UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ X] ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF ~~THE~~ THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 2728, ~~2014~~ 2015

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~_____~~_____to to _____

Commission File Number: 000-50367

CRAILAR TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

British Columbia	~~98-0359306~~	98-0359306
(State or other jurisdiction of incorporation or organization)	~~(I.R.S. Employer Identification No.)~~	(I.R.S. Employer Identification No.)
305-4420 Chatterton Way
Victoria, British Columbia, Canada	V8X 5J2
(Address of principal executive offices)	(Zip Code)

305-4420 Chatterton Way
Victoria, British Columbia, Canada		V8X 5J2
(Address of principal executive offices)		(Zip Code)

(250) 658-8582
Registrant’s telephone number, including area code

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X] ] No [ [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X] ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. 66,378,003 ~~shares~~ shares of common stock as of ~~November~~May 1015, ~~2014~~2015.

CRAILAR TECHNOLOGIES INC.

Quarterly Report On Form 10-Q For The Quarterly Period Ended ~~September~~March 2728, ~~2014~~2015

INDEX

PART I – FINANCIAL INFORMATION		4
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1713
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2822
Item 4.	Controls and Procedures	2822
PART II – OTHER INFORMATION		2922
Item 1.	Legal Proceedings	2922
Item 1A.	Risk Factors	2923
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2923
Item 3.	Defaults upon Senior Securities	2923
Item 4.	Mine Safety Disclosures	2923
Item 5.	Other Information	2923
Item 6.	Exhibits	2923

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Forward-looking statements in this quarterly report include, among others, statements regarding our capital needs, business plans and expectations. Such forward-looking statements include, but are not limited to, statements with respect to the following:

•	our need for additional financing;
•	our ability to fully implement our business plan; and
•	our ability to effectively manage our growth; and

Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined in our annual report on Form 10-K for the year ended December 2927, ~~2013~~2014, this quarterly report on Form 10-Q, and, from time to time, in other reports that we file with the Securities and Exchange Commission (the “SEC”). These factors may cause our actual results to differ materially from any forward-looking statement. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

The following unaudited interim financial statements of Crailar Technologies Inc. (~~formerly Naturally Advanced Technologies, Inc.) (~~sometimes referred to as “we”, “us” or the “Company”) are included in this quarterly report on Form 10-Q:

	Page
Consolidated Balance Sheets	5
Consolidated Statements of Operations	6
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8

CRAiLAR ~~Technologies~~TECHNOLOGIES ~~Inc~~INC. ~~Consolidated~~CONSOLIDATED ~~Balance~~BALANCE ~~Sheets~~ SHEETS (InExpressed in thousands US Dollars) (Unaudited)

		September 27,			December 28,
			March 28,			December 27,
		2014			2013
	Notes		2015			2014
		(Unaudited)
ASSETS
ASSETS
Current assets
Current
Cash and cash equivalents		$	862		$	1,196
Cash and cash equivalents	$	4,789,968		$	1,193,365
Receivable			1,468			3,107
Accounts receivable		1,515,891			223,105
Inventory	2		618			449
Inventory (Note 2)		842,029			945,040
Prepaid expenses and deposits			533			336
Prepaid expenses and deposits		225,805			290,872
			3,481			5,088
		7,373,693			2,652,382
Deferred debt issuance costs	5		872			967
Deferred Debt Issuance Costs (Note 5)		1,115,283			1,442,023
Property and equipment, net	3		9,547			10,013
Property and Equipment, net (Note 3)		17,820,415			17,240,012
Intangible assets, net	4		123			129
Intangible Assets, net (Net 4)		138,305			155,545
TOTAL ASSETS		$	14,023		$	16,197
	$	26,447,696		$	21,489,962
LIABILITIES
LIABILITIES
Current liabilities
Current
Accounts payable		$	1,700		$	2,017
Accounts payable	$	1,868,208		$	2,377,901
Accrued liabilities			1,459			1,224
Accrued liabilities		1,735,113			2,342,153
Unearned revenue			276			264
Unearned revenue		270,657			247,655
Current portion of loans payable	5		430			546
Notes Payable (Note 6)		-			476,614
Current portion of long term debt			144			161
Current Portion of loans payable (Note 8)		527,565			634,486
Derivative liabilities			698			872
Current portion of long term debt (Note 5)		142,756			-
			4,707			5,084
Derivative liabilities (Note 7)		3,621,786			-
Non-current liabilities
		8,166,085			6,078,809
Loans payable			333			361
Deferred Income Tax Liability		184,168			199,131
Long term debt	5		16,694			18,024
Loans Payable (Note 8)		413,050			551,190
TOTAL LIABILITIES			21,734			23,469
Long Term Debt (Note 5)		18,780,235			16,674,686
STOCKHOLDERS’ DEFICIT
		27,543,538			23,503,816
Capital stock	6
STOCKHOLDERS' DEFICIT
Authorized: unlimited common shares without par value Issued and outstanding: 66,378,003 common shares (December 27, 2014 – 66,378,003 common shares)			39,665			39,665
Capital Stock (Note 7) Authorized: 100,000,000 common shares without par value Issued and outstanding : 50,428,003 common shares (December 28, 2013 - 47,806,031)		40,226,287			34,889,370
Additional paid-in capital			15,603			15,219
Additional Paid-in Capital		10,775,389			9,934,322
Accumulated other comprehensive income			838			1,483
Accumulated Other Comprehensive Gain (Loss)		1,338,113			585,301
Deficit			(63,817	)		(63,639	)
Deficit		(53,435,631	)		(47,422,847	)
			(7,711	)		(7,272	)
		(1,095,842	)		(2,013,854	)
		$	14,023		$	16,197
	$	26,447,696		$	21,489,962

~~The~~Nature ~~accompanying~~and ~~notes~~continuance ~~are~~of anoperations ~~integral~~(Note ~~part~~1) ~~of these~~Commitments ~~consolidated~~(Note ~~financial~~9) ~~statements.~~

5The accompanying notes are an integral part of these consolidated financial statements

~~CRAiLAR~~5 ~~Technologies Inc. Consolidated Statements of Operations (In US Dollars) (Unaudited)~~

		Thirteen week			Thirteen week			Thirty nine week			Thirty nine week
		period ended			period ended			period ended			period ended
		September 27,			September 27,			September 27,			September 28,
		2014			2013			2014			2013
Revenues	$	1,158,587		$	15,438		$	2,336,601		$	197,814
Cost of sales
Materials and direct product production costs		1,031,896			21,936			2,076,601			222,755
Fixed Overhead		74,345			193,239			249,329			356,427
Facility commissioning costs		88,810			149,283			591,618			356,410
Depreciation		115,015			226,277			350,374			483,624
Impairment Loss on Inventory		-			2,548,827			-			3,422,582
		1,310,066			3,139,562			3,267,922			4,841,798
Gross loss		(151,479	)		(3,124,124	)		(931,321	)		(4,643,984	)
Expenses
Marketing and promotion		104,600			172,979			280,610			605,923
Amortization and depreciation		26,193			62,384			76,619			159,755
General and administrative		1,172,722			1,555,308			3,586,743			5,354,580
		1,303,515			1,790,671			3,943,972			6,120,258
Loss before other items		(1,454,994	)		(4,914,795	)		(4,875,293	)		(10,764,242	)
Other income (expense):
Accretion expense		(63,884	)		-			(501,152	)		-
Research and development		(42,079	)		(130,332	)		(159,159	)		(223,288	)
Interest		(562,936	)		(588,028	)		(1,627,344	)		(1,382,879	)
Gain on disposal of assets		-			-			-			790
Gain on debt settlement		-			-			234,354			-
Write down of equipment		-			(13,368	)		-			(13,368	)
Write down of inventory		-			-			-			-
Fair value adjustment derivative liabilities		651,657			(27,695	)		915,810			452,518
		(17,242	)		(759,423	)		(1,137,491	)		(1,166,227	)
Net loss	$	(1,472,236	)	$	(5,674,218	)	$	(6,012,784	)	$	(11,930,469	)
Other comprehensive income (loss)
Exchange differences on translating to presentation currency		1,239,434			(443,006	)		1,338,113			304,688
Comprehensive loss	$	(232,801	)	$	(6,117,224	)	$	(4,674,671	)	$	(11,625,781	)
Net loss per share (basic and diluted)	$	(0.02	)	$	(0.13	)	$	(0.11	)	$	(0.27	)
Weighted average number of common shares outstanding		59,778,003			44,472,698			52,952,822			44,421,148

CRAiLAR TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in thousands US Dollars except per share amounts)
(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

			Period ended
			March 28,			March 29,
	Notes		2015			2014


Revenues		$	1,727		$	435

Cost of Sales
Materials and direct production costs			1,489			360
Fixed overhead			69			98
Facility commissioning costs			-			251
Depreciation			209			104
			1,767			813

Gross loss			(40	)		(378	)

Expenses
Marketing and promotion			127			83
Amortization and depreciation			18			24
General and administrative			1,034			1,235
			(1,179	)		(1,342	)

Loss before other items			(1,219	)		(1,720	)

Other income (expenses):
Accretion expense	5		(59	)		(262	)
Interest			(534	)		(541	)
Research and development			(61	)		(53	)
Fair value adjustment derivative liabilities			174			-
Exchange gain			1,521			-
			1,041			(856	)

Net loss			(178	)		(2,576	)

Other comprehensive (loss) income
Exchange differences on translating to presentation currency			(645	)		580

Comprehensive loss		$	(823	)	$	(1,996	)

Loss per share (basic and diluted)			(0.00	)		(0.05	)
Weighted average number of common shares outstanding			66,378,003			48,188,001

6The accompanying notes are an integral part of these consolidated financial statements

~~CRAiLAR~~6 ~~Technologies Inc. Consolidated Statements of Cash Flows (In US Dollars) (Unaudited)~~

		For thirty-nine week			For thirty-nine week
		period ended			period ended
		September 27, 2014			September 28, 2013
Cash flows used in operating activities
Net loss	$	(6,012,784	)	$	(11,930,469	)
Adjustments to reconcile net loss to net cash from operating activities
Amortization and depreciation		426,993			875,295
Accretion of debt and amortization of deferred debt issuance costs		823,663			324,277
Fair value adjustment of derivative liability		(915,810	)		(452,518	)
Gain on disposal of assets		-			(790	)
Rent inducement		24,641			114,199
Stock-based compensation		841,067			1,642,532
Gain on settlement of debt		(234,354	)		-
Write down of equipment		-			13,368
Write down of inventory		-			3,422,582
Bargain Purchase		-			-
Gain on foreign exchange		-			-
Changes in working capital assets and liabilities
(Increase) decrease in accounts receivable		(1,292,786	)		33,262
Decrease (increase) in inventory		103,011			(2,936,831	)
Decrease (increase) in prepaid expenses		65,067			(164,910	)
(Decrease) increase in accounts payable		(341,274	)		607,870
Increase in accrued liabilities		145,704			958,767
Net cash used in operating activities		(6,366,862	)		(7,493,366	)
Cash flows used in investing activities
Purchase of property and equipment		(1,092,376	)		(2,734,667	)
Acquisition of intangible assets		(20,692	)		(89,323	)
Net cash flows used in investing activities		(1,113,068	)		(2,823,990	)
Cash flows from financing activities
Issuance of capital stock and warrants		9,060,461			239,746
Promissory notes payable		(661,452	)		-
Loans payable		(186,070	)		-
Proceeds from convertible debenture		-			8,143,108
Proceeds from long term debt		2,999,983			-
Deferred issuance costs for convertible debenture		(52,114	)		(875,981	)
Net cash flows from financing activities		11,160,808			7,506,873
Effect of exchange rate changes on cash and cash equivalents		(84,275	)		280,247
Increase (decrease) in cash and cash equivalents		3,596,603			(2,530,236	)
Cash and cash equivalents, beginning		1,193,365			2,877,210
Cash and cash equivalents, ending	$	4,789,968		$	346,974
SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH FINANCING AND INVESTING ACTIVITIES:
Cash paid for interest	$	995,594		$	277,397
Capital stock issued in settlement of accounts payable and accruals	$	632,376		$	-
Capital stock issued as share issue costs	$	131,744		$	-

CRAiLAR TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands US Dollars)

The accompanying notes are an integral part of these consolidated financial statements.

		Period ended
		March 28,			March 29,
		2015			2014
Cash flows used in operating activities
Net loss	$	(178	)	$	(2,576	)
Adjustments to reconcile net loss to net cash from operating activities
Amortization and depreciation		227			128
Amortization of debt discount		59			262
Amortization of deferred debt issuance costs		95			106
Fair value adjustment of derivative liability		(174	)		-
Rent		(8	)		(8	)
Stock-based compensation		384			71
Gain on foreign exchange		(1,521	)		-
Changes in working capital assets and liabilities
Decrease (increase) in accounts receivable		1,612			(599	)
Increase (decrease) in inventory		(208	)		32
Increase in prepaid expenses		(222	)		(208	)
Increase (decrease) in accounts payable		(419	)		234
Increase in accrued liabilities		215			344
Increase in deferred revenue		12			-
Increase in loan payable		-			6
Net cash used in operating activities		(126	)		(2,208	)

Cash flows used in investing activities
Purchase of property and equipment		(257	)		(554	)
Acquisition of intangible assets		(7	)		(20	)
Net cash flows used in investing activities		(264	)		(574	)

Cash flows provided by (used in) financing activities

Payment of loans		(31	)		-
Loans payable		-			2,136
Proceeds from private placement, net of issue costs		-			3,079
Deferred issuance costs		-			(11	)
Net cash flows provided by (used in) financing activities		(31	)		5,204

Effect of exchange rate changes on cash and cash equivalents		87			252

Change in cash and cash equivalents		(334	)		2,674

Cash and cash equivalents, beginning		1,196			1,193

Cash and cash equivalents, ending	$	862		$	3,867

SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH FINANCING ACTIVITIES:

Capital stock issued as share issue costs	$	-		$	132
Cash paid for interest		15			6,261
Cash paid for income taxes		-			-

7The accompanying notes are an integral part of these consolidated financial statements

~~CRAiLAR~~7 ~~Technologies Inc. Notes to Consolidated Financial Statements September 27, 2014 (Unaudited)~~

1CRAiLAR TECHNOLOGIES INC. ~~Basis~~NOTES ofTO ~~Presentation~~CONSOLIDATED FINANCIAL STATEMENTS MARCH 28, 2015 (In Thousands US Dollars except per share amounts)

These unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial reporting and the rules and regulations of the Securities and Exchange Commission1. ~~They~~Basis do not include all information and footnotes required by United States generally accepted accounting principles (“U.S. GAAP”) for complete financial statement disclosure. The interim consolidated financial statements have been prepared on a consistent basis with the audited consolidated financial statements for the year ended December 28, 2013, included in the Company’s Form 10-K filed with the U.S. Securities and Exchange Commission. Operating results for the thirty-nine week period ended September 27, 2014 are not necessarily indicative of the results that may be expected for the year ending December 27, 2014. These interim unaudited consolidated financial statements should be read in conjunction with the information included in the Company’s Form 10-K filed on March 28, 2014 with the U.S. Securities and Exchange Commission.Presentation

~~Effective~~These ~~fiscal~~interim ~~2013,~~unaudited consolidated financial statements of the Company ~~began~~have tobeen ~~report~~prepared ~~quarterly~~in accordance with generally accepted accounting ~~results~~principles onfor ainterim ~~4-4-5~~financial ~~basis,~~reporting ~~with~~and the ~~quarter~~rules ~~ending~~and onregulations of the Securities ~~Saturday~~and ~~closest~~Exchange toCommission. ~~the~~They do not include all information and ~~last~~footnotes ~~day~~required ofby ~~each~~United ~~third~~States ~~month~~generally accepted accounting principles (“U.S. InGAAP”) ~~fiscal~~for complete financial statement disclosure. The interim consolidated financial statements have been prepared on a consistent basis with the audited consolidated financial statements for the year ended December 27, 2014, included in the Company'’s ~~first~~Form ~~quarter~~10-K ~~ended~~filed with the U.S. Securities and onExchange ~~March~~Commission. ~~29,~~Operating ~~2014,~~results for the ~~second~~thirteen-week ~~quarter~~period ended ~~on June~~ March 28, ~~2014,~~2015 are not necessarily indicative of the ~~third~~results ~~quarter~~that may be expected for ~~ended~~the onyear ~~September~~ending 27December 26, ~~2014~~2015. ~~and~~These interim unaudited consolidated financial statements should be read in conjunction with the ~~fourth~~information ~~quarter~~included in ~~will~~the ~~end~~Company’s Form 10-K filed on ~~December~~April 2713, 2015 with the U.S. Securities and ~~2014~~Exchange Commission.

InEffective ~~the~~fiscal ~~opinion of management~~2013, the ~~accompanying~~Company ~~balance~~began ~~sheet and~~to ~~related~~report ~~statement~~quarterly results ofon ~~operations~~a ~~and~~4-4-5 ~~cash~~basis, ~~flows~~with ~~include~~the ~~all~~quarter ~~adjustments, consisting~~ending ~~only~~on ofthe ~~normal~~Saturday ~~recurring~~closest ~~items,~~to ~~necessary~~the last ~~for~~day ~~their~~of ~~fair~~each ~~presentation in~~third ~~conformity~~month. ~~with~~In ~~U.S.~~fiscal ~~GAAP.~~2015, ~~Preparing~~the ~~financial~~Company's ~~statements~~first ~~requires~~quarter ~~management~~ended toon ~~make~~March ~~estimates~~28, ~~and~~2015, ~~assumptions~~the ~~that~~second ~~affect~~quarter ~~the~~will ~~reported~~end ~~amounts~~on ofJune ~~assets~~27, ~~liabilities,~~ ~~revenue~~2015, ~~and~~the ~~expenses.~~third quarter ~~Actual~~will ~~results~~end on September 26, 2015 and ~~outcomes~~the ~~may~~fourth ~~differ~~quarter ~~from management’s~~will ~~estimates~~end ~~and~~on December ~~assumptions~~26, 2015.

~~The~~In ~~Company’s~~the ~~consolidated~~opinion ~~financial~~of ~~statements~~management, ~~are~~the ~~prepared using~~accompanying ~~U.S.~~balance ~~GAAP~~sheets and ~~applicable~~related tostatements ~~a going concern, which contemplates the realization~~ of ~~assets~~operations and ~~payment~~comprehensive ofloss ~~liabilities~~and incash ~~the~~flows ~~normal~~include ~~course~~all ofadjustments, ~~business.~~consisting ~~The~~only ~~Company~~of ~~has~~normal ~~incurred~~recurring ~~losses since inception of $53~~items,~~435,631~~ ~~and further~~necessary ~~losses~~for ~~are~~their ~~anticipated~~fair presentation in ~~the~~conformity ~~development~~with ofU.S. ~~its business~~GAAP. ~~There~~Preparing ~~can~~financial ~~be no~~statements ~~assurance~~requires ~~that the Company will be able~~ management to ~~achieve~~make orestimates ~~maintain profitability~~ and ~~future~~assumptions ~~operations~~that ~~are~~affect ~~dependent~~the onreported ~~raising~~amounts ~~additional~~of ~~funding~~assets, liabilities, ~~from~~revenue, ~~debt~~and ~~or equity financings~~expenses. ~~These~~Actual ~~factors~~results ~~raise~~and ~~substantial~~outcomes ~~doubt~~may asdiffer ~~to the Company's~~from ~~ability~~management’s toestimates ~~continue~~and ~~as a going concern~~assumptions.

The Company’s ~~has~~consolidated ~~elected~~financial statements are prepared using U.S. GAAP applicable to ~~early~~a ~~adopt~~going ~~the~~concern, ~~guidance~~which incontemplates ~~FASB~~the ~~Topic~~realization ~~915~~of assets and nopayment ~~longer~~of ~~provides~~liabilities in the ~~accounting~~normal ~~disclosures~~course ~~for development~~of ~~stage companies~~business. ~~Accordingly,~~The ~~the~~Company ~~figures~~has ~~for~~incurred ~~the~~losses ~~period~~since ~~from~~ inception toof ~~the~~$63,817 and ~~current~~further ~~period~~losses are anticipated in the development of its business. There can be no ~~longer~~assurance ~~provided~~that ~~and~~the ~~all~~Company ~~references~~will be able to ~~development~~achieve ~~stage~~or maintain profitability and future operations ~~have~~are ~~been~~dependent ~~removed.~~on ~~Other~~raising ~~recent~~additional ~~accounting~~funding ~~pronouncements~~from ~~with~~debt ~~future~~or ~~effective~~equity ~~dates~~financings. ~~are~~These ~~not~~factors ~~expected~~raise tosubstantial ~~have~~doubt anas ~~impact~~to on the Company’'s ~~financial~~ ~~statements.~~ability to continue as a going concern.

2.The ~~Inventory~~Company evaluated events occurring between March 28, 2014 and the date financial statements were issued.

		September 27, 2014		December 28, 2013
CRAiLAR fiber	$	110,855	$	186,464
Decorticated fiber		133,096		252,263
Raw flax fiber feedstock		369,590		369,590
Hemp		13,350		-
Other		215,138		136,723
	$	842,029	$	945,040

The Company has elected to early adopt the guidance in FASB Topic 915 and no longer provides the accounting disclosures for development stage companies. Accordingly, the figures for the period from inception to the current period are no longer provided and all references to development stage operations have been removed. Other recent accounting pronouncements with future effective dates are not expected to have an impact on the Company’s financial statements.

CRAiLAR ~~Technologies~~TECHNOLOGIES ~~Inc~~INC. ~~Notes~~NOTES toTO ~~Consolidated~~CONSOLIDATED ~~Financial~~FINANCIAL ~~Statements~~STATEMENTS ~~September~~MARCH 2728, ~~2014~~2015 (~~Unaudited~~In Thousands US Dollars except per share amounts)

32. ~~Property and Equipment~~Inventory

						Net Book Value		Net Book Value
		March 28, 2015		December 27, 2014
				Accumulated		September 27,		December 28,
CRAiLAR fiber	$	197	$	97
		Cost		Amortization		2014		2013
Decorticated fiber		201		259
Automobiles	$	58,745	$	8,876	$	49,869	$	49,867
Hemp		10		-
Computer equipment		117,797		71,659		46,138		57,180
Other		210		93
Equipment		1,085,399		117,829		967,570		443,105
	$	618	$	449
Equipment held for sale		70,000		-		70,000		70,000
Furniture and fixtures		60,778		39,492		21,286		25,421
Leasehold improvements		6,112,576		377,879		5,734,697		5,711,874
Production equipment		5,884,201		596,839		5,287,362		4,818,280
Production equipment in construction		5,637,341		-		5,637,341		6,060,849
Website development costs		122,945		116,793		6,152		3,436
	$	19,149,782	$	1,329,367	$	17,820,415	$	17,240,012

43. ~~Intangible~~Property ~~Assets~~and Equipment

						Net Book Value		Net Book Value
				Accumulated		Net Book Value		Net Book Value
				Accumulated		September 27,		December 28,
		Cost		Depreciation		March 28, 2015		December 27, 2014
		Cost		Amortization		2014		2013
Automobiles	$	79	$	9	$	70	$	50
Patents	$	172,370	$	93,509	$	78,861	$	85,482
Computer Equipment		98		66		32		35
Trademarks		117,829		92,425		25,404		28,065
Computer Software		10		9		1		2
License fee		61,719		29,745		31,974		41,998
Equipment		692		83		609		612
Computer Software		10,319		8,253		2,066		-
Equipment held for sale		37		-		37		37
	$	362,237	$	223,932	$	138,305	$	155,545
Furniture and fixtures		38		30		8		8
Leasehold Improvements		240		20		220		204
Production Equipment		6,293		857		5,436		5,930
Production Equipment in
construction		3,125		-		3,125		3,125
Website development costs		130		121		9		10
	$	10,742	$	1,195	$	9,547	$	10,013

~~During~~4. ~~the~~Intangible thirty-nine week period ended September 27, 2014, the Company recorded amortization and depreciation expense of $426,993 (2013 - $643,379) of which $350,374 (2013 - $483,624) was classified as cost of sales.Assets

5. Long Term Debt

				Accumulated		Net book Value		Net Book Value
		Cost		Amortization		March 28, 2015		December 27, 2014
Patents	$	173	$	100	$	73	$	75
Trademarks		110		86		24		25
License Fee		59		33		26		29
	$	342	$	219	$	123	$	129

		September 27, 2014			December 28, 2013
Convertible debentures
Balance, beginning	$	16,674,686		$	10,051,262
Convertible debentures issued		-			8,307,249
Discount on debentures		-			(754,829	)
Amendment of debentures – conversion price		-			(79,931	)
Accretion expense		188,153			94,030
Convertible debentures converted		(17,786	)		-
Effect of foreign exchange		(708,945	)		(943,095	)
Balance, ending		16,136,108			16,674,686
IKEA Loan
Balance, beginning		-			-
Loan issued		2,999,983			-
Effect of foreign exchange		(213,100	)		-
Balance, ending		2,786,883			-
Total long-term debt		18,922,991			16,674,686
Less: current portion		(142,756	)		-
Long-term debt – non-current portion	$	18,780,235		$	16,674,686

During the thirteen-week period ended March 28, 2015, the Company recorded amortization and depreciation expense of $227 (2014 - $128) of which $209 (2014 - $104) was classified as cost of sales.

~~Deferred~~5. ~~issuance~~Long ~~costs:~~Term Debt

		September 27, 2014			December 28, 2013
		March 28, 2015			December 27, 2014
Balance, beginning	$	1,442,023		$	1,024,294
Convertible debentures
Issuance costs – cash		52,114			800,910
Balance, beginning	$	15,515		$	16,675
Issuance costs – warrants		-			66,278
Accretion expense		59			252
Issuance costs allocated to additional paid in capital		-			(102,670	)
Convertible debentures converted		-			(18	)
Amortization of issuance costs		(322,511	)		(346,789	)
Effect of foreign exchange		(1,116	)		(1,394	)
Effect of foreign exchange		(56,343	)		-
Balance, ending		14,458			15,515
	$	1,115,283		$	1,442,023
IKEA Loan
Balance, beginning		2,670			-
Loan issued		-			3,000
Effect of foreign exchange		(290	)		(330	)
Balance, ending		2,380			2,670
Total long-term debt		16,838			18,185
Less: current portion		(144	)		(161	)
Long-term debt – long term portion	$	16,694		$	18,024

~~Convertible~~Deferred ~~Debentures~~issuance costs:

On September 20, 2012, the Company completed the offering of $10,051,262 (CAD$10,000,000) convertible debentures (the “September 2012 Debentures”). The September 2012 Debentures mature on September 20, 2017. The September 2012 Debentures bear interest at a rate of 10% per year, payable semi-annually on March 31 and September 30, starting March 31, 2013. As at September 27, 2014, accrued interest of $451,803 (CAD$493,585) (2013 – 485,296, (CAD$500,000)) was included in accrued liabilities. On February 26, 2013, the Company completed an offering of $4,943,643 (CAD$5,000,000) convertible debentures (the “February 2013 Debentures”). The February 2013 Debentures mature on September 30, 2017. The February 2013 Debentures bear interest at a rate of 10% per year, payable semi-annually on March 31 and September 30, starting September 30, 2013. As at September 27, 2014, accrued interest of $226,157 (CAD$246,576) (2013 – 288,518 (CAD$297,260)) was included in accrued liabilities. The Company paid a total of $427,049 (CAD$487,830) in cash issuance costs which have been recorded as deferred debt issuance costs.

		March 28, 2015			December 27, 2014
Balance, beginning	$	967		$	1,442
Issuance costs – cash		-			52
Amortization of issuance costs		(95	)		(428	)
Effect of foreign exchange					(99	)
	$	872		$	967

~~Holders~~10 of the September 2012 Debentures and February 2013 Debentures have the option to convert the convertible debentures into shares of the Company’s common stock at a price of $2.85 (CAD$2.90) per common share at any time prior to the maturity date. The Company may redeem the September 2012 Debentures and the February 2013 Debentures after September 30, 2015 provided that the market price at the time of the redemption notice is not less than 125% of the conversion price. The conversion price is subject to standard anti-dilution provisions.

~~The~~CRAiLAR ~~September~~TECHNOLOGIES ~~2012~~INC. ~~Debentures~~NOTES ~~and~~TO ~~February 2013 Debentures are~~CONSOLIDATED ~~secured~~FINANCIAL bySTATEMENTS aMARCH ~~Guaranty and Security Agreement signed with the Company’s wholly-owned subsidiary~~28, ~~Crailar~~2015 ~~Inc.~~ (~~“CI”),~~In aThousands ~~Nevada~~US ~~incorporated~~Dollars ~~company.~~except CIper ~~has~~share ~~provided~~amounts) a security interest over its assets, having an aggregate acquisition cost of no less than $5,500,000, as security for its guarantee obligation which shall rank in priority to all other indebtedness of CI.

The September 2012 Debentures and February 2013 Debentures do not contain a beneficial conversion feature, as the fair value of the Company’s common stock on the date of issuance was less than the conversion price6. ~~All proceeds~~Capital ~~from the debentures were recorded as a debt instrument.~~ Stock

OnDuring ~~July 26, 2013,~~ the Company closed a convertible debenture offering for gross proceeds of $3,363,606 (CAD$3,535,000) (the “July 2013 Debentures”). The July 2013 Debentures will mature on July 26, 2016 and will accrue interest at a rate of 10% per year, payable semithirteen-~~annually~~week inperiod ~~arrears~~ended on March ~~31 and September 30 commencing September 30~~28, ~~2013. In the event the Company completes one or more equity financings between July 26~~2015, ~~2013 and July 26, 2016 with gross proceeds of at least an aggregate of $19.4 million (CAD$20.0 million),~~ the ~~Company must, subject to providing no less than 60 days prior~~ notice to each holder of the July 2013 Debentures, redeem the July 2013 Debenture in whole at face value plus all accrued and unpaid interest thereon. As at September 27, 2014, accrued interest of $159,893 (CAD$174,329) was included in accrued liabilities. At the holder’s option, the debentures may be converted into common shares in the capital of the Company atdid ~~any~~not ~~time~~issue ~~up to the earlier of the maturity date and the business day immediately preceding the date specified by the Company for redemption of the debentures~~shares. ~~The conversion price is CAD$1.25 per share.~~

10Share purchase warrants outstanding as at March 28, 2015 are:

CRAiLAR Technologies Inc. Notes to Consolidated Financial Statements September 27, 2014 (Unaudited)

			Weighted-Average Exercise
	Warrants		Price
Warrants outstanding, December 27, 2014 and March 28, 2015	22,932,373	$	0.74

InThe ~~addition,~~weighted inaverage ~~connection~~remaining ~~with~~contractual ~~the~~life ~~July~~of ~~2013 Debentures, the~~outstanding ~~Company issued 800 transferable common share purchase~~ warrants (each, a “Warrant”) for each $904 (CAD$1,000) of principal amount, resulting in the issuance of an aggregate of 2,828,000 Warrants, with each Warrant entitling the holder thereof to purchase one additional common share (each, a “Warrant Share”) at anMarch ~~exercise price of $2.00 per Warrant Share until July 26~~28, ~~2016. The Company determined the fair value of the Warrants to be $974~~2015,~~387~~ ~~(CAD$1,003,910)~~is ~~using the Black-Scholes Option Pricing Model with the following assumptions: expected dividend yield – 0; expected stock price volatility – 56%; risk-free interest rate – 0~~3.~~59%;~~63 ~~expected life – 2.83~~ years.

~~The~~Stock ~~proceeds~~options ~~were~~outstanding ~~allocated~~as toat ~~the~~March ~~July 2013 Debentures and the Warrants based on their relative fair values and accordingly~~28, ~~$2,295,309 (CAD$2,757,300)~~2015 ~~was~~are: ~~allocated to the July 2013 Debentures and $754,829 (CAD$777,700) was allocated to the Warrants and recorded as a reduction in the July 2013 Debentures and an increase in additional paid-in capital.~~

The Company incurred a total of $440,139 in issuance and commission costs relating to the July 2013 Debentures. This included $373,861 in cash issuance costs and the fair value of warrants to purchase 192,360 common shares issued to a finder of $66,278. The warrants entitle the holder to purchase common shares for CAD $1.25 per share for three years from the date of issuance. The fair value of the warrants was calculated using the Black-Scholes Option Pricing Model with the following assumptions: expected dividend yield – 0; expected stock price volatility – 56%; risk-free interest rate – 0.59%; expected life – 2.83 years. The allocation of the issuance costs were based on the relative fair value of the July 2013 Debentures and the Warrants and, accordingly, $337,469 was allocated to deferred debt issuance costs and $102,670 was allocated to additional paid-in capital during the year ended December 28, 2013.

				Weighted-Average Exercise
	Shares			Price
Options outstanding, December 27, 2014	6,769,294		$	1.79
Options cancelled/expired	(170,417	)	$	2.33
Options outstanding, March 28, 2015	6,597,877		$	1.75

~~The~~Stock ~~July~~options ~~2013~~outstanding ~~Debentures~~at ~~include~~March ~~a continuing security interest in certain of the Company’s assets pursuant to a Guaranty and Security Agreement. On December 17~~28, ~~2013 the Guaranty and Security Agreement was amended to only provide a security interest in certain specific assets held by the Company which had an acquisition cost of $3~~2015,~~922,240.~~ Asare ~~consideration~~summarized ~~for the~~as modification, the conversion price of the debentures was amended to $1.21 (CAD$1.25) per share. The Company determined the fair value of the additional debt discount to be $79,931 using the Black-Scholes Option Pricing Model with the following assumptionsfollows: ~~expected dividend yield – 0; expected stock price volatility – 56%; risk-free interest rate – 0.59%; expected life – 2.42 years.~~

During the thirty-nine week period ending September 27, 2014 the Company recorded accretion of the July 2013 Debentures debt discount in the amount of $188,153 which was included in interest expense.

Weighted

Weighted Average

Weighted

Average

Range of

Number

Remaining Contractual

Average Exercise

Number

Exercise

Exercise Prices

Outstanding

Life (yr)

Price

Exercisable

Price

$0.54 - $3.05

6,597,877

2.19

1.75

6,570,793

1.75

During the ~~thirty~~thirteen-~~nine~~ week period ended ~~September~~March 2728, ~~2014~~2015, options to purchase 408,708 (2014 – 62,502) common shares vested under the Company’s amended ~~recorded~~2011 Fixed Share Option Plan. A total expense of $~~307,444~~384 (~~2013~~2014 - $~~288~~71) was recorded as stock-based compensation,~~462~~ of which $100 (2014 - $nil) was included in ~~interest~~consulting and contract labor expense ~~for~~and ~~the amortization~~$284 of(2014 ~~deferred~~- ~~issuance~~$71) ~~costs~~was included in salaries and benefits expense.

~~IKEA~~11 ~~Supply AG Loan~~

~~During~~CRAiLAR ~~the~~TECHNOLOGIES ~~thirty-nine~~INC. ~~week~~NOTES ~~period~~TO ~~ended September 27, 2014 the~~CONSOLIDATED ~~Company~~FINANCIAL ~~received~~STATEMENTS ~~$2,197,153~~MARCH ~~(€1~~28,~~597,000)~~ ~~pursuant~~2015 ~~to a loan agreement entered into with IKEA Supply AG~~ (~~“IKEA”)~~In ~~with~~Thousands anUS ~~effective~~Dollars ~~date~~except ~~of November 29, 2013. The loan bears an interest rate of 1.9%~~ per ~~annum and is payable in monthly~~ ~~installments~~share ~~of $15,118 (€11,000~~amounts) from December 20, 2014 through June 20, 2016 with the remainder due in full on June 25, 2016. IKEA agreed to loan the Company a total of $3,028,300 (€2,190,000) which was fully drawn during the second quarter. The loan is secured by assets purchased with the proceeds, as well as a portion of the secured assets used to secure the July 2013 Debentures. As at September 27, 2014, accrued interest of $32,524 (€25,554) was included in accrued liabilities.

~~The Company incurred a total of $52,114 in issuance costs related to the IKEA loan~~7. ~~This~~Segment included $37,079 in costs paid during the year ended December 28, 2013 and $15,034 paid during the thirty-nine week period ended September 27, 2014. During the thirty-nine week period ended September 27, 2014, the Company recorded $15,067 (2013 - $nil) in interest expense for the amortization of deferred issuance costs. Information

11The Company currently has production facilities in North America and Europe. Operations at the North American facilities are currently suspended until the Company decides to install the necessary additional equipment to improve capacity or moves the equipment elsewhere for production.

CRAiLAR Technologies Inc. Notes to Consolidated Financial Statements September 27, 2014 (Unaudited)

For the thirteen-week period
ended March 28, 2015 ( $
thousands)		North America		Europe			Total
Sales to external customers	$	8	$	1,719		$	1,727
Depreciation and amortization	$	16	$	211		$	227
Segment net income (loss)	$	1,627	$	(1,805	)	$	(178	)
Total assets	$	8,731	$	5,292		$	14,023

6. Notes Payable

For the thirteen-week period
ended March 27, 2014
($ thousands)		North America			Europe			Total
Sales to external customers	$	14		$	421		$	435
Depreciation and amortization	$	25		$	103		$	128
Segment net loss	$	(2,160	)	$	(416	)	$	(2,576	)
Total assets	$	21,985		$	3,137		$	25,122

		September 27, 2014			December 28, 2013
Balance, beginning	$	476,614		$	-
Principal		-			655,804
Interest		29,384			23,781
Repayment		(661,452	)		(48,326	)
Beneficial conversion feature		-			(188,140	)
Accretion expense – beneficial conversion feature		150,372			33,495
Bonus shares issued		(131,744	)		-
Accretion expense – bonus shares issued		131,744			-
Effect of foreign exchange		(5,082	)		-
	$	-		$	476,614

Of our sales in the period ended March 28, 2015, two customers represent 95% of the total.

