☒QUARTERLY REPORT PURSUANT TO SECTIONS 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, $0.001 par value, as of November 11, ~~2020~~2021 was ~~71,651,556~~74,815,090 shares.

		i
~~Item 4.~~	~~Mine Safety Disclosures.~~		32

~~Item 5.~~	~~Other Information.~~		32

~~Item 6.~~	~~Exhibits.~~		33

~~SIGNATURES~~			34

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Celsius Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

September 30,
2020 December 31,
2019 ⁽¹⁾
(Unaudited)
ASSETS
Current assets:
Cash $ 52,158,098 $ 23,090,682
Accounts receivable-net (note 2) 16,561,371 7,774,618
Note receivable-current (note 6) 1,810,773 1,181,116
Inventories-net (note 4) 15,679,192 15,292,349
Prepaid expenses and other current assets (note 5) 4,731,887 4,170,136
Total current assets 90,941,321 51,508,901

Notes Receivable (note 6) 9,053,866 10,630,040
Property and equipment-net (note 8) 467,380 132,889
Right of use assets 415,595 809,466
Long term security deposits 60,875 104,134
Intangibles (note 9) 16,740,838 17,173,000
Goodwill (note 9) 10,419,321 10,023,806
Total Assets $ 128,099,196 $ 90,382,236

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses (note 11) $ 18,117,611 $ 17,292,647
Lease liability obligation (note 7) 397,931 649,074
Bonds payable-net (note 13) 9,540,007 8,634,279
Other current liabilities (note 12) 716,678 107,399
Total current liabilities 28,772,227 26,683,399

Long-term liabilities:
Lease liability obligation (note 7) 124,978 239,848
Total Liabilities 28,897,205 26,923,247

Commitments and contingences (note 17)

Stockholders’ Equity:
Common stock, $0.001 par value; 100,000,000 shares authorized, 71,651,556 and 68,941,311 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively (note 15) 71,652 68,942
Additional paid-in capital 156,548,446 127,552,998
Accumulated other comprehensive loss (866,664 ) (753,520 )
Accumulated deficit (56,551,443 ) (63,409,431 )
Total Stockholders’ Equity 99,201,991 63,458,989
Total Liabilities and Stockholders’ Equity $ 128,099,196 $ 90,382,236

⁽¹⁾

~~Derived from Audited Consolidated Financial Statements~~

(Unaudited)


	September 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	61,377,202		$	43,248,021
Accounts receivable-net (note 2)		43,500,578			14,986,213
Note receivable-current (note 6)		2,543,225			1,885,887
Inventories-net (note 4)		122,311,445			18,403,622
Prepaid expenses and other current assets (note 5)		22,829,510			14,626,922
Total current assets		252,561,960			93,150,665

Note receivable (note 6)		6,993,869			9,429,437
Property and equipment-net (note 8)		2,454,914			579,377
Right-of-use asset-operating leases		888,911			836,038
Right-of-use asset-finance leases		106,675			162,119
Long-term security deposits		308,449			122,733
Intangibles (note 9)		16,811,762			16,590,083
Goodwill (note 9)		14,851,635			10,419,321
Total Assets	$	294,978,175		$	131,289,773

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses (note 10)	$	91,931,593		$	25,412,753
Lease liability-operating leases (note 7)		376,602			321,283
Lease liability-finance leases (note 7)		155,508			205,824
Other current liabilities (note 11)		957,627			425,232
Total current liabilities		93,421,330			26,365,092

Long-term liabilities:
Lease liability-operating leases (note 7)		550,547			514,948
Lease liability-finance leases (note 7)		88,649			82,290
Deferred tax liability		3,497,240			-
Other long-term liabilities		22,198			-
Total Liabilities		97,579,964			26,962,330

Commitments and contingences (note 15)

Stockholders’ Equity:
Common stock, $0.001 par value; 100,000,000 shares authorized, 74,745,924 and 72,262,829 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (note 13)		74,746			72,263
Additional paid-in capital		244,293,710			159,884,154
Accumulated other comprehensive income/(loss)		1,165,027			(202,142	)
Accumulated deficit		(48,135,273	)		(55,426,832	)
Total Stockholders’ Equity		197,398,211			104,327,443
Total Liabilities and Stockholders’ Equity	$	294,978,175		$	131,289,773

The accompanying notes are an integral part of these unaudited consolidated financial statements

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	For the three months ended September 30,						For the nine months ended September 30,						For the three months ended September 30,						For the nine months ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Revenue (note 3)	$	36,839,149		$	20,423,847		$	95,061,265		$	51,031,426		$	94,909,100		$	36,839,149		$	210,017,302		$	95,061,265
Cost of revenue (note 2)		19,305,416			11,801,478			51,512,534			29,821,968			57,215,728			19,305,416			123,495,466			51,512,534
Gross profit		17,533,733			8,622,369			43,548,731			21,209,458			37,693,372			17,533,733			86,521,836			43,548,731

Selling and marketing expenses		8,267,996			4,923,968			23,640,914			14,086,910			22,621,062			8,267,996			50,111,103			23,640,914
General and administrative expenses		4,557,438			2,194,530			12,460,009			7,249,378			11,140,030			4,752,428			28,066,228			13,178,593
Total operating expenses		12,825,434			7,118,498			36,100,923			21,336,288			33,761,092			13,020,424			78,177,331			36,819,507

Income/(loss) from operations		4,708,299			1,503,871			7,447,808			(126,830	)
Income from operations														3,932,280			4,513,309			8,344,505			6,729,224

Other Income (Expense):
Other income (expense):
Interest income on note receivable (note 6)		78,690			96,300			268,709			288,070			76,473			78,690			239,586			268,709
Interest on notes		-			(105,385	)		-			(348,493	)
Interest expense on bonds		(144,021	)		-			(391,458	)					-			(144,021	)		-			(391,458	)
Interest on other obligations		(3,419	)		(3,393	)		(13,400	)		(12,041	)		(4,524	)		(3,419	)		(7,496	)		(13,400	)
Amortization of discount on notes payable		-			(528,463	)		-			(707,285	)
Amortization of discount on bonds payable		(178,649	)		-			(506,100	)		-			-			(178,649	)		-			(506,100	)
Amortization of intangibles		(145,277	)		-			(429,307	)		-
Amortization of financial leases		(49,713	)		-			(289,277	)		-
Other miscellaneous income/(expense)		(62,817	)		-			(27,614	)		-			(97,038	)		(62,817	)		-			(27,614	)
Gain on lease cancellations		-			-			152,112			-			-			-			-			152,112
Realized foreign exchange gain/(loss)		142,917			-			262,022			-
Gain/(loss) on investment repayment-China (Note Receivable Note 6)		407,593			(1,888	)		384,493			12,050,921
Total other income (expense)		45,304			(542,829	)		(589,820	)		11,271,172
Foreign exchange gain/(loss)														(327,581	)		550,510			(451,217	)		646,515
Total other income/(expense)														(352,670	)		240,294			(219,127	)		128,764

Net Income		4,753,603			961,042			6,857,988			11,144,342
Net income before income taxes														3,579,610			4,753,603			8,125,378			6,857,988

Other comprehensive income/(loss):
Unrealized foreign currency translation income/(losses).		110,027			(55,303	)		(113,144	)		(71,793	)
Income tax expense														833,819			-			833,819			-

Net income														2,745,791			4,753,603			7,291,559			6,857,988

Other comprehensive income:
Foreign currency translation gain/(loss)														1,282,683			110,027			1,367,169			(113,144	)
Comprehensive Income		4,863,630			905,739			6,744,844			11,072,549			4,028,474			4,863,630			8,658,728			6,744,844

Income per share:
Basic	$	0.07		$	0.02		$	0.10		$	0.19		$	0.04		$	0.07		$	0.10		$	0.10
Diluted	$	0.06		$	0.03		$	0.09		$	0.20		$	0.03		$	0.06		$	0.09		$	0.09
Weighted average shares outstanding:
Basic		70,473,351			59,307,404			70,184,071			58,023,685			74,609,195			70,473,351			73,758,731			70,184,071
Diluted ¹		74,848,239			62,532,510			73,524,209			62,050,032			78,473,866			74,848,239			77,782,459			73,524,209

⁽¹⁾

Please refer to Earnings Per Share section for further ~~details~~details.

The accompanying notes are an integral part of these unaudited consolidated financial statements

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, ~~2020~~2021

(Unaudited)

Accumulated
Additional Other-
Common Stock Paid-In Comprehensive Accumulated
Shares Amount Capital Income (Loss) Deficit Total
Balance at December 31, 2019 68,941,311 $ 68,942 $ 127,552,998 $ (753,520 ) $ (63,409,431 ) $ 63,458,989
Stock option expense 1,400,000 1,400,000
Issuance of common stock pursuant to exercise of stock options-Cashless 204,028 204 (204 ) -
Issuance of common stock pursuant to exercise of stock options-Cash 133,921 134 215,213 215,347
Foreign currency translation loss (114,490 ) (114,490 )
Net Income 546,051 546,051
Balance at March 31, 2020 69,279,260 $ 69,280 $ 129,168,007 $ (868,010 ) $ (62,863,380 ) $ 65,505,897
Stock option expense 1,174,999 1,174,999
Issuance of common stock pursuant to exercise of stock options-Cashless 106,327 106 (106 ) -
Issuance of common stock pursuant to exercise of stock options-Cash 176,914 177 489,140 489,317
Foreign currency translation loss (108,681 ) (108,681 )
Net Income 1,558,334 1,558,334
Balance at June 30, 2020 69,562,501 $ 69,563 $ 130,832,040 $ (976,691 ) $ (61,305,046 ) $ 68,619,866
Stock option expense 2,143,700 2,143,700
Issuance of common stock-Private Placement 1,437,909 1,438 21,981,678 21,983,116
Issuance of common stock pursuant to exercise of stock options-Cashless 86,405 86 (86 ) -
Issuance of common stock pursuant to exercise of stock options-Cash 564,741 565 1,591,114 1,591,679
Foreign currency translation loss 110,027 110,027
Net Income 4,753,603 4,753,603
Balance at September 30, 2020 71,651,556 $ 71,652 $ 156,548,446 $ (866,664 ) $ (56,551,443 ) $ 99,201,991


								Accumulated
	Common Stock				Additional Paid-In			Other Comprehensive			Accumulated
	Shares		Amount		Capital			Income (Loss)			Deficit			Total

Balance at December 31, 2020		72,262,829	$	72,263	$	159,884,154		$	(202,142	)	$	(55,426,832	)	$	104,327,443
Share-based payment expense		-		-		3,575,001			-			-			3,575,001
Issuance of common stock pursuant to exercise of stock options - cashless		88,312		88		(88	)		-			-			-
Issuance of common stock pursuant to exercise of stock options - cash		234,546		235		715,675			-			-			715,910
Foreign currency fluctuations		-		-		-			(192,509	)		-			(192,509	)
Net income		-		-		-			-			585,424			585,424
Balance at March 31, 2021		72,585,687	$	72,586	$	164,174,742		$	(394,651	)	$	(54,841,408	)	$	109,011,269
Share-based payment expense		-		-		4,022,259			-			-			4,022,259
Issuance of common stock pursuant to exercise of stock options - cashless		315,913		316		(316	)		-			-			-
Issuance of common stock pursuant to exercise of stock options - cash		434,986		435		1,798,672			-			-			1,799,107
Issuance of common stock from capital raise		1,133,953		1,134		67,768,252			-			-			67,769,386
Foreign currency fluctuations		-		-		-			276,995			-			276,995
Net income		-		-		-			-			3,960,344			3,960,344
Balance at June 30, 2021		74,470,539	$	74,471	$	237,763,609		$	(117,656	)	$	(50,881,064	)	$	186,839,360
Share-based payment expense		-		-		5,803,321			-			-			5,803,321
Issuance of common stock pursuant to exercise of stock options - cashless		117,923		118		(118	)		-			-			-
Issuance of common stock pursuant to exercise of stock options - cash		157,462		157		726,898			-			-			727,056
Issuance of common stock from capital raise									-			-
Foreign currency fluctuations		-		-		-			1,282,683			-			1,282,683
Net income		-		-		-			-			2,745,791			2,745,791
Balance at September 30, 2021		74,745,924	$	74,746	$	244,293,710		$	1,165,027		$	(48,135,273	)	$	197,398,211

The accompanying notes are an integral part of these unaudited consolidated financial statements

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, ~~2019~~2020

(Unaudited)

Accumulated
Preferred Stock Common Stock Additional
Paid-In Other-
Comprehensive Accumulated
Shares Amount Shares Amount Capital Income (Loss) Deficit Total
Balance at December 31, 2018 - $ - 57,002,508 $ 57,003 $ 85,153,667 $ (26,997 ) $ (73,380,691 ) $ 11,802,982
Stock option expense 1,358,503 1,358,503
Issuance of common stock pursuant to exercise of stock options-Cashless 115,107 115 (115 ) -
Issuance of common stock pursuant to exercise of stock options-Cash 80,750 80 24,680 24,760
Beneficial Conversion Feature on Convertible Instruments 166,667 166,667
Foreign currency translation gain 260,665 260,665
Net Income 11,656,594 11,656,594
Balance at March 31, 2019 $ - 57,198,365 $ 57,198 $ 86,703,402 $ 233,668 $ (61,724,097 ) $ 25,270,171
Stock option expense 1,095,792 1,095,792
Issuance of common stock pursuant to exercise of stock options-Cashless 79,488 80 (80 ) -
Issuance of common stock pursuant to exercise of stock options-Cash 93,334 93 122,574 122,667
Foreign currency translation loss (256,974 ) (256,974 )
Net Loss (1,473,295 ) (1,473,295 )
Balance at June 30, 2019 - $ - 57,371,187 $ 57,371 $ 87,921,688 $ (23,306 ) $ (63,197,392 ) $ 24,758,361
Stock option expense 900,000 900,000
Issuance of common stock-Capital Raise 7,986,110 7,986 26,947,451 26,955,437
Issuance of common stock-Notes Payable Conversion 3,196,460 3,197 10,230,136 10,233,333
Issuance of common stock pursuant to exercise of stock options-Cashless 250,000 250 (250 ) -
Issuance of common stock pursuant to exercise of stock options-Cash 71,500 72 76,584 76,656
Foreign currency translation loss (547,814 ) (547,814 )
Net Income 961,042 961,042
Balance at September 30, 2019 - $ - 68,875,257 $ 68,876 $ 126,075,609 $ (571,120 ) $ (62,236,350 ) $ 63,337,015

								Accumulated
	Common Stock				Additional Paid-In			Other Comprehensive			Accumulated
	Shares		Amount		Capital			Income (Loss)			Deficit			Total

Balance at December 31, 2019		68,941,311	$	68,942	$	127,552,998		$	(753,520	)	$	(63,409,431	)	$	63,458,989
Share-based payment expense		-		-		1,400,000			-			-			1,400,000
Issuance of common stock pursuant to exercise of stock options - cashless		204,028		204		(204	)		-			-			-
Issuance of common stock pursuant to exercise of stock options - cash		133,921		134		215,213			-			-			215,347
Foreign currency fluctuations		-		-		-			(114,490	)		-			(114,490	)
Net income		-		-		-			-			546,051			546,051
Balance at March 31, 2020		69,279,260	$	69,280	$	129,168,007		$	(868,010	)	$	(62,863,380	)	$	65,505,897
Share-based payment expense						1,174,999						-			1,174,999
Issuance of common stock pursuant to exercise of stock options - cashless		106,327		106		(106	)		-			-			-
Issuance of common stock pursuant to exercise of stock options - cash		176,914		177		489,140			-			-			489,317
Foreign currency fluctuations		-		-					(108,681	)		-			(108,681	)
Net income		-		-		-			-			1,558,334			1,558,334
Balance at June 30, 2020		69,562,501	$	69,563	$	130,832,040		$	(976,691	)	$	(61,305,046	)	$	68,619,866
Share-based payment expense						2,143,700						-			2,143,700
Issuance of common stock – private placement		1,437,909		1,438		21,981,678			-			-			21,983,116
Issuance of common stock pursuant to exercise of stock options - cashless		86,405		86		(86	)		-			-			-
Issuance of common stock pursuant to exercise of stock options - cash		564,741		565		1,591,114			-			-			1,591,679
Foreign currency fluctuations		-		-					110,027			-			110,027
Net income		-		-		-			-			4,753,603			4,753,603
Balance at September 30, 2020		71,651,556	$	71,652	$	156,548,446		$	(866,664	)	$	(56,551,443	)	$	99,201,991

The accompanying notes are an integral part of these unaudited consolidated financial statements

Celsius Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)


