AVALON HOLDINGS CORP (Form: 10-K, Received: 03/11/2011 16:31:52)

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2010

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2010

¨	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		Name of Each Exchange on Which Registered
Class A Common Stock, $.01 par value		NYSE Amex

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

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

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

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

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

The aggregate market value of Class A Common Stock held by non-affiliates of the registrant on March 7, 2011 was $8.6 million. Assuming that the market value of Avalon Holdings Corporation’s Class B Common Stock was the same as its Class A Common Stock by reason of its one-to-one conversion rights, the market value of Class B Common Stock held by non-affiliates of the registrant on March 7, 2011 was approximately $3,300. The registrant had 3,191,038 shares of its Class A Common Stock and 612,293 shares of its Class B Common Stock outstanding as of March 7, 2011.

Documents Incorporated by Reference

1.	Portions of the Avalon Holdings Corporation Annual Report to Shareholders for the year ended December 31, 2010 (Parts I and II of Form 10-K).

2.	Portions of the Avalon Holdings Corporation Proxy Statement for the 2011 Annual Meeting of Shareholders are incorporated by reference herein into Part III.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

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

TABLE OF CONTENTS


Part I		Page

Item 1.	Business	1
Item 1A.	Risk Factors	4
Item 1B.	Unresolved Staff Comments	8
Item 2.	Properties	8
Item 3.	Legal Proceedings	9
Item 4.	Removed and Reserved	9

Part II

Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters	10
Item 6.	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	10
Item 8.	Financial Statements and Supplementary Data	10
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	11
Item 9A.	Controls and Procedures	11
Item 9B.	Other Information	11

Part III

Item 10.	Directors and Executive Officers of the Registrant	12
Item 11.	Executive Compensation	13
Item 12.	Security Ownership of Certain Beneficial Owners and Management	13
Item 13.	Certain Relationships and Related Transactions	13
Item 14.	Principal Accountant Fees and Services	13

Part IV

Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	14

Signatures		16

Note on Incorporation by Reference

Throughout this report various information and data are incorporated by reference from Avalon’s 2010 Annual Report to Shareholders (hereinafter referred to as the “Annual Report to Shareholders”). Any reference in this report to disclosures in the Annual Report to Shareholders shall constitute incorporation by reference of that specific material into this Form 10-K.

PART 1

ITEM 1.

BUSINESS

General

Avalon Holdings Corporation (“Avalon”) 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 (the “Spin-off”). The history and organization of the remaining operations, some of which were contributed to Avalon as a result of the Spin-off, are described below.

In June 1990, AWS purchased approximately 5.6 acres of real estate located in Warren, Ohio on which it constructed Avalon’s corporate headquarters. In connection with the acquisition of such property, Avalon Lakes Golf, Inc. (“ALGI”), a former subsidiary of AWS and now a subsidiary of Avalon, acquired the real and personal property associated with the Avalon Lakes Golf Course, an 18-hole golf course adjacent to the office property. The corporate headquarters and ALGI were contributed to Avalon by AWS. The Avalon corporate headquarters building has been remodeled to include a clubhouse, restaurant and pro shop for the Avalon Golf and Country Club at Avalon Lakes Golf Course.

In 1995, American Waste Management Services, Inc. (“AWMS”) commenced its waste disposal brokerage and management operations and in 1997, American Landfill Management, Inc. (“ALMI”) started its captive landfill management operations. Both companies were contributed to Avalon by AWS and now are subsidiaries of Avalon.

In November 2003, TBG, Inc. (“TBG”), a subsidiary of ALGI, entered into a long-term lease agreement with Squaw Creek Country Club to lease and operate its golf course and related facilities. As a result of the transaction, Avalon created a newly organized subsidiary, Avalon Golf and Country Club, Inc. (“AGCC”) which manages all the golf courses and related operations.

On October 23, 2006, Avalon, through a newly created subsidiary, Avalon Country Club at Sharon, Inc. (“Sharon”), completed the acquisition of the Sharon Country Club assets. The primary assets of the Sharon club include the golf course and clubhouse. Avalon renovated the clubhouse and constructed additional recreational facilities and operates the Sharon facilities as part of its Avalon Golf and Country Club.

Business Segments Information

Avalon’s business segments are waste management services and golf and related operations. The waste management services segment includes waste disposal brokerage and management services and captive landfill management operations. The golf and related operations segment includes the operation and management of golf courses, fitness centers, tennis, spa services, dining and banquet facilities and a travel agency. In 2010, one customer accounted for 12% of the waste management services segment’s net operating revenues to external customers and 9% of the consolidated net operating revenues. In 2009, no customer individually accounted for 10% or more of Avalon’s consolidated net operating revenues.

Waste Management Services

Avalon’s waste management subsidiaries provide hazardous and nonhazardous waste brokerage and management services and captive landfill management services. Waste management services are provided to industrial, commercial, municipal and governmental customers primarily in selected northeastern and midwestern United States markets. For the years 2010 and 2009, the net operating revenues of the waste management services segment represented approximately 78% and 75%, respectively, of Avalon’s total segments’ net operating revenues.

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

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

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

These procedures are important to both AWMS and its customers because the key to proper handling of waste is accurate identification. Hazardous waste which is not identified as such, and thus, improperly disposed of can result in substantial liability to the waste generator, the disposal facility, AWMS and potentially to all other waste generators that have used the disposal site. Conversely, waste that could safely and legally be disposed of in a solid waste landfill, but is instead sent to a hazardous waste facility for treatment and disposal, will result in substantial and unnecessary expense to the generator.

American Landfill Management, Inc. (“ALMI”) is a landfill management company that provides technical and operational services to customers owning captive disposal facilities. A captive disposal facility only disposes of waste generated by the owner of such facility. ALMI provides turnkey services, including daily operations, facilities management and management reporting for its customers. Currently, ALMI manages one captive disposal facility located in Ohio. In addition, American Construction Supply, Inc., a wholly owned subsidiary of ALMI, sells construction mats.

Golf and Related Operations

Avalon’s golf and related operations segment operates golf courses and related facilities and a travel agency. For the years 2010 and 2009, the net operating revenues of the golf and related operations segment represented approximately 22% and 25%, respectively, of Avalon’s total segments’ net operating revenues.

Avalon Lakes Golf, Inc. (“ALGI”) owns and operates a Pete Dye designed championship golf course located in Warren, Ohio. ALGI generates revenue from membership dues, greens fees, cart rentals, merchandise, and food and beverage sales. TBG, a subsidiary of ALGI, entered into a long-term agreement with Squaw Creek Country Club to lease and operate its golf course and related facilities. The lease, which commenced on November 1, 2003, has an initial term of ten (10) years with four (4) consecutive ten (10) year renewal term options unilaterally exercisable by TBG. In addition to a championship golf course, the Squaw Creek facilities include a swimming pool, tennis courts and a clubhouse that includes a fitness center, dining and banquet facilities. TBG generates its revenue in the same manner as ALGI, but also generates revenues from tennis. Avalon Travel, Inc., a subsidiary of ALGI, owns and operates a travel agency which generates its revenue from booking travel reservations.

In November 2003, Avalon formed the Avalon Golf and Country Club to manage the golf courses and the related operations. Members of the Avalon Golf and Country Club are entitled to privileges at all the facilities. Membership requires payment of annual dues. Members receive several benefits including reduced greens fees, preferential tee times and discounts on merchandise.

On October 23, 2006, Avalon, through its subsidiary, Avalon Country Club of Sharon, Inc., completed the acquisition of the Sharon Country Club assets. The primary assets of Sharon include the golf course and clubhouse which includes, dining and banquet facilities, a swimming pool, spa services and a fitness center. Sharon generates its revenue in the same manner as ALGI but also generates revenues from its fitness center and spa services.

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 these three facilities will result in additional memberships in the Avalon Golf and Country Club. Due to the state of the economy, the ability to retain current members and attract new members has become more difficult. Although Avalon was able to retain and slightly increase the number of members of the Avalon Golf and Country Club in 2010, as of December 31, 2010, Avalon has not attained its membership goals. There can be no assurance as to when such goals will be attained and when the golf and related operations will ultimately become profitable. Avalon is continually using different marketing strategies to attract new members, such as local television advertising and various membership promotions. A significant decline in members could adversely affect the future financial performance of Avalon.

The golf courses are significantly dependent upon weather conditions during the golf season as a result of being located in northeast Ohio and western Pennsylvania. Avalon’s financial performance is adversely affected by adverse weather conditions.

Governmental Regulations

The federal government and numerous state and local governmental bodies are continuing to consider legislation or regulations to either restrict or impede the disposal and/or transportation of waste. A portion of Avalon’s waste brokerage and management services revenues is derived from the disposal and/or transportation of out-of-state waste. Any law or regulation restricting or impeding the transportation of waste or the acceptance of out-of-state waste for disposal could have a negative effect on Avalon. Avalon’s waste brokerage and management services may also be affected by the trend toward laws requiring the development of waste reduction and recycling or other programs.

All three of Avalon’s golf course operations 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.

Sales and Marketing

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

Competition

The hazardous and nonhazardous waste disposal brokerage and management business is highly competitive and fragmented. Avalon’s waste disposal brokerage and management business competes with other brokerage companies, as well as, with companies which own treatment and disposal facilities. In addition to price, knowledge and service are key factors when competing for waste disposal brokerage and management business. Avalon’s waste disposal brokerage and management operations obtain and retain customers by providing services and identifying cost-efficient disposal options unique to a customer’s needs. Consolidation within the solid waste industry has resulted in a reduction in the number of disposal options available to waste generators and may cause disposal pricing to increase. Avalon may need to absorb all or a portion of these cost increases depending upon competitive conditions at the time.

Avalon’s golf courses are located in Warren, Ohio, Vienna, Ohio and Sharon, Pennsylvania and compete with many public courses and country clubs in the area.

Insurance

Avalon carries $5,000,000 of liability insurance coverage. This insurance includes coverage for comprehensive general liability, automobile liability and other customary coverage. Avalon also carries $5,000,000 of liability insurance for the golf courses and related operations which maintain separate insurance coverage. Avalon carries comprehensive property damage coverage and, also, professional

liability insurance for its fitness, swimming and spa activities. No assurance can be given that such insurance will be available in the future or, if available, that the premiums for such insurance will be reasonable.

If Avalon were to incur a substantial liability for damages not covered by insurance or in excess of its policy limits or at a time when Avalon no longer is able to obtain appropriate liability insurance, its financial condition could be materially adversely affected.

Employees

As of December 31, 2010, Avalon had 226 employees, 29 of whom were employed by the waste management services segment, 168 of whom were employed by the golf and related operations and 29 of whom were employed in financial and administrative activities. Avalon believes that it has a good relationship with its employees.

Other Business Factors

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

ITEM 1A.

RISK FACTORS

The following factors, as well as, factors described elsewhere in the Form 10-K, or in other filings by Avalon with the Securities and Exchange Commission, could adversely affect Avalon’s consolidated financial position, results of operations or cash flows. Other factors not presently known to us or that we presently believe are not material could also affect our business operations and financial results.

Voting Control by Management

The holders of the Avalon Class B Common Stock (which has ten votes per share), consisting principally of the management of Avalon, have approximately 66 percent of the aggregate voting power of the outstanding Avalon Common Stock. Thus, the holders of the Avalon Class A Common Stock (which has one vote per share) will not, either alone or acting collectively, be able to elect a majority of the members of Avalon’s Board of Directors (the “Avalon Board”) or control many corporate actions. However, the holders of the Avalon Class A Common Stock, voting as a separate class, have the right to elect the number of directors equal to at least 25 percent of the total Board of Directors of Avalon until the outstanding Avalon Class B Common Stock constitutes less than 50 percent of the total voting power of the outstanding Avalon Common Stock, after which time the holders of the Avalon Class A and Class B Common Stock will vote as a single class for the election of directors and all matters presented for a vote to the shareholders. The holders of a majority of all outstanding shares of Class A Common Stock or Class B Common Stock, voting as separate classes, must also approve amendments to the Articles of Incorporation that adversely affect the shares of their class.

Each share of Class B Common Stock is convertible, at any time, at the option of the shareholder, into one share of Class A Common Stock. Shares of Class B Common Stock are also automatically converted into shares of Class A Common Stock on the transfer of such shares to any person other than Avalon, another holder of Class B Common Stock or a Permitted Transferee, as defined in Avalon’s Articles of Incorporation.

