Note

Stockholders’ Equity

September 2015,

the Company filed with the Securities and Exchange Commission (the SEC) a

$75

million shelf registration statement on Form S-

(the

2015

Shelf Registration Statement) (File

No.

333

206789

) that allows the Company to issue any combination of common stock, preferred stock or warrants to purchase common stock or preferred stock. This shelf registration was declared effective on

September 25, 2015.

At the

2016

Annual Meeting of Stockholders of the Company in

June 2016,

the Company’s stockholders of the Company approved an increase in the number of the authorized shares of the Company’s common stock from

75,000,000

shares to

112,500,000

shares. The number of the authorized shares of preferred stock remained at

100,000

shares. The aggregate number of shares of all classes of stock that the Company

may

issue, after giving effect to such amendment as approved by the stockholders, is

112,600,000

shares.

Reverse Stock Split

May 26, 2017,

the Company effected a

-for-

reverse stock split of its common stock which was made effective for trading purposes as of the commencement of trading on

May 30, 2017.

As of that date, each

shares of issued and outstanding common stock and equivalents was consolidated into

one

shares of common stock. In addition, at the market open on

May 30, 2017,

the Company’s common stock started trading under a new CUSIP number

15117N503

although the Company’s ticker symbol, CLSN, remained unchanged.

The reverse stock split was previously approved by the Company’s stockholders at the

2017

Annual Meeting held on

May 16, 2017,

and the Company subsequently filed a Certificate of Amendment to its Certificate of Incorporation to effect the stock consolidation. The primary reasons for the reverse stock split and the amendment are:

●

To increase the market price of the Company’s common stock making it more attractive to a broader range of institutional and other investors, and

●

To provide the Company with additional capital resources and flexibility sufficient to execute its business plans including the establishment of strategic relationships with other companies and to ensure its ability to raise additional capital as necessary.

Immediately prior to the reverse stock split, the Company had

56,982,418

shares of common stock outstanding which consolidated into

4,070,172

shares of the Company’s common stock.

fractional shares were issued in connection with the reverse stock split. Holders of fractional shares have been paid out in cash for the fractional portion with the Company’s overall exposure for such payouts consisting of a nominal amount. The number of outstanding options and warrants were adjusted accordingly, with outstanding options being reduced from approximately

2.4

million to approximately

0.2

million and outstanding warrants being reduced from approximately

33.5

million to approximately

2.4

million.

February 14, 2017

Public Offering

February 14, 2017,

the Company entered into a securities purchase agreement whereby it sold, in a public offering (the

February 14, 2017

Public Offering), an aggregate of

1,384,704

shares of common stock of the Company at an offering price of

$3.22

per share. In addition, the Company sold Series AA Warrants (the Series AA Warrants) to purchase up to

1,177,790

shares of common stock and Pre-Funded Series BB Warrants (the Pre-Funded Series BB Warrants) to purchase up to

185,713

shares of common stock. The Series AA Warrants have an exercise price of

$3.22

per share, have a

five

year life and are immediately exercisable. The Pre-Funded Series BB Warrants were offered at

$3.08

per share, are immediately exercisable for

$0.01

per share of common stock, do

not

have an expiration date and were issued in lieu of shares of common stock to the extent that the purchase of common stock would cause the beneficial ownership of the purchaser of such shares, together with its affiliates and certain related parties, to exceed

9.99%

of our common stock. The Company received approximately

$5.0

million in gross proceeds before the deduction of the placement agent fees and offering expenses (excluding any proceeds from the exercise of the warrants) in the

February 14, 2017

Public Offering.

In connection with the

February 14, 2017

Public Offering, the Company filed with the Securities and Exchange Commission a registration statement on Form S-

(Registration

No.

333

215321

) on

December 23, 2016,

as amended by Pre-Effective Amendment

No.

filed with the Commission on

January 20, 2017,

as further amended by Pre-Effective Amendment

No.

filed with the Commission on

February 13, 2017,

as further amended by Pre-Effective Amendment

No.

filed with the Commission on

February 13, 2017

and as further amended by Pre-Effective Amendment

No.

filed with the Commission on

February 14, 2017

for the registration of the securities issued and sold under the Securities Act of

1933,

as amended.