	For the nine months ended						For the nine months ended
	September 30, 2020			September 30, 2019			September 30, 2021			September 30, 2020
Cash flows from operating activities:
Net income	$	6,857,988			11,144,342		$	7,291,559		$	6,857,988
Adjustments to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
Depreciation		82,180			48.289			519,765			82,180
Amortization		1,224,684			713,360			550,800			1,224,684
Bad debt allowance		244,685			62,678
Inventory excess and obsolescence allowance		211,822			300,143
Unrealized currency gain								(76,765	)		-
Bad debt expense								(207,261	)		244,685
Inventory excess and obsolescence expense								12,234			211,822
Stock-based compensation expense		4,718,699			3,354,295			13,400,581			4,718,699
Gain on China transaction		(384,493	)		(12,050,921	)		-			(384,493	)
Gain on lease cancellations		(152,112	)		-			(14,669	)		(152,112	)
Changes in operating assets and liabilities:
Accounts receivable-net		(9,031,438	)		(4,405,426	)		(28,307,104	)		(9,031,438	)
Inventory		(598,665	)		2,136,895
Inventory-net								(103,920,057	)		(598,665	)
Prepaid expenses and other current assets		(561,752	)		(2,087,991	)		(8,202,588	)		(561,752	)
Accounts payable and accrued expenses		824,964			(27,338	)		66,694,568			824,964
Deposits/deferred revenue and other current liabilities		257,023			(252,302	)
Change in Right to Use and Lease Obligation-net		149,925			97,512
Net cash provided/(used) in operating activities		3,843,510			(966,464	)
Other assets								(185,716	)		43,259
Other liabilities								532,395			213,764
Deferred Tax Liability-net								(182,156	)		-
Change in right-of-use asset and lease liability-net								30,465			149,925
Net cash (used in)/provided by operating activities								(52,063,949	)		3,843,510

Cash flows from investing activities:
Proceeds from note receivable		1,331,011			-			1,885,724			1,331,011
Purchase of property and equipment		(416,671	)		(55,321	)		(2,395,302	)		(416,671	)
Cash paid to escrow for acquisition					(14,849,999	)
Net cash provided/(used) in investing activities		914,340			(14,905,320	)
Net cash (used in)/provided by investing activities								(509,578	)		914,340

Cash flows from financing activities:
Proceeds from notes payable-related-party, net		-			1,500,000
Principal payments financial lease obligations		(259,231	)		-
Principal payments on finance lease obligations								(72,386	)		(259,231	)
Proceeds from capital raise								67,769,386			21,983,116
Proceeds from exercise of stock options		2,296,343			224,083			3,242,073			2,296,343
Net Proceeds from Sale of Common Stock		21,983,116			26,955,437
Net cash provided by financing activities		24,020,228			28,679,520			70,939,073			24,020,228

Effect on exchange rate changes on cash and cash equivalents		289,338			(19,026	)		(236,365	)		289,338

Net increase in cash and cash equivalents		29,067,416			12,788,710			18,129,181			29,067,416
Cash and cash equivalents at beginning of the period		23,090,682			7,743,181			43,248,021			23,090,682

Cash and cash equivalents at end of the period	$	52,158,098		$	20,531,891		$	61,377,202		$	52,158,098

Supplemental disclosures:
Cash paid during period for:
Interest	$	299,394		$	131,528		$	5,364		$	299,394

Taxes								398,326			-
Non-cash investing and financing activities:
Debt Conversion and Related Accrued Expenses	$	-		$	10,233,333

European Acquisition Adjustment:
Goodwill	$	395,515			-		$	-		$	395,515
Other liabilities	$	(395,515	)					-			(395,515	)

The accompanying notes are an integral part of these unaudited consolidated financial statements

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

1.	ORGANIZATION AND DESCRIPTION OF BUSINESS

Business —Celsius Holdings, Inc. (the “Company” or “Celsius Holdings”) was incorporated under the laws of the State of Nevada on April 26, 2005. On January 24, 2007, the Company entered into a merger agreement and plan of reorganization with Elite FX, Inc., a Florida corporation. Under the terms of the Merger Agreement, Elite FX, Inc. was merged into the Company’s subsidiary, Celsius, Inc. and became a ~~wholly-owned~~wholly owned subsidiary of the Company on January 26, 2007. In addition, on March 28, 2007 the Company established Celsius Netshipments, Inc. a Florida corporation as a subsidiary of the Company.

On February 7, 2018, the Company established Celsius Asia Holdings Limited, a Hong Kong corporation, as a ~~wholly-owned~~wholly owned subsidiary of the Company. On February 7, 2018 Celsius China Holdings Limited, a Hong Kong corporation, became a ~~wholly-owned~~wholly owned subsidiary of Celsius Asia Holdings Limited and on May 9, 2018, Celsius Asia Holdings Limited established Celsius (Beijing) Beverage Limited, a China corporation, as a ~~wholly-owned~~wholly owned subsidiary of Celsius Asia Holdings Limited.

On October 25, 2019, the Company acquired 100% of Func Food Group, Oyj (“Func Food”). The Acquisition was structured as a purchase of all of Func Food’s equity shares and a restructuring of Func Food’s pre-existing debt. Func Food was the Nordic distributor for the Company since 2015. Func Food is a marketer and distributor of nutritional supplements, health food products, and ~~beverages (see Note 10).~~beverages.

The Company is engaged in the development, marketing, sale and distribution of “functional” calorie-burning fitness beverages under the Celsius® brand name.

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation – The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and ~~Article 8-03~~Rule 10-01 of Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These unaudited consolidated financial statements and the accompanying notes should be read in conjunction with the ~~10K~~Form 10-K filed for December 31, ~~2019.~~2020. The consolidated financial statements of the Company include the Company and its wholly owned subsidiaries. All material inter-company balances and transactions have been eliminated.

Significant Estimates — The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Significant estimates include the allowance for doubtful accounts, allowance for inventory obsolescence, the useful lives and values of property, fixtures and equipment, impairment of intangible assets & goodwill, valuation of stock-based compensation, and deferred tax asset valuation allowance.

Reclassification of Prior Year Presentation – Certain prior year amounts in the consolidated statements of ~~cash flows~~operations and comprehensive income have been reclassified for consistency with the current year presentation. ~~An adjustment~~A reclassification has been made to present ~~certain changes in operating~~amortization of intangible assets and ~~liabilities related to the China Settlement as part~~amortization of ~~the total net changes~~finance lease right-of-use assets in ~~operating assets~~general and ~~liabilities,~~administrative expenses, rather than as separately presented items. Additionally, modifications have been made to present the effects of depreciation & amortization, bad debt allowance and inventory excess and obsolescence allowance as adjustments to reconcile net income/(loss) to net cash flows from operating activities, rather than as part of changes in ~~operating assets and liabilities.~~other expenses. These reclassifications had no effect on previously reported ~~cash flows~~net income and comprehensive income and did not have a material effect to the financial statements.

Segment Reporting— Operating segments are defined as components of an enterprise that engage in business activities, have discrete financial information, and whose operating results are regularly reviewed by the chief operating decision maker (CODM) to make decisions about allocating resources and to assess performance. Even though we have operations in several geographies, we operate as a single enterprise. Our operations and strategies are centrally designed and executed given that our geographical components are very similar. Our CODM, the CEO, reviews operating results primarily from ~~operating, investing, or financing activities.~~a consolidated perspective, and makes decisions and allocates resources based on that review. The reason our CODM focuses on consolidated results in making decisions and allocating resources is because of the significant economic interdependencies between our geographical operations and the Company’s U.S. entity.

~~Segment Reporting~~ — Although the Company has a number of operating divisions, separate segment data has not been presented, as they meet the criteria for aggregation as permitted by ASC Topic 280, Segment Reporting, (formerly Statement of Financial Accounting Standards (SFAS) No. 131, ~~Disclosed About Segments of an Enterprise and Related Information.)~~

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Our chief operating decision-maker is considered to be our Chief Executive Officer (CEO). The CEO reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. The financial information reviewed by the CEO is identical to the information presented in the accompanying consolidated statement of operations. Therefore, the Company has determined that it operates in a single operating segment. For the nine months ended September 30, 2020 and 2019 all material assets and revenues of the Company were in the United States except as disclosed in Note 3.

Concentrations of Risk — Substantially all of the Company’s revenue derives from the sale of Celsius ® beverages.

The Company uses single supplier relationships for its raw materials purchases and filling capacity, which potentially subjects the Company to a concentration of business risk. If these suppliers had operational problems or ceased making product available to the Company, operations could be adversely affected.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high-quality financial institutions. At times, balances in the Company’s cash accounts may exceed the Federal Deposit Insurance Corporation limit. At September 30, ~~2020,~~2021, the Company had approximately ~~$51.9~~$9.3 million in excess of the ~~Federal Deposit Insurance Corporation limit.~~insurance protection provided by financial institutions.

For the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company had the following 10 percent or greater concentrations of revenue with its ~~customers:~~customers. The following customers met or exceeded 10% of our revenue for both or either the nine months ended September 30, 2021 and 2020, respectively. The below table reflects this customer’s evolution as a percentage of our total revenue for the nine months ended September 30, 2021 and 2020:

Schedule of revenue & accounts receivable with customers
	2020			2019			2021			2020
A*		16.6	%		12.9	%
B*		-			13.9	%
Amazon								10.0	%		16.6	%
Costco								11.3	%		2.6	%
All other		83.4	%		73.2	%		78.7	%		80.8	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

Revenues from customer A are derived from a customer located in the United States. Revenues from customer B were derived from a customer located in Sweden which was acquired on October 25, 2019. Please refer to note 10, for further details. All other revenues were mainly derived from customers in the United States.

At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had the following 10 percent or greater concentrations of accounts receivable with its customers:

	2020			2019			2021			2020
A**		19.9	%		19.2	%
Amazon								12.6	%		11.4	%
Costco								11.4	%		6.6	%
All other		80.1	%		80.8	%		76.0	%		82.0	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

**	~~Receivables from customer A are obtained from a customer located in the United States.~~

Cash Equivalents — The Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents. At September 30, ~~2020~~2021 and ~~2019,~~December 31, 2020, the Company did not have any investments with maturities of three months or less.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounts Receivable — Accounts receivable are reported aat net realizable value. The Company establishes an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, historical trends, and other information. Delinquent accounts are written-off when it is determined that the amounts are uncollectible. At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, there was an allowance for doubtful accounts of ~~$537,000~~$342,312 and ~~$292,400,~~$549,573, respectively.

Inventories — Inventories include only the purchase cost and are stated at the lower of cost and net realizable value. Cost is determined using the FIFO method. Inventories consist of raw materials and finished products. The Company establishes an inventory allowance to reduce the value of the inventory during the period in which such materials and products are no longer usable or marketable. Specifically, the Company reviews inventory utilization during the past twelve months and also customer orders for subsequent months. If there has been no utilization during the last 12 months and there are no orders in-place in future months which will require the use of an inventory item and then the inventory item will be included as part of the allowance during the period being evaluated. Inventory allowance pertains to excess and obsolete products and certain quality control costs. Management will then specifically evaluate whether these items may be utilized within a reasonable time frame (e.g., 3 to 6 months). At September 30, ~~2020~~2021 and December 31, ~~2019, the Company recorded~~2020, there was an allowance of ~~$1,077,000~~$1,625,289 and ~~$865,000~~$1,613,000, respectively. The changes in the allowance are included in cost of revenue.

Property and Equipment — Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful life of the asset generally ranging from three to seven years.

Impairment of Long-Lived Assets — In accordance with ASC Topics 350 “Goodwill and Other Intangibles” and 360, “Property, Plant, and Equipment” the Company reviews the carrying value of intangibles and other long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair value. The Company did not record any impairment charges during the nine months ended September 30, 2021 and 2020.

Long-lived Asset Geographic Data

The following table sets forth long-lived asset information, which includes property and equipment and right-of-use assets and excludes goodwill and intangibles, where individual countries represent a significant portion of the total:

Schedule of long-lived asset geographic data
	September 30,		December 31,
	2021		2020

United States	$	2,338,295	$	694,697

Sweden		776,420		431,959
Finland		335,785		450,878
Long-lived assets related to foreign operations		1,112,205		882,837
Total long-lived assets-net	$	3,450,500	$	1,577,534

Goodwill — The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. We assess goodwill at the reporting unit level on an annual basis as of December 31, or more frequently if events or changes in circumstances suggest that goodwill may not be recoverable. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company determines that the fair value is less than the carrying value, the Company will recognize an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. At September 30, ~~2020,~~2021, there were no indicators of impairment.

~~Revenue Recognition~~Intangible assets ~~— As~~– Intangible assets are comprised of ~~January 1, 2018,~~customer relationships and brands acquired in a business combination. The Company amortizes intangible assets with a definitive life over their respective useful lives. Intangibles with indefinite lives are tested for impairment on an annual basis, or more frequently if the Company ~~adopted~~ believes indicators of impairment exist.

Revenue from Contracts with Customers (Topic 606) (“ASC 606”). The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. The Company adopted the standard using the modified retrospective method and the adoption did not have a material impact on its consolidated financial statements.

~~Celsius Holdings, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2020~~

2.	~~BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

~~Revenue is derived from the sale of beverages.~~Recognition — The Company recognizes revenue in accordance with ASC Topic 606 “Revenue from Contracts with Customers.” The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in customer incentives the Company offers to its customers and their customers. ~~Any discounts, slotting fees, sales incentives~~The Company elected to apply the practical expedient to expense contract acquisition costs as incurred where the expected period of benefit is one year or ~~similar arrangements with the customer are estimated at time of sale and deducted from revenue.~~less. Sales taxes and other similar taxes are excluded from revenue.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, 2021

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Customer Advances — From time to time the Company requires ~~prepayments for~~ deposits in advance of delivery of products and/or production runs. Such amounts are initially recorded as customer ~~deposits.~~advances liability within other current liabilities. The Company recognizes such revenue as it is earned in accordance with revenue recognition policies. The Company had 0 customer advances as of September 30, 2021 or December 31, 2020 respectively.

Advertising Costs — Advertising costs are expensed as incurred. The Company uses mainly radio, local sampling events, sponsorships, endorsements, and digital advertising. The Company incurred marketing and advertising ~~expense~~expenses of approximately ~~$9.6~~$23.8 million and ~~$5.4~~$9.6 million, during the nine months ~~ending~~ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

Research and Development — Research and development costs are charged to general and administrative expenses as incurred and consist primarily of consulting fees, raw material usage and test productions of beverages. The Company incurred expenses of ~~$280,000~~$0.7 million and ~~$246,000~~$0.3 million during the nine months ~~ending~~ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

Foreign Currency ~~Translation~~Gain/Losses — Foreign subsidiaries’ functional currency is the local currency of operations and the net assets of foreign operations are translated into U.S. dollars using current exchange rates. The ~~U.S. dollar results~~foreign subsidiaries perform remeasurements of their assets and liabilities denominated in non-functional currencies on a periodic basis and the gain or losses from these adjustments are included in the Statement of Operations as foreign exchange gains or losses. For the nine months ended September 30, 2021 exchange losses have amounted to approximately $451,000 while during the nine months ended September 30, 2020, we recognized foreign currency gains of approximately $647,000 mainly related to fluctuations in exchange rates. Translation gain and losses that arise from ~~such~~the translation of net assets, as well as ~~unrealized~~ exchange gains and losses on intercompany balances of long-term investment nature, are included in Comprehensive Income. The Company incurred foreign currency translation ~~gains~~net gain during the nine months ended September 30, ~~2020~~2021 of approximately ~~$113,000~~$1,367,000 and a net loss of approximately ~~$72,000~~$113,000 during the nine months ended September 30, ~~2019.~~2020. Our operations in different countries required that we transact in the following currencies:

Chinese-Yuan

Norwegian-Krone

Swedish-Krona

Finland-Euro

~~Chinese-Yuan~~

~~Norwegian-Krone~~

~~Swedish-Krona~~

~~Finland-Euro~~

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments— The carrying value of cash and cash equivalents, accounts receivable, ~~intangible assets,~~ accounts payable and accrued expenses ~~and notes payable~~ approximates fair value due to their relative short-term maturity and market interest rates.

Fair Value Measurements - ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

	Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities.

	Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data.

	Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

Other than these noted previously, the Company did not have any other assets or liabilities measured at fair value at September 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

Income Taxes — The Company accounts for income taxes pursuant to the provisions of ASC 740-10, “Accounting for Income Taxes,” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach require the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company follows the provisions of the ASC 740 -10 related to, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

The Company has adopted ASC 740-10-25 Definition of Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The Company’s tax returns for tax years in ~~2017~~2015 through ~~2019~~2020 remain subject to potential examination by the taxing authorities.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings per Share — Basic earnings per share are calculated by dividing net income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. Under ASC 260-10-45-16, the calculation of diluted earnings per share, the numerator should be adjusted to add back any convertible dividends and the after-tax amount of interest recognized in the period associated with any convertible debt. The denominator should include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Please refer to the below table for additional details:

Schedule of anti-dilutive shares
	For the three months ended September 30,				For the nine months ended September 30,				For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Net income available to common stockholders	$	4,753,603	$	961,042	$	6,857,988	$	11,144,342
Adjustments for diluted earnings
Interest expense on convertible notes		-		105,385		-		348,493
Amortization of discount on notes payable		-		528,464		-		707,286
Diluted net income (loss) available to common stockholders	$	4,753,603	$	1,594,891	$	6,857,988	$	12,200,121
Net income									$	2,745,791	$	4,753,603	$	7,291,559	$	6,857,988

Income per share:
Basic	$	0.07	$	0.02	$	0.10	$	0.19	$	0.04	$	0.07	$	0.10	$	0.10
Diluted	$	0.06	$	0.03	$	0.09	$	0.20	$	0.03	$	0.06	$	0.09	$	0.09
Weighted average shares outstanding:
Basic		70,473,351		59,307,404		70,184,071		58,023,685		74,609,195		70,473,351		73,758,731		70,184,071
Effect of dilutive shared based awards										3,864,671		4,374,888		4,023,728		3,340,138
Diluted		74,848,239		62,532,510		73,524,209		62,050,032		78,473,866		74,848,239		77,782,459		73,524,209

Share-Based Payments — The Company follows the provisions of ASC Topic 718 “Compensation — Stock Compensation” and related interpretations. As such, compensation cost is measured on the date of grant at the fair value of the share-based payments. Such compensation amounts, if any, are amortized over the respective vesting periods of the grants. On April 30, 2015, the Company adopted the 2015 Stock Incentive Plan. The 2015 Stock Incentive Plan, allows us to grant equity based compensation awards including, without limitation, Options, Stock Appreciation Rights, sales or bonuses of Restricted Stock, Restricted Stock Units or Dividend Equivalent Rights, and an Award may consist of one such security or benefit, or two or more in any combination or alternative. This plan is intended to provide incentives which will attract and retain highly competent persons at all levels as employees of the Company, as well as independent contractors providing consulting or advisory services to the Company, by providing them opportunities to acquire the Company’s common stock or to receive monetary payments based on the value of such shares pursuant to Awards issued. The 2015 Plan permits the grant of options and shares for up to 5,000,000 shares. In addition, there is a provision for an annual increase of 15% to the shares included under the plan, with the shares to be added on the first day of each calendar year, beginning on January 1, ~~2017.~~2017 (note 14). As of September 30, ~~2020,~~2021, total shares available are ~~880,000.~~4.1 million.

Cost of Sales — Cost of sales consists of the cost of concentrates and or beverage bases, the costs of raw materials utilized in the manufacture of products, co-packing fees, repacking fees, in-bound & out-bound freight charges, as well as certain internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company’s finished products, inventory allowance for excess &and obsolete products and certain quality control costs. Raw materials account for the largest portion of the cost of sales. Raw materials include cans, bottles, other containers, flavors, ingredients and packaging materials.

Operating Expenses — Operating expenses include selling expenses such as warehousing expenses after manufacture, as well as expenses for advertising, samplings and in-store demonstrations costs, costs for merchandise displays, point-of-sale materials and premium items, sponsorship expenses, other marketing expenses and design expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees (including legal fees), depreciation and amortization, and other general and administrative costs.

Shipping and Handling Costs — Shipping and handling costs for freight expense on goods shipped are included in cost of sales. Freight expense on goods shipped for nine months ended September 30, 2021 and 2020 ~~and 2019~~ was ~~$6.5~~$18.1 million and ~~$4.5~~$6.5 million, respectively.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

The Company adopts all applicable, new accounting pronouncements as of the specified effective dates.

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which requires the immediate recognition of management’s estimates of current and expected credit losses. In November 2018, the FASB issued ASU 2018-19, which makes certain improvements to Topic 326. In April and May 2019, the FASB issued ASUs 2019-04 and 2019-05, respectively, which adds codification improvements and transition relief for Topic 326. In November 2019, the FASB issued ASU 2019-10, which delays the effective date of Topic 326 for Smaller Reporting Companies to interim and annual periods beginning after December 15, 2022, with early adoption permitted. In November 2019, the FASB issued ASU 2019-11, which makes improvements to certain areas of Topic 326. In February 2020, the FASB issued ASU 2020-02, which adds an SEC paragraph, pursuant to the issuance of SEC Staff Accounting Bulletin No. 119, to Topic 326. Topic 326 is effective for the Company for fiscal years and interim reporting periods within those years beginning after December 15, 2022. Early adoption is permitted for interim and annual periods beginning December 15, 2019. The Company is currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

OnIn December 2019, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update on income taxes. The new guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. The Company adopted this standard effective January 1, 2020, the Company adopted ASU No. 2017-04, “Intangibles and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to calculate the implied fair value of goodwill, but rather requires an entity to record an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. Adoption2021. The adoption of this ~~ASU~~standard did not have a material ~~effect~~impact on ~~our~~the Company's consolidated financial ~~statements.~~position, results of operations and cash flows.

~~On January 1, 2020,~~Except for the Company adopted ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820. Adoption of this ASU did not have a material effect on our consolidated financial statements.

~~All~~updates previously disclosed above, all new accounting pronouncements issued but not yet effective are not expected to have a material impact on our results of operations, cash flows or financial position with the exception of the updated previously disclosed above, there have been no new accounting pronouncements not yet effective that have significance to our consolidated financial statements.position.

Liquidity — These financial statements have been prepared assuming the Company will be able to continue as a going concern. At September 30, ~~2020,~~2021, the Company had an accumulated deficit of ~~$56,551,443~~$48,135,273 which includes a net income of ~~$6,857,988~~$7,291,559 for the nine months ended September 30, ~~2020.~~2021. During the nine months ~~ending~~ended September 30, ~~2020~~2021 the Company had net cash ~~provided in~~used by operating activities of ~~$3,843,510~~$52,063,949.

If our sales volumes do not meet our projections, expenses exceed our expectations, or our plans change, we may be unable to generate enough cash flow from operations to cover our working capital requirements. In such case, we may be required to adjust our business plan, by reducing marketing, lower our working capital requirements and reduce other expenses or seek additional financing. Furthermore, our business and results of operations may be adversely affected by changes in the global macro-economic environment related to the pandemic and public health crises related to the COVID-19 outbreak. ~~Please refer~~

Correction of Immaterial Errors — The company performed immaterial corrections to the ~~Item 1.A. Risk Factors,~~previously reported consolidated financial statements related to the Func Foods acquisition in 2019. As of September 30, 2021, goodwill increased by $3.7 million and deferred tax liabilities increased by $3.5 million attributable to tax implications of acquired intangible assets that had not been recorded in the purchase accounting treatment acquisition. The impact on the consolidated statements of operations and comprehensive income for ~~further details regarding this situation.~~the nine months ended September 30, 2021, resulted in a $0.2 million deferred tax benefit.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

3.	REVENUE

The Company recognizes revenue when obligations under the terms of a contract with the customer are satisfied. Product sales occur once control is transferred upon delivery to the customer. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in customer incentives the Company offers to its customers and their customers. Sales taxes and other similar taxes are excluded from revenue.

Information about the Company’s net sales by geographical location for the nine months ended September 30, 2021 and 2020 ~~and 2019 are~~is as follows:

Schedule of net sales by reporting segment
	For the nine months ended				For the nine months ended
	September 30,		September 30,		September 30,		September 30,
	2020		2019		2021		2020
North America	$	67,083,888	$	42,607,433	$	177,093,834	$	67,083,888
Europe		26,799,756		7,635,845		30,695,477		26,799,756
Asia		868,915		629,028		1,861,130		868,915
Other		308,706		159,120		366,861		308,706
Net sales	$	95,061,265	$	51,031,426	$	210,017,302	$	95,061,265

All of the Company’s North America revenue is derived from the United States, which is the Company’s country of domicile. Of the Company’s total foreign revenues of approximately $32.9 million and $28.0 million for the nine months ended September 30, 2021 and 2020, respectively. Sweden, represented the largest portion of total consolidated revenue with total revenues of approximately $21.1 million and $19.2 million for the nine months ended September 30, 2021 and 2020, respectively. Revenues are attributed to countries based on the location of the customer.

License Agreement

In January 2019, the Company entered into a license and repayment of investment agreement with Qifeng Food Technology (Beijing) Co., Ltd (“Qifeng”). Under the agreement, Qifeng was granted the exclusive license rights to manufacture, market and commercialize Celsius branded products in China. The term of the agreement is 50 years, with annual royalty fees due from Qifeng after the end of each calendar year. The royalty fees are based on a percentage of Qifeng’s sales of Celsius branded products; however, the fees are fixed for the first five years of the agreement, totaling approximately ~~$6.6~~$6.6 million, and then are subject to annual guaranteed minimums over the remaining term of the agreement.

Under the agreement, the Company grants Qifeng exclusive license rights and provides ongoing support in product development, brand promotion and technical expertise. The ongoing support is integral to the exclusive license rights and, as such, both of these represent a combined, single performance obligation. The transaction price consists of the guaranteed minimums and the variable royalty fees, all of which are allocated to the single performance obligation.

The Company recognizes revenue from the agreement over time because the customer simultaneously receives and consumes the benefits from the services. The Company uses the passage of time to measure progress towards satisfying its performance obligation because its efforts in providing the exclusive license rights and ongoing support occur on a generally even basis throughout the year. Total revenue recognized under the agreement was approximately ~~$570,000~~$1.2 million for the nine months ended September 30, 2021 and $570,000 for the nine months ended September 30, 2020, ~~and is~~which are reflected in the Company’s Asia reporting ~~segment which was determined by the minimum royalties due during first year, as per the licensing agreement.~~geography.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

4.	INVENTORIES

Inventories consist of the following at:

Schedule of inventories
	September 30,			December 31,			September 30,			December 31,
	2020			2019			2021			2020
Finished goods	$	12,056,353		$	12,990,044		$	81,377,525		$	15,334,386
Raw Materials		4,700,209			3,167,853			42,559,209			4,682,291
Less: Inventory allowance for excess and obsolete products		(1,077,370	)		(865,548	)		(1,625,289	)		(1,613,055	)
Inventories	$	15,679,192		$	15,292,349		$	122,311,445		$	18,403,622

5.	PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets total ~~$4.7~~approximately $22.8 million 22,829,510and ~~$4.2~~$14.6 million14,626,922 at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, consist mainly of prepaid advances to co-packers related to inventory production, advertising, prepaid insurance, prepaid slotting fees, value added tax payments and ~~net~~ deposits on purchases. The increase of approximately $8.2 million is mainly related to advances to co-packers and deposits to raw material suppliers pertaining to the processing and the procuring of inventory.

6.	NOTE RECEIVABLE

Note receivable consists of the following at:

September 30, December 31,
2020 2019
Note Receivable-current $ 1,810,773 $ 1,181,116
Note Receivable-non-current 9,053,866
10,630,040

Total Note Receivable $ 10,864,639 $ 11,811,156

Schedule of note receivable
	September 30,		December 31,
	2021		2020
Note receivable-current	$	2,543,225	$	1,885,887
Note receivable-non-current		6,993,869		9,429,437
Total Note receivable	$	9,537,094	$	11,315,324

OnEffective January 1, 2019, we restructured our China distribution efforts by entering into two separate economic agreements as it relates to the ~~Company entered into~~commercialization of our Celsius products (i.e., license agreement) and a ~~license and~~ repayment of investment agreement with ~~Qifeng Food Technology (Beijing) Co., Ltd (“Qifeng”).~~Qifeng. Under the license agreement, Qifeng was granted the exclusive license rights to manufacture, market and commercialize Celsius® brand products in China. Qifeng will pay a minimum royalty fee of approximately $6.6 million for the five years of the term of the agreement, transitioning to a volume-based royalty fee, thereafter. Under a separate economic agreement, Qifeng Food will repay the marketing investments made by Celsius into the China market ~~investment Celsius has made into China~~through 2018, over the same five-year period. The repayment, which was formalized via a Note Receivable from Qifeng, will need to ~~date, over a five-year period, under an unsecured, interest-bearing~~be serviced even if the licensing agreement is cancelled or terminated. The note receivable ~~(“Note”). The initial outstanding principal under the Note was approximately $12.2 million which~~ is denominated in Chinese Renminbi (CNY) and was recorded as Other Income on the Consolidated Statements of Operations. The amount recognized considered the net of the balances of the accounts receivable, accounts payable and accrued expenses, as well as the marketing investments that were performed in the China market.Chinese-Yuan.

Scheduled principal payments plus accrued interest are due annually on March 31 of each year starting in 2020. The Note is recorded at amortized cost basis and accrues interest at a rate per annum equal to the weighted average of 5% of the outstanding principal up to $5 million and 2% of the outstanding principal above $5 million. On September 12, 2020, it was agreed to fix the interest rate at ~~3.21%~~3.21% which reflected the weighted average interest rate for the 5-year period of the Note. For the nine months ended September 30, ~~2020,~~2021, interest income was approximately ~~$270,000.~~$240,000.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

6.	NOTE RECEIVABLE (Continued)

The Company assesses the Note for impairment ~~periodically~~at each reporting period, by evaluating whether it is probable that the Company will be unable to collect all the contractual interest and principal payments as scheduled in the Note agreement, based on historical experience about Qifeng’s ability to pay, the current economic environment and other factors. If the Note is determined to be impaired, the impairment is measured based on the present value of the expected future cash flows under the Note, discounted at the Note’s effective interest rate. At September 30, ~~2020,~~2021, the Note was not deemed to be impaired.

The first installment of the note and interest of RMB 10,848,193 as well as royalties in the amount of RMB 2,404,900 were due on March 31, 2020. We were requested to provide a 3-month consideration to delay payment until September 30, 2020, due to the impact of the health crisis in China. As of June 30, 2020, we received payment of the RMB 10,848,193. An additional extension of 3-months was requested regarding the payment of the RMB 2,404,900 pertaining to the royalties. As of September 30, ~~2020, we received payment in full of~~2021, Qifeng is current on all amounts due under the ~~royalties that were due.~~Note and the license agreement.

~~In order to grant the aforementioned considerations, a guarantee was obtained~~As collateral for the ~~full amount of the royalties that were payable as of September 30, 2020, as well as the amounts that become due on March 31, 2021 pertaining to the~~ Note, ~~related interest and royalties. As collateral, we maintain~~ a stock certificate in Celsius Holdings, Inc., which ~~amount~~amounts to ~~337,079 shares. The consideration and guarantee~~272,830 of shares owned by an affiliate under common control with Qifeng is being held at a brokerage account. These shares were ~~provided and therefore~~originally issued on April 20, 2015 via a private transaction which involved Risejoy Services Limited an affiliate under the ~~payments~~common control of Qifeng, our Chinese licensee. Payment in-full was received timely pertaining to the ~~royalties, principal~~amounts due on March 31, 2021. Furthermore, a letter of guarantee was executed with several restrictions regarding these shares. In particular, it was agreed that the stock would not be sold or transferred without the prior written consent from Celsius Holdings, Inc. There are other restrictions and ~~interest are expected~~agreements, which include that a Statement of Account will be provided to ~~be paid in full~~Celsius on a Quarterly basis to confirm and validate the existence of the shares. These shares serve only as collateral and is a component of management’s consideration when ~~they become due.~~evaluating impairment indicators.

7.	LEASES

The Company’s leasing activities include an operating lease of its corporate office space from a related party (see ~~Note 14)~~note 12) and ~~several~~ other operating and finance leases of vehicles and office space for the Company’s European operations.

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term, and (3) whether the Company has the right to direct the use of the asset. The Company allocates the consideration in the contract to each lease and non-lease component based on the component’s relative stand-alone price to determine the lease payments. Lease and non-lease components are accounted for separately.

Leases are classified as either finance leases or operating leases based on criteria in ASC Topic ~~842.~~842, “Leases”. The Company’s operating leases are generally comprised of real estate and vehicles, and the Company’s finance leases are generally comprised of vehicles.

