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2025

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2025

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

for the transition period from _______________ to ________________

Commission file number 1-14105

AVALON HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

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

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

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

The registrant had 3,287,647 shares of its Class A Common Stock and 611,784 shares of its Class B Common Stock outstanding as of November 7, 2025.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

INDEX

| Page
PART I. FINANCIAL INFORMATION |
Item 1. Financial Statements |
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) | 1
Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024 (Unaudited) | 2
Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended September 30, 2025 and 2024 (Unaudited) | 3
Condensed Consolidated Statements of Shareholders’ Equity for the Nine Months Ended September 30, 2025 and 2024 (Unaudited) | 4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited) | 5
Notes to Unaudited Condensed Consolidated Financial Statements | 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24
Item 3. Quantitative and Qualitative Disclosures about Market Risk | 37
Item 4. Controls and Procedures | 37
PART II. OTHER INFORMATION |
Item 1. Legal Proceedings | 38
Item 2. Changes in Securities and Use of Proceeds | 38
Item 3. Defaults upon Senior Securities | 38
Item 4. Mine Safety Disclosures | 38
Item 5. Other Information | 38
Item 6. Exhibits and Reports on Form 8-K | 38
SIGNATURE | 39

i

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)

|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Net operating revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Waste management services |  | $ | 12,918 |  |  | $ | 11,461 |  |  | $ | 32,338 |  |  | $ | 36,151 |
Food, beverage and merchandise sales |  |  | 4,553 |  |  |  | 4,615 |  |  |  | 10,337 |  |  |  | 10,622 |
Other golf and related operations |  |  | 8,275 |  |  |  | 8,159 |  |  |  | 19,392 |  |  |  | 19,377 |
Total golf and related operations |  |  | 12,828 |  |  |  | 12,774 |  |  |  | 29,729 |  |  |  | 29,999 |
Total net operating revenues |  |  | 25,746 |  |  |  | 24,235 |  |  |  | 62,067 |  |  |  | 66,150 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Waste management services operating costs |  |  | 10,259 |  |  |  | 8,949 |  |  |  | 25,330 |  |  |  | 28,372 |
Cost of food, beverage and merchandise |  |  | 1,958 |  |  |  | 2,010 |  |  |  | 4,688 |  |  |  | 4,717 |
Golf and related operations operating costs |  |  | 7,425 |  |  |  | 7,308 |  |  |  | 19,401 |  |  |  | 18,925 |
Depreciation and amortization expense |  |  | 932 |  |  |  | 975 |  |  |  | 2,867 |  |  |  | 2,957 |
Selling, general and administrative expenses |  |  | 2,826 |  |  |  | 2,719 |  |  |  | 7,835 |  |  |  | 7,970 |
Operating income |  |  | 2,346 |  |  |  | 2,274 |  |  |  | 1,946 |  |  |  | 3,209 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense, net |  |  | (512 | ) |  |  | (502 | ) |  |  | (1,532 | ) |  |  | (1,531 | )
Other income, net |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7 |
Income before income taxes |  |  | 1,834 |  |  |  | 1,772 |  |  |  | 414 |  |  |  | 1,685 |
Provision for income taxes |  |  | 45 |  |  |  | 42 |  |  |  | 100 |  |  |  | 126 |
Net income |  |  | 1,789 |  |  |  | 1,730 |  |  |  | 314 |  |  |  | 1,559 |
Less net loss attributable to non-controlling interest in subsidiaries |  |  | (113 | ) |  |  | (110 | ) |  |  | (363 | ) |  |  | (256 | )
Net income attributable to Avalon Holdings Corporation common shareholders |  | $ | 1,902 |  |  | $ | 1,840 |  |  | $ | 677 |  |  | $ | 1,815 |
Income per share attributable to Avalon Holdings Corporation common shareholders: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic net income per share |  | $ | 0.49 |  |  | $ | 0.47 |  |  | $ | 0.17 |  |  | $ | 0.47 |
Weighted average shares outstanding - basic |  |  | 3,899 |  |  |  | 3,899 |  |  |  | 3,899 |  |  |  | 3,899 |

See accompanying notes to unaudited condensed consolidated financial statements.

1

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share amounts)

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Assets |  |  |  |  |  |  |  |
Current Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 4,551 |  |  | $ | 2,803 |
Accounts receivable, less allowance for credit losses |  |  | 12,498 |  |  |  | 8,595 |
Unbilled membership dues receivable |  |  | 814 |  |  |  | 582 |
Inventories |  |  | 1,686 |  |  |  | 1,558 |
Prepaid expenses |  |  | 606 |  |  |  | 1,003 |
Other current assets |  |  | 15 |  |  |  | 15 |
Total current assets |  |  | 20,170 |  |  |  | 14,556 |
Property and equipment, net |  |  | 54,454 |  |  |  | 55,582 |
Property and equipment under finance leases, net |  |  | 6,230 |  |  |  | 5,647 |
Operating lease right-of-use assets |  |  | 1,078 |  |  |  | 1,383 |
Restricted cash |  |  | 8,699 |  |  |  | 8,958 |
Noncurrent deferred tax asset |  |  | 27 |  |  |  | 27 |
Other assets, net |  |  | 28 |  |  |  | 33 |
Total assets |  | $ | 90,686 |  |  | $ | 86,186 |
Liabilities and Equity |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Current portion of long-term debt |  | $ | 604 |  |  | $ | 575 |
Current portion of obligations under finance leases |  |  | 362 |  |  |  | 201 |
Current portion of obligations under operating leases |  |  | 363 |  |  |  | 365 |
Accounts payable |  |  | 9,605 |  |  |  | 7,116 |
Accrued payroll and other compensation |  |  | 1,731 |  |  |  | 1,064 |
Accrued taxes |  |  | 638 |  |  |  | 594 |
Deferred membership dues revenue |  |  | 4,587 |  |  |  | 3,524 |
Other liabilities and accrued expenses |  |  | 2,005 |  |  |  | 2,024 |
Total current liabilities |  |  | 19,895 |  |  |  | 15,463 |
Long-term debt, net of current portion |  |  | 28,190 |  |  |  | 28,646 |
Line of credit |  |  | 3,200 |  |  |  | 3,200 |
Obligations under finance leases, net of current portion |  |  | 1,220 |  |  |  | 707 |
Obligations under operating leases, net of current portion |  |  | 715 |  |  |  | 1,018 |
Asset retirement obligation |  |  | 100 |  |  |  | 100 |
Commitments and contingencies (Note 15) |  |  |  |  |  |  |  |
Equity: |  |  |  |  |  |  |  |
Avalon Holdings Corporation Shareholders' Equity: |  |  |  |  |  |  |  |
Class A Common Stock, $.01 par value |  |  | 33 |  |  |  | 33 |
Class B Common Stock, $.01 par value |  |  | 6 |  |  |  | 6 |
Paid-in capital |  |  | 59,206 |  |  |  | 59,206 |
Accumulated deficit |  |  | (20,534 | ) |  |  | (21,211 | )
Total Avalon Holdings Corporation Shareholders' Equity |  |  | 38,711 |  |  |  | 38,034 |
Non-controlling interest in subsidiaries |  |  | (1,345 | ) |  |  | (982 | )
Total equity |  |  | 37,366 |  |  |  | 37,052 |
Total liabilities and equity |  | $ | 90,686 |  |  | $ | 86,186 |

See accompanying notes to unaudited condensed consolidated financial statements

2

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

(in thousands, except for share data)

|  | For the Three Months Ended September 30, 2025 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  |  | Non- |  |  |  |  |
|  | Common Stock |  |  |  |  |  |  |  |  |  |  | Avalon |  |  | controlling |  |  |  |  |
|  | Shares |  |  | Amount |  |  | Paid-in |  |  | Accumulated |  |  | Shareholders' |  |  | Interest in |  |  |  |  |
|  | Class A |  |  | Class B |  |  | Class A |  |  | Class B |  |  | Capital |  |  | Deficit |  |  | Equity |  |  | Subsidiaries |  |  | Total |
Balance at July 1, 2025 |  |  | 3,287,647 |  |  |  | 611,784 |  |  | $ | 33 |  |  | $ | 6 |  |  | $ | 59,206 |  |  | $ | (22,436 | ) |  | $ | 36,809 |  |  | $ | (1,232 | ) |  | $ | 35,577 |
Net Income (loss) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,902 |  |  |  | 1,902 |  |  |  | (113 | ) |  |  | 1,789 |
Balance at September 30, 2025 |  |  | 3,287,647 |  |  |  | 611,784 |  |  | $ | 33 |  |  | $ | 6 |  |  | $ | 59,206 |  |  | $ | (20,534 | ) |  | $ | 38,711 |  |  | $ | (1,345 | ) |  | $ | 37,366 |

|  | For the Three Months Ended September 30, 2024 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  |  | Non- |  |  |  |  |
|  | Common Stock |  |  |  |  |  |  |  |  |  |  | Avalon |  |  | controlling |  |  |  |  |
|  | Shares |  |  | Amount |  |  | Paid-in |  |  | Accumulated |  |  | Shareholders' |  |  | Interest in |  |  |  |  |
|  | Class A |  |  | Class B |  |  | Class A |  |  | Class B |  |  | Capital |  |  | Deficit |  |  | Equity |  |  | Subsidiary |  |  | Total |
Balance at July1, 2024 |  |  | 3,287,647 |  |  |  | 611,784 |  |  | $ | 33 |  |  | $ | 6 |  |  | $ | 59,206 |  |  | $ | (22,554 | ) |  | $ | 36,691 |  |  | $ | (762 | ) |  | $ | 35,929 |
Net Income (loss) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,840 |  |  |  | 1,840 |  |  |  | (110 | ) |  |  | 1,730 |
Balance at September 30, 2024 |  |  | 3,287,647 |  |  |  | 611,784 |  |  | $ | 33 |  |  | $ | 6 |  |  | $ | 59,206 |  |  | $ | (20,714 | ) |  | $ | 38,531 |  |  | $ | (872 | ) |  | $ | 37,659 |

See accompanying notes to unaudited condensed consolidated financial statements

3

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

(in thousands, except for share data)

|  | For the Nine Months Ended September 30, 2025 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  |  | Non- |  |  |  |  |
|  | Common Stock |  |  |  |  |  |  |  |  |  |  | Avalon |  |  | controlling |  |  |  |  |
|  | Shares |  |  | Amount |  |  | Paid-in |  |  | Accumulated |  |  | Shareholders' |  |  | Interest in |  |  |  |  |
|  | Class A |  |  | Class B |  |  | Class A |  |  | Class B |  |  | Capital |  |  | Deficit |  |  | Equity |  |  | Subsidiaries |  |  | Total |
Balance at January 1, 2025 |  |  | 3,287,647 |  |  |  | 611,784 |  |  | $ | 33 |  |  | $ | 6 |  |  | $ | 59,206 |  |  | $ | (21,211 | ) |  | $ | 38,034 |  |  | $ | (982 | ) |  | $ | 37,052 |
Net Income (loss) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 677 |  |  |  | 677 |  |  |  | (363 | ) |  |  | 314 |
Balance at September 30, 2025 |  |  | 3,287,647 |  |  |  | 611,784 |  |  | $ | 33 |  |  | $ | 6 |  |  | $ | 59,206 |  |  | $ | (20,534 | ) |  | $ | 38,711 |  |  | $ | (1,345 | ) |  | $ | 37,366 |

|  | For the Nine Months Ended September 30, 2024 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  |  | Non- |  |  |  |  |
|  | Common Stock |  |  |  |  |  |  |  |  |  |  | Avalon |  |  | controlling |  |  |  |  |
|  | Shares |  |  | Amount |  |  | Paid-in |  |  | Accumulated |  |  | Shareholders' |  |  | Interest in |  |  |  |  |
|  | Class A |  |  | Class B |  |  | Class A |  |  | Class B |  |  | Capital |  |  | Deficit |  |  | Equity |  |  | Subsidiaries |  |  | Total |
Balance at January 1, 2024 |  |  | 3,287,647 |  |  |  | 611,784 |  |  | $ | 33 |  |  | $ | 6 |  |  | $ | 59,206 |  |  | $ | (22,529 | ) |  | $ | 36,716 |  |  | $ | (616 | ) |  | $ | 36,100 |
Net Income (loss) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,815 |  |  |  | 1,815 |  |  |  | (256 | ) |  |  | 1,559 |
Balance at September 30, 2024 |  |  | 3,287,647 |  |  |  | 611,784 |  |  | $ | 33 |  |  | $ | 6 |  |  | $ | 59,206 |  |  | $ | (20,714 | ) |  | $ | 38,531 |  |  | $ | (872 | ) |  | $ | 37,659 |