Certain Anti-Takeover Provisions of Articles of Incorporation, Code of Regulations and Ohio Law

The Articles of Incorporation and Code of Regulations of Avalon, as well as, Ohio statutory law, contain provisions that may have the effect of discouraging an acquisition of control of Avalon not approved by the Avalon Board. Such provisions may also have the effect of discouraging third parties from making proposals involving an acquisition or change of control of Avalon, even though such proposals, if made, might be considered desirable by a majority of the Avalon stockholders. Such

provisions could also have the effect of making it more difficult for third parties to cause the replacement of the current management of Avalon without the concurrence of the Avalon Board. These provisions have been designed to enable Avalon to develop its business and foster its long-term growth without disruptions caused by the threat of a takeover not deemed by the Avalon Board to be in the best interest of Avalon and its stockholders.

Dividend Policy

The dividend policy of Avalon is determined by the Avalon Board. Avalon presently intends to retain earnings for use in the operation and expansion of its business and, therefore, does not anticipate paying cash dividends in the foreseeable future.

Avalon’s market for shares may be subject to greater volatility and limited daily activity

Market fluctuations, as well as economic conditions, may adversely affect the market price of the Avalon Class A Common Stock. Given the relatively small market capitalization of Avalon, the market for its Class A Common Stock may be subject to greater volatility than would be the case for a large company. In addition, the selling and buying of shares on a daily basis may be limited because of the relatively small capitalization of Avalon.

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

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.

The golf operations primary source of 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 operations are primarily dependent on the sale and renewal of memberships in the Avalon Golf and Country Club, on a year to year basis.

Long-lived asset impairment

Certain events or changes in circumstances may indicate that the recoverability of the carrying value of long-lived assets should be assessed. Such events or changes may include a significant decrease in market value, a significant change in the business climate in a particular market, or a current-period operating or cash flow loss combined with historical losses or projected future losses. If an event occurs or changes in circumstances are present, Avalon estimates the future cash flows expected to result from the use of the applicable groups of long-lived assets and their eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying value, Avalon would recognize an impairment loss to the extent the carrying value of the groups of long-lived assets exceeds their 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.

The ability to accurately predict future cash flows may impact the determination of fair value. Avalon’s assessments of cash flows represent management’s best estimate at the time of the impairment review. Avalon estimates the future cash flows expected to result from the use and, if applicable, the eventual disposition of the assets. The key variables that management must estimate include, among other factors, sales, costs, inflation and capital spending. Significant management judgment is involved in estimating these variables, and they include inherent uncertainties. If different cash flows had been estimated in the current period, the value of the long-lived assets could have been materially impacted. Furthermore, Avalon’s accounting estimates may change from period to period as conditions in markets change, and this could materially impact financial results in future periods.

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 could be adversely affected by adverse weather conditions.

Environmental Liabilities

Avalon may be subject to liability for environmental contamination caused by pollutants, the transportation, treatment or disposal of which was arranged for by Avalon or one of its predecessors.

Although Avalon has compliance guidelines for its waste brokerage and management services business, Avalon could still incur a substantial liability for environmental damage not covered by or in excess of its insurance policy limits and, as such, its financial condition could be adversely affected.

Competitive pressures

The hazardous and nonhazardous waste disposal brokerage and management business is highly competitive and fragmented. Avalon’s waste disposal brokerage and management business competes with other brokerage companies, as well as, with companies which own treatment and disposal facilities. In addition to price, knowledge and service are key factors when competing for waste disposal brokerage and management business. Avalon’s waste disposal brokerage and management 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 companies offering disposal options available to waste generators and may cause disposal pricing to increase. Avalon may need to absorb all or a portion of these cost increases depending upon competitive conditions at the time.

Golf Memberships and Liquor Licenses

The Avalon Golf and Country Club has golf courses and clubhouses at each of its three facilities. The Squaw Creek and Sharon facilities each have a swimming pool, a fitness center and dining and banquet facilities. In addition, the Squaw Creek facility has tennis courts and the Sharon facility offers spa services. The Avalon Golf and Country Club competes with many public courses and country clubs in the area. Although the golf courses continue to be available to the general public, the primary source of revenues is derived from the members of the Avalon Golf and Country Club. Avalon believes that the combination of its three facilities will result in additional memberships in the Avalon Golf and Country Club. Due to the state of the economy, the ability to retain current members and attract new members has become more difficult. Although Avalon was able to retain and slightly increase the number of members of the Avalon Golf and Country Club in 2010, as of December 31, 2010, Avalon has not attained its membership goals. There can be no assurance as to when such goals will be attained and when the golf and related operations will ultimately become profitable. Avalon is continually using different marketing strategies to attract new members, such as local television advertising and various membership promotions. A significant decline in members could adversely affect the future financial performance of Avalon.

Growth Strategy

Our growth strategy for the waste management services segment will focus 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.

•

Pricing Activities . We seek to secure price increases necessary to offset increased costs, to improve our operating margins and to obtain adequate returns on our investments in assets.

•

Long-Term Agreements . We seek to obtain long-term agreements with all of our customers. By obtaining such long-term agreements, we will have the opportunity to grow our revenue base at the same rate as the underlying revenue growth of these customers. We believe that this positions us to minimize revenue deterioration and experience internal growth rates that are generally higher than our industry’s overall growth rate. Additionally, we believe that by securing a base of long-term recurring revenue, we are better able to protect our market position from competition and our business may be less susceptible to downturns in economic conditions.

•

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.

For the golf and related operations segment, 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. Such potential acquisitions could be financed by existing working capital, utilizing its line of credit, secured or unsecured debt, issuance of common stock, or issuance of a security with characteristics of both debt and equity, any of which could impact liquidity in the future.

Government regulations

The federal government and numerous state and local governmental bodies are continuing to consider legislation or regulations to either restrict or impede the disposal and/or transportation of waste. A portion of Avalon’s waste management services revenues is derived from the brokerage of the disposal and/or transportation of out-of-state waste. Any law or regulation restricting or impeding the transportation of waste or the acceptance of out-of-state waste for disposal could have a negative effect on Avalon. Avalon’s waste brokerage and management services may also be affected by the trend toward laws requiring the development of waste reduction and recycling or other programs.

Changes in laws, regulations and accounting standards

Our implementation of new accounting rules and interpretations or compliance with changes in existing accounting rules could adversely affect our balance sheet or results of operations or cause unanticipated fluctuations in our results of operations in future periods.

Accounting estimates and judgments

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and subsequent adjustments could have a material adverse effect on operating results for the period or periods in which the change is identified.

Inflation

Avalon has not entered into any long-term fixed price contracts that could have a material adverse impact upon its financial performance in periods of inflation. In general, management believes that rising costs resulting from price inflation could be passed on to customers; however, Avalon may need to absorb all or a portion of these cost increases depending upon competitive conditions at the time.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

There were no unresolved comments from the Staff of the U. S. Securities and Exchange Commission at December 31, 2010.

ITEM 2.

PROPERTIES

Avalon owns a 37,000 square foot headquarters building located on approximately 5.6 acres of property in Warren, Ohio adjacent to the Avalon Lakes Golf Course. The corporate and administrative offices of ALMI, AWMS and all the golf operations are located at the headquarters building of Avalon in Warren, Ohio. Avalon’s corporate headquarters building also includes a clubhouse, restaurant and pro shop for the Avalon Golf and Country Club at Avalon Lakes Golf Course.

ALGI owns an 18-hole golf course and practice facility on approximately 200 acres, a maintenance and storage building of approximately 12,000 square feet, a restaurant building of approximately 10,400 square feet, and a banquet facility of approximately 7,000 square feet. ALGI currently leases the restaurant building and banquet facility to a third party operator. All of ALGI’s facilities are located in Warren, Ohio.

TBG, Inc. leases and operates the Avalon Golf and Country Club at Squaw Creek in Vienna, Ohio, which includes an 18-hole golf course and practice facility on approximately 224 acres, an outdoor swimming pool, 4 outdoor tennis courts, 4 indoor tennis courts and a 67,000 square foot clubhouse that includes a pro shop, fitness center, restaurants and banquet facilities.

Avalon Country Club at Sharon, Inc. owns an 18-hole golf course on approximately 130 acres. The clubhouse has been renovated and additional banquet and recreational facilities have been constructed. The renovated clubhouse and recreational facilities are approximately 80,000 square feet and include a pro shop, dining and banquet facilities, an outdoor swimming pool, a spa and fitness center.

The captive landfill management operations use approximately six pieces of equipment (such as bulldozers, excavators and backhoes) all of which are owned or leased by ALMI.

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

ITEM 3.

LEGAL PROCEEDINGS

In 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 Item 1. “Business—Insurance.”

ITEM 4.

REMOVED and RESERVED

PART II

Information with respect to the following items can be found on the indicated pages of Exhibit 13.1, the 2010 Annual Report to Shareholders, if not otherwise included herein.


ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

		Page(s)
Common stock information		24
Dividend policy		24

ITEM 6. SELECTED FINANCIAL DATA
Not required for Smaller Reporting Company

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for Smaller Reporting Company.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent auditors’ report regarding financial statements as of December 31, 2010 and 2009 and for each of the two years in the period ended December 31, 2010		20

Financial Statements:
Consolidated Balance Sheets, December 31, 2010 and 2009		9
Consolidated Statements of Operations for the years ended December 31, 2010 and 2009		10
Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009		11
Consolidated Statements of Shareholders’ Equity for each of the two years in the period ended December 31, 2010		12

Notes to Consolidated Financial Statements		13-19

Information regarding financial statement schedules is contained in Item 15(a) of Part IV of this report.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. 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 the end of the period covered by the Annual Report. 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 December 31, 2010, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting . There were no changes in our internal control over financial reporting during the fourth fiscal quarter ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 regarding Directors is contained under the caption “Election of Directors” in the Registrant’s definitive Proxy Statement for its 2011 Annual Meeting of Shareholders (the “Proxy Statement”) which will be filed with the Securities and Exchange Commission, pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year, which information under such caption is incorporated herein by reference. The following information with respect to the Executive Officers of Avalon is included pursuant to Instruction 3 of Item 401(b) of Regulation S-K:


Name	Age		Position
Ronald E. Klingle		63	Chairman of the Board and a Director
Steven M. Berry		48	President, Chief Executive Officer and a Director
Timothy C. Coxson		60	Treasurer, Chief Financial Officer, Secretary and a Director
Frances R. Klingle		64	Chief Administrative Officer
Kenneth J. McMahon		58	Chief Executive Officer and President of American Waste Management Services, Inc.

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

Ronald E. Klingle has been a director and Chairman of the Board of the Company since June 1998. He was Chief Executive Officer from June 1998 until December 2002. He reassumed and held the position of Chief Executive Officer from March 15, 2004 until February 28, 2010. Due to the resignation of Mr. Steven M. Berry which is effective February 15, 2011, Mr. Klingle has been appointed to the position of Chief Executive Officer effective February 16, 2011. Mr. Klingle has over 30 years of environmental experience and received his Bachelor of Engineering degree in Chemical Engineering from Youngstown State University. Mr. Klingle is the spouse of Frances R. Klingle who is the Chief Administrative Officer of the Company.

Steven M. Berry was elected as a director and President and Chief Executive Officer on March 1, 2010 by the Board of Directors. Mr. Berry was Area Vice President for Waste Management, Inc. from 2006 until January 2009 and Vice President Marketing, Planning and Development from 1998 to 2006. Mr. Berry has over 25 years of experience in the waste management business and has extensive experience in mergers and acquisitions, customer service and sales and marketing. Mr. Berry received his Bachelor of Science degree from Kent State University. Mr. Berry resigned effective February 15, 2011.

Timothy C. Coxson has been a director of the Company since April 2007. He has been Chief Financial Officer and Treasurer since March 2006. He became Secretary in April 2007. Mr. Coxson had been Chief Financial Officer and Treasurer of Avalon from June 1998 until August 2004. From September 2004 to March 2006, Mr. Coxson was Director of Corporate Services of Avalon. He has over 25 years of experience working for publicly owned companies in accounting and external reporting. He received a Bachelor of Business Administration degree in Accounting from The Ohio State University.

Frances R. Klingle has been Chief Administrative Officer since June 1998. She was Controller of Avalon from June 1998 to April 2002. Ms. Klingle received a Bachelor of Arts degree in French from Kent State University and has completed postgraduate work in accounting at Youngstown State University. Ms. Klingle is the spouse of Ronald E. Klingle who is Chairman of the Board and a director of Avalon.

