Vestal Wiler

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SOFIDEL America

SOFIDEL AMERICA CORP.

FINANCIAL STATEMENTS

WITH INDEPENDENT AUDITOR'S REPORT

December 31, 2014 and 2013

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Page

INDEPENDENT AUDITOR'S REPORT 1

BALANCE SHEETS 2

STATEMENTS OF OPERATIONS 3

STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY 4

STATEMENTS OF CASH FLOWS 5

NOTES TO FINANCIAL STATEMENTS 7

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Vestal Wiler

C E R T I F I E D P U B L I C A C C O U N T A N T S

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors

Sofidel America Corp. Haines City, Florida

We have audited tlie accompanying financial statements of Sofidel America Corp., which comprise the balance sheets as of December 31, 2014 and 2013, and the related statements of operations, changes in stockholder's equity, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of tiiese financial statements in accordance with accounting principles generally accepted in the United States of America; this includes tlie design, implementation, and maintenance of internal control relevant to tlie preparation and fair

presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the

financial statements are free of material misstatement.

An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in die

financial statements. The procedures selected depend on die auditor's judgment, including tlie risks of

material misstatement of tlie financial statements, whether due to fraud or error. In making tiiose risk

assessments, the auditor considers internal control relevant to tlie entity's preparation and fair presentation

of the financial statements in order to design audit procedures that are appropriate in the circumstances, but

not for tlie purpose of expressing an opinion on tlie effectiveness of die entity's internal control.

Accordingly, we express no such opinion. An audit also includes evaluating die appropriateness of

accounting policies used and die reasonableness of significant accounting estimates made by management,

as well as evaluating die overall presentation of the financial statements.

We believe tiiat die audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion, die accompanying financial statements referred to above present fairly, in all material

respects, die financial position of Sofidel America Corp. as of December 31, 2014 and 2013, and die results of

its operations and its cash flows for die years then ended, in accordance with accounting principles

generally accepted in die United States of America.

^otalf^iMm,

Certified Public Accountants

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2014 2013 CURRENT ASSETS:

Cash $ 1,689,536 $ 2,084,537 Accounts receivable, net of allowance for doubtful

accounts of $207,759 and $207,759 14,531,182 20,865,998 Inventories (Note 2) 40,364,853 36,693,429 Prepaid expenses 650,293 1,398,181 Deferred income taxes (Note 7) 816,000 592,000 TOTAL CURRENT ASSETS 58,051,864 61,634,145 PROPERTY AND EQUIPMENT - Net (Note 3) 132,961,463 97,361,034 OTHER ASSETS:

Deposits and other assets 221,107 91,672 Loan costs, net accumulated amortization

of $125,688 in 2013 - 638,759 Intangible assets - net (Note 4) 10,227,473 10,934,716 Goodwill 53,973,437 53,973,437 TOTAL OTHER ASSETS 64,422,017 65,638,584

255,435,344

$ $ 224,633,763

SOFIDEL AMERICA CORP.

BALANCE SHEETS December 31, 2014 and 2013

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See notes to financial statements.

2014 2013

CURRENT LIABILITIES:

Line of credit (Notes 5 and 6) $ - $ 16,000,000 Current maturities of long-term debt (Notes 5 and 6) 37,000,000 5,108,000 Accounts payable 21,257,033 20,054,788 Accounts payable - related parties 3,797,064 5,846,703 Accrued liabilities 1,756,107 1,553,288 TOTAL CURRENT LIABILITIES 63,810,204 48,562,779 LINE OF CREDIT AND LONG-TERM DEBT (Note 6) 10,361,818 39,277,000 PROMISSORY NOTES - PARENT (Note 5) 79,000,000 66,000,000 DEFERRED INCOME TAXES (Note 7) 6,875,600 4,881,000 COMMITMENTS AND CONTINGENCIES

(Notes 8 and 9)

STOCKHOLDER'S EQUITY

Common stock, $0.01 par value; 1,000 shares

authorized, 100 issued and outstanding 1 1 Additional paid-in capital 84,999,999 54,999,999 Retained earnings 10,387,722 10,912,984 TOTAL STOCKHOLDER'S EQUITY 95,387,722 65,912,984

255,435,344

$ $ 224,633,763 LIABILITIES AND STOCKHOLDER'S EQUITY

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See notes to financial statements. 3 2014 2013 REVENUE - Net $ 187,890,726 $ 188,107,851 COST OF REVENUE: 149,515,315 144,812,962 GROSS PROFIT 38,375,411 43,294,889 OPERATING EXPENSES:

