START-UP CROWDFUNDING OFFERING DOCUMENT 15, 2016 · 2016. 11. 29. · Various real estate...

The Company described in this offering document is attempting to raise money for its business by offering securities to the public in British Columbia,

Saskatchewan, Manitoba, New Brunswick and Nova Scotia, under certain private placement exemptions applicable in those jurisdictions. As a result, the

Company is subject to strict limits on the maximum dollar amount that it can raise and the maximum dollar amount that can be sold to any one investor. The

information contained in this offering document has been provided by the Company itself. No securities regulator has attempted to verify the accuracy or

completeness of the information provided in this Offering Circular by the Company.

Investment in a small business is often risky, and some businesses are much riskier than others. Most small businesses fail within the first several years of their

operation. YOU SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT . See the

Risk Factors section of the offering document for a discussion of the risk factors that the Company believes present the most substantial risks to you.

START-UP CROWDFUNDING OFFERING DOCUMENT

DATED NOVEMBER 15, 2016

ITEM 1: RISKS OF INVESTING

No securities regulatory authority or regulator has assessed, reviewed or approved

the merits of these securities or reviewed this Offering Document. Any

representation to the contrary is an offence. This is a risky investment.

ITEM 2: THE ISSUER

2.1 Who We Are and Our Contact Information

1014332 B.C. Ltd.

dba, Quidni Estate Winery

1465 Naramata Road, Penticton, BC, V2A 8X2

p. 250.490.5251

w. QuidniWine.com and Club.QuidniWine.com

2.2 Who You Can Contact if You Have any Questions about Us or this

Offering

Martin Gunderson

Founder/CEO

1230 91 Street SW, #201, Edmonton, AB, T6X0P2

p. 780.906.8190

[email protected]

http://www.quidniwine.com/

http://www.club.quidniwine.com/

Quidni Estate Winery - Start-Up Offering Document – November 2016 | 2

ITEM 3: BUSINESS OVERVIEW

3.1 Summary of Our Business and This Offering

Summary of Our Business

Quidni Estates Winery (the “Company”, “we”, “our” and “us”) was formed September 2014 to

grow, produce and sell entry level, premium, and super premium priced wines. We are a “land-

based” winery headquartered in Penticton, British Columbia, in the Okanagan Valley. Our wines

are made from grapes grown in vineyards owned by us, and from grapes purchased from other

nearby vineyards. The grapes are harvested, fermented, and made into wine at our on-site

winery and our wines are sold principally under our Quidni label. We offer eleven different

wines, including one fortified wine.

We sold 18,000 bottles of wine in 2015, mainly from people coming into our winery, which is

extraordinary for our first year of operation. Our plan is to double that by selling 36,000

bottles of wine in 2016.

Summary of this Offering

We are offering a maximum of $150,000 Class B Preferred Non-Voting Shares (the “Preferred

Shares”) in the capital of our Company at an initial price of ten Canadian dollars ($1o) per

Preferred Share (the “Offering”). Each Preferred Share represents a beneficial interest in the

profits of our business, which will principally be comprised of a 6% dividend per annum. Your

right to receive dividends may be cumulative if in any one year we have not made enough profits

in our business to pay-out dividends to all holders of Preferred Shares.

We plan on registering as an “eligible small business” under the British Columbia Small

Business Venture Capital Act, which will provide British Columbia resident investors with

certain tax credit incentives (see Item 6.7 “Registered Plan Eligibility and BC Venture

Capital Program”).

In addition to Preferred Shares, we are also going to give you some cool perks and benefits

depending on how much you invest.

As there is no market for the Preferred Shares, it may be difficult or even impossible to sell

them. Preferred Shares are subject to resale restrictions and you will be restricted from selling

your Preferred Shares for an indefinite period (see Item 12 “Resale Restrictions”). However,

you may elect to redeem any or all of your Preferred Shares at certain times if you follow the


procedures established (see Item 5.5 “Other Terms of Preferred Shares – Redemption

Rights”).

How We Plan on Using the Funds Raised

We intend to use the funds raised under this offering to expand our business and reach our

6,000 case target. Specifically, we plan to use the funds to hire more sales staff, purchase more

wine making equipment, such as tanks, and invest in our 2016 marketing initiative.

A more detailed description of the issuer’s business is provided below.

ITEM 4: MANAGEMENT

4.1 Promoter, Directors, Officers and Control Persons Involved in Our

Business

The following table provides information for each promoter, director, officer and control person

involved with our business:

Full legal name, municipality of residence and position at Quidni(1)

Principal occupation for the last five years

Expertise, education and experience that is relevant to Quidni’s business

Number and type of Quidni securities owned(2)

Date securities were and acquired and price paid for securities

Percentage of Quidni securities held as of the date of this offering

Martin Gunderson

Sherwood Park, Alberta

Founder/CEO

CEO, Quidni, since 2014.

CEO, Solomon Land Group. Various real estate developments

Mr. Gunderson has been in business for over 30 years focusing on real estate, financing and marketing.

930,000

September 23, 2014

Allotted from treasury.

100%

(Common Shares)

Notes:

(1) Information as to municipality of residence has been provided by the individual referenced.

(2) Directly or indirectly.

4.2 Penalties, Sanctions and Bankruptcy

To our knowledge, none of our promoters, directors, officers or control persons involved with

our business:

(a) has ever, pled guilty to or been found guilty of:

a summary conviction or indictable offence under the Criminal Code (R.S.C.,

1985, c. C-46) of Canada,

a quasi-criminal offence in any jurisdiction of Canada or a foreign jurisdiction,

a misdemeanour or felony under the criminal legislation of the United States of

America, or any state or territory therein, or


an offence under the criminal legislation of any other foreign jurisdiction,

(b) is or has been the subject of an order (cease trade or otherwise), judgment, decree,

sanction, or administrative penalty imposed by a government agency, administrative

agency, self- regulatory organization, civil court, or administrative court of Canada or a

foreign jurisdiction in the last ten years related to his or her involvement in any type of

business, securities, insurance or banking activity,

(c) is or has been the subject of a bankruptcy or insolvency proceeding,

(d) is a director or executive officer of an issuer that is or has been subject to a proceeding

described in paragraphs (a), (b) or (c) above.

ITEM 5: START-UP CROWDFUNDING DISTRIBUTION

5.1 The Funding Portal Helping Us Raise Capital

The funding portal, FrontFundr.com, run by Silver Maple Ventures Inc., (“FrontFundr”), is

helping us raise capital in Canada. FrontFundr is an Exempt Market dealer and is registered in

Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Québec, and

Saskatchewan.

5.2 Where We are Offering Our Securities

We intend to offer our securities under the Start-Up Crowdfunding exemption in British

Columbia, Manitoba, New Brunswick, Nova Scotia and Saskatchewan.

Concurrent with this offering, we intend to offer our securities to qualified accredited investors

and close personal friends, family members and business associates in Alberta, British

Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, and Saskatchewan.

We may also offer our securities to qualified accredited investors outside of Canada.

5.3 The Closing Date for this Offering

This offering is open for 90 days from the date of launch on FrontFundr.com. Closing of this

offering will occur 90 days from the date of launch on FrontFundr.com if the minimum offering

amount has been sold or at an earlier date if the maximum offering amount has been sold. If

we are unable to sell the minimum offering amount within 90 days from launch, any funds held

in escrow in connection with this offering will be promptly returned to subscribers.

No amendment has been made to this Offering Document.

5.4 The Securities We Are Offering

We are offering Class B Non-Voting Preferred Shares (“Preferred Shares”) at a price of ten

Canadian dollars ($ 10.00) per share.

http://www.fontfundr.com/


5.5 The Rights Attached to the Securities We Are Offering

Summary of the Rights Attached to the Preferred Shares

The Preferred Shares we are offering provide you with the following rights:

Voting rights,

Dividends or interests,

Conversion rights, and

Other rights.

No Voting Rights are Attached to the Preferred Shares

The Preferred Shares are non-voting and as a holder of the Preferred Shares you will not be

entitled to receive notice of or to attend, or vote at any general meetings of our Common

Shareholders.

The Preferred Shares Entitle You to a 6% Dividend per annum

The Preferred Shares bears a cumulative dividend of $0.60 per share per annum. However,

prior to the declaration and payment of dividends our board of directors must determine,

among other things, that funds are available out of our surplus and that the payment would not

render us insolvent or compromise our ability to pay our obligations as they come due in the

ordinary course of business. We can not declare or pay any dividends on the Preferred Shares or

other class or series of Preferred Shares unless we have paid all cumulative dividends on the

Class A Preferred Shares, first. Additionally, although we have no express contractual

restrictions to pay dividends, our existing credit facility limits, and future debt obligations may

limit, both our legal and our practical ability to declare and pay dividends in certain

circumstances. As a result, although the Preferred Shares will continue to earn a right to receive

dividends, our ability to pay dividends will depend, among other things, upon our ability to

generate excess cash. Further, although shares of our Preferred Shares will earn cumulative

dividends, unpaid dividends will not, themselves, accumulate (as might compound interest on a

debt security, for example).

Conversion Rights Attached to the Preferred Shares

You may, on or any time after the third anniversary date of the issuance of the Preferred Shares,

request, in writing, that all or some of your Preferred Shares be converted into our Common

shares. The conversion price of each preferred share is three Common Shares for every

Preferred Share converted, subject to certain adjustments as set-out in our Articles.


Other Rights Attached to Our Preferred Shares

Special Benefits for Holders of Preferred Shares

We have set-up a Preferred Shareholder perk program. Depending on how much a Preferred

Shareholder invests (under the Start-Up Crowdfunding exemption, Accredited Investor

exemption, and Close Personal Friends. Family and Business Associates exemptions) they will

be entitled to receive the following additional benefits:

INVEST BETWEEN

Special Benefits for Bracket of

Investor

Benefits Shared by all

Preferred Shareholders

$1,000 - $4,990

(100-499 Preferred

Shares)

(500 max)

A three (3) pack of our best-selling wines,

shipped to your door free of charge:

Quidni “Why Not” White;

Quidni “Why Not” Red; and our

Quidni Pinot Noir

Every Preferred Shareholder will also

be entitled to:

250 personalized business cards;

Quidni t-Shirt;

Quidni stickers;

20 Quidni brochures;

advance notice and presale right to

acquire new vintages prior to

release to the public beginning

with the 2017 season releases;

a 10% discount on wine purchases

made directly from the winery;

priority access to winery suite

reservations;

reports on winery developments

seeking shareholder feedback and

involvement;

priority access to appointment

only vineyard tasting experiences;

and

certain other items of nominal

value.

$5,000 - $9,990

(500-999 Preferred

Shares)

(50 max)

Two cases of our wine. Any one case of our

wines (your choice), which may include our:

Quidni Sparkling Rosé

Quidni Pinot Noir

And:

A case of our Quidni Quorto Port, (which will

be bottled in the fall and released to the

pubic after investors receive theirs, if there is

any leftover)


$10,000 -

$24,990

(500-999 Preferred

Shares)

(50 max)

Five (5) cases of any available Quidni wine with

a personalized label designed by the investor to

be bottled in the fall of 2016.

$25,000 -

$49,990

(500-999 Preferred

Shares)

(10 max)

A barrel of Quidni white wine (of a varietal that

is available):

Makes 25 cases of white wine;

Create your own label, with the help of

Quidni’s professional designer;

Quidni white wines will be available for

spring 2017;

Ongoing consultation with wine maker to

match wine with your taste; and

Involvement to pick, process and taste the

wine to be bottle is available.

