FACT Corporation Shareholder Update from President & CEO Jacqueline Danforth.

FREEHOLD, N.J. -- Ms. Jacqueline Danforth, the President & CEO of FACT Corporation (OTCBB:FCTOA.OB), announced the following shareholder update today.

Financial Overview - 2004

As we previously announced, FACT Corp. has seen a dramatic increase in its business since 2003. Through September 30, 2004, we generated approximately $1.1 million of revenues - an annualized revenue run rate of nearly $1.5 million. Given that the Company generated less than $250,000 of food premix revenues for the nine months ending September 2003, we are justifiably proud of the Company's accomplishments this year. I am gratified that we were able to achieve a 400% increase in sales compared to the same period in 2003.

Market Analysis

The food market in the United States is changing rapidly, and a surprising precedent has been set. While the big players used to wait until the market confirmed that a trend was going to develop into more than a fad, last year we saw companies like Kraft and McCain enter the low-carb market early. Some current trends include:

--The average carbohydrate-conscious shopper now spends $85 per month on specialty foods and the proportion of low-carb products seems to have stabilized in the retail marketplace.

--While low-carb and low-fat are 'trends' that will ebb and flow, they are indications of a much larger trend - the growing understanding within the mass market of the direct link between diet and health.

--A growing recognition of the glycemic index, which measures the impact of a particular food on blood sugar.

--A growing recognition of the value of fiber in the daily diet as it pertains to weight loss, digestive health and other functional nutritional benefits.

FACT's products are ideally suited to the glycemic-index conscious consumer and those consumers seeking to enhance their fiber intake. Consumers are increasingly aware of the ill effects of too many simple carbohydrates and sugars, portions that are too large, and too much of the wrong fats in their diets. FACT's high fiber baked goods with low impact on blood sugar levels, reduced fat and reduced calories are ideally positioned for consumer tastes in 2005 and beyond.

Some key indicators of this growing trend:

--Sales of mainstream bread products have dropped by 10% over the last year. Bakers are boosting sagging sales by offering premium products with added health benefits.

--We are witnessing the gradual emergence of a wholesale move towards individual portion packaging, which indicates that the importance of portion control is sinking in.

--The FDA has published a final rule requiring manufacturers to list trans fatty acids, or trans fat, on the Nutrition Facts panel of conventional foods and some dietary supplements. (Trans fats raise levels of bad cholesterol (LDL) and may be linked to cancer and Alzheimer's. To read the FDA Backgrounder, visit http://www.fda.gov/oc/initiatives/transfat/backgrounder.html).

--Manufacturers are focusing more on products which tie into the values on the glycemic index, a system of rating the extent to which different carbohydrates raise blood sugar levels and consequently contribute to the risk of diabetes and weight gain.

--Manufacturers are playing up the inclusion of fiber in their products as pertains to weight control, cancer and gastrointestinal health.

--The new and emerging area of 'functional foods' and nutrition sciences that acts as an indicator of the new consumer focus on overall nutrition. The category is now responsible for sales of approximately $30 billion per year in the United States. We will see this figure increase dramatically in the coming years as consumer awareness continues to grow. FACT is very well-positioned to capitalize on this trend, and in fact, has been interviewed by publications such as European Baker, Refrigerated & Frozen Foods Retailers and Health Products Business on the trend toward functional food and nutritional sciences.

Upcoming Initiatives: Cremes

As most of our shareholders know, FACT is the exclusive distributor of Aunt Lydia's Italian Cremes. It is our goal to substantively increase our sales of Aunt Lydia's Italian Cremes in 2005. In achieving this, we will focus on two distribution channels (a) club stores and (b) major grocery chains., with our planned ecommerce site, launching in early December as a third direct to consumer channel. We have, therefore, entered into negotiations with several major players in both of these categories. The Company believes that we will secure distribution of Aunt Lydia's Italian Cremes in at least one major club store chain and one major grocery chain in 2005 and we are currently in the middle stage of negotiations with a national club store and major grocery chain. If we are successful in that endeavor, we would hope to achieve a 400% or greater increase in sales of this product in 2005.

Upcoming Initiatives: Commercial Premix Sales

--Having built a core business and demonstrated our ability to deliver quality product, FACT is hopeful that 2005 will prove to be a break-out year in the sale of premix products. We are undertaking a commercial test on the East coast with a product manufacturer who is using one of our premixes as the core for a line of reduced-carb fresh pasta products and sauces. A successful test on the East coast with this product line will secure a national launch for spring 2005. Should this relationship come to fruition, we would anticipate a dramatic increase in revenues from associated premix sales of up to 500-600%, compared to present day sales volumes.

--We are also involved in product testing and negotiations with several franchise organizations that offer primarily baked goods to their customer base. The Company believes that it will obtain at least one franchise customer in 2005. If we are successful in that endeavor, we would hope to achieve an increase in revenues from this product of 60-75% of present day sales volumes from that client alone.

--The Company also has a number of negotiations occurring with potential customers across other key industry sectors including options for ready-to-eat products and other products incorporating our commercial premixes. It is the goal of the Company to close at least one of these deals in 2005. Should we be successful in obtaining such a client, we would expect to at least double our existing revenue base across this product category.

Upcoming Initiatives: Retail

In 2005 we will also see increased distribution of our retail consumer product line, which is set for launch later this month. We also have plans for expansion of the existing product portfolio. Initially the Company will be focusing on the marketing of our Nutrition First(TM) line of at-home baked goods through our ecommerce site. Ultimately the Company hopes to expand its distribution to other retailers and undertake a branded effort suitable for mainstream retail grocery channels. The Company anticipates that a successful launch of its consumer product line would result in a 50% increase in present day premix sales.

The above initiatives, both retail and commercial, including those currently under negotiation or undergoing product testing are independent of one another, so that the combined result of successful conclusion of these projects across our four key initiatives could result in an increase in revenues of up to 800% as compared to present day sales.

In conclusion, I would like our shareholders to know that we at FACT Corporation anticipate a year of exciting growth and appreciate our shareholder support. I can assure you that the management of FACT Corporation will continue to strive for excellence in our products and to bring about success within the Company on behalf of its shareholders.

ABOUT FACT:

FACT Corporation develops, licenses and sells proprietary functional premixes, formulations and ready-to-eat products through its wholly owned subsidiaries, Food & Culinary Technology Group Inc. and FACT Products Inc. The FACT companies serve clients who manufacture, distribute and market functional food products through a variety of conventional and alternative distribution channels, including branded and private-label retail opportunities, as well as food-service and specialty markets. For more information about FACT's premixes, product information, industry trends and functional foods, please visit http://www.factfoods.com.