OnSource Corporation announced that it executed a definitive agreement to merge with Osmotics Pharma, Inc. OPI is an emerging specialty pharmaceutical company focused on developing prescription products for the treatment of various dermatological disorders, antibiotic-resistant strains of bacteria and certain cancers.
OPI has the exclusive worldwide rights covering technologies developed by the University of California and Brigham Young University. Applications of these technologies are currently being tested by some of the leading research institutions in the world. All of OPI's products are in the development stage and subject to approval by the United States Food and Drug Administration. OPI has filed its first application with the FDA on form 510(k) seeking marketing clearance for Epiceram, a topical barrier repair cream for treatment of atopic dermatitis, radiation dermatitis and several other indications.
The merger agreement is subject to customary conditions, including OPI shareholder approval. OPI's largest shareholder, Osmotics Corporation, which owns 98 per cent of the outstanding shares of OPI, has indicated that it will vote in favour of the proposed merger agreement. Pursuant to the terms of the agreement, a subsidiary of OnSource will be merged with OPI in a stock-for-stock transaction in which OnSource will issue approximately 11.4 million shares of its common stock to the holders of OPI's common shares. Additionally, OnSource will issue 1.0 million shares of 6 per cent, Series A Preferred Stock (convertible into 1.0 million shares of OnSource common stock), approximately 1.1 million common stock purchase warrants and approximately 2.7 million options to purchase common stock to the shareholders and employees of OPI. As a result, upon completion of the proposed transaction, OPI's shareholders will own approximately 94 per cent of OnSource on a fully diluted basis. The Merger will be completed without registration under the Securities Act; and all securities issued in the Merger will be "restricted securities" within the meaning of Rule 144.
Following completion of the merger, which is expected to close in the second quarter of 2005, the OnSource board will be increased from three to six members, which will include three members designated by OPI, and the officers of OPI will become the officers of OnSource. The current OnSource officers will continue in their roles as officers of OnSource's gaming subsidiaries, Global Alaska Industries, Inc., and Alaska Bingo Supply, Inc.
Frank Jennings, chief executive officer of OnSource, said, "We believe this merger is in the best interests of our shareholders and represents a tremendous opportunity for them."
Steven Porter, chief executive officer of OPI, stated, "I look forward to this new stage in our company's lifecycle as it provides us with access to the public capital markets to help fuel our growth. It is our goal to commercialize a variety of therapeutic products that we believe will provide safe and effective approaches to urgent unmet medical needs in the fields of dermatology, infectious diseases and oncology."