In 2003, Functional Technologies licensed a novel yeast enhancement technology from a prominent Canadian university that effectively reduces the production and content of EC in various fermented foods and beverages. EC is a well known, naturally occurring contaminant that was upgraded in 2007 to a Group 2A carcinogen --- the same carcinogen class as lead, creosotes, acrylamide and diesel exhaust --- by the WHO's International Agency for Research on Cancer (IARC). Ethyl carbamate is found in varying quantities in many commonly consumed fermented foods and beverages, e.g., wine, brandy, whiskey, sake, sherry, beer bread, and soy sauce, and is considered a significant health risk.
In 2006, the company opened a marketing and technical support office in Napa, California to lead the initial North American field trials of its EC-reducing yeast. In autumn of the same year, commercial wineries in California --- ranging from several of the largest wine producers in the world to small, highly respected boutique producers --- began trialing Functional Technologies' EC-reducing yeasts. These trials were followed by South American commercial winery trials.
Field results from both continents came back positive, with comparable sensory characteristics and fermentation kinetics, as well as ethyl carbamate reductions ranging as high as 76%--92% versus control yeast strains used under similar conditions. These trial protocols and results provided vital instructive and confirming data for the development of subsequent trials and advancement of the commercialization process.
In 2007, Functional Technologies expanded its business to include novel micro-algae technology through the acquisition of Phycobiologics Inc. This acquisition provided the company with a portfolio of promising micro-algae assets, a world-class management and operations team, and access to substantial government funding. Phycobiologics became a wholly owned subsidiary of Functional Technologies and was renamed Phyterra Bio. In addition, the acquisition immediately added an in-house research team with start-up to Fortune 500 level experience, and a research and product pipeline from highly promising research tracks.
The acquisition of Phycobiologics also marked the beginning of the company's transition of its operations, and much of its research and development team, to Prince Edward Island (PEI) in Atlantic Canada. The company's in-house production potential was advanced significantly in 2008 through the acquisition of a 36,000 sq.ft. production facility at Grahams Pond, PEI and a state-of-the-art pulse dryer.
In 2008, the company expanded its yeast portfolio through the licensing of proprietary hydrogen sulphide (H2S) reducing technology from the University of California at Davis. H2S is a colourless volatile gas that produces a distinctive, unpleasant noxious odour in wine, beer and other fermented beverages. H2S is one of the most common occurring sensory defects, and a significant problem in wine production worldwide. Through its subsidiary, Phyterra Yeasts Inc., the company began trialing its H2S- reducing yeasts in numerous wineries (including three of the top ten U.S. wine producers) during the fall 2009 harvesting season.
In November 2009, Phyterra Yeast received substantial government funding approvals to build a yeast production facility in PEI with expected capacity of 50,000 kilograms of active dry yeast per year (and potential for 150,000 kg). Supplementing this capacity will be third-party contract production.
Today, Functional Technologies' platform yeast technologies provide the company with highly effective proprietary solutions to two of the most widely recognized quality-control problems currently facing commercial wineries everywhere.
In addition, through its subsidiary Phyterra Bio, the company is also actively researching and developing novel healthcare products derived from micro-algae. The initial target markets for Phyterra Bio's micro-algae products include various aquaculture vaccine markets.