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<SEC-DOCUMENT>0000950132-01-000184.txt : 20010323
<SEC-HEADER>0000950132-01-000184.hdr.sgml : 20010323
ACCESSION NUMBER:		0000950132-01-000184
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010322

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AVALON HOLDINGS CORP
		CENTRAL INDEX KEY:			0001061069
		STANDARD INDUSTRIAL CLASSIFICATION:	REFUSE SYSTEMS [4953]
		IRS NUMBER:				341863889
		STATE OF INCORPORATION:			OH
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K405
		SEC ACT:		
		SEC FILE NUMBER:	001-14105
		FILM NUMBER:		1575282

	BUSINESS ADDRESS:	
		STREET 1:		ONE AMERICAN WAY
		CITY:			WARREN
		STATE:			OH
		ZIP:			44484
		BUSINESS PHONE:		3308568800
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM10-K405
<TEXT>

<PAGE>

                                      2000
================================================================================

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                        ______________________________

                                   FORM 10-K

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

                  For the fiscal year ended December 31, 2000

    [_] 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                       (I.R.S. Employer
 of incorporation or organization)                   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:

                                                          Name of Each Exchange
           Title of Each Class                             on Which Registered
           -------------------                             -------------------

Class A Common Stock, $.01 par value                     American Stock Exchange


       Securities registered pursuant to Section 12(g) of the Act: None



Indicate by 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

The aggregate market value of Class A Common Stock held by non-affiliates of the
registrant on February 9, 2001 was $10.3 million. Assuming that the market value
of Avalon Holdings Corporation's Class B Common Stock was the same as its Class
A Common Stock by reason of its one-to-one conversion rights, the market value
of Class B Common Stock held by non-affiliates of the registrant on February 9,
2001 was approximately $4,900. The registrant had 3,185,240 shares of its Class
A Common Stock and 618,091 shares of its Class B Common Stock outstanding as of
March 2, 2001.

                      Documents Incorporated by Reference

1. Portions of the Avalon Holdings Corporation Annual Report to Shareholders for
   the year ended December 31, 2000 (Parts I and II of Form 10-K).
2. Portions of the Avalon Holdings Corporation Proxy Statement dated March 22,
   2001 (Part III of Form 10-K).

================================================================================
<PAGE>

                 AVALON HOLDINGS CORPORATION AND SUBSIDIARIES
                       _________________________________

As used in this report, the terms "Avalon," "Company," and "Registrant" mean
Avalon Holdings Corporation and its wholly owned subsidiaries, taken as a whole,
unless the context indicates otherwise.

                       _________________________________

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
Part I                                                                      Page
                                                                            ----
<S>                                                                         <C>
 Item 1.  Business.........................................................   1
 Item 2.  Properties.......................................................   6
 Item 3.  Legal Proceedings................................................   6
 Item 4.  Submission of Matters to a Vote of Security Holders..............   7


Part II

 Item 5.  Market for the Registrant's Common Equity and Related
          Stockholder Matters..............................................   8
 Item 6.  Selected Financial Data..........................................   8
 Item 7.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations........................................   8
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.......   8
 Item 8.  Financial Statements and Supplementary Data......................   8
 Item 9.  Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure.............................................   8


Part III

 Item 10. Directors and Executive Officers of the Registrant...............   9
 Item 11. Executive Compensation...........................................  10
 Item 12. Security Ownership of Certain Beneficial Owners and Management...  10
 Item 13. Certain Relationships and Related Transactions...................  10


Part IV

 Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.  11


Signatures.................................................................  13
</TABLE>

                      Note on Incorporation by Reference


Throughout this report various information and data are incorporated by
reference from Avalon's 2000 Annual Report to Shareholders (hereinafter referred
to as the "Annual Report to Shareholders"). Any reference in this report to
disclosures in the Annual Report to Shareholders shall constitute incorporation
by reference of that specific material into this Form 10-K.
<PAGE>

                                    PART 1

ITEM 1. BUSINESS

Spin-off
- --------

  Pursuant to the terms of a Contribution and Distribution Agreement dated as of
May 7, 1998 between Avalon and American Waste Services, Inc. ("AWS"), AWS
contributed to Avalon its transportation operations, technical environmental
services operations, waste disposal brokerage and management operations, and
golf course and related operations together with certain other assets including
the headquarters of AWS and certain accounts receivable. In connection with the
contribution, Avalon assumed certain liabilities of AWS including, without
limitation, liabilities relating to the termination of employment of certain
employees of AWS and costs and potential liabilities relating to a certain legal
proceeding. 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 (the "Spin-off").

General
- -------

  Avalon was incorporated in Ohio on April 30, 1998 solely for the purpose of
effecting the Spin-off. Avalon is a holding company which owns subsidiaries that
historically performed the transportation operations, technical environmental
services operations, waste disposal brokerage and management operations and golf
course and related operations of AWS.

  In January 1990, AWS acquired Avalon's transportation companies: DartAmericA,
Inc. and its subsidiaries which provide hazardous and nonhazardous waste
transportation, transportation of general and bulk commodities, and
transportation brokerage and management services; and Envirco Transportation
Management, Inc., a waste transportation brokerage and management business.
These companies became subsidiaries of Avalon as a result of the Spin-off.

  In June 1990, AWS purchased approximately 5.6 acres of real estate located in
Warren, Ohio on which it constructed Avalon's 26,000 square foot office building
to serve as its corporate headquarters. In connection with the acquisition of
such property, Avalon Lakes Golf, Inc. ("ALGI") acquired the real and personal
property associated with the Avalon Lakes Golf Course, an 18-hole public golf
course adjacent to the office property. ALGI became a subsidiary of Avalon as a
result of the Spin-off.

  In October 1990, AWS acquired Avalon's environmental consulting, laboratory
and remediation companies: Earth Sciences Consultants, Inc., Antech Ltd., and
AWS Remediation, Inc. These technical environmental services firms are referred
to collectively as the "Earth Sciences Companies." The Earth Science Companies
became subsidiaries of Avalon as a result of the Spin-off.

  During 1995, American Waste Management Services, Inc., a subsidiary of AWS,
commenced its waste disposal brokerage and management operations. This company
became a subsidiary of Avalon as a result of the Spin-off.

  During the third quarter of 1997, a newly organized subsidiary of AWS,
American Landfill Management, Inc., started its captive landfill management
operations. This company became a subsidiary of Avalon as a result of the Spin-
off.

Business Segments Information
- -----------------------------

  Avalon's business segments are transportation services, technical
environmental services, waste disposal brokerage and management services, and
golf and related operations. The transportation services, technical
environmental services and waste disposal brokerage and management services are
provided to industrial, commercial, municipal and governmental customers
primarily in selected northeastern and midwestern United States markets and are
therefore somewhat seasonal in nature. Avalon's transportation services segment
provides transportation of hazardous and nonhazardous waste, transportation of
general and bulk commodities and the brokerage and management of transportation
services. For the years 2000, 1999 and 1998, the net operating

                                       1
<PAGE>

revenues of the transportation services segment represented approximately 48%,
45% and 46%, respectively, of Avalon's total segments' net operating revenues.
Avalon's technical environmental services segment provides environmental
consulting, engineering, site assessments, analytical laboratory, remediation
and captive landfill management services. For the years 2000, 1999 and 1998, the
net operating revenues of the technical environmental services segment
represented approximately 28%, 32% and 31%, respectively, of Avalon's total
segments' net operating revenues. Avalon's waste disposal brokerage and
management services segment provides hazardous and nonhazardous waste disposal
brokerage and management services. For the years 2000, 1999 and 1998, the net
operating revenues of the waste disposal brokerage and management services
segment represented approximately 23%, 21% and 18%, respectively, of Avalon's
total segments' net operating revenues. Avalon's golf course and related
operations segment operates an 18-hole public golf course and travel agency. For
the years 2000, 1999 and 1998, the net operating revenues of the golf and
related operations segment represented approximately 1%, 2%, and 3%,
respectively, of Avalon's total segments' net operating revenues.

Transportation Services

  Avalon's transportation subsidiaries transport waste and other materials on
behalf of customers within the United States and portions of Canada and provide
transportation brokerage and management services, as well as intermodal
transportation services. The transportation operations have the equipment and
the expertise to transport virtually all types of waste and most commodity
products.

  DartAmericA, Inc. through its subsidiaries (collectively, "Dart"),
headquartered in Warren, Ohio, is engaged in the transportation of waste and is
a common carrier of both general and bulk commodities. Dart, which commenced
operations in 1965, also engages in the brokerage and management of
transportation.

  Dart is a fully licensed hazardous and nonhazardous waste carrier.
Approximately 79%, 72% and 65% of the revenue generated by Dart in 2000, 1999
and 1998, respectively, related to the transportation of waste. Hazardous waste
represented 37%, 56% and 63% of Dart's waste transportation revenues in 2000,
1999 and 1998, respectively.

  Dart, which is licensed as a common carrier in 49 states and several provinces
of Canada, derived 21%, 28% and 35% of its revenues in 2000, 1999 and 1998,
respectively, from the transportation of bulk commodities, such as coal, salt,
sand, ash, steel products and heavy machinery. A common carrier engaged in the
transportation of goods owned by others is subject to federal and state
regulations which establish operating and safety standards. Carriers are liable
for loss of or damage to goods entrusted to their care. Public liability and
property damage insurance is compulsory.

  A majority of the truck power units and a substantial number of the trailers
used by Dart are owned and operated by independent truckers who receive a
negotiated percentage of the gross revenue from carriage. Most of the
approximately 70 to 90 independent truckers who regularly provide services for
Dart have been doing so for a number of years. These independent truckers pay
for fuel and all other expenses with the exception of automotive liability
insurance, hazardous waste permits, special equipment required to carry
hazardous waste and other safety equipment, all of which are provided by Dart.
Equipment used by the independent truckers is inspected at least annually and is
subject to random inspections by Dart. See Item 2--"Properties."

  Waste is transported by roll-off trailers, specialized tankers, van trailers,
dump trailers or flatbed trailers to treatment and disposal facilities. Dart
leases roll-off containers to customers which fill the containers with waste as
it is generated. Using specially designed trailers, Dart periodically picks up
and replaces the containers, which it transports to approved facilities for
disposal. See Item 2--"Properties."

  Dart also provides transportation brokerage and management services to a
variety of customers. Dart maintains lists of approved transporters, which it
periodically reviews and updates, and Dart will only engage transporters that it
believes are reliable and efficient in providing the services required in
accordance with Dart's standards. Subsequent to the Spin-off, the waste
transportation brokerage and management operations of Envirco Transportation
Management, Inc. were consolidated with the operations of Dart.

  During 2000, three customers of the transportation services segment accounted
for approximately 18%, 12% and 12%, respectively, of the segment's net operating
revenues to external customers.

                                       2
<PAGE>

Technical Environmental Services

  The Earth Sciences Companies, headquartered in Export, Pennsylvania, provide a
wide range of technical environmental services, including environmental impact
studies, landfill design, permitting, site assessments, waste management and
minimization, consulting, laboratory services, site remediation, and
environmentally related construction activities, including removal of
underground storage tanks, conducting landfill closures and performing
decommissioning activities. These companies also provide hazardous and
nonhazardous waste management, groundwater remediation and underground storage
tank management. The Earth Sciences Companies are often engaged to perform a
remedial investigation/feasibility study ("RI/FS"), which first entails
performing a site assessment involving the gathering of samples from a
contaminated site, followed by laboratory analyses to establish or verify the
nature and extent of the contaminants. Alternative solutions to remedy the
particular problem are then developed, evaluated and presented to the client.
The Earth Sciences Companies are equipped to implement the mitigation and
decontamination program then selected by the client and approved by the
appropriate regulatory agency. When implementing such a program, the Earth
Sciences Companies may employ the transportation, management and/or brokerage
services of its affiliated companies. The Earth Sciences Companies also possess
the expertise to perform the evaluation and analysis necessary to advise clients
on compliance with federal and state environmental regulations, and have
assisted clients in developing waste management and compliance policies,
including the development of plans for waste minimization and disposal. The
Earth Sciences Companies also provide services related to the evaluation of the
environmental condition of real estate for law firms, banks or potential
purchasers, as well as expert environmental testimony in legal proceedings.

  The Earth Sciences Companies provide comprehensive organic, inorganic and
radiochemical laboratory services, including water and wastewater analyses,
waste characterization, sludge, soil and rock analyses and related bench studies
for wastewater treatment and process design.

  American Landfill Management, Inc. ("ALMI") is a landfill management company
that 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. ALMI provides turnkey services,
including daily operations, facilities management and management reporting for
its customers. Currently, ALMI manages one captive disposal facility located in
Ohio.

  During 2000, one customer of the technical environmental services segment
accounted for approximately 26.7% of the segment's net operating revenues to
external customers.

Waste Disposal Brokerage and Management Services


  American Waste Management Services, Inc. ("AWMS") assists customers with
managing and disposing of wastes at approved treatment and disposal sites based
upon a customer's needs.

  Because waste generators remain liable for their waste both before and after
disposal, they require assurance that their waste will be safely and properly
transported, treated and disposed of. To give customers this confidence, as well
as to limit its own potential liability, AWMS has instituted procedures designed
to minimize the risks of improper handling or disposal of waste.

  Prior to AWMS providing waste brokerage or management services, a potential
customer must complete a detailed questionnaire setting forth the amount,
chemical composition and any special characteristics for each separate waste to
be handled. Representative samples of the waste are analyzed by a state or
federally certified laboratory. In addition, an AWMS representative generally
inspects the process generating the waste, the location where the waste may be
temporarily stored or the site of the remediation project producing the waste,
and interviews representatives of the generator familiar with the waste. This
inspection, along with the laboratory results, allows AWMS to determine whether
the waste is within acceptable parameters for disposal and, if so, what special
handling and treatment procedures must be instituted. If the waste is
continuously generated, new representative samples are tested on a periodic
basis.

