<PAGE>

                          Avalon Holdings Corporation

                              1999 Annual Report

<PAGE>

---------------------------------------------------------------------
                              Financial Highlights


  (in thousands, except for per share amounts)
<TABLE>
<CAPTION>

For the year                                       1999      1998
-----------------------------------------------  --------  --------
<S>                                              <C>       <C>
Net operating revenues.........................  $80,860   $74,495
Income (loss) from operations..................      992    (1,551)
Net income (loss)..............................    1,223      (647)
Net income and pro forma net (loss) per share..      .32      (.17)
Net cash provided by operating activities......    2,046     1,558
Net cash used in investing activities..........   (5,594)   (2,186)
Net cash provided by financing activities......  $  ----   $21,139

At year-end                                         1999      1998
-----------------------------------------------  -------   -------
Working capital................................  $26,969   $28,973
Total assets...................................   66,404    66,685
Shareholders' equity...........................   54,161    52,938

</TABLE>
---------------------------------------------------------------------


                                  The Company

Avalon Holdings Corporation provides transportation services, waste disposal
brokerage and management services, and technical environmental services
including environmental engineering, site assessment, analytical laboratory,
remediation and landfill management services to industrial, commercial,
municipal and governmental customers.  Avalon Holdings Corporation also owns and
operates a golf course and related facilities.

--------------------------------------------------------

                Contents
<TABLE>
<CAPTION>

<S>                                         <C>
Financial Highlights.................        1

Management's Discussion and
   Analysis of Financial Condition
   and Results of Operations.........        2

Consolidated Balance Sheets..........        9

Consolidated Statements of
  Operations.........................       10

Consolidated Statements of Cash
  Flows..............................       11

Consolidated Statements of
   Shareholders' Equity..............       12

Notes to Consolidated Financial
   Statements........................       13

Independent Auditors' Report.........       22

Digest of Financial Data.............       24

Company Location Directory...........       25

Directors and Officers...............       26

Shareholder Information..............       27

</TABLE>

                                                                               1
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------


Management's Discussion and Analysis of
Financial Condition and Results of Operations

The following discussion provides information which management believes is
relevant to an assessment and understanding of the operations and financial
condition of Avalon Holdings Corporation and its Subsidiaries (collectively the
"Company" or "Avalon"), formerly the Avalon Business of American Waste Services,
Inc.  This discussion should be read in conjunction with the consolidated
financial statements and accompanying notes.

Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations which are not historical in nature are
intended to be, and are hereby identified as, `forward looking statements.'  The
Company cautions readers that forward looking statements, including, without
limitation, those relating to the Company's future business prospects, revenues,
working capital, liquidity, capital needs, interest costs, and income, are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those indicated in the forward looking statements, due to
risks and factors identified herein and from time to time in the Company's
report filed with the Securities and Exchange Commission.

Spin-off

Pursuant to the terms of a Contribution and Distribution Agreement dated as of
May 7, 1998 between Avalon and American Waste Services, Inc. ("AWS"), AWS
contributed to Avalon its transportation operations, technical environmental
services operations, waste disposal brokerage and management operations, and
golf course and related operations together with certain other assets including
the headquarters of AWS and certain accounts receivable.  In connection with the
contribution, Avalon assumed certain liabilities of AWS including, without
limitation, liabilities relating to the termination of employment of certain
employees of AWS and costs and potential liabilities relating to a certain legal
proceeding.  On June 17, 1998 AWS distributed, as a special dividend, all of the
outstanding shares of capital stock of Avalon to the holders of AWS common stock
on a pro rata and corresponding basis (the "Spin-off").

Liquidity and Capital Resources

For the year 1999, the Company utilized existing cash and cash provided by
operations to fund capital expenditures and meet operating needs.

  During 1999, capital expenditures for the Company totaled $5.9 million which
was principally related to the purchase of equipment for the Company's
transportation operations and capital improvements to the Company's golf course.
The Company's aggregate capital expenditures in 2000 are expected to be in the
range of $4 million to $6 million, which will relate principally to acquiring
additional transportation equipment and capital improvements to the golf course.

  On August 2, 1999, the Company closed the golf course to begin capital
improvements which are expected to be in the range of $3.5 million to $4
million.  In addition to the capital improvements to the golf course, the
Company anticipates capital expenditures of approximately $1 million for
improvements to golf course related facilities.  During 1999, golf course
related capital expenditures were $2.4 million. The timing of expenditures is
subject, among other things, to weather conditions.  The Company expects the
golf course to resume operations during the third quarter of 2000.

  Working capital decreased to $27 million at December 31, 1999 compared with
$29 million at December 31, 1998.  The decrease is primarily the result of
utilizing existing cash for capital expenditures.


  The increase in Accounts receivable at December 31, 1999 compared with
December 31, 1998 is primarily the result of increased net operating revenues in
the fourth quarter of 1999 compared with the fourth quarter of 1998.

2
<PAGE>

  The increase in Accrued payroll and other compensation at December 31, 1999
compared with December 31, 1998 is primarily the result of an increase in
accrued performance-based compensation during 1999.

  The decrease in Accrued income taxes at December 31, 1999 compared with
December 31, 1998 is primarily the result of federal income tax payments made in
1999.

  The decrease in Other noncurrent liabilities at December 31, 1999 compared
with December 31, 1998 is primarily the result of a decrease in the estimated
liability associated with the remediation of a hazardous waste disposal facility
for which the Company had been identified as a potentially responsible party.

  Management believes that cash provided from operations, the availability of
working capital, as well as the Company's ability to incur indebtedness, will
be, for the foreseeable future, sufficient to meet operating requirements and
fund capital expenditure programs.  Avalon does not currently have a credit
facility.

  Currently, the Company is not aggressively pursuing potential acquisition
candidates but will continue to consider acquisitions that make economic sense.
While the Company has not entered into any pending agreements for acquisitions,
it may do so at any time.  Such potential acquisitions could be financed by
existing working capital, secured or unsecured debt, issuance of common stock,
or issuance of a security with characteristics of both debt and equity, any of
which could impact liquidity in the future.

Results of Operations

Avalon's primary business segment provides transportation services which include
transportation of hazardous and nonhazardous waste and transportation of general
and bulk commodities.  The technical environmental services segment provides
environmental engineering, site assessment, analytical laboratory, remediation
and captive landfill management services.  The waste disposal brokerage and
management services segment provides disposal brokerage and management services
for both hazardous and nonhazardous waste.  Other businesses include the
operation of a public golf course and related operations.

Performance in 1999 compared with 1998


Overall performance.  Net operating revenues increased 8.5% to $80.9 million in
1999 from $74.5 million in 1998.  The increase is primarily the result of a 7.4%
increase in the net operating revenues of the transportation services segment, a
14.5% increase in the net operating revenues of the technical environmental
services segment and a 28.4% increase in the net operating revenues of the waste
disposal brokerage and management services segment partially offset by a
decrease in the net operating revenues of the other business segment, which
includes the golf course and related facilities.  The golf course was closed
August 2, 1999 to begin capital improvements.  Cost of operations as a
percentage of net operating revenues decreased to 85.8% in 1999 compared with
87.4% in 1998.  The decrease is primarily the result of lower cost of operations
as a percentage of net operating revenues of the technical environmental
services segment.  Selling, general and administrative expenses increased to
$10.5 million in 1999 compared with $10 million in 1998.  Such increase was
primarily attributable to additional expenses resulting from operating as an
independent company subsequent to the Spin-off for the entire year of 1999.
Interest income increased to $1.1 million in 1999 compared with $.7 million in
1998 primarily as a result of higher average cash  and cash equivalent balances
for the entire year of 1999.  The Company recorded net income of $1.2 million in
1999 compared with a net loss of $.6 million in 1998.

Segment performance.  Segment performance should be read in conjunction with
Note 11 to the Consolidated Financial Statements.

  Net operating revenues of the transportation services segment increased 7.4%
to $40.1 million in 1999 from $37.3 million in 1998.  The increase in net
operating revenues is primarily attributable to an increase in the
transportation of municipal solid waste and hazardous waste, partially offset by
a decrease in the transportation of general commodities.  Income before taxes of
the transportation services segment increased to $2.3 million in 1999

                                                                               3
<PAGE>

compared with $1.6 million in 1998. Such increase is primarily attributable to
increased net operating revenues and a reduction in operating costs of
approximately $.6 million resulting from the Company reducing its accrued
liability associated with anticipated remediation costs of a hazardous waste
facility partially offset by higher fuel costs and increased rental expense of
transportation equipment. Income before taxes for 1998 included a write-down of
certain assets to be disposed of in the amount of approximately $.5 million
partially offset by a one-time rebate of workers compensation premiums of $.4
million from the State of Ohio.

  Net operating revenues of the technical environmental services segment
increased 14.5% to $29 million in 1999 from $25.3 million in 1998.  The increase
in net operating revenues is primarily the result of increased net operating
revenues of remediation services and to a lesser extent increased net operating
revenues of engineering and consulting services, laboratory services, and
captive landfill management operations.  Income before taxes increased to $2
million in 1999 compared with a loss before taxes of $.1 million in 1998.  The
increase in income before taxes is primarily the result of improved operating
results of the remediation, engineering and consulting and captive landfill
management operations.  The loss before taxes for the technical environmental
services segment in 1998 included a write-down of certain assets to be disposed
of in the amount of $.1 million and a write-down of costs in excess of fair
market value of net assets of acquired businesses of $.4 million.

