June 2014

SHAPE FOODS, INC. Western Canadian Functional Food Ingredients:

Strategies to Manage Costs and Enhance Products

Shape Foods, Inc.

Raison d’etre: Process flax products to replenish the

diminished dietary essential omega 3 fat alphalinolenic acid (ALA) in the human food

supply.

Why Flax?

Shape Foods • Located in Brandon MB. • Manufacturer of shelf stable cold pressed flax oil

and partially defatted flax meal. • Flaxseed processed:

• Conventional and certified organic brown flax. • Conventional and certified organic yellow flax.

• Toll processing: • Conventional and certified organic hemp.

• Shape Foods has developed a unique proprietary technology to manufacture the most stable cold pressed flax seed oil for human consumption available.

• The high omega-3 content of flax oil is very difficult to extract as a cold pressed oil and protect the nutritional value, have a shelf stable durable life of more than a year while maintaining a good flavour profile.

PROPRIETARY PROCESS

PROPRIETARY PROCESS

• Our process maintains all the natural healthy ingredients and the quality of the flax oil. This is accomplished by removing impurities including herbicide and pesticide residues.

• Our process does not use chemicals, additives or preservatives.

• The flax oil is kept hermetically shielded from air, heat, light, moisture and other agents that would degrade the oil.

Shape Foods Certifications • GMP / HACCP • SQF Pending • Certified Organic • Kosher • Halal

Shape Foods Product Policies • Non GMO. • All natural.

• Natural flavours.

• Allergen free. • Gluten free.

• Flax oils are herbicide and pesticide free. • Non toxin use:

• No food contact substances that contains Benzo[a]pyrene (BaP), Benzoperylene (BP), Phthalates, Acetaldehyde, Bisphenol-A and Dioxins.

Shape Foods Flax Seed Products And There Applications As Functional Ingredients In The

Food Industry. • Flax Oil. • Flax Seed Cake. • Flax Meal. • Flax Stone Ground Flour. • Flax Sediment Butter. • Flavoured Flax Oils. • Flax Oil Blends.

Flax oil Technical Info

Flax Oil Fat Technical Info

Flax Oil ALA Omega 3 Content • Flax oil averages 57% ALA omega 3. • Canadian Flax has higher ALA amounts due to

impact of more northern latitude. • A tablespoon of flax oil is 15mL / 14g which

averages 8000mg ALA omega 3 per serving. • Some flaxseed cultivars can have over 70%

ALA such as Viterra’s NuLin.

• Pasteurization stability. • Use in various medium.

• Increasing or decreasing stability. • Emulsions

• Increasing or decreasing bioavailability

• Mixing consideration • Low shear vs high shear

• Homogenization

• Process stage insertion

Shape Foods Flax Oil as a Functional Food Ingredient for Products with Health Benefits

Flax oil ingredient use considerations • Handling considerations

• Light exposure • Photoxidation issues

• Modified atmosphere protection (MAP) • Auto-oxidation rates

• Solvent actions • Seal material • Hose material

• Shelf life • Flavour loss

Canada Omega 3 Content Claim Threshold

USA Flax Oil ALA Omega 3 Content Claim Threshold

USFDA Final Ruling April 2014

Flax Oil Ingredient Uses Examples

• Omega 3 Content Claim. • Currently in use for:

• Flax Milk. • Soya Milk. • Margarine. • Salad Dressings. • Nutraceuticals.

Flax Oil Use Issues

• Flax oil’s high ALA content can thin the blood. • Consult a physician if taking blood thinner medication. • Pregnant women in their 3rd trimester reduce intake to

limit risk of hemorrhage during birth.

Shape Foods Flax Meal as a Functional Food Ingredient

for Products with Health Benefits • 2 plus year shelf life. • Applicable USFDA Content Claims:

• Omega 3 ALA Content Claim. • Dietary Fibre Content Claim. • Protein Content Claim.

• SDG Lignan Functional Ingredient.

Flax Meal Technical Info

Flax Meal Ingredient Uses • Baking Ingredient at 12% (USFDA) of Recipe:

• Thickener and water binding agent. • Improves rheological characteristics. • Extends shelf life.

• Rational for USFDA 12% flax meal ingredient limit. • Bulk regulator action of flax meal; absorbs 13X weight in

water.

