PDI was organized in 1987 and at present operates a franchise management company in the Greater Montreal area. At May 31, 2005, PDI supports twenty-four (24) pizza outlets. Twenty (20) were franchised and four (4) locations represent outlets at which the Company has terminated franchises due to under performance by the franchisees. Typically at these locations the Company installs its home office personnel to rehabilitate the facility and, if appropriate, it will recommence limited operations for a limited period of time in order to be able to effectively transfer such locations to new franchisees. Except at one such location, the Company does not assume the existing financial responsibilities of the terminated franchisee. However, when a new franchisee is appointed by the Company, that party either assumes the existing prior lease and other obligations or negotiates a new lease with the Landlord. In one instance, the Company entered into a new five-year lease for a rental of C$1,275 per month for 1,000 square feet. All outlets are in Greater Montreal.

In addition, PDI entered into a three year arrangement with Intrawest Corp, an international developer and operator of recreational destination resorts, to supply pizzas at the Mont Tremblant Ski and Recreational Resort.

As franchisor, PDI supplies the franchisees, through its wholly-owned subsidiary Pizado Foods (2001) Inc. ("Pizado"), with the dough and sauces used in the preparation of Pizza Donini recipes. Pizado also supplies a separate product line of pizza dough and sauces to other restaurants and distributors in the Province of Quebec. In connection with frozen pizza wholesale orders, the Company employs subcontractors to produce its products.

In addition to supplying its franchisees with food supplies, PDI also provides various forms of marketing and operating support. Besides traditional radio, television, print and direct mail advertising, it operates, through another wholly-owned subsidiary, Pizza Donini.Com Inc. ("Donini.Com"), a call center that executes home delivery through one central telephone number. The call center dispatches telephone orders to the closest franchisee for prompt delivery. Donini.Com has also embarked on an internet-based order taking and processing program. DoniniCo Inc. ("DoniniCo"), a wholly-owned subsidiary of PDI, repurchases existing Donini franchised restaurants and operates them, pending their resale to new franchisees.

Employees

We have approximately 36 employees of whom 6 are executives, 6 are clerical and administrative, 7 are manufacturing and 17 are sales and marketing.

Patent Protection

We have no patents relating to our products or processes but have U.S. and Canadian trademarks relating to our name, logo and certain products, and rely on our trade secrets, proprietary formulations and confidentiality arrangements with respect to our food products.

Competition

The food industry is highly competitive and is dominated by several large public multinational food companies including several which dominate the pizza market. In addition, there are a great number of independently owned single or small multi-location chains, many of which compete with us in our present market area. Although we have satisfactory penetration in the Province of Quebec, Canada, entering new markets is important to our future growth. We expect to face very strong competition. Our ability to succeed will depend on our ability to maintain and improve our competitive position.

Potential Markets

In addition to expanding our existing base of franchised outlets and wholesale distribution and sales, we also plan to expand our efforts into alternative business-to-business (B2B) distribution channels, which started development in 2002 and has to date very limited sales. The B2B would sell to such customers as department store cafeterias and other restaurants. In this regard, PDI has developed a line of frozen, ready-to-use pizza products with self-rising crust capable of being prepared, freezer to table, in six to eight minutes and intends to expand its business by marketing its own brand of Pizza Donini frozen pizza to retail grocery outlets including mass merchandise stores and supermarkets.

In addition to generating revenues from our franchisees in the form of initial franchise fees and royalties, revenues have also been generated by our three operating subsidiaries, Pizado, Donini.Com and DoniniCo. Pizado intends to expand its existing distribution business to additional customers.

We believe that our largest growth area will be the further development of our B2B (business to business) distribution of a fully-topped, ready-to-use self-rising crust, frozen pizza product to its existing and new foodservice customers such as department store cafeterias, other restaurants, hospitality and leisure venues, convenience stores, video stores, gas stations and contract caterers.

In October 2004, the Company launched a new full service Resto-Bar concept, which features casual dining in neighborhood restaurants serving fine Italian cuisine in addition to Pizza Donini's menu items, providing a full-service breakfast, lunch and dinner menus as well as offering a full-service bar, take-out and delivery services. The Company plans, with new

capital, to expand into the Northeast United States and in Canada with its new Resto-Bar Concept in the next twelve months.

After several years of experimentation, we developed a new microwaveable pizza which we started to market this fiscal year.

Marketing Activities

Although we had an independent market research firm conduct a market survey, which ascertained that our products compared favorably to our present competitors, and the Company's new microwaveable pizza reported to be superior to the other major competing products, there can be no assurance that the public's taste will remain attracted to our products. In order to maintain our favorable consumer acceptance we will have to maintain our high quality of products and competitive prices.

The Company has finalized a new sales effort with a test program in six video store locations, marketing a twelve-inch frozen pizza and a new seven-inch microwaveable pizza to be sold in an attractive branded chest freezer, and inaugurated a program to sell these products through a local supermarket chain.

In August 2004, the Company entered into a marketing agreement with Premier Marketing International Ltd., a leading marketing company in the food business to market its new frozen pizza products. The agreement expires December 31, 2006 and contains continuous one year renewal terms.

The Company has redirected its energy and focus on its core business, i.e. to improve the profitability of its franchise units and improve the efficacy of its existing call center. To do this, the senior management team is analyzing and devoting hands on effort to review the status of all existing franchisee sites. The Company has already re-acquired four underperforming franchises and intends to purchase up to three more.