##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 001-32563
 Orchids Paper Products Company
  Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    23-2956944
(I.R.S. Employer
Identification No.)
 4826 Hunt Street
Pryor, Oklahoma 74361
 (918) 825-0616
  o þ
  o o þ
  o þ




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##### 



ORCHIDS PAPER PRODUCTS COMPANY
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 2007
 PagePART I. FINANCIAL INFORMATIONITEM 1.
    
    Financial StatementsBalance Sheets as of June 30, 2007 (Unaudited) and December 31, 2006
    
    
    3Statements of Income for the three months ended June 30, 2007 and 2006 (Unaudited)
and the six months ended June 30, 2007 and 2006 (Unaudited)
    
    
    4Statements of Cash Flows for the six months ended June 30, 2007 and 2006 (Unaudited)
    
    
    5Notes to Unaudited Interim Financial Statements
    
    
    6ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    10ITEM 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    25ITEM 4.
    
    Controls and Procedures
    
    
    25ITEM 4T.
    
    Controls and Procedures
    
    
    25PART II. OTHER INFORMATIONITEM 1.
    
    Legal Proceedings
    
    
    25ITEM 1A.
    
    Risk Factors
    
    
    25ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25ITEM 3.
    
    Defaults Upon Senior Securities
    
    
    26ITEM 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    26ITEM 5.
    
    Other Information
    
    
    27ITEM 6.
    
    Exhibits
    
    
    27Signatures
    
    
    28Amendment to the Amended and Restated Certificate of Incorporation302 Certification of Interim Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of Interim Chief Executive Officer906 Certification of Chief Financial OfficerPress Release
  -2-




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PART 1. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 
 ORCHIDS PAPER PRODUCTS COMPANY
BALANCE SHEETS
(Dollars in thousands, except share data)
 As ofJune 30,
    
    
    December 31,2007
    
    
    2006(unaudited)ASSETSCurrent assets:Cash
    
    $
    4
    
    
    $
    3Accounts receivable, net of allowance of
$138 in 2007 and $100 in 2006
    
    
    6,404
    
    
    
    5,089Inventories, net
    
    
    4,301
    
    
    
    4,379Restricted certificate of deposit
    
    
    
    
    
    
    1,500Income taxes receivable
    
    
    1,242
    
    
    
    1,242Prepaid expenses
    
    
    143
    
    
    
    306Deferred income taxes
    
    
    346
    
    
    
    346Total current assets
    
    
    12,440
    
    
    
    12,865Property, plant and equipment
    
    
    63,301
    
    
    
    63,081Accumulated depreciation
    
    
    (6,540
    )
    
    
    (5,042
    )Net property, plant and equipment
    
    
    56,761
    
    
    
    58,039Deferred debt issuance costs, net of accumulated
amortization of $552 in 2007 and $424 in 2006
    
    
    140
    
    
    
    124Total assets
    
    $
    69,341
    
    
    $
    71,028LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,910
    
    
    $
    3,772Accrued liabilities
    
    
    2,138
    
    
    
    1,805Current portion of long-term debt
    
    
    2,250
    
    
    
    2,263Total current liabilities
    
    
    8,298
    
    
    
    7,840Long-term debt, net of unamortized discount of $59
in 2007 and $74 in 2006
    
    
    28,559
    
    
    
    31,575Deferred income taxes
    
    
    6,999
    
    
    
    6,909Stockholders equity:Common stock, $.001 par value, 25,000,000 and 10,000,000
shares authorized in 2007 and 2006, respectively, 6,234,346
shares issued and outstanding in 2007 and 2006
    
    
    6
    
    
    
    6Additional paid-in capital
    
    
    21,308
    
    
    
    21,139Common stock warrants
    
    
    141
    
    
    
    141Retained earnings
    
    
    4,030
    
    
    
    3,418Total stockholders equity
    
    
    25,485
    
    
    
    24,704Total liabilities and stockholders equity
    
    $
    69,341
    
    
    $
    71,028
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ORCHIDS PAPER PRODUCTS COMPANY
STATEMENTS OF INCOME
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)(Dollars in thousands, except share and per share data)Net sales
    
