UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-K
 (Mark
One)
 [X]                         ANNUAL
REPORT PURSUANT TO SECTION 13
 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the fiscal year ended January 31, 2010
 
 OR
 
 [  ]                      TRANSITION
REPORT PURSUANT TO SECTION 13
 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the
transition period from __________ to ______________
 
 Commission
File Number 333-119566
 
 AVALON
HOLDING GROUP INC.
 (Exact
name of registrant as specified in its charter)
 
 Nevada
            
            26-3608086State
      or other jurisdiction of
            
            (I.R.S.
      Employerincorporation
      or organization
            
            Identification
      No.)
 
 6536 102nd Place NE,
Kirland, WA 98033 USA
 (Address
of principal executive offices) (Zip Code)
 
 Registrant’s
telephone number, including area
code:                                                                                     206-947-5639
 
 Securities
registered under Section 12(b) of the Exchange Act:
 
 Title
      of each class
            
            
            Name
      of each exchange on which registeredNone
            
            
            None
 
 Securities
registered under Section 12(g) of the Exchange Act:
 
 Common Stock, $0.001 Par
Value
 (Title of
class)
 
  Check
whether the issuer is not required to file reports pursuant to Section 13 or 15
(d) of the Exchange Act [    ]
   Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.    Yes [X]
No [  ]
   Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Date File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this
chapter) during the preceding 12 months (or such shorter period that the
registrant was required to submit and post such files).
   Yes
[    ] No [  x ]
   Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-K.  [ X ]
  
  Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a small reporting company. See the definitions of “large accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
   Large
accelerated filer
[   ]                                                                Accelerated
filer [   ]
   Non-accelerated
filer
[   ]                                                                Smaller
reporting company [X ]
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).    Yes [X] No
[   ]
 
 Net
revenues for our most recent fiscal year:
$446.00
  Aggregate
market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was sold on the
average bid and asked price of such common equity, as of July 31, 2009, the last
business day of the registrant’s most recently completed second fiscal quarter:
$ 0.00.
  Number of
common voting shares issued and outstanding as of April 30,
2010:                                                                                                                                5,055,000
shares of common stock
 
 DOCUMENTS
INCORPORATED BY REFERENCE
 
 If the following documents are
incorporated by reference, briefly describe them and identify the part of the
Form 10-K (e.g. Part I, Part II, etc.) into which the document is incorporated:
(1) any annual report to security holders; (2) any proxy or information
statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the
Securities Act of 1933. The listed documents should be clearly described for
identification purposes (e.g., annual report to security holders for fiscal year
ended December 24, 1990).
 
 Transitional Small Business Disclosure
Format (Check one):
_________Yes                                                                                                                                ____X______No
 
 
 
 
 
 TABLE
OF CONTENTS
 
 
 PagePART
      IItem
      1.  Description of Business
            4Item
      2.  Description of Properties
            7Item
      3.  Legal Proceedings
            7Item
      4.  Submission of Matters to a Vote of Security
      Holders
            7PART
      IIItem
      5.  Market For Registrant’s Common Equity and Related
      Stockholder Matters
            8Item
      6.  Management’s Plan of Operation
            9Item
      7.  Financial Statements and Supplementary Data
            11Item
      8.  Changes in and Disagreements With Accountants on Accounting
      and Financial Disclosure
            23PART
      IIIItem
      9.  Directors, Executive Officers, Promoters and Control Persons
      and Corporate Governance: compliance with Section 16(A) of the Exchange
      Act
            24Item
      10. Executive Compensation
            26Item
      11. Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder   Matters
            26Item
      12. Certain Relationships and Related Transactions, and Director
      Independence
            27Item
      13. Exhibits
            28Item
      14. Principal Accountant Fees and Services
            28Signatures
 
 
 
 
 PART
I
 
 
 ITEM
1.                      DESCRIPTION
OF BUSINESS
 
 We were
incorporated on July 28, 2008 under the laws of the state of Nevada.  Our
principal offices were located at 3/2 Yahtennaya Street, Suite 158, St.
Petersburg, Russia 197374.  In  September 2009, we relocated our
principal offices to 6536 102nd Place NE, Kirland, WA 98033 USA. Our telephone
number is 206-947-5639.Our
fiscal year end is January 31.
 
 During
our first year of operations, we intended to commence operations in the
entertainment and amusement industry. We purchased coin operated amusement
machines for the purpose of placing and operating them in public venues with
high traffic flow in Russia. We were initially focused on four amusement games,
"Arm Wrestling Game”, "Hammer Game”, "Kicking Game” and “Punching Game” and
place them in places such as nightclubs, bars, pubs, cinemas and amusement
complexes. Strength testing amusement games have been around for many years, and
prior management believed that if placed in high traffic location can be high
revenue producers.
 
 Since our
inception, we have purchased three such machines from our supplier, “Punchline
Europe”. Our business strategy was to continue acquiring and placing additional
amusement machines in as many places in different cities of Russia as
possible.
 
 We do not
believe that we will be able to generate significant revenues from sales during
the next twelve months in the area of coin operated amusement machines. At this
time in the financial markets there has been a major reduction in investor and
lender willingness to provide capital to new businesses throughout the world.
Our efforts to seek additional funding this year have encountered high levels of
resistance to its inquiries for new sources of cash flows. During the period
ended October 31, 2010, due to the high cost of maintaining the operations of
the company in Russia, we took a loss for the historical value of our vending
machines and wrote them off on our balance sheet. We have abandoned the machines
and are looking for new business ventures to be engaged in. Currently, we do not
have any operations or assets.
 
