Avalon Holding Group, Inc. - FORM 10-Q

Attached files

file	filename
EX-32 - Avalon Holding Group, Inc.	exhibit32.htm
EX-31 - Avalon Holding Group, Inc.	exhibit31.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 October 31, 2010

[ ]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, Kirkland, WA 98033 USA

(Address of principal executive offices)

206-947-5639

(Registrant’s telephone number, including area code)

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 [X] No [ ]

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) Smallerreporting 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 [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Number of shares outstanding of the registrant’s class of common stock as of December 28, 2010: 121,320,000

Avalon Holding Group, Inc.

INDEX TO THE FORM 10-Q

For the quarterly period ended October 31, 2010

			PAGE

PART I	FINANCIAL INFORMATION		F-1
	ITEM 1.	FINANCIAL STATEMENTS (unaudited)	F-1
		Balance Sheets	F-2
		Statements of Operations	F-3
		Statements of Stockholders’ Equity	F-4
		Statements of Cash Flow	F-5
		Notes to the Financial Statements	F-6
	ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
	ITEM 3. ITEM 4.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK CONTROLS AND PROCEDURES	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

OCTOBER 31, 2010

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 SHEETS

(Unaudited)

		October 31, 2010 (Unaudited)		January 31, 2010

Current
Cash	$	-	$	-
Total Current Assets		-		-


Total Assets	$	-	$	-


Liabilities and Stockholders’ Equity (deficit)

Current Liabilities
Accounts payable	$	15,017	$	3,991
Loans payable		11,115		-
Loans from director		11,409		6,850

Total Liabilities		37,541		10,841

Stockholders’ Equity (Deficit)

Common stock, $0.001 par value, 500,000,000 shares
Authorized;
121,320,000 shares issued and outstanding	$	121,320	$	121,320

Additional paid-in-capital		(92,820)		(92,820)
Deficit accumulated during the development stage		(66,041)		(39,341)

Total Stockholders’ Equity (Deficit)	$	(37,541)	$	(10,841)

Total Liabilities and Stockholders’ Equity	$	-	$	-

The accompanying notes are an integral part of these statements.

F-2

Avalon Holding Group, Inc

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Unaudited)

		Nine-month Period Ended October 31, 2010 (Unaudited)		Nine-month Period Ended October 31, 2009 (Unaudited)		From Inception on July 28, 2008 to October 31, 2010

Revenue

Revenue	$	-	$	446	$	446
Total revenue	$	-		446	$	446

Expenses
General and administrative expenses		26,700		22,097		56,587
Depreciation		-		965		965
Total expenses		26,700		23,062		57,552

Loss before other items and taxes		(26,700)		(22,616)		(57,106)

Loss on disposal of equipment		-		(8,935)		(8,935)
				-
Net Loss	$	(26,700)	$	(31,551)	$	(66,041)

Loss per common share – basic and diluted	$	Nil	$	Nil

Weighted Average Number of common shares outstanding		121,320,000		121,320,000

The accompanying notes are an integral part of these statements.

F-3

Avalon Holding Group, Inc

(A Development Stage Company)

STATEMENTS OF OPERATIONS

		Three-month Period ending October 31, 2010 (Unaudited)		Three-month Period ending October 31, 2009 (Unaudited)

Revenue

Revenue	$	-	$	-
Total revenue	$	-	$	-

Expenses
General and administrative expenses		8,457		9,817
Depreciation		-		-
Total expenses		8,457		9,817

Loss before other items and taxes		(8,457)		(9,817)

Loss on disposal of equipment		-		(8,935)

Net Loss	$	(8,457)	$	(18,752)

Loss per common share – basic and diluted	$	Nil	$	Nil

Weighted Average Number of common shares outstanding		121,320,000		121,320,000

The accompanying notes are an integral part of these statements.

