Note 7 - Leases

12 Months Ended

Dec. 31, 2025

Notes to Financial Statements

Lessee, Operating and Financing Leases [Text Block]

Note 7.  Leases

Operating Leases

Avalon leases golf carts and associated GPS equipment, machinery and equipment for the landfill operations, furniture and office copiers under operating leases. Our operating leases have remaining lease terms ranging from less than 1 year to 5.0 years. The weighted average remaining lease term on operating leases was approximately 3.9 years and 4.0 years at December 31, 2025 and 2024, respectively.

During 2025, the Company entered into new operating lease agreements for a shuttle bus and golf carts. The Company recorded operating lease right-of-use assets and corresponding obligations under the operating leases of approximately $0.4 million. During 2024, the Company entered into new operating lease agreements for a golf carts and equipment. The Company recorded operating lease right-of-use assets and corresponding obligations under the operating leases of approximately $0.7 million.

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

	2025		2024
Operating lease right-of-use assets	$	1,379	$	1,383
Current portion of obligations under operating leases	$	362	$	365
Long-term portion of obligations under operating leases		1,017		1,018
Total obligations under operating leases	$	1,379	$	1,383

The weighted average discount rate on operating leases was 7.0% at December 31, 2025 and 6.6% at December 31, 2024.

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 December 31, 2025 there were approximately 27.8 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 December 31, 2025 and 2024, respectively.

In addition, the Company also entered into lease agreements for vehicles, golf course maintenance and restaurant equipment which were determined to be finance leases. At December 31, 2025, the vehicles, golf course maintenance and restaurant equipment have remaining lease terms ranging from less than one year to 5.0 years. The weighted average remaining lease term on the vehicles and equipment leases was approximately 3.8 years at both December 31, 2025 and 2024.

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

	2025			2024
Leased property under finance leases	$	14,433		$	13,554
Less accumulated amortization		(8,166	)		(7,907	)
Leased property under finace leases, net	$	6,267		$	5,647
Current portion of obligations under finance leases	$	384		$	201
Long-term portion of obligations under finance leases		1,248			707
Total obligations under finance leases	$	1,632		$	908

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

For the years ended December 31, 2025 and 2024, components of lease expense were as follows (in thousands):

	2025		2024
Operating lease cost:
Rental expense	$	572	$	627
Finance lease cost:
Depreciation expense	$	573	$	535
Interest expense		90		43
Total finance lease cost	$	663	$	578

For the twelve months ending December 31, future commitments under long-term, operating and finance leases are as follows (in thousands):

	Finance		Operating		Total
2026	$	481	$	448	$	929
2027		431		434		865
2028		394		329		723
2029		305		269		574
2030		95		104		199
Thereafter		329		-		329
Total lease payments		2,035		1,584		3,619
Less imputed interest		403		205		608
Total		1,632		1,379		3,011
Less current portion of obligations under leases		384		362		746
Long-term portion of obligations under leases	$	1,248	$	1,017	$	2,265