 Employees
 
 We have
no employees at the present time.  Our officers and directors are
responsible for all planning, developing and operational duties, and will
continue to do so throughout the early stages of our growth.
 
 We have
no intention of hiring employees until our business has been successfully
launched and we have sufficient, reliable revenue flow from our
operations.  Our sole executive officer and director will undertake
the work and tasks necessary to bring our business to the point of having
positive cash flow by earning revenues. We do not expect to hire any employees
within the next twelve (12) months.
 
 Risk Related to our
Business
 
 You
should carefully consider the following risk factors and all other information
contained herein as well as the information included in this Annual Report in
evaluating our business and prospects.  The risks and uncertainties
described below are not the only ones we face.  Additional unknown
risks and uncertainties, or that we currently believe are immaterial, may also
impair our business operations. If any of the following risks occur, our
business and financial results could be harmed. You should refer to the other
information contained in this Annual Report, including our financial statements
and the related notes.
 
 We Have a Limited Operating
History.
 
 We have a
limited operating history.  Our operations will be subject to all the
risks inherent in the establishment of a developing enterprise and the
uncertainties arising from the absence of a significant operating
history.  No assurance can be given that we may be able to operate on
a profitable basis.
 
 
 We may Require Significant
Additional Financing before we can Commence Operations and There is No Assurance
that such Funds will be Available.
 
 Our
ability to enter into a new area of business operations is dependent upon our
ability to raise significant additional financing.  There can be no
assurance that we will be able to obtain financing on acceptable terms in light
of factors such as the market demand for our securities, the state of financial
markets generally and other relevant factors.
 
 Inability Of Our Sole
Executive Officer And Director To Devote Sufficient Time To The Operation Of Our
Business May Limit Our Success.
 
 Presently,
our sole executive officer and director allocates only a portion of his time to
our business.Should
our business develop faster than anticipated, our officer may not be able to
devote sufficient time to the operation of our business to ensure that it
continues as a going concern.  Even if our management’s lack of
sufficient time is not fatal to our existence, it may result in our limited
growth and success.
 
 Unproven Profitably Due to
Lack of Operating History Makes an Investment in Us an Investment in an Unproven
Venture.
 
 We were
formed on July 28, 2008.  Since our date of inception, we have not had
significant revenues or operations and we have few assets.  If we
cannot obtain new assets and a business objective and then successfully
implement our business strategies, we may not be able to generate sufficient
revenues to operate profitably.  Insufficient revenues would result in
termination of our operations, as we cannot fund unprofitable operations unless
additional equity or debt financing is obtained.
 
 Our Independent Auditors’
Report States that there is a Substantial Doubt that we will be able to Continue
as a Going Concern.
 
 Our
independent auditors, Madsen & Associates, Certified Public Accountants,
state in their audit report, that since we have minimal business operations to
date and losses to date of approximately $39,341, there is a substantial doubt that we will be able to continue
as a going concern.
 
 ITEM
2.                      DESCRIPTION
OF PROPERTIES.
 
 We do not
own or rent facilities of any kind.  At present we are operating from
our principal office that is located within the offices of our President, who
provides this space free of charge.  We will continue to use this
space for our executive offices for the foreseeable future.
 
 We do not
have any manufacturing plants and have minimal equipment for the operation of
our business.
 
 We do not
have any investments or interests in any real estate.
 
 ITEM
3.                      LEGAL
PROCEEDINGS.
 
 We are
not currently party to any legal proceedings, nor are we aware of any
contemplated or pending legal proceedings against us.
 
 
 ITEM
4.                      SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
 We have
not yet held our annual shareholders’ meeting or submitted any matters to a vote
of shareholders during the fiscal year to which this Annual Report
pertains.
 
 
 
 
 
 PART
II
 
 ITEM
      5.
            MARKET
      FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS.
 
 Market
for Common Equity and Related Stockholder Matters
 
 (a)  Market
Information
 
 Our
shares of common stock, par value $0.001 per share, were quoted on the OTC
Bulletin Board under the symbol “AVLH” from May 22, 2009, through March 25,
2010. Since then, our stock has been quoted on the PinkSheets.com under the same
ticker symbol.
 
 Fiscal
Year Ended January 31, 2010
 
 Quarter Ended
            April 30, 2009*
            July 31, 2009*
            October 31, 2009
            January 31, 2010High
            N/A
            $0.00
            $0.00
            $0.00Low
            N/A
            $0.00
            $0.00
            $0.00
 
 * On May
22, 2009, we obtained regulatory approval to post our common shares for trading
on the OTC.BB.
 
 (b)  Holders
 
 As of
April 30, 2010, there were 32 holders of record of our common
stock.
 
 (c)  Dividend
Policy
 
 We have
never declared or paid dividends on our common stock.  We intend to retain
earnings, if any, to support the development of our business and therefore do
not anticipate paying cash dividends for the foreseeable future.  Payment
of future dividends, if any, will be at the discretion of our board of directors
after taking into account various factors, including current financial
condition, operating results and current and anticipated cash
needs.
 
 (d)  Securities
authorized for issuance under equity compensation plans
 
 None.
 
 RECENT
SALES OF UNREGISTERED SECURITIES
 
 We have
not sold any unregistered securities during the period covered by this annual
report.
 
 USE
OF PROCEEDS FROM SALE OF REGISTERED SECURITIES
 
 Not
applicable.
 
 DESCRIPTION
OF SECURITIES
 
 Common
Stock
 
 On                                
, our Board of Directors authorized
a                                                                           -for-1
stock dividend for our shareholders of our $0.001 par value common
stock.  As a result of the split, 171,600,000 additional shares were
authorized for issuance. We are waiting for FINRA to process this stock dividend
in the market, upon which we will issue the additional  shares and our
capital and additional paid-in capital will be adjusted according.
 
