Exhibit 10.1

MONTALVO SPIRITS, INC.

SUBSCRIPTION AGREEMENT
 
This Subscription Agreement (this “Agreement”) is made as of the date set forth
on the signature page of this Agreement between the subscriber set forth on the
signature page hereof (the “Subscriber”) and Montalvo Spirits, Inc., a
publicly-owned Nevada corporation whose shares are quoted under the symbol
“TQLA” (the “Company”), and each party who is a signatory hereto (the
“Subscriber”).
 
1.           DESCRIPTION OF THE OFFERING.  This Offering (the “Offering”) is for
units (the “Units”) to purchase securities of the Company, with a Unit being
comprised of 1,136,363 (One Million One Hundred Thirty Six Three Hundred Sixty
Three) shares of the Company’s common stock (the “Shares”) and a warrant
(“Warrant”) to purchase 568,181 (Five hundred Sixty Eight Thousand One Hundred
Eighty One Dollars) shares of the Company’s Common Stock (“Warrant Shares”), at
an exercise price of $0.022, and expiring in three years (the Units, the Shares,
the Warrant, and the Warrant Shares are sometimes referred to herein as the
“Securities”).  The Company is offering Units on a “best efforts” basis for
$25,000 per Unit, with a maximum of 40 Units for a maximum offering amount of
$1,000,000 (the “Maximum Offering”); however, the Board of Directors of the
Company reserves the right, in its sole discretion, to increase the Maximum
Offering.  The Offering is being made only to accredited investors who qualify
as accredited investors pursuant to suitability standards for investors
described under Regulation D of the Securities Act of 1933, as amended (the
“Securities Act”) and who have no need for liquidity in their
investments.  Prior to this Offering there was no public market for the
Securities and no assurance can be given that a market will develop for the
Securities or if developed, that it will be maintained so that any subscribers
in this offering may avail any benefit form the same.  The Company reserves the
right, in its sole discretion, to accept fractional subscriptions.  The Company
has not engaged the services of a placement agent, but reserves the right in its
sole discretion to do so in the future.
 
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK
AND SHOULD NOT BE PURCHASED BY ANYONE WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT.  THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE, OR OTHER JURISDICTION AND
ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE SECURITIES MAY NOT BE
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR ASSIGNED EXCEPT AS PERMITTED UNDER
SUCH ACT OR SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

 
2.           OTHER TERMS OF THE OFFERING.  The Offering will continue until
subscriptions for the Maximum Offering are received or until June 15, 2015 (the
“Offering Period”), unless extended an additional thirty (30) days (the
“Termination Date”) by the Company, in its sole discretion.  The execution of
this Subscription Agreement shall constitute an offer by the Subscriber to
exercise the Warrants in the amount and on the terms specified herein.  The
Subscriber must also complete and execute the Subscriber Questionnaire attached
hereto.  The Company reserves the right, in its sole discretion, to reject in
whole or in part, any subscription offer.  If the Subscriber's offer is
accepted, the Company will execute a copy of this Subscription Agreement and
return it to Subscriber.  The Company, may in its sole discretion, accept
fractional subscriptions.
 
 
 

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3.           SUBSCRIPTION PROCEDURES.  To subscribe, the Subscriber must send a
completed and executed copy of each this Subscription Agreement and Subscriber
Questionnaire to:
 

Montalvo Spirits, Inc.
5301 N. Commerce Ave
Suite F
Moorpark, California  93021

along with, either

 
·
payment of the Subscriber’s subscribed amount by wire transfer as follows:

Bank of America
Goshen, NY 10924

Account Name:  
Account #
ABA # 

Memo: Montalvo Spirits, Inc.

or

 
·
payment of the Subscriber’s subscribed amount by check payable to Montalvo
Spirits, Inc

4.           TERMS OF THE SUBSCRIPTION.
 
4.1.  The Company hereby agrees to issue and to sell to Subscriber, and
Subscriber hereby agrees to purchase from the Company, such number of Units at
the price and for the aggregate subscription amount set forth on the signature
page hereto.  The Subscriber understands that this subscription is not binding
upon the Company until the Company accepts it.  The Subscriber acknowledges and
understands that acceptance of this Subscription will be made only by a duly
authorized representative of the Company executing and mailing or otherwise
delivering to the Subscriber at the Subscriber’s address set forth herein, a
counterpart copy of the signature page to this Subscription Agreement indicating
the Company’s acceptance of this Subscription.  The Company reserves the right,
in its sole discretion for any reason whatsoever, to accept or reject this
subscription in whole or in part.  Following the acceptance of this Subscription
Agreement by the Company, the Company shall instruct its transfer agent to issue
and deliver to Subscriber (i) a certificate evidencing the Common Stock
purchased by the Subscriber pursuant to this Agreement against payment in U.S.
Dollars of the Purchase Price (as defined below) and (ii) a certificate
evidencing the Warrants purchased by the Subscriber pursuant to this
Agreement.  If this subscription is rejected, the Company and the Subscriber
shall thereafter have no further rights or obligations to each other under or in
connection with this Subscription Agreement.

4.2.  Subscriber has hereby delivered and paid concurrently herewith the
aggregate purchase price for the Units set forth on the signature page hereof in
an amount required to purchase and pay for the Units subscribed for hereunder
(the “Purchase Price”), which amount has been paid in U.S. Dollars by wire
transfer or check, subject to collection, to the order of “Casa Montalvo
Holdings, Inc.”

4.3.   Subscriber understands and acknowledges that this subscription is part of
a private placement by the Company of the Units, which offering is being made on
a “best efforts” basis, for a maximum of the Maximum Offering (as defined
above).
 
 
 

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5.           REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER. The Subscriber
agrees, represents and warrants to the Company with respect to itself and its
purchase hereunder and not with respect to any of the other Subscribers, that:
 
5.1.  Organization and Qualification.  If an entity, the Subscriber is duly
incorporated, organized or otherwise formed, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated,
organized or otherwise formed.

5.2.  Authorization.  If an entity: (a) the Subscriber has the requisite
corporate or other requisite power and authority to enter into and to perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof; and (b) the execution,
delivery and performance of this Agreement by the Subscriber and the
consummation by it of the transactions contemplated hereby have been duly
authorized by the Subscriber’s Board of Directors or other governing body and no
further consent or authorization of the Subscriber, its Board of Directors or
its shareholders, members or other interest holders is required.

5.3.  Enforcement.  This Agreement has been duly executed by the Subscriber and
constitutes a legal, valid and binding obligation of the Subscriber enforceable
against the Subscriber in accordance with its terms, subject to the effect of
any applicable bankruptcy, insolvency, reorganization or moratorium or similar
laws affecting the rights of creditors generally and the application of general
principles of equity.

5.4.  Consents.  The Subscriber is not required to give any notice to, make any
filing, application or registration with, obtain any authorization, consent,
order or approval of or obtain any waiver from any person or entity in order to
execute and deliver this Agreement or to consummate the transactions
contemplated hereby.

5.5.  Non-contravention.  Neither the execution and the delivery by the
Subscriber of this Agreement, nor the consummation by the Subscriber of the
transactions contemplated hereby, will (a) violate any law, rule, injunction, or
judgment of any governmental agency or court to which the Subscriber is subject
or any provision of its charter, bylaws, trust agreement, or other governing
documents or (b) conflict with, result in a breach of, or constitute a default
under, any agreement, contract, lease, license, instrument, or other arrangement
to which the Subscriber is a party or by which the Subscriber is bound or to
which any of its assets is subject.

5.6.  Investment Purpose.  The Subscriber is purchasing the Securities, for its
own account and not with a present view toward the public sale or distribution
thereof.

5.7.  Accredited Subscriber Status.  The Subscriber is an “accredited investor”
as defined in Regulation D under the Securities Act of 1933, as amended (the
“Securities Act”), and has delivered to the Company a Confidential Subscriber
Questionnaire substantially in the form of Exhibit A attached hereto.  The
Subscriber hereby represents and warrants that, either by reason of the
Subscriber’s business or financial experience or the business or financial
experience of the Subscriber’s advisors (including, but not limited to, a
“purchaser representative” (as defined in Rule 501(h) promulgated under
Regulation D), attorney and/or an accountant each as engaged by the Subscriber
at its sole risk and expense) the Subscriber (a) has the capacity to protect its
own interests in connection with the transaction contemplated hereby and/or (b)
the Subscriber has prior investment experience, including investments in
securities of privately-held companies or companies whose securities are not
listed, registered, quoted and/or traded on a national securities exchange, to
the extent necessary, the Subscriber has retained, at its sole risk and expense,
and relied upon appropriate professional advice regarding the investment, tax
and legal merits and consequences of this Agreement and the purchase of the
Units hereunder; if an entity, the Subscriber was not formed for the sole
purpose of purchasing the Units.

5.8.  Reliance on Exemptions.  The Subscriber agrees, acknowledges and
understands that the Units are being offered and sold to it in reliance upon
specific exemptions from the registration requirements of United States federal
and applicable state securities or “blue sky” laws and that the Company and its
counsel are relying upon the truth and accuracy of, and the Subscriber’s
compliance with, the representations, warranties, covenants, agreements,
acknowledgments and understandings of the Subscriber set forth herein in order
to determine the availability of such exemptions and the eligibility of the
Subscriber to acquire the Units.