F-4

Avalon Holding Group, INC

(A Development Stage Company)

STATEMENTS OF STOCKHOLDERS’ EQUITY

From Inception on July 28, 2008 to October 31, 2010

Memo: September 29, 2010 Stock split 24:1	Number of common Shares	Amount		Additional Paid-in-Capital		Deficit accumulated During development stage		Total
Common shares issued for cash at $0.00004 November 20 ,2008	72,000,000	$	72,000	$	-	$	-	$	3,000
Common shares issued for cash at $0.0002 January 12, 2009	28,800,000		28,800				-		6,000
Common shares issued for cash at $0.00083 January 27, 2009	18,600,000		18,600				-		15,500
Common shares issued for cash at $0.002	1,920,000		1,920		(92,820)		-		4,000
Net Loss	-		-		-		(1,017)		(1,017)

Balance as of January 31,2010	121,320,000		121,320		(92,820)		(1,017)		27483
Net Loss	-		-		-		(38,324)		(38,324)
Balance as of January 31, 2010	121,320,000		121,320		(92,820)		(39,341)	$	(10,841)
Net loss	-		-		-		(26,700)		(26,700)
Balance as of October 31, 2010	121,320,000	$	121,320	$	(92,820)	$	(66,041)	$	(37,541)

The accompanying notes are an integral part of these statements.

F-5

Avalon Holding Group, Inc

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Unaudited)

		Nine Month Period Ended October 31, 2010		Nine Month Period Ended October 31, 2009		From Inception on July 28, 2008 to October 31, 2010

Operating Activities
Net loss	$	(26,700)	$	(31,551)	$	(66,041)
Depreciation		-		965		965
Loss on disposal of equipment		-		8,935		8,935
Changes in current assets and liabilities Accounts payable & accrued liabilities		11,026		-		15,017

Net Cash used for operating activities		(15,674)		(21,651)		(41,124)

Investing Activities
Purchase of vending equipment		-		-		(9,900)
Net cash used in investing activities		-		-		(9,900)

Financing Activities
Loans payable (Note 7)		11,115		-		11,115
Loans from director (Note 8)		4,559		2,608		11,409
Issuance of common stock (Note 5)		-		-		28,500
Net cash provided by financing activities		15,674		2,608		51,024

Net increase (decrease) in cash and equivalents		-		(19,043)		-
Cash and equivalents at beginning of the period		-		19,043		-

Cash and equivalents at end of the period	$	-	$	-	$	-

Supplemental cash flow information:

Cash paid for:

Interest	$	-	$	-	$	-
Income taxes	$	-	$	-	$	-

Non-Cash Activities	$	-	$	-	$	-

The accompanying notes are an integral part of these statements.

AVALON HOLDING GROUP, INC

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

October 31, 2010

(Unaudited)

1. ORGANIZATION AND BUSINESS OPERATIONS

a)	Organization

AVALON HOLDING GROUP, INC (“the Company”) was incorporated under the laws of the State of Nevada, U.S. on July 28, 2008.

b)	Development Stage Activities

The Company is in the development stage as defined under FASB ASC 915 formerly Statement on Financial Accounting Standards No. 7, Development Stage Enterprises (“SFAS No.7”) and commenced 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 October 31, 2010, the Company has generated $446 in revenues and has accumulated losses of $66,041.

Based upon our business plan, we are a development stage enterprise. Accordingly, we present our financial statements in conformity with the accounting principles generally accepted in the United States of America that apply in establishing operating enterprises. As a development stage enterprise, we disclose the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from our inception to the current balance sheet date.

2.	BASIS OF PRESENTATION – GOING CONCERN

Our accompanying unaudited financial statements have been prepared in conformity with GAAP, which contemplates our continuation as a going concern. However, we have minimal business operations to date. In addition, from the period from inception on July 28, 2008 through October 31, 2010, we have incurred losses of $66,041, and have working capital deficit of $37,541. These matters raise substantial doubt about our ability to continue as going concern. In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon our ability to meet our financing requirements, raise additional capital, and the success of our future operations. There is no assurance that future capital raising plans will be successful in obtaining sufficient funds to assure our eventual profitability. While management believes that actions planned and presently being taken to revise our operating and financial requirements provide the opportunity for us to continue as a going concern, there is no assurance the actions will be successful. In addition, recent events in worldwide capital markets may make it more difficult for us to raise additional equity or debt capital.

