Pacific Orient Capital Inc.
TSX VENTURE : AAQ.P

April 09, 2010 10:33 ET

Pacific Orient Capital Inc. Signs Letter of Intent With AlphaRx Canada Limited as Its Qualifying Transaction

TORONTO, ONTARIO--(Marketwire - April 9, 2010) - Pacific Orient Capital Inc. (TSX VENTURE:AAQ.P) (the "Company"), a Capital Pool Company, announced today that it has entered into a non-binding letter of intent concerning the proposed acquisition of AlphaRx Canada Limited ("ACL"). The proposed acquisition, if completed, will constitute the Company's qualifying transaction pursuant to the policies of the TSX Venture Exchange Inc. (the "Exchange").

The Proposed Qualifying Transaction

The Company, AlphaRx, Inc. ("ARI") and ACL have entered into a non-binding letter of intent dated April 6, 2010 (the "LOI") under which the qualifying transaction will be completed.

The acquisition of ACL is to be completed as a share exchange through the issuance of 5,500,000 common shares of the Company to AlphaRx International Holdings Limited ("AIH") at a deemed price of $0.60 per share in exchange for all of the issued and outstanding shares in the capital of ACL (the "Transaction"). The Company will advance ACL $25,000 on a non-refundable basis.

The Company or ACL will conduct a non-brokered private placement (the "Proposed Financing") to raise a minimum of $1,500,000 by issuance of common shares at $0.60 per share. Completion of the Proposed Financing is a condition of closing the Transaction. If the Proposed Financing is conducted through ACL, the securities issued by ACL under the Proposed Financing will be exchanged for common shares of the Company on a 1-for-1 basis.

Prior to completion of the Proposed Financing, AIH (an 80% subsidiary of ARI) will own all of the outstanding shares of ACL (being 5,500,000 common shares). All of the shares issued by the Company to AIH will be subject to escrow provisions under the policies of the Exchange.

Assuming completion of the minimum Proposed Financing, following completion of the Transaction 5,500,000 (55%) of the outstanding shares in the Company will be owned by AIH, 2,500,000 (25%) of the outstanding shares in the Company will be owned by participants in the Proposed Financing and the 2,000,000 shares now outstanding in the Company will represent 20% of the outstanding shares in the Company.

Completion of the proposed Transaction is also conditional on the execution of a definitive share exchange agreement to be negotiated among the parties, the satisfactory completion of due diligence, Exchange acceptance and the satisfaction of the minimum listing requirements of the Exchange.

The acquisition by the Company of all of the issued and outstanding shares in the capital of ACL is not a Non-Arm's Length Qualifying Transaction under the policies of the Exchange and the Transaction will not be subject to approval of the shareholders of the Company.

AlphaRx

ACL is a corporation incorporated under the Business Corporations Act (Ontario) with offices in Markham, Ontario. Since July 2003, ACL has conducted research and development activities on behalf of ARI. Prior to the Transaction, ACL will discontinue its research and development activities for ARI and ACL will receive a 15 year royalty free license, granted by ARI, to commercialize Indaflex in Mexico and Asia. ACL expects to focus it efforts to commercialize Indaflex in China, once regulatory approvals are received permitting sales in that country. Indaflex is a topical non-steroidal anti-inflammatory drug (NSAID) formulation intended to be used in the treatment of arthritis.

Based on ACL's unaudited financial statements, expressed in Canadian dollars, for the year ended September 30, 2009 ACL generated $71,300 in net sales and a net loss of $117,788. As of September 30, 2009, ACL had total assets of $66,643, total current liabilities of $1,631,670 and a shareholder deficit of $1,565,027. These financial results reflect the previous activities of ACL conducting research and development activities on behalf of ARI, activities which will be discontinued by ACL. Current liabilities of approximately $830,000 will be assumed by ARI prior to closing of the Transaction.

AIH is a corporation incorporated under the laws of the British Virgin Islands. AIH is 80% owned by ARI and 20% owned by Ruby Hui (the President of ARI's China Operations). Michael Lee is the largest shareholder of ARI, with approximately 16.8% of the outstanding shares.

ARI (OTCBB:ALRX) is a Delaware corporation trading on the Over The Counter Bulletin Board. ARI is a pharmaceutical company, engaged in the research and development of innovative therapeutic products using advanced drug delivery technologies, which the company believes can be combined with a broad range of therapeutic products to improve their effectiveness. The core strength of ARI revolves around its proprietary Bioadhesive Colloidal Dispersion (BCD™) drug delivery system, which utilizes nanotechnology to enhance and improve the medical benefits of drugs. ARI's product candidates address various pharmaceutical markets, including inflammation, stroke and pneumonia.

ARI currently has nine products which are at various stages of development. The most advanced of these products is Indaflex, a prescription drug at the clinical trial stage. Indaflex is approved for sale in Mexico. Before Indaflex can be sold in China, ACL will have to conduct clinical trials and obtain marketing approval from Chinese regulatory authorities.

Indaflex's active ingredient, Indomethacin, has a long-standing and proven clinical treatment record. With its enhanced proprietary drug delivery system, ARI believes its clinical effectiveness to be significantly enhanced. Topical Indaflex delivery is intended to circumvent the significant gastro intestinal side effects found with orally ingested NSAID's.

