STATEMENTS OF COMPREHENSIVE INCOME 3

Page

INDEPENDENT AUDITOR'S REPORT 1

BALANCE SHEETS 2

STATEMENTS OF COMPREHENSIVE INCOME 3

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY 4

STATEMENTS OF CASH FLOWS 5

NOTES TO THE FINANCIAL STATEMENTS 7

CONTENTS

2013 2012 CURRENT ASSETS:

Cash $ 2,084,537 $ 598,228

Accounts receivable, net of allowance for doubtful

accounts of $207,759 and $407,759 20,865,998 20,368,574 Inventories (Note 3) 36,163,516 27,428,178 Prepaid expenses 1,928,094 622,158 Income tax refund receivable (Note 8) - 502,000 Deferred income taxes (Note 8) 592,000 640,000 TOTAL CURRENT ASSETS 61,634,145 50,159,138 PROPERTY AND EQUIPMENT - Net (Note 4) 97,361,034 62,982,720 OTHER ASSETS:

Deposits and other assets 91,672 1,623,614 Loan costs, net accumulated amortization

of $125,688 638,759 - Intangible assets - net (Note 5) 10,934,716 11,615,389 Goodwill (Note 2) 53,973,437 53,973,437 TOTAL OTHER ASSETS 65,638,584 67,212,440

224,633,763

$ $ 180,354,298 BALANCE SHEETS

December 31, 2013 and 2012

ASSETS (Note 7)

See notes to financial statements.

2013 2012

CURRENT LIABILITIES:

Temporary bank overdrafts $ - $ 61,257 Line of credit (Note 7) 16,000,000 - Current maturities of long-term debt (Note 7) 5,108,000 - Accounts payable 20,054,788 9,413,114 Accounts payable - related parties 5,846,703 6,713,905 Accrued liabilities 1,553,288 4,315,194 Due to sellers (Note 2) - 9,373,506 TOTAL CURRENT LIABILITIES 48,562,779 29,876,976 LINE OF CREDIT AND LONG-TERM DEBT (Note 7) 39,277,000 25,070,868 PROMISSORY NOTE TO PARENT (Note 6) 66,000,000 66,000,000 DEFERRED INCOME TAXES (Note 8) 4,881,000 1,142,000 COMMITMENTS AND CONTINGENCIES

(Notes 9 and 10)

STOCKHOLDER'S EQUITY

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

authorized, 100 issued and outstanding 1 1 Additional paid-in capital 54,999,999 54,999,999 Retained earnings 10,912,984 3,264,454 TOTAL STOCKHOLDER'S EQUITY 65,912,984 58,264,454

224,633,763

$ $ 180,354,298

LIABILITIES AND STOCKHOLDER'S EQUITY

See notes to financial statements.

3

2013 2012

REVENUE - Net $ 188,107,851 $ 182,363,424

COST OF REVENUE: 144,812,962 139,189,489

GROSS PROFIT 43,294,889 43,173,935

OPERATING EXPENSES:

Depreciation and amortization (Notes 4 and 5) 6,564,888 1,683,832 Other operating expenses (Note 12) 22,129,888 24,056,783 TOTAL OPERATING EXPENSES 28,694,776 25,740,615 INCOME FROM OPERATIONS 14,600,113 17,433,320 OTHER INCOME (EXPENSE):

Loss on disposal of property and equipment (5,683) (25,030) Interest income 1,323 - Interest expense (Notes 6 and 7) (2,523,885) (1,683,678)

Other 280,698 4,752

Foreign currency exchange (21,500) - Non recurring expenses (1,034,550) (4,055,867)

OTHER EXPENSE - Net (3,303,597) (5,759,823) INCOME BEFORE INCOME TAXES 11,296,516 11,673,497 PROVISION FOR INCOME TAXES (NOTE 8) 3,647,986 1,955,500

NET INCOME $ 7,648,530 $ 9,717,997

Other comprehensive income:

Net income $ 7,648,530 $ 9,717,997

Change in fair value of interest rate swaps - 580,234 Total comprehensive income $ 7,648,530 $ 10,298,231

EBITDA (Note 13) $ 21,619,839 $ 24,861,440

STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2013 and 2012

See notes to financial statements.