~~On October 11, 2013, the Company issued a convertible promissory note in favor of Mr~~8. ~~Jason~~Related ~~Finnis,~~Party an officer and director, in the principal amount of $96,180 (CDN$100,000). The promissory note is unsecured and bears interest on the principal amount at the rate of 12% per annum, which interest is payable in full on repayment of the principal amount. On November 7, 2013, the company repaid Mr. Finnis $48,326 (CDN$50,000) of principal including interest of $441 (CDN$460). On April 1, 2014 the Company repaid Mr. Finnis $49,427 (CAD $52,807) for the remaining balance of the note and interest. Transactions

OnDuring ~~October 11, 2013,~~ the ~~Company~~thirteen-week ~~issued~~period aended ~~convertible promissory~~March ~~note in favor of Mr. Kenneth Barker~~28, ~~an officer and director~~2015, ~~in the~~$174 ~~principal~~(2014 ~~amount~~- of $~~50,000.~~217) ~~The~~was ~~promissory~~incurred ~~note~~for isremuneration ~~unsecured~~to officers and ~~accrues interest~~directors ~~on the principal amount at the rate~~ of ~~12% per annum, which interest is payable in full on repayment of~~ the ~~principal amount. On April 2, 2014 the~~ Company ~~repaid Mr~~. ~~Barker $52,751 for the outstanding balance of the note including interest.~~

~~On October 11, 2013, the Company issued a demand convertible promissory note in favor of Mr~~9. Robert Edmunds, a director, in the principal amount of $467,369 (CDN$500,000). On December 4, 2013, the Company issued an additional demand convertible promissory note in favor of Mr. Edmunds, pursuant to a loan from Mr. Edmunds to the Company in the principal amount of $42,255 (CDN$45,000). The promissory notes are unsecured and accrue interest on the principal amount at a rate of 20% per annum, which interest is payable in full on repayment of the principal amount. In connection with the amendment of such convertible promissory notes, 181,666 bonus common shares of the Company were issued to Mr. Edmunds on January 30, 2014 with a fair value of $131,744. The value of the shares will be amortized over the term of the loan. During the thirty-nine week period ended September 27, 2014, the Company recorded $131,744 in interest expense relating to the amortization of the value of the bonus shares. On April 1, 2014 the Company repaid Mr. Edmunds $559,274 for the outstanding balance of the note including interest. Commitments

The ~~promissory~~Company notes issued to our officers and directors during the year ended December 28, 2013 contain conversion features. Each lender has the right to convert any portion of the outstanding principal and interest payable for units at a conversion price of $0.60 per unit. Each unit is ~~comprised~~ ofcommitted ~~one common share and one common share purchase warrant of the Company. Each warrant entitles the holder~~ to ~~acquire~~lease ~~one~~payments ~~common share of the~~totaling ~~Company~~approximately ~~at an exercise price of CAD~~$~~0.70~~1,120 ~~per common share~~ for apremises ~~term~~under ~~of five years~~lease. The ~~Company~~minimum ~~recognized~~lease apayments ~~beneficial conversion feature of $188,140 (CAD$200,000) based on the excess of the fair value of the common stock~~ over ~~the~~ ~~conversion price. During~~ the ~~thirty-nine~~next ~~week~~five ~~period~~years ~~ended~~are ~~September~~as ~~27,~~follows: 2014, the Company amended the loans and removed the beneficial conversion feature. The Company incurred an accretion expense of $150,372 during the thirty-nine week period ended September 27, 2014, reducing the value of the beneficial conversion feature to a balance of $nil.

2015		192
2016		243
2017		228
2018		237
2019		220
Total	$	1,120

~~CRAiLAR~~12 ~~Technologies Inc. Notes to Consolidated Financial Statements September 27, 2014 (Unaudited)~~

7Item 2. ~~Capital~~Management’s ~~Stock~~Discussion and Analysis of Financial Condition and Results of Operations

~~During~~The ~~the~~following ~~thirty-nine~~discussion ~~week~~and ~~period~~analysis ~~ended~~of ~~September~~our ~~27,~~results ~~2014,~~of operations and financial position should be read in conjunction with our consolidated financial statements and the ~~Company~~notes ~~issued~~thereto ~~shares~~included aselsewhere ~~follows:~~in this report. Our consolidated financial statements are prepared in accordance with U.S. GAAP. All references to dollar amounts in this section are in U.S. dollars unless expressly stated otherwise.

a.Overview The Company completed a private placement on March 20, 2014 of 2,515,000 units at $1.25 per unit for gross proceeds of $3,143,750. Each unit is comprised of one common share and one-half of one transferable common share purchase warrant of the Company. Each warrant entitles the holder thereof to acquire one common share of the Company at an exercise price of $1.75 per common share for a term of 2 years. In addition, finder’s fees of an aggregate of 176,400 shares were issued to two finders in conjunction with the closing of this private placement. The warrants have exercise prices denominated in United States dollars, which differs from the Company’s functional currency and are therefore classified as a derivative liability and recorded at fair value which was determined to be $578,450 on issuance and $86,768 at September 27, 2014. The fair value of warrants is re-measured at each balance sheet date and the change in fair value is recorded in the statement of operations. The fair value was determined using the Black-Scholes option pricing model with an expected life of two years and with the same assumptions used for stock options below. b. The Company issued 181,666 common shares with a fair value of $131,744 as a bonus on an amendment of a promissory notes issued to one of our directors. Refer to Note 6. c. On May 23, 2014, the Company issued 1,724 shares of common stock upon the conversion of $4,681 (CAD$5,000) principal amount of previously issued convertible debentures at the conversion price of $2.70 (CAD$2.90) per share. On June 17, 2014, the Company issued 4,827 shares of common stock upon the conversion of $13,105 (CAD$14,000) principal amount of previously issued convertible debentures at the conversion price of $2.68 (CAD$2.90) per share. d. The Company completed a private placement of units to thirteen creditors in settlement of $927,944 in debt on June 2, 2014 of 742,355 units at an agreed issuance price of $1.25 per unit. Each unit was comprised of one common share and one-half of one transferable common share purchase warrant of the Company. Each whole warrant entitles the holder thereof to acquire one common share of the Company at an exercise price of $1.75 per common share for a term of 2 years. The warrants have exercise prices denominated in United States dollars, which differs from the Company’s functional currency and are therefore classified as a derivative liability and recorded at fair value which was determined to be $56,072 on issuance. The fair value of warrants is re-measured at each balance sheet date and the change in fair value is recorded in the statement of operations. The fair value was determined using the Black-Scholes option pricing model with an expected remaining life of 1.58 years and with the same assumptions used for stock options below. e. On August 6, 2014, the Company completed the public offering of 13,000,000 units of the Company at a price of $0.50 per unit for gross proceeds of $6,500,000. Each unit is comprised of one common share and one common share purchase warrant of the Company. Each warrant entitles the holder to acquire one common share of the Company at an exercise price of $0.535 per common share at any time prior to August 6, 2019. The Company paid 7% of gross proceeds of the offering to the underwriters and granted them an option (the “Over-Allotment Option”), exercisable in whole or in part at any time up to 30 days following the closing of the Offering. The Over-Allotment Option allowed the underwriters to purchase an additional 15% of the Offering solely to cover over-allotments, if any, and for market stabilization purposes. The Over-Allotment Option entitled the underwriters to purchase a maximum of 1,950,000 units at a price of $0.50 per unit or 1,950,000 common shares at a price of $0.499 per share and/or 1,950,000 warrants. Each warrant entitles the holder to acquire one common share of the Company at an exercise price of $0.535 per common share at any time prior to August 6, 2019. On August 6, 2014, The Over-Allotment Option was partially exercised and the underwriters purchased 1,950,000 warrants at $0.001 per warrant for proceeds of $1,950. On August 15, 2014, the Over-Allotment Option completed for 1,950,000 shares of the Company at a price of $0.499 per unit for gross proceeds of $973,050. The Company paid 7% of the gross proceeds of the Over-Allotment Option to the underwriters. The warrants on this offering have exercise prices denominated in United States dollars, which differs from the Company’s functional currency and are therefore classified as a derivative liability and recorded at fair value which was determined to be $3,927,000 on issuance and $3,509,000 at September 27, 2014. The fair value of warrants is re-measured at each balance sheet date and the change in fair value is recorded in the statement of operations. The fair value was determined using the Black-Scholes option pricing model with an expected remaining life of 4.35 years and with the same assumptions used for stock options below.

13We are focused on bringing sustainable bast fiber-based products to market that are environmentally friendly natural fiber alternatives with equivalent or superior performance characteristics to cotton, wood or fossil-fuel based fibers. Our business operations consist primarily of the production of our natural and proprietary CRAiLAR® Flax fibers targeted at the natural yarn and textile industries, as well as the deployment of our CRAiLAR® processing technologies in the cellulose pulp and composites industries. We believe that we offer two key opportunities for development:

• CRAiLAR® ~~Technologies~~fibers ~~Inc.~~(using ~~Notes~~flax, tohemp ~~Consolidated Financial~~or ~~Statements~~other ~~September~~sustainable ~~27,~~bast ~~2014~~fiber) for textiles (~~Unaudited~~knit and woven constructions) available in a variety of blends, textures, colors and applications; • CRAiLAR® fibers for non-woven constructions.

~~Share~~Effective ~~purchase~~in ~~warrants~~Fiscal ~~outstanding~~2013, aswe atbegan ~~September~~to 27report our first, ~~2014~~second, ~~are:~~third and fourth quarters on a 4-4-5 basis, with each quarter ending on the Saturday closest to the last day of each third month.

				Weighted-Average Exercise
	Warrants			Price
Warrants outstanding, December 28, 2013	6,887,580		$	1.15
Warrants issued	16,578,680		$	0.65
Warrants expired	(434,594	)	$	3.45
Warrants outstanding, September 27, 2014	23,031,666		$	0.74

Acquisition of Production Facility

~~The~~We ~~weighted~~commenced ~~average~~production ~~remaining~~of ~~contractual~~the ~~life~~first stage of ~~outstanding~~the ~~warrants~~CRAiLAR® flax fiber process in the first quarter of Fiscal 2013 out of our decortication facility in Pamplico, South Carolina. Following the decortication process, the fibers were converted into CRAiLAR® Flax fiber at ~~September~~a 27third party wet processing facility with initial fiber sales beginning in the second quarter of Fiscal 2013. We suspended operations at the South Carolina facility in third quarter of 2013 until improvements have been built and installed to the front end of the production line. In December 2013, we ~~2014~~acquired a European fiber dyeing facility with equipment similar to that used to produce CRAiLAR® Flax fiber. The acquisition was made pursuant to an Asset Purchase Agreement dated November 6, is2013, 4which was amended and restated on December 13, 2013.12 ~~years~~The new facility allowed us to accelerate our timeline for establishing a company-controlled CRAiLAR® wet processing capability. Production of CRAiLAR® fibers at this facility commenced in January 2014. The facility has a maximum capacity to produce approximately 280,000 pounds of CRAiLAR® Flax fiber per week and can be expanded.

~~Stock~~Completion ~~options~~of ~~outstanding~~Public ~~as at September 27, 2014 are:~~ Offering

	Shares			Weighted-Average Exercise Price
Options outstanding, December 28, 2013	6,468,799		$	1.80
Options granted	1,688,000		$	1.31
Options cancelled/expired	(159,171	)	$	2.28
Options outstanding, September 27, 2014	7,997,628		$	1.70
Options exercisable, September 27, 2014	7,144,851		$	1.74

On August 6, 2014, the Company completed the public offering of 13,000,000 units of the Company at a price of $0.50 per unit for gross proceeds of $6,500,000. Each unit is comprised of one common share and one common share purchase warrant of the Company. Each warrant entitles the holder to acquire one common share of the Company at an exercise price of $0.535 per common share at any time prior to August 6, 2019.

~~Stock~~The ~~options~~Company ~~outstanding~~paid 7% of gross proceeds of the offering to the underwriters and granted them an option (the “Over-Allotment Option”), exercisable in whole or in part at ~~September~~any 27time up to 30 days following the closing of the Offering. The Over-Allotment Option allowed the underwriters to purchase an additional 15% of the Offering solely to cover over-allotments, if any, and for market stabilization purposes. The Over-Allotment Option entitles the underwriters to purchase a maximum of 1,950,000 units at a price of $0.50 per unit or 1,950,000 common shares at a price of $0.499 per share and/or 1,950,000 warrants at a price of $0.001 per warrant. Each warrant entitles the holder to acquire one common share of the Company at an exercise price of $0.535 per common share at any time prior to August 6, 2019. On August 6, 2014 the Over-Allotment Option was partially exercised and the underwriters purchased 1,950,000 ~~are~~warrants ~~summarized~~at $0.001 per warrant for proceeds of $1,950. On August 15, as2014, ~~follows:~~the Over –Allotment Option was exercised for the remaining 1,950,000 shares of the Company at a price of $0.499 per share for gross proceeds of $973,050. The Company paid 7% of the gross proceeds of the Over-Allotment Option to the underwriters.

Weighted

Weighted Average

Average

Range of Exercise

Number

Remaining Contractual

Weighted Average

Number

Exercise

Prices

Outstanding

Life (yr)

Exercise Price

Exercisable

Price

$0.87 - $3.05

7,997,628

2.32

1.70

7,134,851

1.74

~~During~~Debentures the thirty-nine week period ended September 27, 2014, options to purchase 895,522 (2013 – 1,393,844) common shares vested under the Company’s amended 2011 Fixed Share Option Plan. A total expense of $841,067 (2013 - $1,642,532) was recorded as stock-based compensation, of which $33,729 (2013 - $214,398) was included in consulting and contract labour expense and $807,368 (2013 - $1,428,134) was included in salaries and benefits expense.

~~The~~On ~~fair~~September ~~value~~20, 2012, we completed the offering of ~~options~~$10.1 million ~~granted~~(CAD$10.0 ~~during~~million) worth of convertible debentures (the ~~thirty~~“September 2012 Debentures”), which bear interest at a rate of 10% per year, payable semi-~~nine~~annually ~~week~~on March 31 and September 30 of each year and mature on September ~~period~~30, ~~ended~~2017. The holders of the September 272012 Debentures have the option to convert the September 2012 Debentures into shares of our common stock at a price of $2.85 (CAD$2.90) per share at any time prior to the maturity date. On February 25, ~~2014~~2013, ~~was~~we ~~determined~~completed ~~using~~another offering of $4.9 million (CAD$5.0 million) convertible debentures (the ~~Black~~“February 2013 Debentures”) with essentially the same terms as the previously mentioned offering. Furthermore, on July 26, 2013, we completed a third offering of $3.4 million (CAD$3.5 million) worth of convertible debentures (the “July 2013 Debentures”) with an interest rate of 10% payable semi-~~Scholes~~annually on March 31 and September 30 of each year, which mature on July 26, 2016. Originally, the holders of the July 2013 Debentures had the option to convert such debentures into shares of our common ~~pricing~~stock ~~model~~at ~~with~~a price of $1.94 (CAD$2.00) per share at any time prior to the ~~following~~maturity date. ~~assumptions:~~However, pursuant to the Amended and Restated Convertible Debenture Indenture dated December 23, 2013, the conversion price for the July 2013 Debentures has been reduced to $1.21 (CAD$1.25) per share of common stock. The holders of the July 2013 Debentures also each received warrants to purchase 800 shares of our common stock at an exercise price of $1.21 (CAD$1.25) per share for each $904 (CAD$1,000) of principal amount of July 2013 Debentures purchased, which warrants are exercisable at any time prior to the maturity date of the debentures.

Risk-free interest rates	0.63% to 0.93%
Volatility factor	73% to 88%
Expected life of options, in years	3 - 4.8

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

~~The~~Principles ~~weighted average fair value~~ of ~~the~~Consolidation ~~options granted during the thirty-nine week period ended September 27, 2014 is $1.31.~~

14The consolidated financial statements for the Company’s fiscal year ended December 27, 2014 include the accounts of the Company and its six wholly-owned subsidiaries as of December 27, 2014: Crailar Inc., a Nevada incorporated company; Hemptown USA, Inc., a Nevada incorporated company; 0697872 B.C. Ltd., a British Columbia incorporated company; Crailar Fiber Technologies Inc., a British Columbia incorporated company, HTnaturals Apparel Corp, a British Columbia incorporated company and Crailar Europe NV, a Belgian corporation. All intercompany transactions and account balances have been eliminated upon consolidation.

~~CRAiLAR~~Cash ~~Technologies~~and ~~Inc.~~Cash ~~Notes~~Equivalents ~~to Consolidated Financial Statements September 27, 2014 (Unaudited)~~

8Cash equivalents consist of cash on deposit and term deposits with original maturities of one year or less at the time of issuance. ~~Business~~As ~~Combination~~of March 28, 2015, the Company had $0.9 million in cash and cash equivalents.

OnInventory December 1, 2013, the Company acquired certain assets of Schrurs NV, a textile company located in Ieper, Belgium, by means of an asset purchase agreement. The assets purchased include all of the production equipment, computer equipment and the rights to all of the employee contracts related to a production facility in Ieper, Belgium. The purchase price of the assets of Schrurs NV was settled by the Company assuming outstanding debt of $1,172,081 (€861,551). The general decline in the textile business in Europe had left assets available at a favorable price for the Company. This acquisition resulted in a bargain purchase gain of $425,909 as follows:

Fair value of assets acquired	$	1,797,121
Fair value of debt assumed		(1,172,081	)
Deferred income tax liability		(199,131	)
Bargain purchase gain	$	425,909

The raw flax fiber feedstock, decorticated fiber and CRAiLAR^® fiber is valued at the lower of cost and market. All direct costs are capitalized to raw flax fiber inventory, decorticated fiber inventory and CRAiLAR^® fiber. Seed inventory is valued at the lower of average cost and market. Cost represents the cost to purchase seed and/or growing cost plus any related shipping costs. Other inventories, which primarily consist of production consumables, are recorded at the lower of cost and replacement cost, which approximates net realizable value.

~~Under~~Use ~~the terms~~ of ~~the~~Estimates asset purchase agreement, for a term of five years from the closing date of December 1, 2013, the repayment of the debt assumed by the Company shall be made in accordance with the terms of such debts and / or the repayment terms agreed upon between the seller and the respective creditors of the seller’s debts. On the fifth anniversary of the closing date, the aggregate outstanding amount under the seller’s debts at that point in time shall be repaid in whole by the Company to the respective creditors of the seller’s debts. During the thirty-nine week period ended September 27, 2014, the Company made repayments of $157,864 and accrued interest of $17,545.

AtThe ~~September~~preparation ~~27,~~of ~~2014~~financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported ~~debt~~amounts ~~assumed~~of ~~consists~~assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ~~following~~of revenues and expenses during the period. Actual results could differ from those estimates. Significant areas requiring management’s estimates and assumptions are inventory costing and net realizable value, the expected future use and other impairment considerations of property and equipment, fair value of warrants, options, derivative liabilities, provision for income taxes, depreciation and financial instruments.