See accompanying notes to unaudited condensed consolidated financial statements

4

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

|  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net income |  | $ | 314 |  |  | $ | 1,559 |
Reconciliation of net loss to cash provided by operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization expense |  |  | 2,867 |  |  |  | 2,957 |
Amortization of debt issuance costs |  |  | 45 |  |  |  | 45 |
Provision for losses on accounts receivable |  |  | 83 |  |  |  | 23 |
Gain on disposal of equipment |  |  | - |  |  |  | (7 | )
Change in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | (3,986 | ) |  |  | (527 | )
Unbilled membership dues receivable |  |  | (232 | ) |  |  | (278 | )
Inventories |  |  | (128 | ) |  |  | (51 | )
Prepaid expenses |  |  | 397 |  |  |  | 436 |
Other assets, net |  |  | 5 |  |  |  | 1 |
Accounts payable |  |  | 2,385 |  |  |  | (2,002 | )
Accrued payroll and other compensation |  |  | 667 |  |  |  | 473 |
Accrued taxes |  |  | 44 |  |  |  | 21 |
Deferred membership dues revenue |  |  | 1,063 |  |  |  | 1,228 |
Other liabilities and accrued expenses |  |  | (19 | ) |  |  | 74 |
Net cash provided by operating activities |  |  | 3,505 |  |  |  | 3,952 |
Cash flows from investing activities: |  |  |  |  |  |  |  |
Capital expenditures |  |  | (1,283 | ) |  |  | (1,705 | )
Proceeds from disposal of equipment |  |  | - |  |  |  | 7 |
Net cash used in investing activities |  |  | (1,283 | ) |  |  | (1,698 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |
Principal payments on term loan facilities |  |  | (472 | ) |  |  | (445 | )
Principal payments on finance lease obligations |  |  | (261 | ) |  |  | (174 | )
Net cash used in financing activities |  |  | (733 | ) |  |  | (619 | )
Increase in cash, cash equivalents and restricted cash |  |  | 1,489 |  |  |  | 1,635 |
Cash, cash equivalents and restricted cash at beginning of period |  |  | 11,761 |  |  |  | 11,452 |
Cash, cash equivalents and restricted cash at end of period |  | $ | 13,250 |  |  | $ | 13,087 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |  |
Significant non-cash operating and investing activities: |  |  |  |  |  |  |  |
Capital expenditures included in accounts payable |  | $ | 104 |  |  | $ | 25 |
Significant non-cash investing and financing activities: |  |  |  |  |  |  |  |
Operating lease right-of-use assets in exchange for lease obligations |  | $ | - |  |  | $ | 684 |
Finance lease obligation incurred |  | $ | 935 |  |  | $ | 201 |
Cash paid during the period for interest |  | $ | 1,576 |  |  | $ | 1,645 |
Cash paid during the period for income taxes |  | $ | 7 |  |  | $ | - |

See accompanying notes to unaudited condensed consolidated financial statements.

5

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2025

Note 1. Description of Business

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

Avalon provides waste management services to industrial, commercial, municipal and governmental customers in selected northeastern and midwestern U.S. markets, captive landfill management services and salt water injection well operations. Avalon also owns and operates a hotel and its associated resort amenities, four golf courses and related country clubs and a multipurpose recreation center.

Note 2. Basis of Presentation

The unaudited condensed consolidated financial statements of Avalon and related notes included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted consistent with such rules and regulations. The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in Avalon’s 2024 Annual Report to Shareholders.

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

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

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

The condensed consolidated financial statements presented herein reflect our current estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures as of the date of the financial statements and reported amounts of revenues and expenses during the reporting periods presented.

Note 3. Recent Accounting Pronouncements

From time to time, the Financial Accounting Standards Board (the “FASB”) or other standards setting bodies issue new accounting pronouncements. The FASB issues updates to new accounting pronouncements through the issuance of an Accounting Standards Update (“ASU”). The Company does not discuss recent pronouncements that are not anticipated to have an impact on, or are unrelated to, its consolidated financial condition, results of operations, cash flows or disclosures.

In December 2023, The FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to improve income tax disclosures around effective tax rates and cash income taxes paid. ASU 2023-09 is effective for public entities for annual periods beginning after December 15, 2024 (calendar year 2025). The Company does not expect the adoption to have a material impact on the Company’s financial position, results of operations or financial disclosures.

In November 2024, The FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses. This ASU requires additional disclosures to disaggregate costs and expense line items presented on the face of the consolidated statements of operations. These disclosures include: (a) amounts related to purchased inventory, employee compensation, depreciation, amortization, and other significant components of costs and expenses; (b) an explanation of costs and expenses that are not disaggregated quantitatively; and (c) the definition and total amount of selling expenses. This ASU is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this ASU and has not yet determined its effect on the consolidated financial statements.

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In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows for a practical expedient election to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset in the development of a reasonable and supportable forecast as part of estimating expected credit losses. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of electing the practical expedient under ASU 2025-05.

Note 4. Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents for purposes of the Condensed Consolidated Balance Sheets. Avalon maintains its cash balances in various financial institutions. These balances may, at times, exceed federal insured limits. Avalon has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk relating to its cash and cash equivalents.

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in restricted cash on the Condensed Consolidated Balance Sheets. Restricted cash consists of loan proceeds deposited into a project fund account to fund costs associated with the renovation and expansion of The Grand Resort and Avalon Field Club at New Castle. The project fund account will also be utilized with necessary remodeling during the term of the loan agreement and is classified as long-term and in accordance with the provisions of the loan and security agreement (See Note 9).

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets of which the sum total equal amounts shown in the Condensed Consolidated Statements of Cash Flows. Cash, cash equivalents and restricted cash consist of the following at September 30, 2025 and December 31, 2024 (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Cash and cash equivalents |  | $ | 4,551 |  |  | $ | 2,803 |
Restricted cash |  |  | 8,699 |  |  |  | 8,958 |
Cash, cash equivalents and restricted cash |  | $ | 13,250 |  |  | $ | 11,761 |

Note 5. Revenues

Revenue Recognition

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

Waste Management Services

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

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

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

Avalon is a minority owner with managerial control over two salt water injection wells and its associated facility. Operations of the salt water injection wells have been suspended in accordance with the Chief of the Division of Oil and Gas Resources Management order (See Note 15). Due to the suspension of the salt water injection wells, there were no operating revenues for the three and nine months ended September 30, 2025 and 2024.

For the three months ended September 30, 2025 and 2024, the net operating revenues related to waste management services represented approximately 50% and 47%, respectively, of Avalon’s total consolidated net operating revenues. Net operating revenues related to waste management services represented approximately 52% and 55%, respectively of Avalon’s total consolidated net operating revenues for the nine months ended September 30, 2025 and 2024.

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

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

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

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

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

Golf and Related Operations

Avalon’s golf and related operations include the operation and management of four golf courses and associated clubhouses, recreation and fitness centers, tennis courts, salon and spa services along with dining and banquet facilities. The golf and related operations also include the operation of a hotel and its related amenities including dining, banquet and conference facilities, fitness center, indoor junior Olympic size swimming pool and tennis courts. Revenues for the golf and related operations consists primarily of food, beverage and merchandise sales, membership dues, greens fees and associated cart rentals, room rentals, fitness activities, salon and spa services. Due to adverse weather conditions, net operating revenues relating to the golf courses, which are located in northeast Ohio and western Pennsylvania, were minimal during the first three months of 2025 and 2024.

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For the three months ended September 30, 2025 and 2024, the net operating revenues related to the golf and related operations represented approximately 50% and 53%, respectively, of Avalon’s total consolidated net operating revenues. For both of the nine months ended September 30, 2025 and 2024, the net operating revenues related to the golf and related operations represented approximately 48% and 45%, respectively of Avalon’s total consolidated net operating revenues. For both the nine months ended September 30, 2025 and 2024, no one customer individually accounted for 10% or more of Avalon’s golf and related operations segment revenues.

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

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

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

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

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

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The following table presents our net operating revenues disaggregated by revenue source for the three and nine months ended September 30, 2025 and 2024 (in thousands). Sales and other taxes are excluded from revenues.

|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Waste management and brokerage services |  | $ | 12,156 |  |  | $ | 10,752 |  |  | $ | 29,821 |  |  | $ | 33,976 |
Captive landfill management operations |  |  | 762 |  |  |  | 709 |  |  |  | 2,517 |  |  |  | 2,175 |
Total waste management services revenues |  |  | 12,918 |  |  |  | 11,461 |  |  |  | 32,338 |  |  |  | 36,151 |
Food, beverage and merchandise sales |  |  | 4,553 |  |  |  | 4,615 |  |  |  | 10,337 |  |  |  | 10,622 |
Membership dues revenue |  |  | 1,770 |  |  |  | 1,801 |  |  |  | 5,431 |  |  |  | 5,614 |
Room rental revenue |  |  | 2,870 |  |  |  | 2,846 |  |  |  | 5,974 |  |  |  | 5,893 |
Greens fees and cart rental revenue |  |  | 1,911 |  |  |  | 1,784 |  |  |  | 3,030 |  |  |  | 3,022 |
Salon and spa services |  |  | 936 |  |  |  | 1,015 |  |  |  | 2,865 |  |  |  | 2,805 |
Fitness and tennis lesson revenue |  |  | 51 |  |  |  | 55 |  |  |  | 160 |  |  |  | 243 |
Other revenue |  |  | 737 |  |  |  | 658 |  |  |  | 1,932 |  |  |  | 1,800 |
Total golf and related operations revenue |  |  | 12,828 |  |  |  | 12,774 |  |  |  | 29,729 |  |  |  | 29,999 |
Total net operating revenues |  | $ | 25,746 |  |  | $ | 24,235 |  |  | $ | 62,067 |  |  | $ | 66,150 |

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

Receivables, Net

Receivables, net, include amounts billed and currently due from customers. The amounts due are stated at their net realizable value. At September 30, 2025 and December 31, 2024, accounts receivable, net, related to our waste management services segment were approximately $10.6 million and $7.5 million, respectively. At September 30, 2025, one customer accounted for 22% of total consolidated receivables and 26% of the waste management services segment’s receivables. At December 31, 2024 one customer accounted for 12% consolidated receivables and 14% of the waste management service’s segment’s receivables. Accounts receivable, net, related to our golf and related operations segment were approximately $1.9 million and $1.1 million at September 30, 2025 and December 31, 2024, respectively. No one customer of the golf and related operations segment accounted for more than 10% of consolidated receivables or more than 10% of Avalon’s golf and related operations segment at September 30, 2025 or December 31, 2024.

