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<p style="margin: 0"></p>

<!-- Field: Rule-Page --><div style="margin-top: 10pt; margin-bottom: 3pt; width: 100%"><div style="border-top: Black 2pt solid; border-bottom: Black 1pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page -->

<p style="margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 14pt Times New Roman, Times, Serif"><b>UNITED
STATES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 14pt Times New Roman, Times, Serif"><b>SECURITIES
AND EXCHANGE COMMISSION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 12pt Times New Roman, Times, Serif"><b>Washington,
D.C. 20549</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 18pt Times New Roman, Times, Serif"><b>FORM
<span id="xdx_902_edei--DocumentType_c20210101__20210930_zucdOSU3N3c4"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:DocumentType">10-Q</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><b>(MARK ONE)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p>

<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 3%; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt"><span style="font: 12pt Times New Roman, Times, Serif"><span id="xdx_907_edei--DocumentQuarterlyReport_c20210101__20210930_zFyWiHKhAbT9"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" format="ixt:booleantrue" name="dei:DocumentQuarterlyReport">&#9746;</ix:nonNumeric></span></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 97%; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 12pt Times New Roman, Times, Serif"><b>QUARTERLY
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>For
the quarter ended <span id="xdx_90B_edei--DocumentPeriodEndDate_c20210101__20210930_z9TSMgV8jOOa"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" format="ixt:datemonthdayyearen" name="dei:DocumentPeriodEndDate">September 30, 2021</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p>

<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 3%; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt"><span style="font: 12pt Times New Roman, Times, Serif"><span id="xdx_907_edei--DocumentTransitionReport_c20210101__20210930_zZuv213L52M8"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" format="ixt:booleanfalse" name="dei:DocumentTransitionReport">&#9744;</ix:nonNumeric></span></span></td>
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    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>For
the transition period from to</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>Commission
file number: <span id="xdx_909_edei--EntityFileNumber_c20210101__20210930_zCvsyh4WQBf2"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:EntityFileNumber">001-40872</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    name of registrant as specified in its charter) </span></td></tr>
  <tr style="vertical-align: top">
    <td colspan="3" style="font: 10pt Times New Roman, Times, Serif; padding: 0pt; text-align: center; text-indent: 0pt"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; padding: 0pt; width: 51%; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><b><span id="xdx_90D_edei--EntityIncorporationStateCountryCode_c20210101__20210930_zU7XFIN4oTY8"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" format="ixt-sec:stateprovnameen" name="dei:EntityIncorporationStateCountryCode">Delaware</ix:nonNumeric></span></b></span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">(State
    or other jurisdiction of<br />
    incorporation or organization)</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">(I.R.S.
    Employer<br />
    Identification No.)</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif"><b><span id="xdx_90E_edei--EntityAddressAddressLine1_c20210101__20210930_z1ePYpWI9ST4"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:EntityAddressAddressLine1">2 Embarcadero Center</ix:nonNumeric></span>, <span id="xdx_903_edei--EntityAddressAddressLine2_c20210101__20210930_z3AdfGOcgt93"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:EntityAddressAddressLine2">8th Floor</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;<span id="xdx_904_edei--EntityAddressCityOrTown_c20210101__20210930_zj1C4OmN7AQ3"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:EntityAddressCityOrTown">San Francisco</ix:nonNumeric></span>, <span id="xdx_907_edei--EntityAddressStateOrProvince_c20210101__20210930_zVoc6qkWwRLh"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:EntityAddressStateOrProvince">CA</ix:nonNumeric></span> <span id="xdx_903_edei--EntityAddressPostalZipCode_c20210101__20210930_zEpSf9GrXzng"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:EntityAddressPostalZipCode">94111</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b>(Address
of principal executive offices)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b><span id="xdx_900_edei--CityAreaCode_c20210101__20210930_zITkZDuajcVf"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:CityAreaCode">(415)</ix:nonNumeric></span>
<span id="xdx_90E_edei--LocalPhoneNumber_c20210101__20210930_zGodd0PQpVik"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:LocalPhoneNumber">423-0010</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b>(Registrant&#8217;s
telephone number, including area code)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>Not
applicable.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>&#160;</b>(Former
name, former address and former fiscal year, if changed since last report)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Securities
registered pursuant to Section 12(b) of the Act:</span></p>

<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; width: 39%; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>Title
    of each class</b></span></td>
    <td style="border-bottom: white 1pt solid; padding: 0.25pt 0.25pt 0.5pt; width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; width: 21%; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>Trading
    Symbol(s)</b></span></td>
    <td style="border-bottom: white 1pt solid; padding: 0.25pt 0.25pt 0.5pt; width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: black 1pt solid; font: 10pt Times New Roman, Times, Serif; width: 38%; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>Name
    of each exchange on which registered</b></span></td></tr>
  <tr style="vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><span id="xdx_90D_edei--Security12bTitle_c20210101__20210930__us-gaap--StatementClassOfStockAxis__custom--UnitsEachConsistingOfOneShareOfClassCommonStockParValue0.0001PerShareAndThreefourthsOfOneRedeemableWarrantMember_zYdvNomVkTLc"><ix:nonNumeric contextRef="From2021-01-012021-09-30_custom_UnitsEachConsistingOfOneShareOfClassCommonStockParValue0.0001PerShareAndThreefourthsOfOneRedeemableWarrantMember" name="dei:Security12bTitle">Units,
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    <td style="padding: 0.25pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><span id="xdx_90E_edei--TradingSymbol_c20210101__20210930__us-gaap--StatementClassOfStockAxis__custom--UnitsEachConsistingOfOneShareOfClassCommonStockParValue0.0001PerShareAndThreefourthsOfOneRedeemableWarrantMember_zjuOGU8plc14"><ix:nonNumeric contextRef="From2021-01-012021-09-30_custom_UnitsEachConsistingOfOneShareOfClassCommonStockParValue0.0001PerShareAndThreefourthsOfOneRedeemableWarrantMember" name="dei:TradingSymbol">AVACU</ix:nonNumeric></span></span></td>
    <td style="padding: 0.25pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">The
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  <tr style="vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><span id="xdx_902_edei--Security12bTitle_c20210101__20210930__us-gaap--StatementClassOfStockAxis__custom--ClassCommonStockParValue0.0001PerShareMember_zCWXYEbbqMv7"><ix:nonNumeric contextRef="From2021-01-012021-09-30_custom_ClassCommonStockParValue0.0001PerShareMember" name="dei:Security12bTitle">Class
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    <td style="padding: 0.25pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><span id="xdx_90A_edei--TradingSymbol_c20210101__20210930__us-gaap--StatementClassOfStockAxis__custom--ClassCommonStockParValue0.0001PerShareMember_zCTnpQgfrz49"><ix:nonNumeric contextRef="From2021-01-012021-09-30_custom_ClassCommonStockParValue0.0001PerShareMember" name="dei:TradingSymbol">AVAC</ix:nonNumeric></span></span></td>
    <td style="padding: 0.25pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">The
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    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><span id="xdx_903_edei--Security12bTitle_c20210101__20210930__us-gaap--StatementClassOfStockAxis__custom--RedeemableWarrantsEachWholeWarrantExercisableForOneShareOfClassCommonStockAtExercisePriceOf11.50PerWholeShareMember_zzFAmjvCgHXe"><ix:nonNumeric contextRef="From2021-01-012021-09-30_custom_RedeemableWarrantsEachWholeWarrantExercisableForOneShareOfClassCommonStockAtExercisePriceOf11.50PerWholeShareMember" name="dei:Security12bTitle">Redeemable
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    <td style="padding: 0.25pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><span id="xdx_903_edei--TradingSymbol_c20210101__20210930__us-gaap--StatementClassOfStockAxis__custom--RedeemableWarrantsEachWholeWarrantExercisableForOneShareOfClassCommonStockAtExercisePriceOf11.50PerWholeShareMember_zeaLiMk6IjIh"><ix:nonNumeric contextRef="From2021-01-012021-09-30_custom_RedeemableWarrantsEachWholeWarrantExercisableForOneShareOfClassCommonStockAtExercisePriceOf11.50PerWholeShareMember" name="dei:TradingSymbol">AVACW</ix:nonNumeric></span></span></td>
    <td style="padding: 0.25pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">The
    <span id="xdx_90E_edei--SecurityExchangeName_c20210101__20210930__us-gaap--StatementClassOfStockAxis__custom--RedeemableWarrantsEachWholeWarrantExercisableForOneShareOfClassCommonStockAtExercisePriceOf11.50PerWholeShareMember_zKsUGvUpR9jc"><ix:nonNumeric contextRef="From2021-01-012021-09-30_custom_RedeemableWarrantsEachWholeWarrantExercisableForOneShareOfClassCommonStockAtExercisePriceOf11.50PerWholeShareMember" format="ixt-sec:exchnameen" name="dei:SecurityExchangeName">Nasdaq</ix:nonNumeric></span> Stock Market LLC</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><span id="xdx_90F_edei--EntityCurrentReportingStatus_c20210101__20210930_ztMLyvpG0GSd"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:EntityCurrentReportingStatus">Yes</ix:nonNumeric></span>
&#9746; No &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif"></span></p>

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    <div style="border-bottom: Black 2pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (&#167;232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><span id="xdx_905_edei--EntityInteractiveDataCurrent_c20210101__20210930_zuquWGvvrDtj"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" name="dei:EntityInteractiveDataCurrent">Yes</ix:nonNumeric></span>
&#9746; No &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See definitions of &#8220;large accelerated filer,&#8221; &#8220;accelerated filer,&#8221; &#8220;smaller
reporting company,&#8221; and &#8220;emerging growth company&#8221; in Rule 12b-2 of the Exchange Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="padding: 0.25pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding: 0.25pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding: 0.25pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt"><span style="font: 10pt Times New Roman, Times, Serif">Emerging growth company</span></td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. <span id="xdx_905_edei--EntityExTransitionPeriod_c20210101__20210930_zIkB9cTiUQil"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" format="ixt:booleanfalse" name="dei:EntityExTransitionPeriod">&#9744;</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><span id="xdx_902_edei--EntityShellCompany_c20210101__20210930_zC4EizQ6mSH1"><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" format="ixt:booleantrue" name="dei:EntityShellCompany">Yes</ix:nonNumeric></span>
&#9746; No &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">As
of November 17, 2021, there were <span id="xdx_901_edei--EntityCommonStockSharesOutstanding_iI_c20211117__us-gaap--StatementClassOfStockAxis__custom--ClassACommonStockMember_z7kIggIM8Ug2"><ix:nonFraction name="dei:EntityCommonStockSharesOutstanding" contextRef="AsOf2021-11-17_custom_ClassACommonStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">20,855,250</ix:nonFraction></span> shares of Class A common stock, par value $0.0001 per share, and <span id="xdx_907_edei--EntityCommonStockSharesOutstanding_iI_c20211115__us-gaap--StatementClassOfStockAxis__custom--ClassBCommonStockMember_z8Lra4cFMHl6"><ix:nonFraction name="dei:EntityCommonStockSharesOutstanding" contextRef="AsOf2021-11-15_custom_ClassBCommonStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">5,175,000</ix:nonFraction></span> shares
of Class B common stock, par value $0.0001 per share, issued and outstanding.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>AVALON ACQUISITION IN INC.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2021</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>TABLE OF CONTENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&#160;</b></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0.25pt 0.5pt; width: 95%"><span style="font-size: 10pt">&#160;</span></td>
<td style="border-bottom: black 1pt solid; width: 5%; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>Page</b></span></td></tr>
<tr style="vertical-align: top">
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_001">Part I. Financial Information</a></span></td>
<td style="padding: 0.25pt"><span style="font-size: 10pt">&#160;</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 1. Financial Statements (Unaudited)</span></td>
<td style="padding: 0.25pt"><span style="font-size: 10pt">&#160;</span></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 18pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_002">Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">1</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 18pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_003">Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2021 (unaudited) and for the period from October 12, 2020 (inception) through December 31, 2020</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">2</span></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 18pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_004">Condensed Statements of Changes in Stockholders&#8217; Equity for the Three and Nine Months Ended September 30, 2021 (unaudited) and for the period from October 12, 2020 (inception) through December 31, 2020</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">3</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 18pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_005">Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2021 (unaudited) and for the period from October 12, 2020 (inception) through December 31, 2020</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">4</span></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 18pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_006">Notes to Condensed Financial Statements</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">5</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_007">Item 2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">16</span></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_008">Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">20</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_009">Item 4. Controls and Procedures</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">20</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 9pt"><span style="font-size: 10pt">&#160;</span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font-size: 10pt">&#160;</span></td></tr>
<tr style="vertical-align: top">
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_010">Part II. Other Information</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">21</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_011">Item 1. Legal Proceedings</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">21</span></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_012">Item 1A. Risk Factors</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">21</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_013">Item 2. Unregistered Sales of Equity Securities and Use of Proceeds</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">21</span></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_014">Item 3. Defaults Upon Senior Securities</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">22</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_015">Item 4. Mine Safety Disclosures</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">22</span></td></tr>
<tr style="vertical-align: top">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_016">Item 5. Other Information</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">22</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 9pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_017">Item 6. Exhibits</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">22</span></td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="padding-left: 9pt"><span style="font-size: 10pt">&#160;</span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font-size: 10pt">&#160;</span></td></tr>
<tr style="vertical-align: top">
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_018">Part III. Signatures</a></span></td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: right"><span style="font: 10pt Times New Roman, Times, Serif">23</span></td></tr>
</table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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    <div style="border-bottom: Black 2pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><b><span id="a_001"></span>PART I - FINANCIAL INFORMATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">Item 1. Interim Financial Statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>AVALON ACQUISITION INC.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><span id="a_002"></span>CONDENSED BALANCE SHEETS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;<b>&#160;</b></p>

<table cellpadding="0" cellspacing="0" id="xdx_306_111_zAVnKugTlsPk" summary="xdx: Statement - CONDENSED BALANCE SHEETS (unaudited)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 20pt; text-align: left; text-indent: -10pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_491_20210930_zandeYZ1y2tl" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_495_20201231_zg0u3urALVrl" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td style="padding: 0pt 0pt 0pt 10pt; text-align: center; text-indent: -10pt">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; text-align: center">September 30, 2021 (unaudited)</td><td style="padding-bottom: 1pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  <tr id="xdx_406_eus-gaap--DeferredOfferingCosts_i01I_maCzdLL_zK4PAqcKyx26" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_408_eus-gaap--AccruedLiabilitiesCurrent_i02I_maCzoF2_zxx8Ow0STOE5" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_406_ecustom--AccruedOfferingCosts_i02I_maCzoF2_zVlPCQhSrqil" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_400_eus-gaap--DueToRelatedPartiesCurrent_i02I_pp0p0_maCzoF2_zkTtNquPHvA" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40A_eus-gaap--LiabilitiesCurrent_i01TI_mtCzoF2_maLASEzzHA_zdcvtlmOV5Bj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_40A_eus-gaap--CommitmentsAndContingencies_iI_maCzXMN_zcZss0VgkzTh" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 10pt; font-weight: bold; text-align: left; text-indent: -10pt">Commitments and contingencies</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_407_eus-gaap--StockholdersEquityAbstract_iB" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt 0pt 0pt 10pt; font-weight: bold; text-align: left; text-indent: -10pt">Stockholder&#8217;s Equity</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40B_eus-gaap--PreferredStockValue_i01I_maSEzDqQ_zm4F3csZYv3l" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0083">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0084">&#8212;</span></td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td id="xdx_98D_eus-gaap--CommonStockValue_iI_c20210930__us-gaap--StatementClassOfStockAxis__custom--CommonStockClassAMember_zIdGFcUWBHic" title="Common Stock, Value, Issued" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0118">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98E_eus-gaap--CommonStockValue_iI_c20201231__us-gaap--StatementClassOfStockAxis__custom--CommonStockClassAMember_zntN8uBT8Fc2" title="Common Stock, Value, Issued" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0120">&#8212;</span></td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td id="xdx_988_eus-gaap--CommonStockValue_iI_c20210930__us-gaap--StatementClassOfStockAxis__custom--CommonStockClassBMember_zCIRjzx0XwPe" title="Common Stock, Value, Issued" style="text-align: right"><ix:nonFraction name="us-gaap:CommonStockValue" contextRef="AsOf2021-09-30_custom_CommonStockClassBMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">518</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_eus-gaap--CommonStockValue_iI_c20201231__us-gaap--StatementClassOfStockAxis__custom--CommonStockClassBMember_zAJKWPazHO57" title="Common Stock, Value, Issued" style="text-align: right"><ix:nonFraction name="us-gaap:CommonStockValue" contextRef="AsOf2020-12-31_custom_CommonStockClassBMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">518</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--AdditionalPaidInCapital_iI_maSEzDqQ_znnzssNrujf2" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt">Additional paid-in capital</td><td>&#160;</td>
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  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font: 10pt Times New Roman, Times, Serif">(1)</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><i>The accompanying notes are an integral part of the
condensed financial statements. </i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>AVALON ACQUISTION INC.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><span id="a_003"></span>CONDENSED STATEMENTS OF OPERATIONS </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<table cellpadding="0" cellspacing="0" id="xdx_307_113_zhW4yqDttFb9" summary="xdx: Statement - CONDENSED STATEMENTS OF OPERATIONS  (unaudited)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td id="xdx_492_20210101__20210930_z9ePNE7sdbGi" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<tr style="vertical-align: bottom">
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    <td style="padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt"><span style="font: 10pt Times New Roman, Times, Serif">Weighted average common shares outstanding, basic and diluted <sup id="xdx_F4C_zWc4dDHkRK7j">(1) </sup></span></td><td>&#160;</td>
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  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span id="xdx_F08_zeZn2eSqNpKg" style="font: 10pt Times New Roman, Times, Serif">(1)</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><i>The accompanying notes are an integral part of the
condensed financial statements. </i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>AVALON ACQUISITION INC.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><span id="a_004"></span>CONDENSED STATEMENT OF CHANGES IN STOCKHOLDER&#8217;S
EQUITY</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
2021</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<table cellpadding="0" cellspacing="0" id="xdx_309_114_zaBmjBEs5lX2" summary="xdx: Statement - CONDENSED STATEMENT OF CHANGES IN STOCKHOLDER&apos;S EQUITY (unaudited)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<tr style="vertical-align: bottom">
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    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Shares</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Amount</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
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    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Equity</td></tr>
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    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0213">&#8212;</span></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
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  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span id="xdx_F02_zyvT604Zq7d8" style="font: 10pt Times New Roman, Times, Serif">(1)</span></td>
    <td style="text-align: justify"><span id="xdx_F1E_zVwk0JmVXphj" style="font: 10pt Times New Roman, Times, Serif"><ix:footnote id="Footnote000224" xml:lang="en-US">Includes an aggregate of 675,000 shares that are subject to forfeiture to the extent that the underwriter&#8217;s over-allotment is not exercised in full or in part (see Note&#160;7). The underwriter exercised its over-allotment option in full on October 8, 2021 and, as a result, 675,000 shares are no longer subject to forfeiture.</ix:footnote></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><i>The accompanying notes are an integral part of the
condensed financial statements. </i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>AVALON ACQUISTION INC.&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><span id="a_005"></span>CONDENSED STATEMENTS OF CASH FLOWS </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<table cellpadding="0" cellspacing="0" id="xdx_308_112_zAGDnUclBgYb" summary="xdx: Statement - CONDENSED STATEMENTS OF CASH FLOWS  (unaudited)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_494_20210101__20210930_z4Psad1aFiXh" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_49C_20201013__20201231_zpXTeTGFlaT6" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td style="padding: 0pt 0pt 0pt 10pt; text-align: center; text-indent: -10pt">&#160;</td><td>&#160;</td>
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    <td style="padding: 0pt 0pt 0pt 10pt; font-weight: bold; text-align: left; text-indent: -10pt">Cash Flows from Operating Activities:</td><td>&#160;</td>
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    <td style="padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt">Changes in operating assets and liabilities:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="padding: 0pt 0pt 0pt 10pt; font-weight: bold; text-align: left; text-indent: -10pt">Supplemental Disclosures of Non-Cash investing and financing activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><i>The accompanying notes are an integral part of the
condensed financial statements. </i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>AVALON ACQUISTION INC.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><span id="a_006"></span>NOTES TO CONDENSED FINANCIAL STATEMENTS </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:BusinessDescriptionAndBasisOfPresentationTextBlock"><p id="xdx_807_eus-gaap--BusinessDescriptionAndBasisOfPresentationTextBlock_z248tqyHBBR" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>NOTE 1 &#8212; <span id="xdx_828_z0V43oq8xcH7">DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS</span> </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">Avalon Acquisition Inc. (the &#8220;Company&#8221;)
was incorporated in Delaware on October 12, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the &#8220;Business Combination&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">Although the Company is not limited
to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on businesses
that are in the financial services and financial technologies industries. The Company is an early stage and emerging growth company and,
as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">As of September 30, 2021, the
Company had not commenced any operations. All activity for the period from October 12, 2020 (inception) through September 30, 2021 relates
to the Company&#8217;s formation and the preparation for its initial public offering (&#8220;Initial Public Offering&#8221;). The Company
will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company
will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company
has selected December&#160;31 as its fiscal year end.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The registration statement for
the Company&#8217;s Initial Public Offering was declared effective on October 5, 2021. On October 8, 2021, the Company consummated the
Initial Public Offering of <span id="xdx_900_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20210101__20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_pdd" title="Stock Issued During Period, Shares, New Issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2021-01-012021-09-30_us-gaap_CommonClassAMember_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">20,700,000</ix:nonFraction></span> units (the &#8220;Units&#8221; and, with respect to the shares of Class A common stock included
in the Units sold, the &#8220;Public Shares&#8221;), which includes the full exercise by the underwriter of the over-allotment option
to purchase an additional <span id="xdx_908_ecustom--AdditionalOptionPurchase_c20210101__20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_pdd" title="Additional option purchase"><ix:nonFraction name="AVACU:AdditionalOptionPurchase" contextRef="From2021-01-012021-09-30_us-gaap_CommonClassAMember_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">2,700,000</ix:nonFraction></span> Units, at $<span id="xdx_908_eus-gaap--SharePrice_c20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember_pdd" title="Share Price"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2021-09-30_us-gaap_CommonClassAMember_custom_UnderwriterMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">10.00</ix:nonFraction></span> per Unit, generating gross proceeds of $<span id="xdx_900_eus-gaap--StockIssuedDuringPeriodValueNewIssues_c20210101__20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_pp0p0" title="Stock Issued During Period, Value, New Issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueNewIssues" contextRef="From2021-01-012021-09-30_us-gaap_CommonClassAMember_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">207,000,000</ix:nonFraction></span>, which is described in Note 3.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Simultaneously with the closing
of the Initial Public Offering, the Company consummated the sale of <span id="xdx_908_eus-gaap--SaleOfStockNumberOfSharesIssuedInTransaction_c20210101__20210930__us-gaap--StatementClassOfStockAxis__custom--WarrantsMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_ztRmF88nHwDa" title="Sale of Stock, Number of Shares Issued in Transaction"><ix:nonFraction name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" contextRef="From2021-01-012021-09-30_custom_WarrantsMember_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">8,100,000</ix:nonFraction></span> warrants (each, a &#8220;Private Placement Warrant&#8221;
and, collectively, the &#8220;Private Placement Warrants&#8221;) at a price of $<span id="xdx_900_eus-gaap--SaleOfStockPricePerShare_c20210930__us-gaap--StatementClassOfStockAxis__custom--WarrantsMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_pdd" title="Sale of Stock, Price Per Share"><ix:nonFraction name="us-gaap:SaleOfStockPricePerShare" contextRef="AsOf2021-09-30_custom_WarrantsMember_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.00</ix:nonFraction></span> per Private Placement Warrant in a private placement
to Avalon Acquisition Holdings, LLC (the &#8220;Sponsor&#8221;), generating gross proceeds of $<span id="xdx_908_eus-gaap--ProceedsFromIssuanceOrSaleOfEquity_c20210101__20210930__us-gaap--StatementClassOfStockAxis__custom--WarrantsMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_pp0p0" title="Proceed from sales of stock"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOrSaleOfEquity" contextRef="From2021-01-012021-09-30_custom_WarrantsMember_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">8,100,000</ix:nonFraction></span>, which is described in Note 4.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Following the closing of the
Initial Public Offering on October 8, 2021, an amount of $<span id="xdx_900_eus-gaap--ProceedsFromIssuanceInitialPublicOffering_c20210101__20210930_pp0p0" title="Intial public offering price"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceInitialPublicOffering" contextRef="From2021-01-01to2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">210,105,000</ix:nonFraction></span> ($10.15 per Unit) from the net proceeds of the sale of the units
in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the &#8220;Trust Account&#8221;)
located in the United States and held as cash and will be invested only in U.S. government securities, within the meaning set forth in
Section 2(a)(16) of the Investment Company Act of 1940, as amended (the &#8220;Investment Company Act&#8221;), with a maturity of 185&#160;days
or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions
of Rule&#160;2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i)&#160;the completion of a Business
Combination or (ii)&#160;the distribution of the funds in the Trust Account, as described below.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company&#8217;s management
has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private
Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company&#8217;s
initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of
the balance in the Trust Account (as defined below) (excluding taxes payable on interest income earned from the Trust Account and the
deferred underwriting commissions) at the time of the agreement to enter into the initial Business Combination. The Company will only
complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the
target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. There is no assurance that the Company will be able to complete a Business Combination successfully.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;The Company will provide
its holders of the outstanding Public Shares (the &#8220;Public Stockholders&#8221;) with the opportunity to redeem all or a portion of
their Public Shares upon the completion of a Business Combination either (i)&#160;in connection with a stockholder meeting called to approve
the Business Combination or (ii)&#160;by means of a tender offer. The decision as to whether the Company will seek stockholder approval
of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will
be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be
$10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company
to pay its tax obligations). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be
reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note&#160;6). There will be
no redemption rights upon the completion of a Business Combination with respect to the Company&#8217;s warrants. The Public Shares subject
to redemption are recorded at redemption value and classified as temporary equity in accordance with the Accounting Standards Codification
(&#8220;ASC&#8221;) Topic 480 &#8220;Distinguishing Liabilities from Equity.&#8221;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company will proceed with
a Business Combination if the Company has net tangible assets of at least $<span id="xdx_906_eus-gaap--BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedPropertyPlantAndEquipment_c20210930_pp0p0" title="Business Combination tangible assets"><ix:nonFraction name="us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedPropertyPlantAndEquipment" contextRef="AsOf2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,000,001</ix:nonFraction></span> upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder
vote is not required by law or stock exchange requirements and the Company does not decide to hold a stockholder vote for business or
other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the &#8220;Amended and Restated
Certificate of Incorporation&#8221;), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission
(&#8220;SEC&#8221;) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder
approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the
Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender
offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company&#8217;s Sponsor has agreed
to vote their Founder Shares (as defined in Note&#160;5) and any Public Shares purchased during or after the Initial Public Offering in
favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective
of whether they vote for or against the proposed transaction.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Notwithstanding the above, if
the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules,
the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a &#8220;group&#8221; (as defined under Section&#160;13 of the
Securities Exchange Act of 1934, as amended (the &#8220;Exchange Act&#8221;)), will be restricted from redeeming its shares with respect
to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company&#8217;s Sponsor has
agreed (i)&#160;to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the
completion of a Business Combination and (ii)&#160;not to propose an amendment to the Company&#8217;s Amended and Restated Certificate
of Incorporation that would affect the substance or timing of the Company&#8217;s obligation to redeem 100% of its Public Shares if the
Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their
shares in conjunction with any such amendment.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company will have until January
8, 2023 to consummate a Business Combination or until July 8, 2023 if the Company extends the period of time to consummate an initial
Business Combination by the full amount of time (the &#8220;Combination Period&#8221;). If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i)&#160;cease all operations except for the purpose of winding up, (ii)&#160;as
promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account
and not previously released to the Company to pay taxes (less up to $100,000 to pay dissolution expenses), divided by the number of then
outstanding Public Shares, which redemption will completely extinguish public stockholders&#8217; rights as stockholders (including the
right to receive further liquidating distributions, if any), subject to applicable law, and (iii)&#160;as promptly as reasonably possible
following such redemption, subject to the approval of the Company&#8217;s remaining stockholders and the Company&#8217;s board of directors,
dissolve and liquidate, subject in each case to the Company&#8217;s obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company&#8217;s
warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Sponsor has agreed to waive
its right to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such
Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination
within the Combination Period. The underwriter has agreed to waive their rights to their deferred underwriting commission (see Note&#160;6)
held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such
event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the
Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Initial Public Offering price per Unit ($10.00).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">In order to protect the amounts
held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services
rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction
agreement, reduce the amount of funds in the Trust Account to below (i)&#160;$10.15 per Public Share or (ii)&#160;such lesser amount per
Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust
assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a
waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company&#8217;s indemnity of the
underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended
(the &#8220;Securities Act&#8221;). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party,
the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility
that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers
(other than our independent registered public accounting firm), prospective target businesses or other entities with which the Company
does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the
Trust Account.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Liquidity and Going Concern</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">As of September 30,
2021, the Company had $<span id="xdx_90F_eus-gaap--CashAndCashEquivalentsAtCarryingValue_iI_pp0p0_c20210930_zsdaiBoyJ4s1" title="Cash Ending"><ix:nonFraction name="us-gaap:CashAndCashEquivalentsAtCarryingValue" contextRef="AsOf2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">29</ix:nonFraction></span>
in its operating bank accounts and negative working capital of approximately $<span id="xdx_905_ecustom--WorkingCapital_c20210101__20210930_z3ee60OlT7C9" title="Working capital"><ix:nonFraction name="AVACU:WorkingCapital" contextRef="From2021-01-01to2021-09-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">377,000</ix:nonFraction></span>. <span style="background-color: white">The
Company&#8217;s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment
of $<span id="xdx_90C_ecustom--ProceedsFromSaleOfSharesOfCommonStockToInitialShareholder_pp0p0_c20201013__20201231_za5soKcm30C4" title="Proceeds from sale of shares of common stock to initial shareholder"><ix:nonFraction name="AVACU:ProceedsFromSaleOfSharesOfCommonStockToInitialShareholder" contextRef="From2020-10-132020-12-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">25,000</ix:nonFraction></span>&#160;from
the Sponsor to cover certain expenses on behalf of the Company in consideration of Founder Shares (as defined in Note 4), and
the loan from the Sponsor of $<span id="xdx_907_ecustom--ProceedsFromPromissoryNoteWithRelatedParties_c20210101__20210930_pp0p0" title="Proceeds from promissory note with related parties"><ix:nonFraction name="AVACU:ProceedsFromPromissoryNoteWithRelatedParties" contextRef="From2021-01-01to2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">197,000</ix:nonFraction></span>&#160;as
of September 30, 2021 under the Note (as defined in Note 4). The Company repaid the Note in full on October 15, 2021.
