OG Business Review - Oct 2016

Company OverviewOctober 2016

CSE:OG

DisclaimerAllstatementsotherthanstatementsofhistoricalfactmaybeforward-lookingstatements.Forward-lookingstatementsincludeforecastsforproduction,investments,cashflow,capitalexpendituresanddebtlevelsandarebasedonestimates.Thesestatementsinvolveknownandunknownrisks,uncertainties,assumptionsandotherfactors,someofwhicharebeyondOrganicGarage�scontrol,thatmaycauseactualresultstodiffermateriallyfromaconclusion,forecastorprojectioninsuchforward-lookingstatements.OrganicGaragebelievesthattheexpectationsreflectedinthoseforward-lookingstatementsarereasonableatthetimemadebutnoassurancecanbegiventhattheseexpectationswillprovetobecorrectandsuchforward-lookingstatementsincludedin,orincorporatedbyreferenceinto,thispresentationshouldnotbeundulyreliedupon.Thesestatementsspeakonlyasofthedateofsuchinformation,asthecasemaybe,andmaybesupersededbysubsequentevents.OrganicGaragedoesnotintend,anddoesnotassumeanyobligation,toupdatetheseforward-lookingstatementswhetherasaresultofinformation,futureeventsorotherwise.

ForfurtherdetailspleasereviewthecompaniescorporatefilingsincludingauditedfinancialstatementsdatedJuly31,2016whichcanbefoundalongwithotherdisclosureatwww.sedar.com

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ACanadianfamilyrungrocerystorechainsellingfreshorganicandallnaturalproductsatthebestprices since2005

WELCOMETO

OrganicGarage isamid-sizeretailfoodbusinesswithaten-yearoperatinghistoryintheGreaterTorontoArea.TheCompanyhastworetaillocationssupportedbyacentralizeddistributioncentre.TheflagshipstoreiswellestablishedandlocatedinOakvilleand,alongwithitsnewsisterlocationinVaughan,producesover$15millioninannualrevenue.

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§ Onlyhealthy,natural,organicproducts

§ Highlycompetitivepricingo Weaverage8-24%lowerpricing

thankeycompetitorsacrosstheindustry

§ Fullservicegroceryretailerwithbroadproductoffering

§ 12-14,000SKUscoveringallproductcategories

CustomerValueProposition

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Although it may be difficult to see, the sign above the store in thispicture reads �We sell for less.� This tagline would end up beingthe inspiration of what was to come almost 80 years later. Thestory begins in 1928 when my great grandfather and greatgrandmother emigrated from Poland and settled in downtownToronto. They struggled like many other families before them buthard work and dedication made it possible to open their firstgrocery store in 1931.

When you come into Organic Garage you can see this picture ofmy grandfather and his two brothers standing in front of theirCollege Street store. It is hung in a prominent place as a reminderof what perseverance and commitment can achieve.

OurRoots

MattLurieFounderofOrganicGarage

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§ FounderofOrganicGarage§ 4th generationgrocer§ Highlyexperiencedfoodretailer§ Hands-onoperatorandmanager§ Passionateandentrepreneurial

MattLurieChairman/CEOFounder

Mr.LuriehasbeenadirectorandofficerofOrganicGaragesincefoundingthecompanyonDecember7,2005.Followingemploymentinthegroceryretailindustrythroughouthighschoolanduniversity,hesawanopportunityinthegrowingSubwaybrandandsignedhisfirstfranchiseagreementinTorontoattheageof20.Mr.Luriebecameoneoftheyoungestmulti-unitSubwayfranchiseesinCanadauponopeningtwoadditionalrestaurantsoverthefollowingthreeyearperiod.Mr.LurieopenedthefirstOrganicGaragelocationin2005,followingthesuccessofafarmersmarkethestartedunderatentinhighparksellingorganicfruitsandvegetables,whichatthetimewereonlyavailableatselectgrocerystoresforasignificantpremiumcomparedtoconventionalproduce.Forthelast10+years,Mr.LuriehasoverseenandmanagedthegrowthofthecompanyandopenedasecondlocationinVaughanaswellasa40,000sq/ftstateoftheartcentralizeddistributionfacilityinEtobicoke.

Mr.LuriereceivedtheGenerationNextAward byCanadianGrocerin2016andwasfeaturedinIHRMagazineintheMarch/April2012Edition.1Founding

Vision

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The Company is currently focused on implementation of a high growth strategydevised to take advantage of its economies of scale and scope residing in itsinternal distribution network. Matt Lurie, the Company owner and CEO, is ahands-on manager executing a four-year growth plan to expand from two retaillocations to eleven in the Greater Toronto Area.

The expansion plan leverages on the current infrastructure and overheadincluding the distribution centre in Etobicoke. The distribution centre has thecapacity to support up to 15 stores.

OurStrategy

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TenttoBricks

ADecadeofSteadyGrowth

• $15MM+business

• 2highlysuccessful10,000-15,000squarefootretaillocations(OakvilleandVaughan)• 40,000squarefoot,scalabledistributioncentre (Etobicoke)withcapacitytoservice

13morestores

GenesisofOrganicGarage

Mattbeganbyestablishingahighparkfarmersmarketin2004totesttheviabilityoffair-pricedorganicproducts.