  These procedures are important to both AWMS and its customers since the key to
proper handling of waste is accurate identification. Hazardous waste which is
not identified as such and thus improperly disposed of can

                                       3
<PAGE>

result in substantial liability to the waste generator, the disposal facility,
AWMS and potentially to all other waste generators that have used the disposal
site. Conversely, waste that could safely and legally be disposed of in a solid
waste landfill but is instead sent to a hazardous waste facility for treatment
and disposal will result in substantial and unnecessary expense to the
generator.

Golf and Related Operations

  Avalon Lakes Golf, Inc. ("ALGI") owns and operates a travel agency and a Pete
Dye designed championship golf course located in Warren, Ohio. ALGI hosted a
Ladies Professional Golf Association ("LPGA") tournament event from 1994 through
2000. During the third quarter of 1999, ALGI closed the golf course to make
significant capital improvements to the course and related facilities. The golf
course resumed operations on a limited basis during the third quarter of 2000.
ALGI generates its revenue from greens fees, cart rentals, merchandise sales and
booking travel reservations. As a result of ALGI being located in northeast
Ohio, the public golf course is significantly dependent upon weather conditions
during the golf season.

Governmental Regulations

  In order to transport hazardous waste and, in certain cases, nonhazardous
solid waste, Avalon's transportation operations must possess and maintain one or
more state operating permits. These operating permits must be renewed annually
and are subject to modification and revocation by the issuing agency. In
addition, Avalon's waste transportation operations are subject to evolving and
expanding operational, monitoring and safety requirements.

  In the ordinary course of their operations, Avalon's subsidiaries may from
time to time receive citations, notices or comments from regulatory authorities
that such operations are not in compliance with applicable environmental
regulations. These agencies may seek to impose fines, or revoke or deny renewal
of operating permits or licenses, or require the remediation of environmental
problems resulting from Avalon's transportation or waste brokerage operations.
Upon receipt of such citations, notices or comments, the appropriate subsidiary
works with the authorities in an attempt to resolve the issues raised. Failure
to correct the problems to the satisfaction of the authorities could lead to
fines and/or a curtailment or cessation of certain operations.

  The federal government and numerous state and local governmental bodies are
increasingly considering, proposing or enacting legislation or regulations to
either restrict or impede the disposal and/or transportation of waste. A
significant portion of Avalon's disposal brokerage and transportation revenues
is derived from the disposal 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 significant negative effect on
Avalon. Avalon's transportation operations may also be affected by the trend
toward laws requiring the development of waste reduction and recycling or other
programs.

Sales and Marketing

  Avalon's sales and marketing approach is decentralized, with each operation
being responsible for its own sales and marketing efforts. Each operation
employs its own sales force which concentrates on expanding its business.

Competition

  The markets for the transportation of hazardous and nonhazardous waste and for
the transportation of general and bulk commodities are each highly competitive.
There are numerous participants, and no one transporter has a dominant market
share. Avalon competes primarily with other short and long-haul carriers for
both truckload and less than truckload shipments. Competition for the
transportation of waste is based on the ability of the carrier to transport the
waste at a competitive price and in accordance with applicable regulations.
Competition for the transportation of commodities is based primarily on price
and service. As is the case with any transportation company, Avalon's costs
depend on the price and availability of diesel fuel. During 2000 and continuing
into the first quarter of 2001, a substantial increase in fuel prices subjected
Avalon to increased operating expenses, which Avalon has not and will not be
able to entirely pass on to its customers.

                                       4
<PAGE>

  Avalon's technical environmental services operations compete with numerous
large and small companies, each of which is able to provide one or more of the
environmental services offered by Avalon and some of which have greater
financial resources. Avalon attempts to develop relationships with clients who
have an ongoing need for its integrated technical environmental services. The
availability of skilled technical personnel, the quality of performance and
service, and fees are the key competitive factors in developing such
relationships.

  The hazardous and nonhazardous waste disposal brokerage and management
business is highly competitive and fragmented. Avalon's waste disposal brokerage
and management business competes with other brokerage companies as well as with
companies which own treatment and disposal facilities. In addition to price,
knowledge and service are the key factors when competing for waste disposal
brokerage and management business.

  Avalon's waste disposal brokerage and management operations obtain and retain
customers by providing service and identifying cost-efficient disposal options
unique to a customer's needs. Continued consolidation within the solid waste
industry has resulted in reducing the number of disposal options available to
waste generators and has caused disposal pricing to increase. Avalon does not
believe that pricing changes alone will have a material effect upon its waste
disposal brokerage and management operations. However, consolidation will have
the effect of reducing the number of competitors offering disposal alternatives,
which may adversely impact the future financial performance of Avalon's waste
disposal brokerage and management operations.

  Avalon's golf course and related operations are located in Warren, Ohio and
the golf course is significantly dependent on weather conditions during the golf
season. The public golf course competes with many public and private courses in
the area.

Insurance

  Avalon carries $21,000,000 of comprehensive general liability insurance
coverage for Avalon and its subsidiaries (other than with respect to ALGI, which
has separate insurance). This policy includes coverage for automobile liability
(including a pollution liability endorsement which covers certain liabilities
from spills), comprehensive property damage and other customary coverage. Dart
self-insures collision risks. The Earth Sciences Companies also maintain
professional and contractors pollution liability coverages. No assurance can be
given that such insurance will be available in the future or, if available, that
the premiums for such insurance will be reasonable.

  If Avalon were to incur a substantial liability for damages not covered by
insurance or in excess of its policy limits or at a time when Avalon no longer
is able to obtain appropriate liability insurance, its financial condition could
be materially, adversely affected. Avalon has entered into contracts with
governmental authorities for a variety of environmental services. Typically,
such contracts require surety bonds or other financial instruments to assure
performance under the terms thereof. Avalon has obtained in the past, and
expects to be able to obtain in the future, such bonds or other financial
instruments.

Employees

  As of December 31, 2000, Avalon had 450 employees, 201 of whom were employed
in transportation operations, 189 of whom were employed in technical
environmental services, 20 of whom were employed by the waste disposal brokerage
and management operations, 10 of whom were employed by the golf course and
related operations and 30 of whom were employed in financial and administrative
activities. Avalon believes that it has a good relationship with its employees.

Other Business Factors

  None of Avalon's business segments is materially dependent on patents,
trademarks, licenses, franchises or concessions, other than permits, licenses
and approvals issued by regulatory agencies. Avalon does not sponsor significant
research and development activities.

                                       5
<PAGE>

ITEM 2. PROPERTIES

  Dart provides transportation services from locations in Canfield, Ohio (where
Dart owns an 18,800 square foot facility); Oxford, Massachusetts (where Dart
leases a 5,760 square foot terminal); Kenova, West Virginia (where Dart leases a
1,500 square foot terminal); Chicago, Illinois (where Dart leases a 500 square
foot terminal and leases a 5,100 square foot maintenance facility); Bedford, New
Hampshire (where Dart leases a 300 square foot terminal; and Paulsboro, New
Jersey (where Dart leases a 1,000 square foot terminal). At December 31, 2000,
the transportation operations owned a fleet of 20 power units (in addition to
144 power units which are leased), 305 trailers (in addition to 176 trailers
which are leased and 33 which are rented), and 682 roll-off and other
containers. In addition, 90 to 110 power units and 130 to 150 trailers owned by
independent owner/operators are available for use in Dart's operations.

  The Earth Sciences Companies own their main offices and laboratory facilities
located in a 48,000 square foot building in Export, Pennsylvania. In addition,
13,000 square feet is leased for field equipment and vehicle storage and
dispatch in Murrysville, Pennsylvania. The Earth Sciences Companies also own
numerous pieces of laboratory, field, computer and other equipment.

  The captive landfill management operations use approximately six pieces of
equipment (such as a bulldozer, excavator and backhoe) all of which are owned or
leased by ALMI.

  ALGI owns an 18-hole public golf course on approximately 200 acres, a
maintenance and storage building of approximately 12,000 square feet, a pro shop
and restaurant building of approximately 10,400 square feet, and a banquet
facility of approximately 7,000 square feet. All the facilities are located in
Warren, Ohio.

  Avalon owns a 26,000 square foot headquarters building located on
approximately 5.6 acres of property in Warren, Ohio adjacent to the golf course.
The corporate and administrative offices of Dart, ALMI, and American Waste
Management Services, Inc. are each located at the headquarters building of
Avalon in Warren, Ohio.

  Generally, Avalon's fixed assets are in good condition and are satisfactory
for the purposes for which they are intended.

ITEM 3. LEGAL PROCEEDINGS

     In September 1995, certain subsidiaries of Avalon were informed that they
had been identified as potentially responsible parties by the Indiana Department
of Environmental Management with respect to a Fulton County, Indiana, hazardous
waste disposal facility which is subject to remedial action under Indiana
Environmental Laws. Such identification was based upon the subsidiaries having
been involved in the transportation of hazardous substances to the facility. A
large number of waste generators and other waste transportation and disposal
companies were also identified as responsible or potentially responsible parties
with respect to this facility. During the fourth quarter of 1999, Avalon became
a party to an Agreed Order and a Participation Agreement regarding the
remediation of a portion of this site. The Participation Agreement provides for,
among other things, the allocation of all site remediation costs except for
approximately $3 million.

  The extent of any ultimate liability of any of Avalon's subsidiaries with
respect to these additional costs is unknown. The measurement of environmental
liabilities is inherently difficult and the possibility remains that
technological, regulatory or enforcement developments, the results of
environmental studies or other factors could materially alter Avalon's
expectations at any time. Currently, however, because of the expected sharing
among responsible and potentially responsible parties, the availability of legal
defenses, and typical settlement results, Avalon currently estimates that the
ultimate liability for this matter will be consistent with the amounts recorded
on Avalon's financial statements.

  In addition to the foregoing, in the ordinary course of conducting its
business, Avalon also 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, Avalon does not believe

                                       6
<PAGE>

that any uninsured ultimate liabilities, fines or penalties resulting from such
pending proceedings, individually or in the aggregate, would have a material
adverse effect on it. See Item 1. "Business--Insurance."

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  No matters were submitted to a vote of Avalon's security holders during the
fourth quarter of 2000.

                                       7
<PAGE>

                                    PART II

  Information with respect to the following items can be found on the indicated
pages of Exhibit 13.1, the 2000 Annual Report to Shareholders if not otherwise
included herein.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS
                                                                         Page(s)
                                                                         -------
Common stock information................................................   26
Dividend policy.........................................................   26


ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is included in the Digest of
 Financial Data for the years 1996 through 2000 under the captions Net
 operating revenues, Net income (loss), Net income (loss) and pro forma
 net loss per share, Total assets and Long-term debt....................   23


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition
 and Results of Operations..............................................   2-8


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
         ABOUT MARKET RISK
The information set forth under the subcaption "Market Risk" contained
 in Item 7, "Management's Discussion and Analysis of Financial Condition
 and Results of Operations" is incorporated herein by reference.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent auditor's report regarding financial statements as of
 December 31, 2000 and 1999 and for each of the years in the two-year
 period ended December 31, 2000.........................................   21

Independent auditor's report regarding financial statements as of
 December 31, 1998 and for the year ended December 31, 1998.............   22

Financial Statements:
 Consolidated Balance Sheets, December 31, 2000 and 1999................    9
 Consolidated Statements of Operations for the years ended December 31,
  2000, 1999 and 1998...................................................   10
 Consolidated Statements of Cash Flows for the years ended December 31,
  2000, 1999 and 1998...................................................   11
 Consolidated Statements of Shareholders' Equity for each of the years
  in the three-year period ended December 31, 2000......................   12
 Notes to Consolidated Financial Statements.............................   13-21

  Information regarding financial statement schedules is contained in Item 14(a)
of Part IV of this report.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
        ACCOUNTING AND FINANCIAL DISCLOSURE
 None

                                       8
<PAGE>

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

  The information required by Item 10 regarding Directors is contained under the
caption "Election of Directors" in the Registrant's definitive Proxy Statement
for its 2001 Annual Meeting of Shareholders (the "Proxy Statement") which will
be filed with the Securities and Exchange Commission, pursuant to Regulation
14A, not later than 120 days after the end of the fiscal year, which information
under such caption is incorporated herein by reference. The following
information with respect to the Executive Officers of Avalon is included
pursuant to Instruction 3 of Item 401(b) of Regulation S-K:

<TABLE>
<CAPTION>
        Name           Age                                          Position
        ----           ---                                          --------
<S>                    <C>             <C>
Ronald E. Klingle      53              Chairman of the Board, Chief Executive Officer and a Director
Timothy C. Coxson      50              Treasurer and Chief Financial Officer
Jeffrey M. Grinstein   40              General Counsel and Secretary
Frances R. Klingle     54              Chief Administrative Officer and Controller
Steve G. Kilper        41              Chief Executive Officer of the Earth Science Companies and American
                                       Landfill Management, Inc. and a Director
Kenneth J. McMahon     46              Chief Executive Officer and President of American Waste Management
                                       Services, Inc.
</TABLE>

  The above-listed individuals have been elected to the offices set opposite
their names to hold office at the discretion of the Board of Directors of Avalon
or its subsidiaries, as the case may be.


  Ronald E. Klingle has been a director, Chairman of the Board and Chief
Executive Officer since June 1998. He had been Chairman, Chief Executive Officer
and a director of American Waste Services, Inc. since December 1988. Mr. Klingle
has approximately 30 years of environmental experience and received his Bachelor
of Engineering degree in Chemical Engineering from Youngstown State University.
Mr. Klingle is the spouse of Frances R. Klingle who is the Chief Administrative
Officer and Controller of Avalon.

  Timothy C. Coxson has been Treasurer and Chief Financial Officer since June
1998. He had been Executive Vice President, Finance, Treasurer and Chief
Financial Officer and a director of American Waste Services, Inc. since May
1995. He received a Bachelor of Business Administration degree in Accounting
from The Ohio State University.