Kenneth J. McMahon has been Chief Executive Officer and President of American Waste Management Services, Inc. since June 1998. Mr. McMahon had previously been Executive Vice President, Sales and a director of American Waste Services, Inc. from September 1996 to June 1998. Mr. McMahon received a Bachelor of Business Administration degree in finance and his Master of Business Administration degree from Youngstown State University.

CODE OF ETHICS

Avalon has adopted a Code of Ethics in the form of Standards of Business Ethics and Conduct. Such code applies to all employees of Avalon including its principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions. The Code of Ethics is posted on our website at http://www.avalonholdings.com

Copies of Avalon’s Code of Ethics may be obtained without charge by any shareholder. Written requests for copies should be directed to the Secretary of Avalon Holdings Corporation, One American Way, Warren, Ohio 44484.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is contained under the captions “Executive Compensation,” and “Compensation of Directors and Executive Officers” in the Proxy Statement. The information under such captions is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 is contained under the caption “Independent Public Accountants” in the Proxy Statement which information under such captions is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

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

Financial Statements and Independent Auditors’ Report (See Part II, Item 8 of this report regarding incorporation by reference from the 2010 Annual Report to Shareholders).

Financial Statement Schedules required to be filed by Item 8 and Paragraph (d) of this Item 15.

The following financial statement schedule, which is applicable for years ended December 31, 2010 and 2009, should be read in conjunction with the previously referenced financial statements.

Independent Auditors’ Report on Financial Statement Schedule

Schedule II - Valuation and Qualifying Accounts

Such independent auditors’ report and financial statement schedule are at pages 17 and 18 of this report. The other schedules are omitted because of the absence of conditions under which they are required or because the information required is shown in the consolidated financial statements or the notes thereto.

Exhibits.

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


Exhibit No.

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

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

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

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

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

4.2		Avalon Holdings Corporation Long-Term Incentive Plan incorporated herein by reference to Avalon Holdings Corporation Registration Statement on Form S-8, Exhibit 4.2.

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

10.2		Lease Agreement with Squaw Creek Country Club, as referenced as Exhibit 10.3 to the registrant’s Form 10-Q for the period ended September 30, 2003.

10.3		Stock Purchase Agreement dated as of June 30, 2004 between Avalon Holdings Corporation and BMC International, Inc. for the purchase of DartAmericA, Inc., as referenced as Exhibit 10.4 to the registrant’s Form 10-Q for the period ended June 30, 2004.



11.1		Omitted—inapplicable. See “Basic net loss per share” on page 14 of the 2010 Annual Report to Shareholders.

13.1		Avalon Holdings Corporation 2010 Annual Report to Shareholders (except pages and information therein expressly incorporated by reference in this Form 10-K, the Annual Report to Shareholders, is provided for the information of the Commission and is not to be deemed “filed” as part of the Form 10-K).

14.1		Code of Ethics

21.1		Subsidiaries of Avalon Holdings Corporation.

23.1		Consent of Grant Thornton, as referenced as Exhibit 23.1 to the Avalon Holdings Corporation Registration Statement on Form S-8

23.2		Consent of Grant Thornton, as referenced as Exhibit 23.2 to the registrant’s Form 10-K for the year ended December 31, 2010

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

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

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

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

(b)	Reports on Form 8-K

On January 12, 2011, Avalon announced the resignation of Mr. Steve M. Berry as a director, President and Chief Executive Officer effective February 15, 2011.

(c)	Reference is made to Item 15 (a)(3) above for the index of Exhibits.

(d)	Reference is made to Item 15 (a)(2) above for the index to the financial statements and financial statement schedules.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on the 11 ^th day of March, 2011.


AVALON HOLDINGS CORPORATION
(Registrant)

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated, on the 11 ^th day of March, 2011.


Signatures		Title

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

/s/ TIMOTHY C. COXSON		Chief Financial Officer, Treasurer, Secretary
Timothy C. Coxson		and Director

/s/ KURTIS D. GRAMLEY		Director
Kurtis D. Gramley

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

/s/ DAVID G. BOZANICH		Director
David G. Bozanich

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and

Shareholders of Avalon Holdings Corporation

We have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) the consolidated financial statements of Avalon Holdings Corporation and subsidiaries referred to in our report dated March 11, 2011, which is included in the 2010 Annual Report to Shareholders and incorporated by reference in Part II of this form. Our audits of the consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(a) (2), which is the responsibility of the Company’s management. In our opinion, this financial statement schedule, when considered in relation to the consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/ GRANT THORNTON LLP

Cleveland, Ohio

March 11, 2011

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

(thousands of dollars)


DESCRIPTION	Balance at Beginning of Year		Additions				Deductions / (Recoveries) ¹		Balance at End of Year
DESCRIPTION	Balance at Beginning of Year		Charged to Costs and Expenses		Charged to Other Accounts		Deductions / (Recoveries) ¹		Balance at End of Year

Allowance for Doubtful Accounts:
Year ended December 31,
2010	$	165	$	14	$	—	$	11	$	168

2009	$	369	$	93	$	—	$	297	$	165

¹	Accounts receivable written-off as uncollectible, net of recoveries.

AVALON HOLDINGS CORPORATION AND SUBSIDIARIES

EXHIBIT INDEX


		Exhibit

13.1		2010 Annual Report to Shareholders

14.1		Code of Ethics

21.1		Subsidiaries of Avalon Holdings Corporation

23.2		Consent of Independent Registered Public Accounting Firm

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

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

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

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 13.1

Avalon Holdings Corporation

LOGO

2010 Annual Report

Financial Highlights

(in thousands, except for per share amounts)


For the year	2010			2009
Net operating revenues	$	43,453		$	36,920
Loss before income taxes		(502	)		(750	)
Net loss		(543	)		(774	)
Net loss per share		(.14	)		(.20	)

At year-end	2010			2009
Working capital	$	6,590		$	5,712
Total assets		47,337			47,757
Shareholders’ equity		38,977			39,400

The Company

Avalon Holdings Corporation provides waste management services to industrial, commercial, municipal and governmental customers in selected northeastern and midwestern U.S. markets. Avalon Holdings Corporation also owns the Avalon Golf and Country Club, which operates golf courses and related facilities.

Contents


Financial Highlights			1

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

Consolidated Balance Sheets			9

Consolidated Statements of Operations			10

Consolidated Statements of Cash Flows			11

Consolidated Statements of Shareholders’ Equity			12

Notes to Consolidated Financial Statements			13

Report of Independent Registered Public Accounting Firm			20

Management’s Report on Internal Controls over Financial Reporting			21

Company Location Directory			22

Directors and Officers			23

Shareholder Information			24

Avalon Holdings Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion provides information which management believes is relevant to an assessment and understanding of the operations and financial condition of Avalon Holdings Corporation and its Subsidiaries (collectively “Avalon”). This discussion should be read in conjunction with the consolidated financial statements and accompanying notes.

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

Liquidity and Capital Resources

For the year 2010, Avalon utilized cash provided by operations and existing cash to fund capital expenditures and meet operating needs.

Avalon’s aggregate capital expenditures in 2010 were $.4 million. Such expenditures related principally to purchases of equipment and building improvements for the golf and related operations segment. Avalon’s aggregate capital expenditures in 2011 are expected to be in the range of $.3 million to $.5 million, which will principally relate to building improvements and equipment purchases for the golf and related operations.

On November 1, 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. Avalon has made $7.5 million of leasehold improvements as of December 31, 2010. Based upon the amount of leasehold improvements already made and leasehold improvements anticipated to be made in the future, Avalon expects to exercise all of its renewal options.

Working capital was $6.6 million at December 31, 2010 compared with $5.7 million at December 31, 2009. The increase was primarily due to an increase in accounts receivable and a decrease in accrued payroll and other compensation.

The increase in accounts receivable of $1.1 million at December 31, 2010 compared with December 31, 2009 is primarily due to significantly higher net operating revenues of the waste management services segment in the fourth quarter of 2010 compared with the fourth quarter of 2009.

The decrease in accrued payroll and other compensation of $.2 million at December 31, 2010 compared with December 31, 2009 is primarily the result of a decrease in accrued bonuses of the waste brokerage and management services business due to the timing of payments and a decrease in the amount of accrued payroll at yearend.

On March 21, 2008, Avalon entered into a $3.5 million unsecured line of credit agreement with The Huntington National Bank. Interest on borrowings accrues at LIBOR plus 1.75%. The agreement was amended in April 2009 to provide for a minimum interest rate of 3.25%. The line of credit contains certain financial and other covenants, customary representations, warranties and events of defaults. Avalon was in compliance with the debt covenants at December 31, 2010 and expects to meet the covenants throughout 2011. At December 31, 2010 and December 31, 2009, there were no borrowings under the line of credit.

Avalon Holdings Corporation and Subsidiaries

Management believes that anticipated cash provided from future operations and existing working capital, as well as Avalon’s ability to borrow money under its credit facility, will be, for the foreseeable future, sufficient to meet operating requirements and fund capital expenditure programs.

Growth Strategy: Our growth strategy for the waste management services segment will focus 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:

•

Pricing Activities . We seek to secure price increases necessary to offset increased costs, to improve our operating margins and to obtain adequate returns on our investments in assets.

•

Long-Term Agreements . We seek to obtain long-term agreements with all of our customers. By obtaining such long-term agreements, we will have the opportunity to grow our revenue base at the same rate as the underlying revenue growth of these customers. We believe this positions us to minimize revenue deterioration and experience internal growth rates that are generally higher than our industry’s overall growth rate. Additionally, we believe that by securing a base of long-term recurring revenue, we are better able to protect our market position from competition and our business may be less susceptible to downturns in economic conditions.

•

For the golf and related operations, 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. Such potential acquisitions could be financed by existing working capital, utilizing its line of credit, secured or unsecured debt, issuance of common stock, or issuance of a security with characteristics of both debt and equity, any of which could impact liquidity in the future.

Results of Operations

Avalon’s primary business segment, the waste management services segment, provides hazardous and nonhazardous waste brokerage and management services and captive landfill management services. The golf and related operations segment includes the operation of golf courses and related facilities and a travel agency.

Avalon Holdings Corporation and Subsidiaries

Performance in 2010 compared with 2009

Overall Performance

Net operating revenues increased to $43.5 million in 2010 compared with $36.9 million in 2009. The increase is primarily the result of a significant increase in the net operating revenues of the waste management services segment. Costs of operations increased to $35.8 million in 2010 compared with $30.1 million in 2009. The increase is primarily due to higher transportation and disposal costs of the waste management services segment, as these costs vary directly with the net operating revenues. Fixed costs relating to depreciation and amortization expense were $1.7 million in both 2010 and 2009. Consolidated selling, general and administrative expenses increased to $6.8 million in 2010 compared with $6.1 million in 2009. The increase is primarily due to an increase in salary and wages due to the hiring of Mr. Steven M. Berry as Chief Executive Officer, compensation costs relating to stock options granted in the first quarter of 2010 and $.1 million of non-recurring maintenance expenses at the corporate headquarters building. Additionally, in 2009, the results were favorably impacted by the Board of Director’s decision to eliminate the 2008 employer discretionary contribution of $.1 million to Avalon’s 401k plan, which was scheduled to be made in the third quarter of 2009. Avalon incurred a net loss of $.5 million or $.14 per share in 2010 compared with a net loss of $.8 million or $.20 per share in 2009.

Segment Performance . Segment performance should be read in conjunction with Note 12 to the Consolidated Financial Statements.

Net operating revenues of the waste management services segment increased to $33.9 million in 2010 compared with $27.5 million in 2009. Net operating revenues of the waste brokerage and management services increased to $31.3 million in 2010 from $25.3 million in 2009 and the net operating revenues of the captive landfill management operations increased to $2.6 million in 2010 from $2.2 million in 2009. The increase in net operating revenues of the waste brokerage and management services was primarily due to an increase of 47% in event work and a 4% increase in continuous or ongoing work. 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. The increase in event work was primarily due to an increase in the number and size of the projects won in 2010 compared with 2009. Net operating revenues of the captive landfill management operations increased in 2010 compared with 2009 primarily as a result of an increase in the sales of construction mats and an increase in the volume of waste disposed at the landfill. The volume of waste disposed of at the landfill is entirely dependent upon the amount of waste generated by the owner of the landfill for whom Avalon manages the facility.

Income before taxes of the waste management services segment increased to $2.8 million in 2010 compared with $2.2 million in 2009. The increase is primarily due to the aforementioned increase in net operating revenues of the waste brokerage and management services business. Income before taxes of the waste brokerage and management services business was $2.3 million in 2010 compared with $1.7 million in 2009. Income before taxes of the captive landfill management operations was $.5 million in both 2010 and 2009. Although the net operating revenues of the captive landfill management operations increased, income before income taxes remained the same as a result of additional incentive bonuses during 2010 and higher operating costs.