  Net operating revenues of the waste disposal brokerage and management services
segment increased 28.4% to $18.5 million in 1999 from $14.4 million in 1998.
The increase in net operating revenues is primarily the result of an increase in
the level of disposal brokerage and management services provided during the
first six months of 1999 as compared with the first six months of 1998 which
preceded the Spin-off.  Many customers, which had previously utilized the
nonhazardous waste disposal facilities owned by American Waste Service, Inc.,
elected to do business with the Company's waste disposal brokerage and
management operations after the Spin-off to ensure a continuation of the high
level of management services to which these customers had become accustomed.
The waste disposal brokerage and management services segment recorded income
before taxes of $1.4 million in 1999 compared with $1.3 in 1998.  The increase
is primarily the result of a reduction in operating costs of approximately $.3
million arising from the Company reaching a favorable agreement with a third
party vendor during the third quarter of 1999 concerning amounts previously
accrued by the Company for disposal and transportation services.  Excluding this
reduction in operating costs, income before taxes decreased primarily as a
result of significantly higher selling and administrative expenses.

  The Company's other businesses consist primarily of the operation of a public
golf course and related operations.  During the third quarter of 1999, the
Company closed the golf course to make significant capital improvements to the
course and related facilities.  As a result, net operating revenues for the
other businesses decreased to $2.4 million in 1999 compared with $3.6 million in
1998 and the other businesses incurred a loss before taxes of $.4 million in
1999 compared with income before taxes of $.4 million in 1998.  The Company
expects the golf course to resume operations during the third quarter of 2000.

Interest Income

Interest income increased to $1.1 million in 1999 compared with $.7 million in
1998, primarily because the cash resulting from the Spin-off was invested for
the full year of 1999 as compared with only six and a half months in the prior
year.

General Corporate Expenses

General corporate expenses were $4.1 million in 1999 compared with $4.2 million
in 1998.  General corporate expenses for 1999 were the actual expenses incurred
by the Company for such period, which includes all of the costs associated with
the corporate headquarters contributed to the Company by AWS and additional
expenses resulting from operating as an independent company subsequent to the
Spin-off.  General corporate expenses for 1998 included approximately $.9
million of corporate expenses which were allocated to the Company by AWS prior
to the Spin-off and a one-time charge of $1.4 million for additional
compensation and severance which was paid in the second quarter of 1998.

4
<PAGE>

Net Income

The Company recorded net income of $1.2 million in 1999 compared with a net loss
of $.6 million in 1998 primarily as a result of the foregoing.  The Company's
overall effective tax rate , including the effect of state income tax
provisions, was 44% in 1999.  In 1998, the Company recorded a provision for
income taxes instead of an income tax benefit even though the Company incurred a
loss before income taxes, primarily because of the nondeductibility for tax
purposes of the amortization and write-down of costs in excess of fair market
value of acquired businesses and other nondeductible items.  The effective tax
rate for the current and prior year period is higher than statutory rates
primarily due to state income taxes, the nondeductibility for tax purposes of
the amortization of costs in excess of fair market value of net assets of
acquired businesses, and other nondeductible expenses.

Performance in 1998 compared with 1997

Overall performance.  Net operating revenues were $74.5 million in 1998 compared
with $60.7 million in 1997. The increase is primarily attributable to increased
net operating revenues of the Company's waste disposal brokerage and management
operations and technical environmental services.  Costs of operations as a
percentage of net operating revenues decreased to approximately 87.4% in 1998
compared with approximately 89.8% in 1997.  In 1997, the technical environmental
services segment incurred significant charges relating to a remediation project
in Denver, Colorado while recognizing very little revenue.  As a result, costs
of operations as a percentage of net operating revenues for 1997 were higher
than historical levels.  During 1998, in accordance with the Company's asset
impairment policy and the Company's policy on long-lived assets to be disposed
of, the Company recorded charges of approximately $.4 million for the write-down
of costs in excess of fair market value of net assets of acquired businesses and
$.6 million for the write-down of assets.  Selling, general and administrative
expenses increased to $10.0 million in 1998 compared with $7.1 million in 1997.
Such increase was attributable to additional expenses resulting from operating
as an independent company subsequent to the Spin-off, including the costs
associated with the corporate headquarters and additional compensation expenses
including bonuses and severance payments, partially offset by a decrease in the
provision for losses on accounts receivable.  Other income in 1998 was primarily
the result of a one-time rebate of workers' compensation premiums from the State
of Ohio.  The Company incurred a net loss of $.6 million in 1998 compared with a
net loss of $.7 million in 1997.

Segment performance.  Segment performance should be read in conjunction with
Note 11 to the Consolidated Financial Statements.

  Net operating revenues of the transportation services segment increased 2.9%
to $37.3 million in 1998 from $36.3 million in 1997.  The increase in net
operating revenues is primarily attributable to increased transportation of
hazardous and nonhazardous waste, partially offset by a decrease in the
transportation of general commodities.  Income before taxes decreased to $1.6
million in 1998 compared with $2.1 million in 1997 primarily as a result of the
write-down of certain assets to be disposed of and an increase in rental expense
of power units and trailers, partially offset by decreased workers' compensation
expense resulting from a one-time rebate of premiums from the State of Ohio.
Excluding the effects of the write-down, income before taxes for 1998 would have
been $2.1 million.

  Net operating revenues of the technical environmental services segment
increased to $25.3 million in 1998 compared with $17 million in the prior year.
The increase in net operating revenues was primarily the result of an increase
in the level of engineering, consulting, remediation and laboratory services
provided.  The net operating revenues of the technical environmental services
segment for 1998 also included a full year of net operating revenues associated
with the management of a captive landfill which had commenced operations in the
fourth quarter of 1997.  The technical environmental services segment incurred a
loss before taxes of $.1 million in 1998 compared with a loss before taxes of
$2.6 million in 1997.  The loss before taxes of the technical environmental
services segment in 1998 includes the write-down of certain assets to be
disposed of in the amount of $.1 million and the write-down of costs in excess
of fair market value of net assets of acquired businesses in the amount of $.4
million.  Excluding the effects of these write-downs, the technical
environmental services segment would have had income before taxes of $.4 million
in 1998.  The decreased loss before taxes is primarily attributable to the
inclusion of a full year of operating income from the management of a captive
landfill and the increase in the level of business of the engineering and
consulting and laboratory services.  The remediation business continued to incur
operating

                                                                               5
<PAGE>

losses, although to a lesser extent than in the previous year. For the full year
of 1997, the technical environmental services segment incurred a significant
loss before taxes which was primarily attributable to losses incurred in
connection with a remediation project in Denver, Colorado as well as operating
inefficiencies and delays at other remediation sites. In December 1998, the
Company closed the technical environmental services office in Denver, Colorado
which had historically incurred operating losses.

  Net operating revenues of the waste disposal brokerage and management services
segment increased to $14.4 million in 1998 compared with $7 million in 1997.  A
significant portion of net operating revenues of the waste disposal brokerage
and management services segment was from customers which had previously utilized
the disposal facilities owned by AWS.  Subsequent to the Spin-off, these
customers elected to continue to do business with the Company's waste disposal
brokerage and management operations to ensure a continuation of the high level
of management services to which these customers had become accustomed.  The
waste disposal brokerage and management services segment recorded income before
taxes of $1.3 million in 1998 compared with $.9 million in 1997.  The increase
in income before taxes is primarily attributable to increased levels of
business.  Despite the significant increase in net operating revenues, income
before taxes did not increase proportionately, primarily because of increased
costs, including significantly higher selling and administrative expenses and,
to a lesser extent, as a result of reduced margins on the disposal of waste from
a certain remediation project.

Interest Expense

Interest expense declined to $45,000 in 1998 compared with $118,000 in 1997
primarily due to a reduction in the amount of principal outstanding.  During the
third and fourth quarters of 1998, the Company did not have any debt
outstanding.

Interest Income

Interest income increased to $.7 million in 1998 compared with $.1 million in
1997 primarily because of the additional cash resulting from the capital
contribution made by AWS in connection with the Spin-off.

General Corporate Expense

General corporate expenses were $4.2 million for 1998 compared with $1.7 million
for the prior year.  Avalon's general corporate expenses after the Spin-off were
significantly higher than the historical expenses allocated to Avalon prior to
the Spin-off.  General corporate expenses for 1998 reflect an allocation of a
portion of the general corporate expenses of AWS prior to the Spin-off and the
actual expenses incurred by the Company subsequent to the Spin-off.  General
corporate expenses for 1997 were based solely upon an allocation of a portion of
the general corporate expenses of AWS prior to the Spin-off.  The increase in
general corporate expenses for 1998 compared with 1997 is attributable to
additional compensation, including bonuses and severance expenses, the costs
associated with the corporate headquarters contributed to Avalon by AWS, and
additional expenses resulting from operating as an independent company
subsequent to the Spin-off.

Net Income (Loss)

The Company recorded a net loss of $.6 million in 1998 compared with a net loss
of $.7 million in 1997 primarily as a result of the foregoing.  The Company
recorded a provision for income taxes of $.2 million in 1998 compared to a
benefit for income taxes of $.1 million in 1997.  In 1998 the Company recorded a
provision for income taxes instead of an income tax benefit even though the
Company incurred a loss before income taxes, primarily because of the
nondeductibility for tax purposes of the amortization and write-down of costs in
excess of fair market value of net assets of acquired businesses and other
nondeductible items.  In 1997 the Company's overall effective income tax rate,
including the effect of state income tax provisions, was 17.2%.  The 1997
overall effective income tax rate was substantially lower than the statutory
income tax rates primarily as a result of permanent differences relating to the
amortization of certain intangibles as well as the inability to recognize net
operating loss benefits for state income tax purposes.