Bank line of credit, bearing interest at 3.25%, repayable December 25, 2014	$	248,301
Bank term loans, bearing interest ranging from 3.1% to 4.55%, repayable between November 2014 and August 2018		544,607
Loan payable on demand bearing interest at 4% per annum		84,067
Loan payable on demand bearing no interest		63,640
		940,615
Less: current portion		527,565
	$	413,050

9.Property ~~Segment~~and ~~Information~~Equipment

~~The~~Property ~~Company~~and ~~currently~~equipment ~~has~~are ~~production~~stated ~~facilities~~at incost ~~North America~~ and ~~Europe. Operations at the North American facilities~~ are ~~currently~~depreciated ~~suspended~~as ~~until~~follows: ~~the Company decides to install the necessary additional equipment to improve capacity or moves the equipment elsewhere for production.~~

For the thirteen week period ended September 27, 2014
Automobiles	20% declining balance
($ thousands)		North America			Europe			Total
Computer equipment	30% declining balance
Sales to external customers	$	4		$	1,155		$	1,159
Computer software	100% declining balance
Depreciation and amortization	$	25		$	116		$	141
Equipment	30% declining balance
Segment net loss		($1,396	)		($165	)		($1,561	)
Furniture and fixtures	20% declining balance
Total assets	$	22,962		$	3,48		$	26,448
Production Equipment	30% declining balance
Leasehold improvements	Term of lease
Website development	100% declining balance

For the thirteen week period ended September 28, 2013
($ thousands)		North America			Europe		Total
Sales to external customers	$	15		$	-	$	15
Depreciation and amortization	$	289		$	-	$	289
Segment net loss		($5,674	)	$	-		($5,674	)
Total assets	$	19,931		$	-	$	19,931

Depreciation is claimed at one-half of the regular rate in the year of addition. No depreciation is claimed in the year of disposal.

15Intangible Assets

~~CRAiLAR~~Intangible ~~Technologies~~assets ~~Inc.~~are ~~Notes~~stated toat ~~Consolidated Financial~~cost ~~Statements~~and ~~September~~are ~~27,~~amortized ~~2014~~as follows: ~~(Unaudited)~~

For the thirty-nine week period ended September 27, 2014
Trademarks	5 year straight - line
($ thousands)		North America			Europe			Total
License Fee	10 year straight - line
Sales to external customers	$	33		$	2,304		$	2,337
Patent	10 year straight – line
Depreciation and amortization	$	74		$	353		$	427
Segment net loss	$	(5,062	)	$	(1,039	)	$	(6,101	)
Total assets	$	22,962		$	3,48		$	26,448

For the thirty-nine week period ended September 27, 2013
($ thousands)		North America			Europe		Total
Sales to external customers	$	198		$	-	$	198
Depreciation and amortization	$	643		$	-	$	643
Segment net loss	$	(11,930	)	$	-	$	(11,930	)
Total assets	$	19,931		$	-	$	19,931

Revenue Recognition

~~During~~Revenue ~~the~~is ~~thirty-nine~~recognized ~~week~~when ~~period~~there ~~ended~~is ~~September~~persuasive ~~27,~~evidence ~~2014,~~of a ~~sales~~sale arrangement, delivery to ~~two~~the ~~major~~customer ~~customers~~has ~~accounted~~occurred, ~~for~~the ~~85%~~fee ofis ~~revenue~~fixed ~~(2013~~and determinable, -and ~~60%)~~collectability is considered probable.

~~10.~~Foreign ~~Related~~Currency ~~Party~~Translation ~~Transactions~~

~~During~~The ~~the~~functional ~~thirty-nine~~currencies ~~week~~of ~~period~~the ~~ended~~Company ~~September~~and ~~27,~~its ~~2014,~~subsidiaries are as follows: Crailar Technologies Inc. – US$~~793,370~~; ~~(2013~~Crailar Inc. - US$1; Hemptown USA,~~104,489)~~ ~~was~~Inc. ~~incurred~~– ~~for~~US$; ~~remuneration~~0697872 toB.C. ~~officers~~Ltd. ~~and~~– US$; Crailar Fiber Technologies Inc. – US$; ~~directors~~HTNaturals ofApparel ~~the~~Corp. ~~Company~~– US$, and Crailar Europe NV – Euro.

~~Refer~~Effective September 28, 2014 management determined that the functional currency of Crailar Technologies Inc., 0697872 B.C. Ltd. and Crailar Fiber Technologies Inc. changed from the Canadian dollar to ~~Note~~the 6U.S. dollar. As a result, translation adjustments for prior periods were not removed from equity and the translated amounts for nonmonetary assets at the end of the prior period become the accounting basis for those assets in the period of the change and subsequent periods.

11The Company translates its financial statements with other than US$ functional currencies to U.S. ~~Commitments~~dollars using the following method:

~~The~~All ~~Company~~assets isand ~~committed~~liabilities toare ~~lease~~translated ~~payments~~into ~~totaling~~U.S. dollars at ~~approximately~~the ~~$1,058,000~~exchange ~~for~~rate ~~premises~~in ~~under~~effect ~~lease~~at the period-end. ~~The~~Revenues ~~minimum~~and ~~lease~~expenses ~~payments~~are ~~over~~translated throughout the ~~next~~period ~~five~~at ~~years~~the weighted average exchange rate. Exchange gains or losses from such translations are included in accumulated comprehensive income (loss), as ~~follows:~~a separate component of stockholders’ deficit.

2014	$	70,000
2015		261,000
2016		261,000
2017		261,000
2018		205,000
Total	$	1,058,000

Foreign currency transaction gains and losses are included in the results of operations.

16Income Taxes

~~Item~~The 2.Company ~~Management’s~~utilizes ~~Discussion~~the ~~and~~liability ~~Analysis~~method of ~~Financial~~accounting ~~Condition~~for deferred ~~and~~income ~~Results~~taxes. ofUnder ~~Operations~~the ~~Management’s~~liability ~~Discussion~~method, ~~and~~deferred ~~Analysis~~income oftaxes ~~Financial~~are determined ~~Condition~~based on the temporary differences between the financial statement and ~~Results~~tax bases of ~~Operations~~assets and liabilities using enacted tax rates. A valuation allowance is recorded when it is more likely than not that potential the future tax assets will not be realized.

~~The~~Comprehensive ~~following~~Loss discussion and analysis of our results of operations and financial position should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this report. Our consolidated financial statements are prepared in accordance with U.S. GAAP. All references to dollar amounts in this section are in U.S. dollars unless expressly stated otherwise.

~~Overview~~Comprehensive loss is the change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners. Other comprehensive income (loss) includes items of income and expense that are not recognized in net loss as required or permitted by U.S. GAAP.

We15 are focused on bringing sustainable bast fiber-based products to market that are environmentally friendly natural fiber alternatives with equivalent or superior performance characteristics to cotton, wood or fossil-fuel based fibers. Our business operations consist primarily of the production of our natural and proprietary CRAiLAR® Flax fibers targeted at the natural yarn and textile industries, as well as the deployment of our CRAiLAR® processing technologies in the cellulose pulp and composites industries. We believe that we offer two key opportunities for development:

~~• CRAiLAR® fibers (using flax, hemp or other sustainable bast fiber) for textiles (knit, woven and non~~Stock-~~woven constructions) available in a variety of blends, textures, colors and applications; and • CRAiLAR® technologies for processing cellulose-~~based ~~fibers~~Compensation ~~as a high grade dissolving pulp for use in the additives, ethers and performance apparel markets.~~

~~Effective~~The Company accounts for stock-based payment transactions in which ~~Fiscal~~an ~~2013,~~enterprise wereceives ~~began~~services toin ~~report~~exchange ~~our~~for ~~first,~~(a) ~~second,~~equity instruments of ~~third~~the ~~and~~enterprise ~~fourth~~or ~~quarters~~(b) liabilities that are based on athe ~~4-4-5~~fair ~~basis,~~value ~~with~~of ~~each~~the enterprise’s ~~quarter~~equity ~~ending~~instruments onor that may be settled by the issuance of such ~~Saturday~~equity ~~closest~~instruments. toThe Company uses the ~~last~~Black-Scholes ~~day~~option-pricing ofmodel ~~each~~to establish ~~third~~the ~~month~~fair-value of stock-based awards.

~~Acquisition~~Earnings of(Loss) ~~Production~~Per ~~Facility~~Share

WeBasic ~~commenced~~and ~~production~~diluted ofearnings ~~the~~(loss) ~~first~~per ~~stage~~share ofare ~~the~~computed ~~CRAiLAR® flax~~using ~~fiber process in~~ the ~~first~~weighted ~~quarter~~average ofnumber ~~Fiscal 2013 out~~ of ~~our~~shares ~~decortication facility~~outstanding induring ~~Pamplico,~~the ~~South Carolina~~year. ~~Following~~Common ~~the decortication process, the~~stock ~~fibers~~equivalents ~~were~~from ~~converted~~stock ~~into~~options ~~Crailar®~~and ~~Flax~~warrants ~~fiber~~were atexcluded afrom ~~third party wet processing facility with initial fiber sales beginning in~~ the ~~second quarter of Fiscal~~calculation ~~2013. We suspended operations at the South Carolina facility in third quarter~~ of ~~2013~~ ~~until~~net ~~improvements~~loss ~~have~~per ~~been~~share ~~built~~for ~~and installed to~~ the ~~front~~periods ~~end~~ended ofMarch ~~the production line. In December 2013~~28, we2015 acquired a European fiber dyeing facility with equipment similar to that used to produce CRAiLAR® Flax fiber. The acquisition was made pursuant to an Asset Purchase Agreement dated November 6, 2013, which was amended and ~~restated~~March ~~on December 13~~29, ~~2013.~~2014 ~~The new facility~~as ~~allowed~~their useffect tois ~~accelerate our timeline for establishing a company~~anti-~~controlled CRAiLAR® wet processing capability~~dilutive. Production of CRAiLAR® fibers at this facility commenced in January 2014. We believe the facility has the capacity to produce over 280,000 pounds of CRAiLAR® Flax fiber per week with space to expand the capacity to over 560,000 pounds per week.

~~Completion~~Long-Lived ofAsset ~~Public~~Impairment ~~Offering~~

OnLong-lived ~~August~~assets ~~6, 2014, the Company completed the public offering~~ of ~~13,000,000~~ ~~units of~~ the Company atare areviewed ~~price~~when ofchanges ~~$0.50 per unit for gross proceeds~~in ofcircumstances ~~$6,500,000.~~suggest ~~Each~~their ~~unit~~carrying isvalue ~~comprised~~has ofbecome ~~one common share and one common share purchase warrant of the Company~~impaired. ~~Each warrant entitles the holder to acquire one~~Management ~~common~~considers ~~share~~assets ~~of the Company at an exercise price of $0.535 per common share at any time prior~~ to August 6, 2019. The warrants have exercise prices denominated in United States dollars, which differs from the Company’s functional currency and are therefore classified as a derivative liability and recorded at fair value which was determined to be ~~$3,927,000~~impaired onif ~~issuance and $3,509,000 at September 27, 2014. The fair value of warrants is re-measured at each balance sheet date and~~ the ~~change~~carrying ~~in fair~~ value isexceeds ~~recorded in~~ the ~~statement~~estimated discounted offuture ~~loss. The~~projected ~~fair~~cash ~~value~~flows ~~was~~to ~~determined~~result ~~using~~from the ~~Black-Scholes~~use ~~option pricing model. The Company paid 7%~~ of ~~gross proceeds of~~ the ~~offering~~asset ~~to the underwriters~~ and ~~granted~~its ~~them~~eventual ~~an option (the “Over-Allotment Option”), exercisable in whole or in part at any time up to 30 days following the closing of the offering~~disposition. ~~The Over-Allotment~~If ~~Option~~impairment ~~allowed~~is ~~the~~deemed ~~underwriters~~ to ~~purchase~~exist, ~~an additional 15% of~~ the ~~offering~~assets ~~solely~~will ~~to cover over-allotments, if any, and for market~~be ~~stabilization~~written ~~purposes.~~down ~~The Over-Allotment Option entitled the underwriters~~ to ~~purchase~~ afair ~~maximum of 1,950,000 units at a price of $0~~value.50 ~~per~~Fair ~~unit~~value oris ~~1,950,000 common~~generally ~~shares~~determined atusing a ~~price of $0.499 per share and/or 1,950,000 warrants. Each~~hierarchy ~~warrant entitles the holder to acquire one common share~~ of ~~the~~fair ~~Company~~value atmethodologies ~~an exercise~~under ~~price of $0~~U.~~535 per common share at any time prior to August 6, 2019~~S. On ~~August 6~~GAAP, ~~2014,~~primarily ~~the~~based ~~Over-Allotment~~on ~~Option~~a ~~was partially exercised and the~~discounted ~~underwriters~~cash ~~purchased~~flow ~~1,950,000 warrants at $0~~analysis.~~001~~ ~~per warrant for proceeds of $1,950. On~~

17Risk Management

~~August~~Currency ~~15,~~risk. ~~2014~~Although the Company conducts its business principally in Canada, the ~~Over-Allotment~~majority ~~Option~~of ~~completed~~its ~~for~~purchases are made in Euros ~~1,950,000~~while ~~shares~~the majority of its sales are in USD. Currently, the majority of the Company’s atdebt ais ~~price~~denominated ofin $0CAD currency.~~499~~ ~~per~~A ~~unit~~5% ~~for~~fluctuation ~~gross~~in ~~proceeds~~currency rates for the Company’s Euro debt of $~~973~~78,~~050~~078. The Company ~~paid~~does 7%not ofcurrently hedge ~~the~~its ~~gross~~foreign ~~proceeds~~currency ofexposure ~~the~~and ~~Over-Allotment Option~~accordingly tois ~~the~~at ~~underwriters~~risk for foreign currency exchange fluctuations.

~~Debentures~~Credit risk. Credit risk is managed by dealing with customers whose credit standing meets internally approved policies, and by ongoing monitoring of credit risk. The risk in cash accounts is managed through the use of a major financial institution which has high credit quality as determined by the rating agencies. As of March 28, 2015, $984,975 is due from a single customer and therefore 63% of receivables are exposed to concentration of credit risk.

OnInterest ~~September 20, 2012, we completed the offering of $10.1 million (CAD$10.0 million) worth of convertible debentures (the “September 2012 Debentures”), which bear interest at a~~ rate ~~of 10% per year, payable semi-annually on March 31 and September 30 of each year and mature on September 20, 2017~~risk. ~~The~~Approximately ~~holders of the September 2012 Debentures have the option to convert the September 2012 Debentures into shares of our common stock at a price of~~ $~~2.85 (CAD$2.90) per share for each $972 (CAD$1~~277,~~000)~~500 of ~~principal amount at any time prior to~~ the ~~maturity date. On February 25, 2013, we completed another~~ ~~offering~~Company’s ofdebt ~~$4.9~~bears million (CAD$5.0 million) convertible debentures (the “February 2013 Debentures”) with essentially the same terms as the previously mentioned offering. Furthermore, on July 26, 2013, we completed a third offering of $3.4 million (CAD$3.5 million) worth of convertible debentures (the “July 2013 Debentures”) with an interest rate of 10% payable semi-annually on March 31 and September 30 of each year, which mature on July 26, 2016. Originally, the holders of the July 2013 Debentures had the option to convert such debentures into shares of our common stock at afluctuating ~~price of $1~~rates.~~94 (CAD$2.00)~~ ~~per~~Consequentially ~~share for each $972 (CAD$1,000) of principal amount of debentures at any time prior to~~ the ~~maturity date. However, pursuant to the Amended and~~Company ~~Restated~~is ~~Convertible~~exposed ~~Debenture Indenture dated December 23, 2013, the conversion price for the July 2013 Debentures has been reduced~~ to ~~$1.21~~interest ~~(CAD$1.25)~~rate ~~per share of common stock~~fluctuations. The ~~holders~~Company ofdoes ~~the~~not ~~July~~currently ~~2013 Debentures also each~~hedge ~~received~~its ~~warrants~~exposure to ~~purchase~~interest ~~800~~rate ~~shares of our common stock at an exercise price of $1~~risk.~~21 (CAD$1.25) per share for each $972 (CAD$1,000) of principal amount of July 2013 Debentures purchased, which warrants are exercisable at any time prior to the maturity date of the debentures.~~

~~CRITICAL~~Commodity ~~ACCOUNTING~~price ~~POLICIES~~risk. ~~AND~~Commodity ~~ESTIMATES~~price risk is the risk that the fair value of future cash flows will fluctuate because of changes in the market prices of commodities. The Company is exposed to commodity price risk as it purchases fiber feedstock from the flax producers in Europe. The Company purchases the short fiber waste product called “tow” and the price fluctuates based on supply. The Company has relationships with several short fiber producers and anticipates little issue in obtaining sufficient fiber for its needs. The Company does not currently enter into futures contracts or otherwise hedge its exposure to commodity price risk.

~~Principles~~Research ofand ~~Consolidation~~Development

~~The~~Research ~~consolidated financial statements include the accounts of the Company~~ and ~~its~~development ~~six~~costs ~~wholly-owned~~are ~~subsidiaries~~charged asto ofoperations ~~September 27, 2014:~~as ~~Crailar Inc~~incurred., a Nevada incorporated company; Hemptown USA, Inc., a Nevada incorporated company; 0697872 B.C. Ltd., a British Columbia incorporated company; Crailar Fiber Technologies Inc., a British Columbia incorporated company; HTnaturals Apparel Corp, a British Columbia incorporated company; and Crailar Europe NV, a Belgian corporation. All intercompany transactions and account balances have been eliminated upon consolidation.

~~Cash~~Recent ~~and Cash Equivalents~~ Pronouncements.

~~Cash~~There ~~equivalents~~are ~~consist~~no ofrecent ~~cash~~accounting onpronouncements ~~deposit~~that ~~and term deposits~~are ~~with~~applicable ~~original~~to ~~maturities of one year or less at~~ the ~~time of issuance. As of September 27, 2014, the~~ Company ~~had $4~~.~~8 million in cash and cash equivalents.~~

~~Inventory~~16

~~The~~RESULTS ~~raw~~OF flax fiber feedstock, decorticated fiber and CRAiLAR® fiber are valued at the lower of cost and market. All direct costs are capitalized to raw flax fiber inventory, decorticated fiber inventory and CRAiLAR® fiber. Seed inventory is valued at the lower of average cost and market. Cost represents the cost to purchase seed and/or growing cost plus any related shipping costs. Other inventories, which primarily consist of production consumables, are recorded at the lower of cost and replacement cost, which approximates net realizable value. OPERATIONS

~~Use~~Non-GAAP ofFinancial ~~Estimates~~Measures

The ~~preparation~~table ofbelow ~~financial~~reconciles ~~statements~~net inloss ~~conformity with U.S. GAAP requires management~~ to ~~make~~Adjusted ~~estimates~~EBITDA ~~and~~for ~~assumptions that affect~~ the ~~reported~~periods ~~amounts~~presented of(in ~~assets~~thousands): and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant areas requiring management’s estimates and assumptions are inventory costing and net realizable value, the expected future use and other impairment considerations of property and equipment, fair value of warrants, options, derivative liabilities, provision for income taxes, depreciation and financial instruments.

		Thirteen Weeks Ended
		March 28, 2015			March 27, 2014
Consolidated
Net loss	$	(178	)	$	(2,576	)
Interest expense		534			541
Accretion expense		59			-
Depreciation and amortization		227			128
EBITDA		642			(1,907	)
Stock-based compensation		384			71
Facility commissioning expense		-			251
Fair value adjustment derivative liabilities		(175	)		-
Exchange gain		(1,520	)		-
Rent inducement expense		(8	)		(8	)
Adjusted EBITDA	$	(677	)	$	(1,593	)

~~Property~~Regulation G, “Conditions for Use of Non-GAAP Financial Measures,” and ~~Equipment~~other provisions of the Exchange Act define and prescribe the conditions for use of certain non-GAAP financial information. We provide “EBITDA,” which is a non-GAAP financial measure that consists of net income before (a) interest expense; (b) accretion expense; and (c) depreciation and amortization. “Adjusted EBITDA” further adjusts EBITDA with respect to stock-based compensation expense, facility commissioning expense, fair value adjustment of derivative liabilities, exchange gain and rent inducement expense.

