##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2005o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission File Number:
    001-32563
  
  ORCHIDS PAPER PRODUCTS
    COMPANY
  A Delaware
    Corporation

I.R.S. Employer
    Identification
    Number 23-2956944   4826 Hunt Street
 Pryor, Oklahoma 74361
  Registrants telephone number, including area code:
 (918) 825-0616
  Securities registered pursuant to Section 12(b) of the
    Act:
   Title of Each Class

Name of Exchange on Which
    RegisteredCommon Stock, $0.001 Par Value

American Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K.




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##### 



TABLE OF
    CONTENTS
   
 PagePart IItem 1.

Business


3Item 1A.

Risk Factors


10Item 1B.

Unresolved Staff
    Comments


16Item 2.

Properties


16Item 3.

Legal
    Proceedings


17Item 4.

Submission of
    Matters to a Vote of Security Holders


17Part IIItem 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


17Item 6.

Selected Financial
    Data


18Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


19Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


33Item 8.

Financial
    Statements and Supplementary Data


34Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


51Item 9A.

Controls and
    Procedures


51Item 9B.

Other
    Information


51Part IIIItem 10.

Directors and
    Executive Officers of the Registrant


51Item 11.

Executive
    Compensation


52Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


52Item 13.

Certain
    Relationships and Related Transactions


52Item 14.

Principal
    Accountant Fees and Services


52Part IVItem 15.

Exhibits and
    Financial Statement Schedules


52Signatures


54SubsidiariesConsent of Independent Registered Public Accounting FirmSection 302 CertificationSection 302 CertificationSection 906 Certification   2




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##### Table of Contents



PART I  Form 10-K
    Item 1.
    BUSINESS  Overview
    of Our Business
  900-mile ® ®
        History
     3




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##### Table of Contents



Our
    Competitive Strengths
  Focus on supplying value retailers.
  Proximity to key customers.
  Experienced management team and trained
    workforce.
  Low cost tissue manufacturers.
  Our
    Strategy
    
    decreasing our reliance on third-party parent rolls;
    leveraging our existing customer relationships in the value
    retail channel; and
    selectively expanding our customer base in other retail channels. 4




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##### Table of Contents



Decreasing Our Reliance on Third-Party Parent
    Rolls.
    Leveraging Our Existing Customer Relationships in the Value
    Retail Channel.
    Selectively Expanding Our Customer Base in Other Retail
    Channels.
  Product
    Overview
   5




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##### Table of Contents



® ® ® ® ®
  Customers
      900-mile
    Dollar General.
  Family Dollar. Form 10-K
  Other Customers.
  Sales and
    Marketing Team
     6




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##### Table of Contents



Manufacturing
      2005


2004


2003


2002


2001(Tons)Manufactured


26,051



26,382



26,701



25,683



26,332Purchased


12,153



5,017



3,349



10,363



8,825Converted


38,204



31,399



30,050



36,046



35,157        7




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##### Table of Contents



Distribution
  drop-and-hook
  Raw
    Materials and Energy
      Backlog
    Trademarks
    and Trade Names
  ® ® ® ® ® ®
  Employee
    and Labor Relations
   8




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##### Table of Contents



Environmental,
    Health and Safety Matters
        Executive
    Officers
    Name

Age

PositionMichael P. Sage

59

Chief Executive Officer and
    President, DirectorKeith R. Schroeder

50

Chief Financial Officer   Michael
    P. Sage, 59, Chief Executive Officer and President,
    Director
  (1995-1998), (1991-1995), (1985-1989).
  Keith
    R. Schroeder, 50, Chief Financial Officer
  (1989-1996) (1978-1989).
  Available
    Information
  1-800-SEC-0330
 9




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##### Table of Contents



Item 1A.
    RISK
    FACTORS  Form 10-K
  Risks
    Related To Our Business
  We
    face intense competition and if we cannot successfully compete
    in the marketplace, our business, financial condition and
    operating results may be materially adversely
    affected.
      
    the availability, quality and cost of parent rolls purchased
    from third parties;
    aggressive pricing by competitors, which may force us to
    decrease prices in order to maintain market share;
    our ability to maintain and improve plant efficiencies and
    operating rates and lower manufacturing costs;
    the availability, quality and cost of raw materials,
    particularly recycled waste paper and labor; and
    the cost of energy.    A
    substantial percentage of our revenues are attributable to two
    large customers, which may decrease or cease purchases at any
    time.
   10




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##### Table of Contents



We may
    experience cost overruns in and delays in the start up of our
    project to expand our paper mill.
    We
    have significant indebtedness which limits our free cash flow
    and subjects us to restrictive covenants relating to the
    operation of our business.
      The
    availability of and prices for energy will significantly impact
    our business.
   11




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##### Table of Contents



Our
    exposure to variable interest rates may affect our financial
    health.
    We
    depend on our management team to operate the Company and execute
    our business plan.
    We
    exclusively use preconsumer solid bleached sulfate paper, or SBS
    paper, to produce parent rolls and any disruption in our supply
    or cost of preconsumer SBS paper could disrupt our production
    and harm our ability to produce tissue at competitive
    prices.
      We
    purchase parent rolls on the open market and any disruption in
    supply or increase in cost of parent rolls could harm our
    ability to produce tissue at competitive prices.
   12




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Labor
    interruptions would adversely affect our business.
  and/or
  Our
    paper mill may experience shutdowns adversely affecting our
    financial position and results of operations.
        Our
    operations require substantial capital, and we may not have
    adequate capital resources to provide for all of our cash
    requirements.
    Our
    business is subject to extensive governmental regulations and
    any imposition of new regulations or failure to comply with
    existing regulations could involve significant additional
    expense.
   13




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##### Table of Contents



We
    incur significant costs as a result of operating as a public
    company.
    If we
    fail to maintain an effective system of internal controls, we
    may not be able to accurately report our financial results or
    prevent fraud and, as a result, our business could be harmed and
    current and potential stockholders could lose confidence in us,
    which could cause our stock price to fall.
    Risks
    Related To Our Common Stock
  We do
    not pay cash dividends on our capital stock, and we do not
    anticipate paying any cash dividends in the
    future.
   14