    $
    18,515
    
    
    $
    13,675
    
    
    $
    35,152
    
    
    $
    27,774Cost of sales
    
    
    15,567
    
    
    
    12,669
    
    
    
    30,334
    
    
    
    25,205Gross profit
    
    
    2,948
    
    
    
    1,006
    
    
    
    4,818
    
    
    
    2,569Selling, general and administrative expenses
    
    
    1,365
    
    
    
    1,281
    
    
    
    2,562
    
    
    
    2,529Operating income (loss)
    
    
    1,583
    
    
    
    (275
    )
    
    
    2,256
    
    
    
    40Interest expense
    
    
    708
    
    
    
    243
    
    
    
    1,581
    
    
    
    290Other (income) expense, net
    
    
    (7
    )
    
    
    (51
    )
    
    
    (27
    )
    
    
    (63
    )Income (loss) before income taxes
    
    
    882
    
    
    
    (467
    )
    
    
    702
    
    
    
    (187
    )Provision (benefit) for income taxes:Current
    
    
    
    
    
    
    (183
    )
    
    
    
    
    
    
    (109
    )Deferred
    
    
    139
    
    
    
    9
    
    
    
    90
    
    
    
    33139
    
    
    
    (174
    )
    
    
    90
    
    
    
    (76
    )Net income (loss)
    
    $
    743
    
    
    $
    (293
    )
    
    $
    612
    
    
    $
    (111
    )Net income (loss) per share:Basic
    
    $
    0.12
    
    
    
    ($0.05
    )
    
    $
    0.10
    
    
    
    ($0.02
    )Diluted
    
    $
    0.12
    
    
    
    ($0.05
    )
    
    $
    0.10
    
    
    
    ($0.02
    )Shares used in calculating net income
(loss) per share:Basic
    
    
    6,234,346
    
    
    
    6,234,346
    
    
    
    6,234,346
    
    
    
    6,234,346Diluted
    
    
    6,344,260
    
    
    
    6,234,346
    *
    
    
    6,427,130
    
    
    
    6,234,346
    *
 
 *
    
    Due to net loss, option and warrant shares are anti-dilutive and thus not considered.  -4-




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ORCHIDS PAPER PRODUCTS COMPANY
STATEMENTS OF CASH FLOWS
 Six Months Ended June 30,2007
    
    
    2006(unaudited)
    
    
    (unaudited)(Dollars in thousands)Cash Flows From Operating ActivitiesNet income (loss)
    
    $
    612
    
    
    $
    (111
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    1,641
    
    
    
    886Provision for doubtful accounts
    
    
    30
    
    
    
    30Deferred income taxes
    
    
    90
    
    
    
    33Stock option plan expense
    
    
    169
    
    
    
    155Foreign currency transaction loss
    
    
    
    
    
    
    35Gain on foreign currency exchange contracts
    
    
    
    
    
    
    (74
    )Changes in cash due to changes in operating assets
and liabilities:Accounts receivable, net
    
    
    (1,345
    )
    
    
    (18
    )Inventories
    
    
    78
    
    
    
    (243
    )Prepaid expenses
    
    
    163
    
    
    
    250Income taxes receivable
    
    
    
    
    
    
    (210
    )Accounts payable
    
    
    138
    
    
    
    391Accrued liabilities
    
    
    333
    
    
    
    173Net cash provided by operating activities
    
    
    1,909
    
    
    
    1,297Cash Flows From Investing ActivitiesPurchases of property, plant and equipment
    
    
    (220
    )
    
    
    (15,105
    )Proceeds from the sale of restricted certificate of deposit
    
    
    1,500
    
    
    
    Net cash provided by (used in) investing activities
    
    
    1,280
    
    
    
    (15,105
    )Cash Flows From Financing ActivitiesNew borrowings on long-term debt
    
    
    26,500
    
    
    
    Retirement of borrowings on long-term debt
    
    
    (25,866
    )
    
    
    Principal payments on long-term debt
    
    
    (1,186
    )
    
    
    (773
    )Net borrowings (repayments) on revolving credit line
    
    
    (2,492
    )
    