Subsequent to the consummation of the Initial Public Offering, the Company&#8217;s liquidity has been satisfied through the
net proceeds of $<span id="xdx_907_eus-gaap--ProceedsFromIssuanceOfPrivatePlacement_dm_c20210101__20210930_zvELxM7p4Eeb" title="Proceeds from Issuance of Private Placement"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceOfPrivatePlacement" contextRef="From2021-01-01to2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="3" unitRef="USD">2.28</ix:nonFraction></span>&#160;million
from the consummation of the Initial Public Offering (including the Over-Allotment), the Private Placement and the Second
Private Placement held outside of the Trust Account. In addition, in order to finance transaction costs in connection with a
Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company&#8217;s officers and directors
may, but are not obligated to, provide the Company Working Capital Loans (as defined in Note 4). As of September 30, 2021 and
December 31 2020, there were no amounts outstanding under any Working Capital Loans.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"><span style="background-color: white">Based
on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through
one year from this filing. Over this time period, the Company will be using the funds held outside of the Trust Account for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><p id="xdx_801_eus-gaap--SignificantAccountingPoliciesTextBlock_zYSHDnKwfd27" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 2 &#8212; <span id="xdx_82E_zlhKaLZlZ7J7">SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES</span> </b></p>

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<ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:BasisOfAccountingPolicyPolicyTextBlock"><p id="xdx_846_eus-gaap--BasisOfAccountingPolicyPolicyTextBlock_zB5Zierw9ou5" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i><span id="xdx_86B_zg0aA4q4Klf">Basis of Presentation</span> </i></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The unaudited condensed financial
statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;)
and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by
GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<ix:exclude><p id="xdx_235_zM0eixR66GA1" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The accompanying unaudited condensed
financial statements should be read in conjunction with the audited financial statements and notes thereto included in the final prospectus
filed by the Company with the SEC on October 7, 2021 related to the Initial Public Offering and the audited balance sheet included in
the Current Report on Form 8-K filed by the Company with the SEC on October 15, 2021. The interim results for the three and nine months
ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any
future periods.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="AVACU:EmergingGrowthCompanyPolicyTextBlock"><p id="xdx_848_ecustom--EmergingGrowthCompanyPolicyTextBlock_zvInDBupxdXb" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_864_zoWiTw9641o7">Emerging Growth Company</span> </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company is an &#8220;emerging
growth company,&#8221; as defined in Section&#160;2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of
certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements
of Section&#160;404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports
and proxy statements, not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight
Board regarding mandatory audit firm rotation or to provide a supplement to the auditor&#8217;s report providing additional information
about the audit and the financial statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Further, Section&#160;102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period
which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company,
as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company&#8217;s financial statements with another public company which is neither an emerging growth company
nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:CashAndCashEquivalentsPolicyTextBlock"><p id="xdx_84A_eus-gaap--CashAndCashEquivalentsPolicyTextBlock_zsqsqJikU9vd" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_869_zikTZgHanjD5">Cash and Cash Equivalents</span></i></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company considers all short-term
investments with an original maturity of three months or less when purchased to be cash equivalents.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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Initial Public Offering</span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company complies with the
requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A &#8211; &#8220;Expenses of Offering.&#8221; Costs
incurred in connection with preparation for the Public Offering ($<span id="xdx_90E_eus-gaap--OtherDeferredCostsNet_iI_pp0p0_c20210930_zjkbBD2CK4c6" title="Public Offering cost"><ix:nonFraction name="us-gaap:OtherDeferredCostsNet" contextRef="AsOf2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">684,509</ix:nonFraction></span>) together with $<span id="xdx_90E_ecustom--UnderwritersDiscount_c20210930_pp0p0" title="Underwriters discount"><ix:nonFraction name="AVACU:UnderwritersDiscount" contextRef="AsOf2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">10,953,007</ix:nonFraction></span> of underwriters&#8217; discount,
were allocated to equity instruments ($<span id="xdx_90D_ecustom--AllocatedEquityInstruments_c20210101__20210930_pp0p0" title="Allocated equity instruments"><ix:nonFraction name="AVACU:AllocatedEquityInstruments" contextRef="From2021-01-01to2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">11,157,580</ix:nonFraction></span>) and derivative warrant liabilities ($<span id="xdx_900_eus-gaap--DerivativeLiabilities_c20210930_pp0p0" title="Derivative warrant liabilities"><ix:nonFraction name="us-gaap:DerivativeLiabilities" contextRef="AsOf2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">479,936</ix:nonFraction></span>), based on their relative values, and
charged to temporary equity or expensed (in the case of the portion allocated to derivative warrant liabilities) upon completion of the
Initial Public Offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><p id="xdx_847_eus-gaap--IncomeTaxPolicyTextBlock_zBKPBqD7C1kl" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_861_zD8gOiZQZ76d">Income Taxes </span></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company follows the asset
and liability method of accounting for income taxes under FASB ASC&#160;Topic 740, &#8220;Income Taxes.&#8221; Deferred tax assets and
liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement&#8217;s
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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Deferred tax assets are de minimis as of September 30, 2021 and December 31, 2020.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">FASB ASC Topic 740 prescribes
a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained
upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as
income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021
and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals
or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Net loss per common
share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the
period, excluding shares of common stock subject to forfeiture. Weighted average common shares were reduced for the effect of
an aggregate of <span id="xdx_908_eus-gaap--WeightedAverageNumberOfSharesCommonStockSubjectToRepurchaseOrCancellation_c20210101__20210930_zb9YHJ0U7Qfb" title="Weighted average common shares"><ix:nonFraction name="us-gaap:WeightedAverageNumberOfSharesCommonStockSubjectToRepurchaseOrCancellation" contextRef="From2021-01-01to2021-09-30" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">675,000</ix:nonFraction></span>
shares of common stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriter. At
September 30, 2021 and December 31, 2020, the Company did not have any other dilutive securities and other contracts that
could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a
result, diluted loss per common share is the same as basic loss per common share for the periods presented.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">As discussed in Note 1, all of
the <span id="xdx_90F_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20210101__20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_zNyJIXH22PBh" title="Stock Issued During Period, Shares, New Issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2021-01-012021-09-30_us-gaap_CommonClassAMember_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">20,700,000</ix:nonFraction></span> public shares sold as part of Units in the Initial Public Offering contain a redemption feature which allows for the redemption
of public shares if the Company holds a stockholder vote or there is a tender offer for shares in connection with a Business Combination.
In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security to be classified
outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity&#8217;s equity
instruments, are excluded from the provisions of FASB ASC 480. Although the Company did not specify a maximum redemption threshold, its
charter provides that in no event will it redeem its public shares in an amount that would cause its net tangible assets (i.e., total
assets less intangible assets and liabilities) to be less than $<span id="xdx_901_eus-gaap--BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedPropertyPlantAndEquipment_iI_pp0p0_c20210930_zfk0HOAdPRob" title="Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment"><ix:nonFraction name="us-gaap:BusinessCombinationRecognizedIdentifiableAssetsAcquiredAndLiabilitiesAssumedPropertyPlantAndEquipment" contextRef="AsOf2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,000,001</ix:nonFraction></span> upon the closing of a Business Combination.</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">While redemptions cannot cause
the Company&#8217;s net tangible assets to fall below $5,000,000, all shares of Class A common stock sold in the Initial Public Offering
are redeemable and will be classified as classified as temporary equity on the Company&#8217;s balance sheet until such time as a redemption
event takes place. The value of Class A common stock that may be redeemed will be equal to $10.15 per share (which is the assumed redemption
price) multiplied by 20,700,000 shares of Class A common stock.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="AVACU:DerivativeWarrantLiabilitiesPolicyTextBlock"><p id="xdx_840_ecustom--DerivativeWarrantLiabilitiesPolicyTextBlock_zWWur2CIEHn3" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_867_z7IFojQwbJ31">Derivative Warrant Liabilities</span> </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company will account for
warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant&#8217;s specific terms
and in accordance with FASB ASC 480, Distinguishing Liabilities from Equity (&#8220;ASC 480&#8221;) and ASC 815, Derivatives and Hedging
(&#8220;ASC 815&#8221;). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet
the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under
ASC 815, including whether the warrants are indexed to the Company&#8217;s own shares, among other conditions for equity classification.
This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent
quarterly period end date while the warrants are outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">For issued or modified warrants
that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in
capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants
are required to be recorded at their initial fair value of the date of issuance, and each balance sheet date thereafter. Changes in the
estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. Costs associated with
issuing the warrants classified as derivative liabilities are charged to operations when the warrants are issued.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:ConcentrationRiskCreditRisk"><p id="xdx_849_eus-gaap--ConcentrationRiskCreditRisk_zlxdpRQmTH53" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_86D_zW5BxYKPhZq">Concentration of Credit Risk </span></i></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Financial instruments that potentially
subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The fair value of the Company&#8217;s
assets and liabilities, which qualify as financial instruments under ASC Topic 820, &#8220;Fair Value Measurement,&#8221; approximates
the carrying amounts represented in the balance sheet, primarily due to their short-term nature.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The preparation of financial
statements in conformity with GAAP requires the Company&#8217;s 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 expenses during the reporting period.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set
of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could
change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those
estimates.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p id="xdx_84D_eus-gaap--NewAccountingPronouncementsPolicyPolicyTextBlock_zzkaz4AtcGi6" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_867_zvA18PEo6Yca">Recent Accounting Pronouncements</span> </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">In August 2020, the Financial
Accounting Standards Board (&#8220;FASB&#8221;) issued Accounting Standards Update (&#8220;ASU&#8221;) 2020-06, Debt &#8212; Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging &#8212; Contracts in Entity&#8217;s Own Equity (Subtopic 815-40)
(&#8220;ASU 2020-06&#8221;) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require
separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception
guidance pertaining to equity classification of contracts in an entity&#8217;s own equity. The new standard also introduces additional
disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity&#8217;s own equity. ASU 2020-06
amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted
beginning on January 1, 2021. The Company is currently evaluating the impact the pronouncement will have on the condensed financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Management does not believe that
any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the
Company&#8217;s financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="AVACU:Covid19PolicyTextBlock"><p id="xdx_846_ecustom--Covid19PolicyTextBlock_zZE0FpNXoSJ5" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><span id="xdx_86B_z6R1yMOex6Zj">COVID-19</span></i></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Management continues to evaluate
the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a
negative effect on the Company&#8217;s financial position, results of its operations, and/or search for a target company, the specific
impact is not readily determinable as of the date of the financial statement. The financial statement does not include any adjustments
that might result from the outcome of this uncertainty.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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</ix:nonNumeric></ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="AVACU:InitialPublicOfferingTextBlock"><p id="xdx_80E_ecustom--InitialPublicOfferingTextBlock_z58WtdUb36lg" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 3 &#8212; <span id="xdx_82D_zsI6m8ZkwR9g">INITIAL PUBLIC OFFERING</span> </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">On October 8, 2021, the Company
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Simultaneously with the closing
of the Initial Public Offering, the Sponsor purchased an aggregate of <span id="xdx_904_eus-gaap--SaleOfStockNumberOfSharesIssuedInTransaction_c20210101__20210930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SponsorMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--PrivatePlacementMember_pdd" title="Sale of Stock, Number of Shares Issued in Transaction"><ix:nonFraction name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" contextRef="From2021-01-012021-09-30_custom_SponsorMember_us-gaap_PrivatePlacementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">8,100,000</ix:nonFraction></span> Private Placement Warrants for an aggregate purchase price
of $<span id="xdx_903_eus-gaap--SaleOfStockConsiderationReceivedOnTransaction_c20210101__20210930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SponsorMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--PrivatePlacementMember_pp0p0" title="Sale of Stock, Consideration Received on Transaction"><ix:nonFraction name="us-gaap:SaleOfStockConsiderationReceivedOnTransaction" contextRef="From2021-01-012021-09-30_custom_SponsorMember_us-gaap_PrivatePlacementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">8,100,000</ix:nonFraction></span>. Each Private Placement Warrant is exercisable to purchase one share of Class&#160;A common stock at a price of $<span id="xdx_90B_ecustom--WarrantExercisePrice_c20210930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SponsorMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--PrivatePlacementMember_pdd" title="Warrant exercise price"><ix:nonFraction name="AVACU:WarrantExercisePrice" contextRef="AsOf2021-09-30_custom_SponsorMember_us-gaap_PrivatePlacementMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">11.50</ix:nonFraction></span> per
share.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p id="xdx_803_eus-gaap--RelatedPartyTransactionsDisclosureTextBlock_z1HMmGGo2fLc" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 4 &#8212; <span id="xdx_820_zWIPnVt5UGFc">RELATED PARTY TRANSACTIONS</span> </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Founder Shares </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">On October 21, 2020, the Sponsor
paid an aggregate of $<span id="xdx_900_eus-gaap--StockIssuedDuringPeriodValueNewIssues_c20201001__20201021__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--AvalonAcquisitionHoldingsMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pp0p0" title="Stock Issued During Period, Value, New Issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueNewIssues" contextRef="From2020-10-012020-10-21_custom_AvalonAcquisitionHoldingsMember_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">25,000</ix:nonFraction></span>, or approximately $0.004 per share, to cover certain of our offering costs in consideration of <span id="xdx_90F_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20201001__20201021__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--AvalonAcquisitionHoldingsMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Stock Issued During Period, Shares, New Issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2020-10-012020-10-21_custom_AvalonAcquisitionHoldingsMember_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">5,750,000</ix:nonFraction></span>
shares of our Class&#160;B common stock, par value $0.0001. On August 30, 2021, the Sponsor forfeited <span id="xdx_90B_eus-gaap--StockIssuedDuringPeriodSharesRestrictedStockAwardNetOfForfeitures_c20210801__20210830__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_pdd" title="Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesRestrictedStockAwardNetOfForfeitures" contextRef="From2021-08-012021-08-30_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,437,500</ix:nonFraction></span> of these shares, for no
consideration, such that there were <span id="xdx_90F_eus-gaap--CommonStockSharesOutstanding_c20210830__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2021-08-30_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">4,312,500</ix:nonFraction></span> shares of Class B common stock outstanding. On October 5, 2021, the Company effected a stock
dividend of 0.2 of a founder share for each outstanding founder share, which resulted in the Sponsor holding an aggregate of <span id="xdx_909_eus-gaap--StockIssuedDuringPeriodValueNewIssues_c20201001__20201005__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--AvalonAcquisitionHoldingsMember__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pp0p0" title="Stock Issued During Period, Value, New Issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueNewIssues" contextRef="From2020-10-012020-10-05_custom_AvalonAcquisitionHoldingsMember_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,175,000</ix:nonFraction></span>
Founder Shares (up to 675,000 of which are subject to forfeiture by the Sponsor depending on the extent to which the underwriter&#8217;s
option to purchase additional units is exercised). The Founder Shares include an aggregate of up to <span id="xdx_906_eus-gaap--StockIssuedDuringPeriodSharesRestrictedStockAwardNetOfForfeitures_c20201001__20201005__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_pdd" title="Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesRestrictedStockAwardNetOfForfeitures" contextRef="From2020-10-012020-10-05_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">675,000</ix:nonFraction></span> shares subject to forfeiture
to the extent that the underwriter&#8217;s over-allotment option is not exercised in full or in part, so that the Sponsor will own, on
an as-converted basis, 20% of the Company&#8217;s issued and outstanding shares after the Initial Public Offering. As a result of the
underwriter&#8217;s election to exercise fully its over-allotment option, 675,000 Founder Shares are no longer subject to forfeiture.
On October 5, 2021, the Sponsor transferred <span id="xdx_903_ecustom--NumberOfSharesTransferred_c20201005__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--AvalonAcquisitionHoldingsMember_pdd" title="Number of shares transferred"><ix:nonFraction name="AVACU:NumberOfSharesTransferred" contextRef="AsOf2020-10-05_custom_AvalonAcquisitionHoldingsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">150,000</ix:nonFraction></span> Founder Shares to its independent directors.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Sponsor has agreed, subject
to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A)&#160;one year after
the completion of a Business Combination or (B)&#160;subsequent to a Business Combination, (x)&#160;if the last reported sale price of
the Class&#160;A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150&#160;days after a Business Combination,
or (y)&#160;the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results
in all of the Company&#8217;s stockholders having the right to exchange their shares of common stock for cash, securities or other property.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Promissory Note&#8212;Related Party </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">On October 31, 2020, the Sponsor
agreed to loan the Company an aggregate of up to $<span id="xdx_90D_eus-gaap--GeneralAndAdministrativeExpense_c20211001__20211031__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SponsorMember__us-gaap--LongtermDebtTypeAxis__custom--UnsecuredPromissoryNoteMember_pp0p0" title="General and administrative expense"><ix:nonFraction name="us-gaap:GeneralAndAdministrativeExpense" contextRef="From2021-10-012021-10-31_custom_SponsorMember_custom_UnsecuredPromissoryNoteMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">250,000</ix:nonFraction></span> to cover expenses related to the Proposed Public Offering pursuant to a promissory
note (the &#8220;Promissory Note&#8221;). The Promissory Note is non-interest bearing and was payable, as amended, on the earlier of December
31, 2021 or the completion of the Initial Public Offering. As of September 30, 2021, $<span id="xdx_902_eus-gaap--DebtInstrumentFaceAmount_c20210930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SponsorMember__us-gaap--LongtermDebtTypeAxis__custom--UnsecuredPromissoryNoteMember_pp0p0" title="Principal amount"><ix:nonFraction name="us-gaap:DebtInstrumentFaceAmount" contextRef="AsOf2021-09-30_custom_SponsorMember_custom_UnsecuredPromissoryNoteMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">197,000</ix:nonFraction></span> was outstanding under the Promissory Note.
At December 31, 2020, there was no amount outstanding under the Promissory Note. On October 15, 2021, the Company repaid the balance in
full to the Sponsor. Because the balance of the Promissory Note has been repaid, it is no longer available to the Company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Administrative Support Agreement </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Commencing on the effective date
of the Initial Public Offering, the Company agreed to pay the Sponsor a total of $<span id="xdx_907_eus-gaap--DebtInstrumentPeriodicPayment_c20211001__20211005__us-gaap--TypeOfArrangementAxis__custom--AdministrativeSupportAgreementMember_pp0p0" title="Periodic payment"><ix:nonFraction name="us-gaap:DebtInstrumentPeriodicPayment" contextRef="From2021-10-012021-10-05_custom_AdministrativeSupportAgreementMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">10,000</ix:nonFraction></span> per month for office space, and administrative
support services. Upon completion of an initial Business Combination or the Company&#8217;s liquidation, the Company will cease paying
these monthly fees. As of September 30, 2021 and December 31, 2020, there were no amounts accrued under this agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<ix:exclude><p id="xdx_230_zF7dCbE4QaL3" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Related Party Loans </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">In order to finance transaction
costs in connection with a Business Combination, the Sponsor, or the Company&#8217;s officers and directors may, but are not obligated
to, loan the Company funds as may be required (&#8220;Working Capital Loans&#8221;). If the Company completes a Business Combination,
the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. In the event that
a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital
Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms
of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working
Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender&#8217;s discretion,
up to $<span id="xdx_907_ecustom--WorkingCapitalLoans_c20210930_pp0p0" title="Working Capital Loans"><ix:nonFraction name="AVACU:WorkingCapitalLoans" contextRef="AsOf2021-09-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,500,000</ix:nonFraction></span> of such Working Capital Loans may be convertible into warrants at a price of $<span id="xdx_908_eus-gaap--DebtInstrumentConvertibleConversionPrice1_c20210930_pdd" title="Conversion Price"><ix:nonFraction name="us-gaap:DebtInstrumentConvertibleConversionPrice1" contextRef="AsOf2021-09-30" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.00</ix:nonFraction></span>&#160;per warrant at the option of
the lender. The warrants would be identical to the Private Placement Warrants. As of September 30, 2021 and December 31, 2020, there was
no working capital loan outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:CommitmentsDisclosureTextBlock"><p id="xdx_801_eus-gaap--CommitmentsDisclosureTextBlock_zn8znQXGLFdc" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 5 &#8212; <span id="xdx_826_z5vUMlb3vkK5">COMMITMENTS</span> </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Registration Rights </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The holders of the Founder Shares,
Private Placement Warrants, warrants and representative shares that may be issued upon conversion of Working Capital Loans (and any shares
of Class&#160;A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion
of Working Capital Loans) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or
on the effective date of Initial Public Offering. The holders of these securities will be entitled to make up to three demands, excluding
short form demands, that the Company register such securities. In addition, the holders have certain &#8220;piggy-back&#8221; registration
rights with respect to registration statements filed subsequent to the completion of a Business Combination. However, the registration
rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective
until termination of the applicable lockup period. The Company will bear the expenses incurred in connection with the filing of any such
registration statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Underwriting Agreement </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company granted the underwriter
a 45-day option from the date of Initial Public Offering to purchase up to <span id="xdx_901_ecustom--AdditionalOptionPurchase_c20210101__20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_zb6XDKYqS3v9" title="Additional Option Purchase"><ix:nonFraction name="AVACU:AdditionalOptionPurchase" contextRef="From2021-01-012021-09-30_us-gaap_CommonClassAMember_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">2,700,000</ix:nonFraction></span> additional Units to cover over-allotments, if any,
at the Initial Public Offering price less the underwriting discounts and commissions. At October 8, 2021, the underwriter exercised such
option in full.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The underwriter was entitled
to an underwriting discount of $0.125 per Unit, or $<span id="xdx_902_ecustom--UnderwritersDiscount_iI_c20210930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember_zRkliqKZHRDa" title="Underwriting discount"><ix:nonFraction name="AVACU:UnderwritersDiscount" contextRef="AsOf2021-09-30_custom_UnderwriterMember" format="ixt:numunitdecimalin" decimals="0" unitRef="USD">1,875,00</ix:nonFraction></span> in the aggregate (or $<span id="xdx_905_eus-gaap--ProceedsFromSaleOfAvailableForSaleSecurities_c20210101__20210930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember_zlV0d0tBkwVb" title="Proceeds from Sale of Available-for-sale Securities"><ix:nonFraction name="us-gaap:ProceedsFromSaleOfAvailableForSaleSecurities" contextRef="From2021-01-012021-09-30_custom_UnderwriterMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,156,250</ix:nonFraction></span> in the aggregate if the underwriter&#8217;s
over-allotment option is exercised in full) of the gross proceeds of the Initial Public Offering. In addition, the underwriter was entitled
to a deferred fee of $0.35 per Unit, or $<span id="xdx_90D_eus-gaap--DeferredCosts_iI_c20210930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember_z36ftCHu70Bh" title="Deferred fee"><ix:nonFraction name="us-gaap:DeferredCosts" contextRef="AsOf2021-09-30_custom_UnderwriterMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,250,000</ix:nonFraction></span> in the aggregate (or $<span id="xdx_906_eus-gaap--ProceedsFromSaleOfAvailableForSaleSecurities_c20210101__20210930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_zjhQvEP9mMR8" title="Proceeds from Sale of Available-for-sale Securities"><ix:nonFraction name="us-gaap:ProceedsFromSaleOfAvailableForSaleSecurities" contextRef="From2021-01-012021-09-30_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">6,037,500</ix:nonFraction></span> in the aggregate if the underwriter&#8217;s over-allotment
option is exercised in full); <span id="xdx_905_ecustom--UnderwriterOverAllotmentDescription_c20210101__20210331__us-gaap--TypeOfArrangementAxis__custom--UnderwritingAgreementMember_zcdJdAwP6cga" title="Underwriter over allotment description"><ix:nonNumeric contextRef="From2021-01-012021-03-31_custom_UnderwritingAgreementMember" name="AVACU:UnderwriterOverAllotmentDescription">provided that up to 0.875% of the gross proceeds or $1,312,500 (or $1,509,375 if the over-allotment option
is exercised in full) in the aggregate may be paid to third parties not participating in the offering</ix:nonNumeric> </span>(but who are members of the Financial
Industry Regulatory Authority (&#8220;FINRA&#8221;) or regulated broker-dealers) that assist the underwriter in consummating the initial
Business Combination. The deferred fee will be waived by the underwriter in the event that the Company does not complete a Business Combination,
subject to the terms of the underwriting agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<ix:exclude><p id="xdx_230_zB4ZpTDciJE9" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">In addition, the Company issued
to the underwriter <span id="xdx_90E_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_c20210101__20210930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_pdd" title="Stock Issued During Period, Shares, New Issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2021-01-012021-09-30_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">155,250</ix:nonFraction></span> non-redeemable shares of Class A common stock upon closing of the Initial Public Offering, at a price of $<span id="xdx_907_eus-gaap--SharePrice_c20210930__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--UnderwriterMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--OverAllotmentOptionMember_pdd" title="Share Price"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2021-09-30_custom_UnderwriterMember_us-gaap_OverAllotmentOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.0001</ix:nonFraction></span>
(the &#8220;Representative Shares&#8221;). The holder of the Representative Shares has agreed not to transfer, assign or sell any such
shares without the Company&#8217;s prior consent until the completion of the Company&#8217;s initial Business Combination. In addition,
the holder of the Representative Shares has agreed (i) to waive its conversion rights (or right to participate in any tender offer) with
respect to such shares in connection with the completion of the Company&#8217;s initial Business Combination and (ii) to waive its rights
to liquidating distributions from the Trust account with respect to such shares if the Company fails to complete its initial Business
Combination within the required time period. The Representative Shares have been deemed compensation by FINRA and are therefore subject
to a lock-up for a period of 180 days immediately following the date of the effectiveness of the registration statement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:ProductWarrantyDisclosureTextBlock"><p id="xdx_800_eus-gaap--ProductWarrantyDisclosureTextBlock_z0HgIZoZc9zb" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 6 &#8211; <span id="xdx_82C_znH7Xm38TCYc">WARRANTS LIABILITIES</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">There were no warrants outstanding
at September 30, 2021 and December 31, 2020. The Company will account for the Public and Private Placement Warrants in accordance with
the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder,
each warrant must be recorded as a liability. Accordingly, the Company will classify each warrant as a liability at its fair value and
charge the costs associated with issuing such warrants to operations. The accounting treatment of derivative financial instruments requires
that the Company records a derivative liability upon the closing of the Initial Public Offering. Accordingly, the Company will classify
the warrants as a liability at their fair value and allocate a portion of the proceeds from the issuance of the Units to the warrants.
This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted
to fair value, with the change in fair value recognized in the Company&#8217;s statement of operations. The Company will reassess the
classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be
reclassified as of the date of the event that causes the reclassification.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:StockholdersEquityNoteDisclosureTextBlock"><p id="xdx_803_eus-gaap--StockholdersEquityNoteDisclosureTextBlock_z2PTLzLIkEMk" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 7 &#8212; <span id="xdx_827_zHeMcybsbx58">STOCKHOLDERS&#8217; DEFICIT</span></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"><b><i>Preferred Stock </i></b>&#8212;
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voting and other rights and preferences as may be determined from time to time by the Company&#8217;s board of directors. At September
30, 2021 and December 31, 2020, there were <span id="xdx_90C_eus-gaap--PreferredStockSharesIssued_iI_do_c20210930_z4udZSGRO447" title="Preferred Stock, Shares Issued"><span id="xdx_90D_eus-gaap--PreferredStockSharesOutstanding_iI_do_c20210930_z5zCP6pwo2F5" title="Preferred Stock, Shares Outstanding"><span id="xdx_901_eus-gaap--PreferredStockSharesIssued_iI_do_c20201231_zZO4XvLm0STg" title="Preferred Stock, Shares Issued"><span id="xdx_90E_eus-gaap--PreferredStockSharesOutstanding_iI_do_c20201231_zeyvHAiIbvDa" title="Preferred Stock, Shares Outstanding"><ix:nonFraction name="us-gaap:PreferredStockSharesIssued" contextRef="AsOf2021-09-30" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesOutstanding" contextRef="AsOf2021-09-30" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesIssued" contextRef="AsOf2020-12-31" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesOutstanding" contextRef="AsOf2020-12-31" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares">no</ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction></span></span></span></span> shares of preferred stock issued or outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"><b><i>Class&#160;A Common Stock
</i></b>&#8212; The Company was authorized to issue <span id="xdx_90B_eus-gaap--CommonStockSharesAuthorized_c20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_pdd" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2021-09-30_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">100,000,000</ix:nonFraction></span> shares of Class&#160;A common stock with a par value of $<span id="xdx_900_eus-gaap--CommonStockParOrStatedValuePerShare_c20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassAMember_pdd" title="Common stock, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2021-09-30_us-gaap_CommonClassAMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.0001</ix:nonFraction></span> per share.
Holders of Class&#160;A common stock are entitled to one vote for each share. At September 30, 2021 and December 31, 2020, there were
<span id="xdx_903_eus-gaap--CommonStockSharesIssued_iI_do_c20210930__us-gaap--StatementClassOfStockAxis__custom--CommonStockClassAMember_zH5agXQaN8uc" title="Common Stock, Shares, Issued"><span id="xdx_90E_eus-gaap--CommonStockSharesOutstanding_iI_do_c20210930__us-gaap--StatementClassOfStockAxis__custom--CommonStockClassAMember_z3XsTeMKDLBc" title="Common Stock, Shares, Outstanding"><span id="xdx_900_eus-gaap--CommonStockSharesIssued_iI_do_c20201231__us-gaap--StatementClassOfStockAxis__custom--CommonStockClassAMember_zKKvNZAhgfCk" title="Common Stock, Shares, Issued"><span id="xdx_907_eus-gaap--CommonStockSharesOutstanding_iI_do_c20201231__us-gaap--StatementClassOfStockAxis__custom--CommonStockClassAMember_zF943ifm3Bdd" title="Common Stock, Shares, Outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2021-09-30_custom_CommonStockClassAMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2021-09-30_custom_CommonStockClassAMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2020-12-31_custom_CommonStockClassAMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2020-12-31_custom_CommonStockClassAMember" format="ixt-sec:numwordsen" decimals="INF" unitRef="Shares">no</ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction></span></span></span></span> shares of Class&#160;A common stock issued and outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"><b><i>Class&#160;B Common Stock</i></b>
&#8212; The Company was authorized to issue <span id="xdx_903_eus-gaap--CommonStockSharesAuthorized_c20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2021-09-30_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">10,000,000</ix:nonFraction></span> shares of Class&#160;B common stock with a par value of $<span id="xdx_901_eus-gaap--CommonStockParOrStatedValuePerShare_c20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2021-09-30_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.0001</ix:nonFraction></span> per share. Holders
of Class&#160;B common stock are entitled to one vote for each share. At September 30, 2021, there were <span id="xdx_900_eus-gaap--CommonStockSharesIssued_c20210930__us-gaap--StatementClassOfStockAxis__us-gaap--CommonClassBMember_pdd" title="Common stock, shares issued"><span id="xdx_903_eus-gaap--CommonStockSharesOutstanding_c20210930__us-gaap--StatementClassOfStockAxis__custom--CommonStockClassBMember_pdd" title="Common Stock, Shares, Outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2021-09-30_us-gaap_CommonClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2021-09-30_custom_CommonStockClassBMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">5,175,000</ix:nonFraction></ix:nonFraction></span></span> shares of Class&#160;B
common stock issued and outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">Holders of Class&#160;B common
stock will have the right to elect all of the Company&#8217;s directors prior to a Business Combination. Holders of Class&#160;A common
stock and Class&#160;B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except
as required by law.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The shares of Class&#160;B common
stock will automatically convert into shares of Class&#160;A common stock on the first business day following the completion of a Business
Combination at a ratio such that the number of shares of Class&#160;A common stock issuable upon conversion of all Founder shares will
equal, in the aggregate, on an as-converted basis, 20% of the sum of (i)&#160;the total number of shares of the Company&#8217;s common
stock issued and outstanding upon completion of Initial Public Offering, plus (ii)&#160;the sum of (a)&#160;all shares of the Company&#8217;s
common stock issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or deemed issued by the Company
in connection with or in relation to the completion of a Business Combination, excluding (1)&#160;any shares of Class&#160;A common stock
or equity-linked securities exercisable for or convertible into shares of Class&#160;A common stock issued, or to be issued, to any seller
in a Business Combination and any (2)&#160;Private Placement Warrants issued to the Sponsor or any of its affiliates upon conversion of
Working Capital Loans minus (b)&#160;the number of Public Shares redeemed by public stockholders in connection with a Business Combination.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"><b><i>Warrants </i></b>&#8212;Public
Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only
whole warrants will trade. The Public Warrants will become exercisable on the later of (a)&#160;30&#160;days after the completion of a
Business Combination or (b)&#160;12&#160;months from the closing of the Initial Public Offering. The Public Warrants will expire five
years after the completion of a Business Combination or earlier upon redemption or liquidation. As of September 30, 2021 and December
31, 2020, there were no warrants outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company will not be obligated
to deliver any shares of Class&#160;A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant
exercise unless a registration statement under the Securities Act with respect to the shares of Class&#160;A common stock underlying the
warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect
to registration, or a valid exemption from registration is available. No warrant will be exercisable and the Company will not be obligated
to issue shares of Class&#160;A common stock upon exercise of a warrant unless the share of Class&#160;A common stock issuable upon such
warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered
holder of the warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company has agreed that as
soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, the Company will use its
commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares
of Class&#160;A common stock issuable upon exercise of the warrants. The Company will use its commercially reasonable efforts to cause
the same to become effective within 60 business days following the closing of our initial business combination and to maintain the effectiveness
of such registration statement, and a current prospectus relating thereto, until the expiration or redemption of the warrants in accordance
with the provisions of the warrant agreement. If a registration statement covering the issuance of the shares of Class&#160;A common stock
issuable upon exercise of the warrants is not effective by the 60th business day after the closing of a Business Combination, warrant
holders may, until such time as there is an effective registration statement and during any period when the company will have failed to
maintain an effective registration statement, exercise warrants on a &#8220;cashless basis&#8221; in accordance with Section&#160;3(a)(9)
of the Securities Act or another exemption. In addition, if the Class&#160;A common stock are at the time of any exercise of a warrant
not listed on a national securities exchange such that they satisfy the definition of a &#8220;covered security&#8221; under Section&#160;18(b)(1)
of the Securities Act, the Company may, at its option, require holders of the Public Warrants who exercise their warrants to do so on
a &#8220;cashless basis&#8221; in accordance with Section&#160;3(a)(9) of the Securities Act and, in the event the Company elects to do
so, the Company will not be required to file or maintain in effect a registration statement, but it will use its best efforts to register
or qualify the shares under applicable blue sky laws to the extent an exemption is not available.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt"><i>Redemption of warrants when
the price per share of Class&#160;A common stock equals or exceeds $18.00. </i>Once the Public Warrants become exercisable, the Company
may redeem the Public Warrants (except with respect to the Private Placement Warrants):</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">at a price of $0.01 per warrant;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">upon not less than 30&#160;days prior written notice of redemption to each warrant holder; and</span></td></tr>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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    <td style="text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#9679;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">If and when the warrants become redeemable by the
Company, the company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale
under all applicable state securities laws.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 24.5pt"><i>Redemption of warrants when
the price per share of Class&#160;A common stock equals or exceeds $10.00.</i>&#160;Once the Public Warrants become exercisable, the Company
may redeem the Public Warrants:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 33px; text-align: justify">&#160;</td>
    <td style="width: 33px; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#9679;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 33px; text-align: justify">&#160;</td>
    <td style="width: 33px; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#9679;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 33px; text-align: justify">&#160;</td>
    <td style="width: 33px; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted); and</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 33px; text-align: justify">&#160;</td>
    <td style="width: 33px; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#9679;</span></td>
    <td style="text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">if the Reference Value is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 24.5pt">If and when the Public Warrants
become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying
securities for sale under all applicable state securities laws.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 24.5pt">If the Company calls the Public
Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on
a &#8220;cashless basis,&#8221; as described in the warrant agreement. The exercise price and number of shares of Class&#160;A common
stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization,
reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuances of Class&#160;A
common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.
