##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 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 MARCH 31, 2010
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 Commission file number 001-16695
 
 Radient Pharmaceuticals Corporation
  
 Delaware
    
    33-0413161(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)2492 Walnut Avenue, Suite 100Tustin, California
    
    92780-7039(Address of principal executive offices)
    
    (Zip Code)
 (714) 505-4460
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ




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##### 



RADIENT PHARMACEUTICALS CORPORATION
 FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010
INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets at March 31, 2010 (Unaudited) and December 31, 2009 (Audited)
    
    
    3Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months
ended March 31, 2010 and 2009
    
    
    4Unaudited Condensed Consolidated Statements of Cash Flows For the three months ended March 31, 2010
and 2009
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4. Controls and Procedures
    
    
    33PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    35Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 3. Defaults Upon Senior Securities
    
    
    35Item 4. Submission of Matters to a Vote of Security Holders.
    
    
    36Item 5. Other Information
    
    
    36Item 6. Exhibit Index
    
    
    36Signatures
    
    
    37EX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



PART 1  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 Radient Pharmaceuticals Corporation


CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited)
    
    
    (Audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    43,678
    
    
    $
    12,145Accounts receivable, net
    
    
    1,550
    
    
    
    Inventories
    
    
    62,780
    
    
    
    79,255Prepaid expenses and other current assets
    
    
    38,717
    
    
    
    57,778Prepaid consulting
    
    
    364,667
    
    
    
    358,667Total current assets
    
    
    511,392
    
    
    
    507,845Property and equipment, net
    
    
    75,135
    
    
    
    83,547Intangible assets, net
    
    
    1,133,333
    
    
    
    1,158,333Receivable from JPI, net of allowance
    
    
    2,675,000
    
    
    
    2,675,000Investment in JPI
    
    
    20,500,000
    
    
    
    20,500,000Debt issuance costs
    
    
    1,382,002
    
    
    
    1,288,910Other assets
    
    
    92,040
    
    
    
    105,451Total assets
    
    $
    26,368,902
    
    
    $
    26,319,086LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    1,829,430
    
    
    $
    1,542,974Accrued salaries and wages
    
    
    1,043,774
    
    
    
    738,331Accrued interest expense
    
    
    632,969
    
    
    
    432,337Derivative liabilities
    
    
    703,139
    
    
    
    354,758Deferred revenue
    
    
    103,128
    
    
    
    103,128Convertible
notes, net of discount
    
    
    645,677
    
    
    
    240,482Current
portions of notes payable, net of debt discount
    
    
    2,101,109
    
    
    
    1,316,667Total current liabilities
    
    
    7,059,226
    
    
    
    4,728,677Other long-term liabilities
    
    
    32,164
    
    
    
    295,830Notes payable, net of current portion and debt discount
    
    
    
    
    
    
    601,819Total liabilities
    
    
    7,091,390
    
    
    
    5,626,326Commitments and contingenciesStockholders equity:Preferred stock, $0.001 par value; 25,000,000 shares
authorized; none issued and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 100,000,000 shares
authorized; 25,439,261 and 22,682,116 shares issued at
March 31, 2010 and December 31, 2009, respectively;
25,297,583 and 22,265,441 shares outstanding at March
31, 2010 and December 31, 2009, respectively
    
    
    25,297
    
    
    
    22,265Additional paid-in capital
    
    
    74,288,010
    
    
    
    73,109,048Accumulated deficit
    
    
    (55,035,795
    )
    
    
    (52,438,553
    )Total stockholders equity
    
    
    19,277,512
    
    
    
    20,692,760Total liabilities and stockholders equity
    
    $
    26,368,902
    
    
    $
    26,319,086
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##### Table of Contents



Radient Pharmaceuticals Corporation


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
 (Unaudited)
 Three Months Ended March 31,2010
    
    
    2009Net revenues
    
    $
    36,842
    
    
    $
    2,711,737Cost of sales
    
    
    21,935
    
    
    
    1,585,573Gross profit
    
    
    14,907
    
    
    
    1,126,164Operating expenses:Research and development
    
    
    51,036
    
    
    
    92,684Selling, general and administrative
    
    
    1,355,182
    
    
    
    2,590,7691,406,218
    
    
    
