Radient may be in default, after settling disagreement with investors

Company maintains investors Alpha Capital, Whalehaven are affiliates

By Devika Patel

Knoxville, Tenn., July 25 - Radient Pharmaceuticals Corp. investors Alpha Capital Anstalt and Whalehaven Capital Fund Ltd. are disputing the company's claim that they are company affiliates, according to an 8-K filed Monday with the Securities and Exchange Commission. The dispute is arising from an agreement the company negotiated with the investors to cure a previous dispute.

The investors originally were disputing the number of warrants they received in a November 2009 registered direct offering, claiming that the effective price of the notes and shares sold in a March and April 2010 private placement was lower than the company claimed and that the effective price of the shares and notes required that the company reset the warrant strike price.

As previously reported, the company settled this dispute with court approval by agreeing to issue $10.91 million in shares. The shares would have been issued so that Alpha Capital received 11,603,000 shares and Whalehaven Capital got 8,897,000 shares. In addition, the investors would have received 8% four-month promissory notes for the monetary value of the remaining shares owed to them.

The investors initially received 500,000 common shares and received an additional 20.5 million common shares when the company was were delisted from the NYSE-Amex exchange on June 22. The remaining shares were to be evidenced by the four-month notes, which were convertible.

Based on the notes' conversion price, the number of shares that the investors would receive upon full conversion would have raised each investor's beneficial ownership stake to higher than 10%. As a result of this, the company determined that the investors are company affiliates and the resale of these shares must be made under Rule 144A's safe harbor provisions.

On July 19, the investors indicated in a letter to the court that they were disputing the company's conclusion and were seeking a judgment in default of the settlement agreement.

The company said in Monday's 8-K that it "strongly" believes that a default has not occurred.

Based in Tustin, Calif., Radient is a developer and marketer of In Vitro Diagnostic cancer tests.

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