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##### Table of Contents



Our
    certificate of incorporation and bylaws, and Delaware law
    contain provisions that could discourage a
    takeover.
    
    discourage, delay or prevent a change in the control of our
    company or a change in our management;
    adversely affect the voting power of holders of common
    stock; and
    limit the price that investors might be willing to pay in the
    future for shares of our common stock.  Our
    future operating results may be below securities analysts
    or investors expectations, which could cause our stock
    price to decline.
    
    our ability to reduce production costs;
    demand for our products; and
    our ability to develop sales and marketing capabilities.    Our
    common stock has only been publicly traded for a short period of
    time, and we expect that the price of our common stock could
    fluctuate substantially, possibly resulting in class action
    securities litigation.
    
    actual or anticipated variations in our results of operations or
    those of our competitors;
    changes in earnings estimates or recommendations by securities
    analysts or our failure to achieve analysts earnings
    estimates; and
    developments in our industry.   15




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##### Table of Contents



Our
    directors have limited personal liability and rights of
    indemnification from us for their actions as
    directors.
    
    any breach of their duty of loyalty to the corporation or its
    stockholders;
    acts or omissions not in good faith or which involve intentional
    misconduct or a knowing violation of law;
    unlawful payments of dividends or unlawful stock repurchases or
    redemptions; or
    any transaction from which the director derived an improper
    personal benefit.          Item 1B.
    UNRESOLVED
    STAFF COMMENTS    Item 2.
    PROPERTIES  36-acre
  AnnualFacility

Capacity


Sq. Ft.Paper
    making  existing machines


27,000 tons



120,000Paper making  new
    machine


35,000 tons



60,000Converting


7,000,000 cases



300,000    16




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##### Table of Contents



Item 3.
    LEGAL
    PROCEEDINGS    Item 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  Item 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    Information
    High


LowYear Ended December 31,
    2005:July 15, 2005 to
    September 30, 2005

$
10.45


$
8.50Fourth Quarter

$
10.55


$
9.65     Dividends
    Recent
    Sales of Unregistered Securities
    Initial
    Public Offering and Use of Proceeds from Recent Securities
    Offerings
    Repurchase
    of Equity Securities
   17




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##### Table of Contents



Item 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
  Successor


PredecessorTen-Months


Two-Months


Combined


PredecessorYear Ended


Ended


Ended


Year Ended


Year Ended


Year Ended


Year EndedDecember 31,


December 31,


February 29,


December 31,


December 31,


December 31,


December 31,2005


2004


2004


2004


2003


2002


2001(In thousands, except per case,
    tons and per ton data)Net Sales

$
57,700


$
39,736


$
7,191


$
46,927


$
44,524


$
53,202


$
51,304Cost of Sales


49,769



33,390



6,156



39,546



36,673



44,261



42,922Gross Profit


7,931



6,346



1,035



7,381



7,851



8,941



8,382Selling, General and Administrative
    Expenses


4,629



3,363



1,196



4,559



4,069



4,623



4,044Operating Income (Loss)


3,302



2,983



(161
)


2,822



3,782



4,318



4,338Interest Expense


1,213



1,052



45



1,097



347



574



1,220Other (Income) Expense, net


(102
)


(5
)






(5
)


19



320



(18
)Income (Loss) Before Income Taxes


2,191



1,936



(206
)


1,730



3,416



3,424



3,136Provision for Income Taxes


799



642



66



708



1,367



1,026



1,324Net Income (Loss)

$
1,392


$
1,294


$
(272
)

$
1,022


$
2,049


$
2,398


$
1,812Operating DataCases Shipped


5,305



3,645



641



4,286



4,040



4,746



4,516Net Selling Price per Case

$
10.88


$
10.90


$
11.22


$
10.95


$
11.02


$
11.21


$
11.36Total Paper
    Usage  Tons


38,204



26,824



4,575



31,399



30,050



36,046



35,157Total Paper Cost per Ton

$
830


$
718


$
706


$
716


$
690


$
701


$
703Total Paper Cost

$
31,719


$
19,248


$
3,229


$
22,477


$
20,729


$
25,260


$
24,710Cash Flow Data:Cash Flow Provided by (Used in):Operating Activities

$
2,644


$
4,722


$
847


$
5,569


$
3,846


$
6,796


$
3,638Investing Activities

$
(19,238
)

$
(19,794
)

$
(112
)

$
(19,906
)

$
(619
)

$
(966
)

$
(736
)Financing Activities

$
16,487


$
15,067


$
(445
)

$
14,622


$
(3,247
)

$
(5,622
)

$
(2,902
)   18




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##### Table of Contents



As of
    December 31,Successor


Predecessor2005


2004


2003


2002


2001Working Capital

$
4,514


$
3,399


$
3,194


$
2,349


$
4,394Net Property, Plant and Equipment

$
42,194


$
24,492


$
14,335


$
15,701


$
16,863Total Assets

$
53,710


$
33,407


$
22,960


$
23,805


$
25,991Long-Term Debt, net of current
    portion

$
17,002


$
15,145


$
4,846


$
7,657


$
7,388Total Stockholders Equity

$
23,712


$
6,941


$
10,050


$
8,001


$
12,446   Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  You should read the following discussion of our financial
    condition and results of operations in conjunction with the
    audited financial statements and the notes to those statements
    included elsewhere in this filing. This discussion contains
    forward-looking statements that involve risks and uncertainties.
    You should specifically consider the various risk factors
    identified in this prospectus that could cause actual results to
    differ materially from those anticipated in these
    forward-looking statements.
  Executive
    Overview
  What were
    our key 2005 financial results?
  