$50,000 -

$99,990

(500-999 Preferred

Shares)

(10 max)

A barrel of Quidni red wine (of a varietal that is

available):

Makes 25 cases of red wine;

Create your own label, with the help of

Quidni’s professional designer;

Quidni red wine will be available for spring

2017;



Involvement to pick, process and taste the

wine to be bottle is available.


$100,000+

(500-999 Preferred

Shares)

(10 max)

Three (3) barrels of Quidni wine (your choice):

Each barrel makes 25 cases;

Design your own label, with help from

Quidni’s professional designer ;



Involvement to pick, process and taste is

available

The value of these benefits, if any, is indeterminable and is not associated with the number of

shares of Preferred Shares you own. Similarly, these rights may not be transferred separately

from our Preferred Shares (although a transfer of fewer than all of an investor’s Preferred Shares

will allow both the transferor and the transferee to participate in such intangible rights). We

have not attempted to establish a value for these benefits, and we do not consider them material

to the determination of the price or value of our Preferred Shares.

The Preferred Shares Have No Maturity Date

The Preferred Shares do not have any stated maturity and are not subject to any sinking fund or

mandatory redemption. Accordingly, the Preferred Shares will remain outstanding indefinitely

unless we decide to redeem them or you decide to retract or convert them.

Optional Redemption Rights are Attached to the Preferred Shares

Redemption at Our Option. We may at our option redeem all, or some, of the Preferred Shares

on or after three years from the issuance of the Preferred Shares, at a redemption price equal to

the original issue price of the Preferred Shares ($10.00 per share), plus all accrued and unpaid

dividends (whether or not earned or declared) to the redemption date. We will provide you with

not less than 30 days prior written notice of any such redemption. We cannot redeem any

Preferred Shares or other class or series of shares unless we have first redeemed all Class A

Preferred Shares or no Class A Preferred Shares are outstanding.

We will not exercise our option to redeem Preferred Shares held by British Columbia residents

who are claiming tax credits under the Small Business Venture Capital Act (British Columbia),

except as otherwise allowed under the Act. If you are a resident in British Columbia see Item

5.6 “Material restrictions or conditions attached to the Securities We Are Offering -

Constraints on Transferability”.

Retraction Rights at Option of Holder. You may, on or any time after the third anniversary date

of the issuance of the Preferred Shares, request, in writing, that all or some of your Preferred

Shares be retracted on 90 days prior written notice. No Preferred Share may be retracted if any

Class A Preferred Shares are outstanding. The retraction price for each Preferred Share will be:

90% of the deemed fair market value of $10.00 per share, if retracted on or after the

third anniversary of the shares having been issued but before the fifth anniversary date

,plus all the aggregate of all issued but unpaid dividends;


95% of the deemed fair market value of $10.00 per share, if retracted on or after the fifth

anniversary of the shares having been issued but before the sixth anniversary date, plus

all the aggregate of all issued but unpaid dividends; and

100% of the deemed fair market value of $10.00 per share, if retracted on or after the

sixth anniversary of the shares having been issued plus all the aggregate of all issued but

unpaid dividends.

We reserve the right to decline any request for retraction, in whole or in part, if:

any Class A Preferred Shares are outstanding;

we have a working capital deficiency or the redemption would cause us to have a working

capital deficiency;

we are insolvent or the redemption would cause us to become insolvent;

the retraction would cause us to be in default of its financial obligations under a bona

fide arm’s length loan agreement; or

the retraction is otherwise prohibited under all applicable laws.

Retraction requests that are declined by us, in whole or in part will remain in effect and will be

deemed to have been received by us on the first day on which the applicable circumstances no

longer exist. Declined retraction requests will be deemed to have been received in the order in

which they were originally received or deemed to have been received by us, in priority to any

other retraction requests received by us on such day.

If you are a resident in British Columbia see Item 5.6 “Material restrictions or conditions

attached to the Securities We Are Offering - Constraints on Transferability”.

The Preferred Shares Have Certain Rights on Our Liquidation and Winding-Up

If we are involved in the liquidation, dissolution or winding-up of our business, whether

voluntary or involuntary, or in the event of any other distribution of our assets among our

shareholders for the purpose of winding-up our affairs, we will distribute our assets, first to the

Class A Preferred Shares ($700,000 plus accrued and unpaid dividends), and then return the

original issue price of $1o.00 per share on the Preferred Shares outstanding plus dividends

declared but not yet paid. If there is insufficient assets to fully return the original issue price of

$1o.00 per share to the Preferred Shareholders, the Preferred Shareholders will receive an

amount equal to their pro rata share in proportion to the original issue price of $10.00 per share

of their holdings in us.

After such amounts have been distributed to the Preferred Shares, the holders of Common

Shares are then entitled to receive the remaining assets on a pro rata basis to the number of

Common Shares held.


5.6 Material Restrictions or Conditions Attached to the Securities We

Are Offering

Restriction on Who May Purchase Our Securities

The ownership of our securities, including the Preferred Shares, are subject to restrictions by the

British Columbia Liquor Control and Licensing Branch (“LBD”).

The LBD will conduct a criminal record check, and in some cases a review of the driving record,

of all individuals who hold more than 10% of our voting shares. Although the Preferred Shares

do not carry voting rights, the LBD has the discretion at any time to require all shareholders of a

licensee to undergo a criminal record check and driving record review, to determine if any of the

shareholders have a criminal record and assess whether they are suitable to hold a liquor

licence.

Our license as a “land-based” winery requires that we not be associated, directly or indirectly,

with any establishment holding a liquor licence - a bar or restaurant, for example - other than

one operated in combination with, and on the same site as, our winery, or a tied house

association approved by the LBD.

Given the foregoing, we may reject, or be forced to buy-back shares acquired, by someone

identified by us or the LBD as someone who would put us in breach of LBD requirements.

Constraints on Transferability

General

Except as where necessary to comply with our corporate Articles, no Preferred Shares shall be

transferred without the consent of our directors expressed by a resolution of the Board of

Directors and the directors may at any time in their absolute discretion decline to register any

proposed transfer and shall not be required to disclose their reasons for rejection.

B.C. Resident Preferred Shareholders

If you are resident in British Columbia, and are claiming tax credits under the Small Business

Venture Capital Act (British Columbia) (“SBVCA”) you will not be able to sell, assign or

transfer your Preferred Shares for five years from the date of purchase unless the transfer is

permitted under the SBVA, or you are willing to repay to the province 100% of the tax credits

received.

See also Item 12 – “Resale Restrictions” for further restrictions on transferability of the

Preferred Shares.


5.7 Offering Amount and Price per Security

Total Amount ($) Total number of eligible

securities issuable

Minimum offering amount $50,000 5,000

Maximum offering amount $150,000 15,000

Price per eligible security $10

5.8 Minimum Investment amount per purchaser

The Minimum Investment Amount per purchaser is one thousand Canadian dollars ($1,000).

5.9 Minimum Investment Amount May be Reached with Funds from

Concurrent Offerings

Note: The minimum offering amount stated in this Offering Document may be

satisfied with funds that are unconditionally available to Quidni that are raised by

concurrent distributions using other prospectus exemptions without having to

amend this Offering Document.

ITEM 6: ISSUER’S BUSINESS

6.1 Our Business and the Wine Industry

Quidni Estate Winery is a fully functioning winery located in the beautiful Okanagan Valley,

specifically on the Naramata Bench, widely revered as one of the best wine regions in all of

Canada. The winery has been operating for over a year and a half, and in that time has been

making great strides in wine production and sales distribution.


The winery includes two acres of 5-year-old vines planted which include 6 varietals:

Gewürztraminer, Viognier, Pinot Gris, Merlot, Cab Franc and Syrah. We also have a number of

local vineyards under contract to ensure we have enough fruit.

Our building includes three elegant guest rooms which we book out through the season. Our

guest rooms are currently ranked number one on Trip Advisor for specialty lodging in Penticton.

On the main floor, we have two tasting rooms, one for drop in traffic and one for wine tour

companies called our VIP room. The bottom floor features a walk out basement where all the

wine is prepared.

We have created three levels of wine for each varietal we bottle. The first level is our “Why Not

Series”. These are our most affordable wines and a blend of various grapes we have available to

us. The next level of wine is called our “Varietal Series”, where each wine has a distinct type of

grape or grapes. This is our mid-tier wine and is priced accordingly. Our top end wine category

is called our “Barrel Select Series”. We also have bottled two specialty wines and a fortified

wine.

Our theme is “Ask yourself why not, and see where it takes you.”

The Wine Industry

Canadian Wine Industry

According to Agriculture and Agri-food Canada, the Canadian wine industry has seen a rapid

increase in the number of wineries being established throughout the country, and sales of

Canadian wine. From 2006 to 2012, Canadian wineries grew in number from 299 to 432. Sales

of wine produced in Canada from 2004 to 2012, increased 31.2% to a value of over $1 billion.

In addition, wineries are classified as one of the fastest growing segments in agriculture with an

average annual growth of 10% to 15%.

The Vintners Quality Alliance (“VQA”) oversees the regulation of the premium wine industry in

Canada. It has become recognized throughout the world as the appellation of origin system for

Canadian wines based on minimum standards and identification of wines based on the origin of

the grapes from which they are produced.

British Columbia Wine Industry

British Columbia is a relatively new wine producing region compared to France, Italy, and North

American jurisdictions like California in the United States.

There are 257 licensed grape wineries and 929 vineyards currently operating in British

Columbia. These properties are located primarily in five designated wine-growing areas in the

province: Okanagan Valley, Similkameen Valley, Fraser Valley, Vancouver Island and the Gulf

Islands. There are also four emerging regions: Shuswap, North Okanagan, Thompson Nicola

and the West Kootenays. Over 10,000 acres are dedicated to growing grapes in these areas.

The top wine varietals produced in British Columbia are: Chardonnay, Merlot, Pino Gris and

Pinot Noir. Over eighty other varietals are also produced in the province. In 2015, 32,848

short tons of grapes were harvested in British Columbia which produced approximately


21,351,200 litres of wine. British Columbia wineries 2014 crop had a value of over $260

million.

Sales of British Columbia wines in terms of volume and revenue has been growing at a rate of

12% per year over the last five years. This trend is expected to continue over the upcoming

years due to increased consumption by millennials who have more recently adopted wine as

their beverage of choice, the widely reported health benefits of moderate wine consumption, and

a movement towards an increased consumption of wine made by existing wine lovers who enjoy

a glass or bottle of wine with friends and family.

Our Position in the Industry

Within the wine industry, we believe our principal competitors include wineries in British

Columbia, California and Washington, producing similar entry level, premium, and super

premium wines. Andrew Peller Ltd. has a 14% share of the national wine market in Canada,

when imports are included, and 38% of the domestic wine market. In our opinion, no

independent British Columbia winery dominates the British Columbia wine market. Several

British Columbia wineries, however, are older and better established and have greater label

recognition than that of Quidni Estates Winery. We are a niche player in this market and to a

certain extent we see that as a one of our strengths.

We are a land-based winery

Quidni Estate Winery is a “land-based” winery, as defined by the British Columbia Liquor

Distribution Branch (“LBD”). We grow and bottle wine from our own supply of grapes and we

purchase inventory from other growers in the valley to supplement our volume.

As a “land-based” winery:

our wine is made from 100% British Columbia grown grapes. No Washington, Oregon or

any other imported grapes allowed;

we are required to have a minimum of 2 acres of vineyards at our winery site and use the

grapes we harvest from those acres to produce wine;

at least 25% of the grapes we use to make wine comes from land owned or leased by our

winery;

we use “traditional” wine-making techniques;

we only buy wine or juice from other land-based wineries and not from Commercial

wineries;

we have no common ownership with a Commercial winery, as defined by the LBD.

