Functional Technologies Announces Fiscal Year End 2011 Financial Results
December 29 2011 - 7:30AM
Marketwired Canada
Functional Technologies Corp. (TSX VENTURE:FEB) (the "Company") today reported
operational and financial results for the year ended August 31, 2011 ("FY2011").
Amounts, unless specified otherwise, are expressed in Canadian dollars and in
accordance with Canadian Generally Accepted Accounting Principles ("Canadian
GAAP").
Mr. Howard Louie, Functional Technologies' CEO and Chairman, said, "Functional
Technologies has accomplished significant achievements in the past year,
particularly in building technical and commercial value for our proprietary
acrylamide-preventing ("AP") yeast platform. This extends from demonstrating
compelling efficacy data, to the cultivation of strategic relationships with
multiple tier one and tier two yeast producers as well as an increasing range of
food processing end users. Our corporate goal to drive technologies from bench
to commercialization is being realized with our H2S-preventing wine yeasts,
achieving increasing market presence through significant growth in the number of
wineries purchasing introductory quantities of our product with results that
reflect a strong market interest across several new regional markets. Meanwhile,
our technical research and development team continue to improve and increase the
quality and breadth of our wine yeast product offering to fulfill our goals to
develop and increase market share while establishing the business model of our
technology as a platform."
FY2011 Operating Highlights
Acrylamide-Preventing (AP) Yeast Program:
-- Announced Functional Technologies entered into an agreement to research
and evaluate its AP yeasts with an undisclosed global company (the
"Collaboration Partner"). The Collaboration Partner is considered one of
the leading companies in the development, manufacturing, marketing and
distribution of snacks and other food products, sectors outside of the
conventional bread-based products that utilize baker's yeast and in
which the application of the Company's AP yeast products could provide
considerable value.
-- Entered into a collaboration agreement with an undisclosed, leading
multinational company possessing significant capabilities in the
production and distribution of microorganism-based products, to confirm
the performance characteristics of its AP yeasts in one of several
applicable sectors of food-related products. Collaborating with several
leading multinational firms in the food processing and ingredients
sectors provides key opportunities to gain rapid access to global
production capacity and global distribution networks. Such partnerships
are expected to better position the Company to accelerate the commercial
progression of its AP yeast products.
-- Announced that the Company's subsidiary, Phyterra Yeast Inc. ("PYI"),
was awarded $2.5 million in non-dilutive funding from the Government of
Canada's Atlantic Innovation Fund (AIF) under the oversight of the
Atlantic Canada Opportunities Agency (ACOA). These funds will support a
project to develop and commercialize the application of its proprietary
AP yeast technology in the processed potato industry.
-- Announced that considerable progress had been made towards the
commercialization of its AP yeast technology. Several international food
ingredient companies are in various stages of conducting tests to
confirm the effectiveness of the Company's AP yeast in baked products.
Hydrogen Sulphide (H2S)-Preventing Wine Yeast Program:
-- Announced the renewal of the Company's distribution agreement with
Beverage Supply Group ("BSG"), including an increase in the minimum
purchase volume of Phyterra(TM)-branded H2S-preventing wine yeasts in
the U.S. market for the 2011 season.
-- Announced that the U.S. Food and Drug Administration (FDA) issued a "no
questions" letter in response to the Generally Recognized as Safe
("GRAS") notification for the Company's Phyterra(TM)-branded H2S-
reducing yeast for use in preventing the formation of H2S during the
fermentation of various alcoholic beverages including red and white
wine, sake and other rice wines, and beer.
-- Reported that in the first, introductory commercial season, the
Company's Phyterra(TM)-branded wine yeast strains were sold into over 75
wineries in 13 U.S. states, with a majority of the sales occurring in
the key California market.
Other Developments:
-- One of six companies across Canada recognized by the Government of
Canada as businesses whose investments in R&D initiatives have been
supported by federal funding, and which have subsequently evolved into
commercial entities. This recognition also reflects the partnership
Functional Technologies has built with federal and provincial
governments, allowing strong R&D initiatives to be maintained while
building a reputation for commercializing novel technologies that
attract the interest of multinational companies.
Operating Highlights Subsequent to Year-End
-- Announced the Company has commenced evaluation food trials with its
proprietary AP yeast technology for a leading European producer of
intermediary starch-based food products including extruded snack food
pellets (the "Collaborator"), which are purchased and integrated by
numerous downstream food manufacturers into a variety of other food
products. These downstream food manufacturers represent many brand
leaders in the processed food industries, and the Collaborator has
established its global position over decades.
-- Announced that the development of a third (3rd) generation of its
proprietary AP yeast platform, wherein various improvements made to the
Company's original underlying AP technology have enabled the yeast's
capacity to degrade asparagine, a rate-limiting precursor to acrylamide,
to be accelerated and elevated.
-- Announced that it has signed an agreement enabling an undisclosed
leading European producer of sweet & savoury baked goods, snacks and
confectionaries to evaluate the Company's proprietary AP yeast
technology in the European food producer's commercial materials used to
produce many of their branded food products.
