Functional Technologies Announces Third Quarter 2011 Financial Results

Functional Technologies Corp. (TSX VENTURE:FEB) (the "Company") today reported
operational and financial results for the third quarter ended May 31, 2011.
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 with the significant achievements accomplished in recent months, which
demonstrates our focus in driving our technologies towards revenue. We continue
to direct significant effort to attaining considerable revenue growth from our
H2S-preventing wine yeasts and developing strategic partnerships across several
food sectors for our acrylamide-preventing yeasts." 


Q3 2011 Operating Highlights 



--  Announced the renewal of the Company's distribution agreement with
    Beverage Supply Group ("BSG"), including an increase of more than 350%
    in the minimum purchase volume of Phyterra(TM)-branded H2S-preventing
    wine yeasts in the U.S. market for the upcoming 2011 season. The
    guaranteed sales represented by this amended agreement will be supported
    by technical sales and resources from Functional Technologies, and are
    expected to be complemented by direct sales initiatives of the Company
    as it also expands commercially in Europe and South America. 
--  Entered into a collaboration agreement with an undisclosed, leading
    multinational company to confirm the performance characteristics of its
    acrylamide-preventing ("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., 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.  
--  Strengthened the Company's Boards with the appointment of Mr. Richard
    Sherman, an Advisor to the Company at the time, to its Board of
    Directors, and Mr. John Campbell and Mr. Michael Liggett to its Advisory
    Board. Mr. Sherman possesses extensive experience in numerous life
    science sectors both as legal counsel and as a principal structuring
    joint ventures, licensing agreements and mergers and acquisitions (M&A).
    Mr. Campbell possesses over 29 years of extensive experience in the
    investment industry as well as significant expertise in M&A, and Mr.
    Liggett is a chartered accountant and seasoned biotechnology executive
    experienced in executing strategic collaborations, M&A, and financings. 



Operating Highlights Subsequent to Quarter-End



--  Announced Functional Technologies has entered into an agreement to
    research and evaluate its AP yeasts in a second food sector, with an
    undisclosed global company (the "Collaboration Partner") considered one
    of the leading companies in the development, manufacturing, marketing
    and distribution of snacks and other food products. This initial
    agreement enables collaboration between the two companies on proof-of-
    concept, pre-pilot scale trials, as well as preliminary review and
    development of production protocols. This stage of development and
    testing are a condition precedent to full scale pilot trials and
    commercial negotiations, facilitating meaningful discussions to
    determine how the Company's technologies and/or services may be employed
    by the Collaboration Partner. 
--  Received gross proceeds of $3.3 million from the exercise of 4.1 million
    common share purchase warrants, which were exercisable at a price of
    $0.80 per warrant until June 18, 2011. All associated warrants not
    exercised have expired. 
--  Appointed Mr. James D. Pratt, an accomplished food industry executive,
    to the position of Chief Business Officer with responsibilities
    including the cultivation of strategic partnerships and commercial
    relationships in new food sectors, increasing the scope and breadth of
    industry applications and markets for the Company's products. Mr. Pratt
    possesses more than 24 years of executive experience in the food
    industry and most recently was CEO of Sepp's Food Group, a multinational
    manufacturer and provider of frozen foods, including private label
    "health and well-being" frozen breakfast products. 
--  Appointed Mr. Alan Maddox, a food industry veteran possessing more than
    30 years of sales and executive experience in international business and
    food industries including several senior sales roles at McCain Foods
    Ltd., to the Company's Advisory Board. 



Q3 2011 Financial Results

The Company incurred a net loss of $1.1 million for the three months ended May
31, 2011, compared to a net loss of $0.8 million for the three months ended May
31, 2010, representing an increase of $0.3 million due primarily to an increase
in operating expenses and a decrease in government assistance.


Operating expenses, excluding stock-based compensation expenses, for Q3 2011
were $1.0 million, compared to $0.9 million in Q3 2010, consisting primarily of
office and general expenses, professional fees, research and development costs,
marketing efforts, salaries and wages, and the amortization of capital assets.
The increase in operating expenses was attributed primarily to modest increases
in depreciation of capital assets, travel and meal expenses and salaries and
wages, associated in part with elevated development, business development, and
marketing activities.


Liquidity and Outstanding Share Capital 

As at May 31, 2011, the Company had cash and short-term investments of $2.3
million compared to $0.9 million as at August 31, 2010. As at May 31, 2011, the
Company had working capital of $3.0 million compared to $1.4 million as at
August 31, 2010. Subsequent to quarter-end, Functional Technologies received
gross proceeds of $3.3 million associated with the conversion of 4.1 million
common share purchase warrants. 


As at July 28, 2011, Functional Technologies had 48,796,895 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 May 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 Statements

This news release contains forward-looking statements about Functional
Technologies Inc. and its future plans. Forward-looking statements are
statements that are not historical facts, and in this news release include the
statements regarding: (1) the Company's expectation for volume and revenue
growth in the upcoming winemaking seasons; (2) the expectation for additional
key developments related to the Company's AP-yeasts; (3) the extended and
amended agreement with BSG that includes an increase in the minimum purchase
volume of Phyterra's H2S-preventing wine yeasts to U.S.; (4) the Company's
expected commercial expansion in the U.S., Europe and South America; and (5) 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. 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
19 of the Company's management's discussion and analysis relating to the fiscal
quarter ended May 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.