Quidni Wines

We have six varietal grape vines planted with a focus on Viognier, Gewurztraminer and Merlot.

Out of the harvest from these vines we currently produce eleven different wines. We are about to

debut our first pinot noir, a 2014 vintage, that we hope will be worth the wait.

We have a range of domestic wines including our:

entry level Quidni “Why Not” Series ($12 to $15);


Quidni Varietal Series ($16-21), a premium priced VQA series of wines;

Quidni Barrel Select Series (>$22/bottle), a super-premium priced VQA series of wines.

We also bottle two specialty wines and a fortified wine, why not? Both of our specialty wines

have won industry awards and our fortified wine was such a big bit we sold out within six

months of its release.

Quidni “Why Not” Series

It is our opinion that everyone should have a “house wine” that you are not embarrassed to serve

to company. A wine that won’t break the bank, goes with almost everything, and yet is delicious

to the core. Our “Why Not” White and “Why Not” Red we believe fits the bill perfectly.

Quidni “Why Not” White

Our Quidni “Why Not” White is a Gewurztraminer

& Riesling blend. It has intense fruitiness in the

aroma and on the palate. Its crisp finish will be

welcomed on any summer deck which makes this

wine a great all-rounder.

Quidni “Why Not” Red

Our Quidni “Why Not” Red is a Merlot and Cab

Franc blend. Its smooth and medium bodied

qualities make this wine great for casual get

togethers. This wine will impress the new wine

drinkers as well as the experts.

Quidni Varietal Series

Our varietal series focusing on bringing the individual grape forward in the wine.

Quidni Pinot Noir

Our 2014 Pinot Noir is our latest addition to our varietal series of wine.

Quidni Pinot Noir is made from 40 year old vines on the Naramata Bench.

Barrel aged for 19 months in neutral oak shows off the delicate fruit. Black

cherry on the nose with slight mushroom and earthy aromas. Palate has lots

of fruit with light tannins and a long finish.

Great food wine that pairs with an array of West Coast Food and can also be

enjoyed on its own in a park.


Quidni Viognier

Our 2015 Viognier is a

blend of fruit from our

Estate Vineyard and the

Lutz Family Vineyard in

Summerland. Viognier

has higher tannin than

other white grapes, so

our process is to gently

de-stem and whole

berry press.

Aromas of honeysuckle

and peaches with a rich

floral feel and long

mouthwatering finish.

Viognier lends itself to

several types of cuisine;

spicy Asian food,

seafood, hard and soft

cheeses.

Quidni

Gewürztraminer

Our 2013 Varietal

Gewurztraminer is a

classic version of this

popular grape. It has

all the character you'd

expect along with

bountiful aromas of

lychee and grapefruit.

The palate is very

smooth and full with

typical varietal elegance

that makes

Gewurztraminer a

favorite for almost any

occasion. The wine

finishes with a crisp

citrus acidity that makes

it a great wine to pair

with Asian foods.

Quidni Merlot

Our 2013 Varietal

Merlot is a full bodied,

fruit driven wine with a

long, lingering finish.

It has loads of stewed

berry fruit aromas

topped off with a touch

of oak that adds

complexity.

The richness comes

through with intense

fruit flavours and will

continue to enrich on

your palate long after

it's disappeared.

Quidni Riesling

Sourced from 39 year

old vines on the

Naramata Bench, hand

harvested at 22brix in

late October, then

carefully de-stemmed

and crushed. Soaked

on the skins for twelve

hours in the press for

flavor extraction, then

fermented for 14 days

and carefully racked off

first set of lees. The

wine was left for 5

months on secondary

lees without stirring,

producing aromas of

citrus, pineapple and

apricot with a well

balance finish.

Enjoy this wine with

diverse foods, such as

pork chops with curry

apple sauce or pan fried

whole trout.


Quidni Barrel Select Series

We created our Barrel Select Series so you can experience our wines as we taste them in the

cellar. This is a small case production of our top wine (generally 50 or less cases).

Quidni Barrel Select Chardonnay

Our 2013 Chardonnay was selected from our barrel

cellar as a standout wine and was bottled as a small

lot to highlight its uniqueness. The wine was aged

“on lees” in the French oak and hand racked to

capture the flavours that have been created during

the barrel aging process.

Quidni Barrel Select Merlot

Our 2012 Merlot was selected from our barrel cellar

as a standout wine and was bottled as a small lot to

highlight its uniqueness. Grapes from a low yield

vineyard provided the density of flavor allowing it to

age remarkably. This wine was kept in French oak,

racked by gravity and bottled by hand, in order to

capture all the subtle flavours that occur through

the barrel aging.

Quidni Specialty Blends and Fortified Wine

We offer two specialty wines, and a fortified wine, that are somewhat out of the box, but huge

favorites by us and those who have tried them first hand.

Quidni

Old Cicero Aromatic

The 2015 Old Cicero is a blend of

Pinot Blanc 15%, Riesling 40%,

Gewürztraminer 40%, and Pinot

Gris 5%, made with vines ranging

from 25 to 40 years old. Grapes

were hand-picked at 24 brix,

followed by a warm fermentation

in small lots with several yeast

strain. This detailed process

gives this blend multiple layers of

complexity.

Quidni Sparkling Rosé

All the grapes for our 2015

Sparkling Rose were sourced

from the Naramata Bench.

Predominantly Pinot Noir with

small batches of Gamay Noir

and Pinot Meunier. This wine

is intensely aromatic with ripe

raspberry being the front

contender. It's well balanced

on the palate with a long

lingering cherry finish. Enjoy

with friends and lots of

sunshine.

Quidni 2014 Quorto

The 2014 Vintage Quorto is made

from our Estate grown Merlot,

picked in December to maximize

sugar and phenolics. We made

this Port Style wine to show how

good port from the Bench can be.

Very low yields and just two

barrels made and one barrel

bottled after a year of aging.

Aromas of cherries and

blackberries with excellent

acidity with velvety tannins give

way to this drinkable wine.


Our Wine Has Won Awards

2015 Awards

Our Viognier, Merlot, Gewurztraminer, and Pinot Gris Viognier all won awards in 2015. We

believe this a huge triumph given this was the first year of our winery!

Quidni Viognier

2014

Wine Align

Quidni

Gewürztraminer

2013

NW Wine Summit

Quidni Merlot 2013

Wine Align

Quidni Pinot Gris

Viognier 2013

Wine Align

2016 Awards

In case you were thinking 2015 was a newcomer fluke, our wines have won a number of awards

in 2016. We love our wines, and are happy that those in the know also recognize the effort we

are putting forward in making great wines that don’t take themselves too seriously.

Quidni Viognier

2015

Wine Align

WhyNot Red 2012

Wine Align

Quidni Rose 2015

Wine Align

Quidni Old Cicero

Aromatic 2015

Wine Align


Our Vineyard Estate

Our Vineyard

We own approximately 3.67 acres of land of which 2 acres are planted as vineyard. At full

production, we anticipate these vineyards would enable us to grow over 25% of the grapes

needed to meet the needs of our winery's production capacity of 3,000 cases of wine in 2016.

We meet grape needs by purchasing grapes from other nearby vineyards at competitive prices.

In 2015, the Company purchased an additional 20 tons of grapes from other growers.

We currently do not grow enough grapes to meet our anticipated production needs, and acquire

grapes from local vineyards in the area to make up the difference. Contracted grape purchases

are considered an important component of our long-term growth and risk-management

strategy. We believe high quality grapes are available for purchase in sufficient quantity to meet

our requirements.

In the future, we also anticipate we will lease or purchase new properties for future vineyards.

Our Winery

The Winery is approximately

1,000 square feet in size and

contains areas for processing,

fermenting, aging and bottling

wine, as well as an underground

wine cellar, and administrative

offices. There is a 500 square

feet outside production area for

harvesting, pressing and

fermenting wine grapes, and

insulated storage facility with a

capacity of approximately 3,000

cases of wine. We expect we will


need to acquire an offsite storage facility to store our inventory of bottled product in 2017. The

production area is equipped with a settling tank and sprinkler system for disposing of

wastewater from the production process in compliance with environmental regulations.

Our winery and production facilities are capable of producing up to 3,000 cases of wine per

year, depending on the type of wine produced. We would like to expand this capacity to 6,000

cases of wine by this year purchasing at least three more fermentation tanks. Ultimately, we

would like to produce and sell 10,000 cases per year by 2018.

Hospitality Facility

We have two new tasting rooms totaling approximately 1,500 square feet in our hospitality

facility located at our vineyard. One of the rooms is dedicated for drop in traffic and one for

wine tour companies, which we call our VIP room. Tiered decks around our hospitality facility

enable visitors to enjoy the view of the Okanagan Valley and our vineyard.

We have 3 different levels of formal tours. Each includes a tasting of our line- up of wines.

Tasting Room (30 minutes);

Catwalk overhead view of the wine making equipment (45 minutes); and

Full tour including a special trip into our barrel room to sample the wines straight from

the barrel (60 minutes).


Guest Rooms

We have three guest suites for

overnight accommodations.

Each of our three guest suites

include an ultra-comfortable bed,

an ensuite, a balcony, free internet

and a private wine tasting for our

guests. The rooms are marketed

through Expedia, Booking.com, as

well as a number of other travel

sites. We also take bookings

directly from our website and

Facebook page. We are almost

100% fully booked from May to

November, 2016. On

Tripadvisor.com, we have achieved

a certificate of excellence and our accommodations are ranked #1 in Penticton for specialty

lodgings.


Live-In Residence

We provide living accommodations in a residence on our premises as required in British

Columbia if we are to offer guest rooms on our premises. In exchange for living accommodation,

the person that lives in residence provides security and lock-up services, as well as serves as a

back-up contact for our guests.

Mortgages on Our Property

Our vineyard and winery facilities are subject to a mortgage with an aggregate principal balance

of approximately $931,000 at September 30, 2016. The mortgages is payable in monthly

aggregate installments, including principal and interest, of approximately $4,750. The maturity

date of the mortgage is September 1, 2021. We expect we will have no issue in renewing our

mortgage at that time. We also have a line of credit for $1.3 million secured by way of a second

mortgage on the property.

Sales and Distribution

Marketing Strategy

We market and sell our wines through a combination of direct sales at the Winery, through our

website, email mailing lists, and through distributors and wine brokers. The Company uses a

variety of marketing channels to generate interest in its wines such as participation in wine

tastings and competitions in British Columbia, social media campaigns, and email blasts to our

database of prior customers.

Direct Sales

We believe the location of our vineyard, hospitality facility and guest rooms at the cross road of

Naramata Road and Three Mile Road 5, significantly increases direct sales to consumers. We are

a ten minute drive from Penticton and are at the start of the Naramata Bench. As a result, our

first year of sales was primarily driven by direct sales from the winery. Our tasting room is


open daily 1 PM to 6 PM during the season (May to November) and offers wine tasting and

education by trained personnel.

In 2015, we launched our online wine club membership program which has had a very positive

response to date. We intend to use up to $10,000 received under this offering to further build-

out and advertise our wine club.

Distributors and Wine Brokers

We use in-house and independent distributors to primarily market our wines in specific targeted

areas. We are currently investigating potential export partners to sell our wine in the United

States, Europe and Japan. All three regions have distributors who have asked us if they could

represent us in their respective regions. We believe we will be able to leverage recent media

reports in these regions proclaiming the Okanagan as the number two wine region in North

America. We expect that we will need to spend up to $10,000 to establish one of these sales

channels.

