Crailar (CRLRF) 10-Q 2010 Q3 Quarterly report

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

FORM 10-Q

T    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

£    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

NATURALLY ADVANCED TECHNOLOGIES INC.
(Exact name of small business issuer as specified in its charter)

British Columbia	98-0359306
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
402-1008 Homer Street Vancouver, British Columbia, Canada	V6B 2X1
(Address of principal executive offices)	(Zip Code)
(604) 683-8582
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.          YesT    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£    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 companyT

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes£    NoT

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.35,313,202 shares of common stock as of November 10, 2010.

NATURALLY ADVANCED TECHNOLOGIES INC.
Quarterly Report On Form 10-Q
For The Quarterly Period Ended
September 30, 2010

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	12
	Item 4.	Controls and Procedures	19
PART II - OTHER INFORMATION			19
	Item 1.	Legal Proceedings	19
	Item 1A.	Risk Factors	19
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
	Item 3.	Defaults Upon Senior Securities	19
	Item 4.	(Removed and Reserved)	20
	Item 5.	Other Information	20
	Item 6.	Exhibits	20

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;
• the competitive environment in which we operate;
• our dependence on key personnel;
• conflicts of interest of our directors and officers;
• our ability to fully implement our business plan;
• our ability to effectively manage our growth; and
• other regulatory, legislative and judicial developments.

Forward-looking statements are made, without limitation, in relation to operating plans, property exploration and development, availability of funds, environmental reclamation, operating costs and permit acquisition. 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 31, 2009, 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 Naturally Advanced Technologies, Inc. (sometimes referred to as "we", "us" or "our 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

Naturally Advanced Technologies, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
(In US Dollars)
(Unaudited)
				September 30,		December 31,
				2010		2009
ASSETS
Current
	Cash and cash equivalents		$	334,365	$	421,452
	Accounts receivable			49,181		11,552
	Prepaid expenses and other			49,212		48,367
	Current assets of discontinued operations			10,173		42,218
				442,931		523,589
Property and Equipment				36,901		132,185
Intangible Assets				76,074		85,071
			$	555,906	$	740,845
LIABILITIES
Current
	Accounts payable		$	375,954	$	234,313
	Accrued Liabilities (Note 5)			182,294		346,963
	Due to related party (Note 2)			928,874		-
	Note payable (Note 5)			200,000		-
				1,687,122		581,276
Note payable(Note 5)				-		200,000
Due to Related Party(Note 2)				-		928,347
				1,687,122		1,709,623
STOCKHOLDERS' DEFICIT
Capital Stock(Note 3)
	Authorized: 100,000,000 common shares without par value
	Issued and outstanding : 35,313,202 common shares
		(December 31, 2009 - 33,354,215)		12,283,486		10,443,962
Additional Paid-in Capital				2,452,267		2,011,047
Accumulated Other Loss				(84,213)		(12,840)
Deficit				(12,251,005)		(12,251,005)
Deficit accumulated in the development stage				(3,531,751)		(1,159,942)
				(1,131,216)		(968,778)
			$	555,906	$	740,845

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

5

Naturally Advanced Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(In US Dollars)
(Unaudited)
		For the three month period ended				For the nine month period ended			Cumulative from October 1,
		September 30,				September 30,				to
		2010		2009		2010		2009		September 30, 2010
Expenses
Advertising and promotion	$	61,496	$	62,266	$	164,357	$	180,126	$	235,024
Amortization & depreciation		8,426		7,527		25,155		17,873		35,918
Consulting & Contract Labour (Note 2 and 3)		136,512		345,814		361,162		571,568		483,517
General & Administrative		94,088		134,043		287,483		236,896		464,681
Interest		35,202		35,264		158,541		101,231		196,583
Professional Fees		82,147		77,470		179,093		203,723		293,956
Research & Development		169,646		88,646		429,644		244,672		667,094
Salaries & Benefits (Note 2 and 3)		222,694		163,670		685,877		459,334		1,075,658
Write down of equipment		91,972		-		91,972		163,371		91,972
Loss before other item		902,183		914,700		2,383,284		2,178,794		3,544,403
Other income		-		-		-		-		1,177
Loss from continuing operations		(902,183)		(914,700)		(2,383,284)		(2,178,794)		(3,543,226)
Gain (Loss) from discontinued operations		(49)		(131,594)		11,475		(602,393)		11,475
Net loss for the period	$	(902,232)	$	(1,046,294)	$	(2,371,809)	$	(2,781,187)	$	(3,531,751)
Loss from continuing operations per share (basic and diluted)	$	(0.03)	$	(0.03)	$	(0.07)	$	(0.07)
Earnings (Loss) from discontinued operations per share (basic and diluted)	$	0.00	$	0.00	$	0.00	$	(0.02)
Weighted average number of common shares outstanding (basic and diluted)		35,297,386		31,994,498		34,338,647		31,744,224