 
 

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5.9.  No General Solicitation.  No Units were offered or sold to it by means of
any form of general solicitation or general advertising, and in connection
therewith, the Subscriber did not receive any general solicitation or general
advertising including, but not limited to, the Subscriber’s: (i) receipt or
review of any advertisement, article, notice or other communication published in
any newspaper, magazine or similar media or broadcast over television or radio,
whether closed circuit, or generally available; or (ii) attendance at any
seminar meeting or industry investor conference whose attendees were invited by
any general solicitation or general advertising.

5.10. Information.  The Subscriber agrees, acknowledges and understands that the
Subscriber and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company, and materials
relating to the offer and sale of the Units that have been requested by the
Subscriber or its advisors, if any, the risk factors set forth therein.  The
Subscriber represents and warrants that the Subscriber and its advisors, if any,
have been afforded the opportunity to ask questions of the Company.  The
Subscriber agrees, acknowledges and understands that neither such inquiries nor
any other due diligence investigation conducted by the Subscriber or any of its
advisors or representatives modify, amend or affect the Subscriber’s right to
rely on the Company’s representations and warranties contained herein.

5.11. Governmental Review.  The Subscriber agrees, acknowledges and understands
that no United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or endorsement of
the Units or an investment therein.

5.12. Transfer or Resale.  The Subscriber agrees, acknowledges and understands
that:

(a) the Securities have not been and, except as set forth herein, are not being
registered under the Securities Act or any applicable state securities or “blue
sky” laws.  Consequently, the Subscriber may have to bear the risk of holding
the Securities for an indefinite period of time because the Securities may not
be transferred unless: (i) the resale of the Securities and is registered
pursuant to an effective registration statement under the Securities Act; (ii)
the Subscriber has delivered to the Company an opinion of counsel reasonably
acceptable to the Company and its counsel (in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration; or (iii) the Securities are sold or
transferred pursuant to Rule 144 promulgated under the Securities Act (“Rule
144”);

(b) any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and, if Rule 144 is not applicable, any
resale of the Securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the Securities Act) may require compliance with some other
exemption under the Securities Act or the rules and regulations of the
Securities and Exchange Commission (the “Commission”) promulgated thereunder;
and

(c) except as set forth in herein, neither the Company nor any other person is
under any obligation to register the Securities under the Securities Act or any
state securities or “blue sky” laws or to comply with the terms and conditions
of any exemption thereunder.

5.13. Legends.

(d) The Subscriber agrees, acknowledges and understands that the certificates
representing the Securities (the “Restricted Securities”) will bear restrictive
legends in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for such Restricted Securities):

THESE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.

 
 

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(e) The Subscriber agrees, acknowledges and understands that the Company will
make a notation in the appropriate records with respect to the foregoing
restrictions on the transferability of the Restricted Securities.  Certificates
evidencing the Restricted Securities shall not be required to contain such
legend or any other legend (a) following any sale of the Restricted Securities
pursuant to Rule 144, or (b) if the Restricted Securities are eligible for sale
under Rule 144 or have been sold pursuant to a registration statement and in
compliance with the Subscriber’s obligations set forth in this Agreement, or (c)
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the Staff of
the Commission), in each such case (a) through (c) to the extent reasonably
determined by the Company’s legal counsel.

5.14. Residency.  The Subscriber is a resident of the jurisdiction set forth
immediately below the Subscriber’s name on the signature pages hereto.

5.15. Not a Registered Representative.  The Subscriber agrees, acknowledges and
understands that if it is a Registered Representative of a FINRA member firm, he
or she must give such firm the notice required by FINRA’s Rules of Fair
Practice, receipt of which must be acknowledged by such firm in the Confidential
Subscriber Questionnaire attached hereto as Exhibit A.

5.16. No Brokers.  The Subscriber has not engaged, consented to or authorized
any broker, finder or intermediary to act on its behalf, directly or indirectly,
as a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement.  The Subscriber hereby agrees to indemnify and
hold harmless the Company from and against all fees, commissions or other
payments owing to any such person or firm acting on behalf of the Subscriber
hereunder.

5.17. Integration.  This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements, understandings, offers and negotiations, oral or written, with
respect thereto and no extrinsic evidence whatsoever may be introduced in any
judicial or arbitration proceeding, if any, involving this Agreement.

5.18. Reliance on Representations.  The Subscriber agrees, acknowledges and
understands that the Company and its counsel, are entitled to rely on the
representations, warranties and covenants made by the Subscriber herein.

6.           REPRESENTATIONS BY THE COMPANY.  The Company hereby makes the
following representations and warranties to each Subscriber as follows:
 

6.1.  Subsidiaries.  Casa Montalvo Holdings, Inc., a company formed under the
laws of the State of California is a wholly-owned subsidiary of the Company (the
“Subsidiary”).  The Company owns, directly or indirectly, all of the capital
stock or other equity interests of the Subsidiary free and clear of any Liens,
and all of the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and
similar rights to subscribe for or purchase securities.

6.2.  Organization and Qualification.  The Company and each of its Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted.  Neither the Company nor any
Subsidiary is in violation or default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, does not
have and would not reasonably be expected to result in (i) a material adverse
effect on the legality, validity or enforceability of this Agreement, (ii) a
material adverse effect on the results of operations, assets, business, or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (iii) a material adverse effect on the Company’s ability to perform
in any material respect on a timely basis its obligations under this Agreement
(any of (i), (ii), or (iii), a “Material Adverse Effect”) and no Proceeding has
been instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or qualification.

 
 

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6.3.  Authorization; Enforcement.  The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder.  The
execution and delivery of each of the Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, the Board of Directors or the Company’s
stockholders in connection therewith.  This Agreement has been (or upon delivery
will have been) duly executed by the Company and, when delivered in accordance
with the terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

6.4.  No Conflicts; No Violation.  The execution, delivery and performance of
the Agreement by the Company and the consummation by the Company of the other
transactions contemplated hereby do not and will not: (i) conflict with or
violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of clause (ii), such as does not have and would not reasonably be
expected to result in a Material Adverse Effect.

6.5.  Filings, Consents and Approvals.  The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than the filing
of Form D with the Commission and such filings as are required to be made under
applicable state securities laws.

6.6.  Issuance of the Securities.  The Units and the Shares of the Company
purchased under this Agreement, will be  duly authorized and, upon issuance in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for herein.

6.7.  Capitalization.  The capitalization of the Company is set forth on
Schedule 6.7.  No Person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by this Agreement.  Except as set forth in Schedule 6.7, as a
result of the purchase and sale of the Securities, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire, any Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional Common Stock.  The issuance and sale of the
Common Stock will not obligate the Company to issue Common Stock or other
securities to any Person (other than the Subscribers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. There are no shares of
outstanding Common Stock.  All of the outstanding Common Stock or Common Stock
Equivalents are validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities.  No further approval or
authorization of any stockholder, the Board of Directors or other Person is
required for the issuance and sale of the Common Stock.  There are no
stockholders agreements, voting agreements or other similar agreements with
respect to Common Stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders.

 
 

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6.8.  Litigation.  There is no action, suit, inquiry, notice of violation, or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”) or Proceeding which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Shares or (ii) would, if there were an unfavorable decision, reasonably be
expected to result in, a Material Adverse Effect.  Neither the Company nor any
Subsidiary, nor any manager, director or officer thereof, is or has been the
subject of any Action or Proceeding involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty.  There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation or Proceeding by the
Commission involving the Company or any current or former director or officer of
the Company.

6.9.  Labor Relations.  No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company
which does have or would reasonably be expected to result in a Material Adverse
Effect.  None of the Company’s or any Subsidiary’s employees is a member of a
union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good.  No executive officer,
to the knowledge of the Company, is, or is now expected to be, in violation of
any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant in favor of any third party,
and the continued employment of each such executive officer does not subject the
Company or any of its Subsidiaries to any liability with respect to any of the
foregoing matters.  The Company and its Subsidiaries are in compliance with all
U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

6.10. Compliance.  Neither the Company nor any Subsidiary (i) is in violation of
any order of any court, arbitrator or governmental body, or (ii) is or has been
in violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws
applicable to its business and all such laws that affect the environment, except
in each case as would not reasonably be expected to result in a Material Adverse
Effect.

6.11. Regulatory Permits.  The Company and any Subsidiary’s possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such permits would
not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.

6.12. Title to Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties.  Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in
compliance, except in each case as would not reasonably be expected to result in
a Material Adverse Effect.

6.13. Patents and Trademarks.  The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
material for use in connection with their respective businesses and which the
failure to so have could have a Material Adverse Effect (collectively, the
“Intellectual Property Rights”).  Neither the Company nor any Subsidiary has
received a notice (written or otherwise) that any of the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes upon the
rights of any Person. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights.  The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where
failure to do so would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 
 

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6.14. Insurance.  The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage at least equal to the Subscription Amount.  Neither
the Company nor any Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.

6.15. Transactions with Affiliates and Employees.  None of the officers or
directors of the Company and, to the knowledge of the Company, none of the
employees of the Company is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $50,000
other than for (i) payment of salary, consulting fees or bonuses in connection
with services rendered or to be rendered, (ii) reimbursement for expenses
incurred on behalf of the Company, (iii) other employee benefits, including
stock option agreements under any stock option plan of the Company, or (iv) any
item referenced in the Company’s Annual Report filed on Form 10-K.

