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Business Description

We are a corporation that was formed under the laws of Ontario on October 22, 2010, and we began operation on November 8, 2010. We have offered Metal Supermarkets franchises since December 2010 and have not offered franchises in any other line of business. We have not operated any Stores, but as noted below, our affiliate MSEI has operated Metal Supermarkets stores in the U.S. since August 2017, and our affiliate MSUK has operated Metal Supermarkets stores in the United Kingdom since 1995. We conduct business under our corporate name>and as Metal Supermarkets. Our principal business address is 520 Abilene Drive, Mississauga, Ontario, Canada L5T 2H7. Our agents for Service of process are listed in Exhibit A.

Prior Experience

We do not have a parent company. We have two predecessors On November 8, 2010 we acquired assets from both Retail Metal Stores, Inc. (formerly known as Metal Supermarkets Corporation), a Delaware corporation (“RMS”) and from Retail Metal Stores, Inc. (formerly known as Metal Supermarkets Corporation), a Canadian corporation (“MS(Canada)”). The last known principal business address of RMS and MS (Canada) was 77 KingStreet West, Suite 3000, Toronto, Ontario M5K 2A1, RMS and MS (Canada) and their affiliates owned, operated and franchised to others the fight to operate Metal Supermarkets stores in Canada, the United States, the United Kingdom and Austria RMS operated Metal Supermarkets stores (through controlled subsidiaries or affiliates) from June 1997 until August 2011 and offered Metal Supermarkets franchises from July 1994 until November 2010. MS (Canada) operated Metal Supermarkets stores from 1985 until February 2011 and offered Metal Supermarkets franchises from June 1987 until November 2010. On November 8, 2010, RMS assigned to us its U.S. Metal Supermarkets franchise agreements; RMS and its affiliate also sold the Metal Supermarkets trademarks and franchise system to Metal Supermarkets IP Inc., which changed its name to MSKS IP, Inc. (“MSKS”), an affiliate of ours. MSKS has granted to Metal Supermarkets Service Company Inc. (“MSSC”), a wholly-owned subsidiary of MSKS, an exclusive, license to use, and to sublicense others to use, toe System (as defined below). MSSC has in tom granted to us an exclusive license to use, and to sub cense others to use, the System in the United. States; MSSC has also granted Metal Supermarkets Franchising Cpipbration (“MSFC”), an affiliate of ours; an exclusive license to use, and to sublicense others to use, the. System everywhere in the world except the United States, toe United Kingdom and the Republic of Ireland. MSSC has also granted to Metal Supermarkets Franchising UK Limited (“MSFK”) an affiliate of ours, an exclusive license to use and to sublicense others to use the System the United. Kingdom and Ireland. The principal business address for MSFK and MSUK is Blabby Business Centre, First Floor, 33 Leicester Road, Blabby, Laics' LE8 4GR, United Kingdom, MSFK owns Metal Supermarkets UK Limited (“MSUK”) which owns and operates five Stores in the United Kingdom. MSFA has granted to Metal Supermarkets Enterprises, Inc. (“MSEI”), an affiliate of ours, toe right to operate Stores and to use the System. MSEI operates four Stores in the U.S. under franchise agreements with MSFA.

