UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period
ended December 31, 2012 or



 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



333-173537

Commission File Number



MONTALVO SPIRITS, INC.

(Exact name of registrant
as specified in its charter)



|Nevada                                                          | 27-4004890                          
|--------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or 
organization) | (I.R.S. Employer Identification No.)
|4326 Laurel Glen Drive, Moorpark, California                    | 93021                               
|(Address of principal executive offices)                        | (Zip Code)                          



818-266-9286

(Registrant’s telephone number, including
area code)



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.xYes ̈No



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ̈YesxNo



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.



|Large accelerated filer ̈                                            | Accelerated filer ̈        
|------------------------------------------------------------------- | --------------------------
|                                                                    |                           
|Non-accelerated filer ̈(Do not check if a smaller reporting company) | Smaller reporting companyx



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ̈Yes Nox



Indicate the number of shares outstanding
of each of the issuer’s classes of common stock, as of the latest practicable date. As of February 19, 2013, the Registrant
had 66,900,012 shares of common stock issued and outstanding.













Table of Contents



PART I-FINANCIAL INFORMATION



|Item 1. Financial Statement.                                                                   | 2 
|---------------------------------------------------------------------------------------------- | --
|                                                                                               |   
|Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations. | 20
|                                                                                               |   
|Item 3. Quantitative and Qualitative Disclosures About Market Risk.                            | 20
|                                                                                               |   
|Item 4. Controls and Procedures.                                                               | 21
|                                                                                               |   
|PART II—OTHER INFORMATION                                                                      | 22
|                                                                                               |   
|Item 1. Legal Proceedings.                                                                     | 22
|                                                                                               |   
|Item 1A. Risk Factors.                                                                         | 2 
|                                                                                               |   
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.                           | 22
|                                                                                               |   
|Item 3. Defaults Upon Senior Securities.                                                       | 22
|                                                                                               |   
|Item 4. Mine Safety Disclosures.                                                               | 22
|                                                                                               |   
|Item 5. Other Information.                                                                     | 23
|                                                                                               |   
|Item 6. Exhibits.                                                                              | 23
|                                                                                               |   
|SIGNATURES                                                                                     | 23



1







PART I-FINANCIAL INFORMATION



Item 1. Financial Statements.



MONTALVO SPIRITS, INC.

(formerly known as Advanced Cloud Storage,
Inc.)

(A development stage
company)



FINANCIAL STATEMENTS



December 31, 2012

(Unaudited)



|BALANCE SHEETS                               | 3
|-------------------------------------------- | -
|                                             |  
|STATEMENTS OF OPERATIONS                     | 4
|                                             |  
|STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) | 6
|                                             |  
|STATEMENTS OF CASH FLOWS                     | 7
|                                             |  
|NOTES TO AUDITED FINANCIAL STATEMENTS        | 8



2







MONTALVO SPIRITS, INC.

(formerly known as Advanced Cloud Storage,
Inc.)

(A development stage
company)



BALANCE SHEETS



|                                                                                                                                    |  | December 31, 2012 |            |   | March 31, 2012 |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | -------------- | -
|                                                                                                                                    |  | (Unaudited)       |            |   | (Unaudited)    |  
|ASSETS                                                                                                                              |  |                   |            |   |                |  
|CURRENT ASSETS                                                                                                                      |  |                   |            |   |                |  
|Cash                                                                                                                                |  | $                 | 1,715      |   |                | $
|Subscription Receivable                                                                                                             |  |                   | 70,000     |   |                |  
|Prepaid expenses                                                                                                                    |  |                   | 2,099      |   |                |  
|Inventories                                                                                                                         |  |                   | 347,640    |   |                |  
|                                                                                                                                    |  |                   |            |   |                |  
|Total Current Assets                                                                                                                |  |                   | 421,454    |   |                |  
|                                                                                                                                    |  |                   |            |   |                |  
|TOTAL ASSETS                                                                                                                        |  | $                 | 421,454    |   |                | $
|                                                                                                                                    |  |                   |            |   |                |  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                      |  |                   |            |   |                |  
|CURRENT LIABILITIES                                                                                                                 |  |                   |            |   |                |  
|Accounts payable and accrued liabilites                                                                                             |  | $                 | 301,175    |   |                | $
|Advances from stockholders                                                                                                          |  |                   | 9,809      |   |                |  
|Bank overdraft                                                                                                                      |  |                   | -          |   |                |  
|Advance from officer                                                                                                                |  |                   | 150        |   |                |  
|Note payable                                                                                                                        |  |                   | 19,000     |   |                |  
|Notes payable - related parties                                                                                                     |  |                   | 21,000     |   |                |  
|                                                                                                                                    |  |                   |            |   |                |  
|Total Current Liabilities                                                                                                           |  |                   | 351,134    |   |                |  
|                                                                                                                                    |  |                   |            |   |                |  
|LONG-TERM LIABILITIES                                                                                                               |  |                   |            |   |                |  
|Notes payable - related parties, net of current maturities                                                                          |  |                   | 324,000    |   |                |  
|                                                                                                                                    |  |                   |            |   |                |  
|Total Liabilities                                                                                                                   |  |                   | 675,134    |   |                |  
|                                                                                                                                    |  |                   |            |   |                |  
|STOCKHOLDERS'EQUITY (DEFICIT)                                                                                                       |  |                   |            |   |                |  
|Preferred stock: $0.001 par value, 10,000,000 shares authirozied; none issued or outstanding                                        |  |                   | -          |   |                |  
|Common stock, $0.001 par value, 300,000,000 shares authorized; 66,900,012 and 59,000,016 shares issued and outstanding respectively |  |                   | 66,900     |   |                |  
|Additional paid-in capital                                                                                                          |  |                   | 1,240,257  |   |                |  
|Common Stock Subscribed                                                                                                             |  |                   | (30,000    | ) |                |  
|Deficit accumulated during the development stage                                                                                    |  |                   | (1,530,837 | ) |                |  
|                                                                                                                                    |  |                   |            |   |                |  
|Total Stockholders' Equity (Deficit)                                                                                                |  |                   | (253,680   | ) |                |  
|                                                                                                                                    |  |                   |            |   |                |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                |  | $                 | 421,454    |   |                | $



The accompanying notes are an integral part
of these financial statements.