Net operating revenues of the golf and related operations segment were $9.6 million in 2010 compared with $9.4 million in 2009. 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 2010 and 2009. The average number of members during 2010 increased to 2,804 compared with 2,645 in 2009. The average net operating revenues per member from membership dues decreased slightly in 2010 compared with the prior year due to a change in the mix between social and golf members and promotional membership programs. As such, net operating revenues from membership dues increased only slightly in 2010 compared with 2009. Net operating revenues associated with golfing activities decreased in 2010 while food and beverage, tennis, and net operating revenues related to spa services increased. The golf and related operations segment incurred a loss before taxes of $.6 million in 2010 compared with a loss before taxes of $.8 million in 2009. The results in 2010 improved compared to 2009 primarily as a result of an increase in net operating revenues and decreases in advertising and sales promotion expenses which were partially offset by increases in various operating expenses. The ability to attract and retain members is very important to the success of the golf and related operations segment. Avalon is continually using

Avalon Holdings Corporation and Subsidiaries

different marketing strategies to attract and retain members, such as local television advertising and/or various membership promotions. However, due to the state of the economy, retaining members and attracting new members has been difficult. A significant decline in members could adversely impact the financial results of the golf and related operations segment.

Interest Income

Interest income was $24,000 in 2010 compared with $33,000 in 2009. The decrease is primarily the result of lower average investment rates.

Other Income, net

Other income, net was $253,000 in 2010 compared with $210,000 in 2009. Other income, net consists primarily of rental income, service charges to members and gas and oil royalty payments received. The increase in 2010 is primarily due to an increase in gas and oil royalties paid to Avalon.

General Corporate Expenses

General corporate expenses were $2.7 million in 2010 compared with $2.3 million in 2009. The increase is primarily due to increased salary and wages as a result of hiring Mr. Steven M. Berry as Chief Executive Officer on March 1, 2010, compensation costs relating to stock options granted in the first quarter of 2010 and approximately $.1 million of non-recurring maintenance expenses at the corporate headquarters building.

Net Income

Avalon incurred a net loss of $.5 million in 2010 compared with a net loss of $.8 million in 2009. Excluding the minor effect of state income tax provisions and some minor tax credits, Avalon’s overall effective tax rate was 0% for 2010 and 2009. The overall effective tax rate is different than statutory rates primarily due to a change the valuation allowance. As such, Avalon’s income tax benefit in 2010 and 2009 was offset by a change in the valuation allowance. A valuation allowance has been provided when it is more likely than not that the deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.

Trends and Uncertainties

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

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.

Avalon Holdings Corporation and Subsidiaries

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.

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

The Avalon Golf and Country Club has golf courses and clubhouses at each of its three facilities. The Squaw Creek and Sharon facilities each have a swimming pool, a fitness center and dining and banquet facilities. The Squaw Creek facility has tennis courts and Sharon offers spa services. 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 for use by the general public, the primary source of revenues will be generated by the members of the Avalon Golf and Country Club. Avalon believes that the combination of its three facilities will result in additional memberships in the Avalon Golf and Country Club. Due to the state of the economy, the ability to retain current members and attract new members has been difficult. Although Avalon has been able to retain and increase the number of members of the Avalon Golf and Country Club, as of December 31, 2010, Avalon has not attained its membership goals. There can be no assurance as to when such goals will be attained or when the golf and related operations will ultimately become profitable. Avalon is continually using different marketing strategies to attract new members, such as local television advertising and/or various membership promotions. A significant decline in members could adversely affect the future financial performance of Avalon.

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

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

Inflation Impact

Avalon has not entered into any long-term fixed price contracts that could have a material adverse impact upon its financial performance in periods of inflation. In general, management believes that rising costs resulting from 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.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles requires management to make judgments, assumptions, and estimates that affect reported amounts. Significant accounting policies used in the preparation of Avalon’s Consolidated Financial Statements are described in Note 2 to the consolidated financial statements. Estimates are used when accounting for, among other things, the allowance for doubtful accounts, asset impairments, compensation costs relating to stock options granted, contingencies and administrative proceedings, environmental matters and taxes.

The majority of Avalon’s accounts receivable are due from industrial and commercial customers. Credit is extended based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts receivable 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

Avalon Holdings Corporation and Subsidiaries

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. Bankruptcy or economic challenges of a particular customer represent uncertainties that are not controllable by management. If management’s assessments change due to different assumptions or if actual collections differ from management’s estimates, future operating results could be impacted. Avalon writes off accounts receivable when they become uncollectible. Payments subsequently received on such receivables are credited to the allowance for doubtful accounts, or to income, as appropriate under the circumstances.

Avalon recognizes share-based compensation expense related to stock options issued to employees and directors. Avalon estimates the fair value of the stock options granted using a 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 expected term, or time until the option is exercised is typically based on historical exercising behavior of previous option holders of a company’s stock. Due to the fact there were no options previously granted and, therefore no historical exercising behavior available, we estimated the expected term of each award to be half the maximum term. Avalon amortizes the fair value of the stock options over the expected term or requisite service period. If accelerated vesting occurs based on the market performance of Avalon’s common stock, the compensation costs related to the vested stock options that have not previously been amortized are recognized upon vesting.

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

Avalon Holdings Corporation and Subsidiaries

Avalon’s estimates are revised, as deemed necessary, as additional information becomes known. Such revisions may impact future operating results. Although Avalon is not currently aware of any environmental liability, there can be no assurance that in the future an environmental liability will not occur.

Avalon recognizes deferred tax assets and liabilities based on differences between financial statement carrying amounts and the tax bases of assets and liabilities. Avalon also records tax benefits when it believes that it is more likely than not that the benefit will be sustained by the tax authority. Avalon regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance based upon historical taxable income, projected future taxable income and the expected timing of the reversals of existing temporary differences to reduce its deferred assets to the amount that it believes is more likely than not to be realized. Avalon has considered future taxable income in assessing the need for the valuation allowance. The $2,024,000 of deferred tax liabilities will reverse in the same period and jurisdiction and is of the same character as the temporary differences giving rise to the $2,032,000 of deferred tax assets. Avalon has not provided a valuation allowance on the amount of deferred tax assets that it estimates will be utilized as a result of these reviews. The net deferred tax asset of $8,000 as of December 31, 2010 is likely to be utilized upon the filing of certain state tax returns. If future taxable income is less than the amount that has been assumed in assessing the recoverability of the deferred tax assets, then an increase in the valuation allowance will be required, with a corresponding increase to income tax expense. Likewise, should Avalon ascertain in the future that it is more likely than not that deferred tax assets will be realized in excess of the net deferred tax assets, all or a portion of the $905,000 valuation allowance as of December 31, 2010, of which $625,000 relates to a net operating loss carryforward, would be reversed as a benefit to the provision for income taxes in the period such determination was made.

Avalon Holdings Corporation and Subsidiaries

Consolidated Balance Sheets

(in thousands, except for share data)


	December 31,
	2010			2009
Assets
Current Assets:
Cash and cash equivalents	$	5,565		$	5,862
Accounts receivable, less allowance for doubtful accounts of $168 in 2010 and $165 in 2009		8,202			7,094
Prepaid expenses		341			291
Refundable income taxes		14			25
Other current assets		600			568

Total current assets		14,722			13,840
Property and equipment,		27,265			28,277
Leased property under capital leases, net		5,314			5,574
Noncurrent deferred tax asset		8			8
Other assets, net		28			58

Total assets	$	47,337		$	47,757

Liabilities and Shareholders’ Equity
Current Liabilities:
Current portion of obligations under capital leases	$	1		$	1
Accounts payable		5,173			5,119
Accrued payroll and other compensation		383			545
Other accrued taxes		269			274
Deferred Revenues		1,988			1,943
Other liabilities and accrued expenses		318			246

Total current liabilities		8,132			8,128
Obligations under capital leases		228			229
Contingencies and commitments		—			—
Shareholders’ Equity:
Class A Common Stock, $.01 par value, one vote per share; authorized 10,500,000 shares; issued and outstanding 3,191,038 shares at December 31, 2010 and December 31, 2009		32			32
Class B Common Stock, $.01 par value, ten votes per share; authorized 1,000,000 shares; issued and outstanding 612,293 shares at December 31, 2010 and December 31, 2009		6			6
Paid-in capital		58,216			58,096
Accumulated deficit		(19,277	)		(18,734	)

Total shareholders’ equity		38,977			39,400

Total liabilities and shareholders’ equity	$	47,337		$	47,757

See accompanying notes to consolidated financial statements.

Avalon Holdings Corporation and Subsidiaries

Consolidated Statements of Operations

(in thousands, except for per share amounts)


	Year Ended December 31,
	2010			2009

Net operating revenues	$	43,453		$	36,920
Costs and expenses:
Costs of operations		35,751			30,114
Depreciation and amortization		1,684			1,688
Selling, general and administration expenses		6,783			6,096

Operating loss		(765	)		(978	)
Other income (expense):
Interest expense		(14	)		(15	)
Interest income		24			33
Other income, net		253			210

Loss before income taxes		(502	)		(750	)
Provision for income taxes		41			24

Net loss	$	(543	)	$	(774	)

Net loss per share –basic and diluted	$	(.14	)	$	(.20	)

Weighted average shares outstanding		3,803			3,803

See accompanying notes to consolidated financial statements.

Avalon Holdings Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)


	Year Ended December 31,
	2010			2009
Operating activities:
Net loss	$	(543	)	$	(774	)
Reconciliation of net loss to cash provided by (used in) operating activities:
Depreciation		1,683			1,687
Amortization		1			1
Compensation costs – stock options		120			—
Provision for losses on accounts receivable		14			93
Provision for deferred taxes		—			17
Gain from disposal of property and equipment		(24	)		(2	)
Change in operating assets and liabilities:
Accounts receivable		(1,122	)		2,117
Prepaid expenses		(50	)		18
Refundable income taxes		11			(25	)
Other current assets		(32	)		68
Other assets, net		29			—
Accounts payable		54			288
Accrued payroll and other compensation		(162	)		(166	)
Accrued income taxes		—			(19	)
Other accrued taxes		(5	)		(7	)
Deferred revenues		45			(57	)
Other liabilities and accrued expenses		72			(220	)

Net cash provided by operating activities		91			3,019

Investing activities:
Capital expenditures		(411	)		(219	)
Proceeds from disposal of property and equipment		24			2

Net cash used in investing activities		(387	)		(217	)

Financing activities:
Principal payments on capital lease obligations		(1	)		(1	)

Net cash used in financing activities		(1	)		(1	)

(Decrease) increase in cash and cash equivalents		(297	)		2,801
Cash and cash equivalents at beginning of year		5,862			3,061

Cash and cash equivalents at end of year	$	5,565		$	5,862

Supplemental disclosures of cash flow information:
Cash paid during the year for interest expense	$	14		$	15
Cash received during the year as interest income	$	24		$	33

For supplemental cash flow information regarding income taxes, see Note 6.

See accompanying notes to consolidated financial statements.

Avalon Holdings Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity

(in thousands)


	For The Two Years Ended December 31, 2010
	Shares				Common Stock				Paid-in		Accumulated
	Class A		Class B		Class A		Class B		Capital		Deficit			Total
Balance at January 1, 2009		3,191		612	$	32	$	6	$	58,096	$	(17,960	)	$	40,174
Net loss		—		—		—		—		—		(774	)		(774	)

Balance at December 31, 2009		3,191		612	$	32	$	6	$	58,096	$	(18,734	)	$	39,400
Stock options – Compensation costs		—		—		—		—		120		—			120
Net loss		—		—		—		—		—		(543	)		(543	)

Balance at December 31, 2010		3,191		612	$	32	$	6	$	58,216	$	(19,277	)	$	38,977

See accompanying notes to consolidated financial statements.

Avalon Holdings Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Note 1. Description of the Business

Avalon provides waste management services to industrial, commercial, municipal and governmental customers in selected northeastern and midwestern U.S. markets and manages a captive landfill for an industrial customer. In addition, Avalon owns the Avalon Golf and Country Club, which has golf courses and clubhouses at each of its three facilities. The Squaw Creek and Sharon facilities each have a swimming pool, a fitness center and dining and banquet facilities. The Squaw Creek facility also has tennis courts, while the Sharon facility offers spa services. Avalon also owns and operates a travel agency.

