It is made out of a treasure chest and sells "military" things, like canned food and novelty shirts that say "I Heart Mischief." A shopkeeper that looks like Larry runs it and it is also Octavio's "lair" for the "revolution."
This is Octavio's lair for Level 6 in the game. One can also buy things from here. The password is "Sticks and stones can't break our bones, because we don't have any!" One must also have a black turtleneck to get in.