Trends and Uncertainties

In the ordinary course of conducting its business, Avalon becomes involved in
lawsuits, administrative proceedings and governmental investigations, including
those relating to environmental matters.  Some of these proceedings may

6
<PAGE>

result in fines, penalties or judgments being assessed against Avalon which,
from time to time, may have an impact on its business and financial condition.
Although the outcome of such lawsuits or other proceedings cannot be predicted
with certainty, the Company does not believe that any uninsured ultimate
liabilities, fines or penalties resulting from such pending proceedings,
individually or in the aggregate, would have a material adverse effect on it.

  The Company's significant information technology systems include its
accounting systems, the technical services project management systems, the
transportation services dispatch and operations management systems, and certain
equipment used to provide laboratory analyses.  The Company believes that each
of its significant computerized systems is Year 2000 compliant.  All upgrades
and replacements were completed during the third quarter of 1999 and the
associated costs of remediating any non-compliant system have not been material.
The Company has not experienced a failure of its systems, however, should a
failure occur, the Company does not believe that such failure will have a
material adverse effect upon the Company's business, results of operations or
financial condition.

  The federal government and numerous state and local governmental bodies are
increasingly considering, proposing or enacting legislation or regulation to
either restrict or impede the disposal and/or transportation of waste.  A
significant portion of Avalon's transportation and disposal brokerage and
management revenues is derived from the disposal or transportation of out-of-
state waste.  Any law or regulation restricting or impeding the transportation
of waste or the acceptance of out-of-state waste for disposal could have a
significant negative effect on Avalon.

  An increase in fuel prices may subject the transportation operations to
increased operating expenses, which the Company, in light of competitive market
conditions, may not be able to pass on to its customers. During the first
quarter of 2000, the Company's transportation operations experienced significant
increases in fuel prices, some of which the Company will not be able to pass on
to its customers.

  Competitive pressures within the environmental industry continue to impact the
financial performance of Avalon's transportation services, technical
environmental services and waste disposal brokerage and management services.  A
decline in the rates which customers are willing to pay for its services could
adversely impact the future financial performance of Avalon.

  The Company's waste disposal brokerage and management operations obtain and
retain customers by providing service and identifying cost-efficient disposal
options unique to a customer's needs.  Continued consolidation within the solid
waste industry has resulted in reducing the number of disposal options available
to waste generators and has caused disposal pricing to increase.  The Company
does not believe that pricing changes alone will have a material effect upon its
waste disposal brokerage and management operations.  However, consolidation will
have the effect of reducing the number of competitors offering disposal
alternatives to the Company, which may adversely impact the future financial
performance of the waste disposal brokerage and management operations.

  The Company's operations are somewhat seasonal in nature because a significant
portion of the operations are performed primarily in selected northeastern and
midwestern states.  As a result, the company's financial performance could be
adversely affected by winter weather conditions.

Market Risk

The Company does not have significant exposure to changing interest rates.  A
10% change in interest rates would have an immaterial effect on the Company's
pretax earnings for the next fiscal year.  The Company currently has no debt
outstanding and invests in short-term money market funds and other short-term
obligations.  The Company does not undertake any specific actions to cover its
exposure to interest rate risk and the Company is not a party to any interest
rate risk management transactions.

  The Company does not purchase or hold any derivative financial instruments.

                                                                               7
<PAGE>

Inflation Impact

The Company has not entered into any long-term fixed price contracts that could
have a material adverse impact upon its financial performance in periods of
inflation.  In general, management believes that rising costs resulting from
price inflation could be passed on to customers; however, the Company may need
to absorb all or a portion of these cost increases depending upon competitive
conditions at the time.  As is the case with any transportation company, an
increase in fuel prices may subject the transportation operations to increased
operating expenses, which the Company, in light of competitive market
conditions, may not be able to pass on to its customers.  During the first
quarter of 2000, the Company's transportation operations experienced significant
increases in fuel prices, some of which will not be able to pass on to its
customers.

Accounting Pronouncements

During 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments and for hedging activities. The Company is
required to adopt this statement, as amended by SFAS No. 137, on June 15, 2000.
While the Company has not yet determined the effects the statement will have on
its financial position or results of operations, it does not anticipate a
material impact.

8
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------


Consolidated Balance Sheets



   (in thousands, except for share data)
<TABLE>
<CAPTION>

                                                                                        December 31,
                                                                                  ----------------------
                                                                                     1999           1998
                                                                                   -------        -------
<S>                                                                               <C>            <C>
Assets (Note 1)
Current Assets:
  Cash and cash equivalents.....................................................  $18,726        $22,274
  Accounts receivable, less allowance for
     doubtful accounts of $790 in 1999 and $740 in 1998.........................   16,628         16,172
  Deferred income taxes (Note 5)................................................      403            316
  Prepaid expenses..............................................................    1,567          1,468
  Other current assets..........................................................      414            436
                                                                                  -------        -------

       Total current assets.....................................................   37,738         40,666

Property and equipment, net (Notes 3 and 4).....................................   26,165         23,300
Costs in excess of fair market value of net assets of acquired businesses, net
     (Note 3)...................................................................    2,324          2,473
Other assets, net...............................................................      177            246
                                                                                  -------        -------

             Total assets.......................................................  $66,404        $66,685
                                                                                  =======        =======
Liabilities and Shareholders' Equity (Note 1)
Current Liabilities:
  Accounts payable..............................................................  $ 6,001        $ 6,279
  Accrued payroll and other compensation........................................    1,833          1,242
  Accrued income taxes..........................................................      618          1,078
  Other accrued taxes...........................................................      720            922
  Other liabilities and accrued expenses (Notes 1 and 6)........................    1,597          2,172
                                                                                  -------        -------

         Total current liabilities..............................................   10,769         11,693

Deferred income taxes (Note 5)..................................................    1,354          1,209
Other noncurrent liabilities (Note 9)...........................................      120            845

Contingencies and Commitments (Notes 9 and 10)..................................       --             --

Shareholders' Equity (Note 8):
  Class A Common Stock, $0.01 par value, one vote per share; authorized
     10,500,000 shares, issued 3,185,240 shares at December 31, 1999 and
     3,175,944 shares at December 31, 1998......................................       32             32
  Class B Common Stock, $.01 par value, ten votes per share; authorized
     1,000,000 shares; issued 618,091 shares at December 31, 1999 and
     627,387 shares at December 31, 1998........................................        6              6
  Paid in capital...............................................................   58,096         58,096
  Accumulated deficit...........................................................   (3,973)        (5,196)
                                                                                  -------        -------

      Total shareholders' equity................................................   54,161         52,938
                                                                                  -------        -------

      Total liabilities and shareholders' equity................................  $66,404        $66,685
                                                                                  =======        =======
</TABLE>

  See accompanying notes to consolidated financial statements.

                                                                               9
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------

Consolidated Statements of Operations

  (in thousands, except for per share amounts)

<TABLE>
<CAPTION>

                                                                        Year Ended December 31,
                                                                      ----------------------------
                                                                        1999      1998      1997
                                                                      --------  --------  --------
<S>                                                                   <C>       <C>       <C>
Net operating revenues..............................................  $80,860   $74,495   $60,687

Cost and expenses:
  Costs of operations...............................................   69,349    65,119    54,484
  Write-down of assets (Note 3).....................................       --       599        --
  Write-down of costs in excess of fair market value of net assets
     of acquired businesses (Note 3)................................       --       377        --
  Selling, general and administrative expenses......................   10,519     9,951     7,144
                                                                      -------   -------   -------
Income (loss) from operations.......................................      992    (1,551)     (941)

Other income (expense):
  Interest expense..................................................       (2)      (45)     (118)
  Interest income...................................................    1,073       667        84
  Other income, net.................................................      138       465       171
                                                                      -------   -------   -------
Income (loss) before income taxes...................................    2,201      (464)     (804)

Provision (benefit) for income taxes (Note 5):
  Current...........................................................      920       745       (46)
  Deferred..........................................................       58      (562)      (92)
                                                                      -------   -------   -------
                                                                          978       183      (138)
                                                                      -------   -------   -------

Net income (loss)...................................................  $ 1,223   $  (647)  $  (666)
                                                                      -------   -------   -------
Net income and pro forma net (loss) per share (*) (Note 2)..........     $.32     $(.17)    $(.26)
                                                                      -------   -------   -------
Weighted average shares outstanding (*).............................    3,803     3,803     3,803
                                                                      -------   -------   -------
</TABLE>

(*)  In accordance with the Securities and Exchange Commission regulations, pro
     forma per share data has been presented for 1998, the year in which the
     Spin-off occurred, and the preceding year. For purposes of determining the
     pro forma per share data, all of the Company's common stock issued as a
     result of the Spin-off is deemed to have been outstanding since the
     beginning of 1997.


See accompanying notes to consolidated financial statements.

