Functional Technologies Corp.
TSX VENTURE : FEB

Functional Technologies Corp.

October 20, 2008 08:43 ET

Functional Technologies Announces $1.8 Million Private Placement

Previously Announced Rights Offering Cancelled

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 20, 2008) -

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Functional Technologies Corp. (TSX VENTURE:FEB) is pleased to report that, subject to receipt of TSX Venture Exchange approval, it has negotiated a non-brokered private placement to raise $1.8 million by the issuance of units at a price of $0.60 per unit. Each unit will consist of one common share of the company and a share purchase warrant entitling the holder to purchase one common share of the company at a price of $0.60 per share for a period of two years. Finder's fees will be payable in connection with this financing.

The aforementioned financing is being led by the senior officers of New York City based Phoenix Group, Philip S. Sassower and Andrea Goren. Phoenix is a private equity firm that invests in undervalued companies and has had an historical IRR of over 60% p.a. from its portfolio investments. Current portfolio investments include The Fairchild Corporation, (NYSE:FA) that owns an aerospace division and a motorcycle apparel and accessories division; Xplore Technologies Corp. (OTCBB:XLRT), a leading provider of rugged mobile computers; Communication Intelligence Corporation (NASDAQ:CICI), the recognized leader in biometric signature verification; and JLM Industries, Inc., a privately held global chemical company.

"Functional Technologies fits the investment profile we typically seek: undervalued stock, market-leading product offering, strong management, global market potential and at an inflection point where value growth begins to accelerate," said Mr. Sassower, CEO of Phoenix. He added, "We have historically been long-term investors and we look forward to a long and successful relationship with Functional Technologies."

Phoenix was involved in providing standby guarantees for the previously announced rights offering for Functional Technologies.

This financing replaces the planned rights offering, announced July 23, 2008. Functional Technologies management has determined that the current volatility of the financial markets is not compatible with the long time periods required to close a Rights Offering and, accordingly, have moved to replace that offering with a structure more appropriate to current market conditions.

The equity amount negotiated for this Private Placement is less than the $2.8 million contemplated by the previously announced Rights Offering, so as to reduce dilution in current market conditions. This lessor amount of equity will not negatively affect the company business plan as Functional Technologies management has structured required manufacturing equipment purchases to utilize the company's cash and equity in a highly leveraged formula. This has been done by accessing several excellent government programs with private lending sources, which preserves the company's capital resources. This innovative approach to financing is anti-dilutive to the company's corporate structure as Functional Technologies purchases larger more important pieces of its production equipment.

The securities contemplated to be issued in connection with this private placement have not been and will not be registered under the Securities Act of 1933, as amended, or any state securities laws, and the securities may not be offered or sold in the United States absent registration or an applicable exemption from such registration. This news release does not constitute an offer of securities.

About Functional Technologies Corp.

Functional Technologies is a functional foods and biological health products company that develops and commercializes advanced yeast products, and other novel biological products, for the food and the health care industries. The company is currently commercializing a platform yeast technology that substantially reduces the formation of ethyl carbamate (also known as urethane, which has been recently reclassified by the World Health Organization up to a Group 2A carcinogen - the same carcinogen class as lead, mercury, acrylamide and diesel exhaust), from wines and other fermented beverages and foods. Functional Technologies has licensed the exclusive worldwide rights to this technology from The University of British Columbia (UBC). The company is expanding the development of next generation products in this area, as well as evaluating new yeast based technologies with broad commercial market applications. In addition Functional Technologies, through its wholly-owned subsidiary Phyterra Bio Inc., is developing a platform of proprietary biological products, for animal health, utilizing proprietary science in the field of micro-algae.

For further company information, please access our website at www.functionaltechcorp.com.

ON BEHALF OF THE BOARD

Howard Louie, Chief Executive Officer

This news release contains forward-looking statements as defined under applicable securities legislation. The forward-looking statements are made as of the date hereof, and the company has no intention to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise except as required by law. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such statements. Such factors include, among others, the company's stage of development, lack of product revenues and no assurance of product acceptance in the market, additional capital requirements, the ability to protect its intellectual property and dependence upon key personnel. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. Additional risks and uncertainties relating to the company and its business can be found in the "Risks and Uncertainties" section of its most recent Management's Discussion & Analysis filed on SEDAR (www.sedar.com).

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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