    
    909Borrowings under construction loan
    
    
    
    
    
    
    13,299Deferred debt issuance costs
    
    
    (144
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (3,188
    )
    
    
    13,435Net increase (decrease) in cash
    
    
    1
    
    
    
    (373
    )Cash, beginning
    
    
    3
    
    
    
    378Cash, ending
    
    $
    4
    
    
    $
    5Supplemental Disclosure:Interest paid
    
    $
    1,486
    
    
    $
    1,052Income taxes paid
    
    $
    
    
    
    $
    221
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ORCHIDS PAPER PRODUCTS COMPANY
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
 Note 1  Basis of Presentation
    Note 2  Purchase Commitment and Foreign Currency Derivatives
   -6-




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Note 3  Capitalized Interest
  Note 4  Credit Agreements
  
    
    a $6.0 million revolving credit facility with a three-year term;
($2.1 million outstanding at June 30, 2007). In addition, $451,000 of
bank overdrafts are included with long-term debt in the balance sheet
at June 30, 2007. The borrowing base for the revolving credit
facility is determined by adding qualified receivables and inventory.
At June 30, 2007, the borrowing base for the revolving credit facility
was $6.7 million, limited to the $6.0 million amount of the facility.
    
    a $10.0 million term loan A with a ten-year term that has no principal
repayments for the first 24 months of the loan and then will be
amortized as if the loan had an 18 year life; ($10.0 million
outstanding at June 30, 2007).
    
    a $16.5 million term loan B with a four-year term that is being
amortized as if the loan had a six-year life; ($16.1 million
outstanding at June 30, 2007).
    
    a $3.0 million capital expenditures facility with a four-year term
that will be amortized as if the loan had a five-year life; ($0
outstanding at June 30, 2007).
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Note 5  Earnings per Share
  Three Months Ended June 30,
    
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    
    2007
    
    
    2006Net income (loss)  ($ thousands)
    
    $
    743
    
    
    $
    (293
    )
    
    
    $
    612
    
    
    $
    (111
    )Weighted average shares outstanding
    
    
    6,234,346
    
    
    
    6,234,346
    
    
    
    
    6,234,346
    
    
    
    6,234,346Effect of stock options
    
    
    37,211
    
    
    
    
    
    
    
    
    93,673
    
    
    
    Effect of dilutive warrants
    
    
    72,703
    
    
    
    
    
    
    
    
    99,111
    
    
    
    Weighted average shares outstanding
 assuming dilution
    
    
    6,344,260
    
    
    
    6,234,346
    
    
    
    
    6,427,130
    
    
    
    6,234,346Earnings per common share:Basic
    
    $
    0.12
    
    
    $
    (0.05
    )
    
    
    $
    0.10
    
    
    $
    (0.02
    )Diluted
    
    $
    0.12
    
    
    $
    (0.05
    )*
    
    
    $
    0.10
    
    
    $
    (0.02
    )*
 
  Note 6  Stock Incentive Plan
   Grant
    
    Number
    
    Exercise
    
    Risk-Free
    
    Estimated
    
    Dividend
    
    ExpectedDate
    
    of Shares
    
    Price
    
    Interest Rate
    
    Volatility
    
    Yield
    
    LifeFeb-06
    
    
    3,750
    
    
    $
    7.61
    
    
    
    4.56
    %
    
    
    41
    %
    
    None
    
    5 yearsJun-06
    
    
    11,250
    
    
    $
    10.05
    
    
    
    4.97
    %
    
    
    40
    %
    
    None
    
    5 yearsFeb-07
    
    
    3,750
    
    
    $
    8.58
    
    
    
    4.83
    %
    
    
    40
    %
    
    None
    
    5 yearsJun-07
    
    
    28,750
    
    
    $
    5.18
    
    
    
    5.09
    %
    
    
    38
    %
    
    None
    
    5 years
  -8-




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Note 7  Major Customers and Concentration of Credit Risk
  Note 8  New Accounting Standards
    -9-




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ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Information
  
    
    our business strategy;
    
