Independent Auditors’ Report

Financial Statements

Balance sheets

Statements of income

Statements of shareholder’s equity

Statements of cash flows

Notes to consolidated financial statements

December 31,

Assets

Current

Cash and cash equivalents

Accounts receivable:

Trade, net of allowance for doubtful accounts of $104,496 and $71,756 (Note 9)

Inventories (Note 2)

Prepaid expenses and other

Total current assets

Property and equipment, net (Note 3)

Other assets

Deferred income taxes (Note 5)

Total assets

Liabilities and Shareholder’s Equity

Current

Accounts payable

Due to related parties (Notes 6 and 7)

Other accrued expenses (Note 4)

Total current liabilities

Related party loan payable (Note 6)

Deferred income taxes (Note 5)

Liabilities for pension benefits

Total liabilities

Commitments and contingencies (Notes 3, 10 and 12)

Shareholder’s equity

Common stock

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss (Note 14)

Total shareholder’s equity

Total liabilities and shareholder’s equity

Year ended December 31,

Net sales (Notes 7 and 9)

Cost of sales (Note 7)

Gross profit

Operating expenses:

Selling, general and administrative (Note 7)

Research and development

Total operating expenses

Income from operations

Other income (expense):

Interest, net

Miscellaneous, net

Total other income, net

Income before income taxes

Income tax expense (Note 5)

Net income

Balance, December 31, 2008

Cumulative effect of adoption of standards on uncertainty in income taxes (Note 5)

Net income

Translation adjustment

Minimum pension liability adjustment (net of tax of $165,376)

Comprehensive income

Balance, December 31, 2009

Net income

Translation adjustment

Minimum pension liability adjustment (net of tax of $528,794)

Comprehensive income

Balance, December 31, 2010

Year ended December 31,

Cash flows from operating activities:

Net income

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

Depreciation and amortization

Realized and unrealized foreign exchange loss on related party loan

Loss on disposal of property and equipment

Deferred income taxes

Provision for pension

Payment of pension

Provision for losses on accounts receivable

Decrease (increase) in assets:

Accounts receivable

Inventories

Prepaid expenses and other

Due from related parties

Increase (decrease) in liabilities:

Accounts payable

Accrued expenses and other

Due to related parties

Net cash provided by operating activities

Cash flows from investing activities:

Additions to property and equipment

Proceeds on disposal of property and equipment

Net cash used in investing activities

Effect of exchange rates on cash and cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Business – Banner Pharmacaps Europe B.V. (the “Company”), is an indirect wholly owned subsidiary of Vion Holding N.V.

The Company manufactures soft elastic gelatin capsules, primarily containing prescription and non-prescription pharmaceuticals, vitamins and dietary supplements.

Foreign Currency Translation – Foreign currency denominated assets and liabilities of subsidiaries with local functional currencies are translated to United States dollars at year-end exchange rates. Revenues and expenses of foreign subsidiaries are translated at average exchange rates prevailing during the year. The effects of translation are recorded in the accumulated other comprehensive income (loss) component of stockholders’ equity.

Transactions denominated in foreign currency are translated using the exchange rate in effect at the transaction date. Gains and losses arising from subsequent fluctuations in exchange rates are included in other income.

Trade Accounts Receivable and Credit Risk – Accounts receivable are customer obligations due under normal trade terms. Substantially all of the Company’s trade receivables are from pharmaceutical and biotech companies, as well as retail organizations. The Company performs continuing credit evaluations of its customers’ financial condition and generally does not require collateral.

Management reviews accounts receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The allowance for doubtful accounts includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve based on management’s assessment of their customers’ overall financial position. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company has a limited number of customers with individually large amounts due at any given balance sheet date. (See Note 9 for major customers.) Any unanticipated change in one of those customers’ credit worthiness, or other matters affecting the collectability of amounts due from such customers, could have a material effect on the results of operations in the period in which such changes or events occur. Based on all available information, management believes the allowance for doubtful accounts is adequate. However, actual write-offs might exceed the recorded allowance.

Cash and Cash Equivalents – The Company considers investments with an original maturity of three months or less when purchased to be cash equivalents. The Company deposits its cash in several financial institutions. The balances at times may exceed insured limits.

Inventories – Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method.

Property and Equipment – Property and equipment are carried at cost. Depreciation is computed over the estimated useful lives of the assets by the straight-line method for financial reporting purposes and by

Research and Development Expenses – Research and development (R&D) costs are expensed as incurred. These expenses consist of the Company’s proprietary R&D efforts.

Advertising Costs – Costs for newspaper, television, radio and other media are expensed as incurred. The costs for these types of advertising were approximately $0 and $0 in 2010 and 2009.

Other Comprehensive Income (Loss) – Other comprehensive income (loss) includes translation adjustments arising from the translation of the assets and liabilities of the Company into US Dollars.

Comparative Financial Statements – Certain 2009 amounts have been classified to conform to the 2010 presentation.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Subsequent Events – Management has evaluated events occurring subsequent to the balance sheet date through January 31, 2011, the date that the financial statements were available to be issued determining no events require adjustment to or additional disclosure in the financial statements.

The Company is part of a group that files consolidated tax returns. Taxes are allocated to the Company as if that entity filed its own income tax returns.

Income tax benefit consists of foreign deferred taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Sales to parties related through common ownership amounted to $0 and $0 in 2010 and 2009.

The Company purchased materials from parties related through common ownership aggregating $1,908,000 and $1,666,806 during 2010 and 2009.

An administration charge of $633,000 and $577,200 from the Company’s Parent was recorded in 2010 and 2009. These charges are included in the selling, general and administrative expenses in the consolidated statements of income.

The Company has a defined benefit plan. For the defined benefit pension plan, the pension obligation has been calculated, using the defined unit credit method. Consistent with the instructions of this method, future benefits earned by employees in their current and past periods of services are being estimated. Subsequently, the present value of this obligation is calculated.

The funded status of this plan is as follows:

The Company expects to contribute $644,048 to its pension plan in 2011.

The pension benefit payments, which reflect expected future service, are expected to be in the next years: