Note 5 - Credit Facility

6 Months Ended

Jun. 30, 2015

Notes to Financial Statements

Debt Disclosure [Text Block]

Note 5. Credit Facility

On May 21, 2015 Avalon and certain wholly owned subsidiaries entered into a line of credit agreement (the “Agreement”) with The Home Savings and Loan Company of Youngstown, Ohio expiring on June 30, 2016. The Agreement provides for a line of credit of up to $9 million. Borrowings under the line of credit agreement are secured by all business assets of the Company including accounts receivable, inventory, equipment and certain real property as defined in the Agreement. Interest on outstanding borrowings accrue at Prime Rate plus .25%. The line of credit agreement contains certain financial and other covenants, customary representations, warranties and events of defaults. Avalon was in compliance with the debt covenants at June 30, 2015. At June 30, 2015, the outstanding borrowings under the line of credit agreement were $6.6 million. As of June 30, 2015, the Company has $2.4 million available under the line of credit agreement. During the three and six months ended June 30, 2015, the weighted average interest rate on outstanding borrowings under the line of credit agreement was 3.11% and 2.99%, respectively. At June 30, 2015, the interest rate was 3.50%. Total unamortized debt issuance costs incurred in connection with the Agreement were $22,000 at June 30, 2015.

Borrowings of $5.0 million under the Agreement were utilized to repay the total amount outstanding under the line of credit agreement with The Huntington National Bank. The line of credit agreement with Huntington National Bank was terminated in conjunction with the repayment. At June 30, 2014, there were no borrowings under the line of credit agreement.

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 835-20,

Capitalization of Interest

, during the three and six month periods ended June 30, 2015, Avalon capitalized approximately $44,000 and 77,000, respectively, of interest costs on borrowings incurred related to construction on The Avalon Inn.