    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, and intentions contained in this report that are not
historical facts.
   
    
    we face intense competition in our market and our
profitability would be reduced if aggressive pricing by our competitors forces us to decrease our prices;
    
    a substantial percentage of our revenues are attributable to three large customers which may decrease or cease purchases at
any time;
    
    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 could significantly affect our business;
    
    our exposure to variable interest rates may affect our financial health;
 -10-




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
    
    the disruption in supply or cost of waste paper;
    
    the loss of key personnel;
    
    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; and
    
    failure to maintain an effective system of internal controls necessary to accurately report our financial results and
prevent fraud.
  Overview
 ® ®
  
    
    the market price of our product;
    
    the cost of recycled paper used in producing paper;
    
    the efficiency of operations in both our paper mill and converting plant; and
    
    energy costs.
 -11-




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Comparative Three-Month Periods Ended June 30, 2007 and 2006
 Net Sales
 Three Months Ended June 30,2007
    
    2006(in thousands, except price per ton and tons)Net sales
    
    $
    18,515
    
    
    $
    13,675Total tons shipped
    
    
    12,816
    
    
    
    8,756Average price per ton
    
    $
    1,445
    
    
    $
    1,562
  -12-




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Cost of Sales
 Three Months Ended June 30,2007
    
    
    2006(in thousands, except gross profit margin %)Cost of paper
    
    $
    9,418
    
    
    $
    7,549Non-paper materials, labor, supplies, etc.
    
    
    5,400
    
    
    
    4,727Sub-total
    
    
    14,818
    
    
    
    12,276Depreciation
    
    
    749
    
    
    
    393Cost of sales
    
    $
    15,567
    
    
    $
    12,669Gross Profit
    
    $
    2,948
    
    
    $
    1,006Gross Profit Margin %
    
    
    15.9
    %
    
    
    7.4
    %
   Three Months Ended June 30,2007
    
    
    2006Paper usage (tons)Converted-internal
    
    
    9,652
    
    
    
    6,383Converted-purchased
    
    
    465
    
    
    
    2,373Total converted
    
    
    10,117
    
    
    
    8,756Third-party parent roll sales
    
    
    2,699
    
    
    
    Paper costs per tonCost per ton produced internally
    
    $
    719
    
    
    $
    790Cost per ton purchased from third parties
    
    $
    1,157
    
    
    $
    1,056Total cost per ton consumed
    
    $
    735
    
    
    $
    862Total paper costs (in thousands)Cost of internally produced paper
    
    $
    8,880
    
    
    $
    5,043Cost of paper purchased from third parties
    
    
    538
    
    
    
    2,506Total paper costs
    
    $
    9,418
    
    
    $
    7,549
  -13-




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Gross Profit
  Selling, General and Administrative Expenses
 Three Months Ended June 30,2007
    
    
    2006(In thousands, except SG&A as a % of net sales)Commission expense
    
    $
    256
    
    
    $
    193Other S, G&A expenses
    
    
    1,109
    
    
    
    1,088Selling, General & Adm exp
    
    $
    1,365
    
    
    $
    1,281SG&A as a % of net sales
    
    
    7.4
    %
    
    
    9.4
    %
  Operating Income
  Interest and Other Expense
 Three Months Ended June 30,2007
    
    2006(In thousands)Interest expense
    
    $
    708
    
    
    $
    243Other (income) expense, net
    
    $
    (7
    )
    
    $
    (51
    )
 -14-




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Income (Loss) Before Income Taxes
  Income Tax Provision (Benefit)
  Comparative Six-Month Periods Ended June 30, 2007 and 2006
 Net Sales
 Six Months Ended June 30,2007
    
    2006(in thousands, except price per ton and tons)Net sales
    
    $
    35,152
    
    
    $
    27,774Total tons shipped
    
    
    23,977
    
    
    
    17,974Average price per ton
    
    $
    1,466
    
    
    $
    1,545
 -15-




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Cost of Sales
 Six Months Ended June 30,2007
    
    
    2006(in thousands, except gross profit margin %)Cost of paper
    
    $
    18,115
    
    
    $
    15,540Non-paper materials, labor, supplies, etc.
    