6.16. Internal Accounting Controls.  The Company and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.  

6.17. No brokerage or finder’s fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement.  The Subscriber shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement.

6.18. Private Placement.  Assuming the accuracy of the Subscribers’
representations and warranties set forth in Section 5.7, no registration under
the Securities Act is required for the offer and sale of the Shares by the
Company to the Subscribers as contemplated hereby.

6.19. Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Shares, will not be or be an
Affiliate required to file as, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended within a period of one year from the
date hereof.

6.20. Registration Rights.  No Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the
Company.

6.21. Disclosure.  All disclosure furnished by or on behalf of the Company to
the Subscribers regarding the Company, its business and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, is
true and correct and does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.  The Company acknowledges and agrees that no Subscriber makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 5 hereof.

6.22. No Integrated Offering. Assuming the accuracy of the Subscriber’s
representations and warranties set forth in Section 5.7, neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Shares to be integrated with prior offerings by the Company for
purposes of the Securities Act which would require the registration of any such
securities under the Securities Act.

 
 

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6.23. Tax Status.  Except for matters that do not have (and would not reasonably
be expected to result in), individually or in the aggregate, a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

6.24. No General Solicitation.  Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Shares by any form of
general solicitation or general advertising.  The Company has offered the Shares
for sale only to the Subscribers and certain other “accredited investors” within
the meaning of Rule 501 under the Securities Act.

6.25 Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of
the Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is  in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.

6.26. Acknowledgement Regarding Subscriber’s Trading Activity.  Anything in this
Agreement or elsewhere herein to the contrary notwithstanding, it is understood
and acknowledged by the Company (i) that none of the Subscribers have been asked
by the Company to agree, nor has any Subscriber agreed, to desist from
purchasing or selling, long and/or short, securities of the Company, or
“derivative” securities based on securities issued by the Company or to hold the
Shares for any specified term; (ii) that past or future open market or other
transactions by any Subscriber, specifically including, without limitation,
Short Sales or “derivative” transactions, before or after the closing of this or
future private placement transactions, may negatively impact the market price of
the Company’s publicly-traded securities; (iii) that any Subscriber, and
counter-parties in “derivative” transactions to which any such Subscriber is a
party, directly or indirectly, presently may have a “short” position in the
Common Stock, and (iv) that each Subscriber shall not be deemed to have any
affiliation with or control over any arm’s length counter-party in any
“derivative” transaction.  The Company further understands and acknowledges that
(a) one or more Subscribers may engage in hedging activities at various times
during the period that the Shares are outstanding, and (b) such hedging
activities (if any) could reduce the value of the existing stockholders’ equity
interests in the Company at and after the time that the hedging activities are
being conducted. The Company acknowledges that such aforementioned hedging
activities within the bounds of applicable law or regulation do not constitute a
breach of any of the Agreement.

6.27. Regulation M Compliance. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the Shares,
(ii) sold, bid for, purchased, or, paid any compensation for soliciting
purchases of, any of the Shares, or (iii) paid or agreed to pay to any Person
any compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid to
the Company’s placement agent in connection with the placement of the Shares.

7.           RISK FACTORS.  THE SUBSCRIBER ACKNOWLEDGES THERE ARE SIGNIFICANT
RISKS ASSOCIATED WITH THE PURCHASE OF THE UNITS AND THAT SUCH SECURITIES ARE
HIGHLY SPECULATIVE AND SHOULD NOT BE PURCHASED BY ANYONE WHO CANNOT AFFORD A
TOTAL LOSS OF HIS OR HER ENTIRE INVESTMENT.  The Subscriber represents and
warrants that he or she has carefully considered and reviewed all the
information contained within the reports the Company files with the Securities
and Exchange Commission (available at www.sec.gov), and the following risks, in
reaching a determination to purchase the Units:
 

OUR SECURITIES ARE HIGHLY SPECULATIVE, AND PROSPECTIVE PURCHASERS SHOULD BE
AWARE THAT AN INVESTMENT IN THE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
ACCORDINGLY, PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS IN ADDITION TO THE OTHER INFORMATION IN THIS CURRENT REPORT AND RELATED
EXHIBITS, INCLUDING OUR FINANCIAL STATEMENTS.

 
 

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RISK FACTORS ASSOCIATED WITH OUR BUSINESS

We have inadequate capital and need additional financing to accomplish our
business and strategic plans.
 
 We have very limited funds, and such funds are not adequate to develop our
current business plan. We believe that for our company to be successful, we will
be required to spend significant sums to market our products. If the sales of
our products do not enable us to meet this need, our ultimate success may depend
on our ability to raise additional capital. In the absence of additional
financing or significant revenues and profits, the we will have to approach our
business plan from a much different and much more restricted direction,
attempting to secure additional funding sources to fund our growth, borrowing
money from lenders or elsewhere or to take other actions to attempt to provide
funding. We cannot guarantee that we will be able to obtain sufficient
additional funds when needed, or that such funds, if available, will be
obtainable on terms satisfactory to us.

Our limited operating history does not afford investors a sufficient history on
which to base an investment decision.
 
 We are currently in the early stages of developing our business. There can be
no assurance that at this time that we will operate profitably or will have
adequate working capital to meet our obligations as they become due.
 
 Investors must consider the risks and difficulties frequently encountered by
early stage companies, particularly in rapidly evolving and changing markets.
Such risks include the following:

●
the nature of our competition and our ability to effectively market our
products;
●
ability to anticipate and adapt to the highly competitive alcoholic beverage and
spirits market;
●
ability to effectively manage expanding operations; amount and timing of
operating costs and capital expenditures relating to expansion of our business,
operations, and infrastructure; and
●
dependence upon key personnel to market and sell our services and the loss of
one of our key managers may adversely affect the marketing of our services.

 
 We cannot be certain that our business strategy will be successful or that we
will successfully address these risks. In the event that we do not successfully
address these risks, our business, prospects, financial condition, and results
of operations could be materially and adversely affected and we may not have the
resources to continue or expand our business operations.

 
 

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Recent worldwide and domestic economic trends and financial market conditions
could adversely impact our financial performance.
 
 The worldwide and domestic economies have experienced adverse conditions and
may be subject to further deterioration for the foreseeable future. We are
subject to risks associated with these adverse conditions, including economic
slowdown and the disruption, volatility and tightening of credit and capital
markets. This global economic situation could adversely impact our major
suppliers, distributors and retailers. In addition, unfavorable global or
domestic economic situations could adversely impact our major suppliers,
distributors and retailers. Financial difficulties experienced by our suppliers
or customers could result in product delays, possible accounts receivable
defaults and inventory challenges. The inability of suppliers, distributors or
retailers to conduct business or to access liquidity could impact our ability to
distribute our products.
 
 There can be no assurance that market conditions will improve in the near
future. A prolonged downturn, further worsening or broadening of the adverse
conditions in the worldwide and domestic economies could affect consumer
spending patterns and purchases of our products, and create or exacerbate credit
issues, cash flow issues and other financial hardships for us and for our
suppliers, distributors, retailers and consumers. Depending upon their severity
and duration, these conditions could have a material adverse impact on our
business, liquidity, financial condition and results of operations. We are
unable to predict the likely duration and severity of the current disruption in
the financial markets and the adverse economic conditions in the U.S. and other
markets.

We depend on a limited number of suppliers. Failure to obtain satisfactory
performance from our suppliers or loss of our existing suppliers could cause us
to lose sales, incur additional costs and lose credibility in the marketplace.
We also have annual purchase obligations with certain suppliers.
 
 We depend on a limited number of third-party suppliers for the sourcing of all
of our products, including both our own proprietary brands and those we
distribute for others. These suppliers consist of third-party distillers,
bottlers and producers in Mexico. For our proprietary products, we may rely on a
single supplier to fulfill one or all of the manufacturing functions for a
brand. For instance, Destilidora Huerta Real, S.A. de C.V. is the sole producer
for Montalvo Tequila. The termination of our written or oral agreements or an
adverse change in the terms of these agreements could have a negative impact on
our business. If our suppliers increase their prices, we may not have
alternative sources of supply and may not be able to raise the prices of our
products to cover all or even a portion of the increased costs. Also, our
suppliers’ failure to perform satisfactorily or handle increased orders, delays
in shipments of products from international suppliers or the loss of our
existing suppliers, especially our key suppliers, could cause us to fail to meet
orders for our products, lose sales, incur additional costs and/or expose us to
product quality issues. In turn, this could cause us to lose credibility in the
marketplace and damage our relationships with distributors, ultimately leading
to a decline in our business and results of operations. If we are not able to
renegotiate these contracts on acceptable terms or find suitable alternatives,
our business could be negatively impacted.
 
The sales of our products could decrease significantly if we cannot secure and
maintain listings in the control states.
 
 In the control states, the state liquor commissions act in place of
distributors and decide which products are to be purchased and offered for sale
in their respective states. Products selected for listing must generally reach
certain volumes and/or profit levels to maintain their listings. Products are
selected for purchase and sale through listing procedures which are generally
made available to new products only at periodically scheduled listing
interviews. Products not selected for listings can only be purchased by
consumers in the applicable control state through special orders, if at all. If,
in the future, we are unable to maintain our current listings in the control
states, or secure and maintain listings in those states for any additional
products we may acquire, sales of our products could decrease significantly.

 
 

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Currency exchange rate fluctuations and devaluations may have a significant
adverse effect on our revenues, sales, costs of goods and overall financial
results.
 
