10-Q

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 SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 27, 2015

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

For the transition period from _____to _____

Commission File Number: 000-50367

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

British Columbia	98-0359306
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

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 of common stock as of August 12, 2015.

CRAILAR TECHNOLOGIES INC.

Quarterly Report On Form 10-Q
For The Quarterly Period Ended
June 27, 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	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23
PART II – OTHER INFORMATION		23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24

2

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 27, 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.

3

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

The following unaudited interim financial statements of Crailar 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

4

CRAiLAR Technologies Inc.

Consolidated Balance Sheets

(In thousands of US Dollars)

		June 27, 2015			December 27, 2014
		(Unaudited)
ASSETS
Current
Cash and cash equivalents	$	98		$	1,196
Accounts receivable		1,199			3,107
Inventory (Note 2)		421			449
Prepaid expenses and deposits		423			336
		2,141			5,088
Deferred Debt Issuance Costs (Note 5)		774			967
Property and Equipment, net (Note 3)		9,499			10,013
Intangible Assets, net (Net 4)		120			129
	$	12,534		$	16,197
LIABILITIES
Current
Accounts payable	$	1,793		$	2,017
Accrued liabilities		1,195			1,224
Unearned revenue		264			264
Current Portion of loans payable		479			546
Current portion of long term debt (Note 5)		148			161
Derivative liabilities		492			872
		4,371			5,084
Loans Payable		272			361
Long Term Debt (Note 5)		16,996			18,024
		21,639			23,469
STOCKHOLDERS' DEFICIT
Capital Stock
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
Additional Paid-in Capital		15,615			15,219
Other Comprehensive Income		1,804			1,483
Deficit		(66,189	)		(63,639	)
		(9,105	)		(7,272	)
	$	12,534		$	16,197

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

5

CRAiLAR Technologies Inc.

Consolidated Statements of Operations

(In thousands of US Dollars)

(Unaudited)

		Thirteen week			Thirteen week			Twenty-six week			Twenty-six week
		period ended			period ended			period ended			period ended
		June 27, 2015			June 28, 2014			June 27, 2015			June 28,2014
Revenues	$	1,804		$	743		$	3,531		$	1,178
Cost of sales
Materials and direct product costs		1,617			685			3,106			1,045
Production facility overhead costs		68			77			137			175
Facility commissioning costs		-			251			-			503
Depreciation		206			132			415			235
		1,891			1,145			3,658			1,958
Gross loss		(87	)		(402	)		(127	)		(780	)
Expenses
Marketing and promotion		57			93			184			176
Amortization and depreciation		19			26			37			50
General and administrative		830			1,179			1,864			2,414
		906			1,298			2,085			2,640
Loss before other items		(993	)		(1,700	)		(2,212	)		(3,420	)
Other income (expense):
Accretion expense		(61	)		(175	)		(120	)		(437	)
Research and development		(72	)		(64	)		(133	)		(117	)
Interest		(439	)		(524	)		(973	)		(1,064	)
Gain on debt settlement		-			234			-			234
Fair value adjustment derivative liabilities		206			264			380			264
Exchange gain (loss)		(1,013	)		-			508			-
		(1,379	)		(265	)		(338	)		(1,120	)
Net Loss		(2,372	)		(1,965	)		(2,550	)		(4,540	)
Other comprehensive income (loss)
Exchange differences on translating to presentation currency		966			(481	)		321			99
Comprehensive loss	$	(1,406	)	$	(2,446	)	$	(2,229	)	$	(4,441	)
Loss per share (basic and diluted)	$	(0.04	)	$	(0.04	)	$	(0.04	)	$	(0.09	)
Weighted average number of common shares outstanding	$	66,378,003		$	50,892,464		$	66,378,003		$	49,540,232

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

6

CRAiLAR Technologies Inc.

Consolidated Statements of Cash Flows

(In thousands of US Dollars)

(Unaudited)

		Twenty-six week			Twenty-six week
		period ended			period ended
		June 27, 2015			June 28, 2014
Cash flows used in operating activities
Net loss for the period	$	(2,550	)	$	(4,540	)
Adjustments to reconcile net loss to net cash from operating activities
Accretion expense		120			437
Amortization and depreciation		452			285
Amortization of deferred debt issuance costs		191			171
Fair value adjustment of derivative		(380	)		(264	)
Rent inducement		(16	)		16
Stock based compensation		396			448
Gain on settlement of debt		-			(234	)
Gain on foreign exchange		(508	)		-
Changes in working capital assets and liabilities
Increase (decrease) in accounts receivable		1,874			(929	)
Decrease (increase) in inventory		5			19
Increase in prepaid expenses		(106	)		(465	)
Increase (decrease) in accounts payable		(307	)		333
Increase (decrease) in accrued liabilities		(36	)		(217	)
Net cash used in operating activities		(865	)		(4,940	)
Cash flows used in investing activities
Purchase of property and equipment		(316	)		(1,091	)
Acquisition of intangible assets		(15	)		(23	)
Net cash flows used in investing activities		(331	)		(1,114	)
Cash flows used in financing activities
Issuance of capital stock and warrants		-			3,148
Payment of loans		(108	)		(661	)
Loans payable		-			(125	)
Proceeds from long term debt		-			2,984
Net cash flows from (used in) financing activities		(108	)		5,346
Effect of exchange rate changes on cash and cash equivalents		206			3
Decrease in cash and cash equivalents		(1,098	)		(705	)
Cash and cash equivalents, beginning		1,196			1,193
Cash and cash equivalents, ending	$	98		$	489
SUPPLEMENTAL CASH FLOW INFORMATION AND
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Cash paid for interest	$	806		$	983
Capital stock issued for share issue costs	$	-		$	221

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

7

CRAiLAR Technologies Inc.
Notes to Consolidated Financial Statements
June 27, 2015
(In US Dollars)
(Unaudited)

1. Basis of Presentation

These interim 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 Commission. They 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 27, 2014, included in the Company’s Form 10-K filed with the U.S. Securities and Exchange Commission. Operating results for the twenty-six week period ended June 27, 2015 are not necessarily indicative of the results that may be expected for the year ending December 26, 2015. These interim unaudited consolidated financial statements should be read in conjunction with the information included in the Company’s Form 10-K filed on April 13, 2015 with the U.S. Securities and Exchange Commission.

In the opinion of management, the accompanying balance sheets and related statements of operations and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with U.S. GAAP. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions.

The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and payment of liabilities in the normal course of business. The Company has a working capital deficiency of $2,230,226 at June 27, 2015 and incurred losses since inception of $66,189,168 and further losses are anticipated in the development of its business. There can be no assurance that the Company will be able to achieve or maintain profitability and future operations are dependent on raising additional funding from debt or equity financings. These factors raise substantial doubt as to the Company's ability to continue as a going concern.

The Company evaluated events occurring between June 27, 2015 and the date financial statements were issued.