The Company maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be collected. Customer accounts that are outstanding longer than the contractual payment terms are considered past due. Avalon determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, Avalon’s previous accounts receivable loss history, the customer’s current ability to pay its obligation to Avalon and the condition of the general economy and the industry as a whole. Avalon writes off accounts receivable when they become uncollectible. Payments subsequently received on such receivables are credited to the allowance for credit losses, or to income, as appropriate under the circumstances. Allowance for credit losses was approximately $0.3 million at both September 30, 2025 and December 31, 2024.

The following table presents changes in our allowance for credit losses during the three and nine months ended September 30, 2025 and 2024 (in thousands):

|  |  |  |  |  | Provision |  |  | Write-offs |  |  |  |  |
|  | Balance at |  |  | for Credit |  |  | less |  |  | Balance at |
|  | Beginning of Period |  |  | Losses |  |  | Recoveries |  |  | End of Period |
Allowance for credit losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three months ended September 30, 2025 |  | $ | 260 |  |  | $ | 38 |  |  | $ | (13 | ) |  | $ | 285 |
Three months ended September 30, 2024 |  | $ | 254 |  |  | $ | 8 |  |  | $ | (10 | ) |  | $ | 252 |
Nine months ended September 30, 2025 |  | $ | 260 |  |  | $ | 83 |  |  | $ | (58 | ) |  | $ | 285 |
Nine months ended September 30, 2024 |  | $ | 260 |  |  | $ | 23 |  |  | $ | (31 | ) |  | $ | 252 |

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Contract Assets

Contract assets include unbilled membership dues receivables related to the Avalon Golf and Country Club for the customers membership commitment which are billed on a monthly basis over the course of the annual agreement. Such amounts are stated at their net realizable value. Contract assets related to unbilled membership dues are classified as current as revenue related to such agreements is recognized within the annual membership period. Unbilled membership receivables in our Condensed Consolidated Balance Sheets were approximately $0.8 million at September 30, 2025 and $0.6 million at December 31, 2024.

The following table presents changes in our contract assets during the three and nine months ended September 30, 2025 and 2024 (in thousands):

|  |  |  |  |  | Unbilled |  |  |  |  |  |  |  |  |
|  | Balance at |  |  | Membership |  |  |  |  |  |  | Balance at |
|  | Beginning of Period |  |  | Dues |  |  | Billings |  |  | End of Period |
Contract Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unbilled membership dues receivable |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three months ended September 30, 2025 |  | $ | 1,037 |  |  | $ | 227 |  |  | $ | (450 | ) |  | $ | 814 |
Three months ended September 30, 2024 |  | $ | 1,110 |  |  | $ | 219 |  |  | $ | (484 | ) |  | $ | 845 |
Nine months ended September 30, 2025 |  | $ | 582 |  |  | $ | 1,610 |  |  | $ | (1,378 | ) |  | $ | 814 |
Nine months ended September 30, 2024 |  | $ | 567 |  |  | $ | 1,747 |  |  | $ | (1,469 | ) |  | $ | 845 |

Contract Liabilities

Contract liabilities include unrecognized or deferred revenues relating to membership dues and customer advance deposits. We record deferred revenue when cash payments are received in advance of satisfying our performance obligation. We classify deferred membership dues revenue as current based on the timing of when we expect to recognize revenue for the membership commitment based on the Company satisfying the stand ready performance obligation throughout the annual membership period. The unrecognized or deferred revenues related to membership dues in our Condensed Consolidated Balance Sheets were approximately $4.6 million at September 30, 2025 and $3.5 million at December 31, 2024, respectively.

Customer advance deposits are recorded as a liability until the goods or services are provided to the customer. Generally, customer advances, and corresponding performance obligation are satisfied within 12 months of the date of receipt of advance payment. The unrecognized revenues related to customer advance deposits are recorded in “Other liabilities and accrued expenses” in our Condensed Consolidated Balance Sheets. Customer advance deposits were approximately $1.5 million at September 30, 2025 and $1.6 million at December 31, 2024.

The following table presents changes in our contract liabilities during the three and nine months ended September 30, 2025 and 2024 (in thousands):

|  | Balance at |  |  |  |  |  |  | Revenue |  |  | Balance at |
|  | Beginning of Period |  |  | Billings |  |  | Recognized |  |  | End of Period |
Contract Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred membership dues revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three months ended September 30, 2025 |  | $ | 5,734 |  |  | $ | 623 |  |  | $ | (1,770 | ) |  | $ | 4,587 |
Three months ended September 30, 2024 |  | $ | 5,863 |  |  | $ | 609 |  |  | $ | (1,801 | ) |  | $ | 4,671 |
Nine months ended September 30, 2025 |  | $ | 3,524 |  |  | $ | 6,494 |  |  | $ | (5,431 | ) |  | $ | 4,587 |
Nine months ended September 30, 2024 |  | $ | 3,443 |  |  | $ | 6,842 |  |  | $ | (5,614 | ) |  | $ | 4,671 |
Customer advance deposits |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three months ended September 30, 2025 |  | $ | 1,649 |  |  | $ | 708 |  |  | $ | (884 | ) |  | $ | 1,473 |
Three months ended September 30, 2024 |  | $ | 1,311 |  |  | $ | 853 |  |  | $ | (859 | ) |  | $ | 1,305 |
Nine months ended September 30, 2025 |  | $ | 1,565 |  |  | $ | 1,330 |  |  | $ | (1,422 | ) |  | $ | 1,473 |
Nine months ended September 30, 2024 |  | $ | 1,223 |  |  | $ | 2,062 |  |  | $ | (1,980 | ) |  | $ | 1,305 |

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Note 6. Property and Equipment

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the asset which varies from 10 to 30 years for land improvements; 5 to 50 years in the case of buildings and improvements; and from 3 to 10 years for machinery and equipment, vehicles and office furniture and equipment. Leasehold improvements are included in building improvements and amortized on a straight-line basis over the shorter of their estimated useful lives or term of the lease.

Major additions and improvements are charged to the property and equipment accounts while replacements, maintenance and repairs, which do not improve or extend the life of the respective asset, are expensed as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation is eliminated from the accounts in the year of disposal.

Property and equipment at September 30, 2025 and December 31, 2024 consists of the following (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Land and land improvements |  | $ | 17,071 |  |  | $ | 17,071 |
Buildings and improvements |  |  | 54,865 |  |  |  | 54,673 |
Machinery and equipment |  |  | 10,905 |  |  |  | 9,866 |
Office furniture and fixtures |  |  | 11,829 |  |  |  | 10,568 |
Vehicles |  |  | 1,127 |  |  |  | 1,065 |
Construction in progress |  |  | 202 |  |  |  | 1,136 |
|  |  | 95,999 |  |  |  | 94,379 |
Less accumulated depreciation and amortization |  |  | (41,545 | ) |  |  | (38,797 | )
Property and equipment, net |  | $ | 54,454 |  |  | $ | 55,582 |

At September 30, 2025, the Company did not have any significant fixed contractual commitments for construction projects.

Avalon reviews the carrying value of its long-lived assets whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If indicators of impairment exist, Avalon would determine whether the estimated undiscounted sum of the future cash flows of such assets and their eventual disposition is less than its carrying amount. If less, an impairment loss would be recognized if, and to the extent that the carrying amount of such assets exceeds their respective fair value. Avalon would determine the fair value by using quoted market prices, if available, for such assets; or if quoted market prices are not available, Avalon would discount the expected estimated future cash flows. During the first nine months of 2025 and 2024, no triggering events were present.

Note 7. Leases

Operating Leases

Avalon leases golf carts, machinery and equipment for the landfill operations, furniture and fixtures for The Grand Resort and office copiers under operating leases. Our operating leases have remaining lease terms ranging from less than 1 year to 4.0 years. The weighted average remaining lease term on operating leases was approximately 2.7 years and 4.0 years at September 30, 2025 and December 31, 2024, respectively.

During the first nine months of 2025, the Company did not record any new operating lease right-of-use assets or corresponding obligations under operating leases. During the first nine months of 2024, the Company entered into a new operating lease agreement for golf carts and GPS equipment. During the first nine months of 2024, the Company recorded operating lease right-of-use assets and corresponding obligations under the operating leases of approximately $684,000.

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Leased property and associated obligations under operating leases at September 30, 2025 and December 31, 2024 consists of the following (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Operating lease right-of-use assets |  | $ | 1,078 |  |  | $ | 1,383 |
Current portion of obligations under operating leases |  | $ | 363 |  |  | $ | 365 |
Long-term portion of obligations under operating leases |  |  | 715 |  |  |  | 1,018 |
Total obligations under operating leases |  | $ | 1,078 |  |  | $ | 1,383 |

The weighted average discount rate on operating leases was 6.7% and 6.6% at September 30, 2025 and December 31, 2024, respectively.

Finance Leases

In November 2003, Avalon entered into a long-term agreement with Squaw Creek Country Club to lease and operate its golf course and related facilities. The lease has an initial term of ten (10) years with four (4) consecutive ten (10) year renewal term options unilaterally exercisable by Avalon. Under the lease, Avalon is obligated to pay $15,000 in annual rent and make leasehold improvements of $150,000 per year. Amounts expended by Avalon for leasehold improvements during a given year in excess of $150,000 will be carried forward and applied to future leasehold improvement obligations. Based upon the amount of leasehold improvements already made, Avalon expects to exercise all its remaining renewal options. At September 30, 2025 there were approximately 28.1 years remaining on the golf course and related facilities finance lease. At December 31, 2024 there were approximately 28.8 years remaining on the golf course and related facilities finance lease. The net asset value of finance leases, excluding leasehold improvements was $1.6 million and $0.8 million at September 30, 2025 and December 31, 2024, respectively.

In addition, the Company also entered into lease agreements for a vehicle, golf course maintenance equipment and the captive landfill operations entered into lease agreements for equipment which were determined to be finance leases. At September 30, 2024, the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from less than 1 year to 4.9 years. The weighted average remaining lease term on the vehicles and equipment leases was approximately 4.0 and 3.8 years at September 30, 2025 and December 31, 2024.

Leased property and associated obligations under finance leases at September 30, 2025 and December 31, 2024 consists of the following (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Leased property under finance leases |  | $ | 14,237 |  |  | $ | 13,554 |
Less accumulated amortization |  |  | (8,007 | ) |  |  | (7,907 | )
Leased property under finance leases, net |  | $ | 6,230 |  |  | $ | 5,647 |
Current portion of obligations under finance leases |  | $ | 362 |  |  | $ | 201 |
Long-term portion of obligations under finance leases |  |  | 1,220 |  |  |  | 707 |
Total obligations under finance leases |  | $ | 1,582 |  |  | $ | 908 |

The weighted average discount rate on finance leases was 6.7% at September 30, 2025 and 7.8% at December 31, 2024.

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For the three and nine months ended September 30, 2025 and 2024, components of lease expense were as follows (in thousands):

|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Operating lease cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rental expense |  | $ | 239 |  |  | $ | 257 |  |  | $ | 465 |  |  | $ | 480 |
Finance lease cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation expense |  | $ | 148 |  |  | $ | 161 |  |  | $ | 416 |  |  | $ | 431 |
Interest expense |  |  | 21 |  |  |  | 12 |  |  |  | 54 |  |  |  | 41 |
Total finance lease cost |  | $ | 169 |  |  | $ | 173 |  |  | $ | 470 |  |  | $ | 472 |

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

|  | Finance |  |  | Operating |  |  | Total |
2026 |  | $ | 458 |  |  | $ | 432 |  |  | $ | 890 |
2027 |  |  | 412 |  |  |  | 348 |  |  |  | 760 |
2028 |  |  | 370 |  |  |  | 248 |  |  |  | 618 |
2029 |  |  | 302 |  |  |  | 195 |  |  |  | 497 |
2030 |  |  | 113 |  |  |  | - |  |  |  | 113 |
Thereafter |  |  | 345 |  |  |  | - |  |  |  | 345 |
Total lease payments |  |  | 2,000 |  |  |  | 1,223 |  |  |  | 3,223 |
Less: imputed interest |  |  | 418 |  |  |  | 145 |  |  |  | 563 |
Total |  |  | 1,582 |  |  |  | 1,078 |  |  |  | 2,660 |
Less: current portion of obligations under leases |  |  | 362 |  |  |  | 363 |  |  |  | 725 |
Long-term portion of obligations under leases |  | $ | 1,220 |  |  | $ | 715 |  |  | $ | 1,935 |

Note 8. Basic and Diluted Net Income per Share

Basic net income per share attributable to Avalon Holdings Corporation common shareholders is computed by dividing the net income by the weighted average number of common shares outstanding. For both the three and nine months ended September 30, 2025 and 2024, the weighted average number of common shares outstanding was 3,899,431.