• risk of blockage in elderly with insufficient water intake with flax meal.

Flax Constituent Constraints in Meal • Cyanogenic glycosides.

• Very high in green seeds. • Issues with pigs fed just flax seeds in the 1930s. • Conversion enzyme beta glycosidase.

• Linamarin to linostatin to neolinostatin to HCN. • Beta glycosidase destroyed by 100C for 10 min.

• Cadmium. • Higher in clay soils. • Terminal moraines deposits from last ice age.

Improving the Bottom Line by Developing Flax Constituent Ingredient Markets.

• Flax seed cake and meal constituent opportunities: – Insoluble dietary fibre lignan extraction for:

• Nutraceutical use. • Pharmaceutical use.

– Soluble dietary fibre extraction for guar gum alternative.

– Protein extraction for high value plant protein.

Flax Oil Based - Omega 3 enriched:

Available on the Market and in Development:

Mayonnaise Salad Dressings Sauces Snack Bars Yogurt Cheese Cottage Cheese Peanut Butter Sour Cream Pet Food

OTHER PRODUCT POTENTIAL

Meat Fortification • Meat is a substantial part of the diet and a natural

medium for omega-3 fortification. • Meat omega-3 levels have diminished over the last

century due to livestock rearing and feeding practices.

Granny’s new Turkey Deli Roast (Seasoned and Smoked) is Reduced in Sodium, infused with Omega-3, and No Trans Fat. Also, it is approved by the Heart & Stroke Foundation under their Health Check program.

PRODUCTS IN THE MARKET

• Shape Foods Flax Oil is used in the production of multiple flax beverage products including Flax Milk.

PRODUCTS IN THE MARKET

WhiteWave Foods, part of Dean Foods is one of the largest producers of soymilk in North America. Shape Foods flax oil is used in their Omega-3 enriched Silk Soymilk.

PRODUCTS IN THE MARKET

PRODUCTS IN THE MARKET

Nippon Flour Mill is one of the largest food processing companies in Japan. Shape Foods provides bulk flax oil for their line of flax oil products

(C-Pro)

PRODUCTS IN THE MARKET

PRODUCTS IN THE MARKET

Smart Balance, part of Boulder Brands, produces a number of products that are enriched with Omega-3 from flax oil.

Clear Valley® Omega-3 oil

• Clear Valley® Omega-3 oil is a unique canola-flax oil blend that provides food manufacturers with a method to add a source of Alpha-linolenic Acid (ALA) omega-3 to shelf stable products without affecting product taste, mouth-feel or shelf life. This heart-healthy oil may allow food manufactures to make an ALA omega-3 Nutrient Content Claim, creating an opportunity for companies to capture market share and/or increase product pricing.

• Clear Valley® Omega-3 canola oil allows food manufacturers to create healthier options so consumers can easily add omega-3 to their diets. Growing demand for omega-3 enriched products creates an opportunity for food manufacturers to meet the health demands of consumers with their products.

Shape Foods Flax Oil is used exclusively by Cargill in their Clear Valley® Omega-3 oil

PRODUCTS IN THE MARKET

Flavoured Flax Oils Dessert Flavours Culinary Flavours

Flax Meal Based - Omega 3 enriched:

Available on the Market and in Development: Cereals Breads Croutons Pancakes Pitas Tortillas Pasta Pizza Crusts Pet Food

OTHER PRODUCT POTENTIAL

PRODUCTS IN THE MARKET

Shape Foods Flax Meal is used in the production of pasta by multiple companies, including Eden Foods.

PRODUCTS IN THE MARKET

Shape Foods Flax Meal has been trialed successfully in the formulation of baked goods such as breads, muffins, and tortillas.

International Markets & Opportunities

Key Current Markets Pending Markets Target Markets

Shape Foods Production Capabilities • Bulk oil for food blends, ingredient use,

microencapsulation and gel caps • Bulk Flax Oil in 1000L totes or 200L barrels • Brand and/or private label Flax Oil in 250ml and 500ml bottles • Pure or flavored Flax Oils • Bulk Flax Meal in 750 kg totes or 50 lb bags • Brand and/or private label Flax Meal in 1lb bags

PRODUCTS AND CAPABILITIES

Putting Omega-3 back in the food supply!!

Not just good…Essential!