Cellectar Biosciences Inc

Management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive office and principal accounting officer, respectively) maintains “disclosure controls and procedures,” as such terms are defined in Rules 13a 15(e) and 15d 15(e) of the Exchange Act, that are designed to ensure that information required to be disclosed by the Company in reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures. Based on management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of March 31, 2024, our management has concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms as a result of the material weaknesses identified below.

During the period ended March 31, 2024, the Company did not design and maintain effective controls related to properly applying fair value methodologies and assumption used in Level 3 instruments and did not design and maintain controls to ensure the proper application of technical accounting guidance in accordance with U.S. generally accepted accounting principles which resulted in material audit adjustments due to these material weaknesses. Our management, with oversight from our Audit Committee, is in the process of developing and implementing remediation plans in response to the identified material weakness.

During the period ended December 31, 2023, and continuing into the period ended March 31, 2024, management identified a material weakness in our internal control over financial reporting as a result of the limited number of staff in our finance and accounting function. It is difficult to design and maintain appropriate segregation of duties in the initiation, recording, and approval of transactions within financial systems with a limited number of personnel. This, coupled with management having not designed and maintained user access controls that adequately restrict user and privileged access to financial applications, and the absence of sufficient other mitigating controls, created a segregation of duties weakness which could potentially have resulted in a material misstatement. Management has identified remediation actions that require the addition of personnel to the finance and accounting function, which will allow the Company to design the control environment in a manner that provides effective segregation of duties, beginning with personnel having been added to the finance function in early 2024.

During the period ended December 31, 2023, and continuing into the period ended March 31, 2024, management identified a material weakness in our recording of stock-based compensation because we failed to design and implement adequate internal controls over the recording of such transactions. Our management has developed a remediation plan that will allow such transactions to be properly recorded in the future through the implementation of a control design change and the addition of personnel to the accounting function. This remediation plan, with oversight from our Audit Committee, is in the process of implementation in response to the identified material weakness.

Notwithstanding such material weaknesses, our consolidated financial statements and other financial information included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial condition, results of operations, and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States. As noted above, the material weaknesses described herein resulted in material audit adjustments that were recorded in the consolidated financial statements. There were no changes to our historical consolidated financial statements.

Changes in internal control over financial reporting. Based on management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of March 31, 2024, our management has concluded that there have not been any significant changes in the Company’s internal control over financial reporting other than the material weaknesses and related remediation measures as described above.

The Chief Executive Officer and the Audit Committee perform significant roles in ensuring the accuracy and completeness of our financial reporting and the effectiveness of our disclosure controls and procedures. We have not identified any changes that occurred during the Company’s fiscal quarter ended March 31, 2024 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting other than the material weaknesses and related remediation measures as described above.

Important Considerations. Any system of controls, however well designed and operated, can provide only reasonable, and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part on certain assumptions about the likelihood of future events. The effectiveness of our disclosure controls and procedures is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Because of these and other inherent limitations of control systems, there can be no assurance that any system of disclosure controls and procedures will be successful in achieving its stated goals, including but not limited to preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management, under all potential future conditions, regardless of how remote.