Functional Technologies Enters Evaluation Agreement with Significant European Confectionary Producer

Regarded as a top-tiered confectionary producer in Europe, the Collaboration Partner is seeking innovative strategies that mitigate acrylamide in numerous products, but with minimal impact on sensory attributes of the end-product.

Nov 15 2011 --- Functional Technologies Corp. has signed an agreement enabling an undisclosed leading European producer of sweet & savoury baked goods, snacks and confectionaries (the “Collaboration Partner”) to evaluate the Company’s proprietary acrylamide-preventing (AP) yeast technology in the Collaboration Partner’s commercial materials used to produce many of their branded food products.

Regarded as a top-tiered confectionary producer in Europe, the Collaboration Partner is seeking innovative strategies that mitigate acrylamide in numerous products, but with minimal impact on sensory attributes of the end-product. Given previous successful studies, including in end-user provided commercial materials for the production of non-bread products, the application of the Company’s AP yeast products are expected to yield valuable, affirmative data. Functional Technologies’ AP yeast platform will be evaluated in pre-pilot scale trials that simulate commercial conditions, which should also simultaneously enable preliminary development of production protocols. Results obtained from these studies are expected to facilitate meaningful discussions for the Company’s technologies and/or services to subsequently be employed by the Collaboration Partner.

This agreement adds to several other existing collaborative and testing relationships with top-tiered multinational producers of food products that span several sectors in major regions of the world. Various companies operating in both traditional and non-traditional (i.e. non-bread) baker’s yeast markets such as baked goods, biscuits, snack foods, pasta-based foods or sweet & savoury foods have already engaged Functional Technologies to test its proprietary AP yeast strains in a variety of products. Several additional companies are in discussions with management to begin the same over the next few months. These companies typically represent thought leaders in their respective sectors, and are dominant in North America, Europe, and/or Asia. Cumulatively, these collaborations speak to Functional Technologies’ strategic cultivation of working and potentially commercial relationships with end-users of its proprietary yeasts to drive new market opportunities.

In recognition of the opportunities associated with these efforts, one top-tiered multinational yeast producer has manufactured and provided to Functional Technologies free of charge, 1,500 kg of one of the Company’s AP yeast strains for use in evaluation trials, alleviating in part the cost associated with conducting such studies. As at the end of August 2011, Functional Technologies had cash and equivalents of approximately $4.2 million. This does not include $2.5 million in funding from the Government of Canada (announced in March 2011) supporting the development of AP yeast applications in commercial potato processing. Consequently, while the Company believes it is well capitalized to weather the current turbulent capital markets environment, the gratuitous provision of yeast inventory to advance studies confirming the effectiveness of Functional Technologies’ AP yeast platforms in commercial applications is useful in extending the Company’s runway.      

“We are pleased the attractiveness of our proprietary platform solution to prevent and mitigate acrylamide in a variety of foods continues to be validated, as multinational food companies seek to remain competitive in the global marketplace by addressing the health and liability associations with this chemical,” said Howard Louie, chairman and CEO of Functional Technologies. “It is a pleasure and privilege for our management and technical teams to work with sector-leading companies, and to continue to establish the efficacy, commercial protocols and thereby commercial appeal of our AP yeasts.”