10
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------

Consolidated Statements of Cash Flows


(in thousands)

<TABLE>
<CAPTION>

                                                                                                     Year Ended December 31,
                                                                                           ---------------------------------------

                                                                                              1999             1998          1997
                                                                                           ---------------------------------------

<S>                                                                                        <C>               <C>           <C>
Operating activities
  Net income (loss).......................................................................  $ 1,223          $  (647)      $  (666)
  Reconciliation of net income (loss) to cash provided by
     operating activities:
     Depreciation.........................................................................    2,739            2,401         2,140
     Amortization.........................................................................      223              221           187
     Write-down of assets.................................................................       --              599            --
     Write-down of costs in excess of fair market value of net
        assets of acquired businesses.....................................................       --              377            --
     Provision for deferred income taxes..................................................       58             (562)          (92)
     Provision for losses on accounts receivable..........................................      231              326           808
     (Gain) loss from disposal of property and equipment..................................      (10)              11           (89)
     Change in operating assets and liabilities:
       Accounts receivable................................................................     (687)          (3,083)         (501)
       Refundable income taxes............................................................       --              105          (105)
       Prepaid expenses...................................................................      (99)            (785)          712
       Other current assets...............................................................       22              133           (84)
       Other assets.......................................................................       (5)             (47)         (112)
       Accounts payable...................................................................     (278)           1,196           490
       Accrued payroll and other compensation.............................................      591              336           (73)
       Accrued income taxes...............................................................     (460)             358           (94)
       Other accrued taxes................................................................     (202)              75           125
       Other liabilities and accrued expenses.............................................     (575)             555           188
       Other noncurrent liabilities.......................................................     (725)             (11)          (85)
                                                                                           ---------------------------------------
         Net cash provided by operating activities........................................    2,046            1,558         2,749
                                                                                           ---------------------------------------
Investing activities:
  Capital expenditures....................................................................   (5,898)          (2,269)       (2,881)
  Proceeds from disposal of property and equipment........................................      304               83           325
                                                                                           ---------------------------------------
         Net cash used in investing activities............................................   (5,594)          (2,186)       (2,556)
                                                                                            ---------------------------------------
Financing activities:
  Capital contribution from AWS...........................................................       --           22,475            --
  Repayments of long-term debt............................................................       --           (1,236)         (305)
  Dividends paid to AWS...................................................................       --             (100)         (100)
                                                                                           ---------------------------------------
         Net cash provided by (used in) financing activities..............................       --           21,139          (405)
                                                                                           ---------------------------------------
Increase (decrease) in cash and cash equivalents..........................................   (3,548)          20,511          (212)
Cash and cash equivalents at beginning of year............................................   22,274            1,763         1,975
                                                                                           ---------------------------------------
Cash and cash equivalents at end of year..................................................  $18,726          $22,274       $ 1,763
                                                                                           =======================================
</TABLE>

For supplemental disclosures of cash flow information and non-cash investing
and financing activities, see Notes 1 and 5.

See accompanying notes to consolidated financial statements.

                                                                              11
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------


Consolidated Statements of Shareholders' Equity

  (in thousands)

<TABLE>
<CAPTION>


                                                                           For The Three Years Ended December 31, 1999
                                                          -------------------------------------------------------------------------

                                                               Shares            Common Stock    Combined
                                                          -----------------   -----------------  Capital    Paid-in    Accumulated
                                                          Class A   Class B   Class A   Class B  Accounts   Capital    Deficit
                                                          -------   -------   -------   -------  --------   --------   -----------
<S>                                                       <C>       <C>       <C>       <C>      <C>        <C>        <C>
Balance at January 1, 1997..............................       --        --   $    --   $    --  $ 37,596    $    --       $(3,883)

Dividend from subsidiary paid
   to American Waste Services,
   Inc. prior to the Spin-off...........................       --        --        --        --      (100)        --            --
Net loss................................................       --        --        --        --        --         --          (666)
                                                          -------   -------      ----   -------  --------   --------   -----------

Balance at December 31, 1997............................       --        --        --        --    37,496         --        (4,549)

Dividends from subsidiaries to
   American Waste Services, Inc.
   prior to the Spin-off................................       --        --        --        --      (259)        --            --

Issuance of the Avalon Holdings
   Corporation common stock
   and Spin-off of the Avalon
   Business from AWS....................................    3,176       627        32         6   (37,237)    37,199            --

Capital contribution from
   American Waste Services, Inc.
   (Note 1).............................................       --        --        --        --        --     20,897            --
Net loss................................................       --        --        --        --        --         --          (647)
                                                          -------   -------      ----   -------  --------   --------   -----------

Balance at December 31, 1998............................    3,176       627        32         6        --     58,096        (5,196)

Conversion of shares by
   shareholders.........................................        9        (9)       --        --        --         --            --

Net income..............................................       --        --        --        --        --         --         1,223
                                                          -------   -------      ----   -------  --------   --------   -----------

Balance at December 31, 1999............................    3,185       618      $ 32        $6  $     --    $58,096       $(3,973)
                                                          =======   =======      ====   =======  ========   ========   ===========
</TABLE>

See accompanying notes to consolidated financial statements.

12
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------



Notes to Consolidated Financial Statements

Note 1.  Description of the Business


Avalon Holdings Corporation provides transportation services, technical
environmental services, and waste disposal brokerage and management services to
industrial, commercial, municipal and governmental customers primarily in
selected northeastern and midwestern U.S. markets.  Avalon Holdings Corporation
also owns and operates a golf course and related facilities.

Avalon Holdings Corporation ("Avalon" or "Company") was formed on April 30, 1998
as a subsidiary of American Waste Services, Inc. ("AWS").  Pursuant to the terms
of a Contribution and Distribution Agreement dated as of May 7, 1998 between
Avalon and AWS, AWS contributed to Avalon its transportation operations,
technical environmental services operations, waste disposal brokerage and
management operations, and golf course and related operations together with
certain other assets including the headquarters of AWS and certain accounts
receivable.  In connection with the contribution, Avalon assumed certain
liabilities of AWS including, without limitation, liabilities relating to the
termination of employment of certain employees of AWS and costs and potential
liabilities relating to a certain legal proceeding.  On June 17, 1998 AWS
distributed, as a special dividend, all of the outstanding shares of capital
stock of Avalon to the holders of AWS common stock on a pro rata and
corresponding basis (the "Spin-off").

The assets and liabilities of AWS contributed to and assumed by Avalon pursuant
to the Contribution Agreement and Merger Agreement were as follows (in
thousands):
<TABLE>
<CAPTION>


Assets contributed:
<S>                                         <C>
 Cash.....................................  $ 4,974
 Accounts receivable......................       69
 Accounts receivable -- AWS subsidiaries..   15,965
 Deferred income taxes....................        8
 Prepaid expenses.........................      275
 Properties, net..........................    5,100
 Notes receivable -- AWS subsidiaries.....    1,536
 Other assets.............................       15
                                            -------
   Total assets contributed...............  $27,942
                                            =======
Liabilities assumed:
 Accounts payable.........................  $   298
 Accounts payable -- Avalon subsidiaries..    5,688
 Other current liabilities................      764
 Deferred income taxes....................      295
                                            -------
  Total liabilities assumed...............    7,045
                                            -------
   Net assets contributed.................  $20,897
                                            =======
</TABLE>


The net assets contributed were recorded as a paid-in capital contribution.

The Accounts receivable-AWS subsidiaries and Notes receivable-AWS subsidiaries
were paid to Avalon prior to the Spin-off.  These funds, together with the cash
contributed by AWS of approximately $5 million, are reflected in the financing
activities of the Consolidated Statements of Cash Flows, under the caption
"Capital contribution from AWS."

The financial information of Avalon for all periods presented prior to June 18,
1998 reflect the operation of the businesses of the Company while operating as
subsidiaries of American Waste Services, Inc.

Note 2.  Summary of Significant Accounting Policies

The significant accounting policies of Avalon  which are summarized below are
consistent with generally accepted accounting principles and reflect practices
appropriate to the businesses in which they operate.  The preparation of
financial statements in conformity with generally accepted accounting principles
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.

Principles of consolidation

The consolidated financial statements include the accounts of the Company
including all wholly owned subsidiaries.  All significant intercompany accounts
and transactions have been eliminated in consolidation.  The financial
information of Avalon for all periods presented prior to June 18, 1998 reflect
the combined operations of the businesses of the Company while operating as
subsidiaries of American Waste Services, Inc.


Cash and cash equivalents

Cash and cash equivalents include money market instruments and other highly
liquid investments that

                                                                              13
<PAGE>

are stated at cost which approximates market value. Such investments, which
mature in three months or less from date of purchase, are considered to be cash
equivalents for purposes of the Consolidated Statements of Cash Flows and
Consolidated Balance Sheets. The balance of such short-term investments was
$18,166,000 and $21,577,000 at December 31, 1999 and 1998, respectively and were
not insured by the Federal Deposit Insurance Corporation.

The Company maintains its cash balances in several financial institutions, which
at times, may exceed federal insured limits.  The Company has not experienced
any losses in such accounts and believes it is not exposed to any significant
credit risk relating to cash and cash equivalents.

Financial instruments

The fair value of financial instruments consisting of cash, cash equivalents,
receivables, and accounts payable at December 31, 1999 and 1998, approximates
carrying value due to the relative short maturity of these financial
instruments.


Property and equipment

All property and equipment, other than property and equipment subject to a plan
of disposal, is stated at cost and depreciated using the straight-line method
over the estimated useful life of the asset which varies from 10 to 20 years for
land improvements; 5 to 50 years in the case of buildings and improvements; and
from 3 to 10 years for machinery and equipment, transportation equipment and
vehicles, and office furniture and equipment.