2. Inventory

		June 27, 2015		December 27, 2014
CRAiLAR fiber	$	177,546	$	97,309
Decorticated fiber		44,164		258,679
Hemp		10,484		-
Other		188,823		92,581
	$	421,017	$	448,569

3. Property and Equipment

		Cost		Accumulated		Net Book Value		Net Book Value
				Depreciation		June 27, 2015		December 27, 2014
Automobiles	$	79,980	$	9,938	$	70,042	$	49,869
Computer Equipment		98,660		68,065		30,595		34,956
Computer Software		10,095		9,292		803		1,749
Equipment		676,521		74,654		601,867		612.079
Equipment held for sale		25,000		-		25,000		37,160
Furniture and fixtures		37,678		30,106		7,572		8,416
Leasehold Improvements		250,885		31,768		219,117		203,705
Production Equipment		6,488,287		1,074,502		5,413,785		5,929,684
Production Equipment in construction		3,124,937		-		3,124,937		3,124,937
Website development costs		129,561		124,131		5,430		10,857
	$	10,921,603	$	1,422,456	$	9,499,148	$	10,013,413

During the twenty-six week period ended June 27, 2015, the Company recorded depreciation expense $436,163 (2014 - $267,681) of which $415,932 (2014 - $235,359) was classified as cost of sales

8

CRAiLAR Technologies Inc.
Notes to Consolidated Financial Statements
June 27, 2015
(In US Dollars)
(Unaudited)

4. Intangible Assets

				Accumulated		Netbook Value		Net Book Value
		Cost		Amortization		June 27, 2015		December 27, 2014
Patents	$	182,270	$	109,294	$	72,976	$	75,345
Trademarks		110,979		87,805		23,174		24,592
License Fee		59,504		35,925		23,579		28,729
	$	352,753	$	233,024	$	119,729	$	128,666

During the twenty-six week period ended June 27, 2015, the Company recorded amortization expense of $16,723 (2014 - $18,104).

5. Long Term Debt

		June 27, 2015			December 27, 2014
Convertible debentures
Balance, beginning	$	15,514,592		$	16,674,686
Accretion expense		120,038			251,528
Convertible debentures converted		-			17,786
Effect of foreign exchange		(912,702	)		(1,292,836	)
Balance, ending		14,721,928			15,514,592
IKEA Loan
Balance, beginning		2,670,398			-
Loan issued		-			2,999,983
Payments		(27,643	)		-
Effect of foreign exchange		(221,365	)		(329,585	)
Balance, ending		2,421,390			2,670,398
Total long-term debt		17,143,318			18,184,990
Less: current portion		(147,642	)		(161,025	)
Long-term debt – long term portion	$	16,995,676		$	18,023,965

Deferred debt issuance costs:

		June 27, 2015			December 27, 2014
Balance, beginning	$	967,294		$	1,442,023
Issuance costs – cash		-			52,114
Amortization of issuance costs		(191,278	)		(428,073	)
Effect of foreign exchange		(1,697	)		(98,770	)
	$	774,319		$	967,294

9

CRAiLAR Technologies Inc.
Notes to Consolidated Financial Statements
June 27, 2015
(In US Dollars)
(Unaudited)

6. Capital Stock

During the twenty-six week period ended June 27, 2015, the Company did not issue shares.

Share purchase warrants outstanding as at June 27, 2015 are:

	Warrants		Weighted-Average Exercise Price
Warrants outstanding, December 27, 2014	22,932,373	$	0.74
Warrants issued	-	$	0.00
Warrants expired	-	$	0.00
Warrants outstanding, June 27, 2015	22,932,373	$	0.74

The weighted average remaining contractual life of outstanding warrants at June 27, 2015, is 3.38 years.

Stock options outstanding as at June 27, 2015 are:

	Options			Weighted-Average Exercise Price
Options outstanding, December 27, 2014	6,769,294		$	1.79
Options granted	-		$	0.00
Options cancelled/expired	(206,418	)	$	2.10
Options outstanding, June 27, 2015	6,562,876		$	1.78
Options exercisable, June 27, 2015	6,552,876		$	1.75

Stock options outstanding at June 27, 2015, are summarized as follows:

							Weighted
		Weighted Average					Average
Range of Exercise	Number	Remaining Contractual		Weighted Average	Number		Exercise
Prices	Outstanding	Life (yr)		Exercise Price	Exercisable		Price
$0.54 - $3.05	6,552,876	1.94	$	1.78	6,552,876	$	1.75

During the twenty-six week period ended June 27, 2015, options to purchase 418,600 (2014 – 467,393) common shares vested under the Company’s amended 2011 Fixed Share Option Plan. A total expense of $396,122 (2014 - $448,407) was recorded as stock-based compensation, of which $107,181 (2014 - $13,468) was included in consulting and contract labour expense and $288,941 (2014 - $434,939) was included in salaries and benefits expense.

10

CRAiLAR Technologies Inc.
Notes to Consolidated Financial Statements
June 27, 2015
(In US Dollars)
(Unaudited)

7. Segment Information

The 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.

For the twenty-six week period ended June 27, 2015 ( $ thousands)		North America			Europe			Total
Sales to external customers	$	13		$	3,518		$	3,531
Depreciation and amortization	$	32		$	420		$	452
Segment net income (loss)		($2,289	)		($261	)		($2,550	)
Total assets	$	7,384		$	5,150		$	12,534

For the twenty-six week period ended June 28, 2014 ( $ thousands)		North America			Europe			Total
Sales to external customers	$	27		$	1,151		$	1,178
Depreciation and amortization	$	49		$	237		$	286
Segment net income (loss)		($3,695	)		($845	)		($4,540	)
Total assets	$	18,869		$	3,949		$	22,818

Of the Company's sales in the period ended June 27, 2015, two customers represent 97% of the total.

8. Related Party Transactions

During the twenty-six week period ended June 27, 2015, $348,597 (2014 - $534,228) was incurred for remuneration and $233,506 (2014 - $377,264) was incurred for stock-based compensation to officers and directors of the Company.

9. Commitments

The Company is committed to lease payments totaling approximately $1,051,864 for premises under lease. The minimum lease payments over the next five years are as follows:

2015	$	129,943
2016		239,486
2017		225,600
2018		236,440
2019		220,395
Total	$	1,051,864

11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following 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

We 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 and woven constructions) available in a variety of blends, textures, colors and applications;

• CRAiLAR^® fibers for non-woven constructions.

Effective in Fiscal 2013, we began to report our first, second, 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.

Acquisition of Production Facility

We commenced production of the first stage of the 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 a third 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 acquired a European fiber dyeing facility with equipment similar to that used to produce CRAiLAR^® Flax fiber. The transaction was initiated pursuant to an Asset Purchase Agreement dated November 6, 2013, which was amended and restated on December 13, 2013. 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.

Completion of Public Offering

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 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 warrants at $0.001 per warrant for proceeds of $1,950. On August 15, 2014, 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.

Debentures

On 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 30, 2017. The 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 at any time prior to the maturity date. On February 25, 2013, we completed another offering of $4.9 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 a price of $1.94 (CAD$2.00) per share at any time prior to the maturity date. 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.

12

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Principles of Consolidation

The 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.

Cash and Cash Equivalents

Cash equivalents consist of cash on deposit and term deposits with original maturities of one year or less at the time of issuance. As of June 27, 2015, the Company had $0.1 million in cash and cash equivalents.

Inventory

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.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets 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.

Property and Equipment

Property and equipment are stated at cost and are depreciated as follows:

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

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

13

Intangible Assets

Intangible assets are stated at cost and are amortized as follows:

Trademarks	5 year straight - line
License Fee	10 year straight - line
Patent	10 year straight – line

Revenue Recognition

Revenue is recognized when there is persuasive evidence of a sale arrangement, delivery to the customer has occurred, the fee is fixed and determinable, and collectability is considered probable.

Foreign Currency Translation

The functional currencies of the Company and its subsidiaries are as follows: Crailar Technologies Inc. – US$; Crailar Inc. - US$; Hemptown USA, Inc. – US$; 0697872 B.C. Ltd. – US$; Crailar Fiber Technologies Inc. – US$; HTNaturals Apparel Corp. – US$, and Crailar Europe NV – Euro.