~~Property~~We believe that this non-GAAP financial measure provides important supplemental information to management and ~~equipment~~investors. ~~are~~This ~~stated~~non-GAAP financial atmeasure ~~cost~~reflects an additional way of viewing aspects of our operations that, when viewed with the GAAP results and ~~are~~the ~~depreciated~~accompanying asreconciliation ~~follows:~~to corresponding GAAP financial measures, provides a more complete understanding of factors and trends affecting our business and results of operations.

Automobiles	20% declining balance
Computer equipment	30% declining balance
Computer software	100% declining balance
Equipment	30% declining balance
Furniture and fixtures	20% declining balance
Production equipment	30% declining balance
Leasehold improvements	Term of lease
Website development	100% declining balance

Our management uses Adjusted EBITDA as a measure of our Company’s operating performance because it assists in comparing our 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 our capacity to fund capital expenditures and expand our business. We also believe that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of development stage companies. Additionally, we believe that lenders or potential lenders use Adjusted EBITDA to evaluate our ability to repay loans.

~~Depreciation~~This non-GAAP financial measure is ~~claimed~~used atin ~~one-half~~addition ofto ~~the~~and ~~regular~~in conjunction ~~rate~~with results presented in ~~the~~accordance with GAAP and should not be ~~year~~relied upon to the exclusion of ~~addition~~GAAP financial measures. NoManagement ~~depreciation~~strongly encourages isinvestors ~~claimed~~to review our 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 ~~year~~or similar names. In addition, we expect to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of ~~disposal~~these items from our non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

~~Intangible~~17 ~~Assets~~

~~Intangible~~Thirteen-Week ~~assets~~Period ~~are~~Ended ~~stated~~March at28, ~~cost~~2015 ~~and~~Compared ~~are~~to Thirteen-Week ~~amortized~~Period ~~as follows:~~Ended March 27, 2014

Trademarks	5 year straight - line
		Thirteen Weeks Ended
License fee	10 year straight - line
		March 28, 2015			March 27, 2014
Patent	10 year straight - line
		(amounts in thousands, except per share data)
Revenues	$	1,727		$	435
Cost of sales
Materials and direct production costs		1,489			360
Facility commissioning costs		-			251
Production facility overhead costs		69			98
Depreciation		209			104
		1,767			813
Gross loss		(40	)		(378	)
Expenses:
Marketing and promotion		127			83
Amortization and depreciation		18			24
General and administrative		1,034			1,235
		1,179			1,342
Loss before other items		(1,219	)		(1,720	)
Other income (expense):
Accretion expense		(59	)		(262	)
Interest		(534	)		(541	)
Research and development		(61	)		(53	)
Fair value adjustment derivative liabilities		175			-
Exchange gain		1,520			-
		1,041			(856	)
Net loss		(178	)		(2,576	)
Exchange differences on translating to presentation currency		(645	)		580
Total comprehensive loss		(823	)		(1,996	)
Loss per share (basic and diluted)	$	(0.00	)	$	(0.05	)

Revenue ~~Recognition~~and Gross Margins

~~Revenue~~For isthe ~~recognized~~thirteen-week ~~when~~period ~~there~~ended isMarch ~~persuasive~~28, ~~evidence~~2015 (“First Quarter 2015”) and the thirteen-week period ended March 27, 2014 (“First Quarter 2014”) our revenues were derived from sales of aCRAiLAR® fiber and ~~sale~~other ~~arrangement,~~fiber ~~delivery~~(non-CRAiLAR) toproduced mainly at our new European production facility. Revenue for the ~~customer~~First ~~has~~Quarter ~~occurred~~2015 was $1.7 million, an increase of $1.3 million from Q1 2014. The $1.3 million increase in revenues in the ~~fee~~First Quarter is2015 ~~fixed~~compared ~~and~~with 2014 was the result of a 360 percent increase in the ~~determinable,~~production and ~~collectability~~sale isof ~~considered~~CRAiLAR ~~probable~~fibers.

~~Foreign~~Our ~~Currency~~gross ~~Translation~~loss for the First Quarter 2015 was $40 thousand (2014: $0.4 million). Our variable margin was 14% and was impacted negatively by labor inefficiencies and product re-work caused by equipment downtime. Cost of sales is comprised of $1.5 million (2014: $0.36 million) for flax feedstock, utilities, labor, chemicals and water directly related to sales of CRAiLAR Flax fiber and the non-CRAiLAR legacy fiber dyeing business; $0.1 million (2014: $0.1 million) of facility overhead costs and $0.2 million (2014: $0.1 million) for depreciation of production equipment; and $Nil (2014: $0.2 million) to temporarily outsource the final CRAiLAR process until equipment was installed and training expenses for new employees to add more production shifts.

~~The~~Operating Company’s functional currency is Canadian dollars. The Company translates its financial statements to U.S. dollars using the following method: All assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the period-end. Revenues and expenses are translated throughout the year at the weighted average exchange rate. Exchange gains or losses from such translations are included in accumulated comprehensive income (loss), as a separate component of stockholders’ equity. Foreign currency transaction gains and losses are included in the statement of operations and comprehensive loss. Expenses

~~Income~~During ~~Taxes~~the First Quarter 2015 we recorded operating expenses of $1.2 million compared to operating expenses of $1.3 million for the First Quarter 2014, a decrease of $0.1 million or approximately 8%. Causes for the reduction are a decrease in general and administrative expenses of $0.2 million.

~~The~~Marketing ~~Company~~and ~~utilizes~~promotion ~~the~~expenses ~~liability~~comprised ~~method~~ of ~~accounting for~~marketing ~~deferred~~salaries ~~income~~and ~~taxes.~~sales ~~Under~~development ~~the~~costs ~~liability~~were ~~method,~~$0.1 ~~deferred~~million ~~income~~for ~~taxes are determined based on~~ the ~~temporary~~First ~~differences~~Quarter 2015, ~~between~~ the ~~financial~~same ~~statement and~~as ~~tax~~in ~~bases of assets and liabilities using enacted tax rates. A valuation allowance is recorded when it is more likely than not that potential~~ the ~~future tax~~First ~~assets~~Quarter ~~will not be realized~~2014.

~~Comprehensive~~General ~~Loss~~and administrative expenses for the First Quarter 2015 decreased to $1.0 million, a reduction of $0.2 million or approximately 18% from $1.2 million for the First Quarter 2014. The decrease was primarily caused by a $0.2 million decrease in professional fees; $0.1 million decrease in salary expense; $0.1 million decrease in facility expense and $0.1 from exchange rates partially offset by a $0.3 million increase in stock-based compensation.

~~Comprehensive~~18 loss is the change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners. Other comprehensive income (loss) includes items of income and expense that are not recognized in net loss as required or permitted by U.S. GAAP.

~~Stock-based~~Other ~~Compensation~~Items

~~The~~Interest ~~Company~~expense ~~accounts~~was $0.5 million for ~~stock-based~~the ~~payment~~First ~~transactions~~Quarter in2015 ~~which~~and an2014. ~~enterprise~~Interest ~~receives~~expense ~~services~~is inattributable ~~exchange~~to ~~for~~the ~~(a)~~convertible ~~equity~~debenture interest, ~~instruments~~European ~~of the~~facility ~~enterprise~~loan orinterest, ~~(b)~~IKEA ~~liabilities~~loan ~~that~~interest, ~~are~~early ~~based~~pay discount onand the ~~fair~~amortization ~~value~~of the deferred debt issuance costs of $0.1 million. Accretion expense was $0.1 million from the amortization of bonus ~~enterprise’s~~shares ~~equity~~issued ~~instruments~~with orpromissory ~~that~~notes ~~may~~and bea ~~settled~~reduction byof the ~~issuance~~conversion ofprice ~~such~~for ~~equity~~convertible ~~instruments.~~debentures ~~The~~issued ~~Company~~July ~~uses~~2013 compared with $0.3 million for the ~~Black-Scholes~~First Quarter ~~option-pricing~~2014. ~~model~~For toFirst Quarter 2015 and 2014, research and development costs ~~establish~~were $0.1 million while the fair- value adjustment of ~~stock-based~~derivative ~~awards~~liabilities was a gain of $0.2 compared to $0 in 2014 as well as a gain in foreign exchange of $1.5 million compared to $0 in 2014.

19Net Loss

~~Earnings~~Our ~~(Loss)~~net ~~Per~~loss ~~Share~~for the First Quarter 2015 was $0.2 million, or $0.00 per share, compared to $2.6 million, or $0.05 per share for the thirteen-week period ended March 27, 2014. The reduction in loss was primarily attributable to the reduction in gross loss of $0.3 million and a reduction of general and administration expenses of $0.2 million, a gain in the fair value of derivative liabilities of $0.2 million and a gain in foreign exchange of $1.5 million.

~~Basic~~For ~~and~~the ~~diluted~~period ~~earnings~~ended ~~(loss)~~March ~~per~~28, ~~share~~2015, ~~are computed using~~ the weighted average number of shares outstanding ~~during~~was ~~the~~66,378,003 ~~year.~~compared ~~Common~~to ~~stock equivalents~~48,188,001 ~~from~~for ~~stock options and warrants were excluded from~~ the ~~calculation~~ ofperiod ~~net loss per share for the periods~~ ended ~~September~~March 27, 2014 ~~and September 28, 2013 as their effect is anti-dilutive~~.

~~Long-Lived~~LIQUIDITY ~~Asset~~AND ~~Impairment~~CAPITAL RESOURCES

~~Long-lived~~First ~~assets~~Quarter of2015 ~~the~~Compared ~~Company are reviewed when changes in circumstances suggest their carrying value has become impaired. Management considers assets~~ to beFiscal ~~impaired~~Year ifEnded ~~the carrying value exceeds the estimated~~December ~~discounted future projected cash flows to result from the use of the asset and its eventual disposition. If impairment is deemed to exist~~27, ~~the~~2014 ~~assets will be written down to fair value. Fair value is generally determined using a hierarchy of fair value methodologies under U.S. GAAP, primarily based on a discounted cash flow analysis.~~

Risk Management

		2015			2014
		(in thousands)
Cash and cash equivalents	$	862		$	1,196
Working capital	$	(1,226	)	$	4
Total assets	$	14,023		$	16,197
Total liabilities	$	21,734		$	23,469
Shareholders’ equity (deficit)	$	(7,711	)	$	(7,272	)

~~Currency~~The ~~risk~~Company has historically relied on equity financings, and more recently from the sale of convertible debentures to fund its operations. ~~The~~On August 15, 2014 the Company iscompleted ~~exposed~~a to“Follow On” equity financing with gross ~~currency~~proceeds ~~risk~~of to$1.0 million. On August 6, 2014 the ~~extent~~Company ~~that~~completed ~~certain~~an ~~inventory~~equity financing ~~and~~with ~~equipment~~gross isproceeds ~~purchased~~of $6.5 million. On June 2, 2014 the Company ~~from~~completed ~~Europe~~an equity financing for settlement of $0.9 million in debts. On March 20, 2014, the Company completed an equity financing with gross proceeds of $3.1 million. On December 20, 2013, the Company completed an equity financing with gross proceeds of $1.9 million (CAD$2.0 million). On December 19, 2013, but having an effective date of November 29, 2013, we entered into a loan agreement to borrow up to $2.9 million (€2.2 million, approximately CAD$3.2 million). The Company ~~purchase~~has ~~price~~drawn on the loan $2.9 million (€2.2 million), which was used for capital ~~such~~expenditures ~~inventory~~for ~~and~~the ~~equipment~~European isprocessing ~~generally~~facility inand general working ~~Euros~~capital. ~~The~~In February 2013, the Company ~~does~~completed ~~not~~a ~~currently~~convertible ~~hedge~~debt ~~its~~financing for ~~foreign~~gross ~~currency~~proceeds ~~exposure~~of ~~and~~$4.9 million (CAD$5.0 million). In July 2013, the Company ~~accordingly~~completed an additional convertible debt financing for gross proceeds of $3.4 million (CAD$3.5 million). In September 2012, isthe atCompany ~~risk~~completed a convertible debt financing for ~~foreign~~gross ~~currency~~proceeds ~~exchange~~of ~~fluctuations~~$10.1 million (CAD$10.0 million). The Company expects to fund future operations and ~~its~~expansion ~~subsidiaries~~from dothe proceeds ~~not~~of ~~have~~this ~~significant~~offering, ~~transactions~~through orbank ~~hold~~debt, ~~significant~~government loan programs, customer ~~cash~~financing, ~~denominated~~lease inprograms, ~~currencies~~additional ~~other~~equity ~~than~~and ~~their~~debt ~~functional~~financings, ~~currencies~~as well as cash generated from operations.

~~Credit~~Net ~~risk.~~Cash ~~The~~Used ~~risk~~ in ~~cash~~Operating accounts is managed through the use of a major financial institution, which has high credit quality as determined by the rating agencies. Receivables are managed through the use of Letters of Credit and therefore credit risk is minimal.Activities

~~Interest~~Net ~~rate~~cash ~~risk~~flows used in operating activities for the First Quarter of 2015 were $0.1 ~~Approximately~~million compared with $~~340~~2.2 million for the First Quarter of 2014. Cash flows used in operations for the First Quarter of 2015 consisted primarily of a net loss of $0.2 million offset by the following items: amortization and depreciation of $0.2 million (2014: $0.1 million),~~000~~ primarily related to production equipment in Europe; amortization of debt discount of $0.1 million (2014: $0.3) related to the ~~Company’s~~beneficial conversion feature of the promissory notes and amortization of the bonus shares issued pursuant to the promissory note; amortization of deferred debt ~~bears~~issuance ~~interest~~costs atof ~~fluctuating~~$0.1 ~~rates~~million (2014: $0.1 ~~Consequentially~~million); fair value adjustment of derivative liability gain of $0.2 million (2014: $Nil), the gain in 2015 related to the decrease in the value of ~~Company~~the iswarrant ~~exposed~~liability; rent of ($0.0 million) (2014: $0.0 million) related to the ~~interest~~lease ~~rate~~deferral ~~fluctuations~~at the South Carolina decortication facility; stock-based compensation of $0.4 ~~The~~million ~~Company~~(2014: ~~does~~$0.1 ~~not~~million) ~~currently~~was greater as more options ~~hedge~~vested ~~its~~in ~~exposure~~2015 than in 2014; a gain on foreign exchange of $1.5 million (2014: $Nil); decrease in accounts receivable of $1.6 million due to ~~interest~~timing ~~rate~~of shipments ~~risk~~of Crailar sales in Europe, (2014: increase of $0.6 million); a decrease in inventory of $0.2 million (2014: $0.0 million); an increase in prepaid expenses of $0.2 million (2014: $0.2 million) mostly due to the timing of insurance, financing and listing costs; a decrease in accounts payable of $0.4 million (2014: an increase of $0.2 million); an increase in accrued liabilities of $0.2 million (2014: $0.3 million) mostly related to debenture interest.

~~Commodity~~19 price risk. Commodity price risk is the risk that the fair value of future cash flows will fluctuate because of changes in the market prices of commodities. The Company is exposed to commodity price risk as it purchases fiber feedstock from the flax producers in Europe. The Company purchases the short fiber waste product called “tow” and the price fluctuates based on supply. The Company has relationships with several short fiber producers and does not currently anticipate any issue in obtaining sufficient fiber for its needs. The Company does not currently enter into futures contracts or otherwise hedge its exposure to commodity price risk.

~~Research~~Net ~~and~~Cash ~~Development~~Used in Investing Activities

~~Research~~Net ~~and~~cash ~~development~~flows ~~costs~~used ~~are~~in ~~charged~~investing activities for the First Quarter of 2015 were $0.3 million, compared to ~~operations~~$0.6 asmillion for the First ~~incurred~~Quarter of 2014. Cash flows used in investing activities consisted primarily of the acquisition of equipment for the European production facility of $0.3 million (2014: $ 0.6 million)

~~Recent~~Net ~~Accounting~~Cash ~~Pronouncements.~~Provided by Financing Activities

~~There~~Cash ~~are~~flows noused ~~recent~~by ~~accounting~~financing ~~pronouncements~~activities ~~that~~for ~~are~~the First Quarter ~~applicable~~of 2015 totaled $0.0 million compared to $5.2 million gained for the ~~Company~~First Quarter of 2014.

20Effect of Exchange Rate

~~RESULTS~~The OFeffect ~~OPERATIONS~~of exchange rates on cash resulted in an unrealized gain of $87,000 for the First Quarter of 2015, as compared with an unrealized gain of $252,000 for the First Quarter of 2014.

~~Non-GAAP~~MATERIAL ~~Financial~~COMMITMENTS ~~Measures~~

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

		Thirteen Weeks Ended						Thirty-nine Weeks Ended
		September 27,			September 28,			September 27,			September 28,
		2014			2013			2014			2013
Consolidated
Net loss	$	(1,472	)	$	(5,674	)	$	(6,013	)	$	(11,930	)
Interest expense		563			588			1,627			1,383
Accretion expense		64			-			501			-
Depreciation and amortization		141			289			427			643
EBITDA		(704	)		(4,797	)		(3,458	)		(9,904	)
Stock-based compensation		393			607			855			1,643
Facility commissioning expense		89			149			592			356
Fair value adjustment derivative liabilities		(652	)		28			(916	)		(453	)
Gain on settlement of debt		-			-			(234	)		-
Gain on disposal of assets		-			-			-			(1	)
Impairment loss		-			2,549			-			3,436
Rent inducement expense		8			40			25			114
Adjusted EBITDA	$	(866	)	$	(1,424	)	$	(3,136	)	$	(4,809	)

We completed the following three convertible debt offerings in 2012 and 2013: (i) the September 2012 Debentures with gross proceeds of $10.1 million (CAD$10.0 million) on September 20, 2012; (ii) the February 2013 Debentures with gross proceeds of $4.9 million (CAD$5.0 million) on February 25, 2013; and (iii) the July 2013 Debentures with gross proceeds of $3.4 million (CAD$3.5 million) on July 26, 2013. The September 2012 Debentures mature on September 30, 2017 and bear interest at a rate of 10% per year, payable semi-annually on March 31 and September 30 of each year, starting March 31, 2013. The February 2013 Debentures mature on September 30, 2017 and bear interest at a rate of 10% per year, payable semi-annually on March 31 and September 30 of each year, starting on September 30, 2013. The February 2013 Debentures are ranked subordinate to the September 2012 Debentures. Non-Canadian resident holders of the February 2013 Debentures will receive additional interest equal to the amount of the withholding taxes paid by us for Canadian tax purposes. The July 2013 Debentures mature on July 26, 2016 and bear interest at a rate of 10% per year, payable semi-annually on March 31 and September 30 of each year, commencing on September 30, 2013. The July 2013 Debentures are secured by production equipment and fixtures located at our South Carolina facility that are different from the production equipment and fixtures at the South Carolina facility that were used to secure the September 2012 Debentures and the February 2013 Debentures. In the event we complete one or more equity financings between July 26, 2013 and July 26, 2016 with gross proceeds of at least an aggregate of $19.4 million (CAD$20.0 million), we must, subject to providing no less than 60 days prior notice to each holder of the July 2013 Debentures, redeem the July 2013 Debentures in whole at face value plus all accrued and unpaid interest thereon. The initial conversion rates of each of the September 2012 Debentures, the February 2013 Debentures and the July 2013 Debentures were $2.85 (CAD$2.90), $2.85 (CAD$2.90) and $1.94 (CAD$2.00), respectively, and are subject to anti-dilution provisions.

