AVALON HOLDINGS CORP

Working Capital

At December 31, 2023 and 2022, there was a working capital deficit of approximately $3.9 million and $2.8 million, respectively. Working capital was negatively impacted by a decrease in accounts receivable along with increases in accrued payroll and other compensation.

Accounts receivable decreased to $9.5 million at December 31, 2023 compared with $11.1 million at December 31, 2022. Accounts receivable related to our waste management services segment decreased approximately $1.8 million at December 31, 2023 compared with December 31, 2022 as a result of a decrease in net operating revenues in the fourth quarter of 2023 compared with the fourth quarter of 2022 and the timing of receipt on those associated receivables. Accounts receivable related to the golf and related operations segment increased approximately $0.2 million at December 31, 2023 compared to December 31, 2022 due to an increase in membership dues and the associated timing of annual membership renewals.

Inventory was approximately $1.7 million at December 31, 2023 compared to $1.5 million at December 31, 2022. Food and beverage inventory quantities slightly increased along with an increase in product costs.

Accounts payable was approximately $9.7 million at December 31, 2023 compared to $11.0 million at December 31, 2022. The decrease in accounts payable between periods was primarily related to our waste management segment as a decrease in business resulted in a decrease in amounts due to disposal facilities and transportation carriers in the fourth quarter of 2023 compared to the fourth quarter of 2022.

Deferred revenue relating to membership dues was approximately $3.4 million at December 31, 2023 compared to $3.6 million at December 31, 2022. The slight decrease was primarily due to timing of membership renewals and the associated dues collected prior to year-end. The number of members at December 31, 2023 was 4,952 compared to 4,983 at December 31, 2022.

Accrued payroll and other compensation was approximately $1.3 million at December 31, 2023 compared to $1.0 million at December 31, 2022. The increase is primarily due to the associated timing of payment of certain employee incentives earned.

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