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

6

Naturally Advanced Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(In US Dollars)
(Unaudited)
		For nine months ended September 30,				Cumulative from October 1, 2009 to
		2010		2009		September 30, 2010
Cash flows from (used in) operating activities
Net loss from continuing operation for the period	$	(2,383,284)	$	(2,178,794)		(3,543,226)
Adjustments to reconcile net loss to net cash from operating activities
Amortization & depreciation		25,155		17,873		35,918
Write down of equipment		91,972		163,371		91,972
Stock based compensation		557,928		589,899		806,708
Non cash finance charge		54,580		-		54,580
Changes in working capital assets and liabilities
Decrease (increase) in accounts receivable		(37,629)		5,437		27,766
Increase in prepaid expenses		(845)		64,264		20,913
Increase (decrease) in accounts payable		141,641		36,732		38,093
(Decrease) increase in accrued liabilities		(164,669)		(87,955)		52,605
(Decrease) increase in due to related parties		527		47,657		28,874
Net cash used in operating activities of continuing operations		(1,714,624)		(1,341,516)		(2,385,797)
Net cash provided by discontinued operations		43,520		247,776		69,967
Cash flows from (used in) investing activities
Purchase of property and equipment		(3,552)		(27,837)		(11,555)
Acquisition of trademarks & license		(9,294)		(41,950)		(9,294)
Net cash flows used in investing activities		(12,846)		(69,787)		(20,849)
Cash flows from (used in) financing activities
Issuance of capital stock		1,668,235		1,698,088		1,674,668
Related parties advances		-		200,000		-
Related parties payments		-		-		(69,015)
Short term loan		-		(25,590)		-
Net cash flows from financing activities		1,668,235		1,872,498		1,605,653
Effect of exchange rate changes on cash and cash equivalents		(71,372)		26,118		24,869
Increase (decrease) in cash		(87,087)		734,089		(719,082)
Cash and cash equivalents, beginning of period		421,452		319,358		1,053,447
Cash and cash equivalents, end of period	$	334,365	$	1,053,447	$	334,365
SUPPLEMENTAL CASH FLOW INFORMATION
AND NON-CASH FINANCING AND INVESTING ACTIVITIES:
Cash paid for interest	$	84,252	$	35,968		153,267
Cash paid for income taxes	$	-	$	-		$             -
Capital stock issued in settlement of accounts payable	$	-	$	-		$             -
Capital stock issued as finance fee	$	-	$	-		$             -

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

7

Naturally Advanced Technologies Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2010
(Unaudited)

1.           Basis of Presentation

These unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial reporting and the rules and regulations of the Securities and Exchange 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. However, except as disclosed herein, there have been no material changes in the information contained in the notes to the audited consolidated financial statements for the year ended December 31, 2009, included in the Company's Form 10-K filed with the Securities and Exchange Commission. Operating results for the nine months ended September 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. These interim unaudited consolidated financial statements should be read in conjunction with the in the informatio n included in the Company's Form 10-K filed on April 13, 2010 with the U.S. Securities and Exchange Commission.

In the opinion of management, the accompanying balance sheets and related interim statements of income, cash flows, and stockholders' equity include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with US GAAP. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples include: estimates of loss contingencies, and stock-based compensation forfeiture rates. Actual results and outcomes may differ from management's estimates and assumptions.

We evaluated events occurring between the end of our fiscal quarter, September 30, 2010 and the date financial statements were issued.

Recent accounting pronouncements with future effective dates are not expected to have an impact on the Company's financial statements.

2.           Related Parties Transactions

a)     As at September 30, 2010 a director had advanced the Company a total amount of $900,000. The loan is secured and bears interest at a rate of 12% and a due date of February 16, 2011. An accrual for interest of $28,874 (December 31, 2009 - $28,347) has been included in amounts due to related party as at September 30, 2010.

b)     During the nine month period ended September 30, 2010, $373,282 (2009 - $343,260) was incurred as remuneration to officers and directors of the Company. Of this amount, $237,282 (2009 - $208,260) is recorded as salaries and benefits expense and $136,000 (2009 - $135,000) is recorded as consulting and contract labour expense.

8

Naturally Advanced Technologies Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2010
(Unaudited)

3. Capital Stock

During the period ended September 30, 2010, the Company issued shares of common stock as follows:

a)           Total 534,248 shares were issued pursuant to the exercise of employee and consultants options between $0.37 and $0.80 per share for proceeds of $305,648.

b)          In May the Company issued 1,424,739 units at $1.00 per unit for gross proceeds of $1,424,739.
Each unit consists of one common share and one-half of one share purchase warrant of the Company. Each whole warrant entitles the subscriber thereof to acquire one additional common share of the Company at an exercise price of $1.25 per share up to and including May 19, 2013. The estimated fair value of the warrants is $262,667 using the Black Scholes option pricing model using a 3 year term, an expected volatility of 64% and a risk free interest rate of 1.26%. The fair value of the warrants is included in share capital. The Company paid a total $62,152 for agent commissions and other expenses which have been recorded as share issue costs.

Share purchase warrants outstanding at September 30, 2010, are summarized as follows:

Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life (yr)
$1.10 - $1.95	1,928,918	1.75

Share purchase warrants outstanding are:

	Shares		Weighted-Average Exercise Price
Warrants outstanding at December 31, 2009 Warrants granted during the period Warrants expired during the period	1,319,788 712,370 (103,240)	$		1.69 1.25 1.42
Warrants outstanding at September 30, 2010	1,928,918	$		1.54

During the period ended September 30, 2010, the Company extended the expiry date of 736,213 warrants from July 3, 2010 to July 3, 2011. The incremental increase in value of the warrants after the extension was estimated to be $54,580 using the Black Scholes option pricing model using a 1 year term, an expected volatility of 67% and a risk free interest rate of 0.28%. The amount was expensed during the nine month period ending September 30, 2010, as interest and financing charge.