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 the U.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.

The Company translates its financial statements with other than US$ functional currencies 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 period 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’ deficit.

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

Income Taxes

The Company utilizes the liability method of accounting for deferred income taxes. Under the liability method, deferred income taxes are determined based on the temporary differences between the financial statement and tax 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 assets will not be realized.

Comprehensive Loss

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.

Stock-based Compensation

The Company accounts for stock-based payment transactions in which an enterprise receives services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. The Company uses the Black-Scholes option-pricing model to establish the fair-value of stock-based awards.

Earnings (Loss) Per Share

Basic and diluted earnings (loss) per share are computed using the weighted average number of shares outstanding during the year. Common stock equivalents from stock options and warrants were excluded from the calculation of net loss per share for the periods ended June 27, 2015 and June 28, 2014 as their effect is anti-dilutive.

14

Long-Lived Asset Impairment

Long-lived assets of the Company are reviewed when changes in circumstances suggest their carrying value has become impaired. Management considers assets to be impaired if the carrying value exceeds the estimated discounted future projected cash flows to result from the use of the asset and its eventual disposition. If impairment is deemed to exist, the 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

Currency risk. Although the Company conducts its business principally in Canada, the majority of its purchases are made in Euros while the majority of its sales are in USD. Currently, the majority of the Company’s debt is denominated in CAD currency. A 5% fluctuation in currency rates for the Company’s Euro debt of $158,000. The Company does not currently hedge its foreign currency exposure and accordingly is at risk for foreign currency exchange fluctuations.

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 June 27, 2015, $392,000 is due from a single customer and therefore 33% of receivables are exposed to concentration of credit risk.

Interest rate risk. Approximately $255,000 of the Company’s debt bears interest at fluctuating rates. Consequentially the Company is exposed to interest rate fluctuations. The Company does not currently hedge its exposure to interest rate risk.

Commodity 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 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.

Research and Development

Research and development costs are charged to operations as incurred.

Recent Pronouncements.

There are no recent accounting pronouncements that are applicable to the Company.

15

RESULTS OF OPERATIONS

Non-GAAP Financial Measures

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

		Thirteen Weeks Ended						Twenty-six Weeks Ended
		June 27, 2015			June 28, 2014			June 27, 2015			June 28, 2014
Consolidated
Net loss	$	(2,372	)	$	(1,965	)	$	(2,550	)	$	(4,541	)
Interest expense		439			524			973			1,064
Accretion expense		61			175			120			437
Depreciation and amortization		225			158			452			286
EBITDA		(1,647	)		(1,108	)		(1,005	)		(2,754	)
Stock-based compensation		12			378			396			448
Facility commissioning expense		-			251			-			503
Fair value adjustment derivative liabilities		(206	)		(264	)		(380	)		(264	)
Gain on settlement of debt		-			(234	)		-			(234	)
Exchange (gain) loss		1,013			-			(508	)		-
Rent inducement expense		(8	)		-			(16	)		-
Adjusted EBITDA	$	(836	)	$	(977	)	$	(1,513	)	$	(2,301	)

Regulation G, “Conditions for Use of Non-GAAP Financial Measures,” and 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, facility commissioning expense, fair value adjustment derivative liabilities, gain on settlement of debt, exchange (gain) loss, and rent inducement expense.

We believe that this non-GAAP financial measure provides important supplemental information to management and investors. This non-GAAP financial measure reflects an additional way of viewing aspects of our 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 our business and results of operations.

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.

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 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 or similar names. In addition, we expect to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

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Thirteen-Week Period Ended June 27, 2015 Compared to Thirteen-Week Period Ended June 28, 2014

		Thirteen Weeks Ended
		June 27, 2015			June 28, 2014
		(amounts in thousands, except per share data)
Revenues	$	1,804		$	743
Cost of sales
Materials and direct production costs		1,617			685
Facility commissioning costs		-			251
Production facility overhead costs		68			77
Depreciation		206			132
		1,891			1,145
Gross loss		(87	)		(402	)
Expenses:
Marketing and promotion		57			93
Amortization and depreciation		19			26
General and administrative		830			1,179
		906			1,298
Loss before other items		(993	)		(1,700	)
Other income (expense):
Accretion expense		(61	)		(175	)
Interest		(439	)		(524	)
Research and development		(72	)		(64	)
Gain on debt settlement		-			234
Fair value adjustment derivative liabilities		206			264
Exchange gain (loss)		(1,013	)		-
		(1,379	)		(265	)
Net loss		(2,372	)		(1,965	)
Exchange differences on translating to presentation currency		966			(481	)
Total comprehensive loss		(1,406	)		(2,446	)
Loss per share (basic and diluted)	$	(0.04	)	$	(0.04	)

Revenue and Gross Margins

For the thirteen week period ended June 27, 2015 (“Second Quarter 2015”) and the thirteen week period ended June 28, 2014 (“Second Quarter 2014”) our revenues were derived from sales of CRAiLAR^® fiber and other fiber (non-CRAiLAR) produced mainly at our new European production facility. Revenue for the Second Quarter 2015 was $1.8 million, an increase of $1.1 million from Q2 2014. The $1.1 million increase in revenues in the Second Quarter 2015 compared with 2014 was the result of a 118% percent increase in the production of CRAiLAR fibers.

Our gross loss for the Second Quarter 2015 was $87 thousand (2014: $0.4 million). Our variable margin was 12% and was impacted negatively by labor inefficiencies and product re-work caused by equipment downtime. Cost of sales is comprised of $1.6 million (2014: $0.7 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.

Operating Expenses

During the Second Quarter 2015 we recorded operating expenses of $0.9 million compared to operating expenses of $1.3 million for the Second Quarter 2014, a decrease of $0.3 million or approximately 30%. Causes for the reduction are a decrease in general and administrative expenses of $0.4 million.

Marketing and promotion expenses comprised of marketing salaries and sales development costs were $0.1 million the same for the Second Quarter 2015 and 2014.

General and administrative expenses for the Second Quarter 2015 decreased to $0.8 million, a reduction of $0.4 million or approximately 30% from $1.2 million for the Second Quarter 2014. The decrease was primarily caused by a $0.4 million decrease in stock based compensation and $0.1 million decrease in salary expense; partially offset by a $0.1 million increase in consulting expense.

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Other Items

Interest expense was $0.4 million for the Second Quarter 2015 and $0.5 million for the Second Quarter 2014. Interest expense is attributable to the convertible debenture interest, European facility loan interest, IKEA loan interest and the amortization of 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 and a reduction of the conversion price for convertible debentures issued July 2013 compared with $0.2 million for the Second Quarter 2014. For the Second Quarter 2015 and 2014, research and development costs were $0.1 million while the fair value adjustment of derivative liabilities was a gain of $0.2 million compared to $0.3 million in 2014 as well as a loss in foreign exchange of $1.0 million compared to $0 in 2014.

Net Loss

Our net loss for the Second Quarter 2015 was $2.4 million, or $0.04 per share, compared to $2.0 million, or $0.04 per share for the Second Quarter ended June 28, 2014. The increase in loss was primarily attributable to a foreign exchange loss of $1.0 million while there was a reduction in gross loss of $0.3 million, a reduction of general and administration expenses of $0.3 million, a reduction of accretion expense of $0.1 million, and a reduction of interest expense of $0.1 million while in 2014 there was a gain on settlement of debt of $0.3 million.

For the period ended June 27, 2015, the weighted average number of shares outstanding was 66,378,003 compared to 50,892,464 for the period ended June 28, 2014.