Depreciation and amortization (Notes 3 and 4) 7,518,109 6,564,888 Other operating expenses (Note 11) 29,318,495 22,129,888 TOTAL OPERATING EXPENSES 36,836,604 28,694,776 INCOME FROM OPERATIONS 1,538,807 14,600,113 OTHER INCOME (EXPENSE):

Loss on disposal of property and equipment (27,464) (5,683) Write off of unamortized loan costs (507,200) -Interest income 1,244 1,323 Interest expense (Notes 5 and 6) (2,222,824) (2,523,885) Other 289,139 280,698 Foreign currency exchange gain (loss) 1,254,737 (21,500) Non recurring expenses - (1,034,550) OTHER EXPENSE - Net (1,212,368) (3,303,597) INCOME BEFORE INCOME TAXES 326,439 11,296,516 PROVISION FOR INCOME TAXES (NOTE 7) 851,701 3,647,986 NET INCOME (LOSS) $ (525,262) $ 7,648,530 EBITDA (Note 12) $ 10,309,578 $ 21,619,839

STATEMENTS OF OPERATIONS

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Additional Paid- Retained

Common Stock in Capital Earnings Total

BALANCE - January 01, 2013 $ 1 $ 54,999,999 $ 3,264,454 $ 58,264,454 Net income - - 7,648,530 7,648,530 BALANCE - December 31, 2013 1 54,999,999 10,912,984 65,912,984 Capital contributions - 30,000,000 - 30,000,000 Net loss - - (525,262) (525,262) BALANCE - December 31, 2014 $ 1 $ 84,999,999 $ 10,387,722 $ 95,387,722

STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY For the Years Ended December 31, 2014 and 2013

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(Continued)

See notes to financial statements. 5

2014 2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ (525,262) $ 7,648,530

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Provision for bad debts - (200,000)

Depreciation 6,611,872 5,619,617

Amortization 1,413,437 945,271

Gain on foreign currency remeasurement (1,245,489)

-Loss on disposal of property

and equipment 27,464 5,683

Deferred income taxes 1,770,600 3,787,000

Cash flows from changes in:

Accounts receivable 6,334,816 (297,424)

Inventories (3,671,424) (8,735,338)

Prepaid expenses 747,888 (1,305,936)

Income tax refund receivable - 502,000

Accounts payable 1,514,235 10,641,674

Accounts payable - related parties (2,049,639) (867,202)

Accrued liabilities 202,819 (2,761,906)

Net cash provided by operating activities 11,131,317 14,981,969

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment (30,986,448) (22,241,882)

Proceeds from disposal of property and equipment 42,000 16,450

Net change in deposits (129,435) 128,225

Payment for software licenses (67,435) (113,375)

Net cash used in investing activities (31,141,318) (22,210,582)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net change in bank overdraft - (61,257)

Net borrowings (repayments) on lines of credit (16,000,000) 15,464,102

Borrowings of long-term debt - 4,065,030

Repayments of long-term debt (44,385,000) (615,000)

Proceeds from promissory note from parent 50,000,000

-Repayments of stockholder notes payable - (9,373,506)

Payment of loan costs - (764,447)

Capital contributions 30,000,000

-Net cash provided by financing activities 19,615,000 8,714,922

STATEMENTS OF CASH FLOWS

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(Concluded)

2014 2013

NET (DECREASE) INCREASE IN CASH (395,001) 1,486,309

CASH - Beginning of year 2,084,537 598,228

CASH - End of year $ 1,689,536 $ 2,084,537

Cash paid for interest $ 2,215,000 $ 2,524,000

Cash paid for income taxes $ 20,000 $

-(Continued)

For the Years Ended December 31, 2014 and 2013

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

STATEMENTS OF CASH FLOWS

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES: During 2014 and 2013, the Company acquired approximately $11,295,000 and $16,400,000, respectively, of property and equipment with long-term debt. At December 31, 2014, the outstanding principle on the notes totaling $11,295,000 was reduced by $933,499 for a foreign currency remeasurement gain.

During 2013, deposits of $1,403,717 were reclassified as property and equipment.

During 2013, the Company obtained new financing through long-term debt, proceeds of which were used to satisfy the existing line of credit.

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NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013

7

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business – Sofidel America Corp. (the Company) is primarily engaged in the manufacture and conversion of paper into paper products such as toilet paper and paper towels. The Company is also engaged in the sale of paper dispensers and other paper accessories. The Company’s customers are primarily private label companies located in the United States, South America and the Caribbean.

