964			6,458
Vehicles		499			455
Construction in progress		2,084			2,569
		71,441			64,406
Less accumulated depreciation and amortization		(23,222	)		(21,872	)
Property and equipment, net	$	48,219		$	42,534

At

September 30, 2019,

the Company did

not

have any significant fixed contractual commitments for construction projects.

XML

Note 3 - Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Note

3.

Recent Accounting Pronouncements

Adopted Accounting Standards

In

February 2016,

the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016

-

02,

Leases

(“ASU

2016

-

02”

). 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. 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. On

January 1, 2019,

the Company adopted ASU

2016

-

02

under the modified retrospective method with the available practical expedients. As a result of adoption, on

January 1, 2019,

the Company recorded a ROU asset and related lease liability of approximately

$

1.7

million for its golf carts, machinery and equipment for the landfill operations, furniture and fixtures for The Grand Resort and office copiers under operating leases (See Note

7

).

In

May 2014,

the FASB issued 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. On

January 1, 2018,

the Company adopted ASU

2014

-

09

and ASU

2016

-

08,

and all related amendments using the modified retrospective method. The adoption did

not

result in an impact to the way the Company records revenue and as such did

not

result in period reclassifications to or from revenue or its associated costs. As a result of the adoption, the Company separately disclosed contract assets, in our Condensed Consolidated Balance Sheets at

September 30, 2019

and

December 31, 2018

and associated cash flows in our Condensed Consolidated Statements of Cash Flows for the

nine

months ended

September 30, 2019

and

2018

(See Note

5

).

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. On

January 1, 2018,

the Company adopted ASU

2016

-

15.

The adoption of this standard did

not

have an 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.  On

January 1, 2018,

the Company adopted ASU

2016

-

18.

The adoption of ASU

2016

-

18

impacted the presentation of our Condensed Consolidated Statements of Cash Flows and resulted in additional disclosure in our Notes to Unaudited Condensed Consolidated Financial Statements for the restricted cash related to the loan proceeds deposited into our project fund account that have

not

yet been utilized to fund the additional renovation and expansion of The Grand Resort (See Note

4

).

In

January 2017,

the FASB issued ASU

2017

-

01,

Business Combinations

(Topic

805

)

: Clarifying the Definition of a Business

(“ASU

2017

-

01”

). The purpose of ASU

2017

-

01

is to change the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The Company adopted ASU

2017

-

01

on

January 1, 2018.

The acquisition of the Boardman Tennis Center property, acquired in

March 2018,

and the acquisition of the New Castle Country Club property, acquired in

May 2019,

was accounted for in accordance with ASU

2017

-

01

(See Note

16

).

In

March 2018,

the FASB issued ASU

2018

-

05,

Income Taxes (Topic

740

):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin

No.

118

("ASU

2018

-

05"

). ASU

2018

-

05

adds the SEC guidance released on

December 22, 2017

regarding the Tax Cuts and Jobs Act (the “Tax Act”) to the FASB Accounting Standards Codification. ASU

2018

-

05

provides additional guidance allowing companies to use a

one

year measurement period to account for the impacts of the Tax Act in their financial statements. The Company adopted ASU

2018

-

05

in

March 2018.

The Company has accounted for the impacts of the Tax Act, including the use of reasonable estimates where necessary.

Accounting Standards

Not

Yet Adopted

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.

XML

Note 4 - Cash, Cash Equivalents and Restricted Cash (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Table Text Block]

	September 30,		December 31,
	2019		2018
Cash and cash equivalents	$	1,942	$	1,406
Restricted cash		-		502
Cash, cash equivalents and restricted cash	$	1,942	$	1,908

XML

Note 14 - Certain Relationships and Related Transactions

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

Note

14.

Certain Relationships and Related Transactions

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, 2019

and

December 31, 2018,

respectively, Avalon owns approximately

47%

of AWMS Holdings, LLC. In accordance with ASC

810

-

10

and related amendment

,

due to the managerial control of American Water Solutions, LLC, AWMS Holdings, LLC is a variable interest entity, and the financial statements of AWMS Holdings, LLC and subsidiaries are included in Avalon’s consolidated financial statements. 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.

XML

Note 9 - Term Loans and Line of Credit Agreements (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	September 30, 2019
	Gross Amount		Debt Issuance Costs			Net Amount
2016 Term loan agreement	$	10,454	$	(139	)	$	10,315
2019 Term loan agreement		2,934		(39	)		2,895
Commercial Mortgage		630		-			630
Total		14,018		(178	)		13,840
Less current portion		807		(25	)		782
Long-term debt	$	13,211	$	(153	)	$	13,058

	December 31, 2018
	Gross Amount		Debt Issuance Costs			Net Amount
2016 Term loan agreement	$	10,898	$	(153	)	$	10,745
Less current portion		597		(19	)		578
Long-term debt	$	10,301	$	(134	)	$	10,167

Schedule of Maturities of Long-term Debt [Table Text Block]

For the Twelve Month Period Ending September 30,
2020	$	807
2021		853
2022		901
2023		951
2024		1,005
Thereafter		9,501
Total	$	14,018

XML

Note 9 - Term Loans and Line of Credit Agreements - Future Maturities of Long-term Debt (Details) $ in Thousands	Sep. 30, 2019 USD ($)
2020	$ 807
2021	853
2022	901
2023	951
2024	1,005
Thereafter	9,501
Total	$ 14,018

XML

Note 7 - Leases (Details Textual)		1 Months Ended	9 Months Ended
	May 13, 2019 USD ($)	Nov. 30, 2003	Sep. 30, 2019 USD ($)	Jan. 01, 2019 USD ($)	Dec. 31, 2018 USD ($)
Operating Lease, Liability, Total			$ 1,505,000
Operating Lease, Right-of-Use Asset			$ 1,505,000
Operating Lease, Weighted Average Remaining Lease Term			3 years 73 days
Operating Lease, Weighted Average Discount Rate, Percent			5.01%
Lessee, Finance Lease, Term of Contract		10 years
Number of Consecutive Renewal Term Options		4
Lessee, Finance Lease, Renewal Term		10 years
Lessee, Finance Lease, Annual Rent			$ 15,000
Leasehold Improvements Required to be Made Per Year			$ 150,000
Finance Lease, Remaining Term Of Contract			34 years 36 days
Finance Lease, Weighted Average Remaining Lease Term			2 years 109 days
Finance Lease, Weighted Average Discount Rate, Percent			4.80%		4.80%
Minimum [Member]
Lessee, Operating Lease, Remaining Term Of Contract			1 year
Minimum [Member] | Golf and Related Operations [Member]
Finance Lease, Remaining Term Of Contract			2 years
Maximum [Member]
Lessee, Operating Lease, Remaining Term Of Contract			5 years
Maximum [Member] | Golf and Related Operations [Member]
Finance Lease, Remaining Term Of Contract			5 years
Accounting Standards Update 2016-02 [Member]
Operating Lease, Liability, Total				$ 1,700,000
Operating Lease, Right-of-Use Asset				1,700,000
New Castle Country Club [Member]
Operating Lease, Liability, Total	$ 126,000			$ 1,700,000
Operating Lease, Right-of-Use Asset	$ 126,000
New Castle Country Club [Member] | Vehicles [Member]
Lessee, Operating Lease, Remaining Term Of Contract	3 years

XML

Note 7 - Leases - Future Commitments Under Long-Term Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
2020	$ 285
2020	593
2020	878
2021	251
2021	496
2021	747
2022	72
2022	343
2022	415
2023	33
2023	175
2023	208
2024	20
2024	31
2024	51
Thereafter	435
Thereafter
Thereafter	435
Total lease payments, Finance Lease	1,096
Total lease payments, Operating Lease	1,638
Total lease payments	2,734
Less imputed interest	331
Less imputed interest	133
Less imputed interest	464
Total	765	$ 924
Operating Lease, Liability, Total	1,505
Total	2,270
Less: current portion of obligations under leases	250	236
Less: current portion of obligations under leases	528
Less: current portion of obligations under leases	778
Long-term portion of obligations under leases	515	688
Long-term portion of obligations under leases	977
Long-term portion of obligations under leases	$ 1,492

XML

Note 11 - Long-term Incentive Plan (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

			Weighted		Weighted
	Number of		Average		Average
	Options		Exercise		Fair Value at
	Granted		Price		Grant Date
Outstanding at January 1, 2019		688,000		2.52		1.00
Options granted		-		-		-
Options exercised		-		-		-
Options cancelled or forfeited		-		-		-
Outstanding at September 30, 2019		688,000	$	2.52	$	1.00
Options Vested		652,000	$	2.56	$	1.03
Exercisable at September 30, 2019		634,000	$	2.58	$	1.05

Schedule Of Period And Predetermined Stock Price Needed For Vesting [Table Text Block]

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

XML

Note 5 - Revenues (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Waste management and brokerage services	$	10,867	$	12,009	$	33,853	$	30,779
Captive landfill management operations		705		548		2,055		1,746
Total waste management services revenues		11,572		12,557		35,908		32,525
Food, beverage and merchandise sales		2,587		2,285		6,027		5,531
Membership dues revenue		1,474		1,278		4,220		3,871
Room rental revenue		814		739		1,808		1,781
Greens fees and cart rental revenue		1,098		865		1,755		1,460
Other revenue		473		424		1,333		1,201
Total golf and related operations revenue		6,446		5,591		15,143		13,844
Total net operating revenues	$	18,018	$	18,148	$	51,051	$	46,369

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

			Provision		Write-offs
	Balance at		for Doubtful		less			Balance at
	Beginning of Period		Accounts		Recoveries			End of Period
Three months ended September 30, 2019
Allowance for doubtful accounts	$	267	$	9	$	(3	)	$	273
Three months ended September 30, 2018
Allowance for doubtful accounts	$	263	$	11	$	(6	)	$	268
Nine months ended September 30, 2019
Allowance for doubtful accounts	$	255	$	27	$	(9	)	$	273
Nine months ended September 30, 2018
Allowance for doubtful accounts	$	237	$	34	$	(3	)	$	268

Contract with Customer, Asset and Liability [Table Text Block]

			Unbilled
	Balance at		Membership					Balance at
	Beginning of Period		Dues		Billings			End of Period
Three months ended September 30, 2019
Contract Assets:
Unbilled membership dues receivable	$	1,101	$	284	$	(532	)	$	853
Three months ended September 30, 2018
Contract Assets:
Unbilled membership dues receivable	$	1,009	$	184	$	(419	)	$	774
Nine months ended September 30, 2019
Contract Assets:
Unbilled membership dues receivable	$	554	$	1,813	$	(1,514	)	$	853
Nine months ended September 30, 2018
Contract Assets:
Unbilled membership dues receivable	$	580	$	1,475	$	(1,281	)	$	774

	Balance at				Revenue			Balance at
	Beginning of Period		Billings		Recognized			End of Period
Three months ended September 30, 2019
Contract Liabilities:
Deferred membership dues revenue	$	4,497	$	831	$	(1,474	)	$	3,854
Customer advance deposits	$	556	$	438	$	(487	)	$	507
Three months ended September 30, 2018
Contract Liabilities:
Deferred membership dues revenue	$	4,034	$	595	$	(1,278	)	$	3,351
Customer advance deposits	$	491	$	514	$	(582	)	$	423
Nine months ended September 30, 2019
Contract Liabilities:
Deferred membership dues revenue	$	2,899	$	5,175	$	(4,220	)	$	3,854
Customer advance deposits	$	453	$	1,100	$	(1,046	)	$	507
Nine months ended September 30, 2018
Contract Liabilities:
Deferred membership dues revenue	$	2,718	$	4,504	$	(3,871	)	$	3,351
Customer advance deposits	$	430	$	1,186	$	(1,193	)	$	423

XML

Note 15 - Injection Wells Suspension

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Suspended Injection Well Costs Disclosure [Text Block]

Note

15

.