 Each
record holder of common stock is entitled to one vote for each share held in all
matters properly submitted to the stockholders for their
vote.  Cumulative voting for the election of directors is not
permitted by the By-Laws of Avalon.
 
 
 Holders
of outstanding shares of common stock are entitled to such dividends as may be
declared from time to time by the Board of Directors out of legally available
funds; and, in the event of liquidation, dissolution or winding up of the
affairs of Avalon, holders are entitled to receive, ratably, the net assets of
Avalon available to stockholders. Holders of outstanding shares of common stock
have no preemptive, conversion or redemptive rights.  To the extent
that additional shares of Avalon’s common stock are issued, the relative
interest of the existing stockholders may be diluted.
 
 Stock
Purchase Warrants
 
 None.
 
 Stock
Purchase Options
 
 None.
 
 
 ITEM
6.                      MANAGEMENT’S
PLAN OF OPERATION.
 
 We have
generated only
$                                           446
in revenues from the operation of our gaming machines from inception prior to
abandonment of such operations on September 2, 2009.  The following
should be read jointly with the financial statements, related notes, and the
cautionary statement regarding forward-looking statements, which appear
elsewhere in this filing.
 
 Plan
of Operation for the Next Twelve (12) Months
 
 The
following discussion of the plan of operation, financial condition, results of
operations, cash flows and changes in financial position should be read in
conjunction with our most recent financial statements and notes appearing
elsewhere in this Form 10-K; our 10-Q filed June 12, 2009, our 10-Q filed
September 21, 2009 and our 10-Q filed December 15, 2009.
 
 Our
survival is dependent upon the identification and successful completion of
additional long-term or permanent equity financing, the support of creditors and
shareholders, and, ultimately, the acquisition and/or implementation of
profitable operations.  There can be no assurances that we will be
successful, which would in turn significantly affect our ability to survive as a
going concern. If not, we will be required to dissolve.  We will
continue to seek means of financing in order to acquire an ongoing business or
assets or to implement a new business strategy.
 
 We do not
anticipate making any major purchases of capital assets, or conducting any
research and development in the next twelve (12) months.  Other than
our current sole executive officer, we have no employees at the present
time.  We do not expect to hire any employees within the next twelve
(12) months.
 
 We
currently do not any have cash. However, our current officers and directors have
personally committed to provide up to an aggregate amount of $20,000 in funds to
meet our operational needs. We believe that with this commitment we have
sufficient cash resources to satisfy our needs through the middle of April
2011.  Our ability to satisfy cash requirements thereafter and the
need for additional funding is dependent on our ability to acquire new business
and generate revenue from such new business in sufficient quantity and on a
profitable basis.  To the extent that we require additional funds, we
may attempt to sell additional equity shares or issue debt.  Any sale
of additional equity securities will result in dilution to our
stockholders.  Should we require additional cash in the future, there
can be no assurance that we will be successful in raising additional debt or
equity financing on terms acceptable to us, if at all.
 
 The
recent and continuing downturn in the U.S. economy has had an effect on our
ability to generate revenues and to attract long-term financing for our
operations. The downturn in the U.S. economy has also made it more difficult to
find investors that either have capital to invest or are willing to put capital
at risk by investing in our company. We anticipate that both effects of the
current economic rescission will continue to hinder our abilities to become a
profitable company and to grow our operations.
 
 Management's
Discussion and Analysis of Financial Condition and Results of
Operations
 
 Full
Fiscal Years
 
 
 At
January 31, 2010, we had a working capital deficit of ($10,841), compared to
working capital of $17,583 at January 31, 2009.  At January 31, 2010,
we had no assets, compared to assets, as of January 31, 2009, consisting of cash
of $19,043 and vending equipment of $9,900.
 
 At
January 31, 2010, our total current liabilities increased to $10,841 from $1,460
as at January 31, 2009.
 
 We
recognized $446 in revenue from the operation of gaming machines for the year
ended January 31, 2010.  Cost of goods sold for the year ended January
31, 2010 were zero, resulting in a gross profit of $446.  This
compares with revenues from the operation of gaming machines of zero during the
year ended January 31, 2009.  The cost of goods sold for the year
ended January 31, 2009 was zero.
 
 We have
recognized $446 in revenue from inception.
 
 Result
of Operations
 
 For the
year ended January 31, 2010, operating expenses were $29,835, compared to $1,017
for the year end January 31, 2009.  The increase of $28,818 was due to
an increase in our general and administrative expenses over the prior
period.
 
 We
recognized a loss on disposal of equipment of ($8,935) for the year ended
January 31, 2010 compared with no loss or gain on the disposal of equipment from
the prior year.
 
 We posted
a net loss of $(38,324) for the year ended January 31, 2010, compared to a net
loss of $(1,017)for the year
ended January 31, 2009.  From inception to January 31, 2010 we have
incurred a net loss of $(39,341).
 
 As of the
date of this report, our net cash balance is approximately nil. We do not have
any lending arrangements in place with banking or financial institutions and we
do not anticipate that we will be able to secure these funding arrangements in
the near future.
 
 Our sole
executive officer has committed to provide up to $20,000 to meet our operational
needs. We believe that such commitment is sufficient to carry our normal
operations for the next twelve (12) months.  To the extent that we
require additional funds to support our operations or the expansion of our
business, we may attempt to sell additional equity shares or issue
debt.  Any sale of additional equity securities will result in
dilution to our stockholders.  There can be no assurance that
additional financing, if require, will be available to us or, if available to
us, on acceptable terms.
 