Note 2. Summary of Significant Accounting Policies

The significant accounting policies of Avalon, which are summarized below, are consistent with generally accepted accounting principles and reflect practices appropriate to the businesses in which they operate. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates. Certain prior year amounts have been reclassified to be consistent with the 2010 presentation.

Principles of consolidation

The consolidated financial statements include the accounts of Avalon and its wholly owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Cash and cash equivalents

Cash and cash equivalents include money market instruments that are stated at cost, which approximate market value. Investments with original maturities of three months or less from date of purchase are considered to be cash equivalents for purposes of the Consolidated Statements of Cash Flows and Consolidated Balance Sheets. Such investments were not insured by the Federal Deposit Insurance Corporation. The balance of cash and cash equivalents was $5.6 million and $5.9 million at December 31, 2010 and 2009, respectively.

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.

Financial instruments

The fair value of financial instruments consisting of cash, cash equivalents, accounts receivable, and accounts payable at December 31, 2010 and 2009 approximates carrying value due to the relative short maturity of these financial instruments.

Property and equipment

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the asset which varies from 0 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 (See Note 5).

Major additions and improvements are charged to the property and equipment accounts while replacements, maintenance and repairs, which do not improve or extend the life of the respective asset, are expensed currently. The cost of assets retired or otherwise disposed of and the related accumulated depreciation is eliminated from the accounts in the year of disposal. Gains or losses resulting from disposals of property and equipment are credited or charged to operations currently. Interest costs, if any, would be capitalized on significant construction projects.

Income taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and to operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded against net deferred tax assets when management believes it is more likely than not that such deferred tax assets will not be realized. Avalon recognizes any interest and penalty assessed by taxing authorities as a component of interest expense and other expense, respectively.

Revenue recognition

Avalon recognizes revenue for waste management services as services are performed. Revenues for the golf operations are recognized as services are provided with the exception of membership dues which are recognized proportionately over twelve months based upon each member’s anniversary date. The deferred revenues relating

Avalon Holdings Corporation and Subsidiaries

to membership dues at December 31, 2010 and December 31, 2009 were $2.0 million and $1.9 million, respectively.

Accounts Receivable

The majority of Avalon’s accounts receivable is due from industrial and commercial customers. Credit is extended based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. Avalon determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, Avalon’s previous accounts receivable loss history, the customer’s current ability to pay its obligation to Avalon and the condition of the general economy and the industry as a whole. Avalon writes off accounts receivable when they become uncollectible. Payments subsequently received on such receivables are credited to the allowance for doubtful accounts, or to income, as appropriate under the circumstances.

Leases

Avalon applies the accounting rules for leases to categorize leases at their inception as either operating or capital leases depending on certain defined criteria. Leasehold improvements are capitalized at cost and are amortized over the lesser of their expected useful life or the life of the lease (See Notes 3, 5 and 11).

Stock-Based compensation

Avalon recognizes share-based compensation expense related to stock options issued to employees and directors. Avalon estimates the fair value of the stock options granted using a 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.

Avalon amortizes the fair value of the stock options over the expected term or requisite service period. If accelerated vesting occurs based on the market performance of Avalon’s common stock, the compensation costs related to the vested stock options that have not previously been amortized are recognized upon vesting.

Asset impairments

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. Avalon does not believe there was a triggering event in 2010 or 2009 as the golf operations’ future cash flows have not changed significantly and asset values have remained relatively stable.

Environmental liabilities

When Avalon concludes that it is probable that a liability has been incurred with respect to a site, a provision is made in Avalon’s financial statements for Avalon’s best estimate of the liability based on management’s judgment and experience, information available from regulatory agencies, and the number, financial resources and relative degree of responsibility of other potentially responsible parties who are jointly and severally liable for remediation of that site, as well as, the typical allocation of costs among such parties. If a range of possible outcomes is estimated and no amount within the range appears to be a better estimate than any other, Avalon provides for the minimum amount within the range, in accordance with generally accepted accounting principles. The liability is recognized on an undiscounted basis. Avalon’s estimates are revised, as deemed necessary, as additional information becomes known. Although Avalon is not currently aware of any environmental liability, there can be no assurance that in the future an environmental liability will not occur.

Basic net loss per share

Basic net loss per share has been computed using the weighted average number of common shares outstanding each period, which were 3,803,331. Although there are common equivalent shares outstanding, no diluted per share amounts are reported because Avalon was in a net loss position for the year ended December 31, 2010. As a result, such dilution would be considered anti-dilutive. Therefore, diluted per share amounts are equal to basic per share amounts for the years ended December 31, 2010 and 2009.

Avalon Holdings Corporation and Subsidiaries

Subsequent Events

Avalon evaluated subsequent events through the date the financial statements were issued. On January 12, 2011, Avalon announced the resignation of Mr. Steven M. Berry effective February 15, 2011 as a director, President and Chief Executive Officer of Avalon Holdings Corporation. As a result, Mr. Berry will forfeit his 450,000 stock options. The compensation costs related to these options, which totaled $.1 million though the first nine months of 2010, were reversed in the fourth quarter of 2010.

Note 3. Capital Leased Assets

Note 4. Credit Facility

On March 21, 2008, Avalon entered into a $3.5 million unsecured line of credit agreement with The Huntington National Bank. Interest on borrowings accrues at LIBOR plus 1.75%. The agreement was amended in April 2009 to provide for a minimum interest rate of 3.25%. The line of credit contains certain financial covenants, customary representations, warranties and events of defaults. At December 31, 2010 and December 31, 2009, there were no borrowings under the line of credit and Avalon was in compliance with all covenants.

Note 5. Property and Equipment

Property and equipment at December 31, 2010 and 2009 consists of the following (in thousands):


	2010			2009
Land and land improvements	$	11,799		$	11,759
Buildings and improvements		19,764			19,742
Machinery and equipment		2,794			2,757
Vehicles		222			165
Office furniture and equipment		2,909			2,896

		37,488			37,319
Less: accumulated depreciation and amortization		(10,223	)		(9,042	)

Property and equipment, net	$	27,265		$	28,277

Leased property under capital leases at December 31, 2010 and 2009 consists of the following (in thousands):


	2010			2009
Leased property under capital leases	$	7,481		$	7,348
Less: accumulated amortization		(2,167	)		(1,774	)

Leased property under capital leases, net	$	5,314		$	5,574

Note 6. Income Taxes

Loss before income taxes for each of the two years in the period ended December 31, 2010 was subject to taxation under United States jurisdictions only.

The provision for income taxes consists of the following (in thousands):


	2010			2009
Current:
Federal	$	(1	)	$	(14	)
State		42			21

		41			7

Deferred:
Federal		—			23
State		—			(6	)

		—			17

	$	41		$	24

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at December 31, 2010 and 2009 are as follows (in thousands):


	2010			2009
Deferred tax assets:
Accounts receivable, allowance for doubtful accounts	$	62		$	61
Reserves not deductible until paid		47			6
Net operating loss carryforwards
Federal		2,323			2,188
State		356			262
Federal Tax Credit		139			107
Other		10			—

Gross deferred tax assets		2,937			2,624
Less valuation allowance		(905	)		(656	)

Deferred tax assets net of valuation allowance	$	2,032		$	1,968

Deferred tax liabilities:
Property and equipment	$	(2,024	)	$	(1,960	)
Other		—			—

Gross deferred tax liabilities	$	(2,024	)	$	(1,960	)

Net deferred tax asset	$	8		$	8

The $2,024,000 of deferred tax liabilities will reverse in the same period and jurisdiction and is of the same character as the temporary differences giving rise to the $2,032,000 of deferred tax assets. Avalon has not provided a valuation allowance on the amount of deferred tax assets that it estimates will be utilized as a result of these reviews. The net deferred tax asset of $8,000 as of December 31, 2010 is likely to be utilized upon the filing of certain state tax returns. If future taxable income is less than the amount that has been assumed in assessing the recoverability of the deferred tax assets, then an increase in the valuation

Avalon Holdings Corporation and Subsidiaries

allowance will be required, with a corresponding increase to income tax expense. Likewise, should Avalon ascertain in the future that it is more likely than not that deferred tax assets will be realized in excess of the net deferred tax assets, all or a portion of the $905,000 valuation allowance as of December 31, 2010, of which $625,000 relates to a net operating loss carry-forward, would be reversed as a benefit to the provision for income taxes in the period such determination was made. In 2009, the capital loss carryforward of $2.9 million expired and as such, the valuation allowance relating to this capital loss carryforward was reversed.

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


	2010			2009
Loss before income taxes	$	(502	)	$	(750	)
Federal statutory tax rate		35	%		35	%

		(176	)		(263	)
State income taxes, net of federal income tax benefits		27			43
Change in valuation allowance		249			(3,302	)
Expired capital loss carryforward		—			2,934
Increase in available federal tax credit		(32	)		(87	)
Other deferred asset adjustments					374
Other nondeductible expenses		45			49
(Increase) decrease in net operating loss carryforward: state		(83	)		329
federal		5			(5	)
Other, net		6			(48	)

	$	41		$	24

Avalon is subject to income taxes in the U.S. federal and various states jurisdictions. With few exceptions, Avalon is no longer subject to U.S. federal, state and local income tax examinations by taxing authorities for the years before 2006. Avalon recognizes any interest and penalty assessed by taxing authorities as a component of interest expense and other expense, respectively. There were no accruals for the payment of interest and penalties for 2010 and 2009.

Avalon made net income tax payments of $32,000 and $48,000 in 2010 and 2009, respectively. At December 31, 2010, Avalon has taxable loss carryforwards for federal income tax purposes aggregating approximately $6,831,000 which are available to offset future federal taxable income. These carryforwards expire in 2021 through 2030. In addition, at December 31, 2010, certain subsidiaries of Avalon have net operating loss carryforwards for state purposes which are available to offset future state taxable income. These carryforwards expire at various dates through 2031. A valuation allowance has been provided because it is more likely than not that the deferred tax assets relating to certain of the federal and state loss carryforwards will not be realized.

Note 7. Retirement Benefits

Avalon sponsors a defined contribution profit sharing plan that is a qualified tax deferred benefit plan under Section 401(k) of the Internal Revenue Code (the “Plan”). Substantially all employees are eligible to participate in the Plan. The Plan provides for employer discretionary cash contributions as determined by Avalon’s Board of Directors. Discretionary contributions vest on a graduated basis and become 100% vested after five years of service. Plan participants may also contribute a portion of their annual compensation to the Plan, subject to maximums imposed by the Internal Revenue Code and related regulations. In August 2009, the Board of Directors of Avalon decided to eliminate the employer discretionary contribution for the years 2009 and 2008. As a result, the discretionary contribution of $126,000 costs charged to operations in 2008 was not paid and the expense was reversed in 2009. In November 2010, the Board also decided not to make a discretionary employer contribution for 2010.

Note 8. Long-term Incentive Plan

On August 12, 2009, the Board of Directors of Avalon approved the renewal of the expired 1998 Long-term Incentive Plan which provides for the granting of options which are intended to be non-qualified stock options (“NQSO’s”) for federal income tax purposes except for those options designated as incentive stock options (“ISO’s”) which qualify under Section 422 of the Internal Revenue Code. The name of the plan was changed to the 2009 Long-term Incentive Plan (“the Option Plan”) to reflect the year of approval. On October 6, 2009, at a Special Meeting of Shareholders, the shareholders approved the Option Plan. Avalon has reserved 1,300,000 shares of Class A Common Stock for issuance to employees and non-employee directors. NQSO’s may be granted with an exercise price which is not less than 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

Avalon Holdings Corporation and Subsidiaries

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.

During the first quarter of 2010, Avalon granted 980,000 stock options, which were the first stock options granted under the Option Plan. These 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.

Mr. Steven M. Berry resigned effective February 15, 2011 as a director, President and Chief Executive Officer of Avalon Holdings Corporation. None of Mr. Berry’s stock options were vested and as a result, Mr. Berry will forfeit his 450,000 stock options. The compensation costs related to this forfeiture, which amounted to $.1 million through the first nine months of 2010, were reversed in the fourth quarter of 2010.

Compensation costs were approximately $120,000 for the year ended December 31, 2010 based upon the estimated fair value calculation. The deferred tax benefit recorded was offset by an increase to the valuation allowance.

As of December 31, 2010, there was approximately $.4 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 3.71 years.

