Fourth Quarter Highlights:

• Adjusted EBITDA for Q4 was a loss $1.2 million.
• Completes acquisition of European production facility.
• Receives $4.9 million funding from IKEA and Hydra Ventures (the
  corporate venture arm of adidas Group).

PORTLAND, OR, March 27, 2014 /PRNewswire/ – CRAiLAR Technologies Inc. (“CL” or
the “Company”) (TSXV: CL) (OTCQB: CRLRF), which produces and markets CRAiLAR Flax fiber The Friendliest Fiber On The Planet™, today reported sales of $0.4 million and a net loss of $3.2 million or
$0.07 per share for the fourth quarter ended December 28, 2013,
compared with nil sales and a net loss was $3.1 million or $0.07 per
share for Q4 2012. This quarter’s loss included a $1.2 million
write-down of feedstock inventory due to weather partially offset by a
$0.4 million bargain purchase gain from the acquisition of its European
production facility. Q4 2012 included a $0.6 million write-off of the
Company’s pilot scale decortication facility that was deemed not
commercially viable and a $0.3 million write-off of seed inventory. The
Company’s Adjusted EBITDA for the quarter was a loss of $1.2 million, a
reduction of $0.3 million from Q4 2012’s Adjusted EBITDA loss of $1.5
million. For further information regarding Adjusted EBITDA, including a
reconciliation of Adjusted EBITDA to net loss, see non-GAAP Financial
Measures below.

During the fourth quarter of 2013, the Company completed the acquisition
of a fiber dyeing facility in Belgium strategically located in Europe’s
flax growing region in a non-cash transaction through the assumption of
$1.2 million of debt payable over five years. The fiber dyeing facility
currently has the necessary equipment to perform the ezymatic
processing step and has the capacity to produce in excess of 280,000
pounds a week of CRAiLAR Flax fiber. Also, during the fourth quarter
the Company received $4.9 million of funding from IKEA and Hydra
Ventures (the corporate venture arm of the adidas Group AG (FRA:AGS).
The IKEA funding is a $3.0 million facility with a term of 30 months at
a low interest rate and is designated for working capital and
equipment. Along with the loan, IKEA signed a general supply agreement
that provides for exclusivity in certain domestic textile categories
and which requires minimum order quantities through 2022. The Hydra
funding is a $1.9 million equity investment.

For the year ended December 28, 2013, the Company reported sales of $0.6
million and a net loss of $15.2 million or $0.34 per share, compared
with nil sales last year and a net loss of $9.3 million or $0.22 per
share. This year’s loss includes a $4.6 million write-down of feedstock
and seed inventory and $2.1 million of interest. The Company’s Adjusted
EBITDA for the year was a loss of $6.3 million compared with an
Adjusted EBITDA loss of $5.4 million last year. The Adjusted EBITDA
loss increase from the prior year was largely due to increased spending
associated with the commissioning of the Company’s decortication
facility.

“The fourth quarter was a period of transition where accounting numbers
do not reflect the tremendous progress we made positioning the Company
for success,” stated Kenneth C. Barker, Chief Executive Officer. “We
now have the ability to produce high quality CRAiLAR Flax Fiber for our
customers and, for the first time, we have funding from highly regarded
brands that serve as an endorsment of our product and our potential. We
are now shipping CRAiLAR Flax Fiber to our customers as we optimize our
new production facility and we look forward to future investor
updates.”

Cash and cash equivalents and investments at December 28, 2013 were $1.2
million down from $2.9 million at December 31, 2012. The decrease in
cash equivalents of $1.7 million resulted from $8.1 million of cash
used in operations and $4.0 million of cash invested property and
equipment partially offset by $10.2 million of cash from financing
activities through the issuance of $7.4 million of convertible
debentures net of debenture costs, $1.9 million of equity securities,
$0.6 million of promissory notes and $0.2 million of common stock and
warrants.

The Company expects first quarter 2014 sales of $0.5 million, which is
double fiber sales for the fourth quarter 2013. Capacity was limited
during the first quarter as the plant was being configured to optimize
CRAiLAR production. The Company expects those modifications to be
complete in the second quarter and sales to more than double for that
quarter.

Non-GAAP Financial Measures

Regulation G, “Conditions for Use of Non-GAAP Financial Measures,” and
other provisions of the Securities Exchange Act of 1934, as amended,
define and prescribe the conditions for use of certain non-GAAP
financial information. We provide “Adjusted EBITDA,” which is a
non-GAAP financial measure. Adjusted EBITDA consists of net income
before (a) interest income (expense), net; (b) income tax provision
(benefit); (c) amortization of intangibles and impairment loss; (d)
depreciation and amortization; (e) share-based compensation expense;
(f) non-cash write-downs of equipment and inventory and (g) non-cash
rent expense.

The Company believes that this non-GAAP financial measure provides
important supplemental information to management and investors. This
non-GAAP financial measure reflect an additional way of viewing aspects
of the Company’s operations that, when viewed with the GAAP results and
the accompanying reconciliation to corresponding GAAP financial
measures, provides a more complete understanding of factors and trends
affecting the Company’s business and results of operations.