At lease commencement, the Company records a lease liability equal to the present value of the remaining lease payments, discounted using the rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. A corresponding right-of-use asset (“ROU asset”) is recorded, measured based on the initial measurement of the lease liability. ROU assets also include any lease payments made and exclude lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expense for operating leases, consisting of lease payments, is recognized on a straight-line basis over the lease term. Included in lease expense are any variable lease payments incurred in the period that were not included in the initial lease liability. Lease expense for finance leases consists of the amortization of the ROU asset on a straight-line basis over the shorter of the useful life of the asset or the lease term, and interest expense is calculated using the effective interest rate method.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

7.	LEASES (Continued)

The following is a summary of lease cost recognized in the Company’s consolidated statements of operations:

Schedule of components of lease costs
	Three months ended				Three months ended				Three months ended				Three months ended
	September 30, 2020				September 30, 2019				September 30, 2021				September 30, 2020
	Operating		Finance		Operating		Finance		Operating		Finance		Operating		Finance
	Leases		Leases		Leases		Leases		Leases		Leases		Leases		Leases
Lease cost in general and administrative expenses:
Operating lease expense	$	104,380	$	-	$	38,760	$	-	$	124,885	$	-	$	104,380	$	-
Amortization of finance lease ROU assets		-		49,713		-		-		-		34,129		-		49,713
Total lease cost in general and administrative expenses		104,380		49,713		38,760		-		124,885		34,129		104,380		49,713

Lease cost in other expense:
Interest on finance lease liabilities		-		21,530		-		-		-		2,397		-		21,530
Total lease cost in other expense		-		21,530		-		-		-		2,397		-		21,530
Total lease cost	$	104,380	$	71,243	$	38,760		-	$	124,885	$	36,526	$	104,380	$	71,243

	Nine months ended				Nine months ended
	September 30, 2021				September 30, 2020
	Operating		Finance		Operating		Finance
	Leases		Leases		Leases		Leases
Lease cost in general and administrative expenses:
Operating lease expense	$	366,863	$	-	$	297,459	$	-
Amortization of finance lease ROU assets		-		106,122		-		289,277
Total lease cost in general and administrative expenses		366,863		106,122		297,459		289,277

Lease cost in other expense:
Interest on finance lease liabilities		-		5,365		-		27,585
Total lease cost in other expense		-		5,365		-		27,585
Total lease cost	$	366,863	$	111,487	$	297,459	$	316,862

Nine months ended Nine months ended
September 30,
2020 September 30,
2019
Operating Finance Operating Finance
Leases Leases Leases Leases
Lease cost in general and administrative expenses:
Operating lease expense $ 297,459 $ - $ 118,146 $ -
Amortization of finance lease ROU assets - 289,277 - -
Total lease cost in general and administrative expenses 297,459 289,277 118,146 -

Lease cost in other expense:
Interest on finance lease liabilities - 27,585 - -
Total lease cost in other expense - 27,585 - -
Total lease cost $ 297,459 $ 316,862 $ 118,146 -

~~Celsius Holdings, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2020~~

7.	~~LEASES (Continued)~~

The following is a summary of the impact of the Company’s leases on the consolidated statements of cash flows:

Schedule of cash flow information related to leases
	Nine months ended						Nine months ended
	September 30,						September 30,
	2020			2019			2021			2020
Leasing activity in cash flows from operating activities:
Operating leases		(185,388	)		(112,071	)
Payments under operating leases								(363,600	)		(185,388	)
Interest payments on finance lease liabilities		(27,585	)		-			(5,365	)		(27,585	)
Total leasing activity in cash flows from operating activities		(212,973	)		(112,071	)		(368,965	)		(212,973	)

Leasing activity in cash flows from financing activities:
Principal payments on finance lease liabilities		(259,232	)		-			(72,386	)		(259,231	)
Total leasing activity in cash flows from financing activities:		(259,232	)		(74,714	)		(72,386	)		(259,231	)

The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases at September 30, ~~2020~~2021 and December 31, ~~2019~~2020 were as follows:

Schedule of weighted average remaining lease term and weighted average discount rate
	September 30,			December 31,
	2021			2020
Weighted average remaining lease term (years) - operating leases		2.4			2.6
Weighted average remaining lease term (years) - finance leases		0.8			1.1
Weighted average discount rate - operating leases		6.37	%		6.52	%
Weighted average discount rate - finance leases		3.09	%		3.95	%

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, 2021

September 30, December 31,
2020 2019
Weighted average remaining lease term (years) - operating leases 1.0 0.8
Weighted average remaining lease term (years) - finance leases 1.3 -
Weighted average discount rate - operating leases 4.76 % 5.00 %
Weighted average discount rate - finance leases 3.87 % - %

LEASES (Continued)

The future annual minimum lease payments required under the Company’s ~~leases~~operating and finance lease liabilities as of September 30, ~~2020~~2021 are as follows:

Operating Finance
Future minimum lease payments Leases Leases Total
2020 $ 79,568 $ 80,485 $ 160,053
2021 148,984 126,958 275,942
2022 10,516 67,106 77,622
2023 - 23,162 23,162
Total future minimum lease payments 239,068 297,711 536,779
Less: Amount representing interest (5,612 ) (8,258 ) (13,870 )
Present value of lease liabilities 233,452 289,453 522,909
Less: current portion (205,427 ) (192,504 ) (397,931 )
Long-term portion $ 28,029 $ 96,949 $ 124,978

Schedule of future annual minimum cash payments required under operating lease
	Operating			Finance
Future minimum lease payments	Leases			Leases			Total
2021	$	107,567		$	24,826		$	132,393
2022		420,694			177,626			598,320
2023		381,537			46,983			428,520
2024		84,736			-			84,736
2025		5,387			-			5,387
Total future minimum lease payments		999,921			249,435			1,249,356
Less: Amount representing interest		(72,772	)		(5,278	)		(78,050	)
Present value of lease liabilities		927,149			244,157			1,171,306
Less: current portion		(376,602	)		(155,508	)		(532,110	)
Long-term portion	$	550,547		$	88,649		$	639,196

8.	PROPERTY AND EQUIPMENT

Property and equipment consist of the following at:

Schedule of property and equipment
	September 30,			December 31,			September 30,			December 31,
	2020			2019			2021			2020
Furniture, equipment and vehicles	$	946,221		$	529,550
Property and equipment							$	3,498,603		$	1,103,301
Less: accumulated depreciation		(478,841	)		(396,661	)		(1,043,689	)		(523,924	)
Total	$	467,380		$	132,889		$	2,454,914		$	579,377

Depreciation expense amounted to ~~$82,180~~$519,765 and ~~$48,289~~$82,180 for the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

9.	GOODWILL AND INTANGIBLES

Goodwill consists of ~~approximately $10,419,000~~ $14,851,635 resulting from the excess of the consideration paid and the fair value of net tangible and intangible assets acquired from the Func Food Acquisition, ~~(see Note 10). As~~including an immaterial correction further detailed in Note ~~10 goodwill increased by $395,000. There was no further activity related to goodwill during the nine months ended September 30, 2020.~~2 above.

Intangible assets consist of acquired customer relationships and brands from the Func Food Acquisition. The ~~gross carrying amount and accumulated amortization of~~following table reflects our indefinite-lived intangible assets ~~were as follows~~and our definite-lived intangible assets and related accumulated amortization as of September 30, ~~2020~~2021 and December 31, ~~2019:~~2020, respectively:

September 30, December 31,
2020 2019
Intangible assets subject to amortization
Customer relationships gross carrying amount $ 14,047,671 $ 14,006,244
Less: accumulated amortization (473,589 ) -
Total $ 13,574,082 $ 14,006,244

Intangible assets not subject to amortization
Brands total carrying amount $ 3,166,756 $ 3,166,756
Total Intangibles $
16,740,838
$ 17,173,000

Schedule of accumulated amortization of intangible assets
	September 30,			December 31,
	2021			2020
Definite-lived intangible assets
Customer relationships	$	14,525,741		$	14,050,000
Less: accumulated amortization		(978,275	)		(582,917	)
Definite-lived intangible assets, net	$	13,547,466		$	13,467,083

Indefinite-lived intangible assets
Brands	$	3,264,296		$	3,123,000
Total Intangibles	$	16,811,762		$	16,590,083

Customer relationships are amortized over an estimated useful life of 25 years and brands have an indefinite life. Amortization expense for the nine months ended September 30, 2021 and 2020 was ~~$429,307. There was no amortization expense related to intangible assets for~~approximately $445,000 and $429,000, respectively is being reflected in the ~~nine months ended September 30, 2019.~~general and administrative expenses.

Other fluctuations in the amounts of goodwill and intangible assets are due to currency translation adjustments.

The following is the future estimated annualized amortization expense related to customer relationships:

Schedule future estimated amortization expense
As of September 30, 2021:
2021		$	117,000
2022			562,000
2023			562,000
2024			562,000
2025			562,000
Thereafter			11,182,466
Total	Total		$	13,547,466

As of September 30, 2020:
2020 $ 132,057
2021 560,378
2022 560,378
2023 560,378
2024 560,378
Thereafter 11,200,513
$ 13,574,082

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

10.

~~ACQUISITION-EUROPEAN OPERATIONS~~

~~The Company acquired 100% of Func Food Group, Oyj (“~~~~Func Food~~~~”) on October 25, 2019 (the “~~~~Acquisition~~”). The Acquisition was structured as a purchase of all of Func Food’s equity shares and a restructuring of Func Food’s pre-existing debt. Total consideration was $27,060,701, which consisted of approximately $14,188,000 in cash, $8,357,000 of newly issued bonds (see Note 13) and $4,516,000 related to the settlement of a pre-existing debt. In addition to the aforementioned bond issuance, the Company financed the acquisition by issuing new common shares.

Func Food is a marketer and distributor of nutritional supplements, health food products, and beverages that support sport activities and healthy living and lifestyles in Finland, Sweden, and Norway. Func Food has been the Nordic distributor of Celsius products since 2015 and, as a result of the acquisition, the Company expects to further increase its Nordic market share by leveraging collaborations, revamping its marketing strategy and focusing on core products. It also expects to reduce costs through economies of scale.

The Company recorded the acquisition in accordance with ASC-805, pertaining to business combinations. The following table summarizes the consideration paid for Func Food and the amounts of the assets acquired at fair market value and liabilities assumed recognized at the Acquisition date.

Acquisition consideration
Cash $ 14,188,056
Bonds payable 8,356,958
Settlement of pre-existing debt 4,515,687
Total consideration transferred 27,060,701

Assets acquired and liabilities assumed
Accounts receivable $ 1,300,468
Inventories 2,161,067
Prepaid expenses and other current assets 331,774
Property and equipment 616
Right of use asset 806,572
Other long-term assets 101,413
Intangible assets-Customer relationships 14,050,000
Intangible assets-Brands 3,123,000
Accounts payable and accrued expenses (3,489,080 )
Lease liability Obligations (817,041 )
Other current liabilities (927,088 )
Total identifiable net assets $ 16,641,701
Goodwill $ 10,419,000

During the three months ended September 30, 2020, goodwill increased by approximately $395,000 due to an additional liability that the Company assumed from the Func Food Acquisition. The additional liability consisted of charges related to an uncertain fiscal position reflected in a 2016 filing. This increase in liabilities and goodwill was recorded as a measurement period adjustment to the net assets acquired from the Func Food Acquisition. The additional liability is reflected in other current liabilities.

For the three and nine months ended September 30, 2020, the amount of revenue of Func Food that is included in the Company’s consolidated income statement was approximately $9,530,000 and $26,552,000, respectively, and the amount of losses from Func Food for the same periods was approximately $25,600 and a loss of $742,000, respectively.

On a pro forma basis, if the Acquisition had occurred on January 1, 2019, the Company’s total consolidated revenue for the three and nine months ended September 30, 2019 would have been $27.4 million and $71.9 million, respectively. For the same periods, pro forma consolidated earnings would have been $(1.5) million and $2.9 million, respectively. Pro forma earnings include adjustments to reflect the additional amortization that would have been charged for the intangible assets recognized in the Acquisition.

Pro forma earnings for the three and nine months ended September 30, 2019 also include historical, non-recurring expenses of Func Food amounting to approximately $2.2 million and $6.7 million, respectively, which are not expected to have an ongoing effect after the Acquisition. These non-recurring expenses related to inventory impairment, restructuring, and interest on debt that was restructured as part of the Acquisition. Consequently, had these non-recurring expenses not been incurred, pro forma earnings for the three months ended September 30, 2019 would have amounted to $0.38 million and a pro forma loss for the nine months ended September 30, 2019 of $8.52 million.

~~Celsius Holdings, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2020~~

~~11.~~

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following at:

Schedule of accounts payable and accrued expenses
	September 30,		December 31,		September 30,		December 31,
	2020		2019		2021		2020
Accounts payable	$	5,191,208	$	10,159,900	$	41,097,808	$	11,854,421
Accrued expenses		12,926,403		7,132,747		29,056,893		7,997,269
Accrued promotional allowances						21,776,892		5,561,063
Total	$	18,117,611	$	17,292,647	$	91,931,593	$	25,412,753

~~12.~~11.

OTHER CURRENT LIABILITIES

Other current liabilities consist of the following at:

Schedule of other current liabilities
	September 30,		December 31,		September 30,		December 31,
	2020		2019		2021		2020
Other Liabilities-State Beverage Container Deposit	$	716,678	$	107,399	$	957,627	$	425,232
Total	$	716,678	$	107,399	$	957,627	$	425,232

~~13.~~12.

~~BONDS PAYABLE~~

~~Bonds payable consists of the following as of:~~

September 30, December 31,
2020 2019
Bonds were originally issued by Func Food Group, Oyj and were reinstated as part of the purchase consideration to acquire the European Operations (see Note 10). The Bonds are Euro-denominated, unregistered, and were issued on October 25, 2019 at an initial nominal amount of approximately $9.1 million, less discount and issuance costs of approximately $0.7 million. The Bonds accrue interest at a stated interest rate of 6.00% per annum, due semi-annually in arrears, with the first interest payment due on April 30, 2020. The maturity date of the Bonds is October 30, 2020. The Bonds are carried at the nominal amount, less any unamortized discount and issuance costs. The original issuance discount amounted to approximately $381,000. The discount is amortized using the effective interest rate method. As of September 30, 2020, the unamortized balance of the discount is approximately $42,000. Amortization of the discount was approximately $339,000 for the nine months ended September 30, 2020. The bond issuance costs amounted to $188,000. The issuance costs are being amortized over a straight-line basis, given the short-term nature and that it does not result in a material difference from applying the effective interest rate method. Amortization of the total bond discounts for the nine months ended September 30, 2020 was $506,100. Fluctuations in currency resulted in a translation loss of $399,628, for the nine months ended September 30, 2020.

Upon maturity of the Bonds, Func Food Group, Oyj may, at its own election, convert up to 50% of the outstanding nominal amount of the Bonds into shares of common stock, at a conversion price relative to the 30-day weighted-average trading price of the Company’s common shares prior to the Acquisition.

At Func Food Group, Oyj’s election, the Bonds are callable at 103% at any time. Additionally, mandatory prepayments would be required in the event of either i) a capital raise consummated by the Company or ii) the sale of a certain product line of Func Food. To the fullest extent possible, the net proceeds derived from either event must first be applied towards prepayment of the bonds at 103%, plus any accrued but unpaid interest on the repaid amount.

The Bonds are unsubordinated and are guaranteed by Func Food and its direct and indirect subsidiaries. The Bonds are secured by substantially all the assets of Func Food. The Bonds contain certain financial covenants that are specific to Func Food, mainly related to minimum cash requirements at the end of each quarter. As of September 30, 2020, Func Food is in compliance with these covenants. $ 9,540,007 $ 8,634,279

Total Bonds Payable $ 9,540,007 $ 8,634,279

~~Celsius Holdings, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~September 30, 2020~~

~~14.~~

RELATED PARTY TRANSACTIONS

The Company’s office is rented from a company affiliated with CD Financial, LLC which is controlled by one of our major shareholders. ~~Currently, the~~The current lease expires on ~~October 2020~~January 2024 with monthly base rent of ~~$12,826. The rental fee is commensurate with other properties available in the market.~~$17,295.

~~15.~~13.

STOCKHOLDERS’ EQUITY

Issuance of common stock pursuant to exercise of stock options

During the nine months ended September 30, ~~2020,~~2021, the Company issued an aggregate of ~~1,272,336~~1,349,142 shares of its common stock pursuant to the exercise of stock options granted under the Company’s 2015 Stock Incentive Plan. The Company received aggregate proceeds of ~~$2,296,343~~$3,242,073 for ~~875,576~~826,994 options exercised for cash, with the balance of the options having been exercised on a “cashless” basis.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, 2021

13.

STOCKHOLDERS’ EQUITY (Continued)

During the nine months ended September 30, ~~2019,~~2020, the Company issued an aggregate of ~~690,179~~1,272,336 shares of its common stock pursuant to the exercise of stock options granted under the Company’s 2015 Stock Incentive Plan. The Company received aggregate proceeds of ~~$224,083~~$2,296,343 for ~~245,584~~ 875,576 options exercised for cash, with the balance of the options having been exercised on a “cashless” ~~basis.~~basis, which consist of utilizing shares to cover the cost of the Stock Option exercise.