~~Regulation~~Holders G,of ~~“Conditions~~the ~~for~~September ~~Use~~2012 ofDebentures ~~Non-GAAP Financial Measures,”~~ and ~~other provisions of~~ the ~~Securities~~February ~~Exchange Act of 1934, as~~2013 ~~amended~~Debentures (have the ~~“Exchange~~option ~~Act”)~~to ~~define~~convert ~~and~~their ~~prescribe~~debentures ~~the~~into ~~conditions~~common ~~for~~stock ~~use~~at ofa ~~certain~~price ~~non-GAAP~~of ~~financial~~$2.85 ~~information~~(CAD$2.90) Weper ~~provide~~share ~~“EBITDA,”~~of ~~which~~common isstock aat ~~non-GAAP financial~~any ~~measure~~time ~~that~~prior ~~consists~~to oftheir respective ~~net~~maturity ~~income~~date. ~~(loss)~~We ~~before~~may ~~(a)~~redeem ~~interest expense,~~the ~~(b)~~September ~~accretion~~2012 ~~expense,~~Debentures and ~~(c) depreciation and amortization. “Adjusted~~the ~~EBITDA”~~February ~~further~~2013 ~~adjusts~~Debentures ~~EBITDA~~after toSeptember ~~exclude stock-based compensation expense~~30, ~~facility~~ ~~commissioning~~2015 ~~expense,~~provided ~~fair~~that ~~value~~the ~~adjustment~~market ~~derivative liabilities,~~price ~~gain~~at onthe ~~settlement~~time of ~~debt,~~the ~~gain~~redemption onnotice ~~disposal~~is ofnot ~~assets,~~less ~~impairment~~than ~~loss~~125% ~~and~~of ~~rent inducement~~the ~~expense~~conversion price.

WeIn ~~believe~~accordance ~~that~~with ~~these~~the ~~non-GAAP~~conditions ~~financial~~of ~~measures~~the ~~provide~~IKEA Loan (defined ~~important~~below), ~~supplemental~~we ~~information~~approached tothe ~~management~~debenture ~~and~~holders ~~investors.~~(the ~~These~~“Debentureholders”) ~~non-GAAP~~of ~~financial~~the ~~measures~~July ~~reflects~~2013 Debentures about releasing their security over certain assets held by our subsidiary, CRAiLAR Inc., having an ~~additional~~acquisition ~~way~~cost of ~~viewing~~$1.3 ~~aspects~~million, which form a portion of ~~our~~the assets securing the July 2013 Debentures pursuant to ~~operations~~the ~~that,~~Guaranty ~~when~~and ~~viewed~~Security ~~with~~Agreement (the ~~U.S.~~“Guaranty”) ~~GAAP~~between ~~results~~CRAiLAR Inc. (the “Guarantor”) and Computershare Trust Company of Canada (the “Trustee”), ~~accompanying~~dated July 26, 2013, as set forth in Schedule “A” to the ~~reconciliation~~Guaranty, to ~~corresponding~~be Uused as separate security for the IKEA Loan to us.S As consideration for such alteration to the secured assets, the conversion price of the July 2013 Debentures was reduced from $1.94 ~~GAAP~~(CAD$2.00) ~~financial~~per ~~measures~~share to $1.21 (CAD$1.25) per share. On December 23, ~~provides~~2013, athe ~~more~~Trustee and us entered into an ~~complete~~Amended ~~understanding~~and Restated Convertible Debenture Indenture which reflects the modification and alteration of ~~factors~~the rights of the Debentureholders and ~~trends~~the Trustee ~~affecting~~against ~~our~~us ~~business~~with respect to (i) the secured assets to now only include those specific assets held by the Guarantor as set forth in Schedule “F” to the Amended and ~~results~~Restated Convertible Debenture Indenture having an acquisition cost of ~~operations~~$3.9 million, and (ii) the reduction of the conversion price of the July 2013 Debentures from $1.94 (CAD$2.00) per share to $1.21 (CAD$1.25) per share. In addition, on the same date, the Guarantor and the Trustee entered into an Amended and Restated Guaranty and Security Agreement, which reflects the modification and alteration with respect to the secured assets as discussed above.

~~Our~~20 management uses EBITDA and Adjusted EBITDA as a measure of our Company’s operating performance because it assists in comparing our operating performance on a consistent basis by removing the impact of items not directly resulting from core operations. Internally, these non-GAAP measures are 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 our capacity to fund capital expenditures and expand our business. We also believe that analysts and investors use these measures as supplemental measures to evaluate the overall operating performance of development stage companies. Additionally, we believe that lenders or potential lenders use EBITDA and Adjusted EBITDA to evaluate our ability to repay loans.

21Debt

~~These~~On ~~non-GAAP~~December ~~financial~~1, ~~measures~~2013, ~~are~~we ~~used~~purchased incertain ~~addition~~assets toof ~~and~~a European infiber ~~conjunction~~dyeing ~~with~~facility. ~~results~~We ~~presented~~acquired inthese ~~accordance~~assets ~~with~~by ~~U.S.~~assuming ~~GAAP~~an ~~and~~aggregate ~~should~~of $1.2 ~~not~~million beof ~~relied~~the ~~upon~~seller’s debts, which we have agreed to repay on the ~~exclusion~~earlier of their ~~U.S.~~respective ~~GAAP~~due ~~financial~~dates ~~measures~~and December 1, 2018. ~~Management~~On December 13, 2013, we ~~strongly~~entered ~~encourages~~into ~~investors~~an toamended ~~review~~asset ~~our~~purchase ~~consolidated~~agreement ~~financial~~for ~~statements~~such inassets, which replaced ~~their~~the ~~entirety~~initial ~~and~~asset topurchase ~~not~~agreement ~~rely~~and onprovides ~~any~~that ~~single~~the ~~financial~~title ~~measure.~~to ~~Because~~and ~~non-GAAP~~economic ~~financial~~risk ~~measures~~in ~~are~~respect ~~not~~of ~~standardized,~~the itenvironmental ~~may~~permit ~~not~~and bethe ~~possible~~employees passed to ~~compare~~us ~~these~~on ~~financial~~December ~~measures~~1, ~~with~~2013, ~~other~~however, ~~companies’~~the ~~non-GAAP~~title ~~financial~~to ~~measures~~the ~~having~~equipment at the facility shall only ~~same~~pass orto ~~similar~~us ~~names.~~upon Infull ~~addition,~~payment weof ~~expect~~the toforegoing ~~continue~~assumed toindebtedness ~~incur~~of ~~expenses~~the ~~similar~~seller, tonotwithstanding the ~~non-GAAP~~fact ~~adjustments~~that ~~described~~physical ~~above,~~possession and ~~exclusion~~economic ofrisk ~~these~~of ~~items~~all ~~from~~assets ~~our~~of ~~non-GAAP~~the ~~measures~~acquired ~~should~~facility ~~not~~passed beto ~~construed~~us ason December 1, 2013. We have reached an ~~inference~~oral ~~that~~agreement with the seller to lease the real property for the ~~these~~facility ~~costs~~and are ~~unusual,~~in ~~infrequent~~the orprocess ~~non-recurring.~~of formalizing that oral agreement.

~~Thirteen-Week~~On ~~Period~~December ~~Ended~~19, ~~September~~2013, 27but having an effective date of November 29, ~~2014~~2013, ~~Compared~~we entered into a loan agreement (the “Loan Agreement”) with IKEA Supply AG (“IKEA”), whereby IKEA agreed to loan us $3.0 million ~~Thirteen-Week~~(€2.2 ~~Period~~million, ~~Ended~~approximately ~~September~~CAD$3.2 28million) (the “IKEA Loan”) having a term until June 25, 2016 and bearing interest at a rate of 1.9% per annum. As security for the IKEA Loan, IKEA required that the IKEA Loan be secured by assets purchased with the proceeds of the IKEA Loan, as well as a portion of the secured assets used to secure the July 2013 Debentures. The proceeds from the IKEA Loan are designated for the installation of equipment to support and expand our European production facility and for working capital to fulfill IKEA orders. During the First Three Quarters of 2014 the Company received $2,906,985 (€2,200,000) pursuant to the loan agreement.

		Thirteen Weeks Ended
		September 27, 2014			September 28, 2013
		(amounts in thousands, except per share data)
Revenues	$	1,159		$	15
Cost of sales
Materials and direct production costs		1,032			22
Facility commissioning costs		89			149
Production facility overhead costs		74			193
Depreciation		115			226
Impairment loss on inventory		-			2,549
		1,310			3,140
Gross loss		(151	)		(3,124	)
Expenses:
Marketing and promotion		105			173
Amortization and depreciation		26			62
General and administrative		1,173			1,555
		1,304			1,791
Loss before other items		(1,455	)		(4,915	)
Other income (expense):
Accretion expense		(64	)		-
Interest		(563	)		(588	)
Research and development		(42	)		(130	)
Gain on disposal of assets		-			-
Gain on debt settlement		-			-
Impairment loss on inventory		-			(13	)
Fair value adjustment derivative liabilities		652			(28	)
		(17	)		(759	)
Net loss		(1,472	)		(5,674	)
Exchange differences on translating to presentation currency		1,239			(443	)
Total comprehensive loss		(233	)		(6,117	)
Loss per share (basic and diluted)	$	(0.02	)	$	(0.13	)

We entered into the following loan arrangements with each of the following directors: Jason Finnis, Kenneth Barker and Robert Edmunds:

~~Revenue~~• Finnis. Pursuant to a convertible promissory note, dated for reference October 11, 2013, Mr. Finnis granted us a loan in the principal amount of $96,180 (CAD$100,000) bearing interest at a rate of 12% per annum and ~~Gross~~due ~~Margins~~on December 11, 2013. On November 7, 2013, we repaid to Mr. Finnis $47,885 (CAD$50,000), such that a principal amount of $47,885 (CAD$50,000) remained due and payable on the loan. Pursuant to a loan extension agreement, dated for reference December 18, 2013, Mr. Finnis and we agreed to extend the term for repayment of the loan and interest thereon until the earlier of (i) December 20, 2014 and (ii) such time as we complete our next public offering of registered securities by way of a registration statement on Form S-1 of not less than $2.8 million (CAD$3.0 million) in gross proceeds to us. We repaid this loan and interest thereon in full in April 2014. • Barker. Pursuant to a convertible promissory note, dated for reference October 11, 2013, Mr. Barker granted us a loan in the principal amount of $50,000 bearing interest at a rate of 12% per annum and due and payable on December 11, 2013. Pursuant to a loan extension agreement, dated for reference December 18, 2013, Mr. Barker and we agreed to extend the term for repayment of the loan and interest thereon until the earlier of (i) December 20, 2014 and (ii) such time as we complete our next public offering of registered securities by way of a registration statement on Form S-1 of not less than $2.8 million (CAD$3.0 million) in gross proceeds to us. We repaid this loan and interest thereon in full in April 2014. • Edmunds. Pursuant to demand convertible promissory notes, dated for reference October 11, 2013 and December 4, 2013, respectively, Mr. Edmunds granted us loans in the aggregate principal amount of $509,624 (CAD$545,000) bearing interest at a rate of 20% per annum. Pursuant to a loan extension agreement, dated for reference December 18, 2013, Mr. Edmunds and we agreed to extend the term for repayment of the loan and interest thereon until the earlier of (i) December 20, 2014 and (ii) such time as we complete our next public offering of registered securities by way of a registration statement on Form S-1 of not less than $2.8 million (CAD$3.0 million) in gross proceeds to us. As consideration for the extension, we issued to Mr. Edmunds 181,666 shares of our common stock at a deemed value of $0.56 (CAD$0.60) per share. We repaid this loan and interest thereon in full in April 2014.

~~For~~We ~~the~~are ~~thirteen~~committed ~~week~~to ~~period~~annual ~~ended~~debt ~~September 27, 2014 (“Third Quarter 2014”) our revenues were derived from sales of CRAiLAR® fiber~~ and ~~other fiber~~debenture ~~(non-CRAiLAR)~~interest ~~produced mainly at our new European production facility. For~~payments over the ~~thirteen~~next ~~week~~five ~~period~~years ~~ended~~as ~~September~~follows ~~28, 2013~~ (~~“Third~~in ~~Quarter 2013”~~thousands): ~~our revenues were derived from CRAiLAR® fiber.~~

Our gross loss for the Third Quarter 2014 was $0.2 million (2013: $3.1 million). Our variable margin was 11% and was impacted negatively by labor inefficiencies and product re-work caused by equipment downtime. Cost of sales is comprised of $1.0 million (2013: $0.02 million) for flax feedstock, utilities, labor, chemicals and water directly related to sales of CRAiLAR Flax fiber and the non-CRAiLAR legacy fiber dyeing business; $0.1 million (2013: $0.2 million) to temporarily outsource the final CRAiLAR process until equipment is installed and training expenses for new employees to add more production shifts; $0.1 million (2013: $0.2 million) of facility overhead costs and $0.1 million (2013: $0.2 million) for depreciation of production equipment. (In the Third Quarter 2013 there was an impairment loss on inventory of $2.5 million.)

2015	$	1,246
2016		1,502
2017		976
2018		13
2019		12
Total	$	3,749

22Annual Leases

~~Operating~~We ~~Expenses~~are committed to current annual lease payments totaling $1.1 million for all of our premises under lease. Approximate minimum lease payments over the next five years are as follows (in thousands):

During the Third Quarter 2014 we recorded operating expenses of $1.3 million compared to operating expenses of $1.8 million for the Third Quarter 2013, a decrease of $0.5 million or approximately 22%. Causes for the reduction are a decrease in general and administrative expenses of $0.4 million and a reduction in marketing and promotion expense of $0.1 million.

2015	$	192
2016		243
2017		228
2018		237
2019		220
Total	$	1,120

~~Marketing~~OFF-BALANCE ~~and~~SHEET ~~promotion~~ARRANGEMENTS expenses, comprised of marketing salaries and sales development costs, were $0.1 million for the Third Quarter 2014, a decrease of $0.1 million or approximately 40% from $0.2 million for the Third Quarter 2013. The decrease was driven by a $0.1 million reduction in investor relations and public relations expenses.

~~General~~As ~~and~~of ~~administrative~~the ~~(G&A)~~date ~~expenses~~of ~~for~~this ~~the~~prospectus, ~~Third~~we do not have any ~~Quarter~~off-balance ~~2014~~sheet ~~decreased~~arrangements tothat ~~$1.2~~have, ~~million~~or are reasonably likely to have, a current ~~reduction~~or offuture ~~$0.4~~effect ~~million~~on orour financial condition, changes in financial ~~approximately~~condition, ~~25%~~revenues ~~from~~or ~~$1.6~~expenses, ~~million~~results ~~for~~of ~~the~~operations, ~~Third~~liquidity, ~~Quarter~~capital expenditures ~~2013~~or capital resources that are material to investors. The ~~decrease~~term “off-balance ~~was~~sheet arrangement” generally means any transaction, agreement or ~~primarily~~other ~~caused~~contractual byarrangement ato ~~$0.2~~which ~~million~~an ~~reduction~~entity inunconsolidated ~~salaries~~with ~~and~~us ~~consultants~~is a ~~expense~~party, aunder ~~$0.2~~which ~~million~~we ~~reduction~~have inany ~~stock-based~~obligation ~~compensation,~~arising ~~and~~under a ~~reduction~~guarantee contract, inderivative ~~general~~instrument ~~office~~or ~~costs~~variable ~~and~~interest; ~~travel~~or ofa ~~$0.2~~retained ~~million,~~or ~~which~~contingent ~~reductions were~~interest ~~partially~~in ~~offset~~assets bytransferred ato ~~$0.1~~such ~~million~~entity ~~cost~~or ~~increase~~similar ~~associated~~arrangement ~~with~~that ~~the~~serves ~~South~~as ~~Carolina~~credit, ~~facility~~liquidity ~~and~~or anmarket ~~increase~~risk ofsupport ~~$0.1~~for ~~million~~such ~~in professional fees~~assets.

~~Other~~Item ~~Items~~3. Quantitative and Qualitative Disclosures about Market Risk

~~Interest~~We ~~expense~~are ~~was~~a ~~$0.6~~smaller ~~million~~reporting ~~for~~company ~~the Third Quarter 2014, approximately the same~~ as ~~the~~defined ~~Third~~by ~~Quarter~~Rule ~~2013.~~12b-2 ~~Interest expense is~~of ~~attributable to~~ the ~~convertible~~Exchange ~~debenture~~Act ~~interest, European facility loan interest, IKEA loan interest~~ and ~~the~~are ~~amortization~~not ofrequired the deferred debt issuance costs of $0.1 million. Accretion expense was $0.1 million from the amortization of bonus shares issued with promissory notes. There was no accretion expense in the Third Quarter 2013. For Third Quarter 2014 compared to ~~the~~provide ~~Third Quarter 2013, research and development costs decreased by $0.1million while~~ the ~~fair value~~information ~~adjustment~~required ~~of derivative liabilities was a gain of $0.6 million compared~~under tothis ~~$0 in 2013~~item.

~~Net~~Item ~~Loss~~4. Controls and Procedures

~~Our~~Disclosure ~~net~~Controls loss for the Third Quarter 2014 was $1.5 million, or $0.02 per share, compared to $5.7 million, or $0.11 per share for the Third Quarter 2013. The reduction in loss was primarily attributable to the reduction in general and ~~administration~~Procedures expenses of $0.4 million, a reduction in marketing and promotion expenses of $0.1 million, a reduction of research and development costs of $0.1 million and a reduction in gross margin loss of $3.0 million. Included in the gross margin expense for the Third Quarter of 2013 was an impairment charge on inventory of $2.5 million.

~~For~~Lesley ~~the~~Hayes, ~~period~~our ~~ended~~Chief ~~September~~Executive 27Officer, ~~2014~~and Theodore Sanders, our Chief Financial Officer, have evaluated the ~~weighted~~effectiveness ~~average~~of our ~~number~~disclosure ofcontrols ~~shares~~and ~~outstanding~~procedures ~~was~~(as ~~59,778,003~~defined ~~compared~~in toRule ~~44,472,698~~13a-15(e) ~~for~~of the Exchange Act) as of the end of the period ~~ended~~covered ~~September~~by this Quarterly Report. Based on that evaluation, they concluded that our disclosure controls and procedures were effective as of March 28, ~~2013~~2015.

23No Changes in Internal Control over Financial Reporting

~~First~~There ~~Three~~were ~~Quarters~~no ~~2014~~changes ~~Compared~~in our internal control over financial reporting that occurred during our fiscal quarter ended March 28, 2015 that have materially affected, or are reasonably likely to ~~First~~materially ~~Three~~affect, ~~Quarters~~our internal ~~2013~~control over financial reporting.