3







MONTALVO SPIRITS, INC.

(formerly known as Advanced Cloud Storage,
Inc.)

(A development stage
company)



STATEMENTS OF OPERATIONS

(Unaudited)





|                                           |  |                     |            |   | For the Period from |   |            | For the Period from | 
|------------------------------------------ |  | ------------------- | ---------- | - | ------------------- | - | ---------- | ------------------- | 
|                                           |  | For the Nine Months |            |   | April 4, 2011       |   |            | April 4, 2011       | 
|                                           |  | ended               |            |   | (inception) through |   |            | (inception) through | 
|                                           |  | December 31, 2012   |            |   | December 31, 2011   |   |            | December 31, 2012   | 
|                                           |  | (Unaudited)         |            |   | (Unaudited)         |   |            | (Unaudited)         | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|SALES                                      |  | $                   | 25,471     |   |                     | $ | -          |                     | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|COST OF GOODS SOLD                         |  |                     | 9,944      |   |                     |   | -          |                     | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|GROSS PROFIT                               |  |                     | 15,527     |   |                     |   | -          |                     | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|OPERATING EXPENSES                         |  |                     |            |   |                     |   |            |                     | 
|Selling                                    |  |                     | 31,532     |   |                     |   | 33,224     |                     | 
|Salaries and wages                         |  |                     | 169,500    |   |                     |   | 7,500      |                     | 
|Consulting                                 |  |                     | 54,000     |   |                     |   | -          |                     | 
|Stock based compensation                   |  |                     | 1,137,601  |   |                     |   | -          |                     | 
|General and administrative                 |  |                     | 23,845     |   |                     |   | 9,650      |                     | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|Total Operating Expenses                   |  |                     | 1,416,478  |   |                     |   | 50,374     |                     | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|LOSS FROM OPERATIONS                       |  |                     | (1,400,951 | ) |                     |   | (50,374    | )                   | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|OTHER (INCOME) EXPENSE                     |  |                     |            |   |                     |   |            |                     | 
|Interest expense                           |  |                     | 3,316      |   |                     |   | 392        |                     | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|Total Other (Income) Expense               |  |                     | 3,316      |   |                     |   | 392        |                     | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|LOSS BEFORE INCOME TAXES                   |  |                     | (1,404,267 | ) |                     |   | (50,766    | )                   | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|Income tax provision                       |  |                     | -          |   |                     |   | -          |                     | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|NET LOSS                                   |  |                     | (1,404,267 | ) |                     | $ | (50,766    | )                   | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|Net Loss per Common Share                  |  |                     |            |   |                     |   |            |                     | 
|- Basic and diluted                        |  |                     | (0         | ) |                     | $ | (0.00      | )                   | 
|                                           |  |                     |            |   |                     |   |            |                     | 
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |  |                     |            |   |                     |   |            |                     | 
|- Basic and diluted                        |  |                     | 59,287,576 |   |                     |   | 59,000,016 |                     | 



The accompanying notes are an integral part
of these financial statements.



4







MONTALVO SPIRITS, INC.

(formerly known as Advanced Cloud Storage,
Inc.)

(A development stage
company)



Consolidated Statement
of Operations



|                                           |  | For the Three Months |            |   | For the Three Months |  
|------------------------------------------ |  | -------------------- | ---------- | - | -------------------- | -
|                                           |  | ended                |            |   | ended                |  
|                                           |  | December 31, 2012    |            |   | December 31, 2011    |  
|                                           |  | (Unaudited)          |            |   | (Unaudited)          |  
|                                           |  |                      |            |   |                      |  
|SALES                                      |  | $                    | 9,323      |   |                      | $
|                                           |  |                      |            |   |                      |  
|COST OF GOODS SOLD                         |  |                      | 3,353      |   |                      |  
|                                           |  |                      |            |   |                      |  
|GROSS PROFIT                               |  |                      | 5,970      |   |                      |  
|                                           |  |                      |            |   |                      |  
|OPERATING EXPENSES                         |  |                      |            |   |                      |  
|Selling                                    |  |                      | 11,324     |   |                      |  
|Salaries and wages                         |  |                      | 54,000     |   |                      |  
|Consulting                                 |  |                      | 18,000     |   |                      |  
|Stock based compensation                   |  |                      | 1,137,601  |   |                      |  
|General and administrative                 |  |                      | 8,748      |   |                      |  
|                                           |  |                      |            |   |                      |  
|Total Operating Expenses                   |  |                      | 1,229,673  |   |                      |  
|                                           |  |                      |            |   |                      |  
|LOSS FROM OPERATIONS                       |  |                      | (1,223,703 | ) |                      |  
|                                           |  |                      |            |   |                      |  
|OTHER (INCOME) EXPENSE                     |  |                      |            |   |                      |  
|Interest expense                           |  |                      | 1,206      |   |                      |  
|                                           |  |                      |            |   |                      |  
|Total Other (Income) Expense               |  |                      | 1,206      |   |                      |  
|                                           |  |                      |            |   |                      |  
|LOSS BEFORE INCOME TAXES                   |  |                      | (1,224,909 | ) |                      |  
|                                           |  |                      |            |   |                      |  
|Income tax provision                       |  |                      | -          |   |                      |  
|                                           |  |                      |            |   |                      |  
|NET LOSS                                   |  |                      | (1,224,909 | ) |                      |  
|                                           |  |                      |            |   |                      |  
|Net Loss per Common Share                  |  |                      |            |   |                      |  
|- Basic and diluted                        |  |                      | (0.02      | ) |                      |  
|                                           |  |                      |            |   |                      |  
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |  |                      |            |   |                      |  
|- Basic and diluted                        |  |                      | 59,858,746 |   |                      |  



The accompanying notes are an integral part
of these financial statements



5







Consolidated Statement of Stockholders'
Equity (Deficit)