Management uses Adjusted EBITDA as a measure of the Company’s operating
performance because it assists in comparing the Company’s operating
performance on a consistent basis by removing the impact of items not
directly resulting from core operations. Internally, this non-GAAP
measure is also used by management for planning purposes, including the
preparation of internal budgets; for allocating resources to enhance
financial performance; for evaluating the effectiveness of operational
strategies; and for evaluating the Company’s capacity to fund capital
expenditures and expand its business. The Company also believes that
analysts and investors use Adjusted EBITDA as a supplemental measure to
evaluate the overall operating performance of developemental companies.
Additionally, lenders or potential lenders use Adjusted EBITDA to
evaluate the Company’s ability to repay loans.

This non-GAAP financial measure is used in addition to and in
conjunction with results presented in accordance with GAAP and should
not be relied upon to the exclusion of GAAP financial measures.
Management strongly encourages investors to review the Company’s
consolidated financial statements in their entirety and to not rely on
any single financial measure. Because non-GAAP financial measures are
not standardized, it may not be possible to compare these financial
measures with other companies’ non-GAAP financial measures having the
same or similar names. In addition, the Company expects to continue to
incur expenses similar to the non-GAAP adjustments described above, and
exclusion of these items from the Company’s non-GAAP measures should
not be construed as an inference that these costs are unusual,
infrequent or non-recurring.

---

The table below reconciles net loss to Adjusted EBITDA for the periods
presented (in thousands):

				For the thirteen weeks ended			For the fifty-two weeks ended
				December 28,	December 31,		December 28,	December 31,
				2013	2012		2013	2012
Net loss				($3,239)	($3,051)		($15,170)	($9,315)
Interest expense, net				$676	59		$2,059	100
Income tax (benefit) provision				–	–		–	–
Amortization and depreciation				$220	114		$856	279
EBITDA				($2,343)	(2,878)		($12,255)	(8,936)
Share-based compensation				$362	454		$2,005	2,398
Impairment loss on inventory				$1,219	304		$4,642	304
Write down of equipment				–	594		$13	594
Rent inducement expense				$37	120		$152	120
Fair value adjustment to derivative liabilities				–	(91)		($453)	98
Bargain purchase				($426)	–		($426)	–
Adjusted EBITDA				($1,151)	(1,498)		($6,322)	($5,422)

Conference Call

A conference call to discuss the company’s fourth quarter and year ended
December 28, 2013 results is scheduled to begin at 2:00 pm Pacific
Daylight Time (5:00 pm Eastern Daylight Time) on Thursday, March 27,
2014. Participants may access the call by dialing 877-407-3982 (North
America) or 201-493-6780 (international), 5 to 10 minutes before the
call and ask for the CRAiLAR Technologies Inc. Fourth Quarter 2013
Conference Call. In addition, the call will be broadcast live over the
Internet and accessible through website: http://public.viavid.com/index.php?id=108405. If you are unable to participate during the live call, an audio
replay will be available until midnight on April 10, 2014 by dialing
877-870-5176 or 858-384-5517 for international callers, and entering
pin number 13579006. A transcript will be available approximately 24
hours after the call on CRAiLAR’s investor page.

About CRAiLAR Technologies Inc.

CRAiLAR(R) Technologies Inc. offers cost-effective and environmentally
sustainable natural fiber in the form of flax, hemp and other bast
fibers for use in textile, industrial, energy, medical and composite
material applications. Produced using a fraction of water and chemical
inputs compared with other natural fibers, CRAiLAR Flax is the newest
natural fiber introduction to the market in decades. The Company
supplies its CRAiLAR Flax to HanesBrands, Georgia-Pacific, Brilliant
Global Knitwear, Tuscarora Yarns, Target Corp. and Kowa Company for
commercial use, and to Levi Strauss & Co., Cintas, Carhartt, Ashland,
PVH Corp., Cotswold Industries, Cone Mills and Lenzing for evaluation
and development. The Company was founded in 1998 as a provider of
environmentally friendly, socially responsible clothing. For more
information, visit www.crailar.com.

Neither the TSX Venture Exchange Inc. 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.

Safe Harbor Statement

This news release includes certain statements that may be deemed
“forward-looking statements”. All statements in this news release,
other than statements of historical facts, are forward-looking
statements. Forward-looking statements or information are subject to a
variety of risks and uncertainties which could cause actual events or
results to differ from those reflected in the forward-looking
statements or information and including, without limitation, risks and
uncertainties relating to: any market interruptions that may delay the
trading of the Company’s shares, technological and operational
challenges, needs for additional capital, changes in consumer
preferences, market acceptance and technological changes, dependence on
manufacturing and material supplies providers, international
operations, competition, regulatory restrictions and the loss of key
employees. In addition, the Company’s business and operations are
subject to the risks set forth in the Company’s most recent Form 10-K,
Form 10-Q and other SEC filings which are available through EDGAR at www.sec.gov. These are among the primary risks we foresee at the present time. The
Company assumes no obligation to update the forward-looking statements.