Our financial statements do not include any adjustments that might result from these uncertainties.

AVALON HOLDING GROUP, INC

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

October 31, 2010

(Unaudited)

3. SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to assist in understanding our financial statements. Our financial statements and notes are representations of our management who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States of America (“GAAP”) and have been consistently applied in the preparation of the financial statements. The financial statements are stated in United States of America dollars.

Income Taxes

We have adopted the ASC subtopic 740-10 (formerly Statement of Financial Accounting Standards (“SFAS”) No. 109 – “Accounting for Income Taxes”). ASC 740-10 requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method of ASC 740-10, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

We provide deferred taxes for the estimated future tax effects attributable to temporary differences and carry forwards when realization is more likely than not.

Property and Equipment

Property and equipment is stated at cost, and is depreciated over estimated useful lives using primarily the straight line method for financial reporting purposes. Useful lives range from 3 to 5 years. We evaluate property and equipment at least annually for impairment. Since inception, all of the equipment had been sold for a net loss of $8,935. The Company has no property and equipment of value as of October 31, 2010.

Basic and Diluted Loss Per Share

In accordance with ASC subtopic 260-10 (formerly SFAS No. 128 – “Earnings Per Share”), the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At October 31, 2010 and 2009, we had no stock equivalents that were anti-dilutive and excluded in the earnings per share computation.

AVALON HOLDING GROUP, INC

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

October 31, 2010

(Unaudited)

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Estimated Fair Value of Financial Instruments

The carrying value of our financial instruments, consisting of cash, and accounts payable approximate their fair value due to the short-term maturity of such instruments. Unless otherwise noted, it is management’s opinion that we are not exposed to significant interest, currency or credit risks arising from these financial statements.

Revenue Recognition

It is our policy that revenues will be recognized in accordance with ASC subtopic 605-10 (formerly SEC Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition."). Under ASC 605-10, product revenues (or service revenues) are recognized when persuasive evidence of an arrangement exists, delivery has occurred (or service has been performed), the sales price is fixed and determinable and collectability is reasonably assured.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash is comprised of cash on hand and demand deposits. Cash equivalents include short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

Interim Financial Statements

The interim financial statements presented herein have been prepared pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The interim financial statements should be read in conjunction with the company’s annual report. In the opinion of management, all adjustments which are necessary to provide a fair presentation of financial position as October 31, 2010 and related operating results and cash flows for the interim period presented have been made. All adjustments are of a normal recurring nature. The results of operations, for the period presented are not necessarily indicative of the results to be expected for the year ended January 31, 2011.

AVALON HOLDING GROUP, INC

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

October 31, 2010

(Unaudited)

4. RECENT ACCOUNTING PRONOUNCEMENTS

In August 2010, the FASB issued Accounting Standard Updates No. 2010-21 (ASU No. 2010-21) “Accounting for Technical Amendments to Various SEC Rules and Schedules” and No. 2010-22 (ASU No. 2010-22) “Accounting for Various Topics – Technical Corrections to SEC Paragraphs”. ASU No 2010-21 amends various SEC paragraphs pursuant to the issuance of Release no. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies. ASU No. 2010-22 amends various SEC paragraphs based on external comments received and the issuance of SAB 112, which amends or rescinds portions of certain SAB topics. Both ASU No. 2010-21 and ASU No. 2010-22 are effective upon issuance. The amendments in ASU No. 2010-21 and No. 2010-22 will not have a material impact on the Company’s financial statements.

A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, management has not determined whether implementation of such proposed standards would be material to the Company’s consolidated financial statements.

5. COMMON STOCK

The authorized capital of the Company is 500,000,000 common shares with a par value of $ 0.001 per share.