During the

first

half of

2017,

all

185,713

of the Series BB Pre-Funded warrants were exercised in full. During the

first

half of

2017,

we received approximately

$2.1

million from the exercise of Series AA Warrants to purchase

636,713

shares of common stock.

December 2016

Common Stock Offering

December 20, 2016,

the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company sold and issued on

December 23, 2016,

in a registered direct offering, an aggregate of

367,346

shares of the Company’s common stock at an offering price of

$4.90

per share for gross proceeds of approximately

$1.8

million before the deduction of the placement agent fee and offering expenses (the

“December 2016

Offering”). In a concurrent private placement (the “Private Placement Transaction”), the Company agreed to issue to the investors certain warrants at an exercise price of

$6.44

per share (the

December 2016

Warrants). The

December 2016

Warrants are exercisable to purchase common stock for an aggregate of

367,343

shares of common stock. The warrants are initially exercisable

six

months following issuance and terminate

five

and

one

-half years following the date of issuance. The

December 2016

Warrants

may

be exercised from time to time beginning on

June 20, 2017

and expire on

June 20, 2022.

April 5, 2017,

the Company filed a registration statement on Form S-

for the resale of any share of common stock issued upon exercise of the

December 2016

Warrants on Form S-

(File

No.

333

217156

) which was declared effective by the SEC on

April 19, 2017.

The private placement of the

December 2016

Warrants was structured to comply with the requirements of Section

(a)(

) under the Securities Act and Rule

506

(b) promulgated thereunder.

June 2016

Common Stock Offering

June 13, 2016,

the Company entered into a securities purchase agreement with investors, pursuant to which the Company issued and sold, in a registered direct offering, an aggregate of

165,126

shares of common stock, par value

$0.01

per share, of the Company at an offering price of

$19.04

per share for gross proceeds of approximately

$6.0

million before the deduction of the placement agent fee and offering expenses. In a concurrent private placement, the Company issued to the investor Series A warrants (the

“June 2016

Series A Warrants”), each to purchase

0.5

share of the Company’s common stock, Series C warrants (the

“June 2016

Series C Warrants”), each to purchase

one

share of the Company’s common stock, and Series D warrants (the

“June 2016

Series D Warrants”), each to purchase

0.5

share of the Company’s common stock (collectively, the

“June 2016

Warrants”). The

June 2016

Series A Warrants are initially exercisable

six

months following issuance and terminate

five

and

one

-half years following issuance. The

June 2016

Series C Warrants are initially exercisable

six

months following issuance and terminate

one

year following issuance. The

June 2016

Series D Warrants only become exercisable ratably upon the exercise of the

June 2016

Series C Warrants, are initially exercisable

six

months following issuance, and terminate

five

and

one

-half years following issuance. The

June 2016

Warrants have an exercise price of

$19.60

per share and are exercisable to purchase an aggregate of

630,252

shares of Common Stock. On

October 31, 2016,

the Company filed a registration statement on Form S-

for the resale of any share of common stock issued upon exercise of the warrants on Form S-

(File

No.

333

212353

) which was declared effective by the SEC on

November 16, 2016.

The private placement of the

June 2016

Warrants was structured to comply with the requirements of Section

(a)(

) under the Securities Act and Rule

506

(b) promulgated thereunder.

Reduced Exercise Price of Warrants

February 22, 2013,

the Company entered into a securities purchase agreement with certain investors pursuant to which the Company agreed, among other things, to issue warrants (the

“2013

Warrants”) to purchase up to

95,811

shares of our common stock at an exercise price of

$74.34

per share to such investors in a registered direct offering. On

January 15, 2014,

the Company entered into a securities purchase agreement with certain investors pursuant to which the Company agreed, among other things, to issue warrants (the

“2014

Warrants”) to purchase up to

64,348

shares of our common stock at an exercise price of

$57.40

per share to such investors in a registered direct offering. On

June 9, 2017,

the Company entered into warrant exercise agreements (the “Exercise Agreements”) with certain holders of the

2013

Warrants, the

2014

Warrants and the

June 2016

Warrants (the “Exercising Holders”), which Exercising Holders own, in the aggregate, warrants exercisable for

790,411

shares of our common stock. Pursuant to the Exercise Agreements, the Exercising Holders and the Company agreed that the Exercising Holders would exercise their

2013

Warrants, the

2014

Warrants and the

June 2016

Warrants with respect to

790,411

shares of our common stock underlying such warrants for a reduced exercise price equal to

$2.70

per share. The Company received aggregate gross proceeds of approximately

$2.1

million from the exercise of the

2013

Warrants, the

2014

Warrants and the

June 2016

Warrants by the Exercising Holders.