		Thirty-nine Weeks Ended
		September 27, 2014			September 28, 2013
		(amounts in thousands, except per share data)
Revenues	$	2,337		$	198
					-
Cost of sales
Materials and direct production costs		2,077			223
Facility commissioning costs		592			356
Production facility overhead costs		249			356
Depreciation		350			484
Impairment loss on inventory					3,423
		3,268			4,842
Gross loss		(931	)		(4,644	)
Expenses:
Marketing and promotion		280			606
Amortization and depreciation		77			160
General and administrative		3,587			5,355
		3,944			6,120
Loss before other items		(4,875	)		(10,764	)
Other income (expense):
Accretion expense		(501	)		-
Interest		(1,627	)		(1,383	)
Research and development		(159	)		(223	)
Gain on disposal of assets		-			1
Gain on debt settlement		234			-
Impairment loss on inventory		-			(13	)
Fair value adjustment derivative liabilities		916			453
		(1,137	)		(1,166	)
Net loss		(6,013	)		(11,930	)
Exchange differences on translating to presentation currency		1,138			305
Total comprehensive loss		(4,675	)		(11,626	)
Loss per share (basic and diluted)	$	(0.11	)	$	(0.27	)

PART II – OTHER INFORMATION

~~Revenue~~Item ~~and~~1. ~~Gross~~Legal ~~Margins~~ Proceedings

~~For~~Management ~~the~~is ~~thirty-nine~~not ~~week~~aware ~~period~~of ~~ended~~any ~~September~~material ~~27,~~legal ~~2014 (the~~proceedings ~~“First~~contemplated ~~Three~~by ~~Quarters~~any ofgovernmental ~~2014”),~~authority ~~our~~or ~~revenues~~any ~~were~~other ~~derived~~party ~~from~~involving ~~sales~~us ofor ~~CRAiLAR®~~our ~~fiber~~properties. ~~and~~As ~~other~~of ~~fiber~~the ~~(non-CRAiLAR)~~date atof ~~our~~this ~~new~~Report, ~~European~~no ~~production~~director, officer or affiliate ~~facility.~~is ~~For~~a ~~the~~party ~~thirty-nine~~adverse ~~week~~to ~~period~~us ~~ended~~in ~~September~~any 28legal proceeding, ~~2013~~or ~~(the~~has ~~“First~~an adverse interest to ~~Three~~us ~~Quarters~~in any legal proceedings. Management is not aware of ~~2013”)~~any ~~our~~other ~~revenues~~material ~~were~~legal proceedings ~~derived~~pending ~~from~~or ~~CRAiLAR®~~that ~~fiber~~have been threatened against us or our properties.

~~Our~~22 gross loss for the First Three Quarters of 2014 was $0.9 million (2013: $4.6 million). Cost of sales is comprised of $2.0 million (2013: $0.2 million) for flax feedstock, utilities, labor, chemicals and water directly related to sales of CRAiLAR Flax fiber and the non-CRAiLAR legacy fiber dyeing business; $0.6 million (2013: $0.4 million) to temporarily outsource the final CRAiLAR process until equipment is installed and training expenses for new employees to add more production shifts; $0.2 million (2013: $0.4 million) of facility overhead costs and $0.4 million (2013: $0.5 million) for depreciation of production equipment. (In the First Three Quarters of 2013 there was an impairment loss on inventory of $3.4 million.)

~~Operating~~Item ~~Expenses~~1A. Risk Factors

~~During~~We ~~the~~are ~~First~~a ~~Three~~smaller ~~Quarters~~reporting ofcompany ~~2014~~as wedefined ~~recorded~~by ~~operating expenses~~Rule of12b-2 ~~$3.9 million compared to operating expenses~~ of ~~$6.1 million for the~~ ~~First~~the ~~Three~~Exchange ~~Quarters~~Act ofand ~~2013,~~are anot ~~decrease~~required ofto ~~$2.2~~provide ~~million or approximately 35%. Causes for~~ the ~~reduction~~information ~~are~~required ~~a decrease in general and administrative expenses~~under ofthis $1item.8 ~~million and a reduction in marketing and promotion expense of $0.3 million.~~

~~Marketing~~Item ~~and promotion expenses comprised of marketing salaries and sales development costs were $0~~2.3 ~~million~~Unregistered ~~for~~Sales ~~the First Three Quarters~~ of ~~2014,~~Equity aSecurities ~~decrease of $0.3 million or approximately 50% from $0.6 million for the First Three Quarters of 2013. The decrease was primarily driven by a $0.1 million reduction in product development costs~~ and ~~investor~~Use ~~relations and public relations expenses~~ of ~~$0.2 million.~~Proceeds

24During our fiscal quarter ended March 28, 2015, we did not sell any equity securities that were not registered under the U.S. Securities Act of 1933, as amended.

~~General~~Item ~~and administrative (G&A) expenses for the First Three Quarters of 2014 decreased to $~~3.6 ~~million,~~Defaults aupon ~~reduction~~Senior of $1.8 million or approximately 33% from $5.4 million for the First Three Quarters of 2013. The decrease was primarily caused by a $0.4 million reduction in salaries and consultants expense, a decrease in professional fees of $0.2 million, a $0.8 million reduction in stock-based compensation, and a reduction of $0.4 million in general office and other administration costs. Securities

~~Other~~None. ~~Items~~

~~Interest~~Item ~~expense increased to $1.6 million for the First Three Quarters of 2014, compared to $1.~~4 ~~million for the First Three Quarters of 2013, an increase of $0~~.2 ~~million,~~Mine ~~resulting~~Safety from interest on the convertible debentures, amortization of deferred debt issuance cost and debt discount. Interest expense is attributable to the convertible debenture interest, European facility loan interest, IKEA loan interest and note payable interest, and the amortization of the deferred debt issuance costs. Accretion expense increased to $0.5 million from the beneficial conversion feature of the promissory notes and amortization of bonus shares issued with promissory notes in the First Three Quarters of 2014, compared to $0 for the First Three Quarters of 2013. During the First Three Quarters of 2014 there was a gain in the settlement of debt of $0.2 million, compared to $0 in the First Three Quarters of 2013. For the First Three Quarters of 2014 compared to the First Three Quarters of 2013, the fair value adjustment of derivative liabilities was a gain of $0.9 million compared to a gain of $0.5 million.Disclosures

~~Net~~Not ~~Loss~~applicable.

~~Our~~Item ~~net loss for the First Three Quarters of 2014 was $6~~5.~~0 million,~~ orOther ~~$0.11 per share, compared to $11.9 million, or $0.27 per share for the First Three Quarters of 2013.~~Information

~~For~~Not ~~the~~applicable ~~First Three Quarters of 2014, the weighted average number of shares outstanding was 52,952,822 compared to 44,421,148 for the First Three Quarters of 2013.~~

~~LIQUIDITY~~Item ~~AND~~6. ~~CAPITAL RESOURCES~~ Exhibits

First Three Quarters 2014 Compared to Fiscal Year Ended December 28, 2013

Exhibit	Document
No.
3.1	Notice of Articles (23)
3.2	Articles, as amended (23)
4.1	Convertible Debenture Indenture among CRAiLAR Technologies Inc. and Computershare Trust Company of Canada, dated September 20, 2012 (18)
4.2	Convertible Debenture Indenture among CRAiLAR Technologies Inc. and Computershare Trust Company of Canada, dated February 25, 2013 (16)
4.3	Form of Subscription Agreement for Secured Subordinated Convertible Debentures (February 25, 2013) (16)
4.4	Convertible Debenture Indenture among CRAiLAR Technologies Inc. and Computershare Trust Company of Canada, dated July 26, 2013 (19)
4.5	Form of Subscription Agreement for Secured Convertible Debentures (July 26, 2013) (19)
4.6	Form of Warrant (July 26, 2013) (19)
4.7	Amended and Restated Convertible Debenture Indenture among Crailar Technologies Inc. and Computershare Trust Company of Canada, dated December 23, 2013 (21)
4.8	Form of Subscription Agreement for December 20, 2013 private placement (21)
4.9	Form of Warrant for December 20, 2013 private placement (21)
4.10	Form of Warrant for August 6, 2014 offering (26)
10.1	Collaboration Agreement dated effective May 7, 2004 between Hemptown Clothing, Inc., and the National Research Council of Canada (1)
10.2	Renewed Collaboration Agreement dated effective December 7, 2007 between CRAiLAR Fiber Technologies Inc., and the National Research Council of Canada (1)
10.3	Amendment to the Renewed Collaboration Agreement dated effective February 19, 2010 between Naturally Advanced Technologies Inc. and the National Research Council of Canada (1)
10.4	Master Agreement for Technology Development between Alberta Research Council and CRAiLAR Fiber Technologies dated January 1, 2007 (2)
10.5	CEO Executive Services Agreement between Naturally Advanced Technologies Inc. and Meriwether Accelerators LLC dated November 27, 2007 with effective date of August 24, 2007 (3)
10.6	2006 Stock Option Plan (4)
10.7	Letter Agreement dated September 2, 2008 between Naturally Advanced Technologies Inc. and Lipper/Heilshorn & Associates, Inc. (5)
10.8	Renewal of CEO Executive Services Agreement between Naturally Advanced Technologies Inc. and Meriwether Accelerators LLC dated October 14, 2008 (6)
10.9	2008 Fixed Share Stock Option Plan (7)
10.10	CEO Executive Services Agreement between Naturally Advanced Technologies Inc. and Kenneth Barker, dated for reference August 24, 2009 (9)
10.11	Service Agreement between Naturally Advanced Technologies Inc. and OrganicWorks Marketing LLC dated November 25, 2010 (9)

		2014			2013
		(in thousands)
Cash and cash equivalents	$	4,790		$	1,193
Working capital	$	(792	)	$	(3,426	)
Total assets	$	26,448		$	21,490
Total liabilities	$	27,544		$	23,504
Shareholders’ equity (deficit)	$	(1,096	)	$	(2,014	)

The Company has historically relied on equity financings, and more recently on sales of convertible debentures, to fund its operations. On August 15, 2014 the Company completed a “Follow On” equity financing with gross proceeds of $1 million. On August 6, 2014 the Company completed an equity financing with gross proceeds of $6.5 million. On June 2, 2014 the Company completed an equity financing for settlement of $927,944 in debts. On March 20, 2014, the Company completed an equity financing with gross proceeds of $3.1 million. On December 20, 2013, the Company completed an equity financing with gross proceeds of $1.9 million (CAD$2.0 million). On December 19, 2013, but having an effective date of November 29, 2013, we entered into a loan agreement to borrow up to $2.9 million (€2.2 million, approximately CAD$3.2 million). The Company has drawn on the loan $2.9 million (€2.2 million), which was used for capital expenditures for the European processing facility and general working capital. In February 2013, the Company completed a convertible debt financing for gross proceeds of $4.9 million (CAD$5.0 million). In July 2013, the Company completed an additional convertible debt financing for gross proceeds of $3.4 million (CAD$3.5 million). In September 2012, the Company completed a convertible debt financing for gross proceeds of $10.1 million (CAD$10.0 million). The Company expects to fund future operations and expansion from its current cash position, through bank debt, government loan programs, customer financing, lease programs, additional equity and debt financings, as well as through cash generated from operations.

10.12	Equipment Lease and Location Sublease dated August 9, 2010 between Naturally Advanced Technologies Inc. and Eastern Flax of South Carolina, LLC (10)
10.13	2010 Fixed Share Option Plan (11)
10.14	Lease Agreement, dated June 30, 2011 between 0702311 BC Ltd. and Naturally Advanced Technologies Inc. (13)
10.15	Office Lease Agreement dated August 8, 2011 between Naturally Advanced Technologies Inc. and MDW Properties, LLC (13)
10.16	Lease Agreement dated July 1, 2011 between Naturally Advanced Technologies Inc. and Jessie Dale McCollough (13)
10.17	2011 Fixed Share Option Plan, as amended (28)
10.18	Lease Agreement dated March 14, 2012 between Colony Square Investment Company, LLC and Naturally Advanced Technologies US Inc. (13)
10.19	Supply Agreement among CRAiLAR Technologies Inc. and Kowa Company Ltd., dated January 10, 2013 (14)
10.20	Development Agreement among CRAiLAR Technologies Inc. and Cotswold Industries Inc., dated February 10, 2013 (15)
10.21	Senior Executive Employment Agreement between the Company and Kenneth Barker, dated April 2, 2012 (18)
10.22	Senior Executive Employment Agreement between the Company and Guy Prevost, dated April 2, 2012 (18)
10.23	Senior Executive Employment Agreement between the Company and Jason Finnis, dated April 2, 2012 (18)
10.24	Senior Executive Employment Agreement between the Company and Larisa Harrison, dated April 2, 2012 (18)
10.25	Senior Executive Employment Agreement between the Company and Jay Nalbach, dated April 24, 2012 (18)
10.26	Senior Executive Employment Agreement between the Company and Tom Robinson dated June 18, 2012 (18)
10.27	Marketing and Development Agreement among CRAiLAR Technologies Inc. and Cone Denim LLC., dated March 11, 2013 (17)
10.28	Demand Convertible Promissory Note from CRAiLAR Technologies Inc. to Robert Edmunds, dated October 11, 2013 (20)
10.29	Asset Purchase Agreement between Schrurs NV, CRAiLAR Technologies Inc. and Mr. Serge Schrurs, dated November 6, 2013 (24) (†)
10.30	Loan Agreement between Crailar Technologies Inc. and IKEA Supply AG, dated November 29, 2013 (24) (†)
10.31	General Supply Agreement between Crailar Technologies Inc. and IKEA Supply AG, dated December 9, 2013 (22) (†)
10.32	Asset Purchase Agreement between Schrurs NV, CRAiLAR Technologies Inc. and Mr. Serge Schrurs, dated December 13, 2013 (22) (†)
10.33	Framework Agreement Development Work between IKEA Supply AG, Crailar Technologies Inc. and Schrurs NV, dated December 13, 2013 (22) (†)
10.34	Tripartite Agreement between National Research Council of Canada, CRAiLAR Technologies Inc. and IKEA Supply AG, dated December 18, 2013 (21)
10.35	Amended and Restated Promissory Note from Crailar Technologies Inc. to Jason Finnis, dated January 21, 2014 (21)
10.36	Amended and Restated Promissory Note from Crailar Technologies Inc. to Kenneth Barker, dated January 21, 2014 (21)
10.37	Amended and Restated Promissory Note from Crailar Technologies Inc. to Robert Edmunds, dated January 21, 2014 (21)
10.38	Senior Executive Employment Agreement between Crailar Technologies Inc. and Ted Sanders, dated April 16, 2014 (25)
10.39	Consulting Services Agreement between Crailar Technologies Inc. and Kenneth C. Barker, dated November 10, 2014 (27)
14.1	Code of Ethics (8)
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act *
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act *
32.1	Certification of Chief Executive Officer and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
101.INS	XBRL Instance Document *
101.SCH	XBRL Taxonomy Extension Schema *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase *
101.DEF	XBRL Taxonomy Extension Definition Linkbase *
101.LAB	XBRL Taxonomy Extension Label Linkbase *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase *

~~Net~~24 ~~Cash Used in Operating Activities~~

Net cash flows used in operating activities for the First Three Quarters of 2014 were $6.4 million compared with $7.5 million for the First Three Quarters of 2013. Cash flows used in operations for the First Three Quarters of 2014 consisted primarily of a net loss of $6.1 million offset by the following items: amortization and depreciation of $0.4 million (2013: $0.9 million), primarily related to production equipment in Europe for 2014 and to the decortication facility in the USA in 2013; accretion of debt and amortization of deferred debt issuance costs of $0.8 million (2013: $0.3 million), which includes expenses related to the beneficial conversion feature of the promissory notes and amortization of the bonus shares issued pursuant to the promissory note; fair value adjustment of derivative liability of $(0.9 million) (2013: $(0.5 million)), the gain in 2013 related to the expiration of warrants having an exercise price in a currency other than the Company’s functional currency; rent of $0.0 million (2013: $0.1 million) related to the lease deferral at the South Carolina decortication facility; stock-based compensation of $0.8 million (2013; $1.6 million) was lower because of fewer options vesting in 2014 than in 2013; gain on settlement of debt $(0.2 million) (2013:$0); impairment of inventory of $0 (2013: $3.4 million) relating to the write down of raw feedstock and Crailar fiber to market price; (increase) in accounts receivable of $(1.3 million) due to increased Crailar sales in Europe (2013: $0.0 million); a decrease in inventory of $0.1 million (2013: $(2.9 million)); a decrease in prepaid expenses of $0.1 million (2013: $(0.2 million) mostly due to the timing of insurance, financing and listing costs; an increase in accounts payable of $(0.3 million) (2013: $0.6 million); and an increase in accrued liabilities of $0.1 million (2013: $1.0 million) mostly related to debenture interest.

*	Filed herewith.
(1)	Filed as an exhibit to our Form 8-K as filed with the SEC on March 8, 2010.
(2)	Filed as an exhibit to our Form 8-K as filed with the SEC on June 25, 2007.
(3)	Filed as an exhibit to our Form 8-K as filed with the SEC on December 21, 2007.
(4)	Filed as an exhibit to our Form 10-KSB for fiscal year ended December 31, 2006 as filed with the SEC on March 31, 2007.
(5)	Filed as an exhibit to our Form 8-K as filed with the SEC on September 8, 2008.
(6)	Filed as an exhibit to our Form 8-K as filed with the SEC on October 28, 2008.
(7)	Filed as an exhibit to our Form S-8 as filed with the SEC on October 10, 2008.
(8)	Filed as an exhibit to our Form 10-KSB for fiscal year ended December 31, 2007 as filed with the SEC on April 11, 2008
(9)	Filed as an exhibit to our Form 10-K for the fiscal year ended December 31, 2010, as filed with the SEC on April 13, 2010.
(10)	Filed as an exhibit to our Form 8-K as filed with the SEC on August 12, 2010.
(11)	Filed as an exhibit to our Form 10-Q for the quarter ended September 30, 2010, as filed with the SEC on November 15, 2011.
(12)	Filed as an exhibit to our Form S-8 as filed with the SEC on February 16, 2012.
(13)	Filed as an exhibit to our Form 10-Q for the quarter ended March 31, 2012, as filed with the SEC on May 11, 2012.
(14)	Filed as an exhibit to our Form 8-K as filed with the SEC on January 16, 2013.
(15)	Filed as an exhibit to our Form 8-K as filed with the SEC on February 14, 2013.
(16)	Filed as an exhibit to our Form 8-K as filed with the SEC on February 26, 2013.
(17)	Filed as an exhibit to our Form 8-K as filed with the SEC on March 14, 2013.
(18)	Filed as an exhibit to our Form 10-K as filed with the SEC on March 18, 2013.
(19)	Filed as an exhibit to our Form 8-K as filed with the SEC on July 31, 2013.
(20)	Filed as an exhibit to our Form 10-Q as filed with the SEC on November 7, 2013.
(21)	Filed as an exhibit to our Form 8-K as filed with the SEC on February 5, 2014.
(22)	Filed as an exhibit to our Form 8-K/A as filed with the SEC on February 21, 2014.
(23)	Filed as an exhibit to our Form 10-K for the fiscal year ended December 28, 2013, as filed with the SEC on March 28, 2014.
(24)	Filed as an exhibit to our Form 8-K/A as filed with the SEC on May 6, 2014.
(25)	Filed as an exhibit to our Form 10-Q for the quarter ended March 29, 2014, as filed with the SEC on May 19, 2014.
(26)	Filed as an exhibit to our Registration Statement on Form S-1 (Amendment No. 2), as filed with the SEC on July 31, 2014.
(27)	Field as an exhibit to our Form 8-K filed with the SEC on November 17, 2014.
(28)	Filed as an exhibit to our Form 10-K for fiscal year ended December 31, 2014 , as filed with the SEC on April 13, 2015.
(†)	Portions of this exhibit have been omitted pursuant to a request for confidential treatment.