 For fiscal 2014, non-U.S. operations accounted for none of our revenues but we
are dependent upon resources in Mexico for the products we intend to market,
distribute and sell. Therefore, gains and losses on the conversion of foreign
payments into U.S. dollars could cause fluctuations in our results of
operations, and fluctuating exchange rates could cause reduced revenues and/or
gross margins from non-U.S. dollar-denominated international sales and inventory
purchases. Our ability to acquire spirits and wine and produce and sell our
products at favorable prices will also depend in part on the relative strength
of the U.S. dollar. We may not be able to hedge against these risks.

If our inventory is lost due to theft, fire or other damage or becomes obsolete,
our results of operations would be negatively impacted.
 
 We expect our inventory levels to fluctuate to meet customer delivery
requirements for our products. We are always at risk of loss of that inventory
due to theft, fire or other damage, and any such loss, whether insured against
or not, could cause us to fail to meet our orders and harm our sales and
operating results. Also, our inventory may become obsolete as we introduce new
products, cease to produce old products or modify the design of our products’
packaging, which would increase our operating losses and negatively impact our
results of operations.

Weather conditions may have a material adverse effect on our sales or on the
price of raw materials used to produce spirits.
 
 We operate in an industry where performance is affected by the weather. Extreme
changes in weather conditions may result in lower consumption of tequila and
other alcoholic beverages. In particular, unusually cold spells in winter or
high temperatures in the summer can result in temporary shifts in customer
preferences and impact demand for the alcoholic beverages we produce and
distribute. Similar weather conditions in the future may have a material adverse
effect on our sales which could affect our business, financial condition and
results of operations. In addition, inclement weather may affect the
availability of grain used to produce raw spirit, which could result in a rise
in raw spirit pricing that could negatively affect margins and sales.

Climate change, or legal, regulatory or market measures to address climate
change, may negatively affect our business, operations or financial performance,
and water scarcity or poor quality could negatively impact our production costs
and capacity.
 
 Our business depends upon agricultural activity and natural resources. There
has been much public discussion related to concerns that carbon dioxide and
other greenhouse gases in the atmosphere may have an adverse impact on global
temperatures, weather patterns and the frequency and severity of extreme weather
and natural disasters. Severe weather events and climate change may negatively
affect agricultural productivity in the regions from which we presently source
our agricultural raw materials such as agave. Decreased availability of our raw
materials may increase the cost of our products. Severe weather events or
changes in the frequency or intensity of weather events can also disrupt our
supply chain, which may affect production operations, insurance cost and
coverage, as well as delivery of our products to wholesalers, retailers and
consumers.
 
 Water is essential in the production of our products. The quality and quantity
of water available for use is important to the supply of agave and our ability
to operate our business. Water is a limited resource in many parts of the world
and if climate patterns change and droughts become more severe, there may be a
scarcity of water or poor water quality which may affect our production costs or
impose capacity constraints. Such events could adversely affect our results of
operations and financial condition.

 
 

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The Company has limited protection of the Exclusive Master Distribution
Agreement (“Distribution Agreement”).
 
 The Company currently has an exclusive right to distribute all Casa Montalvo
products throughout the world for a three-year term. The term will be extended
indefinitely provided the Company hits minimal sales requirements. Any breach of
the Distribution Agreement, or an act of terminating cause, could lead to the
loss of the Company’s exclusive distribution rights, for the respective
jurisdictions which the Company operates, which would have a material adverse
effect on the business, results of operations and financial condition.

Either our or our strategic partners’ failure to protect our respective
trademarks and trade secrets could compromise our competitive position and
decrease the value of our brand portfolio.
 
 Since we frequently enter into exclusive arrangements to market our products
with unaffiliated agents, our business and prospects depend in part on our, and
with respect to our agency or joint venture brands, our strategic partners’
ability to develop favorable consumer recognition of our brands and trademarks.
Although both we and our strategic partners actively apply for registration of
our brands and trademarks, they could be imitated in ways that we cannot
prevent. Also, we rely on trade secrets and proprietary know-how, concepts and
formulas. Our methods of protecting this information may not be adequate.
Moreover, we may face claims of misappropriation or infringement of third
parties’ rights that could interfere with our use of this information. Defending
these claims may be costly and, if unsuccessful, may prevent us from continuing
to use this proprietary information in the future and result in a judgment or
monetary damages being levied against us. We do not maintain non-competition
agreements with all of our key personnel or with some of our key suppliers. If
competitors independently develop or otherwise obtain access to our or our
strategic partners’ trade secrets, proprietary know-how or recipes, the appeal,
and thus the value, of our brand portfolio could be reduced, negatively
impacting our sales and growth potential.

We operate in highly competitive industries, and competitive pressures could
have a material adverse effect on our business.
 
 The alcoholic beverages production and distribution industries in our region
are intensely competitive. The principal competitive factors in these industries
include product range, pricing, distribution capabilities and responsiveness to
consumer preferences, with varying emphasis on these factors depending on the
market and the product. The alcoholic beverage industry competes with respect to
brand recognition, product quality, brand loyalty, customer service and price.
Failure to maintain and enhance our competitive position could materially and
adversely affect our business and prospects for business. Wholesaler, retailer
and consumer purchasing decisions are influenced by, among other things, the
perceived absolute or relative overall value of our products, including their
quality or pricing, compared to competitor’s products. Unit volume and dollar
sales could also be affected by pricing, purchasing, financing, operational,
advertising or promotional decisions made by wholesalers, state and provincial
agencies, and retailers which could affect their supply of, or consumer demand
for, our products. We could also experience higher than expected selling,
general and administrative expenses if we find it necessary to increase the
number of our personnel or our advertising or marketing expenditures to maintain
our competitive position or for other reasons.
 
Our business could be adversely affected by a decline in the consumption of
alcohol and spirits we sell.
 
 While over the past several years there have been modest increases in
consumption of beverage alcohol in most of our product categories and geographic
markets, there have been periods in the past in which there were substantial
declines in the overall per capita consumption of beverage alcohol products in
the U.S. and other markets in which we participate. A limited or general decline
in consumption in one or more of our product categories could occur in the
future due to a variety of factors, including:

●
A general decline in economic or geopolitical conditions;
●
Concern about the health consequences of consuming beverage alcohol products and
about drinking and driving;
●
A general decline in the consumption of beverage alcohol products in on-premise
establishments, such as may result from smoking bans and stricter laws related
to driving while under the influence of alcohol;
●
Consumer dietary preferences favoring lighter, lower calorie beverages such as
diet soft drinks, sports drinks and water products;
●
The increased activity of anti-alcohol groups;
●
Increased federal, state, provincial or foreign excise or other taxes on
beverage alcohol products and possible restrictions on beverage alcohol
advertising and marketing; and
●
Increased regulation placing restrictions on the purchase or consumption of
beverage alcohol products.

 

 
 

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We are subject to extensive government regulation and are required to obtain and
renew various permits and licenses; changes in or violations of laws or
regulations or failure to obtain or renew permits and licenses could materially
adversely affect our business and profitability.
 
 Our business of marketing and distributing alcoholic beverages in the United
States is subject to regulation by national and local governmental agencies.
These regulations and laws address such matters as licensing and permit
requirements, regarding the production, storage and import of alcoholic
products; competition and anti-trust matters; trade and pricing practices;
taxes; distribution methods and relationships; required labeling and packaging;
advertising; sales promotion; and relations with wholesalers and retailers. Loss
of production capacity due to regulatory issues can negatively affect our sales
and increase our operating costs as we attempt to increase production at other
facilities during that time to offset the lost production. It is possible that
we could have similar issues in the future that will adversely impact our sales
and operating costs. Additionally, new or revised regulations or requirements or
increases in excise taxes, customs duties, income taxes, or sales taxes could
materially adversely affect our business, financial condition and results of
operations.
 
 In addition, we are subject to numerous environmental and occupational, health
and safety laws and regulations in the countries in which we plan to operate. We
may incur significant costs to maintain compliance with evolving environmental
and occupational, health and safety requirements, to comply with more stringent
enforcement of existing applicable requirements or to defend against challenges
or investigations, even those without merit. Future legal or regulatory
challenges to the industry in which we operate or our business practices and
arrangements could give rise to liability and fines, or cause us to change our
practices or arrangements, which could have a material adverse effect on us, our
revenues and our profitability.
 
 Governmental regulation and supervision as well as future changes in laws,
regulations or government policy (or in the interpretation of existing laws or
regulations) that affect us, our competitors or our industry generally, strongly
influence our viability and how we operate our business. Complying with existing
laws, regulations and government policy is burdensome, and future changes may
increase our operational and administrative expenses and limit our revenues.
 
 Additionally, governmental regulatory and tax authorities have a high degree of
discretion and may at times exercise this discretion in a manner contrary to law
or established practice. Such conduct can be more prevalent in jurisdictions
with less developed or evolving regulatory systems like Mexico. Our business
would be materially and adversely affected if there were any adverse changes in
relevant laws or regulations or in their interpretation or enforcement. Our
ability to introduce new products may also be affected if we cannot predict how
existing or future laws, regulations or policies would apply to such products or
services.

If we fail to manage growth effectively or prepare for product scalability, it
could have an adverse effect on our employee efficiency, product quality,
working capital levels and results of operations.
 