On November 3, 2008, the Company issued 72,000,000 shares of common stock at a price of $0.00004 per share for total cash proceeds of $3,000.

In November 20, 2008, the Company issued 28,800,000 shares of common stock at a price of $0.0002 per share for total cash proceeds of $6,000.

In January 2009, the Company issued 18,600,000 shares of common stock at a price of $0.008 per share for total cash proceeds of $15,500.

In January 2009, the Company also issued 1,920,000 shares of common stock at a price of $0.002 per share for total cash proceeds of $4,000.

On September 29, 2010, a forward split 24:1 was approved and enacted.

AVALON HOLDING GROUP, INC

(A Development Stage Company)

Notes to the Financial Statements

October 31, 2010

(Unaudited)

6. INCOME TAXES

As of October 31, 2010, the Company had net operating loss carry forwards of approximately $66,041 that may be available to reduce future years’ taxable income through 2030. 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

7. LOANS PAYABLE

Loans from a non-related third party as of October 31, 2010 totaled of $11,115 (January 31, 2010 - $Nil). The amounts due are non-interest bearing, unsecured and are due upon demand. The loans were the result of expenses paid on behalf of the Company.

8. RELATED PARTY TRANSACTIONS

The Company entered into the following transactions with related party:

Loans from a director as of October 31, 2010 totalled $11,409 (January 31, 2010 - $6,850). The amounts due are non-interest bearing, unsecured and are due upon demand. The loans were the result of expenses paid on behalf of the Company. The amounts and dates of the loans are as follows:

Date	Amount
October 28, 2009	$4,068
January 31, 2010	2,782
April 30, 2010	4,159
July 31, 2010	400
Total loans payable to a director	$11,409

9. SUBSEQUENT EVENTS

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date of this report.

There are no subsequent events to disclose.

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

GENERAL

We were incorporated on July 28, 2008 under the laws of the state of Nevada. Our principal offices were located at 3/2 Yahtennaya Street, Suite 158, St. Petersburg, Russia 197374. In September 2009, we relocated our principal offices to 6536 102nd Place NE, Kirland, WA 98033 USA. Our telephone number is 206-947-5639. Our fiscal year end is January 31.

During our first year of operations, we intended to commence operations in the entertainment and amusement industry. We purchased coin operated amusement machines for the purpose of placing and operating them in public venues with high traffic flow in Russia. We were initially focused on four amusement games, "Arm Wrestling Game”, "Hammer Game”, "Kicking Game” and “Punching Game” and place them in places such as nightclubs, bars, pubs, cinemas and amusement complexes. Strength testing amusement games have been around for many years, and prior management believed that if placed in high traffic location can be high revenue producers.

Since our inception, we have purchased three such machines from our supplier, “Punchline Europe”. Our business strategy was to continue acquiring and placing additional amusement machines in as many places in different cities of Russia as possible.

We do not believe that we will be able to generate significant revenues from sales during the next twelve months in the area of coin operated amusement machines. At this time in the financial markets there has been a major reduction in investor and lender willingness to provide capital to new businesses throughout the world. Our efforts to seek additional funding this year have encountered high levels of resistance to its inquiries for new sources of cash flows. During the period ended October 31, 2009, due to the high cost of maintaining the operations of the company in Russia, we took a loss for the historical value of our vending machines and wrote them off on our balance sheet. We have abandoned the machines and are looking for new business ventures to be engaged in. Currently, we do not have any operations or assets.

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.

Nine Month Period Ended October 31, 2010

Our net loss for the nine-month period ended October 31, 2010 was $26,700, compared to a loss of $31,551 during the same period from the prior fiscal year. During the nine-month period ended October 31, 2010, we did not generate any revenue and incurred general and administrative expenses of $26,700. General and administrative expenses incurred durinincurringne-month period ended October 31, 2010 were generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting expenses. The increase in our general and administrative expenses for the nine-month period ended October 31, 2010, compared to the same period from the prior fiscal year was due to increased legal and accounting expenses. Also during the nine-month period ended October 31, 2010, we did not incur a depreciation expense compared to $965 in depreciation expense incurred during the same period from the prior year.