Injection Wells

Suspension

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 Avalon’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 that the saltwater injection wells pose a risk of increasing or creating seismic activity.

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 for the AWMS

#2

injection well. To date, the Division has

not

responded to that plan despite Avalon’s request 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 temporary, and he expects that AWMS

#2

will be allowed to resume operations 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 would allow the Chief more time to 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 to the Franklin County Court of Common Pleas (the “Court”), 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 over the

26

month period was arbitrary and

not

in accordance with reason.  Subsequent to the ruling, and in accordance with the Court’s Decision and Order, both Avalon and the Division submitted their proposed restart plans to the Court. Avalon’s plan sets forth both the initial volumes and pressures and increases in volume and pressure while continuously monitoring seismicity and addressing the concerns of public health and safety.

On

February 21, 2017,

the Court issued its Final Decision and Order. The Court’s Final Decision and Order set forth conditions for restarting the AWMS

#2

salt water injection well in accordance with the proposed restart plans filed by Avalon with minor revisions. On

February 22, 2017,

the Division appealed the Final Decision and Order and filed a Motion to Stay the Court Order. The Motion to Stay was granted by the Ohio

10th

District Court of Appeals on

March 21, 2017.

On

September 14, 2017,

an appeal hearing was held in the Ohio

10

th

District Court of Appeals and on

July 31, 2018

a decision was issued on the appeal. 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,

Avalon, 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.  

Based on the Supreme Court of Ohio’s decision

not

to accept the Company’s appeal for review and the economically unfeasible conditions required by the Division of Oil & Gas Resources Management proposed restart plan, management of Avalon and its Board of Directors concluded that the injection wells would

not

resume operations in the near future and that the carrying value of the salt water injection wells was

not

recoverable. In the

fourth

quarter of

2018,

the Company recorded an impairment charge of approximately

$3.3

million, the full carrying value of the Company’s salt water injection wells.

On

April 5, 2019,

Avalon filed with the Oil and Gas Commission a motion to vacate its prior decisions in this matter. There can be

no

guarantee that the salt water injection wells will resume operations, but the Company will continue to pursue all available avenues to allow the restart of the Company’s salt water injection well under reasonable conditions. Currently, there is

no

implemented state-wide policy on induced seismicity and the Ohio Department of Natural Resources (“ODNR”) has refused to communicate with the Company regarding the status and requirements of any policymaking. The operations of Company’s injection wells will remain suspended until that time. The Oil and Gas Commission scheduled a hearing on this motion for

August 13, 2019. 

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, which is pending.

Concurrently with the filing of the appeal with the Franklin County Court of Common Pleas, the Company filed a writ of mandamus in the

10

th

District Court of Appeals on

August 30, 2019

to compel the chief of the Division to issue restart orders, or alternative orders that would allow the Company to either restart the AWMS

#2

well, or appeal said orders to the Oil and Gas Commission in accordance with Ohio Law.

In addition, on

August 26, 2016,

Avalon filed a complaint in the

11

th

Appellate District Court in Trumbull County, Ohio for a Peremptory Writ of Mandamus to compel the Director of the ODNR to initiate appropriations procedures to determine damages from the illegal regulatory taking of the Company’s property, or issue an alternative remedy at law. The Company believes that the actions, and lack of responsible actions, by the ODNR is a clear violation of the Company’s property rights and a violation of the Fifth and Fourteenth Amendments to the U.S. Constitution; Article I, Section

19

of the Ohio Constitution; and Ohio Revised Code Chapter

163.

 

On

March 18, 2019,

Avalon, received notice that the

11

th

Appellate District Court in Trumbull County, Ohio issued summary judgment in favor of the Ohio Department of Natural Resources in the writ of mandamus action that resulted from the suspension order of the Company’s salt water injection well. The decision was appealed to the Supreme Court of Ohio on

April 5, 2019.

To date, oral arguments in that case have

not

been scheduled.

XML

Note 6 - Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Property and equipment, gross	$ 71,441	$ 64,406
Less accumulated depreciation and amortization	(23,222)	(21,872)
Property and equipment, net	48,219	42,534
Land and Land Improvements [Member]
Property and equipment, gross	14,612	14,231
Building and Building Improvements [Member]
Property and equipment, gross	42,413	36,185
Machinery and Equipment [Member]
Property and equipment, gross	4,869	4,508
Office Equipment [Member]
Property and equipment, gross	6,964	6,458
Vehicles [Member]
Property and equipment, gross	499	455
Construction in Progress [Member]
Property and equipment, gross	$ 2,084	$ 2,569

XML

Note 7 - Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Operating lease cost	$ 298	$ 195	$ 586	$ 446
Depreciation on right-of-use assets	124	129	376	354
Interest on lease liabilities	(11)	(13)	(33)	(38)
Total finance lease cost	$ 135	$ 142	$ 409	$ 392

XML

Note 9 - Term Loans and Line of Credit Agreements - Summary of Term Loan and Line of Credit Agreements (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Long-term debt, gross	$ 14,018
Debt issuance costs	(178)
Long-term debt	13,840
Debt issuance costs	178
Less current portion of long-term debt, gross	807	$ 597
Less current portion debt issuance costs	(25)	(19)
Less current portion of long-term debt	782	578
Long-term debt, gross, net of current portion	13,211	10,301
Debt issuance costs, net of current portion	(153)	(134)
Long-term debt, net of current portion	13,058	10,167
Term Loan Agreement [Member]
Long-term debt, gross	10,454	10,898
Debt issuance costs	(139)	(153)
Long-term debt	10,315	10,745
Debt issuance costs	139	$ 153
The 2019 Term Loan Agreement [Member]
Long-term debt, gross	2,934
Debt issuance costs	(39)
Long-term debt	2,895
Debt issuance costs	39
New Castle Country Club Commercial Mortgage [Member]
Long-term debt, gross	630
Debt issuance costs
Long-term debt	630
Debt issuance costs

XML

Note 16 - Asset Acquisitions - Assets Acquired and Liabilities Assumed in Boardman Tennis Center Acquisition (Details) - Boardman Tennis Center [Member] $ in Thousands	Mar. 07, 2018 USD ($)
Building and land	$ 1,302
Total assets acquired:	1,302
Accrued liabilities	33
Total liabilities assumed	33
Total consideration	$ 1,269

XML

Note 13 - Business Segment Information - Segment Reporting Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Revenue from Contract with Customer, Excluding Assessed Tax, Total	$ 18,018	$ 18,148	$ 51,051	$ 46,369
Income (loss) before income taxes	164	805	53	445
Interest expense	(222)	(167)	(600)	(512)
Other income, net	41	45	257	218
Total Assets	71,059		71,059		$ 64,769
Operating Segments [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	18,028	18,163	51,096	46,426
Income (loss) before income taxes	1,174	1,699	2,932	3,223
Total Assets	134,329		134,329		122,851
Intersegment Eliminations [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	(10)	(15)	(45)	(57)
Total Assets	(63,270)		(63,270)		(58,082)
Corporate, Non-Segment [Member]
Interest expense	(203)	(154)	(551)	(474)
Other income, net	3	1	51	14
General corporate expenses	(810)	(741)	(2,379)	(2,318)
Total Assets	49,925		49,925		47,394
Waste Management Services [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	11,572	12,557	35,908	32,525
Waste Management Services [Member] | Operating Segments [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	11,572	12,557	35,908	32,525
Income (loss) before income taxes	1,074	1,244	3,295	2,768
Total Assets	29,107		29,107		27,383
Waste Management Services [Member] | Intersegment Eliminations [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total
Golf and Related Operations [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	6,446	5,591	15,143	13,844
Golf and Related Operations [Member] | Operating Segments [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	6,456	5,606	15,188	13,901
Income (loss) before income taxes	100	455	(363)	455
Total Assets	55,297		55,297		$ 48,074
Golf and Related Operations [Member] | Intersegment Eliminations [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	$ 10	$ 15	$ 45	$ 57

XML

Note 11 - Long-term Incentive Plan (Details Textual) - USD ($)	3 Months Ended		9 Months Ended		120 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Apr. 25, 2019	Dec. 31, 2018	Oct. 06, 2009
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance	688,000		688,000		688,000		688,000
Minimum Percentage of Fair Market Value for Non-qualified Stock Option Price			100.00%
Share-based Payment Arrangement, Expense	$ 1,000	$ 2,000	$ 4,000	$ 5,000
Ten Percent Shareholders [Member]
Minimum Percentage of Fair Market Value for Incentive Stock Option Price			110.00%
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period			10 years
Other Employees [Member]
Minimum Percentage of Fair Market Value for Incentive Stock Option Price			100.00%
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period			5 years
Avalon Holdings Corporation 2009 Long Term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures, Total					760,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period					72,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance	688,000		688,000		688,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period			10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			5 years
Number Of Years After Options Vested, Stock Price Reach Predetermined Vesting Price			3 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate			0.00%
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 19,000		$ 19,000		$ 19,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			4 years 244 days
Avalon Holdings Corporation 2009 Long Term Incentive Plan [Member] | Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period			1 year
Avalon Holdings Corporation 2009 Long Term Incentive Plan [Member] | Share-based Payment Arrangement, Option [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Requisite Service Period			180 days
Avalon Holdings Corporation 2009 Long Term Incentive Plan [Member] | Common Class A [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized								1,300,000
The 2019 Long-Term Incentive Plan [Member] | Common Class A [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized						1,300,000
Avalon Holdings Corporation 2009 Long Term Incentive Plan And 2019 Long Term Incentive Plan [Member] | Common Class A [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized						1,300,000