Accumulated Other

Additional Paid- Retained Comprehensive

Common Stock in Capital Earnings Income (Loss) Total

BALANCE - January 01, 2012 $ 3,000 $ 1,966,103 $ 32,964,366 $ (580,234) $ 34,353,235 Distributions - - (2,426,659) - (2,426,659) Comprehensive income - - 6,453,543 481,070 6,934,613 Balance - August 30, 2012 3,000 1,966,103 36,991,250 (99,164) 38,861,189 Merger (2,999) 53,033,896 (36,991,250) - 16,039,647 Comprehensive income - - 3,264,454 99,164 3,363,618 BALANCE - December 31, 2012 1 54,999,999 3,264,454 - 58,264,454 Comprehensive income - - 7,648,530 - 7,648,530 BALANCE - December 31, 2013 $ 1 $ 54,999,999 $ 10,912,984 $ - $ 65,912,984

SOFIDEL AMERICA CORP.

STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

For the Years Ended December 31, 2013 and 2012

(Continued)

See notes to financial statements.

5

2013 2012

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 7,648,530 $ 9,717,997

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for bad debts (200,000) -

Depreciation 5,619,617 7,299,971

Amortization 945,271 -

Loss on disposal of property

and equipment 5,683 25,030 Deferred income taxes 3,787,000 502,000 Cash flows from changes in:

Accounts receivable (297,424) (35,935)

Inventories (8,735,338) (2,804,435)

Prepaid expenses (1,305,936) 3,322

Income tax refund receivable 502,000 (502,000)

Accounts payable 10,641,674 2,183,397

Accounts payable - related parties (867,202) 6,207,516 Accrued liabilities (2,761,906) (40,249) Net cash provided by operating activities 14,981,969 22,556,614 CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of Cellynne Holdings, Inc. - (121,969,652) Purchases of property and equipment (22,241,882) (2,547,102) Proceeds from disposal of property and equipment 16,450 750 Net change in deposits 128,225 (1,116,214) Payment for software licenses (113,375) - Net cash used in investing activities (22,210,582) (125,632,218) CASH FLOWS FROM FINANCING ACTIVITIES:

Net change in bank overdraft (61,257) (1,966,755) Net borrowings (repayments) on lines of credit 15,464,102 (7,330,495) Borrowings of long-term debt 4,065,030 - Repayments of long-term debt (615,000) - Proceeds from promissory note from parent - 66,000,000 Repayments on stockholder notes payable (9,373,506) (1,238,335) Payment of loan costs (764,447) - Capital contributions - 55,000,000

Distributions - (6,801,906)

Net cash provided by financing activities 8,714,922 103,662,509 STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2013 and 2012

2013 2012

NET INCREASE IN CASH 1,486,309 586,905

CASH - Beginning of year 598,228 11,323

CASH - End of year $ 2,084,537 $ 598,228

Cash paid for interest $ 2,524,000 $ 1,795,000

Cash paid for income taxes $ - $ 2,104,000 (Continued)

For the Years Ended December 31, 2013 and 2012

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

SOFIDEL AMERICA CORP.

STATEMENTS OF CASH FLOWS

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:

During 2013 and 2012, the Company acquired approximately $16,400,000 and $2,500,000, respectively, of property and equipment with borrowings on the line of credit and long-term debt.

During 2013, deposits on property and equipment of $1,403,717 were placed in service.

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

At December 31, 2012, the Company owed the sellers $9,373,506 in connection with the purchase

of the outstanding stock of Cellynne Holdings, Inc. which was paid during 2013.

NOTES TO FINANCIAL STATEMENTS December 31, 2013 and 2012

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. The accompanying financial statements present the operations of Cellynne for the period January 1, 2012 through August 30, 2012 and the operations of Sofidel for the period August 31, 2012 through December 31, 2013.

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 2012 financial statements to conform with the 2013 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. Beginning August 31, 2012, depreciation is provided using the straight-line method over the estimated useful lives of the assets, ranging from 2 to 20 years. Prior to that, both accelerated and straight-line methods were used. 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.

