AVALON HOLDINGS CORP

Finance Leases

In November 2003, Avalon entered into a long-term agreement with Squaw Creek Country Club to lease and operate its golf course and related facilities. The lease has an initial term often (10) years with four (4) consecutiveten (10) year renewal term options unilaterally exercisable by Avalon. Under the lease, Avalon is obligated to pay $15,000 in annual rent and make leasehold improvements of $150,000 per year. Amounts expended by Avalon for leasehold improvements during a given year in excess of $150,000 will be carried forward and applied to future leasehold improvement obligations. Based upon the amount of leasehold improvements already made, Avalon expects to exercise all its remaining renewal options. At December 31, 2023 there were approximately 29.8 years remaining on the golf course and related facilities finance lease.

In addition, the Company also entered into lease agreements for vehicles, golf course maintenance and restaurant equipment which were determined to be finance leases. At December 31, 2023, the vehicles, golf course maintenance and restaurant equipment have remaining lease terms ranging from less thanone year to 4.7 years. The weighted average remaining lease term on the vehicles and equipment leases was approximately 3.4 years at December 31, 2023.

Leased property and associated obligations under finance leases at December 31, 2023 and 2022 consist of the following (in thousands):

The weighted average discount rate on finance leases was 6.3% at December 31, 2023 and 5.2% at December 31, 2022.

For the years ended December 31, 2023 and 2022, components of lease expense were as follows (in thousands):

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

Note 8. Basic and Diluted Net Loss per Share

Basic net loss per share attributable to Avalon Holdings Corporation common shareholders is computed by dividing the net loss attributable to Avalon Holdings Corporation common shareholders by the weighted average number of common shares outstanding. For both the years ended December 31, 2023 and 2022, the weighted average number of common shares outstanding was 3,899,431.

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

For the year ended December 31, 2023 there was no outstanding options, therefore, no dilution. For the year ended December 31, 2022 the diluted per share amount reported is equal to the basic per share amount because Avalon was in a net loss position and as a result, such dilution would be considered anti-dilutive.

The loss per share calculations for the years ended December 31, 2023 and 2022 are as follows (in thousands, except per share amounts):

Note 9. Term Loans and Line of Credit Agreements