Executive Summary

“I am more fearful about the safety of the American food supply than anything else.”
Tommy G. Thompson, Secretary
United States Department of Health and Human Services
In a report to Congress, October 24, 2001

The Company is a food safety educational service provider to the food service, food and hospitality industries. The Company delivers a patent-protected, on-line, transaction fee-based educational and risk management system to food-related businesses to reduce food-borne illness, limit liability and business interruption losses and comply with increasing state and federal regulation.

Delivery of these products and services is timely as a result of:

• The lack of on-line competitors,
• Increased mandated food safety education requirements by state and local health departments,
• Increased operating costs and business risk due to legal, medical and other expenses incurred as a result of improper food handling,
• Increased public awareness of food-related outbreaks and product contamination, and
• Increased public agency awareness to improve food security standards and methods.

A former FDA/USDA deputy commissioner sits on our Board of Directors. Our Board of Professional Advisors includes prominent figures in medicine, animal agriculture, consumer food safety, and public health. The management team has more than 80 years successful senior experience in food service, risk-management and web-technology.

FoodSafety has recently acquired the rights to all versions of the food safety manual and educational system entitled “Applying HACCP Principles,” approved by both the City of Philadelphia (and the State of Pennsylvania in 2003) and the State of Florida. The Company anticipates strong demand for this emerging educational mandate.

Problem and Solution
According to the United Nations, illness due to contaminated food is the most widespread health problem in the contemporary world, yet food-borne illness is 100% preventable through improved process control and education. Each day more than 200,000 Americans are sickened by food, more than 1,000 are hospitalized and 14 die. This translated into a $7.7 billion economic cost in 1998.

The problem is worldwide and is caused by:

• Inadequate knowledge on the part of food handlers,
• The lack of a centralized, comprehensive educational resource,
• Half our food is now prepared by others (the source of 80% of traceable food-borne illness),
• A dramatic increase in the consumption of fresh food (ironically, more risky than cooked),
• An exponential rise in international food trade,
• Decreasing state and federal oversight of food manufacturing, processing and imports, and
• Increased pathogenic resistance.

Our service is designed to address these escalating needs through mass customization of interactive, scenario-based on-line food safety education specific to business, regulatory and employee learning requirements. The Company will deliver educational content as “learning objects” on-the-fly, assembling the parts of the courseware as it is delivered based upon the predetermined profiling rules of each customer and individual employees. Because many learning objects are reusable in courseware across the entire target audience, development costs are radically reduced and gross margins are significantly increased. Our business system provides faster learning and lower costs with improved accountability and compliance monitoring.

Learning is supplemented by risk management products and services and operations-related on-line applications to provide comprehensive food safety education, performance support and risk control.

The Market
The Company will initially target the retail food industry’s top 200 eating and drinking establishment chains, top 30 contract food service providers, top 20 healthcare providers, top 15 hotel and lodging chains, large supermarket operations and national convenience stores. This market represents an employee/student population of 6.1 million in over 300,000 locations.

The Company estimates that the total U.S. market opportunity for courseware and other products and services to be almost $1 billion ($993 million) in 2002 with a similar or larger market opportunity for the non-U.S. market. The need for this service is inherently global.

Revenue Model
Transaction-based courseware fees will be: Manager courseware: $150 per user, food workers: $20-24 per user per year; gross margins >75%. Additional subscription-based products include access to our proprietary database of food safety knowledge, the customization of certain services, geographically-specific product recall notifications, news alerts, insurance products tied to training, and integration to client legacy systems for employee assessment and development. Mandated re-certification of existing student population accounts for 25 percent of revenue by 2005.

Competition
There is no recognized first mover delivering food safety education on-line. A very limited number of courses are currently available on-line but do not meet regulatory requirements, are generic in nature and are unrealistically priced. All other competition is off-line, with providers being non-profits (National Restaurant Association – 14% market share), internal company training programs, small local training companies, community colleges and health departments. All providers have serious cost/benefit and logistical problems. Non-profits and public agencies lack sufficient funding to provide comprehensive food safety training, on-line or otherwise. The food safety training market is highly fragmented and undercapitalized.

Competitive Advantage
FoodSafety, Inc. has identified seven strategies to ensure a distinct and sustainable advantage over competitors and to retain customers over the long-term:

• A unique and patent-pending learning/knowledge management platform specifically designed to address market needs,
• Superior value - global access 24x7 at <25% of competitors’ costs,
• Manner of delivery - mass customization and personalization of learning accelerates employee development, improves retention and enhances performance,
• Back-end integration with client legacy systems,
• Vertical integration of food safety risk management (one-stop shopping),
• The experience and focus of the management team, and
• Ownership of the URL “foodsafety.com.”

Xxxxxx Xxxxxx, former Deputy Commissioner, FDA and Administrator, USDA Food Safety and Inspection Service, is a member of the Board of Directors. Xxxxxx Xxxxxx, President of the Animal Agricultural Alliance, is a member of the Board of Directors. Xxxxxx Xxxxxx, former head of food safety training and education for the State of Xxxxxxx, is Executive Vice President of the Company. Please see www.foodsafety.com for full biographies of key management personnel.

Exit Strategy
As a deep vertical in a lucrative market segment, Food Safety, Inc. should be an attractive acquisition candidate for one of the major business and educational publishers, such as Addison-Wesley, Reed Elsivere, Pearson Education or the Thompson Group looking to grow their on-line presence. The Company could also be attractive to any one of the publicly traded generic e-learning companies or to a major business entity affiliated with the food industry, such as the National Environmental Health Association. The acquisition of turn-key educational systems with good revenue streams is an obvious opportunity for any potential acquirer.