Major additions and improvements are charged to the property and equipment
accounts while replacements, maintenance and repairs which do not improve or
extend the life of the respective asset are expensed currently.  The cost of
assets retired or otherwise disposed of and the related accumulated depreciation
is eliminated from the accounts in the year of disposal.  Gains or losses
resulting from disposals of property and equipment are credited or charged to
operations currently.  Interest costs are capitalized on significant projects of
development or expansion and other construction.

Costs in excess of fair market value of net assets
of acquired businesses

The costs in excess of fair market value of net assets of acquired businesses is
amortized on a straight-line basis over 25 years.  Amortization of these costs
was $149,000 in 1999 and $172,000 in 1998 and 1997.  Accumulated amortization at
December 31, 1999 and 1998 was $4,946,000 and $4,797,000, respectively.  During
the fourth quarter of 1998, in accordance with the Company's asset impairment
policy, a portion of the costs in excess of fair market value of net assets of
acquired businesses was written off (see Note 3).


Income taxes

Income taxes are accounted for under the asset and liability method.  Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards.  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.  The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

Prior to the Spin-off, the Company's operations were included in the
consolidated federal and state income tax returns of AWS.  For all periods
presented, the income tax provisions and tax liabilities of the Company have
been recorded as if the Company had been a stand-alone entity filing separate
tax returns


Revenue recognition

The Company recognizes revenue for transportation services on the date of
delivery.  Revenue for waste disposal brokerage and management services and
technical environmental services, excluding laboratory services, is recognized
as services are performed, while revenue for laboratory services is recognized
when the service is completed.  On contracts where the percentage-of-completion
method is used, revenue is recognized for a portion of the total contract
revenue, in the proportion that costs incurred bear to management's estimate of
total contract costs to be incurred, commencing when progress reaches a point
where experience is sufficient to estimate final results with reasonable
accuracy. Earnings and costs on contracts are subject to revision throughout the
term of the contract, and any required revisions are made in the periods in
which revisions become known.  Provision is made

14
<PAGE>

for the full amount of anticipated losses in the period in which they are
determinable.

Costs and estimated earnings in excess of billings on uncompleted
contracts represent revenues recognized on contracts for which billings will be
presented in accordance with contract provisions. Such revenues are generally
expected to be billed and collected within one year.

Asset impairments

The Company periodically reviews the carrying value of certain of its assets in
relation to historical results, current business conditions and trends to
identify potential situations in which the carrying value of assets may not be
recoverable.  If such reviews indicate that the carrying value of such assets
may not be recoverable, the Company would estimate the undiscounted sum of the
expected future cash flows of such assets to determine if such sum is less than
the carrying value of such assets to ascertain if an impairment exists.  If an
impairment exists, the Company would determine the fair value by using quoted
market prices, if available, for such assets; or if quoted market prices are not
available, the Company would discount the expected future cash flows of such
assets.


Environmental liabilities

When the Company concludes that it is probable that a liability has been
incurred with respect to a site, a provision is made in the Company financial
statements for the Company's best estimate of the liability based on
management's judgment and experience, information available from regulatory
agencies, and the number, financial resources and relative degree of
responsibility of other potentially responsible parties who are jointly and
severally liable for remediation of that site as well as the typical allocation
of costs among such parties.  If a range of possible outcomes is estimated and
no amount within the range appears to be a better estimate than any other, then
the Company provides for the minimum amount within the range, in accordance with
generally accepted accounting principles.  The liability is recognized on an
undiscounted basis.  The Company's estimates are revised, as deemed necessary,
as additional information becomes known.



Basic net income per share and pro forma net (loss) per share

For the year ended December 31, 1999 basic net income per share has been
computed using the weighted average number of common shares outstanding which
was 3,803,331.  For purposes of determining the pro forma net (loss) per share
data for the years ended December 31, 1998 and 1997, all of the Company's common
stock issued as a result of the Spin-off is deemed to have been outstanding
since the beginning of 1997. As such, the weighted average number of shares
outstanding for 1998 and 1997 is 3,803,331. There were no common equivalent
shares outstanding and therefore diluted per share amounts are equal to basic
per share amounts for 1999, 1998 and 1997.

Pro forma adjustments for 1997 have been made to (i) eliminate the results of
operations of Eagle Fidelity Insurance Company, a subsidiary of AWS contributed
to Avalon, the sole function of which was to provide insurance to the AWS
landfill subsidiaries, and (ii) reflect a tax adjustment due to the inability of
Avalon to carry back a net operating loss.  The total amount of these pro forma
adjustments is $341,000, thereby increasing the net loss in 1997.  No pro forma
adjustments were made in 1998 because the adjustments were immaterial.

Comprehensive income

Comprehensive income equals net income for all years presented.

Selling, general and administrative expense

Certain selling, general and administrative expenses were allocated to the
Company from AWS prior to the Spin-off.  The amount allocated to Avalon from AWS
from January 1, 1998 to June 17, 1998 amounted to $867,000.  The amounts
allocated to Avalon from AWS for the full year of 1997 was $1,709,000.  These
costs represent costs of AWS allocated to the Company and are not necessarily
representative of what these costs would have been if the Company had been
operating on an independent basis.

                                                                              15
<PAGE>

Note 3.  Long-lived Asset Impairments

During the fourth quarter of 1998, the remediation business of the Company's
technical environmental services operations continued to experience operating
losses.  As a result, the Company has changed the focus of its remediation
business from larger projects to smaller projects and to providing support to
the Company's other environmental services.  In accordance with the Company's
asset impairment policy, the Company performed an evaluation of the costs in
excess of fair market value of net assets of businesses acquired ("goodwill") of
the remediation business to determine if the carrying value of such asset was
recoverable.

In accordance with the Company's asset impairment policy, to ascertain whether
an impairment existed, the Company estimated the undiscounted sum of the
expected future after-tax cash flows of the remediation business, excluding
amortization of goodwill, to determine if such sum was less than the carrying
value of the goodwill, which had a remaining life of 17 years.  The evaluation
indicated the existence of an impairment.

As a result of the existence of an impairment, in determining the fair value of
the goodwill, the Company concluded that the remediation business could not be
sold for more than the carrying value of its property and equipment.  Therefore,
the Company recorded a write-down of the goodwill in the amount of $377,000 in
the fourth quarter of 1998.  The write-down is included in the Consolidated
Statements of Operations under the caption "Write-down of costs in excess of
fair market value of net assets of acquired businesses."

In addition, as a result of the change in focus to smaller remediation projects,
the management of the remediation business decided during the fourth quarter of
1998 to sell a piece of equipment which had been utilized solely on large
remediation projects.  In accordance with the Company's asset impairment policy,
the Company recorded a write-down of $100,000 in the fourth quarter of 1998 to
reflect the fair value of this asset.  This write-down is included in the
Consolidated Statements of Operations under the caption "Write-down of assets."


The carrying value of such assets was approximately $100,000 at December 31,
1998 and was included in the Consolidated Balance Sheets under the caption
"Property and Equipment, Net."  The asset was sold in 1999 for approximately
$103,000.  During the fourth quarter of 1998, he Company also committed to a
plan to dispose of certain assets of the transportation operations which
resulted in the write-down of such assets in accordance with the Company's asset
impairment policy.  Prior to the Spin-off, the Company used special containers
designed primarily for hauling waste over long distances to an affiliated
disposal facility which owned special equipment necessary to unload these
specialized containers.  As a result of  the transportation operation's
decreased utilization of  these containers subsequent to the Spin-off and the
fact that the disposal facility which owns the unloading equipment is no longer
affiliated with the Company, management of the transportation operations decided
during the fourth quarter of 1998 to discontinue utilizing these special
containers and  to sell or dispose of them.  In accordance with the Company's
asset impairment policy, the Company, therefore, recorded a write-down of
$499,000 in the fourth quarter of 1998 to reflect the fair value of these
assets.  The write-down is included in the Consolidated Statements of Operations
for the year ended December 31, 1998 under the caption "Write-down of assets."

The carrying value of such assets at December 31, 1999 is approximately $40,000
and is included in the Consolidated Balance Sheets under the caption "Property
and Equipment, Net."  These assets are being held for sale.


Note 4.  Property and Equipment

Property and equipment at December 31, 1999  and 1998 consists of the following
(in thousands):
<TABLE>
<CAPTION>
                                       1999       1998
                                     ---------  ---------
<S>                                  <C>        <C>
Land and land improvements.........  $  3,885   $  4,180
Buildings and improvements.........    13,610     13,431
Machinery and equipment............     5,118      4,859
Transportation equipment and
         vehicles..................    12,992     11,722
Office furniture and equipment.....     4,777      4,416
Construction in progress...........     2,427         18
                                     --------   --------
                                       42,809     38,626
Less accumulated depreciation and
      amortization.................   (16,644)   (15,326)
                                     --------   --------
Property and equipment, net........  $ 26,165   $ 23,300
                                     ========   ========
</TABLE>
Construction in progress at December 31, 1999 includes $2,420,000 relating to
capital improvements to the golf course.

16
<PAGE>

Note 5.  Income Taxes

Prior to the Spin-off, the Company's operations were included in the
consolidated federal and state income tax returns of AWS.  For all periods
presented, the income tax provisions and tax liabilities of the Company have
been recorded as if the Company had been a stand-alone entity filing separate
tax returns.

Income (loss) before income taxes for each of the three years ended December 31,
1999 was subject to taxation under United States jurisdictions only.