Twenty-Six Week Period Ended June 27, 2015 Compared to Twenty-Six Week Period Ended June 28, 2014

		Twenty-Six Weeks Ended
		June 27, 2015			June 28, 2014
		(amounts in thousands, except per share data)
Revenues	$	3,531		$	1,178
Cost of sales
Materials and direct production costs		3,106			1,045
Facility commissioning costs		-			503
Production facility overhead costs		137			175
Depreciation		415			235
		3,658			1,958
Gross loss		(127	)		(780	)
Expenses:
Marketing and promotion		184			176
Amortization and depreciation		37			50
General and administrative		1,864			2,414
		2,085			2,640
Loss before other items		(2,212	)		(3,420	)
Other income (expense):
Accretion expense		(120	)		(437	)
Interest		(973	)		(1,064	)
Research and development		(133	)		(117	)
Gain on debt settlement		-			234
Fair value adjustment derivative liabilities		380			264
Exchange gain		508			-
		(338	)		(1,120	)
Net loss		(2,550	)		(4,540	)
Exchange differences on translating to presentation currency		321			99
Total comprehensive loss		(2,229	)		(4,441	)
Loss per share (basic and diluted)	$	(0.04	)	$	(0.09	)

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Revenue and Gross Margins

For the twenty-six week period ended June 27, 2015 (“First Half of 2015”) and the twenty-six week period ended June 28, 2014 (“First Half of 2014”) our revenues were derived from sales of CRAiLAR^® fiber and other fiber (non-CRAiLAR) produced mainly from our European production facility. Revenue for the First Half of 2015 was $3.5 million, an increase of $2.3 million from the First Half of 2014. The $2.3 million increase in revenues in the First Half of 2015 compared with 2014 was the result of a 218% percent increase in the production of CRAiLAR fibers.

Our gross loss for the First Half of 2015 was $0.1 million (2014: $0.8 million). Our variable margin was 13% and was impacted negatively by labor inefficiencies and product re-work caused by equipment downtime. Cost of sales is comprised of $3.1 million (2014: $1.0 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: $0.2 million) of facility overhead costs and $0.4 million (2014: $0.2 million) for depreciation of production equipment.

Operating Expenses

During the First Half of 2015 we recorded operating expenses of $2.1 million compared to operating expenses of $2.6 million for the First Half of 2014, a decrease of $0.5 million or approximately 21%. The primary cause for the reduction was a decrease in general and administrative expenses of $0.5 million.

Marketing and promotion expenses comprised of marketing salaries and sales development costs were $0.2 million, the same for the First Half of 2015 and 2014.

General and administrative expenses for the First Half of 2015 decreased to $1.9 million, a reduction of $0.5 million or approximately 21% from $2.4 million for the First Half of 2014. The decrease was primarily caused by a $0.1 million decrease in stock based compensation a $0.3 million decrease in salary expense and a decrease in professional fees of $0.1 million.

Other Items

Interest expense was $1.0 million for the First Half of 2015 and $1.1 million for the First Half of 2014. Interest expense is attributable to the convertible debenture interest, European facility loan interest, IKEA loan interest and the amortization of the deferred debt issuance costs of $0.2 million. For the First Half of 2015 accretion expense was $0.1 million from the amortization of bonus shares issued with promissory notes and a reduction of the conversion price for convertible debentures issued July 2013 compared with $0.4 million of accretion expense for the First Half of 2014. For the First Half of 2015 and 2014, research and development costs were $0.1 million while the fair value adjustment of derivative liabilities was a gain of $0.4 compared to $0.3 million in 2014 as well as a gain in foreign exchange of $0.5 million compared to $0 in 2014.

Net Loss

Our net loss for the First Half of 2015 was $2.6 million, or $0.04 per share, compared to $4.5 million, or $0.09 per share for the First Half of 2014. The reduction in loss was primarily attributable to the reduction in gross loss of $0.7 million and a reduction of general and administration expenses of $0.5 million, a reduction in accretion expense of $0.3 million, an increase in the gain in the fair value of derivative liabilities of $0.1 million and a gain in foreign exchange of $0.5 million, while in the First Half of 2014 there was a gain on debt settlement of $0.2 million.

For the period ended June 27, 2015, the weighted average number of shares outstanding was 66,378,003 compared to 49,540,232 for the period ended June 28, 2014.

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LIQUIDITY AND CAPITAL RESOURCES

First Half of 2015 Compared to Fiscal Year Ended December 27, 2014

		June 27, 2015			December 27, 2014
		(in thousands)
Cash and cash equivalents	$	98		$	1,196
Working capital (deficiency)	$	(2,230	)	$	4
Total assets	$	12,534		$	16,197
Total liabilities	$	21,639		$	23,469
Shareholders’ equity (deficit)	$	(9,105	)	$	(7,272	)

The Company has historically relied on equity financings, and more recently from the sale of convertible debentures to fund its operations. On August 15, 2014 the Company completed a “Follow On” equity financing with gross proceeds of $1.0 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 $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 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 the proceeds of this offering, through bank debt, government loan programs, customer financing, lease programs, additional equity and debt financings, as well as cash generated from operations.

Net Cash Used in Operating Activities

Net cash flows used in operating activities for the First Half of 2015 were $0.9 million compared with $4.9 million for the First Half of 2014. Cash flows used in operations for the First Quarter of 2015 consisted primarily of a net loss of $2.6 million offset by the following items: amortization and depreciation of $0.5 million (2014: $0.3 million), primarily related to production equipment in Europe; accretion expense of $0.1 million (2014: $0.4) related to the beneficial conversion feature of the promissory notes and amortization of the bonus shares issued pursuant to the promissory note; amortization of deferred debt issuance costs of $0.2 million (2014: $0.2 million); fair value adjustment of derivative liability gain of ($0.4 million) (2014: ($0.3 million)), related to the decrease in the value of the warrant liability; rent of ($0.0 million) (2014: $0.0 million) related to the lease deferral at the South Carolina decortication facility; stock-based compensation of $0.4 million (2014: $0.4 million); a gain on foreign exchange of $0.5 million (2014: $nil); an increase in accounts receivable of $1.9 million due to timing of shipments of Crailar sales in Europe in the First Quarter 2015, (2014: a decrease of ($0.9 million)); an increase in inventory of $0.0 million (2014: $0.0 million); an increase in prepaid expenses of ($0.1 million) (2014: ($0.5 million)) mostly due to the timing of insurance, financing and listing costs; a decrease in accounts payable of ($0.3 million) (2014: an increase $0.3 million); a decrease in accrued liabilities of $0.0 million (2014: $0.2 million) mostly related to debenture interest.

Net Cash Used in Investing Activities

Net cash flows used in investing activities for the First Half of 2015 were $0.3 million, compared to $1.1 million for the First Half 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: $1.1 million).

Net Cash Used in or Provided by Financing Activities

Cash flows used in financing activities for the First Half of 2015 totaled ($0.1 million) compared to $5.3 million provided by financing activities for the First Half of 2014. In the first half of 2015, the Company repaid loans $0.1 million (2014: $0.8 million).

Effect of Exchange Rate

The effect of exchange rates on cash resulted in an unrealized gain of $0.2 million for the First Half of 2015, as compared with an unrealized gain of $3 thousand for the First Half of 2014.

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MATERIAL COMMITMENTS

Debt Offerings

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.

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.

21

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

• 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 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 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.

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

2015	$	786
2016		1,417
2017		920
2018		13
2019		12
Total	$	3,148

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):

2015	$	130
2016		239
2017		227
2018		236
2019		220
Total	$	1,100

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this prospectus, 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.