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OrganicGarageistheonly full-offeringorganicretailerinOntariotoadoptandsuccessfullyexecuteoperationalefficienciesinkeystrategicareas:

DistinctandProvenBusinessModel

6Strategic Drivers

1 Centralizedbuyingtomaximizediscounts

2 Minimalproductoverlapwithfocusonstockinghighestvalueproductsineverymajorcategory

3 Tight management of labour costs

4 FullyfunctioningDistributionCentretogeneratesignificantsupplychainefficiencies

5 Strongdirectrelationshipwithsupplierstooptimizevolumediscountsandrebates

Abilitytomaintainlowcapitaloutlayratioforexpansion(relativetogrosssalesupside)

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§ OrganicGarageisfocusedonopeningitsthirdlocationintheGTAbyQ12017.ThesiteisinthesoughtafterJunctionneighbourhoodlocatedinanewdevelopmentnexttoaflagshipLAFitness.

§ ThefourthlocationhasbeenidentifiedintheeastendofTorontoandisinnegotiationfor2017.Tenantinducementsarebeingnegotiatedtherebycreatinganewoccupancymodelgoingforward.

§ Demographicstudiessubstantiatethefuturelocationsbydensityandages.

§ Expectedrevenuegrowthisestimatedtoexceed$60millionwithinthenextfewyears.

§ Expansionwillleveragedistributioncentre costsoveramuchlargerbase.

GrowthStrategy

OrganicGarage– JunctionSite

OrganicGarage– TorontoEastRendering

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ProjectedRevenueGrowth

$0.00

$10,000,000.00

$20,000,000.00

$30,000,000.00

$40,000,000.00

$50,000,000.00

$60,000,000.00

2016 2017 2018 2019

Estimatedrevenueperlocation$6MM-$10MM+

Financialresultsoverthepast10yearshavebeenquiterobustdisplayingagrossmarginsignificantlyaboveindustryaverage.TheCompanyhasreportedthefollowingyear-over-yearresultsfortheyearendedJanuary31:

OakvilleLocation• NetProfitMargin=11%Average

• $10.3MillionSales(2015)• $1.2MillionNetProfit(2015)

2016 2015 2014

Sales $15,564,192$16,079,691$13,739,371

GrossProfit $4,284,050$4,891,081$3,804,751$

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EnormousMarketPotential

§ OntarioisthelargestorganicretailmarketinCanadao Valuedat$1billionperannum

§ Highlyfragmented§ Nodominantmarketleader§ Absenceofcriticalmassamongstkeyplayers§ Segmentoutperformingconventionalgrocers§ GTA– highpotentialmarket,grosslyunderserved

Ontario’sOrganicRetailMarket

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Canada’sGroceryRetailMarket

In2015groceryretailersregistered2%currentvaluegrowthinCanada,reachingC$140.3billion.OverallgroceryretailinginCanadawasactive.Onefactordrivinggrowthwasthegrowingfocusonhealthandwellness,whichsupportedvaluesales.

Canada’s Grocery Retail Market

= $140+ Billion Dollar Marketplace

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KeyCompetitors

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Targets thehigh-endmarketwith2locationsoutsideoftheGTA.

OrganicGarageaverages12-15%lessexpensive

NaturesEmporium

Majorgrocerychainsareheavilydependenton“conventional”foods,andwhiletheycontinuetogrowtheirorganicsection.


MajorChainsLoblaw’s,Sobeys,Metro,Longo’s,Fortino’s

Fillsthehigh-endmarket.


WholeFoods

Targets themiddle-endmarketwith9locationsoutsideoftheGTA.


GoodnessMe

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BasketStrength§ OrganicGarageaveragebasketsizeisinthe$45to$50range,thehighendofthemarket.

§ Highbasketdenotesperceivedvaluecustomersfeeltheyaregettingandarethereforepurchasingfullerbaskets.

§ Basketstrengthkeytobetterprofitability– enablesmarginmixacrossdifferentcategoriesversusbeingshoppedforlossleadertrafficgenerators.

Discounters - $18-24(deepdiscountchains)

Mid-range - $25-35(maingrocerychains)High-end - $50+(specialtystores)

AverageBasketSizeComparison

$

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PerformanceComparable

Gross Sales per Retail Square Foot

Gross Profit Margin

Average Store Footprint

$800 - $1,000/sq ft

26-28%

10,000-12,000 sq ft

$450-600/sq ft (Sobey’s or Metro)

19-22% (Metro)

28,000-40,000 sq ft

OrganicGarage Comparable

22%28%

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§ OnApril29th OrganicGarageenteredintoanArrangementAgreementtogopublicinCanadabywayofmergerwithaCanadianlistedcompany.ThetransactionprovidedsufficientfundstocompletethethirdlocationintheGTAandprovideforsignificantworkingcapital.

§ MattLurieremainsCEOandChairmanwithadditionaloperationalpersonneltobehiredwiththegrowthplan.

§ OrganicGarageLtd.commencedtradingonOctober24,2016ontheCSEunderticker“OG”.

