Note 7 - Leases

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Lessee, Operating and Financing Leases [Text Block]

Note 7. Leases

Operating Leases

Avalon leases golf carts, machinery and equipment for the landfill operations, furniture and fixtures for The Grand Resort and office copiers under operating leases. Our operating leases have remaining lease terms ranging from less than 1 year to 4.0 years. The weighted average remaining lease term on operating leases was approximately 2.7 years and 4.0 years at September 30, 2025 and December 31, 2024, respectively.

During the first nine months of 2025, the Company did not record any new operating lease right-of-use assets or corresponding obligations under operating leases. During the first nine months of 2024, the Company entered into a new operating lease agreement for golf carts and GPS equipment. During the first nine months of 2024, the Company recorded operating lease right-of-use assets and corresponding obligations under the operating leases of approximately $684,000.

Leased property and associated obligations under operating leases at September 30, 2025 and December 31, 2024 consists of the following (in thousands):

	September 30,		December 31,
	2025		2024
Operating lease right-of-use assets	$	1,078	$	1,383
Current portion of obligations under operating leases	$	363	$	365
Long-term portion of obligations under operating leases		715		1,018
Total obligations under operating leases	$	1,078	$	1,383

The weighted average discount rate on operating leases was 6.7% and 6.6% at September 30, 2025 and December 31, 2024, respectively.

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 of ten (10) years with four (4) consecutive ten (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 September 30, 2025 there were approximately 28.1 years remaining on the golf course and related facilities finance lease. At December 31, 2024 there were approximately 28.8 years remaining on the golf course and related facilities finance lease. The net asset value of finance leases, excluding leasehold improvements was $1.6 million and $0.8 million at September 30, 2025 and December 31, 2024, respectively.

In addition, the Company also entered into lease agreements for a vehicle, golf course maintenance equipment and the captive landfill operations entered into lease agreements for equipment which were determined to be finance leases. At September 30, 2024, the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from less than 1 year to 4.9 years. The weighted average remaining lease term on the vehicles and equipment leases was approximately 4.0 and 3.8 years at September 30, 2025 and December 31, 2024.

Leased property and associated obligations under finance leases at September 30, 2025 and December 31, 2024 consists of the following (in thousands):

	September 30,			December 31,
	2025			2024
Leased property under finance leases	$	14,237		$	13,554
Less accumulated amortization		(8,007	)		(7,907	)
Leased property under finance leases, net	$	6,230		$	5,647
Current portion of obligations under finance leases	$	362		$	201
Long-term portion of obligations under finance leases		1,220			707
Total obligations under finance leases	$	1,582		$	908

The weighted average discount rate on finance leases was 6.7% at September 30, 2025 and 7.8% at December 31, 2024.

For the three and nine months ended September 30, 2025 and 2024, components of lease expense were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Operating lease cost:
Rental expense	$	239	$	257	$	465	$	480
Finance lease cost:
Depreciation expense	$	148	$	161	$	416	$	431
Interest expense		21		12		54		41
Total finance lease cost	$	169	$	173	$	470	$	472

For the twelve months ending September 30, future commitments under long-term, operating and finance leases are as follows (in thousands):

	Finance		Operating		Total
2026	$	458	$	432	$	890
2027		412		348		760
2028		370		248		618
2029		302		195		497
2030		113		-		113
Thereafter		345		-		345
Total lease payments		2,000		1,223		3,223
Less: imputed interest		418		145		563
Total		1,582		1,078		2,660
Less: current portion of obligations under leases		362		363		725
Long-term portion of obligations under leases	$	1,220	$	715	$	1,935