9

Naturally Advanced Technologies Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2010
(Unaudited)

3.          Capital Stock (cont.)

Stock options outstanding at September 30, 2010 are summarized as follows:

Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (yr)	Weighted Average Exercise Price	Number Exercisable	Weighted Average Exercise Price
$0.75 - $1.45	4,364,877	2.97		$1.13	1,680,977	$1.19

Stock options outstanding are:

	Shares		Weighted-Average Exercise Price
Options outstanding, December 31, 2009	4,724,125			1.01
Options exercised during the period	(534,248)			0.57
Options granted during the period	1,488,377			0.98
Options expired during the period	(1,313,377)			0.76
Options outstanding, September 30, 2010	4,364,877	$		1.13

During the nine month period ended September 30, 2010, 534,248 options were exercised and a total of $171,289 has been reclassified from additional paid-up capital to capital stock.

During the nine month period ended September 30, 2010, the Company granted a total of 1,488,377, five year common stock options to employees and consultants, exercisable between $0.95- $1.02 per share, which were valued at $903,563. These options were granted under the terms of the Company's 2008 Fixed Share Option Plan.

The fair value of options issued during the period ended September 30, 2010, was determined using the Black-Scholes option pricing model with the following assumptions:

Risk-free interest rate	1.31% to 2.51%
Volatility factor	76% to 78%
Expected life of options, in years	5
Weighted average fair value of options granted	$0.61

During the nine month period ended September 30, 2010, 462,079 (2009: 455,577) options vested under the Company's 2008 Fixed Share Option Plan. Total expenses of $557,928 (2009: $589,899) was recorded as stock-based compensation, $170,611 (2009-$361,903) was included in Consulting and Contract Labour expense and $387,317 (2009- $227,996) was included in Salaries and Benefits expense.

10

Naturally Advanced Technologies Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 2010
(Unaudited)

5.          Note payable

As at September 30, 2010, the Company owed $200,000 on a note payable which is due on January 22, 2011. Included in accrued liabilities at September 30, 2010 is an accrual for interest of $131,500 (December 31 2009- $102,169). The note is secured by a security interest in all assets of the Company, subject and subordinate, to any borrowing by the Company with banks and lending institutions.

6.Commitments

Investor Relations contract

On August 9, 2010, the Company hired an unrelated firm to perform investor relations activities. The agreement term is one year with ninety days notice of termination by either party. The monthly retainer is $10,000 with 125,000 stock options exercisable at $1.01 expiring August 9, 2015.

Lease

Effective August 9, 2010, the Company entered into a 10 month sub-lease at a rental rate of $4,400 per month.

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 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.

The matters discussed in these sections that are not historical or current facts deal with potential future circumstances and developments. Such forward-looking statements include, but are not limited to, the development plans for the Company's growth, trends in the results of the Company's development, anticipated development plans, operating expenses and the Company's anticipated capital requirements and capital resources. As such, these forward-looking statements may include words such as "plans", "intends", "anticipates", "should", "estimates", "expects", "believes", "indicates", "targeting", "suggests" and similar expressions. The actual results are expected to differ from these forward-looking statements and these differences may be material.

Discontinued Operations -During fiscal 2009, the Company closed its apparel business, which operated under the brand "HTnaturals". The apparel business is classified as discontinued operations in the Company's financial statements.

In this Report, "NAT", "we", "us", "our" and the "Company" refer to Naturally Advanced Technologies Inc. and its subsidiaries, unless the context otherwise requires.

OVERVIEW

Naturally Advanced Technologies Inc. is a Green Tech company focused on providing environmentally friendly textile, composite, biomass and pulping solutions through the cost effective process of industrial hemp, flax and other bast fiber crops. Naturally Advanced Technologies is bringing sustainable bast fiber-based products to market, providing environmentally friendly natural fiber alternatives for a broad range of existing and emerging product applications, with equivalent or superior performance characteristics to cotton, wood or fossil-fuel based competitors. As of the date of this Report, our business operations consist of the development and execution of our proprietary processing platforms called CRAiLAR^® and CRAiLEX^TM technology, which are bast fiber processing technologies targeted at the textile, pulping, composite and plastics industries.

The Naturally Advanced Technologies Solution

Bast fiber from hemp and flax is known to combine attractive performance characteristics with superior agronomic properties, providing sustainable, natural product solutions for a vast range of market applications.

However, two factors have created a barrier to the exploitation of these crops: 1) until recently industrial hemp cultivation was prohibited in much of the developed world, and 2) the technologies had not been developed to transform raw bast fiber into the quality of products that was demanded.

The first barrier is no longer an issue, with commercial hemp cultivation legalized in Canada in 1998. The U.S. is one of the last countries that still actively discourage hemp cultivation.

NAT has dismantled the second barrier. In concert with its key technology partners, Alberta Innovates -- Technology Futures (formerly the Alberta Research Council) and the National Research Council, NAT has developed proprietary technologies (the CRAiLAR^® and CRAiLEX^TM platforms) to process hemp fiber into superior decorticated bast fiber, organic bast fiber, dissolving pulp and fluff pulp; all environmentally friendly products that are fully fungible with traditional pulp and cotton processing lines. These products offer the comfort apparel, absorbent pulp and paper, and performance apparel sectors the ability to substitute superior natural fiber alternatives into their existing production lines, while unlocking a host of additional commercial opportunities in existing and emerging markets.