 Any significant growth in the market for our products or our entry into new
markets may require an expansion of our employee base for managerial,
operational, financial, and other purposes. As of March 31, 2014, we had no full
time employees outside of our management team. During any period of growth, we
may face problems related to our operational and financial systems and controls,
including quality control and delivery and service capacities. We would also
need to continue to expand, train and manage our employee base. Continued future
growth will impose significant added responsibilities upon the members of
management to identify, recruit, maintain, integrate, and motivate new
employees.
 
 Aside from increased difficulties in the management of human resources, we may
also encounter working capital issues, as we will need increased liquidity to
finance the marketing of the products we sell, and the hiring of additional
employees. For effective growth management, we will be required to continue
improving our operations, management, and financial systems and controls. Our
failure to manage growth effectively may lead to operational and financial
inefficiencies that will have a negative effect on our profitability. We cannot
assure investors that we will be able to timely and effectively meet that demand
and maintain the quality standards required by our existing and potential
customers.
 
 
 

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Our management team may not be able to successfully implement our business
strategies.
 
 If our management team is unable to execute on its business strategies, then
our development, including the establishment of revenues and our sales and
marketing activities would be materially and adversely affected. In addition, we
may encounter difficulties in effectively managing the budgeting, forecasting
and other process control issues presented by any future growth. We may seek to
augment or replace members of our management team or we may lose key members of
our management team, and we may not be able to attract new management talent
with sufficient skill and experience.

If we are unable to retain key executives and other key affiliates, our growth
could be significantly inhibited and our business harmed with a material adverse
effect on our business, financial condition and results of operations.
 
 Our success is, to a certain extent, attributable to the management, sales and
marketing, and operational and technical expertise of certain key personnel.
Alex Viecco, our Chief Executive Officer, Carlos Gonzalez Rivera, our Chief
Operating Officer, and Sergio Gonzalez Rivera, our President, perform key
functions in the operation of our business. The loss of any of these individuals
could have a material adverse effect upon our business, financial condition, and
results of operations. We do not maintain key-person insurance for members of
our management team because it is cost prohibitive at this point. If we lose the
services of any member of senior management, we may not be able to locate
suitable or qualified replacements, and may incur additional expenses to recruit
and train new personnel, which could severely disrupt our business and
prospects.
 
Our success in the future may depend on our ability to establish and maintain
strategic alliances, and any failure on our part to establish and maintain such
relationships would adversely affect our market penetration and revenue growth.
 
 Due to the regulated nature of the alcoholic beverage industry, we will be
required to establish strategic relationships with third parties. Our ability to
establish strategic relationships will depend on a number of factors, many of
which are outside our control, such as the competitive position of our product
and marketing plan relative to our competitors. We may not be able to establish
other strategic relationships in the future. In addition, any strategic
alliances that we establish may subject us to a number of risks, including risks
associated with sharing proprietary information, loss of control of operations
that are material to developed business and profit-sharing arrangements.
Moreover, strategic alliances may be expensive to implement and subject us to
the risk that the third party will not perform its obligations under the
relationship, which may subject us to losses over which we have no control or
expensive termination arrangements. As a result, even if our strategic alliances
with third parties are successful, our business may be adversely affected by a
number of factors that are outside of our control.

Our financial results may not meet the expectations of investors and may
fluctuate because of many factors and, as a result, investors should not rely on
our revenue and/or financial projections as indicative of future results.
 
 Fluctuations in operating results or the failure of operating results to meet
the expectations of investors may negatively impact the value of our securities.
Operating results may fluctuate due to a variety of factors that could affect
revenues or expenses in any particular quarter. Fluctuations in operating
results could cause the value of our securities to decline. Investors should not
rely on revenue or financial projections or comparisons of results of operations
as an indication of future performance. As a result of the factors listed below,
it is possible that in future periods results of operations may be below the
expectations of investors. This could cause the market price of our securities
to decline. Factors that may affect our quarterly results include:

●
delays in sales resulting from potential customer sales cycles;
●
variations or inconsistencies in return on investment models and results;
●
delays in demonstrating product performance or installations;
●
changes in competition; and
●
changes or threats of significant changes in legislation or rules or standards
that would change the drivers for product adoption.

 

 
 

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Because our auditors have issued a going concern opinion, there is substantial
doubt about our ability to continue as a going concern.
 
 Our report from our independent registered public accounting firm for the year
ended March 31, 2014 includes an explanatory paragraph stating that our
recurring losses from operations and negative cash flows raise substantial doubt
about our ability to continue as a going concern. If we are unable to obtain
sufficient funding, our business, prospects, financial condition and results of
operations will be materially and adversely affected and we may be unable to
continue as a going concern. If we are unable to continue as a going concern, we
may have to liquidate our assets and may receive less than the value at which
those assets are carried on our audited consolidated financial statements, and
it is likely that investors will lose all or a part of their investment.

Our strategy may include acquiring companies which may result in unsuitable
acquisitions or failure to successfully integrate acquired companies, which
could lead to reduced profitability.
 
 We may embark on a growth strategy through acquisitions of companies or
operations that complement existing product lines, customers or other
capabilities. We may be unsuccessful in identifying suitable acquisition
candidates, or may be unable to consummate desired acquisitions. To the extent
any future acquisitions are completed, we may be unsuccessful in integrating
acquired companies or their operations, or if integration is more difficult than
anticipated, we may experience disruptions that could have a material adverse
impact on future profitability. Some of the risks that may affect our ability to
integrate, or realize any anticipated benefits from, acquisitions include:

●
unexpected losses of key employees or customer of the acquired company;
●
difficulties integrating the acquired company’s standards, processes, procedures
and controls;
●
difficulties coordinating new product and process development;
●
difficulties hiring additional management and other critical personnel;
●
difficulties increasing the scope, geographic diversity and complexity of our
operations;
●
difficulties consolidating facilities, transferring processes and know-how;
●
difficulties reducing costs of the acquired company’s business;
●
diversion of management’s attention from our management; and
●
adverse impacts on retaining existing business relationships with customers.

 
RISKS RELATED TO OUR INDUSTRY

Demand for our products may be adversely affected by many factors, including
changes in consumer preferences and trends.
 
 Consumer preferences may shift due to a variety of factors including changes in
demographic and social trends, public health initiatives, product innovations,
changes in vacation or leisure activity patterns and a downturn in economic
conditions, which may reduce consumers’ willingness to purchase distilled
spirits or cause a shift in consumer preferences toward beer, wine or
non-alcoholic beverages. Our success depends in part on fulfilling available
opportunities to meet consumer needs and anticipating changes in consumer
preferences with successful new products and product innovations.

 
 

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We face substantial competition in our industry and many factors may prevent us
from competing successfully.
 
 We compete on the basis of product taste and quality, brand image, price,
service and ability to innovate in response to consumer preferences. The global
spirits industry is highly competitive and is dominated by several large,
well-funded international companies which trend toward consolidation. It is
possible that our competitors may either respond to industry conditions or
consumer trends more rapidly or effectively or resort to price competition to
sustain market share, which could adversely affect our sales and profitability.
The dollar amount and unit volume of our sales could be negatively affected by
our inability to maintain or increase prices, changes in geographic or product
mix, a general decline in beverage alcohol consumption or the decision of
wholesalers, retailers or consumers to purchase competitor’s products instead of
our products. Wholesaler, retailer and consumer purchasing decisions are
influenced by, among other things, the perceived absolute or relative overall
value of our products, including their quality or pricing, compared to
competitor’s products. Unit volume and dollar sales could also be affected by
pricing, purchasing, financing, operational, advertising or promotional
decisions made by wholesalers, state and provincial agencies, and retailers
which could affect their supply of, or consumer demand for, our products. We
could also experience higher than expected selling, general and administrative
expenses if we find it necessary to increase the number of our personnel or our
advertising or marketing expenditures to maintain our competitive position or
for other reasons.

Adverse public opinion about alcohol could reduce demand for our products.
 
 Anti-alcohol groups have, in the past, advocated successfully for more
stringent labeling requirements, higher taxes and other regulations designed to
discourage alcohol consumption. More restrictive regulations, negative publicity
regarding alcohol consumption and/or changes in consumer perceptions of the
relative healthfulness or safety of beverage alcohol could decrease sales and
consumption of alcohol and thus the demand for our products. This could, in
turn, significantly decrease both our revenues and our revenue growth, causing a
decline in our results of operations.

Class action or other litigation relating to alcohol abuse or the misuse of
alcohol could adversely affect our business.
 
 The alcoholic beverage industry faces the possibility of class action or
similar litigation alleging that the continued excessive use or abuse of
beverage alcohol has caused death or serious health problems. It is also
possible that governments could assert that the use of alcohol has significantly
increased government funded health care costs. Litigation or assertions of this
type have adversely affected companies in the tobacco industry, and it is
possible that we, as well as our suppliers, could be named in litigation of this
type.
 
 Also, lawsuits have been brought in a number of states alleging that beverage
alcohol manufacturers and marketers have improperly targeted underage consumers
in their advertising. Plaintiffs in these cases allege that the defendants’
advertisements, marketing and promotions violate the consumer protection or
deceptive trade practices statutes in each of these states and seek repayment of
the family funds expended by the underage consumers. While we have not been
named in these lawsuits, we could be named in similar lawsuits in the future.
Any class action or other litigation asserted against us could be expensive and
time-consuming to defend against, depleting our cash and diverting our personnel
resources and, if the plaintiffs in such actions were to prevail, our business
could be harmed significantly.