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.

exercising behavior available, we estimated the expected term to be half the maximum term. Because of the nature of the vesting as described above, the options were separated into five blocks, with each block having its own vesting period and expected term. Assuming the vesting occurs ratably over the vesting period for each option block, the average vesting term (requisite service period) for each option block was calculated to be 2.54, 3.54, 4.54, 5.54 and 6.54 years for option blocks 1 through 5, respectively. As such, the expected terms were calculated to be 6.27, 6.77, 7.27, 7.77 and 8.27 years, for option blocks 1 through 5, respectively.

The current 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 volatility was based on the observed volatility of Avalon common stock for a five year period prior to the grant dates. The expected volatility that was used ranged from 60.9% to 61.5% with a weighted average expected volatility of 60.9%.

There were no expected dividends and the risk-free interest rate(s) which ranged from 2.28% to 2.44% were based on yield data for U. S. Treasury securities over a period consistent with the expected term.

The following table is a summary of the stock option activity during 2010:


	Number of Options Granted		Weighted Average Exercise Price		Weighted Average Fair Value at Grant Date
Outstanding – January 1, 2010		—		—		—
Granted		980,000	$	2.52	$	3.56
Exercised		—		—		—
Expired		—		—		—
Forfeited (a)		—		—		—

Outstanding – December 31, 2010		980,000	$	2.52	$	3.56

Exercisable – December 31, 2010		—		—		—

(a)	450,000 stock options will be forfeited in 2011 due to Mr. Steven Berry’s resignation effective February 15, 2011.

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 Contract Vesting Term.

Avalon Holdings Corporation and Subsidiaries

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


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

Note 9. Shareholders’ Equity

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

Note 10. Legal Matters

Note 11. Lease Commitments

Avalon leases golf carts, machinery and equipment, and copiers under operating leases and land and land improvements under a capital lease. Future commitments under long-term, operating leases and capital lease at December 31, 2010 are as follows (in thousands):


	Capital		Operating		Total
2011	$	15	$	335	$	350
2012		15		334		349
2013		15		256		271
2014		15		76		91
2015		15		—		15
After 2015		555		—		555

Total minimum lease payments		630	$	1,001	$	1,631

Less: Amounts representing interest		401

Present value of minimum payments		229
Less: Current portion of obligations under capital leases		1

Long-term portion of obligations under capital leases	$	228

Rental expense included in the Consolidated Statements of Operations amounted to $421,000 in 2010 and $418,000 in 2009.

Avalon Holdings Corporation and Subsidiaries

Note 12. Business Segment Information

Avalon’s reportable segments include waste management services and golf and related operations. 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.” On this basis, 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 and manages a captive landfill for an industrial customer. The golf and related operations segment includes the operations of golf courses and related facilities and a travel agency. Revenue for the golf and related operations segment consists primarily of membership dues, greens fees, cart rentals, merchandise, tennis, spa services and food and beverage sales. Avalon does not have significant operations located outside the United States and, accordingly, geographical segment information is not presented. In 2010, one customer accounted for 12% of the waste management services segment’s net operating revenues to external customers and 9% of the consolidated net operating revenues. In 2009, no customer individually accounted for 10% or more of Avalon’s consolidated net operating revenues.

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

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


	2010			2009
Net operating revenues from:
Waste management services:
External customers revenues	$	33,888		$	27,531
Intersegment revenues		—			—

Total waste management services		33,888			27,531

Golf and related operations:
External customer revenues		9,565			9,389
Intersegment revenues		56			39

Total golf and related operations		9,621			9,428

Segment operating revenues		43,509			36,959
Intersegment eliminations		(56	)		(39	)

Total net operating revenues	$	43,453		$	36,920

Income (loss) before taxes:
Waste management services	$	2,791		$	2,246
Golf and related operations		(595	)		(757	)

Segment income before taxes		2,196			1,489
Corporate interest income		24			32
Corporate other income, net		(21	)		13
General corporate expenses		(2,701	)		(2,284	)

Income before taxes	$	(502	)	$	(750	)

Depreciation and amortization:
Waste management services	$	25		$	25
Golf and related operations		1,536			1,535
Corporate		123			128

Total	$	1,684		$	1,688

Interest income:
Waste management services	$	—		$	1
Corporate		24			32

Total	$	24		$	33

Capital expenditures:
Waste management services	$	95		$	6
Golf and related operations		269			182
Corporate		47			31

Total	$	411		$	219


	2010			2009
Identifiable assets at December 31:
Waste management services	$	11,648		$	10,300
Golf and related operations		30,233			31,443
Corporate		40,006			40,160

Sub Total		81,887			81,903
Elimination of intersegment receivables		(34,550	)		(34,146	)

Total	$	47,337		$	47,757

The increase of $1.3 million in identifiable assets of the waste management services segment is primarily the result of an increase in accounts receivable due to higher net operating revenues in the fourth quarter of 2010 compared with the fourth quarter of 2009. The decrease of $1.2 million in identifiable assets of the golf and related operations segment is primarily due to the depreciation of property and equipment.

Avalon Holdings Corporation and Subsidiaries

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors of Avalon Holdings Corporation

We have audited the accompanying consolidated balance sheets of Avalon Holdings Corporation and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations, shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Avalon Holdings Corporation and subsidiaries as of December 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Cleveland, Ohio

March 11, 2011

Avalon Holdings Corporation and Subsidiaries

Management’s Annual Report on Internal Control over Financial Reporting

The management of Avalon, including the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) of the Securities and Exchange Act of 1934, as amended. Avalon’s internal control system was designed to provide reasonable assurance as to the reliability of the preparation and presentation of the consolidated financial statements for external reporting and the safeguarding of assets from unauthorized use or disposition.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

With our participation, an evaluation of the effectiveness of our internal control over financial reporting was conducted as of December 31, 2010, based upon the framework and criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2010.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.


/s/ Ronald E. Klingle				/s/ Timothy C. Coxson
Chief Executive Officer				Chief Financial Officer

March 11, 2011

Avalon Holdings Corporation and Subsidiaries

Company Location Directory


Corporate Office Avalon Holdings Corporation One American Way Warren, Ohio 44484-5555 (330) 856-8800 Waste Management Services American Waste Management Services, Inc. One American Way Warren, Ohio 44484-5555 (330) 856-8800 American Landfill Management, Inc. One American Way Warren, Ohio 44484-5555 (330) 856-8800 American Construction Supply, Inc. One American Way Warren, Ohio 44484-5555 (330) 856-8800		Golf and Related Operations Avalon Golf and Country Club One American Way Warren, Ohio 44484-5555 (330) 856-8898 Avalon Lakes Golf Course One American Way Warren, Ohio 44484-5555 (330) 856-8898 Squaw Creek Golf Course 761 Youngstown-Kingsville Road Vienna, Ohio 44473 (330) 539-5103 Avalon Country Club at Sharon, Inc. 1030 Forker Blvd. Hermitage, PA 16148-1566 (724) 981-6700 Avalon Travel, Inc. One American Way Warren, Ohio 44484-5555 (330) 856-8400

Avalon Holdings Corporation and Subsidiaries

Directors and Officers


Directors Ronald E. Klingle Chairman of the Board and Chief Executive Officer Executive Committee (Chairman) Compensation Committee Timothy C. Coxson Treasurer, Chief Financial Officer and Secretary Compensation Committee Kurtis D. Gramley Chairman and Chief Executive Officer, Edgewood Surgical Hospital Audit Committee (Chairman) Executive Committee Option Plan Committee Stephen L. Gordon Partner, Beveridge & Diamond, P.C. Compensation Committee Audit Committee Option Plan Committee (Chairman) David G. Bozanich Director of Finance, City of Youngstown Audit Committee Executive Committee Option Plan Committee		Officers Ronald E. Klingle Chairman of the Board and Chief Executive Officer Timothy C. Coxson Treasurer, Chief Financial Officer and Secretary Frances R. Klingle Chief Administrative Officer Richard R. Fees Controller

Avalon Holdings Corporation and Subsidiaries

Shareholder

Information

Common stock information

Avalon’s Class A Common Stock is listed on the NYSE Amex (symbol: AWX). Quarterly stock information for 2010 and 2009 as reported by The Wall Street Journal is as follows:


2010:
Quarter Ended	High		Low		Close
March 31	$	3.89	$	2.16	$	3.41
June 30		3.55		2.33		2.50
September 30		2.97		2.34		2.90
December 31		2.99		2.65		2.73


2009:
Quarter Ended	High		Low		Close
March 31	$	1.82	$	1.23	$	1.60
June 30		2.85		1.32		2.63
September 30		2.80		2.27		2.80
December 31		3.08		2.08		2.10

No dividends were paid during 2010.

There are 441 Class A and 10 Class B Common Stock shareholders of record as of the close of business March 4, 2011. The number of holders is based upon the actual holders registered on the records of Avalon’s transfer agent and registrar and does not include holders of shares in “street names” or persons, partnerships, associations, corporations or other entities identified in security position listings maintained by depository trust companies.

Dividend policy

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

Annual report on Form 10-K

Copies of Avalon’s annual report on Form 10-K can be obtained free of charge by writing to Avalon Holdings Corporation, One American Way, Warren, Ohio 44484-5555, Attention: Shareholder Relations or by visiting Avalon’s web-site at www.avalonholdings.com.

Transfer agent and registrar

The transfer agent and registrar for Avalon is American Stock Transfer and Trust Company. All correspondence concerning stock transfers should be directed to them at 59 Maiden Lane, New York, New York 10038.

Investor inquiries

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

Policy statement on equal employment opportunity and affirmative action

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

Exhibit 14.1

AVALON HOLDINGS CORPORATION

STANDARDS OF BUSINESS ETHICS AND CONDUCT

TABLE OF CONTENTS


TOPIC	PAGE

STATEMENT OF BUSINESS ETHICS AND CONDUCT POLICY		3

BUSINESS CONDUCT POLICY		4

STANDARDS		5

Conflicts of Interest		5

Possible Improper or Illegal Conduct		7

Antitrust Compliance		9

The Use of Inside Information and Trading In Securities		10

Disclosure		11

Press Releases		12

Political Contributions		13

Environmental Actions		13

Equal Opportunity		13

ACKNOWLEDGEMENT		13

HELP AND INFORMATION		13

DISCIPLINE/MANDATORY SANCTIONS		14

SUMMARY		14

ACKNOWLEDGMENT OF STANDARDS OF BUSINESS ETHICS AND CONDUCT		15

TO:

ALL EMPLOYEES OF AVALON HOLDINGS CORPORATION AND ITS AFFILIATES

STATEMENT OF BUSINESS ETHICS AND CONDUCT POLICY

Avalon Holdings Corporation and its affiliates are a major corporate group making many vital contributions to the security and well being of society and its environment. Our staff has performed excellently. We recognize that this performance is the result of a strong commitment to provide quality services. Our staff is also determined to meet high moral and ethical standards.

Sometimes, we take it for granted that our employees fully understand the importance of meeting the highest standards of business ethics and that they understand those standards. It is certainly essential that each employee has a personal commitment to meeting these ethical standards, as well as meeting the more obvious requirements for quality service. It goes without saying that the company’s reputation reflects the performance of its individual employees in all areas.

We believe that our employees have been carefully selected and that we can trust their integrity and judgment. To avoid any misunderstanding, this booklet, which is a compilation and discussion of our company’s standards of ethics and conduct, has been prepared as an aid to all of us. While there may be a number of subjects covered which are not familiar to you, we are sure you will agree that these standards go well beyond mere compliance with laws and regulations and that they are common sense “rules” by which all of us are determined to live.

We all need to understand the vital importance of the company’s standards of business ethics and conduct and to make them an automatic part of our daily business lives.

All persons to whom this booklet is presently distributed, and all those who serve hereafter in positions of responsibility, must certify that they have read this booklet and understand the company’s business conduct and ethics policies.

We trust that you will become intimately familiar with the contents of this booklet. We are confident that the company’s reputation for the highest standard of business integrity will be maintained.

Sincerely,

Ronald E. Klingle, Chairman

BUSINESS CONDUCT POLICY

This booklet is not intended to cover all situations that may arise or to make you a legal expert. Rather, it is designed to alert you to problems you may face and enable you to know when you should seek guidance before taking action that may have a legal impact on the Company. As used throughout this booklet, the term “Company” refers to Avalon Holdings Corporation and its subsidiary and affiliated corporations. Problems can usually be avoided or minimized if advice is obtained at the outset of business dealings rather than at a later stage when it may be more difficult to make the necessary changes. In all cases, you should resolve any uncertainty by promptly consulting, in person or by telephone, a member of the Ethics Program Committee (consisting of the Chief Administrative Officer, Chief Financial Officer and Chief Executive Officer) or the senior management of your company.

