Cellectar Biosciences, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2014

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

1A. RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

Overview

On August 20, 2014, Cellectar Biosciences, Inc. (“Cellectar Bio” or the “Company”) completed an underwritten public offering of 3,583,333 shares of its common stock and warrants to purchase 3,833,333 shares of its common stock at an exercise price of $4.68 per share, expiring on August 20, 2019 (the “August 2014 Underwritten Offering”). In conjunction with the August 2014 Underwritten Offering, all of the holders of the debentures issued in February 2013 elected to participate in the offering of common stock and warrants at the combined offering price of $3.76 per share. As a result, $4,000,000 principal amount of debentures and accrued interest of $172,435 was extinguished in exchange for 1,109,690 shares of the Company’s common stock and warrants to purchase 1,109,690 shares of common stock at $4.68 per share (the “August 2014 Debenture Tender and Exchange”). See Note 8 for further discussion of the August 2014 Underwritten Offering and the August 2014 Debenture Tender and Exchange (together the “August 2014 Offering”).

On May 14, 2015, the Audit Committee of the Company’s Board of Directors (the “Audit Committee”), in consultation with management, determined that due to a misapplication of the guidance on accounting for certain of its warrants issued in the August 2014 Offering, the Company’s previously issued financial statements for the periods ended September 30, 2014 and December 31, 2014 (the “Affected Periods) should no longer be relied upon. As a result, the Company has restated the financial statements for the Affected Periods. These restatements result in non-cash, non-operating financial statement corrections and have no impact on the Company’s current or previously reported cash position, operating expenses or total operating, investing or financing cash flows.

The warrants issued in the August 2014 Offering (the “August 2014 Warrants”) contain a cash settlement feature applicable in circumstances where there is no current prospectus to support the issuance of registered common stock and a warrant holder wishing to exercise the warrant requests gross settlement rather that the net settlement via cashless exercise provided for in the warrant. Based on Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), warrant instruments that could potentially require net cash settlement in the absence of express language precluding such settlement and those which include “down-round provisions” should be initially classified as derivative liabilities at their estimated fair values, regardless of the likelihood that such instruments will ever be settled in cash. In periods subsequent to issuance, changes in the estimated fair value of the derivative instruments should be reported in the statement of operations.

Of the August 2014 Warrants, 4,943,023 contain the cash settlement feature. Previously classified as equity, these warrants have been reclassified as a derivative liability in the restated information. These warrants are listed on the NASDAQ Capital Market under the symbol CLRBW; therefore, the Company has established their fair value based upon the market value (see Note 3). The impact of the restatement on the consolidated balance sheet, statement of operations, changes in stockholders’ equity, and cash flows, as of and for the period ended December 31, 2014, is presented below.

	As of December 31, 2014
	As Previously Reported		Adjustment		As Restated
Consolidated Balance Sheet Data:
Derivative liability	$	1,128,499	$	4,048,416	$	5,176,915
Total current liabilities		2,184,590		4,048,416		6,233,006
Total liabilities		2,673,567		4,048,416		6,721,983
Additional paid-in capital		69,911,836		(4,102,709)		65,809,127
Accumulated deficit		(59,165,963)		54,293		(59,111,670)
Total stockholders’ equity		10,745,949		(4,048,416)		6,697,533

	Year Ended December 31, 2014
	As Previously Reported		Adjustment		As Restated
Consolidated Statement of Operations Data:
Gain on revaluation of derivative warrants	$	2,230,864	$	54,293	$	2,285,157
Total other income, net		1,784,550		54,293		1,838,843
Net loss		(8,106,395)		54,293		(8,052,102)
Basic and diluted net loss per common share		(1.77)		0.01		(1.75)

	Year Ended December 31, 2014
	As Previously Reported		Adjustment		As Restated
Consolidated Statement of Cash Flows Data:
Net loss		(8,106,395)		54,293		(8,052,102)
Gain on revaluation of derivative warrants		(2,230,864)		(54,293)		(2,285,157)

- Definition

The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period.

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