 Off Balance Sheet Arrangements.
 
 None.
 
 ITEM
7.                      FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.
 
 The
financial statements required by this Item begin on Page F-14 of this Form 10-K,
and include (1) Report of Independent Registered Public Accounting Firm; (2)
Balance Sheets; (3) Statements of Operations, Statements of Cash Flows,
Statement of Stockholders’ Equity; and (4) Notes to Financial
Statements.
 
 
 
 AVALON
HOLDING GROUP INC.
  FINANCIAL
STATEMENTS
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 JANUARY
31, 2010
 
 
 
 PageReport
      of Independent Registered Public Accounting Firm
            F-2Financial
      Statements:Balance Sheets
            F-3Statements of
      Operations
            F-4Statements of Cash
      Flows
            F-5Statement of Stockholders’ Equity
      (Deficit)
            F-6Notes to Financial
      Statements
            F-7
      to F-11
 
 
 
 MADSEN
& ASSOCIATES, CPA’s Inc.                                     
684 East Vine St, Suite 3
 Certified Public Accountants and
Business
Consultants              Murray,
Utah 84107
 Telephone
801 268-2632
 Fax
801-262-3978
 
 
 
 Board of
Directors
 Avalon  Holding  Group,
Inc.
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 We have
audited the accompanying   balance
sheets  of  Avalon  Holding  Group,
Inc.  at January 31, 2010 and 2009 and the  statements of
operations,  stockholders' equity, and cash flows for the year
ended   January 31,  2010 and the period July 28, 2008
to January 31, 2009 and the period July 28, 2008 (date of inception) to January
31, 2010. These financial  statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (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. The company is not required
to  nor were we engaged to perform an audit of its internal control
over financial reporting.  Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness for the company’s internal control
over financial reporting.  Accordingly, we express no such opinion. 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 over all  financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
 
 In our
opinion, the  financial statements referred to above present fairly,
in all material respects, the  financial position
of  Avalon  Holding  Group,
Inc.   at  January 31, 2010 and 2009 and
the  statements of operations and  stockholders' equity for
the year ended   January 31,  2010 and the period July
28, 2008 to January 31, 2009 and the period July 28, 2008 (date of inception) to
January 31, 2010  in conformity with accounting principles generally
accepted in the United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  The Company   will
need additional  working capital  for its planned activity
and to service its debt, which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
described in the notes to the financial statements. These financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
 
 Salt Lake
City, Utah
 May  4,
2010                                            /s/
Madsen & Associates, CPA’s Inc.
 
 
 AVALON
      HOLDING GROUP, INC
              (A
      Development Stage Company)
              Balance
      SheetsAssetsJanuary
      31,
            
            January
      31,2010
            
            2009Current
      AssetsCash
            
            
            $
            -
            $
            19,043Total  Current
      Assets
            
            
            
            -
            
            19,043Other
      AssetsVending
      equipment
            
            
            
            -
            
            9,900Total Other
      Assets
            
            
            
            -
            
            9,900Total
      Assets
            
            
            
            $
            -
            $
            28,943Liabilities
      and Stockholders’ Equity (deficit)Current
      LiabilitiesAccounts
      payable
            
            
            $
            3,991
            $
            -Loan
      from director (Note 6)
            
            
            
            6,850
            
            1,460Total
      Liabilities
            
            
            $
            10,841
            $
            1,460Stockholders’
      Equity (deficit)Common
      stock, $0.001par value, 75,000,000 shares authorized;5,055,000
      shares issued and outstanding (Note 4)
            
            
            
            5,055
            
            5,055Additional
      paid-in-capital (Note 4)
            
            
            
            23,445
            
            23,445Deficit
      accumulated during the development stage
            
            
            
            (39,341)
            
            (1,017)Total
      Stockholders’ Equity (deficit)
            
            
            
            (10,841)
            
            27,483Total
      Liabilities and Stockholders’ Equity
            
            
            $
            -
            $
            28,943The
      accompanying notes are an integral part of these financial
      statements.AVALON
      HOLDING GROUP, INC(A
      Development Stage Company)Statements
      of Operations(Audited)From
      InceptionYear
            
            Period
            
            on
      July 28, 2008Ended
            
            Ended
            
            toJanuary
      31,
            
            January
      31,
            
            January
      31,2010
            
            2009
            
            2010RevenueRevenue
            
            
            
            
            
            
            $
            446
            $
            -
            $
            446Total
      revenue
            
            
            
            
            
            446
            
            -
            
            446ExpensesGeneral
      and administrative expenses
            
            
            
            
            
            28,870
            
            1,017
            
            29,887Depreciation
            
            
            
            
            
            965
            
            -
            
            965Total
      expenses
            
            
            
            
            
            (29,835)
            
            (1,017)
            
            (30,852)Loss
      before other items and taxes
            
            
            
            
            
            (29,389)
            
            (1,017)
            
            (30,406)Loss
      on disposal of equipment
            
            
            
            
            
            (8,935)
            
            -
            
            (8,935)Provision
      for income taxes
            
            
            
            
            
            -
            
            -
            
            -Net
      loss
            
            
            
            
            $
            (38,324)
            $
            (1,017)
            $
            (39,341)Loss
      per common share – basic and diluted
            $
            -
            $
            -
            $
            -Weighted
      average number of common shares outstanding
            
            
            
            
            
            5,055,000
            
            5,055,000
            
            -The
      accompanying notes are an integral part of these financial
      statements.
 