Tourists

We are in the heart of the Okanagan and the Naramata Bench, one of British Columbia’s leading

wine regions. Our location provides high visibility for our business to passing motorists, thus

enhancing the number of visitors to our winery, and increasing the recognition of our products

in retail outlets and restaurants.

Our Team Members You Should Know

Our Founder

Martin (Marty) Gunderson, is our founder, President and

visionary.

Marty is new to the wine industry. He has over 20 years in the

financial and investment industry. For the last ten years he has

been the President of Solomon Land Group, Inc., a real estate

investment and development company. Since 2011, he has worked

on various finance projects with exempt market dealers and others

through his consulting firm Gunderson & Associates. Marty

formerly served as a director of the Private Capital Market

Association and is currently a director of the National Crowdfunding Association of Canada.


Our Head Winemaker

Todd Moore, our head winemaker, helped set-up our winery,

briefly left to do other things, and rejoined us in the fall of 2016.

Todd oversees our day to day winemaking and production. He also

runs our vineyard.

Todd started his winemaking career in 1987 as a cellar hand. Since

that time he has taken on ever increasing roles at wineries in

British Columbia and the Barossa Valley in Australia. In 1996, he

took on the role of Winemaker with Cherry Point Vineyards

(Vancouver Island), and continued with them as head Winemaker

until the fall of 1999. Since the fall of 1999, Todd worked as a winery consultant assisting

setting up new wineries and their production facilities..

In 1998, Todd accepted a position on the British Columbia Wine Institute Technical Committee,

which is responsible for determining VQA wine standards in British Columbia. During 1999-

2000, he was elected Chairman of the Technical Committee and was instrumental in

establishing the current Ice Wine Standards in place today. Todd was appointed Technical

Advisor to the National Committee on Wine Standards, the federal body in charge of wine

standards, in 2000 and participated in the developmental stages of this process.

Our Wine Shop & Guest House Manager & Sales Manager

Emma Bandol, our Wine Shop & Guest House Manager & Sales

Manager, joined us in the spring, 2015.

Emma spent 15+ years of working in the corporate finance world,

being an entrepreneur, owning a successful coffee shop and

restaurant before finally coming to work in the wine industry.

She is intensely motivated to achieve success in all areas of her life;

including cycling, triathlon and mountain biking. When she’s not

running the daily winery operations, heading up the successful sales

department, moderating our social media content; she can be found shredding a sweet single

track, or racing for the Fresh Air Athena Road Cycling team, or competing at national and world

class level triathlons.


Assistant Winemaker

Dustin Legacy, our Assistant Winemaker and anything else we

need him to be that day, joined us in October, 2014.

Dustin has been with us almost since day 1. His role has evolved

from doing odd jobs during our remodel to becoming an assistant

winemaker. He has done almost every job imaginable at the

winery and continues to help-out wherever needed. He is a big hit

with the guests and one of the key reasons we believe we have a #1

rating on Trip Advisor. Read some of our reviews on Trip Advisor

and you’ll see Dustin’s positive impact on our business.

6.2 Our Legal Structure

We were incorporated under the Business Corporations Act (British Columbia) on September

23, 2014 under the name 1014332 B.C. LTD. We do business under the name Quidni Estates

Winery. We are a private company.

6.3 Where You Can View Our Corporate Documents

The Company’s notice of incorporation and articles are available to purchasers at our registered

and records office at: 202 – 1007 Fort Street, Victoria, BC V8V 3K5.

6.4 Operations of the Company

Our business operations can be best described as:

Has never conducted operations,

Is in the development stage,

Is currently conducting operations, and

Has shown profit in the last financial year.

6.5 Financial Statements

We have prepared unaudited financial statements for the year ended October 31, 2015, and the

six month period ended July 30, 2016, for potential investors to review upon request as part of

this offering.

Information for purchasers: If you receive financial statements from an issuer

conducting a start-up crowdfunding distribution, you should know that those

financial statements have not been provided to or reviewed by a securities

regulatory authority or regulator. They are not part of this Offering Document.

You should ask the issuer which accounting standards were used to prepare the

financial statements and whether the financial statements have been audited. You


should also consider seeking advice of an accountant or an independent financial

adviser about the information in the financial statements.

6.6 Description of Our Ownership Structure

Share Capital

Our authorized share capital under our notice of articles, allows us to issue up to: (1) an

unlimited number of Common Shares without par value, (2) 70,000 Class A Preferred Shares

with a par of $0.0001 per share; and (3) 500,000 Class B Preferred Shares without par value.

As of November 15, 2016 there were 930,000 Common Shares outstanding, 70,000 Class A

Preferred Shares outstanding, and no Class B Preferred Shares outstanding.

Summary of the Rights Attached to the Common Shares

Our Common Shares Have Voting Rights

Holders of our Common Shares are entitled to one vote for each Common Share held of record

on the applicable record date on all matters submitted to a vote of shareholders. A corporate

action voted on by shareholders generally is approved, provided a quorum is present, if the votes

cast within the voting group favoring the action exceed the votes cast opposing the action.

Holders of the Common Shares are not entitled to cumulate their votes in the election of

directors.

Our Common Shares Have Dividend Rights Only if Declared by Our Board of Directors

Holders of the Common Shares are entitled to receive ratably such dividends, if any, as may be

declared from time to time by the Board of Directors out of funds legally available for that

purpose, subject to any preferential dividend rights or other preferences granted to the holders

of any of the then-outstanding shares of Preferred Stock.

Our Common Shares have Certain Rights Upon Liquidation After Exhausting the Rights of all

Preferred Shares Outstanding

In the event of our liquidation, dissolution or winding up, whether voluntary or involuntary, the

holders of the Common Shares are entitled to share ratably in all remaining assets available for

distribution to shareholders after payment of, or provision for, our liabilities, subject to prior

distribution rights of shares of the preferred shares, if any, then outstanding.

Our Common Shares Do Not have Preemptive Rights

Holders of the Common Shares do not have any preemptive rights to purchase, subscribe for or

otherwise acquire any unissued or treasury shares or other of our securities.

Class A Preferred Non-Voting Shares

Class A Preferred Shares are identical to the Class B Preferred Shares (6% dividend per annum,

redemption at our option, certain rights on liquidation and winding-up) being offered under this

offering other than as follows:


The Rights of the Class A Preferred Shares Rank in Preference to All Other Shares Outstanding

The Class A Preferred Shares are entitled to preference over the Common Shares, the Class B

Preferred Shares and any other shares of we may issue ranking junior to the Class A Preferred

Shares with respect to the payment of dividends and in the distribution of assets in the event of

our liquidation, dissolution or winding-up, whether voluntary or involuntary, or in the event of

any other distribution of assets of the Company among its shareholders for the purpose of

winding-up its affairs.

No Voting Rights Unless We Fail to Redeem the Class A Preferred Shares When Required

The Class A Preferred Shares are non-voting unless we fail to redeem these shares when

required, after five years from the date of their issuance. If we fail to redeem the Class A

Preferred Shares, the holders are immediately entitled to receive notice of and to attend all

general meetings of our shareholders. They also are entitled for one vote for each share held by

them, and are entitled to vote as a separate class to elect two people to the board of directors of

our Company. Our board of directors can only consist of three people if this occurs.

The Class A Preferred Shares do Not Have Conversion Rights

The Class A Preferred Shares do not have any right to convert the shares into or exchange the

shares for any other class or series of our shares or obligations.

The Class A Preferred Shares Retraction Rights

The Class A Preferred Shares any time after the fifth anniversary date of their issuance (October

2019) may be retracted at the request of the holder on 90 days prior written notice. The

retraction price for each Preferred Share is $10.00 per share plus all the aggregate of all issued

but unpaid dividends.

We are not obligated to redeem or repurchase the Class A Preferred Shares if the redemption or

repurchase would contravene any applicable statute, regulation, or rule of law or equity.

6.7 Registered Plan Eligibility and BC Venture Capital Program

Eligibility for Registered Plans

A share of the capital stock of a corporation not listed on a prescribed stock exchange in Canada

would generally be a qualified investment for a trust governed by a registered retirement savings

plan, registered retirement income fund or tax-free savings account (in any case, a “Registered

Plan”) at a particular time provided that at that time the following conditions are satisfied:

(i) The corporation was a Canadian corporation which was not controlled by one or more

non-residents.

(ii) Substantially all of the fair market value of the corporation’s assets at that time is

attributable to assets that are used principally in an active business carried on primarily

in Canada by the corporation or a related corporation, shares or indebtedness of such a

corporation, or a combination of such assets.

If the corporation subsequently ceases to satisfy the foregoing conditions at any time, the shares

will be deemed to be a “prohibited investment” for all Registered Plans, regardless of the


number of shares owned, unless they are a qualified investment at that time under another

relevant provision of the Tax Act. Penalty taxes will apply where a Registered Plan holds shares

that are a prohibited investment.

Notwithstanding that shares of the capital stock of a corporation may otherwise be a qualified

investment as described above, such shares will not be a qualified investment for a particular

Registered Plan if they are a “prohibited investment” for that Registered Plan at the time of

acquisition. In general terms, such shares will be a prohibited investment for a particular

Registered Plan if the annuitant or holder of the Registered Plan (the “Planholder”) does not

deal at arm’s length with the corporation, or has a “significant interest” in the corporation for

the purposes of the Income Tax Act (Canada) (“Tax Act”). Generally, a Planholder will have a

significant interest in a corporation if the Registered Plan, the Planholder, and other persons not

at arm’s length with the Planholder together, directly or indirectly, own more than 10% of the

shares of any class of shares of the Corporation.

Holders who plan to contribute all or a portion of their Class B Preferred Shares into a

Registered Plan should consult their own tax advisor as to the eligibility of the shares and the tax

consequences of such a transfer.

Tax Credits Under the Small Business Venture Capital Act (British Columbia)

We have applied to be recognized as an Eligible Business Corporation (“EBC”) under the Small

Business Venture Capital Act of British Columbia (“SBVC Act”). The SBVC Act is designed to

encourage arm’s length investors to make equity investments in businesses operating in sectors

which result in export enhancement or otherwise diversify the economy of British Columbia. An

EBC may receive investments under the SBVC Act directly from investors. We expect to receive a

certificate of registration as an EBC prior to closing this offering.

Assuming we are recognized as an EBC, and provided that we comply with the requirements and

intent of the SBVC Act, we will be entitled to apply on behalf of purchasers of the Class B

Preferred Shares who are resident in British Columbia on the date of the purchase for tax credit

certificates entitling the purchasers to a tax credit equal to 30% of the amount paid by the

purchasers for the Class B Preferred Shares. The issuance of tax credit certificates is contingent

on available room in the province’s budget for the tax credit imposed by the SBVC Act. If a tax

credit certificate is issued to our BC resident purchasers, it will entitle these purchasers to a

credit against the purchaser's provincial income tax payable to the Province of British Columbia

for the taxation year.

A Subscriber who is an individual investor must deduct the lesser of his or her tax credit or

$60,000 against tax otherwise payable under the Income Tax Act (British Columbia) (“B.C.

Tax Act”) for that taxation year. To the extent that the tax credit of the individual exceeds the

amount of provincial taxes payable, the individual will be entitled to a refund of the difference

between the lesser of $60,000 or his or her tax credit and the tax otherwise payable, after

deducting certain other credits available under the B.C. Tax Act.