    2,683,453Loss from operations
    
    
    (1,391,311
    )
    
    
    (1,557,289
    )Other expense:Interest expense
    
    
    (1,162,674
    )
    
    
    (234,217
    )Other expense, net
    
    
    (43,257
    )
    
    
    (36,109
    )Total other expense, net
    
    
    (1,205,931
    )
    
    
    (270,326
    )Loss before provision for income taxes and
discontinued operations
    
    
    (2,597,242
    )
    
    
    (1,827,615
    )Provision for income taxes
    
    
    
    
    
    
    110,502Loss from continuing operations
    
    
    (2,597,242
    )
    
    
    (1,938,117
    )Income from discontinued operations, net
    
    
    
    
    
    
    247,026Net loss
    
    
    (2,597,242
    )
    
    
    (1,691,091
    )Other comprehensive income:Foreign currency translation gain
    
    
    
    
    
    
    42,431Comprehensive loss
    
    
    (2,597,242
    )
    
    
    (1,648,660
    )Basic and diluted income (loss) per common share:Loss from continuing operations
    
    $
    (0.11
    )
    
    $
    (0.12
    )Income from discontinued operations
    
    $
    
    
    
    $
    0.01Net loss
    
    $
    (0.11
    )
    
    $
    (0.11
    )Weighted average common shares outstanding 
basic and diluted
    
    
    23,887,666
    
    
    
    15,851,815
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Radient Pharmaceuticals Corporation


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended March 31,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (2,597,242
    )
    
    $
    (1,691,091
    )Less: income from discontinued operations
    
    
    
    
    
    
    247,026(2,597,242
    )
    
    
    (1,938,117
    )Adjustments to reconcile net loss before discontinued operations to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    33,412
    
    
    
    352,441Amortization of debt discount and accretion of debt issuance costs
    
    
    870,077
    
    
    
    69,965Share-based
compensation related to options granted to employees and directors for services
    
    
    173,758
    
    
    
    157,155Share-based
compensation related to common stock, warrants and options expensed for services
    
    
    342,311
    
    
    
    105,925Fair value adjustment to warrants accounted for as liabilities
    
    
    
    
    
    
    35,558Provision for bad debts
    
    
    
    
    
    
    202,817Change in fair value of derivative
    
    
    42,994
    
    
    
    Penalties due to late payment of debt
    
    
    50,000
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,550
    )
    
    
    3,307,879Inventories
    
    
    16,475
    
    
    
    (567,218
    )Prepaid expenses and other assets
    
    
    26,472
    
    
    
    (831,172
    )Accounts payable, accrued expenses and accrued salaries and wages
    
    
    531,826
    
    
    
    269,767Income taxes payable
    
    
    
    
    
    
    (381,648
    )Deferred revenue
    
    
    
    
    
    
    (43,817
    )Net cash provided by (used in) operating activities of continuing operations
    
    
    (511,467
    )
    
    
    739,535Net cash provided by operating activities of discontinued operations
    
    
    
    
    
    
    101,457Net cash provided by (used in) operating activities
    
    
    (511,467
    )
    
    
    840,992Cash flows from investing activities:Purchase of property and equipment
    
    
    
    
    
    
    (407,156
    )Net cash used in investing activities of continuing operations
    
    
    
    
    
    
    (407,156
    )Net cash used in investing activities
    
    
    
    
    
    
    (407,156
    )Cash flows from financing activities:Proceeds from issuance of Senior Notes, net of issuance costs of $113,400
    
    
    
    
    
    
    566,600Proceeds
from issuance of convertible debt, net of original issue discount of
$385,000 and issuance costs of $112,000
    
    
    403,000
    
    
    
    Proceeds from the exercise of warrants
    
    
    140,000
    
    
    
    Net cash provided by financing activities
    
    
    543,000
    
    
    
    566,600Effect of exchange rates on cash and cash equivalents
    
    
    
    
    
    
    2,510Net change in cash and cash equivalents
    
    
    31,533
    
    
    
    1,002,946Cash and cash equivalents, beginning of period
    
    
    12,145
    
    
    
    2,287,283Cash and cash equivalents, end of period
    
    $
    43,678
    
    
    $
    3,290,229
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##### Table of Contents