 AVALON
      HOLDING GROUP, INC
              (A
      Development Stage Company)
              Statement
      of Stockholders’ Equity
              From
      Inception onJuly 28, 2008 to
      January 31, 2010
              (Audited)Number
      of
              Common
              Shares
            Amount
            Additional
              Paid-in-
              Capital
            
            Deficit
              accumulated
              During  development
      stage
            TotalBalance
      at inception on July 28, 2008November
      3, 2008Common
      shares issued for cash   at $0.001
            
            3,000,000
            $   3,000
            $          -
            
            $               -
            $    3,000November
      20, 2008Common
      shares issued for cash   at $0.005
            
            1,200,000
            1,200
            4,800
            
            -
            6,000January
      12, 2009Common
      shares issued for cash at $0.02
            
            775,000
            775
            14,725
            
            -
            15,500January
      27,2009Common
      shares issued for cash at $0.05
            
            80,000
            80
            3,920
            
            
            4,000Net
      loss
            
            
            
            
            
            (1,017)
            (1,017)Balance
      as of January 31, 2009
            
            5,055,000
            5,055
            23,445
            
            (1,017)
            27,483Net
      loss
            
            
            -
            -
            
            (38,324)
            (38,324)Balance
      as of January 31, 2010
            
            5,055,000
            $   5,055
            $23,445
            
            $    (39,341)
            $    (10,841)
 
 
 
 
 
 
 The
accompanying notes are an integral part of these financial
statements.
 
 
 
 AVALON
      HOLDING GROUP, INC
              (A
      Development Stage Company)
              Statements
      of Cash Flows(Audited)Year
      Ended
              January
      31, 2010
            Period
      Ended
              January
      31, 2009
            
            From  Inception
      on
              July
      28, 2008 to
              January
      31,
              2010Operating
      ActivitiesNet
      loss
            
            
            $           (38,324)
            $(1,017)
            $
            (39,341)Depreciation
            
            
            965
            -
            
            965Loss
      on disposal of equipment
            
            
            8,935
            -
            
            8,935Changes
      in current assets and liabilitiesAccounts
      payable
            
            
            3,991
            -
            
            3,991Net
      cash used for operating activities
            
            
            (24,433)
            (1,017)
            
            (25,450)Investing
      ActivitiesPurchase
      of vending equipment
            
            
            -
            (9,900)
            
            (9,900)Net
      cash used in investing activities
            
            
            -
            (9,900)
            
            (9,900)Financing
      ActivitiesLoans
      from director (Note 6)
            
            
            5,390
            1,460
            
            6,850Issuance
      of common stock (Note 4)
            
            
            -
            28,500
            
            28,500Net
      cash provided by financing activities
            
            
            5,390
              7,531
            29,960
              29,960
            
            35,350
              37,491Net
      increase (decrease) in cash and equivalents
            
            
            (19,043)
            19,043
            
            -Cash
      and equivalents at beginning of the period
            
            
            19,043
            -
            
            -Cash
      and equivalents at end of the period
            
            
            $                      
      -
            $            19,043
            $
            -Supplemental
      cash flow information:Cash
      paid for:Interest
            $                         -
            $                      -
            $
            -Taxes
            $                      
      -
            -
            $
            -Non-Cash
      Activities
            $                      
      -
            -
            $
            -The
      accompanying notes are an integral part of these financial
      statements.
 
 
 
 AVALON
HOLDING GROUP, INC
 (A
Development Stage Company)
 Notes
To The Financial Statements
 January
31, 2010
 (Unaudited)
 
 1. ORGANIZATION AND BUSINESS
OPERATIONS
 
 a)
            Organization
 
 AVALON
HOLDING GROUP, INC (“the Company”) was incorporated under the laws of the State
of Nevada, U.S. on July 28, 2008.
 
 b)
            Development
      Stage Activities
 
 The
Company is in the development stage as defined under Statement on Financial
Accounting Standards No. 7, Development Stage Enterprises (“SFAS No.7”) and
commenced operations in the entertainment and amusement industry by placing and
operating of amusement gaming machines in public venues with high traffic flow
in Russia. For the period from inception on July 28, 2008 through January 31,
2010 the Company has generated $446 in revenues and has accumulated losses of
$39,341.
 
 Based
upon our business plan, we are a development stage
enterprise.  Accordingly, we present our financial statements in
conformity with the accounting principles generally accepted in the United
States of America that apply in establishing operating
enterprises.  As a development stage enterprise, we disclose the
deficit accumulated during the development stage and the cumulative statements
of operations and cash flows from our inception to the current balance sheet
date.
  On July
31, 2009, the operations in Russia were abandoned.
  2.
            BASIS
      OF PRESENTATION – GOING CONCERN
 
 Our
accompanying audited financial statements have been prepared in conformity with
GAAP, which contemplates our continuation as a going
concern.  However, we have minimal business operations to
date.  In addition, at January 31, 2010, we had incurred losses of
$39,341, and have working capital deficit of $10,841.  These matters
raise substantial doubt about our ability to continue as going
concern.  In view of these matters, realization of certain of the
assets in the accompanying balance sheet is dependent upon our ability to meet
our financing requirements, raise additional capital, and the success of our
future operations.  There is no assurance that future capital raising
plans will be successful in obtaining sufficient funds to assure our eventual
profitability.  While management believes that actions planned and
presently being taken to revise our operating and financial requirements provide
the opportunity for us to continue as a going concern, there is no assurance the
actions will be successful.  In addition, recent events in worldwide
capital markets may make it more difficult for us to raise additional equity or
debt capital.
 