  Jeffrey M. Grinstein has been General Counsel and Secretary since June 1998.
He had been an Executive Vice President, General Counsel and Secretary of
American Waste Services, Inc. since December 1992. Mr. Grinstein was previously
with the Youngstown, Ohio law firm of Nadler, Nadler & Burdman Co. L.P.A. He
received his Bachelor of Business Administration degree from Emory University
and his Doctor of Jurisprudence degree from The Ohio State University.

  Frances R. Klingle has been Chief Administrative Officer and Controller since
June 1998. She had been Controller of American Waste Services, Inc. since June
1986. Ms. Klingle received a Bachelor of Arts degree in French from Kent State
University and has completed postgraduate work in accounting at Youngstown State
University. Ms. Klingle is the spouse of Ronald E. Klingle who is Chairman of
the Board, Chief Executive Officer and a director of Avalon.

  Stephen G. Kilper has been director of Avalon since October 1999. He has been
Chief Executive Officer of Avalon's technical environmental services operations
since June 1998. Mr. Kilper was Executive Vice President, Disposal Services, and
a director of American Waste Services, Inc. and Chief Executive Officer of its
wholly owned disposal subsidiaries from October 1995 to June 1998. Mr. Kilper
received his degree in Agricultural Engineering from the University of
Wisconsin - Madison.

  Kenneth J. McMahon has been Chief Executive Officer and President of American
Waste Management Services, Inc. since June 1998. Mr. McMahon had previously been
Executive Vice President, Sales and a director

                                       9
<PAGE>

of American Waste Services, Inc. since September 1996. Mr. McMahon received a
Bachelor of Business Administration degree in finance and his Master of Business
Administration degree from Youngstown State University.

ITEM 11. EXECUTIVE COMPENSATION

  The information required by Item 11 is contained under the captions "Meetings
and Committees of the Board" and "Compensation of Directors and Executive
Officers" in the Proxy Statement. The information under such captions is
incorporated herein by reference, except that information contained under
subpart captions "Board Committee Reports on Executive Compensation" and
"Performance Graph" are specifically not incorporated herein.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT

  The information required by Item 12 is contained under the captions "Voting
Securities and Principal Holders Thereof" and "Stock Ownership of Management" in
the Proxy Statement which information under such captions is incorporated herein
by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  Avalon did not have any transactions during fiscal 2000 with any director,
director nominee, executive officer, security holder known to Avalon to own of
record or beneficially more than 5% of Avalon's Common Stock, or any member of
the immediate family of any of the foregoing persons, in which the amount
involved exceeded $60,000.

                                       10
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  The following documents are filed as part of this report:

     1.   Financial Statements and Independent Auditors' Reports (See Part II,
          Item 8 of this report regarding incorporation by reference from the
          Annual Report to Shareholders)

     2.   Financial Statement Schedules required to be filed by Item 8 and
          Paragraph (d) of this Item 14.

     The following financial statement schedule, which is applicable for years
ended December 31, 2000, 1999 and 1998, should be read in conjunction with the
previously referenced financial statements.

          Independent Auditors' Reports on Financial Statement Schedule
          Schedule II - Valuation and Qualifying Accounts

     Such independent auditors' reports and financial statement schedule are at
pages 14 through 16 of this report. The other schedules are omitted because of
the absence of conditions under which they are required or because the
information required is shown in the consolidated financial statements or the
notes thereto.

     3.   Exhibits

     Registrant will furnish to any shareholder, upon written request, any of
the following exhibits upon payment by such shareholder of the Registrant's
reasonable expenses in furnishing any such exhibit.

Exhibit No.
- -----------

     2.1  Agreement and Plan of Merger, dated as of February 6, 1998, entered
          into by and among USA Waste Services, Inc. ("USA"), C&S Ohio Corp. and
          American Waste Services, Inc. ("AWS"), incorporated herein by
          reference to Avalon Holdings Corporation Registration Statement on
          Form 10, Exhibit 2.1

     2.2  Form of Contribution and Distribution Agreement, dated as of May 7,
          1998, by and between AWS and Avalon Holdings Corporation ("Avalon"),
          incorporated herein by reference to Avalon Holdings Corporation
          Registration Statement on Form 10, Exhibit 2.2

     3.1  Articles of Incorporation of Avalon incorporated herein by reference
          to Avalon Holdings Corporation Registration Statement on Form 10,
          Exhibit 3.1

     3.2  Code of Regulations of Avalon incorporated herein by reference to
          Avalon Holdings Corporation Registration Statement on Form 10, Exhibit
          3.2

     4.1  Form of certificate evidencing shares of Class A common stock, par
          value $.01, of Avalon Holdings Corporation incorporated herein by
          reference to Avalon Holdings Corporation Registration Statement on
          Form 10, Exhibit 4.1

    10.1  Form of Tax Allocation Agreement, dated as of May 7, 1998, by and
          among AWS, Avalon and USA incorporated herein by reference to Avalon
          Holdings Corporation Registration Statement on Form 10, Exhibit 10.1

    10.2  Avalon Holdings Corporation Long-Term Incentive Plan incorporated
          herein by reference to Avalon Holdings Corporation Registration
          Statement on Form 10, Exhibit 10.2

    11.1  Omitted--inapplicable. See "Basic net income (loss) per share and pro
          forma net loss per share" on page 15 of the 2000 Annual Report to
          Shareholders

    13.1  Avalon Holdings Corporation 2000 Annual Report to Shareholders (except
          pages and information therein expressly incorporated by reference in
          this Form 10-K, the Annual Report to Shareholders is provided for the
          information of the Commission and is not be deemed "filed" as part of
          the Form 10-K)

    21.1  Subsidiaries of Avalon Holdings Corporation

                                       11
<PAGE>

(b)  Reports on Form 8-K

          On December 15, 2000, Avalon Holdings Corporation announced a stock
          repurchase program.

(c)  Reference is made to Item 14 (a)(3) above for the index of Exhibits.

(d)  Reference is made to Item 14 (a)(2) above for the index to the financial
     statements and financial statement schedules.

                                       12
<PAGE>

                                  SIGNATURES


  Pursuant to the requirements of Section 13 or 15(d) 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, on the 22nd day of March,
2001.


                                             AVALON HOLDINGS CORPORATION
                                             (Registrant)


                                             By /s/ TIMOTHY C. COXSON
                                             -------------------------------
                                             Timothy C. Coxson - Treasurer and
                                             Chief Financial Officer


                           __________________________


  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, on the 22nd day of March, 2001.



         Signatures                                    Title
         ----------                                    -----

/s/ RONALD E. KLINGLE                        Chairman of the Board, Chief
- -----------------------------------------
Ronald E. Klingle                            Executive Officer and Director


/s/ STEPHEN G. KILPER                        Director
- -----------------------------------------
Stephen G. Kilper


/s/ SANFORD B. FERGUSON                      Director
- -----------------------------------------
Sanford B. Ferguson


/s/ ROBERT M. ARNONI                         Director
- -----------------------------------------
Robert M. Arnoni


/s/ STEPHEN L. GORDON                        Director
- -----------------------------------------
Stephen L. Gordon

                                       13
<PAGE>

                         Independent Auditors' Report
                         ----------------------------


The Shareholders and Board of Directors
of Avalon Holdings Corporation:

Under date of March 2, 2001, we reported on the consolidated balance sheets of
Avalon Holdings Corporation and subsidiaries as of December 31, 2000 and 1999,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for the years then ended, as contained in the 2000 Annual Report to
Shareholders. These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the year 2000.
In connection with our audits of the aforementioned consolidated financial
statements, we also have audited the 2000 and 1999 information included in the
related financial statement schedule as listed in the accompanying index. The
2000 and 1999 information included in the financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on the 2000 and 1999 information included in the financial statement
schedule based on our audits.

In our opinion, the 2000 and 1999 information included in the financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.



Grant Thornton LLP


Cleveland, Ohio
March 2, 2001

                                       14
<PAGE>

                         Independent Auditors' Report
                         ----------------------------



The Shareholders and Board of Directors
of Avalon Holdings Corporation:

Under date of March 10, 1999, we reported on the consolidated statements of
operations, shareholders' equity, and cash flows of Avalon Holdings Corporation
and subsidiaries (formerly the Avalon Business of American Waste Services, Inc.)
for the year ended December 31, 1998, which are included in the 2000 Annual
Report to Shareholders. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for the
year 2000. In connection with our audit of the aforementioned consolidated
financial statements, we also have audited the related 1998 information included
in the financial statement schedule entitled Schedule II - Valuation and
Qualifying Accounts, included in the Form 10-K for the year 2000. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statement schedule
based on our audit.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.



KPMG LLP


Cleveland, Ohio
March 10, 1999

                                       15
<PAGE>

                 AVALON HOLDINGS CORPORATION AND SUBSIDIARIES
                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                            (thousands of dollars)






<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
                                                                Additions
          DESCRIPTION                  Balance at                                          Deductions  Balance at End of
                                                      -----------------------------------
                                      Beginning of                                            (1)            Year
                                          Year        Charged to Costs   Charged to Other
                                                        and Expenses         Accounts
- ------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>                <C>               <C>         <C>
Allowance for Doubtful Accounts:

Year ended December 31,

   2000..............................     $790              $905               $--           $1,249          $446
                                          ====              ====               ===           ======          ====

   1999..............................     $740              $231               $--           $  181          $790
                                          ====              ====               ===           ======          ====

   1998..............................     $544              $326               $--           $  130          $740
                                          ====              ====               ===           ======          ====
</TABLE>



(1)  Accounts receivables written-off as uncollectible, net of recoveries.

                                       16
<PAGE>

                 AVALON HOLDINGS CORPORATION AND SUBSIDIARIES


                                 EXHIBIT INDEX

                          ___________________________



                    Exhibit
                    -------


13.1    2000 Annual Report to Shareholders


21.1    Subsidiaries of Avalon Holdings Corporation
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>2000 ANNUAL REPORT TO SHAREHOLDERS
<TEXT>

<PAGE>

                                                                    Exhibit 13.1
================================================================================


                              Financial Highlights


  (in thousands, except for per share amounts)

For the year                                                2000      1999
- ----------------------------------------------------------------------------
Net operating revenues.....................               $ 84,290   $80,860
Income (loss) from operations..............                 (4,593)      992
Net income (loss)..........................                 (2,433)    1,223
Net income (loss) per share................                   (.64)      .32
Net cash provided by operating activities..                    740     2,046
Net cash used in investing activities......                 (8,444)   (5,594)

At year-end                                                   2000      1999
- ----------------------------------------------------------------------------
Working capital............................               $ 21,729   $26,969
Total assets...............................                 62,310    66,404
Shareholders' equity.......................                 51,728    54,161


================================================================================


                                  The Company

Avalon Holdings Corporation provides transportation services, waste disposal
brokerage and management services, and technical environmental services
including environmental engineering, site assessment, analytical laboratory,
remediation and landfill management services to industrial, commercial,
municipal and governmental customers. Avalon Holdings Corporation also owns and
operates a public golf course.


                                    Contents

<TABLE>
<S>                                                                       <C>
Financial Highlights...................................................    1

Management's Discussion and
   Analysis of Financial Condition
   and Results of Operations...........................................    2

Consolidated Balance Sheets............................................    9

Consolidated Statements of Operations..................................   10

Consolidated Statements of Cash  Flows.................................   11

Consolidated Statements of Shareholders' Equity........................   12

Notes to Consolidated Financial
   Statements..........................................................   13

Independent Auditors' Report...........................................   21

Digest of Financial Data...............................................   23

Company Location Directory.............................................   24

Directors and Officers.................................................   25

Shareholder Information................................................   26
</TABLE>

                                                                               1
<PAGE>

Avalon Holdings Corporation and Subsidiaries
- --------------------------------------------------------------------------------


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 (collectively the
"Company" or "Avalon").  This discussion should be read in conjunction with the
consolidated financial statements and accompanying notes.

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.

Spin-off

Pursuant to the terms of a Contribution and Distribution Agreement dated as of
May 7, 1998 between Avalon and American Waste Services, Inc. ("AWS"), AWS
contributed to Avalon its transportation operations, technical environmental
services operations, waste disposal brokerage and management operations, and
golf course and related operations together with certain other assets including
the headquarters of AWS and certain accounts receivable. In connection with the
contribution, Avalon assumed certain liabilities of AWS including, without
limitation, liabilities relating to the termination of employment of certain
employees of AWS and costs and potential liabilities relating to a certain legal
proceeding. 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 (the "Spin-off").

Liquidity and Capital Resources

For the year 2000, Avalon utilized existing cash and cash provided by operations
to fund capital expenditures and meet operating needs.

During 2000, capital expenditures for Avalon totaled $8.1 million which was
principally related to the capital improvements to Avalon's golf course and the
purchase of equipment for Avalon's transportation operations. Avalon's aggregate
capital expenditures in 2001 are expected to be in the range of $2 million to $3
million, which will relate principally to acquiring additional transportation
equipment and capital improvements to the golf course.

On August 2, 1999, Avalon closed the golf course to begin a significant capital
improvement program.  In addition to the capital improvements to the golf
course, Avalon initiated capital expenditures for improvements to golf course
related facilities.  During 1999 and 2000, expenditures for the golf course
capital improvement program amounted to approximately $5.7 million and
expenditures for golf course related facilities amounted to approximately $1
million.  The golf course resumed operations on a limited basis during the third
quarter of 2000.

Working capital decreased to $21.7 million at December 31, 2000 compared with
$27 million at December 31, 1999.  The decrease is primarily the result of
utilizing existing cash for capital expenditures.

The decrease in Accrued payroll and other compensation at December 31, 2000
compared with December 31, 1999 is primarily the result of a decrease in accrued
performance-based compensation during 2000.