For the Period From April 4, 2011 (inception)
through December 31, 2012

(Unaudited)



|                                                                    |  |                                |            |  |         |   |        |              |  |   |             |   |  |         |         |   | Total         |  
|------------------------------------------------------------------- |  | ------------------------------ | ---------- |  | ------- | - | ------ | ------------ |  | - | ----------- | - |  | ------- | ------- | - | ------------- | -
|                                                                    |  |                                |            |  |         |   |        | Additional   |  |   | Stock       |   |  |         |         |   | Stockholders' |  
|                                                                    |  | Common stock: $0.001 par value |            |  | Paid-In |   |        | Subscription |  |   | Accumulated |   |  | Equity  |        
|                                                                    |  | Shares                         |            |  | Amount  |   |        | Capital      |  |   | Receivable  |   |  | Deficit |         |   | (Deficit)     |  
|                                                                    |  |                                |            |  |         |   |        |              |  |   |             |   |  |         |         |   |               |  
|Balance at March 31, 2012                                           |  |                                | 59,000,016 |  |         | $ | 59,000 |              |  | $ | (1,900      | ) |  | $       | -       |   |               | $
|                                                                    |  |                                |            |  |         |   |        |              |  |   |             |   |  |         |         |   |               |  
|Addition paid-in capital during July, 2012                          |  |                                |            |  |         |   | -      |              |  |   | 10,000      |   |  |         |         |   |               |  
|                                                                    |  |                                |            |  |         |   |        |              |  |   |             |   |  |         |         |   |               |  
|Debt converted to equity during December, 2012                      |  |                                |            |  |         |   | -      |              |  |   | 19,000      |   |  |         |         |   |               |  
|                                                                    |  |                                |            |  |         |   |        |              |  |   |             |   |  |         |         |   |               |  
|Equity issued for services during December, 2012                    |  |                                |            |  |         |   | -      |              |  |   | 1,137,601   |   |  |         |         |   |               |  
|                                                                    |  |                                |            |  |         |   |        |              |  |   |             |   |  |         |         |   |               |  
|Reverse acqusition adjustment                                       |  |                                | 7,699,996  |  |         |   | 7,700  |              |  |   | (24,244     | ) |  |         |         |   |               |  
|                                                                    |  |                                |            |  |         |   |        |              |  |   |             |   |  |         |         |   |               |  
|Common stock issued for cash at $0.5 per share on December 21, 2012 |  |                                | 200,000    |  |         |   | 200    |              |  |   | 99,800      |   |  |         | (30,000 | ) |               |  
|                                                                    |  |                                |            |  |         |   |        |              |  |   |             |   |  |         |         |   |               |  
|Net loss                                                            |  |                                |            |  |         |   |        |              |  |   |             |   |  |         |         |   |               |  
|                                                                    |  |                                |            |  |         |   |        |              |  |   |             |   |  |         |         |   |               |  
|Balance, December 31, 2012                                          |  |                                | 66,900,012 |  |         | $ | 66,900 |              |  | $ | 1,240,257   |   |  | $       | (30,000 | ) |               | $



See accompanying notes to the consolidated
financials statements.



6







Consolidated Statements of Cash Flows



|                                                                                                     |  |                     |            |   | For the Period from |   |         | For the Period from | 
|---------------------------------------------------------------------------------------------------- |  | ------------------- | ---------- | - | ------------------- | - | ------- | ------------------- | 
|                                                                                                     |  | For the Nine Months |            |   | April 4, 2011       |   |         | April 4, 2011       | 
|                                                                                                     |  | ended               |            |   | (inception) through |   |         | (inception) through | 
|                                                                                                     |  | December 31, 2012   |            |   | December 31, 2011   |   |         | December 31, 2012   | 
|                                                                                                     |  | (Unaudited)         |            |   | (Unaudited)         |   |         | (Unaudited)         | 
|                                                                                                     |  |                     |            |   |                     |   |         |                     | 
|OPERATING ACTIVITIES:                                                                                |  |                     |            |   |                     |   |         |                     | 
|Net Loss                                                                                             |  |                     | (1,404,267 | ) |                     | $ | (50,766 | )                   | 
|Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation |  |                     | 1,137,601  |   |                     |   | -       |                     | 
|Changes in operating assets and liabilities:                                                         |  |                     |            |   |                     |   |         |                     | 
|Inventories                                                                                          |  |                     | 9,460      |   |                     |   | (16,100 | )                   | 
|Accrued expenses                                                                                     |  |                     | 216,000    |   |                     |   | -       |                     | 
|                                                                                                     |  |                     |            |   |                     |   |         |                     | 
|Net Cash Used in Operating Activities                                                                |  |                     | (41,206    | ) |                     |   | (66,866 | )                   | 
|                                                                                                     |  |                     |            |   |                     |   |         |                     | 
|FINANCING ACTIVITIES:                                                                                |  |                     |            |   |                     |   |         |                     | 
|Notes Payable                                                                                        |  |                     | 17,000     |   |                     |   | 11,000  |                     | 
|Notes Payable:Accrued Interest                                                                       |  |                     | 1,926      |   |                     |   | 392     |                     | 
|Related Party Notes Payable                                                                          |  |                     | 2,200      |   |                     |   | -       |                     | 
|Related Party Notes Payable:Accrued Interest                                                         |  |                     | 1,390      |   |                     |   | -       |                     | 
|Proceeds from the sale of common stock for cash                                                      |  |                     | 10,000     |   |                     |   | 57,100  |                     | 
|                                                                                                     |  |                     |            |   |                     |   |         |                     | 
|Net Cash Provided by Financing Activities                                                            |  |                     | 32,516     |   |                     |   | 68,492  |                     | 
|                                                                                                     |  |                     |            |   |                     |   |         |                     | 
|NET CHANGE IN CASH                                                                                   |  |                     | (8,690     | ) |                     |   | 1,626   |                     | 
|                                                                                                     |  |                     |            |   |                     |   |         |                     | 
|CASH AT BEGINNING OF PERIOD                                                                          |  |                     | 10,405     |   |                     |   | -       |                     | 
|                                                                                                     |  |                     |            |   |                     |   |         |                     | 
|CASH AT END OF PERIOD                                                                                |  |                     | 1,715      |   |                     | $ | 1,626   |                     | 
|                                                                                                     |  |                     |            |   |                     |   |         |                     | 
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                   |  |                     |            |   |                     |   |         |                     | 
|                                                                                                     |  |                     |            |   |                     |   |         |                     | 
|Interest paid                                                                                        |  |                     | -          |   |                     | $ | -       |                     | 
|Income tax paid                                                                                      |  |                     | -          |   |                     | $ | -       |                     | 



See accompanying notes to the consolidated
financials statements.