 Our
financial statements do not include any adjustments that might result from these
uncertainties.
 
 3.      SIGNIFICANT
ACCOUNTING POLICIES
 
 This
summary of significant accounting policies is presented to assist in
understanding our financial statements.  Our financial statements and
notes are representations of our management who is responsible for their
integrity and objectivity.  These accounting policies conform to
generally accepted accounting principles in the United States of America
(“GAAP”) and have been consistently applied in the preparation of the financial
statements.  The financial statements are stated in United States of
America dollars.
 
 AVALON
HOLDING GROUP, INC
 (A
Development Stage Company)
 Notes
To The Financial Statements
 January
31, 2010
 (Unaudited)
 
 3.  SIGNIFICANT
ACCOUNTING POLICIES (cont’d)
 
 a)
            Income
      Taxes
 We have
adopted the ASCsubtopic 740-10
(formerly Statement of Financial Accounting Standards (“SFAS”) No. 109 –
“Accounting for Income Taxes”).  ASC 740-10 requires the use of the
asset and liability method of accounting of income taxes.  Under the
asset and liability method of ASC 740-10, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to temporary
differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases.  Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled.
 
 We
provide deferred taxes for the estimated future tax effects attributable to
temporary differences and carry forwards when realization is more likely than
not.
 
 b)
            Property
      and Equipment
 Property
and equipment is stated at cost, and is depreciated over estimated useful lives
using primarily the straight line method for financial reporting
purposes.  Useful lives range from 3 to 5 years.  We
evaluate property and equipment at least annually for impairment.  As
of January 31, 2010, all of the equipment had been sold for a net loss of
$8,935.   The Company has no property and equipment of value as
of January 31, 2010.
 
 c)
            Basic
      and Diluted Loss Per Share
 In
accordance with ASC subtopic 260-10 (formerly SFAS No. 128 – “Earnings Per
Share”), the basic loss per common share is computed by dividing net loss
available to common stockholders by the weighted average number of common shares
outstanding.  Diluted loss per common share is computed similar to
basic loss per common share except that the denominator is increased to include
the number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive.  At January 31, 2010 and 2009, we had no stock equivalents
that were anti-dilutive and excluded in the earnings per share
computation.
 
 d)
            Estimated
      Fair Value of Financial Instruments
 The
carrying value of our financial instruments, consisting of cash, and accounts
payable approximate their fair value due to the short-term maturity of such
instruments.  Unless otherwise noted, it is management’s opinion that
we are not exposed to significant interest, currency or credit risks arising
from these financial statements.
 
 e)
            Revenue
      Recognition
 It is our
policy that revenues will be recognized in accordance with ASC subtopic 605-10
(formerly SEC Staff Accounting Bulletin (SAB) No. 104, "Revenue
Recognition.").  Under ASC 605-10, product revenues (or service
revenues) are recognized when persuasive evidence of an arrangement exists,
delivery has occurred (or service has been performed), the sales price is fixed
and determinable and collectability is reasonably assured.
  
 f)
            Use
      of Estimates
 The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses during
the reporting period.  Actual results could differ from those
estimates.
 
 
 AVALON
HOLDING GROUP, INC
 (A
Development Stage Company)
 Notes
To The Financial Statements
 January
31, 2010
 (Unaudited)
 3.  SIGNIFICANT
ACCOUNTING POLICIES (cont’d)
 
 g)
            Cash
      and Cash Equivalents
 Cash is
comprised of cash on hand and demand deposits. Cash equivalents include
short-term highly liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of change in value.
 
 h)
            Recent
      Accounting Pronouncements
 
 None of
the recent accounting pronouncements by the Financial Accounting Standards Board
are applicable to the Company’s operations
 
 
 4.  COMMON
STOCK
 
 The
authorized capital of the Company is 75,000,000 common shares with a par value
of $ 0.001 per share.
 
 On
November 3, 2008, the Company issued 3,000,000 shares of common stock at a price
of $0.001 per share for total cash proceeds of $3,000.
 In
November,  2008, the Company issued 1,200,000 shares of common stock
at a price of $0.005 per share for total cash proceeds of $6,000.
 In
January 2009, the Company issued 775,000 shares of common stock at a price of
$0.02 per share for total cash proceeds of $15,500.
 In
January 2009, the Company also issued 80,000 shares of common stock at a price
of $0.05 per share for total cash proceeds of $4,000.
 During
the period July 28, 2008  (inception)  to January 31, 2009,
the Company  sold  a  total of 5,055,000 shares of
common stock  for  total  cash
proceeds  of  $28,500.
 
 5.  INCOME
TAXES
 
 As
of January 31, 2010, the Company had net operating loss carry forwards of
approximately $39,341 that maybe available to reduce future years’ taxable income through 2030. Future
tax benefits which may arise as a result of these losses have not been
recognized in these financial statements, as their realization is determined not
likely to occur and accordingly, the Company has recorded a valuation allowance
for the deferred tax asset relating to these tax loss
carry-forwards.
 
 
 AVALON
HOLDING GROUP, INC
 (A
Development Stage Company)
 Notes
To The Financial Statements
 January
31, 2010
 (Unaudited)
 6.  RELATED
PARTY TRANSACTIONS
 
 The
      Company entered into the following transactions with related
      parties:
 
 a)
            Paid
      consulting fees $5,739 (2008 - $nil) for business
      development services to a former officer and director of the
      Company.
 