2
<PAGE>

The decrease in Other accrued taxes at December 31, 2000 compared with December
31, 1999 is primarily the result of a successful appeal of assessed highway fuel
taxes, which resulted in a reduction in the amount of highway fuel taxes to be
paid.

In December 2000, Avalon authorized the repurchase of up to 1,000,000 shares of
its Class A Common Stock for an aggregate amount not to exceed $2,500,000.
Using available cash, Avalon plans to make purchases from time to time in the
open market and in privately negotiated transactions.  The amount and timing of
any share purchases will be based upon management's ongoing assessment of
Avalon's capital structure, liquidity, general market conditions and other
corporate considerations.

Management believes that cash provided from operations, the availability of
working capital, as well as Avalon's ability to incur indebtedness, will be, for
the foreseeable future, sufficient to meet operating requirements, fund capital
expenditure programs and fund purchases under Avalon's stock repurchase program.
Avalon does not currently have a credit facility.

Currently, Avalon is not aggressively pursuing potential acquisition candidates
but will continue to consider acquisitions that make economic sense.  While
Avalon has not entered into any pending agreements for acquisitions, it may do
so at any time.  Such potential acquisitions could be financed by existing
working capital, secured or unsecured debt, issuance of common stock, or
issuance of a security with characteristics of both debt and equity, any of
which could impact liquidity in the future.

Results of Operations

Avalon's primary business segment provides transportation services which include
transportation of hazardous and nonhazardous waste and transportation of general
and bulk commodities.  The technical environmental services segment provides
environmental engineering, site assessment, analytical laboratory, remediation
and captive landfill management services.  The waste disposal brokerage and
management services segment provides hazardous and nonhazardous disposal
brokerage and management services.  The golf and related operations segment
includes the operation of a public golf course and travel agency.

Performance in 2000 compared with 1999

Overall Performance. Net operating revenues increased to $84.3 million in 2000
from $80.9 million in 1999.  The increase is primarily the result of a 15 %
increase in net operating revenues of the transportation services segment and a
8.8% increase in the net operating revenues of the waste disposal brokerage and
management services segment partially offset by a decline in the net operating
revenues of the technical environmental services segment and golf and related
operations segment.  Cost of operations as a percentage of net operating
revenues increased to 90% in 2000 from 85.8% in 1999.  The increase is primarily
the result of higher costs of operations as a percentage of net operating
revenues of the technical environmental services segment, the transportation
services segment and the golf and related operations segment.  In 2000, the
engineering and consulting business of the technical environmental services
segment experienced a significant loss before taxes due to increased
competition, increased operating costs and a decline in net operating revenues
compared with the prior year.  As a result, Avalon closed its engineering and
consulting offices in Akron, Ohio and reduced its workforce by approximately 30%
in January 2001.  In accordance with Avalon's asset impairment policy, Avalon
recorded charges of approximately $1.1 million for the write-down of costs in
excess of fair market value of net assets of acquired businesses ("goodwill")
and $.7 million for the write-down of other non-current assets.  Selling and
general administrative expenses increased to $11.1 million in 2000 compared with
$10.5 million in 1999 primarily as a result of an increase in the provision for
losses on accounts receivable as a result of significant write-offs of accounts
receivable of customers in the steel business which have recently filed
bankruptcy.  Other income increased to $.5 million in 2000 compared with $.1
million in 1999 primarily as a result of the settlement of Avalon's claim for
attorney's fees in connection with a certain legal proceeding.  Avalon incurred
a net loss of $2.4 million in 2000 compared with net income of $1.2 million in
1999.

                                                                               3
<PAGE>

Segment performance.  Segment performance should be read in conjunction with
Note 11 to the Consolidated Financial Statements.

Net operating revenues of the transportation services segment increased to $46.3
million in 2000 from $40.1 million in 1999.  The increase is primarily
attributable to an increase in the net operating revenues of the transportation
brokerage operations and an increase in the transportation of municipal solid
waste partially offset by decreased transportation of hazardous waste.  Income
before taxes of the transportation services segment decreased to $1.1 million in
2000 compared with $2.3 million in 1999.  The decrease is primarily the result
of increased costs of operations resulting from higher fuel prices and increased
rental, depreciation and employee related expenses, partially offset by improved
operating results of the transportation brokerage operations and a decrease in
accrued highway fuel tax expense as a result of a successful audit appeal.
Also, in 1999, costs of operations were reduced by approximately $.6 million
resulting from Avalon reducing its accrued liability associated with anticipated
remediation costs of a hazardous waste facility.

Net operating revenues of the technical environmental services segment decreased
to $27.3 million in 2000 compared with $29 million in 1999.  The decrease is
primarily attributable to a decrease in net operating revenues of engineering
and consulting services.  The technical environmental services segment incurred
a loss before taxes of $1.7 million in 2000 compared with income before taxes of
$2 million in 1999.  The engineering and consulting business of Avalon's
technical environmental services operations experienced a significant loss
before taxes in 2000 due to increased competition, increased operating costs and
a decline in net operating revenues compared with the prior year.  As a result,
Avalon closed its engineering and consulting office in Akron, Ohio and reduced
its workforce by approximately 30% in January 2001.  In accordance with Avalon's
asset impairment policy, Avalon performed an evaluation of the non-current
assets of the engineering and consulting business including goodwill to
determine if the carrying value of such assets was recoverable. In accordance
with Avalon's asset impairment policy, to ascertain whether an impairment
existed, Avalon estimated the undiscounted sum of the expected future cash flows
of the engineering and consulting business to determine if such sum was less
than the carrying value of the non-current assets.  The evaluation indicated the
existence of an impairment and Avalon determined the fair value of the non-
current assets (and measured the extent of the impairment) by discounting the
expected future cash flows at the rate of 6%.  As a result, in the fourth
quarter of 2000, Avalon recorded a write-down of goodwill in the amount of $1.1
million and a write-down of other non-current assets of $.7 million.   The
laboratory operations also incurred a loss before taxes in 2000 compared with
income before taxes in 1999, which was primarily attributable to increased
operating and depreciation expenses and an increase in the provision for losses
on accounts receivable as a result of a significant write-off of an account
receivable of a customer in the steel industry which filed bankruptcy in the
fourth quarter of 2000.   Although net operating revenues of the remediation
business increased in 2000 compared with 1999, a significant portion of the net
operating revenues of the remediation services business is related to work
performed by subcontractors, for which Avalon invoices its customers with little
or no markup.  Income before taxes of the remediation services business
decreased as a result of lower net operating revenues relating to work not
performed by subcontractors.  Income before taxes of Avalon's captive landfill
management business was relatively unchanged in 2000 from 1999.

Net operating revenues of the waste disposal brokerage and management services
segment increased to $22 million in 2000 compared with $18.5 million in 1999.
The increase in net operating revenues is primarily the result of an increase in
the level of disposal brokerage and management services provided.  Income before
taxes was $1.1 million in 2000 compared with $1.4 million in 1999.  Despite the
increase in net operating revenues, income before taxes did not increase because
of higher selling and administrative expenses, including an increase in the
provision for losses on accounts receivable as a result of a significant write-
off of an account receivable of a customer in the steel industry which recently
filed bankruptcy.

Avalon's golf and related operations segment consists of the operation of a
public golf course and travel agency.  During the third quarter of 1999, Avalon
closed the golf course to make significant capital improvements to the course
and related facilities.  The golf course resumed operations on a limited basis
during the third quarter of 2000.  Net operating revenues for the golf and
related operations segment decreased to $.7 million in 2000 compared with $1.4
million in 1999 primarily as a result of decreased golf revenues.  The golf and
related operations segment incurred a loss before taxes of $1.1 million in 2000
compared with a loss before taxes of $.2 million in 1999

4
<PAGE>

primarily as a result of decreased net operating revenues and increased expenses
associated with the newly renovated golf course. Net operating revenues and
results of operations of the travel agency were relatively unchanged in 2000
from 1999.

Interest Income

Interest income decreased to $.9 million in 2000 compared with $1.1million in
1999, primarily due to a decline in the average amount of cash and cash
equivalents during 2000 compared with 1999 partially offset by an increase in
investment rates.

General Corporate Expenses

General corporate expenses decreased to $3.4 million in 2000 compared with $4.1
million in 1999.  Such decrease is primarily the result of lower performance
based compensation expense.

Net Income (Loss)

Avalon incurred a net loss of $2.4 million in 2000 compared with net income of
$1.2 million in 1999 primarily as a result of the foregoing.  Avalon's overall
effective tax rate, including the effect of state income tax provisions, was
23.4% in 2000.  The effective tax rate in 2000 was significantly impacted by the
nondeductibility for tax purposes of the amortization and write-down of goodwill
and other nondeductible expenses.  The effective tax rate of 44.4% for 1999 is
higher than the federal statutory rate primarily due to state income taxes, the
nondeductibility for tax purposes of the amortization of goodwill and other
nondeductible expenses.

Performance in 1999 compared with 1998

Overall performance.  Net operating revenues increased 8.5% to $80.9 million in
1999 from $74.5 million in 1998.  The increase is primarily the result of a 4.5%
increase in the net operating revenues of the transportation services segment, a
14.6% increase in the net operating revenues of the technical environmental
services segment and a 18.6% increase in the net operating revenues of the waste
disposal brokerage and management services segment partially offset by a
decrease in the net operating revenues of the golf and related operations
segment. The golf course was closed August 2, 1999 to begin capital
improvements. Cost of operations as a percentage of net operating revenues
decreased to 85.8% in 1999 compared with 87.4% in 1998. The decrease is
primarily the result of lower cost of operations as a percentage of net
operating revenues of the technical environmental services segment. Selling,
general and administrative expenses increased to $10.5 million in 1999 compared
with $10 million in 1998. Such increase was primarily attributable to additional
expenses resulting from operating as an independent company subsequent to the
Spin-off for the entire year of 1999. Interest income increased to $1.1 million
in 1999 compared with $.7 million in 1998 primarily as a result of higher
average cash and cash equivalent balances for the entire year of 1999. Avalon
recorded net income of $1.2 million in 1999 compared with a net loss of $.6
million in 1998.

Segment performance.  Segment performance should be read in conjunction with
Note 11 to the Consolidated Financial Statements.

Net operating revenues of the transportation services segment increased to $40.1
million in 1999 from $37.3 million in 1998.  The increase in net operating
revenues is primarily attributable to an increase in the transportation of
municipal solid waste and hazardous waste, partially offset by a decrease in the
transportation of general commodities.  Income before taxes of the
transportation services segment increased to $2.3 million in 1999 compared with
$1.6 million in 1998.  Such increase is primarily attributable to increased net
operating revenues and a reduction in operating costs of approximately $.6
million resulting from Avalon reducing its accrued liability associated with
anticipated remediation costs of a hazardous waste facility partially offset by
higher fuel costs and increased rental expense of transportation equipment.
Income before taxes for 1998 included a write-down of

                                                                               5
<PAGE>

certain assets to be disposed of in the amount of approximately $.5 million
partially offset by a one-time rebate of workers compensation premiums of $.4
million from the State of Ohio.

Net operating revenues of the technical environmental services segment increased
to $29 million in 1999 from $25.3 million in 1998.  The increase in net
operating revenues is primarily the result of increased net operating revenues
of remediation services and to a lesser extent increased net operating revenues
of engineering and consulting services, laboratory services, and captive
landfill management operations.  Income before taxes increased to $2 million in
1999 compared with a loss before taxes of $.1 million in 1998.  The increase in
income before taxes is primarily the result of improved operating results of the
remediation, engineering and consulting and captive landfill management
operations.  The loss before taxes for the technical environmental services
segment in 1998 included a write-down of certain assets to be disposed of in the
amount of $.1 million and a write-down of goodwill of $.4 million.

Net operating revenues of the waste disposal brokerage and management services
segment increased to $18.5 million in 1999 from $14.4 million in 1998.  The
increase in net operating revenues is primarily the result of an increase in the
level of disposal brokerage and management services provided during the first
six months of 1999 as compared with the first six months of 1998 which preceded
the Spin-off.  Many customers, which had previously utilized the nonhazardous
waste disposal facilities owned by American Waste Services, Inc., elected to do
business with Avalon's waste disposal brokerage and management operations after
the Spin-off to ensure a continuation of the high level of management services
to which these customers had become accustomed.  The waste disposal brokerage
and management services segment recorded income before taxes of $1.4 million in
1999 compared with $1.3 million in 1998.  The increase is primarily the result
of a reduction in operating costs of approximately $.3 million arising from
Avalon reaching a favorable agreement with a third party vendor during the third
quarter of 1999 concerning amounts previously accrued by Avalon for disposal and
transportation services.  Excluding this reduction in operating costs, income
before taxes decreased primarily as a result of significantly higher selling and
administrative expenses.

Avalon's golf and related operations segment consist primarily of the operation
of a public golf course and travel agency.  During the third quarter of 1999,
Avalon closed the golf course to make significant capital improvements to the
course and related facilities.  As a result, net operating revenues for the golf
and related operations segment decreased to $1.4 million in 1999 compared with
$2.1 million in 1998 and the golf and related operations segment incurred a loss
before taxes of $.2 million in 1999 compared with income before taxes of $.4
million in 1998.

Interest Income

Interest income increased to $1.1 million in 1999 compared with $.7 million in
1998, primarily because the cash resulting from the Spin-off was invested for
the full year of 1999 as compared with only six and a half months in the prior
year.

General Corporate Expenses

General corporate expenses were $4.1 million in 1999 compared with $4.2 million
in 1998.  General corporate expenses for 1999 were the actual expenses incurred
by Avalon for such period, which includes all of the costs associated with the
corporate headquarters contributed to Avalon by AWS and additional expenses
resulting from operating as an independent company subsequent to the Spin-off.
General corporate expenses for 1998 included approximately $.9 million of
corporate expenses which were allocated to Avalon by AWS prior to the Spin-off
and a one-time charge of $1.4 million for additional compensation and severance
which was paid in the second quarter of 1998.