Radient Pharmaceuticals Corporation
 
 NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 For the Three Months Ended March 31, 2010 and 2009
 NOTE 1  MANAGEMENTS REPRESENTATION
    NOTE 2  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Business
    Deconsolidation
     Going Concern
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tm
  tm tm
 Principles of Consolidation
  Reclassification
  Use of Estimates
  Revenue Recognition
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Accounting for Shipping and Handling Revenue, Fees and Costs
 Shipping and Handling Fees and Costs
 Research and Development
  Cash Equivalents
  Inventories
  Property and Equipment
  Machinery and equipment, including lab equipment
    
    
    5 to 15 yearsOffice equipment
    
    
    3 to 5 years
  - 8 -




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##### Table of Contents



Intangible Assets
  Impairment of Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived
Assets
 
    
    significant under performance relative to expected historical or projected future
operating results;
    
    market projections for cancer research technology;
    
    its ability to obtain patents, including continuation patents, on technology;
    
    significant changes in its strategic business objectives and utilization of the assets;
    
    significant negative industry or economic trends, including legal factors;
    
    potential for strategic partnerships for the development of its patented technology;
    
    changing or implementation of rules regarding manufacture or sale of pharmaceuticals in
China; and
    
    ability to maintain Good Manufacturing Process (GMP) certifications.
   Derivative Financial Instruments
 Derivatives and Hedging
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##### Table of Contents



Fair Value Measurements
       Level 3CarryingValueMarch 31,2010Embedded conversion options
    
    $
    540,750Warrants
    
    
    162,389$
    703,139Decrease in
fair value included in other  expense, net
    
    $
    42,994
  Balance at December 31, 2009
    
    $
    354,758Derivative liabilities added  conversion options
    
    
    205,941Derivative liabilities added  warrants
    
    
    231,627Reclassification to equity in connection with conversion of underlying debt to equity
    
    
    (48,309
    )Reclassification to equity in connection with exercise of underlying stock warrants
    
    
    (83,872
    )Change in fair value
    
    
    42,994Balance at March 31, 2010
    
    $
    703,139
 Risks and Uncertainties
 tm tm
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Share-Based Compensation
  Equity-Based Payments
to Non-Employees,
  Stock
Compensation
 Basic and Diluted Income (Loss) Per Share
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##### Table of Contents



Supplemental Cash Flow Information
 Three Months Ended March 31,2010
    
    
    2009Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    
    
    
    $
    57,000Cash paid during the period for taxes
    
    $
    
    
    
    $
    492,000Supplemental disclosure of non-cash activities:Fair value of warrants issued in connection with Senior Notes, included
in debt issuance costs and debt discount
    
    $
    
    
    
    $
    472,736Fair value of warrants issued in connection with Convertible Debt,
included in debt issuance costs and debt discount
    
    $
    231,627
    
    
    $
    Reclassification of amounts recorded to additional paid-in capital to warrant
liability, including $110,858 recorded to retained earnings, representing the
change in value of the warrants from date of issuance to January 1, 2009
    
    $
    
    
    
    $
    209,166Reclassification of warrant liability to additional paid-in capital upon expiration of share adjustment terms
    
    $
    
    
    
    $
    133,866Voluntary conversion of convertible debt and accrued interest
    
    $
    394,000
    
    
    $
    Fair value of common stock recorded as prepaid consulting
    
    $
    317,500
    
    
    $
    Fair value of warrants issued for services, included in prepaid expense
    
    $
    
    
    
    $
    17,500Fair value of embedded conversion features
    
    $
    205,941
    
    
    $
    Reclassification
of derivative liabilities
    
    $
    132,181
    
    
    $
    Amount paid
directly from proceeds in connection with convertible debt unrelated
to the financing
    
    $
    25,000
    
    
    $
    
 Recent Accounting Pronouncements
   NOTE 3  INVENTORIES
  March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited)
    
    
    (Audited)Raw materials
    
    $
    51,707
    
    
    $
    48,852Work-in-process
    
    
    10,754
    
    
    
    3,265Finished goods
    
    
    319
    
    
    
    27,138$
    62,780
    
    
    $
    79,255
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NOTE 4  INTANGIBLE ASSETS
  March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited)
    