7









MONTALVO SPIRITS, INC.

(formerly known as Advanced Cloud Storage,
Inc.)

(A development stage
company)

NOTES
TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

December 31, 2012 (Unaudited)





Note 1 – Organization and Operations



Advanced Cloud Storage, Inc.



Advanced Cloud Storage, Inc. (“Advanced
Cloud Storage”), a development stage company, was incorporated on November 18, 2010 under the laws of the State of Nevada.
Initial operations have included organization and incorporation, target market identification, marketing plans, and capital formation.
A substantial portion of the Company’s activities has involved developing a business plan and establishing contacts and visibility
in the marketplace. The Company has not generated any revenues since inception. The Company intends to market and sell its planed
secure online data storage through its’ intended website.



Amendment to the Certificate of Incorporation



On December 21, 2012, holders of a majority
of the Company’s outstanding Common Stock voted to amend the Company’s Articles of Incorporation to: (i) change its
name to “Montalvo Spirits, Inc.” (the “Company”), (ii) increase the number of its authorized shares of
capital stock from 75,000,000 shares to 310,000,000 consisting of (a) 300,000,000 shares were designated as Common Stock and (b)
10,000,000 shares were designated as blank check preferred stock and (iii) effectuate a forward split on a 1:32.4552 basis (“the
Amendment”).



CASA Montalvo Holdings, Inc.



CASA Montalvo Holdings, Inc., a development
stage company, (“Casa Montalvo”) was incorporated under the laws of the State of California on April 4, 2011. The Company
develops, markets and/or distributes alcoholic beverages, primarily in the United States.



Montalvo Imports LLC



On August 9, 2012, the Company formed Montalvo
Imports LLC (“Imports”) under the laws of the State of Delaware.  The LLC, of which the Company is the sole member,
was formed to provide the same services as the Company.



Acquisition of CASA Montalvo Treated
as a Reverse Acquisition



On December 21, 2012, Advanced Cloud Storage,
Inc., a Nevada corporation, entered into and consummated the Agreement and Plan of Share Exchange (the “Exchange Agreement”)
with Casa Montalvo Holdings, Inc., a California corporation (“Casa Montalvo”) and the shareholders of Casa Montalvo
(the “Exchange”). Upon consummation of the transactions set forth in the Agreement (the “Closing”), the
Registrant adopted the business plan of Casa Montalvo.



Pursuant to the Agreement, the Registrant
agreed to acquire all of the outstanding capital stock of Casa Montalvo in exchange for the issuance of an aggregate 1,817,891
shares (the “Exchange Shares”) of the Registrant’s common stock, par value $0.001 per share (the “Common
Stock”). As a result of the Exchange, Casa Montalvo became a wholly-owned subsidiary of the Registrant. Following the consummation
of the Exchange, the shareholders of Casa Montalvo will beneficially own approximately eighty-eight and one half percent (88.5%)
of the issued and outstanding Common Stock of the Registrant. The parties have taken the actions necessary to provide that the
Exchange is treated as a “tax free exchange” under Section 368 of the Internal Revenue Code of 1986, as amended. Pursuant
to the terms of the Exchange Agreement, the Registrant’s principal shareholder agreed to retire 10,000,000 shares of the
Registrant’s Common Stock. The Exchange Agreement contains customary representations, warranties and covenants of the Registrant
and Casa Montalvo for like transactions.



8







As a result of the controlling financial
interest of the former stockholder of Casa Montalvo, for financial statement reporting purposes, the merger between the Company
and Casa Montalvo has been treated as a reverse acquisition with Casa Montalvo deemed the accounting acquirer and the Company deemed
the accounting acquiree under the acquisition method of accounting in accordance with section 805-10-55 of the FASB Accounting
Standards Codification. The reverse acquisition is deemed a capital transaction and the net assets of Casa Montalvo (the accounting
acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the acquisition.  The
acquisition process utilizes the capital structure of the Company and the assets and liabilities of Casa Montalvo which are recorded
at their historical cost. The equity of the Company is the historical equity of Casa Montalvo retroactively restated to reflect
the number of shares issued by the Company in the transaction.



Note 2 – Summary of Significant
Accounting Policies



Basis of Presentation



The accompanying unaudited interim financial
statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States
of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States
Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim
financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods presented.  Interim results are not necessarily
indicative of the results for the full year. These unaudited interim financial statements should be read in conjunction with the
financial statements of Casa Montalvo for the year ended December 31, 2011 and for the interim period ended September 30, 2012
and notes thereto contained in the Company’s Current Report on Form 8-K filed with the SEC on December 21, 2012.



Principles of Consolidation



The Company applies the guidance of Topic
810 “Consolidation”of the FASB Accounting Standards Codification to determine whether and how to consolidate
another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has
a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority
owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation
by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8
the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general
rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another
entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership,
for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned
subsidiaries, in which the parent’s power to control exists.



The Company's consolidated subsidiary and/or
entity is as follows:



|Name of consolidated subsidiary or entity |  | State or other jurisdiction of incorporation or organization |  | Date of incorporation or formation
    (date of acquisition, if applicable) |  | Attributable interest |    
|----------------------------------------- |  | ------------------------------------------------------------ |  | --------------------------------------------------------------------------- |  | --------------------- | ---
|CASA Montalvo Holdings, Inc.              |  | California                                                   |  | April 4, 2011                                                               |  |                       | 100
|                                          |  |                                                              |  |                                                                             |  |                       |    
|Montalvo Imports LLC                      |  | Delaware                                                     |  | August 9, 2012                                                              |  |                       | 100



The consolidated financial statements include
all accounts of the Company as of December 31, 2012 and for the period from December 21, 2012 (date of acquisition) through December
31, 2012; Casa Montalvo as of December 31, 2012 and 2011 and for the nine months ended December 31, 2012 and for the period from
April 4, 2011 (inception) through December 31, 2011; and Montalvo Imports as of December 31, 2012 and for the period from August
9, 2012 (inception) through December 31, 2012.