Basis of Presentation – Effective August 31, 2012, the outstanding stock of Cellynne Holdings, Inc. (Cellynne) was purchased by Sofidel America Corp. (Sofidel). Sofidel is a wholly owned subsidiary of Sofidel UK (the parent) which is a wholly owned subsidiary of Sofidel SpA. Effective December 17, 2012, Cellynne was merged into Sofidel.

Use of Estimates – The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Reclassifications – Certain amounts have been reclassed in the 2013 financial statements to conform with the 2014 presentation.

Cash – Cash consists primarily of bank deposits, which may at times exceed federally insured limits.

Accounts Receivable – Accounts receivable are recorded when invoices are issued and are presented in the balance sheets net of the allowance for doubtful accounts. The allowance for doubtful accounts is estimated based on the Company's historical losses, the existing economic conditions in the industry, and the financial stability of its customers. Accounts receivable are written off when they are determined to be uncollectible.

Inventories – Inventories are stated at the lower of cost or market, using the weighted-average cost method when stated at cost or net realizable value when stated at market.

Property and Equipment – Property and equipment is stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, ranging from 2 to 20 years. Expenditures for repairs and maintenance are charged to operations as incurred.

Intangible Assets – Amortizable intangible assets are amortized over their estimated useful lives. Amortization is provided using accelerated and straight-line methods. Unamortizable intangible assets will be tested at least annually for impairment.

Goodwill – The excess of the purchase price over the estimated fair values of the net assets acquired resulted in a residual. Goodwill is no longer amortized, but is tested at least annually for impairment.

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

Income Taxes – The Company records income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

In accordance with U.S GAAP, the Company evaluates each of its tax positions to determine if they are more likely than not to not be sustained if the taxing authority examines the respective position. The Company has evaluated each of its tax positions and has determined that no additional provision or liability for income taxes is necessary.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is no longer subject to U.S. federal income tax examination by tax authorities for years before 2011.

Revenue Recognition – The Company recognizes revenue when the following criteria are met: persuasive evidence of an agreement exists, delivery has occurred, the price to the buyer is fixed and determinable, and the amounts are realizable. Delivery is not considered to have occurred until the customer takes title and assumes the risks and rewards of ownership. The timing of revenue recognition is largely dependent on terms. Revenue is recorded at the time of shipment for terms designated free on board (“f.o.b.”) shipping point. Discounts and allowances are comprised of cash discounts and sales rebates which are estimated using historical experience, and for the years ended December 31, 2014 and 2013 approximated $12,636,000 and $13,277,000, respectively.

Advertising – The Company charges the cost of advertising to operations as incurred. For the years ended December 31, 2014 and 2013, advertising expense charged to operations approximated $802,000 and $759,000, respectively.

Shipping and Handling – Shipping and handling on sales to customers are charged to operations as incurred. For the years ended December 31, 2014 and 2013, these expenses approximated $8,643,000 and $7,815,000, respectively.

Foreign Currency Transactions – The Company enters into transactions with customers and vendors that require payment in a foreign currency. These transactions are recorded in U.S. dollars using the spot rate as of the date of the transaction. Any gain or loss due to the change in exchange rates are recognized when the accounts are settled. Any accounts outstanding at the balance sheet date are remeasured at the spot rate and a gain or loss is recognized.

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9

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

Subsequent Events – The Company has evaluated subsequent events through January 22, 2015, the date which the financial statements were available to be issued.

NOTE 2 INVENTORIES

At December 31, 2014 and 2013, inventories consist of the following:

2014 2013

Raw materials $ 14,612,213 $ 12,032,654 Finished goods 19,267,275 18,721,789 Maintenance - parts and supplies 6,485,365 5,938,986

40,364,853

$ $ 36,693,429 NOTE 3 PROPERTY AND EQUIPMENT

At December 31, 2014 and 2013, property and equipment consists of the following:

2014 2013

Land and improvements $ 3,614,678 $ 2,256,611 Buildings and improvements 24,364,389 23,984,429 Machinery and equipment 97,818,624 67,114,319 Computer equipment 1,564,137 867,430 Furniture and fixtures 303,848 245,170 Vehicles 357,905 279,283 Construction in progress 18,799,652 9,872,224

146,823,233

104,619,466 Less accumulated depreciation 13,861,770 7,258,432

132,961,463

$ $ 97,361,034 For the years ended December 31, 2014 and 2013, depreciation expense amounted to approximately $6,612,000 and $5,620,000, respectively.