In administering the refund process, the refund must first apply to offset other amounts

payable, including arrears under both the Tax Act and the B.C. Tax Act. An individual

shareholder may claim a tax credit in respect of the prior taxation year if the Class B Preferred

Shares of an EBC are purchased within the first 60 days of the next ensuing taxation year.


If an individual purchaser resides in British Columbia at the date of the subscription for shares

but resides outside the province at the end of the year, this may affect the individual’s ability to

claim the tax credit. Individual shareholders who plan to move outside of British Columbia

before year-end are urged to consult with their professional advisors about their eligibility to

claim the tax credit.

A purchaser that is a corporation must deduct the tax credit earned in the taxation year from tax

otherwise payable by the corporation under the B.C. Tax Act; there is no annual limit on the tax

credit for corporations. A corporation is not entitled to a refund in respect of a taxation year if

the amount of the tax credit exceeds the amount of its tax otherwise payable under the B.C. Tax

Act for the taxation year.

A tax credit not so utilized by a corporation may be carried forward for up to four subsequent

taxation years and may be utilized to the extent that there is tax otherwise payable under the

B.C. Tax Act in such taxation years.

As a condition of receiving the tax credit, our B.C. resident purchasers will be required to own

the Class B Preferred Shares for 5 years.

If you require further information about the SBVC Act you are advised to consult their own

professional advisors or contact the British Columbia Investment Capital Branch.

In registering a company under the SBVC Act, the Province of British Columbia

makes no representations with respect to any tax considerations discussed in this

document other than with respect to those dealing with the British Columbia tax

credit available in respect of the purchase of the Class B Preferred Shares.

The Province of British Columbia in no way guarantees the value of any shares

issued by an EBC egistered corporation under the SBVC Act nor does it in any way

express an opinion as to the financial condition of the issuing company or the

merits of an investment in shares of the issuing company.

ITEM 7: USE OF FUNDS

7.1 Funds Previously Raised

Prior to this offering we have raised the following funds:

$250,000 in the form of equity (930,000 Common Shares) and debt ($200,000) from

our founder Marty Gunderson; and

$100,000 promissory note to a third-party for assistance with setting-up the winery.

We have also issued 70,000 shares of Class A Preferred Shares to Canadian Properties Direct

Corporation as part of the consideration we paid for winemaking assets previously owned by an

arm’s length third-party.

We have used the funds we have received to date to acquire the land, building and equipment

forming our vineyard and winery. We have updated the building holding the winery, our tasting

room, and our bed and breakfast rooms, purchased new wine making equipment, hired and paid

for staff and launched our initial marketing campaign which included: a new name and


branding for our vineyard and wine; a merchant website and wine club; social media campaigns;

and, attendance and sponsorship at events in British Columbia, among other things.

See also Item6.1 “Our Business and the Wine Industry – Our Vineyard Estate -

Mortgages on Our Property”.

7.2 Use of Funds of this Offering

We intend to use the funds raised under this offering as follows:

Description of intended use of funds

listed in order or priority

Total amount ($)

Assuming

minimum offering

amount

Assuming

maximum offering

amount

Staff: 26,500 80,000

Equipment and Upgrades: 16,500 50,000

Sales and Marketing HR and Campaign 7,000 20,000

Total – Available Funds 50,000 150,00

We intend to spend the available funds as stated above. However, we may also use these funds

to fund inventory, working capital needs, and any other business purpose.

If the proceeds of this Offering are insufficient to allow us to complete our proposed projects, we

may fund completion with working capital, or we may borrow additional funds under available

lines of credit or may seek alternative equity and debt financing. Further, we may abandon the

winery projects, or may delay the timing or modify the scope of those projects as the board

determines is appropriate. Moreover, an investment in our Preferred Shares represents an

investment in our business as a whole, and not in this specific project or in any other aspect of

our operations.

ITEM 8: PREVIOUS START-UP CROWDFUNDING DISTRIBUTIONS

8.1 Our Previous Experience with Start-Up Crowdfunding Offerings

This is our first Start-Up Crowdfunding Offering. It is also the first Start-Up Crowdfunding

Offering ever conducted by our promoters, directors, officers and control person.


ITEM 9: COMPENSATION PAID TO FUNDING PORTAL

9.1 Our Fee Arrangement with FrontFundr

We have agreed to pay FrontFundr as selling agent, a cash commission of 6% of the funds raised

and broker warrants in the aggregate amount of 6% of the total number of securities issued.

Each broker warrant will entitle FrontFundr to acquire one preferred share for a period of 10

years from the date of issue at an exercise price of ten Canadian dollars ($10.00).

ITEM 10: RISK FACTORS

10.1 Risk Factors in Order of Importance

Risks that Affect an Investment in Our Preferred Shares

We Arbitrarily Determined the Offering Price for, and the Dividend Rate of, the Preferred

Shares.

The offering price for the Preferred Shares, as well as the dividend rate, were arbitrarily

determined by our board of directors based on qualitative factors, such as a diminishing risk

profile over time, which our board of directors believes are reasonable and appropriate. We have

not undertaken a detailed quantitative or qualitative analysis of these factors, nor have we or

any investment banker or other advisor made a determination as to the qualitative

appropriateness of the dividend rate.

We May be Unable to Pay Accumulated Dividends on the Preferred Shares.

The Preferred Shares bear a cumulative dividend of 6% based upon the original issue price or

$0.60 per share per annum. However, prior to the declaration and payment of dividends our

board of directors must determine, among other things, that funds are available out of the

surplus of the revenue and that the payment would not render us insolvent or compromise our

ability to pay our obligations as they come due in the ordinary course of business. Our ability to

pay dividends will depend, among other things, upon our ability to generate excess cash. See

Item 5.5 “The Rights Attached to the Securities We Are Offering” for more detail.

The Preferred Shares Are Subordinate to Our Class A Preferred Shares Outstanding.

The Preferred Shares are subordinate to our Class A Preferred Shares outstanding. We may not

declare or pay dividends on the Preferred Shares if at the same time any arrears or default exists

in the payment of dividends on the Class A Preferred Shares with respect to the payment of

dividends. We also may not redeem or allow the Preferred Shares to be retracted if any Class A

Preferred Shares are outstanding. If we are liquidated or our business is wound-up, we will

distribute our assets, first to the Class A Preferred Shares ($700,000 plus accrued and unpaid

dividends) before we can distribute any of our assets to the Preferred Shareholders. If we fail to

redeem the Class A Preferred Shares when requested by a holder the Class A Preferred

shareholders will have voting rights and the right to determine our board of directors. Item 6.6

“Description of Our Ownership Structure” for more detail.


Our Preferred Shares are not a Debt Instrument

Although our Preferred Shares are senior in preference to our Common Shares, they will be

subordinated to all our debt obligations, both secured and unsecured. Our Preferred Shares are

not insured, are not guaranteed, are not supported by a sinking fund, and are not backed by any

collateral of any sort.

Risks Related to Our Business

Our Business is Subject to Weather and Other Agricultural Risks.

Winemaking and grape growing are subject to a variety of agricultural risks. Various diseases,

pests, fungi, viruses, drought, frost and certain other weather conditions can affect the quantity

of grapes available to us, decreasing the supply of our products and negatively impacting

profitability. The major insect and mite pests of grapes grown in British Columbia are cutworm

larvae that attack buds in spring, leafhoppers that feed on leaves throughout the summer, wasps

that eat ripe fruit and annoy or sting workers, and mealybug and soft scale that transmit

grapevine viruses. Grape phylloxera is an important pest of grapes worldwide but it occurs in

only a few scattered locations in the Pacific North West.

Loss of Key Employees Could Harm Our Reputation and Business

Our success depends to some degree upon the continued service of a number of key employees.

The loss of the services of one or more of these key employees, including Marty Gunderson, our

President, Todd Moore, our Head Winemaker, and Emma Bandol, our Wine Shop & Guest

House Manager & Sales Manager, could harm our business and its reputation and negatively

impact its profitability, particularly if one or more of our key employees resigns to join a

competitor or to form a competing company.

Our Ability to Operate Requires Utilization of a Line of Credit and Maintenance of our Mortgage

Our cash flow from operations to date has not been sufficient to provide all the funds necessary

to fund our operations. In addition to relying on funds from our President, we have entered into

a line of credit agreement to provide such funds and entered into term loan arrangements

(“mortgage”), the proceeds of which were used to acquire our vineyard and winery, construct

and remodel our hospitality center and winery. There is no assurance that we will be able to

comply with all conditions under its credit facilities or mortgage in the future or that the amount

available under the line of credit facility will be adequate for our future needs. Failure to comply

with all conditions of the credit facilities or mortgage, to have sufficient funds for operations

could adversely affect our results of operations and shareholder value. Our lenders could

proceed against the collateral securing that indebtedness if we were to trigger a default event

under these agreements, and we unable to repay, refinance or restructure our indebtedness.

This could force us into bankruptcy or liquidation.

As of September 30, 2016, our outstanding indebtedness was approximately $2.3 million and we

had a line of credit balance of $1.3 million on a maximum borrowing amount of $1.3 million.


Fluctuations in Quantity and Quality of Grape Supply Could Adversely Affect the Quality of Our

Wine and therefore Our Business

A shortage in the supply of quality grapes may result from a variety of factors that determine the

quality and quantity of our grape supply, including weather conditions, pruning methods,

diseases and pests, the ability to buy grapes on long and short term contracts and the number of

vines producing grapes. Any shortage in our grape production could cause a reduction in the

amount of wine we are able to produce, which could reduce sales and adversely impact our

results from operations.

Factors that reduce the quantity of our grapes may also reduce their quality, which in turn could

reduce the quality or amount of wine we produces. Deterioration in the quality of our wines

could harm our brand name and could reduce sales and adversely impact our results of

operations.

A Reduction in Consumer Demand for Wine Could Harm Our Business

There have been periods in the past in which there were substantial declines in the overall per

capita consumption of wine and other alcohol products in British Columbia and other markets

in which we sell our wines. A limited or general decline in consumption of wine could occur in

the future due to a variety of factors, including: a general decline in economic conditions;

increased concern about the health consequences of consuming alcoholic beverage products and

about drinking and driving; a trend toward a healthier diet including lighter, lower calorie

beverages such as diet soft drinks, juices and water products; the increased activity of anti-

alcohol consumer groups; and increased federal, state or foreign excise and other taxes on

beverage alcohol products.

The demand for our products could also be affected adversely by any failure to achieve

consistent, reliable quality in our product or service levels to customers. Retailer and consumer

purchasing decisions are influenced by, among other things, the perceived absolute or relative

overall value of our wine, including their quality or pricing, compared to competitive products.

Unit volume and dollar sales could also be affected by purchasing, financing, operational,

advertising, or promotional decisions made by provincial agencies and retailers which could

affect supply of or consumer demand for our products.

We Faces Significant Competition Which Could Adversely Affect Our Profitability

The wine industry is intensely competitive and highly fragmented. Our wines compete in several

wine market segments with many other British Columbia, Canadian and foreign wines, with

imported wines coming from the United States, France, Italy, Chile, Argentina, South Africa,

New Zealand and Australia. Our wines also compete with popular priced generic wines and with

other alcoholic and, to a lesser degree, non-alcoholic beverages, for shelf space in retail stores

and for marketing focus by our independent distributors, many of which carry extensive brand

portfolios.

Many of our competitors have greater financial, technical, marketing and public relations

resources than we do. Greater worldwide label recognition and larger production levels also

gives many of our competitors certain unit cost advantages. Even though we intend to focus on a

niche market and direct to consumer sales strategy, our sales may still be harmed to the extent


we are not able to compete successfully against such wine or alternative beverage producers’

costs.

Our Business Could be Adversely Affected by the Introduction of More Regulations

The wine industry is subject to extensive regulation by the Federal and Provincial government,

various foreign agencies, and local authorities. These regulations and laws dictate such matters

as licensing requirements, trade and pricing practices, permitted distribution channels,

permitted and required labeling, and advertising and relations with wholesalers and retailers.

Any expansion of our existing facilities or development of new vineyards or wineries may be

limited by present and future zoning ordinances, environmental restrictions and other legal

requirements. In addition, new regulations or requirements or increases in excise taxes, income

taxes, property and sales taxes or international tariffs, could negatively affect our financial

condition or results of operations. New or revised regulations, or increased licensing fees,

requirements or taxes could have a material adverse effect on our financial condition or results

of operations. There can be no assurance that new or revised regulations or increased licensing

fees and requirements will not have a material adverse effect on our business and its results of

operations and its cash flows.

ITEM 11: REPORTING OBLIGATIONS

11.1 Nature and Frequency of Reporting

We are not a “reporting issuer” in any jurisdiction in Canada. This means we are not required

to file documents with securities regulators or provide you with financial or other information

under Canadian securities laws.

As a corporation formed under the Business Corporation Act (British Columbia) we are

required to provide you, and all of our shareholders, with unaudited financial statements

annually.

As a preferred shareholder you will not have a right to receive notice of or participate in the

annual general meeting of our common shareholders. You will only receive notice of and have a

right to attend special meetings for preferred shareholders which are only required to be held if

a matter affects your interest as a preferred shareholder.

ITEM 12: RESALE RESTRICTIONS

12.1 You May Never be Able to Sell These Securities

The securities you are purchasing are subject to a resale restriction. You may

never be able to resell the securities.

We are not a “reporting issuer” issuer in Canada, and we will likely never be, a “reporting

issuer”. This means, in addition to us not being required to file documents with securities

regulators, that our securities are not listed or traded on any exchange or quote system. You will

not be able to sell or trade the Preferred Shares unless you prepare and file a prospectus with


applicable securities regulatory authorities or comply with an exemption from the prospectus

and registration requirements under applicable securities legislation.

You should understand, if you purchase our securities you will likely be required to bear the

financial risk of investing in our securities indefinitely. Under no circumstances are we required

to file a prospectus or similar document with any securities regulatory authority in Canada

qualifying the resale of our securities to the public in any province or territory of Canada.

All our securities will bear the following legend:

“Unless permitted under securities legislation, you cannot trade the

securities before the earlier of the date that is four (4) months and a day

after the date the Company becomes a reporting Issuer in any province or

territory of Canada”.

ITEM 13: PURCHASERS’ RIGHTS

If you purchase these securities, your rights may be limited and you will not have

the same rights that are attached to a prospectus under applicable securities

legislation. For information about your rights you should consult a lawyer.

You can cancel your agreement to purchase these securities. To do so, you must

send a notice to the funding portal within 48 hours of your subscription. If there is

an amendment to this Offering Document, you can cancel your agreement to

purchase these securities by sending a notice to the funding portal within 48 hours

of receiving notice of the amendment.

The offering of securities described in this Offering Document is made pursuant to

a start-up crowdfunding registration and prospectus exemptions order issued by

the securities regulatory authority or regulator in each participating jurisdiction

exempting the issuer from the prospectus requirement.

Continued on Next Page.


ITEM 14: DATE AND CERTIFICATE

On behalf of the issuer, I certify that the statements made in this Offering Document are true.

1014332 B.C. LTD. (DBA, QUIDNI ESTATE WINERY)

“Martin Gunderson”

Martin Gunderson

CEO/Founder

Quidni Estate Winery

Dated: November 15, 2016

I acknowledge that I am signing this Offering Document electronically and agree

that this is the legal equivalent of my handwritten signature. I will not at any time

in the future claim that my electronic signature is not legally binding.


Schedule “A”

Quidni Rights and Restrictions of Share Capital

ARTICLE 27 27. RIGHTS AND RESTRICTIONS OF SHARE CAPITAL

The following are the Rights and Restrictions attached to the shares of the Company.

27.1 DESIGNATION, AMOUNT AND PAR VALUE.

(a) Notice of Articles. The Notice of Articles of the Company authorizes the Company to issue:

(i) Common Shares. An unlimited number of Common Shares without par value;

(ii) Class A Preferred Shares. 70,000 Class A Non-Voting Convertible Preferred Shares with a par value of $0.0001 per share (the "Class A Shares"); and

(iii) Class B Preferred Shares. 500,000 Class B Non-Voting Convertible Preferred Shares without a par value per share (the "Class B Shares").

(collectively the Class A Shares, and the Class B Shares may be called the "Preferred

Shares").

(b) Designation of Pre-existing Preferred Shares. The 70,000 preferred shares of the Company previously issued and outstanding prior to filing a Form 11 Share Alteration creating two class of Preferred Shares, shall be designated “Class A Shares” on a one for one basis. All rights of the Class A Shares date back to their original date of issuance in October 2014.

27.2 VOTING RIGHTS.

(a) Common Shares. Holders of Common Shares are entitled to receive notice of, to attend, and to vote at all meetings of shareholders of the Company. Each Common Share provides the holder with the right to one vote in person or by proxy at all meetings of the shareholders of the Company.

(b) Preferred Shares. Except as otherwise provided in this Article 27.2 or as otherwise required under the Business Corporations Act (British Columbia), as amended, the Preferred Shares shall have no right to receive notice of, attend or vote at any meeting of the shareholders of the Company. However, as long as any shares of the Preferred Shares are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of each class or series of Preferred Shares,

(i) alter or change adversely the powers, preferences or rights given to the subject Preferred Shares,

(ii) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Preferred Shares,


(iii) authorize the dissolution or liquidation of the Company or the disposition of all or substantially all of its undertaking, or

(iv) enter into any agreement with respect to any of the foregoing.

Holders will be entitled to one vote for each Preferred Share held in all such matters

they are entitled to vote.

(c) Class A Shares Right to Vote if Company in Default. If the Company from time to time after five years from the date of issuance of the Class A Shares fails to redeem the Preferred Shares on the dates on which the same should be redeemed pursuant to Article 27.6 “Retraction Rights”, the holders of the Class A Shares shall have:

(i) Voting Rights. The Class A Shares will be entitled to receive notice of and to attend all general meetings of the Company and shall be entitled to one vote for each Class A Share then held by them respectively and in addition shall be entitled, voting separately and exclusively as a class, to elect two directors to the board of directors of the Company. The Company’s board of directors shall consist of a maximum of three directors if this Article is initiated.

(ii) Right to Call a Meeting to Appoint New Board Members. Notwithstanding anything contained in these Articles, the term of office of all persons who may be directors of the Company at any time when the right to elect directors shall accrue to the holders of the Class A Shares as provided in Article 27.2(c)(i) “Voting Rights”, or who may be appointed as directors thereafter and before a general meeting hereinafter referred to shall have been held, shall terminate upon the election of directors at the earlier of the next annual general meeting or the next annual consent resolution of the shareholders, or at a general meeting which may be held for the purpose of electing directors at any time after the accrual of such right to elect directors upon not less than 10 days' written notice and which shall be called by the secretary of the Company upon the written request of the holders of record of at least one-tenth of the outstanding Class A Shares; in default of the calling of such general meeting by the secretary within five days after the making of such request, such meeting may be called by any holder of record of Class A Shares.

(iii) Term of Directors Appointed by Holders of Class A Shares. Notwithstanding anything contained in these Articles,

(A) upon any termination of the said right to elect directors, the term of office of the directors elected by the holders of the Class A Shares exclusively shall forthwith terminate, and

(B) it shall not be necessary for a person to be a holder of Class A Shares in order to qualify him or her for election or appointment as a director of the Company by the holders of Class A Shares exclusively.

If any director elected exclusively by the holders of the Class A Shares shall cease

to hold office for any reason whatsoever and at that time the holders of the Class

A Shares shall be entitled to exclusively elect members of the board of directors,

a director to replace the director so ceasing to hold office may be elected at a


class meeting of the holders of the Class A Shares, called by any holder of record

of Class A Shares for such purpose.

27.3 DIVIDENDS.

(a) Dividend Entitlement. The holders of the Common Shares and the Preferred Shares shall be entitled to receive and the Company shall pay dividends at times determined by the directors but not less frequently than annually thereon as declared by the directors, all of the profits of the Company available for the payment of dividends as follows:

(i) Preferred Shares. The holders of the issued Class A Shares and Class B

Shares shall be paid fixed preferential cumulative dividends at the rate of six (6%) percent per annum on a deemed value of $10.00 per share, out of funds legally available to pay dividends, from the date of original issue of such shares. Under no circumstances will dividends be paid out of capita. Dividends will be payable quarterly on dates to be fixed by the board of directors of the Company; and

(ii) Common Shares. Subject to the rights of the holders of any series of Preferred

Shares, the holder of Common Shares are entitled to receive, from legally available funds, dividends when and as declared by our board of directors, except that so long as any shares of Class A Shares or Class B Shares are outstanding, no dividend will be declared or paid on the Common Shares unless at the time of such dividend or distribution, the Company shall have paid all accrued and unpaid dividends on the outstanding Preferred Shares.

(b) Dividends Cumulative. If on any dividend payment date, dividends are not paid in

full on any shares where dividends are cumulative, such unpaid part of such dividends shall be paid on a subsequent date or dates determined by the board of directors of the Company on which the Company has sufficient moneys properly applicable to the payment of same in priority to any dividends to be paid in subsequent year(s) until such unpaid portion of such dividends is paid in full. No right shall accrue to the holders of shares of Preferred Shares by reason of the fact that dividends on said shares are not declared in any prior year, nor shall any undeclared or unpaid dividend bear or accrue any interest.

(c) Date of Commencement. Dividends shall be payable to holders of shares

commencing on the date of issuance of such shares. For sake of clarity, a shareholder shall only be entitled to dividends for a given period of time if and only if such shareholder is a shareholder of the Company on the date when such dividends are declared. As well, for sake of clarity, if dividends are declared on account of a prescribed period of time, a shareholder shall only be entitled to dividends for the portion of the subject prescribed period of time that such shareholder is a shareholder of the Company.

(d) Restrictions on Payment of Dividends.

(i) Unless all dividends due to the Class A Shares have been paid, no dividends, whether in cash or property, shall be paid on the Class B Shares, any Common Shares, or on any other stock of the Company ranking junior to the Class A Shares; and


(ii) Unless all dividends due to the Class B Shares have been paid, no dividends, whether in cash or property, shall be paid on the Common Shares, or on any other stock of the Company ranking junior to the Class B Shares.

(e) Pro Rata Distribution. Except as otherwise provided herein, if at any time the Company pays less than the total amount of dividends then accrued with respect to a class of Preferred Shares, such payment shall be distributed pro rata among the holders thereof based upon the aggregate amount of the dividend then accrued with respect to the Preferred Shares held by each such holder of that particular class of Preferred Shares.

27.4 OPTIONAL CONVERSION.

The Holders of Class B Shares shall have the following conversion rights (the “Conversion Rights”):

(a) Optional Conversion. Subject to and in compliance with the provisions of this Article 27.4, the Class B Shares may, at the option of the holder, be converted into fully-paid and non-assessable Common Shares. The number of Common Shares to which a holder of Class B Shares shall be entitled upon conversion shall initially be three (3) Common Shares for every Class B Preferred Share being converted, as adjusted (“Conversion Basis”). Notwithstanding the foregoing, unless waived by the Company in its sole discretion, this Optional Conversion Right shall not become effective until at or any time after the third anniversary date of the issue of the Class B Preferred Shares held by the holder.