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

For the both the three and nine months ended September 30, 2025 and 2024 there were no outstanding options. Therefore, no weighted common equivalent shares are included in the calculation, thus, no dilution.

Note 9. Term Loans and Line of Credit Agreements

2022 Term Loan Agreement

On August 5, 2022, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the “2022 Term Loan Agreement”) with Laurel Capital Corporation which provided for a $31.0 million term loan. At closing, $20.2 million of the proceeds were used to pay off and refinance amounts outstanding and associated interest under our 2019 Term Loan Agreement with Laurel Capital Corporation and $0.4 million of the proceeds were utilized to pay transaction costs. The remaining proceeds of approximately $10.4 million were deposited into a project fund account for which those proceeds are to fund future costs of renovating and expanding both The Grand Resort and Avalon Field Club at New Castle. The balance of “Restricted Cash” is $8.7 million and $9.0 million at September 30, 2025 and December 31, 2024, respectively, and presented in the Consolidated Balance Sheets. The monies are earning nominal interest.

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The 2022 Term Loan Agreement is payable in 119 equal monthly installments of principal and interest, based on a twenty-five (25) year maturity schedule which commenced September 5, 2022 followed by one final balloon payment of all remaining principal, interest and fees due on the maturity date of August 5, 2032. Upon request by Avalon, project fund proceeds can be utilized to pay debt service. Borrowings under the 2022 Term Loan Agreement bear interest at a fixed rate of 6.00% until the seventh anniversary date of the closing at which time the interest rate will be reset to a fixed rate equal to the greater of (a) 6.00% per annum or (b) the sum of the three year treasury rate on the date two (2) business days prior to the reset date plus 3.40%, provided that the applicable rate shall in no event exceed 8.50% per annum.

Avalon has the right to prepay the amount outstanding under the 2022 Term Loan Agreement, in whole or in part, at any time upon payment of the principal amount of the loan to be prepaid plus accrued unpaid interest thereon to the prepayment date, plus an applicable prepayment penalty. The prepayment penalty, expressed as a percentage of the principal of the loan being prepaid, is six percent (6%) on any prepayment in the first five years; four percent (4%) on any prepayment in the sixth and seventh year; three percent (3%) on any prepayment in the eighth and ninth year; and two percent (2%) on any prepayment in the tenth year.

Borrowings under the 2022 Term Loan Agreement are secured by certain real property and related business assets as defined in the agreement. The 2022 Term Loan Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year. The 2022 Term Loan also contains other nonfinancial covenants, customary representations, warranties and events of default. Avalon was in compliance with the 2022 Term Loan Agreement covenants at September 30, 2025 and December 31, 2024.

The Company capitalized approximately $0.6 million of debt issuance costs in connection with the 2022 Term Loan Agreement in accordance with ASC Subtopic 470-50, Debt-Modifications and Extinguishments. The Company is amortizing these costs over the life of the 2022 Term Loan Agreement. In accordance with ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, these costs are presented in the Condensed Consolidated Balance Sheets as a direct reduction from the carrying amount of the term loan liability

Line of Credit Agreement

On May 31, 2018, Avalon entered into a business loan agreement with Wesbanco Bank (formerly Premier Bank), (the “Line of Credit Agreement”) which provides for a line of credit of up to $5.0 million. On September 24, 2025, the Company amended the Line of Credit Agreement to extend the maturity date to July 31, 2027. Under the Line of Credit Agreement, borrowings in excess of $1.0 million are subject to a borrowing base which is calculated based off a specific level of eligible accounts receivable of the waste management business as defined in the agreement.

At September 30, 2025 and December 31, 2024, approximately $3.2 million was outstanding under the Line of Credit Agreement. At September 30, 2025 and December 31, 2024, approximately $1.8 million was available under the Line of Credit Agreement. Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .25%. At September 30, 2025, the interest rate on the Line of Credit Agreement was 7.50%.

Borrowings under the Line of Credit Agreement are secured by certain business assets of the Company including accounts receivable, inventory and equipment. The Line of Credit Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year. The Line of Credit Agreement also contains other nonfinancial covenants, customary representations, warranties and events of default. Avalon was in compliance with the Line of Credit Agreements covenants at September 30, 2025 and December 31, 2024.

During the nine months ended September 30, 2025 and 2024, the weighted average interest rate on outstanding borrowings was 6.17% and 6.26%, respectively.

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Obligations under the Company’s debt agreements at September 30, 2025 and December 31, 2024 consist of the following (in thousands):

|  | September 30, 2025 |
|  | Gross Amount |  |  | Debt Issuance Costs |  |  | Net Amount |
Term Loan Agreement |  | $ | 29,188 |  |  | $ | (394 | ) |  | $ | 28,794 |
Less current portion |  |  | 664 |  |  |  | (60 | ) |  |  | 604 |
Long-term debt |  | $ | 28,524 |  |  | $ | (334 | ) |  | $ | 28,190 |

|  | December 31, 2024 |
|  | Gross Amount |  |  | Debt Issuance Costs |  |  | Net Amount |
Term Loan Agreement |  | $ | 29,660 |  |  | $ | (439 | ) |  | $ | 29,221 |
Less current portion |  |  | 635 |  |  |  | (60 | ) |  |  | 575 |
Long-term debt |  | $ | 29,025 |  |  | $ | (379 | ) |  | $ | 28,646 |

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

2026 |  | $ | 664 |
2027 |  |  | 3,905 |
2028 |  |  | 748 |
2029 |  |  | 794 |
2030 |  |  | 843 |
Thereafter |  |  | 25,434 |
Total |  | $ | 32,388 |

Note 10. Income Taxes

During the three months ended September 30, 2025, net income attributable to Avalon Holdings Corporation shareholders was $1.9 million compared to net income attributable to Avalon Holdings Corporation shareholders of $1.8 million during the three months ending September 30, 2024. During the nine months ended September 30, 2025, net income attributable to Avalon Holdings Corporation shareholders was $0.7 million compared to a net income attributable to Avalon Holdings Corporation shareholders of $1.8 million during the nine months ended September 30, 2024. Avalon recorded a state income tax provision in both the three and nine month periods ended September 30, 2025 and 2024, which was related entirely to the waste management and brokerage operations. Due to the recording of a full valuation allowance against the Company’s federal and state net deferred tax assets, the overall effective tax rate in both periods reflects taxes owed in certain U.S state jurisdictions. Avalon’s income tax on the income before taxes was offset by a change in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.

The One Big Beautiful Bill Act (the “OBBBA”) was signed into law on July 4, 2025. The OBBBA contains significant tax law changes with various effective dates after its enactment date. The Company accounted for the tax effects of the change in tax law in the period of enactment, which is the third quarter of calendar year 2025. The net impact of these tax law changes was not material to the consolidated financial statements.

Note 11. Long-Term Incentive Plan

On April 25, 2019, at the Annual Meeting of Shareholders, the shareholders approved the Long-term Incentive Plan “The Plan.” The Plan provides for the granting of options which are intended to be non-qualified stock options (“NQSO’s”) for federal income tax purposes except for those options designated as incentive stock options (“ISO’s”) which qualify under Section 422 of the Internal Revenue Code.

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The Plan has 1,300,000 shares of Class A Common Stock available for stock options to employees and non-employee directors. Shares of stock covered by options granted pursuant to The Plan which terminate or expire prior to exercise or have been surrendered or canceled shall be available for further option grants under the Option Plan.

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

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

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

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

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

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

The expected term, or time until the option is exercised, is based on historical exercising behavior of previous option holders of a company’s stock. Because of the nature of the vesting described above, the options are separated into five blocks, with each block having its own vesting period and expected term.

For stock option awards, the expected volatility is based on the observed historical volatility of Avalon common stock. There were no expected dividends and the risk-free interest rate was based on yield data for U. S. Treasury securities over a period consistent with the expected term.

At March 31, 2024, all options to purchase shares granted were cancelled as the options did not meet the predetermined stock price within the three years following the contractual vesting period. Additionally, all remaining shares previously granted expired. At September 30, 2025 and 2024 there are no outstanding options.

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

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

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

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

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

Note 12. Legal Matters

In the ordinary course of conducting its business, Avalon becomes involved in lawsuits, administrative proceedings and governmental investigations, including those related to environmental matters. Some of these proceedings may result in fines, penalties or judgments being assessed against Avalon which, from time to time, may have an impact on its business and financial condition. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty, Avalon does not believe that any uninsured ultimate liabilities, fines or penalties resulting from such pending proceedings, individually or in the aggregate, would have a material adverse effect on its liquidity, financial position or results of operations (See Note 15).

Note 13. Business Segment Information

In determining the segment information, Avalon considered its operating and management structure and the types of information subject to regular review by its chief operating decision maker (“CODM”), who is the company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. Using the criteria of FASB ASC 280 Segment Reporting, Avalon’s reportable segments include waste management services and golf and related operations. Avalon accounts for intersegment net operating revenues as if the transactions were to third parties. The segment disclosures are presented on this basis for all years presented.

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

Avalon’s golf and related operations segment consists of four golf courses and associated clubhouses which provide dining and banquet facilities, a hotel which provides lodging and resort related amenities including dining, banquet and conference facilities, a multipurpose recreation center, a med spa and dermatology center. Revenue for the golf and related operations segment consists primarily of membership dues, greens fees, cart rentals, room rentals, merchandise sales, tennis and fitness activities, salon and spa services and food and beverage sales

Avalon does not have operations located outside the United States and, accordingly, geographical segment information is not presented. For the three and nine months ending September 30, 2025 and 2024, no one customer accounted for more than 10% of the consolidated net operating revenues to external customers.

The accounting policies of the segments are consistent with those described for the consolidated financial statements in the summary of significant accounting policies included in Avalon’s 2024 Annual Report to Shareholders. Avalon measures segment profit for internal reporting purposes as income (loss) before income taxes.

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Revenue and income (loss) before taxes for each segment are used by the CODM to assess the performance of each segment in the financial period. The CODM assesses revenue and income (loss) before taxes as the measure to make resource (including financial or capital resources) allocation decisions for each segment. The CODM considers expectations and variances on a quarterly basis when evaluating performance for each segment and making decisions about capital allocation. The accounting policies of the segments are consistent with those described for the consolidated financial statements in the basis of presentation (See Note 2). Intercompany revenue and expense amounts have been eliminated within each segment to report on the basis that management uses internally for evaluating segment performance.