XML

Note 13 - Business Segment Information (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net operating revenues from:
Waste management services:
External customer revenues	$	11,572		$	12,557		$	35,908		$	32,525
Intersegment revenues		-			-			-			-
Total waste management services		11,572			12,557			35,908			32,525
Golf and related operations:
External customer revenues		6,446			5,591			15,143			13,844
Intersegment revenues		10			15			45			57
Total golf and related operations		6,456			5,606			15,188			13,901
Segment operating revenues		18,028			18,163			51,096			46,426
Intersegment eliminations		(10	)		(15	)		(45	)		(57	)
Total net operating revenues	$	18,018		$	18,148		$	51,051		$	46,369
Income (loss) before income taxes:
Waste management services	$	1,074		$	1,244		$	3,295		$	2,768
Golf and related operations		100			455			(363	)		455
Segment income before income taxes		1,174			1,699			2,932			3,223
Corporate interest expense		(203	)		(154	)		(551	)		(474	)
Corporate other income, net		3			1			51			14
General corporate expenses		(810	)		(741	)		(2,379	)		(2,318	)
Income before income taxes	$	164		$	805		$	53		$	445

	September 30,			December 31,
	2019			2018
Identifiable assets:
Waste management services	$	29,107		$	27,383
Golf and related operations		55,297			48,074
Corporate		49,925			47,394
Subtotal		134,329			122,851
Elimination of intersegment receivables		(63,270	)		(58,082	)
Total	$	71,059		$	64,769

XML

Note 4 - Cash, Cash Equivalents and Restricted Cash - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Cash and cash equivalents	$ 1,942	$ 1,406
Restricted cash		502
Cash, cash equivalents and restricted cash	$ 1,942	$ 1,908

XML

Note 5 - Revenues - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Balance	$ 1,101	$ 1,009	$ 554	$ 580
Unbilled membership dues	284	184	1,813	1,475
Billings	(532)	(419)	(1,514)	(1,281)
Balance	853	774	853	774
Balance			2,900
Balance	3,900		3,900
Deferred Membership Dues [Member]
Balance	4,497	4,034	2,899	2,718
Billings	831	595	5,175	4,504
Revenue recognized	(1,474)	(1,278)	(4,220)	(3,871)
Balance	3,854	3,351	3,854	3,351
Billings	831	595	5,175	4,504
Revenue recognized	(1,474)	(1,278)	(4,220)	(3,871)
Customer Advance Deposits [Member]
Balance	556	491	453	430
Billings	438	514	1,100	1,186
Revenue recognized	(487)	(582)	(1,046)	(1,193)
Balance	507	423	507	423
Billings	438	514	1,100	1,186
Revenue recognized	$ (487)	$ (582)	$ (1,046)	$ (1,193)

XML

Note 11 - Long-term Incentive Plan

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

Note

11

. Long-T

erm Incentive Plan

On

March 14, 2019,

the Board of Directors of Avalon approved the renewal of the expired

2009

Long-term Incentive Plan (the

“2009

Plan”), which is 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

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. At

September 30, 2019,

options to purchase

760,000

shares have been granted under the

2009

Plan. Of these,

72,000

shares have been exercised, and options for

688,000

shares remain outstanding.

NQSO’s

may

be granted with an exercise price which is

not

less than

100%

of the fair market value of the Class A Common Stock on the date of grant. 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 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 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. In

2018,

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.

The grant-date fair values of 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

) the exercise price of the option,

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

) the current fair value of the underlying equity,

4

) the expected volatility of the value of the underlying share for the expected term of the option,

5

) the expected dividends on the underlying share for the expected term of the option and

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’s publicly traded stock price as of the grant dates times the sum of the Class A and Class B common shares outstanding.

The expected term, or time until the option is exercised, is typically based on historical exercising behavior of previous option holders of a company’s stock.  Due to the fact that the Company has had

no

historical exercising activity, prior to

2018,

the simplified method was applied.  Because of the nature of the vesting described above, the options are separated into

five

blocks, with each block having its own vesting period and expected term. 

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

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

2019:

                    

			Weighted		Weighted
	Number of		Average		Average
	Options		Exercise		Fair Value at
	Granted		Price		Grant Date
Outstanding at January 1, 2019		688,000		2.52		1.00
Options granted		-		-		-
Options exercised		-		-		-
Options cancelled or forfeited		-		-		-
Outstanding at September 30, 2019		688,000	$	2.52	$	1.00
Options Vested		652,000	$	2.56	$	1.03
Exercisable at September 30, 2019		634,000	$	2.58	$	1.05

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.

2 ) The Avalon common stock price traded on a public stock exchange (NYSE Amex) must reach the predetermined vesting price within three years after the options become vested under the contractual vesting term.

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

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

Compensation costs were approximately

$1,000

and

$2,000

for the

three

months ended

September 30, 2019

and

2018,

respectively, and

$4,000

and

$5,000

for the

nine

months ended

September 30, 2019

and

2018,

respectively, based upon the estimated grant date fair value calculations. As of

September 30, 2019,

there was approximately

$19,000

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

4.67

years.

XML

Note 7 - Leases

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Lessee, Operating and Financing Leases [Text Block]

Note

7

. Leases

In

February 2016,

the FASB issued ASU

2016

-

02.

The new standard establishes a 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. In accordance with ASU

2016

-

02,

leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. On

January 1, 2019,

the Company adopted ASU

2016

-

02

under the modified retrospective method with the available practical expedients.

Operating Leases

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

January 1, 2019,

as a result of the adopted ASU

2016

-

02,

the Company recorded a ROU asset and related lease liability of approximately

$1.7

million. Our operating leases have remaining lease terms ranging from

1

to

5

years. The weighted average remaining lease term on operating leases was approximately

3.2

years at

September 30, 2019.

In addition, in connection with the purchase of New Castle Country Club’s real property assets on

May 13, 2019,

the Company assumed the remaining term of New Castle Country Club’s golf cart operating lease. At acquisition, the Company recorded an operating lease right-of-use asset and corresponding obligation under operating leases of approximately

$

126,000

.

The golf cart operating lease had a remaining lease term of

3

years at the acquisition date (See Note

16

).

Leased property and associated obligations under operating leases at

September 30, 2019

consists of the following (in thousands):

	September 30,
	2019
Operating lease right-of-use assets	$	1,505
Current portion of obligations under operating leases	$	528
Long-term portion of obligations under operating leases		977
Total obligations under operating leases	$	1,505

The weighted average discount rate on operating leases was

5.01%

at

September 30, 2019.

Finance Leases

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 its remaining renewal options. At

September 30, 2019

there were approximately

34.1

years remaining on the golf course and related facilities finance lease.

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

September 30, 2019,

the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from

2

to

5

years at

September 30, 2019.   

The weighted average remaining lease term on the vehicles and equipment leases was approximately

2.3

years at

September 30, 2019.

Leased property and associated obligations under finance leases at

September 30, 2019

and

December 31, 2018

consists of the following (in thousands):

	September 30,			December 31,
	2019			2018
Leased property under finance leases	$	11,604		$	11,442
Less accumulated amortization		(5,750	)		(5,374	)
Leased property under finace leases, net	$	5,854		$	6,068
Current portion of obligations under finance leases	$	250		$	236
Long-term portion of obligations under finance leases		515			688
Total obligations under finance leases	$	765		$	924

The weighted average discount rate on finance leases was

4.8%

at both

September 30, 2019

and

December 31, 2018.

For the

three

and

nine

months ended

September 30, 2019

and

2018,

components of lease expense were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Operating lease cost	$	298	$	195	$	586	$	446
Finance lease cost:
Depreciation on right-of-use assets	$	124	$	129	$	376	$	354
Interest on lease liabilities		11		13		33		38
Total finance lease cost	$	135	$	142	$	409	$	392

Future commitments under long-term, operating leases and finance leases at

September 30, 2019

are as follows (in thousands):

	Finance		Operating		Total
2020	$	285	$	593	$	878
2021		251		496		747
2022		72		343		415
2023		33		175		208
2024		20		31		51
Thereafter		435		-		435
Total lease payments		1,096		1,638		2,734
Less imputed interest		331		133		464
Total		765		1,505		2,270
Less: current portion of obligations under leases		250		528		778
Long-term portion of obligations under leases	$	515	$	977	$	1,492

XML

Note 2 - Basis of Presentation

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Basis of Accounting [Text Block]

Note

2.

Basis of Presentation

The unaudited condensed consolidated 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

2018

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, necessary for a fair presentation of the financial position of Avalon as of

September 30, 2019,

and the results of its operations and cash flows for the interim periods presented.

The operating results for the interim periods are

not

necessarily indicative of the results to be expected for the full year.

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accounts receivable, allowance for doubtful accounts	$ 273	$ 255
Common Class A [Member]
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Class B [Member]
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01

XML

Note 7 - Leases (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Lessee, Operating Lease Assets and Liabilities [Table Text Block]

	September 30,
	2019
Operating lease right-of-use assets	$	1,505
Current portion of obligations under operating leases	$	528
Long-term portion of obligations under operating leases		977
Total obligations under operating leases	$	1,505

Lessee, Financing Lease Assets and Liabilities [Table Text Block]

	September 30,			December 31,
	2019			2018
Leased property under finance leases	$	11,604		$	11,442
Less accumulated amortization		(5,750	)		(5,374	)
Leased property under finace leases, net	$	5,854		$	6,068
Current portion of obligations under finance leases	$	250		$	236
Long-term portion of obligations under finance leases		515			688
Total obligations under finance leases	$	765		$	924

Lease, Cost [Table Text Block]

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Operating lease cost	$	298	$	195	$	586	$	446
Finance lease cost:
Depreciation on right-of-use assets	$	124	$	129	$	376	$	354
Interest on lease liabilities		11		13		33		38
Total finance lease cost	$	135	$	142	$	409	$	392

Schedule Of Future Minimum Lease Payments [Table Text Block]

	Finance		Operating		Total
2020	$	285	$	593	$	878
2021		251		496		747
2022		72		343		415
2023		33		175		208
2024		20		31		51
Thereafter		435		-		435
Total lease payments		1,096		1,638		2,734
Less imputed interest		331		133		464
Total		765		1,505		2,270
Less: current portion of obligations under leases		250		528		778
Long-term portion of obligations under leases	$	515	$	977	$	1,492

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

The unaudited condensed consolidated 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

2018

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, necessary for a fair presentation of the financial position of Avalon as of

September 30, 2019,

and the results of its operations and cash flows for the interim periods presented.