    
    (Audited)Intellectual property
    
    $
    2,000,000
    
    
    $
    2,000,000Accumulated amortization
    
    
    (866,667
    )
    
    
    (841,667
    )1,133,333
    
    
    
    1,158,333
   NOTE 5  INCOME TAXES
 740-10, Income Taxes ( ).
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NOTE 6  DEBT
  March 31,
    
    
    December 31,2010
    
    
    2009Convertible Debt
    
    (Unaudited)
    
    
    (Audited)Convertible Notes issued September 2008, net of unamortized discount,
of $1,340,752 and $1,607,111 at March 31, 2010
and December 31, 2009, respectively
    
    $
    284,134
    
    
    $
    17,775St. George Convertible Note, issued September 2009, net of unamortized
discount $95,158 and $393,681 at March 31, 2010 and
December 31, 2009, respectively
    
    
    206,217
    
    
    
    222,707ISP Holdings Note, issued March 22, 2010, net of
unamortized discount of $769,674  at March 31, 2010
    
    
    155,326
    
    
    
    $
    645,677
    
    
    $
    240,482Senior Notes payable, net of unamortized discount of $1,534,990 and $1,701,398 at March 31, 2010 and December 31, 2009, respectively
    
    
    2,018,109
    
    
    
    1,851,854Bridge note
    
    
    83,000
    
    
    
    66,632$
    2,746,786
    
    
    $
    2,158,968Less: Current Portion of Senior Notes and Bridge note
    
    
    (2,101,109
    )
    
    
    (1,316,667
    )Less: Current Portion of Convertible Debt
    
    
    (645,677
    )
    
    
    (240,482
    )$
    
    
    
    $
    601,819
  Defaults on Senior Notes and Proposed Debt Exchanges
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St. George Convertible Note and Warrant Purchase Agreement Defaults and Waivers; Note Conversions
and Warrant Exercises After January 1, 2010
  Note and Warrant Purchase Agreements- March and April 2010
  - 15 -




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Convertible Debt10% Notes
    
    
    St. George Debt
    
    
    ISP Holdings DebtIssued
    
    
    Issued
    
    
    IssuedSeptember 2008
    
    
    September 2009
    
    
    March 2010
    
    
    TotalCarrying Value Before Discount at December 31, 2009
    
    $
    1,624,886
    
    
    $
    616,390
    
    
    $
    
    
    
    $
    2,241,276Penalties added to St George Note
    
    
    
    
    
    
    50,000
    
    
    
    
    
    
    
    50,000Portion of St. George Note converted to equity
    
    
    
    
    
    
    (365,015
    )
    
    
    
    
    
    
    (365,015
    )Face value of Debt issued March 22, 2010
    
    
    
    
    
    
    
    
    
    
    925,000
    
    
    
    925,000Carrying Value Before Discount at March 31, 2010
    
    
    1,624,886
    
    
    
    301,375
    
    
    
    925,000
    
    
    
    2,851,261Discount, net of accumulated amortization at December 31, 2009
    
    
    (1,607,111
    )
    
    
    (393,681
    )
    
    
    
    
    
    
    (2,000,792
    )Acceleration of amortization in connection with conversion of St. George note
    
    
    
    
    
    
    298,523
    
    
    
    
    
    
    
    298,523Discount attributable to ISP Holdings Note issued March 2010
    
    
    
    
    
    
    
    
    
    
    (803,138
    )
    
    
    (803,138
    )Amortization expense during the three months ended March 31, 2010
    
    
    266,359
    
    
    
    
    
    
    
    33,464
    
    
    
    299,823Discount, net of accumulated amortization at March 31, 2010
    
    
    (1,340,752
    )
    
    
    (95,158
    )
    
    
    (769,674
    )
    
    
    (2,205,584
    )Net Carrying Value at March 31, 2010
    
    $
    284,134
    
    
    $
    206,217
    
    
    $
    155,326
    
    
    $
    645,677
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##### Table of Contents



Senior DebtSeries 1
    
    
    Series 2December 2008
    
    
    January 2009
    
    
    May 2009
    
    
    June 2009
    
    
    TotalCarrying Value Before Discount at March 31, 2010
    
    $
    1,077,500
    
    
    $
    680,000
    
    
    $
    1,327,249
    
    
    $
    468,350
    
    
    $
    3,553,099Discount, net of accumulated amortization,
at December 31, 2009
    
    
    (318,178
    )
    