    Our net sales were $57.7 million in 2005, up 23% from
    $46.9 million in 2004.
    We generated operating income of $3.3 million in 2005,
    compared to operating income of $2.8 million in 2004.
    Our earnings per diluted share were $.45 per common share
    in 2005.
    We generated $2.6 million in positive operating cash flow
    and have generated positive operating cash flow each of the last
    five years.  What did
    we focus on in 2005?
         19




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##### Table of Contents



What
    challenges and opportunities did our business face in
    2005?
      Focusing
    on 2006
    start-up start-up.
  Business
    Overview
      
    the market price of our product;
    the cost of parent rolls purchased on the open market to meet
    our converting requirements;
    the cost of recycled waste paper used in producing paper;
    the efficiency of operations in both our paper mill and
    converting plant; and
    energy costs. 20




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##### Table of Contents



Comparative
    Years Ended December 31, 2005, 2004 and 2003
  Net
    Sales
  Successor


PredecessorPeriod from


Period from


Combined


PredecessorYear Ended


March 1 -


January 1 -


Year Ended


Year EndedDecember 31,


December 31,


February 29,


December 31,


December 31,2005


2004


2004


2004


2003(In thousands, except average
    price per case)Net Sales

$
57,700


$
39,736


$
7,191


$
46,927


$
44,524Cases shipped


5,305



3,645



641



4,286



4,040Average Price per Case

$
10.88


$
10.90


$
11.22


$
10.95


$
11.02      21




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##### Table of Contents



Cost of
    Sales
  Successor


PredecessorPeriod from


Period from


Combined


PredecessorYear Ended


March 1 -


January 1 -


Year Ended


Year EndedDecember 31,


December 31,


February 29,


December 31,


December 31,2005


2004


2004


2004


2003(In thousands, except gross
    profit %)Cost of Paper

$
31,719


$
19,248


$
3,229


$
22,477


$
20,729Non-paper materials, labor,
    supplies, etc.


16,549



12,470



2,350



14,820



12,577Operating lease payments






384



193



577



1,147Sub-total


48,268



32,102



5,772



37,874



34,453Depreciation


1,501



1,288



384



1,672



2,220Cost of Sales

$
49,769


$
33,390


$
6,156


$
39,546


$
36,673Gross Profit

$
7,931


$
6,346


$
1,035


$
7,381


$
7,851Gross Profit Margin %


13.7
%


16.0
%


14.4
%


15.7
%


17.6
%        22




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##### Table of Contents



Successor


PredecessorPeriod from


Period from


Combined


PredecessorYear Ended


March 1 -


January 1 -


Year Ended


Year EndedDecember 31,


December 31,


February 29,


December 31,


December 31,2005


2004


2004


2004


2003Paper usage
    (tons)Manufactured


26,051



21,976



4,406



26,382



26,701Purchased


12,153



4,848



169



5,017



3,349Converted


38,204



26,824



4,575



31,399



30,050Paper Costs per
    tonCost per ton produced internally

$
740


$
670


$
703


$
675


$
677Cost per ton purchased from third
    parties

$
1,024


$
933


$
781


$
928


$
792Total cost per ton consumed

$
830


$
718


$
706


$
716


$
690Total paper costs (in
    thousands)Cost of internally produced paper

$
19,278


$
14,724


$
3,097


$
17,821


$
18,077Cost of paper purchased from third
    parties


12,441



4,524



132



4,656



2,652Total paper costs

$
31,719


$
19,248


$
3,229


$
22,477


$
20,729          23




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##### Table of Contents



Gross
    Profit
      Selling,
    General and Administrative Expenses
  Successor


PredecessorPeriod from


Period from


Combined


PredecessorYear Ended


March 1 -


January 1 -


Year Ended


Year EndedDecember 31,


December 31,


February 29,


December 31,


December 31,2005


2004


2004


2004


2003(In thousands, except SG&A
    as a % of net sales)Recurring S,G&A Expenses

$
3,750


$
2,702


$
444


$
3,146


$
3,297Commission Expense


879



661



127



788



772Management Incentive Payments










625



625



Selling, General & Adm Exp

$
4,629


$
3,363


$
1,196


$
4,559


$
4,069SG&A as a % of net sales


8.0
%


8.5
%


16.6
%


9.7
%


9.1
%    24




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##### Table of Contents



Operating
    Income
    Interest
    and Other Expense
  Successor


PredecessorPeriod from


Period from


Combined


PredecessorYear Ended


March 1 -


January 1 -


Year Ended


Year EndedDecember 31,


December 31,


February 29,


December 31,


December 31,2005


2004


2004


2004


2003(In thousands)Interest Expense

$
1,213


$
1,052


$
45


$
1,097


$
347Other (Income) Expense, net


(102
)


(5
)






(5
)


19Income before income taxes

$
2,191


$
1,936


$
(206
)

$
1,730


$
3,416        25




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##### Table of Contents



Income
    Before Income Taxes
    Income
    Tax Provision
      LIQUIDITY
    AND CAPITAL RESOURCES
  Overview
    Form S-1 001-32563),
  
    underwriting discount of 8% or $1.4 million (charged
    against additional
    paid-in-capital);
    direct expenses of $859,000 (charged against additional paid-in
    capital), including legal fees, printing costs, accounting fees,
    qualified independent underwriter fees and other miscellaneous
    direct expenses.     26




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##### Table of Contents



Successor


PredecessorPeriod from


Period from


Combined


PredecessorYear Ended


March 1 -


January 1 -


Year Ended


Year EndedDecember 31,


December 31,


February 29,


December 31,


December 31,2005


2004


2004


2004


2003(In thousands)Cash Flow Data:Cash Flow Provided (Used) by:Operating Activities

$
2,644


$
4,722


$
847


$
5,569


$
3,846Investing Activities

$
(19,238
)

$
(19,794
)

$
(112
)

$
(19,906
)

$
(619
)Financing Activities

$
16,487


$
15,067


$
(445
)