22

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 June 27, 2015.

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 June 27, 2015 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 June 27, 2015, 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

23

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 (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)

24

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 *

*	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.

25

(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.

26

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: August 17, 2015
By:	/s/ Theodore Sanders
	Theodore Sanders
	Chief Financial Officer
	Date: August 17, 2015

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Lesley Hayes, certify that:

1.	I have reviewed this report on Form 10-Q for the quarterly period ended June 27, 2015 of Crailar Technologies Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 17, 2015
/s/ Lesley Hayes
By:	Lesley Hayes
Title:	Chief Executive Officer and a director
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Theodore Sanders, certify that:

1.	I have reviewed this report on Form 10-Q for the quarterly period ended June 27, 2015 of Crailar Technologies Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 17, 2015
/s/ Theodore Sanders
By:	Theodore Sanders
Title:	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Lesley Hayes, the Chief Executive Officer and Theodore Sanders, the Chief Financial Officer, of Crailar Technologies Inc. (the “Company”), each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to her or his knowledge, the Quarterly Report on Form 10-Q for the quarterly period ended June 27, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of the Company.

/s/ Lesley Hayes
Lesley Hayes
Chief Executive Officer and a director
(Principal Executive Officer)
Date: August 17, 2015

/s/ Theodore Sanders
Theodore Sanders
Chief Financial Officer
(Principal Financial Officer)
Date: August 17, 2015

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to Crailar Technologies Inc. and will be retained by Crailar Technologies Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

____________

XML

Schedule of Deferred debt issuance costs (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 27, 2015	Dec. 27, 2014
Deferred Debt Issuance Costs, beginning of period	$ 967,294	$ 1,442,023
Issuance costs - cash	0	52,114
Amortization of issuance costs	(191,278)	(428,073)
Effect of foreign exchange	(1,697)	(98,770)
Deferred Debt Issuance Costs, end of period	$ 774,319	$ 967,294

XML

Capital Stock (Narrative) (Details) - USD ($)	6 Months Ended
	Jun. 27, 2015	Jun. 28, 2014
Class of Warrant or Right, Weighted Average Remaining Contractual Term	3 years 4 months 17 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vests in Period	418,600	467,393
Stock based compensation	$ 396,122	$ 448,407
Consulting and contract labour [Member]
Stock based compensation	107,181	13,468
Salaries and benefits [Member]
Stock based compensation	$ 288,941	$ 434,939

XML

Revenue from External Customers by Geographic Areas (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 27, 2015	Jun. 28, 2014
Sales to external customers	$ 3,531	$ 1,178
Depreciation and amortization	452	286
Segment net income (loss)	2,550	(4,540)
Total assets	12,534	22,818
North America [Member]
Sales to external customers	13	27
Depreciation and amortization	32	49
Segment net income (loss)	2,289	(3,695)
Total assets	7,384	18,869
Europe [Member]
Sales to external customers	3,518	1,151
Depreciation and amortization	420	237
Segment net income (loss)	261	845
Total assets	$ 5,150	$ 3,949

XML

Intangible Assets

6 Months Ended

Jun. 27, 2015

Intangible Assets [Text Block]

4. Intangible Assets

				Accumulated		Netbook Value		Net Book Value
		Cost		Amortization		June 27, 2015		December 27, 2014
Patents	$	182,270	$	109,294	$	72,976	$	75,345
Trademarks		110,979		87,805		23,174		24,592
License Fee		59,504		35,925		23,579		28,729
	$	352,753	$	233,024	$	119,729	$	128,666

During the twenty-six week period ended June 27, 2015, the Company recorded amortization expense of $16,723 (2014 - $18,104).

XML

Schedule of Inventory, Current (Details) - USD ($)	Jun. 27, 2015	Dec. 27, 2014
Inventory, Net	$ 421,017	$ 448,569
CRAiLAR fiber [Member]
Inventory, Net	177,546	97,309
Decorticated fiber [Member]
Inventory, Net	44,164	258,679
Hemp [Member]
Inventory, Net	10,484	0
Other [Member]
Inventory, Net	$ 188,823	$ 92,581

XML

Commitments (Narrative) (Details)	6 Months Ended
	Jun. 27, 2015 USD ($)
Long-term Purchase Commitment, Amount	$ 1,051,864

XML

Property, Plant and Equipment (Details) - USD ($)	Jun. 27, 2015	Dec. 27, 2014
Property, Plant and Equipment, Gross	$ 10,921,603
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	1,422,456
Property, Plant and Equipment, Net	9,499,148	$ 10,013,413
Automobiles [Member]
Property, Plant and Equipment, Gross	79,980
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	9,938
Property, Plant and Equipment, Net	70,042	49,869
Computer equipment [Member]
Property, Plant and Equipment, Gross	98,660
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	68,065
Property, Plant and Equipment, Net	30,595	34,956
Computer software [Member]
Property, Plant and Equipment, Gross	10,095
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	9,292
Property, Plant and Equipment, Net	803	1,749
Equipment [Member]
Property, Plant and Equipment, Gross	676,521
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	74,654
Property, Plant and Equipment, Net	601,867	612.079
Equipment held for sale [Member]
Property, Plant and Equipment, Gross	25,000
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	0
Property, Plant and Equipment, Net	25,000	37,160
Furniture and fixtures [Member]
Property, Plant and Equipment, Gross	37,678
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	30,106
Property, Plant and Equipment, Net	7,572	8,416
Leasehold improvements [Member]
Property, Plant and Equipment, Gross	250,885
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	31,768
Property, Plant and Equipment, Net	219,117	203,705
Production equipment [Member]
Property, Plant and Equipment, Gross	6,488,287
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	1,074,502
Property, Plant and Equipment, Net	5,413,785	5,929,684
Production equipment in construction [Member]
Property, Plant and Equipment, Gross	3,124,937
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	0
Property, Plant and Equipment, Net	3,124,937	3,124,937
Website development [Member]
Property, Plant and Equipment, Gross	129,561
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	124,131
Property, Plant and Equipment, Net	$ 5,430	$ 10,857

XML

Schedule of Intangible Assets and Goodwill (Details) - USD ($)	Jun. 27, 2015	Dec. 27, 2014
Finite-Lived Intangible Assets, Gross	$ 352,753
Finite-Lived Intangible Assets, Accumulated Amortization	233,024
Finite-Lived Intangible Assets, Net	119,729	$ 128,666
Patent [Member]
Finite-Lived Patents, Gross	182,270
Finite-Lived Intangible Assets, Accumulated Amortization	109,294
Finite-Lived Intangible Assets, Net	72,976	75,345
Trademarks [Member]
Finite-Lived Trademarks, Gross	110,979
Finite-Lived Intangible Assets, Accumulated Amortization	87,805
Finite-Lived Intangible Assets, Net	23,174	24,592
License Fee [Member]
Finite-Lived License Agreements, Gross	59,504
Finite-Lived Intangible Assets, Accumulated Amortization	35,925
Finite-Lived Intangible Assets, Net	$ 23,579	$ 28,729

XML

Property and Equipment

6 Months Ended

Jun. 27, 2015

Property and Equipment [Text Block]