    
    (327,809
    )
    
    
    (782,043
    )
    
    
    (273,366
    )
    
    
    (1,701,396
    )Amortization
expense for the
three months ended
March 31, 2010
    
    
    66,093
    
    
    
    47,244
    
    
    
    30,394
    
    
    
    22,675
    
    
    
    166,406Discount, net of accumulated amortization,
at March 31, 2010
    
    
    (252,085
    )
    
    
    (280,565
    )
    
    
    (751,649
    )
    
    
    (250,691
    )
    
    
    (1,534,990
    )Net Carrying Value at March 31, 2010
    
    $
    825,415
    
    
    $
    399,435
    
    
    $
    575,600
    
    
    $
    217,659
    
    
    $
    2,018,109
 Bridge Note
  NOTE 7  EMPLOYMENT CONTRACT TERMINATION LIABILITY
  NOTE 8  COMMITMENTS AND CONTINGENCIES
 Litigation
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Licensing Agreements
  Indemnities and Guarantees
  Tax Matters
  Change in Control Severance Plan
  NOTE 9  SHARE-BASED COMPENSATION
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Summary of Activity
  NOTE 10  FINANCING ACTIVITIES
 Common Stock Issued for Services
    Warrants
  Three months endedMarch 31, 2010WeightedAverageExerciseWarrants
    
    
    PriceOutstanding and exercisable, January 1, 2010
    
    
    10,393,287
    
    
    $
    1.84Granted
    
    
    1,100,000
    
    
    
    0.28Exercised
    
    
    (500,000
    )
    
    
    0.28Outstanding and exercisable, March 31, 2010
    
    
    10,993,287
    
    
    $
    1.74
   NOTE 11  SEGMENT REPORTING
  China
    
    
    Corporate
    
    
    TotalNet revenue
    
    $
    2,688,667
    
    
    $
    23,070
    
    
    $
    2,711,737Gross profit
    
    $
    1,111,169
    
    
    $
    14,995
    
    
    $
    1,126,164Depreciation
    
    $
    206,387
    
    
    $
    13,901
    
    
    $
    220,288Amortization
    
    $
    107,153
    
    
    $
    25,000
    
    
    $
    132,153Interest expense
    
    $
    55,702
    
    
    $
    178,515
    
    
    $
    234,217Income (loss) before discontinued operations
    
    $
    398,564
    
    
    $
    (2,336,681
    )
    
    $
    (1,938,117
    )Capital expenditures
    
    $
    300,719
    
    
    $
    106,437
    
    
    $
    407,156
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NOTE 12  RELATED PARTY TRANSACTIONS
  NOTE 13  SUBSEQUENT EVENTS
 Conversion of St. George Note
  Note Financings
  Minimum
    
    
        Maximum
    
    
    WarrantsFace Value of
    
    
    
    
    
    
    
    
    
    
        Conversion

    
    
        Shares
    
    
    
    
    
    
        MinimumDate of
    
    Convertible
    
    
    
    
    
    
    
    
    
    
        Price Per
    
    
    Issuable upon
    
    
    
    
    
    
        ExerciseIssuance
    
    Notes
    
    
    Discounts [1]
    
    
    Proceeds
    
    
    Share [2]
    
    
    Conversion
    
    
    Number
    
    
    Price4/8/2010
    
    $
    5,490,165
    
    
    $
    (2,285,165
    )
    
    $
    3,205,000
    
    
    $
    0.28
    
    
    
    19,607,732
    
    
    
    6,528,213
    
    
    $
    0.384/13/2010
    
    
    3,957,030
    
    
    
    (1,647,030
    )
    
    
    2,310,000
    
    
    $
    0.28
    
    
    
    14,132,250
    
    
    
    4,705,657
    
    
    $
    0.384/26/2010 [3]
    
    
    599,525
    
    
    
    (249,525
    )
    
    
    350,000
    
    
    $
    0.28
    
    
    
    2,141,161
    
    
    
    712,949
    
    
    $
    0.284/26/2010 [3]
    
    
    85,645
    
    
    