The provisions (benefits) for income taxes charged to operations consist of the
following (in thousands):
<TABLE>
<CAPTION>
             1999    1998    1997
             -----  ------  -------
Current:
<S>          <C>    <C>     <C>
Federal....  $ 835  $ 701    $(105)
State......     85     44       59
             -----  -----    -----
               920    745      (46)
             -----  -----    -----
Deferred:
Federal....     34   (527)     (70)
State......     24    (35)     (22)
             -----  -----    -----
                58   (562)     (92)
             -----  -----    -----
             $ 978  $ 183    $(138)
             =====  =====    =====
</TABLE>

The tax effects of temporary differences that give rise to significant portions
of the deferred tax (assets) liabilities at December 31, 1999 and 1998 are as
follows (in thousands):

<TABLE>
<CAPTION>

                                            1999      1998
                                           -------  --------
<S>                                        <C>      <C>
Deferred tax assets:
Accounts receivable, principally due
 to allowance for doubtful accounts......  $ (288)  $  (266)
Reserves not deductible until paid.......    (312)     (611)
State net operating loss carry-forwards..     (89)     (111)
Other....................................     (50)      (14)
                                           ------   -------
Gross deferred tax assets................    (739)   (1,002)
Less valuation allowance.................      35        75
                                           ------   -------
Net deferred tax assets..................  $ (704)  $  (927)
                                           ======   =======

Deferred tax liabilities:
Property and equipment...................  $1,651   $ 1,578
Other....................................       4       242
                                           ------   -------
Gross deferred tax liabilities...........   1,655     1,820
                                           ------   -------
Net deferred tax liability...............  $  951   $   893
                                           ======   =======
</TABLE>



The provision (benefit) for income taxes differs from the amount of income tax
determined by applying the applicable U.S. statutory federal income tax rate to
income (loss) before income taxes as a result of the following differences (in
thousands):

<TABLE>
<CAPTION>

                                1999     1998    1997
                               -------  ------  ------
<S>                            <C>      <C>     <C>
Income (loss) before income
taxes                          $2,201   $(464)  $(804)
Federal statutory tax rate         35%     35%     35%
                               ------   -----   -----
                                  770    (162)   (281)
State income taxes, net
of federal income tax
benefits.....................      71       6      24
Nondeductible amortization
and depreciation.............      51     187      60
Other nondeductible
expenses.....................     119     132      54
Other, net...................     (33)     20       5
                               ------   -----   -----
                               $  978   $ 183   $(138)
                               ======   =====   =====
</TABLE>

The Company made income tax payments, net of refunds, of $1,376,000, $109,000
and $82,000 in 1999, 1998 and 1997, respectively.


Note 6.  Retirement Benefits

The Company sponsors a defined contribution profit sharing plan that is a
qualified tax deferred benefit plan under Section 401(k) of the Internal Revenue
Code (the "Plan").  Substantially all employees are eligible to participate in
the Plan.  The Plan provides for employer discretionary cash contributions
determined by Avalon's Board of Directors.  Discretionary contributions vest on
a graduated basis and become 100% vested after six years of service.  Plan
participants may also contribute a portion of their annual compensation to the
Plan, subject to maximums imposed by the Internal Revenue Code and related
regulations.  Costs charged to operations for the Company's contributions were
$588,000, $604,000 and $363,000 for the years 1999, 1998 and 1997, respectively.
The liability for the Company contribution is included in the Consolidated
Balance Sheets under the caption "Other liabilities and accrued expenses."

                                                                              17
<PAGE>

Note 7. Stock Option Plan

Effective July 1, 1998, the Company adopted the 1998 Long-term Incentive Plan
which provides for the granting of options which are intended to be non-
qualified stock options ("NQSO's") for federal income tax purposes except for
those options designated as incentive stock options ("ISO's") which qualify
under section 422 of the Internal Revenue Code.  The Company has reserved
1,300,000 shares of Class A Common Stock for issuance to employees and non-
employee directors.  NQSO's may be granted with an exercise price which is not
less than 85% of the fair market value of the Class A Common Stock on the date
of grant.  Options designated as ISO's shall not be less than 110% of fair
market value for employees who are ten percent shareholders and not less than
100% of fair market value for other employees.  The Board of Directors may, from
time to time, in its discretion grant options to one or more outside directors,
subject to such terms and conditions as the Board of Directors may determine,
provided that such terms and conditions are not inconsistent with other
applicable provisions of the 1998 Long-term Incentive Plan.  Options shall have
a term of no longer that ten years from the date of grant; except that for an
option designated as an ISO which is granted to a ten percent shareholder, the
option shall have a term no longer than five years.

No option shall be exercisable prior to one year after its grant, unless
otherwise provided by the Option Committee of the Board of Directors (but in no
event before 6 months after its grant), and thereafter options shall become
exercisable in installments, if any, as provided by the Option Committee.
Options must be exercised for full shares of Common Stock.  To the extent that
options are not exercised when they become initially exercisable, they shall be
carried forward and be exercisable until the expiration of the term of such
options.

To date, no options have been granted under the 1998 Long-term Incentive Plan.



Note 8. Shareholders' Equity

Each share of Class A Common Stock is entitled to one vote and each share of
Class B Common Stock is entitled to ten votes on all matters submitted to a vote
of the shareholders.  Except for the election of the Company's Board of
Directors, the Class A Common Stock and the Class B Common Stock vote together
as a single class on all matters presented for a vote of the shareholders.
However, with regard to the election of directors, for as long as the
outstanding Class B Common Stock has more than 50% of the total outstanding
voting power of all Common Stock,  the holders of the Class A Common Stock,
voting as a separate class, will elect the a number of directors equal to at
least 25% of the total Board of Directors and the holders of the Class B Common
Stock, voting as a separate class, will elect the remaining directors.
Thereafter, the holders of the Class A and Class B Common Stock will vote
together as a single class for the election of directors.  The holders of a
majority of all outstanding shares of Class A Common Stock or Class B Common
Stock, voting as separate classes, must also approve amendments to the Articles
of Incorporation that adversely affect the shares of their class.  Shares of
Class A Common Stock and Class B Common Stock do not have cumulative voting
rights.

  Each share of Class B Common Stock is convertible, at any time, at the option
of the shareholder, into one share of Class A Common Stock.  Shares of Class B
Common Stock are also automatically converted into shares of Class A Common
Stock on the transfer of such shares to any person other than the Company,
another holder of Class B Common Stock or a Permitted Transferee, as defined in
the Company's Articles of Incorporation.  The Class A Common Stock is not
convertible.

18
<PAGE>

Note 9.  Legal Matters

In September 1995, certain subsidiaries of the Company were informed that they
had been identified as potentially responsible parties by the Indiana Department
of Environmental Management with respect to a Fulton County, Indiana, hazardous
waste disposal facility which is subject to remedial action under Indiana
Environmental Laws.  Such identification was based upon the subsidiaries having
been involved in the transportation of hazardous substances to the facility.  A
large number of waste generators and other waste transportation and disposal
companies have also been identified as responsible or potentially responsible
parties with respect to this facility. Although the extent of any ultimate
liability of any of the Company's subsidiaries is unknown, as a result of the
Company obtaining additional information the Company reduced its accrued
liability by $445,000 in the third quarter of 1999.

  During the fourth quarter of 1999, the Company became a party to an Agreed
Order and a Participation Agreement regarding the remediation of a portion of
the site.  The Participation Agreement provides for, among other things, the
allocation of all site remediation costs except for approximately $3 million.
The Company's total liability for the allocated costs under the Participation
Agreement was approximately $73,000.  During the fourth quarter of 1999, the
Company further reduced its estimated accrued liability by $187,000.  The
Company paid $54,000 in the fourth quarter of 1999 and the remaining $19,000 is
included in the 1999 Consolidated Balance Sheet under the caption "Other
liabilities and accrued expenses."

The additional unallocated site remediation costs are currently estimated to be
approximately $3 million.  The extent of any ultimate liability of any of the
Company's subsidiaries with respect to these additional costs is unknown;
however, the Company's allocable share of these site costs is currently
estimated  to be 4%.  As a result, the Company's total accrued liability
relating to the remediation of this site on an undiscounted basis is $139,000,
$120,000 of which is included in the 1999 Consolidated Balance Sheet under the
caption "Other noncurrent liabilities."  The Company's ultimate liability is
expected to be determined during the year 2000.

In the ordinary course of conducting its business, Avalon also becomes involved
in lawsuits, administrative proceedings and governmental investigations,
including those relating to the environmental matters.  Some of these
proceedings may result in fines, penalties or judgments being assessed against
Avalon which, from time to time, may have an impact on its business and
financial condition.  Although the outcome of such lawsuits or other proceedings
cannot be predicted with certainty, the Company does not believe that any
uninsured ultimate liabilities, fines or penalties resulting from such pending
proceedings, individually or in the aggregate, would have a material adverse
effect on it.

Note 10.  Lease Commitments

Avalon leases certain office facilities, vehicles, machinery and equipment.
Future commitments under long-term, noncancellable operating leases at December
31, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>

Year ending December 31,
--------------------------
<S>                         <C>
2000......................  $   2,552
2001......................      2,591
2002......................      2,281
2003......................      2,134
2004......................      1,744
After 2004................      2,458
                            ---------
                            $  13,760
                            =========

</TABLE>

Rental expense included in the Consolidated Statements of Operations amounted to
$3,593,000 in 1999, $2,800,000 in 1998, and $1,724,000 in 1997. Periodically,
the Company's transportation operations rents additional transportation
equipment on a short term basis in order to meet its hauling obligations.