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

|  | Three months ending September 30, 2025 |
|  | Waste Management Services |  |  | Golf and Related Operations |  |  | Corporate |  |  | Total |
Income (loss) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 12,918 |  |  | $ | 12,828 |  |  | $ | - |  |  | $ | 25,746 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of operations |  |  | (10,259 | ) |  |  | (9,383 | ) |  |  | - |  |  |  | (19,642 | )
Selling, general and administrative |  |  | (1,294 | ) |  |  | (652 | ) |  |  | (880 | ) |  |  | (2,826 | )
Depreciation and amortization |  |  | (49 | ) |  |  | (840 | ) |  |  | (43 | ) |  |  | (932 | )
Interest expense, net |  |  | (6 | ) |  |  | (23 | ) |  |  | (483 | ) |  |  | (512 | )
Income (loss) before taxes |  | $ | 1,310 |  |  | $ | 1,930 |  |  | $ | (1,406 | ) |  | $ | 1,834 |

|  | Three months ending September 30, 2024 |
|  | Waste Management Services |  |  | Golf and Related Operations |  |  | Corporate |  |  | Total |
Income (loss) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 11,461 |  |  | $ | 12,774 |  |  | $ | - |  |  | $ | 24,235 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of operations |  |  | (8,949 | ) |  |  | (9,318 | ) |  |  | - |  |  |  | (18,267 | )
Selling, general and administrative |  |  | (1,213 | ) |  |  | (648 | ) |  |  | (858 | ) |  |  | (2,719 | )
Depreciation and amortization |  |  | (52 | ) |  |  | (879 | ) |  |  | (44 | ) |  |  | (975 | )
Interest expense, net |  |  | (7 | ) |  |  | (7 | ) |  |  | (488 | ) |  |  | (502 | )
Income (loss) before taxes |  | $ | 1,240 |  |  | $ | 1,922 |  |  | $ | (1,390 | ) |  | $ | 1,772 |

|  | Nine months ending September 30, 2025 |
|  | Waste Management Services |  |  | Golf and Related Operations |  |  | Corporate |  |  | Total |
Income (loss) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 32,338 |  |  | $ | 29,729 |  |  | $ | - |  |  | $ | 62,067 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of operations |  |  | (25,330 | ) |  |  | (24,089 | ) |  |  | - |  |  |  | (49,419 | )
Selling, general and administrative |  |  | (3,644 | ) |  |  | (1,624 | ) |  |  | (2,567 | ) |  |  | (7,835 | )
Depreciation and amortization |  |  | (145 | ) |  |  | (2,592 | ) |  |  | (130 | ) |  |  | (2,867 | )
Interest expense, net |  |  | (19 | ) |  |  | (51 | ) |  |  | (1,462 | ) |  |  | (1,532 | )
Income (loss) before taxes |  | $ | 3,200 |  |  | $ | 1,373 |  |  | $ | (4,159 | ) |  | $ | 414 |

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|  | Nine months ending September 30, 2024 |
|  | Waste Management Services |  |  | Golf and Related Operations |  |  | Corporate |  |  | Total |
Income (loss) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 36,151 |  |  | $ | 29,999 |  |  | $ | - |  |  | $ | 66,150 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of operations |  |  | (28,372 | ) |  |  | (23,642 | ) |  |  | - |  |  |  | (52,014 | )
Selling, general and administrative |  |  | (3,848 | ) |  |  | (1,604 | ) |  |  | (2,518 | ) |  |  | (7,970 | )
Depreciation and amortization |  |  | (147 | ) |  |  | (2,667 | ) |  |  | (143 | ) |  |  | (2,957 | )
Interest expense, net |  |  | (19 | ) |  |  | (24 | ) |  |  | (1,488 | ) |  |  | (1,531 | )
Other |  |  | 7 |  |  |  | - |  |  |  | - |  |  |  | 7 |
Income (loss) before taxes |  | $ | 3,772 |  |  | $ | 2,062 |  |  | $ | (4,149 | ) |  | $ | 1,685 |

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Identifiable assets: |  |  |  |  |  |  |  |
Waste management services |  | $ | 39,706 |  |  | $ | 35,100 |
Golf and related operations |  |  | 62,469 |  |  |  | 62,500 |
Corporate |  |  | 62,790 |  |  |  | 64,247 |
Subtotal |  |  | 164,965 |  |  |  | 161,847 |
Elimination of intersegment receivables |  |  | (74,279 | ) |  |  | (75,661 | )
Total |  | $ | 90,686 |  |  | $ | 86,186 |

In comparing total assets at September 30, 2025 with those at December 31, 2024, the increase in the total assets of approximately $4.5 million is attributed to an increase in cash and cash equivalents coupled with an increase in accounts receivable generated from improved business activity in both the waste management services and golf and related operations segments, partially offset by a decrease in net property and equipment associated with the golf and related operations segment.

Note 14. Certain Relationships and Related Transactions

AWMS Holdings, LLC

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

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

As a result of a private placement offering, Avalon is not the majority owner of AWMS Holdings, LLC. At September 30, 2025 and December 31, 2024, respectively, Avalon owns approximately 47% of AWMS Holdings, LLC. In accordance with ASC 810-10 and related amendment, due to the managerial control of American Water Solutions, LLC, AWMS Holdings, LLC is a VIE, and the financial statements of AWMS Holdings, LLC and subsidiaries are included in Avalon’s consolidated financial statements. ASC 810-10 requires noncontrolling interests to be reported as a separate component of equity. The amount of net loss attributable to the noncontrolling interest is recorded in “net loss attributable to noncontrolling interest” in our Condensed Consolidated Statements of Operations. During both the three months ended September 30, 2025 and 2024, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $36,000 and $11,000, respectively. During the nine months ended September 30, 2025 and 2024, net loss attributable to the noncontrolling interest in AWMS Holdings, LLC was $126,000 and $49,000, respectively.

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Avalon Med Spa, LLC

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

In 2021, Avalon made a capital contribution totaling $0.4 million, which included cash and certain equipment, in exchange for membership units of Avalon Med Spa, LLC. Through a private placement offering for the purchase of membership units, Avalon Med Spa, LLC raised $0.4 million from accredited investors in August 2021. In March 2022, both Avalon and accredited investors made additional capital contributions of $0.1 million, respectively. An outside director of Avalon, who qualified as an accredited investor, invested less than 10% of the total investment in Avalon Med Spa, LLC. Avalon is the majority owner of Avalon Med Spa, LLC owning 50.1% of the company at both September 30, 2025 and December 31, 2024.

In accordance with ASC 810-10 and related amendment, Avalon Med Spa, LLC is a VIE, and the financial statements of Avalon Med Spa, LLC are included in Avalon’s consolidated financial statements. ASC 810-10 requires noncontrolling interests to be reported as a separate component of equity. The amount of net loss attributable to the noncontrolling interest is recorded in “net loss attributable to noncontrolling interest” in our Condensed Consolidated Statements of Operations. During the three months ended September 30, 2025 and 2024, net loss attributable to the noncontrolling interest in Avalon Med Spa, LLC was approximately $51,000 and $71,000, respectively. During the nine months ended September 30, 2025 and 2024, net loss attributable to the noncontrolling interest in Avalon Med Spa, LLC was approximately $118,000 and $155,000, respectively.

Avalon Dermatology, LLC

In March 2024, Avalon created a new Ohio limited liability company, Avalon Dermatology, LLC. Avalon Dermatology, LLC provides dermatology services provided by a board licensed dermatologist. Avalon will manage all decisions regarding the dermatology operation for a percentage of gross revenues. An outside director of Avalon, who qualified as an accredited investor maintains 49.9% of the total ownership in Avalon Dermatology, LLC. Avalon is the majority owner of Avalon Dermatology, LLC owning 50.1% of the company. Avalon made capital contributions of approximately $0.2 million, which included building improvements and the purchases of certain equipment, in exchange for membership units of Avalon Dermatology, LLC.

In accordance with ASC 810-10 and related amendment, Avalon Dermatology, LLC is a VIE, and the financial statements of Avalon Dermatology, LLC are included in Avalon’s consolidated financial statements. ASC 810-10 requires noncontrolling interests to be reported as a separate component of equity. The amount of net loss attributable to the noncontrolling interest is recorded in “net loss attributable to noncontrolling interest” in our Condensed Consolidated Statements of Operations. During the three months ended September 30, 2025 and 2024, net loss attributable to the noncontrolling interest in Avalon Dermatology, LLC was approximately $26,000 and $28,000, respectively. During the nine months ended September 30, 2025 and 2024, net loss attributable to the noncontrolling interest in Avalon Dermatology, LLC was approximately $119,000 and $52,000, respectively

Note 15. Injection Wells Suspension

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

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

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

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

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

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

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

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

On April 5, 2019, Avalon filed with the Oil and Gas Commission a motion to vacate its prior decisions in this matter. The Oil and Gas Commission scheduled a hearing on this motion for August 13, 2019. Before the hearing began, and in response to the Division’s motion to dismiss the Company’s motion to vacate, the Commission dismissed the matter. The Company appealed that decision to the Franklin County Court of Common Pleas. In April 2020, the Division’s motion to dismiss and the Company’s opposition were reviewed by the Court. Following the restart orders received on May 24, 2021, and discussed below, the Court dismissed the complaint.

Concurrently with the filing of the appeal with the Franklin County Court of Common Pleas, the Company filed a writ of mandamus in the 10th District Court of Appeals on August 30, 2019 to compel the chief of the Division to issue restart orders, or alternative orders that would allow the Company to either restart the AWMS #2 well, or appeal said orders to the Oil and Gas Commission in accordance with Ohio Law. On October 6, 2020 and in response to a motion from the Division, the Court dismissed this complaint for writ of mandamus.

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

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On March 18, 2019, Avalon received notice that the 11th Appellate District Court in Trumbull County, Ohio issued summary judgment in favor of the Ohio Department of Natural Resources in the writ of mandamus action that resulted from the suspension order of the Company’s salt water injection well. The decision was appealed to the Supreme Court of Ohio on April 5, 2019. Oral arguments in the case occurred on April 7, 2020. On September 23, 2020, the Supreme Court of Ohio ruled in favor of the Company. The Supreme Court of Ohio reversed the decision of the 11th Appellate District Court and remanded the case back to that court for a trial on the merits. The trial occurred in September and October 2021. On December 19, 2022, the 11th Appellate District Court denied the Company’s writ of mandamus action. The Court determined that the Company failed to establish a cognizable property interest that would necessitate a just compensation/takings analysis and accordingly denied the Company’s petition for writ of mandamus. The decision was appealed to the Supreme Court of Ohio on January 30, 2023 and on January 24, 2024 the Supreme Court of Ohio ruled in a unanimous decision to overturn the Court of Appeal’s decision. The Supreme Court of Ohio remanded to the Court again for a decision on the mandamus complaint as to whether the Company suffered a total or partial taking.

On September 9, 2024 the 11th Appellate District Court in Trumbull County rendered a non-unanimous decision on remand. The decision denied the Company’s categorical regulatory takings claim, but found for the Company on its partial regulatory takings claim. The decision limited damages due to the Company, and the Company subsequently appealed the Appellate Court’s decision to the Supreme Court of Ohio based on errors regarding the court’s interpretation of Ohio law and abuse of discretion grounds. The Chief of the Division also cross-appealed the Appellate Court’s decision to the Supreme Court. Oral arguments were held on August 20, 2025 and the Company is awaiting a decision from the high court.

On May 24, 2021, the Company received Chief’s Orders from the Division vacating the September 3, 2014 suspension orders for AWMS #2 and setting conditions for restart of that well. Among these conditions was a limit placed on the seismicity within three miles of the well. Under the Order, if a seismic event with a magnitude 2.1 or above occurs, the well must cease operations for an indefinite period of time until concurrence for subsequent restart is received from the Division. The Company appealed the May 2021 Chief’s Order to the Ohio Oil and Gas Commission, seeking reasonable operating conditions that will allow the facility to operate profitably while protecting human health and property. A hearing in this matter occurred in February 2022. On June 30, 2022, the Oil and Gas Commission rendered their decision for the Division in this matter, once again deferring to the Division in their decision. The Company instructed its counsel to appeal the decision to the Franklin County Ohio Court of Common Please no later than August 3, 2022.