12

Naturally Advanced Technologies (NAT) is developing proprietary technology for the engineering, processing and production of textile fibers, composite materials, cellulose pulp, and their resulting byproducts. Developed in collaboration with the National Research Council of Canada and Alberta Innovates -- Technology Futures, the CRAiLAR and CRAiLEX biomass technology platforms offer cost-effective and environmentally friendly processing and production of industrial hemp for global textile, composite material, pulp and paper and energy markets. NAThas the global exclusive rights to any new intellectual property developed under these collaborations. The technology developed is expected to displace some cotton and organic cotton use in textiles, some polyester and nylon use in performance textiles, some fiberglass use in composite materials, some wood pulp use in pulp and paper applications and some oil and gas use in energy markets. The feedstock sources are environmentally effic ient bast fibers such as industrial hemp and flax. During the third quarter of 2008, fiber was spun and then knitted into fabric suitable for T-shirt or other knit garments using the CRAiLAR^® Organic Fibers technology.

As a result of testing of CRAiLAR Organic Fibers at NC State University during the third quarter of 2008, the Company entered into joint development agreements with Hanesbrands, and Georgia Pacific Consumer Products. The Company will be conducting further evaluation of its CRAiLAR Organic Fibers with both commercialization partners over the course of the next four months, with a view to arriving at commercialization terms at the successful conclusion of those trials.

NAT is organized into two brand platforms to best develop, test and commercialize its technology platforms. These include:

1. CRAiLAROrganic Fibers: (near term development/ commercialization) The Organic Fibers division is responsible for CRAiLAR applications in the apparel and textile industries. Using the core fiber from the bast fiber crop, CRAiLAR Organic Fibers can be spun into a traditional yarn, or formed into a mat using non woven technology.
2. CRAiLEX Advanced Materials: (near term development/ commercialization) Focused on applications for our eco-friendly cellulosic pulp, the Advanced Materials division develops technologies for the processing of these cellulose-based fibers in Pulp and Paper, Bioplastics and Performance Apparel industries.

HTnaturals Apparel Corp.

During fiscal 2009 the Company determined it prudent to close its apparel division HTnaturals and focus on its CRAiLAR and CRAiLEX technologies. The warehouse lease was not renewed, the sales team was terminated and all other elements of our apparel division were discontinued. The costs of the apparel division are classified as discontinued operations in the Company's financial statements.

Recent Developments

On September 20, 2010, the Company announced that they have created a sustainable, commercially viable complement to cotton using flax as a raw material. After successfully transforming hemp fibers into yarns and fabrics with the desirable qualities of cotton, the Company is now engaged in a strategic shift to use flax fibers as the foundation for the next phase of its proprietary CRAiLAR Organic Fiber technology.

The Company believes that compared to current cotton prices, flax is a cost-effective raw material for fiber production. The CRAiLAR process can also be used with the stalk portion of the oilseed flax plant -- traditionally cultivated for food and industrial applications -- which would normally be discarded during processing. That Company believes that making use of this byproduct, in addition to processing fiber-variety flax, enhances CRAiLAR's sustainability factor.

The all-natural, 100%-organic CRAiLAR process removes the binding agents from flax that contribute to its stiff texture. The process bathes bast fibers in a proprietary enzyme wash that transforms them into soft, yet strong and durable textile fibers, which can be used in both fashion and industrial applications. The Company believes that fibers made through the CRAiLAR process have the comfort and breathability of cotton, with the strength, moisture-wicking properties and shrink-resistance of sturdy bast fibers. The Company's recent trials have shown that flax can be spun on existing machinery to produce a yarn that can be used alone or blended with other fibers.

13

Results of OperationS

Nine Month Period Ended September 30, 2010 Compared to Nine Month Period Ended September 30, 2009

	Three months ended September 30			Nine months ended September 30,
	2010	2009	% Change	2010	2009	% Change
Loss from Continued Operations	($902,183)	($914,700)	(1.4%)	($2,383,284)	($2,178,794)	8.6%
Gain (Loss) from Discontinued Operations	($49)	($131,594)		$11,475	($602,393)
Net Loss	($902,232)	($1,046,294)	(16.0%)	($2,371,809)	($2,781,187)	17.3%
Loss/share Operations	($0.03)	($0.03)		($0.07)	($0.07)
Loss/share discontinued	($0.00)	($0.00)		($0.00)	($0.02)

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2010 COMPARED WITH NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2009

Operating Expenses

During the nine-month period ended September 30, 2010, we recorded operating expenses of $2,383,284 compared to operating expenses of $2,178,794 during the nine-month period ended September 30, 2009 (an increase of $204,490). The increase in loss was due primarily to an increase on research and development spending and an increase in stock based compensation expensed for options granted in the past.

Operating expenses consisted of: (i) $164,357 (2009: $180,126) in advertising and promotion; (ii) $25,155 (2009: $17,873) in amortization and depreciation; (iii) $361,162 (2009: $571,568) in consulting and contract labor; (iv) $287,483 (2009: $236,896) in general and administrative expenses; (v) $158,541 (2009: $101,231) in interest; (vi) $179,093 (2009: $203,723) in professional fees; (vii) $429,644 (2009: ($244,672) in research and development; (viii) $685,877 (2009: $459,334) in salaries and benefits; and (ix) $91,972 (2009: $163,371) in write-down of equipment..

Advertising and promotion expenses decreased to $164,357 for the nine-month period ended September 30, 2010, from $180,126 compared to the same period in 2009 as the Company reduced the amount paid for PR services.

Consulting and contract labor expenses decreased to $361,162 for the nine-month period ended September 30, 2010, from $571,568 compared to the same period in 2009 due to a decrease in stock based compensation and number of contractors.

General and administrative expenses increased to $287,483 for the nine-month period ended September 30, 2010, compared to $236,896 for the same period in 2009. The increase in general and administrative expenses was due to the increase in travel for trials commercialization of technology and the setting up of the new facility.