    
    10,721
    
    
    
    8,879Sub-total
    
    $
    28,836
    
    
    
    24,419Depreciation
    
    
    1,498
    
    
    
    786Cost of sales
    
    $
    30,334
    
    
    $
    25,205Gross Profit
    
    $
    4,818
    
    
    $
    2,569Gross Profit Margin %
    
    
    13.7
    %
    
    
    9.2
    %
   -16-




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Six Months Ended June 30,2007
    
    
    2006Paper usage (tons)Converted-internal
    
    
    18,953
    
    
    
    12,258Converted-purchased
    
    
    786
    
    
    
    5,716Total converted
    
    
    19,739
    
    
    
    17,974Third-party parent roll sales
    
    
    4,238
    
    
    
    Paper costs per tonCost per ton produced internally
    
    $
    742
    
    
    $
    782Cost per ton purchased from third parties
    
    $
    1,154
    
    
    $
    1,042Total cost per ton consumed
    
    $
    756
    
    
    $
    865Total paper costs (in thousands)Cost of internally produced paper
    
    $
    17,208
    
    
    $
    9,584Cost of paper purchased from third parties
    
    
    907
    
    
    
    5,956Total paper costs
    
    $
    18,115
    
    
    $
    15,540
  Gross Profit
  -17-




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Selling, General and Administrative Expenses
 Six Months Ended June 30,2007
    
    
    2006(In thousands, except SG&A as a % of net sales)Commission expense
    
    $
    478
    
    
    $
    391Other S,G&A expenses
    
    
    2,084
    
    
    
    2,138Selling, General & Adm exp
    
    $
    2,562
    
    
    $
    2,529SG&A as a % of net sales
    
    
    7.3
    %
    
    
    9.1
    %
  Operating Income
  Interest and Other Expense
 Six Months Ended June 30,2007
    
    2006(In thousands)Interest expense
    
    $
    1,581
    
    
    $
    290Other (income) expense, net
    
    $
    (27
    )
    
    $
    (63
    )
   -18-




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Income (Loss) Before Income Taxes
  Income Tax Provision (Benefit)
  Liquidity and Capital Resources
    Six Months Ended June 30,2007
    
    2006(in thousands)Cash flow provided by (used in):Operating activities
    
    $
    1,909
    
    
    $
    1,297Investing activities
    
    $
    1,280
    
    
    $
    (15,105
    )Financing activities
    
    $
    (3,188
    )
    
    $
    13,435
 -19-




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
    
    a $6.0 million revolving credit facility with a three-year term ($2.1
million outstanding at June 30, 2007. In addition, $451,000 of bank
overdrafts were included in the long-term debt section of the balance
sheet at June 30, 2007). The borrowing base for the revolving credit
facility is determined by adding qualified receivables and inventory.
At June 30, 2007, the borrowing base for the revolving credit facility
was $6.7 million, limited to the $6.0 million amount of the facility;
    
    a $10.0 million term loan A with a ten-year term that has no principal
repayments for the first 24 months of the loan and then will be
amortized as if the loan had an 18 year life ($10.0 million
outstanding at June 30, 2007);
    
    a $16.5 million term loan B with a four-year term that is being
amortized as if the loan had a six-year life ($16.1 million
outstanding at June 30, 2007); and
    
    a $3.0 million capital expenditures facility with a four-year term
that will be amortized as if the loan had a five-year life ($0
outstanding at June 30, 2007).
  -20-




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-21-




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Critical Accounting Policies and Estimates
  Accounts Receivable
 Inventory.
 New Accounting Pronouncements
  -22-




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Non-GAAP Discussion
    
    
    it does not reflect our cash expenditures for capital assets;
    
    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;
 -23-




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
    
    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.
   Three Months Ended June 30,2007
    
    
    2006(In thousands, except % of net sales)Net income (loss)
    
    $
    743
    
    
    $
    (293
    )Plus: Interest expense, net
    
    
    708
    
    
    
    243Plus: Income tax (benefit) expense
    
    
    139
    
    
    