                                                                              19
<PAGE>

Note 11.  Business Segment Information

Effective for the year ended December 31, 1998, the Company adopted Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information," requiring that companies disclose segment
data based on how management makes resource allocation decisions and evaluates
segment operating performance.

In applying the Statement, the Company considered its operating and management
structure and the types of information subject to regular review by its "chief
operating decision maker."  On this basis, the Company's reportable segments
include transportation services, technical environmental services, and waste
disposal brokerage and management services.  The Company accounts for
intersegment net operating revenue as if the transactions were to third parties.
The segment disclosures are presented on this basis for all years presented.

Avalon's primary business segment provides transportation services that include
transportation of hazardous and nonhazardous waste as well as general and bulk
commodities.  The technical environmental services segment provides
environmental consulting, engineering, site assessments, analytical laboratory,
remediation services and operates and manages a captive landfill for an
industrial customer. The waste disposal brokerage and management services
segment provides disposal brokerage and management services for both hazardous
and nonhazardous waste.  Other businesses include the operation of a public golf
course and related operations.  Avalon does not have significant operations
located outside the United States and, accordingly, geographical segment
information is not presented.



Prior to the Spin-off, the transportation services segment obtained
approximately $2.4 million, and $5 million of its net operating revenue from
AWS's landfill subsidiaries in 1998 and 1997, respectively.  The other Avalon
segments did not have significant transactions with the AWS landfill
subsidiaries in 1998 or 1997.


The accounting policies of the segments are consistent with those described for
the consolidated financial statements in the summary of significant accounting
policies (see Note 2).  The Company measures segment profit for internal
reporting purposes as income (loss) before taxes.  Business segment information
including the reconciliation of segment income to consolidated income (loss)
before taxes is as follows (in thousands):

20
<PAGE>

<TABLE>
<CAPTION>

                                       1999      1998      1997
                                     --------  --------  --------
<S>                                  <C>       <C>       <C>

Net operating revenues from:
Transportation services:
   External customers revenues.....  $34,607   $33,105   $33,901
   Intersegment revenues...........    5,483     4,215     2,372
                                     -------   -------   -------
   Total transportation services...   40,090    37,320    36,273
                                     -------   -------   -------
Technical environmental services:
   External customers revenues.....   28,871    25,192    16,922
   Intersegment revenues...........      124       134       103
                                     -------   -------   -------
   Total technical environmental
     services......................   28,995    25,326    17,025
                                     -------   -------   -------

Waste disposal brokerage and
management:
   External customers revenues.....   15,302    12,900     6,547
   Intersegment revenues...........    3,231     1,534       493
                                     -------   -------   -------
   Total waste disposal brokerage
     and management services.......   18,533    14,434     7,040
                                     -------   -------   -------

Other businesses:
   External customers revenues.....    2,080     3,298     3,317
   Intersegment revenues...........      293       286       201
                                     -------   -------   -------
   Total other businesses..........    2,373     3,584     3,518
                                     -------   -------   -------
   Segment operating revenues......   89,991    80,664    63,856
   Intersegment eliminations.......   (9,131)   (6,169)   (3,169)
                                     -------   -------   -------
   Total net operating revenues....  $80,860   $74,495   $60,687
                                     -------   -------   -------

Income (loss) before taxes:
   Transportation services.........  $ 2,334   $ 1,575   $ 2,084
   Technical environmental
     services......................    1,991      (115)   (2,594)
   Waste disposal brokerage and
     management services...........    1,369     1,282       908
   Other businesses................     (357)      361       501
                                     -------   -------   -------
   Segment income before taxes.....    5,337     3,103       899
   Corporate interest income.......      944       557        --
   Corporate other income, net.....        2        35         6
   General corporate expenses......   (4,082)   (4,159)   (1,709)
                                     -------   -------   -------
   Income (loss) before taxes......  $ 2,201   $  (464)  $  (804)
                                     -------   -------   -------

Depreciation and amortization:
   Transportation services.........  $ 1,459   $ 1,294   $ 1,245
   Technical environmental
     services......................    1,076       961       830
   Waste disposal brokerage and
     management services...........       --        --        --
   Other businesses................      231       273       252
   Corporate.......................      196        94        --
                                     -------   -------   -------
        Total......................  $ 2,962   $ 2,622   $ 2,327
                                     -------   -------   -------

</TABLE>



<TABLE>
<CAPTION>


                                         1999      1998      1997
                                       --------  --------  --------
<S>                                    <C>       <C>       <C>

Interest expense:
   Transportation services...........  $    --   $     4   $    24
   Technical environmental
     services........................        2        --        --
   Waste disposal brokerage and
     management services.............       --        --        --
   Other business....................       --        41        94
                                       -------   -------   -------
        Total........................  $     2   $    45   $   118
                                       -------   -------   -------

Interest income:
   Transportation services...........  $    38   $    35   $    48
   Technical environmental
     services........................       41        40        15
   Waste disposal brokerage
     and management services.........       40        18         8
   Other business....................       10        17        13
   Corporate.........................      944       557        --
                                       -------   -------   -------
        Total........................  $ 1,073   $   667   $    84
                                       -------   -------   -------

Other significant noncash items:
   Write-down of assets..............
     Transportation services.........  $    --   $   499   $    --
     Technical environmental
       services......................       --       100        --
                                       -------   -------   -------
          Total......................  $    --   $   599   $    --
                                       -------   -------   -------

   Write-down of costs in excess
   of fair market value of net
   assets of businesses acquired:
     Technical environmental
       services......................  $    --   $   377   $    --
                                       -------   -------   -------

Capital expenditures:
   Transportation services...........  $ 2,593   $ 1,171   $ 1,352
   Technical environmental
     services........................      655       895     1,453
   Waste disposal brokerage and
     management services.............       --        --        --
   Other businesses..................    2,598        58        76
   Corporate.........................       52       145        --
                                       -------   -------   -------
       Total.........................  $ 5,898   $ 2,269   $ 2,881
                                       -------   -------   -------

Identifiable assets at December 31:
   Transportation services...........  $15,653   $17,288   $21,881
   Technical environmental
     services........................   16,652    17,954    18,412
   Waste disposal brokerage and
     management services.............    4,358     3,165     1,719
   Other businesses..................    8,257     5,969     5,161
   Corporate.........................   28,793    30,388     1,763
                                       -------   -------   -------
       Sub Total.....................  $73,713   $74,764   $48,936
   Elimination of intersegment
      receivables....................   (7,309)   (8,079)   (4,419)
                                       -------   -------   -------
        Total........................  $66,404   $66,685   $44,517
                                       =======   =======   =======
</TABLE>

                                                                              21
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------


Note 12.  Quarterly financial data (Unaudited)

Selected quarterly financial data for each quarter in 1999 and 1998 is as
follows:

<TABLE>
<CAPTION>

                                                      Year Ended December 31, 1999
                                             -----------------------------------------------
                                              First     Second    Third    Fourth
                                             Quarter   Quarter   Quarter  Quarter    Total
                                             --------  --------  -------  --------  --------
<S>                                          <C>       <C>       <C>      <C>       <C>
Net operating revenues.....................  $19,494   $19,542   $21,513  $20,311   $80,860
Income (loss) from operations..............     (169)      349       872      (60)      992
Net income.................................       66       365       612      180     1,223
Net income per share.......................  $   .02   $   .10   $   .16  $   .05   $   .32
                                             -----------------------------------------------
                                                       Year Ended December 31, 1998
                                             -------------------------------------------
                                              First     Second     Third    Fourth
                                             Quarter   Quarter   Quarter   Quarter   Total
                                             -------   -------   -------  -------   -------
<S>                                          <C>       <C>       <C>      <C>       <C>
Net operating revenues.....................  $15,811   $18,086   $21,204  $19,394   $74,495
Income (loss) from operations..............      186      (242)      500   (1,995)   (1,551)
Net income (loss)..........................       91       103       366   (1,207)     (647)
Pro forma net income (loss) per share (*)..  $   .02   $   .03   $   .10  $  (.32)  $  (.17)
                                             -----------------------------------------------
</TABLE>



(*)In accordance with the Securities and Exchange Commission regulations, pro
forma per share data has been presented for 1998, the year in which the Spin-off
occurred.  For purposes of determining the pro forma per share data, all of the
Company's common stock issued as a result of the Spin-off is deemed to have been
outstanding for all periods presented.

--------------------------------------------------------------------------------

Independent Auditors' Report

The Shareholders and Board of Directors of Avalon Holdings Corporation

We have audited the accompanying consolidated balance sheet of Avalon Holdings
Corporation and subsidiaries as of December 31, 1999 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the year then ended.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States.  Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement.  An audit includes examining, on a best basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audit provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Avalon Holdings
Corporation and subsidiaries as of December 31, 1999 and the results of their
operations and their cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States.

Grant Thornton LLP

/s/ Grant Thornton LLP

Cleveland, Ohio
March 3, 2000

22
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------

Independent Auditors' Report


The Shareholders and Board of Directors of Avalon Holdings Corporation

We have audited the accompanying consolidated balance sheet of Avalon Holdings
Corporation and subsidiaries (formerly the Avalon Business of American Waste
Services, Inc.) as of December 31, 1998 and the related consolidated statements
of operations, shareholders' equity and cash flows for the years ended December
31, 1998 and 1997.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Avalon Holdings
Corporation and subsidiaries (formerly the Avalon Business of American Waste
Services, Inc.) as of December 31, 1998 and the results of their operations and
their cash flows for the years ended December 31, 1998 and 1997, in conformity
with generally accepted accounting principles.