(b) Mechanics of Conversion. Each Holder of Class B Shares who desires to convert the

same into Common Shares pursuant to this Article 27.4 shall surrender the certificate or certificates, duly endorsed, at the office of the Company or any transfer agent for the Class B Shares, and shall give written notice to the Company, a copy of a notice of conversion in the form attached hereto as Exhibit A (the “Conversion Notice”), at such office. The notice must state the number of Class B Shares being converted. On receipt, the Company or its transfer agent will promptly issue and deliver to the holder a certificate or certificates for the number of Common Shares to which the holder is entitled and will promptly pay in cash (at the Common Shares’ deemed value of $3.33 per share) the value of any fractional share of Common Shares otherwise issuable to any holder of Class B Shares. The conversion will be deemed to have been made at the close of business on the date of such surrender of the certificates representing the Class B Shares to be converted, and the person entitled to receive the Common Shares issuable on such conversion shall be treated for all purposes as the record holder of the Common Shares on this date. The Company or its transfer agent will not be obligated to issue certificates evidencing the Common Shares issuable on such conversion unless the certificates evidencing such shares of Class B Shares are either delivered to the Company or its transfer agent, or the holder notifies the Company or its transfer agent that the certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with these certificates.

(c) Adjustment for Stock Splits and Combinations. If the Company at any time after

the date that the first share of Class B Shares is issued (the “Original Issue Date”) effect a subdivision of the outstanding Common Shares without a corresponding subdivision of the Preferred Shares, the Class B Shares Conversion Basis in effect immediately before that subdivision shall be proportionately decreased. Conversely, if the Company at any time after the Original Issue Date combines the outstanding Common Shares into a smaller number of shares without a corresponding combination


of the Preferred Shares, the Class B Shares Conversion Basis in effect immediately before the combination shall be proportionately increased. Any adjustment under this Article 27.4 shall become effective at the close of business on the date the subdivision or combination becomes effective.

(d) Adjustment for Common Shares Dividends and Distributions. If the Company

at any time after the Original Issue Date makes, or fixes a record date for the determination of holders of Common Shares entitled to receive, a dividend or other distribution payable in additional Common Shares, in each such event the Class B Shares Conversion Basis that is then in effect shall be proportionately increased as of the time of such issuance or, in the event such record date is fixed, as of the close of business on such record date, by multiplying the Class B Shares Conversion Basis then in effect by a fraction (i) the numerator of which is the total number of Common Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (ii) the denominator of which is the total number of Common Shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of Common Shares issuable in payment of such dividend or distribution; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefore, the Class B Shares Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Class B Shares Conversion Basis shall be adjusted pursuant to this Article 27.4(d) to reflect the actual payment of such dividend or distribution.

(e) Adjustment for Reclassification, Exchange and Substitution. If at any time or

from time to time after the Original Issue Date, the Common Shares issuable upon the conversion of the Class B Shares is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than an Acquisition as defined in Article 27.8(b) “Merger, Consolidation and Sale of Assets”, or a subdivision or combination of shares or stock dividend or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this Article 27.4), each Holder of Class B Shares shall have the right thereafter to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by Holders of the maximum number of Common Shares into which such shares of Class B Shares could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

(f) Reorganizations, Mergers or Consolidations. If at any time or from time to time

after the Original Issue Date, there is a capital reorganization of the Common Shares or the merger or consolidation of the Company with or into another Company or another entity or person (other than an Acquisition as defined in Article 27.8(b) “Merger, Consolidation and Sale of Assets”, or a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Article 27.4), as a part of such capital reorganization, provision shall be made so that the Holders of the Class B Shares shall thereafter be entitled to receive upon conversion of the Class B Shares the number of shares of stock or other securities or property of the Company to which a Holder of the number of Common Shares deliverable upon conversion would have been entitled on such capital reorganization, subject to adjustment in respect of such stock or securities by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Article 27.4 with respect to the rights of the Holders of Class B Shares after the capital reorganization to the end that the provisions of this Article 27.4 (including adjustment of


the Class B Shares Conversion Basis then in effect and the number of shares issuable upon conversion of the Class B Shares) shall be applicable after that event and be as nearly equivalent as practicable.

(g) Certificate of Adjustment. In each case of an adjustment or readjustment of the Class

B Shares Conversion Basis for the number of Common Shares or other securities issuable upon conversion of the Class B Shares, if the Class B Shares is then convertible pursuant to this Article 27.4, the Company, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered Holder of Class B Shares at the Holder’s address as shown in the Company’s books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of,

(i) the consideration received or deemed to be received by the Company for any

additional Common Shares issued or sold or deemed to have been issued or sold,

(ii) the Class B Shares Conversion Basis at the time in effect,

(iii) the number of additional Common Shares, and

(iv) the type and amount, if any, of other property which at the time would be received upon conversion of the Class B Shares.

(h) Fractional Shares. No fractional Common Shares shall be issued upon conversion of

Class B Shares. All Common Shares (including fractions thereof) issuable upon conversion of more than one share of Class B Shares by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of any fractional share, the Company shall, in lieu of issuing any fractional share, pay cash equal to the product of such fraction multiplied by the Common Shares’ deemed market value ($3.33 per share).

(i) Reservation of Stock Issuable Upon Conversion. The Company shall at all times

reserve and keep available out of its authorized but unissued Common Shares, solely for the purpose of effecting the conversion of the shares of the Class B Shares, such number of its Common Shares as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Class B Shares. If at any time the number of authorized but unissued Common Shares shall not be sufficient to effect the conversion of all then outstanding shares of the Class B Shares, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Common Shares to such number of shares as shall be sufficient for such purpose.

27. 5 REDEMPTION RIGHTS.

(a) Optional Redemption. The Company may at its option redeem all, or some, of the Preferred Shares on or after three years from the issuance of the Preferred Shares, at a redemption price equal to the original issue price of the Preferred Shares ($10.00 per share), plus all accrued and unpaid dividends (whether or not earned or declared) to the redemption date, out of funds legally available. The selection of the Preferred Shares to be redeemed shall be in the absolute discretion of the Directors, and need not be on a pro rata basis, however, no Class B Shares may be redeemed until all of the Class A Shares


have been redeemed, repurchased or otherwise acquired by the Company.

(b) Notice of Redemption. A notice of redemption of Preferred Shares shall be given as set-out in Article 27. 15 “Notices”, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Company. Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Notwithstanding the foregoing, if shares of the Preferred Shares are issued in book-entry form through a third party such as CDS Depository or any other similar facility, notice of redemption may be given to the holders of the Preferred Shares at such time and in any manner permitted by such facility. Each notice of redemption given to a holder shall state: (1) the redemption date; (2) the number of Preferred Shares to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.

(c) Partial Redemption. In case of any redemption of part of the Preferred Shares at the

time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the board of directors or a duly authorized committee thereof may determine to be fair and equitable. Subject to the provisions hereof, the board of directors or a duly authorized committee thereof shall have full power and authority to prescribe the terms and conditions upon which the Preferred Shares shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.

(d) Effectiveness of Redemption. If notice of redemption has been duly given and if on

or before the redemption date specified in the notice all funds necessary for the redemption have been deposited by the Company, in trust for the pro rata benefit of the holders of the shares called for redemption, with a bank or trust company doing business in British Columbia, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from such bank or trust company, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Company, after which time the holders of the shares so called for redemption shall look only to the Company for payment of the redemption price of such shares.

(e) Status of Redeemed Shares. The Preferred Shares that are redeemed, repurchased or

otherwise acquired by the Company shall revert to authorized but unissued Preferred Shares (provided that any such cancelled shares of Preferred Shares may be reissued only as shares of any series of Preferred Shares other than the class of Preferred Shares redeemed).

27.6 RETRACTION RIGHTS. Subject to the provisions of this Article 27.6 holders of Preferred Shares shall be entitled to require the Company to redeem all or any of the Preferred Shares registered in the name of such holder. Retraction payments for the Preferred Shares will be made on or before the last day of each month (a “Retraction Payment Date”) provided that certificate(s) representing the Preferred Shares to be retracted have been surrendered for retraction at least 90 days before the


Retraction Payment Date.

(a) Right to Require Retraction.

(i) Class A Shares. Any holder of Class A Shares may, at any time after the fifth anniversary of the date of the issue of the Class A Shares by giving notice as hereinafter provided, require the Company to redeem the whole or from time to time any part of the Class A Shares held by the holder for at a redemption price equal to the original issue price of the Class A Shares ($10.00 per share), together with an amount equal to all accrued and unpaid dividends up to the Retraction Payment Date (the Class A “Retraction Price”).

(ii) Class B Shares. Any holder of Class B Shares may, at any time after the third

anniversary of the date of the issue of the Class B Shares by giving notice as hereinafter provided, require the Company to redeem the whole or from time to time any part of the Class B Shares held by the holder for at a redemption price equal to:

(A) 90% of the deemed fair market value of $10.00 per share, if retracted

on or after the third anniversary of the shares having been issued but before the fifth anniversary date;

(B) 95% of the deemed fair market value of $10.00 per share, if retracted on or after the fifth anniversary of the shares having been issued but before the sixth anniversary date;

(C) 100% of the deemed fair market value of $10.00 per share, if retracted on or after the sixth anniversary of the shares having been issued,

in each case, together with an amount equal to all accrued and unpaid dividends up to the Retraction Payment Date (the Class B “Retraction Price”).

(iii) Restrictions on Retraction of Class B Shares. No Class B Shares may be

redeemed by the Company until all of the Class A Shares have been retracted, redeemed, repurchased or otherwise acquired by the Company.

(b) Notice of Retraction Request. In order to elect to have the Company redeem the

Preferred Shares pursuant to the above retraction privilege, the holder must, on or before at least 90 calendar days before the date specified for retraction, tender to the Company, at its registered office, at any place at which the Preferred Shares may be transferred or at such other place or places in Canada as shall have been specified by the Company to the holder of Preferred Shares, the certificate or certificates representing the Preferred Shares which the holder wishes the Company to redeem along with a notice of retraction in writing. Such notice shall set out the date on which retraction is to take place (the Retraction Payment Date) and, if only part of the Preferred Shares held by such holder is to be retracted, the number of Preferred Shares to be retracted.

(c) Irrevocable Retraction Request. All notices requesting retraction of Preferred

Shares shall be irrevocable unless payment of the Retraction Price is not be duly made by the Company to the holder on or before the Retraction Payment Date. In the event that payment of the Retraction Price is not made by the Company on or before the Retraction Payment Date, the Company shall forthwith thereafter return the holder's deposited share certificate or certificates to the holder.


(d) Partial Retraction. If only a portion of the Preferred Shares represented by a certificate is retracted, a new certificate for the balance shall be issued at the expense of the Company.

(e) Payment of Retraction Price. The Retraction Price payable in respect of Preferred

Shares tendered for redemption during any calendar month shall be paid by either (i) wire or electronic transfer in lawful money of Canada for such Retraction Price (less any tax required to be deducted and withheld by the Company) made to the account designated by the holder who exercised the right of retraction on or before at least one business day before the last day of the preceding month in which the Preferred Shares were tendered for retraction (the “Retracting Holder”) or (ii) sending to each holder (in the manner provided Article 27.15 “Notices”) a cheque for such retraction price (less any tax required to be deducted and withheld by the Company) payable to the order of the Retracting Holder. Payments made by the Company of the Retraction Price shall be conclusively deemed to have been made upon the mailing of a cheque in a postage prepaid envelope addressed to the former holder unless such cheque is dishonoured upon presentment.