6
<PAGE>

Net Income (Loss)

Avalon recorded net income of $1.2 million in 1999 compared with a net loss of
$.6 million in 1998 primarily as a result of the foregoing.  Avalon's overall
effective tax rate, including the effect of state income tax provisions, was 44%
in 1999.  In 1998, Avalon recorded a provision for income taxes instead of an
income tax benefit even though Avalon incurred a loss before income taxes,
primarily because of the nondeductibility for tax purposes of the amortization
and write-down of goodwill and other nondeductible items.  The effective tax
rate for both 1999 and 1998 is higher than statutory rates primarily due to
state income taxes, the nondeductibility for tax purposes of the amortization of
goodwill, and other nondeductible expenses.

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, Avalon does not believe that any uninsured ultimate liabilities,
fines or penalties resulting from such pending proceedings, individually or in
the aggregate, would have a material adverse effect on it.

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 significant portion of Avalon's
transportation and disposal brokerage and management revenues is derived from
the disposal 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 significant negative effect on Avalon.

As is the case with any transportation company, an increase in fuel prices will
subject Avalon's transportation operations to increased operating expenses,
which, in light of competitive market conditions, Avalon may not be able to pass
on to its customers.  During 2000, and continuing into the first quarter of
2001, Avalon's transportation operations experienced significant increases in
fuel prices, some of which Avalon has not and will not be able to pass on to its
customers.

Competitive pressures within the environmental industry continue to impact the
financial performance of Avalon's transportation services, technical
environmental services and waste disposal brokerage and management services.  A
decline in the rates which customers are willing to pay for its services could
adversely impact the future financial performance of Avalon.

The engineering and consulting business of Avalon's technical environmental
services operations experienced a significant loss before taxes in 2000 due to
increased competition, increased operating costs and a decline in net operating
revenues.  As a result, Avalon closed its engineering and consulting office in
Akron, Ohio and reduced its workforce by approximately 30% in January 2001.

Avalon's waste disposal brokerage and management operations obtain and retain
customers by providing service and identifying cost-efficient disposal options
unique to a customer's needs.  Continued consolidation within the solid waste
industry has resulted in reducing the number of disposal options available to
waste generators and has caused disposal pricing to increase.  Avalon does not
believe that pricing changes alone will have a material effect upon its waste
disposal brokerage and management operations.   However, consolidation will have
the effect of reducing the number of competitors offering disposal alternatives
which may adversely impact the future financial performance of Avalon's waste
disposal brokerage and management operations.

A significant portion of Avalon's business is 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.

                                                                               7
<PAGE>

As a result of the significant capital improvements to the golf course, the
green fees charged customers to play a round of golf have been increased
substantially. Although Avalon believes that the capital improvements made to
the golf course justify the increased green fees and will result in increased
net operating revenues and increased income before taxes, there can be no
assurance as to when such increases will be attained.  Avalon's golf course
competes with many public and private courses in the area.

Avalon's golf course is located in Warren, Ohio and is significantly dependent
upon weather conditions during the golf season.  Additionally, all of Avalon's
other operations are somewhat seasonal in nature because a significant portion
of the operations are performed primarily in selected northeastern and
midwestern states.  As a result, Avalon's financial performance could be
adversely affected by winter weather conditions.

Market Risk

Avalon does not have significant exposure to changing interest rates.  A 10%
change in interest rates would have an immaterial effect on Avalon's pretax
earnings for the next fiscal year.  Avalon currently has no debt outstanding and
invests primarily in short-term money market funds and other short-term
obligations.  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.

Inflation Impact

Avalon has not entered into any long-term fixed price contracts that could have
a material adverse impact upon its financial performance in periods of
inflation.    In general, management believes that rising costs resulting from
price inflation could be passed on to customers; however, Avalon may need to
absorb all or a portion of these cost increases depending upon competitive
conditions at the time.  As is the case with any transportation company, an
increase in fuel prices may subject the transportation operations to increased
operating expenses, which Avalon, in light of competitive market conditions, may
not be able to pass on to its customers.  During 2000 and continuing into the
first quarter of 2001, Avalon's transportation operations experienced
significant increases in fuel prices, some of which Avalon has not and will not
be able to pass on to its customers.

8
<PAGE>

Avalon Holdings Corporation and subsidiaries
- --------------------------------------------------------------------------------

Consolidated Balance Sheets

 (in thousands, except for share data)

<TABLE>
<CAPTION>
                                                                                                    December 31,
                                                                                                 -----------------
                                                                                                   2000      1999
                                                                                                 -----------------
<S>                                                                                              <C>        <C>
Assets
Current Assets:
  Cash and cash equivalents.....................................................                 $11,022   $18,726
  Short-term investments........................................................                     759        --
  Accounts receivable, less allowance for
   doubtful accounts of $446 in 2000 and $790 in 1999...........................                  16,156    16,628
  Refundable income taxes (Note 5)..............................................                     327        --
  Deferred income taxes (Note 5)................................................                     564       403
  Prepaid expenses..............................................................                   1,560     1,567
  Other current assets..........................................................                     564       414
                                                                                                 -----------------

    Total current assets........................................................                  30,952    37,738

Property and equipment, net (Notes 3 and 4).....................................                  30,099    26,165
Costs in excess of fair market value of net assets of acquired businesses, net
  (Note 3)......................................................................                   1,082     2,324
Other assets, net...............................................................                     177       177
                                                                                                 -----------------

     Total assets...............................................................                 $62,310   $66,404
                                                                                                 =================
Liabilities and Shareholders' Equity
Current Liabilities:
  Accounts payable..............................................................                 $ 5,242   $ 6,001
  Accrued payroll and other compensation........................................                   1,249     1,833
  Accrued income taxes..........................................................                     596       618
  Other accrued taxes...........................................................                     305       720
  Other liabilities and accrued expenses (Note 6)...............................                   1,831     1,597
                                                                                                 -------   -------

    Total current liabilities...................................................                   9,223    10,769

Deferred income taxes (Note 5)..................................................                   1,239     1,354
Other noncurrent liabilities (Note 9)...........................................                     120       120

Contingencies and commitments (Notes 9 and 10)..................................                      --        --

Shareholders' Equity (Note 8):
  Class A Common Stock, $.01 par value, one vote per share; authorized
   10,500,000 shares, issued 3,185,240 shares at December 31, 2000 and
   December 31, 1999............................................................                      32        32
  Class B Common Stock, $.01 par value, ten votes per share; authorized
   1,000,000 shares; issued 618,091 shares at December 31, 2000 and
   December 31, 1999............................................................                       6         6
  Paid-in capital...............................................................                  58,096    58,096
  Accumulated deficit...........................................................                  (6,406)   (3,973)
                                                                                                 -----------------

     Total shareholders' equity.................................................                  51,728    54,161
                                                                                                 -----------------

     Total liabilities and shareholders' equity.................................                 $62,310   $66,404
                                                                                                 =================
</TABLE>

  See accompanying notes to consolidated financial statements.

                                                                               9
<PAGE>

Avalon Holdings Corporation and Subsidiaries
- --------------------------------------------------------------------------------


Consolidated Statements of Operations

     (in thousands, except for per share amounts)

<TABLE>
<CAPTION>
                                                                                     Year Ended December 31,
                                                                         ----------------------------------------------
                                                                               2000             1999              1998
                                                                         ----------------------------------------------
<S>                                                                      <C>              <C>               <C>
Net operating revenues.................................................  $    84,290      $    80,860       $    74,495

Cost and expenses:
     Costs of operations...............................................       75,862           69,349            65,119
     Write-down of assets (Note 3).....................................          796               --               599
     Write-down of costs in excess of fair market value of net assets
        of acquired businesses (Note 3)................................        1,093               --               377
     Selling, general and administrative expenses......................       11,132           10,519             9,951
                                                                         ----------------------------------------------
Income (loss) from operations..........................................       (4,593)             992            (1,551)

Other income (expense):
     Interest expense..................................................           --               (2)              (45)
     Interest income...................................................          879            1,073               667
     Other income, net.................................................          538              138               465
                                                                         ----------------------------------------------
Income (loss) before income taxes......................................       (3,176)           2,201              (464)

Provision (benefit) for income taxes (Note 5):
     Current...........................................................         (467)             920               745
     Deferred..........................................................         (276)              58              (562)
                                                                         -----------------------------------------------
                                                                                (743)             978               183
                                                                         ----------------------------------------------

Net income (loss)......................................................  $    (2,433)     $     1,223       $      (647)
                                                                         ===============================================

Net income (loss) and pro forma net loss per share (*) (Note 2)........  $      (.64)     $       .32       $      (.17)
                                                                         ===============================================

Weighted average shares outstanding (*)................................        3,803            3,803             3,803
                                                                         ===============================================
</TABLE>

(*)  In accordance with Securities and Exchange Commission regulations, pro
     forma per share data has been presented for 1998, the year in which the
     Spin-off occurred. For purposes of determining the pro forma per share
     data, all of Avalon's common stock issued as a result of the Spin-off is
     deemed to have been outstanding for 1998.


  See accompanying notes to consolidated financial statements.

10
<PAGE>

Avalon Holdings Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Consolidated Statements of Cash Flows
(in thousands)

<TABLE>
<CAPTION>
                                                                                     Year Ended December 31,
                                                                         -----------------------------------------------
                                                                                2000             1999              1998
                                                                         -----------------------------------------------
<S>                                                                      <C>              <C>               <C>
Operating activities:
     Net income (loss).................................................  $    (2,433)     $     1,223       $      (647)
     Reconciliation of net income (loss) to cash provided by
       operating activities:
         Depreciation..................................................        3,112            2,739             2,401
         Amortization..................................................          153              223               221
         Write-down of assets..........................................          796               --               599
         Write-down of costs in excess of fair market value of net
            assets of acquired businesses..............................        1,093               --               377
         Provision (benefit) for deferred income taxes.................         (276)              58              (562)
         Provision for losses on accounts receivable...................          905              231               326
         (Gain) loss from disposal of property and equipment...........         (146)             (10)               11
         Unrealized gain on short-term investments.....................          (11)              --                --
         Change in operating assets and liabilities:
              Accounts receivable......................................         (433)            (687)           (3,083)
              Refundable income taxes..................................         (327)              --               105
              Prepaid expenses.........................................            7              (99)             (785)
              Other current assets.....................................         (150)              22               133
              Other assets.............................................           (4)              (5)              (47)
              Accounts payable.........................................         (759)            (278)            1,196
              Accrued payroll and other compensation...................         (584)             591               336
              Accrued income taxes.....................................          (22)            (460)              358
              Other accrued taxes......................................         (415)            (202)               75
              Other liabilities and accrued expenses...................          234             (575)              555
              Other noncurrent liabilities.............................           --             (725)              (11)
                                                                         -----------------------------------------------

                 Net cash provided by operating activities.............          740            2,046             1,558
                                                                         ----------------------------------------------

Investing activities:
     Purchases of short-term investments...............................      (12,426)              --                --
     Sales of short-term investments...................................       11,678               --                --
     Capital expenditures..............................................       (8,144)          (5,898)           (2,269)
     Proceeds from disposal of property and equipment..................          448              304                83
                                                                         ----------------------------------------------

                 Net cash used in investing activities.................       (8,444)          (5,594)           (2,186)
                                                                         -----------------------------------------------

Financing activities:
     Capital contribution from AWS.....................................           --               --            22,475
     Repayments of long-term debt......................................           --               --            (1,236)
     Dividends paid to AWS.............................................           --               --              (100)
                                                                         -----------------------------------------------

                 Net cash provided by financing activities.............           --               --            21,139
                                                                         ----------------------------------------------

Increase (decrease) in cash and cash equivalents.......................       (7,704)          (3,548)           20,511
Cash and cash equivalents at beginning of year.........................       18,726           22,274             1,763
                                                                         ----------------------------------------------

Cash and cash equivalents at end of year...............................  $    11,022      $    18,726       $    22,274
                                                                         ==============================================
</TABLE>

See accompanying notes to consolidated financial statements

                                                                              11
<PAGE>

Avalon Holdings Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Consolidated Statements of Shareholders' Equity

   (in thousands)

<TABLE>
<CAPTION>
                                                            For The Three Years Ended December 31, 2000
                                        -------------------------------------------------------------------------------
                                             Shares           Common Stock        Combined
                                        ------------------  -----------------     Capital      Paid-in      Accumulated
                                        Class A   Class B   Class A   Class B     Accounts     Capital        Deficit
                                        ------------------  -----------------     --------     -------     ------------
<S>                                     <C>         <C>     <C>       <C>         <C>          <C>         <C>

Balance at January 1, 1998..........         --      --     $  --     $  --       $ 37,496     $    --       $  (4,549)

Dividends from subsidiaries to
   American Waste Services, Inc.
   prior to the Spin-off............         --      --        --        --           (259)         --              --

Issuance of the Avalon Holdings
   Corporation common stock
   and Spin-off of the Avalon
   Business from AWS................      3,176     627        32         6        (37,237)     37,199              --

Capital contribution from
   American Waste Services, Inc.
   (Note 1).........................         --      --        --        --             --      20,897              --
Net loss............................         --      --        --        --             --          --            (647)
                                       -------------------------------------------------------------------------------

Balance at December 31, 1998........      3,176     627        32         6             --      58,096          (5,196)

Conversion of shares by
   shareholders.....................          9      (9)       --        --             --          --              --

Net income..........................         --      --        --        --             --          --           1,223
                                       -------------------------------------------------------------------------------

Balance at December 31, 1999........      3,185     618        32         6             --      58,096          (3,973)


Net Loss............................         --      --        --        --             --          --          (2,433)
                                       -------------------------------------------------------------------------------

Balance at December 31, 2000........      3,185     618    $   32     $   6       $     --     $58,096       $  (6,406)
                                       ===============================================================================
</TABLE>


See accompanying notes to consolidated financial statements.