If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in
the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution
from the Company&#8217;s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire
worthless.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 24.5pt">In addition, if (x)&#160;the Company
issues additional shares of Class&#160;A common stock or equity-linked securities for capital raising purposes in connection with the
closing of a Business Combination at an issue price or effective issue price of less than $9.20 per Class&#160;A common (with such issue
price or effective issue price to be determined in good faith by the Company&#8217;s board of directors and, in the case of any such issuance
to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance) (the &#8220;Newly Issued Price&#8221;), (y)&#160;the aggregate gross proceeds from such issuances represent more
than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation
of a Business Combination (net of redemptions), and (z)&#160;the volume weighted average trading price of the Company&#8217;s Class&#160;A
common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business
Combination (such price, the &#8220;Market Value&#8221;) is below $9.20 per share, the exercise price of the Public Warrants will be adjusted
(to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption
trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly
Issued Price, and the $10.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to
the higher of the Market Value and the Newly Issued Price.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 24.5pt">The Private Placement Warrants
are identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Private Placement
Warrants and the Class&#160;A common stock issuable upon the exercise of the Placement Warrants will not be transferable, assignable or
salable until the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants
will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees.
If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement
Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-01-01to2021-09-30" escape="true" name="us-gaap:SubsequentEventsTextBlock"><p id="xdx_80E_eus-gaap--SubsequentEventsTextBlock_zIbm2EecNq0c" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>NOTE 8 &#8212; <span id="xdx_820_ziqvVwgmqEO4">SUBSEQUENT EVENTS</span> </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">The Company evaluated subsequent
events and transactions that occurred after the balance sheet date through November 17, 2021, the date that the financial statements
were issued. Other than as described in these financial statements in relation to the Company&#8217;s Initial Public Offering (Note 1,
3 and 5) and related transactions, the Company did not identify any other subsequent events that would have required adjustment or disclosure
in the financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 24.5pt">&#160;</p>

</ix:nonNumeric><p id="xdx_81F_z03yKPPIeyQ" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_007"></span>Item 2. Management&#8217;s Discussion and Analysis of Financial Condition
and Results of Operations.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">References in this report (the &#8220;Quarterly Report&#8221;)
to &#8220;we,&#8221; &#8220;us&#8221; or the &#8220;Company&#8221; refer to Avalon Acquisition Inc. References to our &#8220;management&#8221;
or our &#8220;management team&#8221; refer to our officers and directors, and references to the &#8220;Sponsor&#8221; refer to Avalon
Acquisition Holdings LLC. The following discussion and analysis of the Company&#8217;s financial condition and results of operations should
be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Special Note Regarding Forward-Looking Statements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">This Quarterly Report includes &#8220;forward-looking
statements&#8221; within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical
facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this
&#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221; regarding the Company&#8217;s
financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements.
Words such as &#8220;expect,&#8221; &#8220;believe,&#8221; &#8220;anticipate,&#8221; &#8220;intend,&#8221; &#8220;estimate,&#8221; &#8220;seek&#8221;
and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements
relate to future events or future performance, but reflect management&#8217;s current beliefs, based on information currently available.
A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed
in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially
from those anticipated in the forward-looking statements, please refer to the Risk Factors section of this Quarterly Report and the Risk
Factors section of the Registration Statement on Form S-1 (Registration No. 333-253654) filed with the SEC. The Company&#8217;s securities
filings can be accessed on the EDGAR section of the SEC&#8217;s website at www.sec.gov. Except as expressly required by applicable securities
law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information,
future events or otherwise.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Overview</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are a blank check company formed on October 12,
2020, under the laws of the State of Delaware. We were incorporated for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities that we have
not yet identified (the &#8220;Business Combination&#8221;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 30, 2021, we have not yet commenced
operations. All activity for the period from October 12, 2020 (inception) through September 30, 2021, relates to our formation and our
initial public offering (the &#8220;Initial Public Offering&#8221;), which is described below. We do not expect to generate any operating
revenues until after the completion of our Business Combination, at the earliest. We will generate non-operating income in the form of
interest income from the proceeds derived from the Initial Public Offering. We have selected December 31 as our fiscal year end.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our sponsor is Avalon Acquisition Holdings
LLC, a Delaware limited liability company (the &#8220;Sponsor&#8221;). The registration statement for our Initial Public Offering
was declared effective by the SEC on October 5, 2021. On October 8, 2021, we consummated our Initial Public Offering of 20,700,000
units (the &#8220;Units&#8221; and, with respect to the Class A common stock included in the Units being offered, the &#8220;Public
Shares&#8221;), at $10.00 per Unit, including 2,700,000 Units sold as part of the exercise of the underwriter&#8217;s over-allotment
option in full, generating gross proceeds of $207,000,000. We incurred $11,637,516 in transaction costs, including $2,587,500
of underwriting fees, $8,365,507 of deferred underwriting fees and $684,509 of other costs.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Simultaneously with the closing of the Initial Public
Offering, we consummated the sale of 8,100,000 warrants (each, a &#8220;Private Placement Warrant&#8221; and, collectively, the &#8220;Private
Placement Warrants&#8221;) at a price of $1.00 per Private Placement Warrant in a private placement to our Sponsor, generating gross proceeds
of $8,100,000.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Following the Initial Public Offering, the exercise
of the over-allotment option and the sale of the Private Placement Warrants, a total of $210,105,000 was placed in a trust account (&#8220;Trust
Account&#8221;), located in the United States with Continental Stock Transfer &amp; Trust Company acting as trustee, and may be invested
only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended
(the &#8220;Investment Company Act&#8221;), with a maturity of 185&#160;days or less or in any open-ended investment company that holds
itself out as a money market fund selected by the Company meeting the conditions of Rule&#160;2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i)&#160;the completion of a Business Combination or (ii)&#160;the distribution of the funds in
the Trust Account, as described below.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company&#8217;s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">If we do not completed a
Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account
and not previously released to the Company to pay taxes (less up to $100,000 to pay dissolution expenses), divided by the number of then
outstanding Public Shares, which redemption will completely extinguish public stockholders&#8217; rights as stockholders (including the
right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company&#8217;s remaining stockholders and the Company&#8217;s board of directors, dissolve
and liquidate, subject in each case to the Company&#8217;s obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Liquidity and Going Concern</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 30, 2021, the Company had $29 in its
operating bank accounts and a working capital deficit of $377,024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company&#8217;s liquidity needs
prior to the consummation of our Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to
cover certain expenses on behalf of the Company in exchange for the issuance of 5,175,000 of Class B common stock, par value $0.0001 per share (the &#8220;Founder Shares&#8221;), and the loan from the Sponsor of $197,000 as of
September 30, 2021, under an unsecured promissory note (the &#8220;Note&#8221;). The Company repaid the Note in full on
October 15, 2021. Subsequent to the consummation of the Initial Public Offering, the Company&#8217;s liquidity has been
satisfied through the net proceeds of $2.28 million from the consummation of the Initial Public Offering (including the
Over-Allotment) and the Private Placement held outside of the Trust Account. In addition, in order to finance transaction
costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the
Company&#8217;s officers and directors may, but are not obligated to, provide the Company funds as may be required
(&#8220;Working Capital Loans&#8221;). As of September 30, 2021, there were no amounts outstanding under any Working Capital
Loans.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Based on the foregoing, our management believes that
we will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business
Combination or one year from this filing. Over this time period, we will be using the funds held outside of the Trust Account for paying
existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on
prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the Business Combination.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Results of Operations</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our entire activity from October 12, 200 (inception)
through September 30, 2021, was in preparation for an Initial Public Offering, and since our Initial Public Offering, our activity has
been limited to the search for a prospective initial Business Combination. We will not generate any operating revenues until the closing
and completion of our initial Business Combination.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the three months ended September 30, 2021, we
had a net loss of $875 from formation costs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the nine months ended September 30, 2021,
we had a net loss of $1,325 which consisted of formation and operating costs.</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For the period from October 12, 2020 (inception)
through December 31, 2020, we had a net loss $1,497, which consisted of formation costs.</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Contractual Obligations</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><i>Registration and Shareholder
Rights</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The holders of the
Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class
A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion
of Working Capital Loans) are entitled to registration rights pursuant to a registration rights agreement. The holders of these
securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition,
the holders have certain &#8220;piggy-back&#8221; registration rights with respect to registration statements filed subsequent
to the completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any
such registration statements.</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><i>Underwriting Agreement</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">The underwriters were paid
an underwriting discount of $0.125 per unit, or $2,587,500 in the aggregate, upon the closing of our Initial Public Offering. In addition,
$0.35 per unit, or $7,245,000 in the aggregate, will be payable to the underwriters for deferred underwriting commissions from the amounts
held in the Trust Account solely in the event that that we complete a Business Combination, subject to the terms of the underwriting agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">We granted the underwriters
a 45-day&#160;option from the date of our Initial Public Offering to purchase up to 2,700,000 additional Units at the Initial Public Offering
price less the underwriting discounts and commissions. The underwriters exercised their over-allotment option in full on October 8, 2021
generating gross proceeds of $27 million.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><i>Administrative Support
Agreement</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We do not have any long-term debt, capital lease obligations,
operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a monthly fee of $10,000 for office space,
administrative and support services to the Company. We began incurring these fees on October 8, 2021 and will continue to incur these
fees monthly until the earlier of the completion of the Business Combination and our liquidation.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Critical Accounting Policies</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of condensed financial statements
and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities
at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from
those estimates. We have identified the following critical accounting policies:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><i>Deferred Offering
Costs Associated with the Initial Public Offering</i></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">Deferred offering
costs consists of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that were directly
related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial
Public Offering based on a relative fair value basis, compared to the total proceeds received. Offering costs associated with
derivative warrant liabilities are expensed as incurred, presented as non-operating expenses in the condensed statement of operations.
Offering costs associated with the Class A common stock issued are charged to temporary shareholder&#8217;s equity upon the completion
of the Initial Public Offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Net Loss per Common Share</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, &#8220;Earnings Per Share.&#8221; Net loss per common share is computed by dividing net loss
by the weighted average number of common shares outstanding during the period, excluding common shares subject to forfeiture by
the Sponsor. Weighted average number of common shares as of September 30, 2021 were reduced for the effect of an aggregate of
675,000 Founder Shares that were subject to forfeiture if the over-allotment option was not exercised in full by the underwriter.
As of September 30, 2021, the Company did not have any dilutive securities and other contracts that could potentially be exercised
or converted into common shares and then share in the earnings of the company. As a result, diluted loss per common share is
the same as basic loss per common share for the periods presented.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Recent Accounting Standards</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In August 2020, the FASB issued ASU No. 2020-06, &#8220;Debt-Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity&#8217;s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity&#8217;s Own Equity&#8221; (&#8220;ASU 2020-06&#8221;), which simplifies
accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement
conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings
per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim
periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact on the Company&#8217;s
condensed financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management does not believe that any
other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on
our condensed financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Off-Balance Sheet Arrangements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We did not have any off-balance sheet arrangements
as of September 30, 2021.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>JOBS Act</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">On April 5, 2012, the Jumpstart
Our Business Startups Act of 2012 (the &#8220;JOBS Act&#8221;) was signed into law. The JOBS Act contains provisions that, among other
things, relax certain reporting requirements for qualifying public companies. We will qualify as an &#8220;emerging growth company&#8221;
and under the JOBS Act, we will be allowed to comply with new or revised accounting pronouncements based on the effective date for private
(not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may
not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging
growth companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">Additionally, we are in the
process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain
conditions set forth in the JOBS Act, if, as an &#8220;emerging growth company,&#8221; we choose to rely on such exemptions we may not
be required to, among other things, (i) provide an auditor&#8217;s attestation report on our system of internal controls over financial
reporting pursuant to Section 404 of the JOBS Act, (ii) provide all of the compensation disclosure that may be required of non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may
be adopted by the Public Company Accounting and Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor&#8217;s
report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose
certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of
our Chief Executive Officer&#8217;s compensation to median employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no longer an &#8220;emerging growth company,&#8221; whichever
is earlier.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><span id="a_008"></span>Item 3. Quantitative and Qualitative Disclosures
About Market Risk</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">We are a smaller reporting
company as defined by Rule&#160;12b-2&#160;of the Exchange Act and are not required to provide the information otherwise required under
this item. As of September 30, 2021, we were not subject to any market or interest rate risk. The net proceeds of the Initial Public Offering
(including the Over-Allotment), including amounts in the Trust Account, will be invested in U.S. government securities with a maturity
of 185 days or less or in money market funds that meet certain conditions under Rule&#160;2a-7&#160;under the Investment Company Act of
1940, as amended, that invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments,
we believe there will be no associated material exposure to interest rate risk.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">We have not engaged in any
hedging activities since our inception, and we do not expect to engage in any hedging activities with respect to the market risk to which
we are exposed.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><span id="a_009"></span>Item 4. Controls and Procedures</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Evaluation of Disclosure Controls and Procedures</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Disclosure controls and procedures are designed to
ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within
the time periods specified in the SEC&#8217;s rules and forms, and that such information is accumulated and communicated to our management,
including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Under the supervision and with the participation of
our management we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter
ended September 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation
and in light of the SEC Staff Statement, our Certifying Officers concluded that no material weakness existed and our disclosure controls
and procedures were effective as of September 30, 2021.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Changes in Internal Control over Financial Reporting</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">There was no change in our internal control over financial
reporting that occurred during the first fiscal quarter of 2021 covered by this Quarterly Report on Form 10-Q that has materially affected,
or is reasonably likely to materially affect, our internal control over financial reporting.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><span id="a_010"></span>PART II - OTHER INFORMATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><span id="a_011"></span>Item 1. Legal Proceedings.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">None.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><span id="a_012"></span>Item 1A. Risk Factors.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Except as set forth below, as of the date of this
Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in our Registration Statement
on Form S-1 (No. 333-253654) that was declared effective by the SEC on October 5, 2021 and that was used in connection with our Initial
Public Offering. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the aforesaid
Registration Statement. &#160;Any of these factors could result in a significant or material adverse effect on our results of operations
or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business
or results of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>The securities in which we invest the funds
held in the Trust Account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the
per-share redemption amount received by public stockholders may be less than $10.15 per share.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The proceeds held in the Trust Account are invested
only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S. government
treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central
banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has
not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable to
complete our initial business combination or make certain amendments to our Amended and Restated Certificate of Incorporation, our public
stockholders are entitled to receive their pro-rata share of the proceeds held in the Trust Account, plus any interest income not released
to us, net of taxes payable. Negative interest rates could impact the per-share redemption amount that may be received by public stockholders.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><span id="a_013"></span>Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 21, 2020, our Sponsor paid an aggregate
of $25,000, or approximately $0.004 per share, to cover certain of our offering costs in consideration of 5,750,000 shares of
our Class B common stock, par value $0.0001. On August 30, 2021, the Sponsor forfeited 1,437,500 of these shares, for no consideration,
such that there were 4,312,500 shares of Class B common stock outstanding. On October 5, 2021, the Company effected a stock dividend
of 0.2 of a founder share for each outstanding founder share, which resulted in the Sponsor holding an aggregate of 5,175,000
Founder Shares (up to 675,000 of which are subject to forfeiture by the Sponsor depending on the extent to which the underwriter&#8217;s
option to purchase additional units is exercised). As a result of the underwriter&#8217;s election to exercise fully its over-allotment
option, 675,000 Founder Shares are no longer subject to forfeiture. On October 5, 2021, the Sponsor transferred 150,000 Founder
Shares to its independent directors. The Founder Shares will automatically convert into Class A common stock at the time of the
initial Business Combination.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 8, 2021, we consummated the Initial Public
Offering of 20,700,000 Units, which includes the full exercise by the underwriters of their over-allotment option of 2,700,000 Units.
The Units sold in the Initial Public Offering, including pursuant to the over-allotment option, were sold at an offering price of $10.00
per unit, generating total gross proceeds of $207,000,000. Maxim Group LLC acted as the sole book-runner of the Initial Public Offering.