All inter-company balances and transactions
have been eliminated.



9







Reclassification



Certain amounts in the prior period financial
statements have been reclassified to conform to the current period presentation.  These reclassifications had no effect
on reported losses.



Development Stage Company



The Company is a development stage company
as defined by section 915-10-20 of the FASB Accounting Standards Codification. The Company is still devoting substantially all
of its efforts on establishing the business and its planned principal operations have not commenced.  All losses accumulated
since inception have been considered as part of the Company's development stage activities.



Use of Estimates and Assumptions



The preparation of financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts
of revenues and expenses during the reporting period.



The Company’s significant estimates
and assumptions include the fair value of financial instruments; income tax rate, income tax provision, deferred tax assets and
valuation allowance of deferred tax assets; and the assumption that the Company will be a going concern. Those significant accounting
estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions,
and certain estimates or assumptions are difficult to measure or value.



Management bases its estimates on historical
experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources.



Management regularly evaluates the key
factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances,
historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.



Actual results could differ from those
estimates.



Fair Value of Financial Instruments



The Company follows paragraph 825-10-50-10
of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph
820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of
its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring
fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase
consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting
Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure
fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active
markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value
hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:



|Level 1 |  | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.                                             
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 2 |  | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|Level 3 |  | Pricing inputs that are generally observable inputs and not corroborated by market data.                                                                   



Financial assets are
considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques
and at least one significant model assumption or input is unobservable.



10







The fair value hierarchy
gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority
to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described
above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.



The carrying amounts of the Company’s
financial assets and liabilities, such as prepaid expenses, accounts payable and accrued liabilities, approximate their fair values
because of the short maturity of these instruments.



Transactions involving related parties
cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings
may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions
were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.



It is not, however, practical to determine
the fair value of advances from stockholders, if any, due to their related party nature.



Fiscal Year-End

The Company elected March 31st as its fiscal year ending date.



Fair Value of Non-Financial Assets
or Liabilities Measured on a Recurring Basis



The Company’s non-financial assets
include inventories. The Company identifies potentially excess and slow-moving inventories by evaluating turn rates, inventory
levels and other factors. Excess quantities are identified through evaluation of inventory aging, review of inventory turns and
historical sales experiences. The Company provides lower of cost or market reserves for such identified excess and slow-moving
inventories. The Company establishes a reserve for inventory shrinkage, if any, based on the historical results of physical inventory
cycle counts.



Cash Equivalents



The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash equivalents.



Inventories



Inventory Valuation



The Company values inventory, consisting
of finished goods, at the lower of cost or market. Cost is determined on the first-in and first-out (“FIFO”) method.
The Company reduces inventory for the diminution of value, resulting from product obsolescence, damage or other issues affecting
marketability, equal to the difference between the cost of the inventory and its estimated market value.  Factors utilized
in the determination of estimated market value include (i) estimates of future demand, and (ii) competitive pricing pressures.



Inventory Obsolescence
and Markdowns



The Company evaluates its current level
of inventory considering historical sales and other factors and, based on this evaluation, classify inventory markdowns in the
income statement as a component of cost of goods sold pursuant to Paragraph 420-10-S99 of the FASB Accounting Standards Codification
to adjust inventory to net realizable value. These markdowns are estimates, which could vary significantly from actual requirements
if future economic conditions, customer demand or competition differ from expectations.



There was no inventory obsolescence for
the interim period ended December 31, 2012 or 2011.



There was no lower of cost or market adjustments
for the interim period ended December 31, 2012 or 2011.



Related Parties



The Company follows subtopic 850-10 of
the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.



11







Pursuant to section 850-10-20 the related
parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required,
absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted
for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing
trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the
Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management
or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its
own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting
parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent
that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.



The financial statements shall include
disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar
items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated
or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the
relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were
ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an
understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each
of the periods for which income statements are presented and the effects of any change in the method of establishing the terms
from that used in the preceding period; and d) mounts due from or to related parties as of the date of each balance sheet
presented and, if not otherwise apparent, the terms and manner of settlement.



Commitments and Contingencies



The Company follows subtopic 450-20 of
the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date
the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when
one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company
or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or
unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.



If the assessment of a contingency indicates
that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated
liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially
material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of
the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.



Loss contingencies considered remote are
generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe,
based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated
financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and
adversely affect the Company’s business, financial position, and results of operations or cash flows.



Revenue Recognition



The Company applies paragraph
605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized
or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are
met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to
the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.



12







Stock-Based Compensation for Obtaining
Employee Services



The Company accounts for its stock based
compensation in which the Company obtains employee services in share-based payment transactions under the recognition and measurement
principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting Standards Codification. Pursuant
to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the
fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair
value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is
probable that performance will occur. If shares of the Company are thinly traded the use of share prices established in the Company’s
most recent private placement memorandum ("PPM”), or weekly or monthly price observations would generally be more appropriate
than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and
asked quotes and lack of consistent trading in the market.



The fair value of share options and similar
instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for
inputs are as follows:



·Expected
term of share options and similar instruments: The expected life of options and similar instruments represents the period of time
the option and/or warrant are expected to be outstanding. Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards
Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments
are expected to be outstanding taking into consideration of the contractual term of the instruments and employees’ expected
exercise and post-vesting employment termination behavior into the fair value (or calculated value) of the instruments. Pursuant
to paragraph 718-10-S99-1, it may be appropriate to use the simplified method, i.e., expected term = ((vesting term + original
contractual term) / 2), if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon
which to estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) A company significantly
changes the terms of its share option grants or the types of employees that receive share option grants such that its historical
exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii) A company has or expects
to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable
basis upon which to estimate expected term. The Company uses the simplified method to calculate expected term of share options
and similar instruments as the company does not have sufficient historical exercise data to provide a reasonable basis upon which
to estimate expected term.



·Expected
volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded
or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company
to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons
for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average
historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments
as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally
be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares
could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.



·Expected
annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term
shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is
based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected
term of the share options and similar instruments.



·Risk-free
rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected
term of the share options and similar instruments.