(f) Effectiveness of Redemption. On payment of the Retraction Price, the Company

shall be discharged from all liability to the Retracting Holder in respect of the Preferred Shares redeemed. Preferred Shares that are retracted, redeemed, repurchased or otherwise acquired by the Company shall revert to authorized but unissued Preferred Shares (provided that any such cancelled shares of Preferred Shares may be reissued only as shares of any series of Preferred Shares other than the class of Preferred Shares.

(g) Rights of Retracing Holder. The holder of Preferred Share duly tendered pursuant to

the above retraction privilege will not be entitled to exercise any of the rights of a holder thereof unless payment of the Retraction Price is not made in accordance with the provisions of this Article 27.6(e), in which case the rights of the holder will thereupon be restored.

(h) Retraction Subject to Applicable Law. If, as a result of insolvency provisions or other provisions of applicable law or the rights, privileges, restrictions and conditions attaching to any shares of the Company ranking prior to the Preferred Shares submitted for redemption,

(i) the Company is not permitted to redeem all of the Preferred Shares duly

tendered pursuant to the retraction privilege in this Article 27.6, the Company shall redeem only the maximum number of Preferred Shares (rounded to the next lower multiple of 100 shares) which the board of directors determines the Company is then permitted to redeem. Such redemption shall be made pro rata, disregarding fractions of shares, from each holder of tendered Preferred Shares according to the number of Preferred Shares tendered for redemption by each such holder and the Company shall issue and deliver to each such holder at the expense of the Company a new certificate representing the Preferred Shares not redeemed by the Company.

(ii) the Company fails to redeem all of the Preferred Shares duly tendered

pursuant to the retraction privilege in this Article 27.6, then the Company shall redeem on each Retraction Payment Date thereafter, from Preferred Shares tendered for redemption by the holders thereof on or before the 30th day preceding such Retraction Payment Date in the same manner as set forth in this Article 27.6, the lesser of (i) the number of Preferred Shares so tendered, and (ii) the number of Preferred Shares (rounded to the next lower multiple of 100 shares


and selected pro rata, disregarding fractions of shares, from each holder of tendered Preferred Shares according to the number of Preferred Shares tendered by each such holder) which the board of directors determines the Company is then permitted to redeem. The Company shall be under no obligation to give any notice to the holders of Preferred Shares in respect of the redemptions provided for in this paragraph.

(i) Limited Liability. So long as the board of directors has acted in good faith in making

any of the determinations referred to in Article 27.6 as to the number of Preferred Shares which the Company is permitted at any time to redeem, neither the Company nor the directors shall have any liability in the event that any such determination proves to be inaccurate.

27.7 NO SINKING FUND. The Preferred Shares will not be subject to any mandatory redemption, sinking fund or other similar provisions.

27.8 LIQUIDATION, DISSOLUTION OR WINDING UP.

(a) Liquidation Preference. In the event of a reduction of capital or the liquidation, dissolution or winding up of the Company or other distribution of property or assets of the Company among its Shareholders for the purpose of winding up its affairs:

(i) Preferred Shares. The holders of the Preferred Shares shall be entitled to receive ratably an amount equal to the deemed value of $ 10.00 per share held by them respectively as a class, together with all declared or accrued and unpaid dividends. The holders of Class A Shares are entitled to receive their entire interest before the holders of Class B Shares are entitled to receive any property or assets. On payment of the amount so payable to them, the holders of Preferred Shares shall not be entitled to share in any further distribution of the property or assets of the Company.

(ii) Common Shares. After the Company has made the distribution contemplated by Article 27.8(a)(i), the holders of the Common Shares of the Company shall be entitled to receive a share of the remaining amount available for distribution. The aggregate amount distributable to all holders Common Shares shall be determined by multiplying the amount remaining to be distributed by the issued number of Common Shares.

(iii) Equal Proportional Payment within a Class. Any amount to be distributed to holders of any class of shares pursuant to Articles 27.8(d)(i) and 27.8(d)(ii) shall be distributed pari passu among all holders of shares of that class.

(b) Merger, Consolidation and Sale of Assets. The following events shall be considered a liquidation under this Article 2.8: any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the shareholders of the Company immediately prior to such consolidation, merger or reorganization own less than 50% of the Company’s voting power immediately after such consolidation or any merger or reorganization, or any transaction or series of related transactions, to which the Company is a party in which in excess of fifty percent (50%) of the Company’s voting power is transferred, excluding in either case any consolidation or merger effected principally to change the domicile of the Company or change of entity form (an “Acquisition”).


27.9 RANKING OF PREFERRED SHARES.

The Class B Shares rank junior to the Class A Shares as to the payment of dividends, redemption, liquidation and the distribution of assets. No class of shares may be created or issued ranking as to capital or dividends in priority to or on a parity with the Class A Shares, and the Class B Shares, nor shall the authorized number of any class of shares be increased without the approval of the holders of the subject Preferred Shares given in the manner provided in Article 27.10 “Amendment of Special Rights and Restrictions” below in addition to any other approval required by the Business Corporations Act (British Columbia) as amended.

27.10 AMENDMENT OF SPECIAL RIGHTS AND RESTRICTIONS. The approval of the holders of any class of shares as to any and all matters referred to herein may be given in writing by the holders of not less than sixty-six and two-thirds (66 2/3%) percent of the shares outstanding of the class or by resolution passed at a meeting of the holders of the class duly called and held upon not less than ten (10) days’ notice and at which the holders of at least the majority of the outstanding shares of the class are present or represented by proxy and carried by the affirmative vote of the holders of not less than sixty-six and two-thirds (66 2/3%) percent of the shares represented and voted at such meeting case on a poll. If at any such meeting the holders of a majority of the outstanding shares of the class are not presented or represented by proxy within half an hour after the time appointed for the meeting, then the meeting shall be adjourned to such date being not less than ten (10) days later and to such time and place as may be appointed by the Chairman and not less than four (4) days’ notice as shall be given at such adjourned meeting but it shall not be necessary in such notice to specify the purpose for which the meeting was originally called. At such adjourned meeting the holders of shares of the class present or represented by proxy may transact the business for which the meeting was originally convened and a resolution passed thereat by the affirmative votes of the holders of not less than sixty-six and two-thirds (66 2/3%) percent of the shares of the class represented and voted at such adjourned meeting cast on a poll shall constitute the approval of the holders of the class of shares referred to above. The formalities to be observed with respect to the giving of notice of any such meeting or any adjourned meeting and the conduct thereof shall be those from time to time prescribed in the Articles of the Company with respect to meetings of Shareholders. On every poll taken at every such meeting or adjourned meeting ever holder of shares of any class shall be entitled to one vote in respect of each share held.

27.11 LIMITS TO REDEMPTION AND RETRACTION.

Nothing herein shall be deemed to permit or oblige the Company to redeem or repurchase the Preferred Shares if the redemption or repurchase would contravene any applicable statute, regulation or rule of law or equity.

27.12 NO PREEMPTIVE RIGHTS.

Except as provided in the provisions of this Article 27, no holder of shares in the Company shall be entitled to rights to subscribe for, purchase or receive any part of any new or additional shares of any class, whether now or hereinafter authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares of any class, but all such new or additional shares of any class, or any bond, debentures or other evidences of indebtedness convertible into or exchangeable for shares, may be issued and disposed of by the board of directors on such terms and for such consideration (to the extent permitted by law), and to such person or persons as the board of directors in their absolute discretion may deem advisable.


27.13 CONSTRAINTS ON TRANSFER.

The Company has been incorporated to operate as a “land based” winery as defined by the British Columbia Liqour Distribution Branch, and accordingly, the board of directors of the Company may in their sole discretion refuse to issue, redeem or transfer shares if such action would disqualify the Company as a “land based” winery or otherwise threaten its legal status to operate as a vineyard and winery in British Columbia.

27.14 UNCERTIFIED SHARES - BOOK-ENTRY ONLY SYSTEM. The Preferred Shares are “uncertified shares” as allowed by section 107 of the Business Corporations Act (British Columbia). Holders of Preferred Shares do not have a right to receive share certificates representing their ownership of the shares, but instead will receive notification of their ownership interest which will include the following information:

(a) the name of the Company;

(b) confirmation that the Company is a British Columbia registered company;

(c) the name of holder of the Preferred Shares;

(d) the number, class and, if applicable, series of Preferred Shares and whether those shares are with or without par value and, if with par value, that par value;

(e) the date of issue of the Preferred Shares;

(f) confirmation that the Preferred Shares are subject to a restriction on transfer;

(g) confirmation that the Preferred Shares are subject to special rights and restrictions as set

out in this Article 27, and a full text of these special rights and restrictions may be obtained free of charge from the registered office of the Company; and

(h) a numerical or other designation by which the Preferred Shares issued to the holder is

identified by the Company. The Company currently acts as its own records office. If in the future the shares of the Preferred Shares are issued in book-entry form through a third party such as CDS Depository or any other similar facility, the Company will notify the holder of the name and contact information of such third party. 27.15 NOTICES.

(a) General. Any notice required by the provisions of this Article 27 shall be in writing and shall be deemed effectively given:

(i) upon personal delivery to the party to be notified;

(ii) when sent by confirmed electronic mail or facsimile if sent during normal

business hours of the recipient, and if not, then on the next Business Day;

(iii) five (5) calendar days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or


(iv) one (1) Business Day after deposit with a nationally recognized overnight courier, specifying next Business Day delivery, with verification of receipt.

All notices shall be addressed to each holder of record at the address of such Holder appearing on the books of the Company. For purposes of this Certificate, “Business Day” shall mean a day on which banks are open for business in the Province of British Columbia.

Any notice delivered as provided in this section shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice, or any defect in such notice or in the delivery thereof, to any holder of Preferred Shares shall not affect the validity of the proceedings related to such notice.

(b) Notices of Record Date. Upon (i) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or (ii) any acquisition (as defined in Article 27.8(b) “Merger, Consolidation and Sale of Assets”, or other capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, any merger or consolidation of the Company with or into any other corporation, or any voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall mail to each holder of Common Shares and Preferred Shares at least ten (10) days prior to the record date specified therein (or such shorter period approved by the holders of at least sixty-six and two-thirds (66 2/3%) of the then outstanding shares of each class) a notice specifying (A) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution; (B) the date on which any such acquisition, reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective; and (C) the date, if any, that is to be fixed as to when the holders of record of Common Shares and Preferred Shares (or other securities) shall be entitled to exchange their Common Shares and Preferred Shares (or other securities) for securities or other property deliverable upon such Acquisition, reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up.


EXHIBIT A

CONVERSION NOTICE

The undersigned is a holder of Class B Preferred Shares (the “Preferred Shares”) of 1014332 B.C. Ltd. (the “Company”). In accordance with and pursuant to Article 27.4 of the Articles of the Company, the undersigned hereby elects to convert a certain number of Preferred Shares into Common Shares without par value (the “Common Shares”), of the Company, by tendering the stock certificate(s) representing the Preferred Shares specified below as of the date specified below.

Date of Conversion Request:

Number of Preferred Shares to be converted:

Please confirm the following information: Conversion Price:

Number of shares of Common Stock to be issued:

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the Date of Conversion:

Please issue the Common Stock into which the Preferred Shares are being converted and, if applicable, any check drawn on an account of the Corporation in the following name and to the following address: Issue to:

Email Address:

Authorization:

By:____________________________________

Title:___________________________________

Dated________________

Date post:	05-Sep-2020
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