Functional Technologies Corp.
TSX VENTURE : FEB

Functional Technologies Corp.

January 31, 2011 07:00 ET

Functional Technologies Announces First Quarter 2011 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 31, 2011) - Functional Technologies Corp. (TSX VENTURE:FEB) (the "Company") today reported operational and financial results for the first quarter ended November 30, 2010. Amounts, unless specified otherwise, are expressed in Canadian dollars and in accordance with Canadian Generally Accepted Accounting Principles (Canadian GAAP). 

Mr. Garth Greenham, Functional Technologies' President and COO, said, "We are pleased to receive positive feedback from the American fall wine season. The interest generated by the sensory performance associated with our products is very encouraging and supports launches in South America and Europe."

Operating Highlights

  • During Q1 2011, reported positive results from preclinical studies investigating the use of Functional Technologies' specifically enhanced yeast as a novel approach to the treatment of malaria. Conducted in collaboration with University of Toronto scientists, data from mouse studies showed the oral administration of the Company's enhanced yeast was effective in delivering proteins that neutralized malarial parasites. Results included a statistically significant reduction and delay in the onset of malarial symptoms, and improvement in the health status of treated versus control groups. No toxicity was reported, even at 100 times the effective dosage – a sharp contrast to conventional and widely used chemical treatments that often pose significant side effects for patients. The potential for an oral dosing regimen also offers benefits in cost-effectiveness and convenience.

  • During Q1 2011, reported on the commercialization progress of the Company's proprietary acrylamide-reducing (AR) yeast. Acrylamide is designated a Class 2A carcinogen by the World Health Organization (WHO), and is recognized globally as a serious food safety issue. Formed when starchy foods are baked, fried or toasted at high temperatures, acrylamide has been found in many widely consumed foods including bread, cookies, crackers, French fries and potato chips. Currently, several international food companies are in various stages of conducting tests to confirm the effectiveness of Functional Technologies' AR yeast in baked and potato products. The Company believes partnering with at least one global food ingredient producer would be the most effective way to accelerate the commercialization of its AR yeast technology, in alignment with its corporate objectives. 

  • On December 6, 2010 announced sales results from the first commercial season of the Company's Phyterra™ branded wine yeasts, reflecting that Functional Technologies has commenced penetration into the U.S. wine yeast market. Getting the Company's wine yeast products into large and diverse numbers of U.S. wineries for testing is critical to establish demand for the next season's wine crush and to facilitate introduction into commercial wineries in Europe and South America. The Company's four hydrogen sulphide (H2S)-preventing yeast strains were sold into over 75 wineries in 13 states, with the majority of sales occurring in the key California market. These initial revenues were recorded in Q4 2010, reflecting the seasonality of wine production. 

  • Also subsequent to quarter end, on December 17, 2010, the Company completed a non-brokered private placement, raising gross proceeds of approximately $4.0 million from the issuance of 7,272,845 units at a price of $0.55 per unit. Each unit is comprised of one common share and one-half of a common share purchase warrant. Each whole warrant entitles the holder to purchase one common share at a price of $0.70 for a 24 month period from the closing date. 

  • Subsequent to quarter end, the Company announced the appointment of Dr. Connie Chen as Vice President of Corporate Development and Communications, as well as the engagement of Pathfinder Ventures Corporation, as part of its initiatives to build shareholder value and increase awareness of the Company and its developments to the broader investment community.

Q1 2011 Financial Results

The Company incurred a net loss of $773,608 for the three months ended November 30, 2010, compared to a net loss of $908,912 for the three months ended November 30, 2009, representing a decrease of $135,304 due primarily to reductions in operating expenses. 

Operating expenses, excluding stock-based compensation expenses, for Q1 2011 were $896,715, compared to $919,707 in Q1 2010, consisting primarily of office and general expenses, professional fees, research and development costs, marketing efforts, and salaries and wages. 

The decrease of $22,992 in operating expenses was attributed primarily to the following areas: consulting fees decreased by $67,348, research and development expenses decreased by $42,047, office and general expenses decreased by $19,510 and travel and meals expenses decreased by $18,820. These decreases were partially offset by the increase in salaries and wages of $65,190, amortization of capital assets of $53,557 and sales and marketing expenses of $15,311. 

The decrease in operating expenses was primarily the result of a combination of increased efficiencies and a decrease in operating activities.

Government funding for the three months ended November 30, 2010 was $175,549, compared to $172,456 for the three months ended November 30, 2009. The government funding is directly related to the research and development work being conducted by the Company's subsidiary Phyterra Bio Inc., and for the yeast products under development.

Liquidity and Outstanding Share Capital

As at November 30, 2010, the Company had cash and short-term investments of $431,942 compared to $946,738 as at August 31, 2010. As at November 30, 2010, the Company had working capital of $998,167 compared to $1,352,923 as at August 31, 2010. 

As at November 30, 2010, Functional Technologies had 36,676,050 common shares issued and outstanding. 

Additional Information

This news release should be read in conjunction with the Company's consolidated financial statements for the quarter ended November 30, 2010 and the notes thereto, together with the MD&A for the corresponding period, which are available on the Company's website at www.functionaltechcorp.com and on SEDAR at www.sedar.com

About Functional Technologies Corp.

Functional Technologies develops and commercializes proprietary technologies that enhance the natural properties of yeast and algae – nature's microscopic workhorses. Our scientists apply novel techniques to these micro-celled organisms to resolve significant health and quality problems, and generate new opportunities in the global food, beverage and healthcare industries. Our first commercial products are the PhyterraTM line of proprietary yeast strains, designed to reduce the formation of foul-smelling hydrogen sulphide and the carcinogen urethane in wines and other fermented products. With a head office in Vancouver, Functional Technologies Corp. has R&D facilities in Prince Edward Island and a U.S. sales office in Napa Valley California. For more information, please visit www.functionaltechcorp.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Functional Technologies Corp.
    Connie Chen
    VP, Corporate Development and Communications
    +1.647.282.5038
    www.functionaltechcorp.com