$
14,622


$
(3,247
)            27




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##### Table of Contents




    a $5.0 million revolving credit facility which matures on
    April 30, 2007, of which there was $2.4 million
    outstanding as of December 31, 2005, on an eligible
    borrowing base of $4.6 million. For reporting purposes, as
    of December 31, 2005, $901,000 of bank overdrafts were
    included in the Long-term debt section of the balance sheet;
    a $14.1 million term loan which matures on April 30,
    2007, of which there was $13.3 million outstanding as of
    December 31, 2005; and
    a $15.0 million construction loan which matures
    April 30, 2007 pursuant to which we will receive advances
    which will be used in connection with our new paper machine
    project. As of December 31, 2005, there were no amounts
    outstanding under this loan.       28




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##### Table of Contents



Contractual
    Obligations
      Payments Due by PeriodYearsContractual Cash
    Obligations

Total


1


2 and 3


4 and 5


After 5($ thousands)Long-term debt(1)

$
18,630


$
1,628


$
14,953


$
2,049


$
Interest payments(2)(3)

$
2,523


$
1,589


$
891


$
43


$
Capital expenditures

$
4,688


$
4,688


$



$



$
Management services agreement

$
396


$
125


$
250


$
21


$
Total

$
26,237


$
8,030


$
16,094


$
2,113


$
     (1)
    
    Under Orchids revolving credit and term loan agreement,
    the maturity of outstanding debt could be accelerated if we do
    not maintain certain financial covenants. At December 31,
    2005, we were in compliance with our loan covenants.(2)
    
    These amounts assume interest payments at the year-end borrowing
    amount and rate for our revolving credit facility. The amount
    borrowed in future years is dependent on our free cash flow from
    time-to-time.(3)
    
    Interest payments on the term loan outstanding under our term
    loan agreement have been calculated based on the interest rate
    as of December 31, 2005.  Critical
    Accounting Policies and Estimates
    Accounts Receivable.
 29




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##### Table of Contents



Inventory. (first-in, first-in,
  New
    Accounting Pronouncements
          Non-GAAP Discussion
   30




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##### Table of Contents




    it does not reflect our cash expenditures for capital
    expenditures;
    it does not reflect changes in, or cash requirements for, our
    working capital requirements;
    it does not reflect the interest expense, or the cash
    requirements necessary to service interest or principal payments
    on our indebtedness;
    although depreciation and amortization are non-cash charges, the
    assets being depreciated and amortized will often have to be
    replaced in the future, and EBITDA does not reflect cash
    requirements for such replacements; and
    other companies, including other companies in our industry, may
    calculate these measures differently than we do, limiting their
    usefulness as a comparative measure.      Successor


PredecessorPeriod from


Period from


Combined


PredecessorYear Ended


March 1 -


January 1 -


Year Ended


Year EndedDecember 31,


December 31,


February 29,


December 31,


December 31,2005


2004


2004


2004


2003(In thousands, except percent of
    net sales)Net Income (Loss)

$
1,392


$
1,294


$
(272
)

$
1,022


$
2,049Plus: Interest expense, net


1,213



1,052



45



1,097



347Plus: Income tax expense


799



642



66



708



1,367Plus: Depreciation


1,501



1,288



384



1,672



2,220EBITDA

$
4,905


$
4,276


$
223


$
4,499


$
5,983Percent of net sales


8.5
%


10.8
%


3.1
%


9.6
%


13.4
%      31




---



##### Table of Contents



SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K,
  
    our business strategy;
    our value proposition;
    the market opportunity for our products, including expected
    demand for our products;
    our estimates regarding our capital requirements; and
    any of our other plans, objectives, expectations and intentions
    contained in this prospectus that are not historical facts.      
    competition in our industry;
    adverse developments in our relationships with key customers,
    particularly Dollar General;
    impairment of ability to meet our obligations and restrictions
    on future operations due to our substantial debt;
    the inability to obtain additional financing in connection with
    our project to expand our paper mill;
    cost overruns and delays in start up in connection with our
    project to expand our paper mill;
    the loss of key personnel;
    disruption in supply or cost of SBS paper;
    availability and price of energy;
    labor interruptions;
    natural disaster or other disruption to our facility;
    ability to finance the capital requirements of our business;
    cost to comply with government regulations;
    increased expenses and administrative workload associated with
    being a public company; and
    failure to maintain an effective system of internal controls
    necessary to accurately report our financial results and prevent
    fraud. 32




---



##### Table of Contents



You should read this
    Form 10-K
    completely and with the understanding that our actual results
    may be materially different from what we expect. We undertake no
    duty to update these forward-looking statements after the date
    of this
    Form 10-K,
    even though our situation may change in the future. We qualify
    all of our forward-looking statements by these cautionary
    statements.
  Item 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   33




---



##### Table of Contents



Item 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  INDEX TO
    FINANCIAL STATEMENTS
  Report of
    Independent Registered Public Accounting Firm


35Balance Sheets as
    of December 31, 2005 and 2004


36Statements of
    Income for the Year ended December 31, 2005, the Ten-Month
    Period ended December 31, 2004, the Two-Month Period ended
    February 29, 2004, and the Year ended December 31,
    2003


37Statements of
    Changes in Stockholders Equity for the Year ended
    December 31, 2005, the Ten-Month Period ended
    December 31, 2004, the Two-Month Period ended
    February 29, 2004, and the Year ended December 31,
    2003


38Statements of Cash
    Flows for the Year ended December 31, 2005, the Ten-Month
    Period ended December 31, 2004, the Two-Month Period ended
    February 29, 2004, and the Year ended December 31,
    2003


39Notes to Financial
    Statements


40-50  34




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                35




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  BALANCE SHEETS
 December 31, 2005 and 2004
  2005


2004(Dollars in thousands)ASSETSCurrent assets:Cash

$
378


$
485Accounts receivable, net of
    allowance of $125 in 2005 and $90 in 2004


4,180



3,609Inventories, net


4,420



3,048Investments






750Restricted certificate of deposit


1,500



Income taxes receivable


94



282Prepaid expenses


458



330Deferred income taxes


200



136Total current assets


11,230



8,640Property, plant and equipment


44,983



25,780Accumulated depreciation


(2,789
)