-- Announced that efficacy studies conducted on end-user materials,
investigating the Company's proprietary AP yeast technology in a novel
food application, have demonstrated significant reduction of asparagine.
Moreover, the reduction was achieved well under the normal processing
times associated with the application. Asparagine is a key precursor to
the formation of the mutagen (i.e. carcinogenic), as well as
neurologically and reproductively toxic chemical, acrylamide. Functional
Technologies previously demonstrated that the ability of its technology
to reduce asparagine has been significantly effective in preventing the
formation of, and thereby reducing, acrylamide.
Fiscal Year 2011 Financial Results
The Company incurred a net loss of $4.8 million for the 12 months ended August
31, 2011, compared to a net loss of $3.4 million for the 12 months ended August
31, 2010 ("FY2010"), representing an increase of $1.4 million due primarily to
an increase in operating expenses, inventory write-off, and a decrease in
government assistance.
Revenues for FY2011 were $0.2 million, compared to $0.05 million, in the year
prior. The increase of $0.15 million reflects an increase in the number of
wineries purchasing introductory quantities of the Company's proprietary
H2S-preventing wine yeasts in the U.S., as well as in Europe and Chile where
2011 represented the first year of commercial availability of these wine yeasts.
The Company believes that getting product into use at a large number of
wineries, is key to establishing demand for its wine yeast platform and
products.
Operating expenses, excluding stock-based compensation expenses, for FY2011 were
$4.4 million, compared to $3.6 million in FY2010. The increase in operating
expenses was attributed primarily to increases in salaries and wages,
amortization of capital assets, and travel expenses associated in part with
elevated product development, business development, and marketing activities.
Government funding in FY2011 decreased by $0.4 million from $0.8 million in
FY2010 due to reduced R&D activities conducted by the Company's subsidiary
Phyterra Bio Inc.
Liquidity and Outstanding Share Capital
As at August 31, 2011, the Company had cash and short-term investments of $4.2
million compared to $0.9 million as at August 31, 2010. As at August 31, 2011,
the Company had working capital of $3.9 million compared to $1.4 million as at
August 31, 2010.
As at December 29, 2011, Functional Technologies had 49,396,895 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 August 31, 2011 and the notes
thereto, together with the MD&A for the corresponding period, which are
available on the Company's website www.functionaltechcorp.com and on SEDAR at
www.sedar.com.
Forward-Looking Information
This news release contains forward-looking information (within the meaning of
Canadian securities legislation) about Functional Technologies Inc. and its
future plans. Forward-looking information relate to future events or future
performance and reflect management's expectations or beliefs regarding future
events rather than historical facts, and in this news release include the
statements (the "forward-looking statements") regarding: (1) the expectation for
additional key developments related to the Company's AP-yeasts; (2) the
expectation that collaborating with leading multinational firms in the food
processing and ingredients sectors will provide key opportunities to gain rapid
access to global production capacity and distribution networks; and (3) the
Company's expectation for volume and revenue growth in the upcoming winemaking
seasons, including expansion in the U.S., Europe and South America. The
forward-looking statements in this news release are subject to various risks,
uncertainties and other factors that could cause the Company's actual results or
achievements to differ materially from those expressed in or implied by
forward-looking statements. These risks, uncertainties and other factors
include, without limitation, uncertainty as to the Company's ability to achieve
the goals and satisfy the assumptions of management; uncertainty as to the
demand for the Company's products and the Company's ability to meet such demand;
and general economic factors and other factors that may be beyond the control of
the Company. Forward-looking statements are based on the opinions and
expectations of the Company's management at the time they are made, and the
Company does not assume any obligation to update its forward-looking statements
if those opinions or expectations, or other circumstances, should change.
Reference to the section entitled "Risks and Uncertainties" commencing on page
18 of the Company's management's discussion and analysis relating to the fiscal
year ended August 31, 2011, which is available on SEDAR at www.sedar.com.
About Functional Technologies Corp.
Functional Technologies develops and commercializes proprietary, advanced
yeast-based solutions to significant challenges in the food, beverage and
healthcare industries. The Company's platform improves the performance of innate
yeast functions, and prevents the formation of naturally occurring toxins and
contaminants that either affect final product quality or are classified by the
World Health Organization as probable human carcinogens. Functional
Technologies' lead technologies include yeasts that prevent and reduce the
formation of the foul-smelling hydrogen sulphide (H2S) and the carcinogens
acrylamide and ethyl carbamate (more commonly known as urethane), by-products of
food and beverage processing. These contaminants are found in many commonly
consumed items, such as fermented food products and alcoholic beverages, and
baked and fried foods. With a head office in Vancouver, Functional Technologies
Corp. has R&D operations in Prince Edward Island and Europe, as well as a U.S.
sales office in Napa Valley, California. For more information, please visit our
website at www.functionaltechcorp.com.
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