 
 

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Regulatory decisions and legal, regulatory and tax changes could limit our
business activities, increase our operating costs and reduce our margins.
 
 The production, distribution, marketing, advertising and labeling of beverage
alcohol products is subject to extensive regulation in all of the countries in
which we operate. We are required to comply with these regulations and to
maintain various permits and licenses. We are also required to conduct business
only with holders of licenses to import, warehouse, transport, distribute and
sell beverage alcohol products. We cannot assure you that these and other
governmental regulations applicable to our industry will not change or become
more stringent. Moreover, because these laws and regulations are subject to
interpretation, we may not be able to predict when and to what extent liability
may arise. Additionally, due to increasing public concern over alcohol-related
societal problems, including driving while intoxicated, underage drinking,
alcoholism and health consequences from the abuse of alcohol, various levels of
government may seek to impose additional restrictions or limits on advertising
or other marketing activities promoting beverage alcohol products. Failure to
comply with any of the current or future regulations and requirements relating
to our industry and products could result in monetary penalties, suspension or
even revocation of our licenses and permits. Costs of compliance with changes in
regulations could be significant and could harm our business, as we could find
it necessary to raise our prices in order to maintain profit margins, which
could lower the demand for our products and reduce our sales and profit
potential.
 
 Further, the distribution of beverage alcohol products is subject to extensive
taxation both in the U.S. and internationally (and, in the U.S., at both the
federal and state government levels), and beverage alcohol products themselves
are the subject of national import and excise duties in most countries around
the world. An increase in taxation or in import or excise duties could also
significantly harm our sales revenue and margins, both through the reduction of
overall consumption and by encouraging consumers to switch to lower-taxed
categories of beverage alcohol.

We could face product liability or other related liabilities that increase our
costs of operations and harm our reputation.
 
 Although we maintain liability insurance and will attempt to limit
contractually our liability for damages arising from our products, these
measures may not be sufficient for us to successfully avoid or limit liability.
Our product liability insurance coverage is limited to $1 million per occurrence
and $2 million in the aggregate and our general liability umbrella policy is
capped at $1 million. Further, any contractual indemnification and insurance
coverage we have from parties supplying our products is limited, as a practical
matter, to the creditworthiness of the indemnifying party and the insured limits
of any insurance provided by these suppliers. In any event, extensive product
liability claims could be costly to defend and/or costly to resolve and could
harm our reputation.

If we become subject to product liability claims, personal injury claims or
defective products, our business may be harmed.
 
 The marketing and sale of our products entails risk of product liability and
there can be no assurance that product liability claims will not be asserted
against us. While we intend to obtain some business liability insurance,
insurance designed to cover product liability is expensive, difficult to obtain
in some cases and may not be available now or in the future on acceptable terms,
if at all. Furthermore, there can be no assurance that such insurance coverage
will be adequate, or that a product liability claim, even one without merit,
would not have a material adverse effect on our business or financial condition.
As a result, any imposition of product liability could materially harm our
business, financial condition and results of operations. In addition, we do not
have any business interruption insurance due to the limited coverage of any such
business interruption insurance, and as a result, any business disruption or
natural disaster could severely disrupt our business and operations and
significantly decrease our revenue and profitability.

 
 

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Contamination of our products and/or counterfeit or confusingly similar products
could harm the image and integrity of, or decrease customer support for, our
brands and decrease our sales.
 
 The success of our brands depends upon the positive image that consumers have
of them. Contamination, whether arising accidentally or through deliberate
third-party action, or other events that harm the integrity or consumer support
for our brands, could affect the demand for our products. Contaminants in raw
materials purchased from third parties and used in the production of our
products or defects in the distillation and fermentation processes could lead to
low beverage quality as well as illness among, or injury to, consumers of our
products and could result in reduced sales of the affected brand or all of our
brands. Also, to the extent that third parties sell products that are either
counterfeit versions of our brands or brands that look like our brands,
consumers of our brands could confuse our products with products that they
consider inferior. This could cause them to refrain from purchasing our brands
in the future and in turn could impair our brand equity and adversely affect our
sales and operations.
 
RISKS RELATED TO THE SECURITIES MARKETS AND INVESTMENTS IN OUR COMMON STOCK

There is a substantial lack of liquidity of our Common Stock and volatility
risks.
 
 Our Common Stock is quoted on the OTC Markets under the symbol “TQLA.” The
liquidity of our Common Stock may be very limited and affected by our limited
trading market. The OTC Markets market is an inter-dealer market much less
regulated than the major exchanges, and is subject to abuses, volatilities and
shorting. There is currently no broadly followed and established trading market
for our Common Stock. An established trading market may never develop or be
maintained. Active trading markets generally result in lower price volatility
and more efficient execution of buy and sell orders. Absence of an active
trading market reduces the liquidity of the shares traded.

The trading volume of our Common Stock may be limited and sporadic. This
situation is attributable to a number of factors, including the fact that we are
a small company which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or
influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an
unproven company such as ours or purchase or recommend the purchase of our
shares until such time as we became more seasoned and viable. As a consequence,
there may be periods of several days or more when trading activity in our shares
is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous
sales without an adverse effect on share price. We cannot give you any assurance
that a broader or more active public trading market for our Common Stock will
develop or be sustained, or that current trading levels will be sustained. As a
result of such trading activity, the quoted price for our Common Stock on the
OTC Markets may not necessarily be a reliable indicator of our fair market
value. In addition, if our shares of Common Stock cease to be quoted, holders
would find it more difficult to dispose of or to obtain accurate quotation as to
the market value of, our Common Stock and as a result, the market value of our
Common Stock likely would decline.
 
 The market price for our stock may be volatile and subject to fluctuations in
response to factors, including the following:

●
The increased concentration of the ownership of our shares by a limited number
of affiliated stockholders following the Exchange may limit interest in our
securities;
●
variations in quarterly operating results from the expectations of securities
analysts or investors;
●
revisions in securities analysts’ estimates or reductions in security analysts’
coverage;
●
announcements of new attractions or services by us or our competitors;
●
reductions in the market share of our services;
●
announcements by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
●
general technological, market or economic trends;
●
investor perception of our industry or prospects;
●
insider selling or buying;

 
 

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●
investors entering into short sale contracts;
●
regulatory developments affecting our industry; and
●
additions or departures of key personnel.

 
 Many of these factors are beyond our control and may decrease the market price
of our Common Stock, regardless of our operating performance. We cannot make any
predictions or projections as to what the prevailing market price for our Common
Stock will be at any time, including as to whether our Common Stock will sustain
current market prices, or as to what effect that the sale of shares or the
availability of Common Stock for sale at any time will have on the prevailing
market price.

Our Common Stock may never be listed on a major stock exchange.
 
 We anticipate seeking the listing of our Common Stock on a national or other
securities exchange at some time in the future, assuming that we can satisfy the
initial listing standards for such exchange. We currently do not satisfy the
initial listing standards and cannot ensure that we will be able to satisfy such
listing standards or that our Common Stock will be accepted for listing on any
such exchange. Should we fail to satisfy the initial listing standards of such
exchanges, or our Common Stock is otherwise rejected for listing, the trading
price of our common stock could suffer, the trading market for our Common Stock
may be less liquid, and our Common Stock price may be subject to increased
volatility.
 
A decline in the price of our Common Stock could affect our ability to raise
working capital and adversely impact our ability to continue operations.
 
 A prolonged decline in the price of our Common Stock could result in a
reduction in the liquidity of our Common Stock and a reduction in our ability to
raise capital. A decline in the price of our Common Stock could be especially
detrimental to our liquidity and our operations. Such reductions may force us to
reallocate funds from other planned uses and may have a significant negative
effect on our business plan and operations, including our ability to develop new
services and continue our current operations. If our Common Stock price
declines, we can offer no assurance that we will be able to raise additional
capital or generate funds from operations sufficient to meet our obligations. If
we are unable to raise sufficient capital in the future, we may not be able to
have the resources to continue our normal operations.

Concentrated ownership of our Common Stock creates a risk of sudden changes in
our Common Stock price.
 
 The sale by any shareholder of a significant portion of their holdings could
have a material adverse effect on the market price of our Common Stock.

Sales of our currently issued and outstanding stock may become freely tradable
pursuant to Rule 144 and may dilute the market for your shares and have a
depressive effect on the price of the shares of our Common Stock.
 
 A substantial majority of the outstanding shares of Common Stock are
“restricted securities” within the meaning of Rule 144 under the Securities Act
of 1933, as amended (the “Securities Act”) (“Rule 144”). As restricted shares,
these shares may be resold only pursuant to an effective registration statement
or under the requirements of Rule 144 or other applicable exemptions from
registration under the Securities Act and as required under applicable state
securities laws. Rule 144 provides in essence that a non-affiliate who has held
restricted securities for a period of at least six months may sell their shares
of Common Stock. Under Rule 144, affiliates who have held restricted securities
for a period of at least six months may, under certain conditions, sell every
three months, in brokerage transactions, a number of shares that does not exceed
the greater of 1% of a company’s outstanding shares of Common Stock or the
average weekly trading volume during the four calendar weeks prior to the sale
(the four calendar week rule does not apply to companies quoted on the OTC
Markets). A sale under Rule 144 or under any other exemption from the Securities
Act, if available, or pursuant to subsequent registrations of our shares of
Common Stock, may have a depressive effect upon the price of our shares of
Common Stock in any active market that may develop.
 