 The
amounts charged to the Company for the services provided have been determined by
negotiation among the parties and, in certain cases, are covered by signed
agreements.  These transactions were in the normal course of
operations and were measured at the exchange amount which is the amount of
consideration established and agreed to by the related parties.
 
 b)  Loans
      from a director, as of January 31, 2010 were $6,850 (January 31, 2009 -
      $1,460). The amounts due are non-interest bearing, unsecured and are due
      upon demand.
 
 None of
our officers or directors owns any shares of our common stock.
 
 7.  SUBSEQUENT
EVENTS
 
 In
preparing these financial statements, the Company has evaluated events and
transactions for potential recognition or disclosure through May 4, 2010, the
date the financial statements were issued.
 
 There are
no subsequent events to disclose.
 
 
 ITEM
      8.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
 
 None.
 
 
 ITEM
8A.                      Controls
and procedures
 
 Evaluation of disclosure controls and
procedures.
 
 We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the U.S.
Securities and Exchange Commission rules and forms, and that such information is
accumulated and communicated to our management as appropriate, to allow timely
decisions regarding required disclosure.
 
 An
evaluation was performed under the supervision and with the participation of our
management, including the chief executive officer and the chief financial
officer, of the effectiveness of the design and operation of our disclosure
procedures.  Based on management's evaluation as of the end of the
period covered by this Annual Report, our principal executive officer and chief
financial officer have concluded that our disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) were sufficiently effective to ensure
that the information required to be disclosed by us in the reports that we file
under the Exchange Act is gathered, analyzed and disclosed with adequate
timeliness, accuracy and completeness.
 
 Management’s Annual Report on
Internal Control over Financial Reporting.
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act). Our internal control over financial reporting is
a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives. Furthermore, smaller reporting companies face additional
limitations.  Smaller reporting companies employ fewer individuals and find
it difficult to properly segregate duties.  Smaller reporting companies
tend to utilize general accounting software packages that lack a rigorous set of
software controls.
 
 Our
management, with the participation of the President, evaluated the effectiveness
of the Company’s internal control over financial reporting as of January 31,
2010.  In making this assessment, our management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control — Integrated Framework.  Based on that
evaluation, our management concluded that, as of January 31, 2010, our internal
control over financial reporting was not effective due to material weaknesses in
the system of internal control. Specifically, management identified the
following control deficiency.  The Company has installed accounting
software that does not prevent erroneous or unauthorized changes to previous
reporting periods and does not provide an adequate audit trail of entries made
in the accounting software.
 
 Accordingly,
while the Company has identified certain material weaknesses in its system of
internal control over financial reporting, it believes that it has taken
reasonable steps to ascertain that the financial information contained in this
report is in accordance with generally accepted accounting principles. 
Management has determined that current resources would be appropriately applied
elsewhere and when resources permit, they will alleviate material weaknesses
through various steps.
 
 This
Annual Report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this Annual Report.
 
 
 
 
 Changes
in internal controls
 
 There
have been no changes in our internal control over financial reporting identified
in connection with the evaluation described above that occurred during our last
fiscal quarter that has materially affected, or is reasonable likely to
materially affect, our internal control over financial reporting.
 
 
 ITEM
8B.                      Other
Information
 
 None
 
 PART
III
 
 ITEM
      9.
            DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
  ACT
 
 Directors
and Executive Officers
 
 The
following table sets forth the names, ages and positions of our current
directors and executive officers:
 
 Name                                           Age                                Offices
Held
 Phil
Jennings                                           68                                Director,
President, Secretary and Treasurer
 
 Phillip
Jennings – Director, President, Secretary and Treasurer
 
 Based in
Seattle, Mr. Jennings has thirty years of experience as an investment banker and
entrepreneur. Among the companies Phil co-founded are Dow Jones Teleres, the
first national online real estate company, and Soufun.com, the largest Internet
real estate company in the world, based in Beijing.  He specializes in deal
structure and financing of mergers and acquisitions in the resource, technology
and entertainment industries.  A former United States Marine Corps Captain
and Air America pilot, Phil is also an award-winning author and film
producer.
 
 Significant
Employees
 
 None.
 
 Family
Relationships
 
 None.
 
 Involvement
in Certain Legal Proceedings
 
 None.
 
 Section
16(a) Beneficial Ownership Reporting Compliance
 
 Section
16(a) of the Securities and Exchange Act of 1934 requires any person who is a
director or executive officer or who beneficially holds more than ten percent
(10%) of any class of our securities which have been registered with the
Securities and Exchange Commission, to file reports of initial ownership and
changes in ownership with the Securities and Exchange
Commission.  These persons are also required under the regulations of
the Securities and Exchange Commission to furnish us with copies of all Section
16(a) reports they file.
 
 To our
knowledge, based solely on our review of the copies of the Section 16(a) reports
furnished to us and a review of our shareholders of record for the fiscal year
ended January 31, 2010, there were no filing delinquencies.
 
 
 Code
of Ethics
 
 We have
not yet prepared a written code of ethics and employment
standards.  We have only recently commenced operations.  We
expect to implement a Code of Ethics during the current fiscal
year.
 
 Corporate
Governance; Audit Committee Financial Expert
 
 We
currently do not have an audit committee financial expert or an independent
audit committee expert due to the fact that our Board of Directors currently
does not have an independent audit committee.  Our Board of Directors
currently has only one (1) independent member, and thus, does not have the
ability to create a proper independent audit committee.
 
 ITEM
10                      EXECUTIVE
COMPENSATION.
 
 Our
executive officers have not received any compensation since the date of our
incorporation, and we did not accrue any compensation.  There are no
securities authorized for issuance under any equity compensation plan, or any
options, warrants, or rights to purchase our common stock.
 