SOFIDEL AMERICA CORP.

NOTES TO FINANCIAL STATEMENTS December 31, 2013 and 2012

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

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.

Derivative Financial Instruments – The Company sought to manage its market risk, including interest rate risk associated with variable rate borrowings, through the use of derivative financial instruments. Derivative financial instruments were recognized as assets or liabilities, with changes in fair value affecting net income (loss) or comprehensive income (loss) as applicable. The Company applied hedge accounting for its derivative instrument outstanding during the year ended December 31, 2012. Parties to interest rate exchange agreements are subject to market risk for changes in interest rates and risk of credit loss in the event of nonperformance by the counterparty. The Company did not require any collateral under this agreement, and dealt only with a highly rated financial institution counterparty (which is also the lender on the related debt) and expected the counterparty would meet its obligation.

Accounting guidance establishes a framework for measuring fair value of financial instruments, providing a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities, or “level 1” measurements, and the lowest priority to unobservable inputs, or “level 3” measurements. The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company used fair value measurements to record fair value adjustments and to determine fair value disclosures of derivative financial instruments on a recurring basis. The Company determined the fair value of derivative financial instruments using the counterparty's valuation models and assumptions and available market data, and, accordingly, classified the fair value measurement of these derivatives as Level 2.

Income Taxes – Cellynne, with the consent of its stockholders, elected to be taxed as an S Corporation under the provision of the Internal Revenue Code. In lieu of corporation income taxes, the stockholders of an S Corporation are taxed on the Company's taxable income.

Sofidel 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.

NOTES TO FINANCIAL STATEMENTS December 31, 2013 and 2012

9

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

The Company adopted the provisions of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes. Under this standard, the Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. A tax position includes an entity's status, including its status as a pass- through entity, and the decision not to file a tax return. 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 2010.

Cellynne had elected to pay income tax to the State of Wisconsin on behalf of its stockholders.

Accordingly, the Company had recognized state income tax expense of approximately $148,000 for the year ended December 31, 2012. This expense was included in other operating expenses in the accompanying statement of comprehensive income.

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, 2013 and 2012 approximated

$13,277,000 and $12,367,000, respectively.

Advertising – The Company charges the cost of advertising to operations as incurred. For the years ended December 31, 2013 and 2012, advertising expense charged to operations approximated $759,000 and $733,000, respectively.

Shipping and Handling – Shipping and handling on sales to customers are charged to operations as incurred. For the years ended December 31, 2013 and 2012, these expenses approximated $7,815,000 and $8,346,000, respectively.

Subsequent Events – The Company has evaluated subsequent events through January 27, 2014,

the date which the financial statements were available to be issued.

SOFIDEL AMERICA CORP.

NOTES TO FINANCIAL STATEMENTS December 31, 2013 and 2012

NOTE 2 PURCHASE TRANSACTION

Effective August 30, 2012, Sofidel acquired the outstanding stock of Cellynne for $131,343,157 which is net the assumption of debt. At December 31, 2012, the accompanying balance sheet includes $9,373,506 due to the sellers in connection with the purchase. With this acquisition, Sofidel, Europe’s second biggest paper tissue producer, now has access both to a new continent and the particularly promising US market. Under the acquisition method of accounting, the purchase price was allocated to the assets acquired and the liabilities assumed based upon their estimated fair value at the date of acquisition. The purchase price was allocated as follows:

Cash $ 13,996

Accounts receivable 20,495,615

Inventories 28,088,508

Other current assets 524,522

Property and equipment 64,320,570

Other assets 217,375

Intangible assets 11,853,000

Goodwill 53,973,437

Current liabilities (14,968,978)

Other liabilities (33,174,888)

131,343,157

$

NOTE 3 INVENTORIES

At December 31, 2013 and 2012, inventories consist of the following:

2013 2012

Raw materials $ 12,032,654 $ 11,514,372

Work in process - 13,474

Finished goods 18,191,876 11,030,281

Maintenance - parts and supplies 5,938,986 4,870,051 36,163,516

$ $ 27,428,178

NOTES TO FINANCIAL STATEMENTS December 31, 2013 and 2012

11

NOTE 4 PROPERTY AND EQUIPMENT

At December 31, 2013 and 2012, property and equipment consists of the following:

2013 2012

Land and improvements $ 2,256,611 $ - Buildings and improvements 23,984,429 - Machinery and equipment 67,114,319 64,126,053 Computer equipment 867,430 - Furniture and fixtures 245,170 523,623

Vehicles 279,283 -

Construction in progress 9,872,224 - 104,619,466

64,649,676 Less accumulated depreciation 7,258,432 1,666,956

97,361,034

$ $ 62,982,720 For the years ended December 31, 2013 and 2012, depreciation expense amounted to approximately $5,620,000 and $7,030,000, respectively.

NOTE 5 INTANGIBLE ASSETS

At December 31, 2013 and 2012, intangible assets consist of the following:

Weighted Average

Useful Life 12/31/2013 12/31/2012

Amortized intangibles:

Customer list 15 $ 6,600,000 $ 6,600,000 Accumulated amortization (833,250) (192,500)

5,766,750

6,407,500 Noncompete agreement 3 406,000 406,000 Accumulated amortization (180,444) (45,111)

225,556

360,889 Software licenses 3 144,065 - Accumulated amortization (48,655) -

95,410

- Unamortized intangibles:

Brands 4,847,000 4,847,000

10,934,716

$ $ 11,615,389

SOFIDEL AMERICA CORP.

NOTES TO FINANCIAL STATEMENTS December 31, 2013 and 2012

NOTE 5 INTANGIBLE ASSETS – Continued

Amortization expense amounted to approximately $945,000 and $270,000, respectively, for the years ended December 31, 2013 and 2012, which includes amortization of loan costs of $126,000 and $32,000, respectively.

NOTE 6 PROMISSORY NOTE – 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 (0.35% at December 31, 2013) 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. At December 31, 2013 and 2012, interest on this note of $472,230 and

$506,389, respectively, is included in accounts payable – related parties in the accompanying balance sheets.

In connection with the refinancing agreement (see Note 7), this obligation has become subordinated to those secured obligations.

NOTE 7 LINES OF CREDIT AND LONG-TERM DEBT

At December 31, 2012, the Company had a $60,000,000 revolving line of credit with Branch Banking and Trust Company (the Bank). Interest was payable monthly at the 30-day LIBOR plus an applicable margin based on the Company’s funded debt/EBITDA ratio, ranging from 120 to 230 basis points (1.59% at December 31, 2012). The line was collateralized by substantially all assets and matured in March 2013. The line required the Company to maintain certain covenants.

In March 2013, The Company refinanced the existing line 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 will mature at the end of five years (March 12, 2018).

Interest is 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 are Eurodollar Borrowings thus interest is calculated using the 30 day LIBO Rate (0.1875% at December 31, 2013) plus the applicable rate of 1.80% and payable monthly.

At December 31, 2013, the revolving credit facility has an outstanding balance of $16,000,000.

The term loan has an outstanding balance of $28,600,000 and requires quarterly principal

payments of $1,072,000 beginning March 31, 2014. The mortgage loan has an outstanding

balance of $15,785,000 and requires quarterly principal payments of $205,000.

NOTES TO FINANCIAL STATEMENTS December 31, 2013 and 2012

13

NOTE 7 LINES OF CREDIT AND LONG-TERM DEBT – Continued

Substantially all assets of the Company are collateral for these obligations. The underlying security agreement requires the Company to maintain a Maximum Senior Leverage Ratio and Minimum Debt Service Coverage Ratio.

At December 31, 2013, these obligations mature as follows:

2014 $ 5,108,000

2015 5,108,000

2016 5,108,000

2017 5,108,000

2018 23,953,000

44,385,000

$

The Company entered into a swap agreement (the Agreement) to reduce the effect of changes in interest rates on its revolving line of credit. The Agreement effectively changed the Company's interest-rate exposure on certain fixed rate debt totaling $5,000,000 to a fixed rate of 4.95%. The Agreement expired in November 2012.