    (174
    )Plus: Depreciation
    
    
    749
    
    
    
    393EBITDA
    
    $
    2,339
    
    
    $
    169% of net sales
    
    
    12.6
    %
    
    
    1.2
    %
   Six Months Ended June 30,2007
    
    
    2006(In thousands, except % of net sales)Net income (loss)
    
    $
    612
    
    
    $
    (111
    )Plus: Interest expense, net
    
    
    1,581
    
    
    
    290Plus: Income tax (benefit) expense
    
    
    90
    
    
    
    (76
    )Plus: Depreciation
    
    
    1,498
    
    
    
    786EBITDA
    
    $
    3,781
    
    
    $
    889% of net sales
    
    
    10.8
    %
    
    
    3.2
    %
  -24-




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
  
 ITEM 4. Controls and Procedures
  
 ITEM 4T. Controls and Procedures
  
 PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (a) Unregistered Sales of Equity Securities
  -25-




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##### Table of Contents



(b) Initial Public Offering and Use of Proceeds from the Sale of Registered Securities
  (c) Repurchases of Equity Securities.
  
 ITEM 3. Defaults Upon Senior Securities
  
 ITEM 4. Submission of Matters to a Vote of Security Holders
  (1)
    
    To elect six directors to hold office until the 2008 annual meeting of stockholders
and until their successors are duly elected and qualified. The vote with respect to each
nominee was as follows:
 Nominee
    
    For
    
    WithheldGary P. Arnold
    
    
    5,770,408
    
    
    
    24,250Steven R. Berlin
    
    
    5,582,508
    
    
    
    212,250John C. Guttilla
    
    
    5,770,408
    
    
    
    24,250Douglas E. Hailey
    
    
    5,770,408
    
    
    
    24,250Jeffrey S. Schoen
    
    
    5,770,408
    
    
    
    24,250Jay Shuster
    
    
    5,770,408
    
    
    
    24,250
 (2)
    
    To ratify the appointment of Tullius Taylor Sartain & Sartain as the Companys
independent registered public accounting firm for 2007:
 For
    
    Against
    
    Abstain5,754,908
    
    8,250
    
    31,500
 (3)
    
    To amend the Amended and Restated Certificate of Incorporation to increase the number
of authorized shares of common stock from 10,000,000 to 25,000,000:
 For
    
    Against
    
    Abstain4,929,710
    
    857,448
    
    7,500
 -26-




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##### Table of Contents



ITEM 5. Other Information
  
 ITEM 6. Exhibits
  -27-




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##### Table of Contents



SIGNATURES
  ORCHIDS PAPER PRODUCTS COMPANYDate: August 14, 2007
    By:
    /s/ Keith R. SchroederKeith R. SchroederChief Financial Officer
and Interim Chief Executive
Officer
(On behalf of the registrant and
as Chief Accounting Officer) -28-




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##### Table of Contents



Exhibit Index
 Exhibit
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation of the
Registrant. Incorporated by reference to Exhibit 3.1 to the
Registrants Registration Statement on Form S-1 (File No.
333-124173) filed with the Securities and Exchange Commission on
April 19, 2005.3.1.1
    
    Amendment to the Amended and Restated Certificate of Incorporation
of the Registrant approved by stockholders at the Annual Meeting
on June 19, 2007.3.2
    
    Amended and Restated Bylaws of the Registrant. Incorporated by
reference to Exhibit 3.2 to the Registrants Registration
Statement on Form S-1 (File No. 333-124173) filed with the
Securities and Exchange Commission on April 19, 2005.10.1
    
    Material Contract  Debt Agreement. Incorporated by reference to
Exhibit 10.1 to the Form 8-K filed with the Securities and
Exchange Commission on April 23, 2007.31.1
    
    Certification of Interim Chief Executive Officer Pursuant to
Section 302.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302.32.1
    
    Certification of Interim Chief Executive Officer Pursuant to
Section 906.32.2
    
    Certification of Chief Financial Officer Pursuant to Section 906.99.1
    
    Press Release dated August 13, 2007 announcing financial results
for the quarter and six months ending June 30, 2007.
 -29-