The securities in the offering were registered under the Securities Act on registration statements on Form S-1 (No. 333-253654). The SEC
declared the registration statements effective on October 5, 2021.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Simultaneous with the consummation of the Initial
Public Offering, we consummated the private placement of an aggregate of 8,100,000 Private Placement Warrants to the Sponsor at a price
of $1.00 per Private Placement Warrant, generating total proceeds of $8,100,000. The issuance was made pursuant to the exemption from
registration contained in Section 4(a)(2) of the Securities Act. The Private Placement Warrants are identical to the warrants underlying
the Units sold in the Initial Public Offering, except that the Private Placement Warrants are not transferable, assignable or salable
until 30 days after the completion of a Business Combination, subject to certain limited exceptions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 31, 2020, the Sponsor agreed to loan the
Company up to $250,000 pursuant to the Promissory Note. The Promissory Note was non-interest bearing and was due on the closing date of
the Initial Public Offering. As of September 30, 2021, we borrowed $197,000 under the Promissory Note. We repaid the Note in full on October
15, 2021.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Of the gross proceeds received from the Initial Public
Offering and the Private Placement Warrants, $210,105,000 was placed in the Trust Account. The net proceeds of the Initial Public Offering
and certain proceeds from the sale of the Private Placement Warrants may be invested in U.S. government treasury bills with a maturity
of 185 days or less and in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest
only in direct U.S. government treasury obligations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We paid a total of $2,587,500 in underwriting discounts
and commissions and $684,509 for other costs and expenses and issued 155,250 representative shares with approximate value of $1,121,000
to the underwriter related to the Initial Public Offering. In addition, the underwriter agreed to defer up to $7,245,000 in underwriting
discounts and commissions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For a description of the use of the proceeds
generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_014"></span>Item 3. Defaults Upon Senior Securities.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">None.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_015"></span>Item 4. Mine Safety Disclosures.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Not Applicable.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_016"></span>Item 5. Other Information.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">None.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><span id="a_017"></span>Item 6. Exhibits.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following exhibits are filed as part of, or incorporated
by reference into, this Quarterly Report on Form 10-Q.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td colspan="2" style="border-bottom: black 1pt solid; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>No.</b></span></td>
<td style="border-bottom: white 1pt solid; padding: 0.25pt 0.25pt 0.5pt">&#160;</td>
<td style="border-bottom: black 1pt solid; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>Description of Exhibit</b></span></td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">31.1*</span></td>
<td style="padding: 0.25pt">&#160;</td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"><a href="e3293_ex31-1.htm">Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</a></span></td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">31.2*</span></td>
<td style="padding: 0.25pt">&#160;</td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"><a href="e3293_ex31-2.htm">Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</a></span></td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">32.1**</span></td>
<td style="padding: 0.25pt">&#160;</td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"><a href="e3293_ex32-1.htm">Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</a></span></td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">32.2**</span></td>
<td style="padding: 0.25pt">&#160;</td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"><a href="e3293_ex32-2.htm">Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</a></span></td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">101.INS*</span></td>
<td style="padding: 0.25pt">&#160;</td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">Inline XBRL Instance Document.</span></td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">101.SCH*</span></td>
<td style="padding: 0.25pt">&#160;</td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">Inline XBRL Taxonomy Extension Schema Document.</span></td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">101.CAL*</span></td>
<td style="padding: 0.25pt">&#160;</td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">Inline XBRL Taxonomy Extension Calculation Linkbase Document.</span></td></tr>
<tr style="vertical-align: top">
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<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">Inline XBRL Taxonomy Extension Definition Linkbase Document.</span></td></tr>
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<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">Inline XBRL Taxonomy Extension Labels Linkbase Document.</span></td></tr>
<tr style="vertical-align: top">
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<td style="padding: 0.25pt">&#160;</td>
<td style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">Inline XBRL Taxonomy Extension Presentation Linkbase Document.</span></td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">104*</span></td>
<td style="padding: 0.25pt">&#160;</td>
<td style="padding: 0.25pt">Cover Page Interactive Data File. &#160;</td></tr>
<tr style="vertical-align: top">
<td colspan="2" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: center">&#160;</td>
<td style="padding: 0.25pt">&#160;</td>
<td style="padding: 0.25pt">&#160;</td></tr>
<tr style="vertical-align: top">
<td style="white-space: nowrap; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">*</span></td>
<td colspan="3" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">Filed herewith.</span></td></tr>
<tr style="vertical-align: top">
<td style="white-space: nowrap; padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">**</span></td>
<td colspan="3" style="padding-top: 0.25pt; padding-right: 0.25pt; padding-left: 0.25pt; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">Furnished.</span></td></tr>
<tr>
<td style="width: 2%">&#160;</td>
<td style="width: 8%">&#160;</td>
<td style="width: 1%">&#160;</td>
<td style="width: 89%">&#160;</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><span id="a_018"></span>SIGNATURES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In accordance with the requirements of the Exchange
Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td colspan="2" style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><b>AVALON
ACQUISITION INC.</b></span></td></tr>
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt; width: 49%"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt; width: 1%"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-align: left; text-indent: 0pt; width: 7%"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt; width: 43%"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-align: justify; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Date:
November 17, 2021</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-align: left; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">By:</span></td>
<td style="border-bottom: Black 1pt solid; padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">/s/
S. Craig Cognetti</span></td></tr>
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-align: left; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Name:</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">S. Craig
Cognetti</span></td></tr>
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-align: left; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Title:</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Chief
Executive Officer</span></td></tr>
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-align: left; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">(Principal
Executive Officer) &#160;</span></td></tr>
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-align: left; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-align: justify; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Date:
November 17, 2021</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-align: left; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">By:</span></td>
<td style="border-bottom: Black 1pt solid; padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">/s/
R. Rachel Hsu</span></td></tr>
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-align: left; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Name:</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">R. Rachel
Hsu</span></td></tr>
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-align: left; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Title:</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Chief
Financial Officer</span></td></tr>
<tr style="vertical-align: top">
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-align: left; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0.25pt 0pt 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">(Principal
Accounting Officer and Financial Officer)</span></td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">23</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"></p>

<!-- Field: Rule-Page --><div style="margin-top: 3pt; margin-bottom: 3pt; width: 100%"><div style="border-top: Black 2pt solid; font-size: 1pt">&#160;</div></div><!-- Field: /Rule-Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

























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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(MARK ONE)
☒
QUARTERLY
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarter ended
September 30, 2021
☐
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:
001-40872
AVALON ACQUISITION INC.
(Exact
    name of registrant as specified in its charter)
Delaware
85-3451075
(State
    or other jurisdiction of
incorporation or organization)
(I.R.S.
    Employer
Identification No.)
2 Embarcadero Center
,
8th Floor
San Francisco
,
CA
94111
(Address
of principal executive offices)
(415)
423-0010
(Registrant's
telephone number, including area code)
Not
applicable.
(Former
name, former address and former fiscal year, if changed since last report)
Securities
registered pursuant to Section 12(b) of the Act:
Title
    of each class
Trading
    Symbol(s)
Name
    of each exchange on which registered
Units,
    each consisting of one share of Class A common stock, par value $0.0001 per share and three-fourths of one redeemable warrant
AVACU
The
Nasdaq
Stock Market LLC
Class
    A Common Stock, par value $0.0001 per share
AVAC
The
Nasdaq
Stock Market LLC
Redeemable
    warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per whole share
AVACW
The
Nasdaq
Stock Market LLC
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes
☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☒ No ☐
As
of November 17, 2021, there were
20,855,250
shares of Class A common stock, par value $0.0001 per share, and
5,175,000
shares
of Class B common stock, par value $0.0001 per share, issued and outstanding.
AVALON ACQUISITION IN INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020
1
Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2021 (unaudited) and for the period from October 12, 2020 (inception) through December 31, 2020
2
Condensed Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2021 (unaudited) and for the period from October 12, 2020 (inception) through December 31, 2020
3
Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2021 (unaudited) and for the period from October 12, 2020 (inception) through December 31, 2020
4
Notes to Condensed Financial Statements
5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
16
Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk
20
Item 4. Controls and Procedures
20
Part II. Other Information
21
Item 1. Legal Proceedings
21
Item 1A. Risk Factors
21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
21
Item 3. Defaults Upon Senior Securities
22
Item 4. Mine Safety Disclosures
22
Item 5. Other Information
22
Item 6. Exhibits
22
Part III. Signatures
23
PART I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
AVALON ACQUISITION INC.
CONDENSED BALANCE SHEETS
September 30, 2021 (unaudited)
December 31, 2020
ASSETS
Cash
$
29
$
12,500
Deferred offering costs
399,202
109,253
Total Assets
$
399,231
$
121,753
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accrued expenses
$
—
$
1,497
Accrued offering costs
180,053
96,753
Promissory note – related party
197,000
—
Total Current Liabilities
377,053
98,250
Commitments and contingencies
Stockholder's Equity
Preferred stock, $
0.0001
par value;
1,000,000
shares authorized;
none
issued and outstanding
—
—
Class A common stock, $
0.0001
par value;
100,000,000
shares authorized;
none
issued and outstanding
—
—
Class B common stock, $
0.0001
par value;
10,000,000
shares authorized;
5,175,000
shares issued and outstanding
(1)
518
518
Additional paid-in capital
24,482
24,482
Accumulated deficit
(
2,822
)
(
1,497
)
Total Stockholder's Equity
22,178
23,503
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
$
399,231
$
121,753
(1)
Includes an aggregate of 675,000 shares that are subject to forfeiture to the extent that the underwriter's over-allotment is not exercised in full or in part (see Note 7). The underwriter exercised its over-allotment option in full on October 8, 2021, and, as a result, 675,000 shares are no longer subject to forfeiture.
The accompanying notes are an integral part of the
condensed financial statements.
1
AVALON ACQUISTION INC.
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 2021 (unaudited)
For the Nine Months Ended September 30, 2021
    (unaudited)
For the period from October 12, 2020 (inception) through December 31, 2020
Formation costs
$
875
$
875
$
1,497
General and administrative expenses
—
450
—
Net Loss
$
(
875
)
$
(
1,325
)
$
(
1,497
)
Weighted average common shares outstanding, basic and diluted
(1)
4,500,000
4,500,000
4,500,000
Basic and diluted net loss per common share
$
(
0.00
)
$
(
0.00
)
$
(
0.00
)
(1)
Excludes an aggregate of 675,000 shares that are subject to forfeiture to the extent that the underwriter's over-allotment is not exercised in full or in part (see Note 7). The underwriter exercised its over-allotment option in full on October 8, 2021 and, as a result, 675,000 shares are no longer subject to forfeiture.
The accompanying notes are an integral part of the
condensed financial statements.
2
AVALON ACQUISITION INC.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDER'S
EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
2021
Class B Common Stock
(1)
Additional
Paid-in
Accumulated
Total
Stockholder's
Shares
Amount
Capital
Deficit
Equity
Balance at October 12, 2020 (inception)
—
$
—
$
—
$
—
$
—
Issuance of Class B common stock to Sponsor
(1)
5,175,000
518
24,482
—
25,000
Net loss
—
—
—
(
1,497
)
(
1,497
)
Balance  at December 31, 2020
5,175,000
518
24,482
(
1,497
)
23,503
Net loss
—
—
—
(
450
)
(
450
)
Balance  at June 30, 2021
5,175,000
518
24,482
(
1,947
)
23,053
Net loss
—
—
—
(
875
)
(
875
)
Balance at September 30, 2021 (unaudited)
5,175,000
$
518
$
24,482
$
(
2,822
)
$
22,178
(1)
Includes an aggregate of 675,000 shares that are subject to forfeiture to the extent that the underwriter's over-allotment is not exercised in full or in part (see Note 7). The underwriter exercised its over-allotment option in full on October 8, 2021 and, as a result, 675,000 shares are no longer subject to forfeiture.
The accompanying notes are an integral part of the
condensed financial statements.
3
AVALON ACQUISTION INC.
CONDENSED STATEMENTS OF CASH FLOWS
For the  Nine Months Ended September 30, 2021 (unaudited)
For the period from October 12, 2020 (inception) through December 31, 2020
Cash Flows from Operating Activities:
Net loss
$
(
1,325
)
$
(
1,497
)
Changes in operating assets and liabilities:
Accrued expenses
(
1,497
)
1,497
Net cash used in operating activities
(
2,822
)
—
Cash Flows from Financing Activities:
Payment of offering costs
(
206,649
)
(
12,500
)
Proceeds from sale of shares of common stock to initial shareholder
—
25,000
Proceeds from promissory note with related parties
197,000
Net cash (used in)/ provided by financing activities
(
9,649
)
12,500
Net Change in Cash
(
12,471
)
12,500
Cash—Beginning
12,500
—
Cash—Ending
$
29
$
12,500
Supplemental Disclosures of Non-Cash investing and financing activities:
Deferred offering costs included in accrued offering costs
$
180,053
$
96,753
The accompanying notes are an integral part of the
condensed financial statements.
4
AVALON ACQUISTION INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 —
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Avalon Acquisition Inc. (the "Company")
was incorporated in Delaware on October 12, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the "Business Combination").
Although the Company is not limited
to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on businesses
that are in the financial services and financial technologies industries. The Company is an early stage and emerging growth company and,
as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2021, the
Company had not commenced any operations. All activity for the period from October 12, 2020 (inception) through September 30, 2021 relates
to the Company's formation and the preparation for its initial public offering ("Initial Public Offering"). The Company
will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company
will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company
has selected December 31 as its fiscal year end.
The registration statement for
the Company's Initial Public Offering was declared effective on October 5, 2021. On October 8, 2021, the Company consummated the
Initial Public Offering of
20,700,000
units (the "Units" and, with respect to the shares of Class A common stock included
in the Units sold, the "Public Shares"), which includes the full exercise by the underwriter of the over-allotment option
to purchase an additional
2,700,000
Units, at $
10.00
per Unit, generating gross proceeds of $
207,000,000
, which is described in Note 3.
Simultaneously with the closing
of the Initial Public Offering, the Company consummated the sale of
8,100,000
warrants (each, a "Private Placement Warrant"
and, collectively, the "Private Placement Warrants") at a price of $
1.00
per Private Placement Warrant in a private placement
to Avalon Acquisition Holdings, LLC (the "Sponsor"), generating gross proceeds of $
8,100,000
, which is described in Note 4.
Following the closing of the
Initial Public Offering on October 8, 2021, an amount of $
210,105,000
($10.15 per Unit) from the net proceeds of the sale of the units
in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the "Trust Account")
located in the United States and held as cash and will be invested only in U.S. government securities, within the meaning set forth in
Section 2(a)(16) of the Investment Company Act of 1940, as amended (the "Investment Company Act"), with a maturity of 185 days
or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions
of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business
Combination or (ii) the distribution of the funds in the Trust Account, as described below.
The Company's management
has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private
Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company's
initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of
the balance in the Trust Account (as defined below) (excluding taxes payable on interest income earned from the Trust Account and the
deferred underwriting commissions) at the time of the agreement to enter into the initial Business Combination. The Company will only
complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the
target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. There is no assurance that the Company will be able to complete a Business Combination successfully.
5
The Company will provide
its holders of the outstanding Public Shares (the "Public Stockholders") with the opportunity to redeem all or a portion of
their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve
the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval
of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will
be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be
$10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company
to pay its tax obligations). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be
reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 6). There will be
no redemption rights upon the completion of a Business Combination with respect to the Company's warrants. The Public Shares subject
to redemption are recorded at redemption value and classified as temporary equity in accordance with the Accounting Standards Codification
("ASC") Topic 480 "Distinguishing Liabilities from Equity."
The Company will proceed with
a Business Combination if the Company has net tangible assets of at least $
5,000,001
upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder
vote is not required by law or stock exchange requirements and the Company does not decide to hold a stockholder vote for business or
other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the "Amended and Restated
Certificate of Incorporation"), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission
("SEC") and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder
approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the
Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender
offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company's Sponsor has agreed
to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in
favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective
of whether they vote for or against the proposed transaction.
Notwithstanding the above, if
the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules,
the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a "group" (as defined under Section 13 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), will be restricted from redeeming its shares with respect
to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The Company's Sponsor has
agreed (i) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the
completion of a Business Combination and (ii) not to propose an amendment to the Company's Amended and Restated Certificate
of Incorporation that would affect the substance or timing of the Company's obligation to redeem 100% of its Public Shares if the
Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their
shares in conjunction with any such amendment.