Certain matters are explained in detail in this booklet because of their particular importance to the Company’s business activities. However, you must understand that your responsibilities are not limited to the matters described in the booklet. You must adhere to and comply with all applicable laws and regulations. Failure to comply with the Company’s standards is a serious matter and could result in your dismissal. Furthermore, such failure might involve the violation of federal, state and local laws, exposing you, in some cases, to possible criminal sanctions and/or civil damages.

Each employee is expected to adhere to the following business conduct policies to assure that the Company conducts itself in a manner consistent with its obligations to its stockholders and to society:

1. LOYALTY. No employee should be subject, or even appear to be subject, to influences, interests or relationships which conflict with the best interests of the Company. You must avoid any activity which might compromise or appear to compromise the Company or you.

2. COMPLIANCE WITH APPLICABLE LAWS. We must compete vigorously to maximize profits, but at the same time we must do so in strict compliance with all laws and regulations applicable to our activities. You should not at any time take any action on behalf of the Company which you know or reasonably should know violates any applicable law or regulation. This booklet outlines basic requirements of the laws relating to antitrust, inside information, securities trading, political contributions, equal employment and certain other matters. These laws are explained because of their particular importance to our business activities. You should understand, however, that the Company’s policy is not limited to the laws included in this booklet, but extends to all applicable laws and regulations.

3. OBSERVANCE OF MORAL AND ETHICAL STANDARDS OF SOCIETY. In addition to the above requirements of loyalty to the Company and compliance with law, each employee must adhere to and comply with the moral and ethical standards of our society when conducting business. The Company’s interests can never be served by individual cornercutting in the interests of a quick profit or temporary advantage.

STANDARDS

Conflicts of Interest

A conflict of interest exists when an employee’s duty to give his or her undivided commercial loyalty to the Company can be prejudiced by actual or potential benefit from another source. The Company does not desire to discourage or limit the freedom of its employees to make investments and engage in interests which do not interfere with the performance of their duties and obligations to the Company. The Company is only concerned when there is a possible conflict of interest. Since not every situation is clear, whenever there is any question about a possible or potential conflict of interest, you should disclose the particular situation to a member of the Ethics Program Committee or the senior management of your company. In the event a conflict is found, the matter can be resolved in a manner best suited to the interests of both you and the Company.

Conflicts of interest generally arise in the following situations:

1. You must avoid any kind of financial or personal interest which might affect (or appear to affect) your judgment in dealing with outside firms or individuals on behalf of the Company. In evaluating your compliance with this standard, you must examine your own activities, as well as the activities of (a) your family (i.e., spouse, parents, siblings, children, nieces, nephews and in-laws); (b) any trust or estate in which either you or your family members have a substantial interest; or (c) any partnership, corporation or other firm of which you or your family member is a partner, director or officer or in which you or your family member has a substantial interest. For example, a conflict of interest may exist if an employee’s family member is employed by or affiliated with suppliers of a product or service to the Company.

2. Although it is not feasible to describe every situation which could give rise to a conflict of interest, some examples follow:

(a) Holding a financial interest, directly or indirectly (as an owner, employee, stockholder, partner, joint venturer, creditor, guarantor or director) or engaging with the Company in your individual capacity in a firm which: provides services or supplies materials or equipment to the Company; is in competition with the Company; or to which the Company provides services or supplies materials or equipment.

(b) Speculating or dealing in equipment, supplies, materials, or property purchased by the Company, or speculating or dealing for your own account in products or services sold or provided by the Company.

(c) Accepting cash, commissions or other payments or borrowing money from suppliers or customers or from individuals or firms with whom the Company does business, or competes, other than loans from established financial institutions at normal interest rates and terms prevailing at the time of the actual borrowing.

(d) Accepting gifts, favors or entertainment or other personal items of more than nominal value from suppliers or customers or from individuals or firms with whom the Company

does business. This does not apply to accepting gifts of a value of less than $25 or reasonable personal entertainment, provided such gifts and entertainment are not given in circumstances in which an obligation to the donor is stated or implied. Furthermore, you must exercise care to be sure that continued gift giving does not gradually build up into an embarrassing obligation. Gifts you cannot accept should be returned to the donor with the explanation that the Company’s policy does not permit the acceptance of the gift.

Under no circumstance may you offer or give anything to a customer or a customer’s representative in an effort to influence a contract award or other favorable customer action. The Company’s policy has been and continues to be to compete solely on the merits of its services.

In some foreign countries, customs require the exchange of gifts. In cases where it is necessary to meet such a requirement, the Company will provide the gift and any gifts received will become Company property.

(e) Misusing information to which you have access by reason of your position, such as, by disclosing confidential information (e.g., trade secrets, confidential information of a technical, financial or business nature or other “inside information”) to competitors or any other person or entity outside the Company or using such information for your own benefit (e.g., trading in securities of a company or acquiring an interest in a business, an invention or other property in which the Company has a present or has indicated a prospective interest). This obligation also relates to transactions with respect to the Company’s stock and other securities as described in “The Use of Inside Information and Trading in Securities” below.

(f) Serving another organization or individual in any capacity, such as employee, director, or consultant. However, employees are encouraged to serve and participate in social, civic, charitable, religious and philanthropic organizations as officers, directors and consultants. The above list is not exhaustive and you are encouraged to discuss other opportunities with the senior management of your Company. You are expected to serve the Company’s interests on a full-time basis. Senior management of your Company must give you permission to provide any services to others.

(g) Appropriating a business opportunity in which the Company might reasonably be expected to be interested for your personal benefit, without first making the opportunity available to the Company.

3. Holding not more than 1% of the outstanding securities of a publicly owned corporation (i.e., one whose stock is registered with the Securities and Exchange Commission), other than those in which the Company has any interest, will not alone be deemed a violation of this standard without additional complicating factors.

It is not feasible to describe every situation which would present a conflict of interest. However, a few additional examples may prove helpful:

(a) An employee who owns, directly or beneficially, a significant financial interest in an actual or potential supplier or customer may not, without full disclosure and

specific written authorization from the Ethics committee, be assigned to a position in which the employee can influence decisions with respect to business with such supplier or customer.

Employees who draw specifications for suppliers’ products, equipment or services; recommend, evaluate, test or approve such things; or participate in selection of, or arrangements with, suppliers and vendors are clearly included in this classification.

(b) Accepting gifts of other than token or nominal value or excessive entertainment from an actual or potential competitor, supplier or customer is prohibited. Items classified as advertising novelties which have wide circulation both inside and outside of the Company (calendars, paperweights, etc.) do not violate the policy against receiving gifts. Permitting a supplier’s or vendor’s representative to pay for a meal is not offensive as long as business was discussed and there are absolutely no implications that the intent of the meeting was to subvert the employee’s loyalty.

(c) No information obtained as the result of employment may be used for personal profit or as the basis for a “tip” to others unless such information has been made generally available to the public by the Company. This is true whether or not it appears the Company will be directly injured. This requirement is not limited to transactions relating to securities and embraces any situation in which undisclosed information may be used as the basis for inequitable bargaining with an outsider. For example, the purchase of real estate near property which an employee knows is being considered for purchase or development by the Company would constitute a conflict of interest.

Possible Improper or Illegal Conduct

You must avoid improper acts and the violation of any governmental law or regulation in the course of performing your work, and must adhere and comply with basic moral and ethical standards in the conduct of business. Certain specific areas are discussed in this booklet, many of which are mandated by specific federal, state or local laws. However, as pointed out previously, your required compliance is not limited to the laws and standards specifically included in this booklet.

1. No Company funds or assets shall be used for any purpose which is improper or unlawful under the laws of any jurisdiction (domestic or foreign). Neither the Company nor any employee shall:

(a) Pay or offer to pay anything of value to any foreign political party or official thereof or any candidate for foreign political office or any officer or employee, or any person acting in an official capacity for or on behalf, of a foreign government or any department, agency or instrumentality thereof, for the purpose of influencing an official act or decision of such person or inducing such person to exert his influence to affect the acts or decisions of a foreign government, in each case to obtain, retain or direct business of any person. This prohibition, which is mandated by the Foreign Corrupt Practices Act of 1977, also includes payments to any person where the payor knows or has reason to know that all or a portion of the payment will be

offered or given, directly or indirectly, to persons in the categories described above for the aforesaid purposes.

(b) Pay or offer to pay anything of value in an attempt to influence the action of any federal, state or local government official or employee. This prohibition also applies to payments to any person where the payor knows or has reason to know that some part of the payment will be used as a bribe or otherwise to influence government action.

(c) Pay or offer to pay bribes, kickbacks or other similar payments and benefits, directly or indirectly, to any suppliers or customers of the Company or their agents or employees. This includes unusually large gifts or entertainment since such gifts or entertainment may be construed as constituting an improper inducement to such persons.

(d) Use Company funds, property or resources to support, directly or indirectly (as through reimbursement for individual contributions), any foreign, federal, state or local political party or candidate. An employee’s political activity must, therefore, take place on his or her own time and at his or her own expense.

2. No employee shall accept or receive any payment or other thing of value (except for the nominal gifts and entertainment described in the Section “Conflicts of Interest” above) whether characterized as a kickback, bribe, rebate, refund or otherwise, and whether intended by the payor to be for the Company or for the personal benefit of the employee, unless the payment is in the nature of a refund to the Company which is permitted under applicable laws and regulations.

3. Company policy requires that all transactions involving corporate assets, whether cash, stock, facilities or other assets, be properly recorded on the Company’s books and records so that the true nature of the transaction is evident. Accordingly, no false, artificial, incomplete or misleading entries shall be made in any books, accounts or records of the Company for any reason and no employee shall engage in any arrangement that results in such prohibited act. For example, no employee shall issue or approve an invoice or purchase order that does not correctly reflect the actual transaction. A false, artificial, incomplete or misleading accounting entry is generally one that does not, in reasonable detail, accurately and fairly reflect or describe the underlying transactions or disposition of assets or is not posted to the proper account.

4. No undisclosed or unrecorded funds or assets of the Company shall be established or set aside for any purpose, nor shall any secret or special books and records be maintained for any purpose. Accordingly, all Company bank accounts, funds, properties and assets must be reflected in the Company’s regular books and records and be subject to the Company’s established internal control and audit procedures. All bank accounts and signatories thereon must be authorized by appropriate corporate action.

5. No payment on behalf of the Company shall be approved or made with the intention or understanding that a part or all of such payment is to be used for any purpose other than that described by the document supporting the payment.

6. No employee shall enter into any transaction or arrangement which the employee knows or reasonably should know would violate any foreign or domestic laws or regulations, nor shall any employee assist any third party in violating such laws.

7. No employee shall make any false, misleading or incomplete statements, nor shall such employee omit to state, or cause another person to omit to state, any facts necessary to make any statements made, in light of the circumstances under which such statements were made, not misleading, to any accountant, whether the Company’s independent auditors or internal auditors, in connection with any audit or examination of the financial statements of the Company or in the preparation of or filing of any document or report required to be filed with any federal, state or local governmental agency.

8. Any employee having information or knowledge of any of the foregoing prohibited acts shall promptly report such matter to a member of the Ethics Committee or the senior management of your Company.

Antitrust Compliance

The conviction that the economy and the public will benefit most if businesses compete vigorously, free from unreasonable restraints, is at the heart of the antitrust laws. Federal and many state antitrust statutes prohibit a variety of acts and practices which include conspiracies and understandings that restrain trade; monopolization or attempts to monopolize; the giving or offering of certain benefits to some customers and not to others; the knowing receipt of certain of such benefits; and other unfair trade practices. It is important to note that the concept of any “agreement” or “understanding” under the antitrust laws is extremely broad and need not be reduced to a written document. The “Agreement” can be oral or even a meeting of the minds inferred from a course of conduct, including being present when any prohibited matters are discussed. Prohibited conspiracies and understandings extend not only to formal documents signed by the parties but also include showing that there was any kind of mutual understanding which gives the parties a basis for expecting that a business practice or decision adopted by one would be followed, or at least not opposed, by the other. Accordingly, when there is any doubt whether any discussions or activities violate the antitrust laws (whether the discussions relate to the matters enumerated below or otherwise), you should immediately terminate any such discussions or activities and consult a member of the Ethics Program Committee, or senior management of your Company. Failure to comply with the antitrust laws could result in serious consequences not only for the Company, but also to you. Violations of many antitrust laws are crimes, subjecting you to fines and possible imprisonment. The Company may also be ordered to refrain from engaging in such activity. The Company’s reputation may be damaged even in those cases in which it prevails in a legal action.