 
 

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If we issue additional shares or derivative securities in the future, it will
result in the dilution of our existing stockholders.
 
 Our Articles of Incorporation authorizes the issuance of up to 300,000,000
shares of Common Stock, $0.001 par value per share. Our board of directors may
choose to issue some or all of such shares, or derivative securities to purchase
some or all of such shares, to provide additional financing in the future.

We do not plan to declare or pay any dividends to our stockholders in the near
future.
 
 We have not declared any dividends in the past, and we do not intend to
distribute dividends in the near future. The declaration, payment and amount of
any future dividends will be made at the discretion of the board of directors
and will depend upon, among other things, the results of operations, cash flows
and financial condition, operating and capital requirements, and other factors
as the board of directors considers relevant. There is no assurance that future
dividends will be paid, and if dividends are paid, there is no assurance with
respect to the amount of any such dividend.

The requirements of being a public company may strain our resources and distract
management.
 
 As a public company, we are subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). These requirements are
extensive. The Exchange Act requires that we file annual, quarterly and current
reports with respect to our business and financial condition. The Sarbanes-Oxley
Act requires that we maintain effective disclosure controls and procedures and
internal controls over financial reporting.
 
 We may incur significant costs associated with our public company reporting
requirements and costs associated with applicable corporate governance
requirements. We expect all of these applicable rules and regulations to
significantly increase our legal and financial compliance costs and to make some
activities more time consuming and costly. This may divert management’s
attention from other business concerns, which could have a material adverse
effect on our business, financial condition and results of operations. We also
expect that these applicable rules and regulations may make it more difficult
and more expensive for us to obtain director and officer liability insurance and
we may be required to accept reduced policy limits and coverage or incur
substantially higher costs to obtain the same or similar coverage. As a result,
it may be more difficult for us to attract and retain qualified individuals to
serve on our board of directors or as executive officers. We are currently
evaluating and monitoring developments with respect to these rules, and we
cannot predict or estimate the amount of additional costs we may incur or the
timing of such costs.

If we fail to establish and maintain an effective system of internal controls,
we may not be able to report our financial results accurately. Any inability to
report and file our financial results accurately and timely could harm our
business and adversely affect the trading price of our common stock.
 
 We are required to establish and maintain internal controls over financial
reporting and disclosure controls and procedures and to comply with other
requirements of the Sarbanes-Oxley Act and the rules promulgated by the SEC. Our
management will need to include a report on our internal control over financial
reporting and its assessment on whether such internal controls were effective
for the prior fiscal year with our annual reports that we file under the
Exchange Act with the SEC. Under current federal securities laws, our management
may conclude that our internal control over financial reporting is not
effective.
 
 Our management has limited or no experience operating as a public reporting
company under the Exchange Act or establishing the level of internal control
over financial reporting required by the Sarbanes-Oxley Act. Our management
currently relies in many instances on the professional experience and advice of
third parties including our attorneys and accountants. At present, we have
started reviewing and instituting internal controls, but it may take time to
implement them fully as a newly public reporting company under the Exchange Act.

 
 

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 Our management cannot guarantee that our internal controls and disclosure
controls and procedures will prevent all possible errors. Because of the
inherent limitations in all control systems, no system of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the company have been detected. These inherent limitations include the
possibility that judgments in decision-making can be faulty and subject to
simple error or mistake. Furthermore, controls can be circumvented by individual
acts of some persons, by collusion of two or more persons, or by management
override of the controls. The design of any system of controls is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Over time, a control may become inadequate
because of changes in conditions or the degree of compliance with policies or
procedures may deteriorate. Because of inherent limitations in a cost-effective
control system, misstatements due to error or fraud may occur and may not be
detected.

Persons associated with securities offerings, including consultants, may be
deemed to be broker dealers.
 
 In the event that any of our securities are offered without engaging a
registered broker-dealer, we may face claims for rescission and other remedies.
If any claims or actions were to be brought against us relating to our lack of
compliance with the broker-dealer requirements, we could be subject to
penalties, required to pay fines, make damages payments or settlement payments,
or repurchase such securities. In addition, any claims or actions could force us
to expend significant financial resources to defend our company, could divert
the attention of our management from our core business and could harm our
reputation.

Future changes in financial accounting standards or practices may cause adverse
unexpected financial reporting fluctuations and affect reported results of
operations.
 
 A change in accounting standards or practices can have a significant effect on
our reported results and may even affect our reporting of transactions completed
before the change is effective. New accounting pronouncements and varying
interpretations of accounting pronouncements have occurred and may occur in the
future. Changes to existing rules or the questioning of current practices may
adversely affect our reported financial results or the way we conduct business.

“Penny Stock” rules may make buying or selling our Common Stock difficult.
 
 Trading in our Common Stock is subject to the “penny stock” rules. The SEC has
adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. These rules require that any broker-dealer that recommends
our Common Stock to persons other than prior customers and accredited investors,
must, prior to the sale, make a special written suitability determination for
the purchaser and receive the purchaser’s written agreement to execute the
transaction. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated with trading
in the penny stock market. In addition, broker-dealers must disclose commissions
payable to both the broker-dealer and the registered representative and current
quotations for the securities they offer. The additional burdens imposed upon
broker-dealers by such requirements may discourage broker-dealers from effecting
transactions in our Common Stock, which could severely limit the market price
and liquidity of our Common Stock.
 
8.           COVENANTS OF THE COMPANY AND SUBSCRIBER.

8.1. Form D.  The Company agrees to timely file a Form D with respect to the
Shares as required under Regulation D and to provide a copy thereof to
Subscriber promptly upon request of the Subscriber. The Company shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for, or to qualify the Shares for, sale to the Subscribers at the
Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request
of the Subscriber.

 
 

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8.2.  Expenses.  Each Party is liable for, and shall pay, their own expenses
incurred in connection with the negotiation, preparation, execution and delivery
of this Agreement, including, without limitation, attorneys’ and consultants’
fees and expenses.

8.3.  Sales by Subscribers.  The Subscriber shall sell any and all Securities
purchased hereby in compliance with applicable prospectus delivery requirements,
if any, or otherwise in compliance with the requirements for an exemption from
registration under the Securities Act and the rules and regulations promulgated
thereunder.  The Subscriber will not make any sale, transfer or other
disposition of the Units in violation of federal or state securities or “blue
sky” laws and regulations.

9.           MISCELLANEOUS.

9.1.  Governing Law; Jurisdiction.  This Agreement will be governed by and
interpreted in accordance with the laws of the State of Nevada without regard to
the principles of conflict of laws.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflict of laws
thereof.  Each party agrees that all legal proceedings concerning the
interpretation, enforcement and defense of the transactions contemplated this
Agreement shall be commenced in the state and federal courts sitting in the City
of New York, County of New York (the “New York Courts”).  Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of such New York Courts,
or such New York Courts are improper or inconvenient venue for such
proceeding.  Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under the Transaction Documents and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by applicable law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
the Transaction Documents or the transactions contemplated hereby or thereby. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other reasonable costs and expenses incurred in the investigation,
preparation and prosecution of such action or proceeding.

9.2.  Counterparts; Electronic Signatures.  This Agreement may be executed in
two or more counterparts, all of which are considered one and the same agreement
and will become effective when counterparts have been signed by each party and
delivered to the other parties.  This Agreement, once executed by a party, may
be delivered to the other parties hereto by (e.g. electronic submission,
facsimile transmission or e-mail of a copy of this Agreement bearing the
signature of the party so delivering this Agreement).

9.3.  Headings.  The headings of this Agreement are for convenience of reference
only, are not part of this Agreement and do not affect its interpretation.

9.4.  Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 
 

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9.5.  Remedies.  In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Subscriber
and the Company will be entitled to specific performance under this
Agreement.  The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in this Agreement and hereby agree to waive and not to assert in any
action for specific performance of any such obligation the defense that a remedy
at law would be adequate.

9.6.  Entire Agreement; Amendments.  This Agreement (including all schedules and
exhibits hereto) constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof.  There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein.  This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.  Except as set forth in herein, no provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.

9.7.  Removal of Legends.  Upon the earlier of (i) registration for resale as
set forth herein, or (ii) an exemption under Rule 144 becoming available, the
Company shall (A) deliver to the transfer agent for the Securities (the
“Transfer Agent”) irrevocable instructions that the Transfer Agent shall reissue
a certificate representing shares of Common Stock without legends upon receipt
by such Transfer Agent of the leg ended certificates for such shares, together
with a customary representation by the Subscriber that Rule 144 applies to all
shares of Common Stock represented thereby and (B) cause its counsel to deliver
to the Transfer Agent one or more blanket opinions to the effect that the
removal of such legends in such circumstances may be effected under the
Securities Act subject to such investor and broker representations and
notifications or qualifications (in the case of subscribers who are or may be
deemed affiliates of the Company) that counsel may reasonably request.  From and
after the earlier of such dates, upon a Subscriber’s written request, the
Company shall promptly cause certificates evidencing the Subscriber’s securities
to be replaced with certificates which do not bear such restrictive legends, and
Warrants Shares subsequently issued upon due exercise of the Warrants shall no
bear such restrictive legends provided he provisions of either clause (i) or
(ii) above, as applicable, are satisfied with respect to such Warrant Shares.