June 2021 Public Offering

On June 9, 2021, the Company and certain selling stockholders (the “Selling Stockholders”) entered into an underwriting agreement (the “Underwriting Agreement”) with UBS Securities LLC and Jefferies LLC, as representatives (the “Representatives”) of the several underwriters (the “Underwriters”), relating to the sale of 6,518,267 shares of common stock, par value $0.001 per share, of the Company at a public offering price of $62.50 per share less underwriting discounts and commissions in a registered public offering (the “Offering”). The Company and certain Selling Stockholders also granted the Underwriters an option, exercisable for 30 days, to purchase up to an additional 977,740 shares of its Common Stock. The Underwriters partially exercised their option to purchase 873,141 shares of the Company’s Common Stock on June 11, 2021; 133,953 of which were sold by the Company and 739,188 of which were sold by certain of the Selling Stockholders. The Offering closed on June 14, 2021. The Company issued and sold 1,133,953 shares of Common Stock, and the Selling Stockholders sold 6,257,455 shares, in the aggregate, of Common Stock in the Offering. The Offering generated net proceeds for the Company of $67,769,386 and net proceeds for the Selling Stockholders of $375,447,300. The Company intends to use the proceeds for general corporate purposes. The Company did not receive any proceeds from the sale of shares by the Selling Stockholders.

The Underwriting Agreement contains customary representations and warranties of the parties, and indemnification and contribution provisions under which the Company and the Selling Stockholders have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to the Underwriting Agreement, the Company has agreed, subject to certain exceptions, not to sell or transfer any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock for 90 days after June 9, 2021 without first obtaining the written consent of the Representatives.

Issuance of common stock pursuant to private placement

On August 25, 2020 the Company issued 1,437,909 shares of its common stock and obtained approximately ~~$22,000,000~~$22,000,000 of cash as part of a private placement.

14.

INCOME TAXES

~~Issuance~~The effective income tax rate was 10.2% for the nine months ended September 30, 2021. The effective income tax rate differed from the statutory federal income tax rate of ~~common stock pursuant~~21% primarily due to ~~public placement~~

~~On September 16, 2019~~the impact of state income tax reserves for states in which the Company ~~issued 7,986,110 shares of common stock in a public offering and obtained gross proceeds of $28,749,996 and paid $1,585,000 in commissions & fees and incurred in $209,559 of expenses related to~~has nexus as well as the ~~capital raise thereby resulting in net-proceeds in the amount of $26,955,437.~~net operating loss carryforwards.

~~16.~~15.

STOCK-BASED COMPENSATION

The Company adopted an Incentive Stock Plan on January 18, 2007. This plan is intended to provide incentives which will attract and retain highly competent persons at all levels as employees of the Company, as well as independent contractors providing consulting or advisory services to the Company, by providing them opportunities to acquire the Company’s common stock or to receive monetary payments based on the value of such shares pursuant to Awards issued. While the plan terminates 10 years after the adoption date, issued options have their own schedule of termination. During 2013, the majority of the shareholders approved to increase the total available shares in the plan from 2.5 million to 3.5 million shares of common stock. During May 2014, the majority of the shareholders approved to increase the total available shares in the plan from 3.5 million to 4.25 million shares of common stock, during February 2015, the majority of the shareholders approved to increase the total available shares in the plan from 4.25 million to 4.6 million shares of common stock and during April 2015, the majority of the shareholders approved to increase the total available shares in the plan from 4.6 million to 5.1 million shares of common stock. Options to acquire shares of common stock may be granted at no less than fair market value on the date of grant. Upon exercise, shares of new common stock are issued by the Company.

The Company adopted the 2015 Stock Incentive Plan on April 30, 2015. This plan is intended to provide incentives which will attract and retain highly competent persons at all levels as employees of the Company, as well as independent contractors providing consulting or advisory services to the Company, by providing them opportunities to acquire the Company’s common stock or to receive monetary payments based on the value of such shares pursuant to Awards issued. The 2015 Plan permits the grant of options and shares for up to 5,000,000 shares. In addition, there is a provision for an annual increase of 15% of the shares pertaining to the ~~shares included under~~2015 plan that are outstanding as of the ~~plan, with the shares to be added on the first~~last day of ~~each calendar year, beginning on January 1, 2017.~~the prior year. As of September 30, ~~2020, 880,000~~2021, approximately 4.1 million shares are available.

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

~~16.~~15.

STOCK-BASED COMPENSATION (Continued)

Under the 2015 Stock ~~Option~~Incentive Plan, the Company has issued options ~~outstanding~~ to purchase approximately ~~5.6~~4.0 million shares at an average price of ~~$4.08 per share~~$7.13 with a fair value of ~~$94.2~~ approximately $3.29 million. For the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company issued options to purchase ~~495,274~~304,750 and ~~1.68 million shares.~~ 495,274 shares, respectively. Upon exercise, shares of new common stock are issued by the Company.

For the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company recognized ~~an expense of~~ approximately ~~$4,719,000~~$13.4 million and ~~$3,354,295~~$4.7 million, respectively, of non-cash compensation expense (included in ~~General~~general and ~~Administrative~~administrative expense in the accompanying ~~Consolidated Statement~~consolidated statements of ~~Operations)~~operations and comprehensive income) determined by application of a ~~Black Scholes~~Black-Scholes option pricing model with the following inputs: exercise price, dividend yields, risk-free interest rate, and expected annual volatility. As of September 30, ~~2020,~~2021, the Company had approximately ~~$6,786,000~~$9.1 million of unrecognized pre-tax non-cash compensation expense related to options to purchase shares, which the Company expects to recognize, based on a weighted-average period of 32.1 years. The Company used straight-line amortization of compensation expense over the two to ~~nine-year~~three-year requisite service or vesting period of the grant. The Company recognizes forfeitures as they occur. There are options to purchase approximately ~~2.78~~2.27 million shares that ~~are~~have vested as of September 30, ~~2020.~~2021.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards and warrant issuances. The calculation of the fair value of the awards using the ~~Black - Scholes~~Black-Scholes option-pricing model is affected by the Company’s stock price on the date of grant as well as assumptions regarding the following:

Schedule of black - scholes option-pricing model valuation assumption
	Nine months ended September 30,						Nine months ended September 30,
	2020			2019			2021			2020
Expected volatility		69.18%-81.11	%		58.62%-121.32	%		69.18%-81.11	%		69.18%-81.11	%
Expected term		4.84-5.00 Years			4.02-5.00 Years			4.49-5.00 Years			4.84-5.00 Years
Risk-free interest rate		0.23% - 1.39	%		1.79% - 2.72	%		0.32-1.39	%		0.23% - 1.39	%
Forfeiture Rate		0.00	%		0.00	%		0.00	%		0.00	%

The expected volatility was determined with reference to the historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate in effect at the time of grant.

A summary of the status of the Company’s outstanding stock options as of September 30, ~~2020~~2021 and changes during the period ending on that date is as follows:

Schedule of outstanding stock options
				Weighted Average		Aggregate Intrinsic		Average					Weighted Average						Weighted
	Shares			Exercise		Value		Remaining		Shares			Exercise		Grant Date Fair		Aggregate Intrinsic		Average Remaining
	(000’s)			Price $		($ 000’s)		Term (Yrs)		(000’s)			Price		Value		Value (000’s)		Term (Yrs)
Options
Balance at December 31, 2019		6,528		$	3.55	$	8,978		6.58
At December 31, 2020											5,198		$	4.23			$	240,866		6.89
Granted		495		$	7.07						305		$	42.37	$	30.32
Exercised		(1,293	)	$	2.40						(1,292	)	$	3.84	$	73.91	$	72,192
Forfeiture and cancelled		(141	)	$	3.94						(242	)	$	6.71
Balance at September 30, 2020		5,589		$	4.08	$	94,174		6.41

Exercisable at September 30, 2020		2,785		$	3.79
At September 30, 2021											3,969		$	7.13			$	329,231		6.32
Exercisable at September 30, 2021											2,271		$	4.09			$	195,273		5.02

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

~~16.~~15.

STOCK-BASED COMPENSATION (Continued)

The following table summarizes information about employee stock options outstanding at September 30, ~~2020:~~2021:

Schedule of employee stock options outstanding
		Outstanding Options						Vested Options						Outstanding Options						Vested Options
		Number						Number						Number						Number
		Outstanding						Exercisable						Outstanding		Weighted		Weighted		Exercisable		Weighted		Weighted
		At		Weighted		Weighted		at		Weighted		Weighted
		September 30,		Average		Average		September 30,		Average		Average
		2020		Remaining		Exercise		2019		Exercise		Remaining
Range of Exercise Price		(000’s)		Term		Price $		(000’s)		Price $		Term
Range of														at		Averaged		Averaged		at		Averaged		Averaged
Exercise														September 30,		Remaining		Exercise		September 30,		Exercise		Remaining
Price														2021 (000’s)		Life		Price		2021 (000’s)		Price		Life
$0.20 - $0.53			130		2.34	$	0.27		130	$	0.27		2.34		20		2.33	$	0.34		20	$	0.34		2.33
$0.65 - $1.80			49		4.15	$	1.05		49	$	1.05		4.15		100		3.41	$	1.05		100	$	1.05		3.41
$1.83 - $2.84			258		0.75	$	1.97		258	$	1.97		0.75		112		4.27	$	1.97		112	$	1.97		4.27
$3.20 - $6.20	��		5,089		6.79	$	4.19		2,347		4.24		5.60		3,354		6.17	$	4.10		2.019		4.29		5.13
$7.20 - $22.00			63		9.58	$	14.53		0	$	0		0
$7.20-$60.00															383		9.18		37.04		20		14.53		8.84
Outstanding options			5,589		6.41	$	4.08		2,785	$	3.79		4.97		3,969		6.32	$	7.13		2.271	$	4.09		5.02

As of September 30, ~~2020,~~2021, the Company had approximately ~~$6,786,000~~$9.1 million of unrecognized pre-tax non-cash compensation expense related to options to purchase shares, which the Company expects to recognize, based on a weighted-average period of 32.1 years.

Restricted Stock Awards

Restricted stock awards are awards of common stock that are subject to restrictions on transfer and to a risk of forfeiture if the holder leaves the Company before the restrictions lapse. The ~~holder~~holders of a restricted stock award isare generally entitled ~~at all times on and~~ after the ~~date of issuance of~~release to transact and obtain the ~~restricted shares to exercise the~~same rights as rights of a shareholder of the Company, including the right to vote the shares. The holders of unvested restricted stock awards do not have the same rights as shareholders including but not limited to any dividends which may be declared by the Company, and do not have the right to vote. The value of restricted stock awards that vest over time ~~was~~is established by the market price on the date of its grant. A summary of the Company’s restricted stock activity for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 is presented in the following table:

Schedule of restricted stock activity
	For the Nine Months ended									For the nine months ended
	September 30, 2020					September 30, 2019				September 30, 2021					September 30, 2020
				Weighted				Weighted					Weighted					Weighted
				Average				Average					Average					Average
				Grant Date				Grant Date					Grant Date					Grant Date
	Shares			Fair Value		Shares		Fair Value		Shares			Fair Value		Shares			Fair Value
Unvested at beginning of period		90,000		$	3.23		38,889	$	-		66,229		$	28.11		90,000		$	3.23
Transfers to restricted stock units											(45,871	)		34.02		-			-
Granted		92,444			14.72		-		-							92,444			14.72
Vested		(18,582	)		14.72		8,333		-		(19,429	)		14.79		(18,582	)		14.72
Forfeiture and cancelled											(671	)		14.72		-			-
Unvested at end of period		163,862		$	8.41		30,556	$	3.64		258		$	14.72		163,862		$	8.41

The total fair value of shares vested during the nine months ended September 30, 2021 and 2020 was $1.3 million and $0.5 million, respectively. Unrecognized compensation expense related to outstanding restricted stock awards to employees and directors as of September 30, ~~2020~~2021 was ~~$614,870,~~$1,600 and is expected to be expensed over the next 18ten10 months.

Restricted Stock Units

Restricted stock units are awards that give the holder the right to receive one share of common stock for each restricted stock unit upon meeting service-based vesting conditions (typically annual vesting in three equal annual installments, with a requirement that the holder remains in the continuous employment of the Company). The holders of unvested units do not have the same rights as shareholders including but not limited to any dividends which may be declared by the Company, and do not have the right to vote. The value of restricted stock units that vest over time is established by the market price on the date of its grant. A summary of the Company’s restricted stock unit activity for the nine months ended September 30, 2021 and 2020 is presented in the following table:

	For the nine months ended
	September 30, 2021					September 30, 2020
				Weighted				Weighted
				Average				Average
				Grant Date				Grant Date
	Shares			Fair Value		Shares		Fair Value
Unvested at beginning of period		-		$	-		-	$	-
Transfers from restricted stock awards		45,871			34.02		-
Granted		546,525			52.27		-		-
Vested		(1,334	)		69.63		-		-
Forfeiture and cancelled		(14,900	)		50.67
Unvested at end of period		576,162		$	50.82		-	$	-

Celsius Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

September 30, ~~2020~~2021

~~17.~~15.

STOCK-BASED COMPENSATION (Continued)

The total fair value of shares vested during the nine months ended September 30, 2021 was $90,000. Unrecognized compensation expense related to outstanding restricted stock units to employees and directors as of September 30, 2021 was $20.8 million and is expected to be expensed over the next 2.6 years.

16.

COMMITMENTS AND CONTINGENCIES

On April 8, 2019, Daniel Prescod filed suit against Celsius Holdings, Inc., Case No. 19STCV09321, pending in Superior Court for the State of California, County of Los Angeles (the “Prescod Litigation”). Daniel Prescod asserts that the Company’s use of citric acid in its products while simultaneously claiming “no preservatives” violates California Consumer Legal Remedies Act, California Business and Professions Code Section 17200, et seq., and California Business and Professions Code Section 17500, et seq., because citric acid acts as a preservative. The Company does not use citric acid as a preservative in its products, but rather as a flavoring, and therefore it believes that its “no preservatives” claim is fair and not deceptive. This matter is still in its early stages and discovery has only just begun. ~~The Company intends to contest the claims vigorously. Since this matter is still in its initial stages, the Company is unable to predict the outcome at this time.~~

On January 24, 2020, Evlution Nutrition, LLC filed suit against Celsius Holdings, Inc., Case No. 0:20-cv-60159-BB, pending in federal court for the Southern District of Florida, for trademark infringement (the “Evlution Litigation”). Evlution asserts that Celsius’ BCAA dietary supplement product’s use of BCAA + ENERGY infringes upon Evlution’s registered trademarks. The Company believes that Evlution’s trademarks are invalid, merely descriptive, and unenforceable and Celsius has filed a cancellation proceeding regarding those trademarks with the Trademark Trial and Appeal Board, which has been stayed, but Celsius reasserted these claims in counterclaims filed in the Evlution Litigation. The Company intends to defend against Evlution’s claims vigorously. This matter is still in its early stages and discovery has only just begun. Since this matter is still in its initial stages, the Company is unable to predict the outcome at this time.

In ~~June~~November of 2020, McGovern Capital, Inc. ~~(“McGovern”~~and Kevin McGovern (collectively “McGovern”) ~~indicated that it intended to pursue~~filed a claim in arbitration related to its Representative Agreement with Celsius Holdings, Inc. as amended by the first amendment dated August 6, 2016. Pursuant to the Representative Agreement, McGovern is entitled to receive a fee of three percent (3%) of “Net Revenues” received by the ~~Company’s~~Company from sales of the Company’s Products in the People’s Republic of China for a period of four years from Initial Commercial Sale (which was September 1, 2017). “Net Revenues” are defined in the Representative Agreement as “the Company’s revenues net of actual discounts applied, credits and returns.” Effective January 1, 2019, the Company restructured its China operations from a distribution arrangement with Qifeng Food Technology (Beijing) Co. Ltd. (“Qifeng”), to a license and royalty arrangement and a loan, pursuant to which Qifeng will market and distribute the Company’s products in China, and Celsius will receive an annual royalty payment. The Company intends to pay McGovern its percentage of the annual royalty payment, but McGovern has objected claiming that McGovern is entitled to be paid commissions on the entire royalty payment and the amount of the loan to Qifeng. The Company has obtained two opinions pursuant to GAAP and related accounting rules indicating that its agreements with Qifeng are not “Net Revenue” as it relates to the repayment of the investments which are accounted for as a note receivable to the Company, and therefore that it has not breached any obligations to McGovern under its agreements. The Company intends to defend against McGovern’s claims ~~vigorously.~~vigorously and has filed a counterclaim related to McGovern’s failure to comply with the covenant of good faith and fair dealing in the Representative Agreement. This matter is still in its early stages and ~~there has been no discovery. Since this matter is still in its initial stages,~~ the Company is unable to predict the outcome at this time.