 Compensation
of Directors
 
 We do not
compensate our directors for their time spent on our behalf, but they are
entitled to receive reimbursement for all out of pocket expenses incurred for
attendance at our Board of Directors meetings.
 
 Pension
and Retirement Plans
 
 Currently,
we do not offer any annuity, pension or retirement benefits to be paid to any of
our officers, directors or employees, in the event of
retirement.  There are also no compensatory plans or arrangements with
respect to any individual named above which results or will result from the
resignation, retirement or any other termination of employment with us, or from
a change in our control.
 
 Employment
Agreements
 
 We do not
have written employment agreements.
 
 Audit
Committee
 
 Presently,
our Board of Directors is performing the duties that would normally be performed
by an audit committee.  We intend to form a separate audit committee,
and plan to seek potential independent directors.  In connection with
our search, we plan to appoint an individual qualified as an audit committee
financial expert.
 
 
 ITEM
      11.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
 
 The
following table sets forth certain information concerning the number of shares
of our common stock beneficially owned as of April 30, 2010, by: (a) each person
(including any “group”, as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) who is known
us to be the beneficial owner of more than five percent (5%) of any class of our
voting securities, (b) each of our directors, and (c) our executive officers and
our directors as a group.  Unless otherwise specified in the table
below, such information, other than information with respect to our directors
and officers, is based on a review of statements filed, with the Securities and
Exchange commission (the “Commission”) pursuant to Sections 13 (d), 13 (f), and
13 (g) of the Exchange Act with respect to our Common Stock.  As of
April 30, 2010, there were 5,055,000 shares of Common Stock
outstanding.
 
 The
number of shares of Common Stock beneficially owned by each person is determined
under the rules of the Commission and the information is not necessarily
indicative of beneficial ownership for any other purpose.  Under such
rules, beneficial ownership includes any shares as to which such person has sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within sixty (60) days after the date
hereof, through the exercise of any stock option, warrant or other
right.  Unless otherwise indicated, each person has sole investment
and voting power (or shares such power with his or her spouse) with respect to
the shares set forth in the following table.  The inclusion herein of
any shares deemed beneficially owned does not constitute an admission of
beneficial ownership of those shares.
 
 
 
 
 Title
      of Class
            Name
      and Address of Beneficial Owner
            Amount
      and Nature of Beneficial Ownership
            Percent
              of
      Class1Common
            Nikolai
      Karamkov
              Saekoja
      St 1703
              Tartu
      Estonia 50106
            400,000
            7.91%Common
            Tamara
      Gileva
              3/2
      Yahtennaya St., Suite 15
              St.
      Petersburg Russia 197374
            2,600,000
            51.43%Common
            Phillip
      Jennings - Director, Pres., Secretary and Treasurer
              6536
      102nd Place NE
              Kirland,
      WA 98033
            -0-
            0%Common
            Directors
      and officers as a group (1)
            -0-
            0%
 (1)Percent of Ownership is calculated in accordance with the Securities and
Exchange Commission’s Rule 13(d) – 13(d)(1)
 
 ITEM
      12.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
 
 Other
than the stock transactions disclosed below, we have not entered into any
transactions in which any of our directors, executive officers, or affiliates,
including any member of an immediate family, had or are to have a direct or
indirect material interest.
 
 We have
not sold any securities within the past three (3) years without registering the
securities under the Securities Act of 1933.
 
 
 
 
 
 ITEM
13.                      EXHIBITS
 
 Exhibit Index
 
 3.1                      Articles
of Incorporation*
 3.2                      By-laws*
 31.1                      Section
302 Certification – Chief Executive Officer
 31.2                      Section
302 Certification – Chief Financial Officer
 32.1
            Certification
      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 – Chief Executive
  Officer.
 32.2
            Certification
      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 – Chief Financial
  Officer.
 
 *Incorporated
by reference to our SB2 Registration Statement, file number 333-119566,filed on October 30,
2006.
 
 ITEM
14.                      PRINCIPAL
ACCOUNTANT FEES AND SERVICES
 
 Audit
Fees.
 
 The
aggregate fees billed by our auditor, Madsen & Associates, during the fiscal
year ended January 31, 2010, for professional services rendered for the audit of
our annual financial statements and for the reviews of the financial statements
included in our Quarterly Reports on Form 10-Q during that fiscal year was
$1,850.We
also paid a total of $8,400 to our prior auditors, Seale & Beers, CPAs, and
Moore & Associates, for the review of the financial statements included in
our Quarterly Reports on Form 10-Q during the fiscal year ended January 31,
2010.
 
 Audit
Related Fees.
 
 We
incurred nil to auditors for audit related fees during the fiscal year ended
January 31, 2010.
 
 Tax
Fees.
 
 We
incurred nil fees to auditors for tax compliance, tax advice or tax compliance
services during the fiscal year ended January 31, 2010.
 
 All
Other Fees.
 
 We did
not incur any other fees billed by auditors for services rendered to us other
than the services covered in "Audit Fees" for the fiscal year ended January 31,
2010.
 
 The Board
of Directors has considered whether the provision of non-audit services is
compatible with maintaining the principal accountant's
independence.
 
 Since
there is no audit committee, there are no audit committee pre-approval policies
and procedures.
 
 
 
 
 SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on this 6th day of May,
2010.
 
 
 AVALON
HOLDING GROUP INC.
 
 
 
 Date: May
6,
2010                                                 By:
__/s/ Phillip Jennings__________
 Name:
Phillip Jennings
 Title:
President, principal executive officer, Secretary, Treasurer, principal
financial officer and principal accounting officer