Interest increased to $158,541 for the nine-month period ended September 30, 2010, compared to $101,231 for the same period in 2009. The increase is mostly attributable to the increase in the loan from a director and the timing of interest payments, as well as the stock-based compensation resulting from extending expiry date of 736,233 share purchase warrants.

Research and development costs were $429,644 for the nine-month period ended September 30, 2010, compared to $244,672 for the same nine-month period in 2009. During this period, research and development was mainly focused on the refinement of the CRAiLAR Organic Fiber process through trials in Europe and in the Carolinas. The cost of these trials was the reason behind the increased costs for the period.

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Salaries and benefits expenses increased to $685,877 for the nine-month period ended September 30, 2010, compared with $459,334 for the same period in 2009. This increase was due to an increase in stock based compensation.

Professional fees decreased to $179,093 for the nine-month period ended September 30, 2010, compared with $203,723 for the same period in 2009 as there was a reduction in audit fees.

Discontinued operations contributed a gain of $11,475 for the nine-month period ended September 30, 2010, compared with a loss of ($602,393) for the same period in 2009 as the Company wound up its apparel business.

Net Loss

The net loss for the nine-month period ended September 30, 2010, was ($2,371,809), or ($0.07) per share, compared to a loss of ($2,781,187), or ($0.07) per share, for the same period in 2009, which is a decrease in net loss of ($409,378). The decrease in loss was primarily associated with discontinued operations. For the nine-month period ended September 30, 2010, the weighted average number of shares outstanding was 34,338,647 compared to 31,744,224 at September 30, 2009.

THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2010 COMPARED WITH THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2009

Operating Expenses

During the three-month period ended September 30, 2010, we recorded operating expenses of $902,183 compared to operating expenses of $914,700 during the three-month period ended September 30, 2009, (a decrease of $12,517).

Operating expenses consisted of: (i) $61,496 (2009: $93,602) in advertising and promotion; (ii) $8,426 (2009: $7,527) in amortization and depreciation; (iii) $136,512 (2009: $345,814) in consulting and contract labor; (iv) $94,088 (2009: $102,707) in general and administrative expenses; (v) $35,202 (2009: $35,264) in interest; (vi) $82,147 (2009: $77,470) in professional fees; (vii) $169,646 (2009: $88,646) in research and development; (viii) $222,694 (2009: $163,670) in salaries and benefits; and (ix) $91,972 (2009: $Nil) in write-down of equipment.

Advertising and promotion expenses effectively remained the same as $61,496 for the three-month period ended September 30, 2010, from $62,266 compared to the same period in 2009.

Consulting and contract labor expenses decreased to $136,512 for the three-month period ended September 30, 2010, from $345,814 compared to the same period in 2009 due to a decrease in stock based compensation and number of contractors.

General and administrative expenses decreased to $94,088 for the three-month period ended September 30, 2010, compared to $134,043 for the same period in 2009 as the Company streamlined overhead costs.

Interest decreased to $35,202 for the three-month period ended September 30, 2010, compared to $35,264 for the same period in 2009. The decrease is due to the timing of interest payments.

Research and development costs were $169,646 for the three-month period ended September 30, 2010, compared to $88,646 for the same three-month period in 2009. During this period, research and development was mainly focused on the refinement of the CRAiLAR Organic Fiber process and ongoing trials in Europe and the Carolinas. The cost of these trials was the reason for the increased costs for the period.

Salaries and benefits expenses increased to $222,694 for the three-month period ended September 30, 2010, compared with $163,670 for the same period in 2009. This increase was due to an increase in stock based compensation.

Professional fees increased to $82,147 for the three-month period ended September 30, 2010, compared with $77,470 for the same period in 2009 due to an increase in legal fees associated with the PIPE in the previous period.

Discontinued operations contributed a loss of $49 for the three month period ended September 30, 2010, compared with a loss of $131,594 for the same period in 2009 as the Company wound up its apparel business.

Net Loss

The net loss for the three-month period ended September 30, 2010, was ($902,232), or ($0.03) per share, compared to a loss of ($1,046,294), or ($0.03) per share, for the same period in 2009, which is a decrease in net loss of ($144,062). The decrease in loss was primarily associated with discontinued operations. For the three-month period ended September 30, 2010, the weighted average number of shares outstanding was 35,297,386 compared to 31,994,498 at September 30, 2009.

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LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2010, the Company's current assets were $442,931 and the Company's current liabilities were $1,687,122, which resulted in working capital deficit of $1,244,191. As of September 30, 2010, total assets were $555,906, consisting of: (i) $334,365 in cash and cash equivalents; (ii) $49,181 in trade accounts receivable; (iii) $49,212 in prepaid expenses and other; (iv) $10,173 in current assets of discontinued operations; (v) $36,901 in property and equipment; and (vi) $76,074 in intangible assets.

As at September 30, 2010, total liabilities were $1,687,122 and were comprised of: (i) $375,954 in accounts payable; (ii) $182,294 in accrued liabilities; (iii) $928,874 in amounts due to related party; (iv) $200,000 in note payable.

Stockholders' deficit increased by $164,438 from ($968,778), at December 31, 2009, to ($1,131,216) as at September 30, 2010.

As of September 30, 2010, the Company had cash and cash equivalents of $334,365 compared with $421,452 at December 31, 2009, a decrease of $87,087.