The operating results for the interim periods are

not

necessarily indicative of the results to be expected for the full year.

XML

Note 7 - Leases - Operating Leases Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Operating Lease, Right-of-Use Asset	$ 1,505
Less: current portion of obligations under leases	528
Long-term portion of obligations under leases	977
Total obligations under operating leases	$ 1,505

XML

Note 8 - Basic and Diluted Net Loss Per Share (Details Textual) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Weighted Average Number of Shares Outstanding, Basic, Total	3,875,431	3,803,331	3,875,431	3,803,331
Weighted Average Number of Shares Outstanding, Assuming Dilution	3,892,948	4,048,683	3,909,706	3,895,129

XML

Note 15 - Injection Wells Suspension (Details Textual) $ in Millions	3 Months Ended
	Dec. 31, 2018 USD ($)	Sep. 30, 2019	Sep. 03, 2014
Number of Suspended Saltwater Injection Wells		2	2
Wells and Related Equipment and Facilities [Member]
Asset Impairment Charges, Total	$ 3.3

XML

Note 11 - Long-term Incentive Plan - Period and Predetermined Stock Price Needed for Vesting (Details)	9 Months Ended
	Sep. 30, 2019 $ / shares
Share-based Payment Arrangement, Tranche One [Member]
Begins Vesting	12 months after Grant Dates
Ends Vesting	48 months after Grant Dates
Predetermined Vesting Price (in dollars per share)	$ 3.43
Share-based Payment Arrangement, Tranche Two [Member]
Begins Vesting	24 months after Grant Dates
Ends Vesting	60 months after Grant Dates
Predetermined Vesting Price (in dollars per share)	$ 4.69
Share-based Payment Arrangement, Tranche Three [Member]
Begins Vesting	36 months after Grant Dates
Ends Vesting	72 months after Grant Dates
Predetermined Vesting Price (in dollars per share)	$ 6.43
Share-Based Compensation Award Tranche Four [Member]
Begins Vesting	48 months after Grant Dates
Ends Vesting	84 months after Grant Dates
Predetermined Vesting Price (in dollars per share)	$ 8.81
Share-Based Compensation Award Tranche Five [Member]
Begins Vesting	60 months after Grant Dates
Ends Vesting	96 months after Grant Dates
Predetermined Vesting Price (in dollars per share)	$ 12.07

XML

Note 9 - Term Loans and Line of Credit Agreements

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

9.

Term Loan

s

and Line of Credit Agreements

2016

Term Loan Agreement

On

December 20, 2016,

Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the

“2016

Term Loan Agreement”) with Laurel Capital Corporation which provided for a

$12.0

million term loan. At closing,

$9.1

million of the proceeds were used to pay off amounts outstanding under the then existing line of credit agreement and associated accrued interest with Home Savings Bank, dated

May 21, 2015,

as amended, and pay related transaction costs associated with the

2016

Term Loan Agreement. The line of credit agreement with Home Savings Bank was terminated in conjunction with the repayment. Remaining proceeds of

$2.9

million under the

2016

Term Loan Agreement were deposited in a project fund account to fund costs of renovating and expanding The Grand Resort. At

September 30, 2019

the project fund proceeds related to the

2016

Term Loan Agreement were fully utilized. At

December 31, 2018,

the remaining project fund proceeds of approximately

$0.5

million are presented in the Condensed Consolidated Balance Sheets as “Restricted cash.” On

December 4, 2017

the

2016

Term Loan Agreement was amended to restate the definition of “Total Fixed Charges” utilized in the calculation of the “Fixed Charge Coverage Ratio.”

The

$12.0

million term loan amount 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

2016

Term Loan Agreement matures on

December 20, 2026

at which time the final balloon payment equal to the remaining outstanding principal, interest and fees are due. Borrowings under the

2016

Term Loan Agreement bear interest at a fixed rate of

5.35%

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%

per annum or (b) the sum of the Index Rate on the date

two

(

2

) business days prior to the reset date plus

3.95%,

provided that the applicable rate shall in

no

event exceed

7.50%

per annum.

Avalon has the right to prepay the amount outstanding under the

2016

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

2016

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

2016

Term Loan Agreement also contains certain financial and other covenants, customary representations, warranties and events of default. Avalon was in compliance with the

2016

Term Loan Agreement covenants at

September 30, 2019

and

December 31, 2018.

The Company incurred approximately

$191,000

of debt issuance costs in connection with the

2016

Term Loan Agreement. These debt issuance costs were capitalized and will be amortized over the life of the

2016

Term Loan Agreement. In accordance with ASU

2015

-

03,

Simplifying the Presentation of Debt Issuance Costs

(“ASU

2015

-

03”

), these costs are presented in the Condensed Consolidated Balance Sheets as a direct reduction from the carrying amount of the term loan liability.

2019

Term Loan Agreement

On

March 29, 2019,

Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the

“2019

Term Loan Agreement”) with Laurel Capital Corporation which provided for a

$3.0

million term loan. At closing, a portion of the proceeds were used to pay related transaction costs associated with the

2019

Term Loan Agreement with the remaining proceeds deposited into a project fund account to fund costs of renovating and expanding The Grand Resort. At

September 30, 2019

the project fund proceeds related to the

2019

Term Loan Agreement were fully utilized.

The

$3.0

million outstanding under the

2019

Term Loan Agreement is payable in

92

equal monthly installments of principal and interest

,

based on a

fifteen

(

15

) year maturity schedule which commenced on

April 20, 2019

followed by

one

final balloon payment of all remaining principal, interest and fees due on the maturity date of

December 20, 2026.

Borrowings under the

2019

Term Loan Agreement bear interest at a fixed rate of

6.25%

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)

6.25%

per annum or (b) the sum of the Index Rate on the date

two

(

2

) business days prior to the reset date plus

3.60%,

provided that the applicable rate shall in

no

event exceed

8.50%

per annum.

Avalon has the right to prepay the amount outstanding under the

2019

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 and

two

percent (

2%

) on any prepayment in the sixth,

seventh

or

eighth

year.

Borrowings under the

2019

Term Loan Agreement are secured by a

second

priority mortgage lien on the land, building and improvements on the property owned by The Grand Resort as defined in the agreement. The

2019

Term Loan Agreement also contains certain financial and other covenants, customary representations, warranties and events of default. Avalon was in compliance with the

2019

Term Loan Agreement covenants at

September 30, 2019.

The Company incurred approximately

$42,000

of debt issuance costs in connection with the

2019

Term Loan Agreement. These debt issuance costs were capitalized and will be amortized over the life of the

2019

Term Loan Agreement. In accordance with ASU

2015

-

03,

these costs are presented in the Condensed Consolidated Balance Sheets as a direct reduction from the carrying amount of the term loan liability.

Commercial Mortgage

On

May 13, 2019,

Havana Cigar Shop, Inc., a wholly owned subsidiary of Avalon, entered into an asset Purchase and Sale Agreement with New Castle Country Club (the “Club”) for the purchase of the real property assets associated with the Club. Havana Cigar Shop, Inc. concurrently entered into an Assignment and Assumption and Commercial Loan Modification Agreement (the “Assumption Agreement”) with Mercer County State Bank for the outstanding debt under the Club’s Commercial Mortgage (the “Commercial Mortgage”) and Demand Line of Credit, as amended (the “Demand Line of Credit”), at closing as consideration for the purchase of the real property of the Club (See Note

16

).

At closing the outstanding principal balance assumed under the Commercial Mortgage obligation was

$653,000.

The

$653,000

outstanding under the

$950,000

Commercial Mortgage is payable in

110

equal monthly installments of

$7,573

consisting of principal and interestwhichcommenced

May 21, 2019

and matures on

June 21, 2028.

Borrowings under the Commercial Mortgage bear interest at a fixed rate of

5.50%

until

June 21, 2023

at which time the interest rate will be reset to a fixed rate equal to the greater of (a)

4.25%

per annum or (b) the Prime Rate plus

0.50%.

Avalon has the right to prepay the amount outstanding under the Commercial Mortgage, 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, with

no

prepayment penalty.

Borrowings under the Commercial Mortgage are secured by a

first

lien mortgage and assignment of leases and rents on the land, building and improvements on the property and non-real estate assets owned by Havana Cigar Shop, Inc. The Commercial Mortgage also contains certain financial and other covenants, customary representations, warranties and events of default.

Demand Line of Credit

Under the Assumption Agreement Havana Cigar Shop, Inc. also assumed the Club’s

$150,000

Commercial Demand Line of Credit with Mercer County State Bank of which

$134,000

was outstanding at closing. Monthly payments consist of interest only on the outstanding principal balance with principal due on demand in the event of default as defined in the Commercial Demand Line of Credit agreement. During the

third

quarter of

2019,

the outstanding balance was paid in full.

No

additional funds were drawn under the Demand Line of Credit at

September 30, 2019.

Outstanding borrowings under the Commercial Demand Line of Credit bear interest at Prime Rate plus

0.50%.

At

September 30, 2019,

the interest rate on the Commercial Demand Line of Credit was

5.50%.

Borrowings under the Commercial Demand Line of Credit are secured by a

second

lien mortgage and assignment of leases and rents on the land, building and improvements on the property and non-real estate assets owned by Havana Cigar Shop, Inc. The Commercial Demand Line of Credit agreement also contains certain financial and other covenants, customary representations, warranties and events of default.

Line of Credit Agreement

On

May 31, 2018,

Avalon entered into a new business loan agreement with Home Savings Bank, (the “Line of Credit Agreement”) which provides for a line of credit of up to

$5.0

million with an original maturity date of

May 31, 2020.

On

June 17, 2019,

the Company amended the Line of Credit Agreement to extend the maturity date to

May 31, 2021.

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. The existing line of credit agreement with Home Savings Bank, dated

December 20, 2016,

as amended, which was entered into concurrently with the

2016

Term Loan Agreement, was terminated in conjunction with the new Line of Credit Agreement.

No

amounts were outstanding under the existing line of credit agreement at termination.

At

September 30, 2019,

$575,000

was outstanding under the Line of Credit Agreement.

