form10q.htm

10-Q 1 form10q.htm form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2009

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ______________

Commission File Number 333-157618

AVALON HOLDING GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada		26-3608086
State or other jurisdiction of		(I.R.S. Employer
incorporation or organization		Identification No.)

6536 102nd Place NE, Kirland, WA 98033 USA

(Address of principal executive offices)

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

SEC 1296 (02-08) Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

APPLICABLE ONLY TO CORPORATE ISSUERS:

Number of shares outstanding of the registrant’s class of common stock as of September 15, 2009: 5,055,000

Avalon Holding Group, Inc.

INDEX TO THE FORM 10-Q

For the quarterly period ended July 31, 2009

			PAGE

PART I	FINANCIAL INFORMATION		F-1
	ITEM 1.	FINANCIAL STATEMENTS (unaudited)	F-1
		Condensed Balance Sheets	F-2
		Condensed Statements of Operations	F-3
		Condensed Statements of Cash Flow	F-4
		Notes to the Condensed Financial Statements	F-5
	ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
	ITEM 3. ITEM 4. ITEM 4T.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK CONTROLS AND PROCEDURES CONTROLS AND PROCEDURES	14 14 14
PART II	OTHER INFORMATION		14
	ITEM 1. ITEM 1A.	LEGAL PROCEEDINGS RISK FACTORS	14
	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	14
	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	14
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	14
	ITEM 5.	OTHER INFORMATION	14
	ITEM 6.	EXHIBITS	15
		SIGNATURES	16

AVALON HOLDING GROUP, INC

(A Development Stage Company)

FINANCIAL STATEMENTS

JULY 31, 2009

BALANCE SHEET

STATEMENTS OF OPERATIONS

STATEMENT OF STOCKHOLDERS’ EQUITY

STATEMENTS OF CASH FLOWS

NOTES TO THE FINANCIAL STATEMENTS

AVALON HOLDING GROUP, INC (A Development Stage Company) Balance Sheet


Assets
										July 31,		January 31,
										2009		2009
										(Unaudited)		(Audited)
Current Assets
		Cash						$		7,209	$	19,043
		Total Current Assets								7,209		19,043

Other Assets
				Vending Equipment						8,935		9,900
				Total Other Assets						8,935		9,900

Total Assets								$		16,144	$	28,943
Liabilities and Stockholders’ Equity (deficit)


Long Term Liabilities
			Loan from Director					$		1,460	$	1,460
			Total Long Term Liabilities					$		1,460	$	1,460


Stockholders’ Equity (deficit)

			Common stock, $0.001par value, 75,000,000 shares authorized;
			5,055,000 shares issued and outstanding							5,055		5,055

			Additional paid-in-capital							23,445		23,445
			Deficit accumulated during the development stage							(13,816)		(1,017)
Total stockholders’ equity (deficit)										14,684		27,483
Total liabilities and stockholders’ equity (deficit)								$		16,144	$	28,943

			The accompanying notes are an integral part of these financial statements.
AVALON HOLDING GROUP, INC (A Development Stage Company) Statements of Operations
(Unaudited)

						Three Months Ended July 31, 2009		Six Months Ended July 31, 2009				From Inception on July 28, 2008 to July 31, 2009










	Revenues
	Revenue				$	446	$	446			$	446
	Total Revenue					446		446				446


	Expenses
	General and Administrative Expenses					5,174		12,280				13,297
	Depreciation Expense					470		965				965
	Total Expenses					(5,644)		(13,245)				(14,262)
Provision for Income Taxes								0				0
Net (loss)					$	(5,198)	$	(12,799)			$	(13,816)


(Loss) per common share – Basic and diluted					$	(0.00)	$	(0.00)			$	(0.00)

Weighted Average Number of Common Shares Outstanding						5,055,000			5,055,000












The accompanying notes are an integral part of these financial statements.

AVALON HOLDING GROUP, INC (A Development Stage Company) Statement of Stockholders’ Equity From Inception on July 28, 2008 to July 31, 2009 (Unaudited)
		Number of Common Shares		Amount	Additional Paid-in- Capital	Deficit accumulated During development stage	Total



Balance at inception on July 28, 2008
November 3, 2008
Common shares issued for cash at $0.001		3,000,000		$ 3,000	$ -	$ -	$ 3,000
November 20, 2008
Common shares issued for cash at $0.005		1,200,000		1,200	4,800	-	6,000
January 12, 2009
Common shares issued for cash at $0.02		775,000		775	14,725		15,500
January 27,2009
Common shares issued for cash at $0.05		80,000		80	3,920		4,000
Net (loss)						(1,017)	(1,017)
Balance as of January 31, 2009		5,055,000		5,055	23,445	(1,017)	27,483
Net (loss)				-	-	(12,799)	(12,799)
Balance as of July 31, 2009	5,055,000		$ 5,055		$23,445	$ (13,816)	$ 14,684

The accompanying notes are an integral part of these financial statements.