The Company will have until January
8, 2023 to consummate a Business Combination or until July 8, 2023 if the Company extends the period of time to consummate an initial
Business Combination by the full amount of time (the "Combination Period"). If the Company is unable to complete a Business
Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account
and not previously released to the Company to pay taxes (less up to $100,000 to pay dissolution expenses), divided by the number of then
outstanding Public Shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the
right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the Company's remaining stockholders and the Company's board of directors,
dissolve and liquidate, subject in each case to the Company's obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company's
warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
6
The Sponsor has agreed to waive
its right to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such
Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination
within the Combination Period. The underwriter has agreed to waive their rights to their deferred underwriting commission (see Note 6)
held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such
event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the
Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts
held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services
rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction
agreement, reduce the amount of funds in the Trust Account to below (i) $10.15 per Public Share or (ii) such lesser amount per
Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust
assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a
waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company's indemnity of the
underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party,
the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility
that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers
(other than our independent registered public accounting firm), prospective target businesses or other entities with which the Company
does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the
Trust Account.
Liquidity and Going Concern
As of September 30,
2021, the Company had $
29
in its operating bank accounts and negative working capital of approximately $
377,000
.
The
Company's liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the payment
of $
25,000
from
the Sponsor to cover certain expenses on behalf of the Company in consideration of Founder Shares (as defined in Note 4), and
the loan from the Sponsor of $
197,000
as
of September 30, 2021 under the Note (as defined in Note 4). The Company repaid the Note in full on October 15, 2021.
Subsequent to the consummation of the Initial Public Offering, the Company's liquidity has been satisfied through the
net proceeds of $
2.28
million
from the consummation of the Initial Public Offering (including the Over-Allotment), the Private Placement and the Second
Private Placement held outside of the Trust Account. In addition, in order to finance transaction costs in connection with a
Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company's officers and directors
may, but are not obligated to, provide the Company Working Capital Loans (as defined in Note 4). As of September 30, 2021 and
December 31 2020, there were no amounts outstanding under any Working Capital Loans.
Based
on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through
one year from this filing. Over this time period, the Company will be using the funds held outside of the Trust Account for paying existing
accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective
target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating
and consummating the Business Combination.
NOTE 2 —
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The unaudited condensed financial
statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America ("GAAP")
and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by
GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included.
7
The accompanying unaudited condensed
financial statements should be read in conjunction with the audited financial statements and notes thereto included in the final prospectus
filed by the Company with the SEC on October 7, 2021 related to the Initial Public Offering and the audited balance sheet included in
the Current Report on Form 8-K filed by the Company with the SEC on October 15, 2021. The interim results for the three and nine months
ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any
future periods.
Emerging Growth Company
The Company is an "emerging
growth company," as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of
certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports
and proxy statements, not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight
Board regarding mandatory audit firm rotation or to provide a supplement to the auditor's report providing additional information
about the audit and the financial statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period
which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company,
as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
This may make comparison of the Company's financial statements with another public company which is neither an emerging growth company
nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Cash and Cash Equivalents
The Company considers all short-term
investments with an original maturity of three months or less when purchased to be cash equivalents.
Deferred Offering Costs Associated with the
Initial Public Offering
The Company complies with the
requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A – "Expenses of Offering." Costs
incurred in connection with preparation for the Public Offering ($
684,509
) together with $
10,953,007
of underwriters' discount,
were allocated to equity instruments ($
11,157,580
) and derivative warrant liabilities ($
479,936
), based on their relative values, and
charged to temporary equity or expensed (in the case of the portion allocated to derivative warrant liabilities) upon completion of the
Initial Public Offering.
Income Taxes
The Company follows the asset
and liability method of accounting for income taxes under FASB ASC Topic 740, "Income Taxes." Deferred tax assets and
liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement's
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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Deferred tax assets are de minimis as of September 30, 2021 and December 31, 2020.
8
FASB ASC Topic 740 prescribes
a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained
upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as
income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021
and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals
or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
Net Loss per Common Share
Net loss per common
share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the
period, excluding shares of common stock subject to forfeiture. Weighted average common shares were reduced for the effect of
an aggregate of
675,000
shares of common stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriter. At
September 30, 2021 and December 31, 2020, the Company did not have any other dilutive securities and other contracts that
could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a
result, diluted loss per common share is the same as basic loss per common share for the periods presented.
Redeemable Common Stock
As discussed in Note 1, all of
the
20,700,000
public shares sold as part of Units in the Initial Public Offering contain a redemption feature which allows for the redemption
of public shares if the Company holds a stockholder vote or there is a tender offer for shares in connection with a Business Combination.
In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security to be classified
outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity's equity
instruments, are excluded from the provisions of FASB ASC 480. Although the Company did not specify a maximum redemption threshold, its
charter provides that in no event will it redeem its public shares in an amount that would cause its net tangible assets (i.e., total
assets less intangible assets and liabilities) to be less than $
5,000,001
upon the closing of a Business Combination.
While redemptions cannot cause
the Company's net tangible assets to fall below $5,000,000, all shares of Class A common stock sold in the Initial Public Offering
are redeemable and will be classified as classified as temporary equity on the Company's balance sheet until such time as a redemption
event takes place. The value of Class A common stock that may be redeemed will be equal to $10.15 per share (which is the assumed redemption
price) multiplied by 20,700,000 shares of Class A common stock.
Derivative Warrant Liabilities
The Company will account for
warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms
and in accordance with FASB ASC 480, Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging
("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet
the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under
ASC 815, including whether the warrants are indexed to the Company's own shares, among other conditions for equity classification.
This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent
quarterly period end date while the warrants are outstanding.
For issued or modified warrants
that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in
capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants
are required to be recorded at their initial fair value of the date of issuance, and each balance sheet date thereafter. Changes in the
estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. Costs associated with
issuing the warrants classified as derivative liabilities are charged to operations when the warrants are issued.
9
Concentration of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed
the Federal Depository Insurance Corporation coverage of $
250,000
. The Company has not experienced losses on this account and management
believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company's
assets and liabilities, which qualify as financial instruments under ASC Topic 820, "Fair Value Measurement," approximates
the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Use of Estimates
The preparation of financial
statements in conformity with GAAP requires the Company's 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 expenses during the reporting period.
Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set
of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could
change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those
estimates.
Recent Accounting Pronouncements
In August 2020, the Financial
Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt — Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40)
("ASU 2020-06") to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require
separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception
guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional
disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06
amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted
beginning on January 1, 2021. The Company is currently evaluating the impact the pronouncement will have on the condensed financial statements.
Management does not believe that
any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the
Company's financial statements.
COVID-19
Management continues to evaluate
the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a
negative effect on the Company's financial position, results of its operations, and/or search for a target company, the specific
impact is not readily determinable as of the date of the financial statement. The financial statement does not include any adjustments
that might result from the outcome of this uncertainty.
10
NOTE 3 —
INITIAL PUBLIC OFFERING
On October 8, 2021, the Company
consummated the Public Offering of
20,700,000
Units, which includes the full exercise by the underwriter of its option to purchase an
additional
2,700,000
Units, at a price of $
10.00
per unit (the "Units"). Each Unit consists of one share of the Company's
Class A common stock, $
0.0001
par value and three-fourths of one redeemable warrant ("Public Warrant"). Each whole Warrant
offered in the Initial Public Offering is exercisable to purchase one share of Class A common stock at $
11.50
per share, subject
to adjustment (see Note 7).
Simultaneously with the closing
of the Initial Public Offering, the Sponsor purchased an aggregate of
8,100,000
Private Placement Warrants for an aggregate purchase price
of $
8,100,000
. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $
11.50
per
share.
NOTE 4 —
RELATED PARTY TRANSACTIONS
Founder Shares
On October 21, 2020, the Sponsor
paid an aggregate of $
25,000
, or approximately $0.004 per share, to cover certain of our offering costs in consideration of
5,750,000
shares of our Class B common stock, par value $0.0001. On August 30, 2021, the Sponsor forfeited
1,437,500
of these shares, for no
consideration, such that there were
4,312,500
shares of Class B common stock outstanding. On October 5, 2021, the Company effected a stock
dividend of 0.2 of a founder share for each outstanding founder share, which resulted in the Sponsor holding an aggregate of
5,175,000
Founder Shares (up to 675,000 of which are subject to forfeiture by the Sponsor depending on the extent to which the underwriter's
option to purchase additional units is exercised). The Founder Shares include an aggregate of up to
675,000
shares subject to forfeiture
to the extent that the underwriter's over-allotment option is not exercised in full or in part, so that the Sponsor will own, on
an as-converted basis, 20% of the Company's issued and outstanding shares after the Initial Public Offering. As a result of the
underwriter's election to exercise fully its over-allotment option, 675,000 Founder Shares are no longer subject to forfeiture.
On October 5, 2021, the Sponsor transferred
150,000
Founder Shares to its independent directors.
The Sponsor has agreed, subject
to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after
the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last reported sale price of
the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination,
or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results
in all of the Company's stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Promissory Note—Related Party
On October 31, 2020, the Sponsor
agreed to loan the Company an aggregate of up to $
250,000
to cover expenses related to the Proposed Public Offering pursuant to a promissory
note (the "Promissory Note"). The Promissory Note is non-interest bearing and was payable, as amended, on the earlier of December
31, 2021 or the completion of the Initial Public Offering. As of September 30, 2021, $
197,000
was outstanding under the Promissory Note.
At December 31, 2020, there was no amount outstanding under the Promissory Note. On October 15, 2021, the Company repaid the balance in
full to the Sponsor. Because the balance of the Promissory Note has been repaid, it is no longer available to the Company.
Administrative Support Agreement
Commencing on the effective date
of the Initial Public Offering, the Company agreed to pay the Sponsor a total of $
10,000
per month for office space, and administrative
support services. Upon completion of an initial Business Combination or the Company's liquidation, the Company will cease paying
these monthly fees. As of September 30, 2021 and December 31, 2020, there were no amounts accrued under this agreement.
11
Related Party Loans
In order to finance transaction
costs in connection with a Business Combination, the Sponsor, or the Company's officers and directors may, but are not obligated
to, loan the Company funds as may be required ("Working Capital Loans"). If the Company completes a Business Combination,
the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. In the event that
a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital
Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms
of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working
Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender's discretion,
up to $
1,500,000
of such Working Capital Loans may be convertible into warrants at a price of $
1.00
per warrant at the option of
the lender. The warrants would be identical to the Private Placement Warrants. As of September 30, 2021 and December 31, 2020, there was
no working capital loan outstanding.
NOTE 5 —
COMMITMENTS
Registration Rights
The holders of the Founder Shares,
Private Placement Warrants, warrants and representative shares that may be issued upon conversion of Working Capital Loans (and any shares
of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion
of Working Capital Loans) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or
on the effective date of Initial Public Offering. The holders of these securities will be entitled to make up to three demands, excluding
short form demands, that the Company register such securities. In addition, the holders have certain "piggy-back" registration
rights with respect to registration statements filed subsequent to the completion of a Business Combination. However, the registration
rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective
until termination of the applicable lockup period. The Company will bear the expenses incurred in connection with the filing of any such
registration statements.
Underwriting Agreement
The Company granted the underwriter
a 45-day option from the date of Initial Public Offering to purchase up to
2,700,000
additional Units to cover over-allotments, if any,
at the Initial Public Offering price less the underwriting discounts and commissions. At October 8, 2021, the underwriter exercised such
option in full.
The underwriter was entitled
to an underwriting discount of $0.125 per Unit, or $
1,875,00
in the aggregate (or $
2,156,250
in the aggregate if the underwriter's
over-allotment option is exercised in full) of the gross proceeds of the Initial Public Offering. In addition, the underwriter was entitled
to a deferred fee of $0.35 per Unit, or $
5,250,000
in the aggregate (or $
6,037,500
in the aggregate if the underwriter's over-allotment
option is exercised in full);
provided that up to 0.875% of the gross proceeds or $1,312,500 (or $1,509,375 if the over-allotment option
is exercised in full) in the aggregate may be paid to third parties not participating in the offering
(but who are members of the Financial
Industry Regulatory Authority ("FINRA") or regulated broker-dealers) that assist the underwriter in consummating the initial
Business Combination. The deferred fee will be waived by the underwriter in the event that the Company does not complete a Business Combination,
subject to the terms of the underwriting agreement.
12
In addition, the Company issued
to the underwriter
155,250
non-redeemable shares of Class A common stock upon closing of the Initial Public Offering, at a price of $
0.0001
(the "Representative Shares"). The holder of the Representative Shares has agreed not to transfer, assign or sell any such
shares without the Company's prior consent until the completion of the Company's initial Business Combination. In addition,
the holder of the Representative Shares has agreed (i) to waive its conversion rights (or right to participate in any tender offer) with
respect to such shares in connection with the completion of the Company's initial Business Combination and (ii) to waive its rights
to liquidating distributions from the Trust account with respect to such shares if the Company fails to complete its initial Business
Combination within the required time period. The Representative Shares have been deemed compensation by FINRA and are therefore subject
to a lock-up for a period of 180 days immediately following the date of the effectiveness of the registration statement.
NOTE 6 –
WARRANTS LIABILITIES
There were no warrants outstanding
at September 30, 2021 and December 31, 2020. The Company will account for the Public and Private Placement Warrants in accordance with
the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder,
each warrant must be recorded as a liability. Accordingly, the Company will classify each warrant as a liability at its fair value and
charge the costs associated with issuing such warrants to operations. The accounting treatment of derivative financial instruments requires
that the Company records a derivative liability upon the closing of the Initial Public Offering. Accordingly, the Company will classify
the warrants as a liability at their fair value and allocate a portion of the proceeds from the issuance of the Units to the warrants.
This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted
to fair value, with the change in fair value recognized in the Company's statement of operations. The Company will reassess the
classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be
reclassified as of the date of the event that causes the reclassification.
NOTE 7 —
STOCKHOLDERS' DEFICIT
Preferred Stock
—
The Company was authorized to issue
1,000,000
shares of preferred stock with a par value of $
0.0001
per share with such designations,
voting and other rights and preferences as may be determined from time to time by the Company's board of directors. At September
30, 2021 and December 31, 2020, there were
no
shares of preferred stock issued or outstanding.
Class A Common Stock
— The Company was authorized to issue
100,000,000
shares of Class A common stock with a par value of $
0.0001
per share.
Holders of Class A common stock are entitled to one vote for each share. At September 30, 2021 and December 31, 2020, there were
no
shares of Class A common stock issued and outstanding.
Class B Common Stock
— The Company was authorized to issue
10,000,000
shares of Class B common stock with a par value of $
0.0001
per share. Holders
of Class B common stock are entitled to one vote for each share. At September 30, 2021, there were
5,175,000
shares of Class B
common stock issued and outstanding.
Holders of Class B common
stock will have the right to elect all of the Company's directors prior to a Business Combination. Holders of Class A common
stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except
as required by law.
The shares of Class B common
stock will automatically convert into shares of Class A common stock on the first business day following the completion of a Business
Combination at a ratio such that the number of shares of Class A common stock issuable upon conversion of all Founder shares will
equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of shares of the Company's common
stock issued and outstanding upon completion of Initial Public Offering, plus (ii) the sum of (a) all shares of the Company's
common stock issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or deemed issued by the Company
in connection with or in relation to the completion of a Business Combination, excluding (1) any shares of Class A common stock
or equity-linked securities exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller
in a Business Combination and any (2) Private Placement Warrants issued to the Sponsor or any of its affiliates upon conversion of
Working Capital Loans minus (b) the number of Public Shares redeemed by public stockholders in connection with a Business Combination.
13
Warrants
—Public
Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only
whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a
Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five
years after the completion of a Business Combination or earlier upon redemption or liquidation. As of September 30, 2021 and December
31, 2020, there were no warrants outstanding.
The Company will not be obligated
to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant
exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the
warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect
to registration, or a valid exemption from registration is available. No warrant will be exercisable and the Company will not be obligated
to issue shares of Class A common stock upon exercise of a warrant unless the share of Class A common stock issuable upon such
warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered
holder of the warrants.
The Company has agreed that as
soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, the Company will use its
commercially reasonable efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares
of Class A common stock issuable upon exercise of the warrants. The Company will use its commercially reasonable efforts to cause
the same to become effective within 60 business days following the closing of our initial business combination and to maintain the effectiveness
of such registration statement, and a current prospectus relating thereto, until the expiration or redemption of the warrants in accordance
with the provisions of the warrant agreement. If a registration statement covering the issuance of the shares of Class A common stock
issuable upon exercise of the warrants is not effective by the 60th business day after the closing of a Business Combination, warrant
holders may, until such time as there is an effective registration statement and during any period when the company will have failed to
maintain an effective registration statement, exercise warrants on a "cashless basis" in accordance with Section 3(a)(9)
of the Securities Act or another exemption. In addition, if the Class A common stock are at the time of any exercise of a warrant
not listed on a national securities exchange such that they satisfy the definition of a "covered security" under Section 18(b)(1)
of the Securities Act, the Company may, at its option, require holders of the Public Warrants who exercise their warrants to do so on
a "cashless basis" in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company elects to do
so, the Company will not be required to file or maintain in effect a registration statement, but it will use its best efforts to register
or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of warrants when
the price per share of Class A common stock equals or exceeds $18.00.