Business Offered

We grant to qualified individuals and business entities (“you”) franchises to own, and operate Metal Supermarkets, stores”). (In this Disclosure Document, “you” means the person or legal entity with whom we enter into an agreement. The term “you” also refers to the' direct and indirect owners of a corporation, partnership, limited liability company, limited liability partnership, or other entity that signs a Franchise Agreement as the “franchisee”). Metal Supermarkets Stores are met^ warehouse and distribution centers that offer a wide variety of rentals and related materials and provide specialized metal services including metal processing, “cut to size” metal pieces, fast delivery computerized ordering facilities, and sourcing of on-:Stock and “hard to fmd” items with no required minimum limit on order size: Stores sell various grades, sizes and shapes of metals such as aluminum, steel, stainless steel, brass and copper to customers who are typically the maintenance and/or engineering departments of businesses such as manufacturing facilities as well as maintenance providers, food processors' machine shops, tool and die shops, contractors, welders, fabricators, schools and universities, hospitals, hotels other institutions and service companies. Stores are authorized to Offer metal processing services which includes, among other things, fabricating, painting, welding, polishing, notching. Galvanizing, bending, cutting, drilling, punching or cutting of metal. Franchisees must sign our standard form of franchise agreement (the “Franchise Agreement”), copy of which is attached as Exhibit: G-2. The Franchise Agreement grants you the right to operate a Store using trademarks and service marks, including the mark “Metal Supermarkets” and other service marks and trademarks that we may designate for your use (the “Marks”), market analyses; supplier relationships, sales and marketing methods, training, record keeping, custom-designed computer software and business management, all of which we or our affiliates may periodically improve, further developer otherwise modify (as fully defined in the Franchise Agreement, the “System”). We' also Offer to qualified individuals and business entities (a “Developer” or “you”) the right to develop an agreed-upon number of Stores within a specific geographic area (“Development Area”) under our area development (letter) agreement (the “Development Agreement”) (a copy ofwhich.is attached as Exhibit C-7). Under a Development Agreement, you will be required to establish an agreed-upon number of Stores within the Development Area, at specific locations (to be specified in separate Franchise Agreements). An important part of the Development Agreement is a development schedule (the “Development Schedule”), which spells out the number of Stores that you agree to have. Established by certain; benchmark dates.

Initial Fees

You must pay us an application fee of $5,000 when you sign the Franchise Application (“Application Fee”). The Application Fee is fully refundable, without interest, provided that you have. Of signed a Franchise Agreement with us; A copy of the Franchise Application is attached as Exhibit C-1 ^ the standard initial franchise fee is $39,500 which is payable in full at the time you sigh the Franchise agreement, we will credit your Application pee against; the initial franchise fee. We participate in the International Franchise Association VetFran Program (the “Vet Fran Program”), which provides a discount on initial franchise fees to veterans of the U.S. Armed Forces who otherwise meet the requirements of the program. For qualified veterans participating in the Vet Fran Program, we will reduce the amount of the initial franchise fee by $5,000 for the first Franchise: Agreement you enter into with us; thus, the initial franchise fee under the Vet Fran Program is reduced to $34,500. To qualify, veterans must provide us with adequate documentation of honorable discharge, and the initial franchisee for the Store to be, operated must be at least .51%,ovvhed by the: veteraii participating in the Vet Fran program. Veterans participating in the Vet Fran Program who wish to transfer the franchise before opening the Store must pay the portion of the initial franchise fee that is waived under the program (S5, 000) a condition to the transfer; The initial franchise fee is not refundable under any circumstances, including your failures to obtain financing, your failure to successfully complete training, or your failure to lease or purchase the; site for the Store within the required time period. Except: as described above, the initial franchise fee is uniform for all franchisees currently being granted a franchise.

Financing

Neither we nor any agent or affiliated of ours offers direct or indirect financing to you or guarantees my note, lease or other obligation of yours.

Franchisee Revenue and Profit

The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable: is for the: information, and if the information is included in. the Disclosure Document, Financial performance information that differs from that included in item 19 may be given only if: (1) a franchisor provides the actual records of an existing Outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example^ by providing, information about possible performance at a particular location; or under particular circumstances. Tables 1-3 below show the actual averted invoice valises gross margins land sales per store for our 20IS, 2016, 2017 and 2018 fiscal, years (which run from October 1 to September 30 of each year). The figures are based on the 37 stores (both franchised and company-owned stores) that operated for the entire four-year period either our server based platform, or that converted from a standalone: system to our server based platform. The figures do not include information on 22 currently operating franchised Stores that were not open for the entire four-year period), six of which were opened in 2015, eight of Which Were opened. in 2016, two of which were opened in 2017, and six of which were opened in 2018. Tables 4: and 5 below provide quarterly Gross Sales information for each new franchised Store that was first opened during our 2013, 2014, 2015, 2016 and 2017 fiscal years (the period from October 1,2012 to September 30,2016) and that operated for at least 12 or 24 full months since then until Our fiscal year end on September 30,2018;