Losses widen at flax fiber producer CRAiLAR in 2012

This quarter's loss included a $0.6 million write-off of the Company's pilot scale decortication facility that was deemed not commercially viable. The Company's Adjusted EBITDA for the quarter was a loss of $1.8 million slightly above last year's $1.6 million fourth quarter Adjusted EBITDA loss resulting from increased compensation spending in preparation for commissioning the first large scale CRAiLAR Flax Fiber production facility.

For the year ended December 31, 2012, the Company reported a net loss of $9.3 million or $0.22 per share compared with last year's net loss of $7.0 million or $0.18 per share. This year's loss included a $0.6 million non-cash write-down of decortication equipment not commercially viable at a pilot research facility.

The Company's Adjusted EBITDA for the year was a loss of $5.9 million compared with an Adjusted EBITDA loss of $4.3 million last year. The Adjusted EBITDA loss increase from the prior year was largely due to increased spending on salaries and benefits due in part to additional hiring as the company prepared for commercialization. In addition, the Company spent $0.8 million on professional fees this year reflecting costs incurred in financing activities, applying for listing on a senior exchange, name change and reorganization costs.

"During 2012 we financed and built the first large scale production facility for CRAiLAR Flax fiber and expanded our partner relationships with many leading companies in the textile industry," stated Kenneth C. Barker, Chief Executive Officer. "We are now at an inflection point where we transform from a developmental company to an operating company in 2013 as we scale-up production of CRAiLAR Flax fiber."

Cash and cash equivalents and investments at December 31, 2012 were $2.9 million down from $6.3 million at December 31, 2011. The decrease in cash equivalents of $3.5 million resulted from $5.7 million of cash used in operations and $10.7 million of cash invested in property and equipment partially offset by $12.9 million of cash from financing activities through the issuance of $10 million of convertible debentures (net $9.0 million after expenses) and $3.9 million of common stock.

CRAiLAR