Once the Public Warrants become exercisable, the Company
may redeem the Public Warrants (except with respect to the Private Placement Warrants):
●
in whole and not in part;
●
at a price of $0.01 per warrant;
●
upon not less than 30 days prior written notice of redemption to each warrant holder; and
●
if, and only if, the reported last sale price of the shares of the Company's Class A common stock for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders (the "Reference Value") equals or exceeds $18.00 per share (as adjusted).
If and when the warrants become redeemable by the
Company, the company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale
under all applicable state securities laws.
14
Redemption of warrants when
the price per share of Class A common stock equals or exceeds $10.00.
Once the Public Warrants become exercisable, the Company
may redeem the Public Warrants:
●
in whole and not in part;
●
at $0.10 per warrant upon a minimum of 30 days prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Class A common stock;
●
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted); and
●
if the Reference Value is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
If and when the Public Warrants
become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying
securities for sale under all applicable state securities laws.
If the Company calls the Public
Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on
a "cashless basis," as described in the warrant agreement. The exercise price and number of shares of Class A common
stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization,
reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuances of Class A
common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.
If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in
the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution
from the Company's assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire
worthless.
In addition, if (x) the Company
issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the
closing of a Business Combination at an issue price or effective issue price of less than $9.20 per Class A common (with such issue
price or effective issue price to be determined in good faith by the Company's board of directors and, in the case of any such issuance
to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance) (the "Newly Issued Price"), (y) the aggregate gross proceeds from such issuances represent more
than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation
of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company's Class A
common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business
Combination (such price, the "Market Value") is below $9.20 per share, the exercise price of the Public Warrants will be adjusted
(to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption
trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly
Issued Price, and the $10.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to
the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants
are identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Private Placement
Warrants and the Class A common stock issuable upon the exercise of the Placement Warrants will not be transferable, assignable or
salable until the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants
will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees.
If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement
Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 8 —
SUBSEQUENT EVENTS
The Company evaluated subsequent
events and transactions that occurred after the balance sheet date through November 17, 2021, the date that the financial statements
were issued. Other than as described in these financial statements in relation to the Company's Initial Public Offering (Note 1,
3 and 5) and related transactions, the Company did not identify any other subsequent events that would have required adjustment or disclosure
in the financial statements.
15
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
References in this report (the "Quarterly Report")
to "we," "us" or the "Company" refer to Avalon Acquisition Inc. References to our "management"
or our "management team" refer to our officers and directors, and references to the "Sponsor" refer to Avalon
Acquisition Holdings LLC. The following discussion and analysis of the Company's financial condition and results of operations should
be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical
facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this
"Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's
financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements.
Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek"
and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements
relate to future events or future performance, but reflect management's current beliefs, based on information currently available.
A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed
in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially
from those anticipated in the forward-looking statements, please refer to the Risk Factors section of this Quarterly Report and the Risk
Factors section of the Registration Statement on Form S-1 (Registration No. 333-253654) filed with the SEC. The Company's securities
filings can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as expressly required by applicable securities
law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information,
future events or otherwise.
Overview
We are a blank check company formed on October 12,
2020, under the laws of the State of Delaware. We were incorporated for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities that we have
not yet identified (the "Business Combination").
As of September 30, 2021, we have not yet commenced
operations. All activity for the period from October 12, 2020 (inception) through September 30, 2021, relates to our formation and our
initial public offering (the "Initial Public Offering"), which is described below. We do not expect to generate any operating
revenues until after the completion of our Business Combination, at the earliest. We will generate non-operating income in the form of
interest income from the proceeds derived from the Initial Public Offering. We have selected December 31 as our fiscal year end.
16
Our sponsor is Avalon Acquisition Holdings
LLC, a Delaware limited liability company (the "Sponsor"). The registration statement for our Initial Public Offering
was declared effective by the SEC on October 5, 2021. On October 8, 2021, we consummated our Initial Public Offering of 20,700,000
units (the "Units" and, with respect to the Class A common stock included in the Units being offered, the "Public
Shares"), at $10.00 per Unit, including 2,700,000 Units sold as part of the exercise of the underwriter's over-allotment
option in full, generating gross proceeds of $207,000,000. We incurred $11,637,516 in transaction costs, including $2,587,500
of underwriting fees, $8,365,507 of deferred underwriting fees and $684,509 of other costs.
Simultaneously with the closing of the Initial Public
Offering, we consummated the sale of 8,100,000 warrants (each, a "Private Placement Warrant" and, collectively, the "Private
Placement Warrants") at a price of $1.00 per Private Placement Warrant in a private placement to our Sponsor, generating gross proceeds
of $8,100,000.
Following the Initial Public Offering, the exercise
of the over-allotment option and the sale of the Private Placement Warrants, a total of $210,105,000 was placed in a trust account ("Trust
Account"), located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and may be invested
only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), with a maturity of 185 days or less or in any open-ended investment company that holds
itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the funds in
the Trust Account, as described below.
The Company's management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully.
If we do not completed a
Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account
and not previously released to the Company to pay taxes (less up to $100,000 to pay dissolution expenses), divided by the number of then
outstanding Public Shares, which redemption will completely extinguish public stockholders' rights as stockholders (including the
right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company's remaining stockholders and the Company's board of directors, dissolve
and liquidate, subject in each case to the Company's obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law.
Liquidity and Going Concern
As of September 30, 2021, the Company had $29 in its
operating bank accounts and a working capital deficit of $377,024.
The Company's liquidity needs
prior to the consummation of our Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor to
cover certain expenses on behalf of the Company in exchange for the issuance of 5,175,000 of Class B common stock, par value $0.0001 per share (the "Founder Shares"), and the loan from the Sponsor of $197,000 as of
September 30, 2021, under an unsecured promissory note (the "Note"). The Company repaid the Note in full on
October 15, 2021. Subsequent to the consummation of the Initial Public Offering, the Company's liquidity has been
satisfied through the net proceeds of $2.28 million from the consummation of the Initial Public Offering (including the
Over-Allotment) and the Private Placement held outside of the Trust Account. In addition, in order to finance transaction
costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the
Company's officers and directors may, but are not obligated to, provide the Company funds as may be required
("Working Capital Loans"). As of September 30, 2021, there were no amounts outstanding under any Working Capital
Loans.
17
Based on the foregoing, our management believes that
we will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business
Combination or one year from this filing. Over this time period, we will be using the funds held outside of the Trust Account for paying
existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on
prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the Business Combination.
Results of Operations
Our entire activity from October 12, 200 (inception)
through September 30, 2021, was in preparation for an Initial Public Offering, and since our Initial Public Offering, our activity has
been limited to the search for a prospective initial Business Combination. We will not generate any operating revenues until the closing
and completion of our initial Business Combination.
For the three months ended September 30, 2021, we
had a net loss of $875 from formation costs.
For the nine months ended September 30, 2021,
we had a net loss of $1,325 which consisted of formation and operating costs.
For the period from October 12, 2020 (inception)
through December 31, 2020, we had a net loss $1,497, which consisted of formation costs.
Contractual Obligations
Registration and Shareholder
Rights
The holders of the
Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class
A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion
of Working Capital Loans) are entitled to registration rights pursuant to a registration rights agreement. The holders of these
securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition,
the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent
to the completion of the initial Business Combination. We will bear the expenses incurred in connection with the filing of any
such registration statements.
Underwriting Agreement
The underwriters were paid
an underwriting discount of $0.125 per unit, or $2,587,500 in the aggregate, upon the closing of our Initial Public Offering. In addition,
$0.35 per unit, or $7,245,000 in the aggregate, will be payable to the underwriters for deferred underwriting commissions from the amounts
held in the Trust Account solely in the event that that we complete a Business Combination, subject to the terms of the underwriting agreement.
We granted the underwriters
a 45-day option from the date of our Initial Public Offering to purchase up to 2,700,000 additional Units at the Initial Public Offering
price less the underwriting discounts and commissions. The underwriters exercised their over-allotment option in full on October 8, 2021
generating gross proceeds of $27 million.
Administrative Support
Agreement
We do not have any long-term debt, capital lease obligations,
operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a monthly fee of $10,000 for office space,
administrative and support services to the Company. We began incurring these fees on October 8, 2021 and will continue to incur these
fees monthly until the earlier of the completion of the Business Combination and our liquidation.
18
Critical Accounting Policies
The preparation of condensed financial statements
and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities
at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from
those estimates. We have identified the following critical accounting policies:
Deferred Offering
Costs Associated with the Initial Public Offering
Deferred offering
costs consists of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that were directly
related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial
Public Offering based on a relative fair value basis, compared to the total proceeds received. Offering costs associated with
derivative warrant liabilities are expensed as incurred, presented as non-operating expenses in the condensed statement of operations.
Offering costs associated with the Class A common stock issued are charged to temporary shareholder's equity upon the completion
of the Initial Public Offering.
Net Loss per Common Share
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, "Earnings Per Share." Net loss per common share is computed by dividing net loss
by the weighted average number of common shares outstanding during the period, excluding common shares subject to forfeiture by
the Sponsor. Weighted average number of common shares as of September 30, 2021 were reduced for the effect of an aggregate of
675,000 Founder Shares that were subject to forfeiture if the over-allotment option was not exercised in full by the underwriter.
As of September 30, 2021, the Company did not have any dilutive securities and other contracts that could potentially be exercised
or converted into common shares and then share in the earnings of the company. As a result, diluted loss per common share is
the same as basic loss per common share for the periods presented.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement
conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings
per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim
periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact on the Company's
condensed financial statements.
Management does not believe that any
other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on
our condensed financial statements.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements
as of September 30, 2021.
19
JOBS Act
On April 5, 2012, the Jumpstart
Our Business Startups Act of 2012 (the "JOBS Act") was signed into law. The JOBS Act contains provisions that, among other
things, relax certain reporting requirements for qualifying public companies. We will qualify as an "emerging growth company"
and under the JOBS Act, we will be allowed to comply with new or revised accounting pronouncements based on the effective date for private
(not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may
not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging
growth companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates.
Additionally, we are in the
process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain
conditions set forth in the JOBS Act, if, as an "emerging growth company," we choose to rely on such exemptions we may not
be required to, among other things, (i) provide an auditor's attestation report on our system of internal controls over financial
reporting pursuant to Section 404 of the JOBS Act, (ii) provide all of the compensation disclosure that may be required of non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may
be adopted by the Public Company Accounting and Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's
report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose
certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of
our Chief Executive Officer's compensation to median employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no longer an "emerging growth company," whichever
is earlier.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
We are a smaller reporting
company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under
this item. As of September 30, 2021, we were not subject to any market or interest rate risk. The net proceeds of the Initial Public Offering
(including the Over-Allotment), including amounts in the Trust Account, will be invested in U.S. government securities with a maturity
of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of
1940, as amended, that invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments,
we believe there will be no associated material exposure to interest rate risk.
We have not engaged in any
hedging activities since our inception, and we do not expect to engage in any hedging activities with respect to the market risk to which
we are exposed.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to
ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within
the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management,
including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.
Under the supervision and with the participation of
our management we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter
ended September 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation
and in light of the SEC Staff Statement, our Certifying Officers concluded that no material weakness existed and our disclosure controls
and procedures were effective as of September 30, 2021.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial
reporting that occurred during the first fiscal quarter of 2021 covered by this Quarterly Report on Form 10-Q that has materially affected,
or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
Except as set forth below, as of the date of this
Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in our Registration Statement
on Form S-1 (No. 333-253654) that was declared effective by the SEC on October 5, 2021 and that was used in connection with our Initial
Public Offering. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the aforesaid
Registration Statement.  Any of these factors could result in a significant or material adverse effect on our results of operations
or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business
or results of operations.
The securities in which we invest the funds
held in the Trust Account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the
per-share redemption amount received by public stockholders may be less than $10.15 per share.
The proceeds held in the Trust Account are invested
only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S. government
treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central
banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has
not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable to
complete our initial business combination or make certain amendments to our Amended and Restated Certificate of Incorporation, our public
stockholders are entitled to receive their pro-rata share of the proceeds held in the Trust Account, plus any interest income not released
to us, net of taxes payable. Negative interest rates could impact the per-share redemption amount that may be received by public stockholders.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.
On October 21, 2020, our Sponsor paid an aggregate
of $25,000, or approximately $0.004 per share, to cover certain of our offering costs in consideration of 5,750,000 shares of
our Class B common stock, par value $0.0001. On August 30, 2021, the Sponsor forfeited 1,437,500 of these shares, for no consideration,
such that there were 4,312,500 shares of Class B common stock outstanding. On October 5, 2021, the Company effected a stock dividend
of 0.2 of a founder share for each outstanding founder share, which resulted in the Sponsor holding an aggregate of 5,175,000
Founder Shares (up to 675,000 of which are subject to forfeiture by the Sponsor depending on the extent to which the underwriter's
option to purchase additional units is exercised). As a result of the underwriter's election to exercise fully its over-allotment
option, 675,000 Founder Shares are no longer subject to forfeiture. On October 5, 2021, the Sponsor transferred 150,000 Founder
Shares to its independent directors. The Founder Shares will automatically convert into Class A common stock at the time of the
initial Business Combination.
On October 8, 2021, we consummated the Initial Public
Offering of 20,700,000 Units, which includes the full exercise by the underwriters of their over-allotment option of 2,700,000 Units.
The Units sold in the Initial Public Offering, including pursuant to the over-allotment option, were sold at an offering price of $10.00
per unit, generating total gross proceeds of $207,000,000. Maxim Group LLC acted as the sole book-runner of the Initial Public Offering.
The securities in the offering were registered under the Securities Act on registration statements on Form S-1 (No. 333-253654). The SEC
declared the registration statements effective on October 5, 2021.
Simultaneous with the consummation of the Initial
Public Offering, we consummated the private placement of an aggregate of 8,100,000 Private Placement Warrants to the Sponsor at a price
of $1.00 per Private Placement Warrant, generating total proceeds of $8,100,000. The issuance was made pursuant to the exemption from
registration contained in Section 4(a)(2) of the Securities Act. The Private Placement Warrants are identical to the warrants underlying
the Units sold in the Initial Public Offering, except that the Private Placement Warrants are not transferable, assignable or salable
until 30 days after the completion of a Business Combination, subject to certain limited exceptions.
21
On October 31, 2020, the Sponsor agreed to loan the
Company up to $250,000 pursuant to the Promissory Note. The Promissory Note was non-interest bearing and was due on the closing date of
the Initial Public Offering. As of September 30, 2021, we borrowed $197,000 under the Promissory Note. We repaid the Note in full on October
15, 2021.
Of the gross proceeds received from the Initial Public
Offering and the Private Placement Warrants, $210,105,000 was placed in the Trust Account. The net proceeds of the Initial Public Offering
and certain proceeds from the sale of the Private Placement Warrants may be invested in U.S. government treasury bills with a maturity
of 185 days or less and in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest
only in direct U.S. government treasury obligations.
We paid a total of $2,587,500 in underwriting discounts
and commissions and $684,509 for other costs and expenses and issued 155,250 representative shares with approximate value of $1,121,000
to the underwriter related to the Initial Public Offering. In addition, the underwriter agreed to defer up to $7,245,000 in underwriting
discounts and commissions.
For a description of the use of the proceeds
generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated
by reference into, this Quarterly Report on Form 10-Q.
No.
Description of Exhibit
31.1*
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*
Inline XBRL Instance Document.
101.SCH*
Inline XBRL Taxonomy Extension Schema Document.
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*
Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*
Cover Page Interactive Data File.
*
Filed herewith.
**
Furnished.
22
SIGNATURES
In accordance with the requirements of the Exchange
Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AVALON
ACQUISITION INC.
Date:
November 17, 2021
By:
/s/
S. Craig Cognetti
Name:
S. Craig
Cognetti
Title:
Chief
Executive Officer
(Principal
Executive Officer)
Date:
November 17, 2021
By:
/s/
R. Rachel Hsu
Name:
R. Rachel
Hsu
Title:
Chief
Financial Officer
(Principal
Accounting Officer and Financial Officer)
23