12
<PAGE>

Avalon Holdings Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Consolidated Financial Statements


Note 1.  Description of the Business

Avalon Holdings Corporation ("Avalon" or "Company") was formed on April 30, 1998
as a subsidiary of American Waste Services, Inc. ("AWS").  Pursuant to the terms
of a Contribution and Distribution Agreement dated as of May 7, 1998 between
Avalon and AWS, AWS contributed to Avalon its transportation operations,
technical environmental services operations, waste disposal brokerage and
management operations, and golf course and related operations together with
certain other assets including the headquarters of AWS and certain accounts
receivable.  In connection with the contribution, Avalon assumed certain
liabilities of AWS including, without limitation, liabilities relating to the
termination of certain employees of AWS and costs and potential liabilities
relating to a certain legal proceeding.  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 (the
"Spin-off").

Avalon Holdings Corporation provides transportation services, technical
environmental services, and waste disposal brokerage and management services to
industrial, commercial, municipal and governmental customers primarily in
selected northeastern and midwestern U.S. markets.  Avalon Holdings Corporation
also owns and operates a public golf course and travel agency.

Note 2.  Summary of Significant Accounting Policies

The significant accounting policies of Avalon which are summarized below are
consistent with generally accepted accounting principles and reflect practices
appropriate to the businesses in which they operate.  The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.  Actual results could differ
from those estimates. Certain prior year amounts have been reclassified to be
consistent with the 2000 presentations.

Principles of consolidation

The consolidated financial statements include the accounts of Avalon including
all wholly owned subsidiaries.  All significant intercompany accounts and
transactions have been eliminated in consolidation.  The financial information
of Avalon for all periods presented prior to June 18, 1998 reflect the combined
operations of the businesses of Avalon while operating as subsidiaries of
American Waste Services, Inc.

Cash and cash equivalents

Cash and cash equivalents include money market instruments and other highly
liquid investments that are stated at cost which approximates market value.
Such investments, which mature in three months or less from date of purchase,
are considered to be cash equivalents for purposes of the Consolidated
Statements of Cash Flows and Consolidated Balance Sheets. The balance of such
short-term investments was $10,223,000 and $18,166,000 at December 31, 2000 and
1999, respectively. Such investments were not insured by the Federal Deposit
Insurance Corporation.

Avalon maintains its cash balances in several 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 cash and cash equivalents.

Short-term investments

Avalon's securities investments that are bought and held principally for the
purpose of selling them in the near term are classified as trading securities.
Trading securities are recorded at fair value on the balance sheet, with the
change in fair value during the period included in earnings.  Trading securities
are invested primarily in debt securities and are included in the Consolidated
Balance Sheets under the caption "Short-term investments".  The balance of
Avalon's trading securities at December 31, 2000 was approximately $734,000.  As
of December 31, 2000 the unrealized gain on trading securities was approximately
$11,000.

Also at December 31, 2000, Avalon held "available-for-sale" securities which
were primarily invested in debt securities.  The approximate fair value of these
available-for-sale securities at December 31, 2000 was $25,000, and

                                                                              13
<PAGE>

such balance was included in the Consolidated Balance Sheet under the caption
"Short-term investments". At December 31, 2000, the cost of available-for-sale
securities approximated their fair value and therefore Avalon had no unrealized
gains or losses on these securities.

Financial instruments

The fair value of financial instruments consisting of cash, cash equivalents,
receivables, and accounts payable at December 31, 2000 and 1999, approximates
carrying value due to the relative short maturity of these financial
instruments.

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, transportation
equipment and vehicles, and office furniture and equipment (See Note 3).

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 currently.  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 currently.  Interest costs, if any, are capitalized on significant
construction projects.

Costs in excess of fair market value of net assets
of acquired businesses ("Goodwill")

Goodwill is amortized on a straight-line basis over 25 years.  Amortization of
these costs was $149,000 in 2000 and 1999 and $172,000 in 1998.  Accumulated
amortization at December 31, 2000 and 1999 was $1,115,000 and $1,720,000,
respectively.  During the fourth quarter of 2000 and the fourth quarter of 1998,
in accordance with Avalon's asset impairment policy, a portion of the goodwill
was written off (see Note 3).

Income taxes

Income taxes are accounted for under the asset and liability method.  Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards.  Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.  The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

Prior to the Spin-off, Avalon's operations were included in the consolidated
federal and state income tax returns of AWS.  For all periods presented, the
income tax provisions and tax liabilities of Avalon have been recorded as if
Avalon had been a stand-alone entity filing separate tax returns.

Revenue recognition

Avalon recognizes revenue for transportation services on the date of delivery.
Revenue for waste disposal brokerage and management services and technical
environmental services, excluding laboratory services, is recognized as services
are performed, while revenue for laboratory services is recognized when the
service is completed.  On contracts where the percentage-of-completion method is
used, revenue is recognized for a portion of the total contract revenue, in the
proportion that costs incurred bear to management's estimate of total contract
costs to be incurred, commencing when progress reaches a point where experience
is sufficient to estimate final results with reasonable accuracy. Earnings and
costs on contracts are subject to revision throughout the term of the contract,
and any required revisions are made in the periods in which the revisions become
known.  Provision is made for the full amount of anticipated losses in the
period in which they are determinable.

Costs and estimated earnings in excess of billings on uncompleted contracts
represent revenues recognized on contracts for which billings will be presented
in accordance with contract provisions.  Such revenues are generally expected to
be billed and collected within one year.

Asset impairments

Avalon periodically reviews the carrying value of certain of its assets in
relation to historical results, current business conditions and trends to
identify potential situations in which the carrying value of assets may not be
recoverable.  If such reviews indicate that the carrying value of such assets
may not be recoverable, Avalon would estimate the undiscounted sum of the
expected future cash flows of

14
<PAGE>

such assets to determine if such sum is less than the carrying value of such
assets to ascertain if an impairment exists. If an impairment exists, Avalon
would determine the fair value by using quoted market prices, if available, for
such assets; or if quoted market prices are not available, Avalon would discount
the expected future cash flows of such assets.

Environmental liabilities

When Avalon concludes that it is probable that a liability has been incurred
with respect to a site, a provision is made in Avalon's financial statements for
Avalon's best estimate of the liability based on management's judgment and
experience, information available from regulatory agencies, and the number,
financial resources and relative degree of responsibility of other potentially
responsible parties who are jointly and severally liable for remediation of that
site as well as the typical allocation of costs among such parties.  If a range
of possible outcomes is estimated and no amount within the range appears to be a
better estimate than any other, then Avalon provides for the minimum amount
within the range, in accordance with generally accepted accounting principles.
The liability is recognized on an undiscounted basis.  Avalon's estimates are
revised, as deemed necessary, as additional information becomes known.

Basic net income (loss) per share and pro forma net income (loss) per share

For the years ended December 31, 2000 and 1999 basic net income (loss) per share
has been computed using the weighted average number of common shares outstanding
which was 3,803,331.  For purposes of determining the pro forma net loss per
share data for the year ended December 31, 1998 all of Avalon's common stock
issued as a result of the Spin-off is deemed to have been outstanding for 1998.
As such, the weighted average number of shares outstanding for 1998 is
3,803,331.  There were no common equivalent shares outstanding and therefore
diluted per share amounts are equal to basic per share amounts for 2000, 1999
and 1998.

Comprehensive income

Comprehensive income equals net income for all years presented.

Selling, general and administrative expense

Certain selling, general and administrative expenses were allocated to Avalon
from AWS prior to the Spin-off.  The amount allocated to Avalon from AWS from
January 1, 1998 to June 17, 1998 amounted to $867,000. These costs represent
costs of AWS allocated to Avalon and are not necessarily representative of what
these costs would have been if Avalon had been operating as an independent
basis.

Note 3.  Long-lived Asset Impairments

The engineering and consulting business of Avalon's technical environmental
services operations experienced a significant loss before taxes in 2000 due to
increased competition, increased operating costs and a decline in net operating
revenues compared with the prior year.  As a result, Avalon closed its
engineering and consulting office in Akron, Ohio and reduced its workforce by
approximately 30% in January 2001.  In accordance with Avalon's asset impairment
policy, Avalon performed an evaluation of the non-current assets of the
engineering and consulting business including the costs in excess of fair market
value of net assets of acquired businesses ("goodwill") to determine if the
carrying value of such assets was recoverable.

In accordance with Avalon's asset impairment policy, to ascertain whether an
impairment existed, Avalon estimated the undiscounted sum of the expected future
cash flows of the engineering and consulting business to determine if such sum
was less than the carrying value of the non-current assets.  The evaluation
indicated the existence of an impairment and Avalon determined the fair value of
the non-current assets (and measured the extent of the impairment) by
discounting the expected future cash flows at the rate of 6%.  As a result, in
the fourth quarter of 2000, Avalon recorded a write-down of goodwill in the
amount of $1,093,000 and a write-down of other non-current assets of $747,000.
These amounts are included in the Consolidated Statements of Operations under
the captions "Write-down of costs in excess of fair market value of net assets
of acquired businesses" and "Write-down of assets", respectively.

During the fourth quarter of 1998, the remediation business of Avalon's
technical environmental services operations continued to experience operating
losses.  As a result, Avalon changed the focus of its remediation business from
larger projects to smaller projects and to providing support to Avalon's other
environmental services.  In accordance with Avalon's asset impairment policy,
Avalon performed an evaluation of the goodwill of the remediation business to
determine if the carrying value of such asset was recoverable.

                                                                              15
<PAGE>

In accordance with Avalon's asset impairment policy, to ascertain whether an
impairment existed, Avalon estimated the undiscounted sum of the expected future
after-tax cash flows of the remediation business, excluding amortization of
goodwill, to determine if such sum was less than the carrying value of the
goodwill, which had a remaining life of 17 years.  The evaluation indicated the
existence of an impairment.

As a result of the existence of an impairment, in determining the fair value of
the goodwill, Avalon concluded that the remediation business could not be sold
for more than the carrying value of its property and equipment.  Therefore,
Avalon recorded a write-down of the goodwill in the amount of $377,000 in the
fourth quarter of 1998.  The write-down is included in the Consolidated
Statements of Operations under the caption "Write-down of costs in excess of
fair market value of net assets of acquired businesses."

In addition, as a result of the change in focus to smaller remediation projects,
the management of the remediation business decided during the fourth quarter of
1998 to sell a piece of equipment which had been utilized solely on large
remediation projects.  In accordance with Avalon's asset impairment policy,
Avalon recorded a write-down of $100,000 in the fourth quarter of 1998 to
reflect the fair value of this asset.  This write-down is included in the
Consolidated Statements of Operations under the caption "Write-down of assets."

During the fourth quarter of 1998, Avalon also committed to a plan to dispose of
certain assets of the transportation operations which resulted in the write-down
of such assets in accordance with Avalon's asset impairment policy.  Prior to
the Spin-off, Avalon used special containers designed primarily for hauling
waste over long distances to an affiliated disposal facility which owned special
equipment necessary to unload these specialized containers.  As a result of the
transportation operation's decreased utilization of these containers subsequent
to the Spin-off and the fact that the disposal facility which owns the unloading
equipment is no longer affiliated with Avalon, management of the transportation
operations decided during the fourth quarter of 1998 to discontinue utilizing
these special containers and to sell or dispose of them.  In accordance with
Avalon's asset impairment policy, Avalon, therefore, recorded a write-down of
$499,000 in the fourth quarter of 1998 to reflect the fair value of these
assets.  The write-down is included in the Consolidated Statements of Operations
for the year ended December 31, 1998 under the caption "Write-down of assets."


Note 4.  Property and Equipment

Property and equipment at December 31, 2000 and 1999 consists of the following
(in thousands):

                                       2000       1999
                                     --------   --------
Land and land improvements.........  $  9,798   $  3,885
Buildings and improvements.........    11,814     13,610
Machinery and equipment............     6,019      5,118
Transportation equipment and
         vehicles..................    13,692     12,992
Office furniture and equipment.....     4,952      4,777
Construction in progress...........       494      2,427
                                     -------------------
                                       46,769     42,809
Less accumulated depreciation and
      amortization.................   (16,670)   (16,644)
                                     -------------------
Property and equipment, net........  $ 30,099   $ 26,165
                                     ===================

Included in construction in progress at December 31, 1999 was $2,420,000 of
capital improvements relating to the golf course.

Note 5.  Income Taxes

Prior to the Spin-off, Avalon's operations were included in the consolidated
federal and state income tax returns of AWS.  For all periods presented, the
income tax provisions and tax liabilities of Avalon have been recorded as if
Avalon had been a stand-alone entity filing separate tax returns.

Income (loss) before income taxes for each of the three years ended December 31,
2000 was subject to taxation under United States jurisdictions only.