§ ThecompanysuccessfullycompletedIPOfinancingof$1millionat.40pershare.

PublicTransactionCommonSharesOutstanding:

21.4million(Directorsown>10million

shares)

SharePurchaseWarrantsOutstanding:4.4million(Between.40and.80cents–expiringin2017)

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Christopher CrupiCPA, CA

Mr.Crupi wastheCo-FounderandCEOofParamountGoldandSilverCorp.from2004untilitseventualsaletoCoeurMininginApril2015forover$200million.Hewasalsoafounderofothersuccessfulminingventures,includingUrastar GoldwhichwassoldtoAgnico Eaglein2013andMeadowBayGoldCorpofwhichheisnowCEO.

HewasformerlyaSpecialAssistanttotheRightHonourable DonMazankowski,DeputyPrimeMinisterofCanada.Mr.Crupi isaCharteredAccountantandpracticedwithseveralinternationalaccountingfirmswherehewasacorporaterestructuringexpert.Mr.CrupiholdsaBachelorofCommerce(Hon.)inFinancefromtheUniversityofOttawa

IndependentDirectors

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Evan Clifford

Mr.Cliffordhasextensiveexperienceinentrepreneurialstart-upsbothintheprivateandpublicsector.Overthelast18years,Mr.Cliffordhasbuiltandmaintainedextensiverelationshipsthroughoutmanydifferentindustries,havingearnedaplatinumrecordasthemanagerofoneofCanada’smostsuccessfulpopmusicartists,playedaleadingroleinbuildingoneoftheworld’sforemostelectriccarcompanies,andbranchedintotherestaurantbusinessasfounderoftheworld’sfirst100%sustainableOceanWisecertifiedsushirestaurant.

In2015,Mr.CliffordplayedaprimaryroleintheintroductionofthesustainableconsumerwaterbrandBoxedWater,intotheCanadianmarket,andwasaspeakerattheworldrenownedIdeaCityConference.


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Ken Villazor

Mr.Villazor hasworkedforSenatorsSports&EntertainmentsinceAugust2003servingprincipallyasanAdvisorandAlternateGovernortoEugeneMelnyk theOwner,Chairman&ChiefExecutiveOfficeroftheNationalHockeyLeague’sOttawaSenators.Kenhasmorethan20yearsofexperienceworkinginawiderangeofareasincludingcommunications,corporateaffairs,publicrelations,businessdevelopment,governmentrelations,philanthropyandpublicpolicy.

HehasheldnumerousseniorpositionsinthebiopharmaceuticalindustryincludingwithSmithKlineBeecham,GlaxoSmithKlineandBiovail Corporationaswellaswiththeindustry’snationaltradeassociationbasedinOttawa.HewasamemberoftheTransitionTeamthatoversawtheoperationalintegrationofthemergerbetweenSmithKlineBeechamandGlaxoWellcome.KenisalsoamemberoftheRendezVous LeBreton groupwhichwasrecentlyselectedasthehighestrankedproponentbytheNationalCapitalCommissiontoredevelopthe53acreLeBreton FlatssiteindowntownOttawa.ThisredevelopmentwillbethesecondlargesturbanrealestatedevelopmentprojectinNorthAmerica.

KensitsontheBoardofDirectorsoftheOttawaSenatorsFoundation.HispreviousBoardexperienceincludessittingonCommitteesresponsibleforfinance,governance,andCEOsearches.KenholdsaBachelorofScience(Hon)degreefromSt.Michael’sCollegeattheUniversityofToronto..


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§ BoardandManagementfocusedonoperationalexcellenceandacceleratedgrowth

§ 10yearsoffinancialstatementsbackedbyasolidtrackrecordofretailandoperationalexperience

§ Enormousmarketpotential:OntariorepresentsthelargestorganicretailmarketinCanadavaluedat$1billionperannum

§ Revenuegrowthwillquadrupleto$60MMby2019§ Coolbrand.Uniqueanddistinctcustomerexperience.§ Real,tangiblegrowthunderway§ ThirdretaillocationtoopeninQ12017§ FourthretaillocationidentifiedwithexecutedLOI

Summary:ShareholderValueProposition

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NextSteps

§ Financingfor2017growthstrategy

§ Continuetoidentifystrategicstorelocations§ Retainafirmpositionofcompetinghead-to-head§ Continueoperationalexcellencefocusedon

betterbuying,rebateprograms,insideprograms,etc.

§ Leveragerevenueoptions:pickandpay,onlineandprivatelabeling

§ Planogramintegration§ Retainaggressiveapproachtocompetitivelease

terms, leaseinducementsandleaseincentives

§ InvestandcapitalizeonthestrongbrandequityofOrganicGarage

www.OrganicGarage.com

[email protected]

EvanClifford(416)[email protected]

Investor Relations

Antonina Szaszkiewicz (“Sas-kuh-vitch”)ECSLAWPROFESSIONALCORPORATION2425MathesonBoulevard E.,8thFloorMississauga,ONL4W5K4(416)[email protected]

Legal Council

Documents

OG Business Review - Oct 2016