The Company’s former counsel did not file a copy of notice to appeal to the Franklin County Court within 30-days of the Commission’s decision. The Division motioned that court for dismissal of the appeal on August 19, 2022 for not perfecting the appeal. The Franklin County Court of Common Pleas granted that motion on October 31, 2024. On November 26, 2024, the Company appealed that dismissal to the 10th Appellate District Court in Franklin County. On May 23, 2025, the Appellate Court affirmed the dismissal. On July 2, 2025, the Company appealed the Appellate Court’s decision to the Supreme Court of Ohio. The Supreme Court declined to hear the appeal. The Company filed a complaint in the Trumbull County Court of Common Pleas on August 4, 2025 seeking damages from the malpractice of the Company’s former legal counsel.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

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

Liquidity and Capital Resources

For the nine months ended September 30, 2025, Avalon utilized existing cash and cash provided by operations to meet operating needs, fund capital expenditures and make required monthly payments on our term loan facility. Cash in our project fund was also utilized to fund capital expenditures.

2022 Term Loan Agreement

On August 5, 2022, Avalon and certain direct and indirect wholly owned subsidiaries entered into a loan and security agreement (the “2022 Term Loan Agreement”) with Laurel Capital Corporation which provided for a $31.0 million term loan. At closing, $20.2 million of the proceeds were used to pay off and refinance amounts outstanding and associated interest under our 2019 Term Loan Agreement with Laurel Capital Corporation and $0.4 million of the proceeds were utilized to pay transaction costs. The remaining proceeds of approximately $10.4 million were deposited into a project fund account for which those proceeds are to fund future costs of renovating and expanding both The Grand Resort and Avalon Field Club at New Castle. The balance of “Restricted Cash” is $8.7 million and $9.0 million at September 30, 2025 and December 31, 2024, respectively, and presented in the Consolidated Balance Sheets. The monies are earning nominal interest. .

The 2022 Term Loan Agreement is payable in 119 equal monthly installments of principal and interest, based on a twenty-five (25) year maturity schedule which commenced September 5, 2022 followed by one final balloon payment of all remaining principal, interest and fees due on the maturity date of August 5, 2032. Upon request by Avalon, project fund proceeds can be utilized to pay debt service. Borrowings under the 2022 Term Loan Agreement bear interest at a fixed rate of 6.00% until the seventh anniversary date of the closing at which time the interest rate will be reset to a fixed rate equal to the greater of (a) 6.00% per annum or (b) the sum of the three year treasury rate on the date two (2) business days prior to the reset date plus 3.40%, provided that the applicable rate shall in no event exceed 8.50% per annum.

Avalon has the right to prepay the amount outstanding under the 2022 Term Loan Agreement, in whole or in part, at any time upon payment of the principal amount of the loan to be prepaid plus accrued unpaid interest thereon to the prepayment date, plus an applicable prepayment penalty. The prepayment penalty, expressed as a percentage of the principal of the loan being prepaid, is six percent (6%) on any prepayment in the first five years; four percent (4%) on any prepayment in the sixth and seventh year; three percent (3%) on any prepayment in the eighth and ninth year; and two percent (2%) on any prepayment in the tenth year.

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Borrowings under the 2022 Term Loan Agreement are secured by certain real property and related business assets as defined in the agreement. The 2022 Term Loan Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year. The 2022 Term Loan also contains other nonfinancial covenants, customary representations, warranties and events of default. Avalon was in compliance with the 2022 Term Loan Agreement covenants at September 30, 2025 and December 31, 2024.

The Company capitalized approximately $0.6 million of debt issuance costs in connection with the 2022 Term Loan Agreement in accordance with ASC Subtopic 470-50, Debt-Modifications and Extinguishments. The Company is amortizing these costs over the life of the 2022 Term Loan Agreement. In accordance with ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, these costs are presented in the Condensed Consolidated Balance Sheets as a direct reduction from the carrying amount of the term loan liability

Line of Credit Agreement

On May 31, 2018, Avalon entered into a business loan agreement with Wesbanco Bank (formerly Premier Bank), (the “Line of Credit Agreement”) which provides for a line of credit of up to $5.0 million. On September 24, 2025, the Company amended the Line of Credit Agreement to extend the maturity date to July 31, 2027. Under the Line of Credit Agreement, borrowings in excess of $1.0 million are subject to a borrowing base which is calculated based off a specific level of eligible accounts receivable of the waste management business as defined in the agreement.

At September 30, 2025 and December 31, 2024, approximately $3.2 million was outstanding under the Line of Credit Agreement. At September 30, 2025 and December 31, 2024, approximately $1.8 million was available under the Line of Credit Agreement. Outstanding borrowings under the Line of Credit Agreement bear interest at Prime Rate plus .25%. At September 30, 2025, the interest rate on the Line of Credit Agreement was 7.50%.

Borrowings under the Line of Credit Agreement are secured by certain business assets of the Company including accounts receivable, inventory and equipment. The Line of Credit Agreement contains a Fixed Charge Coverage Ratio requirement of at least 1.20 tested on an annual basis on December 31 of each year. The Line of Credit Agreement also contains other nonfinancial covenants, customary representations, warranties and events of default. Avalon was in compliance with the Line of Credit Agreements covenants at September 30, 2025 and December 31, 2024.

During the nine months ended September 30, 2025 and 2024, the weighted average interest rate on outstanding borrowings was 6.17% and 6.26%, respectively.

Squaw Creek Country Club Lease Agreement

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

Capital Expenditures

During the nine months ended September 30, 2025, Avalon incurred capital expenditures of $1.4 million of which $1.3 million of such expenditures was paid to vendors during the period. During the nine months ended September 30, 2024, Avalon incurred and paid to vendors capital expenditures in the amount of $1.7 million. For the nine months ended September 30, 2024 expenditures primarily related to the continued remodeling of The Grand Resort. For the nine months ended September 30, 2024 expenditures primarily related to The Grand Resort and Avalon Dermatology, LLC.

In 2025, all hotel rooms at The Grant Resort and other areas of the facility were in the process of being remodeled. Avalon’s aggregate capital expenditures in 2025 are expected to be in the range of $1.5 million to $2.5 million. Capital expenditures primarily relate to hotel room remodeling at The Grand Resort, parking lot paving and resealing along with other building improvements and equipment purchases. Such capital expenditures are expected to be funded with cash from our project fund account and cash generated from operations.

Working Capital

At September 30, 2025 working capital was approximately $0.3 million. At December 31, 2024, there was a working capital deficit of approximately $0.9 million. Working capital was positively impacted by an increase in cash and cash equivalents along with an increase in accounts receivable. The positive impact was partially offset by increases in accounts payable, deferred membership dues and accrued payroll and other compensation.

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Accounts receivable increased to $12.5 million at September 30, 2025 compared with $8.6 million at December 31, 2024. Accounts receivable related to the golf and related operations segment increased approximately $0.8 million at September 30, 2025 compared to December 31, 2024 due to the associated timing of annual membership renewals. Additionally, accounts receivable related to our waste management services segment increased by approximately $3.1 million at September 30, 2025 compared with December 31, 2024 as a result of an increase in net operating revenues in the third quarter of 2025 compared to the fourth quarter of 2024.

Unbilled membership dues receivable was approximately $0.8 million at September 30, 2025 compared to $0.6 million at December 31, 2024. The increase was primarily due to the timing of annual membership renewals related to the Avalon Golf and Country Club and associated monthly billing over the course of the annual agreement.

Inventory was approximately $1.7 million at September 30, 2025 compared to $1.6 million at December 31, 2024. The increase is related to merchandise, food and beverage inventory as a result of the increase in business operations for our golf and related operations segment.

Accounts payable was approximately $9.6 million at September 30, 2025 compared to $7.1 million at December 31, 2024. Approximately $2.0 million of the increase in accounts payable between periods was due to the waste management segment. Accounts payable related to our waste management segment increased as a result of the associated timing of vendor payments in the ordinary course of business. Accounts payable related to our golf and related operations increased $0.5 million at September 30, 2025 compared to December 31, 2024, due to associated timing of vendor payments in the ordinary course of business.

Deferred revenue relating to membership dues was approximately $4.6 million at September 30, 2025 compared to $3.5 million at December 31, 2024. The increase in deferred revenues was primarily due to the associated timing of annual membership renewals.

Accrued payroll and other compensation was approximately $1.7 million at September 30, 2025 compared to $1.1 million at December 31, 2024. The increase is primarily due to the associated timing of employee payroll payments in the ordinary course of business related to our waste management services segment.

Management believes that anticipated cash provided from future operations will be sufficient to meet operating requirements and make required monthly payments under our term loan facility. If business conditions warrant additional monies needed, Avalon will take all available actions to fund operating requirements including borrowing from our existing line of credit.

Growth Strategy

Waste Management Services Segment

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

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

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

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

Golf and Related Operations Segment

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

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

Results of Operations

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

Performance in the third quarter of 2025 compared with the third quarter of 2024

Overall Performance

Net operating revenues increased to $25.7 million in the third quarter of 2025 compared with $24.2 million in the third quarter of 2024. Net operating revenues of the waste management services segment were approximately $12.9 million in the third quarter of 2025 compared to $11.5 million in the third quarter of 2024. The increase in net operating revenues of the waste management services segment was mainly attributed to an increase in event work projects during the third quarter of 2025 compared to the third quarter of 2024. Net operating revenues of the golf and related operations segment were approximately $12.8 million in both the third quarter of 2025 and 2024.

Total cost of operations related to the waste management services segment increased to $10.3 million in the third quarter of 2025 compared with $8.9 million in the third quarter of 2024. The increase in the cost of operations between periods for the waste management services segment is primarily due to an increase in net operating revenues as these costs vary directly with the associated revenues.

Total cost of operations related to the golf and related operations segment increased to $9.4 million in the third quarter of 2025 compared to $9.3 million in the third quarter of 2024. The increase in costs is primarily a result of an increase in employee related and utility costs compared to the prior period.

Depreciation and amortization expense was approximately $0.9 million in the third quarter of 2025 compared to $1.0 million in the third quarter of 2024. The slight decrease is due to a lower depreciable basis compared to the prior period.

Consolidated selling, general and administrative expenses were approximately $2.8 million in the third quarter of 2025 compared to $2.7 million in the third quarter of 2024. The slight increase was primarily a result of increases in certain earned employee incentives relating to our waste management services segment

Interest expense was approximately $0.5 million in both the third quarter of 2025 and 2024, respectively. During the three months ended September 30, 2025 and 2024, the weighted average interest rate on outstanding borrowings was 6.17% and 6.23%, respectively.

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Net income attributable to Avalon Holdings Corporation common shareholders was $1.9 million, or $0.49 per share, in the third quarter of 2025 compared with net income attributable to Avalon Holdings Corporation common shareholders of $1.8 million, or $0.47 per share, in the third quarter of 2024. Avalon recorded a state income tax provision in both the third quarters of 2025 and 2024, which was related entirely to the waste management and brokerage operations. Due to the recording of a full valuation allowance against the Company’s federal net deferred tax assets, the overall effective tax rate in both periods reflect taxes owed in certain U.S state jurisdictions. Avalon’s income tax provision on the income before taxes was offset by a change in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.

Segment Performance

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

Waste Management Services Segment

The net operating revenues of the waste management services were approximately $12.9 million in the third quarter of 2025 compared with $11.5 million in the third quarter of 2024. The waste management services segment includes waste disposal brokerage and management services, captive landfill management operations and salt water injection well operations.

The net operating revenues of the waste disposal brokerage and management services business were approximately $12.2 million in the third quarter of 2025 compared to $10.8 million in the third quarter of 2024. Continuous work in the waste disposal brokerage business decreased by approximately $0.2 million between periods. Net operating revenues related to continuous work were approximately $6.9 million in the third quarter of 2025 compared with $7.1 million in the third quarter of 2024. Event work net operating revenues related to multiple projects increased by approximately $1.6 million during third quarter of 2025 when compared to third quarter of 2024. Event work is defined as bid projects under contract that occurs on a one-time basis over a short period of time. Such work can fluctuate significantly from period to period. Event work net operating revenues were approximately $5.3 million in the third quarter of 2025 compared with $3.7 million in the third quarter of 2024.