No

amounts were drawn under the Line of Credit Agreement at

December 31, 2018.

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

.25%.

At

September 30, 2019,

the interest rate on the Line of Credit Agreement was

5.25%.

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 also contains certain financial and other covenants, customary representations, warranties and events of default. Avalon was in compliance with the line of credit agreements covenants at

September 30, 2019

and

December 31, 2018.

During the

three

month periods ended

September 30, 2019

and

2018,

the weighted average interest rate on outstanding borrowings was

5.53%

and

5.35%,

respectively. During the

nine

month periods ended

September 30, 2019

and

2018,

the weighted average interest rate on outstanding borrowings was

5.48%

and

5.35%,

respectively.

Obligations under the Company’s term loan and mortgage agreements at

September 30, 2019

and

December 31, 2018

consist of the following (in thousands):

	September 30, 2019
	Gross Amount		Debt Issuance Costs			Net Amount
2016 Term loan agreement	$	10,454	$	(139	)	$	10,315
2019 Term loan agreement		2,934		(39	)		2,895
Commercial Mortgage		630		-			630
Total		14,018		(178	)		13,840
Less current portion		807		(25	)		782
Long-term debt	$	13,211	$	(153	)	$	13,058

	December 31, 2018
	Gross Amount		Debt Issuance Costs			Net Amount
2016 Term loan agreement	$	10,898	$	(153	)	$	10,745
Less current portion		597		(19	)		578
Long-term debt	$	10,301	$	(134	)	$	10,167

Future maturities under the Company term loan and mortgage agreements are as follows (in thousands):

For the Twelve Month Period Ending September 30,
2020	$	807
2021		853
2022		901
2023		951
2024		1,005
Thereafter		9,501
Total	$	14,018

XML

Note 5 - Revenues

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

Note

5.

Revenues

Adoption of ASC Topic

606,

“Revenue from Contracts with Customers”

On

January 1, 2018,

Avalon adopted the new accounting standard FASB ASC

606,

Revenue from Contracts with Customers

(“ASC

606”

), and all the related amendments using the modified retrospective method for all contracts. The Company's accounting policy has been updated to align with Topic

606,

and

no

significant changes to revenue recognition have occurred as a result of the change. The adoption of ASC

606

did

not

result in an impact to the way the Company records revenue and as such did

not

result in period reclassifications to or from revenue or its associated costs. As a result of the adoption, the Company separately disclosed contract assets, further described below, in our Condensed Consolidated Balance Sheets at

September 30, 2019

and

December 31, 2018

and associated cash flows in our Condensed Consolidated Statements of Cash Flows for the

nine

months ended

September 30, 2019

and

2018.

Revenue Recognition

The Company identifies a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when obligations under the terms of the contract with our customer are satisfied; generally this occurs with the transfer of control of the good or service to the customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. The Company does

not

incur incremental costs to obtain contracts or costs to fulfill contracts that meet the criteria for capitalization. In addition, the Company does

not

have material significant payment terms as payment is received at or shortly after the point of sale.

Waste Management Services

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

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

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

one

captive disposal facility located in Ohio. The net operating revenues of the captive landfill operations are almost entirely dependent upon the volume of waste generated by the owner of the landfill for whom Avalon manages the facility.

Avalon is a minority owner with managerial control over

two

salt water injection wells and its associated facility. Operations of the salt water injection wells have been suspended in accordance with the Chief of the Division of Oil and Gas Resources Management order (See Note

15

). Due to the suspension of the salt water injection wells, there were

no

operating revenues for the

three

and

nine

months ended

September 30, 2019

and

2018.

For the

three

months ended

September 30, 2019

and

2018,

the net operating revenues related to waste management services represented approximately

64%

and

69%,

respectively, of Avalon’s total consolidated net operating revenues. For both the

nine

months ended

September 30, 2019

and

2018,

the net operating revenues related to waste management services represented approximately

70%

of Avalon’s total consolidated net operating revenues. For both the

nine

months ended

September 30, 2019

and

2018,

no

one

customer individually accounted for

10%

or more of Avalon’s waste management services segment revenues.

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

In addition, as the promise to provide services qualifies as a series accounted for as a single performance obligation, the Company applied the practical expedient guidance that allows an entity that is recognizing revenue over time by using an output method to recognize revenue equal to the amount that the entity has the right to invoice if the invoiced amount corresponds directly to the value transferred to the customer. The Company applied the standard's practical expedient that permits the omission of disclosures relating to unsatisfied performance obligations as most of the Company’s waste management service contracts (i) have an original expected length of

one

year or less and (ii) the Company recognizes revenue at the amount to which the Company has the right to invoice for services performed. For contracts with terms that extend beyond a year, variability will be resolved over the remaining term. The nature of the variability is based on a fixed rate for invoices processed and/or tonnages of waste transported and disposed.

Avalon evaluated whether we are the principal (i.e. report revenues on a gross basis) or agent (i.e. report revenues on a net basis). Avalon reports waste management services on a gross basis, that is, amounts billed to our customers are recorded as revenues, and amounts paid to vendors for providing those services are recorded as operating costs. As principal, Avalon is primarily responsible for fulfilling the promise to provide waste management services for the customer. Avalon accepts credit risk in the event of nonpayment by the customer and is obligated to pay vendors who provide the service regardless of whether the customer pays the Company. Avalon does have a level of discretion in establishing the pricing for its service.

Our payment terms vary by the type and location of our customer and the service offered. Avalon does

not

have any financing arrangements with its customers. The term between invoicing and when payment is due is

not

significant.

The Company assesses each contract amendment individually. Typically, amendments made to our contracts do

not

materially change the terms of the agreement or performance obligation of the Company. The Company accounts for such contract amendments as if it were part of the existing contract as the material terms contained in the contract do

not

change. In cases where Avalon views there is a material change in the terms of the agreement, the Company will reevaluate and determine if the contract should be viewed as an entirely new contract, replacement contract or a continuation of the existing contract.

Consideration promised in our waste management contracts do

not

typically include material variable amounts such as discounts, rebates, refunds, credits, price concessions, incentives, penalties or other such items, and, as such,

no

estimate is made by the Company for such items.

Golf and Related Operations

Avalon’s golf and related operations include the operation and management of

four

golf courses and associated clubhouses, recreation and fitness centers, tennis courts, salon and spa services, dining and banquet facilities and a travel agency. The golf and related operations also include the operation of a hotel and its related amenities including dining, banquet and conference facilities, fitness center, indoor junior Olympic size swimming pool and tennis courts. Revenues for the golf and related operations consists primarily of food beverage and merchandise sales, membership dues, greens fees and associated cart rentals, room rentals, fitness activities, salon and spa services. Due to adverse weather conditions, net operating revenues relating to the golf courses, which are located in northeast Ohio and Pennsylvania, were minimal during the

first

three

months of

2019

and

2018.

For the

three

months ended

September 30, 2019

and

2018,

the net operating revenues related to the golf and related operations represented approximately

36%

and

31%,

respectively, of Avalon’s total consolidated net operating revenues. For both the

nine

months ended

September 30, 2019

and

2018,

the net operating revenues related to the golf and related operations represented approximately

30%

of Avalon’s total consolidated net operating revenues. For both the

nine

months ended

September 30, 2019

and

2018,

no

one

customer individually accounted for

10%

or more of Avalon’s golf and related operations segment revenues.

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

one

year noncancellable commitment and pricing varies based on the membership type selected by the customer. Based on the terms and conditions of the membership contract, resignations received within the membership period do

not

relieve the member of their annual commitment. Memberships automatically renew on the member’s anniversary date unless the member resigns for the upcoming membership period prior to the renewal date.

Membership for the Avalon Golf and Country Club does

not

contain up-front initiation fees or require monthly minimum spending at the facilities. Annual membership dues do

not

cover the cost of food, beverage or any other ancillary paid services which are made available to the member nor do they typically provide for discounts on these goods or services. Members have

no

obligation to purchase or utilize any of these additional goods or services. Avalon is

not

required to provide such goods or services unless requested and paid for at the point of sale by the member.

Under the terms of the contract, Avalon will provide unlimited use and access to the country club facilities. Avalon’s performance obligation in the contract is the “stand ready obligation” to provide access to these facilities for the member for the entire membership term. Avalon providing the “stand ready obligation” for use of the facilities to the member over the entire term of the membership agreement represents a single performance obligation of which Avalon expects the member to receive and consume the benefits of its obligation throughout the membership term, and as such, the Company recognizes membership dues on a straight line basis over the term of the contract. The Company applied the standard's practical expedient that permits the omission of disclosures relating to unsatisfied performance obligations for contracts with an original expected length of

one

year or less as Avalon Golf and Country Club membership agreements are

one

year in length.

For our hotel operations, Avalon’s performance obligation is to provide lodging facilities. The separate components of providing these services (hotel room, toiletry items, housekeeping, and amenities) are

not

distinct within the context of the contract as they are all highly dependent and interrelated as part of the obligation to provide the lodging facility. Room sales are driven by a fixed fee charged to a hotel guest to stay at The Grand Resort for an agreed upon period. The Company agrees to provide a room to the hotel guest for a specified time period for that agreed-upon rate. Our hotel room reservations are performance obligations satisfied over time as the hotel guest simultaneously receives and consumes the benefits provided by the hotel. For performance obligations satisfied over time, our hotel operations measure the progress toward complete satisfaction of the performance obligation and recognize revenue proportionately over the course of the customer’s stay.

For food, beverage, and merchandise sales, greens fees and associated cart rental, fitness activities, salon and spa services and other ancillary services, the transaction price is the set price charged by the Company for those goods or services. Upon purchase of the good or service, the Company transfers control of the good or service to the customer and the customer immediately consumes the benefits of the Company’s performance and, as such, we recognize revenue at the point of sale. Amounts paid in advance, such as deposits on overnight lodging or for banquet or conferences facilities, are recorded as a liability until the goods or services are provided to the customer (see Contract Liabilities below).

The following table presents our net operating revenues disaggregated by revenue source for the

three

and

nine

months ended

September 30, 2019

and

2018

(in thousands). Sales and other taxes are excluded from revenues.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Waste management and brokerage services	$	10,867	$	12,009	$	33,853	$	30,779
Captive landfill management operations		705		548		2,055		1,746
Total waste management services revenues		11,572		12,557		35,908		32,525
Food, beverage and merchandise sales		2,587		2,285		6,027		5,531
Membership dues revenue		1,474		1,278		4,220		3,871
Room rental revenue		814		739		1,808		1,781
Greens fees and cart rental revenue		1,098		865		1,755		1,460
Other revenue		473		424		1,333		1,201
Total golf and related operations revenue		6,446		5,591		15,143		13,844
Total net operating revenues	$	18,018	$	18,148	$	51,051	$	46,369

Avalon does

not

have operations located outside the United States and, accordingly, geographical revenue information is

not

presented.