(1,288
)Net property, plant and equipment


42,194



24,492Deferred debt issuance costs, net
    of accumulated amortization of $232 in 2005 and $42 in 2004


286



275Total assets

$
53,710


$
33,407LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
2,877


$
2,180Accrued liabilities


2,137



1,249Unrealized loss on forward
    currency exchange contracts


74



Current portion of long-term debt


1,628



1,812Total current liabilities


6,716



5,241Long-term debt (net of unamortized
    discount of $101 in 2005 and $125 in 2004)


17,002



15,145Deferred income taxes


6,280



6,080Stockholders equity:Common stock, $.001 par
    value, 10,000,000 shares authorized, 4,156,250 shares
    issued and outstanding in 2005 and 2,000,000 shares issued
    and outstanding in 2004


4



2Additional paid-in capital


20,881



5,504Common stock warrants


141



141Retained earnings


2,686



1,294Total stockholders equity


23,712



6,941Total liabilities and
    stockholders equity

$
53,710


$
33,407    36




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANYSTATEMENTS OF INCOMEYear ended December 31, 2005, the Ten-Month Period
    ended December 31, 2004, the
    Two-Month Period ended February 29, 2004, and the Year
    ended December 31, 2003
  Successor


PredecessorTen-Months


Two-MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


February 29,


December 31,2005


2004


2004


2003(Dollars in thousands, except
    share and per share data)Net sales

$
57,700


$
39,736


$
7,191


$
44,524Cost of sales


49,769



33,390



6,156



36,673Gross profit


7,931



6,346



1,035



7,851Selling, general and
    administrative expenses


4,629



3,363



1,196



4,069Operating income (loss)


3,302



2,983



(161
)


3,782Interest expense


1,213



1,052



45



347Other (income) expense, net


(102
)


(5
)






19Income (loss) before income taxes


2,191



1,936



(206
)


3,416Provision (benefit) for income
    taxes:Current


663



470



(46
)


1,042Deferred


136



172



112



325799



642



66



1,367Net income (loss)

$
1,392


$
1,294


$
(272
)

$
2,049Net income per share:Basic

$
0.47


$
0.65Diluted

$
0.45


$
0.63Shares used in calculating net
    income per share:Basic


2,968,836



2,000,000Diluted


3,062,941



2,052,538    37




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANYSTATEMENTS OF CHANGES IN STOCKHOLDERS
    EQUITYYear ended December 31, 2005, the Ten-Month Period
    ended December 31, 2004, the
    Two-Month Period ended February 29, 2004, and the Year
    ended December 31, 2003
  Common Stock


Additional


Common StockNumber





Paid-In


Warrants


Retainedof Shares


Amount


Capital


Shares


Value


Earnings


Total(Dollars in thousands, except
    share amounts)PredecessorBalance at January 1, 2003


100


$



$
8,001






$



$



$
8,001Net income






















2,049



2,049Balance at December 31, 2003


100







8,001











2,049



10,050Net loss






















(272
)


(272
)Balance at February 29, 2004


100


$



$
8,001






$



$
1,777


$
9,778SuccessorIssuance of Common Stock


728,751


$
1


$
6,049






$



$



$
6,050Valuation of Warrants issued with
    Subordinated Debt














82,607



141







141Valuation of management shares
    issued










103















103Cost of common stock and warrants
    issued










(647
)














(647
)Net income






















1,294



1,294Effect of 2.744 for 1 stock split


1,271,249



1



(1
)














Balance at December 31, 2004


2,000,000



2



5,504



82,607



141



1,294



6,941Issuance of Common Stock , net of
    offering expenses of $2,239


2,156,250



2



15,009















15,011Stock based compensation










368















368Net income






















1,392



1,392Balance at December 31, 2005


4,156,250


$
4


$
20,881



82,607


$
141


$
2,686


$
23,712    38




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANYSTATEMENTS OF CASH FLOWSYear ended December 31, 2005, the Ten-Month Period
    ended December 31, 2004, the
    Two-Month Period ended February 29, 2004, and the Year
    ended December 31, 2003
  Successor


PredecessorYear


Ten Months


Two Months


YearEnded


Ended


Ended


EndedDecember 31,


December 31,


February 29,


December 31,2005


2004


2004


2003(Dollars in thousands)Cash Flows From Operating
    ActivitiesNet income (loss)

$
1,392


$
1,294


$
(272
)

$
2,049Adjustments to reconcile net income
    (loss) to net cash provided by operating activities:Depreciation and amortization


1,688



1,372



386



2,230Provision for doubtful accounts


46



23



5



182Deferred income taxes


136



172



112



325Employee stock compensation






103







Stock option plan expense


368











Foreign currency transaction gain


(35
)










Unrealized loss on foreign exchange
    contracts


74











Changes in cash due to changes in
    operating assets and liabilities, net of acquisition:Accounts receivable, net


(617
)


688



(347
)


(299
)Inventories


(1,372
)


396



344



(806
)Prepaid expenses


(128
)


112



49



20Income taxes receivable


188



(167
)


(49
)


43Accounts payable


697



751



133



237Accrued liabilities


207



(22
)


486



(135
)Net cash provided by operating
    activities


2,644



4,722



847



3,846Cash Flows From Investing
    ActivitiesAcquisition of business, net of
    cash acquired






(14,506
)






Purchases of investment securities
    and restricted certificate of deposit


(17,259
)


(750
)






Proceeds from the sale of
    investment securities


16,509











235Purchases of property, plant and
    equipment


(18,488
)


(4,538
)


(112
)


(854
)Net cash used in investing
    activities


(19,238
)


(19,794
)


(112
)


(619
)Cash Flows From Financing
    ActivitiesProceeds from issuance of common
    stock


17,250



6,050







Cost of common stock and warrants
    issued


(2,239
)


(647
)