3. Property and Equipment

		Cost		Accumulated		Net Book Value		Net Book Value
				Depreciation		June 27, 2015		December 27, 2014
Automobiles	$	79,980	$	9,938	$	70,042	$	49,869
Computer Equipment		98,660		68,065		30,595		34,956
Computer Software		10,095		9,292		803		1,749
Equipment		676,521		74,654		601,867		612.079
Equipment held for sale		25,000		-		25,000		37,160
Furniture and fixtures		37,678		30,106		7,572		8,416
Leasehold Improvements		250,885		31,768		219,117		203,705
Production Equipment		6,488,287		1,074,502		5,413,785		5,929,684
Production Equipment in construction		3,124,937		-		3,124,937		3,124,937
Website development costs		129,561		124,131		5,430		10,857
	$	10,921,603	$	1,422,456	$	9,499,148	$	10,013,413

During the twenty-six week period ended June 27, 2015, the Company recorded depreciation expense $436,163 (2014 - $267,681) of which $415,932 (2014 - $235,359) was classified as cost of sales

XML

Schedule of Long-term Debt Instruments (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 27, 2015	Dec. 27, 2014	Jun. 27, 2015	Dec. 27, 2014
Convertible debt, balance beginning	$ 18,184,990
Total long-term debt	18,184,990		$ 17,143,318	$ 18,184,990
Less: Current portion			(147,642)	(161,025)
Long term debt - long term			16,995,676	18,023,965
Convertible Debentures
Convertible debt, balance beginning	15,514,592	$ 16,674,686
Accretion expense	120,038	251,528
Convertible debentures converted	0	17,786
Effect of foreign exchange	(912,702)	(1,292,836)
Total long-term debt	15,514,592	16,674,686	14,721,928	15,514,592
IKEA Loan [Member]
Balance, beginning	2,670,398	0
Loan issued			$ 0	$ 2,999,983
Payments	(27,643)	0
Effect of foreign exchange	(221,365)	(329,585)
Balance, ending	$ 2,421,390	$ 2,670,398

XML

Consolidated Balance Sheets - USD ($)	Jun. 27, 2015	Dec. 27, 2014
Current
Inventory	$ 421,017	$ 448,569
Deferred Debt Issuance Costs	774,319	967,294
Property and Equipment, net	9,499,148	10,013,413
Current
Current portion of long term debt	147,642	161,025
Non-current liabilities
Long Term Debt	17,143,318	18,184,990
Approximation [Member]
Current
Cash and cash equivalents	98,000	1,196,000
Accounts receivable	1,199,000	3,107,000
Inventory	421,000	449,000
Prepaid expenses and deposits	423,000	336,000
Total Current Assets	2,141,000	5,088,000
Deferred Debt Issuance Costs	774,000	967,000
Property and Equipment, net	9,499,000	10,013,000
Intangible Assets, net	120,000	129,000
Total Assets	12,534,000	16,197,000
Current
Accounts payable	1,793,000	2,017,000
Accrued liabilities	1,195,000	1,224,000
Unearned revenue	264,000	264,000
Current Portion of loans payable	479,000	546,000
Current portion of long term debt	148,000	161,000
Derivative liabilities	492,000	872,000
Total Current Liabilities	4,371,000	5,084,000
Non-current liabilities
Loans Payable	272,000	361,000
Long Term Debt	16,996,000	18,024,000
Total Liabilities	21,639,000	23,469,000
STOCKHOLDERS' DEFICIT
Capital Stock Authorized: unlimited common shares without par value Issued and outstanding: 66,378,003 common shares (December 27, 2014 - 66,378,003 common shares)	39,665,000	39,665,000
Additional Paid-in Capital	15,615,000	15,219,000
Other Comprehensive Income	1,804,000	1,483,000
Deficit	(66,189,000)	(63,639,000)
Total Stockholders Equity	(9,105,000)	(7,272,000)
Total Liabilities and Stockholders Equity	$ 12,534,000	$ 16,197,000

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Basis of Presentation

6 Months Ended

Jun. 27, 2015

Basis of Presentation [Text Block]

1. Basis of Presentation

These interim 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 Commission. They 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 27, 2014, included in the Company’s Form 10-K filed with the U.S. Securities and Exchange Commission. Operating results for the twenty-six week period ended June 27, 2015 are not necessarily indicative of the results that may be expected for the year ending December 26, 2015. These interim unaudited consolidated financial statements should be read in conjunction with the information included in the Company’s Form 10-K filed on April 13, 2015 with the U.S. Securities and Exchange Commission.

In the opinion of management, the accompanying balance sheets and related statements of operations and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with U.S. GAAP. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions.

The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and payment of liabilities in the normal course of business. The Company has incurred losses since inception of $66,189,168 and further losses are anticipated in the development of its business. There can be no assurance that the Company will be able to achieve or maintain profitability and future operations are dependent on raising additional funding from debt or equity financings. These factors raise substantial doubt as to the Company's ability to continue as a going concern.

The Company evaluated events occurring between June 27, 2015 and the date financial statements were issued.

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Schedule of Share-based Compensation, Stock Options, Activity (Details) - 6 months ended Jun. 27, 2015 - Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Domain] - $ / shares	Total
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning of Period	6,769,294
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning of Period	$ 1.79
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period	(206,418)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price	$ 2.10
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, End of Period	6,562,876
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, End of Period	$ 1.78
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number, End of Period	6,552,876
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price, End of Period	$ 1.75

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Basis of Presentation (Narrative) (Details)	Jun. 27, 2015 USD ($)
Cumulative Deficit	$ 66,189,168

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Disclosure of Share-based Compensation Arrangements by Share-based Payment Award (Details) - $ / shares	6 Months Ended
	Jun. 27, 2015	Dec. 27, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	6,562,876	6,769,294
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 1.78	$ 1.79
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	6,552,876
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 1.75
Range 1 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit	0.54
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit	$ 3.05
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	6,552,876
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term	1 year 11 months 8 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 1.78
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	6,552,876
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 1.75

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Intangible Assets (Narrative) (Details) - USD ($)	6 Months Ended
	Jun. 27, 2015	Jun. 28, 2014
Intangible assets, amortization and depreciation expense	$ 16,723	$ 18,104

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Inventory

6 Months Ended

Jun. 27, 2015

Inventory [Text Block]

2. Inventory

		June 27, 2015		December 27, 2014
CRAiLAR fiber	$	177,546	$	97,309
Decorticated fiber		44,164		258,679
Hemp		10,484		-
Other		188,823		92,581
	$	421,017	$	448,569

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Consolidated Balance Sheets (Parenthetical) - $ / shares None in scaling factor is -9223372036854775296	Jun. 17, 2015	Dec. 27, 2014
Common Stock, No Par Value
Common Stock, Shares, Issued	66,378,003	66,378,003
Common Stock, Shares, Outstanding	66,378,003	66,378,003

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Intangible Assets (Tables)

6 Months Ended

Jun. 27, 2015

Schedule of Intangible Assets and Goodwill [Table Text Block]

				Accumulated		Netbook Value		Net Book Value
		Cost		Amortization		June 27, 2015		December 27, 2014
Patents	$	182,270	$	109,294	$	72,976	$	75,345
Trademarks		110,979		87,805		23,174		24,592
License Fee		59,504		35,925		23,579		28,729
	$	352,753	$	233,024	$	119,729	$	128,666

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Document and Entity Information - shares	6 Months Ended
	Jun. 27, 2015	Aug. 12, 2015
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 27, 2015
Trading Symbol	crlrf
Entity Registrant Name	CRAILAR TECHNOLOGIES INC
Entity Central Index Key	0001210294
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		66,378,003
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

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Long Term Debt (Tables)

6 Months Ended

Jun. 27, 2015

Schedule of Long-term Debt Instruments [Table Text Block]

