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

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

"The fourth quarter was a period of transition where accounting numbers do not reflect the tremendous progress we made positioning the Company for success" stated Kenneth C. Barker, Chief Executive Officer. "We now have the the ability to produce high quality CRAiLAR Flax

Fiber for our customers and, for the first time, we have funding from highly regarded brands that serve as an endorsment of our product and our potential. We are now shipping CRAiLAR Flax Fiber to our customers as we optimize our new production facility and we look forward to future investor updates."

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

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

Non-GAAP Financial Measures

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

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

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

This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible

to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company's non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

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

About CRAiLAR Technologies Inc.

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

evaluation and development. The Company was founded in 1998 as a provider of environmentally friendly, socially responsible clothing. For more information, visit www.crailar.com.

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