Proceeds from issuance of
    subordinated debt and common stock warrants






2,150







Proceeds from issuance of long-term
    debt






17,399







Principal payments on long-term debt


(1,643
)


(9,568
)


(445
)


(2,612
)Change in line of credit


3,293











(623
)Deferred debt issuance costs


(174
)


(317
)






(12
)Net cash provided by (used in)
    financing activities


16,487



15,067



(445
)


(3,247
)Net increase (decrease) in cash


(107
)


(5
)


290



(20
)Cash, beginning


485



490



200



220Cash, ending

$
378


$
485


$
490


$
200Supplemental
    Disclosure:Interest paid

$
1,445


$
884


$
48


$
337Income taxes paid

$
475


$
765


$



$
879Supplemental Disclosure of
    Non-Cash Investing and Financing Activities:Contractual obligation for purchase
    of paper machine

$
681


$



$



$
    39




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS
 December 31, 2005, 2004 and 2003
  Note 1  Summary
    of Significant Accounting Policies
  Basis
    of Presentation
    Business
    Summary
    of Significant Accounting Policies
  Fair
    value of financial instruments
    Accounts
    receivable
    Inventories
  (first-in, first-in,
  Investments
    and restricted certificate of deposit
   40




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Property,
    plant and equipment
    Impairment
    of long-lived assets
    Income
    taxes
    Deferred
    debt issuance costs
    Discount
    on debt securities issued
    Stock
    split
    Stock
    option expense
   41




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   Revenue
    recognition
    Shipping
    and handling costs
    Advertising
    costs
    Use of
    estimates
    New
    pronouncements
         42




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Note 2 
    Acquisition
    of Orchids Paper Products Company      ($ thousands)AssetsCurrent assets

$
8,886Property, plant and equipment


21,243Total assets


30,129LiabilitiesCurrent liabilities


2,683Long-term debt


7,092Deferred taxes


5,848Total liabilities


15,623Net assets acquired

$
14,506  43




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   step-up
  2004


2003Net income ($ thousands)

$
1,028


$
1,900Earnings per share:Basic

$
0.51


$
0.95Diluted

$
0.50


$
0.93   Note 3 
    Purchase
    Commitment and Foreign Currency Derivatives  out-of-pocket
      Note 4 
    Inventories    2005


2004($ thousands)Raw materials

$
1,669


$
1,454Bulk paper rolls


1,396



519Converted finished goods


1,355



1,075$
4,420


$
3,048  44




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   Note 5 
    Property,
    Plant and Equipment    EstimatedUseful2005


2004


Lives($ thousands)Land

$
379


$
308



Buildings


3,571



3,276



40Machinery and equipment


20,624



20,062



5 to 25Vehicles


131



103



5Nondepreciable machinery and
    equipment (parts and spares)


1,751



1,619



Construction-in-process


18,527



412



$
44,983


$
25,780   construction-in-process
  Note 6 
    Long-Term
    Debt    2005


2004($ thousands)Revolving line of credit

$
3,293


$
Term note, due in monthly
    installments of $225,000, including interest


13,288



14,925Subordinated debentures at face
    value less unamortized discount of $101,000 and $125,000 at
    December 31, 2005 and 2004, respectively


2,049



2,025Other






718,630



16,957Less current portion


1,628



1,812$
17,002


$
15,145     AnnualPaymentYear

Amount($ thousands)2006

$
1,6282007


14,9532008


2009 (Net of unamortized discount)


2,049$
18,630    45




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
            2.744-for-1
  Note 7 
    Leases   46




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
     Note 8 
    Income
    Taxes    2005


2004($ thousands)Deferred income
    taxes  currentInventories

$
118


$
92Prepaid expenses


(72
)


(74
)Accounts receivable


48



34Accrued vacation


91



84Foreign exchange loss


15



Deferred income tax
    assets  current

$
200


$
136Deferred income
    taxes  noncurrentPlant and equipment

$
(6,280
)

$
(6,080
)Deferred income tax
    liabilities  noncurrent

$
(6,280
)

$
(6,080
)     Ten Months


Two MonthsYear Ended


Ended


Ended


Year EndedDecember 31,


December 31,


February 29,


December 31,2005


2004


2004


2003Statutory tax rate


34.0
%


34.0
%


(34.0
)%


34.0
%State income taxes, net of
    U.S. federal tax benefit


1.2
%






0.9
%


6.1
%Indian employment credits


(5.7
)%


(3.0
)%


68.6
%


(1.3
)%Employee stock compensation


6.9
%


1.9
%






Other


0.1
%


0.3
%


(3.7
)%


1.2
%36.5
%


33.2
%


31.8
%


40.0
%    47




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   Note 9 
    Earnings
    per Share    Year Ended


Ten Months EndedDecember 31,


December 31,2005


2004Net income ($ thousands)

$
1,392


$
1,294Weighted average shares outstanding


2,968,836



2,000,000Effect of Stock Options


41,627



Effect of dilutive warrants


52,478



52,538Weighted average shares
    outstanding  assuming dilution


3,062,941



2,052,538Earnings per common share: (2004
    restated to reflect 2.744 for 1 stock split)Basic

$
0.47


$
0.65Diluted

$
0.45


$
0.63   Note 10 
    Stock
    Incentive Plan       48




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
     Weighted Average


Weighted Average


AggregateWeighted Average


Fair Value of


Remaining


IntrinsicNumber


Exercise Price


Options Granted


Contractual Life


ValueBalance, December 31, 2004














Granted


277,500


$
8.05


$
3.60



Forfeited


8,000


$
8.00







Balance, December 31, 2005


269,500


$
8.05







9.25 years


$
593,000Exercisable at December 31,
    2005


61,500











9.2 5 years


$
125,000Exercisable at December 31,
    2006


113,500











Exercisable at December 31,
    2007


165,500











Exercisable at December 31,
    2008


217,500











Exercisable at December 31,
    2009


269,500











       Note 11 
    Major
    Customers and Concentration of Credit Risk     49




---



##### Table of Contents



ORCHIDS
    PAPER PRODUCTS COMPANY
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   Note 12 
    Employee
    Incentive Bonus and Retirement Plans  1 2
    Note 13 
    Related
    Party Transactions    Note 14 
    Selected
    Quarterly Financial Data (Unaudited)  2005First Quarter