Receivables, Net

Receivables, net, include amounts billed and currently due from customers. The amounts due are stated at their net realizable value. At

September 30, 2019

and

December 31, 2018,

accounts receivable, net, related to our waste management services segment were approximately

$9.7

million and

$11.2

million, respectively. At

September 30, 2019

one

customer accounted for approximately

17%

of the waste management services segment’s receivables and

15%

of the consolidated receivables. At

December 31, 2018

two

customers accounted for approximately

25%

of the waste management services segment’s receivables and

23%

of the consolidated receivables. Accounts receivable, net, related to our golf and related operations segment were approximately

$1.3

million at

September 30, 2019

and

$1.0

million at

December 31, 2018.

No

one

customer of the golf and related operations segment accounted for

10%

or more of Avalon’s golf and related operations segment or consolidated net receivables at

September 30, 2019

or

December 31, 2018.

The Company maintains an allowance for doubtful accounts 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 doubtful accounts, or to income, as appropriate under the circumstances. Allowance for doubtful accounts was approximately

$

0.3

million at both

September 30, 2019

and

December 31, 2018.

The following table presents changes in our allowance for doubtful accounts during the

three

and

nine

months ended at

September 30, 2019

and

2018

(in thousands):

			Provision		Write-offs
	Balance at		for Doubtful		less			Balance at
	Beginning of Period		Accounts		Recoveries			End of Period
Three months ended September 30, 2019
Allowance for doubtful accounts	$	267	$	9	$	(3	)	$	273
Three months ended September 30, 2018
Allowance for doubtful accounts	$	263	$	11	$	(6	)	$	268
Nine months ended September 30, 2019
Allowance for doubtful accounts	$	255	$	27	$	(9	)	$	273
Nine months ended September 30, 2018
Allowance for doubtful accounts	$	237	$	34	$	(3	)	$	268

Contract Assets

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

$0.9

million at

September 30, 2019

and

$0.6

million at

December 31, 2018.

The following table presents changes in our contract assets during the

three

and

nine

months ended

September 30, 2019

and

2018

(in thousands):

			Unbilled
	Balance at		Membership					Balance at
	Beginning of Period		Dues		Billings			End of Period
Three months ended September 30, 2019
Contract Assets:
Unbilled membership dues receivable	$	1,101	$	284	$	(532	)	$	853
Three months ended September 30, 2018
Contract Assets:
Unbilled membership dues receivable	$	1,009	$	184	$	(419	)	$	774
Nine months ended September 30, 2019
Contract Assets:
Unbilled membership dues receivable	$	554	$	1,813	$	(1,514	)	$	853
Nine months ended September 30, 2018
Contract Assets:
Unbilled membership dues receivable	$	580	$	1,475	$	(1,281	)	$	774

Contract Liabilities

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 performance obligation. We classify deferred membership dues revenue as current based on the timing of when we expect to recognize revenue for the membership commitment based on the Company satisfying the stand ready performance obligation throughout the annual membership period. The unrecognized or deferred revenues related to membership dues in our Condensed Consolidated Balance Sheets at

September 30, 2019

and

December 31, 2018

were

$3.9

million and

$2.9

million, respectively. Customer advance deposits are recorded as a liability until the goods or services are provided to the customer. Generally, customer advances, and corresponding performance obligation are satisfied within

12

months of the date of receipt of advance payment. The unrecognized revenues related to customer advance deposits are recorded in “Other liabilities and accrued expenses” in our Condensed Consolidated Balance Sheets. Customer advance deposits were approximately

$

0.5

million at both

September 30, 2019

and

December 31, 2018.

The following table presents changes in our contract liabilities during the

three

and

nine

months ended

September 30, 2019

and

2018

(in thousands):

	Balance at				Revenue			Balance at
	Beginning of Period		Billings		Recognized			End of Period
Three months ended September 30, 2019
Contract Liabilities:
Deferred membership dues revenue	$	4,497	$	831	$	(1,474	)	$	3,854
Customer advance deposits	$	556	$	438	$	(487	)	$	507
Three months ended September 30, 2018
Contract Liabilities:
Deferred membership dues revenue	$	4,034	$	595	$	(1,278	)	$	3,351
Customer advance deposits	$	491	$	514	$	(582	)	$	423
Nine months ended September 30, 2019
Contract Liabilities:
Deferred membership dues revenue	$	2,899	$	5,175	$	(4,220	)	$	3,854
Customer advance deposits	$	453	$	1,100	$	(1,046	)	$	507
Nine months ended September 30, 2018
Contract Liabilities:
Deferred membership dues revenue	$	2,718	$	4,504	$	(3,871	)	$	3,351
Customer advance deposits	$	430	$	1,186	$	(1,193	)	$	423

XML

Note 13 - Business Segment Information

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note

13

.

Business Segment Information

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

Avalon’s golf and related operations segment consists of

four

golf courses and associated clubhouses which provide dining and banquet facilities, a hotel which provides lodging, dining, banquet and conference facilities, a 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, spa services and food and beverage sales.

Avalon does

not

have significant operations located outside the United States and, accordingly, geographical segment information is

not

presented.

For both the

nine

months ended

September 30, 2019

and

2018,

no

one

customer accounted for

10%

of Avalon’s consolidated or reportable segment net operating revenues.

The accounting policies of the segments are consistent with those described for the consolidated financial statements in the summary of significant accounting policies included in Avalon’s

2018

Annual Report to Shareholders. Avalon measures segment profit for internal reporting purposes as income (loss) before taxes.

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net operating revenues from:
Waste management services:
External customer revenues	$	11,572		$	12,557		$	35,908		$	32,525
Intersegment revenues		-			-			-			-
Total waste management services		11,572			12,557			35,908			32,525
Golf and related operations:
External customer revenues		6,446			5,591			15,143			13,844
Intersegment revenues		10			15			45			57
Total golf and related operations		6,456			5,606			15,188			13,901
Segment operating revenues		18,028			18,163			51,096			46,426
Intersegment eliminations		(10	)		(15	)		(45	)		(57	)
Total net operating revenues	$	18,018		$	18,148		$	51,051		$	46,369
Income (loss) before income taxes:
Waste management services	$	1,074		$	1,244		$	3,295		$	2,768
Golf and related operations		100			455			(363	)		455
Segment income before income taxes		1,174			1,699			2,932			3,223
Corporate interest expense		(203	)		(154	)		(551	)		(474	)
Corporate other income, net		3			1			51			14
General corporate expenses		(810	)		(741	)		(2,379	)		(2,318	)
Income before income taxes	$	164		$	805		$	53		$	445

	September 30,			December 31,
	2019			2018
Identifiable assets:
Waste management services	$	29,107		$	27,383
Golf and related operations		55,297			48,074
Corporate		49,925			47,394
Subtotal		134,329			122,851
Elimination of intersegment receivables		(63,270	)		(58,082	)
Total	$	71,059		$	64,769

In comparing the total assets at

September 30, 2019

with those at

December 31, 2018,

the increase in the total assets of the waste management services segment of

$1.7

million is primarily a result of an increase in intersegment transactions, which are eliminated in consolidation, and to a lesser extent, the right-of-use assets relating to operating leases partially offset by a decrease in accounts receivable. The increase in total assets of the golf and related operations segment of

$7.2

million was primarily due to capital expenditures related to the expansion of The Grand Resort, the real property acquired relating to New Castle Country Club, the right-of-use assets related to operating leases, and an increase in accounts receivable, partially offset by current year depreciation on property and equipment. The increase in corporate total assets of approximately

$2.5

million is primarily due to an increase in intersegment transactions, which are eliminated in consolidation.

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net operating revenues:
Operating revenues	$ 18,018	$ 18,148	$ 51,051	$ 46,369
Costs and expenses:
Depreciation and amortization expense	630	732	1,848	2,187
Selling, general and administrative expenses	2,379	2,297	6,990	6,737
Operating income	345	927	396	739
Other income (expense):
Interest expense	(222)	(167)	(600)	(512)
Other income, net	41	45	257	218
Income before income taxes	164	805	53	445
Provision for income taxes	38	52	135	112
Net income (loss)	126	753	(82)	333
Less net loss attributable to non-controlling interest in subsidiary	(18)	(96)	(67)	(340)
Net income (loss) attributable to Avalon Holdings Corporation common shareholders	$ 144	$ 849	$ (15)	$ 673
Income (loss) per share attributable to Avalon Holdings Corporation common shareholders:
Basic net income (loss) per share (in dollars per share)	$ 0.04	$ 0.22	$ 0	$ 0.18
Diluted net income (loss) per share (in dollars per share)	$ 0.04	$ 0.21	$ 0	$ 0.17
Weighted average shares outstanding - basic (in shares)	3,875,431	3,803,331	3,875,431	3,803,331
Weighted average shares outstanding - diluted (in shares)	3,893,000	4,049,000	3,875,000	3,895,000
Waste Management Services [Member]
Net operating revenues:
Operating revenues	$ 11,572	$ 12,557	$ 35,908	$ 32,525
Costs and expenses:
Operating costs	9,229	9,863	28,773	25,615
Golf and Related Operations [Member]
Net operating revenues:
Operating revenues	6,446	5,591	15,143	13,844
Costs and expenses:
Operating costs	4,266	3,337	10,361	8,700
Golf and Related Operations [Member] | Food and Beverage [Member]
Net operating revenues:
Operating revenues	2,587	2,285	6,027	5,531
Costs and expenses:
Operating costs	1,169	992	2,683	2,391
Golf and Related Operations [Member] | Product and Service, Other [Member]
Net operating revenues:
Operating revenues	$ 3,859	$ 3,306	$ 9,116	$ 8,313