The cash flows used in continuing operations for the nine-month period ended September 30, 2010, were ($1,714,624) compared with ($1,341,516) for the same period in 2009. Cash flows used in operations for the nine-month period ended September 30, 2010, consisted primarily of a net loss from continued operation of ($2,383,284); $25,155 in depreciation and amortization; a write down of equipment of $91,972; stock based compensation of $557,928; a non cash finance charge of $54,580; an increase in accounts receivable of ($37,629); an increase in prepaid expenses of ($845); an increase in accounts payable of $141,641; a decrease of accrued liabilities of ($164,669); and an increase in amounts due to related parties of $527.

Net cash flows provided by discontinued operations for the nine-month period ended September 30, 2010, were $43,250 compared to 247,776 for the same period in 2009.

The cash flows used in investing activities for the nine-month period ended September 30, 2010, were ($12,846) compared to ($69,787) for the same period in 2009. Cash flows used in investing activities during the nine months ended September 30, 2010 consisted of (i) a purchase of property and equipment totaling ($3,552) and (ii) the acquisition of trademarks and licenses for ($9,294).

Cash flows from financing activities for the nine-month period ended September 30, 2010, totaled $1,668,235 versus $1,872,498 during the same period in 2009 as the Company issued $1,668,235 of capital stock for cash (2009: $1,698,088).

The effect of exchange rates on cash resulted in an unrealized loss of ($71,372) for the nine-month period ended September 30, 2010, compared with a $26,118 unrealized gain in the same period of 2009.

PLAN OF OPERATION

Management expects to continue expanding its business platform through the development and commercialization of CRAiLAR^®Organic Fibers and CRAiLEX^TM Advanced Materials technology for bast fiber processing and production, with resulting textile, composite, pulp and fiber products expected to address inherent environmental problems currently affecting these industries.

CRAiLAR Organic Fibers technology developed with the National Research Council (NRC) of Canada is a clean, sustainable, environmentally responsible organic fiber replacement that grows naturally, without excessive water and pesticide usage. CRAiLAR will be used in union with cotton, and when blended together, will create a much better performing fiber than cotton alone, taking on some of the characteristics of CRAiLAR, which are durability, superior dye characteristics, and less shrinkage.

CRAiLEX Advanced Materials technology developed with Alberta Innovates -- Technology Futures (formerly the Alberta Research Council) creates a superior dissolving pulp from the hemp plant to be used in performance yarns, industrial additives and absorbent pulp and paper products.

Through our innovative CRAiLAR and CRAiLEX processes, the vast potential benefits locked up in hemp and other bast fiber crops will finally be realized after years of unnecessary stigma and regulations. Industrial hemp, which is grown specifically for commercial use in the textile and other industries, has none of the negative aspects of the plant's infamous cousin, and is loaded with environmental and performance benefits. Flax has similar performance and environmental attributes to hemp while also having the added benefit of not facing any growing restrictions in the U.S.

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Management recognizes the disruptive potential that the CRAiLAR and CRAiLEX technology platforms possess for global textile, composite material and pulp and paper markets. As such, management is focusing on our growth through the commercialization of CRAILARand CRAiLEX. Management believes that an ongoing relationship in the form of joint ventures with established market leaders in both the CRAiLAR Organic Fibers division and the CRAiLEX Advanced Materials division would be the optimum commercialization strategy. Currently, testing and further development of fiber is taking place in conjunction with leading global brands.

In July of 2009 we announced Joint Development Agreements with Hanesbrands Inc., and Georgia Pacific Consumer Products, for our CRAiLAR Organic Fiber technology evaluation, and commercial scale up capability. Since then, we have conducted increasingly larger bulk commercial trails in both partners' facilities, to provide evidence of our ability to seamlessly integrate into existing natural fiber operations and to validate the performance attributes of our organic fiber, over the materials they would be replacing. In January of 2010 we received a purchase order of 10,000 lbs of CRAiLAR Organic Fiber from Hanesbrands Inc, for the final evaluation of the selected processing equipment from a supplier in Germany, in order to validate our enzyme process and scalability potential in volumes that would mimic those seen on a daily basis in full production.

The following results were achieved as a result of improved enzyme processing protocols, better understanding of crop management inputs as it related to enzyme performance, and improved processing efficiency due to the effectiveness of the latest processing equipment available to us:

1. Spun commercial grade yarn in a blend of 25% CRAiLAR Organic Hemp Fiber and 75% cotton, to a yarn count of 18 singles, suitable for tees shirts, socks, fleece garments and similar type apparel.
2. Processed flax fiber through our CRAiLAR enzyme process, to spin a commercial grade yarn in a blend of 25% CRAiLAR Flax Fiber, to a yarn count of 20 singles, suitable for all garment types listed in point 1 above, plus underwear.

The above test results were successfully replicated in fiber processed at our licensed CRAiLAR third party manufacturer in Philadelphia, GJ Littlewood and Sons, and thereafter successfully spun by our Licensed CRAiLAR spinner, Patrick Yarns, confirming our ability to commence supplying our development partners and additional customers in non competing industries with commercials scale fiber volumes immediately.

As a result of the success achieved in these latest trials, Hanesbrands Inc. has elected to move to the final stage of our joint development agreement, namely commercialization. We are in the process of finalizing supply chain, marketing and product positioning strategies with Hanes, before finally determining structure, location and timing of our commercialization of CRAiLAR Organic Fiber with them.

Our joint development agreement with Georgia Pacific Consumer Products continues to execute along the timelines laid out in the agreement, with one final round of testing to complete. At the conclusion of that project, we will be in a position to discuss commercialization opportunities.