Second Quarter


Third Quarter


Fourth Quarter(Dollars in thousands, except
    per share data)Sales

$
12,542


$
13,681


$
15,435


$
16,042Gross Profit

$
1,817


$
1,981


$
2,263


$
1,870Operating Income

$
858


$
773


$
1,029


$
642Net Income

$
346


$
114


$
480


$
452Basic Earnings per share

$
0.17


$
0.06


$
0.13


$
0.11Diluted Earnings per share

$
0.17


$
0.05


$
0.13


$
0.10Price per common shareHigh


n/a



n/a


$
10.45


$
10.55Low


n/a



n/a


$
8.50


$
9.65   2004First Quarter(1)


Second Quarter


Third Quarter


Fourth Quarter(Dollars in thousands, except
    per share data)Sales

$
10,045


$
9,844


$
13,143


$
13,895Gross Profit

$
1,484


$
1,484


$
2,340


$
2,073Operating Income

$
(140
)

$
682


$
1,318


$
962Net Income

$
(356
)

$
257


$
665


$
456Basic Earnings per share

$
(0.04
)

$
0.13


$
0.33


$
0.23Diluted Earnings per share

$
(0.04
)

$
0.13


$
0.32


$
0.22     (1)
    
    Combined results of two months ended February 29, 2004 of
    predecessor and one month ended March 31, 2004 of
    successor, with the exception of earnings per share data which
    only includes the net loss of $84 of successor for the one-month
    period ended March 31, 2004. 50




---



##### Table of Contents



Item 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    Item 9A.
    CONTROLS
    AND PROCEDURES  (a)  Disclosure
    Controls and Procedures:
  Rules 13a-15(e) 15d-15(e)
  (b)  Internal
    Control Over Financial Reporting
    Item 9B.
    OTHER
    INFORMATION   PART III  Item 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT      Regulation S-K
  (www.orchidspaper.com)
      (918) 825-0616
   51




---



##### Table of Contents



Item 11.
    EXECUTIVE
    COMPENSATION    Item 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    Securities
    Authorized for Issuance Under Equity Compensation Plan
  Number of SecuritiesRemaining Available forFuture Issuance UnderNumber of Securities to


Weighted-Average


Equity Compensationbe Issued Upon Exercise


Exercise Price of


Plans (Excludingof Outstanding Options


Outstanding Options,


Securities Reflected inWarrants and Rights


Warrants and Rights


Column (a)Plan Category

(a)


(b)


(c)Equity compensation plans approved
    by security holders


269,500


$
8.05



187,500Equity compensation plans not
    approved by security holders


150,000







Total


419,500







187,500   Item 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS    Item 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   PART IV  Item 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Financial Statements.
  Form 10-K.
  Financial Statement Schedules.
   52




---



##### Table of Contents



Orchids
    Paper Products Company
    Schedule II  Valuation and Qualifying
    Accounts
    Year ended December 31, 2005, the Ten-month Period ended
    December 31, 2004, the Two-month Period ended
    February 29, 2004, and the Year ended December 31,
    2003
  AdditionsBalance at


Charged toBeginning of


Costs and


Deductions


Balance atPeriod


Expenses


Describe(1)(2)


End of Period(In thousands)Accounts Receivable
    Reserve:Year ended December 31, 2005Bad Debt Reserve

$
90


$
46


$
11


$
125Ten-month period ended
    December 31, 2004Bad Debt Reserve

$
105


$
23


$
38


$
90Two-month period ended
    February 29, 2004Bad Debt Reserve

$
100


$
5


$



$
105Year ended December 31, 2003Bad Debt Reserve

$
35


$
145


$
80


$
100Inventory Valuation
    Reserve:Year ended December 31, 2005Inventory Valuation Reserve

$
39


$



$
15


$
24Ten-month period ended
    December 31, 2004Inventory Valuation Reserve

$
27


$
12


$



$
39Two-month period ended
    February 29, 2004Inventory Valuation Reserve

$
27


$



$



$
27Year ended December 31, 2003Inventory Valuation Reserve

$
15


$
12


$



$
27     (1)
    
    Write-off of uncollectible accounts(2)
    
    Write-off of obsolete inventory and physical inventory
    adjustments  Exhibits
   53




---



##### Table of Contents



SIGNATURES      By:
    /s/  Michael P. Sage     By:
    /s/  Keith R. Schroeder       POWER OF
    ATTORNEY
  attorneys-in-fact Form 10-K attorney-in-fact
    Signatures

Title

Date/s/  Douglas E.
    HaileyDouglas
    E. Hailey

Chairman of the Board of Directors

March 28, 2006/s/  Michael P. SageMichael
    P. Sage

Chief Executive Officer
    (Principal Executive Officer)

March 28, 2006/s/  Gary P. ArnoldGary
    P. Arnold

Director

March 28, 2006/s/  Steven BerlinSteven
    Berlin

Director

March 28, 2006/s/  John G. GuttillaJohn
    G. Guttilla

Director

March 28, 2006/s/  Keith R.
    SchroederKeith
    R. Schroeder

Chief Financial Officer
    (Principal Financial and
    Accounting Officer)

March 28, 2006  54




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##### Table of Contents



Exhibit Index
  EXHIBITS
  3
.1

Amended and Restated Certificate
    of Incorporation of the Registrant, incorporated by reference to
    Orchids Paper Products Company
    Form S-1
    (File
    No. 333-124173)
    dated April 19, 2005, exhibit 3.1.3
.2

Amended and Restated Bylaws of the
    Registrant, incorporated by reference to Orchids Paper Products
    Company
    Form S-1
    (File
    No. 333-124173)
    dated April  19, 2005, exhibit 3.2.4
.1