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income (loss)	$ (82)	$ 333
Reconciliation of net income (loss) to cash provided by operating activities:
Depreciation and amortization expense	1,848	2,187
Amortization of debt issuance costs	25	22
Compensation costs - stock options	4	5
Provision for losses on accounts receivable	27	34
Gain from disposal of vehicle	(45)	(17)
Change in operating assets and liabilities, net of effect of acquisition
Accounts receivable	1,175	(1,462)
Unbilled membership dues receivable	(299)	(194)
Inventories	(33)	(31)
Prepaid expenses	(124)	(49)
Other assets	(6)	(4)
Accounts payable	(667)	1,338
Accrued payroll and other compensation	152	281
Accrued income taxes	22	30
Other accrued taxes	(47)	(45)
Deferred membership dues revenue	955	613
Other liabilities and accrued expenses	194	103
Net cash provided by operating activities	3,099	3,144
Cash flows from investing activities:
Capital expenditures	(5,689)	(2,012)
Proceeds from disposal of vehicle	45	17
Net cash used in investing activities	(5,734)	(3,264)
Cash flows from financing activities:
Proceeds under term loan facility	3,000
Payments of debt issuance costs	(47)	(5)
Principal payments on term loan facilities	(533)	(422)
Borrowings under line of credit facility	575
Repayment under line of credit facility	(134)
Principal payments on finance lease obligations	(192)	(178)
Net cash provided by (used in) financing activities	2,669	(605)
Increase (decrease) in cash, cash equivalents and restricted cash	34	(725)
Cash, cash equivalents and restricted cash at beginning of period	1,908	3,851
Cash, cash equivalents and restricted cash at end of period	1,942	3,126
Significant non-cash operating and investing activities:
Capital expenditures included in accounts payable	743	585
Significant non-cash investing and financing activities:
Operating lease right-of-use assets in exchange for lease obligaitons	1,807
Finance lease obligations incurred	33	77
Acquisition of New Castle Country Club real property in exchange for the assumption of outstanding debt	787
Cash paid during the period for interest	556	490
Cash paid during the period for income taxes	113	82
Boardman Tennis Center [Member]
Cash flows from investing activities:
Acquisition of property		(1,269)
New Castle Country Club [Member]
Cash flows from investing activities:
Acquisition of property	$ (90)

XML

Note 1 - Description of Business (Details Textual)	9 Months Ended
	Sep. 30, 2019
Golf and Related Operations [Member]
Number of Golf Courses	4

XML

Note 5 - Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue from Contract with Customer, Excluding Assessed Tax, Total	$ 18,018	$ 18,148	$ 51,051	$ 46,369
Waste Management Services [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	11,572	12,557	35,908	32,525
Waste Management Services [Member] | Waste Brokerage And Management Services Member
Revenue from Contract with Customer, Excluding Assessed Tax, Total	10,867	12,009	33,853	30,779
Waste Management Services [Member] | Captive Landfill Management Operations [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	705	548	2,055	1,746
Golf and Related Operations [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	6,446	5,591	15,143	13,844
Golf and Related Operations [Member] | Food and Beverage [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	2,587	2,285	6,027	5,531
Golf and Related Operations [Member] | Membership Dues [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	1,474	1,278	4,220	3,871
Golf and Related Operations [Member] | Room Rental [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	814	739	1,808	1,781
Golf and Related Operations [Member] | Green Fees and Cart Rental [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	1,098	865	1,755	1,460
Golf and Related Operations [Member] | Other Revenue [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	$ 473	$ 424	$ 1,333	$ 1,201

XML

Note 14 - Certain Relationships and Related Transactions (Details Textual) - USD ($) $ in Millions	12 Months Ended	24 Months Ended
	Dec. 31, 2013	Dec. 31, 2014	Sep. 30, 2019	Dec. 31, 2018
Investment in Subsidiary [Member] | Management and Accredited Investors [Member]
Related Party Transaction, Amounts of Transaction		$ 1.0
AWMS Holdings, LLC [Member]
Equity Method Investments	$ 3.4	$ 3.4
Proceeds from Issuance of Private Placement	$ 3.8
Equity Method Investment, Ownership Percentage			47.00%	47.00%

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Note 11 - Long-term Incentive Plan - Stock Option Activity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2019
Outstanding outstanding (in shares)	688,000
Weighted average exercise price, options outstanding (in dollars per share)	$ 2.52
Weighted average fair value at grant date, options outstanding (in dollars per share)	$ 1
Options granted (in shares)
Weighted average exercise price, options granted (in dollars per share)
Options exercised (in shares)
Weighted average exercise price, options exercised (in dollars per share)
Options cancelled or forfeited (in shares)
Weighted average exercise price, options cancelled or forfeited (in dollars per share)
Outstanding outstanding (in shares)	688,000
Weighted average exercise price, options outstanding (in dollars per share)	$ 2.52
Weighted average fair value at grant date, options outstanding (in dollars per share)	$ 1
Options Vested (in shares)	652,000
Weighted average exercise price, options vested (in dollars per share)	$ 2.56
Weighted average fair value at grant date, options vested (in dollars per share)	$ 1.03
Options exercisable (in shares)	634,000
Weighted average exercise price, options exercisable (in dollars per share)	$ 2.58
Weighted average fair value at grant date, options exercisable (in dollars per share)	$ 1.05

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Note 12 - Legal Matters

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Legal Matters and Contingencies [Text Block]

Note

12

. Legal Matters

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

15

).

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Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 1,942	$ 1,406
Accounts receivable, less allowance for doubtful accounts of $273 at September 30, 2019 and $255 at December 31, 2018	10,995	12,197
Unbilled membership dues receivable	853	554
Inventories	853	820
Prepaid expenses	766	622
Other current assets	26	31
Total current assets	15,435	15,630
Property and equipment, net	48,219	42,534
Property and equipment under finance leases, net	5,854	6,068
Operating lease right-of-use assets	1,505
Restricted cash		502
Noncurrent deferred tax asset	8	8
Other assets, net	38	27
Total assets	71,059	64,769
Liabilities and Equity
Current portion of long-term debt	782	578
Current portion of obligations under finance leases	250	236
Current portion of obligations under operating leases	528
Accounts payable	10,530	10,454
Accrued payroll and other compensation	1,024	872
Accrued income taxes	106	84
Other accrued taxes	358	405
Deferred membership dues revenue	3,854	2,899
Other liabilities and accrued expenses	987	793
Total current liabilities	18,419	16,321
Long-term debt, net of current portion	13,058	10,167
Line of credit	575
Obligations under finance leases, net of current portion	515	688
Obligations under operating leases, net of current portion	977
Asset retirement obligation	100	100
Equity:
Paid-in capital	59,145	59,141
Accumulated deficit	(21,716)	(21,701)
Total Avalon Holdings Corporation Shareholders' Equity	37,468	37,479
Non-controlling interest in subsidiary	(53)	14
Total equity	37,415	37,493
Total liabilities and equity	71,059	64,769
Common Class A [Member]
Equity:
Common Stock	33	33
Common Class B [Member]
Equity:
Common Stock	$ 6	$ 6

XML

Note 1 - Description of Business

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

Note

1.

Description of Business

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 Resorts and Clubs, Inc. (“ARCI”), which includes the operation and management of

four

golf courses and associated clubhouses, athletic and fitness centers, tennis courts, salon and spa services, dining and banquet facilities and a travel agency. ARCI also owns and operates a hotel and related resort amenities including dining, banquet and conference facilities, fitness center, indoor junior Olympic size swimming pool and tennis courts. In the

third

quarter of

2019,

The Avalon Inn, which includes the hotel and related resort amenities was renamed The Grand Resort.

XML

Note 8 - Basic and Diluted Net Loss Per Share

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

Note

8

.

Basic and Diluted

Net

Income

(

Loss

)

p

er Share

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

three

and

nine

months ended

September 30, 2019

and

2018,

the weighted average number of common shares outstanding was

3,875,431

and

3,803,331

,

respectively.

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

For the

three

months ended

September 30, 2019

and

2018,

the diluted weighted average number of shares outstanding was

3,892,948

and

4,048,683,

respectively. For the

nine

months ended

September 30, 2019,

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

months ended

September 30, 2019

was

3,909,706.

For the

nine

months ended

September 30, 2018,

the diluted weighted average number of shares outstanding was

3,895,129.

XML

Note 4 - Cash, Cash Equivalents and Restricted Cash

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Cash and Cash Equivalents Disclosure [Text Block]

Note

4.

Cash, Cash Equivalents and Restricted Cash

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

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 expansion of The Grand Resort in accordance with the provisions of the loan and security agreements (See Note

9

).

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

September 30, 2019

and

December 31, 2018 (

in thousands):

	September 30,		December 31,
	2019		2018
Cash and cash equivalents	$	1,942	$	1,406
Restricted cash		-		502
Cash, cash equivalents and restricted cash	$	1,942	$	1,908

XML

Note 3 - Recent Accounting Pronouncements (Details Textual) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Operating Lease, Liability, Total	$ 1,505
Operating Lease, Right-of-Use Asset	$ 1,505
Accounting Standards Update 2016-02 [Member]
Operating Lease, Liability, Total		$ 1,700
Operating Lease, Right-of-Use Asset		$ 1,700

XML

Note 5 - Revenues - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Allowance for doubtful accounts, Balance	$ 267	$ 263	$ 255	$ 237
Provision for losses on accounts receivable	9	11	27	34
Write-offs	(3)		(9)
Allowance for doubtful accounts, Balance	$ 273	268	$ 273	268
Recoveries		$ (6)		$ (3)

XML

Note 6 - Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	September 30,			December 31,
	2019			2018
Land and land improvements	$	14,612		$	14,231
Buildings and improvements		42,413			36,185
Machinery and equipment		4,869			4,508
Office furniture and fixtures		6,964			6,458
Vehicles		499			455
Construction in progress		2,084			2,569
		71,441			64,406
Less accumulated depreciation and amortization		(23,222	)		(21,872	)
Property and equipment, net	$	48,219		$	42,534

XML

Note 16 - Asset Acquisitions

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Asset Acquisition [Text Block]

Note

16.

Asset

Acquisition

s

Boardman Tennis Center property

On

March 7, 2018,

Avalon, through a newly created subsidiary, Avalon Mahoning Sports Center, Inc., completed the acquisition of the Boardman Tennis Center property in Boardman, Ohio for approximately

$1.3

million in cash. In accordance with our Term Loan Agreement, the Company withdrew funds from the restricted cash account for reimbursement for capital expenditures incurred in

2017

related to The Grand Resort that were paid with operating cash to fund the acquisition of the Boardman Tennis Center property. Subsequent to the acquisition, the Boardman Tennis Center property was named the Avalon Athletic Club at Boardman. The primary assets of the Avalon Athletic Club at Boardman include the acquired real property consisting of the building and associated land.

In the

third

quarter of

2018,

the Company began renovating the facility. The renovations include the conversion of the facility into a multipurpose recreation center including indoor tennis, basketball, volleyball and pickleball courts and a fitness area. The facilities interior renovations were completed in the

first

quarter of

2019.