~~Net~~SIGNATURES ~~Cash Used in Investing Activities~~

~~Net~~Pursuant ~~cash~~to ~~flows used in investing activities for~~ the ~~First~~requirements ~~Three Quarters~~ of ~~2014 were $1.1 million, compared to $2.8 million for~~ the ~~First~~Securities ~~Three Quarters~~Exchange ofAct ~~2013. Cash flows used in investing activities consisted primarily~~ of ~~the~~1934, ~~acquisition of property and equipment for~~ the ~~European~~registrant ~~production~~has ~~facility of~~duly ~~$1.1~~caused ~~million~~this ~~(compared~~report ~~with~~to ~~$2.7~~be ~~million~~signed ~~for~~on ~~the~~its ~~purchase~~behalf ~~of equipment at the~~by ~~U.S.~~the ~~decortication~~undersigned, ~~plant~~thereunto induly ~~2013)~~authorized.

Net Cash Provided by Financing Activities

CRAILAR TECHNOLOGIES INC.

By:	/s/ Lesley Hayes
	Lesley Hayes
	Chief Executive Officer and a director
	Date: May 18, 2015

By:	/s/ Theodore Sanders
	Theodore Sanders
	Chief Financial Officer
	Date: May 18, 2015

Cash flows provided by financing activities for the First Three Quarters of 2014 totaled $11.2 million compared to $7.5 million during for the First Three Quarters of 2013. The Company received proceeds from equity financings of $9.1 million (2013: $0.2 million) and received proceeds from long term debt of $3.0 million (2013: $0) and had debt issuance costs of $0.1 million (2013: $0.9 million). The Company also repaid promissory notes and loans $0.8 million (2013: $0). During the First Three Quarters of 2013, we received proceeds of $8.1 million from the issuance of convertible debentures.

Effect of Exchange Rate

The effect of exchange rates on cash resulted in an unrealized loss of $84,275 for the First Three Quarters of 2014, as compared with an unrealized gain of $280,247 for the First Three Quarters of 2013.

MATERIAL COMMITMENTS

Debt Offerings

Holders of the September 2012 Debentures and the February 2013 Debentures have the option to convert their debentures into common stock at a price of $2.85 (CAD$2.90) per share of common stock at any time prior to their respective maturity date. We may redeem the September 2012 Debentures and the February 2013 Debentures after September 30, 2015 provided that the market price at the time of the redemption notice is not less than 125% of the conversion price.

In accordance with the conditions of the IKEA Loan (defined below), we approached the debenture holders (the “Debentureholders”) of the July 2013 Debentures about releasing their security over certain assets held by our subsidiary, CRAiLAR Inc., having an acquisition cost of $1.3 million, which form a portion of the assets securing the July 2013 Debentures pursuant to the Guaranty and Security Agreement (the “Guaranty”) between CRAiLAR Inc. (the “Guarantor”) and Computershare Trust Company of Canada (the “Trustee”), dated July 26, 2013, as set forth in Schedule “A” to the Guaranty, to be used as separate security for the IKEA Loan to us. As consideration for such alteration to the secured assets, the conversion price of the July 2013 Debentures was reduced from $1.94 (CAD$2.00) per share to $1.21 (CAD$1.25) per share. On December 23, 2013, the Trustee and us entered into an Amended and Restated Convertible Debenture Indenture which reflects the modification and alteration of the rights of the Debentureholders and the Trustee against us with respect to (i) the secured assets to now only include those specific assets held by the Guarantor as set forth in Schedule “F” to the Amended and Restated Convertible Debenture Indenture having an acquisition cost of $3.9 million, and (ii) the reduction of the conversion price of the July 2013 Debentures from $1.94 (CAD$2.00) per share to $1.21 (CAD$1.25) per share. In addition, on the same date, the Guarantor and the Trustee entered into an Amended and Restated Guaranty and Security Agreement, which reflects the modification and alteration with respect to the secured assets as discussed above.

Debt

On December 1, 2013, we purchased certain assets of a European fiber dyeing facility. We acquired these assets by assuming an aggregate of $1.2 million of the seller’s debts, which we have agreed to repay on the earlier of their respective due dates and December 1, 2018. On December 13, 2013, we entered into an amended asset purchase agreement for such assets, which replaced the initial asset purchase agreement and provides that the title to and economic risk in respect of the environmental permit and the employees passed to us on December 1, 2013, however, the title to the equipment at the facility shall only pass to us upon full payment of the foregoing assumed indebtedness of the seller, notwithstanding the fact that physical possession and economic risk of all assets of the acquired facility passed to us on December 1, 2013. We have reached an oral agreement with the seller to lease the real property for the facility and are in the process of formalizing that oral agreement.

On December 19, 2013, but having an effective date of November 29, 2013, we entered into a loan agreement (the “Loan Agreement”) with IKEA Supply AG (“IKEA”), whereby IKEA agreed to loan us $3.0 million (€2.2 million, approximately CAD$3.2 million) (the “IKEA Loan”) having a term until June 25, 2016 and bearing interest at a rate of 1.9% per annum. As security for the IKEA Loan, IKEA required that the IKEA Loan be secured by assets purchased with the proceeds of the IKEA Loan, as well as a portion of the secured assets used to secure the July 2013 Debentures. The proceeds from the IKEA Loan are designated for the installation of equipment to support and expand our European production facility and for working capital to fulfill IKEA orders. During the First Three Quarters of 2014 the Company received $2,906,985 (€2,200,000) pursuant to the loan agreement.

We repaid the following loan arrangements with each of the following directors: Jason Finnis, Kenneth Barker and Robert Edmunds during the First Three Quarters of 2014:

•

Finnis. Pursuant to a convertible promissory note, dated for reference October 11, 2013, Mr. Finnis provided us a loan in the principal amount of $96,180 (CAD$100,000) bearing interest at a rate of 12% per annum and due on December 11, 2013. On November 7, 2013, we repaid to Mr. Finnis $47,885 (CAD$50,000), such that a principal amount of $47,885 (CAD$50,000) remained due and payable on the loan. Pursuant to a loan extension agreement, dated for reference December 18, 2013, Mr. Finnis and we agreed to extend the term for repayment of the loan and interest thereon until the earlier of (i) December 20, 2014 and (ii) such time as we complete our next public offering of registered securities by way of a registration statement on Form S-1 of not less than $2.8 million (CAD$3.0 million) in gross proceeds to us. We repaid this loan and interest thereon in full in April 2014.

•

Barker. Pursuant to a convertible promissory note, dated for reference October 11, 2013, Mr. Barker provided us a loan in the principal amount of $50,000 bearing interest at a rate of 12% per annum and due and payable on December 11, 2013. Pursuant to a loan extension agreement, dated for reference December 18, 2013, Mr. Barker and we agreed to extend the term for repayment of the loan and interest thereon until the earlier of (i) December 20, 2014 and (ii) such time as we complete our next public offering of registered securities by way of a registration statement on Form S-1 of not less than $2.8 million (CAD$3.0 million) in gross proceeds to us. We repaid this loan and interest thereon in full in April 2014.

• Edmunds. Pursuant to demand convertible promissory notes, dated for reference October 11, 2013 and December 4, 2013, respectively, Mr. Edmunds provided us loans in the aggregate principal amount of $509,624 (CAD$545,000) bearing interest at a rate of 20% per annum. Pursuant to a loan extension agreement, dated for reference December 18, 2013, Mr. Edmunds and we agreed to extend the term for repayment of the loan and interest thereon until the earlier of (i) December 20, 2014 and (ii) such time as we complete our next public offering of registered securities by way of a registration statement on Form S-1 of not less than $2.8 million (CAD$3.0 million) in gross proceeds to us. As consideration for the extension, we issued to Mr. Edmunds 181,666 shares of our common stock at a deemed value of $0.56 (CAD$0.60) per share. We repaid this loan and interest thereon in full in April 2014.

We are committed to annual debt and debenture interest payments over the next five years as follows (in thousands):

2014	$	450
2015		1,738
2016		1,574
2017		1,021
2018		15
Total	$	4,798

Annual Leases

We are committed to current annual lease payments totaling $1.1 million for all of our premises under lease. Approximate minimum lease payments over the next five years are as follows (in thousands):

2014	$	70
2015		261
2016		261
2017		261
2018		205
Total	$	1,058

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this report, we do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest; or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

SUBSEQUENT EVENT

On November 10, 2014, subsequent to the Company’s Annual General and Special Meeting of Shareholders on that date, Kenneth Barker (the Chief Executive Officer and a director of the Company) resigned as an officer and director of the Company, and Lesley Hayes (a director of the Company and Chair of the Board) was appointed interim Chief Executive Officer of the Company.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Lesley Hayes, our Chief Executive Officer, and Theodore Sanders, our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, they concluded that our disclosure controls and procedures were effective as of September 27, 2014.

No Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our fiscal quarter ended September 27, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Management is not aware of any material legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Report, no director, officer or affiliate is a party adverse to us in any legal proceeding, or has an adverse interest to us in any legal proceedings. Management is not aware of any other material legal proceedings pending or that have been threatened against us or our properties.

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During our fiscal quarter ended September 27, 2014, we did not sell any equity securities that were not registered under the U.S. Securities Act of 1933, as amended.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable

Item 6. Exhibits

Exhibit	Document
No.
3.1	Notice of Articles (23)
3.2	Articles, as amended (23)
4.1	Convertible Debenture Indenture among CRAiLAR Technologies Inc. and Computershare Trust Company of Canada, dated September 20, 2012 (18)
4.2	Convertible Debenture Indenture among CRAiLAR Technologies Inc. and Computershare Trust Company of Canada, dated February 25, 2013 (16)
4.3	Form of Subscription Agreement for Secured Subordinated Convertible Debentures (February 25, 2013) (16)
4.4	Convertible Debenture Indenture among CRAiLAR Technologies Inc. and Computershare Trust Company of Canada, dated July 26, 2013 (19)
4.5	Form of Subscription Agreement for Secured Convertible Debentures (July 26, 2013) (19)
4.6	Form of Warrant (July 26, 2013) (19)
4.7	Amended and Restated Convertible Debenture Indenture among Crailar Technologies Inc. and Computershare Trust Company of Canada, dated December 23, 2013 (21)
4.8	Form of Subscription Agreement for December 20, 2013 private placement (21)
4.9	Form of Warrant for December 20, 2013 private placement (21)
4.10	Form of Warrant for August 6, 2014 offering (26)
10.1	Collaboration Agreement dated effective May 7, 2004 between Hemptown Clothing, Inc., and the National Research Council of Canada (1)
10.2	Renewed Collaboration Agreement dated effective December 7, 2007 between CRAiLAR Fiber Technologies Inc., and the National Research Council of Canada (1)
10.3	Amendment to the Renewed Collaboration Agreement dated effective February 19, 2010 between Naturally Advanced Technologies Inc. and the National Research Council of Canada (1)
10.4	Master Agreement for Technology Development between Alberta Research Council and CRAiLAR Fiber Technologies dated January 1, 2007 (2)

10.5	CEO Executive Services Agreement between Naturally Advanced Technologies Inc. and Meriwether Accelerators LLC dated November 27, 2007 with effective date of August 24, 2007 (3)
10.6	2006 Stock Option Plan (4)
10.7	Letter Agreement dated September 2, 2008 between Naturally Advanced Technologies Inc. and Lipper/Heilshorn & Associates, Inc. (5)
10.8	Renewal of CEO Executive Services Agreement between Naturally Advanced Technologies Inc. and Meriwether Accelerators LLC dated October 14, 2008 (6)
10.9	2008 Fixed Share Stock Option Plan (7)
10.10	CEO Executive Services Agreement between Naturally Advanced Technologies Inc. and Kenneth Barker, dated for reference August 24, 2009 (9)
10.11	Service Agreement between Naturally Advanced Technologies Inc. and OrganicWorks Marketing LLC dated November 25, 2010 (9)
10.12	Equipment Lease and Location Sublease dated August 9, 2010 between Naturally Advanced Technologies Inc. and Eastern Flax of South Carolina, LLC (10)
10.13	2010 Fixed Share Option Plan (11)
10.14	Lease Agreement, dated June 30, 2011 between 0702311 BC Ltd. and Naturally Advanced Technologies Inc. (13)
10.15	Office Lease Agreement dated August 8, 2011 between Naturally Advanced Technologies Inc. and MDW Properties, LLC (13)
10.16	Lease Agreement dated July 1, 2011 between Naturally Advanced Technologies Inc. and Jessie Dale McCollough (13)
10.17	2011 Fixed Share Option Plan, as amended (23)
10.18	Lease Agreement dated March 14, 2012 between Colony Square Investment Company, LLC and Naturally Advanced Technologies US Inc. (13)
10.19	Supply Agreement among CRAiLAR Technologies Inc. and Kowa Company Ltd., dated January 10, 2013 (14)
10.20	Development Agreement among CRAiLAR Technologies Inc. and Cotswold Industries Inc., dated February 10, 2013 (15)
10.21	Senior Executive Employment Agreement between the Company and Kenneth Barker, dated April 2, 2012 (18)
10.22	Senior Executive Employment Agreement between the Company and Guy Prevost, dated April 2, 2012 (18)
10.23	Senior Executive Employment Agreement between the Company and Jason Finnis, dated April 2, 2012 (18)
10.24	Senior Executive Employment Agreement between the Company and Larisa Harrison, dated April 2, 2012 (18)
10.25	Senior Executive Employment Agreement between the Company and Jay Nalbach, dated April 24, 2012 (18)
10.26	Senior Executive Employment Agreement between the Company and Tom Robinson dated June 18, 2012 (18)
10.27	Marketing and Development Agreement among CRAiLAR Technologies Inc. and Cone Denim LLC., dated March 11, 2013 (17)
10.28	Demand Convertible Promissory Note from CRAiLAR Technologies Inc. to Robert Edmunds, dated October 11, 2013 (20)
10.29	Asset Purchase Agreement between Schrurs NV, CRAiLAR Technologies Inc. and Mr. Serge Schrurs, dated November 6, 2013 (24) (†)
10.30	Loan Agreement between Crailar Technologies Inc. and IKEA Supply AG, dated November 29, 2013 (24) (†)
10.31	General Supply Agreement between Crailar Technologies Inc. and IKEA Supply AG, dated December 9, 2013 (22) (†)
10.32	Asset Purchase Agreement between Schrurs NV, CRAiLAR Technologies Inc. and Mr. Serge Schrurs, dated December 13, 2013 (22) (†)
10.33	Framework Agreement Development Work between IKEA Supply AG, Crailar Technologies Inc. and Schrurs NV, dated December 13, 2013 (22) (†)
10.34	Tripartite Agreement between National Research Council of Canada, CRAiLAR Technologies Inc. and IKEA Supply AG, dated December 18, 2013 (21)
10.35	Amended and Restated Promissory Note from Crailar Technologies Inc. to Jason Finnis, dated January 21, 2014 (21)
10.36	Amended and Restated Promissory Note from Crailar Technologies Inc. to Kenneth Barker, dated January 21, 2014 (21)
10.37	Amended and Restated Promissory Note from Crailar Technologies Inc. to Robert Edmunds, dated January 21, 2014 (21)
10.38	Senior Executive Employment Agreement between Crailar Technologies Inc. and Ted Sanders, dated April 16, 2014 (25)
10.39	Form of Request for Wavier of Right to Exercise Options (26)
14.1	Code of Ethics (8)
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act *
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act *
32.1	Certification of Chief Executive Officer and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

101.INS	XBRL Instance Document *
101.SCH	XBRL Taxonomy Extension Schema *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase *
101.DEF	XBRL Taxonomy Extension Definition Linkbase *
101.LAB	XBRL Taxonomy Extension Label Linkbase *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase *

*	Filed herewith.
(1)	Filed as an exhibit to our Form 8-K as filed with the SEC on March 8, 2010.
(2)	Filed as an exhibit to our Form 8-K as filed with the SEC on June 25, 2007.
(3)	Filed as an exhibit to our Form 8-K as filed with the SEC on December 21, 2007.
(4)	Filed as an exhibit to our Form 10-KSB for fiscal year ended December 31, 2006 as filed with the SEC on March 31, 2007.
(5)	Filed as an exhibit to our Form 8-K as filed with the SEC on September 8, 2008.
(6)	Filed as an exhibit to our Form 8-K as filed with the SEC on October 28, 2008.
(7)	Filed as an exhibit to our Form S-8 as filed with the SEC on October 10, 2008.
(8)	Filed as an exhibit to our Form 10-KSB for fiscal year ended December 31, 2007 as filed with the SEC on April 11, 2008
(9)	Filed as an exhibit to our Form 10-K for the fiscal year ended December 31, 2010, as filed with the SEC on April 13, 2010.
(10)	Filed as an exhibit to our Form 8-K as filed with the SEC on August 12, 2010.
(11)	Filed as an exhibit to our Form 10-Q for the quarter ended September 30, 2010, as filed with the SEC on November 15, 2011.
(12)	Filed as an exhibit to our Form S-8 as filed with the SEC on February 16, 2012.
(13)	Filed as an exhibit to our Form 10-Q for the quarter ended March 31, 2012, as filed with the SEC on May 11, 2012.
(14)	Filed as an exhibit to our Form 8-K as filed with the SEC on January 16, 2013.
(15)	Filed as an exhibit to our Form 8-K as filed with the SEC on February 14, 2013.
(16)	Filed as an exhibit to our Form 8-K as filed with the SEC on February 26, 2013.
(17)	Filed as an exhibit to our Form 8-K as filed with the SEC on March 14, 2013.
(18)	Filed as an exhibit to our Form 10-K as filed with the SEC on March 18, 2013.
(19)	Filed as an exhibit to our Form 8-K as filed with the SEC on July 31, 2013.
(20)	Filed as an exhibit to our Form 10-Q as filed with the SEC on November 7, 2013.
(21)	Filed as an exhibit to our Form 8-K as filed with the SEC on February 5, 2014.
(22)	Filed as an exhibit to our Form 8-K/A as filed with the SEC on February 21, 2014.
(23)	Filed as an exhibit to our Form 10-K for the fiscal year ended December 28, 2013, as filed with the SEC on March 28, 2014.
(24)	Filed as an exhibit to our Form 8-K/A as filed with the SEC on May 6, 2014.
(25)	Filed as an exhibit to our Form 10-Q for the quarter ended March 29, 2014, as filed with the SEC on May 19, 2014.
(26)	Filed as an exhibit to our Registration Statement on Form S-1 (Amendment No. 2), as filed with the SEC on July 31, 2014.
(†)	Portions of this exhibit have been omitted pursuant to a request for confidential treatment.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CRAILAR TECHNOLOGIES INC.

By: /s/ Lesley Hayes Lesley Hayes Chief Executive Officer and a director Date: November 12, 2014 By: /s/ Theodore Sanders Theodore Sanders Chief Financial Officer Date: November 12, 2014

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