The net operating revenues of the captive landfill management operations were approximately $0.7 million in the third quarter of both 2025 and 2024. The net operating revenues of the captive landfill operations are almost entirely dependent upon the volume of waste generated by the owner of the landfill for whom Avalon manages the facility.

Costs of operations related to the waste management services segment were approximately $10.3 million in the third quarter of 2025 compared with $8.9 million in the third quarter of 2024. The increase in the cost of operations between periods for the waste management segment is primarily due to an increase in net operating revenues as these costs vary directly with the associated revenues. The overall gross margin percentage of the waste brokerage and management services business was approximately 20% in the third quarter of 2025 compared to 22% in the third quarter of 2024. The decrease in the overall gross margin percentage was primarily attributable to a lower gross profit generated from event work projects during third quarter of 2025.

Income before income taxes for the waste management services segment was approximately $1.3 million in the third quarter of 2025 compared to $1.2 million in the third quarter of 2024. Income before income taxes of the waste brokerage and management services business was approximately $1.3 million in the third quarter of 2025 compared to approximately $1.2 million in the third quarter of 2024. Income before income taxes of the captive landfill operations were approximately $0.1 million in both the third quarter of 2025 and 2024. During both the third quarter of 2025 and 2024, the salt water injection wells incurred a loss before income taxes of less than $0.1 million primarily due to legal and professional costs incurred relating to Avalon’s appeal and mandamus processes.

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $12.8 million in both the third quarter of 2025 and 2024, respectively. Avalon’s golf and related operations segment consists of the operation and management of four golf courses and related country clubs which provide dining and banquet facilities, a hotel, The Grand Resort, which provides lodging, dining, banquet and conference facilities and other resort related amenities along with a multipurpose recreation center.

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Food, beverage and merchandise sales were approximately $4.6 million in both the third quarter of 2025 and in the third quarter of 2024.

Other golf and related operation revenues were approximately $8.2 million in both the third quarter of 2025 and 2024, respectively. Membership dues revenue was approximately $1.8 million in both the third quarter of 2025 and 2024. Net operating revenues related to room rental was approximately $2.9 million in the third quarter of 2025 compared to $2.8 million in the third quarter of 2024. The increase in room revenue was a result of a slight increase in average room rates when compared to the prior period. Greens fees and associated cart rentals were approximately $1.9 million the third quarter of 2025 compared to $1.8 million in the third quarter of 2024. Other revenues consisting of athletic, fitness, salon and spa related activities were approximately $1.6 million in the third quarter of 2025 compared to $1.8 million in the third quarter of 2024. The decrease between periods was primarily due to a decrease in salon and spa revenue.

Total cost of operations for the golf and related operations segment were $9.4 million in the third quarter of 2025 compared with $9.3 million in the third quarter of 2024. Cost of food, beverage and merchandise was approximately $2.0 million in both the third quarter of 2025 and 2024. The cost of food, beverage and merchandise sales was approximately 43% of associated revenue in the third quarter of 2025 compared to 44% in the third quarter of 2024. Golf and related operations operating costs increased to approximately $7.4 million in the third quarter of 2025 compared with $7.3 million in the third quarter of 2024. The slight increase in operating costs between periods is primarily related to an increase in employee related costs in the third quarter of 2025 compared to the third quarter of 2024.

The golf and related operations recorded income before income taxes of $1.9 million in both the third quarter of 2025 and 2024, respectively.

General Corporate Expenses

General corporate expenses were $0.9 million in both the third quarter of 2025 and 2024, respectively.

Interest Expense

Interest expense was approximately $0.5 million in both third quarter of 2025 and third quarter of 2024. During the three months ended September 30, 2025 and 2024, the weighted average interest rate on outstanding borrowings was 6.17% and 6.23%, respectively.

Net Income

Net income attributable to Avalon Holdings Corporation common shareholders was $1.9 million in the third quarter of 2025 compared to net income attributable to Avalon Holdings Corporation common shareholders of $1.8 million in the third quarter of 2024. Avalon recorded a state income tax provision in both the third quarter of 2025 and 2024, which was related entirely to the waste management and brokerage operations. Due to the recording of a full valuation allowance against the Company’s federal net deferred tax assets, the overall effective tax rate in both periods reflect taxes owed in certain U.S state jurisdictions. Avalon’s income tax on the income before taxes was offset by a change in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.

Performance in the first nine months of 2025 compared with the first nine months of 2024

Overall Performance

Net operating revenues decreased to $62.1 million in the first nine months of 2025 compared with $66.2 million in the first nine months of 2024. Net operating revenues of the waste management services segment were approximately $32.3 million in the first nine months of 2025 compared to $36.2 million in the first nine months of 2024. The decrease in net operating revenues of the waste management services segment was a result of decreases in both event work projects and continuous work during the first nine months of 2025 compared to the first nine months of 2024. Net operating revenues of the golf and related operations segment were approximately $29.7 million in the first nine months of 2025 compared to $30.0 million in the first nine months of 2024. The decrease in net operating revenues of the golf and related operations was a result of a decrease in membership dues revenue coupled with a decrease in business activity at the country clubs.

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Total cost of operations related to the waste management services segment decreased to $25.3 million in the first nine months of 2025 compared with $28.4 million in the first nine months of 2024. The decrease in the cost of operations between periods for the waste management services segment is primarily due to a decrease in net operating revenues as these costs vary directly with the associated revenues.

Total cost of operations related to the golf and related operations segment increased to $24.1 million in the first nine months of 2025 compared to $23.6 million in the first nine months of 2024. The increase in operating costs between periods is primarily related to an increase in utility and operating costs in the first nine months of 2025 compared to the first nine months of 2024.

Depreciation and amortization expense was approximately $2.9 million in the first nine months of 2025 compared to $3.0 million in the first nine months of 2024. The decrease is due to a lower depreciable asset base compared to the prior period.

Consolidated selling, general and administrative expenses were approximately $7.8 million in the first nine months of 2025 compared to $8.0 million in the first nine months of 2024. The decrease is mainly attributed to a decrease in incentive compensation for salesman of waste management services segment.

Interest expense was approximately $1.5 million in both the first nine months of 2025 and the first nine months of 2024. During the nine months ended September 30, 2025 and 2024, the weighted average interest rate on outstanding borrowings was 6.17% and 6.26%, respectively.

Net income attributable to Avalon Holdings Corporation common shareholders was $0.7 million, or $0.17 per share, in the first nine months of 2025 compared with a net income attributable to Avalon Holdings Corporation common shareholders of $1.8 million, or $0.47 per share, in the first nine months of 2024.

Segment Performance

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

Waste Management Services Segment

The net operating revenues of the waste management services segment decreased to $32.3 million in the first nine months of 2025 compared with $36.2 million in the first nine months of 2024.

The net operating revenues of the waste disposal brokerage and management services business were approximately $29.8 million in the first nine months of 2025 compared to $34.0 million in the first nine months of 2024. Continuous work of the waste disposal brokerage business decreased by approximately $0.6 million between periods. Net operating revenues related to continuous work were approximately $19.3 million in the first nine months of 2025 compared with $19.9 million in the first nine months of 2024. Event work net operating revenues decreased by approximately $3.6 million during first nine months of 2025 when compared to first nine months of 2024. Event work is defined as bid projects under contract that occurs on a one-time basis over a short period of time. Such work can fluctuate significantly from year to year. Event work net operating revenues were approximately $10.5 million in the first nine months of 2025 compared with $14.1 million in the first nine months of 2024.

The net operating revenues of the captive landfill management operations were approximately $2.5 million in the first nine months of 2025 compared to $2.2 million in the first nine months of 2024. The net operating revenues of the captive landfill operations are almost entirely dependent upon the volume of waste generated by the owner of the landfill for whom Avalon manages the facility.

Costs of operations related to the waste management services segment decreased to $25.3 million in the first nine months of 2025 compared with $28.4 million in the first nine months of 2024. The decrease in the cost of operations between periods for the waste management segment is primarily due to a decrease in net operating revenues as these costs vary directly with the associated revenues. The overall gross margin percentage of the waste brokerage and management services business was approximately 21% in both the first nine months of 2025 and 2024, respectively.

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Income before income taxes for the waste management services segment were approximately $3.2 million in the first nine months of 2025 compared to $3.8 million in the first nine months of 2024. Income before income taxes of the waste brokerage and management services business was approximately $3.2 million in the first nine months of 2025 compared to $3.7 million in the first nine months of 2024. The decrease in income before income taxes was primarily attributable to decreases in both continuous and event work projects during the first nine months of 2025 compared to the first nine months of 2024. Income before income taxes of the captive landfill operations were approximately $0.2 million for the first nine months of both 2025 and 2024, respectively. During the first nine months of 2025 the salt water injection wells incurred a loss before income taxes of approximately $0.2 million compared with a loss before income taxes of approximately $0.1 million during the first nine months of 2024. The increase is primarily due to legal and professional costs incurred relating to Avalon’s mandamus processes.

Golf and Related Operations Segment

Net operating revenues of the golf and related operations segment were approximately $29.7 million in the first nine months of 2025 compared to $30.0 million in the first nine months of 2024.

Food, beverage and merchandise sales were approximately $10.3 in the first nine months of 2025 compared to $10.6 million in the first nine months of 2024, respectively. Food, beverages and merchandise sales decreased between periods as a result of a decrease in business activity at the country clubs.

Other net operating revenues related to the golf and related operations were approximately $19.4 million in both the first nine months of 2025 and 2024, respectively. Membership dues revenue was approximately $5.4 million in the first nine months of 2025 compared to $5.6 million in the first nine months of 2024. The decrease in membership dues revenue was attributable to a decrease in the ability to attract and retain members. Net operating revenues related to room rental was approximately $6.0 million in the first nine months of 2025 compared to $5.9 million in the first nine months of 2024. The increase in room revenue was a result of higher occupancy when compared to the prior period. Other revenues consisting of athletic, fitness, salon and spa related activities were approximately $5.0 million in the first nine months of 2025 compared to $4.9 million in the first nine months of 2024. The increase between periods was primarily due to an increase in salon and spa revenue associated with The Grand Resort. Greens fees and associated cart rentals were approximately $3.0 million in both the first nine months of 2025 and the first nine months of 2024, respectively. Due to adverse weather conditions, net operating revenues relating to the golf courses, which are located in northeast Ohio and western Pennsylvania, were minimal during the first three months of 2025 and 2024.

Total cost of operations for the golf and related operations segment were $24.1 million in the first nine months of 2025 compared with $23.6 million in the first nine months of 2024. Cost of food, beverage and merchandise was approximately $4.7 million in both the first nine months of 2025 and 2024, respectively. The cost of food, beverage and merchandise sales was approximately 45% of associated revenue in the first nine months of 2025 compared to 44% in the first nine months of 2024. Golf and related operations operating costs increased to approximately $19.4 million in the first nine months of 2025 compared with $18.9 million in the first nine months of 2024. The increase in costs is primarily a result of an increase in utility costs and overall operating expenditures compared to the prior period.

The golf and related operations recorded income before income taxes of $1.4 million in the first nine months of 2025 compared with a net income before income taxes of $2.1 million in the first nine months of 2024. The change between periods was primarily a result of a decrease in membership dues revenue, food beverage and merchandise revenue, coupled with an increase in utility and overall operating costs.

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

General Corporate Expenses

General corporate expenses were $2.7 million in both the first nine months of 2025 and 2024, respectively.