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NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 NOTE 4 INTANGIBLE ASSETS

At December 31, 2014 and 2013, intangible assets consist of the following: Weighted Average Useful Life 12/31/2014 12/31/2013 Amortized intangibles: Customer list 15 $ 6,600,000 $ 6,600,000 Accumulated amortization (1,409,925) (833,250) 5,190,075 5,766,750 Noncompete agreement 3 406,000 406,000 Accumulated amortization (315,778) (180,444) 90,222 225,556 Software licenses 3 211,500 144,065 Accumulated amortization (111,324) (48,655) 100,176 95,410 Unamortized intangibles: Brands 4,847,000 4,847,000 10,227,473 $ $ 10,934,716 Amortization expense amounted to approximately $906,000 and $945,000, respectively, for the years ended December 31, 2014 and 2013, which includes amortization of loan costs of $132,000 and $126,000, respectively.

NOTE 5 PROMISSORY NOTES – PARENT

In connection with the acquisition of Cellynne, the Company entered into a promissory note with the Parent for $66,000,000. The note bears interest at the rate equal to the six-month LIBOR (0.34% at December 31, 2014) plus 150 basis points and an upcharge of 25 basis points. Interest is payable semiannually in arrears on March 1, and September 1 of each year. The unpaid principal shall be payable in full on August 31, 2017. Payments of interest and principal shall be made in U.S. dollars. During 2014, the Company entered into additional promissory notes with the Parent with similar terms.

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11

NOTE 5 PROMISSORY NOTES – PARENT – Continued At December 31, 2014 and 2013, these notes consist of the following:

Interest Payment Dates Maturity 2014 2013 March 1 and September 1 August 31, 2017 $ 66,000,000 $ 66,000,000

quarterly beginning

June 30, 2014 April 24, 2015 37,000,000 -February 21 and August 21 August 21, 2016 5,000,000 -May 13 and November 13 November 13, 2016 4,000,000 -May 28 and November 28 November 28, 2016 4,000,000

-116,000,000

$ $ 66,000,000 At December 31, 2014 and 2013, interest on these notes of $628,494 and $472,230, respectively, is included in accounts payable – related parties in the accompanying balance sheets.

NOTE 6 LINE OF CREDIT AND LONG-TERM DEBT

In March 2013, The Company refinanced its existing debt with a $35,000,000 revolving credit facility and a $28,600,000 term loan facility, as well as up to a $16,400,000 mortgage term loan facility to be used to finance the Company’s acquisition of the Haines City property. These facilities were to mature at the end of five years (March 12, 2018).

Interest was payable in arrears based upon the type of borrowing and an applicable rate based on the Company’s Senior Leverage Ratio. At December 31, 2013, all borrowings were Eurodollar Borrowings thus interest was calculated using the 30 day LIBO Rate (0.1875% at December 31, 2013) plus the applicable rate of 1.80% and payable monthly.

These obligations were satisfied during 2014.

During 2014, the Company entered into three promissory notes payable in Euros with a foreign vendor for the purchase of equipment. These notes bear interest at the rate equal to the six-month LIBOR plus 65 basis points. Principal and interest are payable semiannually as follows:

Interest Principal Maturity Payments Payments Maturity

Note Begin Begin Date 2014 2013

1 01/31/15 01/31/16 07/31/19 $ 3,085,232 $ -2 02/28/15 02/29/16 08/31/19 4,057,428 -3 03/31/15 03/31/16 09/30/19 3,219,158

-10,361,818

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-SOFIDEL AMERICA CORP.

NOTE 6 LINE OF CREDIT AND LONG-TERM DEBT – Continued At December 31, 2014, these notes mature as follows:

2015 $ -2016 1,902,766 2017 2,302,346 2018 2,785,839 2019 3,370,867 10,361,818 $

NOTE 7 INCOME TAXES

The provision for income taxes consists of the following:

2014 2013

Current $ 20,004 $ (139,014) Deferred 831,697 3,787,000

851,701

$ $ 3,647,986 The provision for income taxes differs from that which would be calculated by applying federal statutory rates to net income before taxes primarily due to certain expenses which are not deductible for tax purposes as well as the net operating loss arising in 2013 being applied to taxes paid for 2012 which were received in 2014.