As a result of the announcement of the successful conclusion of our latest bulk commercial scale trials, we have received enquiries from parties interested in sourcing CRAiLAR Organic Fibers for their apparel programs

We entered into a sub lease of a mid volume decortication facility located in Kingstree, South Carolina, in early August. The facility was established under a USDA flax initiative that failed to reach commercial viability. Having successfully spun flax fiber after processing it through our CRAiLAR process, we have unlocked the potential of flax as a bast fiber alternative to cotton, that is sustainable, performs like cotton, and is cost competitive. We intend to use this facility to prove out the viability of flax farming in this region, and to commence early volumes of CRAiLAR fiber to our commercial partners.

Finally, the testing and evaluation of our CRAiLEX Advanced Materials pulping technology continues with an industrial additives company, having produced commercial grade results. We expect to move to commercialization in this division, once our partner has completed their evaluation and go-to -market plans.

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HTnaturals

As the effect of the financial crisis took its toll on all sectors of retail industry, and our focus shifted in increasing intensity to our rapidly developing CRAiLAR and CRAiLEX Fiber business, it became obvious that we needed to concentrate on our CRAiLAR and CRAiLEX technology business model and opportunity.

As a result, we closed our HT Naturals business at the end of the second quarter of 2009. We have now fully transitioned to a "Green Tech" organic fiber company, with industry changing technologies in the natural fiber and forest pulping industries.

Note on Plan of Operation

While the Company expects that profitable operations will be achieved in the future, there can be no assurance that revenue, margins, and profitability will increase, or be sufficient to support operations over the long term. Management expects that the Company will need to raise additional capital to meet short and long-term operating requirements. Management believes that private placements of equity capital and debt financing may be adequate to fund the Company's long-term operating requirements. Management may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash. If the Company raises additional funds through the issuance of equity or convertible debt securities other than to current shareholders, the percentage ownership of current shareholders would be reduced, and such securities might have rights, preferences or privileges senior to the Company's common stock. Additi onal financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict business operations. Management is continuing to pursue external financing alternatives to improve the Company's working capital position and to grow the business to the greatest possible extent.

MATERIAL COMMITMENTS

Rana Corp.

A significant commitment for us during fiscal year 2010 is the principal amount of $200,000 due and owing pursuant to a secured and subordinated loan agreement with Rana Corp. ("Rana"). The term of the loan is from July 21, 2007, until April 22, 2009, at 12% per annum, calculated semi-annually, with payments due semi-annually. An extension of the amount due on July 22, 2009 has been granted to January 22, 2011. There was no fee paid for arranging the renewal of the loan. As at September 30, 2010, accrued interest on the loan was $131,500, which was included in accrued liabilities. The security granted to Rana is a floating charge and a security interest in all of our assets, subject and subordinate to any borrowing by us with banks and lending institutions.

Loan from Director

Another significant commitment for us in fiscal year 2010 is the amount of $700,000 advanced by a director to facilitate the production of the new apparel designs. The loan has an interest rate of 12% with a 1% charge for each advance. The loan matured on February 28, 2009. On February 16, 2009, the director advanced the Company an additional $200,000 for a total amount due to the director, of $900,000. A new secured loan agreement, with an interest rate of 12% is due in February, 2011 and is for the total amount outstanding ($900,000).

NRC Agreement

An additional significant commitment for the Company in fiscal year 2010 is the Joint Collaboration Agreement (JCA) the Company entered into with the NRC during 2008 to continue to develop a patentable enzyme technology for the processing of hemp fibers. Phase II of this agreement is for a three year term, which expires on May 9, 2010. On February 19, 2010, the Company signed an amendment to the agreement which will now expire on May 9, 2012. Over the term of the amended agreement, the Company will pay the NRC, $280, 536 ($294,822 CDN). The NRC is to be paid as it conducts work on the joint collaboration. As the NRC completes research and development work, the monies become due. There are no further costs or other off-balance sheet liabilities associated with the NRC JCA agreement. In addition to cash payments, the Company is to contribute $1,350,000 of "in kind" contributions over the course of the JCA.

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Public Relations Agreement

On November 25, 2009, the Company signed a service agreement with a company to provide public relations services. Pursuant to the agreement, the Company agreed to pay $7,500 per month for a period of one year ending October, 2010. Starting August 1, 2010, the public relations services provider has agreed to reduce their monthly fee to $4,000. Either party may terminate the agreement with 30 days notice.

Investor Relations Agreement

On August 9, 2010, the Company hired a firm to perform investor relation activities. The agreement term is one year with ninety days notice of termination by either party. The monthly retainer is $10,000 with 125,000 stock options exercisable at $1.01 and expiring August 9, 2015.

Lease

Effective August 9, 2010, the Company entered into a 10-month sub-lease at a rental rate of $4,400 per month.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Quarterly Report, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company's 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 the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) 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.

Item 3.             Quantitative and Qualitative Disclosures about Market Risk

Not applicable because we are a smaller reporting company.

Item 4.             Controls and Procedures

Disclosure Controls and Procedures

Kenneth Barker, our Chief Executive Officer, and Guy Prevost, our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, they concluded that our disclosure controls and procedures were effective as of September 30, 2010.

No Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter 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

We currently are not a party to any material legal proceedings and, to our knowledge, no such proceedings are threatened or contemplated.

Item 1A.           Risk Factors

Not applicable because we are a smaller reporting company.

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

Not applicable.

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Item 3.             Defaults upon Senior Securities

None.

Item 4.              (Removed and Reserved)

Not applicable.