Specimen Stock Certificate,
    incorporated by reference to Orchids Paper Products Company
    Form S-1
    (File No.
    333-124173)
    dated June 24, 2005, exhibit 4.1.4
.2

Agented Revolving Credit and Term
    Loan Agreement, dated as of October 15, 2002 among the
    Registrant, Bank of Oklahoma, N.A. and Local Oklahoma Bank,
    N.A., incorporated by reference to Orchids Paper Products
    Company
    Form S-1
    (File
    No. 333-124173)
    dated April  19, 2005, exhibit 4.2.4
.3

Amendment One to Agented Revolving
    Credit and Term Loan Agreement dated October 14, 2003 among
    the Registrant, Bank of Oklahoma, N.A. and Local Oklahoma Bank,
    N.A., incorporated by reference to Orchids Paper Products
    Company
    Form S-1
    (File
    No. 333-124173)
    dated April 19, 2005, exhibit 4.3.4
.4

Amendment Two to Agented Revolving
    Credit and Term Loan Agreement dated January 14, 2004 among
    the Registrant, Bank of Oklahoma, N.A. and Local Oklahoma Bank,
    N.A., incorporated by reference to Orchids Paper Products
    Company
    Form S-1
    (File
    No. 333-124173)
    dated April 19, 2005, exhibit 4.4.4
.5

Amendment Three to Agented
    Revolving Credit and Term Loan Agreement dated March 1,
    2004 among the Registrant, Bank of Oklahoma, N.A. and Local
    Oklahoma Bank, N.A., incorporated by reference to Orchids Paper
    Products Company
    Form S-1
    (File
    No. 333-124173)
    dated April 19, 2005, exhibit 4.5.4
.6

Amendment Four to Agented
    Revolving Credit and Term Loan Agreement dated July 19,
    2004 among the Registrant, Bank of Oklahoma, N.A. and
    International Bank of Commerce (f/k/a Oklahoma Bank, N.A.).,
    incorporated by reference to Orchids Paper Products Company
    Form S-1
    (File
    No. 333-124173)
    dated April  19, 2005, exhibit 4.6.4
.7

Amendment Five to Agented
    Revolving Credit and Term Loan Agreement dated February 28,
    2005 among the Registrant, Bank of Oklahoma, N.A. and
    International Bank of Commerce (f/k/a Local Oklahoma Bank,
    N.A.), incorporated by reference to Orchids Paper Products
    Company
    Form S-1
    (File
    No. 333-124173)
    dated April  19, 2005, exhibit 4.7.4
.8

Form of Subordinated Debenture,
    incorporated by reference to Orchids Paper Products Company
    Form S-1
    (File
    No. 333-124173)
    dated April 19, 2005, exhibit 4.8.4
.9

Amended and Restated Agented
    Credit Agreement, dated as of June 24, 2005, among the
    Registrant, Bank of Oklahoma, N.A., BancFirst and Commerce Bank,
    N.A., incorporated by reference to Orchids Paper Products
    Company
    Form S-1
    (File
    No. 333-124173)
    dated June 24, 2005, exhibit 4.9.10
.1

Amended and Restated Management
    Services Agreement, dated April 19, 2005, between Weatherly
    Group, LLC, Taglich Brothers, Inc. and the Registrant,
    incorporated by reference to Orchids Paper Products Company
    Form S-1
    (File
    No. 333-124173)
    dated April  19, 2005, exhibit 10.1.10
.2#

2005 Stock Incentive Plan,
    incorporated by reference to Orchids Paper Products Company
    Form S-1
    (File No.
    333-124173)
    dated April 19, 2005, exhibit 10.2.10
.3#

Employment Agreement dated
    March 1, 2004, between Michael P. Sage and the Registrant,
    incorporated by reference to Orchids Paper Products Company
    Form S-1
    (File
    No. 333-124173)
    dated April 19, 2005, exhibit 10.3.10
.4#

Employment Agreement dated
    March 1, 2004, between Keith R. Schroeder and the
    Registrant, incorporated by reference to Orchids Paper Products
    Company
    Form S-1
    (File
    No. 333-124173)
    dated April 19, 2005, exhibit 10.4.10
.5#

Form of Identification Agreement
    between Registrant and each of its Directors and Officers,
    incorporated by reference to Orchids Paper Products Company
    Form S-1/A
    (File
    No. 333-124173)
    dated June 1, 2005, exhibit 10.5. 55




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##### Table of Contents



10
.6

Form of Warrant issued by Orchids
    Acquisition Group, Inc. in connection with the acquisition of
    Orchards Paper Products Company, incorporated by reference to
    Orchids Paper Products Company
    Form S-1
    (File No.
    333-124173)
    dated April 19, 2005, exhibit 10.6.10
.7

Form of Warrant issuable to
    designees of the Underwriter, incorporated by reference to
    Orchids Paper Products Company
    Form S-1/A
    (File No.
    333-124173)
    dated June 1, 2005, exhibit 10.7.10
.8

Purchasing documents for tissue
    machine, incorporated by reference to Orchids Paper Products
    Company
    Form S-1
    (File
    No. 333-124173)
    dated April 19, 2005, exhibit 10.8.10
.9

Commitment Letter, dated as of
    May 9, 2005, among the Registrant, Bank of Oklahoma and
    BancFirst, incorporated by reference to Orchids Paper Products
    Company
    Form S-1/A
    (File
    No. 333-124173)
    dated June  1, 2005, exhibit 10.9.10
.10

Engagement Letter, dated as of
    March 15, 2005, among the Registrant, Taglich Brothers,
    Inc. and Sanders Morris Harris Inc., incorporated by reference
    to Orchids Paper Products Company
    Form S-1/A
    (File No.
    333-124173)
    dated July 15, 2005, exhibit 10.10.21


Subsidiaries of the Company.23
.1

Consent of Independent Registered
    Public Accounting Firm  Tullius Taylor
    Sartain & Sartain LLP.     #
    
    Indicates management contract or compensatory plan 56