    (35,645
    )
    
    
    50,000
    
    
    $
    0.28
    
    
    
    305,875
    
    
    
    101,849
    
    
    $
    0.89$
    10,132,365
    
    
    $
    (4,217,365
    )
    
    $
    5,915,000
    
    
    
    
    
    
    $
    36,187,018
    
    
    $
    12,048,668
 
 [1]
    
    In addition to scheduled debt discounts, the Company incurred debt issuance costs of
approximately 13% of the proceeds of these financings, which is not
included herein.[2]
    
    The number of shares of common stock to be issued upon such conversion shall be
determined by dividing (a) the amount sought to be converted by (b) the greater of (i) the
Conversion Price (as defined below) at that time, or (ii) the Floor Price (as defined
below). The Conversion Price is equal to 80% of the volume-weighted average price for the 5
trading days ending on the business day immediately preceding the applicable date the
conversion is sought, as reported by Bloomberg, LP, or if such information is not then being
reported by Bloomberg, then as reported by such other data information source as may be
selected by the lender. The Floor Price is initially equal to $0.28 per share, subject to
adjustment upon the occurrence of certain events, including recapitalization, stock splits,
and similar corporate actions.[3]
    
    As part of the closing on April 26, 2010, certain investors in the 2009 Registered Direct
Offering exercised their Right of Participation and purchased $599,525 of the Notes issued
in that closing and the Company issued such participants warrants to purchase up to 712,949
shares of our common stock exercisable at $0.28 per share. The remainder of the
participants received warrants exercisable at $0.89 per share.    - 20 -




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- 21 -




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Shares Issued in Connection with Warrant Exercises and Financing Arrangements
    - 22 -




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This report contains forward-looking statements. These statements relate to future events or
our future financial performance. In some cases, you can identify forward-looking statements by
terminology such as may, will, should, expect, plan, anticipate, believe, estimate,
predict, potential or continue, the negative of such terms or other comparable terminology.
These statements are only predictions. Actual events or results may differ materially.
 Although we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Moreover, neither we, nor any other person, assume responsibility for the accuracy and completeness
of the forward-looking statements. We are under no obligation to update any of the forward-looking
statements after the filing of this Quarterly Report to conform such statements to actual results
or to changes in our expectations.
 The following discussion of our financial condition and results of operations should be read
in conjunction with our consolidated financial statements and the related notes and other financial
information appearing elsewhere in this Quarterly Report. Readers are also urged to carefully
review and consider the various disclosures made by us which attempt to advise interested parties
of the factors which affect our business, including without limitation the disclosures made under
the caption Managements Discussion and Analysis of Financial Condition and Results of
Operations, and the audited consolidated financial statements and related notes included in our
Annual Report on Form 10-K/A for the year ended December 31, 2009, previously filed with the U.S.
Securities and Exchange Commission (SEC).
 Overview
 The Company
      Deconsolidation
   Monetization of the Value of JPI
  - 23 -




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##### Table of Contents



IV Diagnostics
 IVD Cancer Diagnostics
 ONKO-SURE TM Kit
 TM TM
 TM TM  TM in- vitro TM TM TM
 TM
 TM TM TM
 in-vitro DR-70 TM
 - 24 -




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##### Table of Contents



IVD Cancer Research and Development
 TM TM TM
 TM TM TM TM
  Cancer Therapeutics
  Critical Accounting Estimates
  - 25 -




---



##### Table of Contents



Revenue Recognition.
  Taxes Collected from Customers
and Remitted to Governmental Authorities
 Sales Allowances.
 Allowance for Doubtful Accounts.
 Inventories.
 - 26 -




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##### Table of Contents



Impairment of Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived
Assets
 
    
    significant under performance relative to expected historical or projected future
operating results;
    
    market projections for cancer research technology;
    
    its ability to obtain patents, including continuation patents, on technology;
    
    significant changes in its strategic business objectives and utilization of the assets;
    
    significant negative industry or economic trends, including legal factors;
    
    potential for strategic partnerships for the development of its patented technology;
    
    changing or implementation of rules regarding manufacture or sale of pharmaceuticals in
China; and
    
    ability to maintain Good Manufacturing Process (GMP) certifications.
   Deferred Taxes.
 Litigation.
 - 27 -