To give you some guidance, we have compiled the following list of typical unlawful relationships and dealings under the antitrust laws. This list does not cover all antitrust areas.

1. Agreements or understandings among competitors as to:

their pricing policies (including discounts, credit terms, etc.);

the amount of their production;

the division or allocation of markets, territories or customers; or

boycotting of third parties.

2. Agreements or understandings with customers establishing the prices which they will charge for their products or the prices which others will charge for resale.

3. Sales of products (commodities) of like grade and quality to competing customers at contemporaneous times but at different prices, the effect of which will probably injure competition. Prices set in good faith to meet (but not to beat) a bona fide price offered by a competitor, or price differences which may be justified in appropriate circumstances on the basis of cost savings, are permissible.

4. Promotional payments, services or facilities (such as advertising displays) extended to one customer but not made available on proportionally equal terms to all other competing customers. It is lawful, however, to grant promotional assistance to a particular customer if done in good faith to meet (but not to beat) a bona fide offer of such assistance by a competitor of the Company.

5. The antitrust laws also prohibit “reciprocity”, where it is shown that a buyer with substantial purchasing power has purchased a product from another on condition that the other party makes purchases from it in substantial amounts. This does not mean that the Company cannot purchase from companies who purchase from it. It does prohibit any understanding or agreement that purchases by each party are conditioned upon purchases by the other where the above-described conditions are present.

The Use of Inside Information and Trading In Securities

From time to time, the Company is involved in sensitive matters which are important to the Company, its employees and its stockholders. The federal securities laws impose certain obligations on the Company regarding the disclosure of information to the investing public. To comply with these laws and the regulations promulgated thereunder, the Company has established policies and procedures which are applicable to all of its employees.

Internal information concerning the Company and its affairs to which an employee is privy is considered “inside” information under the applicable securities laws. Until the Company releases inside information to the public, this information must be treated in a confidential fashion. Anyone who is in possession of material inside information is an “insider”. Insiders include not only directors and officers of the Company, but also non-management employees and persons outside the Company (spouses, relatives, friends, brokers, etc.) who may have acquired the information directly or indirectly through tips. Any person who uses material inside information for his or her own benefit in connection with trading in the Company securities or discloses it to others outside the Company, violates this standard. You must make every effort to maintain the confidentiality of the Company’s information. These efforts should include securely handling, storing and disposing of any sensitive documents. Moreover, under the applicable securities laws and the regulations promulgated by the United States Securities and Exchange Commission, trading activity could result in criminal sanctions and substantial civil liability.

Insiders are prohibited from trading in or recommending Company securities while any material inside information remains undisclosed to the general public. Subject to any restrictions on sales of the Company securities that may have been received in private transactions or sales by persons occupying officer or director positions that come within special provisions of the securities laws (e.g. the six-month buy-sell provisions of Section 16(b) of the Securities Exchange Act of 1934 or the sale limitations of Rule 144 under the Securities Act of 1933), an insider is allowed to get back into the market only after the inside information has been publicly disclosed and, then, only after the insider has allowed a reasonable time for the information to be absorbed by the general public. Accordingly, you must not disclose material inside information to anyone, except to persons within the Company whose positions require them to know it, until it has been publicly released by the Company. This standard of disclosure is on a “need to know basis.” In addition, you should not place a purchase or sell order for the Company securities when you have knowledge of material inside information concerning the Company until such information has been publicly released by the Company and the public has had sufficient time to absorb it. Nor can you disclose such information to another person who is likely to trade in the Company’s securities. In general, the inside information you possess is “material” if it is important enough to affect your or anyone else’s decision to buy, sell or hold the Company securities. If you are uncertain as to what you can do, you should consult with a member of the Ethics Committee.

Disclosure

In order to promote the proper dissemination of Company information, the Company has established the following rules:

1. Designated Spokespersons . The Company has designated the Chairman of the Board or Chief Executive Officer, as the sole spokesperson for the Company. No other employees of the Company are authorized to speak on behalf of the Company, unless they have been expressly authorized to make such disclosure. If you receive any inquiry from a third party (except for a securities analyst) regarding the Company, you must refer the inquiry to the Chairman of the Board or Chief Executive Officer.

2. Responding to Rumors . Rumors concerning the business and affairs of the Company may circulate from time to time. It is the Company’s general policy not to comment upon such rumors. You should also refrain from commenting upon or responding to rumors and should refer any requests for comments or responses to the Chairman of the Board or Chief Executive Officer.

Any questions regarding the general applicability of these policies or their applicability to the facts of a specific case, should be directed to the Chief Executive Officer or Chief Financial Officer. Your failure to observe these policies can be the basis for discipline or discharge.

In order to promote the proper dissemination of financial information relating to the Company, the Company has established the following policies:

1. The Company is pleased to maintain an “open door” policy for communications with market markers and securities analysts. However, all such communications must be directed to and handled by the Chief Financial Officer (the “Designated Officer”).

2. Under no circumstances may material information or projections be disclosed to any persons outside the Company unless such information has been previously, or is being simultaneously, disclosed to the investing public through a press release or otherwise.

3. All press releases containing the Company’s financial information must be disseminated by the Designated Officer through the distribution channels they establish.

4. From time to time, the Company will issue press releases in accordance with these guidelines which will contain financial projections or other forward-looking financial information. These financial releases will be issued only with the approval of the Designated Officer.

5. Each financial release must identify the Designated Officer, or another Company employee designated by the Designated Officer, as the sole contact person at the Company. No other Company employee will be authorized to speak about these matters on behalf of the Company.

6. To minimize the need for further comment from the Company, inquiries should be anticipated during the preparation of each financial release.

7. The Designated Officer will review each financial release in light of: (i) prior financial releases issued by the Company and (ii) developments inside and outside of the Company to determine the need to update or correct any prior financial release.

8. When a particular financial release becomes materially inaccurate or misleading, a correcting financial release will be issued promptly in accordance with these guidelines.

Press Releases

Press releases for all Company information other than financial information must be directed to and processed by the Designated Officer so that the information is disseminated to the public through appropriate distribution channels.

Each press release must identify the party whom the reader must contact for further information concerning the release (the “Contact Person”) and designate Mr. Timothy C. Coxson as the wire services’ contact.

The Designated Officer will review each release in light of: (i) prior releases issued by the Company and (ii) developments inside and outside of the Company to determine the need to update or correct any prior release.

When a particular release becomes materially inaccurate or misleading, a correcting release will be issued promptly in accordance with these guidelines.

Political Contributions

Federal law and many state laws prohibit corporations from contributing to political parties or candidates. To ensure compliance with these laws, it is important that no Company funds or other assets are contributed or loaned, directly or indirectly, to any political party or for the campaign of any person for political office or expended in support of or in opposition to such party or person.

Our Company encourages all employees to participate in political activities on an individual basis, on their own time and in their own way.

Environmental Actions

We must exercise good judgment with regard to the environmental aspects of our business. We must comply fully with all federal, state and local environmental protection laws. Any existing or potential violation of these laws should be brought immediately to the attention of the senior management of your Company.

Equal Opportunity

The law forbids discrimination in employment on the basis of race, color, sex, age, religion, national origin, ancestry, handicap or status as a Vietnam-era or special, disabled veteran.

Each of the Company’s facilities is committed to assure fair employment, including equal treatment in hiring, promotion, training, compensation, termination and disciplinary action.

Unlawful discrimination can expose the Company to substantial damages and unfavorable publicity. Moreover, the Equal Employment Opportunity law is administered by a number of different federal and state agencies. Accordingly, it is particularly important that we keep abreast of current legal developments and Company policies in this area.

ACKNOWLEDGEMENT

After you have read this booklet, please sign the Acknowledgement form attached to it and return the form to your supervisor.

HELP AND INFORMATION

The Company has designated a number of staff personnel to help employees resolve any questions involving ethics and conduct. Do not hesitate to avail yourself of this help.

Any employee who needs help or information regarding these standards is encouraged to meet with his or her immediate supervisor. If meeting with a supervisor is not appropriate, the employee should meet with a member of the Ethics Program Committee.

DISCIPLINE/MANDATORY SANCTIONS

The Company and its employees are determined to operate according to the highest possible standards of business ethics and conduct. These standards are important to this Company and are to be taken seriously by all employees. Accordingly, violations of these standards will not be tolerated and, in the discretion of the Company, will result in one or more of the following, as appropriate:

•

A warning;

•

A reprimand (will be noted in individual’s permanent personnel record);

•

Probation;

•

Demotion;

•

Temporary suspension;

•

Discharge;

•

Required reimbursement of losses or damages; or

•

Referral for criminal prosecution or civil action.

SUMMARY

The Company and each of its employees shall strive to operate according to the highest possible standards. We each have a responsibility to ensure that our personal conduct is above reproach. We also have obligations regarding the conduct of those who work around us. When you are aware of violations of the standards in this booklet, you must make that situation known to a member of the Ethics Program Committee.

These standards will be enforced fairly and without prejudice at all levels. Until it has been determined that a violation has occurred, and to the extent permitted by law and the process established in these standards, the Company will keep confidential the identity of employees about or against whom all allegations of violations are brought. Similarly, the Company will keep the identity of anyone reporting a possible violation confidential.

AVALON HOLDINGS CORPORATION AND AFFILIATES

ACKNOWLEDGMENT OF STANDARDS

OF BUSINESS ETHICS AND CONDUCT

I have read and understand the Company Standards of Business Ethics and Conduct. I understand that it is only a guide to possible conflicts of interest and problems of compliance with the law and business ethics, and that all conflicts, violations of law or failure to adhere to business ethics are required to be reported to the Company whether or not they are of the type discussed in these standards.

I understand that I am to give immediate notice to the Company if any situation should arise involving a possible direct or indirect conflict of interest, violation of law or unethical action.

At this time, I have no personal interests and, to the best of my knowledge and belief, no member of my family has any personal interests which conflict with the aforesaid standards. I have not engaged in any activity prohibited by the standards, except as set forth below.

Employee’s Signature

Print Name

Company Affiliation

Position with the Company

Date

Reportable Activity (if none, so state):

Exhibit 21.1

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


*Subsidiary Name*		*State of Incorporation*
• American Landfill Management, Inc.		Ohio

American Construction Supply, Inc.		Ohio

• American Waste Management Services, Inc.		Ohio

• Avalon Golf and Country Club, Inc.		Ohio

• Avalon Lakes Golf, Inc.		Ohio

• Avalon Travel, Inc.		Ohio

• TBG, Inc.		Ohio

• Avalon Country Club at Sharon, Inc.		Pennsylvania

• Havana Cigar Company		Pennsylvania

Parent/subsidiary relationships are indicated by indentations. In each case, 100% of the voting securities of each of the subsidiaries are owned by the indicated parent of such subsidiary.

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our reports dated March 11, 2011 with respect to the consolidated financial statements and schedules included in the Annual Report of Avalon Holdings Corporation on Form 10-K for the year ended December 31, 2010. We hereby consent to the incorporation by reference of said reports in the Registration Statement of Avalon Holdings Corporation on Form S-8 (File No. 333-165064, effective February 25, 2010) .

/s/ GRANT THORNTON LLP

Cleveland, Ohio

March 11, 2011

Exhibit 31.1

AVALON HOLDINGS CORPORATION

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Ronald E. Klingle, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Avalon Holdings Corporation;

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

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

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

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

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

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

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

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

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

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

Date: March 11, 2011

/s/ Ronald E. Klingle

Ronald E. Klingle, Chief Executive Officer

Exhibit 31.2

AVALON HOLDINGS CORPORATION

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Timothy C. Coxson, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Avalon Holdings Corporation;

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

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

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

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

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

Date: March 11, 2011

/s/ Timothy C. Coxson

Timothy C. Coxson, Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Avalon Holdings Corporation (the “registrant”) on Form 10-K for the year ending December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “report”), I, Chief Executive Officer of the registrant, certify, pursuant to 18 U.S.C. (a) 1350, as adopted pursuant to (a) 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)

The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

/s/ Ronald E. Klingle

Ronald E. Klingle

Chief Executive Officer

March 11, 2011

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Avalon Holdings Corporation (the “registrant”) on Form 10-K for the year ending December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “report”), I, Chief Financial Officer of the registrant, certify, pursuant to 18 U.S.C. (a) 1350, as adopted pursuant to (a) 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)

The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

/s/ Timothy C. Coxson

Timothy C. Coxson

Chief Financial Officer

March 11, 2011

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