NOTE 8 INCOME TAXES

The provision for income taxes consists of the following:

2013 2012

Current $ (139,014) $ 1,453,500

Deferred 3,787,000 502,000

3,647,986

$ $ 1,955,500 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.

Deferred tax assets and liabilities consist of the following:

2013 2012

Current:

Deferred tax assets $ 592,000 $ 705,000

Deferred tax liabilities - (65,000) 592,000

$ $ 640,000

SOFIDEL AMERICA CORP.

NOTES TO FINANCIAL STATEMENTS December 31, 2013 and 2012

NOTE 8 INCOME TAXES – Continued

2013 2012

Noncurrent:

Deferred tax assets $ - $ - Deferred tax liabilities (4,881,000) (1,142,000)

(4,881,000)

$ $ (1,142,000) The current deferred tax assets relate to the allowance for doubtful accounts, the allowance for inventory, the capitalization of Section 263a costs into inventory, accrued interest which is not deductible until paid and a net operating loss (NOL) carryforward. The current deferred tax liabilities relate to prepaid expenses being deducted for tax purposes. The noncurrent deferred tax liabilities relate to the amortization of goodwill for income tax purposes and the use of different lives and depreciation methods for property and equipment. At December 31, 2013, the NOL carryforward approximates $7,371,000 and will expire in 2023.

NOTE 9 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 leases expire on dates ranging through February 2021.

For the years ended December 31, 2013 and 2012, total rent expense charged to operations approximated $2,548,000 and $3,352,000, respectively, including $862,000 and $2,568,000 in 2013 and 2012, respectively, paid to the entity owned by the former stockholders.

At December 31, 2013, future minimum lease payments under operating leases with initial or remaining noncancelable lease terms in excess of one year are as follows:

2014 $ 1,247,000

2015 1,193,000

2016 758,000

2017 586,000

2018 346,000

Thereafter 751,000

4,881,000

$

NOTES TO FINANCIAL STATEMENTS December 31, 2013 and 2012

15

NOTE 9 COMMITMENTS AND CONTINGENCIES – Continued 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.

NOTE 10 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 $208,000 and $202,000, respectively, to the Plan during the years ended December 31, 2013 and 2012.

NOTE 11 SIGNIFICANT CUSTOMERS AND VENDORS

For the years ended December 31, 2013 and 2012, the Company recognized revenue from the following significant customers, as well as the percentage of accounts receivable represented by these customers, at December 31, 2013 and 2012:

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

A 15% 32% 18% 20%

B 17% 7% 15% 17%

C 14% 1% 13% 15%

2012 2013

For the year ended December 31, 2013, the Company purchased approximately 13% and 10% its 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 year ended December 31, 2012, the Company purchased approximately 18%, 16% and 13% of its raw materials inventory from three 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, 2013 and 2012, the Company made purchases totaling

approximately $10,714,000 and $11,300,000, respectively, from a company headquartered in

Hong Kong, China in which the former stockholders own 70% through another entity.

SOFIDEL AMERICA CORP.

NOTES TO FINANCIAL STATEMENTS December 31, 2013 and 2012

NOTE 11 SIGNIFICANT CUSTOMERS AND VENDORS – Continued

For the years ended December 31, 2013 and 2012, the Company made purchases totaling approximately $13,088,000 and $3,541,000, respectively, from companies owned by the parent.

NOTE 12 OTHER OPERATING EXPENSES

For the year ended December 31, 2013, other operating expenses consist of the following:

Distribution costs $ 10,046,694

Consumptions (39,246,252)

General administration 6,961,472 Production related expenses 22,893,524

Labor costs 21,474,450

22,129,888

$

The allocation of labor and overhead to inventory and cost of sales is achieved through the use of the consumptions amount.

NOTE 13 EBITDA

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

2013 2012

Net income $ 7,648,530 $ 9,717,997

Add: interest 2,523,885 1,683,678

income tax expense 3,647,986 2,103,927 depreciation expense 5,619,617 7,030,239 amortization expense 945,271 269,732 real estate transaction costs* 200,000 -

non recurring expenses 1,034,550 4,055,867

21,619,839

$ $ 24,861,440

*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