Item 5.             Other Information

An Annual General Meeting of Shareholders ("AGM") of the Company was held on September 22, 2010 to approve the agenda items described below.

The Company is not subject to the proxy solicitation rules under the Securities Exchange Act of 1934, as amended. The solicitation of proxies was effected in accordance with the corporate laws of the Province of British Columbia, Canada, and securities laws of the provinces of Canada.

A total of 20,694,851 shares (58.6% of the 35,288,202 issued and outstanding shares of the Company's common stock entitled to vote as of July 30, 2010, the record date for the AGM) were present in person or by proxy, constituted a quorum for the transaction of business, and were voted at the AGM. The agenda items submitted at the AGM were passed as described below. Percentages indicated below reflect the percentage of the total number of shares voted at the AGM.

Resolution No.	Subject Matter	Number of Shares Voted:
		For	Against	Withheld	Non-Vote
Resolution 1	To set number of directors to be elected at eight (8)	20,498,951	195,900	0	0
Resolutions 2a through 2h	To elect the following persons as directors:	N/A	N/A	N/A	N/A
Resolutions 2a	Kenneth Barker	15,075,762	0	215,000	5,404,089
Resolution 2b	Robert Edmunds	15,191,257	0	99,505	5,404,089
Resolution 2c	Jason Finnis	15,073,757	0	217,005	5,404,089
Resolution 2d	Larisa Harrison	14,952,307	0	338,455	5,404,089
Resolution 2e	Miljenko Horvat	15,180,762	0	110,000	5,404,089
Resolution 2f	Jeremy Jones	15,167,762	0	123,000	5,404,089
Resolution 2g	Peter Moore	15,180,362	0	110,400	5,404,089
Resolution 2h	Guy Prevost	14,868,557	0	422,205	5,404,089
Resolution 3	Appointment of Dale Matheson Carr-Hilton as auditor	20,495,351	0	199,500	0
Resolution 4	Adoption of 2010 Fixed Price Option Plan	10,965,021	4,325,741	0	5,404,089

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Item 6.            Exhibits

Exhibit No.	Document
3.1	Articles of Incorporation, as amended (1)
3.2	Bylaws (1)
10.1	Collaboration Agreement dated effective May 7, 2004 between Hemptown Clothing, Inc., and the National Research Council of Canada (2)
10.2	Renewed Collaboration Agreement dated effective December 7, 2007 between Crailar Fiber Technologies, Inc., and the National Research Council of Canada (2)
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 (2)
10.4	Master Agreement for Technology Development between Alberta Research Council and Crailar Fiber Technologies dated January 1, 2007 (3)
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 (4)
10.6	2006 Stock Option Plan (5)
10.7	Letter Agreement dated September 2, 2008 between Naturally Advanced Technologies Inc. and Lipper/Heilshorn & Associates, Inc. (6)
10.7	Renewal of CEO Executive Services Agreement Between Naturally Advanced Technologies Inc. And Meriwether Accelerators LLC dated October 14, 2008 (7)
10.8	2008 Fixed Share Stock Option Plan (8)
10.9	CEO Executive Services Agreement between Naturally Advanced Technologies Inc. and Kenneth Barker, dated for reference August 24, 2009 (10)
10.10	Service Agreement between Naturally Advanced Technologies Inc. and OrganicWorks Marketing LLC dated November 25, 2010 (10)
10.11	Equipment Lease and Location Sublease dated August 9, 2010 between Naturally Advanced Technologies, Inc. and Eastern Flax of South Carolina, LLC. (11)
10.12	2010 Fixed Share Option Plan (*)
14.1	Corporate Governance Policy (9)
14.2	Corporate Disclosure Policy (9)
14.3	Securities Trading Policy (9)
14.4	Board of Directors Charter (9)
14.5	Terms of Reference for the Chief Financial Officer (9)
14.6	Terms of Reference of Committee Chairs (9)
14.7	Audit Committee Charter (9)
14.8	Corporate Governance Committee Charter (9)
14.9	Compensation Committee Charter (9)

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14.10	Disclosure Charter Policy (9)
14.11	Code of Ethics (9)
14.12	Insider Trading and Reporting Guidelines (9)
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. (*)

(*)   Filed herewith.

(1)   Filed as an exhibit to our Form 10-KSB for fiscal year ended December 31, 2004, as filed with the SEC on March 31, 2005.

(2)   Filed as an exhibit to our Form 8-K as filed with the SEC on March 8, 2010.

(3)   Filed as an exhibit to our Form 8-K as filed with the SEC on June 25, 2007.

(4)   Filed as an exhibit to our Form 8-K as filed with the SEC on December 21, 2007.

(5)   Filed as an exhibit to our Form 10-KSB for fiscal year ended December 31, 2006 as filed with the SEC Commission on March 31, 2007.

(6)   Filed as an exhibit to our Form 8-K as filed with the SEC on September 8, 2008.

(7)   Filed as an exhibit to our Form 8-K as filed with the SEC on October 28, 2008.

(8)   Filed as an exhibit to our Form S-8 as filed with the SEC on October 10, 2008.

(9)   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.

(10) 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.

(11) Filed as an exhibit to our Form 8-K as filed with the SEC on August 12, 2010.

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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.

NATURALLY ADVANCED TECHNOLOGIES INC.

By:       "Kenneth C. Barker"
             Kenneth C. Barker
             Chief Executive Officer, and a director
             Date: November 15, 2010

By:       "Guy Prevost"
             Guy Prevost
             Chief Financial Officer and a director
             Date: November 15, 2010