The provisions (benefits) for income taxes charged to operations consist of the
following (in thousands):

                                              2000    1999   1998
                                             ---------------------
Current:
Federal...................................   $(515)  $ 835  $ 701
State.....................................      48      85     44
                                             --------------------
                                              (467)    920    745
                                             --------------------
Deferred:
Federal...................................     (93)     34   (527)
State.....................................    (183)     24    (35)
                                             --------------------
                                              (276)     58   (562)
                                             --------------------
                                             $(743)  $ 978  $ 183
                                             ====================

16
<PAGE>

The tax effects of temporary differences that give rise to significant portions
of the deferred tax (assets) liabilities at December 31, 2000 and 1999 are as
follows (in thousands):

                                                           2000     1999
                                                         ---------------
Deferred tax assets:
Accounts receivable, principally due
    to allowance for doubtful accounts.................  $ (156)  $ (288)
Reserves not deductible until paid.....................    (205)    (312)
Net operating loss carry-forwards
     Federal...........................................    (245)      --
    State..............................................    (278)     (89)
Other..................................................     (16)     (50)
                                                         ---------------
Gross deferred tax assets..............................    (900)    (739)
Less valuation allowance...............................      35       35
                                                         ---------------
Net deferred tax assets................................  $ (865)  $ (704)
                                                         ---------------


Deferred tax liabilities:
Property and equipment.................................  $1,486   $1,651
Other..................................................      54        4
                                                         ---------------
Gross deferred tax liabilities.........................   1,540    1,655
                                                         ---------------

Net deferred tax liability.............................  $  675   $  951
                                                         ===============

The provision (benefit) for income taxes differs from

the amount of income tax determined by applying the applicable U.S. statutory
federal income tax rate to income (loss) before income taxes as a result of the
following differences (in thousands):


                                                 2000     1999      1998
                                               ---------------------------
Income (loss) before income
 taxes....................................     $(3,176)  $2,201   $  (464)
Federal statutory tax rate................          35%      35%       35%
                                               ---------------------------
                                                (1,112)     770      (162)

State income taxes, net
 of federal income tax
 benefits.................................         (88)      71         6
Nondeductible amortization
 and depreciation.........................         423       51       187
Other nondeductible
 expenses.................................         113      119       132
Other, net................................         (79)     (33)       20
                                               --------------------------
                                               $  (743)  $  978   $   183
                                               ==========================

Avalon had net income tax refunds of $118,000 in 2000 and made net income tax
payments of  $1,376,000 and $109,000 in 1999 and 1998, respectively.  At
December 31, 2000 Avalon has a taxable loss for federal income tax purposes of
$1,683,000, of which $994,000 is being utilized as a carryback to reduce taxable
income of a prior year.  Refundable income taxes of $327,000 have been recorded
as a result of the carryback.  The remaining taxable loss of $689,000 is
available to offset future taxable income through 2020.

In addition, at December 31, 2000 and 1999, certain subsidiaries of Avalon have
net operating loss carryforwards for state purposes aggregating $3,774,000 and
$1,169,000, respectively, which are available to offset future state taxable
income.

Note 6.  Retirement Benefits

Avalon sponsors a defined contribution profit sharing plan that is a qualified
tax deferred benefit plan under Section 401(k) of the Internal Revenue Code (the
"Plan").  Substantially all employees are eligible to participate in the Plan.
The Plan provides for employer discretionary cash contributions determined by
Avalon's Board of Directors.  Discretionary contributions vest on a graduated
basis and become 100% vested after six years of service.  Plan participants may
also contribute a portion of their annual compensation to the Plan, subject to
maximums imposed by the Internal Revenue Code and related regulations.  Costs
charged to operations for Avalon's contributions were $624,000, $588,000 and
$604,000 for the years 2000, 1999 and 1998, respectively.  The liability for
Avalon's contribution is included in the Consolidated Balance Sheets under the
caption "Other liabilities and accrued expenses."

Note 7. Stock Option Plan

Effective July 1, 1998, Avalon adopted the 1998 Long-term Incentive Plan which
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.  Avalon has reserved 1,300,000 shares
of Class A Common Stock for issuance to employees and non-employee directors.
NQSO's may be granted with an exercise price which is not less than 85% 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 1998 Long-term Incentive Plan.  Options shall have a term of no longer than
ten years from the date of grant; except that for

                                                                              17
<PAGE>

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.

To date, no options have been granted under the 1998 Long-term Incentive Plan.

Note 8. Shareholders' Equity

Each share of Class A Common Stock is entitled to one vote and each share of
Class B Common Stock is entitled to ten votes on all matters submitted to a vote
of the shareholders.  Except for the election of Avalon's Board of Directors,
the Class A Common Stock and the Class B Common Stock vote together as a single
class on all matters presented for a vote of the shareholders.  However, with
regard to the election of directors, for as long as the outstanding Class B
Common Stock has more than 50% of the total outstanding voting power of all
Common Stock, the holders of the Class A Common Stock, voting as a separate
class, will elect the number of directors equal to at least 25% of the total
Board of Directors and the holders of the Class B Common Stock, voting as a
separate class, will elect the remaining directors.  Thereafter, the holders of
the Class A and Class B Common Stock will vote together as a single class for
the election of directors.  The holders of a majority of all outstanding shares
of Class A Common Stock or Class B Common Stock, voting as separate classes,
must also approve amendments to the Articles of Incorporation that adversely
affect the shares of their class.  Shares of Class A Common Stock and Class B
Common Stock do not have cumulative voting rights.

Each share of Class B Common Stock is convertible, at any time, at the option of
the shareholder, into one share of Class A Common Stock.  Shares of Class B
Common Stock are also automatically converted into shares of Class A Common
Stock on the transfer of such shares to any person other than Avalon, another
holder of Class B Common Stock or a Permitted Transferee, as defined in Avalon's
Articles of Incorporation.  The Class A Common Stock is not convertible.

In December 2000, Avalon authorized the repurchase of up to 1,000,000 shares of
its Class A Common Stock for an aggregate amount not to exceed $2,500,000.
Using available cash, Avalon plans to make purchases from time to time in the
open market and in private negotiated transactions.  The amount and timing of
any share purchases will be based upon management's ongoing assessment of
Avalon's capital structure, liquidity, general market conditions and other
corporate considerations.

Note 9.  Legal Matters

In September 1995, certain subsidiaries of Avalon were informed that they had
been identified as potentially responsible parties by the Indiana Department of
Environmental Management with respect to a Fulton County, Indiana, hazardous
waste disposal facility which is subject to remedial action under Indiana
Environmental Laws.  Such identification was based upon the subsidiaries having
been involved in the transportation of hazardous substances to the facility.  A
large number of waste generators and other waste transportation and disposal
companies were also identified as responsible or potentially responsible parties
with respect to this facility.  During the fourth quarter of 1999, Avalon became
a party to an Agreed Order and a Participation Agreement regarding the
remediation of a portion of this site.  The Participation Agreement provides
for, among other things, the allocation of all site remediation costs except for
approximately $3 million.  Avalon's total liability for the allocated costs
under the Participation Agreement was approximately $71,000 which Avalon has
paid.

The additional unallocated site remediation costs are currently estimated to be
approximately $3 million and Avalon's total accrued liability relating to the
remediation of this portion of the site on an undiscounted basis is $120,000,
which is included in the December 31, 2000 and 1999 Consolidated Balance Sheets
under the caption "Other noncurrent liabilities."  The extent of any ultimate
liability of any of Avalon's subsidiaries with respect to these additional costs
is unknown.  The measurement of environmental liabilities is inherently
difficult and the possibility remains that technological, regulatory or
enforcement developments, the results of environmental studies or other factors
could materially alter Avalon's expectations at any time.  Currently, however,
because of the expected sharing among responsible and potentially responsible
parties, the availability of legal defenses, and typical settlement results,
Avalon currently estimates that

18
<PAGE>

the ultimate liability for this matter will be consistent with the amounts
recorded on Avalon's financial statements.

In the ordinary course of conducting its business, Avalon also becomes involved
in lawsuits, administrative proceedings and governmental investigations,
including those relating to the 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, would have a material adverse
effect on it.

Note 10.  Lease Commitments

Avalon leases certain office facilities, vehicles, machinery and equipment.
Future commitments under long-term, noncancellable operating leases at December
31, 2000 are as follows (in thousands):

Year ending December 31,
- ------------------------

2001........................................................  $   3,047
2002........................................................      2,702
2003........................................................      2,533
2004........................................................      2,020
2005........................................................      1,805
After 2005..................................................      1,493
                                                              ---------
                                                              $  13,600
                                                              =========

Rental expense included in the Consolidated Statements of Operations amounted to
$4,616,000 in 2000, $3,593,000 in 1999, and $2,800,000 in 1998. Periodically,
Avalon's transportation operations rent additional transportation equipment on a
short-term basis in order to meet its hauling obligations

Note 11.  Business Segment Information

Effective for the year ended December 31, 1998, Avalon adopted Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information," requiring that companies disclose segment
data based on how management makes resource allocation decisions and evaluates
segment operating performance.

In applying the Statement, Avalon considered its operating and management
structure and the types of information subject to regular review by its "chief
operating decision maker."  On this basis, Avalon's reportable segments include
transportation services, technical environmental services, waste disposal
brokerage and 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
years presented.

Avalon's primary business segment provides transportation services that include
transportation of hazardous and non-hazardous waste, transportation of general
and bulk commodities and transportation brokerage and management services.  The
technical environmental services segment provides environmental consulting,
engineering, site assessments, analytical laboratory, remediation services and
operates and manages a captive landfill for an industrial customer. The waste
disposal brokerage and management services segment provides hazardous and
nonhazardous disposal brokerage and management services.  The golf and related
operations includes the operations of a public golf course and travel agency.
Avalon does not have significant operations located outside the United States
and, accordingly, geographical segment information is not presented.

Prior to the Spin-off, the transportation services segment obtained
approximately $2.4 million of its net operating revenue from AWS's landfill
subsidiaries in 1998.  The other Avalon segments did not have significant
transactions with the AWS landfill subsidiaries in 1998.

The accounting policies of the segments are consistent with those described for
the consolidated financial statements in the summary of significant accounting
policies (see Note 2).  Avalon measures segment profit for internal reporting
purposes as income (loss) before taxes.  Business segment information including
the reconciliation of segment income to consolidated income (loss) before taxes
is as follows (in thousands):

                                                                              19
<PAGE>

Avalon Holdings Corporation and Subsidiaries
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                  2000       1999       1998
                                                                                              ------------------------------
<S>                                                                                           <C>        <C>        <C>
Net operating revenues from:
Transportation services:
  External customers revenues...........................................................      $ 39,809   $ 34,607   $ 33,105
  Intersegment revenues.................................................................         6,519      5,483      4,215
                                                                                              ------------------------------
  Total transportation services.........................................................        46,328     40,090     37,320
                                                                                              ------------------------------

Technical environmental services:
  External customers revenues...........................................................        27,232     28,871     25,192
  Intersegment revenues.................................................................            73        124        134
                                                                                              ------------------------------
  Total technical environmental services................................................        27,305     28,995     25,326
                                                                                              ------------------------------

Waste disposal brokerage and management services:
  External customers revenues...........................................................        16,650     15,302     12,900
  Intersegment revenues.................................................................         5,331      3,231      1,534
                                                                                              ------------------------------
  Total waste disposal brokerage and management services................................        21,981     18,533     14,434
                                                                                              ------------------------------

Golf and related operations:
  External customer revenues............................................................           516      1,115      1,857
  Intersegment revenues.................................................................           228        278        286
                                                                                              ------------------------------
  Total golf and related operations.....................................................           744      1,393      2,143
                                                                                              ------------------------------

Other businesses:
  External customers revenues...........................................................            83        965      1,441
  Intersegment revenues.................................................................            --         15         --
                                                                                              ------------------------------
  Total other businesses................................................................            83        980      1,441
                                                                                              ------------------------------
  Segment operating revenues............................................................        96,441     89,991     80,664
  Intersegment eliminations.............................................................       (12,151)    (9,131)    (6,169)
                                                                                              ------------------------------
  Total net operating revenues..........................................................      $ 84,290   $ 80,860   $ 74,495
                                                                                              ------------------------------

Income (loss) before taxes:
  Transportation services...............................................................      $  1,057   $  2,334   $  1,575
  Technical environmental services......................................................        (1,703)     1,991       (115)
  Waste disposal brokerage and management services......................................         1,104      1,369      1,282
  Golf and related operations...........................................................        (1,062)      (187)       399
  Other businesses......................................................................          (192)      (170)       (38)
                                                                                              ------------------------------
  Segment income (loss) before taxes....................................................          (796)     5,337      3,103
  Corporate interest income.............................................................           755        944        557
  Corporate other income, net...........................................................           298          2         35
  General corporate expenses............................................................        (3,433)    (4,082)    (4,159)
                                                                                              ------------------------------
  Income (loss) before taxes............................................................      $ (3,176)  $  2,201   $   (464)
                                                                                              ------------------------------

Depreciation and amortization:
  Transportation services...............................................................      $  1,622   $  1,459   $  1,294
  Technical environmental services......................................................         1,141      1,076        961
  Waste disposal brokerage and management services......................................             9         --         --
  Golf and related operations...........................................................           253        171        197
  Other businesses......................................................................            32         60         76
  Corporate.............................................................................           208        196         94
                                                                                              ------------------------------
      Total.............................................................................      $  3,265   $  2,962   $  2,622
                                                                                              ------------------------------

Interest income:
  Transportation services...............................................................      $     58   $     38   $     35
  Technical environmental services......................................................            27         41         40
  Waste disposal brokerage and management services......................................            33         40         18
  Golf and related operations...........................................................             6         --         --
  Other businesses......................................................................            --         10         17
  Corporate.............................................................................           755        944        557
                                                                                              ------------------------------
      Total.............................................................................      $    879   $  1,073   $    667
                                                                                              ------------------------------

Other significant noncash items:
  Write-down of assets:
    Transportation services.............................................................      $     --   $     --   $    499
    Technical environmental services....................................................           747         --        100
    Other businesses....................................................................            49         --         --
                                                                                              ------------------------------
      Total.............................................................................      $    796   $     --   $    599
                                                                                              ------------------------------

  Write-down of costs in excess of
   fair market value of net assets of
   acquired  businesses:
    Technical environmental services....................................................      $  1,093   $     --   $    377
                                                                                              ------------------------------
      Total.............................................................................      $  1,093   $     --   $    377
                                                                                              ------------------------------

Capital expenditures:
  Transportation services...............................................................      $  2,295   $  2,593   $  1,171
  Technical environmental services......................................................         1,031        655        895
  Waste disposal brokerage and management services......................................           104         --         --
  Golf and related operations...........................................................         4,644      2,598         53
  Other businesses......................................................................            --         --          5
  Corporate.............................................................................            70         52        145
                                                                                              ------------------------------
      Total.............................................................................      $  8,144   $  5,898   $  2,269
                                                                                              ------------------------------