The Company’s policy is to recognize
compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite
service period for the entire award.



Equity Instruments Issued to Parties
Other Than Employees for Acquiring Goods or Services



The Company accounts for equity instruments
issued to parties other than employees for acquiring goods or services under guidance of Sub-topic 505-50 of the FASB Accounting
Standards Codification (“Sub-topic 505-50”).



13







Pursuant to ASC Section 505-50-30, all
transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably
measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on
which the performance is complete or the date on which it is probable that performance will occur. If shares of the Company are
thinly traded the use of share prices established in the Company’s most recent private placement memorandum ("PPM”),
or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares
could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.



The fair value of share options and similar
instruments is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for
inputs are as follows:



·Expected
term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification
the expected term of share options and similar instruments represents the period of time the options and similar instruments are
expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise
behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s
expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual
term of the share options and similar instruments is used as the expected term of share options and similar instruments as the
Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.



·Expected
volatility of the entity’s shares and the method used to estimate it. Pursuant to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded
or nonpublic entity that uses the calculated value method shall disclose the reasons why it is not practicable for the Company
to estimate the expected volatility of its share price, the appropriate industry sector index that it has selected, the reasons
for selecting that particular index, and how it has calculated historical volatility using that index. The Company uses the average
historical volatility of the comparable companies over the expected contractual life of the share options or similar instruments
as its expected volatility. If shares of a company are thinly traded the use of weekly or monthly price observations would generally
be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares
could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.



·Expected
annual rate of quarterly dividends. An entity that uses a method that employs different dividend rates during the contractual term
shall disclose the range of expected dividends used and the weighted-average expected dividends. The expected dividend yield is
based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected
term of the share options and similar instruments.



·Risk-free
rate(s). An entity that uses a method that employs different risk-free rates shall disclose the range of risk-free rates used.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected
term of the share options and similar instruments.



Pursuant to ASC paragraph 505-50-25-7,
if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for
goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the
elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached.
A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether
the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity
under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1,
a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable
equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific
performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity
by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the
balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other
than employees in exchange for goods or services. Section 505-50-30 provides guidance on the determination of the measurement date
for transactions that are within the scope of this Subtopic.



14













Pursuant to Paragraphs 505-50-25-8 and
505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after
a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance
conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity
had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments.
A recognized asset, expense, or sales discount shall not be reversed if a stock option that the counterparty has the right to exercise
expires unexercised.



Pursuant to ASC paragraph 505-50-30-S99-1,
if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity
instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are
not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should
be recorded.



Income Taxes Provision



The Company adopted the provisions of paragraph
740-10-25-13 of the FASB Accounting Standards Codification. Paragraph 740-10-25-13.addresses the determination of whether tax benefits
claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under paragraph 740-10-25-13,
the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized
in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty
percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition,
classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company
had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.



The estimated future tax effects of temporary
differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well
as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded
on its consolidated balance sheets and provides valuation allowances as management deems necessary.



Management makes judgments as to the interpretation
of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the
Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion,
adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates,
additional allowances or reversals of reserves may be necessary.



Uncertain Tax Positions



The Company did not take any uncertain
tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25
for the interim period ended December 31, 2012 or 2011.



Net Income (Loss) per Common Share



Net income (loss) per common share is computed
pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed
by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net
income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock
and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common
shares issuable through contingent shares issuance arrangement, stock options or warrants.



There were no potentially outstanding dilutive
shares for the interim period ended December 31, 2012 or 2011.



15







Cash Flows Reporting



The Company adopted paragraph 230-10-45-24
of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether
they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or
reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification
to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities
by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating
cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments.
The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time
of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in
the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing
and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB
Accounting Standards Codification.



Subsequent Events



The Company follows the guidance in Section
855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent
events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards
Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users,
such as through filing them on EDGAR.



Recently Issued Accounting Pronouncements



FASB Accounting Standards
Update No. 2011-08



In September 2011, the FASB issued the
FASB Accounting Standards Update No. 2011-08 “Intangibles—Goodwill and Other: Testing Goodwill for Impairment”
(“ASU 2011-08”).This Update is to simplify how public and nonpublic entities test goodwill for impairment. The
amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value
of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step
goodwill impairment test described in Topic 350. Under the amendments in this Update, an entity is not required to calculate the
fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its
carrying amount.



The guidance is effective for interim and
annual periods beginning on or after December 15, 2011. Early adoption is permitted.



FASB Accounting Standards
Update No. 2011-11



In December 2011, the FASB issued the FASB
Accounting Standards Update No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU
2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable
users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this
disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP
and those entities that prepare their financial statements on the basis of IFRS.



The amended guidance is effective for annual
reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.



FASB Accounting Standards
Update No. 2012-02



In July 2012, the FASB issued the FASB
Accounting Standards Update No. 2012-02 “Intangibles—Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible
Assets for Impairment” (“ASU 2012-02”).



This Update is intended to reduce the cost
and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. This guidance builds upon the
guidance in ASU 2011-08, entitled Testing Goodwill for Impairment. ASU 2011-08 was issued on September 15, 2011, and
feedback from stakeholders during the exposure period related to the goodwill impairment testing guidance was that the guidance
also would be helpful in impairment testing for intangible assets other than goodwill.



The revised standard allows an entity the
option to first assess qualitatively whether it is more likely than not (that is, a likelihood of more than 50 percent) that an
indefinite-lived intangible asset is impaired, thus necessitating that it perform the quantitative impairment test. An entity
is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test
unless the entity determines that it is more likely than not that the asset is impaired.



16







This Update is effective for annual and
interim impairment tests performed in fiscal years beginning after September 15, 2012.  Earlier implementation is permitted.



Other Recently Issued,
but not Yet Effective Accounting Pronouncements



Management does not believe that any other
recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying
consolidated financial statements.



Note 3 – Going Concern



The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations,
realization of assets, and liquidation of liabilities in the normal course of business.



As reflected in the accompanying consolidated
financial statements, the Company had a deficit accumulated during the development stage at December 31, 2012, and a net loss and
net cash used in operating activities for the interim period then ended, respectively. These factors raise substantial doubt about
the Company’s ability to continue as a going concern.