In March of 2019, Daniel Prescod filed a putative class action lawsuit against the Company in the Superior Court for the State of California, County of Los Angeles, Case Number 19STCV09321, filed on March 19, 2019, (the “Prescod Litigation”). Daniel Prescod asserts that the Company’s use of citric acid in its products while simultaneously claiming “no preservatives” violates California Consumer Legal Remedies Act, California Business and Professions Code Section 17200, et seq., and California Business and Professions Code Section 17500, et seq., because citric acid acts as a preservative. The Company does not use citric acid as a preservative in its products, but rather as a flavoring, and therefore it believes that its “no preservatives” claim is fair and not deceptive. A motion to certify the case as a class action was filed and on August 2, 2021, that motion was granted. However, the Company also has a motion for summary adjudication pending and that motion would be dispositive of plaintiff’s claims if granted. No fact discovery has been conducted on the merits and this matter is still in its initial stages. The Company intends to contest the claims vigorously on the merits. Since merits discovery is still in its initial stages, we are unable to predict the outcome at this time.

On January 8, 2021, we received a letter from the SEC Division of Enforcement seeking the production of documents in connection with a non-public fact-finding inquiry by the SEC to determine whether violations of the federal securities laws have occurred. On August 20, 2021, the SEC issued a subpoena for production of documents in connection with the matter. Neither the January 8, 2021 SEC letter nor the August 20, 2021 subpoena means that the SEC has concluded that the Company or anyone else has violated the federal securities laws. We have cooperated and will continue to cooperate with the SEC staff in its investigation. At this time, however, we cannot predict the length, scope, or results of the investigation or the impact, if any, of the investigation on our results of operations.

In addition to the foregoing, from time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business.

The Company has entered into distribution agreements with liquidated damages in case the Company cancels the distribution agreements without Cause. Cause has been defined in various ways. It is management’s belief that no such agreement has created any liability as of September 30, ~~2020.~~2021.

Additionally, our business and results of operations may be adversely affected by the pandemic and public health crises related to the COVID-19 outbreak which is affecting the macro-economic environment. ~~Please refer to Item 1.A. Risk Factors for further details.~~

~~18.~~17.

SUBSEQUENT EVENTS

None

On October 30, 2020, the Bonds Payable as reflected in Note 13, were paid-in-full and a release letter was obtained from the Bond Holders’ agent thereby releasing Func Food Group from any related liability or debt, as well as the release of the security interest pertaining to Func Food Group assets.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

When used in this report, unless otherwise indicated, the terms “the Company,” “Celsius,” “we,” “us” and “our” refer to Celsius Holdings, Inc. and its subsidiaries.

Note Regarding Forward Looking Statements

This report contains forward-looking statements that reflect our current views about future events. We use the words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “will,” “intend,” “may,” “plan,” “project,” “should,” “could,” “seek,” “designed,” “potential,” “forecast,” “target,” “objective,” “goal,” or the negatives of such terms or other similar expressions. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Business Overview

~~We are engaged~~Celsius Holdings is a fast-growing company in the functional energy drink and liquid supplement categories in the United States and internationally. We engage in the development, processing, marketing, sale, and distribution of “functional~~” calorie-burning~~ drinks and liquid supplements to a broad range of consumers. We believe that we provide differentiated products that offer clinically proven and innovative formulas meant to change the lives of our consumers for the better. We also believe that our brand is attractive to a broad range of customers including fitness ~~beverages under~~enthusiasts.

Our core offerings include pre- and post-workout functional energy drinks, as well as protein bars. Our flagship functional energy drink and liquid supplement brands are backed by science, being clinically proven to deliver health benefits by six self-funded studies published in various journals including the ~~Celsius® brand name. According to multiple clinical~~Journal of the International Society of Sports Nutrition, the Journal of the American College of Nutrition, and the Journal of Strength and Conditioning Research. These studies ~~we funded,~~have concluded that a single serving of ~~Celsius®~~Celsius burns ~~100 to 140~~100-140 calories by(by increasing a consumer’s resting metabolism an average of 12% ~~and~~, while providing sustained energy for up to three hours.

Our flagship asset, Celsius, is a ~~nine-hour period.~~fitness supplement drink which accelerates metabolism and burns calories and body fat while providing energy. This product line comes in two versions, a ready-to-drink supplement format and an on-the-go powder form. We also offer a Celsius Heat and a Branch Chain Amino Acids line, catered to both pre- and post-workout consumer needs. Our ~~exercise focused studies show Celsius delivers additional benefits when consumed prior to exercise. The studies show benefits such as increase~~products are currently offered in ~~fat burn, increase~~major retail channels in ~~lean muscle~~the US including conventional grocery, natural, convenience, fitness, mass market, vitamin specialty and ~~increased endurance.~~e-commerce.

~~We seek to combine nutritional science with mainstream beverages by using~~An integral part of our value proposition is our focus on the functional energy drink and liquid supplement category, ensuring our products have clear and proven benefits. This is why we invest in research and development from the start and utilize our proprietary ~~thermogenic (calorie-burning) MetaPlus®~~MetaPlus formulation ~~while fostering the goal~~in our portfolio, a blend of ~~healthier everyday refreshment by being as natural as possible without the artificial preservatives often found in many energy drinks~~ginger root, guarana seed extract, chromium, vitamins, and ~~sodas. Celsius® has no artificial preservatives, aspartame or high fructose corn syrup and is very low in sodium. Celsius® uses good-for-you ingredients and supplements such as~~ green tea ~~(EGCG), ginger, calcium, chromium, B vitamins~~extract.

Corporate Information

We were incorporated in the State of Nevada in April 2005. Our principal executive offices are located at 2424 North Federal Highway, Suite 208, Boca Raton, Florida 33431, and ~~vitamin C. The main~~ our telephone number is (561) 276-2239. Our website is www.celsiusholdingsinc.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into this Quarterly Report on Form 10-Q.

Celsius ~~line of products~~^®and MetaPlus^® are ~~sweetened with sucralose, a sugar-derived sweetener that is found in Splenda®, which makes our beverages low-calorie and suitable for consumers whose sugar intake is restricted.~~

We have undertaken significant marketing efforts aimed at building brand awareness, including a wide variety of marketing vehicles such as television, radio, digital, social media, sponsorships, and magazine advertising. We also undertake various promotions at the retail level such as coupons and other discounts in addition to in-store sampling.

We do not directly manufacture our beverages, but instead outsource the manufacturing process to established third-party co-packers. We do, however, provide our co-packers with flavors, ingredient blends, cans and other raw materials for our beverages purchased by us from various suppliers.

~~Potential Effects~~registered trademarks of the ~~COVID-19 Pandemic~~Company in the United States. This Quarterly Report on ~~the Company’s Business~~

~~See “~~~~Part II – Item 1.A. Risk Factors~~~~” for disclosure with respect to the potential effects~~Form 10-Q also contains other registered and unregistered trademarks of the ~~COVID-19 pandemic on the Company’s business and additional risk factors with respect thereto.~~Company.

Results of Operations

Three months ended September 30, ~~2020~~2021 compared to three months ended September 30, ~~2019~~2020

Revenue

For the three months ended September 30, ~~2020,~~2021, revenue was approximately ~~$36.8~~$94.9 million, an increase of ~~$16.4~~$58.1 million or ~~80.4%~~158.0% from ~~$20.4~~$36.8 million for the same quarter of 2019. The revenue increase of 80.4% was attributable to continued strong growth of 60.4% in North American revenues, reflecting double digit growth from existing accounts, new distribution and expanded distribution to major retailers. European revenue for the three months ended September 30, ~~2020~~2020. Approximately 99% of this growth was ~~$9.5~~as a result of increased revenues from North America, where third quarter 2021 revenues were $84.5 million, an increase of ~~182.3%~~$57.6 million or 214% from ~~2019 quarter revenue of $3.4 million.~~the 2020 quarter. The ~~2020 results now reflect the full financial impact of consolidation~~balance of the ~~results~~revenues for the 2021 quarter were mainly attributable to European revenues of ~~operations of Func Food Group, Oyj (“~~~~Func Food~~~~”), our European distribution partner whom we acquired in October 2019.~~$9.5 million, which were basically unchanged from the prior year quarter. Asian revenues (which ~~primarily consist of~~include royalty revenues from our China licensee) contributed an additional approximately $706,000, an increase of 157% from approximately $275,000 for the prior year quarter, which include increases in royalties payable under our licensing agreement. Other international markets generated approximately $177,000 in revenues during the three months ended September 30, ~~2020 amounted to $274,532~~2021, an increase of ~~40.8%~~$32,000 or 22% from ~~$194,982 in the 2019 quarter. Other international markets generated $145,415 of revenue during the third quarter of 2020, an increase of $57,015 when compared to $88,400~~$145,000 for the ~~same quarter in the~~ prior ~~year.~~ year quarter.

The total increase in revenue ~~from the 2019 quarter to the 2020 quarter~~ was ~~primarily~~largely attributable to increases in sales volume, as opposed to increases in product pricing. The primary factors behind the increase in North American sales volume were related to continued strong triple-digit growth in traditional distribution channels, combined with an increase in and optimization of our products’ presence in world class retailers (e.g., additional SKUs). Additionally, the continued expansion of our Direct Store Delivery (“DSD”) network resulted in significant growth in distributor revenues when compared to the prior year quarter.

We also obtained triple digit growth in our fitness and vending channels in the 2021 third quarter, as compared to the 2020 third quarter, which provided considerable incremental revenue when compared to the prior year quarter, during which time many fitness facilities were closed due to the COVID-19 pandemic.

The following table sets forth the amount of revenues by ~~segment~~category and changes therein for the three months ended September 30, ~~2020~~2021 and ~~2019:~~September 30, 2020:

	Three months ended September 30,							Three months ended September 30,
Revenue Source	2020		2019		Change			2021		2020		Change
Total Revenue	$	36,839,150	$	20,423,848		80.4	%	$	94,909,100	$	36,839,150		157.6	%

North American Revenue	$	26,891,527	$	16,765,598		60.4	%	$	84,490,062	$	26,891,527		214.2	%

European Revenue	$	9,527,676	$	3,374,868		182.3	%	$	9,535,886	$	9,527,676		0.1	%

Asian Revenue	$	274,532	$	194,982		40.8	%	$	705,697	$	274,532		157.1	%

Other	$	145,415	$	88,400		64.5	%	$	177,455	$	145,415		22.0	%

Gross profit

For the three months ended September 30, ~~2020,~~2021, gross profit increased by approximately ~~$8.9~~$20.2 million or ~~103.4%~~115% to ~~$17.5~~$37.7 million, from ~~$8.6~~$17.5 million ~~for the same quarter in 2019. Gross profit margins~~ for the three months ended September 30, ~~2020, were 47.6%, which compared favorably~~2020. Gross profit margins reflected an erosion to ~~42.2%~~40.0% for the ~~same quarter in 2019.~~three months ended September 30, 2021 from 47.6% for the 2020 quarter. The increase in gross profit dollars is related to increases in volume, while the decrease in gross profit margins is mainly related to higher raw material costs (particularly aluminum cans), ocean freight costs, transportation costs and repackaging costs.

We estimate that the increase in ~~sales volume~~gross profit dollars of approximately $20.2 million from the ~~2019~~2020 quarter to the ~~2020~~2021 quarter, included $27.6 million related to volume increases, as ~~opposed to increases in product pricing.~~well as an unfavorable cost impact of approximately $7.4 million and favorable currency impact of $31,000.

Sales and marketing expenses

Sales and marketing expenses for the three months ended September 30, ~~2020~~2021 were approximately ~~$8.3~~$22.6 million, an increase of approximately ~~$3.3~~$14.4 million or ~~67.9%~~173.6% from approximately ~~$4.9~~$8.3 million infor the ~~2019 quarter.~~three months ended September 30, 2020. This increase ~~reflects the impact of the consolidation of the operating results of Func Food following its October 2019 acquisition by the Company,~~was primarily attributable to higher marketing investment activities, which resulted in an increase ~~in our marketing investments~~ of ~~88.3% or $1.7~~$7.7 million when compared to the prior year quarter. Additionally, employee costs increased by approximately $2.6 million from the ~~2019~~year ago quarter as we continue to invest in this area in order to have the ~~2020 quarter.~~proper infrastructure to support our growth and incurred additional travel and business expenses since we are now able to resume in-person marketing events and selling activities. Similarly, ~~all~~we experienced increases in other sales and marketing expenses ~~give effect to increases~~in the amount of approximately $400,000, mainly related to trade-marketing activities to support our ongoing DSD network expansion. Lastly, storage and distribution expenses as well as broker costs accounted for the ~~consolidation~~remainder of ~~Func Food’s operations. Specifically, employee costs, which also includes investments~~the increase in ~~human resources to properly service our markets, increased to $2.3~~this area in the amount of $3.7 million ~~or 70.9%~~ from the ~~2019~~2020 quarter to the 2020 quarter. Moreover, due to the increase in business volume from the 2019 quarter to the 2020 quarter, our support to distributors and investments in trade activities, our storage and distribution costs increased by $705,000 from the 2019 quarter to the 2020 quarter.2021.

General and administrative expenses

General and administrative expenses for the three months ended September 30, ~~2020~~2021 were approximately ~~$4.6~~$11.1 million, an increase of ~~approximately $2.4~~$6.4 million or ~~107.7%~~134%, from ~~$2.2~~$4.8 million for the three months ended September 30, ~~2019.~~2020. This increase ~~similarly~~was primarily attributable to stock option expense which amounted to $5.8 million for the three months ended September 30, 2021, an increase of $3.7 million which accounts for 50.0% of the total increase in this area when compared to the prior year quarter. Management deems it very important to motivate employees by providing them ownership in the business in order to promote over performance which translates into the continued success of our business based on key performance attributes. Additionally, employee costs for the three months ended September 30, 2021 reflect an increase of $1.0 million or 108%, as investments in this area are also required to properly support our higher business volume and the commercial and operational areas of the business, as well as travel expenses are now being incurred. Administrative expenses amounted to $2.6 million or an increase of $1.3 million or 97%, when compared to the prior year quarter. The additional administrative expenses are mainly related to an increase in bad debt reserve of $200,000 and increases in audit costs, legal expenses, insurance costs and office rent account for the majority of the remaining fluctuation of $1.1 million. Depreciation and amortization increased by approximately $200,000 when compared to the prior year quarter. Lastly, all other administrative expenses which were mainly composed of research, development and quality control testing, increased by approximately $235,000 from to the third quarter of 2020.

Other income/(expense)

Total net other expense for the three months ended September 30, 2021 amounted to $353,000 which reflects an increase of $593,000 when compared to net total other income of $240,000 for the three months ended September 30, 2020. The net other expense of $353,000 is composed of foreign currency exchange losses of $327,600, miscellaneous net other non-operational expenses of $97,000, interest income of $76,500 related to a note receivable from our Chinese licensee, which were offset in part by miscellaneous other interest expenses of $4,500. The note receivable requires repayment by our licensee over a five-year period, of an interest-bearing note representing the investment the Company made in the China market during 2017 and 2018. The note receivable is due from the licensee in accordance with its terms, even if the independent license arrangement with our China licensee is terminated.

Net Income

Net income for the three months ended September 30, 2021 was $2.7 million or $0.04 per share based on a weighted average of 74,609,195 shares outstanding and dilutive earnings per share of $0.03 based on a fully-dilutive weighted average of 78,473,866 shares outstanding, which includes the dilutive impact of ~~the consolidation of Func Food’s operations which were not present in the results for the 2019 quarter. As such, administrative expenses~~outstanding stock options to purchase 3,864,671 shares. In comparison, for the three months ended September 30, 2020, ~~were $1.3 million, an increase of $865,700 or 181.9% from $475,797 for~~ the prior year’s quarter. Employee costs for the three months ended September 30, 2020, reflected an increase of $360,307 or 63.0%, not only attributable to the consolidation of Func Food’s operations, but also reflecting additional investments in resources in order to properly support our higher business volume. All other increases for general and administrative expenses from the 2019 quarter to the 2020 quarter were approximately $1.1 million. These increases mostly resulted from higher stock option expense of $1.2 million and, additional depreciation and amortization of $15,000 which were partially offset by net decreases in all other administrative expense of $121,744.