Interest Expense

Interest expense was approximately $1.5 million for both the first nine months in 2025 the first nine months of 2024. During the nine months ended September 30, 2025 and 2024, the weighted average interest rate on outstanding borrowings was 6.17% and 6.26%, respectively.

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Net Income

Net income attributable to Avalon Holdings Corporation common shareholders was $0.7 million in the first nine months of 2025 compared to a net income attributable to Avalon Holdings Corporation common shareholders of $1.8 million in the first nine months of 2024. Avalon recorded a state income tax provision in both the first nine months of 2025 and 2024, which was related entirely to the waste management and brokerage operations. Due to the recording of a full valuation allowance against the Company’s federal net deferred tax assets, the overall effective tax rate in both periods reflect taxes owed in certain U.S state jurisdictions. Avalon’s income tax on the income before taxes was offset by a change in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.

Trends and Uncertainties

Government regulations

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

Legal matters

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

Credit and collections

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

Competitive pressures

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

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

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

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Numerous economic factors, including a recession, other economic downturns, inflation and the potential for a decrease in consumer spending, could adversely affect us

Various adverse economic conditions, including a recession, other economic downturns and inflation could decrease consumer discretionary spending and adversely affect our financial performance. Rising inflation rates have led to increased interest rates. A recession or other economic downturn could have a material adverse effect on our financial results. The products and services that are golf and related operations offer are products or services that consumers may view as discretionary rather than necessities. Our results of operations are sensitive to changes in macroeconomic conditions that impact consumer spending, including discretionary spending. Other factors, including consumer confidence, employment levels, interest rates, fuel and energy costs, tax rates, and consumer debt levels could reduce consumer spending or change consumer purchasing habits. Slowdowns in the U.S. or global economy, or an uncertain economic outlook, could materially adversely affect consumer spending habits and could have a material adverse effect on our business, results of operations and financial condition.

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

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

The waste brokerage and management division employs individuals with unique capabilities and knowledge in the handling, disposal and transportation of both hazardous and non-hazardous waste. In addition, the majority of the senior management and sales representatives have been employed by Avalon for many years and are approaching retirement age. Over the years, the waste brokerage and management division has had difficulty finding qualified individuals with the required expertise in specific geographic areas. Our inability to replace these individuals upon retirement, with the required expertise could have a negative impact on the profitability of the waste brokerage and management division.

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

The profitability of our golf and related operations segment depends on our ability to anticipate and react to changes in commodity costs, including food, supplies, fuel, utilities and other operating costs, including labor. We continuously monitor supply and cost trends of these commodities. During the first nine months of 2024 and 2023, we experienced high commodity costs compared to the prior years. These increases are primarily driven by overall market demand and inflationary pressures. Volatility in certain commodity prices and fluctuations in labor costs have adversely affected, and in the future, could adversely affect Avalon’s operating results. We anticipate commodity costs to continue to remain elevated throughout 2025 due to inflationary pressures. An increase in commodity costs could have an adverse impact on our profitability.

Effective succession planning is important to our continued success

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

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

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

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

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

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

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

Saltwater disposal wells

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

The saltwater disposal wells are currently not operational. Assuming operations resume in the future, there is a risk during the operation of an environmental event causing contamination to the water tables in the surrounding area, or seismic events. The occurrence of a spill or contamination at a disposal well site could result in remedial expenses and/or result in the operations at the well site being suspended and/or terminated by the Ohio EPA or the ODNR. Incurring remedial expenses and /or a suspension or termination of Avalon’s right to operate one or more saltwater disposal wells at the well site could have an adverse effect on Avalon’s financial results.

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

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

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

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

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

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

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

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

On April 5, 2019, Avalon filed with the Oil and Gas Commission a motion to vacate its prior decisions in this matter. The Oil and Gas Commission scheduled a hearing on this motion for August 13, 2019. Before the hearing began, and in response to the Division’s motion to dismiss the Company’s motion to vacate, the Commission dismissed the matter. The Company appealed that decision to the Franklin County Court of Common Pleas. In April 2020, the Division’s motion to dismiss and the Company’s opposition were reviewed by the Court. Following the restart orders received on May 24, 2021, and discussed below, the Court dismissed the complaint.

Concurrently with the filing of the appeal with the Franklin County Court of Common Pleas, the Company filed a writ of mandamus in the 10th District Court of Appeals on August 30, 2019 to compel the chief of the Division to issue restart orders, or alternative orders that would allow the Company to either restart the AWMS #2 well, or appeal said orders to the Oil and Gas Commission in accordance with Ohio Law. On October 6, 2020 and in response to a motion from the Division, the Court dismissed this complaint for writ of mandamus.

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

On March 18, 2019, Avalon received notice that the 11th Appellate District Court in Trumbull County, Ohio issued summary judgment in favor of the Ohio Department of Natural Resources in the writ of mandamus action that resulted from the suspension order of the Company’s salt water injection well. The decision was appealed to the Supreme Court of Ohio on April 5, 2019. Oral arguments in the case occurred on April 7, 2020. On September 23, 2020, the Supreme Court of Ohio ruled in favor of the Company. The Supreme Court of Ohio reversed the decision of the 11th Appellate District Court and remanded the case back to that court for a trial on the merits. The trial occurred in September and October 2021. On December 19, 2022, the 11th Appellate District Court denied the Company’s writ of mandamus action. The Court determined that the Company failed to establish a cognizable property interest that would necessitate a just compensation/takings analysis and accordingly denied the Company’s petition for writ of mandamus. The decision was appealed to the Supreme Court of Ohio on January 30, 2023 and on January 24, 2024 the Supreme Court of Ohio ruled in a unanimous decision to overturn the Court of Appeal’s decision. The Supreme Court of Ohio remanded to the Court again for a decision on the mandamus complaint as to whether the Company suffered a total or partial taking.

On September 9, 2024 the 11th Appellate District Court in Trumbull County rendered a non-unanimous decision on remand. The decision denied the Company’s categorical regulatory takings claim, but found for the Company on its partial regulatory takings claim. The decision limited damages due to the Company, and the Company subsequently appealed the Appellate Court’s decision to the Supreme Court of Ohio based on errors regarding the court’s interpretation of Ohio law and abuse of discretion grounds. The Chief of the Division also cross-appealed the Appellate Court’s decision to the Supreme Court. Oral arguments were held on August 20, 2025 and the Company is awaiting a decision from the high court.

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On May 24, 2021, the Company received Chief’s Orders from the Division vacating the September 3, 2014 suspension orders for AWMS #2 and setting conditions for restart of that well. Among these conditions was a limit placed on the seismicity within three miles of the well. Under the Order, if a seismic event with a magnitude 2.1 or above occurs, the well must cease operations for an indefinite period of time until concurrence for subsequent restart is received from the Division. The Company appealed the May 2021 Chief’s Order to the Ohio Oil and Gas Commission, seeking reasonable operating conditions that will allow the facility to operate profitably while protecting human health and property. A hearing in this matter occurred in February 2022. On June 30, 2022, the Oil and Gas Commission rendered their decision for the Division in this matter, once again deferring to the Division in their decision. The Company instructed its counsel to appeal the decision to the Franklin County Ohio Court of Common Please no later than August 3, 2022.

The Company’s former counsel did not file a copy of notice to appeal to the Franklin County Court within 30-days of the Commission’s decision. The Division motioned that court for dismissal of the appeal on August 19, 2022 for not perfecting the appeal. The Franklin County Court of Common Pleas granted that motion on October 31, 2024. On November 26, 2024, the Company appealed that dismissal to the 10th Appellate District Court in Franklin County. On May 23, 2025, the Appellate Court affirmed the dismissal. On July 2, 2025, the Company appealed the Appellate Court’s decision to the Supreme Court of Ohio. The Supreme Court declined to hear the appeal. The Company filed a complaint in the Trumbull County Court of Common Pleas on August 4, 2025 seeking damages from the malpractice of the Company’s former legal counsel.

Golf memberships and liquor licenses

The Avalon Golf and Country Club operates four golf courses and related country clubs and a multipurpose recreation center. The Avalon Golf and Country Club facilities also offer swimming pools, fitness centers, tennis courts, dining and banquet facilities, salon and spa services. In addition, The Grand Resort provides guests with a self-contained vacation experience, offering hotel guests golf packages to all of the golf courses of the Avalon Golf and Country Club and allows its guests to utilize the facilities at each of the clubhouses. Members of the Avalon Golf and Country Club also have access to all of the amenities offered by The Grand Resort. The Avalon Golf and Country Club competes with many public courses and country clubs in the area. Although the golf courses continue to be available to the general public, the primary source of revenues is derived from the members of the Avalon Golf and Country Club. Avalon believes that the combination of its golf facilities and The Grand Resort will result in additional memberships in the Avalon Golf and Country Club. The ability to retain current members and attract new members has been an ongoing challenge. Although Avalon was able to increase the number of members of the Avalon Golf and Country Club, as of September 30, 2024, Avalon has not attained its membership goals. There can be no assurance as to when such goals will be attained. Avalon is continually using different marketing strategies to attract new members, such as local television advertising and various membership promotions. A significant decline in members could adversely affect the future financial performance of Avalon.

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

Seasonality

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

Inflation

The Federal Reserve has kept its key interest rates at elevated levels as pricing on consumer goods has remained high. Our operations are substantially affected by economic conditions, including inflation, which can impact consumer disposable income levels and spending habits. Although 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, adverse economic conditions could pressure Avalon’s business and operating performance and financial results may suffer. In general, management believes that rising costs resulting from 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

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Avalon does not have significant exposure to changing interest rates.

Borrowings under our New Term Loan Agreement bear interest at a fixed rate of 6.00% until the seventh anniversary date of the closing at which time the interest rate will be reset to a fixed rate equal to the greater of (a) 6.00% per annum or (b) the sum of the three year treasury rate on the date two (2) business days prior to the reset date plus 3.40%, provided that the applicable rate shall in no event exceed 8.50% per annum.

Outstanding borrowings under our Line of Credit Agreement bear interest at Prime Rate plus .25%. At September 30, 2025, the interest rate on the Line of Credit Agreement was 7.50%. At September 30, 2025, approximately $3.2 million was outstanding under the Line of Credit Agreement.

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.

Item 4. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), Avalon’s management conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2025. For purposes of the foregoing, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Avalon’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as outlined above. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that they believe that, as of September 30, 2025, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Controls over Financial Reporting.

There were no changes in our internal controls over financial reporting during the fiscal quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Reference is made to “Item 3. Legal Proceedings” in Avalon’s Annual Report on Form 10-K for the year ended December 31, 2024 for a description of legal proceedings.

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

| (a) | Exhibits
|  | Exhibit 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|  | Exhibit 31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|  | Exhibit 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|  | Exhibit 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|  | Exhibit 101.INS Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) (1)
|  | Exhibit 101.SCH Inline XBRL Taxonomy Extension Schema Document (1)
|  | Exhibit 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)
|  | Exhibit 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document (1)
|  | Exhibit 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document (1)
|  | Exhibit 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document (1)
|  | Exhibit 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

| (1) | These interactive data files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act, as amended, or otherwise subject to liability under those sections.

| (b) | Reports on Form 8-K
|  | On May 8, 2025, Avalon reported the voting results from the Annual Meeting held on May 7, 2025. On September 24, 2025, Avalon reported that the Company entered into an amendment to its existing Line of Credit Agreement with Premier Bank to extend the maturity date to July 31, 2027.

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SIGNATURE

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

| AVALON HOLDINGS CORPORATION |
| (Registrant) |
Date: November 7, 2025 | By: | /s/ Michael J. Havalo |
| Michael J. Havalo, Chief Financial Officer and |
| Treasurer (Principal Financial and Accounting |
| Officer and Duly Authorized Officer) |

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