		June 27, 2015			December 27, 2014
Convertible debentures
Balance, beginning	$	15,514,592		$	16,674,686
Accretion expense		120,038			251,528
Convertible debentures converted		-			17,786
Effect of foreign exchange		(912,702	)		(1,292,836	)
Balance, ending		14,721,928			15,514,592
IKEA Loan
Balance, beginning		2,670,398			-
Loan issued		-			2,999,983
Payments		(27,643	)		-
Effect of foreign exchange		(221,365	)		(329,585	)
Balance, ending		2,421,390			2,670,398
Total long-term debt		17,143,318			18,184,990
Less: current portion		(147,642	)		(161,025	)
Long-term debt – long term portion	$	16,995,676		$	18,023,965

Schedule of Deferred debt issuance costs [Table Text Block]

		June 27, 2015			December 27, 2014
Balance, beginning	$	967,294		$	1,442,023
Issuance costs – cash		-			52,114
Amortization of issuance costs		(191,278	)		(428,073	)
Effect of foreign exchange		(1,697	)		(98,770	)
	$	774,319		$	967,294

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Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 27, 2015	Jun. 28, 2014	Jun. 27, 2015	Jun. 28, 2014
Revenues	$ 1,804	$ 743	$ 3,531	$ 1,178
Cost of sales
Materials and direct product costs	1,617	685	3,106	1,045
Production facility overhead costs	68	77	137	175
Facility commissioning costs	0	251	0	503
Depreciation	206	132	415	235
Total Cost of Sales	1,891	1,145	3,658	1,958
Gross loss	(87)	(402)	(127)	(780)
Expenses
Marketing and promotion	57	93	184	176
Amortization and depreciation	19	26	37	50
General and administrative	830	1,179	1,864	2,414
Total Expenses	906	1,298	2,085	2,640
Loss before other items	(993)	(1,700)	(2,212)	(3,420)
Other income (expense):
Accretion expense	(61)	(175)	(120)	(437)
Research and development	(72)	(64)	(133)	(117)
Interest	(439)	(524)	(973)	(1,064)
Gain on debt settlement	0	234	0	234
Fair value adjustment derivative liabilities	206	264	380	264
Exchange gain (loss)	(1,013)	0	508	0
Total Other income (expense)	(1,379)	(265)	(338)	(1,120)
Net Loss	(2,372)	(1,965)	(2,550)	(4,540)
Other comprehensive income (loss)
Exchange differences on translating to presentation currency	966	(481)	321	99
Comprehensive loss	$ (1,406)	$ (2,446)	$ (2,229)	$ (4,441)
Loss per share (basic and diluted)	$ (0.04)	$ (0.04)	$ (0.04)	$ (0.09)
Weighted average number of common shares outstanding	66,378,003	50,892,464	66,378,003	49,540,232

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Segment Information

6 Months Ended

Jun. 27, 2015

Segment Information [Text Block]

7. Segment Information

The 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.

For the twenty-six week period ended June 27, 2015 ( $ thousands)		North America			Europe			Total
Sales to external customers	$	13		$	3,518		$	3,531
Depreciation and amortization	$	32		$	420		$	452
Segment net income (loss)		($2,289	)		($261	)		($2,550	)
Total assets	$	7,384		$	5,150		$	12,534

For the twenty-six week period ended June 28, 2014 ( $ thousands)		North America			Europe			Total
Sales to external customers	$	27		$	1,151		$	1,178
Depreciation and amortization	$	49		$	237		$	286
Segment net income (loss)		($3,695	)		$845	)		($4,540	)
Total assets	$	18,869		$	3,949		$	22,818

Of the Company's sales in the period ended June 27, 2015, two customers represent 97% of the total.

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Capital Stock

6 Months Ended

Jun. 27, 2015

Capital Stock [Text Block]

6. Capital Stock

During the twenty-six week period ended June 27, 2015, the Company did not issue shares.

Share purchase warrants outstanding as at June 27, 2015 are:

	Warrants		Weighted-Average Exercise Price
Warrants outstanding, December 27, 2014	22,932,373	$	0.74
Warrants issued	-	$	0.00
Warrants expired	-	$	0.00
Warrants outstanding, June 27, 2015	22,932,373	$	0.74

The weighted average remaining contractual life of outstanding warrants at June 27, 2015, is 3.38 years.

Stock options outstanding as at June 27, 2015 are:

	Options			Weighted-Average Exercise Price
Options outstanding, December 27, 2014	6,769,294		$	1.79
Options granted	-		$	0.00
Options cancelled/expired	(206,418	)	$	2.10
Options outstanding, June 27, 2015	6,562,876		$	1.78
Options exercisable, June 27, 2015	6,552,876		$	1.75

Stock options outstanding at June 27, 2015, are summarized as follows:

							Weighted
		Weighted Average					Average
Range of Exercise	Number	Remaining Contractual		Weighted Average	Number		Exercise
Prices	Outstanding	Life (yr)		Exercise Price	Exercisable		Price
$0.54 - $3.05	6,552,876	1.94	$	1.78	6,552,876	$	1.75

During the twenty-six week period ended June 27, 2015, options to purchase 418,600 (2014 – 467,393) common shares vested under the Company’s amended 2011 Fixed Share Option Plan. A total expense of $396,122 (2014 - $448,407) was recorded as stock-based compensation, of which $107,181 (2014 - $13,468) was included in consulting and contract labour expense and $288,941 (2014 - $434,939) was included in salaries and benefits expense.

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Property and Equipment (Narrative) (Details) - USD ($)	6 Months Ended
	Jun. 27, 2015	Jun. 28, 2014
Depreciation expense	$ 436,163	$ 267,681
Cost of Sales [Member]
Depreciation expense	$ 415,932	$ 235,359

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Capital Stock (Tables)

6 Months Ended

Jun. 27, 2015

Schedule of Stockholders' Equity Note, Warrants or Rights, Activity [Table Text Block]

	Warrants		Weighted-Average Exercise Price
Warrants outstanding, December 27, 2014	22,932,373	$	0.74
Warrants issued	-	$	0.00
Warrants expired	-	$	0.00
Warrants outstanding, June 27, 2015	22,932,373	$	0.74

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Options			Weighted-Average Exercise Price
Options outstanding, December 27, 2014	6,769,294		$	1.79
Options granted	-		$	0.00
Options cancelled/expired	(206,418	)	$	2.10
Options outstanding, June 27, 2015	6,562,876		$	1.78
Options exercisable, June 27, 2015	6,552,876		$	1.75

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

							Weighted
		Weighted Average					Average
Range of Exercise	Number	Remaining Contractual		Weighted Average	Number		Exercise
Prices	Outstanding	Life (yr)		Exercise Price	Exercisable		Price
$0.54 - $3.05	6,552,876	1.94	$	1.78	6,552,876	$	1.75

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Inventory (Tables)

6 Months Ended

Jun. 27, 2015

Schedule of Inventory, Current [Table Text Block]

		June 27, 2015		December 27, 2014
CRAiLAR fiber	$	177,546	$	97,309
Decorticated fiber		44,164		258,679
Hemp		10,484		-
Other		188,823		92,581
	$	421,017	$	448,569

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Related Party Transactions

6 Months Ended

Jun. 27, 2015

Related Party Transactions [Text Block]

8. Related Party Transactions

During the twenty-six week period ended June 27, 2015, $348,597 (2014 - $534,228) was incurred for remuneration and $233,506 (2014 - $377,264) was incurred for stock-based compensation to officers and directors of the Company.