~~Other income/(expense)~~

Total net other income for the three months ended on September 30, 2020 was $45,300, which compares favorably to other expenses of $543,000 for the same period in the prior year. The 2020 quarter results reflect a total favorable impact of $588,300 which includes $155,000 of lower amortization expenses, $143,000 gain related to foreign currency fluctuations, $407,600 gain on note receivable from China and net other miscellaneous expenses of $62,800 which were partially offset by higher net interest expenses of $54,500.

~~Net Income/(Loss)~~

~~As a result of the above, for the three months ended September 30, 2020,~~Company had net income ~~was~~of approximately $4.8 million or $0.07 per share, based on a weighted average of 70,473,351 shares outstanding and a dilutive earnings per share of $0.06 based on a fully-dilutive weighted average of 74,848,239 shares outstanding, which includes the dilutive impact of outstanding stock options to purchase 4,374,888 shares. In comparison, for the three months ended September 30, 2019, the Company had net income of approximately $961,042 or a $0.02 per share, based on a weighted average of 59,307,404 shares outstanding and a dilutive earnings per share of $0.03 based on a fully-dilutive weighted average of 62,532,510 shares outstanding.

Nine months ended September 30, ~~2020~~2021 compared to nine months ended September 30, ~~2019~~2020

Revenue

For the nine months ended September 30, ~~2020,~~2021, revenue was approximately ~~$95.1~~$210.0 million, an increase of ~~$44.1~~$115.9 million or ~~86.3%~~121% from ~~$51.0~~$95.1 million for the same period in 2019. The revenue increase of was attributable in large part to continued strong growth of 57.4% in North American revenues, reflecting double digit growth in both existing accounts, new distribution and expanded distribution to major retailers. European revenue was $26.8 million for the nine-monthsnine months ended September 30, ~~2020,~~2020. Approximately 96% of this growth was as a result of increased revenues from North America, where 2021 period revenues were $177.1 million, an increase of ~~251.0%,~~$110.0 million or 164% from the 2020 period. The balance of the increase was largely attributable to ~~$7.6~~a 14.5% growth in European revenues to $30.7 million in ~~revenue for~~ the ~~2019~~2021 period, from $26.8 million in the 2020 period. ~~The 2020 results now reflect the full financial impact of the consolidation of the results of operations of Func Food.~~ Asian revenues (which ~~primarily consist of~~include royalty revenues from our China licensee) for the nine months ended September 30, ~~2020~~2021 were ~~$868,915~~$1.9 million, an increase of ~~38.1%~~114.2% from ~~$629,028~~$869,000 for the ~~2019~~prior year period. Other international markets generated ~~$308,706 of revenue~~$367,000 in revenues during the nine months ended September 30, ~~2020~~2021, an increase of ~~$149,586~~$58,000 from ~~$159,120~~$309,000 for the ~~same period in 2019.~~ 2020 period.

The total increase in revenue ~~from the 2019 period to the 2020 period~~ was ~~primarily~~largely attributable to increases in sales volume, as opposed to increases in product pricing. The primary factors behind the increase in North American sales volume were related to continued strong triple-digit growth in traditional distribution channels, combined with an increase in and optimization of our products’ presence in world class retailers. Additionally, the continued expansion of DSD network resulted in significant growth of our distributor revenues when compared to the prior year period. Furthermore, our fitness and vending channels also reflected triple digit growth of incremental revenue when compared to the prior year period, during which many fitness facilities were closed due to the COVID-19 pandemic.

Additionally, e-commerce results also contributed to the increase in revenues for the nine months ended September 30, 2021. Furthermore, we estimate that the favorable currency fluctuations of the Euro accounted for approximately 1.5% of the increase in European revenue in the 2021 period, when compared to the 2020 period.

The following table sets forth the amount of revenues by category and changes therein for the nine months ended September 30, ~~2020~~2021 and ~~2019:~~September 30, 2020:

	Nine months Ended September 30,							Nine months ended September 30,
Revenue Source	2020		2019		Change			2021		2020		Change

Total Revenue	$	95,061,265	$	51,031,426		86.3	%	$	210,017,302	$	95,061,265		120.9	%

North American Revenue	$	67,083,888	$	42,607,433		57.4	%	$	177,093,832	$	67,083,888		164.0	%

European Revenue	$	26,799,756	$	7,635,845		251.0	%	$	30,695,477	$	26,799,756		14.5	%

Asian Revenue	$	868,915	$	629,028		38.1	%	$	1,861,130	$	868,915		114.2	%

Other Revenue	$	308,706	$	159,120		94.0	%
Other								$	366,863	$	308,706		18.8	%

Gross profit

For the nine months ended September 30, ~~2020,~~2021, gross profit increased by approximately ~~$22.3~~$43.0 million or ~~105.3%~~98.7% to ~~$43.5~~$86.5 million, from ~~$21.2~~$43.5 million ~~for the same period in 2019. Gross profit margins increased to 45.8%~~ for the nine months ended September 30, ~~2020 from 41.6%~~2020. Gross profit margins decreased to 41.2% for the ~~same period in 2019.~~nine months ended September 30, 2021 from 45.8% for the prior year period. The increase in gross profit dollars ~~and~~is related to increases in sales volume, while the decrease in gross profit margins from the 2020 period to the 2021 period is mainly related to increases in raw material costs (primarily aluminum cans), ocean freight costs, distribution costs, repackaging costs and processing costs. These incremental costs are directly related to added complexities in the supply chain as a result of the COVID-19 pandemic. We estimate that the increase in gross profit dollars of approximately $43.0 million from the nine months ended September 30, 2020 to the nine months ended September 30, 2021, includes approximately $52.0 million related to volume increases, as ~~opposed to~~well as a favorable currency impact of $631,000, which was offset in part by unfavorable increases in ~~product pricing.~~costs of approximately $9.6 million.

Sales and marketing expenses

Sales and marketing expenses for the nine months ended September 30, ~~2020~~2021 were approximately ~~$23.6~~$50.1 million, an increase of approximately ~~$9.5~~$26.5 million or ~~67.8%~~112.0% from approximately ~~$14.1~~$23.6 million for the ~~same period in 2019.~~nine months ended September 30, 2020. This increase ~~reflects the impact of the consolidation of the operating results of Func Food following its October 2019 acquisition by the Company. As~~was largely a result ~~our~~of incremental marketing ~~investments increased by 77.4% or $4.2~~investment activities of $14.3 million from the ~~2019~~2020 period. Additionally, employee costs increased by approximately $4.1 million from the year ago period as we continued to invest in this area in order to have the proper infrastructure to support our growth and incurred additional travel and business expenses now that we are able to resume in-person marketing events and selling activities. Similarly, we experienced increases in other sales expense in the amount of approximately $1.7 million mainly related to trade-marketing activities to support our continued expansion of our DSD network. Lastly, storage and distribution as well as broker costs accounted for the remainder of the increase in this area in the amount of $6.3 million when compared to the ~~2020 period. Similarly, all other sales and marketing expenses give effect to increases~~prior year period, mainly related to the consolidation of Func Food’s operations. Specifically, employee costs for the 2020 period, which also includes investments in human resources to properly service our markets, increased by $3.6 million or 87.9% from the 2019 period. Moreover, due to the increase in business ~~volume, our support to distributors, investments in trade activities and storage and distribution costs increased by $1.7 million from the 2019 period to the 2020 period.~~volume.

General and administrative expenses

General and administrative expenses for the nine months ended September 30, ~~2020~~2021 were approximately ~~$12.5~~$28.1 million, an increase of ~~$5.3~~$14.9 million or ~~71.9%,~~112.8% from ~~$7.2~~$13.2 million for the nine months ended September 30, ~~2019.~~2020. This increase ~~similarly reflects the impact of the consolidation of Func Food’s operations~~was primarily attributable to stock option expense which ~~were not present in the results~~amounted to $13.4 million for the ~~2019 period. As such, administrative expenses reflected~~nine months ended September 30, 2021, an increase of ~~$2.6~~$8.7 million from the prior year period. Management deems it very important to motivate employees by providing them ownership in the business in order to promote over performance which ~~included an increase~~translates into the continued success of ~~$221,000 in~~ our ~~bad debt reserve, to cover potential collectability risks associated with the COVID-19 pandemic. Employee~~business based on key performance attributes. Additionally, employee costs for the nine months ended September 30, ~~2020,~~2021 reflect an increase of ~~$1.1~~$2.3 million or ~~58.9%~~78.5%, ~~not only attributable to the consolidation of Func Food’s operations, but also additional~~as investments in ~~resources in order~~this were also required to properly support our higher business ~~volume. All other increases for general~~volume and ~~administrative~~the commercial and operational areas of the business, as well as travel expenses ~~from the 2019 period~~are now being incurred. Administrative expenses amounted to $7.5 million or an increase of $3.3 million or 76.8%, when compared to the ~~2020 period were $1.4~~prior year period. This variance is mainly related to an increase in bad debt reserve of $1.1 million and increases in audit costs, legal expenses, insurance costs and office rent account for the majority of the remaining fluctuation of $2.2 million. ~~These increases mostly resulted from higher stock option expense of $1.3 million, depreciation~~Depreciation and amortization had an increase of ~~$34,000 and net increases~~approximately $164, 000 when compared to the prior year due to investments in ~~all~~operational equipment (e.g., coolers). All other administrative expenses which were mainly composed of ~~$59,000.~~research, development and quality control testing, increased by approximately $442,000 from the 2020 period.

Other ~~Income/~~income/(expense)

Total net other expense for the nine months ended on September 30, ~~2020~~2021 was ~~$590,000,~~$219,000, which reflects ~~a variance~~an increase of ~~$11.9 million~~$348,000 when compared to net total other income of ~~$11.3 million~~$129,000 for the ~~same period in the prior year.~~nine months ended September 30, 2020. The ~~variance~~net other expense of ~~$11.9 million~~$219,000 is ~~mainly~~composed of foreign currency exchanges losses of $451,000, interest income of $240,000 related to the ~~recognition of a gain of $12.1 million pertaining to a~~ note receivable from our ~~Chinese licensee.~~China licensee, which are offset in part by miscellaneous interest expense of $7,500. The note receivable ~~is the part of an agreement executed with~~requires repayment by our ~~China distributor, related to the restructuring of our business relationship to a royalty-based model, which requires the repayment,~~licensee over a five-year period, ~~pursuant to~~of an ~~unsecured,~~ interest-bearing note ofrepresenting the investment the Company made in the China market during 2017 and 2018. The note receivable is due from the licensee in accordance with its terms, even if the independent license arrangement with our China licensee is terminated.

Net Income

AsNet income for the nine months ended September 30, 2021 was $7.3 million or $0.10 per share based on a ~~result~~weighted average of ~~all~~73,758,731 shares outstanding and dilutive earnings per share of $0.09 based on a fully-dilutive weighted average of 77,782,459 shares outstanding, which includes the ~~above,~~dilutive impact of outstanding stock options to purchase 4,023,728 shares. In comparison, for the nine months ended September 30, 2020, the Company had a net income of ~~$6.9~~approximately $6.8 million or $0.10 per share, based on a weighted average of 70,184,071 shares outstanding and ~~$0.09~~a dilutive earnings per share of $0.09 based on a fully-dilutive weighted average of 73,524,209 shares outstanding, which includes the dilutive impact of outstanding stock options to purchase 3,340,138 shares. In comparison, for the nine months ended September 30, 2019 there was net income of $11.1 million or $0.19 per share based on a weighted average of 58,023,685 shares outstanding, and after adding back interest expense on convertible notes of $348,493 and the amortization on discount on notes payable of $707,286, a diluted net income of $12.2 million or $0.20 per share based on a weighted average of 62,050,032 shares outstanding, which includes the dilutive impact of the stock options of 1,223,700 shares and the dilutive effect of the convertible notes of 2,802,647 shares.outstanding.

Liquidity and Capital Resources

As of September 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, we had cash of approximately ~~$52.2~~$61.4 million and ~~$23.1~~$43.2 million, respectively, and working capital of approximately ~~$62.2~~$156.6 million and ~~$24.8~~$64.9 million, respectively. Cash provided in operations during the nine months ended September 30, 2020 was approximately $3.8 million and cash used in operations was approximately $966,000 for the nine-month period ended September 30, 2019, mainly reflecting investments in inventory, pre-payments and deposits and increase in accounts receivable.

In addition to cash flow from operations, our primary sources of working capital have been private placements and public offerings of our securities, ~~(including~~including an underwritten public offering of 1,133,953 shares at an offering price of $62.50 per share completed on June 14, 2021 and a private placement of 1,437,909 shares at a price of $15.30 completed on August 25, ~~2020 and an underwritten public offering of 7,986,110 shares at an offering price of $3.60 per share completed on September 16, 2019) and our credit facility with CD Financial, LLC (“~~~~CD Financial~~~~”), an affiliate of a principal shareholder of the Company.~~2020.

Our current operating plan for the next twelve (12) months reflects sufficient financial resources, notwithstanding the potential effects of the ~~Covid-19 pandemic nevertheless;~~COVID-19 pandemic.

Cash flows used in operating activities

Cash flows used in operating activities totaled approximately $52.1 million for the nine months ended September 30, 2021, which compares to $3.8 million net cash provided by operating activities for the nine months ended September 30, 2020. The use of cash was primarily driven by higher inventory levels in order to properly service the demand for our products. Additionally, the significant increase in business volume or revenue resulted in an increase in our accounts receivable based on the credit terms offered to our clients. Similarly, pre-payments or deposits to procure inventory also utilized cash which were partially offset by efficient use of terms offered by our vendors as it relates to the commitments and disbursements for the goods and services that are needed for our operations.

Cash flows used in investing activities

Cash flows used in investing activities totaled approximately $0.5 million for the nine months ended September 30, 2021, which compares to cash provided by investing activities of $0.9 million for the nine months ended September 30, 2020. The decrease in the cash provided by investing activities when compared to the 2020 period was primarily due to the fact that we ~~do not contemplate obtaining additional financing.~~invested approximately $2.4 million mainly pertaining to operational equipment which was partially offset by note receivable payments from our China licensee of approximately $1.9 million.

Cash flows provided by financing activities

Cash flows provided by financing activities totaled approximately $70.9 million for the nine months ended September 30, 2021, representing a $46.9 million increase from $24.0 million for the nine months ended September 30, 2020. The increase of cash provided by financing activities is mainly related to the net proceeds of $67.8 million from our June 2021 public offering and proceeds from stock option exercises of $3.2 million, which was offset in part by payments of approximately $72,400 pertaining to financial leases.

Off Balance Sheet Arrangements

As of September 30, ~~2020,~~2021 and December 31, ~~2019,~~2020, we had no off-balance sheet arrangements.

Potential Effects of the COVID-19 Pandemic on the Company’s Business

The current COVID-19 pandemic has presented and continues to present a substantial public health and economic challenge around the world and is affecting our employees, communities and business operations, as well as the global economy and financial markets. The human and economic consequences of the COVID-19 pandemic as well as the measures taken or that may be taken in the future by governments, businesses (including the Company and our suppliers, bottlers/distributors, co-packers and other service providers) and the public at large to limit the COVID-19 pandemic, have and will directly and indirectly impact our business and results of operations, including, without limitation, the following:

●

We have experienced some decreases in sales of our products in various distribution channels that have been affected by the COVID-19 pandemic, such as health and fitness clubs. While some of the restrictions imposed as a result of the initial COVID-19 outbreak have been lifted or eased in many jurisdictions as the rates of COVID-19 infections have decreased or stabilized, resurgence of the COVID-19 pandemic in some markets has slowed or reversed the reopening process, and markets are moving through varying stages of restrictions and re-opening at different times. However, we have recently seen a resurgence of the COVID-19 pandemic in the Northern Hemisphere while cases in the Southern Hemisphere continue to rise. As a result, a number of countries, particularly in EMEA, have reinstituted lockdowns and other restrictions, which could further impact customer demand. If the COVID-19 pandemic and related unfavorable economic conditions continue to intensify, the negative impact on our sales, including our new product innovation launches, could be prolonged and may become more severe.

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Deteriorating economic conditions and continued financial uncertainties in many of our major markets due to the COVID-19 pandemic, such as increased and prolonged unemployment, decreases in per capita income and the level of disposable income, declines in consumer confidence, or economic slowdowns or recessions, could affect consumer purchasing power and consumers’ ability to purchase our products, thereby reducing demand for our products. In addition, public concern among consumers regarding the risk of contracting COVID-19 may also reduce demand for our products.

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The closures of, and continued restrictions on, on-premise retailers and other establishments that sell our products as a result of the COVID-19 pandemic have adversely impacted and may continue to adversely impact our sales and results of operations.