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##### Table of Contents



Stock-Based Compensation Expense.
   Derivative Financial Instruments. Derivatives and Hedging
 Results of Operations
 Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009
 Introduction
  Three months ended March 31,
    
    
    Difference2010
    
    
    2009
    
    
    $
    
    
    %Net revenues
    
    $
    36,842
    
    
    $
    23,070
    
    
    $
    13,772
    
    
    
    60
    %Cost of sales
    
    
    21,935
    
    
    
    8,075
    
    
    
    13,860
    
    
    
    172
    %Gross profit
    
    
    14,907
    
    
    
    14,995
    
    
    
    (88
    )
    
    
    (1
    )%Operating expenses:Research and development
    
    
    51,036
    
    
    
    92,684
    
    
    
    (41,648
    )
    
    
    (45
    )%Selling, general and administrative
    
    
    1,355,182
    
    
    
    2,044,384
    
    
    
    (689,202
    )
    
    
    (34
    )%1,406,218
    
    
    
    2,137,068
    
    
    
    (730,850
    )
    
    
    (34
    )%Loss from operations
    
    
    (1,391,311
    )
    
    
    (2,122,073
    )
    
    
    730,762
    
    
    
    (34
    )%Other expense:Interest expense
    
    
    (1,162,674
    )
    
    
    (178,515
    )
    
    
    (984,159
    )
    
    
    551
    %Other expense, net
    
    
    (43,257
    )
    
    
    (36,093
    )
    
    
    (7,164
    )
    
    
    20
    %Total other expense, net
    
    
    (1,205,931
    )
    
    
    (214,608
    )
    
    
    (991,323
    )
    
    
    462
    %Net loss
    
    
    (2,597,242
    )
    
    
    (2,336,681
    )
    
    
    (260,561
    )
    
    
    11
    %
 - 28 -




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##### Table of Contents



Net Revenues
 tm
 tm
 tm
 tm TM tm
  Gross Profit
 tm
 Research and Development.
  
    
    The need for research and development for an updated version of the
ONKO-SUREtm test kit in the US, clinical trials for such tests and funds
for ultimate USFDA approval; and
    
    Additional expenditures for research and development incurred under agreements with CLIA
laboratories.
 Selling, General and Administrative Expenses
  - 29 -




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##### Table of Contents



Three months ended March 31,2010
    
    
    2009Investor relations (including value of warrants/options)
    
    $
    461,337
    
    
    $
    313,769Salary and wages (including value of options)
    
    
    407,486
    
    
    
    647,944Accounting and other professional fees
    
    
    87,540
    
    
    
    326,428Stock exchange fees
    
    
    85,393
    
    
    
    206,224Directors fees (including value of options)
    
    
    72,500
    
    
    
    Rent and office expenses
    
    
    31,462
    
    
    
    96,377Employee benefits
    
    
    31,312
    
    
    
    26,625Travel and entertainment
    
    
    30,092
    
    
    
    49,307Insurance
    
    
    25,406
    
    
    
    27,116Taxes and licenses
    
    
    22,576
    
    
    
    49,262Other
    
    
    100,078
    
    
    
    301,332$
    1,355,182
    
    
    $
    2,044,384
 Interest Expense
  Other Expense
  Liquidity and Capital Resources
  (i)
    
    Accounts payable and accrued expenses of approximately $1.8 million;(ii)
    
    Accrued salaries of approximately $1.1 million;(iii)
    
    Accrued interest of $633,000;(ii)
    
    An $83,000 unsecured bridge loan bearing interest at 12% per annum which was due
October 9, 2009 and obligations under a consulting agreement aggregating $144,000 due to
Cantone Research, Inc. and Cantone Asset Management, LLC, respectively;(iv)
    
    Approximately $1.6 million in unsecured convertible notes bearing interest at 10% per
annum due September 15, 2010;(v)
    
    Approximately $300,000 in unsecured convertible notes bearing interest at 12%, which
were converted to equity in April 2010;(vi)
    
    Approximately $925,000 in unsecured convertible notes bearing interest at 12% per annum
due March 22, 2011; and(vii)
    
    Approximately $3.6 million in senior unsecured promissory notes bearing interest at 18%
interest, payable quarterly in cash, which are due between December 2010 and May 2011;
 - 30 -