AVALON HOLDING GROUP, INC (A Development Stage Company) Statements of Cash Flows
(Unaudited)


				Six Months Ended July 31, 2009			From Inception on July 28, 2008 to July 31, 2009







Operating Activities
	Net (loss)		$	(12,799)	$		(13,816)
	Depreciation Expense			965			965
	Net cash (used) for operating activities			(11,834)			(12,851)

Investing Activities
	Purchase of Vending Equipment			-			(9,000)
	Net Cash provided by (used in) Investing Activities			-			(9,900)

Financing Activities
	Loans from Director			-			1,460
	Sale of common stock			-			28,500
	Net cash provided by financing activities			-			29,960

Net increase (decrease) in cash and equivalents				(11,834)			7,209

Cash and equivalents at beginning of the period				19,043			-
Cash and equivalents at end of the period			$	7,209	$		7,209


		Supplemental cash flow information:

		Cash paid for:
		Interest	$	-		$		-
		Taxes	$	-		$		-


Non-Cash Activities			$			$



The accompanying notes are an integral part of these financial statements.

AVALON HOLDING GROUP, INC

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2009 (Unaudited)

1. ORGANIZATION AND BUSINESS OPERATIONS

AVALON HOLDING GROUP, INC (“the Company”) was incorporated under the laws of the State of Nevada, U.S. on July 28, 2008. The Company is in the development stage as defined under Statement on Financial Accounting Standards No. 7, Development Stage Enterprises (“SFAS No.7”) and intends to commence operations in the entertainment and amusement industry by placing and operating of amusement gaming machines in public venues with high traffic flow in Russia. For the period from inception on July 28, 2008 through July 31, 2009 the Company has generated $446 in revenues and has accumulated losses of $13,816.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)Basis of Presentation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.

b) Going Concern

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $13,816 as of July 31, 2009 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and or private placement of common stock.

c) Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

d) Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

e) Foreign Currency Translation

The Company's functional currency and its reporting currency is the United States dollar.

f) Financial Instruments

The carrying value of the Company's financial instruments approximates their fair value because of the short maturity of these instruments.

g) Stock-based Compensation

Stock-based compensation is accounted for at fair value in accordance with SFAS No. 123 and 123 (R). To date, the Company has not adopted a stock option plan and has not granted any stock options.

h) Income Taxes

Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial

AVALON HOLDING GROUP, INC

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2009 (Unaudited)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

i) Basic and Diluted Net Loss per Share

The Company computes net loss per share in accordance with SFAS No. 128,"Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement.

Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive.

j) Fiscal Periods

The Company's fiscal year end is January 31.

3. COMMON STOCK

The authorized capital of the Company is 75,000,000 common shares with a par value of $ 0.001 per share.

On November 3, 2008, the Company issued 3,000,000 shares of common stock at a price of $0.001 per share for total cash proceeds of $3,000.

In November, 2008, the Company issued 1,200,000 shares of common stock at a price of $0.005 per share for total cash proceeds of $6,000.

In January 2009, the Company issued 775,000 shares of common stock at a price of $0.02 per share for total cash proceeds of $15,500.

In January 2009, the Company also issued 80,000 shares of common stock at a price of $0.05 per share for total cash proceeds of $4,000.

During the period July 28, 2008 (inception) to January 31, 2009, the Company sold a total of 5,055,000 shares of common stock for total cash proceeds of $28,500.

4. INCOME TAXES

As of July 31, 2009, the Company had net operating loss carry forwards of approximately $13,816 that may be available to reduce future years’ taxable income through 2029. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.

5. RELATED PARTY TRANSACTIONS

On July 28, 2008 related party had loaned the Company $460.15; on January 9, 2009, related party had loaned the Company $1,000. The loans are non-interest bearing, due upon demand and unsecured.

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

AVALON HOLDING GROUP, INC. was incorporated under the laws of the State of Nevada on July 28, 2008. Our registration statement has been filed with the Securities and Exchange Commission on March 02, 2009 and has been declared effective on March 11, 2009.

Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or " Avalon," refers to Avalon Holding Group, Inc.

CURRENT BUSINESS OPERATIONS

As of the date of this Quarterly Report, we have not started operations. Since the date of incorporation, we intended to commence operations in the entertainment and amusement industry. In 2008, we were involved in placing and operating of coin operated amusement machines in public venues with high traffic flow in Russia. We focused on four strength testing machines, "Arm Wrestling Game”, "Hammer Game”, "Kicking Game” and “Punching Game” and placing them in places such as nightclubs, bars, pubs, cinemas and amusement complexes.

Since our inception on July 28, 2008, we have purchased three such machines from Punchline Europe Company. Currently, the machines are delivered and ready for placement. We intend to place them in most popular and crowded nightclubs in Russia. We expect to start receiving our first revenue by the end of June, 2009. Our business strategy is to continue acquiring and placing additional amusement machines in as many places in different cities of Russia as possible.

RESULTS OF OPERATION

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

Three Month and Six Month Periods Ended July 31, 2009

We were incorporated on July 28, 2008 and therefore do not have any periods from the prior fiscal year to which compare the results of our operations for the period ended July 31, 2009. Our net loss for the three-month period ended July 31, 2009 was ($5,198). During the three-month period ended July 31, 2009, we did generate $446 in total revenue and incurred general and administrative expenses of $5,644. General and administrative expenses incurred during the three-month period ended July 31, 2009 were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting, developmental costs, and marketing expenses. During the three-month period ended July 31, 2009, we incurred depreciation expense of $470.

Our net loss for the six-month period ended July 31, 2009 was ($12,799). During such six-month period, we generated $446 in total revenue and incurred general and administrative expenses of $12,280. General and administrative expenses incurred during the six-month period ended July 31, 2009 were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting, developmental costs, and marketing expenses. During the six-month period ended July 31, 2009, we incurred depreciation expense of $965.

The weighted average number of shares outstanding was 5,055,000 for the three-month period and the six-month period ended July 31, 2009.

LIQUIDITY AND CAPITAL RESOURCES

Six-Month Period Ended July 31, 2009

As at the three-month period ended July 31, 2009, our current assets consisted of $7,209 in cash and other assets were $9,405, which consisted of vending equipment. Our total liabilities were $1,460, which resulted in a working capital surplus of $5,849.

Stockholders’ equity decreased from $27,483 as of the fiscal year ended January 31, 2009 to $14,684 as of the period ended July 31, 2009.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the six-month period ended July 31, 2009, net cash flows used in operating activities was ($11,834) consisting primarily of a net loss of ($12,799) and depreciation expense $965. Net cash flows used in operating activities was ($12,851) for the period from inception (July 28, 2008) to July 31, 2009.

Cash Flows from Financing Activities

We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the six-month period ended July 31, 2009, we did not generate net cash flows from financing activities. For the period from inception (July 28, 2008) to July 31, 2009, net cash provided by financing activities was $29,960 received from proceeds from issuance of common stock and loan from director.

PLAN OF OPERATION AND FUNDING

We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.

Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

MATERIAL COMMITMENTS

As of the date of this Quarterly Report, we have a material commitment. During the period from inception (July 28, 2008) to April 30, 2009, one of our Tamara Gileva, loaned us $1,460. The loan is non-interest bearing and payable upon demand.

PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any significant equipment during the next twelve months.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

GOING CONCERN

The independent auditors' report accompanying our January 31, 2009 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse change in foreign currency and interest rates.

Exchange Rate

Our reporting currency is United States Dollars (“USD”). The Russian Ruble has been informally pegged to the USD. However, Russia is under international pressure to adopt a more flexible exchange rate system. If the Russian Ruble was no longer pegged to the USD, rate fluctuations may have a material impact on our financial reporting and make realistic revenue projections difficult. The fluctuation of exchange rates of the Ruble may have positive or negative impacts on our results of operations. However, since all sales revenue and expenses of our company will primarily denominated in U.S. Dollar, the net income effect of appreciation and devaluation of the currency against the US Dollar will be limited to our costs of acquisition of inventory.

Interest Rate

Interest rates in Russia are not generally controlled. Any future loans will relate mainly to trade payables and will be mainly short-term. However our debt may be likely to rise in connection with expansion and if interest rates were to rise at the same time, this could become a significant impact on our operating and financing activities. We have not entered into derivative contracts either to hedge existing risks of for speculative purposes.

ITEM 4. CONTROLS AND PROCEDURES

See Item 4T.

ITEM 4T. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the current quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

None.

ITEM 1A.RISK FACTORS

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Pursuant to Rule 601 of Regulation S-B, the following exhibits are included herein or incorporated by reference.

Exhibit

Number Description

31.1 Section 302 Certification – Chief Executive Officer

32.1

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Chief Executive Officer.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 21st day of September, 2009.

AVALON HOLDING GROUP, INC.

Date: September 21st, 2009 By: /s/ Philip Jennings

Name: Philip Jennings

Title: President (principal executive officer)

Treasurer (principal financial officer and principal accounting officer)