9.8. Successors and Assigns.  This Agreement is binding upon and inures to the
benefit of the parties and their successors and assigns.  The Subscriber
acknowledges that the Company will be assigning this Agreement and any rights or
obligations hereunder without the prior written consent of the Subscriber and
the Subscriber may not assign this Agreement or any rights or obligations
hereunder upon the Closing without the prior written consent of the
Company.  This provision does not limit the Subscriber’s right to transfer the
Common Stock or Warrants pursuant to the terms of this Agreement or to assign
the Subscriber’s rights hereunder to any such transferee pursuant to the terms
of this Agreement.

9.9.  Third Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.

9.10. Further Assurances.  Each party will do and perform, or cause to be done
and performed, all such further acts and things, and will execute and deliver
all other agreements, certificates, instruments and documents, as another party
may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

9.11. No Strict Construction.  The language used in this Agreement is deemed to
be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

9.12. Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise this Agreement and,
therefore, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.  Any reference to any federal, state, local,
or foreign law will be deemed also to refer to law as amended and all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
words “include,” “includes,” and “including” will be deemed to be followed by
“without limitation.” The words “this Agreement,” “herein,” “hereof,” “hereby,”
“hereunder,” and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited.

 
 

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9.13. Acceptance.  Upon the execution and delivery of this Agreement by the
Subscriber, this Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of the Units as herein provided, subject to
acceptance by the Company; subject, however, to the right hereby reserved to the
Company to enter into the same agreements with other Subscribers and to add
and/or delete other persons as Subscribers.

9.14. Waiver.  It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.

9.15. Other Documents.  The parties agree to execute and deliver all such
further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purposes and intent
of this Agreement.

9.16. Public Statements.  The Subscriber agrees not to issue any public
statement with respect to the Subscriber’s investment or proposed investment in
the Company or the terms of any agreement or covenant between them and the
Company without the Company’s prior written consent, except such disclosures as
may be required under applicable law or under any applicable order, rule or
regulation.

9.17. Exculpation Among Subscribers.  The Subscriber agrees, acknowledges and
understands that it is not relying on any of the other Subscribers in making its
investment or decision to invest in the Company.  The Subscriber agrees,
acknowledges and understands that none of the other Subscribers nor their
respective controlling persons, officers, directors, partners, agents or
employees shall be liable to the Subscriber for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Units or the execution of or performance under this Agreement,
nor shall the Subscriber be liable to the other Subscribers for any action
heretofore or hereafter taken or omitted to be taken by the Subscriber in
connection with the purchase of the Units or the execution of or performance
under this Agreement.

9.18. Several Obligations.  The obligations of each Subscriber under any
Subscription Agreements are several and not joint with the obligations of any
other Subscriber, and no Subscriber shall be responsible in any way for the
performance of the obligations of any other Subscriber under any Subscription
Agreement.  Nothing contained herein or in any other Subscription Agreement, and
no action taken by any Subscriber pursuant hereto or thereto, shall be deemed to
constitute the Subscribers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Subscribers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Subscription Agreements.  Each Subscriber
confirms that it has independently participated in the negotiation of the
transaction contemplated hereby with the advice of its own counsel and
advisors.  Each Subscriber shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Subscription Agreements, and it shall not be
necessary for any other Subscriber to be joined as an additional party in any
proceeding for such purpose.  The Company acknowledges that each of the
Subscribers has been provided with the same Subscription Agreements for the
purpose of closing a transaction with multiple Subscribers and not because it
was required or requested to do so by any Subscriber.

9.19. WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVE FOREVER
TRIAL BY JURY.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
 

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SIGNATURE PAGE

The Subscriber hereby offers to purchase and subscribe to 10 Unit(s) and
encloses payment of $250,000 per unit for an aggregate investment of $250,000.

 
__________________________________
Name of Subscriber

__________________________________
Signature of Subscriber

__________________________________
Name of  Joint Subscriber
(If Applicable)

__________________________________
Signature of  Joint Subscriber
(If Applicable)

__________________________________
Name and Title of Authorized Signatory
(If Applicable)

__________________________________
(Print) Street Address - Residence

__________________________________
(Print) City, State and Zip Code

__________________________________
Social Security/Taxpayer I.D. Number:

AGREED TO AND ACCEPTED:

As of _______, 2015

MONTALVO SPIRITS, INC.

By: ____________________________
Name:
Title:

 
 

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EXHIBIT A
 
CONFIDENTIAL INVESTOR QUESTIONNAIRE
 
The Subscriber represents and warrants that he, she or it comes within category
as marked below, and that for any category marked, he, she or it has truthfully
set forth, where applicable, the factual basis or reason the Subscriber comes
within that category.  ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT
STRICTLY CONFIDENTIAL.  The undersigned agrees to furnish any additional
information which the Company deems necessary in order to verify the answers set
forth below.

[        ]  The undersigned is an individual (not a partnership, corporation,
etc.) whose individual net worth, or joint net worth with his or her spouse,
presently exceeds $1,000,000.

 
Explanation.  In calculating net worth you may include equity in personal
property and real estate, including your principal residence, cash, short-term
investments, stock and securities.  Equity in personal property and real estate
should be based on the fair market value of such property less debt secured by
such property.
 
[        ]  The undersigned is an individual (not a partnership, corporation,
etc.) who had an income in excess of $200,000 in each of the two most recent
years, or joint income with his or her spouse in excess of $300,000 in each of
those years (in each case including foreign income, tax exempt income and full
amount of capital gains and losses but excluding any income of other family
members and any unrealized capital appreciation) and has a reasonable
expectation of reaching the same income level in the current year.

[        ]    The undersigned is a director or executive officer of the Company
which is issuing and selling the Units.

[        ]    The undersigned is a bank; a savings and loan association;
insurance company; registered investment company; registered business
development company; licensed small business investment company (“SBIC”); or
employee benefit plan within the meaning of Title 1 of ERISA and (a) the
investment decision is made by a plan fiduciary which is either a bank, savings
and loan association, insurance company or registered investment advisor, or (b)
the plan has total assets in excess of $5,000,000 or (c) is a self directed plan
with investment decisions made solely by Persons that are accredited
Subscribers. (describe entity)
________________________________________________________
________________________________________________________
 
[        ]    The undersigned is a private business development company as
defined in section 202(a)(22) of the Investment Advisors Act of 1940. (describe
entity)
 
________________________________________________________
________________________________________________________
 
[        ]  The undersigned is either a corporation, partnership, Massachusetts
business trust, or non-profit organization within the meaning of Section
501(c)(3) of the Internal Revenue Code, in each case not formed for the specific
purpose of acquiring the Units and with total assets in excess of $5,000,000.
(describe entity)
 
________________________________________________________
________________________________________________________
 
[        ]  The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the Units, where
the purchase is directed by a “sophisticated person” as defined in Regulation
506(b)(2)(ii) under the Securities Act.
 
 
[        ]  The undersigned is an entity (other than a trust) all of the equity
owners of which are “accredited investors” within one or more of the above
categories.  If relying upon this Category H alone, each equity owner must
complete a separate copy of this Agreement.  (describe entity)
 
______________________________________________________

 
 

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[        ]  The undersigned is not within any of the categories above and is
therefore not an accredited investor.
 

The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the Closing Date in the event that the representations and
warranties made by the undersigned in this Agreement shall cease to be true,
accurate and complete.
 
 
SUITABILITY (please answer each question)
 
(a)  For an individual Subscriber, please describe your current employment,
including the company by which you are employed and its principal business:
_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

(b)  For an individual Subscriber, please describe any college or graduate
degrees held by you:
__________________________________________________________________________________________________________________________________________________________________________________________

(c) For all Subscribers, please list types of prior investments:
_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

(d)  For all Subscribers, please state whether you have you participated in
other private placements before:

YES_______                                           NO_______

(e) If your answer to question (d) above was “YES”, please indicate frequency of
such prior participation in private placements of:
 

 
Public
Companies
Private
Companies
Public or Private
[                     ]
 
 
Frequently  
        Occasionally          Never           

(f) For individual Subscribers, do you expect your current level of income to
significantly decrease in the foreseeable future:

YES_______                                           NO_______

(g)  For trust, corporate, partnership and other institutional Subscribers, do
you expect your total assets to significantly decrease in the foreseeable
future:

YES_______                                           NO_______

(h)  For all Subscribers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need sudden cash
requirements in excess of cash readily available to you:

YES_______                                           NO_______
 
 
 

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(i)  For all Subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the securities for which you seek to
subscribe?

YES_______                                           NO_______

(j)  For all Subscribers, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing your
entire investment?

YES_______                                           NO_______

4.           FINRA AFFILIATION.

Are you affiliated or associated with a FINRA member firm (please check one):

Yes _________                                           No __________

If yes, please describe:

_____________________________________________________________________________________________

If Subscriber is a Registered Representative with a FINRA member firm, have the
following acknowledgment signed by the appropriate party:

The undersigned FINRA member firm acknowledges receipt of the notice required by
the Rules of Fair Practice.

_________________________________
Name of FINRA Member Firm

By: ______________________________
      Authorized Officer

Date: ____________________________

5.The undersigned is informed of the significance to the Company of the
foregoing representations and answers contained in the Confidential Investor
Questionnaire and such answers have been provided under the assumption that the
Company, its counsel and agents will rely on them.

Sign Name:  ______________________________

Print Name:  ______________________________

Date:  ___________________