Identifiable assets at December 31:
  Transportation services...............................................................      $ 14,365   $ 15,653   $ 17,288
  Technical environmental services......................................................        14,253     16,652     17,954
  Waste disposal brokerage and management services......................................         4,027      4,358      3,165
  Golf and related operations...........................................................        12,238      7,812      5,636
  Other businesses......................................................................            67        446        333
  Corporate.............................................................................        31,246     28,793     30,388
                                                                                              ------------------------------
      Sub Total.........................................................................        76,196     73,714     74,764
  Elimination of intersegment receivables...............................................       (13,886)    (7,310)    (8,079)
                                                                                              ------------------------------
      Total.............................................................................      $ 62,310   $ 66,404   $ 66,685
                                                                                              ------------------------------
</TABLE>

20
<PAGE>

Avalon Holdings Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Note 12.  Quarterly financial data (Unaudited)

Selected quarterly financial data for each quarter in 2000 and 1999 is as
follows:

<TABLE>
<CAPTION>
                                                              Year Ended December 31, 2000
                                                -------------------------------------------------------
                                                  First      Second      Third       Fourth
                                                 Quarter    Quarter     Quarter      Quarter     Total
                                                -------------------------------------------------------
<S>                                             <C>         <C>         <C>         <C>         <C>
Net operating revenues....................      $21,252     $21,463     $21,968     $19,607     $84,290
Income (loss) from operations.............         (550)       (596)       (512)     (2,935)     (4,593)
Net loss..................................         (137)       (188)       (168)     (1,940)     (2,433)
Net loss per share........................      $  (.04)    $  (.05)    $  (.04)    $  (.51)    $  (.64)
                                                -------------------------------------------------------

                                                            Year Ended December   31, 1999
                                                -------------------------------------------------------
                                                 First       Second      Third       Fourth
                                                Quarter      Quarter    Quarter      Quarter     Total
                                                -------------------------------------------------------
Net operating revenues....................      $19,494     $19,542     $21,513     $20,311     $80,860
Income (loss) from operations.............         (169)        349         872         (60)        992
Net income................................           66         365         612         180       1,223
Net income per share......................      $   .02     $   .10     $   .16     $   .05     $   .32
                                                -------------------------------------------------------
</TABLE>

================================================================================

Independent Auditors' Report

The Shareholders and Board of Directors of Avalon Holdings Corporation

We have audited the accompanying consolidated balance sheets of Avalon Holdings
Corporation and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years then ended.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Avalon
Holdings Corporation and subsidiaries as of December 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.

Grant Thornton LLP


Cleveland, Ohio
March 2, 2001

                                                                              21
<PAGE>

Avalon Holdings Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Independent Auditors' Report

The Shareholders and Board of Directors of Avalon Holdings Corporation

We have audited the accompanying consolidated statements of operations,
shareholders' equity, and cash flows of Avalon Holdings Corporation and
subsidiaries (formerly the Avalon Business of American Waste Services, Inc.) for
the year ended December 31, 1998.  These consolidated financial statements are
the responsibility of the Company's management.  Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and the cash flows
of Avalon Holdings Corporation and subsidiaries (formerly the Avalon Business of
American Waste Services, Inc.) for the year ended December 31, 1998 in
conformity with accounting principles generally accepted in the United States of
America.


KPMG LLP


Cleveland, Ohio
March 10, 1999

22
<PAGE>

Digest of Financial Data

<TABLE>
<CAPTION>
                                                                                (All amounts are in thousands, except per share
                                                                                data, percentages and number of employees)
                                                                                ----------------------------------------------------
                                                                                     2000       1999      1998      1997      1996
                                                                                ----------------------------------------------------
<S>                                                                             <C>          <C>       <C>        <C>       <C>
Selected statement of operations information
Net operating revenues........................................................     $84,290   $ 80,860  $ 74,495   $60,687   $61,361
Income (loss) from operations.................................................      (4,593)       992    (1,551)     (941)    2,109
Interest expense..............................................................          --          2        45       118       141
Net income (loss).............................................................      (2,433)     1,223      (647)     (666)    1,337
Net income (loss) and pro forma net (loss) per share (*)......................        (.64)       .32      (.17)     (.26)        *
Dividends per Class A share...................................................          --         --        --        --        --
Dividends per Class B share...................................................          --         --        --        --        --
Weighted average shares used to calculate net income and
 pro forma net (loss) per share (*)...........................................       3,803      3,803     3,803     3,803         *

Selected cash flow information
Cash provided by
 operating activities.........................................................         740      2,046     1,558     2,749       361
Cash used for capital expenditures............................................       8,144      5,898     2,269     2,881     1,698

Selected year-end balance sheet information
Cash and cash equivalents.....................................................      11,022     18,726    22,274     1,763     1,975
Current assets................................................................      30,952     37,738    40,666    22,078    23,090
Current liabilities...........................................................       9,223     10,769    11,693     8,341     7,780
Working capital...............................................................      21,729     26,969    28,973    13,737    15,310
Properties less accumulated
 depreciation and amortization................................................      30,099     26,165    23,300    19,184    18,680
Total assets..................................................................      62,310     66,404    66,685    44,517    45,099
Current portion of long-term debt.............................................          --         --        --       230       305
Long-term debt................................................................          --         --        --     1,006     1,236
Deferred income taxes (non-current)...........................................       1,239      1,354     1,209     1,367     1,429
Shareholders' equity..........................................................      51,728     54,161    52,938    32,947    33,713

Other information
Working capital ratio.........................................................       3.4:1      3.5:1     3.5:1     2.6:1     3.0:1
Percent of debt-to-total capital employed.....................................          --         --        --         4%        4%
Quoted market price-Class A Shares:
 High.........................................................................       5 3/4      7 1/4     9 1/2       N/A       N/A
 Low..........................................................................      2 5/16    4 13/16   5 11/16       N/A       N/A
 Year-end.....................................................................       2 3/4          5    7 1/16       N/A       N/A
Number of employees at year-end...............................................         450        470       441       373       364
</TABLE>

(*) In accordance with Securities and Exchange Commission regulations, pro forma
    per share data has been presented only for 1998, the year in which the Spin-
    off occurred, and the preceding year. For purposes of determining the pro
    forma per share data, all of Avalon's common stock issued as a result of the
    Spin-off is deemed to have been outstanding since the beginning of 1997.

                                                                              23
<PAGE>

<TABLE>
<S>                            <C>                              <C>
Company Location Directory

Corporate Office               Transportation Offices           Technical
                                                                Environmental
Avalon Holdings Corporation    DartAmericA, Inc.                Services
One American Way               Dart Trucking Company, Inc.
Warren, Ohio 44484-5555        Dart Services, Inc.              Earth Sciences
(330) 856-8800                 TRB National Systems, Inc.       Consultants, Inc.
                               One American Way                 Corporate Headquarters
                               Warren, Ohio 44484-5555          One Triangle Lane
Waste Disposal                 (330) 856-8430                   Export, Pennsylvania 15632
Brokerage and                                                   (724) 733-3000
Management Services
                               Transportation Terminals         Antech Ltd.
American Waste Management                                       One Triangle Lane
Services, Inc.                 Dart Trucking Company, Inc.      Export, Pennsylvania 15632
One American Way               61 Railroad Street               (724) 733-1161
Warren, Ohio 44484-5555        Canfield, Ohio 44406
(330) 856-8800                                                  AWS Remediation, Inc.
                               Dart Trucking Company, Inc.      One Triangle Lane
                               200 Old Webster Road             Export, Pennsylvania 15632
Golf and Related               Oxford, Massachusetts 01540      (724) 733-1009
Operations
                               Dart Trucking Company, Inc.      American Landfill
Avalon Lakes Golf, Inc.        1807A Route 7                    Management, Inc.
One American Way               Kenova, West Virginia 25530      One American Way
Warren, Ohio 44484-5555                                         Warren, Ohio 44484-5555
(330) 856-8898                 Dart Trucking Company, Inc.      (330) 856-8800
                               11861 S. Cottage Grove Ave.
Avalon Travel, Inc.            Chicago, Illinois 60628
One American Way
Warren, Ohio 44484-5555        Dart Trucking Company, Inc.
(330) 856-8400                 5 Crown Point Drive
                               Paulsboro, New Jersey 08066

                               Dart Trucking Company, Inc.
                               11 Riverway Place
                               Building 1
                               Bedford, New Hampshire 03110
</TABLE>

24
<PAGE>

Directors and Officers

Directors                                 Officers

Ronald E. Klingle
/1/(Chairman) /2/(Chairman)               Ronald E. Klingle
Chairman of the Board and                 Chairman of the Board and
Chief Executive Officer                   Chief Executive Officer

Sanford B. Ferguson/1,3,4/ (Chairman)     Timothy C. Coxson
Chairman and Chief Executive Officer of   Treasurer and Chief Financial Officer
Seven Springs Farm, Inc.


Robert M. Arnoni/2,3,4/                   Jeffrey M. Grinstein
President, Arnoni Development             Secretary
Company, Inc.

                                          Frances R. Klingle
Stephen L. Gordon/3/(Chairman),/4/        Chief Administrative Officer
Partner, Beveridge & Diamond (law firm)

                                          Kenneth R. Nichols
                                          Vice President, Taxes
Stephen G. Kilper
Chief  Executive Officer,
American Landfill Management, Inc.        Frank Lamanna
Antech, Ltd.                              Vice President, Corporate Financial
AWS Remediation, Inc.                     Services
Earth Sciences Consultants, Inc.



1  Executive Committee
2  Compensation Committee
3  Audit Committee
4  Option Plan Committee

                                                                              25
<PAGE>

Shareholder Information

Annual meeting of shareholders

The annual meeting of shareholders will be held at the Grand Pavilion, One
American Way, Warren, Ohio, on Monday, April 30, 2001, at 10:00 a.m.

Common stock information

Avalon's Class A Common Stock is listed on the American Stock Exchange (symbol:
AWX). Quarterly stock information for 2000, 1999 and from June 18, 1998 to
December 31, 1998 as reported by The Wall Street Journal is as follows:

 2000:
 Quarter Ended            High        Low        Close
- -------------------------------------------------------
 March 31                 5 3/4       4  5/8     4 3/4
 June 30                  4 3/4       3  3/8     3 1/2
 September 30             3 1/2       3          3 1/16
 December 31              3 3/16      2  5/16    2 3/4

 1999:
 Quarter Ended            High        Low        Close
- -------------------------------------------------------
 March 31                 7 1/4       5  9/16    6 1/16
 June 30                  7 1/8       5  3/4     6 3/4
 September 30                 7       5  1/2     5 5/8
 December 31              5 7/8       4 13/16    5

 1998:
 Quarter Ended            High        Low        Close
- --------------------------------------------------------
 June 30                  8           5 11/16    6 5/8
 September 30             9 1/2       6  3/4     8 1/2
 December 31              8 3/8       7          7 1/16

No dividends were paid during 2000.

There are 687 Class A and 12 Class B Common Stock shareholders of record as of
the close of business March 2, 2001. The number of holders is based upon the
actual holders registered on the records of Avalon's transfer agent and
registrar and does not include holders of shares in "street names" or persons,
partnerships, associations, corporations or other entities identified in
security position listings maintained by depository trust companies.

Dividend policy

Avalon presently intends to retain earnings for use in the operation and
expansion of its business and therefore does not anticipate paying any cash
dividends in the foreseeable future.

Annual report on Form 10-K

Copies of Avalon's annual report on Form 10-K can be obtained free of charge by
writing to Avalon Holdings Corporation, One American Way, Warren, Ohio 44484-
5555, Attention: Shareholder Relations.

Transfer agent and registrar

The transfer agent and registrar for Avalon is American Stock Transfer and Trust
Company. All correspondence concerning stock transfers should be directed to
them at 40 Wall Street, New York, New York 10005.

Investor inquiries

Security analysts, institutional investors, shareholders, news media
representatives and other seeking financial information or general information
about Avalon are invited to direct their inquiries to Timothy C. Coxson,
Treasurer and Chief Financial Officer, telephone (330) 856-8800.

________________________________________________________________________________

Policy statement on equal employment opportunity and affirmative action

Avalon is firmly committed to a policy of equal employment opportunity and
affirmative action. Toward this end, Avalon will continue to recruit, hire,
train and promote persons in all job titles, without regard to race, color,
religion, sex, national origin, age, handicap, ancestry or Vietnam-era or
disabled veteran status. We will base all decisions on merit so as to further
the principle of equal employment opportunity. This policy extends to promotions
and to all actions regarding employment including compensation, benefits,
transfers, layoffs, return from layoffs, company-sponsored training and social
programs.

26
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>3
<FILENAME>0003.txt
<TEXT>

<PAGE>

                                                                    Exhibit 21.1


The following is a list of Avalon's subsidiaries except for unnamed subsidiaries
which considered in the aggregate as a single subsidiary, would not constitute a
significant subsidiary.


     Subsidiary Name                              State of Incorporation
- ------------------------------------------------------------------------


 . American Landfill Management, Inc                         Ohio
 . American Waste Management Services, Inc.                  Ohio
 . Antech Ltd.                                               Pennsylvania
 . Avalon Lakes Golf, Inc.                                   Ohio
     . Avalon Travel, Inc.                                  Ohio
     . TBG, Inc.                                            Ohio
 . AWS Remediation, Inc.                                     Pennsylvania
 . DartAmericA, Inc.                                         Ohio
     . Dart Trucking Company, Inc.                          Ohio
          - Dart Realty, Inc.                               Ohio
          - Dart Services, Inc.                             Ohio
     . TRB National Systems, Inc.                           Ohio
 . Earth Sciences Consultants, Inc.                          Pennsylvania


Parent/subsidiary relationships are indicated by indentations. In each case,
100% of the voting securities of each of the subsidiaries is owned by the
indicated parent of such subsidiary.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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