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##### Table of Contents



Minimum
    
    
    Maximum
    
    
    WarrantsFace Value of
    
    
    
    
    
    
    
    
    
    
    Conversion

    
    
    Shares
    
    
    
    
    
    
    MinimumDate of
    
    Convertible
    
    
    
    
    
    
    
    
    
    
    Price Per
    
    
    Issuable upon
    
    
    
    
    
    
    ExerciseIssuance
    
    Notes
    
    
    Discounts [1]
    
    
    Proceeds
    
    
    Share [2]
    
    
    Conversion
    
    
    Number
    
    
    Price4/8/2010
    
    $
    5,490,165
    
    
    $
    (2,285,165
    )
    
    $
    3,205,000
    
    
    $
    0.28
    
    
    
    19,607,732
    
    
    
    6,528,213
    
    
    $
    0.384/13/2010
    
    
    3,957,030
    
    
    
    (1,647,030
    )
    
    
    2,310,000
    
    
    $
    0.28
    
    
    
    14,132,250
    
    
    
    4,705,657
    
    
    $
    0.384/26/2010 [3]
    
    
    599,525
    
    
    
    (249,525
    )
    
    
    350,000
    
    
    $
    0.28
    
    
    
    2,141,161
    
    
    
    712,949
    
    
    $
    0.284/26/2010 [3]
    
    
    85,645
    
    
    
    (35,645
    )
    
    
    50,000
    
    
    $
    0.28
    
    
    
    305,875
    
    
    
    101,849
    
    
    $
    0.89$
    10,132,365
    
    
    $
    (4,217,365
    )
    
    $
    5,915,000
    
    
    
    
    
    
    $
    36,187,018
    
    
    $
    12,048,668
 
 [1]
    
    In addition to scheduled debt discounts, the Company incurred debt issuance costs of
approximately 13% of the proceeds of these financings.[2]
    
    The number of shares of common stock to be issued upon such conversion shall be
determined by dividing (a) the amount sought to be converted by (b) the greater of (i) the
Conversion Price (as defined below) at that time, or (ii) the Floor Price (as defined
below). The Conversion Price is equal to 80% of the volume-weighted average price for the 5
trading days ending on the business day immediately preceding the applicable date the
conversion is sought, as reported by Bloomberg, LP, or if such information is not then being
reported by Bloomberg, then as reported by such other data information source as may be
selected by the lender. The Floor Price is initially equal to $0.28 per share, subject to
adjustment upon the occurrence of certain events, including recapitalization, stock splits,
and similar corporate actions.[3]
    
    As part of the closing on April 26, 2010, certain investors in the 2009 Registered Direct
Offering exercised their Right of Participation and purchased $599,525 of the Notes issued
in that closing and the Company issued such participants warrants to purchase up to 712,949
shares of our common stock exercisable at $0.28 per share. The remainder of the
participants received warrants exercisable at $0.89 per share.   Operating activities.
  Investing activities.
 Financing activities.
 Future Capital Needs
 tm
 Off-Balance Sheet Arrangements
 - 31 -




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Going Concern
  tm
   tm tm
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  - 32 -




---



##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Disclosure of Controls and Procedures
   Material Weaknesses
       Remediation Plan for Material Weaknesses
    - 33 -




---



##### Table of Contents



Changes in Internal Control Over Financial Reporting.
  - 34 -




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
       
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  - 35 -




---



##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  - 36 -




---



##### Table of Contents



RADIENT PHARMACEUTICALS CORPORATION, INC.
 
 SIGNATURES
  RADIENT PHARMACEUTICALS CORPORATION
(Registrant)Date:  May 24, 2010
    By:
    /s/ Douglas C. MacLellanDouglas C. MacLellan, President andChief Executive OfficerDate:  May 24, 2010
    By:
    /s/ Akio AriuraAkio Ariura, Chief Financial Officer andSecretary (Principal Financial Officer) - 37 -




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EXHIBIT INDEX
 ExhibitNumber
    
    Description:31.1
    
    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002. (Filed herewith.)31.2
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002. (Filed herewith.)32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. §
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. (Filed herewith.)32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. §
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. (Filed herewith.)
 - 38 -