●

Our advertising, marketing, promotional, sponsorship and endorsement activities have been, and will continue to be, disrupted by reduced opportunities for such activities due to measures taken to limit the spread of the COVID-19 pandemic and the cancellations of or reduced capacity at sporting events, concerts and other events may result in decreased demand for our products. Our product sampling programs, which are part of our strategy to develop brand awareness, have been, and will continue to be, disrupted by the COVID-19 pandemic. If we are unable to successfully adapt to the changing landscape of advertising, marketing, promotional, sponsorship and endorsement opportunities created by the COVID-19 pandemic, our sales, market share, volume growth and overall financial results could be negatively affected.

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Our innovation activities, including our ability to introduce new products in certain markets, have been delayed and/or adversely impacted by the COVID-19 pandemic. If such innovation activities are disrupted and we continue to delay the launch of new products and/or we are unable to secure sufficient distribution levels for such new products, our business and results of operations could be adversely affected.

●

Some of our suppliers, bottlers/distributors and co-packers may experience plant closures, production slowdowns and disruptions in operations as a result of the impact of the COVID-19 pandemic. This could result in a disruption to our operations.

●

We may experience delays in receiving certain raw materials as a result of shipping delays due to, among other things, additional safety requirements imposed by port authorities, closures of, or congestion at ports, reduced availability of commercial transportation, border restrictions and capacity constraints.

●

Due to increased demand in at-home consumption, the functional energy drink and liquid supplement industries have experienced some shortages of aluminum cans. However, we have been able to secure adequate supply and have not experienced significant adverse effects on our business, operations and financial condition from such shortage, however we are unable to accurately predict how this might change.

●

As a result of the COVID-19 pandemic, including related governmental measures, restrictions, directives and guidance, many of our office-based employees have worked remotely. We may experience reductions in productivity and disruptions to our business routines while our remote work policy remains in place. If our employees working remotely do not maintain appropriate measures to mitigate potential risks to our technology and operations from information technology-related disruptions, we may face cybersecurity threats. Employees of our third-party service providers who are working remotely, with whom we may share data, are subject to similar cybersecurity risks.

●

Governmental authorities at the U.S. federal, state and/or municipal level and in certain foreign jurisdictions may increase or impose new income taxes, indirect taxes or other taxes or revise interpretations of existing tax rules and regulations as a means of financing the costs of stimulus or may take other measures to protect populations and economies from the impact of the COVID-19 pandemic. Increases in direct and indirect tax rates could affect our net income and increases in consumer taxes could affect our products’ affordability and reduce our sales.

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We may be required to record significant impairment charges with respect to goodwill or intangible assets whose fair values may be negatively affected by the effects of the COVID-19 pandemic.

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The continued financial impact of the COVID-19 pandemic may cause one or more of the financial institutions we do business with to fail or default in their obligations to us or to become insolvent or file for bankruptcy, which could cause us to incur significant losses and negatively impact our results of operations and financial condition.

●

Actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic may result in negative publicity and the Company becoming a party to litigation claims and/or legal proceedings, which could consume significant financial and managerial resources, result in decreased demand for our products and injury to our reputation.

●

The resumption of normal business operations after the disruptions caused by the COVID-19 pandemic may be delayed or constrained by the COVID-19 pandemic’s lingering effects on our suppliers, bottlers/distributors, co-packers, contractors, business partners and/or other service providers.

Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a material adverse effect on our business, reputation, operating results and/or financial condition. Any of these negative impacts, alone or in combination with others, could exacerbate many of the risk factors discussed herein, any of which could materially affect our business, reputation, operating results and/or financial condition.

Item 3. Quantitative Disclosures About Market Risks.

As a “smaller reporting company,” we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Management’s Report on Disclosure Controls and Procedures

Our President and Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, ~~2020,~~2021, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the SEC, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our President and Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial and accounting officer), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on that evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that as of September 30, ~~2020,~~2021, our disclosure controls and procedures were effective in that (a) we maintain records that in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (b) our records provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and board of directors; and (c) our records provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Our President and Chief Executive Officer and our Chief Financial Officer do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officer and our Chief Financial Officer have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

In March 2019, Daniel Prescod filed a putative class action lawsuit against the Company in the Superior Court for the State of California, County of Los Angeles (the “Prescod Litigation”). The plaintiff asserted that the Company’s use of citric acid in its products while simultaneously claiming “no preservatives” violates the California Consumer Legal Remedies Act, California Business and Professions Code and California Business and Professions Code Section, because citric acid acts as a preservative. The Company does not use citric acid as a preservative in its products, but rather as a flavoring, and therefore it believes that its “no preservatives” claim is fair and not deceptive. A motion to certify the case as a class action was filed and on August 2, 2021, that motion was granted. A motion for summary adjudication was also filed by the Company, and that motion was denied. Both decisions have been appealed by petition for Writ of Mandate to the California Court of Appeals, Second District, which has not issued a decision. No fact discovery has been conducted on the merits and this matter is still in its initial stages. The Company intends to contest the claims vigorously on the merits.

In addition to matters previously reported in our periodic reports filed under the Securities Exchange Act of 1934, as amended, from time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business.

Item 1.A. Risk Factors

~~The disclosure below amends and expands a number of the risk factors set forth in~~See “Item ~~1.A -Risk Factors~~1.A. Risk Factors.” in our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2019 to disclose~~2020, as filed with the potential effects of the Coronavirus pandemic on the Company’s business. These risks and uncertainties, along with those previously disclosed in the Annual Report, could materially adversely affect our business or financial results.SEC.

~~Risks Relating to our Business~~

~~Deterioration of general economic conditions could harm our business and results of operations.~~

Our business and results of operations may be adversely affected by changes in the global macro-economic environment which may also reflect the negative impacts caused by pandemic and public health crises related to the COVID-19 pandemic. These macro-economic aspects may also impact inflation, currency exchange rates, interest rates, availability of capital markets, consumer demand, distribution and raw material costs.

~~Volatility in the financial markets and deterioration of global economic conditions could impact our business and operations in several ways, including the following:~~

●

~~Purchasing power of consumers may be reduced thereby affecting demand for our products;~~

●

~~Restrictions related to social distancing and other activities may limit the opportunity for our clients and consumers to purchase our products;~~

●

~~If a significant number of our employees are unable to work, including illness or travel restrictions in connection with COVID-19, our operations may be negatively impacted;~~

●

~~A shutdown of multiple co-packer facilities in connection with COVID-19 may affect our product availability;~~

●

~~Decreased demand for our products due to significant unemployment as a result of COVID-19 and macro-economic environment;~~

●

~~Limitations regarding our raw materials and other input components could substantially impact the availability of our products; and~~

●

If needed, it may become more costly or difficult to obtain debt or equity financing to fund operations or investment opportunities, or to refinance our debt, in each case, on terms and within a time period acceptable to us.

~~Disruption of our supply chain could have an adverse impact on our business, financial condition, and results of operations.~~

Our ability to commercialize our products is critical to our success. Damage or disruption to our supply chain, including third-party manufacturing or transportation and distribution capabilities, due to pandemics (such as the coronavirus (COVID-19)) and related aspects or other reasons beyond our control or the control of our suppliers and business partners, could impair our operations.

We are closely monitoring the COVID-19 pandemic and its potential impact on our supply chain, distribution and our consolidated results of operations. While we do not expect that the COVID-19 pandemic will have a significant adverse effect on our business, financial condition, or operations at this time, we are unable to accurately predict the impact that COVID-19 will have due to the uncertainties which include the ultimate geographic spread of the virus, the intensity of the virus, the duration of the outbreak, and/or actions that may be taken by governmental agencies.

~~We rely on our management team and other key personnel.~~

We depend on the skills, experience, relationships, and continued services of key personnel, including our experienced management team. In addition, our ability to achieve our operating goals also depends on our ability to recruit, train, and retain qualified individuals. We compete with other companies both within and outside of our industry for talented personnel, and we may lose key personnel or fail to attract and retain additional talented personnel. Any such loss or failure could adversely affect our product sales, financial condition, and operating results.

In particular, our continued success will depend in part, on our ability to retain the talents and dedication of key employees. If key employees finalize their employment, become ill as a result of the COVID-19 pandemic, or if an insufficient number of employees is retained to maintain effective operations, our business may be adversely affected and our management team may be distracted. Furthermore, we may not be able to locate suitable replacements for any of our key employees who leave or be able to offer employment to potential replacements on reasonable terms, all of which could adversely affect our procurement & distribution processes, sales & marketing activities, financial processes & condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

~~None.~~

Item 6. Exhibits.

Exhibit No.		Description of Exhibit
31.1		Section 302 Certification of Chief Executive Officer

31.2		Section 302 Certification of Chief Financial Officer

32.1		Section 906 Certification of Chief Executive Officer

32.2		Section 906 Certification of Chief Financial Officer

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CELSIUS HOLDINGS, INC.

Dated: November 12, ~~2020~~2021	By:	/s/ John Fieldly
		John Fieldly, Chief Executive Officer (Principal Executive Officer)

Dated: November 12, ~~2020~~2021	By:	/s/ Edwin Negron-Carballo
		Edwin Negron-Carballo, Chief Financial Officer (Principal Financial and Accounting Officer)

Nevada		20-2745790
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, $.001 par value		CELH		Nasdaq Capital Market

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated filer	☐☒	Smaller reporting company	☒
		Emerging growth company	☐

		Page

PART I – FINANCIAL INFORMATION		1

Item 1.	Financial Statements.	1
	Consolidated Balance Sheets as of September 30, ~~2020 (unaudited)~~2021 and December 31, ~~2019~~2020 (unaudited)	1
	Consolidated Statements of Operations and ~~comprehensive income~~Comprehensive Income for the three and nine months ended September 30, 2021 and 2020 ~~and 2019~~ (unaudited)	2
	Consolidated Statements of Changes in Stockholders’ Equity for three and nine months ended September 30, ~~2020~~2021 (unaudited)	3
	Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, ~~2019~~2020 (unaudited)	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 ~~and 2019~~ (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2524

Item 3.	Quantitative Disclosures About Market Risks.	2930

Item 4.	Controls and Procedures.	30

PART II – OTHER INFORMATION		31

Item 1.	Legal Proceedings.	31

Item 1A.	Risk Factors.	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3231

Item 3.	Defaults Upon Senior Securities.	3231

Item 4.	Mine Safety Disclosures.	31

Item 5.	Other Information.	31

Item 6.	Exhibits.	32

SIGNATURES		33

	September 30, 2020			December 31, 2019 ⁽¹⁾
	(Unaudited)
ASSETS
Current assets:
Cash	$	52,158,098		$	23,090,682
Accounts receivable-net (note 2)		16,561,371			7,774,618
Note receivable-current (note 6)		1,810,773			1,181,116
Inventories-net (note 4)		15,679,192			15,292,349
Prepaid expenses and other current assets (note 5)		4,731,887			4,170,136
Total current assets		90,941,321			51,508,901

Notes Receivable (note 6)		9,053,866			10,630,040
Property and equipment-net (note 8)		467,380			132,889
Right of use assets		415,595			809,466
Long term security deposits		60,875			104,134
Intangibles (note 9)		16,740,838			17,173,000
Goodwill (note 9)		10,419,321			10,023,806
Total Assets	$	128,099,196		$	90,382,236

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses (note 11)	$	18,117,611		$	17,292,647
Lease liability obligation (note 7)		397,931			649,074
Bonds payable-net (note 13)		9,540,007			8,634,279
Other current liabilities (note 12)		716,678			107,399
Total current liabilities		28,772,227			26,683,399

Long-term liabilities:
Lease liability obligation (note 7)		124,978			239,848
Total Liabilities		28,897,205			26,923,247

Commitments and contingences (note 17)

Stockholders’ Equity:
Common stock, $0.001 par value; 100,000,000 shares authorized, 71,651,556 and 68,941,311 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively (note 15)		71,652			68,942
Additional paid-in capital		156,548,446			127,552,998
Accumulated other comprehensive loss		(866,664	)		(753,520	)
Accumulated deficit		(56,551,443	)		(63,409,431	)
Total Stockholders’ Equity		99,201,991			63,458,989
Total Liabilities and Stockholders’ Equity	$	128,099,196		$	90,382,236

								Accumulated
					Additional			Other-
	Common Stock				Paid-In			Comprehensive			Accumulated
	Shares		Amount		Capital			Income (Loss)			Deficit			Total
Balance at December 31, 2019		68,941,311	$	68,942	$	127,552,998		$	(753,520	)	$	(63,409,431	)	$	63,458,989
Stock option expense						1,400,000									1,400,000
Issuance of common stock pursuant to exercise of stock options-Cashless		204,028		204		(204	)								-
Issuance of common stock pursuant to exercise of stock options-Cash		133,921		134		215,213									215,347
Foreign currency translation loss									(114,490	)					(114,490	)
Net Income												546,051			546,051
Balance at March 31, 2020		69,279,260	$	69,280	$	129,168,007		$	(868,010	)	$	(62,863,380	)	$	65,505,897
Stock option expense						1,174,999									1,174,999
Issuance of common stock pursuant to exercise of stock options-Cashless		106,327		106		(106	)								-
Issuance of common stock pursuant to exercise of stock options-Cash		176,914		177		489,140									489,317
Foreign currency translation loss									(108,681	)					(108,681	)
Net Income												1,558,334			1,558,334
Balance at June 30, 2020		69,562,501	$	69,563	$	130,832,040		$	(976,691	)	$	(61,305,046	)	$	68,619,866
Stock option expense						2,143,700									2,143,700
Issuance of common stock-Private Placement		1,437,909		1,438		21,981,678									21,983,116
Issuance of common stock pursuant to exercise of stock options-Cashless		86,405		86		(86	)								-
Issuance of common stock pursuant to exercise of stock options-Cash		564,741		565		1,591,114									1,591,679
Foreign currency translation loss									110,027						110,027
Net Income												4,753,603			4,753,603
Balance at September 30, 2020		71,651,556	$	71,652	$	156,548,446		$	(866,664	)	$	(56,551,443	)	$	99,201,991

												Accumulated
	Preferred Stock				Common Stock				Additional Paid-In			Other- Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Capital			Income (Loss)			Deficit			Total
Balance at December 31, 2018		-	$	-		57,002,508	$	57,003	$	85,153,667		$	(26,997	)	$	(73,380,691	)	$	11,802,982
Stock option expense										1,358,503									1,358,503
Issuance of common stock pursuant to exercise of stock options-Cashless						115,107		115		(115	)								-
Issuance of common stock pursuant to exercise of stock options-Cash						80,750		80		24,680									24,760
Beneficial Conversion Feature on Convertible Instruments										166,667									166,667
Foreign currency translation gain													260,665						260,665
Net Income																11,656,594			11,656,594
Balance at March 31, 2019			$	-		57,198,365	$	57,198	$	86,703,402		$	233,668		$	(61,724,097	)	$	25,270,171
Stock option expense										1,095,792									1,095,792
Issuance of common stock pursuant to exercise of stock options-Cashless						79,488		80		(80	)								-
Issuance of common stock pursuant to exercise of stock options-Cash						93,334		93		122,574									122,667
Foreign currency translation loss													(256,974	)					(256,974	)
Net Loss																(1,473,295	)		(1,473,295	)
Balance at June 30, 2019		-	$	-		57,371,187	$	57,371	$	87,921,688		$	(23,306	)	$	(63,197,392	)	$	24,758,361
Stock option expense										900,000									900,000
Issuance of common stock-Capital Raise						7,986,110		7,986		26,947,451									26,955,437
Issuance of common stock-Notes Payable Conversion						3,196,460		3,197		10,230,136									10,233,333
Issuance of common stock pursuant to exercise of stock options-Cashless						250,000		250		(250	)								-
Issuance of common stock pursuant to exercise of stock options-Cash						71,500		72		76,584									76,656
Foreign currency translation loss													(547,814	)					(547,814	)
Net Income																961,042			961,042
Balance at September 30, 2019		-	$	-		68,875,257	$	68,876	$	126,075,609		$	(571,120	)	$	(62,236,350	)	$	63,337,015

As of September 30, 2020:
2020	$	132,057
2021		560,378
2022		560,378
2023		560,378
2024		560,378
Thereafter		11,200,513
	$	13,574,082

Acquisition consideration
Cash	$	14,188,056
Bonds payable		8,356,958
Settlement of pre-existing debt		4,515,687
Total consideration transferred		27,060,701

Assets acquired and liabilities assumed
Accounts receivable	$	1,300,468
Inventories		2,161,067
Prepaid expenses and other current assets		331,774
Property and equipment		616
Right of use asset		806,572
Other long-term assets		101,413
Intangible assets-Customer relationships		14,050,000
Intangible assets-Brands		3,123,000
Accounts payable and accrued expenses		(3,489,080	)
Lease liability Obligations		(817,041	)
Other current liabilities		(927,088	)
Total identifiable net assets	$	16,641,701
Goodwill	$	10,419,000