The Avalon Athletic Club at Boardman is currently in operation. The operating results are included in the Company’s Condensed Consolidated Statements of Operations and within Avalon’s golf and related operations segment from the date of acquisition. The net operating revenues and results of operations related to the Avalon Athletic Club at Boardman from the period of acquisition are

not

significant and, accordingly, are

not

provided.

The acquisition of the facility and its associated subsequent renovation is consistent with the Company’s athletics and fitness business strategy. Members of the Avalon Golf and Country Club have access to the facility and all the athletic and fitness related activities offered by the Avalon Athletic Club at Boardman. In addition, hotel guests at The Grand Resort can utilize the facility during their stay. The Avalon Athletic Club at Boardman earns revenue through membership fees, athletic and fitness related activities.

The Company accounted for the acquisition of the Avalon Athletic Club at Boardman in accordance with ASU

2017

-

01.

In accordance with ASU

2017

-

01,

the Company evaluated whether to account for the transaction as either a business or asset acquisition. The Company determined that all of the fair value of the gross assets acquired was concentrated in the real property. In accordance with the guidance, assets that are attached to each other, such as land and a building residing on the land which cannot be physically removed and used separately from each other without incurring significant cost are considered to be a single identifiable asset. In accordance with ASU

2017

-

01,

the Company accounted for the transaction as an asset acquisition as all of the value of the gross assets acquired resides in that single asset.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the transaction date (in thousands):

Assets acquired:
Building and land	$	1,302
Total assets acquired:		1,302
Liabilities assumed:
Accrued liabilities		33
Total liabilities assumed		33
Total consideration	$	1,269

New Castle Country Club property

On

May 13, 2019,

Havana Cigar Shop, Inc., a wholly owned subsidiary of Avalon, entered into an asset Purchase and Sale Agreement with New Castle Country Club (“the Club”) for the purchase of the real property assets associated with the Club. Havana Cigar Shop, Inc. concurrently entered into an Assignment and Assumption and Commercial Loan Modification Agreement with Mercer County State Bank for the outstanding debt under the Club’s Commercial Mortgage and Demand Line of Credit, as amended, (collectively the “Agreements”) at closing as consideration for the purchase of the real property of the Club. The total amount of outstanding debt under the Agreements assumed by Havana Cigar Shop, Inc., at closing was approximately

$0.8

million (See Note

9

).

Subsequent to the asset Purchase and Sale Agreement, Havana Cigar Shop, Inc. was named The Avalon Field Club at New Castle. The Avalon Field Club at New Castle is currently in operation. The operating results are included in the Company’s Condensed Consolidated Statements of Operations and within Avalon’s golf and related operations segment from the date of acquisition. The net operating revenues and results of operations related to The Avalon Field Club at New Castle from the period of acquisition are

not

significant and, accordingly, are

not

provided.   

The acquisition is consistent with the Company’s golf operations business strategy as members of the Avalon Golf and Country Club have access to all the golf and related country club activities offered by The Avalon Field Club at New Castle. In addition, hotel guests at The Grand Resort can utilize the facility during their stay. The Avalon Field Club at New Castle earns revenue through membership dues, food, beverage and merchandise sales, greens fees and associated cart rentals.

The Company accounted for the acquisition of The Avalon Field Club at New Castle in accordance with ASU

2017

-

01.

In accordance with ASU

2017

-

01,

the Company evaluated whether to account for the transaction as either a business or asset acquisition. The Company determined that all of the fair value of the gross assets acquired was concentrated in the real property. In accordance with the guidance, assets that are attached to each other, such as land and a building residing on the land which cannot be physically removed and used separately from each other without incurring significant cost are considered to be a single identifiable asset. In accordance with ASU

2017

-

01,

the Company accounted for the transaction as an asset acquisition as all of the value of the gross assets acquired resides in that single asset.

In accordance with ASU

2017

-

01,

the Company capitalized approximately

$67,000

of transaction costs as a component of the cost of the real property assets acquired.

The Avalon Field Club also assumed the remaining term of the Club’s golf cart operating lease. At acquisition the Company recorded an operating lease right-of-use asset and corresponding obligation under operating leases of approximately

$

126,000

.

The golf cart operating lease had a remaining lease term of

3

years at the acquisition date.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the transaction date (in thousands):

Assets acquired:
Building and land	$	854
Operating lease right-of-use assets		126
Prepaid real estate taxes		23
Total assets acquired:		1,003
Liabilities assumed:
Commercial mortgage		653
Demand line of credit		134
Obligations under operating leases		126
Total liabilities assumed		913
Total consideration	$	90

XML

Note 7 - Leases - Financing Leases Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Leased property under finance leases	$ 11,604	$ 11,442
Less accumulated amortization	(5,750)	(5,374)
Leased property under finance leases, net	5,854	6,068
Less: current portion of obligations under leases	250	236
Long-term portion of obligations under leases	515	688
Total obligations under finance leases	$ 765	$ 924

XML

Note 9 - Term Loans and Line of Credit Agreements (Details Textual) - USD ($)					2 Months Ended	3 Months Ended		9 Months Ended
	May 13, 2019	Mar. 29, 2019	May 31, 2018	Dec. 20, 2016	Jun. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Long-term Debt, Gross						$ 14,018,000		$ 14,018,000
Repayments of Lines of Credit								134,000
Restricted Cash and Cash Equivalents, Noncurrent, Total										$ 502,000
Debt Issuance Costs, Net, Total						178,000		178,000
Restricted Cash and Investments, Noncurrent, Total		$ 3,000,000
Long-term Line of Credit, Noncurrent						$ 575,000		$ 575,000
Long-term Debt, Weighted Average Interest Rate, over Time						5.53%	5.35%	5.48%	5.35%
Term Loan Agreement [Member]
Long-term Debt, Gross						$ 10,454,000		$ 10,454,000		10,898,000
Debt Issuance Costs, Net, Total						$ 139,000		$ 139,000		153,000
Term Loan Agreement [Member] | Laurel Capital Corporation [Member]
Long-term Debt, Gross				$ 12,000,000
Restricted Cash and Cash Equivalents, Noncurrent, Total				$ 2,900,000						500,000
Debt Instrument, Periodic Payment, Number of Payments				119
Debt Instrument, Maturity Schedule				15 years
Debt Instrument, Interest Rate, Stated Percentage, First Five Years				5.35%
Debt Instrument, Interest Rate, Stated Percentage, After Year Five, if Greater Than Sum of Index Rate and 3.95%				5.35%
Debt Instrument, Interest Rate, Stated Percentage, After Year Five, Plus Index Rate, if Greater Than 5.35%				3.95%
Debt Instrument, Maximum Interest Rate, Years Six Through Ten				7.50%
Debt Instrument, Prepayment Penalty, Percentage, First Five Years				5.00%
Debt Instrument, Prepayment Penalty, Percentage, Years Six and Seven				4.00%
Debt Instrument, Prepayment Penalty, Percentage, Years Eight and Nine				3.00%
Debt Instrument, Prepayment Penalty, Percentage, Year Ten				2.00%
Debt Issuance Costs, Net, Total				$ 191,000
The Line of Credit Agreement [Member] | Home Savings Bank [Member]
Repayments of Lines of Credit				$ 9,100,000
Line of Credit Facility, Maximum Borrowing Capacity			$ 5,000,000
Long-term Line of Credit, Total			0
Line of Credit Facility, Interest Rate at Period End						5.25%		5.25%
Line of Credit Facility, Amounts in Excess of, Subject to Borrowing Base			$ 1,000,000
Long-term Line of Credit, Noncurrent						$ 575,000		$ 575,000		$ 0
The Line of Credit Agreement [Member] | Home Savings Bank [Member] | Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate			0.25%
The 2019 Term Loan Agreement [Member]
Long-term Debt, Gross						2,934,000		2,934,000
Debt Issuance Costs, Net, Total						39,000		39,000
The 2019 Term Loan Agreement [Member] | Laurel Capital Corporation [Member]
Long-term Debt, Gross		$ 3,000,000
Debt Instrument, Periodic Payment, Number of Payments		92
Debt Instrument, Maturity Schedule		15 years
Debt Instrument, Interest Rate, Stated Percentage, First Five Years		6.25%
Debt Instrument, Maximum Interest Rate, Years Six Through Ten		8.50%
Debt Instrument, Prepayment Penalty, Percentage, First Five Years		5.00%
Debt Issuance Costs, Net, Total		$ 42,000
Debt Instrument, Interest Rate, Stated Percentage, After Year Five, if Greater Than Sum of Index Rate and 3.60%		6.25%
Debt Instrument, Interest Rate, Stated Percentage, After Year Five, Plus Index Rate, If Greater Than 6.25%		3.60%
Debt Instrument, Prepayment Penalty, Percentage, Years Six, Seven, And Eight		2.00%
New Castle Country Club Commercial Mortgage [Member]
Long-term Debt, Gross						630,000		630,000
Debt Issuance Costs, Net, Total
New Castle Country Club Commercial Mortgage [Member] | Mercer County State Bank [Member]
Long-term Debt, Gross	$ 653,000
Debt Instrument, Periodic Payment, Number of Payments	110
Debt Instrument, Face Amount	$ 950,000
Debt Instrument, Periodic Payment, Total	$ 7,573
Debt Instrument, Interest Rate, Stated Percentage	5.50%
Debt Instrument, Stated Percentage, After June 21, 2023	4.25%
New Castle Country Club Commercial Mortgage [Member] | Mercer County State Bank [Member] | Prime Rate [Member]
Debt Instrument, Basis Spread On Variable Rate, After June 21, 2023	0.50%
New Castle Country Club Commercial Demand Line of Credit [Member] | Mercer County State Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 150,000
Long-term Line of Credit, Total	$ 134,000
Proceeds from Lines of Credit, Total					$ 0
Line of Credit Facility, Interest Rate at Period End						5.50%		5.50%
New Castle Country Club Commercial Demand Line of Credit [Member] | Mercer County State Bank [Member] | Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	0.50%

XML

Note 16 - Asset Acquisitions - Assets Acquired and Liabilities Assumed in New Caste Country Club Acquisition (Details) - New Castle Country Club [Member] $ in Thousands	May 13, 2019 USD ($)
Building and land	$ 854
Operating lease right-of-use assets	126
Prepaid real estate taxes	23
Total assets acquired:	1,003
Commercial mortgage	653
Demand line of credit	134
Obligations under operating leases	126
Total liabilities assumed	913
Total consideration	$ 90