KPMG LLP

/s/ KPMG LLP

Cleveland, Ohio
March 10, 1999

                                                                              23
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------



Digest of Financial Data

<TABLE>
<CAPTION>



                                                                                     (All amounts are in thousands, except per share
                                                                                        data, percentages and number of employees)
                                                                                   ------------------------------------------------
                                                                                      1999       1998      1997      1996    1995
                                                                                   --------   --------   -------   -------   -------

<S>                                                                                <C>        <C>        <C>       <C>       <C>
Selected statement of operations information
Net operating revenues.........................................................  $ 80,860   $ 74,495   $60,687   $61,361   $ 65,706
Income (loss) from operations..................................................       992     (1,551)     (941)    2,109    (15,395)

Interest expense...............................................................         2         45       118       141        166
Net income (loss)..............................................................     1,223       (647)     (666)    1,337    (14,660)

Net income and pro forma net (loss) per share (*)..............................       .32       (.17)     (.26)        *          *
Dividends per Class A share....................................................        --         --        --        --         --
Dividends per Class B share....................................................        --         --        --        --         --
Weighted average shares used to calculate net income and
 pro forma net (loss) per share (*)............................................     3,803      3,803     3,803         *          *

Selected cash flow information
Cash flows provided by
 operating activities..........................................................     2,046      1,558     2,749       361      6,059
Cash used for capital expenditures.............................................     5,898      2,269     2,881     1,698      2,183

Selected year-end balance sheet information
Cash and cash equivalents......................................................    18,726     22,274     1,763     1,975      2,647
Current assets.................................................................    37,738     40,666    22,078    23,090     23,059
Current liabilities............................................................    10,769     11,693     8,341     7,780     10,072
Working capital................................................................    26,969     28,973    13,737    15,310     12,987
Properties less accumulated
 depreciation and amortization.................................................    26,165     23,300    19,184    18,680     20,147
Total assets...................................................................    66,404     66,685    44,517    45,099     44,225
Current portion of long-term debt..............................................        --         --       230       305        358
Long-term debt.................................................................        --         --     1,006     1,236      1,633
Deferred income taxes..........................................................     1,354      1,209     1,367     1,429      1,792
Shareholders' equity...........................................................    54,161     52,938    32,947    33,713     32,276

Other information
Working capital ratio..........................................................     3.5:1      3.5:1     2.6:1     3.0:1     2.29:1
Percent of debt-to-total capital employed......................................        --         --         4%        4%         6%

Quoted market price-Class A Shares:
 High..........................................................................     7 1/4      9 1/2       N/A       N/A        N/A
 Low...........................................................................   4 13/16    5 11/16       N/A       N/A        N/A
 Year-end......................................................................         5     7 1/16       N/A       N/A        N/A
Number of employees at year-end................................................       470        441       373       364        354

</TABLE>



(*)  In accordance with the Securities and Exchange Commission regulations, pro
     forma per share data has been presented for 1998, the year in which the
     Spin-off occurred, and the preceding year. For purposes of determining the
     pro forma per share data, all of the Company's common stock issued as a
     result of the Spin-off is deemed to have been outstanding since the
     beginning of 1997.

24
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------


Company Location Directory



Corporate Office

Avalon Holdings Corporation
One American Way
Warren, Ohio 44484-5555
(330) 856-8800



Waste Disposal
Brokerage and
Management Services

American Waste Management
Services, Inc.
One American Way
Warren, Ohio  44484-5555
(330) 856-8800



Transportation Offices

DartAmericA, Inc.
Dart Trucking Company, Inc.
Dart Services, Inc.
TRB National Systems, Inc.
One American Way
Warren, Ohio  44484-5555
(330) 856-8430



Transportation
Terminals

Dart Trucking Company, Inc.
61 Railroad Street
Canfield, Ohio 44406

Dart Trucking Company, Inc.
200 Old Webster Road
Oxford, Massachusetts  01540

Dart Trucking Company, Inc.
1807A Route 7
Kenova, West Virginia 25530

Dart Trucking Company, Inc.
28569 Glenwood Rd., P.O. Box 974
Perrysburg, Ohio  43551

Dart Trucking Company, Inc.
11861 S. Cottage Grove Ave.
Chicago, Illinois  60628

Dart Trucking Company, Inc.
5 Crown Point Drive
Paulsboro, New Jersey  08066

Dart Trucking Company, Inc.
11 Riverway Place
Building 1
Bedford, New Hampshire  03110



Technical
Environmental
Services

Earth Sciences
Consultants, Inc.
Corporate Headquarters
One Triangle Lane
Export, Pennsylvania  15632
(724) 733-3000

Earth Sciences
Consultants, Inc.
Ohio Operations
190 N. Union Street, Suite 301
Akron, Ohio 44304
(330) 535-6966

Antech Ltd.
One Triangle Lane
Export, Pennsylvania  15632
(724) 733-1161

AWS Remediation, Inc.
One Triangle Lane
Export, Pennsylvania  15632
(724) 733-1009

American Landfill
Management, Inc.
One American Way
Warren, Ohio  44484-5555
(330) 856-8800

                                                                              25
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------

Directors and Officers

Directors

Ronald E. Klingle
/1/(Chairman)  /2/(Chairman)
Chairman of the Board and
Chief Executive Officer


Sanford B. Ferguson/1,3,4/ (Chairman)
President, Solutions Consulting, Inc.

Robert M. Arnoni/2,3,4/
President, Arnoni Development


Stephen L. Gordon/3/(Chairman)/4/
Partner, Beveridge & Diamond (law firm)


Stephen G. Kilper
Chief  Executive Officer,
American Landfill Management, Inc.
Antech, Ltd.
AWS Remediation, Inc.
Earth Sciences Consultants, Inc.



/1/  Executive Committee
/2/  Compensation Committee
/3/  Audit Committee
/4/  Option Plan Committee



Officers

Ronald E. Klingle
Chairman of the Board and
Chief Executive Officer


Timothy C. Coxson
Treasurer and Chief Financial Officer


Jeffrey M. Grinstein
Secretary


Frances R. Klingle
Chief Administrative Officer


Kenneth R. Nichols
Vice President, Taxes


Frank Lamanna
Vice President, Corporate Financial
Services

26
<PAGE>

Avalon Holdings Corporation and Subsidiaries (formerly the Avalon business of
-----------------------------------------------------------------------------
American Waste Services, Inc.)
------------------------------


Shareholder Information

Annual meeting of shareholders

The annual meeting of shareholders will be held at the Grand Pavilion, One
American Way, Warren, Ohio, on Friday, April 28, 2000, at 10:00 a.m.

Common stock information

The Company's Class A Common Stock is listed on the American Stock Exchange
(symbol: AWX).  Quarterly stock information for 1999 and from June 18, 1998 to
December 31, 1998 as reported by The Wall Street Journal is as follows:

<TABLE>
<CAPTION>
1999:
Quarter Ended           High        Low       Close
-----------------------------------------------------
<S>                   <C>        <C>        <C>
March 31                  7 1/4     5 9/16     6 1/16
June 30                   7 1/8      5 3/4      6 3/4
September 30                  7      5 1/2      5 5/8
December 31               5 7/8    4 13/16          5

1998:
Quarter Ended           High        Low       Close
-----------------------------------------------------
<S>                   <C>        <C>        <C>
June 30                       8    5 11/16      6 5/8
September 30              9 1/2      6 3/4      8 1/2
December 31               8 3/8          7     7 1/16
</TABLE>

No dividends were paid during 1999.

There are 712 Class A and 12 Class B Common Stock shareholders of record as of
the close of business March 2, 2000.  The number of holders is based upon the
actual holders registered on the records of the Company's transfer agent and
registrar and does not include holders of shares in "street names" or persons,
partnerships, associations, corporations or other entities identified in
security position listings maintained by depository trust companies.

Dividend policy

The Company presently intends to retain earnings for use in the operation and
expansion of its business and therefore does not anticipate paying any cash
dividends in the foreseeable future.



Annual report on Form 10-K

Copies of the Company's annual report on Form 10-K can be obtained free of
charge by writing to Avalon Holdings Corporation, One American Way, Warren, Ohio
44484-5555, Attention:  Shareholder Relations.

Transfer agent and registrar

The transfer agent and registrar for the Company is American Stock Transfer and
Trust Company.  All correspondence concerning stock transfers should be directed
to them at 40 Wall Street, New York, New York 10005.

Investor inquiries

Security analysts, institutional investors, shareholders, news media
representatives and other seeking financial information or general information
about the Company are invited to direct their inquiries to Timothy C. Coxson,
Treasurer and Chief Financial Officer, telephone (330) 856-8800.

-------------------------------------------------------------------------------

Policy statement on equal employment opportunity
and affirmative action

The Company is firmly committed to a policy of equal employment opportunity and
affirmative action.  Toward this end, the Company will continue to recruit,
hire, train and promote persons in all job titles, without regard to race,
color, religion, sex, national origin, age, handicap, ancestry or Vietnam-era or
disabled veteran status.  We will base all decisions on merit so as to further
the principle of equal employment opportunity.  This policy extends to
promotions and to all actions regarding employment including compensation,
benefits, transfers, layoffs, return from layoffs, Company-sponsored training
and social programs.

                                                                              27