The weighted average number of shares outstanding was 121,320,000 for the nine-month period ended October 31, 2010.

LIQUIDITY AND CAPITAL RESOURCES

Nine-Month Period Ended October 31, 2010

As at October 31, 2010, we had no assets; we did not have any assets as of January 31, 2010. As at October 31, 2010, our total liabilities were $37,541, which resulted in a working capital deficit of $37,541, compared to total liabilities of $10,841 and a working capital deficit of $10,841 as of January 31, 2010. The increase in our working capital deficit was due to an increase in accounts payable of $10,026 and loans payable of $11,115 and loans from a director of $4,559 incurred during the period ended October 31, 2010.

Stockholders deficit increased from $10,841 as of the fiscal year ended January 31, 2010 to $37,541 as of the period ended October 31, 2010.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities. For the nine-month period ended October 31, 2010, net cash flows used in operating activities was $(15,674) consisting primarily of a net loss of $26,700 and changes in accounts payable of $11,026. Net cash flows used in operating activities was $(41,124) for the period from inception July 28, 2008 to October 31, 2010.

Cash Flows from Investing Activities

For the nine-month period ended October 31, 2010, we did not generate net cash flows from investing activities. For the period from inception July 28, 2008 to October 31, 2010, net cash used in investing activities was $(9,900) used to purchase vending equipment.

Cash Flows from Financing Activities

We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the period from inception July 28, 2008 to October 31, 2010, net cash provided by financing activities was $51,024. During the nine-month period ended October 31, 2010 $11,115was a loan received from a non-related third party and $4,559 was a loan from director.

PLAN OF OPERATION AND FUNDING

The following discussion of the plan of operation, financial condition, results of operations, cash flows and changes in financial position should be read in conjunction with our most recent financial statements and notes appearing in our Form 10-K for the period ended January 31, 2010.

Our survival is dependent upon the identification and successful completion of additional long-term or permanent equity financing, the support of creditors and shareholders, and, ultimately, the acquisition and/or implementation of profitable operations. There can be no assurances that we will be successful, which would in turn significantly affect our ability to survive as a going concern. If not, we will be required to dissolve. We will continue to seek means of financing in order to acquire an ongoing business or assets or to implement a new business strategy.

We do not anticipate making any major purchases of capital assets, or conducting any research and development in the next twelve (12) months. Other than our current sole executive officer, we have no employees at the present time. We do not expect to hire any employees within the next twelve (12) months.

We currently do not any have cash. However, our current officers and directors have personally committed to provide up to an aggregate amount of $20,000 in funds to meet our operational needs. We believe that with this commitment we have sufficient cash resources to satisfy our needs through the middle of June 2011. Our ability to satisfy cash requirements thereafter and the need for additional funding is dependent on our ability to acquire new business and generate revenue from such new business in sufficient quantity and on a profitable basis. To the extent that we require additional funds, we may attempt to sell additional equity shares or issue debt. Any sale of additional equity securities will result in dilution to our stockholders. Should we require additional cash in the future, there can be no assurance that we will be successful in raising additional debt or equity financing on terms acceptable to us, if at all.

The recent and continuing downturn in the U.S. economy has had an effect on our ability to generate revenues and to attract long-term financing for our operations. The downturn in the U.S. economy has also made it more difficult to find investors that either have capital to invest or are willing to put capital at risk by investing in our company. We anticipate that both effects of the current economic rescission will continue to hinder our abilities to become a profitable company and to grow our operations.

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, 2010 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

Not applicable.

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 December 21, 2010.

AVALON HOLDING GROUP, INC.

By: /s/ Phillip Jennings

Name: Phillip Jennings

Title: President (principal executive officer)

Treasurer (principal financial officer and principal accounting officer)

Avalon Holding Group, Inc. - FORM 10-Q - January 14, 2011

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Avalon Holding Group, Inc. Reports