The reduced exercise price of the

2013

Warrants, the

2014

Warrants and the

June 2016

Series C Warrants increased the fair value of the warrants by approximately

$0.2

million. This increase in fair value is recorded as a deemed dividend in additional paid in capital due to the retained deficit increased the net loss available to common shareholders on the consolidate statement of operations.

May 27, 2015

entered into a securities purchase agreement with certain investors pursuant to which the Company agreed, among other things, to issue warrants (the

“2015

Warrants”) to purchase up to

139,284

shares of the Company’s common stock at an exercise price of

$36.40

per share, to such investors in a registered direct offering. Between

June 22, 2017

through

June 26, 2017,

the Company and holders of the

2015

Warrants and the

December 2016

Warrants (the Exercising Investors) entered into agreements whereby the Company agreed that the Exercising investors would exercise their

2015

Warrants and the

June 2016

Warrants with respect to

506,630

shares of our common stock underlying such warrants for a reduced exercise price equal to

$1.65

per share. The Company received aggregate gross proceeds of approximately

$0.8

million from the exercise of the

2015

Warrants and the

June 2016

Warrants by the Exercising Investors.

The reduced exercise price of the

2015

Warrants increased the fair value of the warrants by approximately

$0.1

Controlled Equity Offering

February 1, 2013,

the Company entered into a Controlled Equity Offering

Sales Agreement (the “ATM Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”), pursuant to which Celsion

may

offer and sell, from time to time, through Cantor, shares of our common stock having an aggregate offering price of up to

$25.0

million (the “ATM Shares”) pursuant to the Company’s previously filed and effective Registration Statement on Form S-

Under the ATM Agreement, Cantor

may

sell ATM Shares by any method deemed to be an “at-the-market” offering as defined in Rule

415

promulgated under the Securities Act of

1933,

as amended, including sales made directly on The NASDAQ Capital Market, on any other existing trading market for the our common stock or to or through a market maker. From

February 1, 2013

through

June 30, 2017,

the Company sold and issued an aggregate of

1,479,535

shares of common stock under the ATM Agreement, receiving approximately

$7.6

million in gross proceeds.

The Company is

not

obligated to sell any ATM Shares under the ATM Agreement. Subject to the terms and conditions of the ATM Agreement, Cantor will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of The NASDAQ Capital Market, to sell ATM Shares from time to time based upon the Company’s instructions, including any price, time or size limits or other customary parameters or conditions the Company

may

impose. In addition, pursuant to the terms and conditions of the ATM Agreement and subject to the instructions of the Company, Cantor

may

sell ATM Shares by any other method permitted by law, including in privately negotiated transactions.

The ATM Agreement will terminate upon the earlier of (i) the sale of ATM Shares under the ATM Agreement having an aggregate offering price of

$25

million and (ii) the termination of the ATM Agreement by Cantor or the Company. The ATM Agreement

may

be terminated by Cantor or the Company at any time upon

days' notice to the other party, or by Cantor at any time in certain circumstances, including the occurrence of a material adverse change in the Company. The Company pays Cantor a commission of

3.0%

of the aggregate gross proceeds from each sale of ATM Shares and has agreed to provide Cantor with customary indemnification and contribution rights. The Company also reimbursed Cantor for legal fees and disbursements of

$50,000

in connection with entering into the ATM Agreement. In connection with the

February

common stock offering, the Company agreed to

not

sell any ATM Shares until

June 23, 2017.

October 2, 2015,

we filed a prospectus supplement to the base prospectus that forms a part of the

2015

Shelf Registration Statement, pursuant to which we

may

offer and sell up to

$7.5

million of shares of common stock from time to time under the ATM Agreement of the

$17.4

million remaining under the ATM Agreement.