Deferred tax assets and liabilities consist of the following:

2014 2013

Current:

Deferred tax assets $ 954,000 $ 760,000 Deferred tax liabilities (138,000) (168,000)

816,000

$ $ 592,000 Noncurrent:

Deferred tax assets $ 12,544,400 $ 2,580,000 Deferred tax liabilities (19,420,000) (7,461,000)

(6,875,600)

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13 NOTE 7 INCOME TAXES – Continued

The current deferred tax assets relate to the allowance for doubtful accounts, an allowance for inventory, the capitalization of Section 263a costs into inventory and accrued interest which is not deductible until paid. The current deferred tax liabilities relate to prepaid expenses being deducted for tax purposes and the gain on foreign currency remeasurement on current balance sheet amounts. The noncurrent deferred tax asset relates to a net operating loss carryforward (NOL). The noncurrent deferred tax liabilities relate to the amortization of goodwill for income tax purposes, the use of different lives and depreciation methods for property and equipment, and the foreign currency remeasurement gain on noncurrent balance sheet accounts. At December 31, 2014, the NOL carryforward approximates $32,000,000 and will begin to expire in 2033.

NOTE 8 COMMITMENTS AND CONTINGENCIES Lease Commitments

The Company leases its facilities and certain equipment under agreements accounted for as operating leases. The Haines City, Florida facility was leased from an entity owned by the former stockholders. This lease included a purchase option which was exercised during 2013. The remaining leases expire on dates ranging through February 2021.

For the years ended December 31, 2014 and 2013, total rent expense charged to operations approximated $3,212,000 and $2,548,115, respectively, including $862,000 in 2013 paid to the entity owned by the former stockholders.

At December 31, 2014, future minimum lease payments under operating leases with initial or remaining noncancelable lease terms in excess of one year are as follows:

2015 $ 3,828,000 2016 2,683,000 2017 2,252,000 2018 1,669,000 2019 1,370,000 Thereafter 446,000 12,248,000 $ Litigation Matters

The Company is party to legal proceedings and potential claims arising in the ordinary course of business. One such claim is related to matters arising before the acquisition date of August 31, 2012, which the Company is indemnified as stated in the purchase agreement. In the opinion of management, the Company does not believe that these matters will have an adverse effect on the Company’s financial position, results of operations, or cash flows.

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NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 NOTE 9 EMPLOYEE BENEFIT PLAN

The Company sponsors a 401(k) Profit Sharing Plan and Trust (the Plan). The Plan covers substantially all employees meeting certain minimum age and length of service requirements. The Company may make contributions to the Plan at its discretion. The Company contributed approximately $243,000 and $208,000, respectively, to the Plan during the years ended December 31, 2014 and 2013.

NOTE 10 SIGNIFICANT CUSTOMERS AND VENDORS

For the years ended December 31, 2014 and 2013, the Company recognized revenue from the following significant customers, as well as the percentage of accounts receivable represented by these customers, at December 31, 2014 and 2013:

Customer % of Revenue % of Receivables % of Revenue % of Receivables

A 25% 14% 17% 8%

B 11% 21% 15% 32%

C 15% 27% 14% 20%

2013 2014

For the year ended December 31, 2013, the Company purchased approximately 13% and 10% of its raw materials inventory from two vendors, respectively. Management believes that there are adequate sources of supplies with other vendors that are readily available in the event of interruption with these significant vendors.

For the years ended December 31, 2014 and 2013, the Company made purchases totaling approximately $14,731,000 and $13,088,000, respectively, from companies owned by the parent. NOTE 11 OTHER OPERATING EXPENSES

For the years ended December 31, 2014 and 2013, other operating expenses consist of the following:

2014 2013

Distribution costs $ 10,538,124 $ 10,046,694 Consumptions (42,972,626) (39,246,252) General administration 9,289,119 6,961,472 Production related expenses 27,035,612 22,893,524 Labor costs 25,428,266 21,474,450

29,318,495

$ $ 22,129,888 The allocation of labor and overhead to inventory and cost of sales is achieved through the use

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15 NOTE 12 EBITDA

At December 31, 2014 and 2013, earnings before interest, taxes, depreciation and amortization and certain non-recurring expenses as defined by the respective Bank consist of the following:

2014 2013

Net income (loss) $ (525,262) $ 7,648,530 Add: interest 2,222,824 2,523,885 income tax expense 851,701 3,647,986 income tax refund

(included in other income) (264,994) -depreciation expense 6,611,872 5,619,617 amortization expense 906,237 945,271 write off of loan costs 507,200 -real estate transaction costs* - 200,000 non recurring expenses - 1,034,550

10,309,578

$ $ 21,619,839 *The credit agreement permits up to $200,000 of non-recurring transaction expenses incurred by the Borrower in its 2013 fiscal year in connection with the acquisition of the Haines City Property to be added back to net income in determining EBITDA. However, this amount was capitalized as part of the real estate purchase as property and equipment