Crailar Technologies Inc.
Consolidated Balance Sheet
(in thousands, except share and per share amounts)
		December 28,		December 31,
		2013		2012
ASSETS
Current assets:
	Cash and cash equivalents	$1,193		$2,877
	Receivables	223		72
	Inventory	945		2,905
	Prepaid expenses and deposits	291		107
		2,652		5,961
Deferred Debt Issuance Costs		1,442		1,024
Property and Equipment, net		17,240		13,249
Intangible Assets, net		156		95
		21,490		20,329
LIABILITIES
Current
	Accounts payable	2,378		1,406
	Accrued liabilities	2,342		1,481
	Unearned revenue	248		–
	Notes payable	477		–
	Current portion of loans	634		–
	Derivative liabilities	–		488
		6,079		3,375
Deferred Income Tax Liability		199		–
Loans Payable		551		–
Long Term Debt		16,675		10,051
		23,504		13,426
Stockholders’ Equity (Deficit)
Capital Stock
	Common stock, authorized: 100,000,000 common shares without par value
	Issued and outstanding : 47,806,031 common shares	34,889		32,617
	(December 31, 2012 – 44,239,198)
Subscription receivable		–		(64)
Additional Paid-in Capital		9,934		7,061
Accumulated Other Comprehensive Income (Loss)		585		(459)
Deficit		(11,485)		(11,485)
Deficit accumulated in the development stage		(35,938)		(20,767)
		(2,014)		6,903
	Total liabilities and stockholders’ equity	$21,490		$20,329
Crailar Technologies Inc.
Comparative Consolidated Income Statement
(in thousands, except share and per share data)
				For the thirteen week period ended			For the year ended
				December 28,	December 31,		December 28,	December 31,
				2013	2012		2013	2012
Revenues				$389	–		$587	–
Cost of sales:
Materials and direct production costs				$247	–		470	–
Facility commissioning costs				$437	–		1,897	–
Depreciation				$195	–		681	–
Impairment loss on inventory				$1,219	–		4,642	–
Gross loss				(1,709)	–		(7,103)	–
Expenses
	Marketing and promotion			$108	113		663	672
	Amortization and depreciation			$25	114		175	279
	General and administrative			$1,015	1,943		5,681	6,609
				$1,149	2,171		6,519	7,560
Loss before other items				(2,857)	(2,171)		(13,622)	(7,560)
Other income (expense):
	Research and development			(132)	(15)		(355)	(660)
	Gain on disposal of assets			–	–		1	–
	Interest			(676)	(58)		(2,059)	(100)
	Write off of equipment			–	(594)		(13)	(594)
	Impairment loss on inventory			–	(304)		–	(304)
	Fair value adjustment derivative liabilities			–	91		453	(98)
	Bargain purchase			$426	–		426	–
				(382)	(880)		(1,548)	(1,756)
Net loss				(3,239)	(3,051)		(15,170)	(9,315)
Loss per share (basic and diluted)				($0.07)	($0.07)		($0.34)	($0.22)
Weighted average number of common shares				44,730,439	44,174,814		44,508,011	43,009,226
Crailar Technologies Inc.
Consolidated Statement of Cash Flows
(in thousands)
							For the year ended
							December 28,	December 31,
							2013	2012
Cash flows used in operating activities
Net loss							($15,170)	($9,315)
Adjustments to reconcile net loss to net cash from operating activities
Accretion expense							128	–
Amortization and depreciation							855	279
Amortization of deferred debt issuance costs							347	90
Fair value adjustment of derivative liabilities							(453)	98
Gain on disposal of assets							(1)	–
Rent							152	120
Stock-based compensation							2,005	2,398
Write off of equipment							13	594
Impairment of inventory							4,642	304
Bargain purchase							426	–
Changes in working capital assets and liabilities								–
(Increase) decrease in accounts receivable							(87)	79
Increase in inventory							(2,683)	(2,172)
Increase in prepaid expenses							(184)	(60)
Increase in accounts payable							971	1,171
Increase in unearned revenue							248	–
Increase in accrued liabilities							710	522
Net cash used in operating activities							(8,080)	(5,894)
Cash flows used in Investing activities
Sale of equipment							36	–
Acquisition of property and equipment							(3,908)	(10,420)
Acquisition of intangible assets							(89)	(30)
Net cash flows used in investing activities							(3,961)	(10,450)
Cash flows from financing activities
Issuance of capital stock and warrants							240	3,949
Net proceeds from promissory notes							621	–
Proceeds from private placement							1,879	–
Proceeds from convertible debentures							8,307	10,051
Deferred issuance costs							(887)	(1,084)
Net cash flows from financing activities							10,161	12,916
Effect of exchange rate changes on cash and cash equivalents							197	(36)
Increase (decrease) in cash and cash equivalents							(1,684)	(3,463)
Cash and cash equivalents, beginning							2,877	6,341
Cash and cash equivalents, ending							$1,193	$2,877
Supplemental disclosures of cash flow information:
Cash paid for interest							1,348	9

SOURCE Crailar Technologies Inc.