AVALON HOLDINGS CORP

Working Capital

At December 31, 2024 and 2023, there was a working capital deficit of approximately $0.9 million and $3.9 million, respectively. Working capital was positively impacted by an increase in cash and cash equivalents along with decreases in accounts payable and accrued payroll and other compensation.

Accounts receivable decreased to $8.6 million at December 31, 2024 compared with $9.5 million at December 31, 2023. The decrease in accounts receivable was directly related to our waste management services segment. Accounts receivable related to our waste management services segment decreased approximately $0.9 million at December 31, 2024 compared with December 31, 2023 as a result of a decrease in net operating revenues in the fourth quarter of 2024 compared with the fourth quarter of 2023.

Inventory was approximately $1.6 million at December 31, 2024 compared to $1.7 million at December 31, 2023. Food and beverage inventory quantities decreased slightly compared to the prior year.

Accounts payable was approximately $7.1 million at December 31, 2024 compared to $9.7 million at December 31, 2023. The decrease in accounts payable between periods was primarily related to our waste management services segment’s accounts payable decreasing approximately $2.4 million at December 31, 2024 compared with December 31, 2023 as a result of a decrease in net operating revenues in the fourth quarter of 2024 compared with the fourth quarter of 2023 and the timing of receipt on those associated receivables.

Deferred revenue relating to membership dues was approximately $3.5 million at December 31, 2024 compared to $3.4 million at December 31, 2023. The slight increase was primarily due to timing of membership renewals and the associated dues collected prior to year-end. Additionally, membership rates increased during 2024. The number of members at December 31, 2024 was 4,661 compared to 4,952 at December 31, 2023. In summary, the 2024 membership dues rate increases offset the decrease in members.

Accrued payroll and other compensation was approximately $1.1 million at December 31, 2024 compared to $1.3 million at December 31, 2023. The decrease is primarily due to the associated timing of payment of certain employee incentives earned related to our waste division.

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.