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Commitments

6 Months Ended

Jun. 27, 2015

Commitments [Text Block]

9. Commitments

The Company is committed to lease payments totaling approximately $1,051,864 for premises under lease. The minimum lease payments over the next five years are as follows:

2015	$	129,943
2016		239,486
2017		225,600
2018		236,440
2019		220,395
Total	$	1,051,864

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Property and Equipment (Tables)

6 Months Ended

Jun. 27, 2015

Property, Plant and Equipment [Table Text Block]

		Cost		Accumulated		Net Book Value		Net Book Value
				Depreciation		June 27, 2015		December 27, 2014
Automobiles	$	79,980	$	9,938	$	70,042	$	49,869
Computer Equipment		98,660		68,065		30,595		34,956
Computer Software		10,095		9,292		803		1,749
Equipment		676,521		74,654		601,867		612.079
Equipment held for sale		25,000		-		25,000		37,160
Furniture and fixtures		37,678		30,106		7,572		8,416
Leasehold Improvements		250,885		31,768		219,117		203,705
Production Equipment		6,488,287		1,074,502		5,413,785		5,929,684
Production Equipment in construction		3,124,937		-		3,124,937		3,124,937
Website development costs		129,561		124,131		5,430		10,857
	$	10,921,603	$	1,422,456	$	9,499,148	$	10,013,413

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Schedule of Stockholders' Equity Note, Warrants or Rights, Activity (Details) - 6 months ended Jun. 27, 2015 - $ / shares	Total
Class of Warrant or Right, Outstanding, Beginning of Period	22,932,373
Class of Warrant or Right, Outstanding, Weighted Average Exercise Price, Beginning of Period	$ 0.74
Class of Warrant or Right, Grants in Period, Net of Forfeitures	0
Class of Warrant or Right, Grants in Period, Weighted Average Exercise Price	$ 0.00
Class of Warrant or Right, Expirations in Period	0
Class of Warrant or Right, Expirations in Period, Weighted Average Exercise Price	$ 0.00
Class of Warrant or Right, Outstanding, End of Period	22,932,373
Class of Warrant or Right, Outstanding, Weighted Average Exercise Price, End of Period	$ 0.74

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Commitments (Tables)

6 Months Ended

Jun. 27, 2015

Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block]

2015	$	129,943
2016		239,486
2017		225,600
2018		236,440
2019		220,395
Total	$	1,051,864

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Segment Information (Narrative) (Details)	6 Months Ended
	Jun. 27, 2015
Two major customers [Member]
Concentration Risk, Percentage	97.00%

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Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 27, 2015	Jun. 28, 2014
Cash flows used in operating activities
Net loss for the period	$ (2,550,000)	$ (4,540,000)
Adjustments to reconcile net loss to net cash from operating activities
Accretion expense	120,000	437,000
Fair value adjustment of derivative	(380,000)	(264,000)
Stock based compensation	396,122	448,407
Gain on settlement of debt	0	(234,000)
Approximation [Member]
Cash flows used in operating activities
Net loss for the period	(2,550,000)	(4,540,000)
Adjustments to reconcile net loss to net cash from operating activities
Accretion expense	120,000	437,000
Amortization and depreciation	452,000	285,000
Amortization of deferred debt	191,000	171,000
Fair value adjustment of derivative	(380,000)	(264,000)
Rent inducement	(16,000)	16,000
Stock based compensation	396,000	448,000
Gain on settlement of debt	0	(234,000)
Gain on foreign exchange	(508,000)	0
Changes in working capital assets and liabilities
Increase (decrease) in accounts receivable	1,874,000	(929,000)
Decrease (increase) in inventory	5,000	19,000
Increase in prepaid expenses	(106,000)	(465,000)
Increase (decrease) in accounts payable	(307,000)	333,000
Increase (decrease) in accrued liabilities	(36,000)	(217,000)
Net cash used in operating activities	(865,000)	(4,940,000)
Cash flows used in investing activities
Purchase of property and equipment	(316,000)	(1,091,000)
Acquisition of intangible assets	(15,000)	(23,000)
Net cash flows used in investing activities	(331,000)	(1,114,000)
Cash flows used in financing activities
Issuance of capital stock and warrants	0	3,148,000
Payment of loans	(108,000)	(661,000)
Loans payable	0	(125,000)
Proceeds from long term debt	0	2,984,000
Net cash flows from (used in) financing activities	(108,000)	5,346,000
Effect of exchange rate changes on cash and cash equivalents	206,000	3,000
Increase (decrease) in cash and cash equivalents	(1,098,000)	(705,000)
Cash and cash equivalents, beginning	1,196,000	1,193,000
Cash and cash equivalents, ending	98,000	489,000
SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH FINANCING AND INVESTING ACTIVITIES:
Cash paid for interest	806,000	983,000
Capital stock issued for share issue costs	$ 0	$ 221,000

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Long Term Debt

6 Months Ended

Jun. 27, 2015

Long Term Debt [Text Block]

5. Long Term Debt

		June 27, 2015			December 27, 2014
Convertible debentures
Balance, beginning	$	15,514,592		$	16,674,686
Accretion expense		120,038			251,528
Convertible debentures converted		-			17,786
Effect of foreign exchange		(912,702	)		(1,292,836	)
Balance, ending		14,721,928			15,514,592
IKEA Loan
Balance, beginning		2,670,398			-
Loan issued		-			2,999,983
Payments		(27,643	)		-
Effect of foreign exchange		(221,365	)		(329,585	)
Balance, ending		2,421,390			2,670,398
Total long-term debt		17,143,318			18,184,990
Less: current portion		(147,642	)		(161,025	)
Long-term debt – long term portion	$	16,995,676		$	18,023,965

Deferred debt issuance costs:

		June 27, 2015			December 27, 2014
Balance, beginning	$	967,294		$	1,442,023
Issuance costs – cash		-			52,114
Amortization of issuance costs		(191,278	)		(428,073	)
Effect of foreign exchange		(1,697	)		(98,770	)
	$	774,319		$	967,294

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Related Party Transactions (Narrative) (Details) - Officers and directors [Member] - USD ($)	6 Months Ended
	Jun. 27, 2015	Jun. 28, 2014
Related Party Transaction, Amounts of Transaction	$ 348,597	$ 534,228
Stock-based compensation [Member]
Related Party Transaction, Amounts of Transaction	$ 233,506	$ 377,264

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Schedule of Future Minimum Lease Payments for Capital Leases (Details)	Jun. 27, 2015 USD ($)
Capital Leases, Future Minimum Payments Due, Current	$ 129,943
Capital Leases, Future Minimum Payments Due in Two Years	239,486
Capital Leases, Future Minimum Payments Due in Three Years	225,600
Capital Leases, Future Minimum Payments Due in Four Years	236,440
Capital Leases, Future Minimum Payments Due in Five Years	220,395
Capital Leases, Future Minimum Payments Due	$ 1,051,864

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Segment Information (Tables)

6 Months Ended

Jun. 27, 2015

Jun. 28, 2014

Revenue from External Customers by Geographic Areas [Table Text Block]

For the twenty-six week period ended June 27, 2015 ( $ thousands)		North America			Europe			Total
Sales to external customers	$	13		$	3,518		$	3,531
Depreciation and amortization	$	32		$	420		$	452
Segment net income (loss)		($2,289	)		($261	)		($2,550	)
Total assets	$	7,384		$	5,150		$	12,534

For the twenty-six week period ended June 28, 2014 ( $ thousands)		North America			Europe			Total
Sales to external customers	$	27		$	1,151		$	1,178
Depreciation and amortization	$	49		$	237		$	286
Segment net income (loss)		($3,695	)		$845	)		($4,540	)
Total assets	$	18,869		$	3,949		$	22,818