Insiders of the Resulting Issuer

The planned officers and directors of the Company, upon completion of the Transaction, are:

Francis Mak, MBA, P.Eng – President, CEO and Director

Mr. Mak is the President and CEO of the Company. Mr. Mak's background is in sales, marketing and engineering. Mr. Mak has been an IT Specialist for a number of technology companies including MTS Allstream and Centron Canada. Mr. Mak graduated with a Bachelor of Electrical Engineering from Queen's University in 1986. He also holds a Master of Business Administration degree from McMaster University. Mr. Mak is a member of the Professional Engineers of Ontario.

Michael M. Lee – Chairman and Director

Mr. Lee is a founder, Chairman and CEO of ARI. Mr. Lee has over 15 years of business experience in the areas of high tech development, marketing and corporate finance. Mr. Lee holds a B.Sc. in Applied Mathematics from the University of Western Ontario. Mr Lee founded AlphaRx, Inc. in August 1997.

Marcel Urbanc, C.A. – Chief Financial Officer

Mr. Urbanc is the Chief Financial Officer of ARI. Mr. Urbanc obtained his Chartered Accountant designation in 1985 after articling with Arthur Andersen & Co. for 3 years. Prior to joining ARI, Mr. Urbanc served as Controller and then VP Finance & CFO of Oasis Technology Ltd., a software company involved in transaction processing from 1994 to 2002. During his tenure at Oasis private equity funding of approximately $45,000,000 was raised. Mr. Urbanc has been with the Company since March 2003.

Michael Weisspapir, M.D., Ph.D.: - Chief Scientific Officer

Dr. Weisspapir is the Chief Medical Scientist of ARI. Dr. Weisspapir has 19 years of successful experience in experimental medicine and extensive experience in interdisciplinary research and development in experimental pharmacology, immunopharmacology, toxicology and neuroscience. Prior to joining the Company, Dr. Weisspapir held a variety of research positions at the University of Tel Aviv and Rabin Medical Center, Israel and the University Health Network, University of Toronto, Canada.

Dr. William Gannon, M.D. - Director

Dr. Gannon has been a practicing Family Practitioner in Sarnia, Ontario since 1973. Dr. Gannon is active in the biotech sector and has been advisor to several Canadian pharmaceutical companies.

Daniel Donn, CA - Director

Mr. Donn serves as the President, Chief Executive Officer and Director of Golden Sunset Trail Inc., a mineral exploration and development company listed on the Exchange. Mr. Donn served in various capacities with Mosaic Mapping Corporation (formerly Londonderrie Trail Inc.) from February 2002 until September 2003. From March 2000 until April 2003, Mr. Donn has served in various capacities with Clearford Industries Inc. (formerly Innovative Water & Sewer Systems Inc. and before that, Red Oak Trail Corp.), a water and waste management company listed on the Exchange. From December 1995 until April 2004, Mr. Donn served as President of Dionne Inc., a private investment company which carries on business in Ontario. Mr. Donn was a consultant to Thermo Tech Technologies Inc. from April 2000 to July 2000. From 1997 to 1999, Mr. Donn was the Chief Financial Officer and Co-Editor for the Technology Review Inc. and Innogis Technology Inc., an industrial Issuer listed on the Canadian Dealing Network. Mr. Donn also served as Chief Financial Officer, Secretary/Treasurer and director of ATH Fund Inc., a private investment company from 1987 to December 1995.

The Company intends to seek approval from the Exchange for the appointment of Ruby Hui as a director and President, and Conroy Cheng as a director, of the Company. Each of them is a resident of Hong Kong. There can be significant delays in conducting Exchange reviews for residents of Hong Kong and so the appointment of Ruby Hui and Conroy Cheng is expected to occur some time after the completion of the Transaction. The appointment of Ruby Hui and Conroy Cheng will not proceed unless the Exchange is satisfied with the results of its review. It is expected that Francis Mak and Daniel Donn will resign as directors and officers at the time that Ms. Hui and Mr. Cheng are appointed. The following is information concerning Ruby Hui and Conroy Cheng.

Ruby Hui

Ms. Hui is the President of China Operations for ARI, through its subsidiary AlphaRx Life Sciences Ltd. Ms. Hui has extensive experience in marketing and project management. Ms. Hui was Marketing Manager at New World Development, a multi-billion investment holding company with interests in health care, pharmaceuticals, property development, hotels, infrastructure, telecommunications and retailing in Hong Kong and China. Before joining New World Development, Ms. Hui was Senior Property Manager at Chinese Estates Holdings Limited, an property development company based in Hong Kong and listed on the Hong Kong Stock Exchange, which is run and controlled by her family members. Ms. Hui indirectly owns 20% of AIH.

Conroy Cheng

Mr. Cheng is a board director of Chow Tai Fook Group. The Chow Tai Fook Group is a substantial private enterprise owned by members of Mr. Cheng's family, with a total market value over US$32 Billion. The Group's businesses primarily focus on mainland China and Hong Kong followed by the rest of the world. Its worldwide work force totals more than 100,000 employees.

Sponsor

Mackie Research Capital Corporation, subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the Transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the Transaction or the likelihood of completion.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared by connection with the Transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. The Company and ACL assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to the Company and ACL. Additional information identifying risks and uncertainties is contained in filings by the Company with Canadian securities regulators, which filings are available under the Corporation's profile at www.sedar.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful. The securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Pacific Orient Capital Inc.
    Francis Mak
    President & CEO
    (905) 479-3245
    pacinc@ymail.com