While the Company is attempting to commence
operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s
daily operations. Management intends to raise additional funds by way of a public or private offering.  Management believes
that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for
the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and
in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as
a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.



The consolidated financial statements do
not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.



Note 4 – Notes Payable



During the fiscal year ended March 31,
2012, an independent third party loaned the Company $21,000 in the form of a promissory note. The Note is due on March 31, 2013
and bears interest at 8% per annum.



During the interim period ended December
31, 2012, the Company repaid $7,000 in the aggregate towards the notes.



On October 7, 2012, an independent third
party loaned the Company $5,000 in the form of a promissory note. The Note is due on October 10, 2013 and bears interest at 8%
per annum.



Note 5 – Related Party Transactions



Related Parties



Related parties with whom the Company had
transactions are:



|Related Parties          |  | Relationship                                                              
|------------------------ |  | --------------------------------------------------------------------------
|Alex Viecco              |  | Chief Executive Officer and significant stockholder of the Company        
|                         |  |                                                                           
|Point Loma Capital, Inc. |  | An entity owned and controlled by a significant stockholder of the Company



17







Notes payable - Related Parties



On June 6, 2011 the Chief Executive Officer
of the Company, loaned the Company $1,000 in the form of a promissory note. The Note is due on June 6, 2013 and bears interest
at 8% per annum.



On June 21, 2011 a significant stockholder
of the Company, loaned the Company $10,000 in the form of a promissory note. The Note is due on June 21, 2013 and bears interest
at 8% per annum.



On June 21, 2011 a significant stockholder
of the Company, loaned the Company $10,000 in the form of a promissory note. The Note is due on June 21, 2013 and bears interest
at 8% per annum.



Advances from Stockholder



From time to time, stockholders of the
Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on
demand.



Advances from stockholder consisted of
the following:



|                           |  | December 
31, 2012 |     |  | March 31, 
2012 |  
|-------------------------- |  | ------------------ | --- |  | --------------- | -
|Advances from stockholders |  | $                  | 150 |  |                 | $
|Total                      |  | $                  | 150 |  |                 | $



Note 6 – Commitments and Contingencies



Financial Advisory Agreement



On
January 1, 2012, the Company entered into a financial advisory services agreement (“Agreement”) with CMFD Group, LLC
(“CMFD”) for consulting services to be provided as required by the Company. The Agreement requires that CMFD be paid
$6,000 per month for one year from date of signing. The sole officer and shareholder of CMFD is a significant stockholder of the
Company.



Employment with the President



On January 1, 2012, the Company and Carlos
Gonzalez (“CG”), entered into an Employment Agreement (the “Employment Agreement”), to employ CG as the
Company’s President. The initial term of employment under the agreement is from January 1, 2012 (the “Effective Date”)
until December 31, 2014, unless sooner terminated in accordance with the terms of the Employment Agreement. Pursuant to the Employment
Agreement, CG is entitled to a salary of $72,000per annum for the period beginning on the Effective Date through December
31, 2012.



Employment with the Chief Operating
Officer



On January 1, 2012, the Company and Sergio
Gonzalez (“SG”), entered into an Employment Agreement (the “Employment Agreement”), to employ CG as the
Company’s Chief Operating Officer. The initial term of employment under the agreement is from January 1, 2012 (the “Effective
Date”) until December 31, 2014, unless sooner terminated in accordance with the terms of the Employment Agreement. Pursuant
to the Employment Agreement, SG is entitled to a salary of $72,000per annum for the period beginning on the Effective
Date through December 31, 2012.



Employment with the Chief Executive
Officer



On January 1, 2012, the Company and Alex
Viecco (“AV”), entered into an Employment Agreement (the “Employment Agreement”), to employ CG as the Company’s
Chief Executive Officer. The initial term of employment under the agreement is from January 1, 2012 (the “Effective Date”)
until December 31, 2014, unless sooner terminated in accordance with the terms of the Employment Agreement. Pursuant to the Employment
Agreement, AV is entitled to a salary of $72,000per annum for the period beginning on the Effective Date through December
31, 2012.



18







Note 7 – Stockholders’ Deficit



Shares Authorized



Upon formation the total
number of shares of common stock which the Company is authorized to issue is Seventy Five Million (75,000,000) shares, par value
$0.001 per share.



Common Stock



Immediately prior to the consummation of
the Exchange Agreement on December 21, 2012, the Company had 332,251,996 common shares issued and outstanding.



Upon consummation of the Exchange Agreement
on December 21, 2012, the then majority stockholders of the Company surrendered 324,552,000 shares of the Company's common stock
which was cancelled upon receipt and the Company issued 59,000,016 shares of its common stock pursuant to the terms and conditions
of the Exchange Agreement.



Sale of Common Stock



On December 21, 2012 the Company issued
200,000 shares of its common stock at $0.75 per share for a total of $100,000. $70,000 was received while the remaining $30,000
was recorded as stock subscription receivable.



Note 8 – Subsequent Events



The Company has evaluated all events that
occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported.
The Management of the Company determined that there were no reportable subsequent events had to be disclosed.



19







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



This section of the Registration Statement
includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance.
Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking
statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to
differ materially from our predictions.



Results of Operations



For the period ending December 31, 2012
we had sales of $9,323. Expenses for the three months ended December 31, 2012 totaled $1,229,673 as compared to expenses of $66
from December 31, 2011 resulting in a net loss of $1,223,703. The reason for the increase was the expenses incurred in the acquisition
by the Company of Casa Montalvo Holdings, Inc. Total operating loss for the three months ended December 31, 2012 was $1,223,703 as
compared to $66 for the three months ended December 31, 2011.



Capital Resources and Liquidity



Our auditors have issued a “going
concern” opinion, meaning that there is substantial doubt if we can continue as an on-going business for the next twelve
months unless we obtain additional capital. No substantial revenues are anticipated until we have completed the financing from
this offering and implemented our plan of operations. With the exception of cash advances from our sole Officer and Director, our
only source for cash at this time is investments by others in this offering. We must raise cash to implement our strategy and stay
in business. The amount of the offering will likely allow us to operate for at least one year.



As of December 31, 2012, we had $1,715
in cash, $70,000 in subscription receivable, $347,640 in inventories and prepaid expenses of $2,099 totaling $421,454 in assets
as compared to $1,239 in total assets for March 31, 2012. The funds available to the Company will not be sufficient to fund the
planned operations of the Company. If we do not substantially increase our sales, we will require funding to continue our operations
of which there can be no assurance that we will be able to raise funds or that if we do so that they will be on grounds that are
favorable to the Company.



Off-balance sheet arrangements



The Company has no off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect or change on the company’s financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term
“off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which
an entity unconsolidated with the company is a party, under which the company has (i) any obligation arising under a guarantee
contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity
or similar arrangement that serves as credit, liquidity or market risk support for such assets



Item 3. Quantitative and Qualitative Disclosures About Market
Risk.



The Company is a smaller reporting Company as defined by Rule
12b-2 of the Securities Act of 1934 and are not required to provide the information under this item.



20







Item 4. Controls and Procedures.



The management of the Company is responsible
for establishing and maintaining adequate internal control over financial reporting, as required by Section 404(a) of the Sarbanes-Oxley
Act of 2002 (SOX). The Company’s internal control over financial reporting is a process designed under the supervision of
the Company’s Chief Executive Officer and its Chief Financial Officer to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with
U.S. generally accepted accounting principles.



As of December 31, 2012, management assessed
the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal
control over financial reporting established in SEC guidance on conducting such assessments. Based on that evaluation, our principle
executive officer, also acting as our principle financial officer concluded that, during the period covered by this report, such
internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described.
below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that
adversely affected our internal controls and that may be considered to be material weaknesses.



The matters involving internal controls
and procedures that the Company’s management considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company's
board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;
(2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting
and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective
controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by
the Company's Chief Financial Officer in connection with the review of our financial statements as of December 31, 2012 and communicated
to our management.



Management believes that the material weaknesses
set forth in items (2), (3) and (4) above did not have an effect on the Company's financial results. However, management believes
that the lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors,
resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures can result
in the Company's determination to its financial statements for the future years. We are committed to improving our financial organization.
As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase
our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company:



(i) appointing one
or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a
fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls
and procedures; and



(ii) preparing and
implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting
with respect to the requirements and application of US GAAP and SEC disclosure requirements.



Management believes that the appointment
of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning
audit committee and a lack of a majority of outside directors on the Company's Board. In addition, management believes that preparing
and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written
policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and
SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management
believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation
of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training
needed to support the Company if personnel turn over issues within the department occur. This coupled with the appointment of additional
outside directors will greatly decrease any control and procedure issues the company may encounter in the future.



We will continue to monitor and evaluate
the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis
and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds
allow.



21







There have been no significant changes
in our internal controls over financial reporting that occurred during the transition period ended December 31, 2012 that have
materially affected or are reasonably likely to materially affect, our internal controls over financial reporting.



PART II—OTHER INFORMATION



Item 1. Legal Proceedings.



The Company is not a party to any pending
legal proceedings, and no such proceedings are known to be contemplated.



No director, officer, or affiliate of the
Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any
such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in
reference to pending litigation.



Item 1A. Risk Factors.



We are a smaller reporting company as defined by Rule 12b-2
of the Securities Act of 1934 and are not required to provide the information under this item.



Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds.



On December 21, 2012, the Company entered
into and consummated the Agreement and Plan of Share Exchange (the “Exchange Agreement”) with Casa Montalvo Holdings,
Inc., a California corporation (“Casa Montalvo”) and the shareholders of Casa Montalvo (the “Exchange”).
Pursuant to the Exchange Agreement, the Company issued 1,817,891 shares of Common Stock to acquire all of the outstanding capital
stock of Casa Montalvo.



The Company relied on the exemption from
federal registration under Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder, based on
its belief that the issuance of such securities did not involve a public offering, as there were fewer than 35 "non-accredited"
investors, all of whom, either alone or through a purchaser representative, had such knowledge and experience in financial and
business matters so that each was capable of evaluating the risks of the investment.



Also on December 21, 2012, the Company
accepted a subscription in the amount of One Hundred Thousand Dollars ($100,000) for 6,162.34 shares of Common Stock.



The securities described above were offered
and sold in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act and Rule 506 of Regulation
D promulgated thereunder. The agreements executed in connection with this sale contain representations to support the Registrant’s
reasonable belief that the Investor had access to information concerning the Registrant’s operations and financial condition,
the Investor acquired the securities for their own account and not with a view to the distribution thereof in the absence of an
effective registration statement or an applicable exemption from registration, and that the Investor are sophisticated within the
meaning of Section 4(2) of the Securities Act and are “accredited investors” (as defined by Rule 501 under the Securities
Act). In addition, the issuances did not involve any public offering; the Registrant made no solicitation in connection with the
sale other than communications with the Investor; the Registrant obtained representations from the Investor regarding their investment
intent, experience and sophistication; and the Investor either received or had access to adequate information about the Registrant
in order to make an informed investment decision.



Item 3. Defaults Upon Senior Securities.



None.



|Item 4. | Mine Safety Disclosures.
|------- | ------------------------



Not applicable.



22







Item 5. Other Information.



None



Item 6. Exhibits.



|31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer
|---- | ---------------------------------------------------------------------
|     |                                                                      
|31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer
|     |                                                                      
|32.1 | Section 1350 Certification of Chief Executive Officer                
|     |                                                                      
|32.2 | Section 1350 Certification of Chief Financial Officer                



SIGNATURES



Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                        | MONTALVO SPIRITS, INC.            
|----------------------- | ----------------------------------
|                        | (Registrant)                      
|Date: February 19, 2013 |                                   
|                        |                                   
|                        | By:                               
|                        | Name: Alex Viecco                 
|                        | Title: Chief Executive Officer    
|                        | (Principal Executive Officer)     
|                        |                                   
|                        | By:                               
|                        | Name: Carlos Gonzalez Rivera      
|                        | Title: Chief Operating Officer and
|                        | Chief Financial Officer           
|                        | (Principal Financial Officer)     



23