AVALON HOLDINGS CORP

Working Capital

At December 31, 2025, there was a working capital surplus of approximately $0.1 million. At December 31, 2024, there was a working capital deficit of approximately $0.9 million. Working capital at December 31, 2025 was positively impacted by an increase in cash and cash equivalents along with increases in accounts receivable.

Accounts receivable increased to $9.8 million at December 31, 2025 compared with $8.6 million at December 31, 2024. The increase in accounts receivable was directly related to our waste management services segment. Accounts receivable related to our waste management services segment increased approximately $1.3 million at December 31, 2025 compared with December 31, 2024 as a result of an increase in net operating revenues in the fourth quarter of 2025 compared with the fourth quarter of 2024.

Inventory was approximately $1.6 million at both December 31, 2025 and December 31, 2024.

Accounts payable was approximately $8.0 million at December 31, 2025 compared to $7.1 million at December 31, 2024. The increase in accounts payable between periods was primarily related to our waste management services segment’s accounts payable increasing approximately $0.9 million at December 31, 2025 compared with December 31, 2024 as a result of an increase in net operating revenues in the fourth quarter of 2025 compared with the fourth quarter of 2024 and the timing of receipt on those associated receivables.

Deferred revenue relating to membership dues was approximately $3.5 million at both December 31, 2025 and December 31, 2024. The number of members at December 31, 2025 was 4,500 compared to 4,661 at December 31, 2024. Although the number of members has decreased compared to the prior year, the deferred revenue relating to membership dues has remained the same due to timing of membership renewals.

Accrued payroll and other compensation was approximately $1.2 million at December 31, 2025 compared to $1.1 million at December 31, 2024. The increase is primarily due to increase in 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.